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?
18 comments:
First, let's note that the SE had the same story, front page, this morning. Mr. Schwebke's story can be found here.
So, Gaddi copped a plea: his company, which he runs, admitted to payroll fraud and agreed to pay $6.3 million to California [personally guaranteed by Mr. Lesham as part of the plea deal, if the company fails to pay, and with property holdings put up as security for payment].
Mr. Lesham and his lawyers have begun spinning the results, claiming that criminal charges should never have been filed, that it was always a civil matter, not a criminal one [neatly ignoring the fact that Mr. Lesham's company, run by him, has plead "no contest" to a charge of felony fraud and that he is being held personally responsible for payment of the $6.3 million]. It was all just an inadvertent bookkeeping error:
Leshem's attorney, Mark Werksman, said... "This was essentially a dispute over the premiums due by a fast-growing company with over 500 employees in California...."
Leshem said... that his company did not properly comply with the complex requirements of its worker-compensation plan during a period of rapid growth, but it was due to a lack of knowledge, not an intent to deceive.
So, Lesham's defense to the charge that his company criminally defrauded the state of California in this matter is that he and his top management people were incompetent at handling the company's financial responsibilities.
And this is supposed to make us feel better about Mayor Matthew Godfrey's placing very nearly the entire River Project's future -- and a lot of downtown Ogden's future --- in his hands?
Curiouser and curiouser....
These guys always spin after court. Just like Geiger and his sign stealing, charges dismissed but a fine was paid but can't admit any wrong doing. These guys are cut from the same cloth, never admit they were wrong, have little ethics, and the end justifies the means. Wow sounds like the mayor, at least he is consistant in the company he keeps.
Sorry to change the subject here, and yes hopefully Mr. Leshem will move forward w/ tenacity and perseverance to get the riverfront project underway and completed, but to those of you who did not catch this story on the nightly news yesterday, here is an interesting piece (as we think about mass transit in Ogden and Utah) on the spike in mass transit ridership:
Mass Transit on the Rise!
Why oh why does Utah keep falling for Pied Piper figures and naked emperors? Does anyone here think Gadi is immune to the current recession's cash flow disasters? Has no one a memory? The following snippet is from a 1987 TIME story:
Khashoggi's most public debacle has been in Utah, where he was attracted by what he believed were prime development opportunities. The centerpiece of his $1 billion Salt Lake City project is the Triad Center, a $400 million, 25-acre complex of office buildings, a hotel and retail shops. Work stopped after only about a third of the glitzy complex was completed. Khashoggi refuses to cave in to Triad's creditors, among them architects, contractors and banks. "They loaned the money against the collateral, the Triad Center," he says. "Now they hear rumors about my cash-flow problems and call the loans. I am not going to bring in cash from other businesses to pay the bankers. The collateral is all they will get if they persist." In Salt Lake City, Khashoggi was regarded as a hero for ten years; now he is branded a fraud. "If he is the richest man in the world and he is flying around in a gilded plane," says Mayor Palmer Depaulis, "why isn't he paying his debts here?"
So I'm curious; did Ogden, which includes the Mayor and the City Council, know that this developer was involved in a lawsuit when they decided to work with this human to help rebuild Ogden?
If so then we'll get what we paid for. Would anyone here hire a contractor to remodel their home if it was known that the contractor's company was involved in a lawsuit? One that carried the sentence of a felony.
Was their no other developers that were still on the good ethics train that the city could assist to make millions?
But to be positive I also hope that the river front project moves along. I don't assume that this developer would cut any corners or do shabby work. He sounds like somebody a girl would be proud to bring home to her father.
I hardly think shelling out six million is going to make Gadi more likely to complete any of his Ogden projects.
Godfrey is looking for ways to pay Gadi the cash he needs even as we speak.
They should have let the owners of the river properties keep their land.
Driving along Grant today by the river I noticed 2 police cars questioning a man, looked like a scavenger. How can the city council allow those homes to have weeds 2 feet high, looks like an EPA toxic clean up site. Pressure needs to be put on the administaration to get the area cleaned up and not at taxpayer expense. How can anyone want to move to Ogden driving around the river area? If the enforcer tried to cite me for weeds on my property I would file a discrimination suit since the adminstartions friends seem to have special privledges.
As a business owner even those in the AmeriCan building driving by those boarded up homes when their customers come calling is an embarasment.
I like to think of having Lesham involved with the River project with such a large hand in it, to inviting a convicted rapist to spend the night in my home with my seven gorgeous daughters.
Mr. Leshem:
Please ask MR Zeev Golan a question just as he asked me a similar question: Is THIS the way you do things in the Israeli Army ? It is no wonder a place like Home Depot actually supports you and your brother in-law
I know Mr Leshan, I even worked for him. In my opinion, he is a crook and he not only knew what he was doing he had his managers cover it up. He should have been held accountable.
If you can believe Mr. Lesham, Mr. & Mrs. Golan are innocent of the crimes they were accused of, you should have been a fly on the wall the day the California Fraud Squad came to the business to raid the accounting information. The faces of the three officers were faces of extreme fear. They were busted.
There was a term used by Mr. Lesham to describe the investigation that proceeded. He tried to make his employees call the investigation and AUDIT. What a crock! Audits are not announced with automatic weapons and bullet proof vests.
As someone that knew them, you can believe one thing, whatever Gadi Lesham says has a spin attached. Don't take it as gospell.
I have seen first hand how curious figures move back and forth on individual budgets and expenditure reports. I actually thought the name of the company was "Coverall of it up". Never quite figured out whose house or car payment the center was making.
gadi is a theif!!!! i agree with all who say he is!!!!i worked for his company for 5 years and get screwed every paycheck now therer is a cuivil lawsuit against him for overtime and back pay from 2006 ha ha gadi roll in that.THIEF!
i am worked for coverall and i think gadi is a crook too...they cant even pay their employees because they have no money so the payroll checks keep bouncing
and now gadi wont pay his empolyees for four weeks of work 12/08--1/4
Lesham is a real sh*t! I worked for him for 10 years and it is trus that he is a cheet and a lier. He asked his managers to report information that was not true regarding installer time cards.
HE IS A CROOK AND A LIAR. I SEEN HIM SNAKE HIS WAY OUT OF PAYING HIS EMPLOYES WITH EMPTY RHETORIC. A SORRY EXCUSE FOR A C.E.O
SOMEONE SHOULD CHECK OUT GADI'S BACKGROUND WITH REGAL REGENCY DEVELOPMENT CORPORATION.
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