By Jamie Moses;
Everyone knows that Frank Parlato is guilty of the 19-count indictment against him for fraud, conspiracy, money laundering, obstructing the IRS and so on. How do we know? Former Federal US Attorney William Hochul said he is guilty. Assistant US Attorney Elizabeth R. Moellering said he is guilty. FBI lead investigator Brian Burns said he is guilty. The IRS said he is guilty. Former Assistant US Attorney Anthony Bruce said he is unquestionably guilty and, based only on what prosecutor Bruce told them, a federal grand jury indicted Parlato in the firm belief he is guilty. News reports on television, radio, online and in print don’t actually say Parlato is guilty, but it’s implied in almost every headline, story, and media report issued on the subject – always careful to also include how many years in prison Parlato could face. The public, uninformed of all the facts, certainly believes he is guilty; I’ve heard it said many times and have even been asked, “When is Parlato going to jail?” as if it were an inevitability.
The only people who know Frank Parlato is not guilty of any crime are, of course, his lawyers, his family, a few close friends and a select group of political insiders who know how things operate behind the scenes at the Department of Justice (and that may include some DOJ lawyers themselves). But Parlato has been charged ergo he is guilty.
In the eyes of the public, the comforting concept that a person is “presumed innocent until proven guilty” is really an American myth. With few exceptions, the reality is public opinion believes that a person is presumed guilty the moment they are charged with a crime. Perhaps because of shows like “CSI” the only thing capable of erasing that perception is DNA evidence contradicting the prosecutor. But that rarely applies to anything other than violent crimes.
In a conversation at a recent public gathering, Anthony Bruce was quoted as saying Parlato is definitely going to jail and that the case against him was one of the most solid cases of his entire career.
But what if Anthony Bruce has been carelessly reckless in his pursuit of a grand jury indictment or even lied or omitted facts just to push this prosecution? It’s not difficult to manipulate a grand jury. According to a U.S. Department of Justice study on plea bargaining, “Grand juries are notorious for being ‘rubber¬stamps’ for the prosecutor…” (Plea Bargaining: Critical Issues and Common Practices, by William F. McDonald)
THE DIFFERENCE BETWEEN A GRAND JURY AND PRELIMARY HEARING
While grand juries are used in federal prosecutions in all 50 states, in state prosecutions, only half the states use grand juries, New York being one of them. Other states use preliminary hearings, which prosecutors are not fond of. Unlike a grand jury a preliminary hearing is presided over by a judge with the defense side present, as well. And unlike the secret witnesses of a grand jury (Parlato has no idea who the supposed witnesses against him are), in a preliminary hearing the defense can see and cross-examine prosecution witnesses.
The presence of a judge, the transparency of evidence and the equal representation of both sides in a preliminary hearing protect a defendant from erroneous charges by a prosecutor and prevent the prosecutor moving forward with an ill-conceived trial. By contrast grand juries have no judge, no one from the defense side, and see and hear only what prosecutors put before them, in this case Anthony Bruce under the direction, according to him, of former US Attorney Hochul.
Now the general rule of ethics is that prosecutors are supposed to also include any evidence to a grand jury that suggests that a defendant might not be guilty—but there is nothing other than the prosecutor’s conscience to enforce this rule. The prosecutor’s conscience may play a big role in the Parlato case.
An affidavit filed by FBI Special Agent Brian Burns is riddled with inaccuracies, misleading information and omitted facts. Because Burns’ investigation and the information contained in his affidavit may have been the basis for Parlato’s grand jury indictment, and because AUSA Bruce was completely dismissive of documents exonerating Parlato, and likely did not show those documents (or explain them properly) to the grand jury, Parlato’s attorneys have recently filed a motion asking to see the grand jury transcripts, a motion that in essence is calling into question the moral conscience of Anthony Bruce.
A PROSECUTOR’S CONSCIENCE AND THE DANGER OF MISINFORMATION
This is a serious and possibly widespread matter that until recently has gone largely ignored. Federal Judge Alex Kozinski of California’s 9th circuit recently declared there is “an epidemic of prosecutorial misconduct abroad in the land,” and “Only judges can put a stop to it” because the Justice Department and district attorneys continue to ignore the problem. When prosecutors are reckless in their pursuit of a conviction innocent people can find their lives and careers ruined, their family torn apart, spend years in prison and even die by wrongful execution.
Two egregious cases of prosecutorial misconduct that come to mind are the famous case against middleweight boxer Rubin “Hurricane” Carter and John Artis, both given three life sentences for a triple murder they didn’t commit. Carter’s conviction was based solely on the testimony of two petty criminals who were committing a burglary a few doors down from the shooting. Prosecutors claimed these two witnessed Carter commit the murders, even though William Marins and Hazel Tanis each described the shooters as being tall, thin and light-skinned. Carter is short with the broad shouldered thick body of a boxer and is dark black. Years later a tape surfaced of a police interview revealing the two witnesses saying they were unsure if Carter was one of the shooters and Patterson, NJ police offering the two criminals money and reduced sentences in unrelated cases if they would testify they saw Carter commit the murders. After spending 20 years in prison Carter was finally freed and the charges dismissed with the US District Judge noting the “The extensive record clearly demonstrates the convictions were predicated on concealment rather than disclosure.”
