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No, ----------- HQi\~~ltirm~~~ , ~

lTNITED STATES Qt.SJJU~1: COURT 'rAL

THE UNITED STATES OF AMERJCA

us.

CONNIE C. ARMSTRONG, JR. and

RICHARD A. FOWLES

INDICTMENT
18 U.S.C, § 2314 - STOLEN PROPERTY;
18 U.S.C. § 1343 - WIRE FRAUD
18 U.S.C. § 2 - AIDING AND ABETTING

------F;~--

FiW In apnI court tlliJ _________________ aay,

01 ___________ A.D. 19 _____ _

Bail. $ ___________ _ (~
(7~ I,

r i:;>.r~hy ~enifj' thaI !.he annexed

lI1Sr::"Um!!~1 .i~ a true and correcl copy
of the ongmal on file in my office.
ATTEST:
RICHARD W. WTEKlNG
CIe!"k. U.S District Court
" ~':-; :~;~:la
Nonhe istriq.,of Califomia
":-'>1 By . /,~n/)
 -I
PER \8 US.£..

FENOANT INFORIV,A- ril .\TIVE TO A CRIMiNAL AC' W __________IC_T_C_O_U_R_T_

OINFORMAllU QINDICTMENT _Na......e 010.11('<:1 Ca"n. aI'\.Qlot Jua9"'~11!tC:~''O
CHARGED I NORTHERN DISTRICT ~F CALIFORNIA
18 U. S :C. § 231'-1 - STOLEN PROPERTY;
18 U.S.C § 13~3 - _ - - DE r:ENDANT - u.s. vs.
18 U.S.:C. § 2 - AIDING AND
ABETTING

PENALTY See

R94 o~
__- - - - - - - - PROCEEDING _ _ _ _ _ _ _ _ __
_ _ - - - - - - - - DE
Name ot Agenev. or Penon 1St if a.nyl IS NOTiN CUSTODY

l) 6D Hu not been arrened. Dending outcome {Mil

If not del.linf;d ClUe any cHior summom
wu 11H'Yl!d on above charge1
person ,$ awaiting rnal
!w"e tlam4!: of coun
11'1 another Federal or SU(t Court, 210
3) 0
Is a Fugi(ille
1$ on Bail or Re-~ase from hhow District} _.
this per"onJpfor.eedlng (j from ano(her Q'$lrlct
pet (circle onel F ACrP 20. 21 Of Show Distcict IS IN CUSTODY
On this ci"HHge
On i!u"!orl'lef convic.tion
Fed'i
!hi~ is a 'eprQ1e'c.uw:~n 01 chargu Awaiting trial on other charges
pre"iousl.,. dismlsse<j which were If an,wcr to 16) is "Yes", show n;ame of innirution
SHOW

o dlu.... 'Heo 0'"

US An'v
of:
DOCKET NO.
If "Ye!>"
this pfO'lecutio.n relates to <I Has duainer L-l Yes
gille date.
case i l1 l1QI"ing t"is tame dejerHl.:ln! been (iled? L-...J No jded !

prior or aODurance!s\ Mo. Yur

before U.S. Magl:UraTe regarding~ DATE OF ~
this defendant wen! recorded under ARREST r L -__~______~------------~

...... Or.," if Arreuing AgenC\l & Warrant wefe not Federal

N;mt ana Oll.a 01 "e.tOn Mo. Day \
FV11"11il\lnQ 11'i./cJfm4~IOI'\ 011 DATE TR.ANSFERRED f)
THIS ~ORM TO U.S. CUSTODY V.
'-----------------------
N;o1T'loe 01 AUI U.S A,,',. 1
", uU9"~1

r - - - - - - - - - - - - - - - A D D I T I O N A L fNFORMA TION OR COMMENTS - - - - - - - - - - -

C. Armstrong, Jr. quest summons
c/o John ano return date 7/20/94
SllMMONS 507 Polk Stree.t
co, CA 94102
BAIL (AM'!').

NO PROCESS'"
·WHERE DEfENDANT PREVIOUSLY APPREHENDED ON COMPLAINTi NO NEW SUMMONS
OR, WARRANT NEEDED, SINCE MAGI5TR~TE HAS SCHEDULED ARRAIGNMENT
;:: ,
•
Maximun penalty each count

18 U.S.C. § 2314 - 1Q
$250,000
Supervised two
but not more
special assessment
S 1343 - illlprisonme.nt
LS U.S.C.
, 000 fine.
two yearlts~n~ mor€\ .
76
ye.a~ 1 " -U ,.,.",
as~ V·,J:..
maximum penalty F\LE.O
130 years
$5.25 m.illion
6) 5upervised
$1050 ial assessments
Fowles 60 s imprisonment
$2.25 mi fine
27
$450
- .../",.
'.-
\',

