IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA

Transcription

1 Case 1:10-cr LMB Document 271 Filed 04/26/11 Page 1 of 7 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division UNITED STATES OF AMERICA ) ) Case No. 1:10-CR-200 v. ) ) LEE BENTLEY FARKAS, ) Honorable Leonie M. Brinkema ) Defendant. ) GOVERNMENT S OPPOSITION TO DEFENDANT S MOTION TO RECONSIDER AND VACATE REMAND The United States of America, by and through undersigned counsel, respectfully submits this response to defendant Lee Bentley Farkas s Motion to Reconsider and Vacate Remand and Reinstate Terms and Conditions of Release. The defendant is a flight risk, the defendant has failed to sustain his burden of proving otherwise, and the defendant s motion should be denied. I. Legal Standard As the statutory language makes clear, and as the Court recognized in its oral order remanding the defendant on April 19, 2011, there is a different environment in which to evaluate the bond issue once a person has been convicted. Tr. 22. Under the statute, the Court shall order that a person who has been found guilty of an offense and who is awaiting imposition or execution of sentence... be detained, unless the [Court] finds by clear and convincing evidence that the person is not likely to flee or pose a danger to the safety of any other person or the community if released. 18 U.S.C. 3143(a)(1). Thus, the burden shifts to the defendant to prove he is not likely to flee.

2 Case 1:10-cr LMB Document 271 Filed 04/26/11 Page 2 of 7 II. Argument The defendant is a flight risk. The magistrate judge in the Middle District of Florida recognized this on June 23, 2010, when it released the defendant subject to 24-hour GPS monitoring the most restrictive condition to prevent flight, short of incarceration. This Court recognized as much on October 22, 2010, when it denied the defendant s motion to eliminate the GPS monitoring requirement. On April 19, 2011, upon the defendant s conviction on fourteen counts of conspiracy, bank, wire, and securities fraud, his risk of flight radically increased, and nothing in his Motion clearly and convincingly establishes otherwise. A. The Defendant s Incentives To Appear Are Minimal In Light Of His Likely Prison Sentence. The defendant is 58 years old and has been convicted on fourteen counts with statutory maximums ranging from 20 to 30 years. Under the advisory Sentencing Guidelines, his sentencing range will be life. Given the defendant s age, the offense conduct, and the charges involved, it is highly likely that even a moderate sentence under the circumstances will be for the defendant a life sentence. This fact in and of itself creates enormous incentives for the defendant to flee. That the defendant appeared for trial is not clear and convincing evidence that he will appear for sentencing, or that he will report as required to the Bureau of Prisons. The defendant was active in his defense at trial, took the stand to testify on his own behalf, and indeed at times appeared to relish his challenge to the charges brought against him. That challenge is over, and the stark reality now likely facing the defendant is the rest of his life in prison. B. The Defendant Has Lied Under Oath And Cannot Be Trusted. The defendant has repeatedly lied to the Court and jury. The fourteen guilty verdicts in this case are necessarily a finding by the jury that the defendant s testimony at trial was not truthful. A defendant has the right to take the stand or remain silent; a defendant has no right to 2

3 Case 1:10-cr LMB Document 271 Filed 04/26/11 Page 3 of 7 commit perjury. The defendant opted to take the stand and testify in his defense, he took an oath to tell the truth, and, as conclusively found by the jury, he flouted that oath and perjured himself in an attempt to avoid conviction. Given the defendant s conduct, the Court should refuse to credit any further representations made to the Court by the defendant, including representations that he will appear and report as required. C. The Defendant Potentially Has Access To Significant Financial Resources. Between August 2009, when law enforcement officers executed a search warrant at the defendant s offices, and his June 2010 indictment in this case, the defendant undertook efforts to transfer money and assets to others for no consideration. Many of these assets have been liquidated or monetized, and the defendant potentially has access to these proceeds. For instance, in the days following the execution of the search warrant, Farkas transferred $650,000 of his personal funds to Sean Murla. In February 2010, the defendant transferred to Murla by quit claim deed a $700,000 property in Ocala, Florida. The next month, Murla took out a $500,000 mortgage on the property. Also in March 2010, the defendant transferred to Murla by quit claim deed a $1.7 million property in Ocala, Florida, owned by the defendant s company Nada Airlines. Murla then transferred that property by quit claim deed to United Funding Mortgage Corp. We have found no evidence that Murla paid the defendant any consideration for either of these properties. And in 2009 and early 2010, Murla liquidated the defendant s car collection. According to Murla s June 3, 2010, deposition testimony in Forsberg v. Pefanis, a civil action pending in the Northern District of Georgia, he liquidated approximately thirty cars and obtained proceeds of in excess of $2 million. In October 2009, the defendant also transferred by quit claim deed a Key West, Florida, property to another individual, S.D. The defendant had purchased the property for nearly 3

