Ex-NGSA Official Faces Criminal Charges
Nicholas J. Bush, former president of the Natural Gas Supply
Association (NGSA), has been charged with one count of criminal
mail fraud and one count of tax evasion in connection for his role
in allegedly embezzling more than $2.8 million through fake
consulting contracts from the producer trade group.
Each charge carries with it a maximum term of five years, but
federal sentencing guidelines would more likely put Bush in federal
prison for 30-37 months if convicted, said a spokesman for the U.S.
Attorney's Office in Washington D.C. That's a "rough calculation"
based on "what we know about him at this time," he noted. The
charges were contained in a "criminal information" filed by
prosecutors , which means Bush has waived his right to have those
charges verified by a grand jury.
Bush, who was ousted from NGSA when the fraud was discovered in
February, could be arraigned before U.S. District Court Judge Emmet
G. Sullivan on the charges as early as June 15. However, if his
attorney, William Murphy of Baltimore, isn't finished with another
case that he's trying by that date, the arraignment will be pushed
back to July 1, the spokesman said.
The arraignment will mark the first public appearance by Bush
since details of the fraud were revealed in a civil lawsuit brought
by NGSA nearly four months ago. The civil action spawned the
subsequent criminal investigation, and even has pointed the finger
at parties in Canada. Compounding Bush's legal woes, his wife,
Katherine, filed for a divorce last month in Fairfax County (VA)
The spokesman declined to say whether the U.S. Attorney's Office
also was investigating Margaret Elizabeth Martin, now an employee
of TransCanada PipeLines Ltd. in Ottawa, who allegedly discovered
Bush's fraud activities while living with him in the early 1990s,
but agreed to keep quiet in return for "certain purchases" made
with the stolen money. The NGSA made the allegations in an amended
lawsuit in late April, but then quickly withdrew them. The
spokesman indicated that "statute of limitation problems" and
Martin's Canadian residency would complicate any investigation of
The charge of mail fraud, plus aiding and abetting mail fraud,
covers Bush's role in the entire scheme in which he "trick[ed] the
NGSA into paying over $2.8 million to him under the assumed names
of 'James W. Rogers,' 'James S. Rosebush,' and 'Kenneth A.
Duberstein'" of The Duberstein Group, a consulting firm in
Washington, according to documents filed by the Economic Crime
Section of the U.S. Attorney's Office in federal court. The fraud
began in 1983 - much earlier than initially was believed - and
continued until January 1999, prosecutors contend.
Prosecutors charge Bush violated the federal mail fraud code
when "on or about" January 1998 he "did knowingly cause to be
delivered by the United States Postal Service to the Internal
Revenue Service" Form 1099 tax information - regarding non-employee
compensation - that had been altered to hide NGSA's payment of
$275,000 to Rogers for consulting work that was to have been
performed during 1997. Rogers was unaware of the scheme, and the
money was pocketed by Bush, they said.
Prosecutors said that Bush between 1991 and 1998 routinely
intercepted Form 1099 tax information that was mailed to the three
"consultants" so that "these individuals were not aware that the
NGSA issued checks made payable in their names." During the same
period, Bush also regularly intercepted and altered the Form 1099
notices that were mailed to the IRS in order to "void" entries
showing the consulting income for the phantom consultants,
according to court documents.
In an attempt to further conceal the "consultant" payments, Bush
filed a "false and fraudulent" income tax return "on behalf of
himself and his spouse" for calendar year 1997, prosecutors said.
Bush listed their joint taxable income for that year as $212,088
even though he "knew and believed" at the time it was
"substantially in excess" of that amount. The Bushes paid $60,332
in taxes for 1997.
Specifically, prosecutors said Bush caused the NGSA to issue -
and then pocketed - more than $2.6 million worth of checks made
payable to Rogers, $160,000 worth of checks made payable to
Rosebush, and a $60,000 check to Duberstein over a 16-year period.
The three "consultants" were unwitting parties to the fraud scheme
engineered by Bush. In each case, "Bush took control of this money
and thereafter spent it for his own personal use," they charged.
To perpetrate the fraud, Bush forged the signatures of Rogers,
Rosebush and Duberstein on bogus retainer agreements, and then
submitted and approved "false and fraudulent expense requests" in
their names, according to prosecutors. They further said Bush "on
or about" 1983 forged Rogers' signature to open a checking account
at a Washington D.C. bank.
In the civil area, Bush last month responded to the charges
brought against him by NGSA in the amended complaint filed in D.C.
Superior Court, conceding that he entered into bogus contracts with
the three "consultants," that they provided no work for the
association and that he received "personal benefit" from the
contracts. But he took issue with the amount of money that NGSA has
accused him of stealing and the damages being sought - $3 million
in compensatory damages and $5 million in punitive damages.
Bush further acknowledged that none of the Form 1099 tax
information was ever sent to Rogers' actual address, and that
Rogers was completely unaware that his name was being used to carry
out the consulting scheme.
Interestingly, Bush also admitted that TransCanada's Martin, who
at the time was an aide in the Canadian Embassy in Washington, did
uncover his fraud activities in the early 1990s and that he bought
her certain items - a summer home in Canada, jewelry and a mink
coat - as inducements not to report his actions to authorities. But
while he hoped the items, especially the $250,000 vacation home,
would help to sway her not to turn him in, Bush denied that Martin
struck any kind of bargain with him in return for the purchases.