CCA Selected 1994 Documents

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H
F~-;02 (Rev- 3-10-82)

• -.L:
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I
FEDERAL BUREAU OF INVESTIGATION
Date o(lnUlIcnptaon 1/18/94
I I
certified Public Accountant, Hemming Morse
Inc., CPA firm, 160 Bovet Road, San Mateo, California 94402,
telephone (415) 574-1900, met the interviewing agent at the
HAMILTON TAFT (HT) offices on the 25th floor of the Russ building
at 235 Montgomery Street, San Francisco, California
Accompanying the interviewing agent was I ]
Financial Analyst, Federal Bureau of Investigation. I fgave
the following information:
The HT employees had described their payroll processing
system to himself and the Trustee. The dates expressed on the
laser ledger are not always exactly accurate.
Checks picked out to be withheld by HT were checks over
a certain threshold which required a second personal signature by
the HT President. These checks were presented for signature and
certain checks_-wer.e picked out by the HT President or someone
appointed by the Pr~sident. Federal Income Tax Withholdings
(FITW) payments to the Internal Revenue Service (IRS) were the
ones withheld.
b7C
HT had approximately 250 clients in 1991. I I
I I former
employee of HT, had assisted him with compiling a
i~st of withheld checks.
HT's deficit was approximately 18 million dollars at

the time CONNIE C. ARMSTRONG take over. possibly this was the
amount of available float at HT. During the buyout by MAXPHARMA
INC. of HT from CIGNA it was agreed that CIGNA would pay any
outstanding liabilities for penalties incurred during the time
CIGNA operated HT. CIGNA paid only approximately $27,000 for
those penalties after the MAXPHARMA buyout of CIGNA. This may
be a good barometer for the normal penalties incurred by HT when
operating normally.
c:::Jgave the interviewing agent copies of documents
that indicated the extent of IRS penalties incurred by HT. These
documents will be incorporated into this FD-302 as an attachment.
InvcstJ.galion on -=1.../,-,1::;4;:..L-/9=4 ." San Francisco, CA F~,' 196A-SF-93255 SUB C-c/
by SA WILLARD L. HATCHER, JR.'WLHW11~ D,.. d"..1cd -,1"',-,1,,,4!.L',,9"'4 _
Tl::us document conlama DCitbcr rccommcndationa not COncluilons of the FBI It is the property ofU.c FBI and l' loaned 10 your agency;
It and n. contcnulU'C not to be dtstnbutcd outlidc your aBeaty.
:Memorandum
To SAC, SAN FRANCISCO D.le 1/28/94
From SA WILLARD L. HATCHER, JR. (196A-SF-93255) (P)
Sub"" CONN:q;: CHIP ARMSTORNG, JR;

ET ALf'--_
FBW(A) , ''Mf
00: SF "'_
Enclosed for the file is a facsimle copy of the

Dresdner $18.9 million note to Hamilton Taft.
,~- File (196A-SF-93255)

~H/Wlh
1.
HEMMING MORSE
Certified Public Accountants and Consultants
160 Bovet Road, 4th Floor
San Mateo. California 94402
\, (415) 574-1900 Facsimile iF: (4151378-4090
FACSIMILE LEAD SHEET
Date/Time: 01/18/9403:02 PM
I
~..':P~LE,=,A~S~E:..~O~EL,=I~VE~R~T!:!H=E.!:F:.=O~L:.'::L.O~W=IN~G:"-.'.T~O::..: ~,'
Name: Will Hatcher
Firm: Federal Bureau of InveslJgalion I

I
Facsimile: (510) 834-6551
I
I
L- -==-=-:-:---=:-:-:=-=-:-=-:::-=-==-=-=-==---:_ _ ,---.1
TOTAL PAGES INCLUDING THIS PAGE' 4
Fromtl.. _ b7C "l

I
Client: Hamilton Taft & Company I
Enclosed IS the a copy of the Dresdner Note dated April 10, 1989, The second
I
paragraph descnbes the principal as due In five years.
The information contained in this facsimile is confidential and may also be attorney-privileged. The
information is intended only for the use of the individual or entity to Whom it is addressed. If you are
not the intended recipient, or the employee or agent responsible to deliver it to the intended recipient.
you are hereby notified that any use, dissemination, distribution or copying of this communication is
strictly prohibited. If you havo received the facsimile In error, please immediately notify us by
telephone. and return the original message to us at the address above via the
U. S. Postal Service. Thank you,
Please call 415) 574-1900 if an error occurs.

z' , ~,: t,. '
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April 1.0, 1.989 Dallas county, Texas $18,962,255.00
roll VlIL'lI1I IUlCBIVlD, the undersi9Jl9d (the "Maker") promises to

pay t.o the order of liudltolll. Taft & eompany, a california
corporation (the IIHolder"), at 74 N_ iklntqomery, San Francisco,
Californla 94105, or at such other place or places as any ho1.der
of this promissory Note may designate in writing, the principal lliUlll
ot Eighteen Million Nine Hundred Sixty Two Thousand Two Hundred
Fifty Five and NO/lOO Dollars ($18,962,255.00) in legal and lawful
money of the United states of America, together with interest on
the unpaid balance from time to time remaining unpaid prior to
maturity at t.he l.eeser of (a) the maxi= l.awful. rate (as
hereinafter defined) or (Ill nine percent (9%) per annum. Int.E.lrest.
shall be cCl1llPuted on the basi$ of a 360 day year and for the actual
number of days elapsed (inclUding the first day but aXcludinq the
last day), unless such calculation would result in a usurious rate,
in whic.~ case intsrc&t shall be calculat=d en a per annum basis of
a year of 365 or 366 days, as the case may be.
Waxer shal.l pay to Holder hereof quarterly installments of
interest hereon commencing' october 1, 1989, and continuing for five
(5) years with the final quarterly paY1llent consisting of all of the
outstanding principal in addition to the accrued interest as set
forth herein. Such quarterl.y paYlllSnts shall be made by Maker on
or before October 1, January 1, April 1 and JUly 1 of each year
until maturity on July 1, 1994. All paY1llents are to be applied
fl.rst to acorued interest and t.he balance to reduction ot the
unpaid principal until the princip!ll is paid in full. This
promissory Note may be prepaid in part or in full at any time
without penalty at ~he discretion of the Maker.
Maker hereby pled9~s to Holder, as eecurity for the full and

