Looks like Bernie Madoff may have some company.
Earlier this week, Edward H. Okun, the owner of the 131-foot Simone, was sentenced to 100 years in prison for trying to defraud clients and obtain about $126 million in client funds held by his company.
Okun is the former owner of The 1031 Tax Group (1031TG), which was established to allow investment property owners to defer the capital gains tax that would be due on properties they sold if they used the proceeds to purchase new property within a specific time frame. The company is named for Section 1031 of the Internal Revenue Code, which specifically permits this type of deferment. Investment property owners deposit the proceeds of property sales with qualified intermediaries, such as 1031TG, and sign exchange agreements that include various promises by the intermediaries regarding the safekeeping and use of exchange funds.
After a three-week federal trial, a jury found Okun guilty of conspiracy to commit mail and wire fraud, committing wire fraud, conspiracy to commit money laundering, committing money laundering, bulk cash smuggling, and perjury. Among other things, the evidence presented during the trial revealed that Okun misappropriated client funds to support his lifestyle, including use of Simone, built by Heesen in 1993 and named for his wife, Simone Bolanji. He additionally instructed employees to withdraw $15,000 in cash from the bank account of another company Okun owned and “smuggle the cash to his personal yacht on Paradise Island in the Bahamas to avoid federal currency reporting requirements,” according to the U.S. Department of Justice.
Last November, Okun signed over ownership of the yacht to a court-appointed 1031TG trustee to pay back clients. The trustee filed papers in U.S. bankruptcy court in December requesting permission to pay the crew’s wages, which the filing states amounts to about $25,000 per month. The trustee explained that the eight-person crew must remain onboard for the insurance coverage to continue, and therefore to prevent the megayacht’s value from falling. The trustee had already reportedly paid a South Florida marina overdue dockage fees and past-due crew salaries.
Simone, which is now known as Brazil, features an on-deck master and cherrywood cabinetry and is for sale for about $11.5 million.
Arnaldo Bomnin
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