Prosecutors fight court order in alleged Ponzi scheme
Federal prosecutors are challenging a court order to provide defense lawyers with a decade's worth of tax returns of the wealthy investors in an alleged $190 million Ponzi scheme.
The tax returns are being sought by Ramon DeSage, the high-rolling businessman facing conspiracy, wire fraud, money laundering and tax evasion charges in the long-running scheme that unfolded on the Las Vegas Strip.
DeSage, 64, contends the investors failed to report to the IRS any cash he paid back, and he wants to use the tax returns to attack their credibility in court.
The largest victim is former casino executive William Richardson, who is alleged to have lost as much as $40 million investing with the internationally known DeSage, according to prosecutors.
As vice chairman of Mandalay Resort Group, Richardson was a major player on the Strip for years until 2005, when the company and its dozen casinos were sold to what is now MGM Resorts International. Richardson is now a prominent developer with ties to the casino industry.
In a written decision earlier this month, U.S. Magistrate Judge Cam Ferenbach ordered prosecutors to turn over to the defense the tax returns of Richardson and several other investors covering the years 2005 through 2014. He also ordered the government to provide the tax returns of the investors' spouses and companies for those years.
But on Monday, Assistant U.S. Attorneys Gregory Damn and Crane Pomerantz filed court papers asking U.S. District Judge Jennifer Dorsey, who is presiding over the case, to overturn Ferenbach's order.
"His order authorizes a rank fishing expedition that puts the victims' sensitive financial data in the hands of the defendant, effectively victimizing them a second time," the prosecutors wrote.
In separate court papers Tuesday, Richardson's lawyers, David Chesnoff and Richard Schonfeld, joined the government opposition.
"The suggestion that the defendant who is charged with victimizing Mr. Richardson for tens of millions of dollars should be entitled to see his tax returns, which are irrelevant, is tough to fathom," the lawyers wrote.
"As the court will be able to ascertain from this motion, the tax returns will detail complex personal financial information of Mr. Richardson, which would simply give Mr. DeSage more opportunity to victimize Mr. Richardson."
Chesnoff and Schonfeld said DeSage still owes Richardson $30.5 million, and DeSage's attempts to obtain the tax returns run afoul of the U.S. Crime Victims' Rights Act of 2004 and are "meant to harass" Richardson.
Prosecutors are not done investigating DeSage and his luxury gifts supply business on the Strip. They have been presenting evidence before a federal grand jury in an effort to return a new indictment against him.
The scheme revolved around DeSage's Las Vegas company, Cadeau Express, and other companies between 2005 and 2012, according to the latest indictment.
DeSage pocketed the money to repay earlier investors, maintain his wealthy lifestyle and cover millions of dollars in gambling losses at casinos along the Strip, some of which he supplies with high-end customer goods, the indictment alleged
Millions of dollars were laundered through several casinos, including Wynn Las Vegas, Caesars Palace, The Venetian, Planet Hollywood and Hard Rock Hotel, according to the indictment
DeSage has been under electronically monitored home detention since his original arrest three years ago. His trial, now set for Jan. 26, has been delayed 10 times
Contact Jeff German at jgerman@reviewjournal.com or 702-380-8135. Find him on Twitter: @JGermanRJ