tilllely payment of this Note, all of Maker'!I rights, title and
interest in, to and under that certain Renewed, Modified and
Increased Promissory Note. in the amount. of $1,500,000 by and
between GUlfte~ Financial Corporation, a Texas corporation,
Gulfstates Management Corporation, a Texas corporation, Whitehall.
Interests, Inc., a Texas corporation, and Whitehall General
Interests, Inc., a Texae corporation, as makerS and Hamilton Taft
& company, as payee, dated February 16, 1989 (the "Gulftex Note") ,
which Gulftex Note was sold to Maker pursuant to that certain Sale
and Assignment of Promissory Notes and Accounts Receivable, by and
between Holder and Ma~r, dated April 10. 1989, and the collateral
securing such Gulftex Notal provic1ed that Mall:er reservelil the right
to convert the !4a.ker'lll interest. in the GUlftex Note into an equity
interest in the makers of the Gul.ftex Nota or their underl.yinq
businesses1 provided furthat' that upon lIIuch conversion, the Maker's
equity interest ehall be pledgllad to Holder alii security for the full
and time1.y ptAY1llent of thu Bot••
PROMISSORY NoTE - page 1

F-~81 T~08 P-003 JHIJ 1:3 "34 15.02
1· •U)"',\ '\. W:\ '.11,1'4 " 'i.r
Al.l Pllllt due principal and interest shall bear interest until
paid at th'll maximUlll lawful rate of interest. in accordance with the
laws of the State of Texas and the united states.
I t d.fault iIlI lllBde in the paYllaent of any installment of
princ:lpal or interest under this Promissory Note, then Holder lIUl.y,
at its option, declare the entire unpaid principal balance of and
accrued and unpaid interest on this PrODissory Note to be
imnadiately due and payable without notice or demand, foreclose all
liens and sec:urity interaste securing the payment of this
promissory Note, or any part thereof, and offset against this
Promissory Note any sum or sums owed by the Holder to Maker, all
at the option of the Holder.
The undersigned and all other parties now or hereafter liable
for the payment hereof, whether as endorser, guarantor, surety or
otherwise, severally waive notice of demand, notice of
acceleration, notice of presentment, demand, presentment, notice
of dishonor, diliq3nc= in collectinq, y.!.aoe and protest. and
consent to all extensions that from time to time may be granted by
the Holder hereof and to all partial paYllaente hereon, Whether
before or after demand.
No delay or omission on the part of the Holder in exercising
any right hereunder. shall operate as a waiver of sUch right or of
any other right under this Promissory Note, A waiver on anyone
occasion shall not be construed as a bar to Qr waiver of any right
or remedy on any future oooasion.
If this Promissory Note is not paid When due, or if it is
collected through a bankrUptcy, probate or other court, the
undersigned agrees to pay all costs of collection, including, but
not limited to, reasonable attorney's tees, filing fees, costs of
court and other costs and expenses inourred by the Holder hereof.
This promisso~ Note sball be binding upon and inure to the
benefit of the part~es hereon and their respective successors and
assigns. The Holder may aseiqn any of it.s right, title or interest
in and. to this promiesory Note or any security agreements or
collateral in connection herewith without the consent of the Maker
hereof.
This Promissory Note shall be construed under and in
accordance with the laws of the state of 'l'exalll.
NotWithstanding anything to the contrary contained in t.his
Promissory Note or in any other a9'reolllllent ent.ered into in
connection with or seourinq the indeJ:>tedness evidenced by this
ProRissory Note, whether now existing- or hereafter arising and
whether written or oral, it is agreed that the aggregate ot all
interest and any other charqee constitutinq interest, or
Ei9MXSSORY NOTE - Paqe 2
adjudicated as constitutinq interest, and contracted for,
cbarqeable or receivable under this Promissory Note or otherwise
in QClMElction with thi. loan transaction, ahal.l under no
cirCU1lUlltanees ..xe.... d the total alDount of interQlllt permitted at: the
_xilll\lJll lawfUl rate. U' from any cirCUlllliltancs the Holder shall
ever reclilive interest, or any other cha~es constitutin<;J interest,
or adjUdicated as constitutinq interest, in exce.... of the total
amount of interest which would have been earned at the maximum
lawful rate. the amount of suoh exceSB interest shall be applied
to the reduction of the principal amount owinq on this Promissory
note or on account of any oth..r principal indebtedn...... of Maker to
the holder, and not to the paym..nt of interest. If the amount of
such excells interest exc..eds the unpaid principaL balance of this
Pro~issory Note and such other indebtedness, the amount of such
excess interest that exceeds the unpaid principal balance of this
~romissory Note and such oth..r indebtsdness shall be refunded to
Maker. All sums paid or aqreed to be paid to the Holder for the
USIlI, fOrbearance or detention of the indebtedness of Maker to the
HolQer shall 1:>.. amortized, prorated, allocated and spread
throuqhout the fUll term of this promissory Note until payment in
full so that the actual rate of interest on account of such
indebtedness i . uniform throughout the ter: of this Promissory
Note.
Xii' W:t'l1l111il~ QEUOlli', the. Maker has caused this Promi5sory Note
to he made and eXeClUted as <:If the day and year first above written.
DUllDlma IllJi'11lilRftIsBs, :INC ••

• Texas Co:po:.ticn
BY:& :. (! 4L
:Its, , .t t,I.
PBQM:ISSORX NOTE - Page 3

'1"" ~-31-91)
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fo Director, FBI (196B-DL-6652il Date 2/1/94
Attn CID, ECONOMIC CR.Ll'1ES Section
r=Dc::.A=.L=LA==;S~ ( 196B-DL-6652yl( P)
\
Title C. I,RMSTRONG, aka Notification of SAC Authority Granted
STRONG' for Emergency Use
of Consensual Monotorlng EqUIpment (Nontelephonic)
~OHPU-CHECK'
b7C
Form must be submitted within 5 working days of the date
FBI., authonzabon was granted
nn. n7"T.T.7'lC
1. Reason for Proposed Use (Check) 2 Type of Equipment (Check)
I:ll:
Corroborate 0 Protect o Protect ~ Transmrtter! o
Microphone! o Concealed
Testimony Consenting Government Receiver Amplilier Recorder
Party Property
o Other (SpeCify) o Other (Specify) .. ,,
3 Consenting Party (Check
o Nonconfldenllal Party
J"' Lb2
4 Intercentee(s" {Include Title rt Public OffiCial'
- I 1
o Conlidentlal Source (Name)
aSSOclates b7C
~ Cooperative Wrtness b7D and other
5 fJf]PPPfYXJPPPFPF 6 InstallatIOn of Equipment (Check) 7 Location where equipment

