Ed Okun acquired a number of 1031 exchange companies and the proceeded to use the 1031 exchange Qualified Intermediary operations as his personal piggy bank to fund his expensive lifestyle, acquire toys, travel and purchase commercial real estate investments.
Cheapest Money He Ever Bought
You may not remember this, but Ed was quoted as saying that the 1031 exchange companies that he purchased was the 'cheapest money that he had ever bought.' I wonder if he still feels the same way about his actions today?
Jury Convicts Okun
The Jury convicted Ed Okun on March 19, 2009 in the $126 million fraud. Ed Okun was convicted on all 23 counts and faces up to 400 years in prison when sentenced in August of this year. Ed Okun's sentencing hearing begins on August 4th.
Ed Okun, 58 years old, of Miami, Florida was indicted last summer on 27 counts of conspiracy, wire and mail fraud, money laundering, currency smuggling and making false statements. Four of the charges were either withdrawn or dismissed before being considered by the jury.
Robert Wagner, one of Ed Okun's attorneys, said they intended to appeal the verdicts.
Six 1031 Exchange Companies
Testimony in the trial showed that Ed Okun acquired six (6) 1031 tax deferred exchange companies that held clients' 1031 exchange funds from the sale of real and personal property in order to defer their capital gain and depreciation recapture taxes.
He started buying the exchange companies in August 2005, and then began raiding the client accounts, in part, to buy more 1031 tax deferred exchange companies to keep the ponzi scheme running as well as personal reasons.
An IRS agent testified that from August 2005 to March 2007 Okun spent $35 million on a divorce settlement, jewelry and boats -- including a 131-foot yacht named Simone after his current wife, whom he married in a $171,000 ceremony in December 2005.
Ed Okun did not testify during the trial and his defense team offered no evidence at trial. His lawyers argued that Ed Okun viewed taking the client money as loans to him and/or his companies that he always intended to repay. They said Okun believed he could use the 1031 tax deferred exchange funds for any purpose as long as the clients' 1031 tax deferred exchange funds were available to them when needed to acquire replacement property for their 1031 exchange transactions.
The evidence indicated that Ed Okun and others had misappropriated about $126 million in client 1031 tax deferred exchange funds. The figure had earlier been listed as $132 million. Three of Ed Okun's co-defendants plead guilty earlier last year and were sentenced last May. The Department of Justice said the continuing investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service and the FBI.