Did Edward Okun commit fraud, or was it the U.S. government? Edward Okun, a 61 year old Miami businessman and real estate investor, was accused of defrauding millions from customers of his 1031 tax deferral company, 1031 Tax group LLC. On March 19 2009, he was found guilty of conspiracy, wire fraud, smuggling, money laundering, and perjury. Prosecutor Michael Dry sought a 400 year sentence for what he called a Ponzi scheme. On August 4, 2009, U.S. District Judge Robert Payne sentenced Okun to 100 years in federal prison and issued this statement, “The sentence must deter those who have access to funds of others. If you ruin lives of others, your life stands to be ruined.” Okun’s sentence is what amounts to a death sentence.

Edward Okun lived a life of luxury. Although prosecutors convinced jurors that he lived this life using money belonging to clients of his tax deferral company, Okun was wealthy and successful in real estate for over 35 years before he purchased his tax deferral companies. Okun owned shopping malls, industrial buildings, 2 jets, multi-million dollar homes in New Hampshire, Minnesota, and Florida, including a waterfront home on prestigious Hibiscus Island in Miami, a 106-foot yacht, and over 400 companies. He lived lavishly most of his life. Why would he suddenly in 2005, need to steal in order to maintain that lifestyle? His businesses were flourishing. He made 50 million in 2005 alone.

Okun’s 1031 tax group consisted of six qualified intermediary companies he purchased in New York, Boston, Tampa, San Antonio, Denver, and San Jose’. QI companies assist property sellers in deferring capitol gain profits by complying with the like kind 1031 IRS rules. The property owner transfers his/her property to the QI company. The QI sells the property and receives the money. The client then designates within 45 days the new property he/she wants to buy with the money. The QI must buy the new property within 180 days of the original sale. The QI then transfers the property to the client and the exchange is complete. If the purchase is not completed, the QI refunds the money to the client and the client must pay the tax on the profits of the original sale. A property owner is required by law to hire a QI in order to facilitate an exchange. A QI client signs a contract called an Exchange Agreement. There are no restrictions in the 1031 IRS tax code of regulations on where the money is to be held or used during the exchange waiting period.

Okun purchased his first 1031 companies in August 2005. He bought one of the companies from attorney Todd Pajonas and hired him as president to manage the companies. According to Okun, he fired Pajonas in November 2006 because of irregularities and because two million dollars came up missing. In December of 2006, he purchased 1031 Advance Inc. from Janet Dashiell and hired her as the new president to manage the companies. Okun says he never had any major problems or customer complaints until 2007 when he hired the Penta Accounting Group to audit his 1031 tax companies and straighten out any problems. According to Okun, the auditors informed him that they found irregularities and thefts including secret accounts opened by the president of his Denver QI, Daniel McCabe and unauthorized accounts opened by Pajones. In March of 2007, the Penta Group informed Okun that the audit might reveal further thefts. Okun began the process of refinancing his real estate to replace the money from the thefts found during the audit.

On the advice of his attorney, Okun decided to close his 1031 companies because they were more trouble than they were worth. He informed Dashiell of his plans. Shortly after that, Dashiell and McCabe contacted the U.S. government claiming that Okun was stealing customer funds. They were both given immunity from prosecution. What is disturbing is that around the same time an un-named source went to the media and blogs including Dean Guadagni’s blog, ‘Deansguide’ to leak information. Guadagni, stated on his blog, “My mystery caller from Miami claimed to have inside Okun information.” The mystery informant said it was going to be major news. He went on to say that the caller, in fact, did have inside information and kept in contact with him throughout the entire proceedings.

According to Okun, once Dashiell and McCabe were given immunity, they fired all the employees of the companies they ran without informing him and stole computers and files and erased servers. Millions of funds had been diverted. On April 26, 2007, Dashiell and McCabe sent out a national press release claiming the QI’s closed down for lack of funds and Okun had stolen 125 million dollars. The next day, the government executed a search warrant on Okun’s administrative offices, seized remaining records and announced on national news that Okun was under criminal investigation. What this did, perhaps purposely, was send Okuns clients into a panic and cripple Okuns ability to receive the loan he had been approved for. As evidenced by a government wiretap, the loan was to be completed within 10 days before the government stopped it. Okun was approved for a 300 million loan from JPS Capital in New York and secured by his assets. The loan would have covered all the missing funds and all clients would have been paid. However, JPS Capital needed the government to waive forfeiture rights so that clean title insurance could be obtained. JPS representatives met with prosecutor Michael S. Dry. Dry refused to waive forfeiture rights. When asked by the JPS representative, “Don’t you care about the customers being paid”, Dry replied, “I don’t care.” The government forced Okun into bankruptcy. This is a common tactic used to get a conviction. By doing this, the accused won’t be able to afford an attorney to defend themselves.

