THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, January 6, 1995 TAG: 9501060493
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: JOE JACKSON, STAFF WRITER
DATELINE: NORFOLK LENGTH: Long : 128 lines
Virginia Beach businessman and civic leader Edmund C. Ruffin pleaded guilty in U.S. District Court Thursday to tax evasion, joining former business partner Nabil Kassir as a federal felon.
The two - former lifeguards who over three decades parlayed modest investments into a sprawling Oceanfront real estate and nightclub empire - now face prison time and hefty fines. Ruffin and Kassir, with their former accountant Marshall Eng, will be sentenced within 70 days.
Ruffin and Kassir have agreed to cooperate with federal authorities in any further investigation of money laundering and tax evasion at the Oceanfront. However, federal prosecutors would not comment Thursday about such an investigation.
Ruffin admitted filing false 1989 income taxes, in which he under-reported an income of $31,787 from his 50 percent ownership of Six-Sixteen Inc., a Virginia Beach-based company that did business as Rogue's Gallery and Mary's Kitchen. Kassir owned the other half of Six-Sixteen.
Federal prosecutors said they did not know how much Ruffin actually received from Six-Sixteen receipts that year. However, tax records entered as evidence in Kassir's 1993 trial showed that Rogue's and Mary's Kitchen grossed a total of $2,098,572 in sales for 1989.
Ruffin also pleaded guilty to helping prepare the false 1989 tax return of Six-Sixteen, court records show.
He faces three years in prison and a $250,000 fine for each count.
Last Jan. 31, a federal jury convicted Kassir of 25 felony counts of conspiracy, mail fraud, money laundering and filing false income tax returns. Prosecutors said Kassir skimmed profits from his businesses, hid proceeds in foreign banks, under-reported income and lied to Alcoholic Beverage Control officials about the volume of his liquor sales. He faces a total of 190 years in prison.
Eng, the accountant who worked for Ruffin and Kassir since 1980, was convicted by the same jury of 12 counts, including conspiracy, mail fraud and aiding in filing false returns.
Ruffin, Kassir and Eng all remain free on bond until their sentencings.
Ruffin's plea agreement Thursday put to rest a half-year of speculation that Ruffin would be dragged into the investigation of Kassir, handled by agents for the Internal Revenue Service and state Alcoholic Beverage Control.
The case started in 1989 when ABC agents rooted around trash bins filled with stale pizza crusts, bags of hair from a beauty shop and reams of shredded paper. Kassir was charged after investigators spent eight months taping together and analyzing shredded business records recovered from the trash cans outside his office and home.
Ruffin's name did not surface officially until September as part of a sentencing agreement between prosecutors and Kassir.
Under that agreement, prosecutors asked a judge to fine Kassir about $15,000. Kassir will forfeit assets of $149,488 and pay $100,000 to the IRS.
In return for Kassir's providing information about Ruffin's activities, the agreement stated, the government said it would try to avoid seizing any of Ruffin's assets in which Kassir held an interest.
Kassir and Ruffin were co-owners of popular Oceanfront nightspots Rogue's and Peabody's, as well as the Crosswinds Resort Inn. Together they owned restaurants and commercial property totaling at least $7 million, court records and news accounts indicate.
In August of this year, liquor licenses at Peabody's and Rogue's were revoked by the ABC, six months after Kassir's conviction. Both clubs are now closed, and their ultimate fates are in limbo, records show.
Besides owning the clubs, Ruffin also charted a lucrative career in real estate. In October 1989, Ruffin formed Prime Real Estate Corp. in Virginia Beach. He was active in restaurant, hotel, night club, condominium and shopping center development in Norfolk and Virginia Beach.
Ruffin has been a member of The Resort Area Advisory Commission, a citizen panel appointed by City Council to oversee resort improvements and activities. He was an original appointee to the commission, created in the early 1980s. His current term will expire Dec. 31, 1996.
Once dubbed ``businessmen with the Midas touch,'' Kassir and Ruffin started with virtually nothing. Kassir emigrated from Iraq to the United States in 1956. Ruffin was orphaned at 15 and a runaway at 16.
But as the money started flowing, the two started skimming profits, court records indicate. Ruffin and Kassir agreed to ``divide certain skimmed receipts from Rogue's and Peabody's'' from the mid-1980s through October 1990, records say.
Kassir - who managed daily operations at the two clubs - skimmed receipts from the businesses, then paid off the clubs' legitimate expenses. He would then take 50 percent of what remained for himself. He did not declare this amount in personal or corporate tax returns, records showed.
The remaining half of the ``skim'' was then left at the beginning of each week in a safe at the office of Kassir Investment Associates, which employed accountant Eng. Kassir also left records in the safe, to be reviewed by Eng, that showed the true weekly income of the businesses.
Each week, Ruffin opened the safe and removed his portion of the skimmed cash, as well as the documents showing true sales receipts. The true business records were then shredded, court records said.
Prosecutors said Ruffin and Kassir deposited the skimmed cash in a joint bank account at the Standard Chartered Bank in Beirut, Lebanon, in the early 1970s. They maintained this account together until 1986, when Ruffin was removed from the account by Kassir without Ruffin's knowledge or permission.
It was not the last time Ruffin would be a victim of Kassir's self-interest.
In December, Ruffin began telling acquaintances that he would probably be indicted, said an acquaintance of Ruffin.
Early that month, Kassir called Ruffin and told him to come over to his house to talk, the acquaintance was told. When he got there, Kassir told Ruffin that he had decided to tell federal authorities about Ruffin's activities in order to save himself. Kassir told Ruffin to be ready for an indictment early this year.
Ruffin told friends that he couldn't believe his former friend was turning on him. But there also seemed to be an understanding of sorts between Ruffin and authorities - Ruffin and his family were going on their annual skiing trip in Colorado in mid to late-December. After that, he would probably go to court, he reportedly told acquaintances.
On Thursday, in federal court, prosecutors shook Ruffin's hand when the hearing ended. Ruffin thanked them in return. Calmly, but sadly, as he left the courtroom, he said he did not want to comment on the charges. ILLUSTRATION: Photos
Graphic
FACING PRISON
Edmund Ruffin
Nabil Kassir
Edmund Ruffin and Nabil Kassir co-owned Oceanfront hot spots Rogue's
and Peabody's. When money started flowing in, the two skimmed
profits, court records say. They face prison time and fines for
felonies, which include mail fraud, conspiracy and filing false tax
returns.
by CNB