Venice civil rights lawyer Stephen Yagman, a combative advocate for the underserved and a longtime thorn in the side of law enforcement, was convicted on 19 felony counts in Los Angeles federal court on Friday, June 22nd.
Yagman was found guilty on 17 counts of money laundering and one count each of attempting to evade taxes and bankruptcy fraud.
The attorney was indicted in June last year after prosecutors accused him of laundering money, hiding his assets and committing bankruptcy fraud in an effort to evade paying more than $200,000 in federal taxes.
Barry Tarlow, Yagman’s attorney, cited his client’s contentious relationship with law enforcement, especially the Los Angeles Police Department, as a possible motive for the government bringing the charges.
In court documents, Tarlow argued that the case was a “vindictive prosecution” for Yagman’s “contentious history with federal law enforcement agencies.”
During an interview in 2001 with Marina del Rey-based documentary producer Leslie Dutton, the fiery attorney described the California Supreme Court as essentially a “cesspool” consisting of “six hacks and one wonderful justice.”
Throughout the four-week trial, the prosecution argued that Yagman filed tax returns from 1994 through 1997, but paid only a small portion of the taxes that, according to his own returns, were owed to the Internal Revenue Service. As a result of the underpayment, Yagman accumulated federal income tax liabilities for those four years, with interest and penalties, that totaled more than $158,000.
Prosecutors alleged that Yagman transferred the deed of his house to his girlfriend, K.D. Mattox, and deposited all of his income into her account, while signing checks in her name. They also claimed that he filed for bankruptcy in New York so trustees would not find his assets in California.
“Hours after he filed for bankruptcy, he spent $2,000 in shoes and clothing [Ö] on Madison Avenue,” assistant U.S. attorney Beong-Soo Kim told jurors during the trial. “And he went out to a $260 dinner,” he added. During the four-year period, the attorney also allegedly failed to pay significant amounts of federal payroll taxes owed by his law firm, which was then called Yagman & Yagman, P.C.
Instead of paying these overdue federal taxes, according to federal prosecutors, Yagman engaged in a scheme to conceal his assets and to impede the collection efforts of the IRS.
In 1999, government officials accused Yagman of attempting to subvert the IRS’s collection efforts by filing for both personal and corporate bankruptcy, according to a statement from the U.S attorney’s office. They alleged that Yagman made misrepresentations and omissions in his bankruptcy petitions and in court proceedings relating to those petitions.
In his personal bankruptcy petition, he failed to disclose to the court that he lived in a 2,800-square-foot house near the beach in Venice, for which he made mortgage and property tax payments, government officials contended.
Yagman also allegedly failed to disclose in his bankruptcy proceedings various personal bank and brokerage accounts that he controlled but which were in his girlfriend’s name, as well as hundreds of thousands of dollars in legal settlements, client payments and attorney’s fees that he received in 1999 and 2000.
Tarlow argued that his client transferred the funds into his girlfriend’s bank account to prove his dedication to her after she moved to Venice from Orange County to be with him.
The jury deliberated for approximately 12 hours before reaching its conclusion. The verdict was unanimous.
“The public expects attorneys to be honest, to be trustworthy and to show respect for the law. The jury’s verdict finding Mr. Yagman guilty on all counts sends a powerful message that his acts of deception and illegal conduct will not be tolerated,” said Internal Revenue Service special-agent-in-charge Debra King.
“[Last week’s] verdict should serve as a strong deterrent to others who would misuse our nation’s mail system to commit tax or bankruptcy fraud,” added acting postal inspector in charge Robert Malaby. “The United States Postal Inspection Service remains dedicated to our mission to protect our nation’s mail system from criminal misuse.”
Yagman has many critics as well as many admirers.
Joe Gunn, a retired Los Angeles Police Department (LAPD) commander alleged in an interview with The Los Angeles Times that Yagman hurt the department’s standing in minority communities with false and misleading accusations. “He won very few cases, but you say things long enough and people start believing it,” he said.
Some of the cases that Yagman won helped solidify his standing among Los Angeles civil rights attorneys. In 1990, he won a million-dollar settlement against San Bernardino County deputies who were caught on tape brutalizing five Latino youths. In 1992, he won a suit against the LAPD’s Special Investigations Section after officers shot and killed three men who had just held up a McDonald’s in Sunland. He called the Special Investigations Section a “death squad.”
Dutton, an Emmy-award-winning producer of the cable program Full Disclosure, told The Argonaut that Yagman was “a complicated man.”
“I became very familiar with him during our interview,” she said. “I learned a lot about him while I was researching him, and while he had definitely had his critics, there are a lot of people who looked to him as someone who could help them,” Dutton acknowledged.
Veteran Los Angeles civil rights lawyer Carol Sobel, who at one time worked for the American Civil Liberties Union, said Yagman has left a lasting legacy. “There is case after case that he won [legal] precedents that we all rely on, including one that held that city officials could be held liable for ignoring continued abuses by the police department,” Sobel, who now practices law in Santa Monica, told The Los Angeles Times.
“I’ve interviewed almost 500 people on my show, and I’ve never interviewed anyone quite like Stephen Yagman,” added Dutton, who says that she has had Hustler publisher Larry Flynt and Whitewater prosecutor Kenneth Starr as guests on her show.
“(The jury) must have thought that the prosecution had a lot of evidence,” she reasoned.
Nevertheless, the producer said that she was “shocked” when she heard that Yagman had been found guilty.
Yagman is free on a $100,000 bond. Prosecutors argued that the defendant should have been taken into custody immediately after the verdict, but U.S. District Judge Stephen V. Wilson ruled that Yagman was not a flight risk.
The civil rights attorney now faces the possibility of at least six years in federal prison, if Wilson’s ruling holds up on appeal.
It was not known as The Argonaut went to press if Yagman plans to appeal the verdict. At Argonaut press time, Tarlow, Yagman’s attorney, had not returned phone requests for an interview.