Federal Defense Attorney John Teakell

The Department of Justice announced this week that a fugitive who has been missing for more than 13 years entered a guilty plea in relation to federal charges of conspiring to commit motor fuel excise tax fraud.  Aaron Misulovin, a former New Jersey resident and a.k.a. Albert Friedman or Valery Vibornov, entered his plea before U.S. District Judge Joseph E. Camden in New Jersey.

Official charges against Misulovin include one count of conspiracy, three counts of wire fraud, three counts of money laundering and three counts of tax evasion.  Misulovin’s plea agreement requires him to serve five years in prison and pay up to $2.5 million in fines and restitution.  His sentencing is currently scheduled for June 19, 2009.

 Case Background

Misulovin was indicted by a federal grand jury on August 3, 1995 in New Jersey; he and 24 other individuals, including 15 Eastern Europe immigrants, were charged with conspiring to defraud the United States and the state of New Jersey of $138 million in motor fuel excise taxes which were owed but never paid. 

Misulovin, born in Riga, Latvia and later naturalized as a U.S. citizen, operated Kings Motor Oils (Kings) along with co-defendants Igor Erlikh and Demetrios Karamanos.  Kings was a wholesale fuel distributorship with offices maintained in Edison, N.J.  The indictment alleges that Kings purchased large quantities of tax-free home heating oil, and subsequently sold it as tax-paid diesel fuel to PetroPlus from 1989 to 1994.

 The Scheme

PetroPlus was a fuel wholesaler in Deptford, N.J., and was owned and operated by another co-defendant, Daniel Enright.  Enright then allegedly sold the fuel as diesel fuel to customers, charging applicable federal and state taxes.

 New Jersey and federal law determined that the co-defendants incurred tax liability on the sale of this fuel, but the applicable tax funds were distributed among individuals in the group versus paying them to the IRS.

 Court documents state that Kings and PetroPlus created “middle companies” between them in this distribution chain, although these entities never took possession of the fuel in question.  Federal charges stemmed due to fraudulent paperwork created to disguise the actual fuel transactions and lack thereof with the middle companies.  This paperwork created the illusion that Kings and PetroPlus were free of any tax liability, and the middle companies were created to disappear in the event of an investigation.

 Federal money laundering charges also ensued because $596 million of the illicitly obtained proceeds from the scheme were filtered through multiple U.S. and overseas bank accounts.  False identifications were also used to create the middle companies, open bank accounts and establish storefront offices to mask the fraudulent activity.

 The Return of Misulovin

In 1995, Misulovin and Erlikh fled the United States, but Erlikh was returned by Ukranian authorites; he is now serving a sentence of nine years in prison and has been ordered to pay $1 million in restitution.  Misulovin was arrested by Israeli police in 2004 in relation to international money laundering investigations involving an underground Israeli bank.  He then entered into an agreement with the U.S. to voluntarily participate in the International Prisoner Transfer Program.

The Council of Europe Convention on the Transfer of Sentenced Persons (the COE Convention) is participated in by both Israel and the U.S.  This allowed Misulovin to be transferred to the U.S., where he will also serve the rest of his sentenced time from the Israeli charges.

About the Author

Jamie Simpson is a legal researcher and journalist based in Indianapolis, Indiana with more than ten years of legal writing experience.  She earned her B.S. in Animal Science from Purdue University, and more recently a Master of Public Affairs-Certificate in Public Management from Indiana University.  As a prospective law student and current author, Jamie regularly reports on recent court rulings and legal challenges of public interest through various publications online.

The AP writes that yet two more fraudulent investment schemes have been discovered and resulted in charges in response to publicity of the Bernard Madoff Ponzi scheme.  New Jersey fund manager James Nicholson, 42, has been accused of defrauding investors of nearly $900 million over the past four years, and Paul Greenwood, 61, and Stephen Walsh, 64, of Sands Point have been charged with conspiracy, securities fraud and wire fraud.

A federal investigation into Nicholson’s activities ensued after clients became concerned and tried to recoup their investments from his Westgate Capital fund due to reports outlining the $50 billion fraud in the Madoff case. 

