Opinion ID: 713017
Heading Depth: 2
Heading Rank: 1

Heading: The Fraudulent Loans.

Text: 10 At trial, the government produced evidence showing that Vebeliunas used his influence to procure a number of improper Kasa loans for the benefit of companies under Vebeliunas' control, including Litas Investing Company, Inc. (Litas), Panagra Properties, Inc. (Panagra), Litas Travel, World Trade Industries (WTI), and Seaview Construction. These companies all had their offices in the same building as did Kasa and Vebeliunas, and there was no physical separation between them and Kasa in that building. Vebeliunas used numerous straw borrowers, who did not actually receive the proceeds of their loans and who were assured that they would not have to repay the loans, to obtain money from Kasa. Vebeliunas also falsified documents in order to raise capital to fund the ventures of the companies under his control. 11
12 In 1984, Vebeliunas formed Panagra in order to acquire the Beach Club of Marco Island (the Beach Club), a condominium hotel in Florida. On February 1, Panagra contracted with Broward Management Company to purchase twenty-seven units of the Beach Club for $2,080,812. This transaction required Panagra to produce a down payment of $310,000. Vebeliunas caused Stephen Hill, an attorney and part-time Kasa employee, to file for a loan in the amount of $310,000 from Kasa. Without Hill's knowledge, Vebeliunas later altered the application by changing the amount of the loan to $350,000. The Kasa board of directors approved the $350,000 loan to Hill based upon the false representation that Hill was in a contractual relationship with Panagra. 13 Vebeliunas then raised the rest of the money for Panagra to purchase the twenty-seven units by persuading twenty-seven individuals to apply for loans from Kasa. While each loan application stated that the individual was making a deposit of approximately $20,000 of his own funds, in fact, each individual paid only $4,750, with the remainder to be supplied by Litas. These twenty-eight loans (including the Stephen Hill loan) were not separately charged in the present prosecution because they were time barred, but the loans were charged as predicate acts under the RICO count. 14 Next, Vebeliunas sought to acquire the remaining Beach Club units. He paid Edwin Stots $10,000 to file a Kasa loan application in the amount of $700,000 in order to raise the money necessary for this endeavor, and Stots testified that Vebeliunas had told Stots that another person named Rimas was doing the same thing. This testimony is corroborated by a Kasa loan application filed by Vebeliunas' wife's brother-in-law, Rimas Valaitis, in the amount of $700,000. The funds from these two loans were subsequently used by Panagra to purchase the remaining Beach Club units. 15 The Stots and Valaitis loans were never fully repaid. When Kasa was placed in conservatorship, the balance on these loans amounted to approximately $627,000. 16
17 Later in the same year, Vebeliunas decided to purchase Club Regency of Marco Island (Club Regency), another condominium development located near the Beach Club. The owner, Leonard Masello, was in default of his loan payments to the Naples Federal Savings and Loan Association (Naples Federal) with respect to Club Regency, and agreed to sell the property. 18 Vebeliunas raised the money for this purchase by persuading eight straw borrowers each to apply for a $100,000 loan from Kasa. The borrowers knew little or nothing about the purpose of the loans, and Vebeliunas assured them that they would not be liable for their repayment. Approximately half of this money was paid to Masello and to Naples Federal, while the other half was placed in a Kasa account that was drawn down to $5.00 by early 1985. These eight loans were never fully repaid, and a balance of $667,110 was due to Kasa as of the date of conservatorship. 19 A few months later, the Naples Federal loan fell into default, and Vebeliunas once again resorted to straw borrowers from Kasa to satisfy Naples Federal's demand for $500,000. Kasa issued loans to Joseph and Raymond Miezelis in the amounts of $150,000 and $350,000, respectively. Once again, the interests of Litas and Vebeliunas in the loan were never disclosed. The loans to the Miezelis were also never fully repaid; approximately $490,000 remained due at the date of conservatorship. 20 In early 1986, the Naples Federal loan again fell into default, and Vebeliunas caused Edwin Stots to write a check for $125,000 to Naples Federal. Vebeliunas then used funds from Kasa to cover this check. The funds were acquired by means of a loan in the name of Stots' father, who was never made aware of the loan. As of the date of conservatorship, this loan had a balance of $109,137.39 that remained due. 21
