Mr. Palmer: Mr. Lasch is now living in South Carolina and is a philanthropist and, as a matter of fact, is serving on a number of charitable boards. As a matter of fact, I would refer you to the Wall Street Journal of last Friday; that is, March 23rd, 2001. On the front page of the Wall Street Journal there is a reference to Mr. Lasch on two occasions and to some of his charitable work. Mr. Lasch is working on raising funds to raise a civil war submarine--
The Court: Oh, the Hunley.
Mr. Palmer: --which--the Hunley. And, as a matter of fact, Mr. Lasch has raised most of the funds for the raising of the Hunley and there is a reference to his fund-raising activities in the Wall Street Journal. So he wants to serve on these charitable boards and he finds it very difficult to serve on these charitable boards. And I can also tell the Court, and I’ll produce the tape if you want me to, that there was a radio show in South Carolina I believe last week where some radio commentator was saying, well, this man is simply a criminal. He should not be allowed to be fund-raising. He should not be allowed to be doing things like he is doing, therefore, he should not be a part of this. Mr. Lasch has also been nominated in South Carolina to serve on the infrastructure board which is a new organization being set up in South Carolina. Mr. Lasch, so far as I know, does not serve to make a whole lot of money as a result of that but would very much like to serve on that board and finds this conviction for failure to mail in this pension fund report as making it very difficult to do that. Now, in that regard, your Honor, I want to go on to make it clear exactly what we’re asking for here. There is this, as I’m sure you’re aware, this standard that the Court is to weigh society and the government’s needs to maintain extensive records to aid an effective law enforcement against the harm to the individual. We are not asking that the Court record be suppressed. We’re not asking for the return of any FBI records. We are not asking for the return of any fees or fines imposed or any other disability imposed.
The Court: So you’re not asking for any relief against the executive branch?
Mr. Palmer: That’s correct. We are simply asking for an order so that Mr. Lasch can state that he does not now stand convicted of a crime. And we believe that this Court has that equitable power under the expungement power of this Court. And I think, as I say, going along with that is this fact that as I interpret it I do not believe that Mr. Lasch was guilty of this crime and we don’t stand here today to find great fault with what the Court did. We stand here to ask the Court to exercise its discretion to allow this man who, quite frankly, on his own has made his fortune and does not need a job and is not seeking a job in any way, to be a fund-raiser and a servant to our society in South Carolina.
The Court: All right. Thank you.
Mr. Palmer: Thank you.
The Court: Mr. Mekaru, anything you want to respond to? Maybe you can answer a question for me since you were involved, I believe, in the negotiated plea.
Mr. Mekaru: That’s correct, your Honor.
The Court: Was there or were there felony charges that were possible that were negotiated away?
Mr. Mekaru: Absolutely, your Honor.
Mr. Mekaru: Your Honor, Mr. Lasch was under investigation for embezzling funds from a pension plan. He was the president of Robin Transport. He was the plan administrator for the pension plan. Now, Robin Transport was purchased from a company called TNT. There was a leveraged buy-out where Mr. Lasch and an investment group bought the company from TNT. TNT had retained a majority creditor position with the company. TNT had lease agreements with Robin Transport and essentially was a major creditor for the company. However, it still became an independent corporation. Mr. Lasch operated the company, operated the company as president and I believe as the chief executive officer, and he played an active role in making decisions on a day-to-day basis in how the company was going to be run. Now, it is true that at some point the company ran into some financial problems wherein TNT began to insert some of its people into the company to watch over the financial activities of Robin Transport. As a major creditor they were concerned about their financial investment in this company. But what was happening was that TNT was running into a cash flow problem and what was--excuse me, Robin Transport was running into a cash flow problem--and what was happening was that Robin Transport began using funds that were supposed to go to the plan, the pension plan, and instead were using those funds to operate its business and began using essentially the float on those funds. Now, there was part of this investigation we looked into the fact that those funds were segregated, were designated for the plan, and once that happens regardless of whether or not they actually ended up with, in this case Principal Financial Group, once they are designated and segregated they become plan funds. Now, actually, the UAW got into a dispute with Robin Transport because Robin Transport was failing to make payments