Tag Archives: 1031TG

An Open Letter about Comments Regarding Richard Simring

Our post on The Rise and Fall of Richard B. Simring, Esq. has gotten a lot of attention.  It has also generated a lot of comments – some of which we’ve posted and some we haven’t — and we want to address these comments in this “open letter.”

We do not know Richard Simring.  We wrote about him because we found his story compelling and perhaps instructive.  A large part of what makes Simring’s story compelling is its moral ambiguity – before his current troubles stemming from his invovement in Ed Okun’s 1031 exchange scam, Simring had an admirable record of achievement and community service, yet he was indicted for (and pled guilty to) participating in a fraudulent scheme that stole millions of dollars from innocent people.

We encourage comments on Richard Simring, as on any other topic.  But we have some minimal conditions that must be met for a comment to be posted.

Here are some guidelines:

Do not use all capital letters.  No one wants to be shouted at, in life or in print.  We do not want our comments section to degenerate into shouting, flaming, and name-calling.

Do not repeat the same opinion over and over. There is no reason to post a comment that simply repeats what you’ve said before. 

Do not libel anyone.

Tell us why you care, and tell us why we should care about your comment.  If you have some inside information or some special insight, let us (and our readers) know.  If you have personal knowledge of the situation or the people involved, share that will us, and be specific.

We hope this explains why some comments have been posted and some not, and that we’ve provided you with guidelines for future comments on our blog.

Thanks.

Advertisements

UPDATE: Richard Simring Pleads Guilty — Set to Testify Against Ed Okun

Richard B. Simring, the attorney charged with mail fraud and money laundering in the 1031 exchange scam led by Ed Okun, has pled guilty and agreed to testify against Okun.

According to a report in the ABA Journal based on a story in the National Law Journal, Simring “entered the plea in July in the Eastern District of Virginia, but few were aware of the development… Simring has agreed to testify against the businessman, billionaire Ed Okun, as part of the deal, Simring’s lawyer, Brian Tannebaum, told the National Law Journal. Simring faces up to five years in prison.”

The article in theNational Law Journal provides a few more details:

“Simring took the plea deal, in which he faces a possible five years in prison and must testify against his former boss, before a grand jury could indict him, according to his lawyer, Brian Tannebaum of Miami’s Tannebaum Weiss. ‘He’s taking responsibility for what the government says he did,’ Tannebaum said. ‘He didn’t want to roll the dice and face… a jury’.”

“Facing 12 to 14 years in prison and having just become a father for the second time, Simring pleaded guilty, said Tannebaum. He’s agreed to testify against Okun and faces a maximum five years in prison.  Tannebaum said Simring — who has no record of Bar complaints or crime — regrets going to work for Okun. ‘If he had it to do all over again he wouldn’t make the same choices,’ Tannebaum said.”

“Simring has notified the Florida Bar of his charges and agreed to temporarily stop practicing law. The Bar will appoint a referee to determine whether to impose any disciplinary action, which sources say will likely mean suspension.”

The Rise and Fall of Richard B. Simring, Esq.

Richard B. Simring is not someone you would expect to be charged with conspiracy to commit mail fraud and money laundering in a multi-million dollar scam.

Simring was a rising legal star and a well respected leader in his community.

The son of an attorney, Simring was valedictorian at Hollywood Hills High School in Florida, a magna cum laud graduate of Princeton University in 1988 and a 1991 summa cum laud graduate of George Washington University Law School.  

Following law school, Simring served as law clerk for Rosemary Barkett, the former Chief Justice of the Florida Supreme Court.  He then developed a successful legal practice in the areas of insurance, banking, and securities, specializing in complex business litigation and winning multi-million dollar verdicts. He represented banks, insurance companies, and financial institutions in reinsurance and insurance disputes, bad faith claims, state and federal RICO actions, securities class actions and broker/dealer arbitrations.  He became a partner in the prestigious law firm Stroock, Stroock & Lavan and then in the law firm Jorden Burt.

Simring actively used his success to benefit others.  He was a prominent figure at Miami fundraising events; charities, schools, and professional organizations were proud to have Richard B. Simring on their side.

He served as Chairman of the Board of Voices for Children Foundation, Inc., a Miami charity that raises money to advocate on behalf of abused and neglected children. He often spoke to legal and community groups about representing abused children in court.  He contributed to the Miami Lighthouse for the Blind, and he served on the board of directors for Educate Tomorrow, an international charity that works to make education an attainable goal for the disadvantaged in Miami and throughout the world, with particular efforts in the impoverished African nation of Niger. He took an active part in Princeton alumni organizations. He donated money to his law school and served as a volunteer on its advisory board of directors. 

