What Are the Charges in U.S. v. Parlato — and What Do They Mean?

Joe O’Hara

[This is Part 4 of a series of articles that I am writing about the U.S. v. Parlato Et Al case. Along the way, I will detail what a sham this case is – and how it was orchestrated by two inner circle members of the NXIVM criminal enterprise, Clare and Sara Bronfman, and a conman named Shmuel Shmueli – all three of whom just happened to be represented by the same attorney, William F. Savino. I will also explain how many of the slimy tactics that were used to indict Frank have become the norm in the everyday operations of the U.S. criminal justice system. Readers are encouraged to ask questions – which I will endeavor to answer on a timely basis].

Part 1: The Buffalo News Raises Questions About Frank Parlato’s Case – More Detailed Analysis Needed

Part 2: The Convoluted History of U.S. v. Parlato Began With the Bronfman Sisters

Part 3: The Federal Case Against Frank Parlato – a Prosecution in Search of a Crime

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As noted in the most recent post concerning the matter of U.S. v. Parlato Et Al, Frank Parlato was originally indicted in the Western District of New York (WDNY) on November 20, 2015 – and charged with nineteen felony counts of criminal activity:

– One (1) count of “impeding, impairing, obstructing, and defeating the lawful functions of the Internal Revenue Service…in the ascertainment, computation, assessment and collection of…income taxes”.

– One (1) count of corruptly endeavoring “…to obstruct and impede the due administration of the internal revenue laws.

– Seven (7) counts of making illegal wire transfers.

– One (1) count of conspiring to commit wire fraud.

– Nine (9) counts of engaging in illegal monetary transactions.

 

On May 23, 2018, a superseding indictment was issued in the case. The new indictment included the following eighteen (18) counts:

– One (1) count of “Conspiracy to Impede, Obstruct and Impair the IRS and to Commit Wire Fraud”;

– Seven (10) counts of “Wire Fraud”; and

– Ten (10) counts of “Engaging in Monetary Transactions in Property Derived From Specified Unlawful Activity”.

Before we get into the details of the allegations set forth in the superseding indictment, let’s look at some of the differences between it and the original indictment.

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Charges Involving the Bronfman Sisters Dismissed

One of the major differences between the two filings is that the superseding indictment totally eliminates any references to Clare and Sara Bronfman.

That’s because, in the intervening thirty months, proof had emerged that Clare Bronfman had, in fact, perjured herself in her testimony to the Grand Jury that handed down the original indictment (Frank had provided the then-lead WDNY prosecutor, Assistant U.S. Attorney Anthony M. Bruce, with proof of Clare’s perjury even before the original indictment was issued but Bruce chose to ignore that information).

In addition, the WDNY prosecutors had undoubtedly been tipped off that Clare was about to be indicted in the Eastern District of New York.

Clare was, in fact, charged with the following criminal acts: Racketeering, Racketeering Conspiracy, and Conspiracy to Commit Identity Theft (The identity theft charge was dismissed on jurisdictional grounds – and referred to the Northern District of New York for prosecution).

She pleaded guilty to two lesser felonies – harboring an illegal immigrant and enabling credit card fraud – and will be sentenced on February 14, 2020 on those convictions.

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Original Count 2 Dropped

Another major difference between the two filings is that the superseding indictment also dropped the original Count 2 charge that involved the alleged endeavoring “…to obstruct and impede the due administration of the internal revenue laws”.

That was done because in the intervening time period the U.S. Supreme Court’s ruling in the case of Molinaro v. United States totally undercut the basis for that charge in Frank’s case.

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Other Differences

Most of the other differences between the original indictment and the superseding indictment are relatively minor in nature.

For example, the superseding indictment extends the time frame for Count 1 from 2014 to 2017 – and this charge now focuses on payments that were received from outdoor vendors.

Which is really interesting because it is not alleged that these vendors were victims of Frank’s alleged illegal actions.

Instead, it’s alleged that the payments he received from them were part of the overt acts he undertook in furtherance of the alleged conspiracy to impair and impede the IRS in the computation of taxes owed by him and his companies.

The superseding indictment also alleges that Frank was late in filing his federal income tax returns for several years. There is, however, no count that specifically charges him with not paying any taxes that he actually owed.

In addition to deleting the Bronfman sisters as alleged victims, the superseding indictment also eliminates the State of New York and local taxing authorities from that category. No explanation was provided for these deletions.

The superseding indictment also includes one new financial transaction that is alleged to have involved money laundering: i.e., a $72,000 funds transfer that was made on February 14, 2014.

Finally, the superseding indictment also indicates that the alleged purpose of the wire fraud conspiracy was to defraud “L.R.” (Larry Reger), one of Frank’s business partners.

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So, What Exactly Is It That Frank Allegedly Did Wrong?

Indictments generally allege very specific criminal conduct on the part of the defendant(s).

Example #1: The defendant shot and killed John Doe by firing three shots into his body at or about 10:00 AM on April 5, 2019 at the premises located at 1234 State Street in Buffalo, NY.

Example #2: Both defendants robbed the ABC Bank located at 1234 Main Street in Buffalo, NY at or about 2:30 PM on September 23, 2018 – and each displayed what appeared to be a handgun in the commission of that crime.

In Frank’s case, however, the allegations are much more nebulous.

Stripped down to its essentials, the prosecution’s case basically alleges that Frank created fifteen business entities – and opened multiple bank accounts – in order to defraud “L.R.” and to interfere with the operations of the IRS.

Perhaps what’s really important is what’s NOT in the superseding indictment.

It does NOT mention that Frank deposited the entire $1 million that he received from the Bronfman sisters into an escrow account – and never accessed even $1.00 of those funds.

It does NOT allege that Frank stole any money from “L.R.” or anyone else.

It does NOT allege that Frank owed any taxes at the time the indictment was issued.

It does NOT mention the circumstances that led Frank to create multiple companies and open multiple bank accounts – and it does NOT mention that all of these actions were undertaken under the advice of his attorney.

It does NOT reveal that every cited bank account was opened under Frank’s name and Social Security Number.

It does NOT indicate that almost half of the cited bank accounts were, in fact, companion Savings Accounts linked to Checking Accounts in the same name.

It does NOT note that “L.R.” – who happens to have been a very wealthy and very sophisticated entrepreneur in Buffalo, NY – never claimed to have been defrauded and never asserted any civil claims against Frank or Frank’s businesses.

On the contrary, “L.R.” described his business dealings with Frank as being very fair and very profitable.

And the attorney who represented “L.R.” in all his business dealings described him as being very satisfied with his dealings with Frank.

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Insinuation Is Not the Same as Evidence of Wrongdoing

There is nothing illegal about having multiple bank accounts.

There is nothing illegal about owning multiple companies.

There is nothing illegal about undertaking actions for sound business reasons and under the advice of your attorney.

Rather than providing hard evidence that Frank committed any crime, the prosecution will be trying to convince the jury that he must have committed some crime because he created all these companies and opened all these bank accounts.

And, of course, he’s been charged with eighteen felonies.

Hopefully, the jury will see right through this contrivance – and acquit Frank of all charges.