United States v. Gurtunca, 85-CR-26.

• Decision Date: 10 July 1986
• Docket Number: No. 85-CR-26.,85-CR-26.
• Citation: 638 F. Supp. 296
• Parties: UNITED STATES of America, Plaintiff, v. Ali Erdogan GURTUNCA a/k/a "Ali Turk", Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

638 F. Supp. 296

UNITED STATES of America, Plaintiff, v. Ali Erdogan GURTUNCA a/k/a "Ali Turk", Defendant.

No. 85-CR-26.

United States District Court, E.D. Wisconsin.

July 10, 1986.

Nathan Fishbach, Asst. U.S. Atty., Milwaukee, Wis., for plaintiff.

Robert Meldman and Thomas Mountin, Meldman, Case & Weine, Milwaukee, Wis., for defendant.

TERENCE T. EVANS, District Judge.

Any fool can tell the truth, but it requires a man of some sense to know how to lie well ... Samuel Butler

DECISION AND ORDER

What do the following people have in common?

1. A Pit Broker at the Board of Trade in Chicago

2. The President of a bank in Oklahoma City

3. The President of a development company in Fargo, North Dakota

4. A businessman in Mexico City

5. The Executive Vice President of Penthouse International in New York

6. The President of a company that manufactures scrap metal processing equipment in Mission Viejo, California

7. A Tax Shelter Specialist in Boston

8. An Investment Broker in Dallas

9. A self-employed Financial Consultant in Virginia, and

10. A Santa Monica, California developer of mines in Oregon.

The answer — they all have done business with Ali Gurtunca. They also have something else in common. All of them probably wish they had never met Ali Gurtunca. Thirty-eight witnesses, including the ten described above, testified during the trial of this case in which Mr. Gurtunca is charged with four counts of filing false income tax returns. At the conclusion of the trial I took the matter under advisement. The following constitutes my decision.

When promoters and developers need money to finance major projects such as shopping centers, apartment buildings, and condominium developments, they generally look to banks and other conventional lending institutions for funds. When the conventional sources do not come across, usually because they sense that the project or the promoters are a bit too risky, unconventional sources of financing are often sought. And, some sources of unconventional financing are more unconventional than others. So meet Ali Gurtunca, also known as Ali Turk, a 54-year old resident of Fox Point, Wisconsin, an unconventional source of unconventional financing.

Ernest Hemingway once noted that a big lie is often more plausible than the truth. Hemingway would have liked Gurtunca.

Gurtunca is a big man, both in height and in weight. He carries a cane with a jewel-like decorative knob on the end. He sold the big lie with a vengeance — holding himself out as someone who had "connections" to millions of dollars of oil money in far away places like Saudi Arabia and Kuwait. In the pursuit of his business, Gurtunca traveled first class all the way. He charged his "clients" in the area of $1,000 a day just for expenses.

Gurtunca was able to convince a lot of people that he had the power to solve their financing dilemmas, for many gave him significant sums of money to act as a loan broker on their behalf. Gurtunca here was not pulling off a confidence game on unsuspecting little old ladies living on widows' pensions, nor was he fooling naive fellows who run with the Brie and Perrier crowd. No, Gurtunca was swimming with sharks. Many of his "victims" had been around the block a few times themselves. Ezra Raiten, a convicted check kiter from Los Angeles, needed $16.5 million for a high-rise building in Los Angeles, Jerry Ranke, convicted of mail fraud, needed funds for a 622-unit apartment complex in Palatine, Illinois, and Francis Rosenbaum of Virginia, convicted of mail fraud and perjury, was trying to get $60 million for Penthouse International so it could build a hotel-casino facility in Atlantic City, New Jersey. These, and a long list of others, relying on Gurtunca's "connections", gave him significant sums of money.

Out of this situation came an indictment charging that Gurtunca, for the years 1978 through 1981, filed false income tax returns by failing to list, under gross receipts on Schedule C of his return, sums received in his loan brokerage business. Beyond a reasonable doubt, and actually beyond any doubt, I find Mr. Gurtunca to be guilty of all four counts as charged.

Specifically, Gurtunca was charged with 4 counts of violating 26 U.S.C. § 7206(1). The statute is violated when a person:

Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter....

While the parties here disagree a bit as to the elements of the offense, I accept that they are:

1 — That the defendant made and subscribed the income tax returns which were false as to the material matter

2 — That the tax returns subscribed to by the defendant contained a written declaration that they were made under the penalties of perjury;

3 — That the defendant did not believe the returns to be true and correct as to every material matter; and

4 — That the defendant falsely subscribed to the returns willfully, with the specific intent to violate the law.

Framed another way, the issue here, viewed as the elements of the crime charged, is whether the funds received by Gurtunca as a loan broker should have been reported on Schedule C of his tax returns for the years in question and, if so, whether his failure to so report them was willful.

When "clients" sought out Gurtunca's help in securing loans from his mysterious foreign sources, Gurtunca usually told them that in order to obtain the funds he needed an advance payment to cover such items as his fees, loan processing expenses, and/or travel. This daily fee ranged from $400 to $1,000 per day. Gurtunca often told his clients that the advance payments were nonrefundable. On other occasions, however, he told them that their payments would be refunded upon the successful closing of their loans, but there was no provision for returning the payments if the loans were not made. Finally, on some occasions, he stated that the advance payments were refundable regardless of whether he successfully obtained the loans.

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