Then he met Ed Okun.

According to the federal indictment, Simring first came into contact with Okun in November 2006, when Okun consulted him about legal issues involving the transfer of client funds in Okun’s 1031 Tax Group LLP (1031TG), a 1031 exchange qualified intermediary scam operated by Okun. 

The indictment does not claim that Simring knew that 1031TG was a scam, or that Simring thought that Okun wanted anything other than legitimate legal help in making sure that his activities were lawful. 

In fact, the indictment states that Simring conducted a legitmate and independent investigation of Okun’s activities with 1031TG and told Okun that they were illegal and needed to be halted until the exchange agreements were changed to allow the transfer of client funds and there were sufficient assets to cover client exchanges as they came due.  Simring also told Okun that doing this would not rectify what Okun had done in the past, but only reduce the liklihood of criminal charges.  Okun told Simring that he would follow his advice and change the exchange agreements and pay back the client exchange funds.  Simring then told Okun that if he failed to do this, he would probably go to jail.

A month later, Okun hired Simring as the Chief Legal Officer for Okun Holdings.  Simring was to be paid a salary of $850,000 and given a signing bonus of $100,000.

The indictment then alleges that in March 2007 Simring became aware that Okun had not followed any of his advice and was continuing to transfer millions of dollars from client exchange accounts into his personal bank account.  Simring also learned that 1031TG was on the brink of insolvency. Simring then “confronted” Okun. Okun assured Simring that he was fixing the problems and was in the process of paying back 1031TG.

By April 2007, the financial situation of 1031TG had become dire and Okun’s scam was on the verge of coming part.  1031TG was no longer able to fund exchanges or pay back clients. And the people whose money Okun had taken were calling and demanding explanations.

This appears to be the point at which Simring went from being Okun’s attorney to his co-conspirator.

According to the indictment, Simring now participated with Okun and others in lying to clients, telling them that their funds were secure.  Now also Simring apparently joined Okun in attempting a “holding action” against client inquiries and complaints, including making “lulling” payments to clients with money misappropriated from other clients.

In late April 2007, 1031TG’s CEO resigned and Okun appointed Simring as interim CEO.  Okun then directed Simring to transfer approximately $8,000,000 in client funds into Okun’s personal bank accounts.  According to the indictment, Simring complied.

Three days later, Simring resigned.

Why did Richard Simring become a co-conspirator of scammer Ed Okun?  Why didn’t he walk away once he learned that Okun wasn’t following his advice and continuing to engage in criminal activity?

Perhaps it was the money — although it seems that Simring had no trouble making money legally.

Perhaps he was caught up in his client’s bunker mentality once it was clear that the enterprise was collapsing.

Or perhaps Simring fell under the spell of Okun’s swindler charm.

We will likely never know why Richard B. Simring, Esq., legal star and community leader, appears to have thrown away his career, his honor, and the respect of his colleages and community.

He may not know himself.

UPDATE:

Read Richard Simring Pleads Guilty — Set to Testify Against Ed Okun.

UPDATE:

Read Wachovia Sued for Millions in 1031 Exchange Fraud.

Ed Okun and Co-Conspirators Lara Coleman and Richard Simring Charged in New Indictments

Edward H. Okun of Miami, Fla., and Lara Coleman, of Richmond, Va., were charged in superseding indictments on July 11, 2008, with conspiracy, fraud and money laundering charges.

The indictments stem from a scheme to defraud and obtain millions of dollars in client funds held by The 1031 Tax Group LLP (1031TG), a 1031 exchange qualified intermediary scam operated by Okun.

On July 10, 2008, a federal grand jury in Richmond, Va., returned a 27 count superseding indictment charging Okun and Coleman with one count of conspiracy to commit mail and wire fraud, one count of conspiracy to commit money laundering, 13 counts of wire fraud, three counts of mail fraud, seven counts of money laundering, one count of bulk cash smuggling and forfeiture. Okun is also charged with one count of making false statements.

The original indictment, returned on March 17, 2008, charged only Okun with mail fraud, bulk cash smuggling and making false statements. Okun’s initial appearance was held March 18, 2008, in the U.S. District Court for the Southern District of Florida, and Coleman’s initial appearance was held Monday, July 14, in the U.S. District Court for the Eastern District of Virginia.

