James Faller: Conman or Dupe?
Businessman Imprisoned As Government Hid Evidence Showing Innocence
By Bill Moushey
James Faller claimed innocence in a complicated loan fraud from the time he reported it to Florida regulators more than 10 years ago, when he tried to explain it to an FBI Agent, when he was indicted, tried, convicted and sentenced to prison.
Along the way he infuriated federal prosecutors by making hundreds of allegations of misconduct at virtually every stage of his prosecution in the $3.6 million fraud because, he claims, they got the wrong guy.
He sent every member of Congress voluminous packages of documents showing he was a victim of the fraud, that prosecutors had illegally imprisoned him with false information three times, they had hidden exculpatory evidence and twisted innocent information into evidence against him.
While the feds angrily denied his accusations and won convictions against him in 2002, on the day he and a co-defendant were sentenced, they found an unlikely ally in the presiding federal judge:
“…having heard all the testimony, I didn’t come away with an overwhelming conviction that these defendants were participating in this… I could certainly see where they could have been duped…” said U.S. District Judge Kenneth Ryskamp of the U.S. District Court for the Southern District of Florida from the bench in September 2003.
Eight months later at the sentencing of the scam’s undisputed ringleader, Ryskamp again questioned whether justice was done.
“…I’ve heard the trial and I have some ambivalent feelings about their involvement or whether they might have been victims…,” the judge said. “I mean, some things just didn’t ring true. You know, the jury found as they did, but it always bothered me,” he said.
Despite that, James Faller, who was raised in Toledo before moving South to build and lose a fortune, has already done 636 days in prison and if his ardent prosecutors win an appeal, he could go back for as much as seven more years on convictions for taking advance fees for millions in loans that were never made. One of his co-defendants, Barbara Murray of Stamford, Conn., a woman Faller only met once before they were charged together in the conspiracy, is soon to follow if her appeal fails.
While Ryskamp voiced reservations, neither he nor two other federal magistrates in South Florida have granted relief for Faller and Murray.
Faller and Murray’s have always claimed the government improperly hid or twisted evidence and testimony to destroy their “good faith” defense in which they claimed they were victims of the scam’s ringleader – a Canadian con man with homes in South Florida and Europe named Richard Armand Adam.
Last spring, when Adam copped a plea in the case, an assortment of new documents surfaced that Faller and Murray say would have dramatically altered the outcome of their case.
They show prosecutors knew Adam was under investigation in several European countries for engaging in a wide assortment of crimes dating back to the early 1980s ranging from fraud to drug trafficking to money laundering for organized crime activities.
Found in numerous boxes of new evidence was a memorandum Faller had never seen from his initial prosecutor which backs his claim that he reported the scam to authorities as soon as it was discovered. While the government claimed Faller started a new firm to cut Adam out of the lucrative scam after he reported his boss, the newly discovered records show that entity was formed by Adam and the government knew it.
A spokesman for the United States Attorney for the Southern District of Florida has refused comment because of pending appeals. Spokesman Carlos Castillo pointed out what prosecutors have argued all along the way -- that while Faller has repeatedly made allegations of misconduct over the 10-year life of the case, not one judge has granted him relief.
Lives in Ruin
While Faller and Murray they have done time or face it, this case has left their lives in ruin.
Faller, who started with nothing when he met Adam, then built himself into a millionaire despite him, has lost his all his money, three businesses, four houses. His wife had a miscarriage during the ordeal and he lost custody of his children for a time over it.
Now, out of a federal jail in Miami, Faller has shed a long list of lawyers who were paid millions over the years and is representing himself in trying to get back into court for the first time to present thousands of pages of new documents from the ringleader’s case that show contradictions on virtually every central issue.
As he waits for an appeal of his conviction to be decided, he recently filed a series of motions to Ryskamp, not only asking the trial judge to dismiss the case but to refer the actions of agents and prosecutors in it to a federal grand jury.
“There can be no greater injustice than being accused of a crime that an individual is a victim of and the prosecution knows the individual did not commit,” he wrote in his motion.
Murray, 51, was in the real estate and related businesses before meeting Adam and going to work for him. She lost her real estate license after prosecutors reported her to state authorities, her businesses, relationships, and most importantly to her, her child-bearing years during this case. Beaten down, she simply wants the government to let her alone.
“I just want my freedom, that’s most important to me. I’ve done nothing wrong. All the papers show it. I just want my piece of mind. I want to live my life. This has destroyed my life,” she said.
The Rise and Fall
Faller was raised in West Toledo, graduated from Whitmer High School in 1978, then washed out after a semester at The University of Toledo before getting married by the time he was 19-years-old. He cleaned carpets and did odd jobs, then spent time in the heavy construction business. After the business failed, he studied for a stock broker’s license and in 1991, moved his family to Tampa for a new start.