Another case is John Thompson of New Orleans who was only days away from being executed for a murder charge when the lead prosecutor on his deathbed shamefully confessed he knowingly convicted an innocent man; he hid test results – evidence of clothing soaked with the blood of the real murderer – because that blood did not match Thompson’s and he would have lost the conviction. Thompson was also freed after spending 18 years in prison. Many others weren’t so lucky and were executed; only to be exonerated after they were dead. Thompson told the Washington Post’s criminal justice writer Radley Balko, “They tried to kill me. The system is broken and it’s the same motherfucking system that protects them [prosecutors enjoy absolute immunity from civil lawsuits, although that is beginning to be punctured more and more].”
While those cases are extreme, the point is that it is only the moral conscience of a prosecutor that determines whether or not to continue pushing a case even though evidence suggests the defendant is innocent. Parlato’s lawyers have certainly been dumbfounded that the case against Frank Parlato has been pushed this far along without being dismissed.
The charges against Frank Parlato revolve around two separate events which have been oddly intermingled by the government: 1) a development project in Los Angeles funded by Clare and Sara Bronfman, heiresses to the Seagram’s fortune; 2) business dealings at the property developed by Parlato in Niagara Falls known as One Niagara.
You would be hard pressed to find a more bizarre cast of characters than the ones the federal government is depending on to press their case against Parlato. Let’s start with One Niagara.
The essential players in the One Niagara case are Frank Parlato, his former business partner Lawrence ‘Larry’ Reger (now deceased), Hong Kong businessman David Ho and Shmuel Shmueli, who is the catalyst for the entire legal debacle.
KING OF CONMEN
To say Shmuel Shmueli is a conman, a liar and a thief would be too simple. Shmueli leaves a crowded trail of deviously deceived victims on every path he walks. He also doesn’t hesitate to falsely inflate who he is, including claiming to be a member of Mossad, the Israeli intelligence group, a rabbi, and the leader of the Hassidic Chabad sect of Judaism. All lies.
Shmueli’s entire life is built on gaming the system. He bought a home in Brooklyn and took out four separate mortgages on it. Then he transferred the home to his wife who got another mortgage. She transferred it back to Shmueli who got still another mortgage. Then Shmueli transferred it back to his wife who a month later transferred it to their 27-year-old daughter who got an additional mortgage for $328,000 before selling the home to Jacob and Eva Furhman for $480,000. The Furhmans closed on the home and expected to move in but Shmueli wouldn’t allow them in and instead produced a document signed by his daughter leasing the property to him. He told the Furhmans he was staying put in the home but that he would pay them rent. The Furhmans had to sue until finally a judge in the US District Court directed the U.S. Marshall to evict Shmueli.
While living in Brooklyn Shmueli started a weekly Hebrew newspaper catering to Brooklyn’s Hebrew community by republishing all the contents of a well know Israeli paper the Haaretz Daily. He got away with it for years until Haaretz caught on and sued him for gross plagiarism and won a $24 million settlement against him. But Shmueli never paid a penny. He declared bankruptcy and discharged the entire debt, along with debts to his lawyers on the case, as well as money owed to all his employees and vendors.
Where Shmueli really thrives though is in the courtroom and he has filed dozens of phony lawsuits with the sole purpose of lining his pockets with gold. He devised a scam where he created a series of companies in different countries and convinces investors that this or that company could make a fortune in a lawsuit if only he had the hundreds of thousands of dollars in lawyer fees needed to pursue a case. He gets an investor to front the money for legal fees with the promise he’ll share the large financial settlement with them. But Shmueli has never won a single lawsuit so no investor in Shmueli’s lawsuit scheme has ever seen a dime from a “large settlement” and all the money they fronted simply evaporates.
Shmueli does actually bring suit and runs up substantial legal fees, but instead of paying the lawyers he stiffs them or pays only a retainer fee and pockets most of the money given to him by his investors. When lawyers demand their money he sues the law firm for malpractice and doesn’t pay the attorneys representing him in the malpractice lawsuit either. He has stiffed lawyers all over the world and more than a dozen lawyers/law firms right here in Buffalo (Well known local lawyers, Joseph Zdarsky, David Gutkowki, Steven Cohen, Corey Hogan, John LaFalce, Kevin Burke, Bradley Hoppe, Eric Bloom, William Savino, Mitchel Banas, Gene Kazlow, Joseph Mazurek, Phil Abramowicz, David Kloss, Robert Koryl, and Michael Paskowitz, are collectively are owed more than $1 million by Shmueli.)
After losing his home, his newspaper and his wife, Shmueli left Brooklyn and wound up in Western New York in 2007 while attempting to scam a Jewish investor living in New York City into buying worthless properties in Niagara Falls.
