By: J.J. O’Hara
[This is Part 14 of a series of articles that I am writing about the pending prosecution of Frank Parlato (Frank’s trial is scheduled to start on May 19th). As usual, readers are encouraged to ask questions – which I will endeavor to answer on a timely basis.
In my last post about this case, I reviewed the evidence that Frank Parlato’s attorneys turned over to then-U.S. Assistant Attorney Anthony M. Bruce on March 17, 2015 to prove that Frank had not attempted to defraud Clare and Sara Bronfman.
Despite the fact that this evidence conclusively proved that the Bronfman sisters were both lying about their business dealings with Frank – and that Clare had, in fact, perjured herself in her testimony before the grand jury that eventually indicted Frank – Bruce refused to back down.
And so it was that when Bruce eventually followed through on his promise to indict Frank, one of the charges concerned Frank’s alleged defrauding of the Bronfman sisters.
Indeed, that charge was featured prominently in the nineteen count indictment that was issued on November 20, 2015.
And that charge would remain in place until May 23, 2018 – which is when the U.S. Attorney’s Office for the Western District of New York (WDNY) issued a superseding eighteen-count indictment that totally omitted all references to Clare and Sara Bronfman (Since Bruce had quit his AUSA job shortly after Frank was indicted, someone else had to clean up this part of the original indictment).
That superseding indictment was issued just two months before Clare Bronfman was indicted for her role in the NXIVM criminal enterprise – and was an obvious attempt by WDNY officials to distance themselves from the Bronfman sisters.
So anxious were they to accomplish that objective that they never charged Clare for her perjurious testimony before the grand jury that indicted Frank.
Of course, doing that would likely have exposed the fact that former AUSA Bruce was well aware that Clare’s testimony was false – and that he had suborned that perjury in order to ensure that Frank was indicted.
The Phony IRS-Related Charges
Bruce had given his word that he would get Frank indicted.
So, it really didn’t matter all that much to him that Frank’s attorneys had produced conclusive evidence that he did not commit any of the crimes that Bruce indicated he was considering bringing against him.
That’s why Bruce chose to totally ignore all the refutational evidence that Frank’s attorneys had produced regarding Frank’s business dealings with Larry Reger, a well-renowned developer and investor in Niagara Falls, NY.
And it’s why Bruce chose to ignore all the contradictory evidence that those same attorneys had produced regarding Frank’s business dealings with the Bronfman sisters.
And as mind-boggling as those decisions were, it was really Bruce’s contortions regarding the IRS-related charges that truly demonstrate just how committed he was to indicting Frank.
Normally, when someone gets indicted for an IRS-related crime, it’s because they didn’t file any tax returns for several years – or the returns they did file contained numerous and egregious misrepresentations or omissions.
Fair enough, right?
If you don’t report your income and pay the applicable taxes, you get charged with tax evasion.
Unless, of course, your Keith Raniere, Nancy Salzman or any of the hundreds of other individuals who did not report some or all of their NXIVM-related income.
How Multiple Companies & Multiple Bank Accounts Got Turned Into a Crime
During the course of its multi-year investigation of Frank and his business dealings, federal investigators had established the fact that he had established some 15 companies – and opened 50 bank accounts – over the course of 12 years.
This was not particularly hard for them to do – especially since Frank voluntarily handed over his business records to them.
He thought he had nothing to worry about since all of his business dealings were above-board and undertaken at the advice of his accountant and attorneys.
Every one of the 15 companies had paperwork that denoted Frank’s ownership interest.
And every one of those 50 bank accounts was opened under Frank’s Social Security Number and home address.
Sure it was a bit complicated – but that didn’t mean it was illegal.
And while it was true that Frank had been late in filing some tax returns, they were all caught up – and he had paid every penny of tax that he owed – including late fees and penalties – long before he was indicted.
But Bruce had made a commitment to indict Frank – and even if there was nothing wrong with someone having multiple companies and multiple bank accounts, Bruce figured that he could somehow wrangle those things into an alleged crime.
Which is exactly what he did.
When he found out that he couldn’t charge Frank with tax evasion or tax fraud, Bruce decided to charge him with the much more nebulous crime of “Corrupt Interference With the Administration of the Internal Revenue Laws”.
Then, using that charge as the springboard, Bruce cited seven specific cash transfers between bank accounts as “Wire Fraud” – and nine such transfers as “Engaging in Monetary Transactions in Property Derived From Specific Unlawful Activity”.
And to top things off, Bruce threw in one count of “Conspiracy to Commit Wire Fraud” – which was based on the same cash transfers as the “Wire Fraud” charges (The conspiracy was based on the fact that Frank’s assistant had made some of the cash transfers).
And that’s how AUSA Anthony M. Bruce was able to bring about the indictment of Frank Parlato on nineteen (19) felony counts:
– One (1) count of “Conspiracy to Commit Fraud” against the Bronfman sisters and Larry Reger;
– One (1) count of “Corrupt Interference With the Administration of the Internal Revenue Laws”;
– Seven (7) counts of “Wire Fraud”;
– Nine (9) counts of “Engaging in Monetary Transactions in Property Derived From Specific Unlawful Activity”; and
– One (1) count of “Conspiracy to Commit Wire Fraud”.
Bruce’s plan was both simplistic and insidious.
Start out with the baseless claim that Frank had defrauded Larry Reger and the Bronfman sisters (Reger never complained of any such fraud – and the Bronfman sisters’ claim was based on proven lies).