pH; []!I:; fJ!J;: UE EfI1 o Concealed on Person 0 In Vehicle Will be utilized (City and State) -
Date Authonzed 2£1f' 4 o In Motel Room lSi! Other (Specify)
nUPi IX r: II -t In Offlce Dallas, Texas
8
i
The follOWing reqUIrements have been fulfilled
a Consenting party has agreed to testlfy_
b Consenting party has executed consent form
c Recording/transmitting deVice Will only be activated
9 Government attorney In JudiCial district where interception
will take place foresees no entrapment and concurs In the use of
this technique being appropnate.
t;i[Yes 0 No Date 10(27/93
I I b7E Identity of Gov~ Ally AUSA 'I'D:LtRY mil;.'...'
JudiCial District Northern Dlscrlct of Texas
1" Vlolatlon(s) Tltle(s) 18 Sec(s) 1343 USC
11 DOJ notification reqUIred 0 Yes It!- No If 'Yes' check reason below

o Interception relates to an Investigation of a member of Congress. a Federal Judge, member of the Executive Branch at Executive
Level IV or above, or a person who has served In such capacity Within the prevIous 2 years
o Interception relates to an investigation of any public official and the offense investigated IS one involVing bribery, conflict of Interest, or
extortion relating to the pertormance of his/her offiCial duties
o Interception relates to an Inveshgatlon of a Federal law enforcement offlClal- - - - -- - - - - - - ------- - _•• - - - -
o Consentlng/nonconsenllng person IS a member of the diplomatiC corps of a foreign country
o Consentlng!nonconsenling person IS or has been a member of the Witness Security Program and that fact IS known to the agency
Involved or ItS officers
o Consentlng/nonconsenllng person IS ,n the custody of the Bureau of Prisons or the U S Marshals Service
o Attorney General, Deputy Attorney General, AsSOCiate Attorney General, ASSistant Attorney General for the Crlmmal 01 ISlon, or the '-
U S Attorney In the district where an mvestlgatlon IS being conducted has rrquested the mvestogatl')9 ~ency to bl I rIor written
consent for making a consensual Interception In a speCIfic Investlgallon / n • - "" &.5 _
12 SynopsIs of Case (Attac
P I rr
lS t e su Jec~ 0 an ~l TRON ;',
lnvest1gatlon ln San FranC1SCO D1V1Slon W1ere he busted out a company

called HM~ILTON~~r. ARMSTRG~G may also be sk1mmLng a loan oDtalned from
an lnvestrnenL company orlgL~al£y made for the beneflt of COMPU-CHECK.
!~~
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SIgnature :.;.~c..,~~~~~~~=--
ureau (Substantive Deskl
o 17 To be executed at FBIHQ (LCD)
(Complete only d OW notification IS necessary)
Signature 'Date
0-621 (Rev 4.-12-89) (Nontelephonlc C. MOnitoring UUlIe Report)
AIRTEL
cf?:filj~ Federal Bureau of Investigation
From SAC, DALLAS (196B-DL-66524) (P) (WCC5)Date 5/4/94
To DIRECTOR, FBI
Attn ELSUR Index
,0
CONNIE C. ARMSTRONG, aka
Subject
(h)': Armstrong i I b7C
COM U-CHECK;
FBW;
00: DALLAS
X__ Emergency Authonty

__ Re Dallas
FD-759 to FBlHQ dated 2/1/94
captioned as above
____ Romme AuthOrity Re to FBIHQ
dated ":"a-:-n"d'Bn"u-;_-_-_-""-;,..,-:-_-_-_-_-_-_-_-_-_-_-_-:-_-_-_ to _
dated captioned as above,
NOTE, If no confirming communication received from FBIHQ in response to

your request for routine use of a nontelephonic consensual monitoring device, mark below:
____ No confIrming commUnicatIOn receIved from FBIHQ to date.
The followmg mformatlon relates to the use of the equipment'

_ _ _ Its use prOVIded informatIOn whlch corroborated or assisted 10
corroboratmg the allegation or suspicIOn
X It was used, but no mformatlon of value was obtamed
It was not used
--- (Only one of the above applIes)
Complete and submn WIthin 30 days of expiration of each and every period
of authOrIzation granted for nontelephonIc consensual monitoring by either the SAC, DOJ or
FBIHQ-CID (Whether an mltIal Or a subsequent authorizatIOn). and for each extensIon
or renewal thereof
Transmit to FBIHQ 10 a sealed brown envelope labeled "Director. FBI, ELSUR
Index, FBlHQ." ' 7'1 J) c:~J! If) )
I'A, I{'//1;;-- rO&~- UL-IO~- f;l-/M~t
~
I } . . tv....:-v l l l ~_J.
2 Bureau
3 - Dallas (2 - 196B-DL-66524)
MSM/rlh (1 - 196B-DL-66524 Sub A)
(5 )
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FD-302 (Rev 3-1(}'82)

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FEDERAL BUREAU OF INVESfIGATION
;}! ~/ 'iii
Dale or lnU15cnpbon
2{25{94
On the morning of February 8, 19941~ lwas
interviewed at I__;::========~;--=-~ Present during this

interview were sAl IOf the FBI, Iand I
I I stated that his home telephone number is
~==,.--- b7C
I By way of background, he advised that he was
formerly employed with Hamilton Taft on{or about April 1, 1990,
through March 31, 1991. He stated that he was hired as the
Executive Vice President for Sales and Marketing.1
,.....="""""::....!:::::=,------l
volunteered that he is a good friend ofl I the
former in-house counsel for Hamilton Taft. with regard to his
job duties he succinctly stated that his primary job duty was to
grow the business. He stated that CONNIE ARMSTRONG, the CEO of
Hamilton Taft told him that he was going to bring Hamilton Taft
back to Dallas. Prior to actually accepting an employment offer
with Hamilton TaftJ....._ _.....J!stated he attempted to get
information on the company which proved to be somewhat difficult
b7C
in that it is not a publicly traded company. I Iadvised
tha~=====~~lgave him some insight into Hamilton Taft's history
and I Isaid that one of the problems with Hamilton Taft had
Invcstlgllhon on
/\
~(~2L/~8L/9~4~) 'al Dallas, Texas Fdel 196A-SF-93255 SUB C -1f;$,
~_/'
by ~L.. .......;Ii-L{---",g"",l_b_7_C_- De" d"teted 2/16/94

nUB document contalllll neither recommendllhons nor conclUl>lons of' the FBI It IS the property of Ihe FBI and 1S loaDed to your agency.
It lind Its contenta are not 10 be dl5tnbu~ out:udo 'Your Bicney
• •
f
FD-302a (Rev 11·15-83)
196A-SF-93255 SUB C
b7C
ConlmuaUon ofFD-302 of _ _ _ _ _ _ _ _ _1 - - ' On _ _2..:../_8..:../_9_4_ _• P.go _ _2_ _
been its historical weak management. On the positive side,

