Medina residents , are being accused by federal prosecutors of hiding millions of dollars in assets from creditors in an off-shore trust in Belize, and now face a 43 count indictment, announced First Assistant United States Attorney Annette L. Hayes Thursday.
The hidden assets, according to federal prosecutors, included diamond rings, a Rolls Royce automobile and their $15 million Medina home. Federal prosecutors also say they transfered money from their hidden bank accounts and paid for car loans for a 2006 Range Rover, a 2007 Bentley Continental, and a 2008 Rolls Royce Phantom Coupe; household expenses; legal expenses; department stores purchases; and a bulk gold coin purchase.
The indictment includes a variety of bankruptcy fraud crimes and multiple counts of money laundering, according to federal prosecutors.
A federal grand jury in Seattle returned the indictment Thursday, one day after the Mastros were caught in the French Alps on a warrant based on six counts related to bankrupcy fraud.
According to the U.S. Department of Justice, the new indictment now replaces the six original charges filed last year as the Justice Department Office of International Affairs works to have the couple returned to the United States.
“Those who flaunt the law and ignore our legal process will be held to account,” said First Assistant United States Attorney Annette L. Hayes, in a prepared statement. “Thanks to the unrelenting efforts of law enforcement both here and abroad, the Mastros have been arrested and will face the charges that the Grand Jury returned in their indictment today.”
According to news reports, Michael Mastro owed millions of dollars to family and friends who had invested with him in real estate. After being forced into bankruptcy, Mastro said he had no assets as he and his wife, Linda, continued a lavish lifestyle, spending thousands at a time shopping and dining internationally and living in their luxury homes, according to news reports, citing court papers.
According to court papers and news reports, they put many of their assets, including a $15 million home in Medina, into an Irrevocable Trust or claimed some of them were the sole property of Linda Mastro before debtors forced him to file bankruptcy in 2009.
A 2011 Forbes article outlines how Mastro and his wife once put together $2 billion in real estate investments, but were left in 2008 with debts of $100 million owed to family and friends who were investing with them.
According to the Forbes article, the Mastros began to transfer assets, including their luxury homes, including the Medina home, into an Irrevocable Trust, and not telling their investors.
Creditors forced Mastro to file bankruptcy in 2009, according to the news reports.
Despite the bankruptcy filing, he and his wife continued to international vacations and kept their Medina home, according to the Wall Street Journal in 2010.
A court voided the transfers, and in an opinion piece for Forbes, attorney Jay Adkisson said that the Mastros likely were out of options:
In the end, the Mastros probably only have one avenue left to end up with significant assets: Flee the country and live on their gold bars, rare coins, the two diamonds, and any other cash they have been able to stash offshore. They could also try to do the right thing and voluntarily work to liquidate their assets for the benefit of their creditors, but that doesn’t seem to be any part of their calculus.
According to the indictment the Mastros acquired assets, including their $15 million home in Medina, and then sought to protect the assets from creditors as the real estate collapsed by transferring them into an off-shore trust in Belize that was set up in October 2008, according to a U.S. Department of Justice press release.
According to federal prosecutors, between July 2009, and July 2010, the couple used more than $761,000 from their hidden accounts for payments on an American Express credit card; car loans for a 2006 Range Rover, a 2007 Bentley Continental, and a 2008 Rolls Royce Phantom Coupe; household expenses; legal expenses; department stores purchases; and a bulk gold coin purchase.
The sixteen counts of money laundering describe the movement of funds to and from the Mastros’ hidden bank account that they utilized as part of the bankruptcy fraud, according to prosecutors.
The indictment also says that the couple concealed a wine collection, Steinway piano, and Chihuly glass artwork in Palm Desert, Calif., without informing the bankruptcy trustee, according to the prosecution.
The indictment also accuses Linda and Michael Mastro of falsely claiming that a 15.93 carat diamond ring was Linda Mastro's own from before their marriage, and claiming that ring and another 27.80 carat ring was with a person “outside the United States,” when in fact she had possession of the rings, according to the federal prosecutors.
“The allegations against the Mastros are serious and the FBI is committed to ensuring that they face those charges,” said Assistant Special Agent in Charge Steven M. Dean of the FBI Seattle Division, in a prepared statement. “We value our strong law enforcement partnerships around the world and are very grateful for the crucial role of the French Police Judiciare in both the fugitive investigation and the arrests.”