But what does conman Shmueli have to do with to One Niagara, the former Occidental Chemical Center, and the case against Frank Parlato? He has a lot to do with it.
THE WOES OF ONE NIAGARA
In 1999, Chinese businessman David Ho announced plans to turn that property into a Niagara Falls tourist attraction named AquaFalls, an oceanographic experience where spectators could view the sea through a series of glass tunnels, similar to Atlantis Aquarium, the very popular tourist attraction at Paradise Island in Nassau, Bahamas. People were particularly excited about the project because Ho described himself as the billionaire founder of a Chinese oil company with ties to Chevron-Texaco who could pay for the $65 million dollar attraction with his own money. It seemed for once a project in Niagara Falls, NY might actually happen. Governor Pataki even arrived for the groundbreaking, the mayor was ecstatic and the Niagara County IDA generously threw in Tax Exempt status for AquaFalls.
Ho hired Ciminelli Construction to blast a 40 ft. deep hole the size of three football fields in front of the old Occidental Building for his aquarium. Then came the famous Niagara Falls “uh oh” moment. “Billionaire” Ho didn’t actually have the money or the financing to build his aquarium. In fact, he couldn’t even pay for the hole until a friend arranged for local developer Larry Reger to loan him $2 million in exchange for a 2nd mortgage on the property. The first mortgage was held somewhat suspiciously by Ho himself in one of his companies’ names for $6.8 million. Five years later there was still no aquarium, the Occidental Building was still vacant and there was a giant hole in the ground. A 2004 Buffalo News story read “There is a huge hole in the City of Niagara Falls and it needs to be filled with more than excuses.”
Meanwhile, after five years of waiting to get his $2 million dollar loan paid back Larry Reger won a judgment against Ho and set a date to foreclose on the property. But Reger had certain challenges. Since Ho held the first mortgage, the first $6.8 million of any money gained from selling the property had to go to Ho before Reger could get paid and the property wasn’t worth anywhere near $6.8 million in its present condition. So if Reger foreclosed he would have to invest in the property which included doing something with the large hole which in fact was starting to undermine the sidewalk and streets surrounding it.
Reger told Ho he would forestall the foreclosure if Ho would merely make a payment of $23,000 to cover one month’s interest. Ho didn’t have $23,000. Enter Frank Parlato.
In 2004 the Chinese “billionaire” asked Frank Parlato to loan him $23,000 to stop the Reger foreclosure. Parlato had a better idea that provided an opportunity for him and would be beneficial to both Ho and Reger. The proposition was to move Reger’s mortgage to first position to stop the foreclosure, and form a partnership with Ho where Parlato would take control of the property and develop it. Ho would not have to invest another penny on the property but would get 50% of the proceeds of a sale and profits from the development after expenses. Everyone agreed to the proposal and Parlato and Ho created One Niagara LLC and their agreement read in part: “Frank Parlato shall be the sole Manager of the Company,” with “full and exclusive right to control day to day operations and business affairs of the Company… Parlato shall be entitled to take any and all actions with respect the Property and the business of the Company that (he) determine(s) to be appropriate and in the Company’s best interest, in each case without any further confirmation or approval of (David Ho).”
With this agreement in hand Parlato over the next two years turned the hole into a fully used paid parking lot and then partnered with Larry Reger who financed $500,000 to develop the first floor into food and souvenir tourist center and another $280,000 to renovate the 9th floor into offices for a bus tour business he and Parlato created.
Within two years the property showed signs of becoming very successful; Reger got every dollar he invested back with interest and the stage was set for Reger, Ho and Parlato to make millions going forward.
Fast forward to 2007. Ho visits the building and sees a full parking lot where he had left a big hole in the ground and the entire first floor of the building bustling with tourism business. Ho immediately demands that Parlato cancel his partnership with Reger and give him Reger’s share. Parlato refuses Ho’s demand.
In response to Parlato’s refusal to dump Reger, Ho came back the next day and introduced Parlato to his new agent. Parlato was told the agent had the right to exercise all and any legal procedures to enforce David Ho’s rights and interests. In short, he was to be David Ho’s enforcer. Who was Ho’s new agent? Shmuel Shmueli, the man who happened to cross paths with Ho while visiting Niagara Falls on a scam expedition, the man who is reportedly hiding out in Israel after being investigated for Grand Larceny by the Niagara Falls police for failing to pay an entire years rent on a luxury condo in Niagara Falls. And the man who today in Israel is suing his bedridden 90 plus year old mother to enforce a suspicious will Shmueli had her sign at the nursing home disinheriting his brother and making Shmueli sole heir to his ailing mother’s estate.
But going back to 2007 and Niagara Falls, what had been a smoothly run and growing development project with Parlato at the helm supported by his partner Larry Reger was about to become a nightmare of Shmueli’s signature litigation and false accusations leading to the foundation of the Federal case against Frank Parlato. Shmueli filed 10 lawsuits against Parlato and Parlato/Reger. As expected, Shmueli lost every single case. A list of the flaws in the government case regarding One Niagara stem from Shmuel Shmueli and branch out to absurdity (flaws to be listed further on in this article).
