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Andrews: Couple accused of tax fraud turning the tables

Greg Andrews
February 29, 2012
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BTN-andrewsA high-profile Carmel couple accused of tax fraud has won a dismissal of those charges and now is going after state investigators with guns blazing.

Real estate investor Chris Marten and his wife, — a longtime Carmel jeweler — charge in a new federal lawsuit that investigators trampled on their constitutional rights during the inquiry, which resulted in 28 criminal charges, including tax evasion and maintaining false tax records. They’re seeking millions of dollars in damages.

Some of their concerns received a sympathetic ear from Hamilton Superior Judge William Hughes, who dismissed the criminal case in October 2010, saying the government abused the discovery process. He expressed exasperation that prosecutors failed to provide hundreds of documents to the other side — despite repeated orders to do so.

In his eight-page order, Hughes wrote: “The court has repeatedly and pointedly expressed its disapproval with the state’s conduct on discovery issues in this case — and still, even after two orders compelling discovery, the state persists in dragging its feet.”

The Martens had defended themselves in the criminal case in part by alleging the state had illegally masqueraded their criminal prosecution as a less-threatening civil matter.

Because Hughes concluded the discovery problems alone were sufficient to justify dismissal, he didn’t try those abuse-of-process allegations — which now are at the heart of the 11-page suit the Martens filed Feb. 15.

In his dismissal order, Hughes did note that Andrew Swain, chief counsel in the tax-litigation division of the Office of the Indiana Attorney General, knew the Martens were targets of a criminal inquiry when he deposed them in a civil inquiry in June 2008.

According to Hughes’ order, Swain denied during a January 2010 court hearing that he knew about the criminal investigation when he deposed them. But the judge pointed out that, in an email three days before the deposition, Swain had written that “the Hamilton County prosecutor is going to pursue criminal tax charges against these guys.”

In their lawsuit, the Martens said Swain had said nothing to suggest their testimony was being used in a criminal investigation. In fact, when they asked him whether they should hire attorneys to represent them, Swain said no, according to the suit.

“The defendants deliberately used their civil powers to gain a tactical advantage in the state’s criminal prosecution,” the lawsuit alleges. The Indiana Department of Revenue “had committed to prosecute the Martens criminally, as evidenced by its preliminary drafting of a probable cause affidavit prior to the Martens’ deposition.”

Added Robert Garelick, an attorney with Cohen Garelick & Glazier representing the Martens: “We thought that was potential double jeopardy and contrary to their rights. It certainly was underhanded.”

The Martens also claim that when Swain and others executed a search in July 2008, they went far beyond what was permitted in the warrant, engaging in “an hours-long, free-for-all looting of the Martens’ home and business,” J.S. Marten Inc., 301 E. Carmel Drive.

Defendants in the suit include the attorney general’s office, the Department of Revenue, Swain and Department of Revenue auditor Rick Albrecht.

Bryan Corbin, a spokesman for the attorney general’s office, said in an email that “we will diligently defend our state agency clients and employees.”

Garelick said the arrest of the Martens in June 2008 triggered a technical default on the line of credit Janice Marten used to finance her jewelry store, which closed a short time later. (Janice Marten now operates JEM Jewellers in Clay Terrace.)

“As a direct and proximate result of the wrongful conduct of the defendants, the Martens have suffered extreme humiliation, embarrassment and loss of reputation, have lost a multimillion-dollar business, and have lost past, present and future income and net profits,” the lawsuit says.

Tax issues

Judge Hughes’ dismissal left unlitigated the merits of the tax charges themselves. Prosecutors had alleged the Martens had failed to remit nearly $900,000 in retail sales taxes from 2004 through 2007. Garelick said the Martens’ position is they’ve paid all the taxes required.

Hughes dismissed the charges with prejudice, which prevents prosecutors from refiling the case.

All of Chris and Janice Marten’s legal problems are not necessarily behind them, however. They remain defendants in a civil securities fraud lawsuit filed three years ago by Indiana Securities Commissioner Chris Naylor.

The suit says the couple participated in a $2 million investment fraud orchestrated by Geist investment dealer Dorothy Geisler-Tragardh. Geisler-Tragardh settled that case and reached a plea agreement in a separate criminal inquiry. She was sentenced in 2011 to one year of home detention and four years on probation.•

This column was originally published in the February 27 issue of Indianapolis Business Journal.

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  1. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  2. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

  3. Hi there I really need help with getting my old divorce case back into court - I am still paying support on a 24 year old who has not been in school since age 16 - now living independent. My visitation with my 14 year old has never been modified; however, when convenient for her I can have him... I am paying past balance from over due support, yet earn several thousand dollars less. I would contact my original attorney but he basically molest me multiple times in Indy when I would visit.. Todd Woodmansee - I had just came out and had know idea what to do... I have heard he no longer practices. Please help1

  4. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  5. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

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