 Nicholson is accused of claiming the holdings of his funds totaled $600 to $900 million when they were actually materially much less, convincing investors to hand over their hard-earned dollars.  He also advertised that the funds were audited by a third-party firm in New York which was actually a virtual office space that he leased himself.

 When two dozen investors requested refunds on their investments, they received nearly $5 million total in checks which were returned for insufficient funds.  Others have unsuccessfully sought returns of more than $10 million from Nicholson.

 Nicholson faces federal charges of one count of securities fraud and once count of bank fraud.  If convicted, he faces up to 20 years and $5 million or more in fines for the securities charge, and up to 30 years in prison and $1 million or more in fines for the bank fraud charge.  It is estimated that more than 350 victims are involved in Nicholson’s alleged scheme, and the court has been asked to hold him without bail.

In the second case, Greenwood and Walsh ran WG Trading Company LP and Westridge Capital management Inc. of Connecticut and California, respectively.  Investors with the pair were informed their funds would be placed using a conservative strategy called “enhanced stock indexing”, aiming to outperform the S&P 500.  These clients consisted mostly of charitable and university foundations, and retirement and pension plans.

 After an audit by the National Futures Association was not complied with, Greenwood and Walsh’s membership with the regulatory group was suspended.  Investigations revealed that of the $812 million in assets held by Westridge, a total of $794 million were promissory notes claiming the two owned their own fund money.

 The federal case against them outlines charges that $1.3 million had been illegally transferred to accounts held by Greenwood and Walsh’s wife.  In addition, an unidentified employee of Westridge claims that this money was used to fund expensive collectibles, horses and apartment purchases.

 Two investors with Westridge, the University of Pittsburgh and Carnegie Mellon University, have sued the defendants seeking to recoup the $114 million they invested in the funds.

Bail for each of the defendants has been set at $7 million, requiring $1 million to be posted that is not related to the alleged fraud and investment money from clients.  The Securities and Exchange Commission has commented that the Westridge case ranks among the largest investment frauds to date.

About the Author

Jamie Simpson is a legal researcher and journalist based in Indianapolis, Indiana with more than ten years of legal writing experience.  She earned her B.S. in Animal Science from Purdue University, and more recently a Master of Public Affairs-Certificate in Public Management from Indiana University.  As a prospective law student and current author, Jamie regularly reports on recent court rulings and legal challenges of public interest through various publications online.

The Department of Justice announces that Cannon Seafood Inc., owner and president Robert Moore Sr. and employee Robert Moore Jr. have pleaded guilty to federal charges of violating the Lacey Act. The Lacey Act prohibits creating false documentation for commercially-caught fish, as well as transporting, selling or buying fish which are illegally harvested. Read the rest of this entry »

A federal grand jury in Las Vegas, NV had indicted Alan Rodrigues of Henderson, Nevada, Weston Coolidge of Las Vegas and Joseph Prokop of Upland, California, charging them with conspiracy and federal fraud charges in relation to their work in promoting a fraudulent tax product through the presently non-existent National Audit Defense Network (NADN), as outlined by the U.S. Department of Justice and Internal Revenue Service (IRS). Read the rest of this entry »

The U.S. Department of Justice announces a 24-count indictment against five individuals alleging manipulation of publicly traded stock of three companies and profiting more than $41 million in the scheme.  Defendants include G. David Gordon, a Tulsa, Oklahoma attorney; Richard Clark of Tulsa; Louisville, KY-based attorney James Reskin; Bahamas resident Dean Sheptycki; and Dallas, TX resident Joshua Wayne Lankford.

Gordon, Clark and Reskin have all been arrested in relation to the <a href=”http://www.federaldefensecases.com”>federal charges</a> and are awaiting initial appearances.  Sheptycki has been withheld by Bahamian authorities and is to be extradited to the United States.  Lankford, however, has not been arrested to date.

The case involves three different companies’ stocks, including Deep Rock Oil & Gas, Inc., Global Beverage Solutions, Inc. (formerly Pacific Peak Investments) and National Storm Management Group, Inc.  Allegations include that between April 2004 and December 2006, the defendants engaged in a “pump and dump” scheme to manipulate the price of penny stock shares and encourage investors to buy them, then sell their personal holdings at a significant profit.

