by Gwen Moritz on Monday, Jun. 30, 2014 12:00 am
(Editor’s Note: This is the latest in a series of business history feature stories. Suggestions for future Fifth Monday articles are welcome. Please contact Gwen Moritz at (501) 372-1443 or GMoritz@ABPG.com.)
James W. Bolt shuffled to the lectern in federal court in Fayetteville last Monday, and it was hard to tell if his gait was the result of the cardiopulmonary diseases that he references constantly in legal pleadings or of the oversized plastic jail slippers that were inches longer than his feet.
Bolt — known as Jim or Jimm — professed himself “nonplussed” to learn that convictions decades ago would send him to prison for years longer than federal sentencing guidelines suggested.
“I’m 61 years old,” Bolt told U.S. District Judge Timothy Brooks. “The range you’re talking about is essentially a life sentence.”
Before the end of the sentencing hearing, which lasted more than four hours, Brooks would sentence Bolt to 100 months in federal prison, 29 months longer than the standard sentencing guideline range — and fine him $50,000. On top of all that, Bolt agreed to pay $2.5 million in restitution when he pleaded guilty in January to wire fraud, mail fraud and money laundering.
Bolt’s sentence could be reduced only slightly for good behavior. He isn’t even likely to get credit for cooperating with a murder investigation in Missouri. And he may well appeal the sentence — “I wouldn’t be surprised,” his defense attorney, Andrew W. “Drew” Miller, said. But whenever he gets out, unless he’s right about dying in prison, Bolt will then have three years of supervised release.
The Bolt who appeared before Brooks has been held in county jails, first in Benton County and then in Washington County, since his arrest last August.
He recited a list of medications he has been taking to control his heart rhythm, high blood pressure and the newly diagnosed COPD that he had vainly hoped would win him a delay of sentencing. But age and infirmity and even the prospect of returning to prison after 18 years of freedom did not appear to prompt any remorse or soul-searching.
“In the interim, I’ve had a good life. I haven’t broken any laws. I haven’t even had a traffic ticket,” Bolt told the judge. “The mistakes I made were paid for.”
Three previous convictions and a total of 10 years spent in prison didn’t deter Bolt from using phony documents, forged signatures, fake notary seals and fictitious people to steal unclaimed assets being held by the states of California and Nevada.
“My biggest concern, Mr. Bolt, [is] if you were to get out in 57 to 71 months, you’re going to be right back out there committing another scheme,” Brooks said.
“You have simply learned from what you participated in years ago and come back with bigger and better,” the judge added.
Brooks, who inherited Bolt’s case from retiring U.S. District Judge Robert Dawson in April, acknowledged “a certain amount of genius” in the frauds that Bolt laundered through a supposed nonprofit that he operated in Rogers called Situs Cancer Research Center.
Unlike at least one of its officers, Situs actually existed. It had a facility on 1222 W. Poplar in Rogers, for which Bolt paid $660,626 in January 2013. It was among assets seized by the government and which Bolt forfeited to help pay his restitution.
He also forfeited two other pieces of real estate in Rogers, three cars, five aircrafts and three vehicles used by Situs. The vehicles and some personal property have already been sold. When the airplanes and real estate are sold, the government expects to clear about $400,000 for the victims, according to U.S. Attorney Conner Eldridge.
What went on at the Situs building was not addressed in the charges against Bolt or in his sentencing hearing. But multiple sources familiar with Situs and the investigation said cancer patients were in fact treated there by the man who answered to “Dr. Bolt” — and so were some pets.
When Arkansas Business reported in June 2013 that the FBI had raided the Situs clinic, an online comment, lacking proper punctuation, appeared under the name of a Rogers real estate agent: “I love this man and his work he has helped me beyond measure and kept me off the surgeon’s table.”
Bolt’s business card identified him as “J.W. Bolt, PhD” and “Clinical Research Director” for Situs Oncology, “a non-profit cancer research organization.” But in court last week, FBI Special Agent Robert Cessario testified that he had not been able to confirm any educational achievement by Bolt beyond a G.E.D.
Situs had been incorporated on the last day of August 2010, about six weeks before Bolt launched the first of the five schemes for which he was sentenced last week. But Situs wasn’t Bolt’s first attempt to treat cancer.
In 2006, Bolt and three of his running buddies were indicted by a federal grand jury in Fayetteville on nine counts of conspiracy and wire and mail fraud for offering to pay a hidden kickback to a stockbroker who said he could deliver a $3 million investment in their company, Shimoda-Atlantic, which supposedly was developing an oleander-based drug for the treatment of lung cancer.
The FBI sting that snared Bolt and his co-defendants — lawyer John Dodge (now deceased), Melvin Robinson and Leroy Hoback — had been run out of the Dallas metro area, and the men were prosecuted in Fayetteville by Department of Justice attorneys from Washington, D.C. Four of the counts were dropped before the trial began on Monday, March 12, 2007, and on Thursday of that week, all four defendants were acquitted of all five remaining charges.
