The long-lingering federal case against Frank Parlato moved closer to final resolution yesterday, when his co-defendant Chitra Selveraj ended her role at sentencing.
Senior US District Court Judge Richard J. Arcara sentenced Selvaraj to no jail, no probation, and no fine for her misdemeanor conviction of failing to file a tax return in 2009.
Asked by the judge if she wanted to say anything, Selvaraj said she did not.
Chitra Selvaraj [above] has finality in her long-fought case.
At the sentencing, Assistant US Attorney Charles Kruly told the judge that the government didn’t want jail time for Selvaraj.
The judge accepted the Department of Justice’s [DOJ] request to dismiss the 18 felony-count indictment against Selvaraj and concluded all proceedings in the seven-year-old federal case against her by ordering her to pay a $25 mandatory special assessment.
In 2015, AUSA Anthony Bruce led the DOJ to file a 19 count felony indictment charging Parlato and Selvaraj with a conspiracy to defraud the IRS, Seagram heiresses Clare and Sara Bronfman, and wealthy businessman Larry Reger.
Larry Reger
The Bronfman sisters
Clare and Sara Bronfman did much to promote Keith Raniere. Unlike the Bronfmans, Reger refused to sign a criminal complaint against Parlato, testifying 13 days before he died that Parlato did not defraud him. The DOJ indicted Parlato and Selvaraj six months after Reger died, and then made motions to exclude Reger’s final testimony as inadmissible evidence.
AUSA Anthony Bruce led the charge to indict Parlato and Selvaraj.
Despite charges of conspiracy to defraud the IRS, the DOJ never alleged tax evasion.
In 2022, the DOJ conceded that Parlato filed and paid all taxes from his ownership of the One Niagara Building and associated companies that operated there, which was the focus of all charges in the indictment.
One Niagara
Selvaraj worked with Parlato during his successful development of the One Niagara building, where he saved the landmark building and created 100 new jobs in economically depressed downtown Niagara Falls, turning the abandoned office building into a tourist hub.
Frank Parlato on the rooftop of the nine-story One Niagara Building in 2008.
Two and half years after the first indictment, the DOJ superseded the indictment in 2018, dropping Clare and Sara Bronfman as victims of any crime, as criminal charges were about to be filed against Clare.
Parlato and Selvaraj were then charged in Bronfman-free 18 count superseding indictment.
Last year, in settlement of all charges against her, Selvaraj pleaded guilty to a misdemeanor charge of failing to file an income tax return in 2009.
At sentencing, the judge remarked he received a letter from Selvaraj that showed she was a woman of intelligence and motivation who endured a long ordeal and faced considerable difficulties and challenges in life. He also noted she expressed remorse for her failure to file.
Selvaraj is a newspaper editor in Western New York. She has no previous criminal history.
Parlato awaits sentencing for a single count of failure to file IRS Form 8300. The charges state that Parlato did not report that a food stand vendor at One Niagara had paid $19,700 in rent in cash to Parlato’s business in 2010. A citizen must report payments in cash exceeding $10,000 from a source in a single year on an IRS Form 8300.
IRS Form 8300 is not a tax collection, but an informational form used by the IRS and the Financial Crimes Enforcement Network to monitor cash payments in the country coming from drug trafficking and other crimes. There was no allegation that the food vendor’s cash came from any illicit enterprise.
The DOJ conceded in Parlato’s plea agreement that while he failed to report the $19,700 that came in cash on Form 8300, he declared the $19,700 income on his 1040 tax returns in 2010 and paid all taxes due.
As part of Parlato’s plea agreement, which was a global settlement of criminal and civil tax matters, he agreed to forfeit $1 million seized by the DOJ in 2015, paid to him by the Bronfmans in 2008.
Out of the $1 million, some $184,000 is slated to the IRS as civil payments. The figure was based on government estimates of what Parlato would owe in taxes from 2014-2017, when he invoked his 5th Amendment right to not file returns while under indictment. After signing the plea agreement, Parlato filed his tax returns. According to his sentencing memorandum, he does not owe any additional money other than what will come out of the $1 million seized.
Not a single charge alleged against Parlato or Selvaraj on the indictment was sustained despite four years of federal investigation and seven years under two indictments.
