At one time, Capwill's company stood guard over $170 million -- much of it the life savings of a few thousand hardworking people he never met. Somehow, that pool of money sprang a $50 million leak. Police arrived at one explanation: Capwill embezzled it.
The remaining funds have steadily evaporated over the past three years, as the courts undertake the tortuously slow task of finding out what happened. The trail has led to strippers, half-baked investments, planes, cars, mansions, foolish business ventures, washed-up R&B singers, and mobsters.
"It's a den of thieves," says attorney Bill Wuliger, whose job it is to make sense of the case. "But when you get to the bottom line, the dirtiest guy is the one with the most money." And that, according to federal prosecutors, is Capwill.
So Capwill's challenge is simple: Before his trial begins June 5, he must sift through his dining room files for a rational explanation for how he, a debt-riddled accountant, could suddenly afford to dole out millions to friends and family, collect houses and buy restaurants, hang with Mafia types on the East Coast and Hollywood types on the West Coast.
Whatever the outcome, one thing already seems certain: Jim Capwill harbored dangerous fantasies. Now he faces a lifetime in prison because, for one fleeting moment, those fantasies came true.
Wealth was a foreign, exotic thing to a young Jim Capwill. His father, James L. Capwill, drove a Snap-On tool truck. His mother worked as a secretary and clerk.
After his father fell ill, Capwill took his place as a Snap-On driver. Fellow John Carroll students teased him when they spotted the truck roaring through campus, but those wages, plus hefty student loans and work at a grocery store, paid his tuition.
Ten days after Capwill graduated, his father died. There was no life insurance, so Capwill's career took on a new urgency. As he polished off his CPA test, he also tended to his distraught mother.
Capwill toiled at small accounting companies for several years after college, but he itched for his own firm. In 1992, at just 27 years old, he founded Capwill & Co.
Business was scarce in those early days, says then-Office Manager Jenny Hale. There were three employees. The receptionist made four -- but that was Capwill's mother, and she worked for free. Hale tended the books, and there was hardly enough money to pay for electricity and rent. Her paycheck bounced twice in two months, she says.
Capwill was a busy accountant -- but that didn't necessarily bring a steady cash flow.
"He was working on the barter system," says Hale. "He would do accounting for a tanning parlor, and he always had a nice tan. He needed legal advice, so he'd do free work for lawyers. Jim would do accounting for a golf course if they let him play. All the while, he could hardly keep the lights on in the office."
It was a business model that kept Capwill & Co. on the verge of bankruptcy, she says, but these were necessary sacrifices for the lifestyle and image Capwill was cultivating.
A friendly lawyer might come in handy when a creditor came calling. Indeed, attorney Bill Summers -- one recipient of free accounting -- came to Capwill's aid when a men's clothing shop sued him for ignoring his bill.
Capwill looked like a millionaire long before he became one. Thanks to those hours at the tanning salon, he always appeared to have just returned from a Caribbean beach house. But other affectations didn't look so authentic. "He dyed his hair jet black, and it dripped onto his shirt," laughs Hale. "He always wanted to be this big Italian guy -- but he was Irish."
Though the CEO of a tiny, failing company where his employees snickered behind his back, Capwill never betrayed the slightest insecurity. He was a big talker who easily made friends -- especially the kind who could help with his problem of the moment.
A credit card binge in his early twenties made home financing tough to come by. So Capwill talked his dentist into fronting the purchase of a home on Pebble Beach Cove in Aurora, Hale says.
When Capwill's company was evicted from its Solon office, she says, softball teammate Mike Badalamenti let Capwill move into vacant space he owned in Twinsburg -- and stay rent-free.
Hale, whose job was to screen calls and tend to bills, agonized over the business's instability. Capwill was unfazed. He offered simple solutions: When the banks called about his unpaid student loans, Hale was to tell them he was not in. The same went for the client who claimed Capwill embezzled $100,000 from his family's savings.
But Hale began to suspect her boss was a professional "flimflam man." So when Capwill told her that giant profits were just around the bend, she was skeptical. She had heard his prophecies before. This time, however, his word would prove true.
Capwill's ascent began in 1997, when the accounting firm Wesley, Mills & Co. split up and a woman named Lynn Day arrived in his office. Day's specialty was the still-blossoming investment field of viaticals, which involved making money off the soon-to-be-dead.
