By: J.J. O’Hara
[This is Part 12 of a series of articles that I am writing about the pending prosecution of Frank Parlato (Frank’s trial is scheduled to start on May 19th). As usual, readers are encouraged to ask questions – which I will endeavor to answer on a timely basis.
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On March 17, 2015, Frank Parlato’s attorneys submitted a 21-page refutation of the various allegations that had been made against him by Clare and Sara Bronfman – and by Anthony M. Bruce, the then-Assistant U.S. Attorney for the Western District of New York (WDNY) who had already made it clear that he intended to indict Frank on something.
If nothing else, Bruce was a man of his word.
When he promised to indict someone, Bruce followed through on his promise – regardless of whether that someone had committed any crimes.
But let’s take a look at some of the information that Frank’s attorneys turned over to Bruce and his colleagues almost five years ago – and see if we can determine what the hell was going on.
The scene is March 2015 – almost 4 years after the FBI and the IRS began investigating Frank (Note: It has now been almost 9 years since this investigation was launched at the request of Bruce).
By that point in time, Frank had already turned over numerous documents and records to the federal investigators on a voluntary basis – i.e., without any subpoenas having been issued – because he knew he hadn’t committed any crimes and he believed that the truth would bring an end to the investigation.
Bruce had outlined what sort of criminal charges he was considering bringing against Frank – and Frank and his attorneys decided to basically show Bruce what their defense would look like if he moved forward with any of those charges.
It’s an unusual scenario – but it’s what actually happened.
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What Charges Were the Feds Considering?
At this stage, Bruce had not identified exactly what crimes he believed Frank committed.
But he asserted, in general terms, that Frank defrauded the Bronfman sisters and one of his business partners, Larry Reger – and that Frank also tried to avoid paying taxes that he owed to the federal government.
And so Frank’s attorneys put together a document “…with the intent of proving that Mr. Parlato did not commit any fraud or attempt to evade any taxes”.
Frank Report readers need to keep several important facts in mind regarding the circumstances that existed in March 2015.
These include the following:
– The Bronfman sisters had already initiated a civil lawsuit against Frank in an effort to get back the $1 million they wired to him in conjunction with the work he undertook to salvage their $26 million investment in a real estate development project in Los Angeles, CA (That lawsuit is still pending). They are represented in that lawsuit by William F. Savino, a local attorney who is a long-time friend of Anthony M. Bruce.
A giant hole was excavated by the previous owner of the property for a failed underground aquarium project. It left an unsightly, large and dangerous hole just 900 feet from the entrance to Niagara Falls. The hole had remained for six years before Frank Parlato stepped in to develop the property. He filled the hole, developed a parking lot and, inside the building [left], which he renamed One Niagara, Parlato built a successful retail tourist center.
Frank Parlato filled the hole, thus removing one of Niagara Falls’ signature eyesores. While most cases of fraud involve a failed business where the victim lost money, the case against Frank centers around a success story and where the alleged victim [Larry Reger] made millions. Frank took an abandoned building, filled in the hole – and made it into a successful paid parking lot – and inside, he created a successful food court and retail center.
Frank scored a major business success in Niagara Falls – without a dime of taxpayer money being used on the One Niagara project.
– Frank and the alleged victim, Larry Reger formed a company named Tourist Services in conjunction with their plan to renovate the abandoned Occidental Chemical building in Niagara Falls, NY – which Frank renamed One Niagara. (They each owned 50% of the company). And they had negotiated – and executed – an “Operating Agreement” that detailed their respective roles and responsibilities as regards the renovation project. Per the terms of that “Operating Agreement”, Frank was to be in charge of the day-to-day operations of the company.
The late Larry Reger had an estimated net worth of $500 million. He owned or controlled some 4 million square feet of real estate in the USA. He was not, as Anthony Bruce tried to suggest, a hapless, little old man victim of Frank Parlato.
– The alleged victim, Larry Reger never complained to the feds – or, for that matter, to anyone else – about his business partnership with Frank Parlato. He made a lot of money on the project. Unlike the usual case where a fraud victim loses money, this is one where the alleged victim made millions from his investment with the accused.
– Prior to Frank coming on board in the Niagara Falls project, Reger had lent $2.5 million to David Ho, the original developer of the abandoned building. Reger stood to lose every penny of that investment as Ho refused to pay him back. There was no equity in the project at that point in time.
– Frank made a deal with the original investor and Larry Reger was repaid.
