Investor funds paid taxes, executive says

Head of Interbank acknowledged at trial that he used $220,000

April 13, 2001|By Walter F. Roche Jr. | Walter F. Roche Jr.,SUN STAFF

ALEXANDRIA, Va. - The head of a company that marketed an investor visa program to foreign residents acknowledged yesterday that he used about $220,000 of investor funds to pay his personal federal and state income taxes.

James F. O'Connor, who headed the Interbank Group of Herndon, Va., made the admission during the second day of cross-examination in his trial on federal charges of visa fraud, wire fraud, conspiracy and income tax violations.

Shown a series of documents by Assistant U.S. Attorney Robert A. Spencer, O'Connor acknowledged that the money he used to pay his Virginia and U.S. federal income taxes in 1998 had come from a bank account of Invest In America, the name given to his investor visa program.

The money had been transferred to another company controlled by O'Connor before being deposited in his personal bank account, records showed. Shortly afterward, O'Connor acknowledged, he mailed checks for $183,000 and $2,731 to the IRS with the balance going to the state of Virginia.

The charges against O'Connor and co-defendant James A. Geisler stem from their marketing of the investor visa program to nearly 300 foreign residents.

Under the federal program, foreigners can get permanent U.S. residency if they invest at least $500,000 in an American business and the investment creates at least 10 jobs. Interbank clients have testified they were told they could qualify by putting up $100,000 and the balance would come from a loan they would never have to repay.

Interbank's activities were described last year in a series of articles in The Sun.

O'Connor has acknowledged that Interbank clients also were promised that their investments would remain untouched in separate bank accounts until the INS issued them visas. Most Interbank clients never received the promised visas.

In earlier cross-examination, Spencer got O'Connor to acknowledge that he had written a series of notes seized by the U.S. Immigration and Naturalization Service in a 1998 raid on Interbank's headquarters. In one note, O'Connor wrote, "We deceived our clients. I held the INS in contempt. I cannot do such things." In another note, entitled "SINS/JFO," O'Connor had written "Lying."

O'Connor and Geisler are defending themselves at the trial.

In other testimony yesterday, Christina Wright, an expert witness for O'Connor and Geisler, testified that her analysis of the Interbank records showed that the clients had legitimate $400,000 loans. With a $100,000 cash investment, that would have made them eligible for the investor visa program, she asserted.

"I think the loans are valid loans," said Wright.

Prosecutors have charged that the loans were bogus and represented money that Interbank recycled over and over again through offshore bank accounts in order to deceive the INS.

"Suppose they [the clients] were told they didn't have to pay the loans back?" asked U.S. District Judge T. S. Ellis III, who is presiding over the nonjury trial.

"It wouldn't matter," Wright responded. She also said that she did not consider it significant that some of the loan documents were never signed.

Prosecutors will cross-examine Wright on Monday.

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