1 ORIGINAL
MICHAEL J. YAMAGUCHI r-ILED
2 United states Attorney
3 Attorney for Plaintiff JUN 27 1994
nlCHARD W. WIEKING
(,/ [RI<. u.s. OISTRIC J COURT
NO!~rl/[f(N DISTRICT OF CALIFORNIA
5

7 UNITED STATES DISTRICT COrffiT

B NORTHERN DISTRICT OF CALIFORUIA

9 UNITED STATES OF AMERICA,

10 Plaintiff, lGR94:
) VIOLATION: Title 18, ~nlt~f
11 v. ) States Code, Section 2314 -
) STOLEN PROPERTY; Title 18,
12 CONNIE c. ARMSTRONG, JR~ and .) United States Code,
RICHARD A. FOWLES, 1 section 1343 - .WIRE FRAUD
13 ) Title 18, United ~tates Code
Defendants. ) Section 2 - AIDING ~ND
14 ) ABETTING
15 r N DIe THE N T
16
INTRODUCTORY ALLEGA1IQNS
17
The Grand Jury charges that:
1. Hamilton Taft (" Company, Inc. ("Hamilton Taft.,)
19
~as incoLporated in California 1n 1979. Its bUsiness was to
20
provide payroll tax services to companies ("clients") with
21
large payrolls. Clients transferred funds to pay their payroll
22
taxes to Hamilton Taft, and Hamilton Taft was, in turn,
23
obl ig~..ted to pay the ·taxes to the InteLnal Revenue Service and
24
· to-other taxing authorities when they vere due.
25
2. .Funds for -federal income and social security
26
taxes wi thheld from employees I wages accounted for most· of the

EXHIBIT 14 000001
Exhibit "l\"
.- If

1
funds transferred to Hamilton Taft~ __ A company with a large
2
payroll is required to pay these federal taxes to the IRS each
3
time its employees are paid, commonly twice a month.
4
. .... . 3• Hamilton Taft had the use of funds it received
,,~. ~.5 . ~
fram clients for limited periods of time before the taxes were
6
due. In the case of federal income and social security taxes,
7
Hamilton Taft had use of the funds for a day or less, except
B
for the "safe haven," an amount equal to five percent of the
9
tax, which was due as much as sixty days later. Most of
10
Hamilton Taft's income was earned by investing the funds it
11
received to pay its clients' taxes in risk-free, short term,
12
liquid investments.
13
4. In addition to paying taxes, Hamilton Taft often
14
provided other servic~s, such as preparing and filing Quarterly
15
Employer Tax Returns, Forms 941. These tax returns are due the
16
last day of the month folloving the end of each quarter.
17
S. The IRS assesses penalties for payroll taxes
18
that are not paid when due, cplled "failure to deposit ..
19
penalties. Absent reasonable cause, vhen any tax payment is
20
missed, a failure to deposit penalty will be assessed, even"if
21
the tax has been paid by the time the quarterly tax return is
22
due. The IRS usually bills a taxpayer for a failure to deposit
23
penalty several months after the tax return for the quarter is
24
filed. If taxes remain unpaid after the quarterly tax return
25

26 I N DIe T MEN T
(Armstrong ... Fowles) 2

000002
 •

1
is filed, an additional penalty, called a "failure to pay"
2
penalty, of one-half percent per month, is assessed and
3
interest is charged on the unpaid balance. The IRS usually
bills a taxpayer for a failure to pay penalty shortly after the
5
quarterly tax return is filed. Thus, failure to pay penalties
6
are typically due months earlier than failure to deposit .
7
penalties.
8
6. Connie C. Armstrong, Jr. ("Armstrong") acquired
9
Hamilton Taft on or about March 3~. 1989. At that time,
10
Hamilton Taft had a working capital deficit of over $14 ~il11on
11
~ue to misappropriations by prior owners of funds received from.
12
clients. The deficit'created a shortage of funds to pay taxes,
13
but taxes could still be paid on time because some of the funds
14
received, such as funds for the five percent safe-haven and for
15
var}ous state and local taxes, were not due immediately. This
16
enabled Hamilton Taft to cover shortages from later collections
17
of funds without falling behind in the payment of taxes and
18
incurring penalties.
19
7. From Armstrong's acquisltion of Hamilton Taft in
20
March 1989, to March 1991, when a trustee in bankruptcy was
21 .
appointed to run Hamilton Taft, Armstrong was Hamilton Taft's
22
chief executive officer and its sole director and shareholder.
23
During much of this time, Richard A. Fowles ("Fowles") was
24
president of Hamilton Taft. At other times, Fowle~-served-
25

