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Judicial Nominee At Center Of Shoreline “Gifting” Case

by marcia chambers | Jan 30, 2013 3:41 pm

(9) Comments | Commenting has been closed | E-mail the Author

Posted to: Legal Writes

Thanks to coincidental timing, Shelley Marcus suddenly finds herself facing two high-profile lines of questioning at once—one involving her fitness to serve as a state judge, one involving a federal fraud court case.

Governor Dannel P. Malloy nominated Marcus last week to become a new Superior Court judge. To get there she has to be approved by the state legislature after a confirmation hearing.

Meanwhile, she has been called to testify in an unrelated case—involving her role in giving advice to a shoreline “gifting table” group.

A gifting table is described by the U.S. Attorney’s office as a four-level pyramid, with eight participants assigned to the bottom row, four participants assigned to the third row, two participants assigned to the second row, and one participant assigned to the top row, the “dessert” of the dinner. Those below are “Entrees,” and those below them are “Soup and Salads.” The lowest rung, the eight who join by each giving $5,000 to the dessert, are known as the “Appetizers.”  The table is dependent upon new participants coming in and paying $5,000 to the person in the “dessert” position, thus enabling the others to move up. Those reaching the top of the pyramid got $40,000.

Two of the major organizers of one such table on the shoreline are currently on trial in U.S. District Court in Hartford. The third pleaded guilty last month and is expected to be sentenced in federal court in March. 

A group of women who actively participated in the so-called “table” told a federal jury yesterday they believed the tables were legal because lawyers and accountants had vetted the group’s guidelines.

The afternoon witnesses, three in all, rejected the idea that tables were based on a pyramid scheme where one main person pulls in all the money. They all referred to a gifting table guideline book that included a section entitled 12 reasons why gifting tables are legal.

Shelley Marcus and her father Ed, partners in the Marcus Law Firm, have been called by both the government and the defense to testify to their role in providing advice to the gifting table group. Several years ago he represented the women now on trial.

That both sides in a criminal case want their testimony is itself unusual. It is not clear when they will testify. There may well be other attorneys who gave advice on gifting tables over the years. The tables have been in existence for over 30 years, first starting in Canada,  and during that period of time laws change.

Shelley Marcus’s name came into testimony at the trial the same week as her nomination to the bench by the governor.

Her father’s involvement in the case is well-documented. Her participation first came to light last week. She and 15 other nominees will participate in a judicial confirmation hearing before their nominations are approved.

Ed and Shelley Marcus are the only partners in the Marcus Law Firm, formerly of New Haven and now located in North Branford. Both live in Branford, she in short Beach, he in Stony Creek.

They served as Branford’s town attorneys between 2005 and 2007 during former First Selectwoman Cheryl Morris’s term. The firm has also been sued by the town of Branford for malpractice in 2008.  That lawsuit is still pending with trial expected to begin in June.

Ed Marcus, former state Democratic chairman, once represented two of the women now on trial in U.S. District Court in Hartford, and they have said he told them the tables were legal.  They are Donna Bello, 56 and Jill Platt, 65, both of Guilford. They are charged with federal violations of wire fraud, filing false tax returns and engaging in a conspiracy from 2008 to 2011.  The trial is being heard before U.S. District Court Judge Alvin Thompson.

Ed Marcus told the New Haven Register in 2009 that “we represent several people that have been contacted by the attorney general’s office.” When asked if the gifting circle was legal, he said, “My position is that it is legal” and that “sometimes people are required to retain counsel to protect their position.”

The Register broke the story about the alleged scam after it sent one of its reporters, Susan Misur, to gifting table events. She had been invited to one of the gatherings. She did not tell the group she was a reporter. Then-Attorney General Richard Blumenthal was also investigating the gifting tables, and eventually the U.S. Attorney’s office convened a grand jury to investigate. Some of the women have pleaded guilty or made restitution. 

Yesterday in court, Norm Pattis, who represents Bello, a former hairdresser, asked one of the witnesses about Ed Marcus: “Did he ever say the tables were illegal?” The witness said no. 

