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DANCER'S SWELLING BANK ACCOUNT IS EVIDENCE IN CAFESJIAN EMBEZZLEMENT TRIAL
Twin Cities
Feb 25 2014
by By David Hanners
When topless dancer-turned-real estate broker Cheri Kuhn filed her
2006 taxes, she listed an adjusted gross income of just $43. She
neglected to mention that that year, her married boyfriend stuck
$226,000 in her bank account.
And the following year, that boyfriend, John Waters Jr., deposited
another $190,000 in her account. On her 2007 form 1040, Kuhn reported
an income of minus $249.
Agents for the IRS and FBI testified about Waters' largesse Wednesday,
but the government claims Waters was being generous with his boss's
money. His boss was the late Gerard Cafesjian, who reaped a fortune
of perhaps $300 million when he retired from West Publishing in 1996
and the company was sold.
Cafesjian had been one of West's owners and a major shareholder.
Revenue agent Nona Bosshart told jurors at Waters' embezzlement trial
that at various points over the past few years, Waters was making two
mortgage payments at once, three car payments each month and was also
putting money into accounts for his daughters.
And there was the spending on travel, jewelry and such things as more
than $19,800 to cater a wedding reception for one of his daughters.
Then there was the $13,200 diamond ring.
"Would the defendant have been able to afford his lifestyle without
Mr. Cafesjian's money?" Assistant U.S. Attorney Sarah Hudleston
asked Bosshart.
"No," the revenuer replied.
The trial of Waters, 57, of Eden Prairie entered its third day in U.S.
District Court in Minneapolis on Wednesday. The man who used to be
Robin to Cafesjian's Batman stands accused of mail and wire fraud,
and the government also claims he failed to pay taxes on the money
he allegedly embezzled.
Bosshart said her analysis of the myriad bank accounts Waters had
control over showed he had taken up to $4.2 million of Cafesjian's
money for his own use.
The defense claims the withdrawals were appropriate under a "modified"
employment agreement Waters and Cafesjian had negotiated. Waters
claimed in a 2012 civil lawsuit against his former boss (the suit
was later thrown out) that the money was loans and part of a deferred
compensation agreement.
But Hudleston and colleague William Otteson spent much of Wednesday
working to disprove that defense, showing that Waters had never spoken
of nor written about the modified agreement until he brought it up
in the civil suit.
In fact, they noted, he had said just the opposite, testifying in
a 2009 deposition that he and Cafesjian had signed the employment
agreement in 1996, "and it was never changed, modified or updated."
With FBI Special Agent Travis Yarbrough on the witness stand,
Otteson played several clips from a videotaped deposition Waters
gave in 2012 in his suit against Cafesjian. In the clips, he said
there were no written documents laying out the alleged deferred
compensation agreement.
At one point in the video, Waters talks about the $250,000 base salary
he'd been making (he also got bonuses) and said, "Did I feel like I
was worth more? Yes."
Waters had gone to work for Cafesjian at West Publishing in 1994. When
Cafesjian retired and used his fortune to set up a number of private
companies and charitable foundations, he hired Waters to oversee them
The Brooklyn-born Cafesjian -- son of immigrant parents from Armenia --
was an avid art and gem collector. He died in Roseville in September
at age 88. His wife, Cleo, had died five months earlier at age 87.
The nine women and five men who make up the jury and alternates have
seen scores of bank records showing the sums of money Waters withdrew
from Cafesjian's accounts and then deposited into other accounts
Waters controlled.
When Waters resigned from Cafesjian's employ in March 2009, company
officials discovered the alleged embezzlement by happenstance. Before
he left, Waters had filled out a change-of-address card for the
accounts so that their statements would go to his home instead of
Cafesjian's Minneapolis office, but one bank statement showed up at
the office after Waters left.
When employees opened it, they saw numerous withdrawals and deposits.
Eventually, a law firm was hired to investigate, and its inquiry was
turned over to the FBI and IRS.
The government claims perhaps $775,000 of the money wound up in an
account Waters had set up for Kuhn, a topless dancer at Deja Vu whom
Waters met in the late 1990s and had an affair with. After he got
divorced, he married her.
Waters said in a deposition that she stopped working at the club
after they met. State records show she was licensed as a real estate
salesperson in December 2000, and was licensed as a real estate broker
in 2006.
In the deposition, Waters denied being her "primary source of support."
Even though Waters was putting large sums in her account, she
apparently was burning through it precipitously. Prosecutors presented
a 2007 email Waters had sent asking her, "Why the overdrafts in
your account?" In the weeks before the email, he'd deposited $20,000
into it.
In a February 2008 email to her, he wrote, "Accounts are almost
empty." In the six weeks before sending the email, he'd deposited
$30,000 in her account, evidence showed.
The day's testimony also involved sometimes-tedious examination of
financial documents with small print, but some of it led to a bit of
humor. One of the witnesses was Liliana Espana, a bank vice president
in Florida, where Cafesjian spent his springs and summers.
Both the prosecution and defense had finished questioning her, but
U.S. District Judge Ann Montgomery said she had a few questions.
"What do you think of the Minnesota weather?" the judge asked.
"Do you want me to tell you the truth?" the Floridian replied.
"You are under oath," Montgomery reminded her.