26 I N DIe T MEN T
(Armstrong & Fowles) 3

000003
1
Hamilton Taft or a related entity ~~other capacities.
2
PREAMBLE TO COUNTS ONE THROUGH TWENTY-ONE
3
The Grand Jury 'furthe r charges tha t :
4
8. Beginning around March 31, 1989, and continuing
5
thereafter to around the end of March, 1991, in the City and
6
County of San Francisco, state and Northern District of
7
California, and elsewhere,
8
CONNIE C. ARMSTRONG, JR.,
9
defendant herein, knowingly aided and abe~ted by
10
RICHARD A. FOWLES,
11
defendant herein, devised and intended to devise a schemenand
12
artifice to defraud and to obtain money from companies that had
13
contracted with Hamilton Taft for payroll tax services by means
14
of false and fraudulent pretenses, representations, and
15
promises. The, scheme is described in paragraphs 9-23.
16
o The Diyersions
17
9. Armstrong caused funds received by Hamilton Taft
18
for the payment of taxes to be diverted to companies he
19
controlled for investment purposes and operati~g costs, or to
20
himself for personal expenditures. In less than two years,
21
approximately $55 million (net) vas taken out of Hamilton Taft
22
for these purposes and replaced with various notes and bonds.
I
23
10. The investments made with the diverted funds
24 .
included the purchase of 011 and ~as leases, participation in a
25

26 I N DIe 'j-M E N T
(Armstrong & Fowles) 4

- I
,-
000004
 , ..

1
shopping center joint venture, and_p~rchases of various real
2
estate interests. The operating costs paid with diverted funds
3
included skyboxes at Texas Stadium and a lavish Fourth of July
4
party. The personal expenditures of diverted funds included
5
the purchase of a ranch and political and charitable
6
contributions.
7
The Holding Back of Tax Payments
8
~1. As a result of the diversions, Hamilton Taft was
9
unable to pay all of its clients' taxes when they were· due]
10
When tax payments were not made when due, penalties, which
11 "

Hamilton Taft was responsible for paying, were incurred. This

12
increased the need to hold back more taxes because more funds
13
were needed to pay the penalties.
14
12. The non-payment of taxes began in the third
15
quarter of 1989 when approximately $25 .• 3 million in tax
16
payments were held back. Beginning in the first quarter of
17
1990, Armstrong caused taxes to be held back each quarter. The
18
holding back of taxes increas~d as follows:
19
First Quarter 1990 $19.4 million
20
Second Quarter 1990 --- $37.8 million
21
Third Quarter 1990 ---- $45.0 million
22
Fourth Quarter 1990 --- $57.0 million
23
First Quarter 1991 ---- $68.2 million
24
13. As time passed, Hamilton Taft became
25

26 I N DIe T MEN T
(Armstrong , Fowles·) 5

"-

000005
 1
f!ncreaSingly dependen~ o~ the rece!p~ of additional funds from
2 ~ r

clients to pay the taxes of clients whose taxes had been held
3
back earlier and to pay penaltiesJ By the time the trustee in
4
bankruptcy was appointed to take over Hamilton Taft in March
5
1991, the cash shortage to pay taxes had increased to
6
approximately $85 million and the unpaid penalty liability was
7
approximately $8 million more.
8
The Penalties
9
14. The holding-back of taxes resulted in a penalty
10
liability to Hamilton Taft of approximately $15 million. By
11
the time the trustee in bankruptcy was appointed, approximately'
12
$7 million of this liability had been paid. The penalty
13
liability alone: vastly' 'exceeded Hamilton Taft's income, even
14
wi thout consideration of' i ts othe~ operating expenses •
.15
The Fraud In the Inducement
16
15. It was part of the scheme to fraudulently induce
17
companies to enter into tax service agreements ("contracts")
18·
with Hamilton- Taft~. J
19
16. Acting through regional sales representatives,
20
Armstrong attempted to sell Hamilton Taft's payroll tax
21
services to large companies throughout the United states.
22
During initial contacts and throughout the negotiations,
23
prospective clients were assured that Hamilton Taft was capable
24
of professionally and reliably providing all the payroll tax
25

26 I N DIe T MEN T
(Armstrong' Fowles) , b

000006
 1
services it offered including, mos~_jmportantly, the timely
2
payment of payroll taxes. Potential clients were encouraged to
3
contact existing Hamilton Taft clients as references and were
4
led to believe that Hamilton Taft was financially secure.
5
17. As 8 result, between June 1989 and early 1991,
6
Hamilton ~aft~ntered Into new customer contracts with clients
7
whose aggregate annual payroll tax lia~llity exceeded $1
8
billion] Each contract provided that Hamilton Taft would pay
9
the client s payroll taxes when they---were due prov-ided certain
I

10
condltions were met.
11
\18. As Armstrong and Fowles knew, these contracts
12 L
were fFaudulently induced, because Armstrong had already begun
13
to divert funds needed for taxes and~~e:~ad no intention of
14
paying all the clients' taxes vhen the~ vere due~ More~ver, as
15
time passed and the capital deficit of Hamilton Taft
16
dramatically increased, Armstrong and Fowles knew that it would
17
be impossible to pay all the taxes Hamilton Taft was
18
responsible for paying. By t~e time the trustee in bankruptcy
19
was appointed, the overdue payroll tax liability was
20
approximately $91 million, of which over half was for clients
21
who signed contracts after Armstrong's acquisition of Hamilton
22
Taft. Hamilton Taft had only approximately $5 million to pay
23
these taxes.
24
II
25

