by Gwen Moritz on Monday, Jun. 20, 2005 12:00 am
By the summer of 2003, the consequences of Little Rock tax attorney Keith Moser's participation in a client's kickback scheme in Michigan were bearing down on him.
He knew it, his defense lawyer knew it, his former law partners knew it.
But his pretty young bride and the rest of his family may have been as ignorant as the clients who believed Moser to be a devout Christian they could trust with their legal work and their money.
The U.S. Department of Justice's Antitrust Division in Cleveland, piqued by a civil lawsuit filed by a Michigan
video distributor, had had FBI and Internal Revenue Service investigators on Moser's tail for more than a year. The criminal investigation was Moser's biggest problem, but certainly not his only one.
In June 2003, Barry Jewell, who had been Moser's law partner for 11 years, filed a civil suit accusing Moser and another former partner, Scott Fletcher, of pocketing more than $150,000 each that rightfully belonged to their defunct firm, Jewell Moser Fletcher & Holleman.
On the last day of June, Moser appeased the clients he was stealing from by creating phony statements as to the amount they had on deposit in his dwindling trust account. They thought they were earning 5 percent annually. Two days later, he bankrolled a trip to Las Vegas with $50,000 he withdrew from his client trust account.
In September 2003, Marilynn McRae Houston, a trustee for the Mary S. Pemberton Trust of Lonoke County, filed a lawsuit claiming Moser unjustly enriched himself with the proceeds of an equipment sale he engineered in 2001.
Meanwhile, Assistant U.S. Attorney Kevin Culum of the Antitrust Division was picking off the participants in the kickback scheme one by one. Michigander Larry E. Bennett pleaded guilty in August to wire fraud for paying nearly $600,000 in kickbacks to Dan F. Whitt of Maumelle. In September, Whitt's son, David Whitt of Little Rock, pleaded guilty to wire fraud for his part in the scheme, which was to use an account with his employer, Merrill Lynch, to transfer the monthly kickback payments. Dan Whitt pleaded guilty on Oct. 30, 2003, to a charge of conspiracy to commit money laundering.
Bennett was sentenced to 12 months in federal prison, David Whitt to 15 months and Dan Whitt to 33.
Moser, who had been Dan Whitt's personal lawyer and who assisted in two failed extortion attempts, was the last to go down. And he went down hardest.
Get Ready, Get Set
"He said he wasn't guilty, that he explained to the government that he didn't make any money off that deal, that the transaction didn't even go through," his wife, Valerie Pike Moser, would later tell Arkansas Business.
But federal prosecutors apparently had little sympathy for a licensed attorney who attempted to extort kickbacks and then responded to subpoenas by sending up falsified documents. What's more, the FBI and IRS had turned up evidence that Moser had engaged in tax fraud — specifically for the benefit of a prominent Little Rock lawyer and businessman named Theodore C. "Ted" Skokos Sr.
Moser started getting ready.
On Monday, Nov. 17, 2003, he executed a warranty deed splitting ownership of his new house in west Little Rock between his wife and a trust for his daughters. On Wednesday he directed his office manager to write a check on the client trust account payable to Metropolitan National Bank of Little Rock in the amount of $500,005. According to an affidavit by IRS investigator Dan Elliott, Moser told the staff to record the distribution as a payment to a particular client, but the client knew nothing of the transaction.
Instead, Moser personally took the check to Metropolitan and used it to purchase a $500,000 cashier's check payable to Excalibur Investments Inc.
On Friday, Nov. 21, he drove to Memphis and opened a checking account at National Bank of Commerce in the name of Excalibur Investments. He deposited the $500,000 cashier's check and a life insurance check for $28,000 that had been written to a 91-year-old client.
He also withdrew $165,000 from the Sterne Agee & Leach account that he had set up the previous December using part of the money that cousins Hutson and Kenneth Way left in his client trust account after he orchestrated the sale of their farm at England (Lonoke County).
On Dec. 24, Moser gave himself a Christmas present: He opened a new account at Twin City Bank in North Little Rock in the name of Acceptance Capital Corp., which he had incorporated in March 2000. Into it he deposited the Ways' $165,000. A week later, on New Year's Eve, he added six more checks made out to various clients, bringing the balance in the account to almost $233,000.
