Arson Case Briefs

provided by the Bureau of Alcohol, Tobacco, and Firearms
for more information on this Brief, contact:
ATF, Arson and Explosive Programs Division - (202) 927-7930

Fusion International, Inc.
Del Mar, CA
August 9, 1991

A. IN: 93160-92-3549 D

B. CASE AGENT: R. Scott Parkhurst

C: FIELD DIVISION/OFFICE: Los Angeles, San Diego I

D. PHONE: 619-557-6392

E. PROSECUTORS:

William Hayes

Timothy Coughlin

F. SYNOPSIS: This brief concerns the successful prosecution of the illegal activities of a company known as Fusion International, Inc.--to wit, arson, conspiracy, smuggling, money laundering, mail fraud, fraud, trafficking in counterfeit goods, false tax returns, and false statements to the Federal grand jury. The investigation resulted in seven defendants; seven convictions; $971,500 in fines; a $1.9 million Criminal Forfeiture Order; and $541,599 forfeited to the U.S. Department of Treasury.

G. CHARGES:

United States Code

Title 18, Section 371 - Conspiracy to Smuggle Goods into the United States

Title 18, Section 545 - Smuggling Goods into the United States;

Title 18, Section 1956 (a)(2)(i) - Laundering of Monetary Instruments.

Title 18, Section 1957 - Engaging in Monetary Transactions and Property Derived from Specified Unlawful Activity.

Title 18, Section 1341 - Mail Fraud

Title 18, Section 844(i) - Using Fire to Commit a Felony

Title 18, Section 982 - Criminal Forfeiture

H. EVIDENCE.

1. On August 9, 1991, at 8:42 p.m., an arson fire occurred at Fusion International, Inc., in Del Mar, California. The fire resulted in an insurance claim of $1.5 million.

2. The fire burned IBM computer cards that were smuggled from France into the United States. ATF's assistance was immediately requested by the San Diego County Bomb and Arson Unit. Investigation soon revealed that is arson was one of numerous crimes involving an international conspiracy. A task force was formed of ATF, U.S. Customs, the Internal Revenue Service, the U.S. Postal Service, the San Diego County Bomb and Arson Unit, and the U.S. Attorney's office.

3. After 18 months of joint investigation, strong motive evidence was developed against Fusion International, Inc., owners Mark Robinson and Brad Hirou. A grand jury investigation was initiated; however, it was determined that there wasn't yet enough evidence to prosecute.

4. On September 16, 1993, agents questioned a confidential informent (CI) for the Drug Enforcement Aagency about an anonymous letter law enforcement officials received that named individuals who were allegedly smuggling and distributing large quantities of cocaine and marijuana from Mexico into the United States. The CI was named in the letter as one of the members of the conspiracy. The letter also named Gerald Nantz, a local cocaine dealer, as the man who arranged the arson of Fusion International, Inc. The CI agreed to meet with Nantz in an undercover capacity. (Note: This letter was the "big break" in this investigation.)

5. On October 25, 1993, the CI went to Nantz' residence at 1727 Oxford, Cardiff, California. The meeting was monitored and recorded. Nantz volunteered that he had been hired by Brad Hirou to find someone to burn Fusion International, Inc. Nantz told the CI that their computer card inventory had become worthless because IBM had uncovered their smuggling scam. Hirou had offered to pay Nantz $30,000 to complete the job. Nantz complained that Hirou still owed him $15,000 for arranging the arson. Unfortunately, the CI forgot to ask Nantz who actually "lit the match," and he was sent back to try to find out before the opportunity was lost. Within minutes, Nantz said he hired Brian Story to actually do the arson. Nantz said Hirou assisted by breaking the skylights in the warehouse to help Story gain access in order to spread the accelerant and set the fire. According to Nantz, the fire caused a loud explosion, resulting in an intense fire that destroyed most of the inventory. Nantz said Hirou refused to pay the balance of the $15,000 because the insurance company had denied the claim, alleging Hirou and Robinson were responsible for the arson.

Note: These two tape recordings were the best evidence concerning this investigation. These tapes caused several of the defendants to cooperate with the Government and also enter into plea agreements. The tapes corroborated much of the evidence already obtained.

6. On June 7, 1995, a Federal grand jury returned a 50-count criminal indictment charging Robinson, Hirou, and Nantz with arson and mail fraud in connection with the Fusion International, Inc., fire. The indictment also charged Robinson, Hirou, and French citizen Stephan Pecqueraux with smuggling and money laundering. The indictment alleged that beginning in 1990, Robinson and Hirou conspired with Pecqueraux to smuggle IBM computer parts worth millions of dollars from France into the United States. The three men used a New York company to disguise the transactions between Fusion International, Inc., and Hi-Tech Trading, a French company owned in part by Pecqueraux. Robinson and Hirou caused approximately $3 million to be wire-transferred from San Diego, California, to Switzerland and elsewhere as payment to Pecqueraux for the smuggled IBM computer parts. In a further attempt to hide payments made by Fusion International, Inc., Pecqueraux, Robinson, and Hirou purchased a Porsche and made a $1.3 million payment on a residence in Rancho Santa Fe for Pecqueraux's benefit.