A BIZARRE CULT USES ANTHONY BRUCE TO PUNISH PARLATO
Let’s move on to the players in the Los Angeles development case. They are Frank Parlato, Clare and Sara Bronfman, Yuri Plyam and Keith Raniere. Although I don’t believe Raniere is named in any of the legal proceedings, he is actually the main player, like the driver ensconced inside an M1 Abrams tank, you don’t see him but he’s the one making the 68 tons of steel weaponry move. That weaponry is Clare and Sara Bronfman. Who is Raniere?
Compared to Keith Raniere, the villain Shmuel Shmueli is nothing more than a tiny opportunistic pimple. A former computer consultant, Raniere’s greatest accomplishment in the normal business world was his 1990 TV infomercial product Consumers’ Buyline which solicited members to join and enjoy wholesale prices for products bought in volume for its members. By 1993 facing hundreds of lawsuits and being investigated by regulators in 20 states, New York’s attorney general shut the business down as a pyramid scheme and thousands of small investors lost whatever money they invested.
Raniere reinvented himself as a self-professed genius, spiritual guru and inspirational coach for business executives. He hooked up with Nancy Salzman, a professional neuro-linguistic programmer (NLP) and hypnotist and started a company outside Albany, NY in 1998 called Executive Success Programs, later named NXIVM (pronounced nex-ee-um). NXIVM soon evolved into a cult that revolves around Raniere who for whatever reason exerts a Svengali-like hold on rich, attractive and powerful women with an “inner circle” of women who run everything for him at the expense of their personal fortunes and sexual submission. James Odato, a journalist for the Albany Times-Union, wrote close to 40 separate articles on NXIVM, including a four-part series titled “Secrets of NXIVM.” Odato describes Raniere as a man who peddles himself as a spiritual being to followers, most of them women, who tend to him, pay his bills, shuttle him around and satisfy his sexual needs. Clare and Sara Bronfman are at the top of those in the inner circle.
The Times Union wasn’t the only publication to investigate NXIVM. There were exhaustive articles by investigative journalists in Forbes, Vanity Fair, NY Post, New York Observer, Village Voice, WoldCultWatch.org, The Nation and many others. Common to many of the articles published were the terms, cult, bribes, coercion, money laundering, unlawful imprisonment, frivolous lawsuits, blackmail, perjury, forgery, tax evasion, statutory rape, and suicides. These are not the terms you would come across when reading about companies like Campbell’s Soup, General Motors, or Microsoft. There is something very weird going on at NXIVM. Raniere was on the cover of the October, 2003 Forbes magazine with a cover title “The World’s Strangest Executive Coach.”
Strange indeed. His former girlfriend Toni Natalie said Raniere bordered on insanity and recalled how he insisted she keep the body of her dead puppy in her garage freezer and look at it daily, which, of course, she did. He was “very charismatic,” she said. “I mean, he could tell you the sun is purple with pink polka dots and you’d look up and see it.”
WHAT’S SO BAD ABOUT NXIVM?
Here are a half-dozen select samples of facts revealed in numerous articles about Raniere and NXIVM:
• Gina Hutchinson was raped by Raniere when she was only 15. She later went to a park near a monastery and committed suicide by shooting herself in the head.
• Kristin Snyder, a 35-year-old environmental consultant, disappeared after a NXIVM session in Alaska. Her body was never found, but in her truck, parked on the shore of Resurrection Bay, was a note which read, “I was brainwashed and my emotional center of the brain was killed/turned off.… Please contact my parents … if you find me or this note. I am sorry … I didn’t know I was already dead.”
• An underaged teenage boy living at the NXIVM compound was forced to videotape Raniere having sex with his underage sisters, as well as other Raniere sexual encounters.
• Raniere and the Bronfman sisters- who together have been described as “a litigation machine” hired investigative firms, including Groupe Canaprobe of Montreal to illegally obtain personal and financial records of U.S. Sen. Chuck Schumer; the publisher and editor of the Albany Times Union; investigative reporter James Odato, Rick Ross, a professional cult expert and deprogrammer, and four federal judges in Albany: U.S. District Chief Judge Gray l. Sharpe; U.S.Magistrate Randolph F. Treece; U.S. Bankruptcy Judge Robert E. Littlefield Jr. Jr., and U.S. Senior Judge Thomas J. Avoy and two federal judges in New Jersey: U.S. District Judge Dennis M. Cavanaugh and U.S. Magistrate Mark Falk. All of the federal judges were overseeing cases where NXIVM was suing some enemy.
• People at NXIVM therapy sessions were made to believe bizarre and terrible things about themselves such as being “reincarnated Nazis” or responsible for 9/11.
• Raniere offered to tutor the 12-year old daughter of a woman who worked for him. Instead of tutoring her, Raniere had sex with the 12-year-old approximately 60 times in his townhouse, empty offices, an elevator, even a broom closet. The girl ran away from home so she wouldn’t have to see him again. She reported the statutory rapes to the state police two years later when she was 14 years old. The police did nothing.
