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United States v. Weichman

United States District Court, N.D. Indiana, Hammond Division

October 3, 2016

UNITED STATES OF AMERICA,
v.
ARI WEICHMAN, et al., Defendants.

          OPINION AND ORDER

          PAUL R. CHERRY MAGISTRATE JUDGE

         This matter is before the Court on a Motion for Severance Due to Improper Joinder [DE 123], filed by Defendant Ari Weichman on July 13, 2016. The Government filed a response on August 11, 2016.

         PROCEDURAL HISTORY

         On September 19, 2014, the Government filed a nine-count Indictment against Jack Weichman, and on May 20, 2015, the Government filed a Superseding Indictment against Jack Weichman. On September 24, 2015, the Government filed a 36-count Second Superseding Indictment against Jack Weichman, Ari Weichman, James Schaefer, and William Bercaw.

         Counts 1-8 of the Second Superseding Indictment allege that Jack Weichman committed bank fraud in that he fraudulently sought to obtain money and funds under the control of Centier Bank by means of false and fraudulent pretenses and representations.

         Count 9 alleges that Jack Weichman committed bank fraud by making false representations to Fifth Third Bank by omitting certain debts.

         Count 10 alleges that Jack Weichman concealed assets in bankruptcy, including the concealment of $351, 900 in wire transfers from January 29, 2008, through November 10, 2008, that Jack Weichman caused to be made from bank accounts held in the names of MMDS and Weichman and Associates to an E-Trade account, **773, held in the name of his son, Ari Weichman.

         Count 11 charges Jack Weichman, Ari Weichman, and James Schaefer with conspiracy to conceal assets in bankruptcy. Count 11 makes the following allegations. In his bankruptcy filing, Jack Weichman told the bankruptcy trustee that he would be paying his unsecured creditors with existing and future income and that his income came from two sources-MMDS and Weichman and Associates. James Schaefer was the Accounting/Tax Manager at Weichman and Associates. Schaefer prepared the tax returns for MMDS, Weichman and Associates, Jack Weichman, and Ari Weichman. Schaefer was responsible for making sure that any money paid by MMDS and by Weichman and Associates was properly classified on the books and records of those companies. Jack Weichman, with the assistance of Schaefer, submitted Monthly Cash Flow Reports to the United States Bankruptcy Court and the United States Bankruptcy Trustee. The monthly cash flow reports required Jack Weichman to report all cash received from all sources as well as all cash spent during the monthly reporting period. Ari Weichman was never employed by nor did he do work for MMDS or Weichman and Associates.

         Count 11 further charges that Jack Weichman, Ari Weichman, and Schaefer, beginning in 2008 and continuing through 2012, defrauded Jack Weichman's bankruptcy creditors by concealing post-petition income, assets, and funds and ultimately allowing Jack Weichman to use those funds at his discretion and for his benefit. It was part of the conspiracy that Jack Weichman, Ari Weichman, and Schaefer, in an effort to conceal Jack Weichman's true financial condition and the assets he actually had available to pay creditors, claim that hundreds of thousands of dollars were paid to Ari Weichman as wage income from his alleged employment at MMDS and Weichman and Associates; however, Ari Weichman never worked at MMDS or Weichman and Associates during the years 2008 through 2012. Jack Weichman caused W2s to be created for Ari Weichman for this alleged wage income in the total amount of $790, 000.00. From 2008 through 2012, in furtherance of the conspiracy, Schaefer prepared income tax returns for MMDS, Weichman and Associates, and Ari Weichman, claiming that Ari Weichman was employed and received wage income from MMDS and Weichman and Associates when Schaefer knew that Ari Weichman was not employed by and did not work for either business during those years.

         Count 11 further alleges that from 2009 through 2012, money allegedly paid to Ari Weichman was used by Jack Weichman to make approximately $30, 000.00 in payments on an $850, 000 life insurance policy with a cash surrender value in excess of $100, 000.00. This policy was concealed from the bankruptcy Trustee and Jack Weichman's creditors. From July 2011 through 2012, money that had allegedly been paid to Ari Weichman was used by Jack Weichman to make approximately $9, 800 in payments on a boat he owned and which he represented to the bankruptcy Trustee and his creditors would be sold or turned over to the bank holding the loan on the boat. Jack Weichman kept the boat and concealed from the bankruptcy Trustee and his creditors his continued possession of and loan payments on the boat.

         Count 11 alleges that, from 2008 through June 2011, Schaefer and Jack Weichman failed to report on Jack Weichman's Monthly Cash Flow Reports money that Jack Weichman directed to be paid to Ari Weichman out of MMDS and Weichman and Associates bank accounts. From 2008 through July 2011, Schaefer and Jack Weichman failed to report on Jack Weichman's Monthly Cash Flow Reports tens of thousands of dollars that was being paid, primarily by Weichman and Associates, to American Express to cover personal credit card charges made on behalf of Jack Weichman and his family members.

         Counts 12-25 charge Jack Weichman with concealing assets in bankruptcy.

         Counts 26-27 charge Jack Weichman and Ari Weichman with money laundering. Count 26 alleges that Jack Weichman and Ari Weichman did knowingly engage in and attempt to engage in a monetary transaction, through a financial institution, affecting interstate commerce, in criminally derived property the value of which was greater than $10, 000.00, namely the issuance of a $200, 000.00 check payable to Jack Weichman drawn on Centier Bank account # ***252 held in the name of Ari Weichman. This $200, 000.00 check was derived, partially, from checks deposited into Ari Weichman's Centier Bank Account # ***252 in the amounts of $125, 209.17, $91, 487.53, and $59, 308.72, which represented property having derived from a specified unlawful activity, namely the concealment of assets in bankruptcy as alleged in Count 21, sections a, b, and c.

         Count 27 alleges that Jack Weichman and Ari Weichman did knowingly engage and attempt to engage in a monetary transaction through a financial institution, affecting interstate commerce, in criminally derived property the value of which was greater than $10, 000.00, namely the issuance of a $40, 000 check payable to Jack Weichman drawn on a Centier Bank account # ***252 held in the name of Ari Weichman, with the property having ...


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