Business Owner Arrested in $132 Million Scheme to Defraud Clients

Edward H. Okun, 57, of Miami was arrested and charged with mail fraud, bulk cash smuggling and making false statements. The indictment stems from Okun's scheme to defraud and obtain millions of dollars in client funds held by The 1031 Tax Group, LLP, (1031TG) a qualified intermediary company owned by Okun.

The indictment states that, from August 2005 to April 2007, Okun used 1031TG and its subsidiaries, all owned by Okun, under false pretenses to defraud clients out of millions of dollars. Internal Revenue Code allows investment property owners to postpone paying capital gains tax on properties sold if the proceeds are used to purchase new property in a specific time period. To facilitate this swap, investment property owners deposit their sales proceeds with qualified intermediaries and sign exchange agreements which include various promises by the qualified intermediaries to clients regarding the safekeeping and use of exchange funds.

The charges the indictment is making against 1031TB / Edward Okun include:

Okun embezzled approximately $132 million in client funds that were obtained by promising clients that their money would be used only to effect 1031 exchange. Okun used the funds to support his lavish lifestyle, pay expenses for his various companies, invest in commercial real estate and purchase more qualified intermediary companies to obtain additional client funds.

Okun instructed employees to withdraw $15,000 in cash from Investment Properties of America’s (IPofA) bank account, a company owned by Okun, and smuggle the cash to his personal yacht in the Bahamas to avoid federal currency reporting requirements.

Okun made material false statements under oath before the U.S. District Court for the Eastern District of Virginia relating to conversations he had with the chief legal officer of IPofA.

The indictment is seeking forfeiture of all funds and assets owned by Okun that were taken from or connected to the $132 million he embezzled from 1031TG and all funds and assets traceable to the $15,000 in cash he instructed to be smuggled to the Bahamas.

If convicted of all charges, Okun will face fines and a max of 30 years in behind bars.