11/24/2008

News / CALIFORNIA MAN CONVICTED OF BANKRUPTCY FRAUD

MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, announced today that WILLIAM H.
SPENCER, the pastor of the House of Truth in Oakland, California,
was convicted yesterday after a two-week jury trial in Manhattan
federal court on charges relating to a multimillion dollar scheme
to defraud the United States Bankruptcy Court for the District of
Hawaii.
According to the evidence at trial:
On March 21, 2003, Hawaiian Airlines, Inc. (“HAL”)
filed a voluntary petition for bankruptcy pursuant to Chapter 11
of the Bankruptcy Code in the United States Bankruptcy Court for
the District of Hawaii (the “Bankruptcy Court”). By November
2004, there were two competing reorganization plans for HAL
pending before the Bankruptcy Court: (1) a plan backed by
Hawaiian Investment Partners Group LLC (the “HIP Plan”); and (2)
a joint plan backed by the trustee appointed by the Bankruptcy
Court and Hawaiian Holdings, Inc., the owner of HAL.
In connection with those proceedings, SPENCER and his
partner, Paul Boghosian, submitted sworn affidavits to the
Bankruptcy Court in which they claimed that SPENCER, through a
trust that he controlled, could provide $300 million to fund the
HIP Plan. In February 2005, as proof of his ability to satisfy
his financial commitments, SPENCER submitted another affidavit
(the “Spencer Affidavit”), together with purported bank records,
to the Bankruptcy Court. In the Spencer Affidavit, SPENCER
falsely represented, among other things, that his trust had
committed $500 million that it held in an account at ABN Amro
Bank N.V. in the Netherlands to fund the HIP Plan. SPENCER and
Boghosian then used SPENCER’s false affidavits and attached
documents to solicit interested parties to support the HIP Plan,
and to solicit others to invest in the HIP Plan or otherwise
provide financing for the HIP Plan.
-2-
To obtain the Bankruptcy Court’s approval of the HIP
Plan, SPENCER and Boghosian also each made false and misleading
statements in depositions conducted by attorneys representing the
Bankruptcy Trustee as part of the Bankruptcy Court proceedings.
In March 2005, SPENCER appeared for sworn testimony and falsely
testified, among other things, that the $500 million described in
the Spencer Affidavit was available at ABN Amro Bank. In fact,
the funds did not exist and the documents SPENCER had submitted
as proof of their existence to the Bankruptcy Court were entirely
fraudulent. In addition, SPENCER testified that he had dealt
directly with two bank employees who in fact never worked for ABN
Amro Bank.
SPENCER, 74, and Boghosian, 49, of St. Louis, Missouri
each face the following maximum penalties: 5 years in prison, a
$250,000 fine or twice the gross gain or loss from the offense,
and 3 years’ supervised release.
Boghosian pleaded guilty on October 29, 2008, before
United States Magistrate Judge MICHAEL H. DOLINGER, and his plea
was accepted on November 12, 2008 by United States District Court
Judge LORETTA A. PRESKA.
Mr. GARCIA, a member of the President’s Corporate Fraud
Task Force, praised the work of the Federal Bureau of
Investigation and thanked the United States Trustee’s Office for
their assistance in the investigation of the case.
SPENCER and Boghosian are scheduled to appear for
sentencing on January 30, 2009, before Judge PRESKA, who presided
over the trial.
Assistant United States Attorneys WILLIAM J. STELLMACH and MAIRE E. DOUVAS are in charge of the prosecution.
http://newyork.fbi.gov/dojpressrel/pressrel08/nyfo112008.pdf

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