THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, October 27, 1996 TAG: 9610270326
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY MARC DAVIS, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: 163 lines
On its face, the bookkeeper's tale seemed incredible.
The woman said there were drugs at the Jewish Mother - not little baggies, but bags stacked 5 feet high. She said the restaurants' owner and manager had guns in safes. She said one owner used heroin, the other used cocaine.
She said an owner and manager had threatened to kill her and her toddler. She said the owner had shoved her against a car and warned her to stay away from government agents.
Most tantalizing, she said the restaurant was laundering more than $1 million a year in drug money.
And this was not just any restaurant. This was the Jewish Mother, one of the most popular spots on the Oceanfront.
The Internal Revenue Service believed the story. The bookkeeper seemed sincere. She was in a position to know.
And so the IRS, based on this informant, launched a massive raid on two restaurants and two houses - a raid with rifles and drug-sniffing dogs, a raid that broke up a teen-age girl's slumber party, a raid that rousted a man from the shower at gunpoint and netted a truckload of evidence.
But it was all wrong.
In the end, the bookkeeper's tale proved to be a lie. There were no guns or drugs or cooked books. In the end, the IRS came back, and returned the truckload of seized property.
In the end, there were no criminal charges. Five months after it began, the investigation was over, without even an apology.
Now, the Jewish Mother and its owners and former manager are suing the government raiders for $20 million. They say the IRS and state liquor agents were fools for believing the bookkeeper, a disgruntled ex-employee who was fired for embezzlement shortly before the raids in April 1994.
What was it about the bookkeeper's story that so enticed the IRS and the state Alcoholic Beverage Control Department? Why did the agents find it so believable?
New court documents - including a 22-page search warrant affidavit, recently unsealed - describe in detail the bookkeeper's story. They also explain why the government believed the woman, despite her criminal past.
On Wednesday, a federal judge refused to throw out the lawsuit, saying he wants to see more evidence on both sides. A trial is scheduled for April.
Meanwhile, court hearings and documents show for the first time how the government raids came to pass, and what the raiders thought they would find.
Deborah A. Shofner was a woman with a past.
She came from Florida. There, in 1992, the young woman ran up big bills on someone else's bank card, without permission. She wound up pleading guilty, was sentenced to 10 months in jail and ordered to pay $19,303 in restitution. She was 29.
Soon after, she wound up in Virginia Beach, working for lawyer Moody ``Sonny'' Stallings. Court papers say she stole money there, too, but was not prosecuted.
Eventually, Shofner landed at the Jewish Mother. She started work in the deli, then became bookkeeper.
In March 1994, the owners fired Shofner and accused her of stealing about $50,000, after she had worked there five months. They called police and tried to press charges.
A week or two later, ABC Agent Clyde Santana knocked on Shofner's door. He wanted to talk. He wanted information about the restaurant's liquor license, among other things.
Shofner had a tale to tell: ``I am in trouble,'' she told the agent. ``I've done some bad things.''
Shofner claimed that the Jewish Mother was not reporting its actual sales to the ABC. She also claimed that she and her son had been threatened by manager Richard ``Scotty'' Miller and co-owner John Colaprete. She said they were upset that she was talking to the ABC.
Santana wanted another meeting. She agreed to meet him and other officers the next day.
On March 30, 1994, Deborah Shofner told all.
In a meeting with Santana, IRS Agent Carol Willman and others, Shofner said the Jewish Mother's owners - Colaprete and Ted Bonk - were involved in ``a massive fraudulent scheme'' to defraud the ABC, IRS and others.
Shofner said the scheme involved skimming and laundering money, and she gave the agents records that, according to the search warrant affidavit, ``confirm her allegations.''
Shofner said the fraud ran to millions of dollars.
For example, Shofner said she found $2 million in unreported income for 1993. She said gross revenues were understated by about $1.9 million for 1992 and 1993. She said gross receipts were understated by more than $1 million a year for 1989, 1990 and 1991.
Worse, Shofner claimed, one owner told her ``they had been doing it this way for 18 years.'' She said the owners ordered her to create false books. So she did.