Charges state that the defendants bought a majority of the free-trading shares of the companies using fraudulent and deceptive means to remove trading restrictions.  It is alleged that the defendants bought their shares before hiding them with friends, family and entities which they owned and controlled.  Then, they allegedly coordinated trading activities to give the appearance of an emerging market after promoting the stocks through unsolicited fax and e-mail campaigns.

These campaigns allegedly did not disclose who was sponsoring them, the fact that the investors intended to sell their shares, and further influenced investors to invest in the artificially inflated stocks.  Subsequently, the sell-offs conducted by the defendants caused the stock prices to deflate and drastically reduce the value of stock held by legitimate investors.

Each of the five defendants is charged with one count of conspiracy to commit securities fraud, wire fraud and money laundering, nine counts of wire fraud, five counts of securities fraud, and six counts of money laundering in the indictment.  Gordon faces additional charges of one count of making false statements regarding the scheme, and one count of wire fraud and one count of obstruction of justice in connection with a similar scheme regarding the penny stock of International Power Group Ltd.

The defendants in this case are accused of profiting more than $41 million from the alleged manipulation scheme, and the indictment seeks the criminal forfeiture of this total.  Additionally, federal prosecutors are seeking a criminal fine of $2.75 million from Gordon in connection with his additional wire fraud charge.

Federal conspiracy and false statement charges can carry up to five years in prison and $250,000 in fines.  The wire fraud and obstruction of justice charges carry a maximum of 20 years in prison and $250,000 in fines.  Each securities fraud charge carries a maximum of 20 years in prison and a $5,000,000 fine, and the money laundering charges can carry a total of 10 years in prison and $250,000 in fines.

The SEC has also filed civil charges against Gordon, Lankford and Sheptycki in relation to this case.

In April of 2006, Phillipsburg-based Atlantic States Cast Iron Pipe Co. and four company officials were found guilty by jury trial on multiple charges of violating environmental and workplace safety laws. Original sentencing was scheduled for September of 2006, but has been delayed until recently.

U. S. District Court Judge Mary Cooper, who presided over the trial, responded to the U.S. Attorney’s Office for New Jersey’s motion to reduce delays and proceed with sentencing. Each individual defendant is scheduled to be sentenced between the dates of April 20 and April 24, 2009.

This trial was the lengthiest criminal environmental trial in the history of the federal court system, lasting a total of seven months. In the recent motion filed by government attorneys, it was argued that stalling the sentencing of the defendants negatively affected public perception. They also cited the federal Crime Victims’ Rights Act, stating that victims of federal offenses have the right to proceedings without undue delays.

The defense team countered that the Crime Victims’ Rights Act does not apply to the sentencing phase of a trial. Judge Cooper did not formally rule on the motion filed, but proceeded to schedule sentencing dates upon hearing oral arguments in the matter.

Case History

Atlantic States is owned by McWane Inc., a privately held manufacturer of ductile iron pipe used in municipal and commercial sewer and water installations. McWane has established more than a dozen plants in the United States and Canada, and became the subject of investigative reports by The New York Times and PBS.

A broad federal investigation ensued, and it was discovered that Atlantic States was dumping waste into the Delaware River, concealing major workplace injuries from the Occupational Safety and Health Administration (OSHA), and concealing a questionable case of the death of a man in a forklift accident in 2000.

Defendants named in the case included the Atlantic States foundry, plant manager John Prisque, maintenance supervisor Jeffrey Maury, finishing superintendent Craig Davidson, and former human resources manager Scott Faubert. Another defendant, former engineering manager Daniel Yadzinski, was acquitted.

Original sentencing dates were set for September 7, 2006. Defendants were initially charged with 34 counts of conspiracy to violate federal clean air and water regulations, workplace safety law violations, and obstruction of criminal and regulatory investigations by the Environmental Protection Agency and OSHA.

Each of the five defendants was found guilty of engaging in a conspiracy to pollute the air and Delaware River through violations of the federal Clean Water and Clean Air Acts for eight years. This count may carry a maximum penalty of five years in prison for the managers and $500,000 in fines for the company.