22 WTI was a New York company that engaged principally in the business of exporting industrial equipment and was owned by Vadim Kersha and two other individuals. In 1983, Kersha and his wife each borrowed $50,000 from Kasa, secured by a second mortgage on their home, to meet WTI's ongoing capital requirements. 23 In 1984, Vebeliunas contracted with Kersha and the other two owners to purchase WTI. In the contract, Vebeliunas promised to cancel or assume the Kershas' Kasa loans. Vebeliunas then hired Romauld Ausmanas, a recent immigrant to the United States, to work for WTI, and convinced him to sign a loan application for $100,000 from Kasa. Vebeliunas used this money to retire the Kershas' loans. 24 WTI filed for bankruptcy in April 1988. The unpaid balance of the Ausmanas loan amounted to $90,364.35 as of the date of conservatorship. 25
26 Doretta Fabbri was an employee of Litas Travel. Her testimony was compelled under a grant of immunity after she invoked the Fifth Amendment privilege against self-incrimination. 27 Fabbri applied for a $525,000 loan from Kasa. This money was used to purchase a house in Mill Neck, New York. While Fabbri signed the loan application, the rest of the handwriting on the application was not hers. At trial, Fabbri claimed that the loan was genuine, and that she had purchased the house as an investment. Nonetheless, the government argued to the jury that her story was incredible, and that she had in fact been a straw borrower who had front[ed] the purchase for Litas. 28 Fabbri conceded that she could not remember who had completed the loan application, that she was not sure how she had learned about the availability of the Mill Neck house for purchase, and could not remember where the house was in Nassau County. Furthermore, Fabbri apparently received a $3,000 commission from Litas for purchasing the house. Litas' bookkeeper, Rima Gudaitis, could offer no explanation why Fabbri was entitled to a commission for purchasing a house as her own personal investment. 29
30 Zenonas Jurys, one of the founders of Kasa and a member of its supervisory committee, and Rimas Vaicaitis, a professor at Columbia University and former president and a director of Kasa, were both longtime associates of Vebeliunas. In July 1985, Jurys and Vaicaitis each applied for $750,000 loans from Kasa. The applications described the loans as bridge loans, and the loans were repaid shortly after they were made. The funds were to be provided to Vebeliunas to use for business purposes. Neither Jurys nor Vaicaitis had the ability to repay the loans, and Vebeliunas assured them that they would not have to do so. 31 These loans were approved on July 16, 1985, three days before the applications were completed and submitted to Kasa for consideration. To correct this discrepancy, the applications were backdated to July 10 (Vaicaitis) and 11 (Jurys). 32 On July 19 and 20, Vebeliunas signed Litas checks in the amount of $3,000 to the order of Vaicaitis and Jurys, respectively. While these checks were recorded as consulting fees, and Vaicaitis and Jurys testified that they were in payment of obligations for genuine services, the government argued to the jury that the payments were in consideration for their acting as straw borrowers. 33
34 By 1988, Vebeliunas had been removed as Kasa's president, and Kasa had adopted a policy that forbade the lending of money to entities with which Vebeliunas was connected. Nevertheless, Vebeliunas persuaded Marissa Santangelo, a friend, to take out a loan from Kasa in order to purchase some land in Daytona Beach, Florida called Lighthouse Shores. Vebeliunas had already purchased the judgment in foreclosure on the property, and needed the money from Kasa to reimburse himself. Vebeliunas promised to grant Santangelo a partnership in the property, which was to be held in Santangelo's name. 35 Vebeliunas caused Santangelo to file the loan application, and to complete a form certifying that she was not a fiduciary or nominee nor d[id she] represent any other person(s), corporation(s), trust(s), partnership(s) or other legal entity of any nature or description whatsoever. Based upon this misrepresentation, Kasa issued a loan to Santangelo in the amount of $136,000 which, after a number of defaults, was ultimately sold. The general manager of Kasa and a member of its credit committee both testified at trial that the loan would not have been approved if Vebeliunas' interest had been disclosed. 36