Where was all this money coming from? That was the most startling ``revelation'' of all.
Shofner told of what she said was a scary encounter on March 15, 1994 - two weeks before the interview.
She said she arrived at the Jewish Mother at 9 p.m. to post payroll, only to find employees blocking her office. She barged in anyway. She said that Colaprete hollered, ``What are you doing here?''
Inside, Shofner said, Miller and another person - the name is blacked out on the affidavit - were standing in front of her computer counter. On the floor were about 100 to 150 semi-transparent plastic bags stacked 5 feet high and 3 feet deep. The bags, about the size of 5-pound flour bags, were filled with ``a white substance,'' she said.
She said Miller had just returned from Florida, where he had picked up a 28-foot boat belonging to Colaprete.
``Deborah, you don't see this,'' Shofner said Miller told her. ``Go home.'' Colaprete repeated the warning.
At that moment, according to the search warrant affidavit, ``She realized . and records of (the restaurants) were actually drug proceeds being laundered through the businesses.''
Two days later, she claimed, Colaprete offered to pay off Shofner's $10,000 debt if she would ignore what she had seen in the office.
Later, she added details about the owners and manager that seemed to corroborate her tale.
For example, she said she saw Bonk, one of the owners, use cocaine in the Norfolk restaurant, and that he carried cocaine in a little vial attached to his key chain at all times. She said that Miller told her he routinely used cocaine. She said Colaprete told her he used heroin.
And, she said, she was scared.
Once, she said, Colaprete and Miller told her ``neither she nor her son would see her son's 2nd birthday if she didn't stay away from Agent Santana,'' the affidavit says.
She said Colaprete kept guns in a safe at home, and Miller kept jewelry, cash and guns in a safe at his home.
Finally, Shofner said that Colaprete had shoved her against a car. According to the affidavit, she had bruises ``consistent with her statement.''
It was enough to convince the IRS.
After the long interview, Agent Willman prepared a search warrant affidavit. This is the document that persuaded a federal magistrate judge to issue the search warrants.
In the affidavit, Willman wrote that Shofner ``appears to (me) to be genuinely apprehensive about her safety and that of her son. . . . Based on the above, it is (my) belief that DS has provided truthful information.''
Willman noted that Shofner knew she could go to jail for her role in the alleged crimes. That made her more believable.
``People do not lie to set themselves up to go to jail,'' ABC attorney J. Patrick Griffin wrote in a legal brief. ``Simply put, the informant had nothing to gain (and, in fact, very much to lose) from the story she told.''
Also, Willman said she checked IRS records and compared them with Shofner's statements. ``Based on my experience and training . . . I believe these tax returns to be substantially understated,'' Willman wrote.
Willman did not consider it unusual that Shofner had a conviction for credit card fraud in Florida. That fact was duly noted in the search warrant affidavit.
``Search warrants are often predicated upon information from informants who have checkered pasts,'' IRS attorneys wrote in a legal brief.
Eventually, Shofner was charged with embezzling from the Jewish Mother and forging company checks. She pleaded guilty in August to stealing about $30,000 and was sentenced to six years and 11 months in prison.
Last year, she also pleaded guilty to three counts of embezzlement in New Bern, N.C.
No charges were filed against Miller, Bonk or Colaprete.
The IRS and ABC say they had no reason to disbelieve Shofner. Even if they had known Shofner was a disgruntled ex-employee who had just been fired - the IRS and ABC say they did not know this - Shofner might have been telling the truth anyway, they say.
``It cannot be said that no reasonable law enforcement officer would have sought a search warrant under these circumstances,'' the IRS argued in a legal brief. ``Even (the restaurants' owners) trusted Shofner, despite her record.'' ILLUSTRATION: Color photo
FILE/The Virginian-Pilot
In April 1994, IRS officials seized records from the restaurant.
KEYWORDS: EMBEZZLEMENT U.S. INTERNAL REVENUE SERVICE
ARREST SENTENCING DRUG ARREST JEWISH
MOTHER RESTAURANT by CNB