Stiff prison terms for two UMDA defendants

Robert Pfaff and John Larson, two primary defendants in an ongoing civil case brought by United Micronesia Development Association on Saipan, received stiff prison terms Thursday in U.S. District Court in New York for crimes that Judge Lewis Kaplan said were “so raw, so brazen, so outrageous” that they clearly “passed the line” into criminality.

Larson was sentenced to 121 months in prison and ordered to pay a $6 million fine and Pfaff received 97 months in prison and was fined $3 million. Kaplan ordered both men to be jailed immediately, denying bail pending an appeal because he thought there was a risk that Pfaff and Larson might flee the country.

The judge said that Larson and Pfaff were “motivated by greed” and criticized professionals who look for a “real or imagined loophole” in the legal system “to make a fortune.”

Pfaff and Larson, former executives of KPMG LLP, were convicted by a federal jury of multiple counts of tax evasion in December 2008 in U.S. v. Stein—a case billed as the largest criminal inquiry into tax fraud in the history of the United States. Charges against KPMG were dismissed in 2007 after the company paid a $456 million fine.

In April of 2007 UMDA filed a civil suit against Pfaff, Larson, and a number of their associates in Superior Court of the of the Commonwealth of the Northern Mariana Islands to recover millions of dollars for harm done to the company over a ten year period ending in 2006 when Pfaff was a director and shareholder in the company.

Russell Snow, president and CEO of UMDA, said: “After two years of litigation we hope to be going to trial in our Saipan case later this year. It’s extremely important that UMDA have its day in court. Our lawsuit alleges that millions of dollars were taken from UMDA shareholders by these defendants who have been convicted in New York and we want to have the chance to prove it to a jury here in Saipan.”

Pfaff is also under separate criminal indictment in the same New York federal court in a related case that is scheduled for trial in New York in September.

According to attorney Robert O’Connor, who represents UMDA in the Saipan case, “This second federal indictment relates to Pfaff’s alleged criminal activities around the globe, including the misuse of UMDA accounts and assets. The government’s indictment reveals how UMDA was victimized by Mr. Pfaff and his co-conspirators and supports many of the key charges made by UMDA against Pfaff and his co-defendants in the civil suit.”[B][I] (UMDA[/I][/B])