Wednesday, September 1, 2004
Lawyer Tied to Ex-Judge Murphy Jailed on Tax Evasion Charge
Disbarred Jurist Allegedly Transferred Funds Involved for Friend
By KENNETH OFGANG, Staff Writer
Attorney and former Azusa Mayor Stephen J. Alexander was being held in Metropolitan Correctional Center last night in lieu of $250,000 bail following his indictment for lying on a tax return.
Alexander was arrested earlier in the day after being charged with failing to report as income the money he allegedly took while helping former Los Angeles Superior Court Judge Patrick Murphy and others conceal funds from their rightful owner.
Magistrate Judge Andrew Wistrich set bond as requested by Assistant U.S. Attorney Angela Davis, rejecting the defendant’s protestations that he couldn’t secure that large an amount.
‘Risk of Flight’
Davis said she asked for the high amount because Alexander’s extensive personal and business ties to Nicaragua, and the fact that he faces discipline proceedings that threaten his law license, create “a serious risk of flight.” Besides, as a lawyer and former public official, Alexander should know people who would be willing and able to secure the funds, the prosecutor told the MetNews.
Alexander is to return to court on Tuesday to plead to the indictment, which alleges he claimed less than $15,000 in income on his 1997 tax return even though his total income that year was “substantially higher.”
Davis confirmed that the charges are based on Alexander’s admissions, in the State Bar proceeding and in a civil case in federal court, that he received funds that year from Irwindale paralegal Maryanne Baumgarten and kept $200,000 for himself.
The prosecutor declined to say whether Murphy, who resigned from the bench while on the verge of removal for abandoning his duties in 2001 and was disbarred earlier this year, or anyone else, might be indicted on related charges.
The MetNews reported in 1999, based on a document and other information obtained from a confidential source, that Alexander had received more than $1.5 million from Baumgarten, who once worked for Murphy as a paralegal.
The document, allegedly prepared by Alexander, was an unsigned receipt reflecting that a total of $1,5526,480 was received from Baumgarten between January and June 1997. At the bottom of the receipt, the words “Commission for handling: account of Stephen J. Alexander—$200,000” have been scratched out, and alongside that language are Baumgarten’s handwritten initials and underneath them the handwritten words “Not Authorized.”
Alleged Gold Delivery
According to the document, $85,530 was wired to “Crystal Bay Trading Company for Gold” in June 1997. The receipt specifies that gold “was personally delivered to Judge Patrick Murphy one week later.”
The document goes on to indicate that a “Cashier’s Check” for $157,500 was “written to Los Angeles Coin” on July 9, and that a check “was personally delivered to Judge Patrick Murphy” on that date.
In court filings, Alexander confirmed that Baumgarten gave him the $1.5 million, which Alexander claimed was to be invested in an offshore bank and insurance company.
According to statements made in interviews and in court documents, nearly $2 million of funds belonging to Dr. George Taus, a friend of Murphy, were transferred first to a Nevada corporation, then to an Encino attorney whose participation was solicited by Murphy, and then, at Murphy’s direction, to Baumgarten, who also allegedly acting on instructions from Murphy, entrusted the funds to Alexander.
The Nevada corporation, Copex, Inc.—which apparently existed only as a conduit for the funds—allegedly released the money to Baumgarten as a supposed settlement of a phony claim for sexual harassment and personal injury.
The funds are believed to have come from the liquidation of securities brokerage accounts by Taus. The doctor’s former wife obtained an arbitration award against the brokers, whom the arbitrator said were at fault in allowing Taus to liquidate the accounts without her consent, in violation of her community property rights.
The brokers then sued Taus, Murphy, Alexander, Baumgarten, and others. That case eventually settled, as did a related suit by the trustee of Taus’ bankruptcy estate.
The State Bar brought a disciplinary action against Alexander—who was Azusa’s mayor from 1994 to 1997 and a candidate for the Citrus Municipal Court in 1996—in March. It accused Alexander of accused of helping Murphy and Baumgarten divert the Taus funds.
In the fall of 1997, Baumgarten filed a lawsuit and a State Bar complaint against Alexander, claiming he took the $200,000 for his personal use. Alexander responded to Baumgarten’s complaint with a letter claiming she was a “go-between to protect the identity of investors” in the offshore venture, the State Bar alleges.
The letter claimed he took his directions from Murphy, and that his fee for involvement in the venture was to be $300,000, but that he only took $200,000, the State Bar said.
In his formal response to the State Bar charges, Alexander called the allegations “half truths.” He said he took his instructions from Baumgarten, that she agreed to his fee for his services in connection with the venture, and that he wired the remainder of the funds to Baumgarten’s sister as per her instructions.
Copyright 2004, Metropolitan News Company