~ Istated that Hamilton Taft appeared to have a good client
base. __________________________lthat he was unaware of the
problems at Hamilton Taft.
L- ~kescribed CHIP ARMSTRONG as a flamboyant,

colorful individual. I lwas favorably impressed with CHIP's
vision and initial presentation regarding the future of Hamilton
Taft. I Ire iterated that he was hired on April 1, 1990, and
he reported tol I President, Hamilton Taft. He stated
thatl Iwas hired onlor about the same time and
she was supposed to be working on marketing for Hamilton Taft.
I- ~Ititle was Marketing Vice President. Istated
b7C he had an interview Withl /prior to being hired. He advised
that each time he inquired about the financial health of Hamilton
Taft he couldn't get any information. He repeated the fact that
I- ~~asically the same thing; that there wasn't
much information available regarding the financial well being of
Hamilton Taft.
______~Istated that he was never aware of the

withholding of client tax payments except upon hearing this from
FD-302a (R.v 11-15-83)
• •
196A-SF-93255 SUB C
b7C
ContlRUll.tlOn of FD-302 of
'- L ,On 2{8{94 ,PlIgC _ _3_ _
one client, commercial Credit Corporation. He said that Hamilton

Taft was very compartmentalized.
~ Istated that any company can save money by

outsourcing some administrative functions such as accounting,
payroll, etc.; because they have lower costs when those tasks are
done by professionals whose primary business is the
accomplishment of those particular tasks.
With regard to selling, he stated that the Client

Services Division prepared the calculation used in sales
marketing proposals which were sent out to a prospective client.
The proposals used the overnight funds rate as the basis of their
calculation. Sales closings were always made in San Francisco.
The idea was that it would be impressive to bring a prospective
client to the offices located at 74 Spear Street. This was
b7C
almost a necessity because of the fact that he didn't have any
financials to show the prospective clients. According tol~ _
the contracts guaranteed the payment of late taxes in the payment
of penalties and this was used by sales people to allay fears
that late payments might be a problem. 1~ lstated that he
tOldl~ lof the difficulty in selling the product without
_r
FD-30Z. (ReY 11-15-83)

• •
196A-SF-93255 SUB C
b7C
Contlnuatton of FD-302 of
J
..... '
O 2/8/94
n _--'---'- ' png' 4 _
current financia1s and that the current or standard response from

..... ~kegarding this problem of the lack of
current financials was that Hamilton Taft was in the process of

compiling current financial information.
According to~I ~lsales grew approximately $1
b7C billion during his tenure at Hamilton Taft. He advised that he

regularly told ARMSTRONG that sales could have grown $5 billion
in 1990 if Hamilton Taft had possessed current audited financial
statements from a big six accounting firm. I I stated that
when he would tell ARMSTRONG this, CHIP would respond by simply
saying that they were working on it. lstated that there
were six sales people covering the entire united states. These
individuals werel
with respect to late payments,I~ lstated it was

his understanding that there were very few late payments while he
was there. He stated that he was not aware of the fact that b7C
there were $8 million in late penalties. I Istated that he

couldn't sell Hamilton Taft's services if he had to tell
prospective clients that their tax payments would be withheld.
FD-302a (Rev 11-15-83)
• •
196A-SF-93255 SUB C
b7C
Contlnuatton of FD-302 of -'========::L ,On 2/8/94 • Pace _..:5:...-_
~ Istated that he wouldn't have stayed around

Hamilton Taft if he had known the true condition of Hamilton Taft
because a person like himself works on some kind of an incentive
basis. Thinking back on it, I Istated that he was the
victim of omission on the part ofl land ARMSTRONG in that
they never told him that the payments of client's taxes were
being withheld. with respect to clients who were brought in
during his tenure, I I cited R.R. Donnelly out of Chicago,
Scott Paper Company, plus a division of Reckitte pohlman, a
maker of condiments and mustards, etc. I Istated that each
of these clients required new sales contracts.
b7C
~ ldescribedl~ ~~I~a~s~a bright person who made
a positive contribution to sales. I stated that she was
also CHIP ARMSTRONG's girlfriend. He stated that she had good
credentials in that she possessed an MBA Degree and was a CPA.
She did not assist in making presentations to prospective
clients. IL lrePlaced AL MAY one Friday at Hamilton Taft
even though there were several people who were more qualified,
but then I Istated that I Iwas ARMSTRONG's
girlfriend. He assumes that is why she was selected to replace
AL MAY.
..
• •
,-
"D-31lli (Rev 11·15·83)
196A-SF-93255 SUB C
b7C
ConlmualJon of Fo-302 of -'========"",JL , On _ _2..:../_8..:../_9_4_ _, P.ge ~=6~_
~ Istated that he used CHIP's Turtle Creek office

for three months after March 31, 1991, when he was laid off by
the trustee. I advised that CHIP ARMSTRONG told him that
he, CHIP, made investments that he wanted to make and nobody told
b7C
him how to make investments. Late payments were never brought up
tOL' .....Ilby ARl'lSTRONG.
I..- Iadvised that 1 1 was a client

relation person whilel----Iwas there.
\
)-,59 (Rev 5-31-91)
)' Director, FBI (196B-DL-66524 ) Date 3/2/94
Attn CID, _-'li\ilh~itt.<g......C;(;QhLl"l,l&arr-lC.::lr;:;li'-llllllee Section
SAC, De1 J as (196B-DL-66524 )(P)
die CONNIE C.~TRONG Notification of SAC Authority Granted

ET AL: forl"PEJijP5?{' Use
FBW; HF
01 Consensual Monitoring Equipment (Nontelephomc)
00: DALLAS
Form must be submitted within 5 working days of the date
authonzatlon was granted
Reason for Proposed Use (Check) 2 Type of Equipment (Check)

