FraudBaron.com

#537 - January 15, 2008

#537 Updated: 1/15/08 9:01 a.m.

Wesley Snipes goes on trial for tax fraud
reuters.com | 1/14/08 | Barbara Liston
OCALA, Florida (Reuters) - Actor Wesley Snipes went on trial on Monday for failing to file U.S.
tax returns on tens of millions of dollars in income from 1999 to 2004. The star of the "Blade"
movie series attended a prayer session at a nearby church organized by 22 pastors before
heading to the U.S. District Court in Ocala, Florida, 80 miles northwest of Orlando and the
celebrity enclave of Isleworth, where prosecutors say Snipes lived at the time of the
suspected fraud. The trial began with jury selection and Snipes' defense team indicated it
expected the trial to last around a month. His lawyers read out a list of potential celebrity
witnesses who might testify on his behalf, including retired NBC News anchor Tom Brokaw,
movie director Spike Lee and actress Goldie Hawn. Snipes, 45, has been charged with six
counts of failing to file tax returns, two counts of fraudulently claiming tax refunds and one
count of conspiracy to defraud the government. He faces 16 years in prison if convicted on all
counts. Also on trial are a known tax protester and former accountant the Justice Department
said was barred by a federal court from preparing other people's tax returns. Snipes' lawyers
say he was duped by his tax advisers. His attorneys have repeatedly sought to move his trial
out of Ocala, Florida, which they say is a hotbed of racism. Prosecutors say the suspected tax
fraud occurred at a time when Snipes was signing movie deals worth more than $10 million
each for "Blade II" and "Blade: Trinity." During the six years in question, prosecutors say
Snipes earned about $40 million. In addition to not filing tax returns, Snipes tried to get
fraudulent refunds from the IRS totaling $11.3 million for taxes he paid in 1996 and 1997,
according to prosecutors. Snipes joined a group in 2000 called American Rights Litigators
headed by Eddie Ray Kahn, a tax protester with convictions dating back to 1985, and
paid Kahn a consulting fee of $2,000, according to prosecutors. Kahn and former accountant
Daniel P. Rosile are co-defendants with Snipes in the trial.

Sheriff Retires to Fight Legal Battle
ap.google.com | 1/14/08 | Gillian Flaccus
corruption case, retired Monday to focus on his defense amid questions about his plans to
use a high-powered law firm to represent him for free. Michael S. Carona, 52, said in an
interview with The Associated Press that the move, which came a week after he returned to
work from a paid 60-day leave, did not signal an upcoming plea deal or any change in the
evidence against him. His trial is set for June. "I am absolutely committed to having my day in
court, I am absolutely committed to the opportunity to have the truth presented and I'm
absolutely committed to being vindicated," he said. "If at the conclusion of my case, I'm found
not guilty, I can't get my job back. How do you un-ring that bell? You can't, so this is a very
difficult decision for me." Carona, 52, was charged with conspiracy, mail fraud and witness
tampering in October in a sweeping federal case that accuses him of pocketing nearly
$700,000 in bribes and kickbacks. Prosecutors alleged he tried to enrich himself, his wife and
a woman identified in the indictment as his "longtime mistress" by accepting cash and gifts in
exchange for political favors. If convicted of all charges, he faces as many as 105 years in
prison. Carona's wife, Deborah, is charged with one count of conspiracy. His alleged mistress,
attorney Debra Hoffman, faces one count of conspiracy, four counts of mail fraud and three
counts of bankruptcy fraud. All three have pleaded not guilty. Carona will receive a pension
equal to his final salary of about $200,000, aid his attorney, Michael Schroeder. Carona has
headed the nation's fifth-largest sheriff's department since 1999, when he was first elected to
oversee the operation of more than 4,000 employees and a $500 million operating budget.
He rose to national prominence in 2002, during a successful investigation into the kidnapping
and murder of 5-year-old Samantha Runnion. The case led CNN's Larry King to dub Carona
"America's Sheriff," a nickname that still appears on his official biography. Schroeder said
Monday that Carona decided to retire to settle questions about whether he could have a
high-powered law firm represent him pro bono without violating state law. There were also
questions about whether he could establish a legal defense fund while in office because
donations to it would be considered gifts. The state attorney general's office has said it was
looking into those complaints, as was the state's Fair Political Practices Commission.
Carona said Assistant Sheriff Jack Anderson will replace him until the County Board of
Supervisors appoints an interim sheriff to fill the post until his term ends in 2011. The board
was to meet Tuesday to discuss the interim position.

Kumar completes $52M restitution payment for fraud at CA
computerworld.com | 1/14/08 | Matt Hamblen
January 14, 2008 (Computerworld) Former CA Inc. chief executive Sanjay Kumar has made the
final $2 million payment of the $52 million he owed in restitution for his involvement in a $2.2
billion accounting fraud at the software company, his attorney said. "He's holding up just fine
and doing the best he can while taking courses and doing a few jobs while there," his
attorney, Lawrence McMichael, said in a telephone interview today. "He's actually teaching
courses, although I'm not sure what," he added. "He's keeping very busy, trying to make a
difference, and is stuck there for the foreseeable future as he awaits his appeal." Kumar is
jailed at the federal Fairton Correctional Institution in south central New Jersey, where he has
an official release date of Jan. 25, 2018, according to the Bureau of Prisons Web site. Another
attorney, Paul Schechtman, is seeking to reduce his prison term. Kumar reported to prison in
August, after he pleaded guilty to fraud and obstruction of justice in 2006. His final payment
on the $52 million, made in late December, came a year early and ended a freeze that had
been placed on his holdings, McMichael said. The federal government can still garnish 20% of
his wages, however. Kumar's guilty plea reduced his original restitution of $1.02 billion to $52
million. Schechtman could not be reached for comment.

