ALEXANDRIA, Va. - Two defendants accused of visa fraud were torpedoed by their own witness yesterday when he testified that he was shocked to learn that they had tapped client funds that were supposed to be kept in special accounts.
"I blew my top," said Dale M. Schwartz, an Atlanta immigration lawyer, when asked what he did when he learned that clients' escrow accounts had been raided. He said he told a staff lawyer at the Interbank Group, a Herndon, Va., company run by defendants James F. O'Connor and James A. Geisler, that "she ought to quit and get out of there."
O'Connor and Geisler are charged with visa fraud, income tax violations, wire fraud, conspiracy and money laundering. The charges stem from the marketing of a program under which foreign investors can gain permanent U.S. residency status by investing at least $500,000 in an American business. The investment must create at least 10 jobs.
Before Schwartz testified, U.S. District Judge T. S. Ellis 3rd denied a motion for acquittal filed by Geisler and O'Connor, who are acting as their own attorneys. Ellis said prosecutors had presented sufficient evidence for the case to proceed.
Schwartz, who acknowledged receiving $196,181 in legal fees from Interbank, testified that he had helped prepare many of the investor visa applications submitted by Interbank to the U.S. Immigration and Naturalization Service.
Schwartz said that in the course of assisting Interbank, he had concluded that the applications they were submitting on clients' behalf were proper and complied with INS requirements. He said they were similar to those he had filed on behalf of his own clients.
Schwartz said he understood that the typical Interbank client put up about $100,000 in cash and obtained the balance through a loan arranged by Interbank with an offshore bank.
Asked if he thought Interbank was required to disclose the fact that loans were used to come up with the required $500,000, Schwartz at first said he did not believe so. But he said it was his recollection that Interbank did disclose the loans in documents submitted with each application.
Under cross-examination, however, Schwartz reversed himself on both points after he was asked to read from INS regulations and to review the file of an Interbank client whose case he had handled.
Asked if there was any mention of a loan in the file, Schwartz said he couldn't find one. He said that "in hindsight," the loans might have to be disclosed.
Prosecutors say that Interbank was required to disclose the loans but did not, and that the loans were fraudulent and part of a series of "sham transactions."
Asked what he would have done had he been told the loans were phony, Schwartz said, "I would have blown up." He said he had never been provided with the actual loan documents despite repeated requests.