The jury, which apparently believed the defense’s argument that the men were simply ignorant of securities regulations, never heard their claims about cancer research. Bolt’s wife, Yvonne, had died the previous month, reportedly of cancer.
Curing cancer was not the only recurring theme in Bolt’s astonishing career. In 1976, he was convicted of impersonating an officer in Oklahoma. In 1983, he was convicted, again in Oklahoma, of mail fraud and making false statements to a federally insured bank. In 1992, he was convicted in Washington County of theft by deception.
At last week’s hearing, Judge Brooks read aloud from the 10th U.S. Circuit Court of Appeals’ rejection of Bolt’s appeal of his 1983 conviction:
“Our review of the evidence establishes that Bolt was involved in elaborate schemes to defraud various companies and individuals. These schemes were built upon a fictitious business enterprise, known as Saturation Systems, which he ran from a small Tulsa office. The Government has aptly described this business as being an enterprise which included a group of imaginary employees, engaged in developing imaginary products and services, located in various imaginary locations in the United States, Scotland, Norway and other overseas locations. The schemes involved the sophisticated use of computers and telex machines and the preparation of various false documents created by Bolt, who appeared to be a skilled draftsman and printer.”
With only a few changes in the wording, Brooks said, he could use the same language to describe the scam for which Bolt was again in federal court.
“You could, your honor,” Bolt agreed matter-of-factly.
In the latest case, Bolt, in search of assets to steal, trolled the unclaimed property websites maintained by state treasurers. At least five times he created phony documents indicating that the last known owner had donated the assets to Situs. He also created a corporate history linking Situs to a legitimate but short-lived Little Rock nonprofit called Life Preservers Inc. to make it appear that the nonprofit he incorporated in August 2010 had a history of good deeds dating to the early 1990s.
The documents were littered with a mix of fact and fiction. Bolt usually signed his own name (albeit with “Ph.D.” attached) and used Situs’ Rogers address. He sometimes managed to find the names of real people associated with the unclaimed assets and use their names. He used fake notary stamps, but in one case he forged the signature of a real notary public.
One constant was Leah Cleveland, the comptroller-treasurer of Situs. Her ever-changing signature appeared on numerous documents, and Bolt blamed her when an auditor from Nevada investigated Situs’ claim to $108,000 from the estate of a Nevada woman with the improbable name of Halloween Barigar, who died in 2002 at age 96.
In February 2011, he received $153,000 from California that way; three months later, he got another $317,000. In 2012, he received $43,000 in June and the Halloween Barigar money in November. In December 2012, he hit the jackpot: $1.9 million that belonged to 401(k) accounts for former employees of a defunct California company called Pacific Financial Research Inc.
Going for the big payoff may have been Bolt’s downfall. A company that specializes in matching up unclaimed assets with the rightful owners in exchange for a commission was also working on the PFR account. When the investments held for PFR were turned over to Situs instead, the company alerted the Arkansas Securities Department, which called in the FBI.
Cessario, the special agent assigned to the case, testified last week that he looked all over for Leah Cleveland. He ultimately concluded that she didn’t exist, as did the judge. Brooks, issuing findings of fact from the bench, specifically concluded the Leah Cleveland was “a figment of Mr. Bolt’s imagination.”
Bolt has yet to admit as much. In fact, in his attempt to delay sentencing, Bolt said he was still waiting for a response to his Freedom of Information Act request for all information the FBI had collected on Leah Cleveland.
Bolt’s clinging to the fiction of Leah Cleveland is reminiscent of his insistence that Juan Gomez was also real.
In 2002, four years before the Atlantic Shimoda cancer drug adventure, Bolt, Dodge and Robinson were operating a low-power Spanish-language television station in northwest Arkansas through a company called Golf Entertainment Inc. Golf Entertainment, later renamed Sienna Broadcasting Corp., bore all the earmarks of a penny-stock pump-and-dump scheme.
When the Northwest Arkansas Business Journal and Arkansas Business, then owned by the same company, put the operation under a microscope, the men retaliated by filing unsuccessful libel suits and by infringing on the publications’ trademarks.
Bolt and Dodge and someone called Juan Gomez filed papers of incorporation with the Arkansas Secretary of State’s Office for companies they called Arkansas Business Publishing Group Inc., Arkansas Business Journal Inc. and Northwest Arkansas Business Journal Inc. The real Arkansas Business Publishing Group eventually prevailed in a federal civil suit, and Bolt and Dodge were ordered in 2005 to pay more than $92,000 in attorneys’ fees, but they never did.
Dodge died in December 2012, and no trace of Juan Gomez was ever found.
Last July, when Arkansas Business reported on the FBI’s latest investigation of Bolt, Bolt sent emails objecting to this reporter’s “overwhelming bias,” calling the trademark infringement “a prank” and insisting that Gomez was real.
“Why do you guys keep picking on Juan?” Bolt wrote. “He was a very nice guy — a huge part of the TV station startup. Had you people been watching the station, you would have seen him every Saturday night on the Elsa Hernandez show.”
Between his release from prison in 1995 and his efforts to make a fortune on Spanish-language TV stock, Bolt launched a publication called the Arkansas Chronicle that specialized in conspiracy theories and attacks on local law enforcement and elected officials.