7. Nantz had been hired to cause the fire and had agreed to be paid, at least in part, by the insurance proceeds. After the fire, Robinson and Hirou sought to obtain over $2 million from their insurance carrier.

8. Robinson, Hirou, and Nantz were charged with the arson of Fusion International, Inc. On June 8, 1995, Robinson, Hirou, and Nantz were arrested in the San Diego area. Robinson, was detained without bail, and Hirou and Nantz were released on $500,000 and $100,000 bail, respectively. Pecqueraux remained a fugitive in France (which does not have an extradition treaty with the U.S.).

9. Subsequent to his arrest, Nantz agreed to cooperate with the Government. He identified the "torch" as Brian Story, residing in Ketcham, Idaho. Nantz made undercover calls to Story that corroborated his information. ATF agents arrested Story in Boise, Idaho, on June 16, 1995. The two monitored undercover phone calls by Nantz to Story and Story's postarrest statement proved to be powerful evidence against him. This led to his subsequent cooperation plea agreement.

10. The trial of the lead defendant, Mark Robinson, began on May 22, 1995, and lasted approximately 4 weeks. The trial required the review of thousands of documents from a number of sources, which caused Federal Chief Judge Judith Keep to declare the trial to be "complex."

11. Based on Nantz' and Story's cooperation and the strength of the evidence against him, Hirou entered into a plea agreement on April 19, 1996. It should be noted that Hirou's, Nantz' and Story's guilty pleas to 844(h), Use Of Fire To Commit A Felony, were the first such guilty pleas to this statute in the Southern Judicial District of California. Due to the above guilty pleas and plea agreements, on May 18, 1996, Pecqueraux voluntarily returned to the United States from France. On May 20, 1996, Pecqueraux entered into a plea agreement and pled guilty to two fraud counts of the indictment. Pecqueraux still faced tax and fraud charges in France.

12. In addition, solely based on this investigation, a spin-off indictment was returned on February 22, 1995, involving a $2 million fraud against the Bank of Southern Africa. Defendants Bradley Hirou, Mark Chin, and Joan Arcidiacono have all pled guilty.

I. LEGAL ISSUES AND PROBLEMS:

As a result of plea agreements, the entire prosecution strategy against the remaining defendant, Mark Robinson, changed. Many of the original witnesses and exhibits were no longer relevant according to the rules of evidence. Also, the international aspect of this investigation extended beyond Switzerland and France when attempts were made to seize Pecqueraux's residence, which had been acquired with the smuggling proceeds. Immediately prior to the seizure, a Bulgarian citizen placed a trust deed for an unspecified amount on Pecqueraux's house. After the seizure, the Bulgarian asserted that he had sold his $20,000 interest in a Russian company to Pecqueraux for $1 million--an amount which happened to correspond with the amount of equity in Pecqueraux's residence. Discussions with Russian consulate officials were instrumental in refuting the Bulgarian's claim, and the matter was settled by returning $500,000 to Pecqueraux's wife (under the innocent spouse provisions) and the Government retaining the remaining $500,000.

Interpol was also used during this investigation.

Unindicted coconspirator Gerald Joyce, the importer of the smuggled computer cards, was granted immunity and would have been a crucial witness but is now deceased.

This case was accepted for Federal nexus prosecution due to Federal law enforcement resources, foreign nexus, multi-venues and jurisdictions, and multi-defendants. Due to the advantages of the Federal grand jury system and the proper application of the appropriate Federal criminal statutes and related penalties, these suspects were prosecuted to the fullest extent of the law.

J. VERDICTS AND SENTENCING:

On September 21, 1995, Story and Nantz pled guilty to seven counts of mail fraud and one count of arson, as charged in the indictment.

On March 13, 1996, Judge Keep sentenced Nantz to 33 months in Federal custody and 5 years' probation.

Hirou pled guilty to money laundering, smuggling, arson, wire fraud, and trafficking in counterfeit goods and was sentenced to 81 months' imprisonment.

Robinson went to trial and was found guilty of conspiracy, 6 counts of smuggling, 33 counts of Title 18 1956 and 1957, money laundering, and additional counts of mail fraud. He was sentenced to 121 months' incarceration and fined $77,150. Prior to his trial, Robinson was offered, and refused, a plea agreement of 60 months' imprisonment.

Pecqueraux voluntarily returned from France to plea to a smuggling charge and testify at Robinson's trial. Pecqueraux was sentenced to 6 months' probation, but is returning to France where he is facing charges of income tax evasion.

Arcidiacono pled guilty to perjury and to willfully subscribing to a false corporate return in violation of 7206(1), and was sentenced to 12 months' incarceration and a $13,600 fine.