Businessman and Lawyer Convicted by Jury in Multi-Million-Dollar Bankruptcy Fraud and Money Laundering Scheme
|U.S. Attorney’s Office July 17, 2013|
SACRAMENTO, CA—Steven Zinnel, 49, of Gold River, was convicted on 15 counts of bankruptcy fraud and money laundering, and attorney Derian Eidson, 49, of Yorba Linda, was convicted on one count of conspiring and one count of attempting to commit money laundering, United States Attorney Benjamin B. Wagner announced. The verdicts were returned by a jury in Sacramento after an 11-day trial before United States District Judge Troy L. Nunley.
Judge Nunley ordered Zinnel immediately remanded to custody, noting that Zinnel had defrauded the bankruptcy court and the family court and could not be trusted.
According to testimony presented at trial, in 2001, Zinnel was involved in extended litigation over child support with his ex-wife, and he indicated to her that he was going to file for personal bankruptcy. Zinnel controlled several corporations in the electrical infrastructure business. Both before and during his bankruptcy, Zinnel put much of his property in others’ names. In his bankruptcy, Zinnel claimed that he had $842,620 in assets, $2,013,896 in secured debt, and $4,036,466 in unsecured debt.
After the successful concealment of the property and the discharge of Zinnel’s bankruptcy, Zinnel laundered funds back to himself through Eidson’s company, Done Deal Inc.; her attorney-client trust account; and her personal bank account. Zinnel throughout this time used several different corporations registered in others’ names, including one registered with a forged signature, to disguise his control of property and to direct the disposition of money. Eidson gave Zinnel signature authority over her company’s bank account, which he used for his personal expenses.
One of the things that Zinnel hid from the bankruptcy court was an investment in an electrical infrastructure company in which he had invested as a “silent partner.” Zinnel invested hundreds of thousands of dollars and prepared the corporate filings, but his name did not appear in any public filing of this company. For years, the company paid distributions to Zinnel as an owner, but those distributions were disguised as payments to Eidson’s company for things like equipment, training, consulting, and legal work. Later, when the person in charge of that company stopped paying distributions to Zinnel through Eidson’s company, Zinnel and Eidson worked together to seek a final $4 million payment that would be characterized as a payment to end a consulting agreement.
This case is the product of an investigation by the FBI and IRS Criminal Investigation. Assistant United States Attorneys Matthew D. Segal and Audrey B. Hemesath are prosecuting the case.
Sentencing is set for October 3, 2013, at 9:30 a.m. before Judge Nunley. The maximum statutory penalty for bankruptcy fraud is five years in prison for each count. The maximum statutory penalty for money laundering or money laundering conspiracy is 20 years in prison per count. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.