Wednesday, November 16, 2016

A secret fortune, a forged will: Fraud case goes to trial

A secret fortune, a forged will: Fraud case goes to trial

Federal officials charging 3 with scheme that cost heir $2.2 million

Editor's note: How come the Probate Court of Cook County criminals are not punished for forging Alice R. Gore's annuity checks?  Fraud goes unpunished in Illinois?  Time for a new U.S. A.G. to go after the crooks!  Lucius Verenus, Schoolmaster,
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    This duplex at 2557 Broadway in Toledo, which was owned by Martin Fewlas, was the home of Margaret McKnight and Kurt Mallory when they hatched their plan to forge Mr. Fewlas’ will, federal prosecutors say.
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    This 1984 photo of Martin Fewlas provided by the family shows him on a Harley-Davidson motorcycle with wife Donna Fewlas on back. The man at left is James McLaughlin, nephew of Martin Fewlas.

  • n1jimmy-3 Jimmy McLaughlin sits in front of his late great uncle’s duplex at 2557 Broadway in Toledo. Three people face trial for allegedly faking a will, giving them the $2.2 million that would have gone to Mr. McLaughlin.
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    The will drafted in 1993 by retired city worker Martin Fewlas would have put his entire $2.2 million estate in the hands of his 28-year-old great-nephew.
    Instead, days after Mr. Fewlas’ death in 2010, the couple who rented the upper half of his South Toledo duplex and a local attorney forged a phony will to gain control of Mr. Fewlas’ assets, federal prosecutors said.
    Opening arguments begin Monday in U.S. District Court in Toledo in the trial for Margaret McKnight, her former boyfriend Kurt Mallory, and Susan Pioch, an attorney who had represented Mr. Mallory in the past.
    The jury, which was picked last week, will decide their guilt or innocence on 59 charges including conspiracy to commit bank and mail fraud, aggravated identity theft, and multiple counts of money laundering and mail and bank fraud.
    Prosecutors said the trio collaborated in drafting a fake will four days after Mr. Fewlas died that named Ms. McKnight as executor and sole beneficiary of his estate, giving her access to the more than $2.1 million in lifetime savings the retired city worker had invested in more than 20 accounts at 15 banks and credit unions.
    Federal prosecutors said about $50,000 in cash, a 1952 Harley-Davidson and several other rare motorcycles, and a 2000 special edition Ford F-150 Harley Davidson pickup truck also were taken from the estate.
    Money and the cash raised from the sale of property in the estate, they said, was used to buy a $50,000 luxury motor home, a classic 1972 Chevrolet El Camino, a used-car dealership, and homes.
    n1house-3 This duplex at 2557 Broadway in Toledo, which was owned by Martin Fewlas, was the home of Margaret McKnight and Kurt Mallory when they hatched their plan to forge Mr. Fewlas’ will, federal prosecutors say.
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    Ms. Pioch and Mr. Mallory took more than $800,000 from the estate, according to court filings by federal prosecutors.
    “I look at this as being a highly unusual investigation. It is not your typical FBI case. This is one which involves an IRS investigation,” said Charles Boss, an attorney representing Ms. McKnight.
    Ms. McKnight, 41, who was a bartender at the American Legion post where Mr. Fewlas belonged, also is charged with structuring for allegedly breaking up the withdrawal of money from banks and credit unions in amounts under $10,000 to get around the federal reporting requirements. She also is charged with causing a financial institution to fail to file a required report.
    Prosecutors said she drained nearly $590,000 in sums of $1,000 to $10,000 on 171 different occasions during the year after Mr. Fewlas died.
    “What we have here is a person who never experienced having money before,” Mr. Boss said, referring to the government’s claim about his client’s withdrawal of money from banks.
    The trial, which Judge James Carr is presiding over, is expected to last three weeks.
    Key witness
    Crucial to the government’s case is Gary Mallory, a co-defendant and father of Kurt Mallory. A key witness, his testimony was videotaped more than three years ago because of his failing health.