As creepy as that sounds, viaticals have a common-sense appeal. The "viator" is a terminally ill person with a life insurance policy. Investors buy the policy at a fraction of the price -- usually from 10 to 50 percent of its value -- so the dying have extra cash for life's final months. When that person dies, the investor claims the death benefit.
Between the dying person and the investor are middlemen. A funding company usually purchases the policies from the dying on one end, then connects these policies to investors on the other end.
A Toledo businessman named J. Richard Jamieson ran a viatical funding company called Liberte Capital Group. While at Wesley, Mills & Co., Day was Jamieson's escrow officer. She was charged with holding investors' funds and making sure premiums were paid, so the life insurance policies didn't lapse.
When Day joined Capwill's office, she brought the Liberte account with her. Capwill soon founded another company, Viatical Escrow Services, and made Day his partner.
Every time Liberte found an investor, those funds were deposited in VES escrow accounts. VES was entitled to most of the interest the accounts earned. It also received about $350 when the viator died and the insurance policy paid off. But since Liberte Capital was fairly new, most of its viators were still living.
In 1998, Capwill met Anne Dileo at a conference. She was launching her own viatical company, called Alpha Capital, in Chattanooga, Tennessee, and contracted with Capwill to handle her escrow accounts.
By that time, Liberte was doubling and tripling its own investor rolls. Viators were dying by the dozen, each bringing $350 to VES. Alpha would soon grow nearly as big as Liberte, and with thousands of investors, the pool of funds from which VES earned interest swelled beyond $100 million.
The viatical industry was booming, and Capwill was riding high. The tidal wave of money washed away his creditors. Checks stopped bouncing. Banks stopped calling about his student loans. He settled a lawsuit with the family accusing him of embezzling $100,000. New staff was hired to accommodate the influx of business.
At just 33 years old, Capwill was the president of a hugely profitable company. He could expect to make about a million dollars annually.
According to investigators, it wasn't enough.
It's hard to tell who was the worse influence on the other, but it is clear that Jim Capwill and Rick Jamieson should never have met.
Both were young, swaggering businessmen who fancied themselves a little more daring, a little more creative than their competition. They got along splendidly.
Jamieson was the more evolved man, say those who met both. He was born to a family that made its riches selling home electronics and was making six digits as a stockbroker before he jumped into viaticals. Two years before Capwill even entered the viatical market, Jamieson was already on the industry's cutting edge.
Capwill lavished attention on Jamieson, the client who fueled VES's surge to become one of the leading viatical escrow agencies in the nation. Jamieson, in turn, mentored Capwill on the ways of the elite businessman. One of Jamieson's first directives to Capwill: Scrap that rusty Camaro for something in the luxury class. Capwill picked out a new Jaguar. The $66,000 came out of Jamieson's business account.
Their friendship soon began to alienate Lynn Day, who had brought Jamieson aboard in the first place. As Capwill expanded his role in viaticals, Day's role diminished, until she finally threatened to leave. "I brought these clients into the business, and he just took them from me," says Day. "He pretty much told me, 'Rick Jamieson will never go with you.'"
She was so disconnected that she didn't even know about Jamieson's November 1997 wiring of $700,000 from the escrow account to a bank in the British West Indies, which was documented in Jamieson's criminal indictment. The money was used to buy a mansion in the Toledo suburb of Ottawa Hills.
By January 1998, Day was gone. The indictment against Capwill only lists offenses occurring after Day's departure, and she faces no criminal charges.
Attorney Bill Wuliger, who represents the Alpha investors, believes Day was the conscience of the office. Once she left, Capwill "had no checks on his behavior, and he became bolder and bolder," he says.
By late 1998, federal investigators were already circling.
A railroad pension was not enough to live on, so Houston Holland and his wife were counting on timber and real estate investments to carry them through retirement.
They were looking to make one more short-term investment to solidify their finances. An ad in their local Madison, Indiana newspaper caught their eye: An insurance agent named Glenn Smith was selling viaticals. It seemed an odd concept, but it offered a return of 14 percent quarterly. Soon, they were in Smith's office, taking a crash course on the industry.
"The way it was set up, it was helping somebody who was going to die anyhow, and they need the money now," says Holland. "And I thought, 'That sounds like a good deal for them and me.'"