Federal investigators chose not to indict McWane in the case, but Atlantic States was convicted on five counts of making materially false statements to OSHA, four counts of obstruction in OSHA investigations, 22 counts of violating the Clean Water Act, and one count of violating the Clean Air Act.

The four individual defendants were each convicted of multiple counts of violations as well. The guilty verdict marked the fifth time in two years that a McWane company either pled guilty or was convicted of environmental worker safety crimes and obstruction.

About the Author
Jamie Simpson is a legal researcher and journalist based in Indianapolis, Indiana with more than ten years of legal writing experience. She earned her B.S. in Animal Science from Purdue University, and more recently a Master of Public Affairs-Certificate in Public Management from Indiana University. As a prospective law student and current author, Jamie regularly reports on recent court rulings and legal challenges of public interest through various publications online.

In April of 2006, Phillipsburg-based Atlantic States Cast Iron Pipe Co. and four company officials were found guilty by jury trial on multiple charges of violating environmental and workplace safety laws. Original sentencing was scheduled for September of 2006, but has been delayed until recently.

U. S. District Court Judge Mary Cooper, who presided over the trial, responded to the U.S. Attorney’s Office for New Jersey’s motion to reduce delays and proceed with sentencing. Each individual defendant is scheduled to be sentenced between the dates of April 20 and April 24, 2009.

This trial was the lengthiest criminal environmental trial in the history of the federal court system, lasting a total of seven months. In the recent motion filed by government attorneys, it was argued that stalling the sentencing of the defendants negatively affected public perception. They also cited the federal Crime Victims’ Rights Act, stating that victims of federal offenses have the right to proceedings without undue delays.

The defense team countered that the Crime Victims’ Rights Act does not apply to the sentencing phase of a trial. Judge Cooper did not formally rule on the motion filed, but proceeded to schedule sentencing dates upon hearing oral arguments in the matter.

Case History

Atlantic States is owned by McWane Inc., a privately held manufacturer of ductile iron pipe used in municipal and commercial sewer and water installations. McWane has established more than a dozen plants in the United States and Canada, and became the subject of investigative reports by The New York Times and PBS.

A broad federal investigation ensued, and it was discovered that Atlantic States was dumping waste into the Delaware River, concealing major workplace injuries from the Occupational Safety and Health Administration (OSHA), and concealing a questionable case of the death of a man in a forklift accident in 2000.

Defendants named in the case included the Atlantic States foundry, plant manager John Prisque, maintenance supervisor Jeffrey Maury, finishing superintendent Craig Davidson, and former human resources manager Scott Faubert. Another defendant, former engineering manager Daniel Yadzinski, was acquitted.

Original sentencing dates were set for September 7, 2006. Defendants were initially charged with 34 counts of conspiracy to violate federal clean air and water regulations, workplace safety law violations, and obstruction of criminal and regulatory investigations by the Environmental Protection Agency and OSHA.

Each of the five defendants was found guilty of engaging in a conspiracy to pollute the air and Delaware River through violations of the federal Clean Water and Clean Air Acts for eight years. This count may carry a maximum penalty of five years in prison for the managers and $500,000 in fines for the company.

Federal investigators chose not to indict McWane in the case, but Atlantic States was convicted on five counts of making materially false statements to OSHA, four counts of obstruction in OSHA investigations, 22 counts of violating the Clean Water Act, and one count of violating the Clean Air Act.

The four individual defendants were each convicted of multiple counts of violations as well. The guilty verdict marked the fifth time in two years that a McWane company either pled guilty or was convicted of environmental worker safety crimes and obstruction.

About the Author
Jamie Simpson is a legal researcher and journalist based in Indianapolis, Indiana with more than ten years of legal writing experience. She earned her B.S. in Animal Science from Purdue University, and more recently a Master of Public Affairs-Certificate in Public Management from Indiana University. As a prospective law student and current author, Jamie regularly reports on recent court rulings and legal challenges of public interest through various publications online.