[]: Corroborate D Protect D Protect I2Il
Transmitter! D Microphone! Ei Concealed
Testimony Consenting Government Receiver Amplifier Recorder
Party Property
D Other (SpeCIfy) D Other (SpeCify)
Consenting Party (Check on<l I 4 Interceptee(s) (Include Title If Public Official) b-;('~
! ....'
D Nonconfldentlal Party
D Confrdentlal Source (Name) b2 - CONNIE C. ARMSTRONGJ I
[X Cooperative Witness I I on, ~.'-~-~
t 1 I,-,_,
Duration of proposed use X~ 6 Installat :qUlpment (l;neCK) 7 Location where equipment
(11111111111 I I 7 TV []I Concealed on Person D In Vehicle Will be utilized (City and Stater
Date Authonzed
3~1~94 o In Motel Room o
Other (Specify) Dallas, Texas
lillllllillill m: &/171
'. The follOWing requrrements have been fulfilled 9 Government attorney rn JudiCial dlstnct where Interception
&
Gt a Consenting party has agreed to testily
b Consenting party has executed consent form
c Recordlng/transmltllng deVice Will only be activated
Will take place foresees no entrapment and concurs In the use of
thiS technique being appropnate
rn Yes D No Date 12/2/93
J Lb7E: fdentlty of Gov1 Ally

JudiCial Dlstnct
AJISA I,INDA GROVES
Northern District of Texas
L "olatlon(s) Tltle(s) J 8 Sects} 134-j USC
1. DOJ notrtlcatlon reqUired D Yes IX No If ·Yes· check reason below