In Tampa, Faller obtained a job in a brokerage and through a cold-call sales session was put in touch with Adam of Lighthouse Point, who gave him what turned out to be a phony bond to open an account. Adam convinced him at the time that he was a victim of fraud, the first of many plausible explanations.
Adam soon offered the aggressive Faller, at the time just shy of 30 years-old, a job working for his company that had control over multi-million-dollar European trusts that that made venture capital loans in the United States. Adam told him he could earn big money in this business – International Business Service Alliance – by collecting advance fees for the loans that were aimed at individuals and companies who could not qualify for conventional financing here.
Adam advanced money to Faller to lease a car, open an office with staff and retain a lawyer to handle loan closings. Murray went through the same process in Connecticut after she hired investigators and lawyers and accountants to check the business out.
In less than a year, Faller’s Tampa office had taken in about $1 million to fund more than $150 million loans, but none of them were closed so he began exerting pressure on Adam and his lawyer to produce. Murray, who had sold three times as many loans as Faller, was also becoming alarmed.
Adam told Murray and Faller the process was a slow one, and invited Faller to Luxemburg to see how it worked. While Faller was a relative neophyte in the financial world, during his 30-day trip, he became thoroughly convinced Adam had access to millions.
“He literally took me into banks and showed me accounts that held as much as $30 million,” says Faller, who says Adam told him to have closing documents prepared when he returned from Europe. Murray was fed the same story.
By October 1993, nine months after he went to work for Adam, despite numerous assurances from Adam and his American lawyer, Faller hired a private detective who discovered his boss had a fraud record in Canada.
Within 30 days, Faller, the lawyer he hired to do closings and the private detective reported Adam to the Florida state controller while Murray reported Adam to the FBI in Connecticut. The FBI in South Florida was also alerted.
Faller quit his job and told his clients Adam was a crook. When she took a few of her clients to Europe to confront Adam over the un-funded loans, Murray was fired.
The Investigation
Using contacts he developed in Europe during his visit to check out Adam, Faller joined a European brokerage, handling transactions on the American stock exchanges for non-citizens, earning him millions over three years. It was that money the government would later tell his jury was stolen from the advance fee clients when Faller says agents and prosecutors knew that was not true.
Faller said he invested about $1 million into an Ohio company developing an early detection machine for breast cancer. He partnered with a European businessman to start an internet service provider business in Augusta, Ga. Faller thought he was on a path to becoming extremely wealthy.
He was also in the middle of a divorce and a nasty custody fight with his first wife.
While he knew there was an investigation going on related to the reports he and Murray made to the government, it was during a custody hearing that Faller learned he was a target when an FBI Agent served him with a federal grand jury subpoena for handwriting exemplars in front of a family court judge.
He says the agent investigating the scam began turning up in virtually every aspect of his life. Federal agents and prosecutors had numerous contacts with bankers he was dealing with, accusing him of crimes ranging from drug smuggling to money laundering. Faller, who says he did not know Adam was involved in those types of activities at the time, said those contacts put severe strains on his business ventures that eventually went bad. In the breast cancer business, he would be slapped with a $3.8 judgment.
Indictments Handed Up and Faller Goes Down
In May 1997 a federal grand jury in South Florida indicted Adam, Faller, Murray and four others on 20 counts of mail fraud, conspiracy and illegal monetary transactions related to the scheme over the fees ranging from $25,000 to $350,000.
Despite Faller’s contention that he lost more money than any of the other victims in the scam, and that he actually loaned one of the victims money to pay the advance fee, the government alleged none of them attempted to secure the loans they were selling.
“In truth and in fact, the participants in the scheme have no capability to provide funding and do not fund the loans of the applicants; rather they merely convert the advance fees to personal use and/or use the money to finance the continuation and expansion of the scheme,” wrote James Mc Adams III, a former official in the U.S. Justice Department’s Office of Intelligence Policy Review, who returned to South Florida as a senior litigator just before Attorney General Janet Reno’s tenure ended. McAdams worked on several high profile cases, including the racketeering case against former Panamanian Dictator Manuel Noriega.
While Murray was granted bond, Faller was jailed after feds told a judge that he had $2 million in a suitcase, a pilot’s license, an alias, “Jarret Rouge,” and had made preparations to disappear. All of that would prove to be bogus. Adam was jailed without bond in Europe and a bank account with $11 million in it was frozen, even if prosecutors contended Adam had no money to loan to anyone.
Faller was locked up for 10 ½ months in the Palm Beach County Detention Center awaiting trial with a co-defendant named Rolan Colon, who unbeknownst to Faller had cut a cooperation deal with the government and became a “spy-in-the-camp” to tell the feds Faller’s defense strategy.