Moser tested the Memphis account on New Year's Day 2004 by withdrawing $100 through an ATM in Little Rock. Later in the month he tried unsuccessfully to raise $26,000 by dumping a couple of pieces of property in Florida.
Long Journey North
Keith Moser was finally charged with crimes on Jan. 28, 2004 — 26 months after a mark in the kickback scheme blew the whistle. For the first time, stories by the Arkansas Democrat-Gazette and the Associated Press connected Moser to the crimes to which Dan and David Whitt had pleaded guilty — a connection Arkansas Business made in December 2002.
Two counts, conspiring to launder money and obstruction of justice, were filed in U.S. District Court for the Eastern District of Michigan by the DOJ's Antitrust Division. They concerned Moser's role in Dan Whitt's ill-fated kickback scheme and the doctored documents he sent the grand jury that was investigating it.
One count was filed in Little Rock by First Assistant U.S. Attorney Sandra Cherry, who accused Moser of defrauding the IRS by helping an unnamed businessman evade federal taxes on capital gains from the sale of a Little Rock telecommunications company in 1996.
Moser signed an agreement to plead guilty on Jan. 29; a plea hearing for the combined cases was scheduled for the afternoon of Feb. 17 in Detroit. About that time, he ran into a longtime client, Marvin W. Jones of Cabot, at a restaurant in Little Rock.
"Keith waited for me outside the restaurant to talk with me," Jones wrote months later in a letter asking U.S. District Judge Susan Webber Wright to be lenient in sentencing Moser. "In our five-minute conversation, he asked for our family to pray for him — in fact, he asked for prayer numerous times during our brief conversation. Keith told me that he had some very difficult decisions to make and asked for divine guidance. ... I know Keith was wrestling with the inner spiritual man."
The inner spiritual man apparently lost.
On Friday, Feb. 6, 2004, Moser cleaned out a safe-deposit box in Izard County. The following Monday, Arkansas Business identified Ted Skokos as the unindicted client whose capital gains on the sale of Cellular One were the subject of Moser's tax fraud charge.
On Tuesday — a week before he was scheduled to enter a guilty plea to the Michigan and Arkansas charges in a Detroit courtroom — Moser withdrew $9,500 in client money from the account at Twin City Bank. Federal law requires banks to report transactions of $10,000 or more.
On Wednesday, he put two suitcases in his car, which was registered in Wyoming, one of his favorite venues for incorporating shell companies. He gave his wife $10,000 and told his daughter to use his credit cards until they wouldn't work anymore.
Valerie Moser said Keith told her he was going to Detroit. Whether she asked why he needed six days to drive 900 miles is unknown. She did tell Arkansas Business that she was upset because he would be away from her on Valentine's Day, the first anniversary of their move into their 5,244-SF house.
Moser made a stop at a National Bank of Commerce branch in Memphis, where he withdrew another $9,500 by cashing an Excalibur Investments check. He was carrying at least $80,000 in cash and various checkbooks when he headed north.
Chuck Banks, the former U.S. attorney who was Moser's defense counsel, tried to call Moser the following Monday to discuss the next day's plea date. Moser's office told him that Moser had already left for Detroit.
Before school on Tuesday, hours before her husband was to plead guilty to three criminal charges, Valerie Moser and her 7-year-old son were among the throng that lined up on West Shackelford Road to buy doughnuts on the day Krispy Kreme opened in Little Rock. While they were in the car, Keith called her cell phone.
"He said he was in a public place. I don't know what that meant," she told Arkansas Business a few days later. He also "made the remark that he couldn't see going to prison for 10 years for something he hadn't even done."
That afternoon, Banks appeared alone before U.S. District Judge Nancy Edmonds and told her he didn't know where his client was.
"If I had known he was not going to appear, I would have certainly tried to advise him that this was very, very ill-advised," Banks told Arkansas Business the next day. "I'm still very interested in where he is and hope he hasn't come to any harm."
Following the Trail
Edmonds initially said she would issue a warrant for Moser's arrest if he didn't show up within 48 hours. But the next day, U.S. Attorney Bud Cummins' office in Little Rock persuaded her to go ahead and issue the warrant.