The Hollands called insurance companies in Indiana and Ohio for second opinions. All told them viaticals were a sound investment. So the couple committed $100,000, enough to buy several life insurance policies.
"Each time we would buy a policy, they'd send us the man's name and what [illness] he had, and how long his life expectancy was," says Holland. "It looked legitimate right down the line."
John Lazar, a former auto engineer from Clinton Township, Michigan, thought the same. He consulted articles in The Wall Street Journal and watched a segment on 60 Minutes. Both lauded viaticals for their low risk and high return. But Lazar was still skeptical, so he planned to invest for just one year before pulling out. He took $120,000 out of an IRA and $50,000 out of his savings, and dropped it into viaticals.
Lazar and Holland dealt only with agents and brokers, whose job was to forward their money to the funding company, which secured the investment in an escrow account, then matched the investor with a terminally ill person. The two men never met Rick Jamieson, the owner of their funding company, or Jim Capwill, their escrow man.
Glenn Smith never met Capwill or Jamieson, either. He just sent investors' money to the corporate office in Atlanta, where his bosses would redirect the funds to Liberte Capital in Toledo. Smith claims neither he nor anyone else had reason to doubt the legitimacy of the transactions. "I really treated this as a golden opportunity," he says. "I thought an insurance policy was the safest investment you could make."
In fact, the viatical industry was swimming in fraud. Some people who sold their policies bought life insurance after being diagnosed with a terminal illness. They left blank the section in which they were asked to list any serious medical conditions. It's called "clean-sheeting," but applicants knew medical exams were not required for policies with values under $100,000. Besides, they would be dead soon, so they had nothing to lose.
But the scam usually didn't originate with the terminally ill. More often, they were acting on the cues of brokers, who promised to deliver cash to any dying person willing to sign up for an insurance policy and sell it.
Those with AIDS were the most coveted prospects, and brokers littered gay magazines with advertisements. The most unscrupulous brokers coached their clients in filling out the applications, then suggested the client apply for policies with several insurers. Some dying people acquired 20 or 30 policies. The broker received generous commissions -- roughly $5,000 for a $100,000 policy -- and funding companies like Liberte and Alpha bought the fraudulent policies, which they turned around and sold to investors.
The investors waited for the original applicant to die to collect their return. But since these insured people typically died soon after the policy was written, the insurance companies investigated the claim. Finding fraud, they would refuse to honor the death benefit.
It would then be too late for the investor to recoup his money. It had long since been divided among the dying person, the broker, the funding company, the escrow company, and that investor's own agent. In the worst cases, investors who were promised a 14 percent quarterly return absorbed a total loss.
A federal prosecutor heading a case against a giant viatical business in Lexington, Kentucky, estimated that, by the end of the decade, viatical fraud had already caused $1 billion in losses nationwide.
In court, Rick Jamieson recalled the exact moment he unleashed Capwill. It happened during a conversation in late 1997.
"He suggested to me that the monies that Liberte Capital Group earned could be utilized better than in leaving them in money-market-like investments," said Jamieson. "And he also suggested that he had opportunity from time to time to introduce me to what would be relatively secure and more productive investments."
Before he could place Jamieson's money with these promising investments, however, Capwill would need to have power of attorney. So Jamieson agreed to sign it over to Capwill, giving him access to all profits Liberte Capital made in the viatical business. The same went for Alpha Capital's money, though Dileo's attorneys claim she did not know her profits were at Capwill's disposal.
Yet much of this profit had been made via fraudulent policies. As soon as this became apparent, the investors would be left to fight over the good policies -- and the millions in profit taken by Alpha and Liberte.
Only Capwill, as the escrow officer, had authority over the entire pile of money -- which, when policy values were included, was pegged at about $170 million. As long as he didn't spend it, the investors had a chance to recover a sizable chunk of their money.
But in January 1998, just after Jamieson agreed to give him power of attorney, Capwill incorporated several of what the FBI calls shell companies -- existing only for the purpose of laundering embezzled money.
The most significant was called Capital Fund Leasing -- a company that, according to Secretary of State files, was to lease construction equipment. It did this once, but prosecutors say its more frequent activity was receiving giant sums from the escrow accounts Capwill was watching.
After the money arrived at CFL, Capwill allegedly transferred millions into companies or brokerage accounts belonging to people he knew, like Mike Badalamenti.