That was when Faller began a letter-writing campaign to Ryskamp from jail, accusing the government of that and a variety of other prosecutorial abuses. He also proved that he did not have an alias, did not have $2 million in a suitcase and was released on bond.
As their trial approached, everyone in the case but Faller, Murray and Adam pleaded guilty in exchange for lenient sentences and their cooperation. Faller refused government offers.
“I wasn’t guilty and I was not about to have my reputation lost for something I did not do.” Murray felt the same way.
Trial and Error
At trial in Spring 2000, the government contended Faller and Murray may have been innocent dupes at one point or another, but became co-conspirators by not getting out of it as soon as they found out what was going on. Their high-paid lawyers argued they were not only scammed just like everyone else, but also lost money too.
The most damning testimony came from 9 of the twenty-five victims who said Faller and Murray told them they had previously funded loans, which if true, would place both of them into the middle of the scam because neither had funded even one loan.
Faller would learn after the testimony was over the government possessed notes from various interviews with the very same witnesses in which they clearly said neither Faller nor Murray ever made such claims.
While Faller and Murray showed how they had diligently hired lawyers, accountants and visited Adam in Europe to ensure this business was legitimate, the government countered with testimony from a supposed banker from Luxemburg named Regis Hempel who said Adam had no genuine business and no relationships with bankers to fund large loans.
At the time, neither Faller nor Murray knew that the government possessed numerous European police reports and corporation records showing this supposed banker worked with Adam and was partners with him in businesses and criminal activities until they had a falling out.
While the government acquiesced to the notion that Faller and Murray reported Adam to authorities, McAdams suggested it was to cover their tracks:
“Faller went to the authorities and until then he was not in the conspiracy. Faller is street wise and a quick learner…He was tired of sending all the money to Adam,” so he started a new company to cut his boss out, McAdams said during closing arguments.
In May 2000, after a two-and-a-half week trial and two days of deliberations, Faller and Murray were convicted of conspiracy to commit mail fraud and money laundering.
At that point Judge Ryskamp was already noting his reservations about the convictions, so he ordered both of them released on appeal bonds.
Fighting Back
After his conviction, in July 2000 Faller started to piece together numerous things his jury did not hear and sent voluminous packages to every member of Congress. He also complained to the U.S. Department of Justice’s Office of Professional Responsibility about the prosecutorial tactics.
When he met with OPR officials Aug. 15, 2000, he covertly made audio tapes of the meeting in which one of the agents declared: “This is a terrible injustice, why hasn’t the judge done something about it.” The Justice Department’s watchdog agency has yet to make any public report on the case.
Nine days later Faller, who had already spent 10 ½ months in prison on unfounded charges that he was a flight risk, was arrested by a cadre of agents as he walked out of his Augusta, Ga. home with his then two-year-old child. This time, the feds said he was intimidating witnesses, but Ryskamp didn’t buy it and released Faller after several more months in detention.
When Ryskamp finally sentenced them, he again noted his apprehension: “(It) goes without saying that this has probably been the most difficult and troubling case that I have tried in the 17 years that I’ve been doing this. There’s a number of factors that contribute to this problem,” the judge said, ticking off some of Faller’s allegations.
Ryskamp dismissed money laundering convictions that carry mandatory 10-year sentences against both of them because he said the case had nothing to do with that crime. Both were ordered to serve 24 months, equal to Colon, the man who lured Faller into the scam and who Ryskamp considered “a more serious defendant.” They were also barred from involvement in financial businesses.
“I really believed that what I was doing was right…and truly regret that I am here today in front of you. I never wanted to let anyone down,” Faller said at the February 2002 sentencing.
Prosecutors quickly appealed Ryskamp’s sentence reductions as illegal. They say Faller should do 10 years in prison.
Losses Not Found
By the time he was sentenced to prison, Faller had lost fancy homes he bought in Europe and Augusta Ga., the internet provider business, his interest in other businesses he invested in and faced millions in judgments over one of them. He moved to Russell Springs, Ky, to help operate a telephone call center bought by a business associate from Europe. Murray is also financially broken.
As Faller awaited a ruling on his appeal, he says the feds began communicating with folks in Kentucky about his business activities. First, his landlord who admitted having contact with Faller’s federal prosecutor, filed charges against him for cutting trees on ground he was buying on a one-year land contract. Faller was arrested for theft of property, but charges were quickly dropped when Faller proved the trees didn’t exist when he moved in.
Then Faller and his current wife were charged with fraud in Kentucky for paying employees in the call center business with bad checks. He not only claims everyone there was paid, but that neither he nor his wife owns the firm. Faller recently requested a state grand jury hearing on those issues.