There is not enough space in this article to catalog the crimes of Raniere or how through Bronfman financed lawsuits he destroyed the lives of dozens of his enemies or those who escaped his control. The lawsuits would drag on until his victims were driven into bankruptcy and their careers and families ruined. Better still, by paying a virtual fortune to attorney and investigators Raniere could sometimes attain his chief prize – a criminal indictment against one of their enemies. Contracts that came up in discovery show that Raniere offered as much as one million dollars to agents, lawyers and political operatives if they could arrange for various enemies to be indicted.
Lawsuits are Raniere’s tool of vengeance, like the one against Parlato.
While Raniere may be the evil controller of events, it is the Bronfmans who provide him the money to maintain that control. Sara was the first Bronfman to join NXIVM in the fall of 2002, after her 4-month marriage to an Irish jockey fell apart. She was 25 at the time and described by acquaintances as a sweet girl, but “an airhead” party girl who flitted around European cities and tropical islands. A friend said she was “desperately looking for a purpose in her life.”
Apparently she found her purpose at NXIVM. Enamored by Raniere she was immediately seduced into the NXIVM ranks and quickly asked her sister Clare to come join her. It wasn’t long before Sara and Clare were NXIVM leaders. They paid a hefty price for that honor. Raniere sucked millions out of their personal fortunes. The control Raniere exerts over the Bronfman sisters is extraordinary. But Raniere is master of controlling people through their vulnerabilities and both Clare and Sara Bronfman have father issues, which he exploited, but unlike Clare who is was accomplished equestrian and owner of a thoroughbred horse farm, Sara is further burdened, by her own account, with a deep sense of worthlessness. One person noted that Raniere’s control and influence over Sara was “that he made her important in her own mind.” In the Forbes article Sara is described caressing her yellow NXIVM sash of achievement and gushing that it was “the first thing that I earned on just my merits.”
According to court documents within the span of six years, the Bronfman sisters blew through $150 million of their fortune to “cover Raniere’s failed bets in the commodities market” ($66 million), “to buy real estate in Los Angeles and around Albany” ($30 million), to purchase a 22-seat private jet ($11 million) and “millions more to support a barrage of lawsuits across the country against NXIVM’s enemies.”
The Los Angeles real estate referred to above is the deal that Parlato got involved in and is now accused of defrauding the Bronfmans of $1 million.
By late 2007, the Bronfmans had sunk $26.4 million into a Los Angeles real-estate project, a joint venture with Yuri Plyam who was purportedly Raniere’s “best friend.” Plyam was also the commodities broker who handled the commodities transactions the sisters lost $66 million dollars on, although curiously there are no records of any transactions ever being made and the Bronfmans never saw anything documenting the trades, either.
At any rate, the Bronfmans and Plyam set up the company Precision Development to build houses and condominiums in the wealthier neighborhoods of Los Angeles. According to Plyam, the project was Raniere’s idea, although his name did not appear on any of the documents. Neither, initially, would the Bronfmans. Raniere told him Sara and Clare’s involvement had to be kept secret, because they were trying to hide the Precision Development investment from their father. As usual, Raniere controlled everything.
As court documents and the Bronfmans own testimony show, because of suspicions about the development project, Parlato went to Los Angeles, acting as the Bronfmans’ consultant, and discovered that Plyam diverted $10 million of the Bronfmans’ money into Plyam’s own personal real estate. Parlato confronted Plyam and got him to sign over to the Bronfmans the Los Angeles real estate the Bronfmans had paid for. Parlato also secured for the Bronfmans controlling interest in the development company, Precision, which before Parlato arrived they had zero documented ownership interest. He also secured for them controlling interest in a construction company, Castle Asset Management, which had substantial construction equipment which the Bronfmans had paid for. Parlato, further, through his team of investigators, discovered where most of the diverted (stolen) money went to: Plyam had built million dollar plus properties in Lake Arrowhead, a $5 million mansion in Beverly Hills for himself and purchased other properties in Los Angeles titled in various shell companies or relatives’ names. Parlato persuaded Plyam to turn over some of those properties and on the rest Parlato filed liens (lis pendens) pending litigation so that Plyam couldn’t sell them and abscond with the Bronfman’s money.
Plyam later accused the Bronfmans of hiring Parlato to successfully “wrest control” of the company away from him, but the Bronfmans and Parlato won that lawsuit when a jury found that Parlato was right and that Plyam had diverted (stolen) more than $10 from the Bronfmans. In the trial against Plyam, Clare Bronfman admitted that but for Parlato, the $26 million would have been lost and probably more would have been stolen by Plyam.
While Parlato was in the thick of rescuing the Los Angeles project, fighting both for physical control of the properties and in court for a legal injunction to prevent Plyam from stripping the properties, the Bronfmans and Raniere promised Parlato if he was successful he could complete the development – which was now in shambles – for a one third interest in the project.