According to the indictment, from August 2005 through April 2007, Okun and Coleman used 1031TG and its subsidiaries, all owned by Okun, in a scheme to defraud clients of millions of dollars through false pretenses. Section 1031 of the Internal Revenue Code allows investment property owners to defer the capital gains tax that would otherwise be due on properties sold, if the proceeds are used to purchase new property in a specified time frame. To facilitate such exchanges, investment property owners deposit the proceeds from the sale of their property with qualified intermediaries and sign exchange agreements, which include various promises by the qualified intermediaries to clients regarding the safekeeping and use of exchange funds.

Specifically, the indictment alleges that 1031TG obtained funds by promising clients that their money would be used solely for 1031 exchanges as outlined in the exchange agreements. After making such promises, Okun and Coleman allegedly misappropriated approximately $132 million in client funds to support Okun’s lavish lifestyle, pay operating expenses for his various companies, invest in commercial real estate, and purchase additional qualified intermediary companies to obtain access to additional client funds.

The indictment also alleges that Okun and Coleman instructed employees to withdraw $15,000 in cash from Investment Properties of America’s (IPofA) bank account, a company owned by Okun, and smuggle the cash to Okun’s personal yacht on Paradise Island in the Bahamas to avoid federal currency reporting requirements.

The indictment further alleges that Okun made material false statements under oath before the U.S. District Court for the Eastern District of Virginia relating to conversations he had with the chief legal officer of IPofA.

The charges of conspiracy to commit mail and wire fraud, conspiracy to commit money laundering, wire fraud, and mail fraud each carry a maximum prison sentence of 20 years. The charges of money laundering, bulk cash smuggling, and false declaration carry a five-year maximum prison sentence. The indictment also seeks forfeiture of all funds and assets owned by Okun and Coleman that were derived from or connected to the misappropriation of approximately $132 million in funds held by 1031TG and all funds and assets traceable to the $15,000 in cash Okun instructed to be smuggled to his yacht in the Bahamas.

This case is being prosecuted by Assistant U.S. Attorney for the Eastern District of Virginia Michael S. Dry and Trial Attorney Brigham Q. Cannon of the Criminal Division’s Fraud Section.  The continuing investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service and the FBI.

You can read the indictment at United States vs. Edward Okun and Lara Coleman (PDF)

In addition, Okun’s former attorney, Richard B. Simring, who had been the Chief Legal Officer for Okun  Holdings, Inc., was indicted in the Eastern District of Virginia on charges of conspiracy to committ mail fraud and money laundering as part of Okun’s schemes.

You can read the indictment here at United States vs. Richard B. Simring. (PDF)

Windfall for Lender – Or Will Natural Gas Discovery Benefit Victims of Ed Okun’s 1031 Tax Group Scam?

There’s a new ripple in the story of indicted 1031 exchange scammer Edward Okun, the 1031 Tax Group, and their victims.

Cordell Funding is a Miami-based hard money mortgage lender. Last fall, Cordell Funding sued Okun to recover $17 million it had loaned to Okun before his fraud-riddled real estate empire collapsed into bankruptcy actions and criminal indictments.

Cordell Funding initially sued Okun in a New York state court, but a federal judge transferred the suit to the U.S. Bankruptcy Court in Manhattan, where Gerard McHale, the court-appointed Chapter 11 trustee of Okun’s 1031 Tax Group, was selling off Okun’s assets.

As part of that bankruptcy case, McHale turned over the rights to several Okun properties to Cordell. One of the properties that McHale turned over to Cordell was the Shreveport Industrial Park, a nearly empty 42-year-old, 956,735-square-foot Class C industrial distribution building at 9595 Mansfield Road in Shreveport, Louisiana.

It wasn’t worth much — certainly not the $17 million that Cordell said it was owed by Okun.

Then natural gas was discovered in the area. 

In fact, it was discovered that under the Shreveport Industrial Park is the largest onshore natural gas field in North America.   It could hold as much as 20 trillion cubic-feet equivalent of natural gas reserves.

The mineral rights lease for the Sheveport Industrial Park is now valued at somewhere between $30 and $60 million.

And property values for the area have soared.

It looks like Cordell Funding got a windfall from the bankruptcy court. 