D Interception relates to an investigation of a member of Congress, a Federal Judge, member of the Executive Branch at Executive
Level IV or above, or a person who has served In such capacity wlthrn the prevIous 2 years
D Interception relates to an Investigation of any public offiCial and the olfense Investigated IS one InvolVing bnbery, conflict of Interest, or
extortion relating to the performance of hls!her offiCial duties
D Interception relates to an investigation of a Federal law enforcement offlclal- -
D Consentlng/nonconsentlng person IS a member of the diplomatiC corps of a foreign country
D Consentlng/nonconsentlng person IS or has been a member of the Witness Secunty Program and that fact IS known to the agency
Involved or Its offIcers
D Consentlng/nonconsentlng person IS In the custody of the Bureau of Pnsons or the U S Marshals Service
D Atlorney General, Deputy Attorney General, ASSOCiate Attorney General, ASSistant Attorney General for the Cnmlnal DIVISion, or the
U S Attorney In the dlsfnct where an Investigation IS being conducted has requested the Investlgatrng agancy to obtain pnor wntl n
consent for makIng a consensual Interception In a speCifiC investigatIon ,/ _ ... (; _ , ; - t'd'- //
2 SynopsIs of Case (Atlach additional page If necessary) Cooperating has that
ARMSTRONG I
I...,--~~~~.,........,=--..---..----,,~
investigation in the San Francisco
Signalu
~~~~Dale )«Or
Date~
b7C
o ~~n:~u~rm!mmn:Pl"I'75Irm:~iI1!'n!lT!Jr!\I~~te~
? Bu"eau 'Substanhve Desk\
o 17 To be executed at FBIHQ (LCD)
(Complete only If DOJ notificatIon IS necessary)
Signature Date
COpy'
--
%
D-6:l1 (Rev (-12-89) (Nontelephonlc Cr MOnltormg Unge Report)
AIRTEL I
'
~.
T
SAC, DALLAS
~IRECTOR,
Attn
FBI
ELSUR Index
Federal Bureau of Investigation
(196B-DL-66524) (P) (WCC5)Date 6/3/94
_-"-!.-=.!.~'----
I I' -J-.
n
Subject CONNIE C. ARMSTRONG;
ET AL;
FBW; MF;
00: DALLAS
X Emergency Authority. Re Dallas FD-759 to FBIHQ dated 3/2/94

captiOned as above.
_ _ _ RoutIne Authonty Re to FBIHQ
dated and Bu to
dated captiOned as above. -------
NOTE: If no confirming communication received from FBIHQ in response to

your request for routine use of a non telephonic consensual monitoring device, mark below:
____ No confIrmIng commUDlcallon receIved from FBIHQ to date.
The folloWIng Information relates to the use of the equipment
_ _ _ Its use provIded Information which corroborated or assisted In

corroboratIng the allegatiOn or suspicion
__X__ It was used, but no InformatIon of value was obtained.
It was not used
--- (Only Qill\ of the above appltes)
Complete and submit wIthin 30 days of expiratiOn of each and every period
of authoTlzatiOn granted for nontelephonic consensual mOnltoring by either the SAC, DOJ or
FBIHQ-CID (whether an inItial or a subsequent authorization), and for each extenSiOn
or renewal thereof
TransmIt to FBIHQ In a sealed brown envelope labeled "Director, FBI, ELSUR

Index, FBIHQ." '
/(/1;)
:0 2 Bureau
- Dallas (2 -
(1
196B-DL-66524)
196B-DL-66524 Sub A)
MSM/rlh
(5)
rD·759 (Rev 5-31-91)
To Director, FBI (
Attn CID, _WHWLTJ..TuE......C,LOLLI....
T...A"'R........
)
CR""T.uME=- Secllon
Date 3-7-94 .
SAC, nATT At: 196B-DL-66524 ) (p )
I
Title CONNIE C.~STRONG; Notification of SAC AuthOrity Granted

ET AL;·
FBW; MF
00: DALLAS
/ for Emergency Use
of Consensual MonitorIng Equlpmenf (Nontelephonic)
Form must be submitted Within 5 working days of the date

authOrization was granted
1 Reason ror Proposed Use (Check) 2 Type of Equipment (Check)

IXJ Corroborate Protect o o Protect ex Transmitter! o
Microphone! o Concealed
Testimony Consenting Government Receiver Amplifier Recorder
Party Property
o Other (Specify) o Other (SpeCify)
3 Consenting Party (Check one) 4 Interceptee(s) (Include Tille If Public OffiCial)
o Nonconf,dentlal Party
o Confidential Source I (.Gail.S}
Ib2 _ CONNIE C. ARMSTRONG,I I
IU Cooperative Witness b7D I I
and others
b7C
-
5 ~ ~ 6 Installation of EqUIpment (Check) 7 LocatIon where equIpment
~ I:l: Concealed on Person 0 In Vehicle Will be utilized (City and State)
Date AuthOrized 3-7-94 o In Motel Room oOther (Specify)
~ 6. . 7' q'f Dallas, Texas
8 The follOWing requirements have been fulfilled 9 Government attorney In JudiCial district where interception
Dca Consenting party has agreed to testify Will take place foresees no entrapment and concurs In the use of
§tb Consenting party has executed consent form thiS teChnique being appropriate
c BecQrdrogOfijQswl!tInq deYlce WIll 90rv be activated aYes o No Date 12-2-93
I 1blE Identity of Gov1 Atty
JudiCIal District
AUSA LINDA GROVES
Northern District of Texas
," VlolatlOn(s) Trtle(s) 18 Sects) 1343 USC
11 DOJ notification reqUIred 0 Yes I:l: No II "Yes' check reason below

o Interception relates to an investigation of a member of Congress, a Federal judge, member of the Executive Branch at Executive
Level IV or above, or a person who has served In such capacity within the prevIous 2 years
o Interception relates to an Investigation of any publiC offiCial and the offense investigated IS one InvolVing bribery, conflict of Interest, or
extortion relating to the performance of his/her offiCial duties
o InterceptIOn relates to an Inves1lgatlOn of a Federal law enforcement offiCial - -. - - - - - - -- - - - ----
o Consentlng/nonconsentlng person IS a member of the diplomatiC corps of a foreIgn country
o Consentlng!nonconsenllng person IS or has been a member of the Witness Security Program and that fact IS known to lhe agency
Involved or ItS officers
o Consentlng/nonconsentlng person IS In the custody of the Bureau of Prisons or the U S Marshals Service
o Attorney General, Deputy Attorney General, ASSOCiate Attorney General, ASSistant Attorney General for the Criminal DIVISion, or the ;.
U S Attorney In the district where an Invesligatlon IS being conducted has requested the Investigating agency to obtain prior written
consent for making a consensual Interception In a speclflc Investlgatlon
12 SynopsIs of Case (Attach addllional page If necessary)
,,j
',-, Cooperating Witness has advised that
an investigation in the San Francisco Division where he busted out
;4 (S~~CY u.se~al /J /' J . J-.,/'

Slgnatur~~Date -r /iJ/ T'i
b'lC
D ~~gn:~ur ate i;d/f,'i
D t6 To De execu
Slgnatulre::::.ai':t::iL...,,!:&;c.&!~~{.J~'4!!-
~
D 17 To be executed at FBIHQ (LC
2 Bureau (Substanllve Deskl
'0 (Complete only tf DOJ notlflGatlon IS necessary)
. I AfJ%L-::::Slg~natu~re=====.:D:::.::ate===.J
COpy t
-
,
0-621 (Rev "'-12-89) (Non telephonIC: Cc- Momtorlng Ulaie Report)
AIRTEL
~
~tt SAC, DALLAS (196i3-DL-66524) (P) FvCC5)Date' --=6..:../-=1.::.3",-/::..94.:.-_ _
O~DIRECTOR, FBI
Altn ELSUR Index
Subject CONNIE C Ure1STRONG;

ET ALi
FBW; :1F;
00: DALLAS
X
Emergency AuthOrIty. Re Dallas FD-759 to FBIHQ dated 3/7/94
captIoned as above.
____ RoutIne AuthOrity Re to FBlHQ
dated and Bu to
dated captIoned as above. -------

your request for routine use of a non telephonic consensual monitoring device, mark below:
____ No conflrmmg commUnIcatIOn receIved from FBIHQ to date.
The followmg mformallon relates to the use of the equipment

_ _ _ Its use prOVIded Information which corroborated Or assisted in