Capwill and Badalamenti had been close friends since they met in a softball league in the mid-1980s. It was Badalamenti who provided Capwill free office space, and Capwill was godfather to one of Badalamenti's children.
In lieu of rent, Capwill offered to fund a brokerage account in Badalamenti's name. They would split the gains fifty-fifty. In court, Badalamenti admitted that, at first blush, the proposition seemed too good to be true. "What's the downside for me?" he asked. "You don't have any downside," Capwill told him.
Capwill dropped about $1 million into Badalamenti's brokerage account. The one catch was that Capwill wanted to control the transactions. "He told me what to buy and when to buy it," Badalamenti testified.
Prosecutors say Capwill also put about $500,000 into accounts in the names of his mother and sister. Another half-million funded an account for his fiancée. Prosecutors believe Capwill called the shots on these accounts, too. He also loaned his brother nearly $1 million for a business called Rainbow Properties, which rehabbed homes and developed real estate.
At least $2 million passed from CFL to an entrepreneur in Florida named Vince Norman. At a hearing last May, Norman said that Capwill phoned him with orders on what stocks to buy. Capwill would then wire money to a company called J&R Paint and Wall Covering, owned by Norman, which would then purchase the stock. There was also a brokerage account in Norman's name, one in his wife's name, and one in the name of Capwill's cousin, who lived in Florida.
Prosecutors believe these measures were intended to hide money illegally taken from the escrow accounts. The sheer magnitude of the spending attracted curiosity on Wall Street, however. Norman remembers taking a call from an investigator with First Montauk Securities.
"He wanted to know why a painter in Melbourne, Florida, is buying five percent of a company," Norman testified.
The money didn't always take a circuitous route. Capwill moved a whopping $11.44 million to a brokerage account in his name at Everen Securities. Another $1.7 million went to Capwill's account at First Montauk, and $2.2 million went to one at Noah Financial Services.
These funds were then scattered among the most obscure stocks in the market. "They were these outrageous penny stocks, and he bought them in huge quantity," says Victor Javitch, the lawyer appointed by the court to recover investors' money. "If one hits, he becomes rich. But almost none of them hit, and he lost a ton of money."
He poured $1.7 million into OmniNet.com, $3 million into Tri-Tech Plastics, which was operated by a friend, and $1.55 million into an obscure company called CDNO.
"It's hard to pick that many bad stocks," says Heinz Ickert, an accountant hired to pick through Capwill's finances. "And we're talking about investments made in the stock market of '97, '98, '99, when you could've made money throwing darts at the wall."
Capwill's single biggest investment was his most colossal failure. Impressed by a golf club that sported a laser beam on its head, Capwill invested $4 million in Gary Player Golf Inc. It was generous enough to earn Capwill and Jamieson -- with whom he consulted on the investment -- an invitation to shoot 18 holes with Player, a legend in professional golf. But the company would fold, taking Capwill's investment down with it.
Not all funds drawn out of CFL disappeared into the stock market. Investigators say some of the money routed through Capwill's Florida contacts was used to buy a Corvette. He rescued a faltering engagement by purchasing his fiancée a ring that, according to Jenny Hale, cost $250,000. ("This thing came through the door before she did -- it was breathtaking," says Hale.) Capwill bought Indians season tickets. He paid for his home in Barrington Estates with $670,000 cash. He acquired Hudson Crossings restaurant in Hudson for $3.9 million, intending to refurbish it, then reopen as Four Fellows Pub.
As for the home on Pebble Beach Cove originally financed via his dentist Capwill decided it was time to renovate. Hale estimates the house itself was worth just $130,000, but she guesses that Capwill poured $600,000 into improvements.
Hale had worked for Capwill when creditors wanted the shirt off his back. She suddenly found herself taking $1 million money orders and cutting company checks for the most lavish expenses. In court, she remembered calling Capwill to ask whether to pay the renovator. "He's telling me that you told him to put in a Jacuzzi and a golf green and a marble patio in the backyard," she told Capwill. "Can I pay him $50,000 or $100,000?"
"Yes, you can," he told her.
Jamieson was living it up, too. According to his criminal indictment, he had purchased the mansion in Ottawa Hills, spent $400,000 on improvements to a Leland, Michigan vacation home, and paid cash for a $53,000 Porsche and a $45,000 boat. He bought a plane, too, as well as an interest in an Ottawa Hills wine shop.