But when the natural gas field was discovered, bankruptcy trustee McHale went back to court to have the bankruptcy judge of the 1031 Tax Group vacate the order giving Cordell Funding rights to the Shreveport property. At the same time, McHale has asked the bankruptcy judge to approve a mineral rights lease with PetroHawk Energy for the benefit of the 1031 Tax Group victims.

Now whether Cordell Funding or the hundreds of creditors of the 1031 Tax Group gets the millions of dollars from the Shreveport natural gas discovery will be determined by the bankruptcy court.

UPDATE:

For the latest on Ed Okun (new federal indictments, plus the indictments of Laura Coleman and Richard B. Simring), click here.

Property of 1031 Exchange Scammer Ed Okun Goes on Sale

High-end retail complex properties in Kansas and Texas owned by the notorious Edward H. Okun have been put up for sale by a federal bankruptcy trustee.

The properties are the 1.1 million square foot West Oaks Mall in Houston, Texas, and the 587,512 square foot Salina Central Mall in Salina, Kansas.

Okun is alleged to be behind the 1031 exchange scam run by The 1031 Tax Group (1031TG) that defrauded thousands of people out of millions of dollars.

Okun was arrested in Miami, Florida, last month and charged with mail fraud, bulk cash smuggling, false statements, and forfeiture from a scheme to defraud and obtain millions of dollars in client funds held by The 1031 Tax Group. 

Those who were defrauded by Okun’s 1031 Tax Group had hoped to recoup some of their missing funds from Okun’s remaining assets — including the West Oaks Mall and the Salina Central Mall — which were purchased from monies allegedly taken from victims in the 1031 exchange scam.

But the Okun-controlled companies that owned the malls declared Chapter 11 bankruptcy in October. 

It is now unclear whether the proceeds from the sale of the properties would go Okun’s 1031 exchange scam victims.

Both properties apparently have a long line of creditors.

The trustee in the bankruptcy case has hired Keen Consultants, the new real estate division of KPMG Corporate Finance, to market both properties.

You can read our earlier post on Okun and his 1031 exchange scam here.

 

 

Man Behind 1031 Exchange Scam Indicted for Fraud

The long awaited indictment of Edward H. Okun took place yesterday. 

Okun is alleged to be behind the 1031 exchange qualifed intermediary (QI) scam run by The 1031 Tax Group (1031TG) that defrauded thousands of people out of millions of dollars.

Okun was arrested last week in Miami, Florida, and charged yesterday by a federal grand jury in Richmond, Virginia, with one count of mail fraud, one count of bulk cash smuggling, and one count of false statements and forfeiture.

According to the indictment, from August 2005 through April 2007, Okun used 1031TG and its subsidiaries, all owned by Okun, in a scheme to defraud clients of millions of dollars through false pretenses.

The indictment alleges that 1031TG promised clients that their money would be used solely to effect 1031 exchange as outlined in the exchange agreements. Instead, Okun is alleged to have misappropriated approximately $132 million in client funds to support his lavish lifestyle, pay operating expenses for his various companies, invest in commercial real estate, and purchase additional qualified intermediary companies to obtain access to additional client funds.

The indictment also alleges that Okun instructed employees to withdraw $15,000 in cash from Investment Properties of America’s (IPofA) bank account, a company owned by Okun, and smuggle the cash to his personal yacht on Paradise Island in the Bahamas to avoid federal currency reporting requirements; and that Okun made material false statements under oath before the U.S. District Court for the Eastern District of Virginia relating to conversations he had with the chief legal officer of IPofA.

Federal prosecutors are seeking the forfeiture of all funds and assets owned by Okun that were derived from or connected to the misappropriation of approximately $132 million in funds held by 1031TG and of all funds and assets traceable to the $15,000 in cash he instructed to be smuggled to his yacht in the Bahamas.

If convicted of all the charges in the indictment, Okun will face a maximum of 30 years in prison and fines.

1031TG is only one of several QIs that have been in legal trouble in the past year, leaving investors with millions of dollars of losses.

The Federation of Exchange Accommodators, the qualified intermediaries’ industry-trade group, requires background checks of all members except those that are subsidiaries of publicly traded parent corporations. The FEA says it is working with the states and may reach out to federal regulators about enhancing oversight of the business. 

Especially in light of the erosion of investor confidence in the credit, banking, and mortgage industries, we think that oversight of 1031 exchange QIs is long overdue.

UPDATE:

For our post on the sale by a bankruptcy trustee of Okun’s West Oaks Mall in Houston, Texas, and Salina Central Mall in Salina, Kansas, click here.