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St. Louis Post-Dispatch, United States
Aug. 25, 2006
A long line of unhappy associates
By Tim McLaughlin
ST. LOUIS POST-DISPATCH
08/27/2006
Several people have felt the sting of doing business with Paul
Boghosian.
There's a widow in Clayton, a former TV sportscaster and a cancer
doctor. They all have something in common: They did a deal with the
Ladue businessman and ended up in court trying to undo it.
Over the last decade, Boghosian has left a number of aggrieved business
associates in his wake. Some may never see the money awarded to them
in civil court judgments.
But in November 2004, Boghosian was about to be stung. Here's how it
went down.
Boghosian was part of an investment group that wanted to buy Hawaiian
Airlines out of bankruptcy. Boghosian didn't know anything about
running an airline, but he talked a pretty good game.
His investment group had access to $500 million in a Dutch bank. That
was his story, which U.S. investigators say was a scheme to entice
legitimate investors into Boghosian's web.
Bankruptcy court officials smelled something fishy. Not long after
suspicions were raised, the FBI ran its own sting operation.
Boghosian was a target, along with his partner, Dr. William H.
Spencer, a 70-something Californian whose background remains somewhat
of a mystery to investigators.
Spencer's lawyers said he has relied on church support for 30 or so
years; it's unclear what sort of doctor he is, if he is one at all.
Boghosian's background is more complete. Of Armenian descent, he
has lived in the St. Louis area all of his 51 years. His late father
worked at the old McDonnell Douglas Corp. for nearly 35 years.
Before his arrest by the FBI in March 2005, Boghosian had been
in insurance, car sales and had some college. He did real estate
deals, helped run a construction company that creditors forced into
bankruptcy liquidation, and he's been an investor in small, publicly
traded companies.
"He was always a go-getter," his mother, Ann Boghosian, said. "He's
been a good son."
Boghosian did not return several telephone calls seeking comment for
this story.
In his wheeling and dealing to buy Hawaiian Airlines in late 2004,
Boghosian came in contact with a hedge fund manager interested in
participating in the deal. Boghosian wanted the hedge fund to give
him $2.5 million so he could pay for things like travel expenses and
lawyer fees.
Boghosian didn't know the hedge fund manager was really an undercover
FBI agent.
To bolster the credibility of his plan, Boghosian gave the undercover
agent a bank document purportedly generated by Dutch investment
banking giant ABN Amro. Unfortunately for Boghosian, Amsterdam was
misspelled in the heading of the bank document: "Amasterdam."
Boghosian met the agent in New York in February 2005. Boghosian
considered it a "see, feel and touch meeting."
The hedge fund manager/FBI agent wasn't impressed. He told Boghosian
that his partner, Spencer, was a crook and the ABN Amro bank document
was bogus. Boghosian was undeterred.
"I thought he was posturing," Boghosian testified last October at his
criminal trial in Manhattan federal court. "I thought he was trying
to see what my reaction would be to my commitment and belief in Dr.
Spencer, and the acquisition of Hawaiian Airlines."
Boghosian also maintained during his trial that he thought the ABN Amro
document was authentic. During the sting operation, the undercover
agent gave Boghosian an ABN Amro number to call and encouraged him
to double-check the document's legitimacy. Boghosian said he took
the number but didn't call it.
Meanwhile, the undercover agent said he wanted some money for
himself if he was going to get his hedge fund involved in the
Hawaiian Airlines reorganization plan. He wanted $500,000 wired to
an offshore account. Boghosian wanted the hedge fund to commit $2
million in exchange.
When the agent told Boghosian the arrangement was essentially stealing
from the hedge fund, "Boghosian stated that he had no problem with
that," FBI Special Agent Jan Trigg later said in an affidavit.
In March 2005, the FBI arrested Boghosian in St. Louis, just hours
before he was due to fly to Honolulu. Boghosian pleaded not guilty
to conspiracy to commit bankruptcy fraud and agreeing to a bribe. He
testified in his own defense and said he had only known Spencer since
August 2004.
The two talked on the telephone and Spencer told him he wanted
to be the first African-American to own a major airline, Boghosian
testified. "It was my hope and dream that our plan would be confirmed,
and that we could acquire Hawaiian Airlines out of bankruptcy."
