A plethora of lawsuits are likely to spring from Operation Islandscam, the feds’ code name for the Phil Harmon scandal. But that’s not all it is likely to produce.Last Halloween, when Phil Harmon formally entered his guilty plea, Steve Schroeder told reporters he expected there would be up to a half dozen more criminal indictments in the case. When I asked him if this was just grandstanding, he said flatly, “I don’t bluff.”He doesn’t hurry, either. Schroeder said in January of this year that the new round of indictments probably won’t be anounced until spring, maybe late spring. For that matter, Phil Harmon is not to be formally sentenced until May 4, six months after his plea. In the meantime, he remains somewhat at liberty, though subject to numerous restrictions.
Why the delay? On the one side, Schroeder and his colleagues want to squeeze as much information from Harmon as possible before he goes off to jail, to aid the recovery effort.
And on the other, Schroeder was frank to admit that, “Fraud cases are among the hardest cases to prove. The defense usually is that this was just an honest business deal that went bad, not a fraud. Sometimes it’s true. How do you tell the difference? Then again, a lot of frauds start out as legitimate businesses, then they go sideways. People begin to lie and send out false information. And the people usually look nice. Trustworthy.”
He said it again: “They’re tough cases,” then added, “that’s why I like them.”
But it also means they take a long time to prepare. And he need Harmon’s information to build the cases against the others.
Which others? That would seem to be the question of the year. Officially, Schroeder couldn’t say. But he admitted that in the cases of Steve Harmon and Terry Beebe, “it really isn’t a matter of ‘if,’ but ‘when.’”
So that’s two.
Another source, outside the U.S. Attorney’s office but close to the investigation, points at two of Harmon’s former employees in the financial side of his operation as likely candidates. The feds found evidence that these two had embezzled funds from Harmon while working for him.
Schroeder grinned when asked about this. “Hey, when you’re working for an outfit that’s mainly involved in stealing its customers’ money, what do you expect?” He hinted that these two might be able to bargain for lesser charges and light sentences by testifying against bigger fish.
One of those fish could be Harmon’s daughter Sandy Kintner, who worked in the company and was a stockholder.
I can’t deny, though, that the name I was most curious to hear was the one Schroeder was most resolutely coy about:
- Will Maurice Roberts be defendant number six?
Roberts was formerly Superintendent of MidAmerica Yearly Meeting. There he was entangled in the Priscilla Deters/Productions Plus frauds, and forced to resign in 1994. In 1995 he came to work for Harmon, as President of one of Harmon’s many companies, Skagit Valley Associates. His function, I gather was as Chief Operating Officer for all the Harmon businesses.
“That decision has not yet been made,” Schroeder said crypically.
I pressed. What goes into such decisions?
“As a general rule, we don’t charge people who didn’t profit from the fraud. So an employee getting a lower middle class salary would not likely fall into that category. But if somebody was making $200,000 a year, that’s a different matter. And we look at who’s making the decisions about illegal actions.”
Reading the tea leaves in a thick stack of court documents, these standards leave Maurice Roberts in a grey area, or rather, teetering on the edge. Consider:
- He worked very close to the center of Harmon’s empire.
- He signed many of the checks included in a list of funds diverted from Harmon’s National friends Insurance trust that was found by investigators.
- Phil Harmon described Roberts as an “extremely close personal friend” and a member of his personal “support group” on a court petition last May, asking permission to contact some 35 of his investors and former employees for personal reasons. (The court okayed contacts with seven of those on the list–not including Roberts.)
On the other hand, the records are not clear on how much Roberts was paid; from the available figures, I estimate about $50,000 per year. That’s good money, but not $200,000. In addition, the receiver reported that Roberts was cooperating fully with efforts to get a clear handle on the tangled web of Harmon’s companies and holdings.
Furthermore, a very curious incident occurred on January 22 and 23, 1997, when Operation Islandscam agents, led by the FBI, arrived at Harmon’s offices with a subpoena for business records. This incident deserves a closer look.
What the agents discovered was that Harmon’s personal office “was very sparsely furnished as compared with the rest of the office complex.” Indeed, it was almost empty.Then the agents received a phone call from a confidential informant, who had in turn been tipped by “a current employee in a position to have firsthand knowledge, who indicated that records from. . . Harmon’s office and his secretary’s office had been moved in anticipation of Agents arrival.”Closer inspection revealed many indentations in the carpet where filing cabinets had been removed, and furniture moved around to conceal the fact.
The agents “approached Roberts about the indentations in the carpet, and he readily admitted that that a file cabinet had been removed….”
(In addition, there was a paper shredder in the office, and Judy Swem says she was told by two former employees that many documents had been shredded during the previous weeks.)
Who was the current employee, in a position to know, who tipped the confidental informant to call the agents and blow the plan to hide the records?
There are only a few possibilities, and Maurice Roberts is one of them. Moreover, it would be entirely appropriate for the FBI to maintain cover for him, by having him call a “confidential informant” who served as a cutout between him and the agents in the office.
Enough of the cloak and dagger. This incident, like the others, leaves me confident that Maurice Roberts will play a major role in the future prosecutions to come out of Steve Schroeder’s work.
But what role? There are, I think, two possibilities.
I predict he will either be:
- Criminal defendant number six on Schroeder’s target list. Or
- A key prosecution witness against all the other defendant