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By Susan E. Clarke
California attorney Robert Standard – who was convicted of five felony counts on September 6, 1994 – was sentenced on February 8, 1995, to 65 months imprisonment, followed by three years of supervised release. He was also ordered to pay restitution of $1,196,264 to First Pacific Bank and Topa Savings Bank.
After a four-day trial, the jury in Standard’s case deliberated only one day before finding him guilty of two counts of subscribing to a false income tax return, two counts of false statements to a lending institution and one count of bankruptcy fraud.
According to the prosecuting attorneys, Alka Sagar and Julie A. Werner-Simon of the United States Attorney’s Office, the evidence presented at trial showed that Standard had used checks drawn on his client trust account to pay millions of dollars to cappers for the referral of personal injury cases. He filed income tax returns showing deductions of $2.9 million in 1987 and $1.7 million in 1988 for these expenses. In 1989, Standard submitted two bank loan applications containing false information about his financial condition and failing to disclose that he had resigned from the State Bar with disciplinary charges pending. In 1991 and 1993, he failed to disclose his large oil and gas investments when he submitted asset schedules in his bankruptcy proceedings.
Standard was forced to resign from the State Bar when his extensive use of cappers was uncovered. As part of his defense, he denied knowing that the use of cappers was illegal and claimed that the law was not generally enforced, making the deductions on his tax returns legal. In addition, he claimed that the deductions he made were legal because he had, in fact, paid the amounts deducted. He claimed that his financial statements were accurate and that he had no duty to disclose his status with the State Bar. His oil and gas investments, he claimed, were not relevant because he believed they were worthless and he had given up on them.
Standard was the first personal injury attorney indicted, tried and convicted in connection with several ongoing investigations into income tax violations by attorneys, doctors, cappers and administrators. The investigations are being conducted by the Criminal Investigation Division and the Examination Division of the Internal Revenue Service. Three other attorneys have also pled guilty to income tax violations and six of the cappers paid by Standard have been indicted and have either pled guilty or been convicted of tax violations.
Among the highlights:
On January 26, 1995, Tommy Choi (aka Soo Chull Choi) was sentenced to 18 months in prison, to be followed by three years of supervised release, and a $4,000 fine to the government. Choi had been found guilty on August 2, 1994, of income tax evasion and failing to file a tax return for income he failed to report in 1988. The jury failed to convict him of identical charges for the year of 1987. Evidence showed he had cashed more than 90 checks from Standard, totaling $308,000. He admitted cashing the checks but claimed all money had been returned to Standard and that he made less than $6,000 per year. Prosecutors pointed to the bank loan applications which listed his annual salary of $45,000 for his position as an administrator for Standard.
Joseph K. Lee and his wife Suzie pled guilty to tax evasion charges on August 1, 1994. The two were charged with failing to report fees they were paid by Standard for referring clients during 1988. Suzie Lee received $152,000 and Joseph Lee received $130,568. The two also entered guilty pleas to charges that they submitted a false tax return in support of a bank loan application in 1989. Both are awaiting sentencing and could each receive a maximum of 35 years in prison. Authorities, however, expect the sentences will be one year for Suzie and two years for Joseph.
Attorney Warren Finn and his partner, Alan Shapiro, both waived indictment and pled guilty to federal charges of knowingly filing fraudulent tax returns for 1988 and 1989. The two – who were already serving state prison terms for their involvement in a staged-accident ring – were charged with diverting $6.6 million in insurance settlement checks to a secret bank account that bypassed their client trust account. The funds were used to pay cappers who provided most of the firm’s personal injury cases.
Jong Won Park, the first of the group to be convicted, decided to cooperate with investigators. In return, he received a lighter sentence. He was recently sentenced to six months of home detention.
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