River Birch landfill executive Dominick Fazzio, center, leaves federal court in New Orleans on Oct. 10 with his wife, Rebecca, by his side. Fazzio faces new charges, as a Belle Chasse businessman is negotiating a plea deal to testify against him, sources said. (Photo by Matthew Hinton, NOLA.com / The Times-Picayune)
"The government is trying to regroup as a result of one of its alleged witnesses changing his testimony." -- Attorney Vinny Mosca
Landing the first defendant in prison is usually a significant milestone in a criminal investigation. But prosecutors in the River Birch landfill probe likely weren't smoking cigars after Mark Titus got a five-year sentence Wednesday. Titus' hostility to the government, and his newfound insistence that he is innocent, turned him into a lousy would-be witness against his alleged co-conspirator, River Birch executive Dominick Fazzio.
So the government is going back to the drawing board, shifting its legal strategy to try to squeeze Fazzio -- a key official in the River Birch empire -- into cooperating against landfill owners Fred Heebe and Jim Ward, the probe's main targets. A new 27-page indictment handed up Thursday accuses Fazzio of tax evasion, conspiracy, wire fraud and money laundering, among other charges. The document also levels new accusations against Titus. But the focus is on Fazzio, and makes clear prosecutors plan to build a case against him without help from Titus, his brother-in-law -- or better yet, put so much pressure on Fazzio that he decides to turn state's evidence.
The government's new best friend in that effort is Hendrikus "Hank" Ton, a Belle Chasse businessman who owns or co-owns several companies that service oil fields. The new indictment accuses Fazzio of conspiring with Ton to help Ton's companies evade almost $3.6 million in payroll taxes between 2006 and 2010.
Ton was not charged. But several sources close to the federal investigation confirmed Friday that Ton is negotiating a plea deal and is expected to face relatively minor charges in a bill of information to be filed as soon as next week. The plea agreement would require Ton to pay the taxes his firms allegedly evaded, sources said. To be charged in a bill of information, a defendant must waive his right to a grand jury indictment, almost always a sign the person has worked out a deal.
"The government is trying to regroup as a result of one of its alleged witnesses changing his testimony," attorney Vinny Mosca said, referring to Titus. "So they have decided to go after Fazzio without Titus."
Attorneys for Fazzio and Titus, Arthur "Buddy" Lemann and Jimmy Ardoin, respectively, said their clients will each plead not guilty to the new charges at a court appearance set for Tuesday. Ton's attorney, Kenneth Polite, declined to comment. Prosecutors have also refused to comment on the investigation.
Fazzio's significance
The significance of Fazzio to the River Birch probe can hardly be overstated. As the landfill's chief financial officer, Fazzio is likely to have intimate knowledge of the company's operations and transactions, including those involving co-owners Heebe and Ward. The two men, who have not been charged and have denied wrongdoing, have waged an aggressive campaign to manipulate regulators and politicians to stave off competitors in the landfill industry.
In the process, River Birch and companies linked to its officers have showered elected officials with generous campaign donations. A lawsuit by the State Board of Ethics has accused Fazzio in particular of using various companies under his control as "straw man" firms to illegally deliver tens of thousands of dollars in contributions to state officials. The firms were used to get around state laws that say a specific person or company may donate no more than $5,000 to a specific campaign in each election cycle.
Separately, former state official Henry Mouton has admitted to taking more than $460,000 in bribes from a landfill owner who has not been named in court records. Other public documents, however, make clear prosecutors are alluding to Heebe or Ward. Prosecutors likely hope Fazzio could shed light on those alleged payments.
Shortly after the government charged Titus and Fazzio in a fraud scheme last year, it became clear prosecutors saw Titus as a conduit to nab Fazzio. Titus even wore a wire to help ensnare his brother-in-law. But Titus' relationship with the government turned sour when the Justice Department sought to seize his property. On Friday, Ardoin said he could not imagine any way his client would cooperate now, especially as the government "piles on" new charges.
"I can't imagine why in the world he would want to help them or that they would want him to," Ardoin said.
Government's Plan B
Prosecutors have clearly been working on an alternate plan to get Fazzio; one that sources said will rely on testimony and records provided by Ton.
According to the new indictment, Fazzio prepared tax filings for Abe's Boat Rentals, Gulf Wells Inc., Heather Marine and B&H Marine Transportation Services. Ton owns or co-owns all four firms, employing about 100 people as recently as 2009, according to the indictment. Fazzio is accused of conspiring with Ton to pay some employees under the table to hide their true income and reduce the company's payroll-tax obligation. The document said Ton paid the workers from a bank account under Heather Marine, a firm that had remained dormant since 1998. In turn, Fazzio "knowingly and willfully" omitted those wages in tax filings for the other Ton firms.
Lemann, Fazzio's attorney, said his client prepared the taxes based on records Ton provided. If any wages were omitted, Lemann said, that was Ton's doing. Fazzio, he said, "is a tax preparer. Ton gave him the records, and he simply prepared the returns."
Mosca, who is not representing anyone in the River Birch probe, said it's "highly unusual" for the government to file criminal charges when a business underpays payroll taxes. Mosca said those cases are normally civil matters, resolved with the payment of the taxes and fines for the delay.
That's not all that's unusual. The new charges against Titus are almost all related to the alleged embezzlement of money from Garner Services, a firm Titus co-owns. The charge Titus has already admitted to was also related to that scheme, and his attorney said the plea agreement the government enforced this week precluded additional charges on that matter.
"The government agreed not to go after him for anything related to Garner," Ardoin said, adding that he will likely challenge the new charges on those grounds.
Mosca said it's also unusual for the government to pile new charges on a defendant with whom they had a previous plea deal, but it's not unprecedented. Usually, he said, new charges are filed when a defendant changes his position or violates the terms of his plea deal. He said Titus' refusal to accept responsibility for his actions at his sentencing Wednesday could be seen as a violation of the plea deal.
Prosecutors are also likely irked that Titus is no longer playing on their team.
"Certainly, the government is angry at him," Mosca said.
How this will all play out may become more apparent next week, when Ton's expected plea deal is revealed. Fazzio's trial for his previous charges remains scheduled for Oct. 22, and the new indictment has now added Titus to that proceeding.
But almost everyone involved in the case agrees in two things: The trial date is likely to change, and the government's emphasis on Fazzio will likely not.
Source: http://www.nola.com/crime/index.ssf/2012/10/charges_in_river_birch_probe_h.html
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