Man who owned Richmond company on trial in fraud case

Two years ago, Bonnie Schloss of Silver Spring, Md., sold her house and avoided paying capital-gains taxes by depositing $335,000 in proceeds with a so-called "1031" company.

Problem was, the owner of the company, Edward Hugh Okun, allegedly stole the money in a $132 million fraud that victimized 577 clients. His trial is to start here today on charges that include fraud, money laundering and bulk-cash smuggling.

Schloss, a semiretired video editor, expects to be one of his unhappy former clients in attendance.

"This is about my whole life for the past couple of years," said Schloss, adding she wants to learn as much as possible about what happened. "I want to [hear] all the testimony and see all the players involved."

According to his indictment, from August 2005 to December 2006, Okun's Richmond-based company, The 1031 Tax Group, bought six intermediary companies that held money from the sale of properties until it could be used to buy new properties.

Under section 1031 of the Internal Revenue Code, such transactions, performed properly, defer the capital-gains tax that would otherwise be due. Sale proceeds are held by the intermediary companies until closing on the replacement property purchase.

Once Okun acquired an intermediary company, the government alleges he wired millions of dollars worth of client money into bank accounts he controlled, using it for personal purposes -- and to buy other intermediary companies in what amounted to a Ponzi scheme.

Among other things, Okun is said to have spent millions on a Miami mansion and a 131-foot yacht.

Okun's lawyers would not discuss the case. But papers filed in U.S. District Court suggest Okun's position is that he saw the removal of money from the accounts as loans that he intended to repay and that he had advice from lawyers it was legal to do so.

According to the government, Okun met his current wife, Simone Bolani, in Miami in 2005, while he was married to another woman and living in Indianapolis. He soon moved to Miami and proposed to Bolani.

In August 2005, Okun signed a settlement agreement with his now-ex-wife requiring him to pay her almost $6 million within 30 days and an additional $2 million within 180 days.

Prosecutors allege Okun's first purchase of one of the intermediary companies, his divorce settlement agreement and his first theft of client money all occurred within one week of one another.

Okun, then 54, married Bolani, then 27, on Dec. 10, 2005, in a $200,000 wedding. The government unsuccessfully sought permission to show parts of the $4,000 wedding video to the jury.

Court records show the defense plans to call four witnesses, including Okun.

The government has 30 people on its witness list. Eight are alleged victims, and three are former Okun employees who have pleaded guilty to charges under agreements that call for them to testify if required to do so.

One is Lara Coleman, the top officer of Investment Properties of America, another Richmond-based Okun company.

She will be sentenced May 1, along with Robert D. Field II, the chief financial officer for Okun Holdings Inc., the parent company of Okun's businesses; and Richard B. Simring, the Okun Holdings chief legal officer.

Jury selection in the three-week trial before U.S. District Judge Robert E. Payne is set to start this afternoon.

Contact Frank Green at (804) 649-6340 or .