26 I N DIe T MEN T
(Armstrong' Fowles) 7

000007
-- r •

1
The Coyer-yp
2
19. It was also part of the scheme to fraudulently
3
conceal the diversions, the systematic holding back of tax
4
payments, the magnitude of the resulting penalties, and
5
Hamilton Taft's ever-increasing dependence on recently received
6
funds for taxes to pay the taxes of clients whose taxes had
7
been held back earlier. This concealment enabled Hamilton Taft
8
to continue to'receive funds from its clients, to avoid massive
9
cancellat ions of its contracts, and- to preserve the opportuni ty
10
for new business.
11
False'Tax Returns are-Filed
12
20. In the third quarter of 1989, when 'approximately
13
$25.3 million in f~deral payroll taxes were not paid, Armstrong
14
and Fowles approved the filing of approximately one hundred
15
false Employer's Quarterly Tax Returns, Forms 941, for the
16
calendar quarter ending September 30, 1989. Each return
17 0

falsely stated that all the taxes for the quarter" had been
18
paid. The- clients who receiv~d these returns were thereby
19
falsely led to believe that all their taxes had been paid.
20
Later, when the IRS discovered the shortage and notified the
21
clients and Hamilton Taft, the clients who inquired were again
22
deceived when Hamilton Taft employees, at Armstrong and Fowles'
23
direction, falsely stated that the reason for the non-payments
24
was a temporary problem with Hamilton Taft's computer software
25

26 I N DIe T MEN T
(Armstrong & Fowles) 8

000008
 1
or was due to a "banking problem_" __ _
2
Ibe Coyer-up Method Changes
, 3: 21. Beginning in the first quarter of 1990,
4
Armstrong directed the systematic holding back of taxes early
5
in 8 quarter, intending that the taxes would be paid around the
6
time the employer quarterly tax ·returns were due to be filed
7
several months later. After the end of each quarter, when the
S
-tax return filing'dat~ was near, the unpaid taxes were paid
9 .
with funds received from other clients,---whose own taxes were
- 10
about to be d4e. Another, larger round of holding back taxes
11·
D 6vas then ~ecessary. By choosing to pay past due taxes instead
12
...
. , of currently due taxes, Armstrong was able to delay,' for a much
.
... ",13
.' '.':: ... . .longer time,o:dJscov~ry by the clients that their taxes had been
"t".A~
'!'~"".. "....
. a a.
f
. ..
.~"'.".. I . . . . . . . . .
.
. a
.-;....-<.~. -: '08 -4 liL·:ia
.... 1~' "~~'.,
te:: -:-A"t
..'
the "same time,
'.
he was able to crea te the false
';. .' 'i!!,~re,ssion that -Hamilton Taft·s bu'siness was running smoothly.
,:.". .i).6 • _.
'!if • " , -'. In' fact,' Hamilton Taft was 'insolvent and heading toward
17 .... "0

co11apse. MOreover, by choosing to pay past due taxes instead

18
. of currently due ta~es, Armst.,rong increased Hamilton Taft I.S
19 c
.penalty liability b'ecal:lse the failure to deposit penalty on the
20
currently due ta~xes would be f fve percent,o while the fl ve per:.-
2~
cent failure to deposit penalty on the overdue taxes had
·22
already accrued and the only additional penalty would be the
·23
fail~re to· pay pen~lty of one-half percent each month the taxes
24 '
remained unpaid . ,
25.

,. ·26 I N D-I C T MEN T

(Armstrong & Fowles) 9

OOOOD9'~" .
 1
Selected Clients' Taxes ~re Not Held BacK
2
22. Some of Hamilton Taft's clients had contracts
3
that reqUired Hamilton Taft to verify each deposit of federal
taxes during a quarter. To ensure the success of th~ cover-up,
5 ~
Armstrong and Fowles directed that the taxes -of these clients
6 . - . :>
not be held back. The remaining clients would ~eceive notice~
.7
of late payments (typically, about six months after ~hey had
B
transferred funds to Hamilton Ta[t)~ but Ham-ii-to~r,. Ta(t:'.Jol\(P' " .'.-,
9 ~ __ : •• 11 . ~ _ :"', L .1": .":.: - ... :_ &..

pay the late penalties and, it would appear to't-he' G,li~l.,~olQ~" "',,~:'
10 ,,' " •. '. , '. "', :''''6 ~=' .
the 1a te pa ymen t wa san i so 1 a ted, i nnocen t pc CU ~ renCf.! ~," :. ....?:i'
".!lI
11 .. , • "..:

