By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
To make matters worse, the prosecutors successfully alleged that Yagman’s aunt, Doris Smolek, was hospitalized and dying from cancer when Yagman raided her bank account, leaving her only $1,200 in savings — and $16,000 in hospital bills — by the end of 1999.
Yagman countered with a simple explanation: His aunts, uncles and mother gave him the money to invest. “It seemed there was money to be made [in the stock market],” Yagman said on the stand, “if you were careful.”
It was an interesting argument that fell flat with jurors. Around the time he was purportedly choosing wise stocks for his relatives, Yagman was preparing to file for personal bankruptcy for the second time in his life, as well as corporate bankruptcy. Moreover, he was a novice in the stock market. “I have never been interested in the stock market,” he testified. Instead, he said he read The New York Times business section and watched CNBC’s Mad Money, hosted by Jim Cramer, whom he described as “a guy with a big mouth and a lot of opinions, but he seemed pretty smart.”
Despite his thin trading education gleaned from mass-market media advice, and despite the fact that he had a checkered financial history, Yagman tried to convince the jury that his relatives trusted him as a sort of budding Warren Buffet.
The story was problematic and the prosecution added further doubt. “If he was really given the money to invest,” Sagar asked during closing arguments, “why didn’t he open up a trust account?” Yagman never gave a good answer for that. And his lifelong friend, Lloyd Cymrot, testified that Yagman didn’t like the idea of putting money into generally safe mutual funds — he would have to surrender control of the money.
The prosecutors throttled Yagman. The IRS, U.S. Postal Service and FBI dug up college transcripts, old credit-card receipts, cashed checks, deeds, housing records, an application for unemployment insurance, DMV records spanning 30 years and even the dedication from Yagman’s first book in which he named and thanked all of his teachers over the years.
The document that created the most grief for Yagman was his 1999 bankruptcy petition. Day after day, the prosecution referred to it with a kind of dry glee, noting its numerous inconsistencies with reality. “These aren’t little white lies or fibs,” Assistant U.S. Attorney Beong-Soo Kim said. “These are whoppers!”
Yagman had filed for bankruptcy in New York, where he lived part of the year with his mother in a rent-controlled housing complex for the middle class in downtown Manhattan. The problem, according to the prosecutors, was that he didn’t report any of his major California assets. Yagman failed to list his relatives’ money, his $650,000 Venice beach house, and big cash settlements of lawsuits he handled, from which he took the standard one-third. On top of all that, whatever assets he did list, he drastically undervalued, the prosecution alleged.
But the jury probably heard one fact with more clarity than the others: Just a few hours after he signed his bankruptcy papers, Yagman sauntered into the luxury Kenneth Cole and Alfred Dunhill boutiques in New York City, laying out some $1,500 on shoes and clothing for himself and his girlfriend.
Yagman again offered simple explanations. For example, he said the relatives’ money wasn’t his, the house had been “gifted” to the girlfriend, and the settlements were either owned by his ex-wife, Marion Yagman, or there was no need to report them. Yagman said he didn’t know anything about tax law and left it to his lawyer, Robert Leinwand, whom he blamed for messing up.
THE MAIN THRUST OF HIS DEFENSE was ignorance of the laws and the rules — echoing defense arguments made by many cops he has successfully hammered over the years. Yagman combined that strategy with an underlying feel-good motif, so that when he wasn’t testifying about his ignorance of tax law or trusts, or his avoidance of the small print on tax forms, he told stories about his close family and his feelings for girlfriend K.D. Mattox. “She is my best friend,” Yagman said, “and I am her third best friend.” Mattox, however, never testified — nor did she stand by Yagman by attending the trial. Yagman had opened bank accounts in her name, depositing money he was “given” by relatives or earned. But Mattox’s lawyer advised her to plead the Fifth Amendment against self-incrimination, so the sole time Mattox appeared was when her lawyer asked Judge Stephen V. Wilson for immunity from prosecution if she testified.
The judge denied it. By lunch, K.D. Mattox, Yagman’s “best friend,” was gone.
Nor was Yagman helped by Kathryn Bloomfield, the lawyer he hired to handle his corporate bankruptcy filing. She was blond and beautiful — and she knew it. Throughout her testimony, she played the role of a faded sex kitten, batting her lashes and softly smiling whenever Yagman’s name came up. It seemed as if at any moment she was going to purr. The jury immediately sensed her sexual vibe.
At first, some jurors covered their mouths to hide smiles and giggles. Then she was asked if Yagman paid her. She paused, looked coyly at him, and said with a little swoon, “Yeaaaaaah, I got paid.” The jury cracked up. When Bloomfield was asked if Yagman ever gave her gifts, she visibly fluttered her lashes and said, “A television set and jewelry from Tiffany’s.”