By Michael Goldstein
By Dennis Romero
By Sarah Fenske
By Matthew Mullins
By Patrick Range McDonald
By LA Weekly
By Dennis Romero
By Simone Wilson
IN THE END, NOTHING WORKED for Stephen Yagman. The pugnacious Venice Beach civil rights attorney hired an expensive criminal defense lawyer, patiently testified for three days, even complimented the judge for a speedy trial. The jury wasn’t impressed. On June 22, it convicted Yagman of every count against him, and a guy accustomed to dropping the shit hammer on the cops found it dropped on him instead.
The verdict came after four weeks of mind-numbing testimony about Yagman’s financial dealings. He faced one count of attempting to evade payment of taxes, one of bankruptcy fraud and 17 of money laundering. In some political circles, it was said the charges were manufactured by a retaliatory federal government, determined to cut down a noisy critic, but that turned out to be a fantasy.
Los Angeles Timescoverage of the conviction, for example, gave the strong impression that Yagman’s renegade past — battling the feds and the Los Angeles Police Department, which the lawyer regularly described as a “criminal enterprise” — was the prime reason he ended up in court. But those reporters, who rarely attended the trial, missed the core tale that unfolded there.
At the trial itself, court watchers saw Yagman’s personal and professional lives opened wide for the jury: a man who took huge amounts of money from aging relatives and spent it on himself, lied about his pricey Venice beach house while claiming bankruptcy, and secreted huge amounts of cash by opening bank and brokerage accounts in the name of a girlfriend, where it was found by the IRS.
Yet Yagman carried himself with an air of indifference. He was always popping Life Savers, and he reclined back in his chair at the defense table as if he were watching an afternoon ball game on TV. The jury only learned late in the trial he suffered chronic back pain. The entire affair seemed to be an annoyance for Yagman, as if it were only a matter of time before the jury saw things his way, acquitted him, and left him free to again start suing the powers that be.
That ballsy attitude came through loud and clear midway through the trial when Yagman approached me in the courtroom gallery during a break. The day before, I had offered him a business card, but Yagman brushed me off. He now walked over in a dark, too-tight suit and apologized. “There’s a lot of stuff happening here,” he said.
When I told him I wrote for the L.A. Weekly, Yagman’s eyes narrowed. Although the Weekly had run my somewhat flattering article about Yagman’s litigation prowess, the piece had also described him as an “obnoxious” lawyer with a “big mouth.” (See “Best Served Cold,” June 1–7, 2007.) And an accompanying photograph showed Yagman speaking out of the side of his mouth, making him look silly.
“You didn’t have to use that picture,” Yagman declared. “You know, when I’m done with all of this stuff,” he said, gesturing to the courtroom, “I’m going to have to sue you.” He then alleged that the Weekly article had been “completely untrue... with no fact checking.” When asked to name the errors, he said he didn’t know and asked for a copy of the paper. Finally, he warned, “If someone tries to damage me or my firm, I have to sue. That’s what I’m known for.”
But he wouldn’t be suing anyone if he was convicted on all 19 counts. He would be focused instead on how to avoid years of sitting in federal prison, broke and disbarred. Still, here was Yagman, drumming up a beef against the Weekly, his hard-ass self trying to instill The Fear into someone — even as he had become the punching bag of a focused and capable prosecution team.
Throughout the trial, the prosecution, led by assistant U.S. district attorneys Alka Sagar and Beong-Soo Kim, hammered away at a central theme: Yagman was a liar, a big-time cheat and possibly an anarchist who thought IRS and other laws didn’t apply to him. Whenever they got the chance, Sagar and Kim used such words as “lies” and “deception” and asked witnesses whether they knew that Yagman stopped paying taxes between 1994 and 1997.
At the end of his cross-examination testimony, Sagar asked the lawyer, “Would you describe yourself as an anarchist?” To his credit, Yagman didn’t dodge the question. He looked up to the ceiling and thought about it. “I have anarchistic tendencies,” he replied, “but I control them.”
YAGMAN, IT TURNED OUT, loved spending other people’s money, most notably his aging relatives’, as the prosecution embarrassingly showed. Sagar and Kim accused Yagman of taking control of investments and savings totaling $776,110 from his aunts, uncles and mother, then transferring the money into bank and brokerage accounts under the name of his girlfriend, K.D. Mattox, so the feds wouldn’t know about the sudden cash influx.
The humiliating part, beyond the alleged gross violation of federal law? He spent the money on himself, according to the prosecutors, paying for expensive suits, meals and other living expenses. It was a devastating charge that ultimately played against him with tax-paying, family-oriented jurors and almost certainly sealed his fate.
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.”
Perhaps the most surprising part of the defense’s doomed case wasn’t something that was said, but wasn’t said. In pretrial court filings, criminal defense attorney Barry Tarlow wrote that his client, Yagman, was the victim of a “vindictive government” because of his “contentious history with federal law enforcement officials.”
Yagman, after all, had been a special prosecutor appointed by Denise Woodbury, the prosecuting attorney of Boundary County, Idaho, in a case involving an infamous lethal FBI shooting at Ruby Ridge, Idaho.
In response to Tarlow’s assertions, Judge Wilson gave the defense leeway to question federal agents about their motives in investigating Yagman, and it seemed to be a promising angle — especially considering polls showing growing distrust of the Bush administration over its use of executive powers to take down perceived political enemies. Yet in court, Tarlow inexplicably never brought up the subject. Instead, he rather pointlessly called up aging former U.S. Attorney General Ramsey Clark, whom Yagman owed $40,000 in legal fees, to testify that Yagman was an “honorable man” who “loved hot dogs.”
“He liked to go to Coney Island,” Clark told Tarlow, who pursued this bizarre line of questioning. “He said they tasted better out there.”
Now Yagman, who’s free on a $100,000 bond, will spend the summer thinking about his appeal and sentencing, maybe eat some hot dogs. The 19 counts add up to 180 years in federal prison, but prosecutors say Yagman will probably be sentenced to only about 80 months, which would make the lawyer nearly 70 years old at the time of his release.
So far, there has been no news of a Free Stephen Yagman campaign, but white-collar criminals like him rarely stir up that kind of grass-roots support. And, as it turns out, the case against Yagman wasn’t an example of the feds going mad with power. Far from it. It was about the government wanting money owed to it, and a pound of flesh. They got it.
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