|
TRI-STAR CASE
INFORMATION PAGE
Updated 2/6/2006.
--------------------------------------------------
Thomas F. McCleery, et al, Plaintiffs
v.
James Charles Reives, Louis Michael Lazorwitz,
Jackie Dobson Pritchett, Lazor, Ltd., and Tri-Star Investment Group, LLC
a/k/a Tri-Star Investment Group, Defendants
Wake County, North Carolina Superior Court
Case No. 04-CVS-8736
--------------------------------------------------
CURRENT STATUS
FREQUENTLY ASKED QUESTIONS
DOCUMENTS FILED IN THE NORTH
CAROLINA CIVIL CASE
INFORMATION FROM THE U.S.
ATTORNEY'S OFFICE ON THE FEDERAL CRIMINAL CASES AGAINST LAZORWITZ, REIVES, AND
PRITCHETT
--------------------------------------------------
CURRENT STATUS
The
Default Judgment
and Order was signed by the Hon. John R. Jolly, Jr., Special Superior Court Judge,
on January 31, 2006.
Judge Jolly found the Defendants jointly and
severally liable to the Plaintiffs for compensatory damages totaling $55,796,042.21 and
for punitive
damages totaling $167,388,126.63, for a total damages award of $223,184,168.84.
Note, however, that obtaining a judgment and practically enforcing it and recovering assets are separate matters.
As recovery by the Justice Department in the criminal case via asset forfeiture
and restitution has been only nominal, no one should hold unreasonable hopes for
a significant civil recovery through enforcement of the civil judgment in this
case. However, victims may be able to lower their income tax liabilities
by deducting Tri-Star losses. See Is there any thing
I can do to catch a break here?? below in the Frequently Asked
Questions.
--------------------------------------------------
FREQUENTLY ASKED
QUESTIONS:
Q: Will I get my money back?
A: It is too early to tell how much money, if any, will be available for
distribution to the Plaintiffs. It appears
likely that recovered assets will be considerably less than the sum of the
Plaintiffs’ original investments.
Q: Is there anything
I can do to catch a break here??
A: You may be able to lower your income tax liability by deducting your Tri-Star
loss (the actual amount of post-tax cash invested - not the lost "profits"
promised).
Victims of investment fraud may deduct their
investment losses as any other investment loss as a standard capital loss. You
can apply the full amount of your Tri-Star investment loss as a long-term
capital loss to offset long-term capital gains. However, you can deduct only
$3,000 of excess long-term capital losses against ordinary income.
Proper characterization of an investment fraud loss as a theft loss for tax
purposes affords significantly greater tax advantages. Generally, under tax law
principles, investment fraud is considered to be theft, if the investment was
sold by the issuer in a fraudulent manner.
A properly characterized theft loss deduction allows an investment fraud victim
to reduce his or her taxable income by the entire amount of the loss, possibly
even reducing taxable income to zero. If the amount of the deduction is more
than the year's income, the excess can be carried back up to 3 years to effect a
refund of back taxes paid, and/or the loss can be carried forward for up to 15
years to reduce future taxes owed.
The following table illustrates the difference between a standard capital loss
deduction and a theft loss deduction for the same loss for three hypothetical
victims of investment fraud:
|
Investor |
Amount invested and lost to fraud |
2006
taxable income |
Combined federal and state marginal income
tax rate |
2006
capital gains |
Reduction of 2006 tax liability if treated as a capital loss |
Reduction of 2006 tax liability if treated as a theft loss |
| Investor A
|
$10,000 |
$50,000 |
20% |
-0- |
$600 |
$2,000 |
| Investor B |
$20,000 |
$80,000 |
30% |
$5,000 |
$1,900 |
$6,000 |
| Investor C |
$100,000 |
$250,000 |
38% |
$20,000 |
$5,140 |
$38,000 |
The potential reduction in income taxes by
means of a theft loss deduction probably is Tri-Star investors' best - and most
economically efficient - means of recovering some portion of their losses.
Note that any recovery, restitution or reimbursement received by a fraud victim
must be included in the victim's taxable income to the extent that a deduction
for the loss was claimed in a prior year.
IRS regulations require us to inform you
that this information is not intended or written by us to be used (and cannot be
used by you) for the purpose of avoiding penalties that may be imposed with
regard to the tax consequences arising from any matters discussed above or for
the purpose of promoting, marketing or recommending to another party any
potential course of action addressed above.
Q: What about the profits that the Defendants made from the Tri-Star
investment program?
A: It is unlikely that investor funds were invested in or used for any
investment program. We believe that the investment program allegedly operated by
Tri-Star was nothing more than a pyramid scheme. We believe that any payments
made to investors were not derived from investment profits, but rather from
investment principal from other investors.
Q: What if I have information that may be helpful in recovering assets?
A: You may contact us by e-mail at
criser@riserlaw.com or by post at 1827 Powers Ferry Rd. SE, Suite 1-200,
Atlanta, GA 30339. Also, you may contact the U.S. Attorney for the Eastern
District of North Carolina by mail at United States Attorney's Office for the
Eastern District of North Carolina, 310 New Bern Avenue, Suite 800, Raleigh,
North Carolina 27601 or by telephone at 919-856-4530.
--------------------------------------------------
DOCUMENTS FILED IN THE
NORTH CAROLINA CIVIL CASE
To view these documents you will need have
Adobe Reader installed. If you do not have it installed, you can
download the
Reader for free.
1. Cover
Page, Complaint, Motion for Preliminary Injunction and Temporary Restraining
Order, Exhibits A - D, Summons
2.
Affidavits of Service (for all
defendants)
3.
First Amended Complaint
4.
Second Amended Complaint
5.
Third Amended
Complaint
6.
Fourth Amended
Complaint
7.
Motion
for Entry of Default
8.
Entry of Default
9.
Motion for Default Judgment
10.
Proposed Judgment and Order
11.
Notice of Hearing
(Motion for Default Judgment)
12.
Default Judgment
and Order (signed and entered)
--------------------------------------------------
INFORMATION FROM THE U.S.
ATTORNEY'S OFFICE ON THE FEDERAL CRIMINAL CASES AGAINST LAZORWITZ, REIVES, AND
PRITCHETT
U.S. Attorney's Office Tri-Star
Case Web Page
In order to participate in the criminal restitution process
to share pro rata in assets recovered by the U.S. Department of Justice (an
action separate from the North Carolina state civil case), Tri-Star
victims must have submitted a completed questionnaire and supporting
documentation to the Office of the U.S. Attorney for the Eastern District of
North Carolina by December 8, 2004. The criminal restitution hearing
was held on December 13, 2004. No more Tri-Star victims will be added to
the
final federal criminal restitution victim list.
Non-inclusion on the federal criminal restitution list
does not preclude a plaintiff in the North Carolina state civil court case from
sharing in any judgment recovery in the North Carolina state civil court case
(no guarantees are made or implied regarding judgment or recovery in the civil
case). The North
Carolina state court civil case and the federal criminal case are separate
matters.
The following documents are available for download from
the U.S. Attorney's Office Tri-Star page.
To view these documents you will need have Adobe
Reader installed. If you do not have it installed, you can
download the
Reader for free.
Restitution Letters and Lists
Louis Michael Lazorwitz
Jackie Dobson Pritchett
James Charles Reives
|