A jury in Manhattan rejected Boghosian's story. A judge sentenced
him in May to two years in a federal prison. He was scheduled to
report the Bureau of Prisons on Aug. 22, but that has been delayed
until at least next month. His lawyer wants the court to consider a
recent court decision that she says will aid Boghosian's appeal.
At his sentencing in May, Boghosian's federal public defender said he
had nothing in his pockets. His financial disclosure is under court
seal. Even though Boghosian lives in an $825,000, two-story brick
house in Ladue, he's a poor person in the eyes of the law.
Spencer received a much stiffer sentence of 51 months. Like Boghosian,
Spencer did not have a prior criminal record, but he was uncooperative
during his pre-sentencing investigation, court papers show. He gave
probation officials scant information about his background.
Boghosian will leave behind his wife of 19 years and a teenage son
who has learning disabilities, public defender Jennifer Brown said
during his sentencing.
"Your honor, this is someone who has done nothing but work hard all
his life," Brown said. "This is someone who makes time for his family;
they're his first priority."
Some of Boghosian's past business associates may not be sympathetic.
Dr. Douglas R. Colkitt, a Pennsylvania physician and entrepreneur,
accused Boghosian and Barron Holding Corp. of gaining control of
shares in two companies that the doctor pledged as collateral for a
line of credit, according to a civil lawsuit in federal court.
At the 1999 trial, a jury ruled in favor of Colkitt, saying Boghosian
and Barron, controlled by Boghosian, unjustly enriched themselves by
$115,000 and $3.1 million, respectively, from the sale of Colkitt's
stock in two medical companies. Boghosian appealed the verdict,
but the Eighth U.S. Circuit Court of Appeals affirmed the
jury's decision in 2001.
"At a minimum, (Boghosian and Barron) had a difficult time explaining
how they received over $3.1 million in proceeds from Colkitt's pledged
shares for which they paid nothing," the appellate court wrote in
its decision. And despite Boghosian's self-serving testimony, there
was sufficient evidence to show "actual or constructive knowledge of
the actionable wrong and partici­pation therein" by Boghosian.
As an aside, in 2000, Colkitt and his cancer centers agreed to pay
$10 million to settle Justice Department allegations that they had
submitted fraudulent billing claims to Medicare and a medical program
for military families.
Former KSDK sportscaster Malcolm Briggs got tangled in Boghosian's
web several years ago when he was trying to form a construction
company. In 2001, Briggs received a $125,000 line of credit from
Frontenac Bank. Briggs told the bank he planned to use the money for
his own investment purposes.
But in a civil lawsuit filed in 2003, the bank said Briggs was in
default and alleged that he and Boghosian conspired to get the line
of credit for the benefit of a Boghosian investment vehicle called
Hachador Holdings.
The case was dismissed, but about the same time, Briggs sued Boghosian
in St. Louis County Circuit Court, seeking more than $400,000 in actual
and punitive damages. Before the lawsuit was dismissed in late 2005,
Briggs alleged that Boghosian made false representations and induced
him to transfer more than $300,000 to entities controlled by Boghosian,
court papers show.
Briggs did not return telephone calls seeking comment.
And then there are people like Susan and Robert McGowan of Clayton.
In 1997, the couple sold the old Wabash train station on Delmar
Boulevard in St. Louis to Boghosian for $173,174, to be paid in 180
monthly installments.
Boghosian made only 25 payments, according to a judgment entered
against Boghosian in St. Louis County Circuit Court.
In 2002, however, Boghosian sold the train station property, and one
of his companies gained more than $400,000 from the deal, according
to court records.
Susan McGowan, whose husband has since died, still is trying to get
her money, court papers show.
University City Loop developer Joe Edwards, who bought the train
property, said he didn't know much about Boghosian from his limited
dealings with him. But he described Boghosian as quiet and "very
personable." He said Boghosian used the train station as his private
office before selling it.
"I never quite understood what his business was," Edwards said. "He
didn't elaborate. I didn't pry."