And Bolt and Dodge also specialized in suing anyone who got in their way — the FBI, the Arkansas Securities Department, the National Association of Securities Dealers and a long list of others. Their lawsuits rarely succeeded in anything but delay. In 2004, Benton County Sheriff Andy Lee settled a four-year running dispute by paying Bolt and Dodge to go away.
That was the year that Bolt, incredibly enough, managed to find his way into a case connected with the Oklahoma City bombing nine years earlier.
Bolt was called as a witness in a preliminary hearing in the state murder trial of Terry Nichols, who was already serving a life sentence in federal prison for his role in helping Timothy McVeigh plan the bombing of the Alfred P. Murrah Federal Building.
Bolt was called to testify about one or more photographs that supposedly showed the Murrah Building at the moment of explosion, evidence said to be in the possession of the Arkansas Chronicle’s “Washington bureau chief,” John Culbertson.
According to the Tulsa World, Bolt testified that Culbertson told him that no such photographic evidence existed. Then Bolt testified that he believed there was a photo of the blast but that he had never seen it.
Bolt’s testimony was cut short, however, when he began to complain of chest pain. He never returned to finish.
Considering Bolt’s long and public history of crime and mischief, the most surprising thing to come from last week’s sentencing hearing was the revelation that Arvest Bank was the biggest victim of his latest scheme.
Cessario, the FBI agent, testified that the Fayetteville-chartered bank had to make good on a guarantee it issued when Bolt fraudulently claimed the $1.9 million that belonged to 401(k) accounts for former employees of Pacific Financial Research.
Arvest spokesman Jason Kincy said he could not comment “on any specific transaction or legal proceeding.” And he added, “Banks do have insurance that cover these types of transactions and potential losses, including Arvest Bank.”
In order to claim the PFR assets, Bolt was required to submit what Cessario called a “medallion stamp” from a bank, and he was somehow able to persuade an Arvest officer to issue one. (Whether Bolt was a regular Arvest customer is not known; the Situs account that he used for his unclaimed property scam was at Liberty Bank of Arkansas, which was subsequently acquired by Centennial Bank of Conway.)
When Bolt’s fraud was uncovered, Arvest was required to honor its guarantee, Cessario testified.
A medallion signature guarantee indicates that a financial institution is a member of a guarantee program, Kincy said, and medallions are commonly used to guarantee customer signatures when securities are transferred between parties.
Most of last week’s hearing was spent debating whether Bolt had stolen $2.4 million or $2.5 million with his latest scheme and whether it could properly be considered “sophisticated.”
The questions were not mere quibbles: Crimes valued at $2.5 million or more and frauds committed by use of “sophisticated means” get more points on the sentencing guideline matrix, points that can mean additional months or years in federal prison.
Bolt’s name wasn’t on the fraudulent documents used to claim $108,000 from the Nevada estate of Halloween Barigar, and backing that amount out of the fraud total attributed to Bolt would mean two fewer points on the sentencing matrix.
Cessario testified that the claim was signed by Bolt’s girlfriend, Nikki Sailer, and by the elusive Leah Cleveland and that the money flowed to the same Liberty Bank account that Bolt used for the four fraudulent claims that did bear his name.
Even Drew Miller, Bolt’s defense attorney, was persuaded.
“I do concede now that we know who got the money and who spent the money,” Miller said.
Judge Brooks agreed. He also rejected Miller’s attempt to minimize the sophistication of Bolt’s fraud. It “wasn’t a simple scheme at all. It was a very complex, well-thought-out scheme,” the judge said, and he applied the additional points when calculating the sentence.
Because Bolt’s previous convictions were more than 15 years ago, they were not considered in arriving at the guideline sentencing range of 57 to 71 months. Under the terms of his plea deal, Assistant U.S. Attorney Glen Hines could ask the judge for no more than the high end of the guideline range.
Miller argued for the low end because the value of Bolt’s fraud barely reached the $2.5 million threshold used to calculate the guideline range.
But federal judges have the authority to “depart” from the guidelines under certain circumstances, including when the guidelines don’t adequately reflect the defendant’s criminal history and when necessary to protect the public from future crimes. And that’s what Brooks did: He recalculated the sentencing range as 100 to 125 months and then sentenced Bolt to the low end of the new range.
“The court is very well persuaded that there’s a high likelihood that Mr. Bolt will recidivate,” he said.
The last time Bolt was convicted, in 1992, he appealed on the grounds that he hadn’t personally waived his right to a jury trial, even though he was there when his lawyer did it for him. The Arkansas Supreme Court rejected his appeal, but used the case to clarify the rules on waiting jury trials. As his attorney said, he may well appeal again.
Meanwhile, he’s neck-deep in the case of Fred Bremer of Rogers, who was charged last August with first-degree murder in the death of Jack McCain, also of Rogers, in February 2011.
McCain, 67, was a business associate of both Bremer and Bolt. He was shot repeatedly and left dead on a roadside near Powell, Missouri.
But that’s another story.
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