U.S. v. Bogart

• Decision Date: 01 June 2007
• Docket Number: No. C2-01-CR-164.,C2-01-CR-164.
• Citation: 490 F.Supp.2d 885
• Parties: UNITED STATES Of America, v. Ronald J. BOGART, et al, Defendants.
• Court: U.S. District Court — Southern District of Ohio

490 F.Supp.2d 885

UNITED STATES Of America, v. Ronald J. BOGART, et al, Defendants.

No. C2-01-CR-164.

United States District Court, S.D. Ohio, Eastern Division.

June 1, 2007.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Brenda S. Shoemaker, United States Attorney's Office, Columbus, OH, Mark J. Yost, Criminal Division-Money Laundering Sect, Washington, DC, for Plaintiff.

David Freeman Axelrod, Vorys Sater Seymour and Pease, LLP, Frederick Douglas Benton, Terry Keith Sherman, Columbus, OH, Barry Bohrer, Morvillo Abramowitz, New York, NY, Justin Thornton, Law Offices of Justin Thornton, Washington, DC, Adam Schwartz, Zuckerman Spaeder, LLP, Jack Fernandez, Tampa, FL, Larry Zukerman, Zukerrnan, Daiker & Lear, Roger L. Kleinman, McDonald Hopkins, S. Michael Lear, Cleveland, OH, for Defendants.

RESTITUTION OPINION AND ORDER

MARBLEY, District Judge.

I. Introduction

This matter comes before the Court by way of a restitution hearing held on April 21, 2006. As detailed herein, this Court finds Defendants jointly and severally liable for restitution in the amount $2,492,424.66.

II. Background¹

This case involves a complex conspiracy orchestrated by Defendants over a seven year period. In short, Defendants conspired to aid Richard Schultz ("Schultz") in hiding his assets from his creditors, his ex-wife, and the United States Government ("the Schultz conspiracy").

Beginning in 1994, Defendant Domenic Massari III ("Massari") assisted Schultz in the fabrication of a backdated letter which purported to transfer $5.5M of Schultz's assets to his father. Massari, Schultz, and others used this letter to conceal these assets, in connection with sham litigation in Florida state court, from Schultz's creditors. Massari also participated in additional sham litigation against Thomas Bourke ("Bourke"), a Schultz creditor, which caused Bourke to incur massive expenses and frustrated him in his pursuit to collect a $2M judgment owed by Schultz. As part of the conspiracy, Massari also refused to provide certain documents to Gene Butler ("Butler"), in connection with Schultz's divorce litigation with his ex-wife, Marva Heinmiller ("Heinmiller").

Defendant Martin Elson ("Elson") was an attorney employed by St. Paul Fire and Marine Insurance Company ("St.Paul").² A central focus of his job was to pursue Schultz's assets on behalf of St. Paul. In December 1995, while still employed at Paul, Elson began secretly working for Schultz. Elson helped hide Schultz's assets and aided in the sham litigation against Bourke. In November 1995, Elson recommended to St. Paul that it sell a judgment it held against Schultz, then valued at over $2M, to Defendant Frank McPeak ("McPeak") for $450,000.³ Elson at all times knew that McPeak was working on behalf of Schultz. Elson never disclosed to St. Paul that McPeak functioned as Schultz's shill. Moreover, Elson billed both McPeak's Judgment Acquisition Corporation and St. Paul for this transaction.

Also in December 1995, while still representing St. Paul, Elson, along with Massari, orchestrated the assignment of Schultz's $1.3M IRA to McPeak's Judgment Acquisition Corporation to shield this asset from St. Paul and other creditors. On this same day, St. Paul assigned its interest in the judgment it had against Schultz to McPeak's corporation.

Elson also participated in additional sham litigation against Bourke and others on behalf of Schultz. He arranged a fictional deposition of Schultz in January 1996 in order to impede Schultz's creditors and ex-wife. Elson participated in the assignment of the Veren judgment (another client of his law firm) to McPeak's corporation. He worked with Massari to file frivolous and unjustified lawsuits against Bourke which caused Bourke to incur substantial and extensive litigation costs. As a result of Massari's and Elson's actions, Schultz achieved a main objective: he substituted the McPeak corporation in place of himself as the party in various litigations, reduced the amount of debt he owed, ion and caused the dismissal of various lawsuits against him.

Defendants Ronald Bogart ("Bogart") and Richard Kennedy ("Kennedy") also played significant roles in the Schultz conspiracy. They assisted Schultz in hiding more than $5M in assets through bogus transactions in 1994 and sheltered his money in various Caribbean bank accounts in 1994 and 1995. Later, Bogart and Kennedy assisted Schultz and Elson in repatriating this money and took over McPeak's role as nominee to hold various judgments against Schultz.

