Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

Ian Jay Evans of Mableton, Georgia, a former Home Depot employee, admitted to splittting  $1.4 million in commissions with a product buyer for Home Depot, first to purchase rugs and other products from a vendor, and later to select Evans as a consolidator for rugs when Home Depot reset its rug department. He was charged in the U.S. District Court for the Northern District of Georgia with conspiracy to commit money laundering and 17 counts of money laundering. However, according to the Atlanta Journal-Constitution, after a week long trial, the jury acquitted Evans on all charges yesterday after deliberating for approximately 30 minutes.

Evans and his counsel argued that, even if the payments violated Home Depot policy, they did not constitute a federal offense. Evans attorney argued that, despite any alleged conduct by Evans, Home Depot did not lose any money but, on the contrary, made millions from the transaction.The Home Depot product buyer, Ronald Douglass Matheny, pled guilty to honest services fraud last year.

Evans' case is one of several against Home Depot employees for alleged kickbacks. A Home Depot spokesman stated that the company is considering filing a civil action against Evans.
 

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As reported by Law.com, Bruce Karatz, Chief Executive Officers of KB Home, a home construction corporation based in Los Angeles, California, was indicted in the action of U.S. v. Nicholas, 2:09-cr-00203-ODW (C.D.Ca. 2009), on 20 counts of fraud for defrauding the company and its shareholders of millions of dollars in undisclosed backdated stock option over a period of seven years, and concealing the fraud from KB Home's  directors, compensation committee and shareholders. Karatz's trial in the U.S. District Court for the Central District of California is scheduled to begin on February 23.

Karatz's attorneys have requested a hearing regarding whether prosecutorial misconduct has tainted the government's case against Karatz. Karatz contends that two witnesses for the government--James Johnson, former Chairman of the Board of Directors' Compensation Committee for KB Home, and Gary Ray, former Vice President of Human Resources--initially believed that the stock options grant practice was lawful, but changed their position following contacts with the prosecution. Karatz's lawyers want to examine Johnson regarding why he denied allegedly defending KB Home's option granting process during an internal investigation by the company's outside counsel in his statements to prosecutors. 

The defense also wants to question Ray, who has pled guilty to obstruction of justice and is cooperating with the government, regarding why he had allegedly previously maintained that the process was "lawful and proper." Following is a link to

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Karatz's motion is based on an order in December by U.S. District Judge Cormac Carney in the action of U.S. v. Nicholas, SACR 08-00139 CJC (C.D.Ca. 2008), another backdating case, in which the Court dismissed the government's indictment against co-founder of Broadcom Corp., Henry Nicholas, and former Broadcom Chief Financial Officer William Ruehle, blasting the prosecution for "distorting the truth-finding process" by intimidating and improperly influencing key witnesses. Karatz also relies on the Ninth Circuit Court of Appeals' overturning last August of the conviction of former Chief Executive Officer for Brocade Communication Systems, Inc., Gregory Reyes, for backdating based on false statements by the prosecution in closing arguments that Brocade's finance department didn't know about backdating. A hearing on Karatz's motion has been scheduled for February 8.

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A second Home Depot Manager, James P. Robinson, pleaded guilty in federal court in Atlanta on Friday to three counts of a criminal Information charging him with: 1) one count of conspiracy to commit mail and wire fraud while he was Divisional Merchandising Manager for flooring by taking hundreds of thousands of dollars in secret payoffs from Anthony Tesvich, a former Home Depot employee who has already pled guilty, and 2) two counts of tax evasion for failing to pay taxes on those secret payoffs. Robinson has also agreed to forfeit substantial properties, including real estate in Tennessee, a 2006 Infiniti SUV, a 2004 Cadillac Escalade and $146,000.00 in a bank account.

The charging document refers to another as yet uncharged co-conspirator and refers to other co-conspirators as well, so look for at least one more guilty plea to arise out of this investigation.

Robinson is scheduled to be sentenced on October 14, 2008, as is his co-defendant Tesvich.

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Anthony Tesvich, a former Home Depot employee, plead guilty in front of Judge Story in Atlanta on Monday to one count of conspiring to defraud Home Depot, and three counts of tax evasion. As part of his plea, Tesvich admitted to taking millions of dollars in secret payoffs from Home Depot vendors and failing to pay taxes on those kickbacks.

The lengthy Criminal Information, available here, alleges that Tesvich conspired with two other Home Depot employees, identified only as co-conspirators A and B, to obtain kickbacks from Home Depot suppliers through various front companies and then paid monies to his Home Depot co-conspirators for the purpose of concealing the receipt of those kickbacks.

Yesterday, July 2, Tesvich forfeited his interest in the following properties.

• $465,999 .69 in proceeds from the consent sale of 90C Carriage Path, S .E ., Smyrna, Cobb County, Georgia;
• 1E255 Mountain View Road, Desert Hot Springs, Riverside County, California, and all buildings and appurtenances thereon;
• Twenty (20) Acres of Vacant Land, Parcel Number 657-270-023-6, Riverside County, California, and all buildings and appurtenances thereon;
• 600 Schillinger Road N., Serrsnes, Mobile County, Alabama, and all buildings and appurtenances thereon;
• 1916 Wildwood Place, Mobile, Mobile County, Alabama, and all buildings and appurtenances thereon; and
• $122,971 .75 in proceeds from the consent sale of Lot 43, Heron Lakes, Phase T, Mobile, Mobile County, Alabama.

Tesvich, who is cooperating with the government will be sentenced on September 2, 2008. Based on the government filings to date, other cases will arise out of Tesvich’s cooperation.

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