Jury convicts Ruxton telemarketer in federal bankruptcy fraud case

Man with rich lifestyle claimed $5,280 in assets

October 24, 2001|By Dennis O'Brien | Dennis O'Brien,SUN STAFF

A 62-year-old businessman who lived in a $1.3 million Ruxton house, bought his girlfriend a $340,000 car and ran a telemarketing operation targeted by the FBI was convicted of bankruptcy fraud yesterday by a federal jury in Baltimore.

Joel Katz was found guilty by a jury of six men and six women that deliberated two hours yesterday in U.S. District Court after a trial that focused on his opulent lifestyle, his six-figure income and the bankruptcy petition he filed claiming only $5,280 in assets.

Katz, who has previous convictions for mail fraud and a firearms violation, sat expressionless as the verdict was announced. He remains free on $100,000 bail.

Katz faces two additional trials on fraud charges stemming from his telemarketing operation. He will be tried before U.S. District Judge Frederic N. Smalkin in January and before U.S. District Judge Andre M. Davis next May.

In the bankruptcy trial, Francis J. Gorman, Katz's lawyer, argued that Katz's creditors knew about his assets and that his client wasn't trying to defraud anyone.

"I'm not denying that he didn't check the right boxes here and there, but there was no intent to conceal anything," Gorman told jurors yesterday.

But prosecutors Joyce K. McDonald and Robert R. Harding, both assistant U.S. attorneys, told jurors that by filing for bankruptcy June 15, 2000, Katz avoided paying $15 million to creditors, $100,000 in federal taxes and $50,000 in state taxes.

They said that Katz's bankruptcy petition failed to list his interest in the home on Ruxton Green Court that Katz shared with his girlfriend, Martha Tuxford. He paid the mortgage on the house, used it to entertain clients and insured it for $1.3 million, they said.

Katz also failed to list the $340,000 Bentley he purchased for Tuxford and the $44,000 Audi he financed with funds from the telemarketing operation, the prosecutors said.

"It boils down to a story about simple greed. He could not bear to cease being an exceedingly wealthy man. He could not bear to be without his house, his cars and his lifestyle," Harding told jurors in closing arguments.

Jurors also heard testimony about the tactics Katz used in his Timonium-based telemarketing operation.

Jeffrey Augen, a disbarred lawyer who served as Katz' chief assistant, told jurors that Katz put Tuxford on his payroll even though she never worked for him.

Katz also set up corporations that never conducted business and had no directors and he made up minutes of board meetings to satisfy lenders, Augen testified.

But Gorman argued that one of Katz's main creditors, Four Star Financial Services, worked closely with Katz in his telemarketing operation, hiring away employees and reviewing Katz' bills as a condition to financing his operation.

"Nothing was concealed from these people; they knew the situation," he said.

Gorman also argued that Tuxford owned the Bentley and the Ruxton house.

Tuxford, 46, was acquitted Friday by Smalkin of bankruptcy fraud charges.

Gorman portrayed the prosecution's case as heavy-handed, noting the evidence included a love letter confiscated by the FBI that Katz wrote to Tuxford in which he told her, "What's mine is yours and what's yours is mine."

"All I can say about this love letter is I hope that we haven't come to a point in this country where we convict people of bankruptcy fraud based on love letters," Gorman told jurors.

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