When those charges were filed, the feds caused him to be jailed him for a third time since his arrest for violating conditions of his bond. He was not released until last July when he completed his federal sentence.
The Discoveries
By the time the latest collection of new evidence surfaced earlier this year, Faller and Murray had already identified numerous pieces of exculpatory evidence related to witnesses against them they believe would have changed the outcome of the trial.
Michael Pasano, then Murray’s lawyer, said prosecutors sat quietly, “...even while they were listening to those witnesses, in essence, testifying to something that they, the government, knew was not accurate...for the government not to have given us those materials is absolute outrage,” Pasano wrote. Faller’s lawyers made the same arguments on a variety of fronts.
The Ringleader
Earlier this year, Adam copped a plea for the time he served in Europe and Canada fighting extradition, was given permanent residency in the United States because he is married to an American citizen and agreed to turn over $4 million of over what was now $14 million (from interest) he had in accounts in Luxemburg and walked free.
What the judge did not hear was that the account was frozen by officials in Luxemburg because of allegations it was being laundered for a major drug trafficker and because of wide-spread criminal activity by Adam there that neither Faller, Murray, their juries or the judge had ever heard about.
That was contained in evidence the government turned over to Adam prior to his trial. Faller contends he should have received it too, because it would have showed his jury that he had been duped by a dangerous criminal.
This new evidence suggests Adam was involved in a wide assortment of crimes dating back to the early 1980s ranging from fraud to drug trafficking in the United States and elsewhere to money laundering.
Court papers called “letters rogatory” in Luxemburg showed Adam was under scrutiny in many scams built around more than 25 corporate shells he’d set up, just like the one that brought Faller and Murray down. It showed he was under investigation in huge South America to Europe drug smuggling and money laundering ventures.
Adam was implicated in a 1997 shipment of 9,880 kilograms of hashish in Morocco, in the seizure in 1995 of 9,000 kilograms of marijuana in Belgium, in laundering proceeds of illegal diamond and expensive art transactions and a variety of other large-scale smuggling ventures.
One of the reports also said Adam claimed he was “telling anyone willing to listen that the large amounts of funds he had at his disposal originated form the biggest Mafia families of Europe and the United States.” The reports also tied Adams to the flow of money out of Iraq during the mid-1990s that was tied individuals in Kurdistan.
There was also contradictory evidence about the supposed European banker who testified Adam had few financial resources and was a con artist.
While the jury heard Hempel, the supposed righteous businessman testify that Adam was a con man, the new documents showed he was a founding partner with Adam in shell corporations used in scams and suggested he may have been involved in numerous criminal conspiracies with Adam.
Most important to Faller were documents disclosed to Adam showing that the company it claimed Faller formed to cut Adam out of the scam was actually formed by Adam.
They also showed American officials knew about the scope of investigations into Adam because the prosecutor actually attended hearings for Adam, who faced criminal investigations in at least three European nations.
“There is good reason to seriously doubt the trustworthiness of IBSA or Mr. Adam, its president. That suspicion has been reinforced by the comprehensive investigations carried out by Interpol of Brussels, the FBI and by the Economic and Financial Division of the Judiciary Police in Luxemburg, and by a letter of complaint by the IML (Luxemburg Monetary Institute) dated Feb. 95,” said one of many court documents that outlined allegations of Adam’s criminal activities.
The new documents also contained a memorandum from the initial prosecutor in the case which raised concerns about the viability of the case because Faller was the first person to report Adam to authorities.
While their jury was convinced they did little more than steal money from loan applicants, the new documents showed both Faller and Murray badgered Adam and his lawyer so much about his failure to fund loans that the con man told associates including his South Florida lawyer not to talk to them.
There was documentation that Faller had lost large amounts of money in and around the scam as well as evidence that some of Faller’s clients continued to send money to Adam many months after Faller quit the firm.
The new information that was in the government’s possession long before the Faller/Murray trial, has caused Faller, who is representing himself, and Murray’s lawyers to not only ask for the cases to be dismissed, but for Ryskamp to refer all of these matters to a federal grand jury.
As Judge Ryskamp now sorts through a series of motions for relief and countermeasures, the judge recently was told that a large portion of the Faller/Murray transcripts have disappeared, rendering it difficult for him to re-construct the case.
In the meanwhile, Murray is awaiting a ruling on her appeal and possible sentencing date while struggling to keep a business she built over 20 years afloat.
Along with losing everything, Faller has had health problems and can’t find a job. While he is broken financially, he has forged ahead with his battle against the government.
In his mind, the only thing he did wrong was ever listening to Adam and his associates. He says he only wants a judge to hear the truth, something he has found to be incredibly difficult: “The government not only can’t stand the truth, but I made them face it,” he said.