--Boundary_(ID_P9hFvKOX3GIBx5inWj7gcg) --
Aug. 25, 2006
A long line of unhappy associates
By Tim McLaughlin
ST. LOUIS POST-DISPATCH
08/27/2006
Several people have felt the sting of doing business with Paul
Boghosian.
There's a widow in Clayton, a former TV sportscaster and a cancer
doctor. They all have something in common: They did a deal with the
Ladue businessman and ended up in court trying to undo it.
Over the last decade, Boghosian has left a number of aggrieved business
associates in his wake. Some may never see the money awarded to them
in civil court judgments.
But in November 2004, Boghosian was about to be stung. Here's how it
went down.
Boghosian was part of an investment group that wanted to buy Hawaiian
Airlines out of bankruptcy. Boghosian didn't know anything about
running an airline, but he talked a pretty good game.
His investment group had access to $500 million in a Dutch bank. That
was his story, which U.S. investigators say was a scheme to entice
legitimate investors into Boghosian's web.
Bankruptcy court officials smelled something fishy. Not long after
suspicions were raised, the FBI ran its own sting operation.
Boghosian was a target, along with his partner, Dr. William H.
Spencer, a 70-something Californian whose background remains somewhat
of a mystery to investigators.
Spencer's lawyers said he has relied on church support for 30 or so
years; it's unclear what sort of doctor he is, if he is one at all.
Boghosian's background is more complete. Of Armenian descent, he
has lived in the St. Louis area all of his 51 years. His late father
worked at the old McDonnell Douglas Corp. for nearly 35 years.
Before his arrest by the FBI in March 2005, Boghosian had been
in insurance, car sales and had some college. He did real estate
deals, helped run a construction company that creditors forced into
bankruptcy liquidation, and he's been an investor in small, publicly
traded companies.
"He was always a go-getter," his mother, Ann Boghosian, said. "He's
been a good son."
Boghosian did not return several telephone calls seeking comment for
this story.
In his wheeling and dealing to buy Hawaiian Airlines in late 2004,
Boghosian came in contact with a hedge fund manager interested in
participating in the deal. Boghosian wanted the hedge fund to give
him $2.5 million so he could pay for things like travel expenses and
lawyer fees.
Boghosian didn't know the hedge fund manager was really an undercover
FBI agent.
To bolster the credibility of his plan, Boghosian gave the undercover
agent a bank document purportedly generated by Dutch investment
banking giant ABN Amro. Unfortunately for Boghosian, Amsterdam was
misspelled in the heading of the bank document: "Amasterdam."
Boghosian met the agent in New York in February 2005. Boghosian
considered it a "see, feel and touch meeting."
The hedge fund manager/FBI agent wasn't impressed. He told Boghosian
that his partner, Spencer, was a crook and the ABN Amro bank document
was bogus. Boghosian was undeterred.
"I thought he was posturing," Boghosian testified last October at his
criminal trial in Manhattan federal court. "I thought he was trying
to see what my reaction would be to my commitment and belief in Dr.
Spencer, and the acquisition of Hawaiian Airlines."
Boghosian also maintained during his trial that he thought the ABN Amro
document was authentic. During the sting operation, the undercover
agent gave Boghosian an ABN Amro number to call and encouraged him
to double-check the document's legitimacy. Boghosian said he took
the number but didn't call it.
Meanwhile, the undercover agent said he wanted some money for
himself if he was going to get his hedge fund involved in the
Hawaiian Airlines reorganization plan. He wanted $500,000 wired to
an offshore account. Boghosian wanted the hedge fund to commit $2
million in exchange.
When the agent told Boghosian the arrangement was essentially stealing
from the hedge fund, "Boghosian stated that he had no problem with
that," FBI Special Agent Jan Trigg later said in an affidavit.
In March 2005, the FBI arrested Boghosian in St. Louis, just hours
before he was due to fly to Honolulu. Boghosian pleaded not guilty
to conspiracy to commit bankruptcy fraud and agreeing to a bribe. He
testified in his own defense and said he had only known Spencer since
August 2004.
The two talked on the telephone and Spencer told him he wanted
to be the first African-American to own a major airline, Boghosian
testified. "It was my hope and dream that our plan would be confirmed,
and that we could acquire Hawaiian Airlines out of bankruptcy."
