COLUMBUS -- Four men, including a Cleveland lawyer, and a Cayman Islands corporation were arraigned today before United States District Court Judge Algenon L. Marbley in connection with a scheme to conceal millions of dollars from creditors and the Internal Revenue Service. Among those charged in the 32-count superseding indictment returned on January 30, 2003 were Martin Elson of Cleveland, Domenic Massari of Tampa, Florida; Ronald J. Bogart of Toronto, Canada; and Francis J. McPeak of Clearwater, Florida; Sandpiper Ltd., a Cayman Islands corporation, and Cedarwood Acquisition of Canada. Also named in the indictment was Richard R. Kennedy of Toronto, Canada, who entered a plea of guilty last Friday, March 7, 2003, to a conspiracy charge in this case.

Each of the defendants arraigned today entered pleas of not guilty to the charges. According to the indictment, Elson is a lawyer from Cleveland; Massari was a lawyer; and Bogart is a Chartered Accountant, which is equivalent to a certified public accountant in the United States. The case is set for trial beginning July 14, 2003.

The superseding indictment alleges that these individuals and corporations conspired with three Ohio men, Richard Schultz, Thomas D. Schultz, Larry K. Carnahan, Richard Kennedy and with others including a London solicitor named Jeremy Franks, to defraud Richard Schultz's creditors, and the Internal Revenue Service by concealing Schultz's ownership interest in approximately $9,000,000, including over $4 million transferred offshore through Canada to the Cayman Islands and the Bahamas beginning in 1994. In addition, the indictment alleges that, in 1994, Massari coordinated a sham lawsuit to obtain a fraudulent state court judgment in Pinellas County, Florida, based upon a letter fabricated by Massari, Schultz and Carnahan. The bogus letter fraudulently conveyed approximately $5,000,000 to Schultz's father, and the state court judgment was then used to shield the money from Schultz's creditors. The indictment alleges that the backdated letter was typed on an old typewriter in August 1994 in an attempt to make it appear genuine.

The superseding indictment returned on January 30th added Elson and Sandpiper Ltd. to the charge of conspiracy to defraud. Sandpiper Ltd., which according to the superseding indictment was a Cayman Islands corporation owned or controlled by McPeak, was also charged in the money laundering conspiracy. The other men are charged with wire fraud, and with conspiracies to launder money and to defraud Schultz's creditors and the Internal Revenue Service. Massari and Bogart are also charged with a conspiracy to obstruct justice beginning in 1997. Bogart and McPeak are charged with international money laundering, and Bogart is charged with mail fraud and tax fraud.

On September 13, 2002, Judge Marbley had sentenced Richard Schultz, 52, of Westerville to 30 months imprisonment, and ordered him to pay $1.26 million in restitution to the IRS, serve 416 hours of community service and pay a $28,500 fine, in connection with Schultz's guilty plea on August 9, 2001, to filing a false income tax return in 1994 in connection with the scheme. Between 1994 and 1998, Richard Schultz was President and Chief Executive Order of National Revenue Corporation, a Columbus-based collections agency.

Also on September 13, 2002, Thomas Schultz, 45, of Powell, Ohio, was sentenced to 24 months in prison, fined $7,500 and ordered to serve 416 hours of community service for his crimes. Thomas Schultz was a Vice President at National Revenue Corporation from1994 to 1998. Thomas Schultz assisted Richard Schultz in concealing millions of dollars in offshore bank accounts, including accounts in the Bahamas and Cayman Islands. In August 2001, Thomas Schultz pled guilty to conspiracy, failure to disclose foreign financial accounts, and obstruction of justice.

Gregory G. Lockhart, United States Attorney for the Southern District of Ohio, Michael Chertoff, Assistant Attorney General for the Criminal Division, and Eileen J. O'Connor, Assistant Attorney General for the Tax Division, along with Cromwell Handy, Special Agent in Charge, Internal Revenue Service; and Elissa Brown, Special Agent in Charge, United States Customs Service, Office of Investigations, previously announced the superseding indictment returned by the grand jury.

"This indictment focuses upon the "gatekeepers" of money laundering and fraud. Often the only reason criminals can launder money and conceal their elaborate fraud schemes is because they have the knowing or willfully blind assistance of professionals such as lawyers and accountants. By prosecuting these gatekeepers, the Justice Department is attempting to close doors that are currently open and available to money launderers. Accountants, lawyers and businessmen or women who consciously avoid knowing what their clients are actually doing or who knowingly assist their clients in laundering money and perpetrating fraud can expect to be charged and prosecuted along with those clients." Lockhart said.

Evidence at previous hearings before Judge Marbley showed that Richard and Thomas Schultz, in concert with others, concealed millions of dollars in offshore accounts in order to defraud the United States Treasury and to avoid creditors who were seeking to collection on approximately $5 million in judgments awarded by a federal court in California in 1994.

In his guilty plea, Richard Schultz admitted using fraudulent business transactions to conceal the transfer of millions of dollars to bank accounts in the Cayman Islands and then signing a false tax return reflecting the fraudulent transactions and failing to disclose the foreign accounts. Thomas Schultz admitted to managing offshore bank accounts in the Cayman Islands and Bahamas and assisting his brother Richard in the transfer of approximately $4 million to the United Kingdom in connection with the repatriation of Richard Schultz's funds to the United States. In addition to pleading guilty to conspiracy, Thomas Schultz failed to disclose foreign financial accounts and obstructed justice by having a secretary at National Revenue Corporation destroy records after receiving a grand jury subpoena in 1997.

In June 2002, Larry Carnahan of Westerville, formerly a partner in a Columbus law firm and Schultz's business transactions lawyer, was sentenced to 27 months in prison based on his plea to charges of conspiracy and tax fraud.

In September 2002, Jeremy A. Franks, formerly a lawyer in a London law firm and another attorney retained by Schultz has pleaded guilty before Judge Marbley to conspiracy charge stemming from his involvement in Schultz's scheme. Franks has not yet been sentenced.

Lockhart commended the agents of the IRS Criminal Investigation Division and the Customs Service agents who investigated the case.

News releases from the U.S. Attorney's Office are available at www.usdoj.gov/usao/ohs/.