It was not unusual for Jamieson to fly to Cleveland, pick up Capwill, and conduct a business meeting in the air. Jamieson testified that the pair once flew to South Carolina "to investigate a dog kennel from which I was considering purchasing a dog."
Prosecutors allege that Jamieson knew most of the insurance policies Liberte sold to investors were fraudulent. They also claim Jamieson took disbursements for himself out of the account reserved for paying life insurance premiums.
In testimony that curdled investors' blood, Jamieson admitted that he and Capwill made one flight to Utah for a meeting with a lawyer whose singular specialty is moving money overseas.
In Tony Marinozzi's line of work, connections are everything.
During his youth, the Cleveland Mafia still kept a presence on the East Side, and Marinozzi says he grew up in their midst, considers them family still. But getting busted for an insurance scam in 1987 taught Marinozzi that he wasn't cut out for crime. Instead, he turned to writing screenplays.
He constantly needs fresh characters, so Marinozzi still keeps company with Mafia players of Cleveland past, as well as a younger set of aspiring toughs. In early 1998, a friend introduced him to Jim Capwill, a man with millions of dollars and an interest in motion pictures -- especially mob movies.
"As a filmmaker, you have to find money to make a movie," says Marinozzi. "I didn't say, 'What's his background?' I just know he's got a lot of money."
Marinozzi had a screenplay, called Entrapped, that he was desperately trying to finance. He had General Hospital actor Maurice Bernard cast in the lead and Cleveland actors ready for other roles. If Capwill could loan him $1.2 million, Marinozzi could shoot the movie, then pay Capwill back, with interest, from the film's profits.
Marinozzi figured he could seal the deal by giving Capwill a glimpse of the fast life. They flew to Connecticut to sit ringside at a boxing match. There, Capwill met Eugene "The Animal" Ciasullo, the alleged muscle behind Cleveland's Licavoli family, which controlled gambling in the 1970s. In author Rick Porrello's Mafia book, To Kill the Irishman, Ciasullo is cast as the most feared tough guy in the city. He is said to have dealt with the family's enemies personally, and in brutal fashion. Legend has it that his nickname was earned after he pounded a man's face in with a cue ball.
Capwill also received a tour of the most exclusive, celebrity-laden clubs in New York, courtesy of a man known as "Ruby," who Marinozzi says is a wise guy gone straight. Ruby helped Capwill develop a taste for expensive cigars. Capwill also began wearing gold chains and rings. He once bragged to Vince Norman about having dinner with Donald Trump. The more he spent, the more friends he made.
"He let everybody know that he controlled a ton of money," says Marinozzi. "That's a good way to meet people."
It's how he met Mike Stevens, another Marinozzi acquaintance and the former owner of the Drip Stick, a preferred coffee shop of Cleveland Mafia types -- real and pretend -- before it closed in the late 1990s. Stevens allegedly told Capwill he was about to win a billion-dollar settlement in a lawsuit against Sprint and would share the winnings if Capwill helped pay his legal bills. Capwill gave Stevens $500,000, according to court documents.
As a show-biz guy, Marinozzi also knew the cast of dancers at Tiffany's, the gentlemen's club now called Christy's. Capwill's engagement had broken off, and the ladies congregated around his money clips. Marinozzi says Capwill pulled dates off the catwalk, including a woman known as "Lalanya" in court documents. Norman testified that, when Lalanya moved to Florida, Capwill arranged a brokerage account in her name, which he used to buy her gifts and launder money.
Even then, Capwill still waffled on funding the movie. "I want to meet your actors," he told Marinozzi.
With that, they flew to Los Angeles, and Capwill found himself on the set of General Hospital, interviewing Bernard. Capwill approved of the casting. Marinozzi knew Jason Priestley, too, and arranged for Capwill to hang around the set of Beverly Hills 90210. Priestley's wife was going to start a makeup line, and Capwill told her he'd pay the start-up costs.
Through a Marinozzi friend in New York, Capwill met R&B singer-turned-producer Al B. Sure, who had several projects in the wings. The criminal indictment says Capwill gave "Albert Brown" $275,000, but Marinozzi says the figure was closer to $1 million. It was enough to earn Capwill the chance to run with Al B.'s posse.
"Broads, booze, drugs -- he was partying hard with everybody," says Marinozzi, though he admits that Capwill only bought drugs for friends, never indulging himself.