Moser had been expert at making money virtually untraceable, but he left a fairly easy trail for the IRS, the FBI, the U.S. Marshal Service and Immigration & Customs Enforcement to follow. His car with Wyoming plates was found in Toronto. Believing Moser to be cooperating, prosecutors hadn't asked him to surrender his passport, and he used it to fly from Toronto to Paris. According to testimony in his sentencing hearing, he posed for a picture in front of the Eiffel Tower.
From there he made his way to Madagascar, an island nation off the coast of South Africa. He would tell federal authorities that he chose Madagascar as his ultimate destination because it doesn't have an extradition treaty with the United States — and because it does have good scuba diving.
Moser's well-publicized run from the law surprised even sympathizers.
"I was so shocked when he did leave the country. That is not his nature at all," Debbie Carter, a legal secretary in Moser's office at the time of his disappearance, wrote to Judge Wright.
It also seemed to animate clients. Former law partner Scott Fletcher told Arkansas Business that three of Moser's clients came to him with their worries that he might have absconded with their money. Clients were also talking to federal prosecutors.
Kenneth Way returned from a trip to Hawaii to find that the lawyer who persuaded him to sell his farm was missing — and so was his money.
Within three days after Moser failed to appear in Detroit, Valerie Moser's passport had been seized and, she told Arkansas Business, she had been subpoenaed to testify before a federal grand jury in Little Rock.
On Feb. 27, the IRS got a warrant to seize the balance in the Excali-bur account in Memphis: $518,437.18.
A week later, on Friday, March 5, U.S. Attorney Bud Cummins announ-ced that the Little Rock grand jury had indicted the fugitive on four criminal counts related to the theft of at least $500,000 in client trust account funds. IRS Agent Dan Elliott said Moser's client trust account should have contained some $1.7 million; instead, it held barely $15,000.
Chuck Banks, who had been representing Moser in the Michigan kickback case and the Arkansas tax fraud case, told Arkansas Business he knew nothing about allegations of missing client funds.
At the press conference announcing the new charges, Cummins made a cryptic remark: "Based on what we have seen out of Mr. Moser so far, I doubt he will be any better at being a fugitive than he was at being an attorney, so he may turn up." He knew, as his audience didn't, that U.S. authorities already felt certain that Moser was in Madagascar. They asked Malagasy authorities to be on the lookout for him.
On March 11, a grand jury in Michigan replaced the two kickback-related charges that were part of Moser's broken plea deal with a seven-count indictment. He now faced 12 federal charges rather than three.
Keith Moser was apprehended on March 15, 2004, when he tried to renew his visa at a government office in Madagascar's capital, Antananarivo. He was relieved of the $34,500 in cash he was carrying, and another $41,233 was found in his luggage.
Two days after Moser's arrest, the U.S. Tax Court handed down a win for his client in a complicated tax case involving the estate of a DeWitt farmer, Merle Allen Whiting, who died in 1997.
Even if he had known about the win, he couldn't have done much celebrating. In the Malagasy prison system, the families of prisoners are expected to supplement the inadequate rations provided by the government. But Moser had no family to help feed him; his family didn't even know he had been picked up.
The feds seized $223,950 from Moser's account at Twin City Bank on March 19, bringing the total found in cash and bank accounts to about $833,000.
A week later, 11 days after he was picked up in Madagascar, Moser arrived back in Little Rock — by way of Johannes-burg, South Africa — in the custody of agents from the IRS and the U.S. Marshal Service. Moser's faith that he would be untouchable in Madagascar turned out to be ill-placed, but it had not been unreasonable. Cummins said Moser was believed to be the first prisoner Madagascar had ever surrendered to the U.S.
Cummins temporarily dismissed the single tax fraud charge pending against Moser in Arkansas, but the world traveler was promptly taken before a federal magistrate to enter a plea of not guilty to the four new charges related to the theft of client trust funds.
Standing up with him was U.S. Public Defender Kimberly Witherspoon. Chuck Banks, the lawyer Moser had left to face the Michigan judge alone, had asked for permission to withdraw as counsel.
In the audience for the arraignment was Valerie Moser. On April 23, the house she and Keith built was sold for $740,000, of which some $278,000 was left after the existing mortgage and other expenses were paid.
