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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. Just an aside, but regardless of the outcome, I 'm proud of Judge William Hughes. He was the original magistrate on the Home place issue. He ruled for Home Place, and was primaried by Brainard for it. Their tool Poindexter failed to unseat Hughes, who won support for his honesty and courage throughout the county, and he was reelected Judge of Hamilton County's Superior Court. You can still stand for something and survive. Thanks, Judge Hughes!

  2. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  3. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  4. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  5. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

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