ESCONDIDO, Calif. (CN) - Escondido attorney Gustav Bujkovsky was sentenced on Monday to 1 year in federal prison and ordered to pay $76,800 for concealing a Ponzi scheme run by his client, Mohit Khanna, and Khanna's business, MAK 1 Enterprises.
Bujkovsky pleaded guilty on Aug. 31, 2010 to an information charging him with obstruction of justice and tax evasion.
Bujkovsky, 67, was sent directly to jail on Monday.
Khanna was sentenced in November to 41 months in prison.
Bujkovsky's actions in the case, according to the U.S. Attorney's Office, were many and tawdry. According to the U.S. Attorney's Office:
Khanna took "millions of dollars" from suckers in his Ponzi scheme, which collapsed in August 2009. Bujkovsky then defended him in an SEC investigation and from civil lawsuits.
"Bujkovsky obstructed justice by, among other things, concealing MAK 1 investor funds in his attorney-client trust account and lying to federal regulators about Khanna," prosecutors said in a statement. "In order to prevent victim investors from locating monies they had entrusted to Khanna, Bujkovsky deposited $1,562,000 of MAK 1 investor funds into his attorney-client trust account between April and August 2009. During that same time period, Bujkovsky disbursed to Khanna and his designees $981,600 of the MAK 1 investor funds he had just deposited into his attorney-client trust account.
"Additionally, Bujkovsky transferred $368,000 of the MAK 1 investor funds from his attorney-client trust account to several bank accounts that he controlled. Bujkovsky then used these investor funds to pay personal expenses he and his wife had incurred, including the repayment of a loan Bujkovsky owed to his father-in-law. Although the improper use of these funds resulted in additional income to Bujkovsky and his wife, he did not file a federal income tax return for the year 2009 and thereby willfully evaded over $76,000 in taxes."
But that's not all. After the SEC served Khanna with a subpoena, on July 7, 2009, and Bujkovsky learned of it, "Bujkovsky told Khanna to flee San Diego and travel to India, so he would not have to attend the SEC testimony or produce records. After
Khanna left for India, Bujkovsky obtained two continuances of Khanna's testimony by intentionally misleading the SEC into believing that Khanna would appear for testimony if the SEC rescheduled it for July 21, 2009. On July 21, 2009, Bujkovsky left a telephone message with the SEC attorney conducting the agency's investigation, claiming to be ignorant of Khanna's whereabouts. In fact, however, Bujkovsky knew that Khanna had fled to India on Bujkovsky's advice in order to avoid the SEC's subpoena," according to the U.S. Attorney's Office.
But that's still not all. A federal judge froze Khanna's and MAK 1's accounts on Aug. 20, 2009, and Bujkovsky "was personally served with a restraining order."
"In response to the TRO, Bujkovsky falsely claimed that he did not have any MAK 1 funds remaining in his attorney-client trust account. In fact, however, Bujkovsky was continuing to conceal $459,508.12 in MAK 1 funds in his account," prosecutors said in their statement. "Instead of maintaining these funds for defrauded investors, Bujkovsky created and back-dated a fictitious, non-refundable retainer agreement which falsely claimed that he was entitled to $300,000 for legal services he allegedly provided between April 2009 and August 2009. Bujkovsky later presented this fictitious retainer agreement to the District Court and the Court-appointed Receiver in order to justify his attempt to keep $300,000 of MAK 1 investor funds remaining
in his attorney-client trust account."
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