...
I ~
".-
..... ~-
',' ,.'_ .::::, :
Moreover, as Armstrong and Fowles knew, Hamiltorl Tafte~mp16ye;:'o
12
...,ho responded to Inqui res did not know the re~son.:, £,Of.', t~ .l·~e
13 _* ~.' 0.

penalties and could only give misleading responses., -:i_a'

14 ..'.: •. p.- ,-,.;
ArmstrooQ Sto~ewalls '
C). _ .. .•~ Iti'"
15
23 • Fin a 11 y l i n ear 1 y Mar ch 1 9 9 1 , wtj"en a.-" Ham ~ 1 ec?n" _.' ..., _,', ..
16 ~.:' ~~.-~ -~ " • f..,·.aI> . t;
Taft employee notified some of the clients of th';-' sys terns t '£:'6-<>'~' ,- .
17 , '. . - ~ .-
diversionyof funds and the non-payment of ta~es, Armstrong"
18
falsely 'repr-esented' tq many cJ ients that the allegat:.ions were
19
false and that taxes. had been pa id iab:~-·-ohl~· oc'Qas Lonally e'

20 ,.
o
Armstrong also attempted to disseminate this false account·
21
through the medla.
22 " - 0
24. The language contained In ~aragraph5.~ - 2) is
23
incorporated by reference in Counts One through T~enty-One
24
e:!nt i rety ... ,: -~~,,~"'~ ~.
25 .. ...., ... ::: . . Lrf_£ ....... ,~J_~
_ . :-~.:;8 ~ I - ..,.: ....
.

26
... -:~.'.:.:~~,'
..
..:~:~ ,'~
: - , : ~.

..... '
. "
<>
 1
COUNTS RELATING TO THE PAYRQL~ TAX SERVICE PROPOSALS
2
COUNT ONE: (18 u. S • C. §§ 2314, 2)
3
The Grand Jury charges that:
4

5 ----
On or about September 27, 1989, in the Northern
District of California and elsewhere 4
.. --.--.. - --.' -. - .~-
6
CONNIE C. ARMSTRONG, JR., and
7 RICHARD A. FOWLES,
8 defendant herein, having devised a~d intending-to devise a
9 scheme and artifice to defraud and to obtain money by means of
10 false and fraudulent pretenses, representations and promises,
11 did knowingly and for the purpose of executing the scheme,
12 cause and induce representatives of Commercial Credit Group,
13 Inc. to travel in interstate commerce from Baltimore, MD, to
14 San Francisco, CA,.for a meeting with Hamilton Taft
15 representatives concerning Hamilton Taftls proposal to provide
16 payroll tax services to Commercial Credit.
17 COUNT TWQ: (18 U.S.C. § 2314, 2)

18 The' Grand Jury further charges that:

19 On or about April 26, 1990, in the Northern District
. r - - -.. -~---"-'"''
20 of California and elsewhere,

21 CONNIE C. ARMSTRONG, JR. and

RICHARD A. FOWLES,
22
defendants herein, having devised and intending to devise a
23
scheme and artifice to defraud and to obtain money by means of
24
.false and fraudulent_pretenses, representations and promise~,
'"'~ . 25

26
..
.- ~- .of: . . - • .1 _ ••

.- 000011
1
did knowingly and for the purpose ~~executing the scheme,
2

3
cause and induce representatives of R. R. Donnelley & Sons
"""'--
Company to travel in interstate commerce from Chicago, IL, to
---~- _.- -- .... ---

4
San Francisco, CA, for a meeting with Hamilton Taft
5
representatives concerning Hamilton Taft's proposal to provide
6
payroll tax services -to R. R. DonnelleY.-
7
COUNT THREE: (18 U.S.C. § 2314)
8
The Grand Jury further charges that:
9

10 -- .--
On or about June 6, 1990, in the Northern District of
,. __ . --.
California and elsewhere,
11
CONNIE C. ARMSTRONG, JR.,
12
defendant herein, having devised and intending to devise a
13
scheme and artifice to defraud and to obtain money by means of
14
false and fraudulent pretense~, representations and promises,
15
did knowingly and for the purpose of executing the scheme,
16
cause and induce representatives of Scott Pa~r Company to
17 ---- ---- - .-. . .
travel in interstate commerce from Philadelphia, PA, to San
18.
Francisco, CA, for a meeting ~ith Hamilton Taft representatives
19
concerning Hamilton Taft's proposal to provide payroll tax
20
services to Scott Paper Company.
21
II
22
II
23
II
24
II
25
26 . 'I . "N-- D I e T ME- N T
(Armstrong & Fowles) 12

000012
 1
CQUNTS RELATING TO TAX SERVICE AGREEMENTS
2
COUNT FOUB: (18 U.S.C. § 1343, 2)
3
The Grand Jury further charges that:
4
On or about December 5, 1989, in the Northern
5
District of California, and elsewhere,
6
CONNIE C. ARMSTRONG, JR. and
7 RICHARD A. FOWLES,

