THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, June 1, 1995 TAG: 9506010406
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY JOE JACKSON, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 91 lines
The final act for two partners in an Oceanfront business success story played out in federal court Wednesday as a judge sentenced Nabil Kassir and Edmund C. Ruffin to prison for tax evasion.
The two - former lifeguards who over three decades parlayed modest investments into a real estate and nightclub empire - were perhaps best known for their co-ownership of Peabody's and Rogue's Gallery, two popular beach nightspots that closed last year after their liquor licenses were revoked because of falsified liquor sales.
The end came slowly after six years of search warrants, indictments, trials and plea agreements. It was an investigation that began in late 1989 with agents rooting around trash bins filled with stale pizza crusts and reams of shredded paper. Kassir and his accountant, Marshall Eng, were charged in April 1990 after ABC and IRS agents spent eight months taping together and analyzing those shredded business records.
They found that Kassir skimmed profits from his businesses, hid proceeds in foreign bank accounts, underreported income and lied to officials about the volume of his liquor sales. Last year, Ruffin was drawn in, but only as part of a sentencing agreement between prosecutors and Kassir.
Yet on Wednesday, federal prosecutor David Barger said the investigation continues. One man will be indicted by a federal grand jury, said Barger, who declined to identify the man. Barger said federal authorities are still deciding whether to charge other people, whose names were supplied by Kassir in exchange for leniency.
Hardest hit on Wednesday was Kassir, who stood before Judge Terrance Boyle and apologized for his crimes.
``I apologize to all who have been affected,'' Kassir said. ``I apologize to the 100 employees who have lost their jobs because of the closing of the two businesses. . . . I'm a decent person, and I made some serious mistakes.''
Kassir has already forfeited $140,000 and is required to pay a down payment of $100,000 for back taxes. Barger called the total back taxes Kassir owes ``astronomical.''
In January 1994, Kassir faced a maximum prison term of 190 years after a federal court jury convicted him of 25 charges, including conspiracy, mail fraud, money laundering and filing false income tax returns. But because he later cooperated with officials, that maximum dropped to 2 1/4 years.
On Wednesday, Boyle sentenced Kassir to 21 months and fined him $15,000.
Ruffin, who pleaded guilty this January to one count of filing false 1989 income taxes, was sentenced to one year and a day in prison and fined $20,000. He faced a maximum sentence of 18 months in prison and a fine of $30,000.
``I've asked myself, `Why did I do this?' '' Ruffin told the judge. ``When you come down to it, it's a character flaw based on greed.''
Barger was less charitable. ``We're talking about a skimming operation that spread in excess of 20 years,'' he told the judge. ``We're talking about a very lengthy period of greed by the defendants.''
Kassir's brother, Farouk Kassir, and Marshall Eng, Kassir's accountant in the nightclub operations, also were sentenced Wednesday.
Farouk Kassir, who pleaded guilty in August to one count of filing a false 1989 tax return, was sentenced to 60 days home confinement and fined $30,000. Barger estimated that Farouk Kassir, who co-owned the nightclub Chicho's with his brother, owed the IRS between $75,000 and $100,000.
Eng - who refused to testify against Kassir, his former employer - was convicted in January 1994 of 12 counts of conspiracy, mail fraud and aiding in filing false returns. Boyle sentenced him to eight months and fined him $5,000.
In addition to the nightspots, Kassir and Ruffin owned the Crosswinds Resort Inn. Together they owned restaurants and commercial property totaling at least $7 million, court records and news accounts indicate.
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 and his brother Farouk were accused of buying beer from Hoffman Beverage Co. off the books - ``off ticket'' - to hide alcohol sales.
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 permission. MEMO: Staff writer Marc Davis contributed to this report.
ILLUSTRATION: Nabil Kassir
Edmund C. Ruffin
KEYWORDS: SENTENCING TAX EVASION by CNB