After the boxing match in Connecticut, Capwill kept in touch with Ciasullo. It's still unclear what their business was, but it seems to have involved wads of cash. Capwill's former accounting manager, Donna Skitzki, testified that Capwill had her place $10,000 in cash in a paper bag for Ciasullo. Hale testified that she stuffed at least one paper bag with $20,000, a few more with $10,000. Capwill told her to put them under her printer. Then he instructed her to call Ciasullo and "tell him that there were funds under my printer. The next morning, I would come in and they would be gone," Hale testified.
The FBI believes Capwill and Ciasullo were partners in loan-sharking. "It's a total lie," says Ciasullo, now on house arrest in Pennsylvania for a drug trafficking conviction. In court, Capwill admitted to giving Ciasullo packets of cash, but he said it was simply used to pay employees of Rainbow Properties, the home renovating company.
It seems everyone Capwill met through Marinozzi -- from crusty mobsters to exotic dancers to actors and singers -- received a pile of money. Yet Marinozzi, for all his efforts, still hadn't seen a dime.
"I did nothing but try to make a fucking movie," he says.
By the IRS's tally, Jim Capwill made about $30 million in 1998. And by 1999, he didn't care who knew it.
That January, he and a group of friends chartered a jet for Miami to watch the Super Bowl. He had dollar signs stamped on the office chairs and a golden dollar-sign lamp hung over his desk. "He thought he was Richie Rich," says one employee.
Wuliger, who has combed through Capwill's credit card statements, says his expenses typically fell into two categories: "Hookers and golf." Accountant Heinz Ickert says the same.
A pond was installed behind his Pebble Beach Cove home, complete with a small waterfall and a lighthouse. Yet Capwill planned a new house in Aurora. This one would be the biggest -- sporting four bars, an indoor pool, an outdoor pool, and a helicopter landing pad. "He could barhop without ever leaving his house," jokes Ickert.
Four Fellows Pub had undergone several hundred thousand dollars in upgrades, including beer-brewing vats and a conference table nearly 40 feet long and 15 feet wide. Opening night was capped with a fireworks extravaganza, the inspiration of which was not lost on his mob-savvy friends.
"Just like Gotti used to do after he beat his case," mused one former friend. "Capwill never could think of anything on his own."
For a party at the Pebble Beach Cove home, he filled his backyard with blackjack tables and an ice sculpture, and "It was nothing for him to spend $15,000 on a suit," says Hale.
Such gaudy displays of wealth tend to impress the wrong people, however. Cockeyed entrepreneurs came from far and wide to beseech Capwill for money, promising to triple or quadruple his investment. Not only did Capwill listen, Hale says, he basked in their deferential tones.
"It was like The Godfather -- just ridiculous," says Hale. "And Jimmy was growing bigger and bigger. He thrived on this sort of stuff."
But Capwill couldn't help them all, and for every new friend, he made two enemies. Rumors began to fly about where Capwill was getting his money, and these people talked to Jamieson and Dileo. Hale says that, when Jamieson demanded a look at his Liberte account, Capwill wired Dileo's money there to cover what he'd taken. When Dileo checked hers, he did the opposite.
This worked only for a short time, however. Hale guesses that Capwill was hoping a few investments would hit gold, giving him a chance to replenish the accounts. It never happened.
In spring of 1999, Hale checked the balance on each escrow account, then compared it to what was supposed to be there. She found that over $50 million was missing.
But it was Marinozzi, still bitter over having his moviemaking dreams dashed, who called Jamieson with news that Capwill was embezzling untold millions.
Neither Jamieson nor his attorney responded to interview requests. But records indicate that Marinozzi peppered Jamieson's office with calls, leaving urgent messages about Capwill's conduct. Hale, who says that for weeks she was being instructed by Capwill to lie to Jamieson and investors, finally disobeyed his orders.
"I think all your money's gone," she told Jamieson.
Jamieson filed a lawsuit against Capwill on April 8, 1999, an action Dileo would join. U.S. marshals subsequently raided Capwill's office, seizing every file they could. It was only a matter of time before the criminal indictment came down.
"The clock had struck 12 for Jim Capwill," says Marinozzi, who adds that, even as he phoned Jamieson, he was tipping off the FBI.