8 defendants herein: for the purpose of executing the scheme to

9 defraud and to obtain money by means of false and fraudulent
10 pretenses, representations, and promises, and attempting to do
11 so, did knowingly cause to be transmitted by means of wire
12 communication in interstate commerce a facsimile copy of a
13 signed Tax Service Agreement from Sunbelt Beverage in
14 Lutherville, MO, to Hamilton Taft in San Francisco, CA.
15 COUNT FIYE: (18 U.S .. C. § 1343,2)

The Grand Jury further.charges that:

.17 On or ~bout December 15, 1989, in the Northern

18 District of California, and elsewhere,
19 CONNIE C. ARMSTRONG, JR. and
RICHARD A. FOWLES,
20
defendants herein, for the purpose of executing the scheme to
21
defraud and to obtain money by means of false and fraudulent
22
pretenses, representations, and promises, and attempting to do
23
so, did knowingly cause to be transmitted by means of wire
24
communication in interstate commerce a facsimile copy of a
25

26 I N DIe T MEN T
(Armstrong & Fowles) 13

00001& .
 1
signed Tax Service Agreement from the Kendall Company in
2
Boston, MA, to Hamilton Taft in San Francisco, CA.
3
COUNT SIX: (18 U.S.C, § 1343)
4
The Grand Jury charges that:
5
On or about September 18, 1990, in the Northern
6
District of California, and elsewhere,
7
CONNIE C. ARMSTRONG, JR.,
8
defendant herein, for the purpose of executing the scheme to
9
defraud and to obtain money by means of false and fraudulent
10
pretenses, representations, and promises, and attempting to do
11
so, did knowingly cause to be transmitted by means of wire
12
communication in interstate commerce a facsimile copy of a
13
signed Tax Service Agreement fr9m Jim Beam Brands Company and
14
JBB Spirits Inc. in Deerfield, IL, to Hamilton Taft in San
15 •
Francisco, CA. ,. '"
Q•
16 ,;,-
.0

17
COUNTS
. RtLATINe
. .
TQ THE DIVZRSION- Of fUNDS NEEPED FOR TAXES
.'
(18 U.s.C. §. 1343,. 2-»
18
The Grand Jury futtDer cha~ges that:
19
On or about September
-,_ .... -
------~ "-
I, 1989, in the Northern
... - ""-- ~. .-~' ~.
20
District of California and elsewhere,
21
CONNIE C. ARMSTRONG, JR., AND
22 RICHARD A. FOWLES,
23 defendant herein, for the purpose of executing the scheme to

24 defraud ~nd to obtain money by false and fraudulent- pretenses,

25 representations, and promises, and attempting to do SOl did
26 I N DIe T MEN T ...
(Armstrong & Fovles) 14

000014
 1
knowingly cause to be transmitted ~y_means of wire
2
communication 1n interstate commerce from a Hamilton Taft Smith
3
Barney account in Newport Beach, CA, to State street Bank &
4
Trust Company, Boston, MA, f/b/o Dresdner Enterprises, Inc., a
5
money wire transfer in the amount of $1 million.
6 -------
QQUNT EIGHT: (18 U.S.C. §§ 1343, 2)
7
The Grand Jury further charges that:
8
On or about November 14, 1989, in the Northern
9
District of California and elsewhere,
10
CONNIE C. ARMSTRONG, JR. Bnd
11 RICHARD A. FOWLES,

12 defendants herein, for the purpose of executing the scheme to

13 defraud and to obtain money by false and fraudulent pretenses,
14 representations, and promises, and attempting to do so, did

15 knowingly cause to be transmitted by means of wire

16 communication in interstate commerce from a Hamilton Taft"Bank

17 of America account in San Francisco, CA, to state street Bank

16 and Trust Company, Boston, MA, f/b/o Dresdner Enterprises,
19 Inc., a money ~ire transfer i; the amount of $1.1 million.

20 II
21 II
22 II
23 II
24 II
25 II
26 I N Die THE N T
(Armstrong' Fowles) 15

000015
 1
/18 U.S.C. ~O 43 I 2
2
The Grand Ju r that:
3
On or t ery S, 1990, in the Northern
4
Distri 1iforn1a elsewhere,
5
CONNIE C. ARMSTRONG, JR.
6 RICHARD A. FOWLES,
7 fendents herein, for the e of execut the scheme to
8 defraud and to obtain money se fraudulent pretenses,
9 representationsJ and omises, and attemptlng to do so, dld
10 knowl cause transmi by means of wire
11 communicat in interstate commerce from a 1 it Smith
account in Newport Beach, Sta Street Bank "
Trust Company, Boston, MA, Win Realty
Company,
----_._------_.-
... -- .
a ---.~

14 money wire trans in amount of $9.8 million.