Elson pled guilty to Count 3 of the third superceding indictment, Conspiracy to Obstruct the Administration of Justice, in violation of 18 U.S.C. § 371 and 2. and 18 U.S.C. § 1503 pursuant to a plea arrangement with the Government. Count 3 incorporates many of the allegations above and specifically states that, beginning in May 1998, Elson:

did unlawfully and knowingly conspire, combine, confederate, and agree with each other, with Richard D. Schultz, Tom Schultz, Ronald Bogart, Richard Kennedy and other known and unknown to the Grand Jury, to corruptly endeavor to obstruct and impede the due administration of justice in an investigation conducted by a federal grand jury in the Southern District of Ohio by violating and attempting to violate 18 U.S.C. § 1503.⁴ In violation of Title 18, U.S.Code, Sections 371⁵ and 2.

On April 21, 2006, after determining that level 10 was the appropriate level under the Sentencing Guidelines, this Court sentenced Defendant to ten months of imprisonment, consisting of two months incarceration and eight months of home confinement as a special condition of the three-year term of supervised release. The Court then ordered that the restitution order applicable to Defendant Elson would be entered pending the completion of the restitution hearing, and the Defendant was provided his appellate rights.

After the restitution hearing, Defendant's counsel asked whether the Court would recommend community confinement in lieu of imprisonment. The Court then ordered the parties to brief the question of whether community confinement will satisfy the term of imprisonment. The parties thereafter briefed the question of community confinement and, on April 24, 2007, the Court issued the Judgment in a Criminal Case ("JNC") reflecting the sentence that was imposed on April 21, 2006, and ordering restitution in the amount of $2,962,880. On May 24, 2007, the Defendant filed a motion for an extension of time to file an appeal of the JNC, contending he did not of the ten-day requirement to file a notice of appeal (Docs.300-302).

The Court issued the JNC before it assessed the Parties' various arguments and the evidence presented at the restitution hearing which is properly addressed below. Moreover, this Court did not set out a payment schedule or other integral parameters of a restitution order under the MYRA in the JNC. The restitution amount, like the $3.3M restitution ordered against Bogart and Massari was a pro forma amount entered pending modification as a result of the restitution hearing. Given the timing of the JNC vis-a-vis this order, Defendant Elson's opposition to the amount of restitution imposed in the JNC can properly be construed as a motion for modification of restitution pursuant to 18 U.S.C. § 3664. The Court will treat it as such and orders that Elson pay the restitution ordered herein according to the payment schedule outlined below. Given that this order modifies the amount of restitution ordered in the JNC, Elson's motion for an extension of time to file an appeal of the JNC (Docs.300-302) is hereby MOOT.

Massari pled guilty to one count of dual object conspiracy — unlawfully conspiring to commit wire fraud (18 U.S.C. § 1343) and to impede the IRS in the performance of its duties, in violation of 18 U.S.C. § 371 — pursuant to a plea agreement with the Government. This Court sentenced him to six months incarceration and three years of supervised release. The Court also ordered him to pay $3.3M in restitution deferring potential modifications pursuant to 18 U.S.C. § 3664. To date, Massari has made timely restitution payments.

Bogart pled guilty to Counts 1, 2, and 32 of time of the second superceding indictment against him pursuant to a plea agreement with the Government. Count 1 charged him with conspiring to violate 18 U.S.C. § 1343 (wire fraud) and 18 U.S.C. § 1341 (mail fraud) in violation of 18 U.S.C. § 371. Count 2 charged him with conspiracy to impede and impair the IRS in its duties in violation of 18 U.S.C. § 371. Count 32 charged him with conspiracy to obstruct a federal grand jury by violating 18 U.S.C. § 1503, in violation of 18 U.S.C. § 371. This Court sentenced Bogart to eighteen months incarceration and three years of supervised release. The Court also ordered him to pay $3.3M in restitution, deferring potential modifications pursuant to 18 U.S.C. § 3664.

Kennedy pled guilty to one count of multiple object conspiracy — unlawfully conspiring with others to commit wire fraud and tax fraud in violation of 18 U.S.C. § 371 — pursuant to a plea agreement with the Government. This Court sentenced him to fifteen months incarceration and two years of supervised release. Defendant Kennedy entered into an agreement with the Government to pay $225,000 within sixty days of sentencing to satisfy his restitution obligation. Kennedy failed to pay this sum within the specified time frame and, as a result, during the restitution hearing on April 21, 2006, this Court vacated the agreement. Contrary to the Government's assertions, this Court did not order that Kennedy pay the full $3.3M in restitution jointly and severally with the other Defendants. The Court will address the amount of restitution Kennedy owes in this order.

McPeak pled guilty to Counts 1 and 2 of the superceding indictment pursuant to a plea agreement with the Government. Count 1 charged him with conspiracy to commit wire fraud in violation of 18 U.S.C....