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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. Your article is a good intro the recent amendments to Fed.R.Civ.P. For a much longer - though not necessarily better -- summary, counsel might want to read THE CHIEF UMPIRE IS CHANGING THE STRIKE ZONE, which I co-authored and which was just published in the January issue of THE VERDICT (the monthly publication of the Indiana Trial Lawyers Association).

  2. Thank you, John Smith, for pointing out a needed correction. The article has been revised.

  3. The "National institute for Justice" is an agency for the Dept of Justice. That is not the law firm you are talking about in this article. The "institute for justice" is a public interest law firm. http://ij.org/ thanks for interesting article however

  4. I would like to try to find a lawyer as soon possible I've had my money stolen off of my bank card driver pressed charges and I try to get the information they need it and a Social Security board is just give me a hold up a run around for no reason and now it think it might be too late cuz its been over a year I believe and I can't get the right information they need because they keep giving me the runaroundwhat should I do about that

  5. It is wonderful that Indiana DOC is making some truly admirable and positive changes. People with serious mental illness, intellectual disability or developmental disability will benefit from these changes. It will be much better if people can get some help and resources that promote their health and growth than if they suffer alone. If people experience positive growth or healing of their health issues, they may be less likely to do the things that caused them to come to prison in the first place. This will be of benefit for everyone. I am also so happy that Indiana DOC added correctional personnel and mental health staffing. These are tough issues to work with. There should be adequate staffing in prisons so correctional officers and other staff are able to do the kind of work they really want to do-helping people grow and change-rather than just trying to manage chaos. Correctional officers and other staff deserve this. It would be great to see increased mental health services and services for people with intellectual or developmental disabilities in the community so that fewer people will have to receive help and support in prisons. Community services would like be less expensive, inherently less demeaning and just a whole lot better for everyone.

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