A jury in Manhattan rejected Boghosian's story. A judge sentenced
him in May to two years in a federal prison. He was scheduled to
report the Bureau of Prisons on Aug. 22, but that has been delayed
until at least next month. His lawyer wants the court to consider a
recent court decision that she says will aid Boghosian's appeal.
At his sentencing in May, Boghosian's federal public defender said he
had nothing in his pockets. His financial disclosure is under court
seal. Even though Boghosian lives in an $825,000, two-story brick
house in Ladue, he's a poor person in the eyes of the law.
Spencer received a much stiffer sentence of 51 months. Like Boghosian,
Spencer did not have a prior criminal record, but he was uncooperative
during his pre-sentencing investigation, court papers show. He gave
probation officials scant information about his background.
Boghosian will leave behind his wife of 19 years and a teenage son
who has learning disabilities, public defender Jennifer Brown said
during his sentencing.
"Your honor, this is someone who has done nothing but work hard all
his life," Brown said. "This is someone who makes time for his family;
they're his first priority."
Some of Boghosian's past business associates may not be sympathetic.
Dr. Douglas R. Colkitt, a Pennsylvania physician and entrepreneur,
accused Boghosian and Barron Holding Corp. of gaining control of
shares in two companies that the doctor pledged as collateral for a
line of credit, according to a civil lawsuit in federal court.
At the 1999 trial, a jury ruled in favor of Colkitt, saying Boghosian
and Barron, controlled by Boghosian, unjustly enriched themselves by
$115,000 and $3.1 million, respectively, from the sale of Colkitt's
stock in two medical companies. Boghosian appealed the verdict,
but the Eighth U.S. Circuit Court of Appeals affirmed the
jury's decision in 2001.
"At a minimum, (Boghosian and Barron) had a difficult time explaining
how they received over $3.1 million in proceeds from Colkitt's pledged
shares for which they paid nothing," the appellate court wrote in
its decision. And despite Boghosian's self-serving testimony, there
was sufficient evidence to show "actual or constructive knowledge of
the actionable wrong and partici­pation therein" by Boghosian.
As an aside, in 2000, Colkitt and his cancer centers agreed to pay
$10 million to settle Justice Department allegations that they had
submitted fraudulent billing claims to Medicare and a medical program
for military families.
Former KSDK sportscaster Malcolm Briggs got tangled in Boghosian's
web several years ago when he was trying to form a construction
company. In 2001, Briggs received a $125,000 line of credit from
Frontenac Bank. Briggs told the bank he planned to use the money for
his own investment purposes.
But in a civil lawsuit filed in 2003, the bank said Briggs was in
default and alleged that he and Boghosian conspired to get the line
of credit for the benefit of a Boghosian investment vehicle called
Hachador Holdings.
The case was dismissed, but about the same time, Briggs sued Boghosian
in St. Louis County Circuit Court, seeking more than $400,000 in actual
and punitive damages. Before the lawsuit was dismissed in late 2005,
Briggs alleged that Boghosian made false representations and induced
him to transfer more than $300,000 to entities controlled by Boghosian,
court papers show.
Briggs did not return telephone calls seeking comment.
And then there are people like Susan and Robert McGowan of Clayton.
In 1997, the couple sold the old Wabash train station on Delmar
Boulevard in St. Louis to Boghosian for $173,174, to be paid in 180
monthly installments.
Boghosian made only 25 payments, according to a judgment entered
against Boghosian in St. Louis County Circuit Court.
In 2002, however, Boghosian sold the train station property, and one
of his companies gained more than $400,000 from the deal, according
to court records.
Susan McGowan, whose husband has since died, still is trying to get
her money, court papers show.
University City Loop developer Joe Edwards, who bought the train
property, said he didn't know much about Boghosian from his limited
dealings with him. But he described Boghosian as quiet and "very
personable." He said Boghosian used the train station as his private
office before selling it.
"I never quite understood what his business was," Edwards said. "He
didn't elaborate. I didn't pry."
--Boundary_(ID_P9hFvKOX3GIBx5inWj7gcg) --