To seal the deal, Raniere told the Bronfmans to advance Parlato $1 million to cover taxes at One Niagara so he could stay in Los Angeles and rescue their Los Angeles project that was teetering on the brink. One Niagara was to be used as collateral for the $1 million and Parlato would repay the $1 million from the earnings of his promised share of the development.
But Raniere had no intention of honoring the agreement. As soon as Parlato successfully recovered the $26 million in assets, secured the physical real estate and control of the company through the successful lawsuit against Plyams on behalf of the Bronfmans, Raniere and the Bronfmans fired Parlato and demanded the $1 million back. Since the $1 million was supposed to be repaid out of the profits of the development Parlato felt he was the one defrauded.
Parlato set aside the $1 million, putting it in escrow, went back to work at One Niagara and paid the taxes due from One Niagara profits. And he set out to fight the Bronfmans in court. The Bronfmans filed suit; in it they swore under oath that there was no written contract, so they did not owe Parlato one third of the project; Parlato filed a countersuit. Then the Bronfmans asked for an adjournment on the civil litigation. Parlato granted the delay thinking that they could settle the dispute amicably. Instead, the Bronfmans filed a criminal complaint with the FBI. In the course of time, Parlato eventually sold One Niagara.
It’s ironic that Anthony Bruce believes he is prosecuting Frank Parlato over an alleged fraud for $1 million in the interest of the Bronfman sisters when he is really acting in the interests of Raniere, a tax evading, money laundering, bribing, coercive child molester who has bilked the Bronfmans for what is now likely over $200 million of their inheritance money.
AN UNSIGNED CONTRACT IS NOT A CONTRACT
It is also ironic that while Parlato had started work in developing the Los Angeles properties he recovered for the Bronfmans, as soon as he was fired, all work ceased on the properties – many of which were in partial stages of construction – and the Bronfmans let millions of dollars of their investment go to foreclosure and neglect as exposed foundations made the construction worthless. They essentially abandoned the project and lost all their money anyway.
In order to invent a fraud he could prosecute perpetrated by Parlato, Anthony Bruce had to have some evidence.
Since the Bronfmans had signed no contract with Parlato on the development of the Los Angeles real estate deal, Bruce had only the Bronfmans verbal representations about what happened and how Parlato allegedly defrauded them.
He had another problem too. The events took place in early 2008 and as Bruce was getting ready to indict in late 2015 – some seven and half years later – anything said or done at the time was beyond the five-year statute of limitations for fraud.
Parlato had transparently told the FBI from day one of the investigation that he had sent sent Raniere a proposed written contract for the Bronfmans to sign – when he was in the midst of saving their investment – but did not sign after he recovered their investment – which was Parlato’s evidence of the Bronfmans’ bad faith.
If the Bronfmans had signed it they would have been in breach of it anyway for unilaterally firing Parlato without cause and denying him his share of the development contained in the proposal.
Nevertheless, Bruce ignored the facts of the case and took the unsigned 2008 proposal and turned it against Parlato. Bruce noticed that one of the terms in the proposal extended three years forward to 2011, which meant, had it been signed by the Bronfmans, it would be within the statute of limitations. What was the fraud? Parlato sold One Niagara, the collateral named in the proposal. But the proposal was never signed so Parlato had no obligation not to sell the building.
Based on the indictment, the discovery documents the government produced, reports of witnesses in the grand jury, and Bruce’s statements to defense lawyers, Bruce misrepresented to the grand jury that Parlato’s proposal was a fully executed contract signed by the Bronfmans which Parlato had violated.
To make it a case of fraud, Bruce had to hold Parlato to the terms of a proposed contract without holding the other party – the Bronfmans – to its terms. By inserting himself into a civil dispute and misrepresenting an unsigned contract, Bruce concocted a crime.
This probably required a hefty dose of lying by omission before the grand jury. This is precisely how Bruce converted the Bronfmans into victims in the Parlato case.
PUTTING WORDS IN A DEAD MAN’S MOUTH
While Bruce has not alleged Parlato defrauded the fraudster Shmueli (that would be laughed out of court), Bruce has alleged Parlato defrauded Reger, Parlato’s partner in the success of One Niagara.
To do that, Bruce ignored the testimony Reger gave before he passed away that he never claimed he was defrauded by Parlato. Bruce ignored the true meaning of the contracts between Reger and Parlato.
Reger and his estate claim they made money with Parlato, but Bruce ignored that too and now says Reger didn’t know he was defrauded. The government, who waited eight months after Reger died before naming him as a victim, claims they know what Reger didn’t know.
FBI Agent Burns said in his very suspicious affidavit, that Reger “was unaware of any of the funds PARLATO stole from him due to the fact PARLATO was never transparent with THE PROPERTY’S financials.”