. ---.- ---- .-~ ~

IS (18 U.S.C. §§ 1343, 2)

16 Grand Jury further cha that:
On or about May 2, 1990, in Nor rn District of
18. California and elsewhere,
19 -
CONNIE C. ARMSTRONG. JR.
Rl A. FOWLES,
20
defendants rein, for the purpose of executl s
21
fraud obtain money by false and fr t es,
22
esentations l and promises, and et ting do so, did
23
-~nowihgly cause to transmit means of wire
- -communlcat1on r in rsta commerce fLom a Hamilton Taft ~anx
25

26
.
I N D I C T MEN T
( t ~ Fowles) 16

OQOOl6
 LJ c..'
1
of America account in San Francisc~~_CA, to a Dresdner
2
Petroleum, Inc., Bank One account in Dallas, TX, a money wire
3
transfer in the amount of $4 million.

COUNT ELEVEN: (18 U.S.C. I 1343)

5
The Grand Jury further charges that:
6
On or about September 4, 1990, in the Northern
7
District of California and elsewhere,
8
CONNIE C. ARMSTRONG, JR.,
9
defendant herein, for the purpose of exe-cuting the scheme to
10
defraud and to obtain money by false and fraudulent pretenses,
11
~epresentations, and promises, and attempting to do so, dld
12
knowingly cause to be transmitted by means of ~lre
13
communication in interstate commerce from a Hamilton Taft Bank
14
of America account in San Francisco, CA, to First National Bank
15
of Chicago, Chicago, 1111nois, {Ib/o Winthrop Realty ~ornpanYI a
16
money wire transfer in the amount of $2 million.
17
COUNT TWELVE: (18 U.S.C. § 1343)
1B
The Grand Jury furtper charges that:
19
On or about September 10, 1990, in the Northern
20
District of California and elsewhere,
21
CONNIE C. ARMSTRONG, JR.,
22
defendant herein, for the purpose DE executing the scheme to
23
defraud and to obtain money by false and fraudulent pretenses,
24
repre?entations, and promises, and attempting to do so, did'-
25
, "--

26 I N DIe T MEN T
(Armstrong' Fowles) 17

000017
 c. I

1
knowingly cause to be transmitted ~y_means of wire
2
communication in interstate commerce from a Hamilton Taft
3
Security Pacific account in San Francisco, CA, to a Remington
4
Companies, Inc. Bank One account in Dallas, TX, a money wire
5
transfer in the amount of $1.7 million.
6
COUNT THIRTEEN: (18 U.S.C. § 1343)
7
The Grand Jury further charges that:
8
On or about September 12, 1990, in the Northern
9
District of California and elsewhere,
10
CONNIE C. ARMSTRONG, JR.,
11
Qefendant herein, for the purpose of executing the scheme to
12
defraud and to obtain money by false and fraudulent pretenses,
13
representations, and promises, and attempting to do so, did
14
knowingly cause to be transmitted by means of wire
15
communication in interstate commerce from a Hamilton Taft
16
Security Paciflc account in San Francisco, C~, to a Remington
17
Companies Inc. Bank One account in Dallas, TX, a money wire
18
transfer ·in the amount of $3.) million.
19
COUNT FQURTEEN: (18 U.S.C. § 1343)
20
The Grand Jury further charges that:
21
On or about December 5, 1990, in the Northern
22
District of California and elsewhere,
o .
23
CONNIE C. ARMSTRONG, JR.,
24
defendant herein, for the purpose of exec~ting the scheme to
25

26 I N DIe T MEN T
(Armstrong ~ Fowles) 18

000018
 1
defraud and to obtain money by false and fraudulent pretenses,
2
representations, and promises, and attempting to do so, did
3
knowingly cause to be transmitted by means of wire
-4
communication 1n interstate commerce from a Hamilton Taft
5
Security Pacific account in San Francisco, CA, to a
6
Knightsbridge Treasury Bank One account in Dallas, TX, a money
7
wire transfer in the amount of $1.1 million.
8
COUNTS RELATING TO THE PAYMENT OF LATE TAXES
9 WITH FUNDS RECEIVED fOR CURRENTLY DUE TAXES
10 COUNT FIFTEEN (18 U.S.C. § 2314, 2 )-- JS-R Do4Z7JJ..r~

11 The Grand Jury further charges that:

12 On or about April 12, 1990, in the Northern District of
13 California, and elsewhere,
14 CONNIE C. ARMSTRONG, JR., and
RICHARD A. FOWLES,
15
defendants herein, did cause to be transported in interstate
16
commerce from Hami~ton Taft in San Francisco, CA, to the North
17
Carolina Nat10~al Bank in Ashville, NC, securities having an
18
aggregate value of approxlmat~ly $19.4 millon, kno~lng that the
19
securities yere traceable to funds that were wrongfully
20
converted and taken by fraud.
21
1/
22
II
23
II
24
/1
25 :-- :".•. "-u ..

