November 12, 2008 in City

Father, son guilty of fraud, money laundering

Pair bilked customers out of thousands of dollars
By The Spokesman-Review
 

A father and son were convicted Tuesday in Spokane of multiple counts of money laundering and fraud for taking money from customers around the world but not delivering promised industrial parts.

After a three-week trial, Frederick M. Simon, 44, and his father, Manfred O. Simon, 81, were found guilty by a U.S. District Court jury that returned its Veterans Day verdict in the downtown federal courthouse, which was otherwise closed in observance of the holiday.

The FBI investigated the case in which victims lost a combined total approaching $500,000.

Frederick Simon, who has lived in Spokane, Kalispell, Mont., and Indianapolis, was convicted on charges of conspiracy to commit wire and mail fraud, five counts of money laundering, eight counts of mail fraud and 11 counts of wire fraud.

Manfred Simon, who lives in Spokane, was convicted of conspiracy, eight counts of mail fraud and five counts of money laundering. He was found not guilty of one count of wire fraud.

Senior U.S. District Court Judge Frem Nielsen set Feb. 10 as the sentencing date for both men.

The elder Simon, who has been free without bond, was allowed to remain out of jail until sentencing. His son will remain in federal custody, the judge ruled.

Frederick Simon was indicted in Montana and convicted in Spokane in October 2007 on a single federal wire fraud charge tied to similar fraudulent business activity. He also will be sentenced in February for that conviction, the judge said.

The Simons were corporate officers of Railway Logistic International Inc., which maintained a bank account in Spokane and used an Internet site to sell and buy railway and industrial components and equipment around the world.

The company was incorporated in Montana in 2002 and reincorporated in Delaware in 2004, court documents say.

Although it billed itself as a global company with offices in multiple countries, a large inventory, a remanufacturing facility and trained personnel who could respond to the customer’s location, RLI “actually had practically no capital resources, very little inventory, no remanufacturing facility and no trained service personnel,” court documents said.

Special Assistant U.S. Attorney Thomas Hopkins prosecuted the case, calling 60 witnesses, including 13 residents of nine countries, including Spain, Germany, Kuwait, Mexico and United Arab Emirates.

The foreigners were under no legal obligation to respond to the witness subpoenas issued by a U.S. court, but all voluntarily responded and traveled to Spokane to testify.

A German businessman told an FBI agent he viewed it as “his duty” to testify for the U.S. government because as a small child in post-World War II Germany he remembers his family members being given chocolate bars and milk by American soldiers.

Neither of the defendants took the stand during the trial and no defense witnesses were called by defense attorney Frank Cikutovich, who represented Manfred Simon, or assistant public defender Joshua Rosen, representing Frederick Simon.


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