Over the course of the day the jury learned from the defense that gifting tables started in Canada more than 30 years ago, that they are well known in states like California and Florida and New York, and that prosecutions, if any, vary from state to state. The jurors, 15 in all because three are alternates, were attentive. They include 10 women and five men.

The “Guidelines” Book

Both Ed and Shelley Marcus have apparently retreated from their position that the tables were legal, those involved in the case say. Whether attorney-client privilege will be an impediment to their testimony remains to be seen. They have said that because they have been called to testify they will not comment.

According to a report last week in the Hartford Courant, Platt’s attorney, Jonathan Einhorn, said he learned of Shelley’s Marcus’s connection to the handbook when he visited Platt at her home. The Courant said Internal Revenue Service agent Eric Wethje testified that Platt told him that Shelley Marcus had suggested changes to a gifting table guidelines by which the club operated. The IRS conducted the investigation. Shelley Marcus has now denied her involvement, the attorney says. 

The guidelines book is central to the gifting group operation. Every member gets a copy.

The handbook, which witnesses indicated yesterday is updated from time to time, maintains the gifting tables are legal and cites U.S. tax codes that say gifts to others are legal as long as they are under $13,000. The IRS, the lead investigator in the federal case, says otherwise. 

According to the Courant, Bello’s attorney, Norm Pattis, asked Wethje last week if Ed and Shelley Marcus were ever considered “subjects” of the IRS investigation.

At the outset of the investigation, Wethje said and the Courant reported that investigators “had to figure that out.”

Pattis took the line of questioning a step further. “Did Mr. Marcus almost get indicted?” he asked. Assistant U.S. Attorney Douglas Morabito objected to the question and Judge Thompson sustained the objection, the Courant reported.

Angela Duvall, who lives in Naples, Florida, and joined the gifting table in her state in 2007, testified in court yesterday. She said she knew Bello, Bello’s sister and mother, all of whom were engaged in gifting table groups in Florida.

Duvall described herself as a “goody two shoes,” someone who cares about legalities. She read the guidelines carefully and talked to many people about it. She and other witnesses rejected the idea that the tables were actually pyramid schemes dependent upon newcomers for the tables to work. 

She said women across professional lines joined the tables and their presence gave credibility to the tables. At one point at yesterday’s court session, Pattis asked witnesses about the legal aspects of the tables, noting along the way that a practicing attorney (from New Haven) was once part of a group.  He did not name the lawyer.

In court yesterday Pattis noted with some witnesses that the head of the table “wasn’t a Bernie Madoff who ruled at the top” for decades. It might take some months, but eventually the person at the gifting table top, the one who reached the grand gift of $40,000, would be displaced by those moving up.

Overall 15 women play at one table, eight were appetizers, donating $5,000, four were salads and soup, two were entrees and one was dessert. Sometimes the women joined two or three tables simultaneously. The table was dependent upon one woman bringing in two more. 

“After I joined,” said Duvall, we were told the guidelines were amended over the last four years to keep us legal. “We had the tax laws in front of us. They said we could give or receive $13,000 in gifts each year without reporting it to the IRS. It was legal.”

The guidelines say that as of 2007 “you are allowed to give up or receive up to $13,000 from any number of people per year without incurring tax liability.”

“Why did you join?” the prosecutor asked. Duvall said she was a wallflower. “They opened their arms. They embraced me.” At the time she was caring for her husband’s dying parents, she said, and she was so depressed she was near to suicide. She agreed when Pattis under cross-examination described the tables as “a godsend in your life.”

Over four years she said she earned $22,500. Like a number of women in the tables, she gave the money to another woman who was down and out, she said.

She also said gifting tables were a hot topic in Florida and described a 9,000 square foot house with hundreds of women packed to the walls, all wanting to participate in the tables. She described a sisterhood among the women, a place where they became empowered.  Other witnesses also testified they were drawn by empowerment. 