26 I N DIe T H tNT
(Armstrong ~ Fo~les) 19

0000]9
- ,
L

1
COUNT SIXTEEN: (18 U.S.C. § 2314)
2
The Grand Jury further charges that:
3
On or about August 1, 1990, in the Northern District of
4
California, and elsewhere,
5
CONNIE C. ARMSTRONG, JR.,
6
defendant herein, dId cause to be transported in interstate
7
commerce from Hamilton Taft 1n San Francisco, CA, to the North
8
Carolina National Bank in Ashville, NC, securities having an
9
aggregate value of approximately $37.8 ml111on,~knowing that
10
the securities were traceable to funds that were wrongfully
11
~onverted and taken by. fraud.
12
COUNT SEVENTEEN: (18 U.S.C. § 2314)
13
The Grand Jury further charges that:
14
On or about November 1, 1990, in the Northern District of
15
California, and elsewhere,
16
CONNIE C. ARMSTRONG, JR.,
17
defendant herein, did cause to be transported in interstate
18
commerce from Hamilton Taft in San Francisco, CA, to the North
19
Carolina National Bank in Ashville, NC, securities having an
20
aggregate value of approximately $45.0 million, knowing .that
21
the securities were traceable to funds that were wrongfully
22
converted and taken by fraud.
23
/1
/1

26 1 N DIe T MEN T
(Armstrong & Fowles) 20

000020
.-" c.·

1
COUNT EIGHTEEN: (18 U.S.C. ~ 23 14 1__
2
The Grand Jury further charges that:
3
On or about February I, 1991, in the Northern District of
4
California, and elsewhere,
5
CONNIE C. ARMSTRONG,
6
defendant herein, did cause to be transported in interstate
7
commerce from Hamilton Taft in San Francisco, CA, to the North
8
Carolina National Bank in Ashville, Ne, securities having an
9
aggregate value of approximately $57.0 million, knowing that
10
the securities were traceable to funds that were wrongfully
11
converted and taken by fraud.
12
COUNTS RELATING TO THE DENIAL OF SOLODQFF'S ALLEGATIONS
13
COUNT NINETEEN: (18 U.S.C. § 1343)
14
The Grand Jury further charges that:
15
On or about March 12, 1991, in the Northern District
16
of California,
17
CONNIE C. ARMSTRONG, JR.,
18
defendant here~n, for the purpose of executing the scheme to
19
defraud and to obtain money by false and fraudulent pretenses,
20
representations, and promises, and attempting to do so, did
21
knowingly cause to be transmitted by means of wire
22
communication in interstate commerce fro~ San Francisco, CA, to
23
Advo System Inc., Windsor, CT, a facs imile let~eI'_ dated· March
24
12, 1991, signed "Connie C. Armstrong, Jr."
25

26 I N DIe T H:E N T
(Armstrong & Fowles) 21

000021
-
1
COUNT TWENTY: (18 U.S.C. § 1343)
2
The Grand Jury further charges that:
3
On or about March 12, 1991, in the Northern District
4
of California,
5
CONNIE C. ARMSTRONG, JR.,
6
defendant herein, for the purpose of executing the scheme to
7
defraud and to obtain money by false and fraudulent pretenses,
B
representations, and promises, and attempting to do so, dld
9
knowingly cause to be transmitted by means of wire
10
communication in interstate commerce from San Francisco, CA, to
11
Federal Express Corporation, Memphis, TN, a facslml~e ~etter
12
dated March 12, 1991, signed nConnie C. Armstrong, Jr."
13
COUNT TWENTY-ONE: (18 U.S.C. § 1343)
14
The Grand Jury further charges that:
15
On or about March 12, 1991, in the Northern District
16
of California,
17
CONNIE C. ARMSTRONG, JR.,
18
defendant herein, for the purpose of executing the scheme to
19
defraud and to obtain money by false and fraudulent pretenses,
20
representations, and promises, and attempting to do so, did
21
II
22
II
23
II
24
II -
25

26 I N DIe T MEN T
(Armstrong & Fowles) 22

000022
 1
kno~lngly cause to be transmitted Qy_means of wire
2
communication in interstate commerce from San Francisco,
3
Scott Paper Company, Phlladelphia, PA, a facsimile letter
4
( March 12, 1991, signed "Connie C. Armstrong, Jr."
5
DATED: A TRUE EILL.
6
rHE DEf
7
pleac
8 FOREPERSON
'0
!
pleat
whic
9
71 was
~ afte 10
TItle 8L 11

lau.S. 12 Approved as to Form: 4,1V

AUSA: LUCKEL
13
18U.E
14

15
16
17
to thl
18
19

20

21

22

') 23

24

2S

26 I N DIe THE N T
(Armstrong & Fowles) 23