corroborating the allegatIon or suspicion.
_-..,_ It was used, but no mformation of value was obtained.
X It was not used
(Only ~ of the above applies)
Complete and submll WIthin 30 days of expiration of each and nery period
of authOrIzatIon granted for nontelephoDlc consensual monitoring by either the SAC, DO] or
FBIHQ-CID (whether an initIal or a sUbse~ent aj\thorization), and for each extens~o7
or renewal thereof. ~ J., D - t L - lR (p te;:J-'t - /
i
Transmll to FBIHQ 10 a sealed rown envelope labeled "Director. 'FBi, ELSUR
Index, FBIHQ." ,
/. )
I __2 - Bureau
3 - Dallas (2 - 196B-DL-66524j
(1 - 196B-DL-66524 Sub A)
:1SH/rlh
(5 )
0-621 (Rev "-12-89) (NontelephoOlc. Cr Momtormg Uaaa:e Report)
A1RTEL I
II oj_
~
~. SAC, DALLAS (196B-DL-66524) (P) (WCC5)Date _-"6,L1.=.3L,/=:..94"---_ _
T ~IRECTOR, FBI
Attn ELSUR Index
n
Subject CONNIE C. ARMSTRONG;
ET AL;
FEW; MF;
00: DALLAS
X Emergency Authority. Re Dallas FD-759 to FBIHQ dated 3/2/94

captIoned as above.
____ Routine Authonty Re to FBIHQ
dated and Bu to
dated captlOned as above. -------

YOUT request for routine use of a nnntelephonic consensual monitoring device, mark below:
____ No confIrm1Og commUnIcatIon receIved from FBIHQ to date.
The follow1Og mformation relates to the use of the equipment
_ _ _ Its use prOVIded 1Oformation which corroborated or assisted 10

corroborat1Og the allegatIon or suspicion
__X__ It was used, but no Information of value was obtained.
It was not used
--- (Only Qilll of the above apphes)
Complete and submit WIthin 30 days of expiratIon of each and every period
of authonzatlOn granted for nonrelephonic consensual mODltoring by eIther the SAC, DOlor
FBIHQ-CID (whether an inItial Or a subsequent authorization), and for each extensIon
or renewal thereof
TransmIt to FBIHQ 10 a sealed brown envelope labeled "Director, FBI, ELSUR

Index, FBIHQ.· '
/6·J;}
N 2 Bureau
- Dallas (2 -
(1 -
196B-DL-66524 )
196B-DL-66524 Sub A)
MSM/rlh
(5)
• •
-; ... -',
FD·302 (Rev 3·10·82)
- 1•
Dull: of Imn~cnphon 6/21/94
I
Control Purchasing Manager, Nations
Bank, form-e-r~l~y--k~n-o-w-n--a-s~N~o~rthCarolina National Bank (NCNB) at
101 Tryan street, Charlotte, North Carolina 25255, was telephoned
by the intrnrjAlc't:ng agents at her office, telephone number (704)
386-6351. L .was advised of the ipterYirWing agents' identity
and of the purpose of the interview. L . gave the following
information:
The interviewing agents askedl Ito describe the

process of which Hamilton Taft & Company (HAMILTON TAFT) checks
drawn on NCNB were processed when these check~ade payable
to Security Pacific Bank (SECURITY PACIFIC). xplained
that HAMILTON TAFT's account at NCNB was a "Con ro isbursement
Account" (COA). She explained that a COA is an account where the
customer is allowed to write checks drawn on the COA but the
b7C customer did not have to deposit funds to cover these checks
until these checks made their way through the Federal Reserve
Bank system and were later presented to NCNB for payment.
I further explained COAs with the follOWing

statements-.--~T~h~e advantage of a COA is that the customer enjoys
approximately one day of "float". with float being described as
the time the customer receives credit for payment when a check is
presented and the time the customer must deposit funds with NCNB
to cover this check.
I
lunderstood that NCNB's slster bank, SECURITY
PACIFIC, "wired" funds to cover HAMILTON TAFT's checks drawn on b7C
it's COA at NCNB. Normally SECURITY PACIFIC would send one
"wire" to cover all of HAMILTON TAFT's checks drawn on the
HAMILTON TAFT NCNB COA which had arrived at the Federal Reserve
Bank in North Carolina that particular day. This Wlre transfer
was a "Fed Wire" which would be sent at approximately 3:00 to
4:00 pm in the afternoon.
(telephonically)
lnvc5t\gatlOnon 6{21(94 at San Francisco, CA 196A-SF-93255(SUB Cl-~7
SA WILLARD L. HATCHER. JR. /WLH W-
by ~ ~b7C Dnllldll..lnh:d
TIuI document cOnllllnS nellher Ncommcnd/lllOn5 nClrconclu~lons oflhe Fal It \'llhe prl1ll... ny \11Ih.: FBlnnd 1\ ]nnnlld 10 your Ilgency.
illl.nd lis canlcntll lire nollo be dll.lnbulcd out'llde your ngem.. y
• •
. .' - ..
FD-302u (Rev 11-15-83)
196A-SF-93255(SUB C)
b7C
ConhnUllllOn or FD-302 of I 0" _ _6-,1,-2_1:...1_9_4__ , Page ~=2=_
______~~tated that a Federal Reserve Bank will separate

checks drawn on CDA accounts from normal checks each day. Then
the Federal Reserve Bank will not~fy NCNB the pending amounts of
checks at the Federal Reserve Bank for each CDA. This allowed
time for NCNB to notify the customer of the need to deposit funds
into the CDA that day to cover these checks.
fD-302 (Rev 3-10-82)
• - I -
•
D:lI~ of trnn""nptlon
6/21/94
I lat Security Pacific

Bank ("SECURITY PACIFIC"), currently employed with Wells Fargo
Bank, telephone (510) 464-1834, was telephoned by the
interviewing agent. The interview(ng pgeqt identified himself
and the purpose of the interview. L Jgave the following
information:
I
lwas asked by the interviewing agent about the
SECURITY PACIFIC arrangement with Hamilton Taft & Company
("HAMILTON TAFT"). HOWARD stated that I Inegotiated the
HAMILTON TAFT banking arrangement with SECURITY PACIFIC. She
said that SECURITY PACIFIC paid only federal taxes for HAMILTON
TAFT. SECURITY PACIFIC did not have the facilities to make state
or local tax payments.
Iwas not sure how exactly SECURITY PACIFIC paid
the Intern~a~I~R~e~v-::"enue Service ("IRS") but she understood that
HAMILTON TAFT sUbmitted checks drawn upon North Carolina National
b7C Bank ("NCNB") to SECURITY PACIFIC along with a corresponding "tax
payment coupon". She understood that SECURITY PACIFIC then in
turn deposited the HAMILTON TAFT checks in a SECURITY PACIFIC
account. SECURITY PACIFIC then would notify the IRS
electronically (by utilizing the information on the tax payment
coupon) that the funds in the SECURITY PACIFIC account were
available. The next business day the IRS then would withdraw
these funds on deposit at SECURITY PACIFIC by electronically
debiting the SECURITY PACIFIC tax deposit account.
I I stated that she recalled HAMILTON TAFT having
about three bank accounts at SECURITY PACIFIC. One account was
the payroll account. Another was the disbursement account. And
the other was the negotiated control disbursement account
("CDA"). She explained that the CDA agreement consisted of three
contracts: One between, SECURITY PACIFIC and HAMILTON TAFT,
second between HAMILTON TAFT and NCNB, and the th~rd contract was
between SECURITY PACIFIC and NCNB. HOWARD sa~d that SECURITY
PACIFIC's contract with NCNB and HAMILTON TAFT did not cost
SECURITY PACIFIC any float or funds, because the IRS was giving
SECURITY PACIFIC one day float on it's tax deposits.
(telephonically)
lnv""g."onon 6/21/94 " San Francisco, CA ft'" 196A-SF-93255(SUB c)-h~
by SA WILLARD L. HATCHER, JR./WLH t'ld= Dot,d,,""d -'6'-'/'-'.2..1=-'-/"-9.:>:4 _
TIlls documenl contains nClther recommcndnllons nor conclu"lOn~ of the FBI 1l." the propeT1 .... oflhe FBI nnd ,0: 1011 ned 10 your ogeney,
It nnd Its conlenls are nOll0 be dlslnbUled OUlIliidc your Ilgency
-')-302, (Rev 1I-15-83l
• •
196A-SF-93255-SUBC
