A Gold River businessman and a Southern California attorney have been convicted for their roles in a multimillion-dollar bankruptcy fraud and money laundering scheme.
Steven Zinnel, 49, of Gold River was convicted of 15 counts of bankruptcy fraud and money laundering, and attorney Derian Eidson, 49, of Yorba Linda was convicted of one count of conspiring and one count of attempting to commit money laundering, according to a federal Department of Justice news release. A federal jury in Sacramento returned the verdicts after an 11-day trial before U.S. District Judge Troy L. Nunley.
Nunley ordered Zinnel immediately remanded to custody. Zinnel and Eidson are to be sentenced Oct. 3.
According to testimony presented at trial, Zinnel in 2001 was involved in extended litigation with his ex-wife over child support, 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 other people's names, authorities said. 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 successful concealment of the property and 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, authorities said.
Throughout this time, Zinnel 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.
Among the things 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 filing, but his name did not appear on any of this company's public filings, authorities said.
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 sought a final $4 million payment that would be characterized as a payment to end a consulting agreement.
The case resulted from and investigation by the FBI and IRS Criminal Investigation.