Clark County Family Court Judge Steven Jones and five others have been indicted by a federal grand jury in a $3 million investment fraud scheme.
The FBI and Las Vegas police executed search warrants Wednesday at the longtime judge's Henderson home in connection with the 20-count indictment, which was returned under seal last week. Investigators seized computers and paperwork.
Jones, 54, was first elected to Family Court in 1993. He is accused of using the power of his office to carry out the decade-long scheme, which authorities alleged began in 2002.
By law, the Nevada Commission on Judicial Discipline must suspend Jones with pay while he is under indictment. A District Court spokeswoman said Jones has taken a leave of absence.
Jones, who has sparred with law enforcement authorities in the past over his personal conduct, is expected to surrender to federal authorities today and appear before a federal magistrate.
Defense lawyer Robert Draskovich said Jones "vehemently" maintains his innocence.
"We live in a country where a person is presumed innocent until the contrary is proven. This presumption applies whether the person is an ordinary citizen or a judge," Draskovich said. "Upon my review of the indictment, I'm concerned that they're alleging acts that occurred over a decade ago."
Jones' former brother-in-law, Thomas A. Cecrle Jr., 55, is among those indicted. Also charged are Terry J. Wolfe, 57, of Henderson; Ashlee M. Martin, 38, of Las Vegas; Mark L. Hansen, 54, of Corvallis, Ore.; and Constance C. Fenton, 68, of Gig Harbor, Wash.
Cecrle, Wolfe and Martin were taken into custody here; Hansen and Fenton were arrested in Oregon and Washington, respectively.
The six defendants face an array of charges, including conspiracy to commit mail fraud and wire fraud, securities fraud and money laundering. They face trial on Jan. 8 before U.S. District Judge Miranda Du.
"Protecting the American people from fraud is a top priority for today's Justice Department," Nevada U.S. Attorney Daniel Bogden said in a statement after the indictment was unsealed Wednesday. "Latest reports from the FBI reveal an unprecedented rise in investment fraud schemes, involving thousands of victims and staggering losses.
"Since 2011, 15 persons have been charged, convicted, or sentenced in Nevada for federal investment fraud crimes, and the total reported amount cheated from victims tops more than $80 million."
HOW THE SCHEME WORKED
According to the Jones indictment, between September 2002 and October 2012 the defendants persuaded people to loan them money under the guise of quick repayment with high rates of interest.
"In truth and fact, however, the defendants had no intention of ever repaying the money as promised and sought only to enrich themselves at the expense of their victims," the indictment said.
The defendants told investors that Cecrle held a special position with the federal government and had access to public officials and secret government programs, authorities alleged.
Investors were told that Cecrle had obtained valuable water rights in northern Arizona and property rights on the Strip and access to World War I bonds but needed short-term loans to fully secure those rights and interests.
The defendants used the loans for their own purposes, including living and gambling expenses, and returned to their victims to solicit more, authorities alleged.
The indictment alleges that when investors became disgruntled and questioned the legitimacy of their investments, the defendants lulled them into a false sense of security by referring them to Jones, who used his stature as a judge in vouching for Cecrle and the investment scheme, knowing it was a fraud.
The judge is alleged to have met with investors "in chambers, over the telephone, and elsewhere," and to have intervened on behalf of Cecrle to prevent or delay legal processes against him.
According to the indictment, Jones took calls from Cecrle in chambers, drafted and reviewed documents associated with sham investments, and received cash from the scheme at the courthouse where he heard cases.
Jones and Cecrle kept a joint bank account used to launder more than $250,000 in proceeds from the fraud, the indictment alleges.
A TROUBLED RECORD
Cecrle has a long history of legal problems involving drugs, domestic violence and questionable financial dealings. In 2006, he pleaded guilty to attempted possession of drugs and served six months in jail after violating probation.
Cecrle has been sued several times over failed investments. Most recently, disbarred lawyer Jeanne Winkler alleged Cecrle conned her into dumping roughly $500,000 into an investment scheme. She was guided to the investment by Jones, court records show.
Winkler was disbarred in 2011 after allegations surfaced she used $233,000 of client trust fund money to help fund the investment, which yielded nothing.
Winkler faces theft and embezzlement charges in the case. She also has pleaded guilty and is cooperating in the sweeping federal investigation into fraud and corruption at Las Vegas Valley homeowners associations.
Jones has been involved in domestic violence incidents with two different women, once as a victim. He was acquitted of domestic battery in 2006 after his girlfriend recanted her testimony.
Jones also came under scrutiny after it was learned that he was having a romantic relationship with a prosecutor who regularly appeared in his court.
The district attorney's office last year filed a complaint with the Judicial Discipline Commission against Jones over his handling of the relationship with Lisa Willardson, who ended up losing her job with the district attorney's office.
Late Wednesday, David Sarnowski, the commission's executive director, declined comment on its investigation.
But Sarnowski said the commission "will act in due course" to move to suspend Jones because of the federal indictment.
THE OTHER DEFENDANTS
At the request of federal prosecutors, U.S. Magistrate Judge Bill Hoffman ordered Wolfe and Martin detained as they face charges. Both pleaded not guilty at the Lloyd George Federal Courthouse in Las Vegas.
First Assistant U.S. Attorney Steve Myhre told Hoffman that prosecutors considered Wolfe, a two-time felon, a key player in the "broad-based scheme."
Myhre said there was no evidence that Wolfe, who lives with Jones, has a job or any ties to the community. Wolfe's court-appointed lawyer, Jess Marchese, said Wolfe's occupation mainly is to serve as a "caretaker" for Jones' ailing mother.
Myhre said prosecutors were concerned that Wolfe tried to influence testimony by two grand jury witnesses in May and was still soliciting money from investors just a few weeks ago.
When Hoffman asked Martin, who lives with Cecrle, whether she understood the charges against her, she responded in a tearful voice, "They're very serious."
Myhre said Martin was "moving funds" through her bank account in the scheme. He said she has a methamphetamine problem and has no independent means of support.
Afterward, Bogden told reporters that Hansen and Fenton were released after initial appearances in their home states and were ordered to come to Las Vegas for arraignment.