The Salt Lake Tribune reports this morning that Riverfront Project developer Gadi Leshem has worked out a resolution of the felony insurance fraud charges that have been pending in the Los Angeles County Superior Court since November of 2006. From this morning's Kristen Moulton story:
OGDEN - All criminal charges were dropped today against a California businessman who is helping Ogden transform its downtown river area.This settlement is highly favorable to the individual defendants in this case, inasmuch as each of them reportedly had all individual criminal charges dismissed, leaving Leshem's corporation as the only named defendant pleading no contest to a felony fraud count.
But his company pleaded no contest to a felony count of insurance fraud, and the investor, Gadi Leshem, is on the hook for a $6.3 million civil settlement in the case.
Michael O'Gara, deputy district attorney for Los Angeles County, said the two-fold settlement was reached as a preliminary hearing for Leshem, Cover-All Flooring Inc. and two other executives was set to begin in Los Angeles Superior Court.
As part of the settlement, Los Angeles County dropped four charges of insurance The case
In the California cases, the state's Insurance Department initially sought $10.8 million in worker-compensation premiums and contended Gadi Leshem's company under-reported its payroll by $31 million. Prosecutors said the state revised the premium amount owed downward after auditing the company, but a defense attorney said the state had improperly classified many Cover-All employees.
fraud and one charge of conspiracy to commit fraud against Cover-All President Leshem, Vice President Zeev Golan and Executive Secretary Irit Golan.
Cover-All Flooring pleaded no contest to one count of insurance fraud and agreed to pay $6.3 million in back worker-compensation premiums to California's State Compensation Insurance Fund (SCIF). The settlement resolved the state's civil case against Cover-All as well.
The only apparent fly in the ointment for Gadi, it seems, would be the plea agreement requirement holding Leshem personally liable for $6.3 million in court ordered restitution if his company does not pay down this sum over the next five years.
For the time being we'll interpret this story as extremely good news for Ogden. Now that Mr. Leshem has finally gotten these criminal matters off his back, we'll be keeping our fingers crossed that he'll move full speed ahead toward implementing Ogden's River Project. Having said that, we're also hoping that the restitution provision won't put a significant dent in Gadi's capacity to move forward with his very ambitious downtown project. Gadi has received recent local criticism for dragging his feet. Hopefully he's now in a position to remedy that.
Before closing, we'd like to congratulate Gadi, each of the individual defendants in the case, and their attorney, Mark Werksman, for engineering this exceptional result. The California Department of Insurance is an extremely tough foe; and today's story, we believe, is a testament to these folks' equally extreme perseverance and tenacity -- the same traits we hope to see in evidence on the River Project imminently.
And what say our readers about all this?