– Frank and Larry [the alleged victim] jointly withstood a barrage of baseless lawsuits that had been initiated against them by a conman named Shmuel Shmueli who was trying to cut himself into a piece of the One Niagara project without investing any money in it (When all was said and done, their court record against Shmueli was 10-0). At one point, Shmueli was represented by the same William F. Savino who is still representing the Bronfman sisters in their pending legal action against Frank.
– The IRS had not filed any claims against Frank for any unpaid taxes (Nor, as it turns out, have they ever done so).
– Larry Reger died in 2015 prior to Frank being indicted – which is awfully convenient for the feds since he cannot testify.
– At the time of the indictment, the two alleged victims were the Bronfman sisters, [who later were dropped from the indictment when Clare was indicted as part of the Feds takedown of the NXIVM criminal enterprise] and a dead man who never complained or sued Frank.
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Anthony Bruce retired almost immediately after indicting Frank Parlato.
Charges Regarding the One Niagara Project
Back in 2015, prior to the indictment, based on what they had been told by Bruce, Frank’s attorneys understood that the charges that the Feds were considering bringing against Frank with regard to the One Niagara project revolved around the Feds’ belief that:
– Larry Reger had not been repaid on a $1.4 million promissory note that had been memorialized in the “Operating Agreement” for Tourist Services;
– Frank had allegedly taken funds from the Tourist Services company that were not reported to Larry Reger; and
– Frank had not been transparent with Larry Reger and his agents.
Even before we look at the refutational evidence that Frank’s attorneys provided to Bruce and his colleagues regarding this matter, one thing should be perfectly clear to Frank Report readers.
If any of the Feds’ allegations regarding the One Niagara renovation project were true, Larry Reger would have undoubtedly initiated a civil lawsuit against Frank. Reger was, after all, a very experienced and sophisticated businessman and investor and he had attorneys and accountants who reviewed – and monitored – every one of his investments.
Bur Larry Reger never initiated any such civil lawsuit.
Nor did he ever complain to the Feds – or anyone else – about his business dealings with Frank.
So, you ask, then why the hell was Bruce inserting himself – without having been requested by anyone to do so – into the private dealings of two experienced businessmen?
Well, as I already noted, Anthony M. Bruce was a man of his word – and when he committed to indicting someone, he was damn well going to indict that person even if there was no basis whatsoever for doing so.
An indictment alone is enough to destroy most people’s lives. It destroys reputations – and it bankrupts people as they pay lawyers to defend themselves. Most people who are indicted lose their jobs or various business opportunities. An indictment alone is – for most people – a financial and personal disaster.
This is why NXIVM paid bonuses to its consultants and attorneys upon the issuance of indictments against its enemies. Convictions weren’t necessary for NXIVM to cripple its enemies.
Bruce very likely assumed that Frank would take a plea deal – and it would never go to trial. After all, that’s what 97% of federal defendants end up doing.
Several plea deals have, in fact, been offered to him. He has flatly refused every one of them.
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Refutational Evidence Regarding the One Niagara Renovation Project
But let’s go back to March 2015 – eight months before Frank was indicted.
During a meeting with Bruce, Frank’s attorneys began by pointing out that the feds were simply confused regarding several aspects of the business dealings of Frank and Larry Reger.
They noted, for example, that the promissory note involving Tourist Services was for $500,000 rather than for $1.4 million, as the feds mistakenly thought.
And they pointed out that Larry Reger had previously testified, under oath, that the $1.4 million promissory note cited by the feds was, in his own words, “completely independent” of Tourist Services.
Frank’s attorneys also provided evidence that Tourist Services’ $500,000 obligation to Larry Reger had been paid in full on or about September 10, 2007 – a fact that Larry Reger also confirmed while testifying, under oath, in another [Shmueli] matter.
In addition, Frank’s attorneys provided documentation to prove that Larry Reger had agreed not to be paid anything on the $1.4 million note unless/until the One Niagara property was sold (He and Frank had signed a “Forbearance Agreement” that ensured interest would continue to accumulate on the debt during the interim period.)
And, lastly, Frank’s attorneys provided detailed documentation to prove that Larry Reger had received payment-in-full for all of Tourist Services’ financial obligations to him. Interestingly enough, that same documentation also showed that as of March 2015, Frank had only received half of what he was owed by the company.
But none of that evidence mattered.
Because Anthony M. Bruce was a man of his word.
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A Crime Without a Victim
Bruce’s insistence that Frank had somehow defrauded Larry Reger was utterly without basis – and totally contrary to what the alleged victim had to say about his business dealings with Frank.