"It was 89 in Miami yesterday," Espana said, dodging the judge's
question.
http://www.twincities.com/localnews/ci_25236542/dancers-swelling-bank-account-is-evidence-cafesjian-embezzlement
Twin Cities
Feb 25 2014
by By David Hanners
When topless dancer-turned-real estate broker Cheri Kuhn filed her
2006 taxes, she listed an adjusted gross income of just $43. She
neglected to mention that that year, her married boyfriend stuck
$226,000 in her bank account.
And the following year, that boyfriend, John Waters Jr., deposited
another $190,000 in her account. On her 2007 form 1040, Kuhn reported
an income of minus $249.
Agents for the IRS and FBI testified about Waters' largesse Wednesday,
but the government claims Waters was being generous with his boss's
money. His boss was the late Gerard Cafesjian, who reaped a fortune
of perhaps $300 million when he retired from West Publishing in 1996
and the company was sold.
Cafesjian had been one of West's owners and a major shareholder.
Revenue agent Nona Bosshart told jurors at Waters' embezzlement trial
that at various points over the past few years, Waters was making two
mortgage payments at once, three car payments each month and was also
putting money into accounts for his daughters.
And there was the spending on travel, jewelry and such things as more
than $19,800 to cater a wedding reception for one of his daughters.
Then there was the $13,200 diamond ring.
"Would the defendant have been able to afford his lifestyle without
Mr. Cafesjian's money?" Assistant U.S. Attorney Sarah Hudleston
asked Bosshart.
"No," the revenuer replied.
The trial of Waters, 57, of Eden Prairie entered its third day in U.S.
District Court in Minneapolis on Wednesday. The man who used to be
Robin to Cafesjian's Batman stands accused of mail and wire fraud,
and the government also claims he failed to pay taxes on the money
he allegedly embezzled.
Bosshart said her analysis of the myriad bank accounts Waters had
control over showed he had taken up to $4.2 million of Cafesjian's
money for his own use.
The defense claims the withdrawals were appropriate under a "modified"
employment agreement Waters and Cafesjian had negotiated. Waters
claimed in a 2012 civil lawsuit against his former boss (the suit
was later thrown out) that the money was loans and part of a deferred
compensation agreement.
But Hudleston and colleague William Otteson spent much of Wednesday
working to disprove that defense, showing that Waters had never spoken
of nor written about the modified agreement until he brought it up
in the civil suit.
In fact, they noted, he had said just the opposite, testifying in
a 2009 deposition that he and Cafesjian had signed the employment
agreement in 1996, "and it was never changed, modified or updated."
With FBI Special Agent Travis Yarbrough on the witness stand,
Otteson played several clips from a videotaped deposition Waters
gave in 2012 in his suit against Cafesjian. In the clips, he said
there were no written documents laying out the alleged deferred
compensation agreement.
At one point in the video, Waters talks about the $250,000 base salary
he'd been making (he also got bonuses) and said, "Did I feel like I
was worth more? Yes."
Waters had gone to work for Cafesjian at West Publishing in 1994. When
Cafesjian retired and used his fortune to set up a number of private
companies and charitable foundations, he hired Waters to oversee them
The Brooklyn-born Cafesjian -- son of immigrant parents from Armenia --
was an avid art and gem collector. He died in Roseville in September
at age 88. His wife, Cleo, had died five months earlier at age 87.
The nine women and five men who make up the jury and alternates have
seen scores of bank records showing the sums of money Waters withdrew
from Cafesjian's accounts and then deposited into other accounts
Waters controlled.
When Waters resigned from Cafesjian's employ in March 2009, company
officials discovered the alleged embezzlement by happenstance. Before
he left, Waters had filled out a change-of-address card for the
accounts so that their statements would go to his home instead of
Cafesjian's Minneapolis office, but one bank statement showed up at
the office after Waters left.
When employees opened it, they saw numerous withdrawals and deposits.
Eventually, a law firm was hired to investigate, and its inquiry was
turned over to the FBI and IRS.
The government claims perhaps $775,000 of the money wound up in an
account Waters had set up for Kuhn, a topless dancer at Deja Vu whom
Waters met in the late 1990s and had an affair with. After he got
divorced, he married her.
Waters said in a deposition that she stopped working at the club
after they met. State records show she was licensed as a real estate
salesperson in December 2000, and was licensed as a real estate broker
in 2006.
In the deposition, Waters denied being her "primary source of support."
Even though Waters was putting large sums in her account, she
apparently was burning through it precipitously. Prosecutors presented
a 2007 email Waters had sent asking her, "Why the overdrafts in
your account?" In the weeks before the email, he'd deposited $20,000
into it.
In a February 2008 email to her, he wrote, "Accounts are almost
empty." In the six weeks before sending the email, he'd deposited
$30,000 in her account, evidence showed.
The day's testimony also involved sometimes-tedious examination of
financial documents with small print, but some of it led to a bit of
humor. One of the witnesses was Liliana Espana, a bank vice president
in Florida, where Cafesjian spent his springs and summers.
Both the prosecution and defense had finished questioning her, but
U.S. District Judge Ann Montgomery said she had a few questions.
"What do you think of the Minnesota weather?" the judge asked.
"Do you want me to tell you the truth?" the Floridian replied.
"You are under oath," Montgomery reminded her.
"It was 89 in Miami yesterday," Espana said, dodging the judge's
question.
http://www.twincities.com/localnews/ci_25236542/dancers-swelling-bank-account-is-evidence-cafesjian-embezzlement