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Ex-NGSA Official Pleads Guilty to Fraud, Tax Evasion

Ex-NGSA Official Pleads Guilty to Fraud, Tax Evasion

In a stunning move, a D.C. federal court judge yesterday remanded Nicholas J. Bush, former president of the Natural Gas Supply Association (NGSA), to a halfway house pending sentencing on two felony charges for embezzling $2.8 million from the producer group. Bush had pleaded guilty.

A U.S. marshal led a weary-looking Bush out of the courtroom following his arraignment Thursday before U.S. District Judge Emmet G. Sullivan, who said he wanted to debunk the "perception" that "life goes on as usual" for white-collar criminals after they plead guilty and sign plea agreements with prosecutors. "I don't think I'm being unreasonable" by taking this action, he told Bush's attorney, William J. Murphy of Baltimore. "Whatever time he serves now would be credited against his sentence."

Sullivan's decision came as a surprise to Murphy, who had asked for Bush to be released on his own recognizance pending sentencing. He said his client was a "long-standing member of his community," had "cooperated fully with the government," turned over his assets as restitution to NGSA and posed no risk of flight.

Bush will remain at the halfway house, the location of which was not disclosed, until he is sentenced on Oct. 25th for one count of tax evasion and one count of mail fraud in connection with a phony consulting scheme that he carried out between 1983-1999 while he was president of NGSA. Each count carries a maximum penalty of five years in prison plus fines (a maximum of $5.6 million for the mail fraud charge alone). The U.S. Attorney's Office in D.C. has agreed to waive any fines so that Bush can continue to make restitution to NGSA.

Under the federal sentencing guidelines, Assistant U.S. Attorney Virginia Cheatham indicated that Bush could get as much as 41 months in a "minimum security" prison. However, if it can't be proven that Bush embezzled the entire $2.8 million-he contends he stole "slightly less" than $2.5 million-and that he abused a position of trust, the former NGSA president could receive a lower sentence of 27 to 33 months, she said. There also is an unresolved issue of "sophisticated concealment" related to the tax offense that could affect his sentencing.

"We anticipate the guidelines to be 33 to 41 months" for Bush, Cheatham told reporters following the arraignment. Prosecutors plan to argue that he stole "more than $2.5 million but less than $5 million," that his fraud offense involved "more than minimal planning," and that he abused a position of trust. But Bush's attorney contends that his client's "psychological makeup" and his "extraordinary effort" at restitution favor a lower sentence.

"This is going to be a complicated sentencing proceeding," Sullivan said. He ordered the D.C. Probation Department to complete a sentencing report within 70 days, and scheduled a hearing on the sentencing issues for Oct. 18th. Whatever term is decided, Sullivan told Bush "you probably will serve the entire sentence," or at least 85% of it.

At the arraignment, Sullivan accepted a plea agreement worked out between the U.S. Attorney Office and Bush's attorney under which Bush waived his right to have the charges against him reviewed by a grand jury. The agreement, among other thing, also preserves Bush's right to argue in the sentencing phase that the amount he stole from NGSA was less than $2.5 million. It further said that no "promises" were made to Bush about a reduced sentence.

Sullivan quizzed Bush about his reasons for signing the plea agreement. "Because I am...guilty of the charges," said the 54-year-old Bush, who noted he has been taking prescribed medication for anxiety and has been in therapy for the past four months. His involvement in the fraudulent consulting scheme was uncovered about five months ago.

Upon reviewing all of the terms of the agreement, Sullivan asked Bush if he still wanted to plead guilty to the two felonies. In doing so, "you will never be allowed to vote again" or be a juror. "I'll give you a fair trial," he promised. Sullivan reminded Bush that he would not be able to withdraw his guilty plea in the event the court decides to impose a sterner sentence than that suggested under the federal guidelines.

After Bush left the courtroom, Sullivan asked Cheatham if the U.S. Attorney's Office had any idea of what happened to "this vast sum of money" that Bush embezzled. "We are attempting to track [that]" now, she said, adding that much of its was spent on "personal items," such as "food, drink, travel and clothing-items that do not retain value."

Bush's attorney told Sullivan that his client has been trying to make restitution. So far, he has sold his house in Washington D.C. for about $800,000-$900,000. But after subtracting what was owed to the mortgage company, only about $250,000 went to NGSA. Also "sort of an agreement in principle" has been worked out to turn over the funds in Bush's retirement and pension accounts, which were estimated at about $1.5 million, to the producer group, according to Murphy.

However, after allowing for the penalties assessed by the Internal Revenue Service (IRS) for early withdrawal of the pension funds, NGSA again would get only a fraction of the amount. Further complicating the matter is the fact that Bush's wife, who has filed for a divorce, owns an interest in the retirement money.

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