Although Valerie Moser argued that she and Keith's teenaged daughters should split the equity, she ultimately received only $11,300 — 5 percent of the proceeds from the sale less rent paid to the new owners while she vacated the house. The trust benefiting the girls received another 5 percent, $14,000. The rest, $252,650, joined the $833,000 in assets that had already been seized, as did a Harley-Davidson motorcycle Moser bought for $17,000 in 2000.
Valerie Moser moved to Los Angeles to pursue an acting career for her son.
'One Step Above Solitary'
For most of the next 13 months, Bobby Keith Moser was held in the Pulaski County Regional Detention Facility in Little Rock. In a letter to Judge Susan Webber Wright, he would describe the jail as "one step above solitary confinement" and ask her to consider the harshness of the conditions there in deciding how much time he should ultimately spend in federal prison.
Moser's spiritual side re-emerged in jail.
"I understand that he has been reading the Bible to fellow inmates and even teaching a Bible class while he has been in jail these past several months," his first wife, Nina Jackson, wrote in a letter to Judge Wright in October. Brittany Vines, a friend of Moser's older daughter, told Wright about "the many baptisms that have resulted from his witnessing these past few months in prison."
And he began to take responsibility for his crimes.
On May 6, 2004, he said, "Guilty, your honor," seven times as U.S. District Judge George Howard Jr. asked him for his pleas on the charges related to the Michigan kickback scheme. On Aug. 6, he pleaded guilty to the four Arkansas counts related to the theft of almost $1.9 million from at least seven clients. The next week he pleaded guilty to two counts related to helping Ted Skokos avoid paying federal taxes on the proceeds of the sale of Cellular One.
But the other Keith Moser, the master at manipulating money, also showed up.
Even from jail he was able to secretly transfer approximately $60,000 from various life insurance policies into a trust account for his children. On July 28, a check for $16,757 was written on the trust account to pay his younger daughter's tuition at The Juilliard School in New York. In November, a $15,940 check was written to Juilliard — more money that Moser, who was being treated as an indigent by the court, had failed to disclose to federal authorities.
In November, he finally surrendered his license to practice law, which had been suspended in March.
Judge Wright Speaks
While her father sat in jail, 19-year-old Elizabeth Moser began asking his friends, relatives and professional acquaintances to write letters to Judge Wright in an attempt to secure a lenient sentence. Witherspoon, his public defender, submitted 75 letters to Judge Wright and a single six-page letter from Moser himself.
Of those six pages, only two sentences addressed his guilt or his victims: "I take full responsibility for all of my actions. I apologize to anyone who has been hurt by my actions."
The rest discussed various theories on criminal punishment; described his success as a father, husband and friend; and compared his crimes — favorably — with those of Enron executive Andrew Fastow and financier Martin Frankel. He concluded by comparing himself to a woman who was brought to Jesus after being caught in the act of adultery, as recorded in the eighth chapter of the Gospel of John:
"The penalty under the law for her crime was death. In verse 11, Jesus said to her, 'Neither do I condemn thee: go, and sin no more.'
"Where there is no compassion; where there is no mercy: There can be no justice."
In a letter to his mother, which she forwarded to Wright, he seemed to identify with the Apostle Paul, who endured beatings, imprisonment, shipwreck and deprivation during his Christian ministry:
"Always remember that God has been very good to us. Anything that we have had to go through here on earth is insignificant compared to what Paul endured. Read 2 Corinthians 11:24-27."
Near the end of a daylong sentencing hearing on May 5, Judge Susan Webber Wright offered Moser one last chance to reduce his jail time by revealing where he hid other assets. This may have been related to the fact that he had failed his second polygraph test just three days earlier.
"There's no money anywhere that hasn't been accounted for," Moser replied. "The government knows good and well that I'm telling the truth about it."
He said the money was lost in connection with his investments in Bob Bomar's Scanning Technologies Inc. of Little Rock, transfers that began more than a decade before any clients realized their money was missing.
"The government is fully aware of that," Moser said in a raised voice, pointing angrily at the prosecutors in the courtroom.