4 Case 1:10-cr LMB Document 271 Filed 04/26/11 Page 4 of 7 $600,000, and the quit claim deed to S.D., signed by the defendant, reflects a sale price of $125,000. Counsel for S.D., however, has contacted counsel for the government and advised that no consideration was actually paid to the defendant in connection with the property transfer. The deed indicating a $125,000 sale price and signed by the defendant is therefore fraudulent. The defendant also appears to have access to significant funds from others. According to representations made by defense counsel on April 19, 2011, the defendant borrowed money from others to repay the CJA fund for monies used to compensate the defendant s court-appointed attorney up until the time he retained counsel. The defendant previously informed the government and the Court that proceeds from the defendant s D&O insurance policy would be used to pay back the fund, and this revelation of the defendant s access to other funds casts doubt on the defendant s actual eligibility for court-appointed counsel up through November In any event, this is further evidence of the defendant s lack of candor with respect to his access to significant financial resources. D. The Defendant, Through LendXFinancial and United Funding Mortgage, Was Previously Involved In Circumventing A Federal Court Order. The defendant has also been involved with a mortgage business in Atlanta that has engaged in fraudulent activity to avoid execution of a federal court order. A $9.2 million judgment was entered against an associate of the defendant named James Pefanis, and his company AME Financial Corporation, in 2009, on sexual harassment and Title VII discrimination claims. See Forsberg v. Pefanis, 1:07-CV JOF (N.D. Ga.). In order to avoid execution of that judgment, and with the assistance of funds invested by the defendant through Sean Murla, the business and assets of AME Financial were transferred to a new company called LendXFinancial LLC. Deposition testimony from that litigation by both Murla and the defendant confirms that that the defendant was the true source of funding for LendX, was 4

5 Case 1:10-cr LMB Document 271 Filed 04/26/11 Page 5 of 7 involved in managing the company, and was involved in moving assets from AME Financial to LendX. In a January 26, 2010 opinion and order, the federal court in Atlanta added LendX as a defendant in the Forsberg suit, ruling that LendX had been created to perpetrate a fraud upon the court and for the purpose of keeping the judgment from being collected. Following that ruling, the assets and business of LendX were transferred yet again, to a company called United Funding Mortgage Corp., which was again being managed by the defendant through Murla and staffed with former TBW employees. A motion to add United Funding Mortgage Corp. as a defendant in the suit was denied in December 2010 because United Funding had filed for bankruptcy. E. Conclusion The defendant cannot be trusted. He has every incentive to flee, and potentially has the means to do so. While the defendant has accused the government of falsely alleging that he established some secret bank account or slush fund to be used to support his escape, the government has done no such thing. Rather, we have summarized the overwhelming evidence of the defendant s giving away of funds and assets to others after he became aware of this investigation, and up until the time of his indictment. We submit that these assets are potentially available to the defendant to support flight. More importantly, it is not the government s burden at this point to prove risk of flight or access to funds to support flight. Contrary to the defendant s contentions, it is not the government s burden to convince the Court of anything. The defendant has been convicted, and the Court shall order [he] be detained unless the defendant proves by clear and convincing evidence that he is not likely to flee. 18 U.S.C. 3143(a)(1). The defendant has utterly failed to sustain that burden, and his motion should be denied. 5

6 Case 1:10-cr LMB Document 271 Filed 04/26/11 Page 6 of 7 Respectfully submitted, Neil H. MacBride United States Attorney By: /s/ Charles F. Connolly Paul J. Nathanson Assistant United States Attorneys Eastern District of Virginia U.S. Attorney s Office 2100 Jamieson Avenue Alexandria, VA Ph: Fax: Charles.Connolly@usdoj.gov Denis J. McInerney United States Department of Justice Chief, Criminal Division, Fraud Section By: /s/ Patrick F. Stokes Deputy Chief Robert A. Zink Trial Attorney U.S. Department of Justice 1400 New York Avenue, NW Washington, DC Ph: Fax: Patrick.stokes2@usdoj.gov 6

7 Case 1:10-cr LMB Document 271 Filed 04/26/11 Page 7 of 7 CERTIFICATE OF SERVICE I hereby certify that on the 26th day of April, 2011, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system, which will send a notification of such filing (NEF) to the following counsel of record in this case: William Bruce Cummings William B. Cummings P.C. P.O. Box 1177 Alexandria, Virginia Ph: wbcpclaw@aol.com /s/ Paul J. Nathanson Assistant United States Attorney Eastern District of Virginia U.S. Attorney s Office 2100 Jamieson Avenue Alexandria, VA Ph: Fax: Paul.Nathanson@usdoj.gov 7