The U.S. 6th Circuit Court of Appeals overturned a decision by U.S District Judge Marianne O. Battani this week, effectively allowing oral statements to be used as evidence in a case against a president of a homeless shelter and his controller.

Defendant Jon Rutherford, President and CEO of Metro Emergency Services, Inc., was indicted in 2006 along with his Controller, Judith Bugaiski, on charges of conspiracy, tax evasion, fraud and willful failure to pay taxes.

Rutherford and Bugaiski entered not guilty pleas in response to charges that Rutherford used $750,000 in funds from the nonprofit agency to make illegal political contributions to Michigan Democrats. He also allegedly hired former Detroit Mayor Kwame Kilpatrick’s father, Bernard N. Kilpatrick, and paid him a $100,000 salary as a consultant to his organization. Other charges accuse the two of making false statements to the Internal Revenue Service and hindering its investigation.

A three-member panel of the court was asked to review a decision by Judge Battani concerning the validity of using oral statements made by the defendants as evidence in the proceedings. Battani determined that they could not be used because the Internal Revenue Service investigators were treating the case as a civil matter even after evidence of criminal fraud had surfaced, which violates their standards of operation. The defendants were not advised they were subjects of a criminal investigation, and thus the IRS violated their constitutional rights.

However, the Appeals Court reversed the decision on the grounds that the 5th Amendment is violated only if the agents forced the defendants to speak against their will. The court found there was no evidence proving that statements from Rutherford and Bugaiski were coerced or forced, and that negligent violations by the IRS did not violate the defendants’ constitutional rights.

Defense attorney Steven Fishman states that he is considering asking the full appeals court to review the decision.

Case History

Rutherford and Bugaiski were charged with conspiracy to evade federal income taxes in addition to 19 other counts of tax evasion and failure to pay, according to the U.S. Department of Justice.

The first count alleged that questionable actions occurred between November 1997 and April 2004, including conspiring to defraud the IRS, evading personal income taxes on $2 million of Rutherford’s income, failing to pay taxes withheld from employees, and falsifying tax returns for a related property management firm.

The additional 19 counts concerned violations of specific tax codes in relation to the conspiracy charges, alleging the two defendants attempted to thwart the investigation by providing false documentation. The case states that proceeds received by Metro Emergency Services were used for contributions to Michigan Democrats and Rutherford’s personal gain. Taxes withheld from employees were also kept by Rutherford versus paid to the IRS as required.

The IRS also charged the defendants with providing falsified documents, and using tax-exempt funds for the political fund contributions. Both parties have pled not guilty to the federal charges before them, and are still awaiting trial.

About the Author
Jamie Simpson is a legal researcher and journalist based in Indianapolis, Indiana with more than ten years of legal writing experience. She earned her B.S. in Animal Science from Purdue University, and more recently a Master of Public Affairs-Certificate in Public Management from Indiana University. As a prospective law student and current author, Jamie regularly reports on recent court rulings and legal challenges of public interest through various publications online.

In light of recent economic downfalls, President Obama took the first step in ensuring that America’s economy works for both men and women workers when he signed the Lilly Ledbetter Fair Pay Act into law today, reports the AP. As his first piece of legislation since becoming president, the equal-pay measure will now allow expanded statutes of limitations when filing U.S. Equal Employment Opportunity Commission claims against employers for gender-based pay discrimination.

The new law is named after a now-retired Goodyear Tire & Rubber Co. area manager who first filed an EEOC complaint against her employer in 1998. At that time, Ledbetter was anonymously informed that she was being paid at a lower rate than men within the company holding her same position.

According to the 1964 Civil Rights Act, no employer may discriminate against any employee on the basis of gender, race, nationality or religion. Ledbetter’s complaint was answered with notification that she had grounds to sue under the act, and in 2003 won a jury verdict in a U.S. district court against the company.

Goodyear appealed the decision, and two years after the original filing the 11th Circuit U.S. Court of Appeals agreed that Ledbetter was much too late to file suit against them. Later, the case was heard by the Supreme Court and the reversed decision was upheld by a slim 5-4 vote.

Later that same year, the House passed the legislation that was blocked by the White House. Since the beginning of the new administration and Democratic majority in Congress, the Ledbetter bill became a top priority this session.

