11 August – LAWFUEL – The Law News Network – R. Alexander Aco…

11 August – LAWFUEL – The Law News Network – R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Michael S. Clemens, Special Agent in Charge of the Miami Division of the Federal Bureau of Investigation, announced today the return of an Indictment by a federal grand jury sitting in Ft. Lauderdale charging defendants, Adam R. Kidan and Jack A. Abramoff, with Conspiracy to Commit Wire Fraud and Mail Fraud, in violation of Title 18, United States Code, Section 371, and five (5) counts of Wire Fraud, in violation of Title 18, United States Code, Section 1343. The Indictment also seeks criminal forfeiture in the approximate amount of $60 million. The statutory maximum penalty for each of the six (6) counts contained in the Indictment is five (5) years’ imprisonment and a $250,000 fine.

As alleged in the Indictment, in February 2000, Konstantinos (Gus) Boulis agreed to divest himself of his ownership interest in SunCruz Casinos (“SunCruz”). That June, the defendants sought financing for the purchase of SunCruz from Foothill Capital Corporation, in conjunction with Citadel Equity Fund, Ltd. As a condition for providing financing, Foothill and Citadel required that the defendants make a cash $23 million equity contribution toward the purchase of SunCruz.

According to the Indictment, on September 21, 2000, the defendants executed an agreement to purchase SunCruz for $147.5 million. This Purchase Agreement provides that “Buyer shall pay to Seller the amount of Buyer’s financing plus Buyer’s equity contribution in the sum of Twenty Three Million Dollars ($23,000,000) . . . by means of a cashier’s check or wire transfer …” To provide financing, the defendants executed with Foothill and Citadel a $60 million loan agreement that likewise required “evidence satisfactory to [the lenders] that Adam Kidan and Jack Abramoff have made an equity contribution to [SunCruz] in cash in an amount no less than $23,000,000.”

The Indictment further alleges that, as evidence that they made the cash equity contribution, the defendants sent the lenders a copy of a wire funds transfer notification reflecting that $23 million had been transferred to the account of Gus Boulis in Miami, Florida. That document was counterfeit; the defendants never transferred these funds and never made a cash equity contribution toward the purchase of SunCruz. In addition, as part of the loan application, both defendants provided personal financial statements that contained false information concerning their respective assets and liabilities.

On September 27, 2000, Foothill and Citadel funded approximately $60 million in loans toward the $147.5 million purchase of SunCruz, according to the allegations in the Indictment. These lenders relied upon the false financial statements and the counterfeit copy of the wire funds transfer to approve and fund the loan.

U.S. Attorney Acosta stated, “Preserving the integrity of our financial system is a top priority of the Department of Justice. Today’s announcement highlights our efforts in the Southern District of Florida to vigorously prosecute corporate fraud and related criminal activities.”

FBI Special Agent in Charge Clemens stated, “This Indictment is the culmination of a complex financial investigation and demonstrates that regardless of position, status, wealth, or associations, fraudulent activity will not be tolerated.”

Mr. Acosta commended the investigative efforts of the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorneys Lawrence D. LaVecchio and Paul F. Schwartz.

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