08/04/2007

News / Federal authorities investigate local lawyers

Federal authorities are investigating several law offices, including one from El Paso, for possible criminal practices in connection with the case of four El Paso businessmen who were indicted earlier this year on charges of participating in a coupon scheme to defraud manufacturers out of $250 million, court records show.
Prosecutors have told U.S. District Judge Patricia J. Gorence of Wisconsin that federal investigators are looking into the possibility that lawyers for International Outsourcing Services, or IOS, may have obstructed justice by giving false information to officials, that some lawyers were used to harass one or more government witnesses and that some witnesses were coached before they were interviewed by federal investigators.

The local law firm named in the court document is Scott, Hulse, Marshall, Feuille, Finger & Thurmond, P.C.

Officials of the law firm said they were not aware of the allegations made by federal prosecutors.

The Scott, Hulse firm represents the El Paso Times.

Earlier this year, Thomas "Chris" Balsiger, Steven Furr, Ovidio Enriquez and James "Jim" Currey were among 11 people indicted on fraud charges in March by a federal grand jury in Wisconsin. All are linked to IOS, the nation's largest coupon clearinghouse for retailers which has operations worldwide, including in El Paso and Juárez.
The indictment alleges that between 1997 and 2006, IOS executives and employees and two executives of Riya Coupon Services of New Jersey participated in a scheme to submit fraudulent coupons to manufacturers for payment. It also alleges the defendants tried to conceal the scheme from the manufacturers and retail clients whose accounts were used to launder fraudulent coupons.

Balsiger was president and chief operating officer of IOS; Steven Furr was chief operating officer of the company's North American operations headquartered in El Paso; Ovidio Enriquez is a former executive vice president over IOS coupon-processing operations; and James "Jim" Currey was on IOS's advisory board and was CEO of Currey Adkins, an El Paso technology services company that did work for IOS. Currey is now chairman of the board of Currey Adkins.

If convicted, each individual could face up to 20 years imprisonment, up to $250,000 in fines, up to three years of supervised release and a restitution ordering the covering of the amount of established loss.

The case is pending. A hearing is set for September to allow lawyers to discuss with the judge when they will be ready to go to trial, court records show.

IOS was also indicted in March by the same grand jury, but the charges were dropped in May after the company agreed to cooperate with the federal investigation.

In a court document filed last month, the U.S. attorney's office in the Eastern District of Wisconsin claims to have in excess of 10 tons of evidence, mostly coupons. They also have many boxes of business records, and a DVD "containing a visual scene" and electronic information, such as compact discs containing financial data.

Prosecutors expected to gather more evidence after the charges against IOS were dropped as part of an agreement in which the company agreed to full cooperation with federal officials, including granting them access to all IOS files.

"As part of the agreement, IOS secured promises from its attorneys, including the law firms of Scott, Hulse, Marshall, Feuille, Finger & Thurmond, P.C. of El Paso; Greenberg Traurig, L.L.P of Chicago; and Mallor Clendening, Grodner & Bohrer L.L.P. of Bloomington, Ind., to make their case and coupon-related files available to the government for review. The vast majority of such documents would be those of the Scott, Hulse firm, which was IOS's corporate counsel for years," the court document stated.

The Scott, Hulse firm notified prosecutors that lawyers for Balsiger and Currey "are asserting a common interest privilege over approximately 50 percent of the documents in the Scott, Hulse files."

Prosecutors plan to challenge Balsiger and Currey on their claims to the documents and further wrote that rather than reviewing the law firm documents piecemeal, "the government will delay the review until any privilege litigation is final."

Sib Abraham, Balsiger's lawyer, said Friday he thinks many of the documents in Scott, Hulse files belong to both IOS and Balsiger.

"We want to review all those documents and that's what we are in the process of doing because clearly there is what is called attorney-client privilege," Abraham said. "The government wants to look at the material and what we want to do is find out if there is privileged communication they shouldn't be able to look at."

As for his client, Abraham said, Balsiger is "innocent."

"Absolutely he is innocent and there is going to come a time when that will come out," Abraham said.

Jim Darnell, Currey's lawyer, also said IOS shouldn't be able to release documents that aren't solely theirs to release.

Darnell also said his client is blameless.

"He is innocent. I think that will come out. He doesn't work for IOS. He never worked for IOS and just is innocent," Darnell said.

The timing of the dispute over the documents held by the law firm will affect the timing of a contemplated superseding indictment, the court document stated.

"The ongoing investigation has shown that a least some attorneys for IOS were used, perhaps unwittingly in most or all cases, to pass along false information to the government in an attempt to obstruct justice," prosecutors stated in the court record. "The investigation also suggests that some attorneys were also deployed to harass one or more government witnesses for the same purpose. Still other witnesses were subjected to coaching before they were interviewed in the government's investigation."

Prosecutors stated that federal investigators are working on trying to determine which individuals were responsible for the alleged additional criminal conduct. More indictments will be issued when that is determined, the prosecutors wrote.

David Bernard, chairman of the Scott, Hulse law firm, said the law firm does not represent IOS in criminal cases.

"I'm confident they are not referring to our firm," he said.

As to the documents in the firm's files, he said those documents have been available to the government since May.

"If there is any delay in the government looking at them, that's purely a matter between some of the individual defendants and the government," Bernard said.

Tammy Fonce-Olivas may be reached at tfonce@elpasotimes.com; 546-6362.

By Tammy Fonce-Olivas / El Paso Times
Source: http://www.elpasotimes.com/breakingnews/ci_6496095



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