The bill passed the House in early January, but included additional pay equity language. Last week, the Senate approved the legislation, but without the additional measures, which effectively required the House to vote once again on the bare-bones version.

Opponents of the bill argued that it would cause a dramatic increase in needless lawsuits against employers, but counter debates pointed out that the congressional budget analysts saw no reason this would be the case.

Under the new law, employees may file suit within six months after an alleged discriminatory paycheck is issued to them. In addition, each paycheck will be considered a new act of discrimination, and employer liabilities are restricted to two years of back pay.

These measures directly counter the high court’s finding in Ledbetter’s original case that these complaints may only be brought against a company within 180 days of the beginning of the discriminating events. Under the new rules, an employee may sue for each paycheck received if it is considered discriminatory any time within that 180-day period.

Potential claimants may file suit citing the new law immediately, though the burden of proof will still lie with the plaintiff. This means that if the employee can not produce evidence proving discrimination due to lost records (or some other reason), there may not be much hope for winning the case.

Lilly Ledbetter’s case became a presidential campaign tool for Obama, and she was present at the bill’s signing today. President Obama noted that the signing was not only in honor of Ledbetter, but of his grandmother and daughters as well, in pursuit of one of America’s first principles: “that we are all created equal and each deserve a chance to pursue our own version of happiness.”

Former Illinois Governor, Rod Blagojevich, was recently removed from office and barred from serving in a public office in the state ever again. However, the probable federal indictments against him and his Chief of Staff, John Harris, for allegedly attempting to sell Barack Obama’s Senate seat still threaten additional headlines in the coming weeks.

Federal investigators have been gathering evidence against the impeached Governor since 2002, but a formal indictment has yet to be filed. Blagojevich is accused of selling Obama’s Senate seat, as well as committing mail fraud and theft or bribery in relation to programs receiving federal funds.

The FBI’s complaint against Blagojevich and John Harris alleges the investigated parties violated US codes that prohibit a State agent, such as a Governor, from accepting or giving anything of more that $5,000 in value to influence a business or government transaction.

Under the first count against Blagojevich and Harris, the FBI alleges the defendants conspired with each other and others to defraud the people and State of Illinois through the used of mail and wire communications. Evidence against the parties has been gathered since 2002 through wire-tapped conversations between the two men and third parties involved in the questionable transactions.

The second count alleges that the two solicited the firing of Chicago Tribune employees responsible for critical editorials of Blagojevich. The former governor is accused of threatening to withhold state funds to the organization if it did not accommodate his demands in the matter.

Blagojevich was arrested on December 9, 2008, and a criminal complaint was filed by the U.S. Attorney at that time. Illinois Attorney General, Lisa Madigan, submitted a request to the state’s Supreme Court to remove Blagojevich from office, but was denied. At the same time, the Illinois House launched the governor’s impeachment proceedings.

In the announcement of the arrests by the U.S. Attorney General’s office, some details of the wire-tapped conversations were outlined. Among the specific actions noted, the two defendants are accused of exchanging “official actions” in exchange for campaign contributions to Friends of Blagojevich, personal financial gains to Blagojevich and his family, and designating federal and state funds for those who complied with the governor’s many self-serving requests.

The alleged conspiracy to sell Obama’s Senate seat resulted in charges after conversations were recorded alluding to appointing candidates in exchange for highly-paid positions for Blagojevich and his wife. These discussed positions would be held with either local non-profit organizations, labor unions or local corporate boards. Other conversations alluded to receiving campaign funds or up-front cash to Blagojevich, as well as cabinet posts and ambassadorships.

All of the charges against Blagojevich fall under federal jurisdiction due to the use of and dispersing of federal funds, as well as conducting the exchanges over the phone and through mail correspondence.

If Blagojevich is indicted, which is expected to happen in the next few months, he will undergo a federal court trial to determine his guilt or innocence on both counts in the criminal complaint. The conspiracy to commit mail and wire fraud charge carries a maximum penalty of 20 years in prison, and solicitation of bribery carries a maximum of 10 years. Each count may also result in a maximum fine of up to $250,000.