Feds, New York Charge Tax Shelter Promoter with Massive Fraud
NEW YORK (AP) _ A tax promoter and three others were charged with tax fraud and racketeering for an allegedly phony oil and gas drilling scheme that netted investors more than $172 million in fraudulent losses, federal prosecutors said Tuesday.
U.S. Attorney Rudolph Giuliani called it ″probably the largest white collar crime case that the FBI has had.″
John Peter Galanis was arrested Tuesday in California with three additional associates on a 57-count New York state indictment charging that they bilked hundreds of investors out of millions of dollars in other schemes, federal officials said.
In the federal indictment, unsealed Tuesday, Galanis was charged with racketeering for alleged bribery of officials at a defunct Rockland County, N.Y., bank and the fraudulent takeover of a Utah bank as well as the phony oil and gas tax shelter promotion.
The Manhattan District Attorney’s office, meanwhile, said comedian Eddie Murphy was among the nearly 1,400 investors stung in the scheme, in which investor’s money alleged was diverted to private use.
Murphy invested more than $240,000 in Nashua Trust Co. (Natco), a corporation set up by Galanis and three co-defendants, said First Assistant District Attorney Barbara Jones.
Robert Wacks, Murphy’s manager, said, the comedian would have no comment, but he said, ″On the face of it, it was a highly recommended investment by accountants. It wasn’t just Eddie, it was thousands of people, of which I am one.″
Galanis, 44, of San Diego, Calif., was arrested at his home on the state indictment. Also arrested in San Diego were Samuel Rosengarten, 66, Armonk, N.Y.; Louis Rosen, 60, University Heights, Ohio; and Laurence Klusky, 40, San Diego. The charges range from grand larceny, which carries a maximum seven- year prison term, to conspiracy, a misdemeanor.
In the federal case, Galanis and his co-defendants face a maximum penalty of 25 years in prison and $500,000 in fines, if convicted. The other defendants, who were expected to surrender for arraignment Wednesday at the federal courthouse in White Plains, N.Y., are: John F. Landon, 39, Park City, Utah; Anthony J. Marchese, 46, Southport, Conn.; and Daniel S. Brier, 57, Pound Ridge, N.Y.