into the pension plan and there was a negotiation between the UAW and Robin Transport where they set up a special account for those plan funds. Now, what happened was what Robin Transport continued to use those funds to operate the company. Now, eventually those funds were paid into the Principal Financial Group’s pension accounts for the employees but that mis-use of those funds was part of the investigation and could very well have been the subject of a criminal charge against Mr. Lasch and Robin Transport as a corporation. Now, in addition, in roughly September-October-November 1991 the company’s financial situation became even worse, and what happened was that beyond even mis-using employer contributions to the pension plan the company began to mis-use employee withholdings. These were funds withheld from the employee’s checks that were supposed to be passed onto Principal Financial Group, PFG, and he used those funds. Well, the company was shut down in November of 1991 because what happened was TNT pulled the plug on the credit line and the reason why TNT pulled the plug on the credit line is because their auditors found out that Mr. Lasch was mis-billing receivables and inflating the amount of business that was being done by the company because he wanted the books to look better. When the company realized that they were being defrauded by Mr. Lasch, they withdrew his line of credit and they shut him down. Now, what happened was once he was shut down all those funds that were being mis-used from the employee withholdings were not forwarded onto PFG and all those employees were out those funds. Now, Mr. Lasch is going to make an argument that it was TNT’s fault and point the finger at TNT and it was their responsibility for deciding who was going to get paid and that he had taken a step back from all of that because as creditors they had taken over running the financial side of the business. Now, we understood that there would be some jury appeal to that sort of defense. We also understood that this case had gone on for some time and we were in the midst of beginning to indict Mr. Lasch because we were concerned about the statute of limitations when we were approached by defense and asked rather than indicting can we continue negotiations. That’s when the parties entered into a waiver of the statute of limitations. We were prepared to indict on felony charges. We withheld on indicting to continue negotiations with Mr. Murphy, with Mr. Frank Reynolds, and with Mr. Larry Willey. Mr. Lasch was ably represented by counsel who had evaluated Mr. Lasch’s exposure not only to the felony charges but to the fact that he was, in fact, under the law of the plan administrator. Now, I don’t hear from the defense at this point the fact that he is not guilty. What I heard from the defense was the fact that he was confused about his legal standing; was he, in fact, under the law of the plan administrator. Well, mistake of law is not a defense. He conceded the fact that he was the plan administrator. Now, PFG prepared 5500s. The company was subpoenaed, and when the company was subpoenaed the FBI found records of 5500s that were prepared by Principal Financial Group and were, in fact, signed by Mr. Lasch. The problem was he never forwarded those on to the Department of Labor or to the IRS. Now, through the discussions with counsel and the government it was decided that a just resolution, given the nature of the case and the fact that Mr. Lasch came forward and asked that he be given an opportunity to plead guilty to a misdemeanor, that he offered to completely make the plan whole, the government was willing to consider the extraordinary resolution of a binding plea agreement. Now, as the Court’s aware binding plea agreements are disfavored in this district. Mr. Lasch was concerned the fact that he might be considered a person who should be sentenced as a felon for misappropriating those funds. There was language included in the plea agreement. Now, we’re not questioning whether or not that was a just resolution. We are confident and we support the resolution and the plea agreement that was entered into by the government and by the defense. It is the defense at this point that is attacking this plea agreement. Now, we could argue the fact that they are breaching the plea agreement. The plea agreement provides in its last paragraph that any attack on this plea could be considered to be a violation of the plea agreement and all charges that could have been brought may be brought. That’s not the position we want to take in this case and that’s not the direction we want to head. Now, Mr. Lasch has presented this whole petition under the context that he is a philanthropist; that in the Wall Street Journal he is quoted as someone who is of importance; that he has taken upon himself the duty and the role of recovering the Hunley. Well, isn’t this a testament to the fact that Mr. Lasch is able to overcome a misdemeanor conviction, a federal misdemeanor conviction; the fact that he’s become financially successful in spite of the financial problems he had at Robin Transport and the federal misdemeanor conviction?