If that’s true why didn’t didn’t they show Reger. Reger died in March 2015. He knew the FBI was investigating Parlato since 2012. He was aware that the US Attorney subpoenaed his business records since he complied with that subpoena in 2013. Reger was interviewed by the FBI, in the presence of his lawyer, Gregory Photiadis, in 2013 — concerning Parlato
Reger was summoned before the grand jury and gave testimony about Parlato on October 17, 2014, where he never claimed he was a victim.
Former US Magistrate Judge Carol Heckman represented Parlato and was given an opportunity to read Reger’s grand jury testimony by Bruce who was pushing hard for Parlato to accept a plea deal.
Heckman wrote to Bruce, “Thank you for allowing me to review Mr. Reger’s 10/17/14 testimony today. Yesterday, you said that the testimony would ‘leave [us] with a sense of why [you] think the way [you] do.’ Based on that, I had expected to read testimony that would suggest wrongdoing of some sort by my client. But there was nothing like that in the testimony… Your opposite view of the testimony makes unmistakable that the prosecution team has not been listening to us, as we have patiently and repeatedly tried to educate you about the commercial context of this case. We have documented critical and indisputable error after error by the prosecution team. We have also pointed out the much more fulsome testimony by Mr. Reger where he actually explains what he means, as opposed to the limited answers given in response to non-specific leading questions in the grand jury. And now the Government is about to indict based on its ignorance of business law and its apparent failure to review the other Reger testimony… If we had any faith that you would listen to us in good faith, we would make another attempt at educating your team to help you avoid a mistake. But you (Tony) have made clear that your mind was made up before we started…”
If Bruce really had proof that Parlato stole from Reger why didn’t he persuade Reger? Bruce had three years to show Reger, his lawyers, his accountants, his family, his partners. Instead he argues that Reger, a very sophisticated businesmann was unaware of Parlato’s slick moves.
LARRY REGER WAS NO DUMMY
Reger’s lawyer, Gregory Photiadis told State Supreme Court Justice Timothy Walker that Reger “has been involved in literally hundreds and hundreds of different entities.”
And he was not exaggerating either.
From 1952 until the time of his death in 2015, Larry Reger formed and built Mader Construction Corp. — one of the largest interior finish contracting companies in the Northeastern United States.
He created Marc Equity Corporation which developed thousands of apartments, single family homes and residential subdivision lots and after merging with Marrano Homes, Reger became the leading residential home builder in Western New York.
He expanded out of state to do extensive residential development in Florida, Pennsylvania, South Carolina, Maine, Rhode Island. Texas and Massachusetts.
Reger acquired companies in solid waste management, steel, equipment leasing. He owned millions of square feet of industrial properties, warehouses, research and development facilities, manufacturing facilities and office properties across the USA. His Carolina Industrial Properties alone owns 4 million square feet of commercial and industrial properties in South Carolina.
During this time, Reger had a comparatively small investment in partnership with Parlato. At the time Reger owned more than six million square feet of industrial and commercial real estate and the lease he had in partnership with Parlato at One Niagara represented less than 1 percent of his holdings.
Yet the government claims that Reger, his son, the team of experts required to operate millions of square feet of real estate were unaware, and could not be persuaded, that Parlato stole from Reger?
Before Reger died, Reger testified at a civil trial before Hon. Timothy J. Walker, on March 11, 2015, in State Supreme Court, in the civil matter of Shmuel Shmueli versus Whitestar (Index 146742).
Reger was examined by Shmueli who was then acting as his own lawyer.
Here was Reger’s chance to say Parlato stole. Instead he testified that he knew precisely where the money went to.
Shmueli implying there was money left over that was stolen from him, Shmueli provoked Reger’s response, “Where is the management fees? You have to manage the building. Who paid for all that? Your owner, Mr. Ho, was spending a half million dollars just on keeping a person there. And then he had to maintain additional monies for all the other maintenance, for the plumbing, heating, keep the heating going so the pipes wouldn’t freeze. I don’t think you quite understand all the expenses that went in – that, many times, I had to put the money in from Tourist Services to keep it going because you didn’t put any money in.”
Shmueli tried to get Reger to admit he was a victim of Parlato when he asked about “shell” entities which the government alleged Parlato used to hide money from Reger.
Reger said he didn’t care about company names.
He said, “The only business dealings I did was with people, I did it with Parlato … People. If there was — if they had companies behind them, I didn’t address that. I only dealt with people.”
Shmueli pressed on. But the millionaire one hundred times over, Larry Reger told Shmueli he appointed Parlato to oversee his interests in Tourist Services implying trust and confidence in Parlato.
Thirteen days later Reger died. But on the witness stand he never even hinted he had reason to regret his partnership with Parlato despite knowing that Anthony Bruce was trying to claim Parlato was a thief.
Reger did however blame Shmueli. Reger said on the witness stand, “I had some extremely heavy legal obligations due to you. You’re the one that caused me over a million dollars in legal fees because of your activities, which also prevented us (Parlato and Reger) from trying to rent the building because it was always under a cloud, the cloud you put in under. I would have loved to have you come in and put some money with me and doing something productive instead of always being an obstruction.”