After calling Moser and his lawyer to the lectern, Wright delivered a stinging explanation of her decision to sentence him to 188 months in prison and to order more than $2.2 million in restitution. She said she had read the stack of letters written on his behalf and had considered the effect of the sentence on the family, but her sympathies clearly lay with the clients who had testified about their losses.
"Mr. Moser blatantly stole money from his clients. He has ruined lives, some of which are in this room. And those people are just as innocent as his daughters and his mother and dad and brother," she said.
She also had little interest in Witherspoon's argument that Moser was a first-time offender.
"I am mindful that Mr. Moser does not have any criminal history," Wright said, "but he certainly has a history of crime. And it is an ongoing pattern of crime. And he seemed unwilling to stop it even when he was caught."
Moser, who will turn 49 in October, will receive credit for the 13 months he was in jail before his sentencing and can earn time off for good behavior. He was taken from the Pulaski County jail on May 10 and is now in a holding facility in Mason, Tenn., awaiting permanent assignment.
He is appealing his sentence.
50 Cents on the Dollar
U.S. District Judge Susan Webber Wright ordered former attorney Keith Moser to pay $2.23 million in restitution, almost $1.87 million of that to seven former clients whose money he stole. Other clients have also applied for compensation from the U.S. Department of Justice's Asset Forfeiture & Money Laundering Section.
The government was able to find assets totaling about $1.07 million, and it is pursuing the sale of two pieces of property in Florida and Moser's share of about $2 million in legal fees owed to the defunct Jewell Moser Fletcher & Holleman law firm.
All together, Moser's assets will likely be adequate to pay his victimized clients between 50 and 60 cents for each dollar he stole. Some victims will also collect $40,000 — the maximum allowable — from the Arkansas Client Security Fund, which is maintained by the state Supreme Court and funded by annual fees paid by licensed attorneys.
If his clients are ever made whole, Wright also ordered Moser to pay $148,335 to Anchor Bay Entertainment of Troy, Mich. That represents a quarter of the kickbacks extorted from a vendor by Dan F. Whitt of Maumelle, the former president of Anchor Bay. Moser was ordered to share in the restitution with Whitt, his son and a Michigan defendant even though there was no evidence that he received any money in the kickback scheme.
Moser also owes more than $212,000 to the federal government for his role in hiding Little Rock businessman Ted Skokos' capital gains.
The client victims named in Wright's order and the amount of restitution ordered were:
• Sharon Dial, $602,550.88. Dial, who now lives in St. Louis, trusted Moser with the settlement she received after the death of her husband, his life insurance and proceeds from the sale of his pharmacies.
• N. Hutson Way, $450,352.50, and Kenneth Way, $406,242.75. Moser persuaded the Lonoke County cousins to sell their farm and to leave the proceeds in his client trust fund for a promised annual interest rate of 5 percent.
• Joyce McAlister, $135,181.12. No additional information was available about McAlister.
• Jim David or Mike Sims, $109,245.15. Micheal Dewayne Sims has also received a $650,000 default judgment against Moser, whom he says sold his farm in Lonoke County without his knowledge. Jim David Sims is Micheal Sims' nephew, who bought the farm.
• Tao Klein of Parthenon (Newton County), $99,431. Klein hired Moser to handle her taxes and to manage her personal affairs, including two family trusts. Klein believes Moser cost her close to $785,000 through mismanagement, according to her husband, Larry Campbell. "We're still working with the IRS. We don't even know how much we owe in federal taxes," he said.
• Bettie Hoyt of Pulaski County, $65,648.82. Hoyt trusted Moser with all the money left after her husband of 51 years died in November 2001.
- Dillard's Investor Advises Company to Pursue REIT Spinoff
- Video: ARK Challenge Concludes Fourth Run in Little Rock
- The Hop Diner is Closing; At the Corner Opening in Its Place
- Wal-Mart Used Technology to Become Supply Chain Leader 2 years ago
- Windstream to Cut 350 Positions, 38 In Arkansas, by December 2 days ago
- Study: CEOs in 10 Big Mergers to Get $430M 23 hours ago
- Dillard's Declares Quarterly Dividend 23 hours ago
- Video: ARK Challenge Concludes Fourth Run in Little Rock 3 days ago