Arkansas Business

Little Rock tax lawyer Barry Jewell said in April 2007 that the federal indictment on money-laundering charges that came down that month caught him by surprise.

Recently unsealed documents in the government's case against Jewell, however, show that he has known at least since 2004 that investigators were looking at him. The documents also show - for the first time - the long and winding road traveled by the U.S. Attorney's Office in acting against Jewell, former law partner of convicted embezzler Keith Moser.

The documents reveal:

• Jewell had worked closely with North Little Rock attorney Sam Perroni, who handles white-collar criminal defense, since 2002 - two years before Moser was charged in U.S. District Court.

• Jewell knew by August 2004 that he was the target of an IRS investigation into alleged tax fraud.

• The IRS audited a number of pension funds Jewell created for clients, including one he created for Perroni.

Perroni said last week that Jewell was surprised because he thought the indictment would never appear.

Jewell "had been strung along and threatened with an indictment several times in order to get him to plead guilty," Perroni said. "When he didn't [plead guilty], he never heard from anybody and months would go by."

Now, though, Jewell is scheduled to go to trial Sept. 2 in U.S. District Court in Little Rock. He is charged with three counts of money laundering, one count of income tax evasion and one count of conspiracy to defraud the government. "We vigorously dispute [the charges]," Perroni said.

The U.S. Attorney's Office doesn't comment on pending cases.

In a separate development, Jewell achieved a victory against the government on March 6 when U.S. District Judge Leon Holmes awarded Jewell nearly $160,000 the IRS had seized from him in June 2006. The money was taken because IRS Special Agent Dan Elliott said it could be traced to Moser's crimes.

In May 2005, Moser pleaded guilty and was sentenced to 188 months in federal prison for stealing nearly $2 million of his clients' money, defrauding the government, dodging capital gains taxes and his role in a kickback scheme in Michigan.

But Jewell hasn't seen his money yet. Perroni filed a motion last week for the government to explain why it hasn't returned the funds.

Road to Indictment

In the summer of 2002, the U.S. Department of Justice and the FBI started investigating Jewell's law firm, Jewell Moser Fletcher & Holleman. Jewell called Perroni for help.

Jewell said he went to Perroni for one reason: he was the best at defending white-collar crimes.

Since 1999, in five jury trials, the U.S Attorney's Office in Little Rock hasn't convicted a client of Perroni's.

Jewell's law firm split up in 2002. Between July 2002 and August 2004, Jewell said, there wasn't any indication that he was being investigated.

Moser appeared to be the one under the microscope. On Jan. 28, 2004, Moser was charged with several crimes in connection with stealing nearly $2 million of his clients' money.

As Moser's case was making its way through U.S. District Court in Little Rock, then-U.S. Attorney Bud Cummins called Perroni in August 2004 for a meeting.

Cummins said Perroni's name was on a list of retirement plans that Jewell had organized and the IRS intended to investigate the retirement plans. Cummins said Perroni would have a conflict of interest in representing Jewell.

Perroni talked it over with his law partner, Patrick James, and both thought no conflict existed, according to the recently unsealed documents.

"In their opinion, this was a pitiful attempt by the government to manufacture a conflict to prevent me from obtaining particularly able counsel," Jewell said, according to the documents. "Sam also advised me that, in his opinion, the United States Attorney's Office ... would do whatever they could to keep him from representing defendants accused of white collar criminal activity."

Perroni thought that if he represented Jewell, Jewell would become the target of the investigation just to justify the government's claims of a conflict. So Perroni agreed it was in Jewell's best interest if Perroni didn't take the case.

Cummins said Perroni did the right thing.

"We were glad to have the conversation privately, as we have no intention of unnecessarily placing issues before the public that might lead to inaccurate speculation in the local press," Cummins said in a letter to Perroni on Sept. 3, 2004.

Under a Cloud

In December 2004, the IRS told Jewell that he was the target of a grand jury investigation for tax fraud for his actions between 1997 and 2001. Later, in December 2004, Jewell said he learned that he would be indicted sometime in early 2005, according to the unsealed documents.

When the indictment didn't come, the IRS told Jewell that he was being investigated as a "tax promoter." In some cases, a tax promoter moves his clients' money offshore to evade U.S. income taxes.

In May 2005, Moser pleaded guilty. At his sentencing, U.S. District Court Judge Susan Weber Wright gave Moser one more chance to reveal the location of his assets, which could be used to repay his victims. She said Moser could use his experience as a tax attorney to hide his money. If he told the truth, Wright said, she would consider reducing his sentence.

"There's no money anywhere that hasn't been accounted for," Moser said. "The government knows good and well that I'm telling the truth about it."

The government said it found some more money in June 2006.

On June 12, 2006, the government seized nearly $160,000 from three of Jewell's pension trust accounts based on statements by IRS Agent Elliott. Elliott said the money was traceable to Moser's crimes and alleged Jewell committed crimes as well.

"Despite the fact that Jewell and Moser had embezzled over $1 million from the client trust account, they continued to pay themselves high salaries and incurred lavish expenses until the firm dissolved in 2002," Elliott said. "Records and information from Moser and other witnesses support the position that Jewell had knowledge of and took an active role in the embezzlement."

Elliott said Jewell used several bank accounts and shell corporations to hide his income.

Jewell said the money was not tied to Moser's crimes and should be returned.

As the forfeiture case moved toward a court date in U.S. District Court, Assistant U.S. Attorney Dan Stripling told Jewell's attorney Roger Rowe that the case should be put on hold, the documents reveal. Stripling told Rowe that the other U.S. attorneys in the Little Rock office had figured out a way to tie Jewell to Moser's theft.

The Indictment

On April 4, 2007, Jewell was indicted and accused of several crimes starting in September 1996 and continuing through July 2005.

The charges include three counts of money laundering, one count of income tax evasion and a count of conspiracy to defraud the government.

Jewell was accused of conspiring with Moser to unlawfully gain control of a Little Rock software company called Scanning Technologies Inc. by using more than $1.5 million from their law firm's client trust account.

Jewell and Moser also were accused of using client trust funds to pay almost $106,000 in child support to Jewell's ex-wife and $500,000 of client money for the firm's general operating expenses at a time when the account had insufficient assets with which to pay clients.

The indictment also said the $160,000 taken from Jewell should be forfeited.

Jewell said the indictment only occurred when the government failed to establish a connection between the seized money and Moser's crimes.

"The government had no basis whatsoever for seizing these funds in that action, but rather than release the funds to Jewell, the government manufactured the allegations contained in the Indictment," Jewell's attorney at the time, Fran Hickman of North Little Rock, said in a May 2007 motion.

As of May 2007, Jewell had spent more than $37,000 in legal fees attempting to recover the seized money.

The U.S. Attorney's Office said it hasn't acted in bad faith or with vindictiveness, according to a June 2007 motion by U.S. attorney Karen Whatley.

Whatley said the evidence shows Jewell's actions resulted in the money being seized.

But on March 6, U.S. District Court Judge J. Leon Holmes agreed with Jewell and ordered the $160,000 to be returned to Jewell, ruling the pension funds are protected from seizure.

The next battle for Jewell will be the criminal trial in September.

Jewell "still keeps hanging in there, fighting the IRS every day over what amounts to frivolous complaints," Perroni said. "And [Jewell] has been successful in beating them off at every juncture."