Visa fraud case defendant says investors were misled

Company officer admits millions of dollars were used inappropriately

April 12, 2001|By Walter F. Roche Jr. | Walter F. Roche Jr.,SUN STAFF

ALEXANDRIA, Va. - One of the defendants on trial in a visa fraud case openly admitted yesterday that dozens of foreign investors were lied to and millions of dollars were never placed in escrow accounts as promised.

Calling his actions a "misrepresentation," James F. O'Connor testified that instead of being placed in separate bank accounts, the clients' money was used to fund ongoing expenses of the Interbank Group, the Herndon company he headed.

The admission came during a daylong court session marked by the unusual. At one point, O'Connor, who is acting as his own attorney, posed questions addressed to himself and then answered them.

Later, under cross-examination by Assistant U.S. Attorney Robert A. Spencer, O'Connor admitted the authenticity of computer files and handwritten notes that he wrote in which he appeared to admit guilt. The records were seized by agents of the U.S. Immigration and Naturalization Service in a raid on Interbank's offices.

"Absolutely," said O'Connor when asked if he was the author of the notes.

O'Connor and co-defendant James A. Geisler are on trial on charges including visa and mail fraud, conspiracy and income tax violations. The charges stem from the marketing of the investor visa program, under which foreign residents can get permanent U.S. residency status, also known as a green card, by investing at least $500,000 in an American business.

While O'Connor, 43, admitted to misrepresentations, he continued to insist that his company met the basic requirements of the 10-year-old investor visa program and that $500,000 was available for investment for each of Interbank's nearly 300 clients.

Prosecutors have charged that in the typical case only $100,000 was invested, and the $400,000 balance was made up through a bogus loan generated through accounts in the Bahamas.

O'Connor also acknowledged in testimony yesterday that the signatures of Interbank clients were forged on some documents submitted by Interbank to the INS. O'Connor said he learned only after the fact that Interbank employees were forging the signatures.

Many of O'Connor's admissions came as he was under direct examination by Geisler, who also is acting as his own attorney in the case. But District Judge T. S. Ellis III also allowed O'Connor to ask himself a series of questions.

But it was under cross-examination by Spencer that O'Connor was confronted with the computer files and handwritten notes seized from Interbank's offices in August 1998. The questioning focused on the escrow accounts.

As O'Connor acknowledged, Interbank clients had been promised that their investments would be kept in escrow accounts until they were granted a visa by the INS.

"It gave clients comfort," he said, adding that without the escrow promise, many Interbank clients would not have signed up.

"We didn't sit down one night and say, `Let's invade the escrow accounts,'" O'Connor said, adding that "laziness" was a factor in the decision never to establish the accounts as promised.

He said he and other Interbank officials assumed that the visa applications would be approved quickly enough so that it "wouldn't make any difference. History has proven it made a considerable difference," he said.

He said that Interbank, which was trying to launch several businesses, was suddenly confronted with a serious cash shortage because the INS had stopped processing investor visa applications and no new clients were signing up.

In one note titled "Spiritual Picture," which Spencer showed to O'Connor, the Interbank official had written, "We have been deceptive in the program."

"We commit to returning the escrow funds," it continued.

In another, he wrote, "I have compromised/sinned." The note then listed among other things, the green card program, a reference to the investor visa program. O'Connor acknowledged the notes were in his handwriting.

Asked if he knew that he had "done wrong," O'Connor answered, "Yes."

Spencer also grilled O'Connor about notes seized in the INS raid relating to his income tax problems with the IRS. Prosecutors have charged that O'Connor and Geisler attempted to disguise earnings by listing them as loans.

In one note, O'Connor had written, "Taxes, rewrite loans to company."

O'Connor said the note simply meant he had decided to acknowledge, as he had intended all along, that the loans were really income.

At another point, confronted with an Interbank document, O'Connor was asked if the statements being made to potential clients were false.

"They weren't false statements. They were inaccurate statements," he said.

O'Connor's cross-examination is to resume today.

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