Greg Photiadis, who represented Reger for more than 35 years and represents the estate of Reger, wrote (on October 6, 2015) to US Attorney William Hochul stating, “… Larry was a sophisticated investor and savvy businessman who understood complex transactions. He was not shy in protecting his interests, when necessary, through civil litigation. As Larry’s legal counsel, I am knowledgeable about his Niagara Falls interests in Tourist Services LLC and its relationship with One Niagara LLC. Similarly, I am familiar with Larry’s business dealings with Frank Parlato along with the multiple civil litigations involving Shmuel Shmueli…. As a partner with Parlato, … he [Reger] was … personally active in monitoring the business of Tourist Services LLC. During his partnership with Parlato, Larry never claimed that he was defrauded or cheated by Parlato nor did he initiate any civil action in that regard. To the contrary, his testimony in the various Shmueli civil actions was complimentary of Parlato. Likewise, it is the position of Larry’s family – who now owns his Niagara Falls interests – that Larry was neither cheated nor defrauded by Parlato.”
But the letter didn’t seem to matter. It was just another bothersome fact to be ignored. Bruce had decided to indict Parlato.
Maybe because he knew that once indicted everyone would believe Parlato was guilty. And that Parlato would take a plea deal and it would be settled anyway.
A PROSECUTOR’S STRATEGY: IGNORE EVERYTHING
Just days before the indictment Bruce offered Parlato a plea deal that could spare him any jail time. Parlato refused.
Then Bruce stormed the grand jury with very questionable arguments to indict Parlato on 19 (mainly repetitive) counts of defrauding the Bronfmans and Reger and a unique tax charge (Klein conspiracy) that alleges Parlato planned to cheat the IRS but did not go through with it.
To get his indictment Bruce ignored scores of documents that contradicted every theory of criminal liability Bruce asserted. But Bruce also was retiring and he knew he would not be around to try the case anyway, and as a prosecutor he is immune from prosecution, so there was little downside for him.
So Bruce ignored the fact that what Parlato proposed to the Bronfman was unsigned by them and instead claimed it was a contract.
Bruce ignored the signed letter from the lawyer for Reger’s estate that stated Reger was not a victim.
Bruce ignored the plain language in agreements and leases between Reger and Parlato.
Bruce misled witnesses by confounding one company’s management fees with another company’s distributions to create the fictional fraud surrounding Reger.
Bruce ignored evidence of company tax returns and the statements of Reger’s accountant that Reger got all the distribution he was entitled to – something Reger knew clearly.
Bruce ignored a sequence of contracts between Parlato and Reger, ignoring the superseding contracts in favor of older agreements to concoct fraud. Bruce ignored the plain language of the main operating contract between Reger and Parlato.
Even if Bruce’s false assertions were true much of it still would be in the realm of civil litigation not criminal as Parlato attorney Dennis Vacco pointed out to Bruce prior to the indictment. At that meeting Bruce said he was committed to getting at least two felony counts – one for the IRS agent and one for the FBI agent – who had worked hard on the case – and that the only thing he was interested in hearing about was whether or not Parlato would take a plea deal.
Prior to the indictment, Bruce possessed all the documents that he later chose to ignore.
The entire list of documents Bruce ignored or mischaracterized in the grand jury come to more than 1000 pages and were detailed in a letter to Bruce three days before Parlato was indicted by his attorneys Heckman and Brian Feldman, a former Assistant US Attorney under Preet Bharara. The letter, on the virtual eve of the indictment, shows disdain and shock at Bruce’s very unprofessional actions in ignoring exonerating evidence.
Heckman and Feldman wrote, “As you must recognize, our client has been exceptionally open with the Government, bearing the risk of previewing his defenses in any criminal trial in order to share with you exculpatory evidence foreclosing any viable criminal prosecution. Yet we have reason to believe that little, if any, of this exculpatory evidence has been shared with the grand jury…. We likewise repeat our demand, by now well documented, that the Government consider the substantial evidence that rebuts the Government’s case, and that the Government present that exculpatory information to the grand jury. To that end, and for your convenience, we attach as Exhibit A a list reminding you of some of the exculpatory evidence we, or prior counsel, have already shared with you in this matter. In our lengthy presentation of October 19, 2015, and in our letters following that meeting, we explained the relevance and import of these materials. We again ask that the Government present all of this material to the grand jury with sufficient explanation of the exculpatory nature of each document…. Unfortunately, you have made clear that you are not interested in talking further about the Government’s contemplated charges against our client. … You have taken these actions notwithstanding the significant exculpatory evidence we have provided you…
“Please be prepared to hear shortly from trial counsel, who will handle this matter going forward and will address any additional issues, including the client’s position on testifying before the grand jury.
“Thank you for considering this submission. We are obviously disappointed that we have been unable to persuade the Government of the imprudence of proceeding with this case, and we hope that, upon further review of the evidence, the prosecution team realizes that this is not an appropriate case to charge.”
If it is proved that Anthony Bruce lied, omitted facts, and misled the grand jury, then I suppose the final question is