It was also the end of the line for Jamieson and Dileo. A criminal indictment came one year later for Dileo. Tennessee prosecutors alleged that she knew some policies Alpha sold were fraudulent. She pleaded guilty to fraud and unlawful monetary transactions, and is serving a three-year prison sentence. She did not respond to interview requests.
Jamieson was charged in January with conspiracy, money laundering, and perjury.
All it took was the Jamieson lawsuit to set off a chain reaction. Investors -- about 4,000 of them in all -- were notified of the missing funds, and they inundated Viatical Escrow Services with calls. Agents who linked investors to Liberte and Alpha encountered angry mobs as well. When one Chicago broker found out about the missing funds, he put a .357 in his mouth and pulled the trigger.
The uproar coincided with a national crackdown on viaticals, through which investors learned that, besides the $40 million to $50 million missing from escrow, most of the policies sold by Liberte and Alpha were fraudulently drawn up and therefore worthless. As investors pondered the savings lost, they consulted lawyers, and hundreds of them swooped into the case.
People who saw Capwill after that first lawsuit say he was consumed by paranoia -- and with good reason. His possessions were under siege. Bill Summers, his former lawyer, had hated Capwill since a dispute over legal fees in 1997. Jamieson hired Summers as his attorney, and Summers gave Capwill a legal pummeling.
A brawl erupted in the Beachwood Marriott parking lot after Capwill -- who was having a business dinner with Dileo -- discovered two of Summers's friends trying to break into his Jaguar. The car was titled in Jamieson's name, so the friends had the right to repossess it, but Capwill was reluctant to give the keys back. As the men charged him, Capwill tossed the keys to Dileo. In trying to pry them from Dileo's grip, the men injured her wrist and thumb. Capwill told police he was punched. Both of Summers's friends were arrested for assault.
Summers says it was a simple case of a repo job turned violent and blames the scrum on Capwill's refusal to cooperate with the seizure.
But Summers, who had to bail his friends out of jail, had a fresh reason to hate Capwill.
To Capwill, it was proof that his enemies would resort to violent means. He hired private investigators and took to carrying guns. He also kept the number of "The Animal" Ciasullo handy.
"He was always calling me, saying somebody was going to hurt him," says Ciasullo. "So I'd send guys out there to watch over him, make sure they leave him alone."
Some say Capwill struck back with intimidation of his own. Kenny "Brick" Stokes, who Capwill knew from his days of fraternizing with Mike Stevens, says Capwill paid him to "dig up some dirt" on Marinozzi -- something that could be used for blackmail.
"I'm poor," explains Stokes, who was cleaning bars in the Flats at the time. "I try to get a dollar any way I can."
Capwill's other assignment, says Stokes, was to fly Stokes to Florida, have him pick up Lalanya, the dancer from Tiffany's, and bring her to Cleveland. There would be extra money if he tracked down the man Lalanya had been living with there, he says. "He wanted this guy rubbed out," says Stokes. "I said, 'I don't know how to do that, but I'll slap him around a bit.' He said he wanted something permanent." In the end, Stokes says, the price was too low. "You can't get nobody killed for $1,500."
At a January bond hearing, Capwill attorney John Pyle denied his client had any association with Stokes. Federal prosecutors have told the court they have found no evidence of a connection between the two.
Marinozzi believes Capwill considered putting a hit on him, too. On a spring afternoon, Marinozzi was walking out of his office when a car pulled alongside him, he says. "Hey, asshole!" the driver said, flinging the passenger door open. The man was pointing a pistol. "Get in the car. Jim Capwill wants to talk to you." Marinozzi bolted back to his office, where he called the police. The car sped off. In court, Pyle has stated that police found no proof to validate Marinozzi's claim.
But according to the FBI, Marinozzi himself was in the middle of a murder plot against Capwill. Upon raiding the home of convicted bank robber Phil Christopher -- under suspicion for partnering in a drug ring unrelated to Capwill's case -- agents discovered taped phone conversations. An agent testified that, on one tape, Marinozzi told Christopher of a plan by which Jamieson would pay to have Capwill killed and had left it to Marinozzi to find the right guy for the job.
Marinozzi denies the conversation took place. Through his attorney, Christopher declined comment.
An FBI agent also testified that, according to a confidential source, "Capwill hired Mr. Ciasullo to either kill or eliminate Mr. Jamieson and/or his attorney, Bill Summers." Ciasullo says there was no such conversation.
