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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. Indianapolis employers harassment among minorities AFRICAN Americans needs to be discussed the metro Indianapolis area is horrible when it comes to harassing African American employees especially in the local healthcare facilities. Racially profiling in the workplace is an major issue. Please make it better because I'm many civil rights leaders would come here and justify that Indiana is a state the WORKS only applies to Caucasian Americans especially in Hamilton county. Indiana targets African Americans in the workplace so when governor pence is trying to convince people to vote for him this would be awesome publicity for the Presidency Elections.

  2. Wishing Mary Willis only God's best, and superhuman strength, as she attempts to right a ship that too often strays far off course. May she never suffer this personal affect, as some do who attempt to change a broken system: https://www.youtube.com/watch?v=QojajMsd2nE

  3. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  4. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  5. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

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