In essence, Bruce was alleging that Frank had committed a crime where there was no victim.
To underscore just how ridiculous this situation was, let me add one other fact that I think is extremely important to the analysis of Bruce’s allegations against Frank.
Per the “Operating Agreement” that Frank and Larry Reger had signed at the time they established Tourist Services, if Larry Reger was not paid in full the total amount he was contractually entitled to – he had the sole and absolute right to remove Frank from his day-to-day management of the company and become co-manager with Frank of the property. This provision was to ensure he got a handsome profit from the project under Frank’s management. If he wasn’t satisfied, he could step in at any time and co-manage the project with Frank.
And guess what? Larry Reger never exercised that right – or even threatened to do so.
It is a fortunate thing for the government that the alleged victim is dead or they might not have even a semblance of a pretend case to try to bluff Frank into taking a plea deal.
But if this case goes to trial, the prosecution still has a serious evidentiary problem. Their victim is dead. While they could allege anything in the world before a puppet grand jury and get Frank indicted, they’ll have a problem proving any of it before a trial jury of 12, where evidence beyond a reasonable doubt is required.
And just as Reger is not alive to testify on Frank’s behalf that he was not a victim, neither can he be called to say that he was a victim.
The written record shows Reger never complained about Frank Parlato.
In fact, within days of the time Frank’s lawyers were showing Bruce evidence that Frank did not defraud the Bronfmans or Larry Reger – Reger testified in the last and final lawsuit of Shmuel Shmeuli against Reger and Frank.
Reger testified that Frank was a good partner.
Within two weeks, Larry, who was in his 80s, suffered a head injury from an auto accident and died.
While the government is aware of Reger’s death, they are probably unaware of his supportive testimony of Frank – essentially his last public statement, under oath and for the record.
On top of that, Larry was repeatedly interviewed by the FBI – and never once accused Frank of cheating him.
Bruce even tried to persuade Reger he was a victim but he couldn’t produce any evidence to back up that assertion. If Reger had been cheated, it would have been the perfect time for him to make a criminal complaint. With Bruce already gunning for Frank, the feds would have welcomed Larry’s claims.
But unlike the Bronfman sisters. Reger declined to file a false criminal complaint against Frank.
When Reger refused to file a criminal complaint against Frank, Bruce shifted to making the case that Reger – a self-made man, whose net worth was estimated to be around $500,000,000 – did not know that he had been cheated by Frank. Bruce tried to tell Frank’s attorneys that Reger just wasn’t savvy enough to realize he had been cheated and then he died.
Unfortunately for the DOJ WDNY, Bruce left them with a case where there is absolute evidence that Reger was not cheated and got every dime he was entitled to.
It’s too bad for them that Frank Parlato refused to take a plea deal no matter how light the sentence is.
It’s a matter of principle, Frank has said.
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In my next post regarding the matter of the U.S. v. Parlato Et Al, I will review more of Anthony M. Bruce’s allegations against Frank Parlato – and detail the evidence that Frank’s attorneys provided to refute those allegations back in March 2015.
What I will not do, however, is try to explain why this travesty of justice is still ongoing.
Anthony M. Bruce retired shortly after Frank was indicted – which means he’s no longer able to pull the strings on this case.
Surely, there must be someone in the U.S. Department of Justice who can put an end to this bullshit right now.
A well-publicized acquittal would be good for the government b ecause it would show that in the end, the system can be fair.
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Previous posts in this series can be accessed at:
Part 1: The Buffalo News Raises Questions About Frank Parlato’s Case – More Detailed Analysis Needed
Part 2: The Convoluted History of U.S. v. Parlato Began With Bronfman Sisters
Part 3: The Federal Case Against Frank Parlato – a Prosecution in Search of a Crime
Part 4: What Are the Charges in U.S. v. Parlato — and What Do They Mean?
Part 5: The Conman Cometh – Schmuel Schmueli – Who, Combined With the Bronfmans, Led to Parlato’s Indictment
Part 6: Fate Brings Conman Shmuel Shmueli Into Frank Parlato’s Life
Part 7: Why Frank Parlato Established Several Companies and Multiple Bank Accounts
Part 9: The Persecution of Frank Parlato: What Have We Learned so Far?
Part 10: Where’s the Beef? Feds Will Try to Convict Parlato on Insinuations Rather Than Facts
Part 11: Feds Refused to Accept Proof of Frank Parlato’s Innocence – Pushed Ahead With Indictment
Marie White painting – Three Little Piggies. L-R Anthony Bruce, William Savino, and Clare Bronfman.