Even Dileo received a death threat. She has testified that a caller to her New York office promised to slaughter her and her loved ones, presumably to deter her from filing criminal charges against her former business partners. Dileo says the voice sounded exactly like Stokes's. He denies it. The FBI thinks Capwill was behind it, and that wouldn't surprise Stokes. "They were all crossing each other like a bunch of fucking snakes," he says.
To a guy like Ciasullo, 70 years old and a survivor of some brutal turf wars, which included his house being bombed twice, the attempts at intimidation smack of amateurism.
"As far as a hit, it's the easiest thing in the world," he says. "If you're really going to do it, you won't talk about it. You'll just do it."
For a man facing the prospect of moving from Barrington Estates to federal prison, Jim Capwill is remarkably composed -- cocky, even.
"I look forward to proving my innocence," Capwill beams. He is seated in his glossed marble kitchen, the sun streaming through twin skylights. "You can quote that," he adds.
It is the only quote Capwill offers for this story. He doesn't want to give prosecutors an edge going into the trial.
Yet Capwill has never taken the Fifth, and he's let prosecutors grill him in pretrial hearings. In general, he maintains that his escrow agreements with Liberte and Alpha gave him the authority to invest their funds as he saw fit -- and that Jamieson and Dileo knew it.
Capital Fund Leasing was not a shell company, he contends. Capwill says its purpose was to assume risk, so that if one investment went sour, creditors could sue for the funds kept in CFL, but not for the rest of the escrow accounts.
And while the criminal indictment lists money that was spent, Capwill points out that it makes no mention of the returns reaped by his investments, which he claims netted millions. As for the funds that ended up in the brokerage accounts of friends and family, Capwill says this money came out of his personal profits.
As for Hale and Marinozzi, Capwill asserts they'll say whatever they're told to say, because they both have reason to see him sweat: Hale's new company, Northeast Escrow Services, inherited the policies left over from VES; Marinozzi simply has a thirst for vengeance after his movie was stymied.
But the two people who have earned Capwill's most searing hatred are attorneys Victor Javitch and Bill Wuliger. Appointed by the court to rescue whatever funds are left for investors, Javitch and Wuliger get heat from both sides. Capwill believes they've slowed their investigation as a way to milk the case for fees. Many of the investors, frustrated by the cumbersome legal process, are beginning to grumble about the same. Indiana insurance agent Glenn Smith filed a lawsuit against Javitch in mid-April and is threatening to tell U.S. Attorney General John Ashcroft about the corruption he sees in Northeast Ohio courts.
It's a no-win situation for Javitch and Wuliger. From their perspective, they're saddled with thousands of furious clients and the hopeless job of following harebrained investments and loans to see if there are a few bucks left to salvage. There rarely are, but they have court orders to keep chasing after every check, every wire transfer, every mouse click on E-Trade, even when they know it's a dead end. If they don't look hard enough, they'll be accused of sloth. If they look too long, they'll be accused of running up the legal tab. By appointing them, the court gambled that the money they recovered would dwarf their legal bills.
After two years, this is in doubt.
Gary Player Golf was a $4 million loss that can't be recovered. Four Fellows Pub was sold at nearly a $3 million loss. Javitch says the $3 million Capwill lent Tri-Tech Plastics is gone forever. The same applies to the millions that went to Al B. Sure, American Auto Sales, and Mike Stevens's lawsuit against Sprint. Thousands of shares Capwill collected in Internet stocks are worthless.
"We have judgments all over the country against people, but we're whistling Dixie to collect them," says Javitch.
After assessing the financial damage, Wuliger has come to one central conclusion: "The most dangerous things in the world are stupid people who think they're smart."
This, he believes, is the reason thousands of people will probably lose their life savings. Capwill simply thought he was a better investor than he turned out to be.
Everyone has their own take on it. Summers believes it was pure greed -- that Capwill is a simple con man whose intent was criminal from the start. "Without question, he is the worst human being that I've ever known -- and I've been defending people charged with crimes for 33 years," says Summers.
Hale leans more toward the Wuliger explanation.
"I don't think he meant to steal all this money," she says. "I just think it got out of control. He thought he was such a smart person that he could invest this money and turn it around 10 times. He had the bank doors open, and he took advantage of it. Some people just can't be exposed to money."
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