Homestore CEO's fraud conviction overturned
sfgate.com | 1/15/08 | Beb Egelko
A federal appeals court on Monday overturned the fraud conviction and 15-year sentence of a
Southern California home-listing company's chief executive in a $67 million revenue-inflation
scheme, saying the trial judge should have disqualified himself because of stock holdings in a
firm linked to the case. Stuart Wolff's sentence in October 2006 was one of the longest in the
nation for a corporate executive, and also included a $5 million fine and $8.6 million in
restitution to stockholders. The ruling by the Ninth U.S. Circuit Court of Appeals in San
Francisco entitles him to a new trial with a different judge. Wolff was the founder in 1996 of
Homestore Inc., a Thousand Oaks (Ventura County) company that sold real estate online and
is now known as move.com. Homestore's stock tumbled in 2001 amid an internal investigation
of accounting practices that led to a restatement of corporate earnings. Wolff resigned in
January 2002. Government regulators said the company pumped up its advertising revenue
with phony three-way transactions, in which Homestore would buy goods or services it didn't
need; the seller would then use part of that money to buy ads from a third company, which
then paid Homestore to advertise on its Web sites after taking a commission. The indictment
against Wolff alleged 23 such three-way deals in the first three quarters of 2001, including 17
in which America Online was the company buying the ads. Ten other Homestore executives
pleaded guilty to criminal charges, including executive vice president Peter Tafeen, a key
prosecution witness in Wolff's three-month trial. Wolff was convicted in June 2006 of all 18
felony charges against him, including lying to the company's accountants and auditor, filing
false reports with the Securities and Exchange Commission, falsifying company records and
insider trading. He is also a defendant in civil suits by the SEC and Homestore stockholders.
He spent about five weeks in jail after the verdict before being freed on bail. On Monday, a
three-judge appeals court panel agreed with Wolff's lawyers that U.S. District Judge
Percy Anderson should have stepped down from the case because he owned stock in AOL, an
alleged participant in the scheme. Anderson disclosed his financial interest during pretrial
proceedings in 2005, without specifying the amount of his holdings. He referred the issue of
his participation to another federal judge, who ruled that the defense had failed to establish
that Anderson had a financial interest in the subject of the case. The appeals court
disagreed, saying AOL was deeply involved in the case. The three-way transactions were
designed by an AOL senior executive, Eric Keller, who was later fired, the court said. Four AOL
officials testified at the trial, and three prosecution witnesses, as well as Wolff, testified about
dealings between Homestore and AOL. In addition, the court said, AOL was criminally
charged in Virginia in connection with at least one of the transactions in Wolff's indictment,
and resolved the case by paying $210 million in compensation and fines. The SEC later
accused the company of aiding Homestore in securities fraud, and it is also a defendant, along
with Wolff and Homestore, in the stockholders' suit. Anderson's rulings in Wolff's case "could
potentially have had a financial impact on AOL," the three-judge panel said. It did not discuss
defense challenges to Anderson's rulings on evidence and jury instructions. Lawrence
Robbins, a lawyer for Wolff, said the ruling means Wolff "will now have a full and fair day in
court before a new decision-maker. We look forward to a new opportunity to clear his
name." Thom Mrozek, spokesman for the U.S. attorney's office in Los Angeles, said the office
is prepared to retry Wolff if it decides not to appeal the ruling.

Former treasurer faces trial for embezzlement
sheboygan-press.com | 1/15/08 | Eric Litke
A 51-year-old Sheboygan Falls man accused of embezzling $56,000 while working as the
Village of Oostburg's treasurer was bound over for trial Monday after waiving a preliminary
hearing in Sheboygan County Circuit Court. Kim B. Simmelink, of 724 Woodview Ave., No. 1,
allegedly forged signatures using a computer scanner and falsified records to cover the thefts.
He was charged Oct. 19 with four counts of forgery and six counts of theft, for checks ranging
from $3,000 to $25,000, according to a criminal complaint. Simmelink faces up to 26½ years in
prison if convicted on all counts for the thefts, which allegedly occurred over a six-month
period in late 2005 and early 2006. He has pleaded not guilty to all 10 counts. "It was going
to be a lengthy preliminary hearing at this point, and it was our decision to waive the hearing,
basically so ongoing discussion between us and the district attorney" could continue, said
defense attorney Christopher Eippert. He declined to classify the discussion as negotiations
for a plea deal. Simmelink, who is free on a $10,000 signature bond, was placed on unpaid
leave in April 2006 after irregularities in the village's bank account came to light, and he
resigned from the position about a month later, Oostburg Village President Jack Hoffmann said.

Simmelink had been with the village since 1987 and handled finances, record keeping and
elections as Oostburg's only full-time administrator. According to the complaint, an official with
the Oostburg State Bank contacted Hoffmann after a check for $25,500 was drawn on the
village account, with the check made out to Simmelink, for "pay out of sick time." Simmelink
had provided the village with false documentation claiming the payment was for services
provided to the village by Crispell-Snyder Inc., the complaint said. A yearlong audit of the
village's finances uncovered six checks cashed by Simmelink totaling more than $56,000, the
complaint said. However, Hoffmann said an audit conducted by the village shows that it could
be out as much as $140,000.
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