Lancer Lobby Loot Tale
By Christopher Byron
New York Post
October 24, 2005
Was money from a now-defunct Park Avenue hedge fund used to help finance President Bush's 2004 re-election campaign?
The fact that such a question could be asked at all is disturbing enough. But a review of U.S. Federal Election Commission records suggests that $314,400 belonging to investors in the collapsed Lancer hedge fund family may have flowed last year into the coffers of not just the Bush-Cheney re-election drive but also to the Republican National Committee and the West Virginia and Ohio State Republican Party executive committees.
Also benefiting from the dough were 10 different Republican candidates for key House and Senate seats, including Bush's home district of Crawford, Texas. No such money went to any Democrats.
The money trail in this matter begins in Midtown and ends at the doorstep of a self-styled "stateless" ex-con named Andrew L. Evans on a remote island west of Vancouver, Canada. Evans and his wife, Ann, were convicted in the 1980s and served prison time for federal bank fraud.
Evans' 2004 contributions to Republicans are the first known instance in which money traceable to an offshore hedge fund appears to have been used to influence a federal election, raising disturbing questions about what Evans hoped to obtain in return.
That is especially so in light of court records that show that Evans left the U.S. in 1995 and has resided continuously in Canada ever since. In July, Evans filed an affidavit in a federal civil case in Massachusetts, successfully claiming for himself the status of a stateless person or someone who has no intention of returning to the U.S. and, more important, cannot be subjected to the jurisdiction of courts here.
Evans left behind only a handful of modest assets. One is a four-bedroom residential property in Mill Creek, Washington, which is on the market at an asking price of $615,000. Evans also is listed in Dunn and Bradstreet business records as owner of Bothell-based Dominion Income Management Corp. But the telephone number provided by D&B connects instead to a deli. The person who answered the phone said the deli has being using the number for the past five years.
For a man whose visible financial heft at least in the U.S. seems so limited, Evans' political largesse was remarkable to say the least. According to a list of top individual donors to Republican candidates in 2004, compiled from FEC data by the Washington D.C.-based Center For Public Integrity, a lobby watchdog group, Evans' $314,400 in contributions placed him at No. 11.
As such, Evans ranked ahead of such well-known Republican fat cats as hotel and gambling world mogul Steve Wynn ($281,780), the late Wal-Mart billionaire John T. Walton, who died last June in a private plane crash ($281,547), and investment world biggie Charles Schwab ($259,379).
Exactly where Evans got this money cannot be stated with certainty. But records in the Lancer hedge fund case show beyond question that he was actually much wealthier thanks to his role in the Lancer affair than his seemingly modest financial profile would suggest.
Evans controlled at least two separate penny stocks that became major, money-losing investments for the Lancer group and with one of them he hit the big time.
That happened in spring 2000 when the Lancer operation was still riding high before a series of articles in The Post exposed the fund as a worthless grab bag of penny stocks. Those articles helped bring about the operation's collapse and seizure by the Securities and Exchange Commission.
Payday for Evans came when he and Lancer's managing partner ex-Kidder Peabody analyst Michael Lauer engaged in the secret "off-the-books" sale to the fund of $11 million in worthless stock that Evans held in Envision Development Corp., an American Stock Exchange-listed company.
Securities regulation requires that all transactions by owners of five percent or more of a public company's stock must be reported to the SEC. But the Envision Development transaction involving stock personally owned by Evans was kept secret for a simple reason: At $11.03 per share, the sale reflected a stupefying 85 percent discount from the $71 per share price that everyday investors were paying for Envision Development, which clearly reflected the view of the two men as to what the company was really worth and just how badly the public investors were being hosed.
None of the required SEC paperwork for the transaction was subsequently provided by Evans, Lauer, or anyone else. Almost immediately after the deal was completed, Envision Development's share price collapsed and the exchange de-listed the shares. Today, no quotation service compiles data in the shares on more than an ad hoc basis. Their most recent known sale involved $15,000 worth of stock at five cents per share in August.
In May 2003, the SEC raided the Lancer offices, seized the group's books and records and appointed a receiver to recover what could be located of an estimated $500 million that Lancer's investors had poured into the group's funds. The investors ranged from the University of Montreal pension fund to real estate magnate Alfred Taubman to Britney Spears.
By coincidence, an FBI sting operation in Miami had recently netted Lancer's Bruce Cowen for soliciting a kickback from an undercover informant in the sale of some stock in the Lancer portfolio. Sources in that case said the SEC consequently urged prosecutors to broaden their case to include the evidence of criminal wrongdoing that had begun pouring from the seized books and records of the Lancer operation.
That evidence included accounting fraud, wire fraud and market manipulation by Lauer and other fund officials as well as the involvement of at least one known organized crime figure and a range of other partners with long histories of regulatory violations.
The seized books and records also showed the involvement and seeming complicity of the PricewaterhouseCoopers accounting firm, Bank of America as well as other similar-sized investment operations both in the U.S and abroad.
But 21/2 years after the Lancer operation was shut down, the receiver has recovered only a small fraction of the investors' money none of which included the more than $11 million of the assets that had been spirited away by Evans. Meanwhile, the SEC civil case has become bogged down in Bleak House-type procedural wrangling with Lauer.
Most worrisome of all, though Cowen pleaded guilty to a failed effort to cook up a kickback and is now in prison, sources in federal law enforcement said Miami prosecutors, who were never eager to pursue the larger Lancer case, have abandoned it, meaning that any concerns Evans may have had of receiving a visit from the feds have largely evaporated.
All in all, it's a sad commentary on white-collar law enforcement in America when an ex-con who did time for bank fraud can walk off with $11 million as his fair share of the loot in the biggest hedge fund collapse on record, then sprinkle $314,400 of it behind him as political contributions to the party in power, and not a cop anywhere even raises an eyebrow.
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