Ex-aide to late philanthropist found guilty of embezzlement
By David Hanners, Pioneer Press, St. Paul, Minn. | |
McClatchy-Tribune Information Services |
So his face showed no emotion Wednesday in
But after the judge had excused the jury, Waters removed his glasses and seemed to wipe at his eyes with his fingers.
Although a federal prosecutor asked U.S. District Judge
"You've dug yourself a very deep hole," Montgomery told the 57-year-old
No sentencing date has been set. Each of the fraud counts carries a maximum of 20 years in prison, while the maximum on the tax evasion counts is six years. Filing a false tax return carries up to three years in prison.
Defense attorney
"We're glad that justice was done," he said.
Cafesjian's daughter,
Over the course of the five-day trial, Otteson and colleague
The jury of seven women and five men deliberated nearly 12 hours over two days. As they filed into the courtroom to deliver their decision, not one looked in the direction of the defense table.
They found Waters guilty of 15 counts of wire fraud, four counts of mail fraud, three counts of income-tax evasion and three counts of filing false tax returns.
The prosecution's case was that Waters embezzled
Waters testified the money wasn't stolen. He said Cafesjian approved the withdrawals and that the money went either to Cafesjian to fund his habit of buying art, gems and jewelry, or it was a loan Waters was taking against deferred compensation he was owed.
The
Just how wealthy is something few people, even Cafesjian, knew. The executive's heart was in art -- he amassed a world-class collection and his mistress of 35 years was an artist -- and he could be nonchalant or even uncaring about money.
Asked in a 2012 deposition in a civil case how much he made when West was sold, he replied: "I think it was
Other estimates put the figure at
Cafesjian funded a variety of philanthropic pursuits. Many of them were in his parents' homeland of
Cafesjian hired Waters to run his businesses and charitable foundations. The two had worked together at West, and there was a time when each expressed great admiration for the other.
In a 2012 deposition in another civil case, Cafesjian said Waters had "tremendous horizons" and "was up for forming a bank or an insurance company or a sculpture garden. You name it, he didn't think it was very difficult to do."
Asked if Waters was creative, Cafesjian replied that "he has creativity with some things, yeah. Some legal, some not."
When Aligada asked Waters on the stand if he'd been Cafesjian's right-hand man, Waters replied: "I was his right hand, and at times his left, his eyes, his ears." He had even negotiated many of Cafesjian's business deals.
By
Waters told jurors that he and Cafesjian negotiated a written compensation agreement in 1996. He said they modified it in 2000 so some of Waters' compensation would be deferred, a tactic carrying certain tax advantages.
He said that in 2005 they modified it again to allow Waters to borrow money from the deferred compensation he had accrued. Waters told jurors the 2000 and 2005 modifications were oral and had not been put in writing.
Cafesjian died in September at the age of 88, five months after his wife of 65 years, Cleo Cafesjian, 87.
Prosecutors contended it was ludicrous to think a shrewd businessman like Cafesjian would renegotiate his top aide's compensation -- twice -- without putting it in writing.
Similarly, the defense maintained that a shrewd businessman like Cafesjian would quickly spot millions of missing dollars from his bank account and that he wouldn't wait two years to find out where the money went.
In fact, Cafesjian had been on the record and under oath about both matters, but jurors never heard his words. Waters sued his former boss in 2012, claiming he was owed
The former exec had said that although he wasn't keen on accounting (he wasn't into the "green eyeshade thing," he said), he considered the money "stolen."
He called Waters' claim of a modified compensation agreement "the craziest thing I ever heard in my life."
"A string of total lies," he said of Waters' claims.
Otteson had wanted jurors to hear that. But before the trial, Montgomery ruled the civil deposition was inadmissible. She said allowing it as testimony would deprive Waters of his right to confront his accuser.
She reasoned that because Cafesjian was dead and Waters represented himself in the civil case -- and because no criminal charges had yet been filed against him -- he lacked an opportunity for an "effective" cross-examination of Cafesjian.
After the verdict, Otteson said Cafesjian's testimony "would've made it a different case, but we were still able to present a pretty powerful circumstantial case."
Testimony showed the stolen funds wound up in a variety of bank accounts Waters controlled. Some went into accounts for his two daughters, and nearly
Aside from a possible prison sentence, Waters faces a civil lawsuit filed by Cafesjian. When he sued his former boss in 2012, Cafesjian responded by filing a counter-claim. In it, he accused Waters of theft.
Last year, U.S. District Judge
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