    He testified that he and Gary Mallory went into the lower half of the duplex on Broadway where Mr. Fewlas lived within a week after he died and broke into a floor safe. He said they removed two pouches of cash; one with $20,000 and $16,000 in the other. He testified he kept only $177 of what was taken from the safe.
    Mallory, 79, who is living in a Phoenix nursing home, was charged in 2014 with conspiracy to commit mail fraud for his role in the forged will.
    He pleaded guilty to felony conspiracy to commit mail fraud on Jan. 12, 2015. He was placed on probation for three years at his sentencing Aug. 30 in U.S. District Court in Phoenix. He also was ordered to pay $50,000 in restitution, and is making $50 monthly payments to resolve the debt.
    His testimony, given May 6, 2013, and heard by Judge Carr in a Phoenix federal courthouse, was attended by his son, Ms. McKnight, Ms. Pioch, and their lawyers, who each asked questions of him.
    Mallory admitted to forging Mr. Fewlas’ signature on will documents given to him by Ms. Pioch in the upper duplex in the days after Mr. Fewlas died.
    He said Kurt Mallory asked him to duplicate Mr. Fewlas’ handwriting on the will, using rent receipts that he had signed.
    “I had good handwriting, you know. I think he thought I had forged other names. I’m not sure where he got that from,” he testified.
    He said he signed three copies on the dining room table while Ms. Pioch watched over him and his son stood nearby.
    He testified he randomly picked June 16, 2010 — less than three months before Mr. Fewlas died — to date the will.
    Kurt Mallory, he said, offered him $100,000 as his share, but he turned it down.
    “No thank you. Take care of your kids,” he testified as to what he told his son.
    n1fewlas-1 This 1984 photo of Martin Fewlas provided by the family shows him on a Harley-Davidson motorcycle with wife Donna Fewlas on back. The man at left is James McLaughlin, nephew of Martin Fewlas.
    Days after the death
    Marty Fewlas died Aug. 28, 2010, at the age of 74. He was taken to the University of Toledo Medical Center on Aug. 5 after falling at his home. He was sent to a nursing home in Springfield Township for rehabilitation, where he suffered additional injuries from a fall, and went back to UTMC, the former Medical College of Ohio Hospital. He died a few days later.
    In the days after his death, Richard “Pops” Wilder, the younger brother of Mr. Fewlas’ late wife, saw people taking things out of his late brother-in-law’s home on Broadway. He went to attorney David Errington to try to find out what he could do to take care of Mr. Fewlas’ belongings and the duplex to make sure they ended up in the right hands.
    Mr. Wilder, who lived a half-block from Mr. Fewlas, died in 2015, but he talked to The Blade in July, 2013. “At that time, he was going to care over the estate,” he said about hiring Mr. Errington. “He applied to take over the estate. He didn’t know there was a lawyer already involved.”
    “At the time, Marty Fewlas was still in the morgue. Mr. Wilder was concerned that no one had made arrangements. Since this guy had no wife and no kids, he was worried that something might be going on and wanted to safeguard the property,” Mr. Errington said. “This was his brother-in-law. He wanted to make sure he was taken care of.”
    In his trial testimony, Gary Mallory said that Mr. Errington paid a visit to the duplex on Broadway where he was living with his son and Ms. McKnight within two weeks of Mr. Fewlas’ death and after he helped forge the will.
    He said Mr. Errington told him he was representing Mr. Fewlas’ nephew. He told the attorney that Ms Pioch was handling the estate, and with that Mr. Errington gave Mr. Mallory his business card and went on his way, according to the trial transcript.
    Mr. Errington immediately withdrew Mr. Wilder’s request in probate court to administer the estate.
    “Once I was told there was another lawyer involved I stepped aside,” he said.
    n1mcknight-4 McKnight
    Eyes on the assets
    Kurt Mallory, 53, moved in with Ms. McKnight sometime before 2008, according to court records. He owned a painting business in Toledo before he moved to Florida.