Next, cite the fact that Frank had multiple companies and multiple bank accounts as an indication that he was trying to make it hard for the IRS to track his business dealings. Not that he didn’t pay his taxes on those business dealings – just that his business structure was complex and hard to follow.
Having leveled the IRS-related charge, Bruce could then cite seven specific cash transfers as instances of wire fraud (Since there was nothing particularly noteworthy about the seven cited transfers, Bruce could have actually charged Frank with hundreds of counts of wire fraud).
And then Bruce could count those same cash transactions – and a couple of others – as instances of engaging in monetary transactions that involved cash that was obtained through illegal activity (Once again, since there was nothing unique about any of the cited cash transfers, Bruce could have actually charged Frank with hundreds of counts of this “crime”).
And lastly, toss in a conspiracy to commit wire fraud charge because Frank’s assistant handled several of the cash transfers.
Hell of a job, Anthony Bruce, hell of a job.
Willie Savino must have been very proud of you – and likely just as appreciative.
Evidence Produced by Frank’s Attorneys Proved He Did Not Intend to Defraud the IRS
Back on March 17, 2015, Frank and his attorneys still believed that Anthony M. Bruce could be convinced to stop investigating Frank if they just showed him enough evidence to disprove his allegations about Frank.
Little did they know that no matter how much exculpatory evidence they produced, Bruce was going to see that Frank got indicted.
And so it was that Frank’s attorneys provided clear and convincing evidence to rebut Bruce’s third allegation against Frank: i.e., that Frank had established multiple companies – and opened multiple bank accounts – in order to obstruct the IRS.
To begin with, they noted that all the questioned transactions occurred in direct response to filings and rulings in the numerous lawsuits that Shmuel Shmueli had initiated against Frank and Larry Reger.
Of particular note were the multiple attempts that Shmueli made in 2009 – all via ex parte orders – to freeze or attach the operating bank accounts regarding the One Niagara building.
Also noteworthy was Shmueli’s attempt to have a Receiver appointed to take over control of the One Niagara building.
As noted in the document they provided to Bruce, Frank’s attorneys explained that he established the multiple companies – and opened the multiple bank accounts – at the advice of his attorney:
“Understandably, the One Niagara litigation caused Mr. Parlato great concern. Although plaintiffs had not successfully frozen assets of Mr. Parlato or of the companies, Mr. Parlato knew plaintiffs would continue their campaign and, in the event that such application was ever successful, it would cripple the operations of Tourist Services and One Niagara. Mr. Parlato consulted with his long-time attorney, Paul A. Grenga, Esq., who advised Mr. Parlato to move money out of Tourist Services to protect it from being seized in litigation through the use of “disregarded entities” – entities that, Mr. Grenga asserted, would simply hold the funds belonging to Tourist Services but that would not otherwise create a taxable event”…
“Believing the use of such entities to be uncontroversial and proper, throughout 2009 Mr. Parlato continued to form such entities in order to shield funds from the hotly contested litigation. Additionally, as further evidence that there was no intent to hide the money in the disregarded entities from the government, Mr. Parlato used his social security number on each account and listed himself as the owner of each account”.
To me, the two most important things to take away from this aspect of the case are (a) that Frank was following the advice of his attorney when he established the multiple companies and opened the multiple bank accounts – and (b) that Frank’s name and Social Security Number were used on every one of those bank accounts.
If Frank wanted to hide what he doing from the IRS – and obstruct its ability to investigate his business dealings – then why the hell would he list his name and his Social Security Number on all of the bank accounts?
Seriously, if Frank was the serious criminal that Anthony M. Bruce alleged him to be, then Frank should have taken up another line of work.
This ends the analysis of the 21-page report that Franks’ attorneys turned over to Anthony M. Bruce on March 17, 2015.
Unfortunately, Bruce chose to use the information contained in that report to refine his allegations against Frank – and to come up with new charges.
Bruce could never be convinced that Frank did not commit any crimes.
That’s because Bruce had made a commitment to get Frank indicted – and regardless of the facts, he was going to ensure that got done.
For, if nothing else, Anthony M. Bruce is a man of his word…
Previous posts in this series can be accessed at:
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 Bronfman Sisters
Part 3: The Federal Case Against Frank Parlato – a Prosecution in Search of a Crime
Part 4: What Are the Charges in U.S. v. Parlato — and What Do They Mean?
Part 5: The Conman Cometh – Schmuel Schmueli – Who, Combined With the Bronfmans, Led to Parlato’s Indictment
Part 6: Fate Brings Conman Shmuel Shmueli Into Frank Parlato’s Life
Part 7: Why Frank Parlato Established Several Companies and Multiple Bank Accounts
Part 8: Why Did Anthony Bruce’s Boss Not Intervene in the Case of the U.S. v. Parlato? – Governor Cuomo’s Lt Governor Was Married to the US Attorney at the Time!
Part 9: The Persecution of Frank Parlato: What Have We Learned so Far
Part 10: Where’s the Beef? Feds Will Try to Convict Parlato on Insinuations Rather Than Facts
Part 11: Feds Refused to Accept Proof of Frank Parlato’s Innocence – Pushed Ahead With Indictment
Part 12: Frank Parlato’s Attorneys Refuted Allegations but That Didn’t Stop Anthony M. Bruce From Moving Forward
Part 13: F—k the Facts – Full Steam Ahead With False Indictment of Frank Parlato – With AUSA Tony Bruce Suborning Perjury