Her experience with the Florida tables, including one major issue that developed when another table no longer wanted to follow the guidelines and she and others left it, was detailed to the jury via e-mails that appeared on screens for the jury to read.  She said she contacted Bello seeking her guidelines, which, she said, were legal. 

At the outset of her testimony Assistant U.S. Attorney Peter Jongbloed asked her if she had reached an agreement with the government regarding her testimony in court. She said “anything I say that is truthful cannot be used against me.”  She has also amended her tax returns to pay the government what she owns them, she said. 

The prosecutors took the various witnesses through their experiences with the tables. They elicited the fact that they were told by Bello and others to keep their money at home or in a safety deposit box. Going to a bank with $10,000 in cash, they all indicated, would be problematic because typically bank officials ask questions about such deposits. Some said they kept their cash in safety deposit boxes.  One of the defendants used her kitchen freezer.

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posted by: Walt on January 30, 2013  6:11pm

Good thing I am not in the Jury Pool

I’d be rejected for service as I could not swallow a claim that these educated ladies and their attorneys ddidn’tnow that this is just another Ponzi scheme   designed to bilk   most participants and help only those near the top of the chain when it is formed,  and that it mathematically guarantees that almost all newcomers are quickly left with empty   pockets

To me attorneys who aid in tricking people into being sucked into such plans should be charged as co-conspirators and probably disbarred.

I recall some years ago , a similar Ponzi scheme by a different name operating among New Haven City Hall folks when a few   founded a Ponzi deal and made quite a bundle but left others less connected, with empty pockets

No one got caught on that one .  Maybe this time is different

A shame..Just an opinion.  I just do not understand it if all get off without punishment.  Who is guilty ?  I don’t know,  but   someone was surely out to screw a naive neighbor   or friend ,

It is more a fraud case than a tax evasion case I would think,  but, as in the old gangland cases,  a tax-  deal conviction if that is all you can get. is still good

posted by: Noteworthy on January 30, 2013  6:14pm

It is very clear to me that the IRS case is arbitrary and hangs on the definition of “gift.” The code clearly allows tax free gifts. Moreover, I’m not surprised somebody said to keep the money at home - $10,000 in cash - would flag you not for the IRS but for the anti-terrorism task force, another group of federal heavy hands that take immense liberties. Every woman charged should get the same deal - if the IRS wants to change the definition of “gift” then they should all keep their money, report the income pay the tax accordingly or take it to court. This is not criminal nor is tax avoidance illegal nor is trying to avoid other federal agency problems.

posted by: Nan Bartow on January 30, 2013  7:10pm

This woman, Shelley Marcus, is nominated to be a new Superior Court judge by our governor????  Heaven help us.

posted by: Wildwest on January 30, 2013  7:51pm

funny how one prominent name is left out of this

posted by: HhE on January 31, 2013  2:18am

More of a pyramid scheme than a Ponzi:  money gets kicked up towards the apex from a base that needs to expand rather than investments being returned as earnings.  Still, high school civics is enough legal training to figure out that this is well short of legal.

On TV, judges are portrayed typically as learned jurists who struggle with tough questions, and most often get it right.  From what I have seen in family court, they are always looking for the easy answer, not the right one.  I’m told in criminal court it is often no better.  So I guess Atty. Marcus is qualified.

posted by: Walt on January 31, 2013  10:40am

HhE

Correct

I use the term as if they were the same frauds but they are not.  Similar though

As most are investing in the plans with the intention of profits,  quite close in meaning

Humbly

posted by: HhE on January 31, 2013  12:42pm

Walt, I hope I was not too hard or gave offense—it is the curse of having an English teacher for a mother, that I have this need to “fix” words.

I have to say, if the typical lawyer was a school teacher, they would be fired before the year was out.  God help them and their excuses if they were in the military. 

Cheers.

posted by: Walt on January 31, 2013  1:27pm

HhE

No offense

I get the same need occasionally

posted by: ohnonotagain on January 31, 2013  5:50pm

Very powerful family the Marcus folks. She should decline the nomination now and save everyone heart aches and humiliation. If she doesn’t the state delegation needs to just say NO!

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