    At his 2015 trial deposition in Arizona, the elder Mallory said he took up residence with his son and Ms. McKnight during the summers and returned to Phoenix in the fall.
    According to the father’s testimony, his son told him Mr. Fewlas was wealthy and all his money would end up with the state because he had no family.
    “He didn’t believe that Marty had any living relatives,” the elder Mallory told the court.
    He testified his son talked about Mr. Fewlas’ money and assets as far back as 2008. He said his son said he wanted to “some day get my hands on that.”
    Court records show Kurt Mallory received 10 payments totaling $531,766 from Ms. McKnight in 2011 and early 2012.
    His attorney, Donna Grill of the federal public defender’s office, did not return phone calls or emails asking for interviews.
    n1kurtmallory Mallory
    Unknown riches
    The duplex on Broadway, located several blocks north of the Toledo Zoo, was Mr. Fewlas’ home for nearly 45 years. He lived alone after his wife, Donna, died in 1990 at age 52. He also owned a small, modest house on Marlboro Street, also in South Toledo, that had belonged to his mother and had been his boyhood home.
    Mr. Fewlas grew up in South Toledo. He dropped out of Macomber Vocational School and worked in construction before he joined the Army in 1959. He served two years active duty, including a year in the North Korea combat zone, and four more years in the Army reserves.
    Mr. Fewlas worked 28 years with the city of Toledo, with most of that time spent in the city street department as a heavy equipment operator. For eight years, he demolished vacant houses and buildings for the federally funded urban renewal program. He was promoted to chief demolition inspector.
    The total value of Mr. Fewlas’ estate — estimated to be more than $2.2 million — came as a shock to many people. Friends and relatives knew he lived frugally, and according to some, to the point of being a miser.
    “If there was a beer a nickel cheaper he would drive 20 miles to buy that beer,” said his good friend, William Sine.
    Mr. Errington said even Mr. Wilder, who lived a block away, didn’t realize his brother-in-law’s wealth.
    “The neighborhood is not great, but not terrible either,” he said. “Who knew what he might have had accumulated when he died.”
    Marty and Donna Fewlas, who were married in 1961, bought, sold, and collected antiques. They owned several stores on Broadway in the 1970s and 1980s stocked with old furniture, collectibles, and specialty items they had amassed.
    Mr. Sine said Mr. Fewlas recognized a good deal that might some day rise in value. Knives, guns, and Harley-Davidson motorcycles were among his prized possessions.
    “You could walk into his house and you could see the antiques all over the dining room,” he said.
    The Blade published a story in 1972 about the couple and their antique shop, Wells-Winter, after they put an advertisement in the newspaper to sell two caskets and a pair of skeletons, one possibly real and the other made of plaster of Paris. The skeletons, a candelabrum, wooden cross, and flower stand, the article said, were bought by Mr. Fewlas from a local fraternal lodge.
    tb-tbdata-Inqueue-PhotoDrop-n1-ioch-jpg-5 Pioch
    Attorney charged
    Susan Pioch, 60, who has been an attorney since 1981, also is charged with filing a false tax return.
    Prosecutors said she reported $84,356 in income for tax year 2011 and amended the filing to $283,846 two years later because she said she inadvertently forgot to include income from the sale of an apartment building, a business transaction the government claims did not happen.
    In addition to the tax charge, she is charged with conspiring, three counts of money laundering, aggravated identity theft, mail fraud, and bank fraud.
    The government said Ms. McKnight gave Ms. Pioch $284,110 from money in Mr. Fewlas’ bank accounts but she reported $60,795 in fees to probate court for handling the estate.
    “The defense will be focusing on what is fundamentally a misunderstanding of what took place,” said her attorney, Richard Kerger. “We will be pointing to factual matters which we believe will convince the jury that the charges are simply wrong.”