Okun voluntarily signed over all his assets to the bankruptcy court with an agreement that the bankruptcy trustee would co-manage the assets. Instead the trustee took all the assets and sold them for pennies on the dollar. This left Okun and his wife and son destitute. This isn’t a case about defrauding clients. This is a case about politics and the government wanting a conviction at any cost. This is a case about government corruption. The government convinced people that this was a ponzi scheme. This isn’t a ponzi scheme. A ponzi scheme is where large investment profits are promised to individuals with fake sources and ultimately have no way to make good on those promises. Until the government stepped in, there wasn’t a single exchange with Okun’s company that wasn’t paid.

The accounting by Penta was never completed. The bankruptcy court spent 7 million dollars trying to do an accounting, however since the records were in such a mess and many were missing, the court gave up.
Okun was arrested on March 18, 2008. Since he was destitute, he couldn’t afford an attorney. His case was given to Barry Pollack by the Virginia Public Defenders Office. As most men and women in prison find out in court, a court appointed attorney works for who he/she is paid by, the state or the government.

At trial, the government put on their case. They didn’t provide any evidence that showed Okun had stolen anything. There was no evidence of a Ponzi scheme presented. There was no evidence that Okun violated the 1031 IRS Code of Regulations. After the prosecution rested, Okuns defense attorney…or should I say the governments second attorney, decided to put on absolutely no defense for Edward Okun. The defense rested.
In an interview from prison, Okun stated he was shocked. He said that Barry Pollack had assured him that he had put together a viable defense and that Okun could testify on his own behalf. Okun stated Pollack refused to allow him to testify.

What is also baffling is the fact that Janet Dashiell admitted under oath that she took millions from the company and placed it in her own bank account. Since she had immunity, she could say whatever she wanted. She admitted to lying to Okun and the bank about the account. McCabe was never required to testify. None of the immunized informants were required to account for the missing millions. The U.S. government didn’t attempt to provide the informants bank statements to the jury and neither did Pollack. The government never introduced Okuns contracts even though the contracts were supposedly how Okun committed wire fraud. After only a 14 day investigation, the U.S. government destroyed Okuns billion dollar business empire and lost jobs for 3200 employees.

Why would Michael Day and Barry Pollack go to such extremes to take down Edward Okun? Politics. This came on the heels of the Benard Madoff case. It was big news. High profile cases are lucrative for attorneys. Day got his name in the news repeatedly. He got a promotion. He got increased income. He got national exposure. What Barry Pollack got was a referral by Day which landed him the Land America case for which, according to sources, he was paid 2.25 million dollars. Politics. Pajonas, Dashiell, and McCabe all bought their own QI companies and are enjoying the fruits of their…labor.

Interestingly, the Land America case, which dealt with the same kind of contracts as Okuns 1031 contacts proved that the contacts were in fact lawful. It set a precedent. Unfortunately for Okun, this opinion from the bankruptcy court came two months too late. He had already been convicted. In the Land America case, the company went bankrupt and customers lost their funds. In Okuns case, customers wouldn’t have lost any funds if prosecutor Drys actions hadn’t made them lose them.

According to Okun, his records were withheld from him until recently. He now has in his possession bank statements that confirm that millions of dollars were taken from his company by Pajonas, McCabe, and Dashiell. He has the Land America ruling which verifies his innocence. What he doesn’t have is an attorney or money to hire one to right this injustice. He sits in a federal prison in Beaumont Texas. If you’re an attorney and want to help Edward Okun by representing him in court or if anyone wishes to donate to his cause, contact Concerned Citizens for Racial Equality at cc_fre@yahoo.com or The Find a Way foundation at findaway_texas@yahoo.com