    Gary Mallory testified he asked his son in June, 2011 — about nine months after Mr. Fewlas died — for money to rent an apartment in Arizona, but his son turned him down. He then went to Ms. Pioch.
    “Eventually I went to Susan’s office, told her I wanted $50,000 from the three of them,” he said.
    The heir
    Prosecutors intend to call about 30 witnesses and introduce about 425 exhibits at trial.
    Among the documents that will be entered are the will that Toledo attorney Thomas Roth drew up for Mr. Fewlas in 1993 and cards and letters from Mr. Fewlas’ great-nephew and his grandmother.
    The 1993 will gave instructions for what Mr. Fewlas wanted to happen to his estate after he died. His half brother, James McLaughlin, would inherit everything. If his brother was dead, it should go to his brother’s son, also named James McLaughlin. His son, James “Jimmy” McLaughlin, was the last in line.
    Jimmy McLaughlin of Rossford has never seen a penny of his great uncle’s estate.
    His grandfather, Mr. Fewlas’ brother, died in 1998 and his father died of complications from cancer in 2004.
    Jimmy McLaughlin, who was 16 when his father died, moved in with his grandmother, Janet McLaughlin, because his mother was struggling to cope with the loss of her husband and couldn’t care for him.
    A Maumee High School graduate, Mr. McLaughlin recalled sending his great uncle an invitation in 2009 to attend a family party celebrating his graduation from cosmetology school. It was among Mr. Fewlas’ mementos found by FBI and IRS agents in a search of the Broadway duplex in 2011.
    Mr. McLaughlin said he has fond childhood memories of Mr. Fewlas attending family gatherings during the holidays and other celebrations, and his visits dwindled after his grandfather died.
    “We always called him Uncle Marty,” he said.
    Mr. McLaughlin said he has struggled financially and at times juggled two jobs to support himself and save money to marry his fiancee, whom he met in high school.
    He delivers pizza for a chain restaurant.
    “With the tips, it’s just enough to get by but not enough to save any money,” he said.
    Spilling the beans
    Gary Mallory, who was a Toledo firefighter and paramedic from 1967 to 1980, is in poor health. He has been living in an assisted care facility in Arizona since 2014.
    He told Judge Carr at the 2015 hearing that he is taking medication for diabetes, cholesterol, and high blood pressure and has been battling bladder cancer since about 2004.
    Mallory testified he turned to Lucas County Probate Court after Ms. Pioch refused to give him money and threw him out of her office. He said he made three phone calls to the court.
    Asked by Gene Crawford, the assistant U.S. attorney, what he told the court staff, he said: “That the will was a fraud. That I had signed Marty’s name.”
    Mallory said he was instructed by the probate court employee who took his call “to come down and see him, and kind of just blew me off.”
    After failing to get traction with the court, Mallory said he dug out Mr. Errington’s business card and told him the same thing he had told probate court workers.
    “The same thing; that the will was a total fraud. That I had signed Martin Fewlas’ name,” he testified.
    Mr. Errington, who about nine months earlier withdrew a claim for Fewlas’ estate on behalf of Mr. Wilder, took the matter seriously. He said he called probate court and passed along what Mallory had told him.
    “I followed up with probate court and let them know that he had contacted me,” he told The Blade. “It’s not every day that you get a call like that, where somebody says they are basically confessing to something that is pretty interesting.”
    Mr. Errington would not say whether it was the judge, a magistrate, or the court administrator who took his call. “Let’s just say I spoke to the right person,” he said.
    It was nearly two years later, in April, 2013, according to Mallory’s testimony, that federal agents knocked on the door of his Phoenix apartment. He testified he admitted to agents that he conspired with the others in forging Mr. Fewlas’ signature on the will.
    According to court documents, federal agents didn’t learn of the alleged fraud through probate court, but instead through an investigation of Ms. McKnight’s withdrawals of cash from Mr. Fewlas’ bank accounts.
    Contact Mark Reiter at: or 419-724-6199.

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