Contmu,lIon 01FD-301 01 _-=========~ ,o. 6/22/94 , P,ge_-,,2:.-_
______~~Irepeated her previous statement that Hamilton

b7C
Taft did mass mailings of sales promotional material and sent
these mailings via the U.S. Mail. She advised that the normal
practice at Hamilton Taft, with regard to the mailinT of sales
packages, was again to send them via the U.S. Mail. L I
did mention that on occasion these sales packages would be sent
via Federal Express or personally delivered to a prospective
customer by regional representation •
!... ~!~tated that she was available for personal
interview.
-. FD-302 (Re"o< 3.1<1-32)
.,
• FEDERAL BUREAU OF INVESTIGATION
- .L: •
Ollll: o(lnm"CnrIIOri
6/23/94
b7C
C;:;:::::::;=:;::;:;:;:;:;;:::::;::;:;:=:;:;:::::;;::::=:;:::I
Bar of California ("STATE BARn), 555 Franklin street, San
The State
Francisco, California, telephone number (415) 561-8389, was
telephoned by the interviewing agent. The interviewing agent
identified himself and the purpose of the interview. The
interviewing agent sent, via facsimile, a copy of a Hamilton Taft
and Company (nHAMILTON TAFT") letter addressed tal I dated
June 26, 1990. This letter will be incorporated into this FD-302
as an attachment. I I gave the following information:
I I
stated that he recalled meeting with HAMILTON
TAFT representatives only twice during the time that STATE BAR
did business with HAMILTON TAFT. These two meetings were once in
the beginning and once at the end after the pUblicity of the
HAMILTON TAFT fraud arose in March of 1991. i , said it was
b7C custom for HAMILTON TAFT to send documents to him via the United
States Postal Service.
C:::::::Jw~eviewed the June 26, 1990 letter. He said
that this letter was sent to him via the United States mail. He
explained that he would not have kept such a letter because it
would have not been needed to be referenced later.
II
letter" re~g L
stated that he did keep a copy of a "denial
dated March 12, 1991.
f@
and signed by CONNIE ARMSTRONG
I
believes that this letter was also
b7C
sent via th'jl United States Mal because it was not sent via
facsimile. ( I stated he would try to locate the original of
this letter so he could later turn it over to the interviewing
agent.
(telephonically) J
!nvc5t1gahon on ~6~/~2~3~/~9~4~ " San Francisco, CA f,l, # 196A-SF-93255 (SUB ck6:;1;
by SA WILLARD L. HATCHER, JR./WLH f!t?14= Dnl~ dl.ltr.ll:d -,6~1,-,2,,-3,,-,-1",9-,,4,-- _
'Illl' dOl:umcnt COaillUl5 neither recommendo.tlons nor conelUllona oflhc FBt II I~ the rmrCr1y of the FBI and I'" IOQllfld 10 your agency.
II and It, conlenla arc nOilo be dl51nbuled outside your agency.
r
FD-302. (R.v 11-15-83) .. •

196A-SF-93255-SUBC
ContmuQhon orFD~302 or dL.... . . . . . . . . . . . . . .L b7C =~=~= . On _ _6.:../_2_3.:../_9_4__,. Pa•• _;:;.2 ____
brochure, and she stated that on occasion this marketing package

was sometimes sent via Federal Express to various clients,
especially the larger ones like 3M corporation.
i lstated that there was a listing service that

Hamilton Taft used in an effort to find the proper market niche
for its services. She stated that Hamilton Taft would actually
buy a list of prospective clients from this company whose
business it was to provide vendors of all kinds of services,
b7C a list of prospective clients that would be most likely to
purchase the services of a particular company like Hamilton Taft.
She stated that generally speaking, mid-sized companies would
receive marketing brochures and sales information via the U.S.
Mail. She stated that the person in Hamilton Taft who would
normally send these packages out to prospective clients was a
person who she identified as the sales secretary namedl I
(last name possibly arently reported to
J ?s
She stated that (phonetic) was
(secretary. was the national sales manager
for Hamilton Taft.
~ ~A~s~a~n~a~s~ide, she stated that the telephone number for

Kphonetic) is 800-669-4342. She stated that
~t~h-'i-s--i~s~h~i-s--w-o-r~k--t~elephonenumber and that he, according to her
latest information, is a sales representative for Sprint.
At this point in time,1 Istated that she felt

personally responsible for her customer's losses. She stated
that! I had telephoned her after the demise of
Hamilton Taft and as a result of his calling her, she went to b7C
work for Comp-U-Check. She mentioned that an unnamed New Jersey
legislator was in the process of purchasing a check clearing
service product from Comp-U-Check. A political consultant in
New Jersey, according to! I was to be paid a monthly retainer
by Comp-U-Check for this business. I Istated that she is
involved in litigation with CHIP ARMSTRONG and that she has
retained counsel for this suit. She advised that the unnamed
political consultant sued CHIP ARMSTRONG in New Jersey State
Court and in Texas State ~ The basis for this suit was not
discussed. According to l----jMr. ARMSTRONG is attempting to
take over a bank owned by some native Americans. She stated that
Mr. ARMSTRONG has some connection with an entity known as Covia
which I Idescribed as being the reservation arm of united
Airlines. She remarked that her employment at Hamilton Taft
FD-302a (Rev 11~1.s-83)
196A-SF-93255-SUBC
• •
Conlmtllluonof ~302of _--,=====:::!...__b_-_'C . On _ _6",-1_2_3",-1_9_4_ _• Png. _3
__
began in March of 1988 and continued on through December of 1988,

and she was re-employed in June of 1989 through March of 1991.
She stated that another individual who would have knowledge of
the sales practices at Hamilton Taft is I I
b7C stated that Mr. ARMSTRONG has stolen money from her and he owes
$12,000 to her.
At this point in time, I lwas asked about the
letter of November 27, 1989. She stated that she dropped
handwritten notes in the mail to various clients with whom she
was corresponding. She advised that it was her normal practice
to call either I I the sales secretary, and
ask them to send a form thank-you letter to various clients.
She stated that the common method of sending these thank-you
letters was via the U.S. Mail. She stated that with regard to
b7C November 27, 1989, she remembers where she was because she was
staying with her sister and that correspondence arrived at her
sister's house in! rlvia the U.S. Mail. I
advised that I phonetic) was the person who
produced the accompany~ng packets that went with the thank-you
letter that was normally sent out by Hamilton Taft sales staff.
i,
~
,
' ,
..
•
• .- Flt:~C
~ Will e, ,~p~
No.___________ ~1~~~~f~~~1~
UNITED STATES Ql-S_T1U.c:r COURT re AI: ...
.
THE UNITED STATES OF AMERICA
"S,
CONNIE C. APJ1STRONG, JR. and

RICHARD A. FOWLES
INDICTMENT
18 U.S.C. § 2314 - STOLEN PROPERTY;
18 U.S.C. § 1343 _. WIRE FRAUD
18 U. S. C. § 2 _. AIDING AND ABETTING
A true bill.
~U~_L _
Fomnmt
Filed in open court thi5 dAy,
of A..D. 19 _
------------------------------------- f!-'Jv~
Clerk
7/l-· D
q '1
t~
/
B'"/. $ ,__
(7~' '. 7/ (9 . N
. [berehy ~ertify that the annexed

m5t:llme~t ,in a true and correct copy
of the ongmal on file in my office.
Al'll:iST:
RICHARD W. WIEKING
Clerk, U.S District Court
Northe istrictof California
By . :2,.
'7 • !2e,,-uty Clerk
PER \8 US.c.
'Mev. 01 fljj
.•_[ :t ,D-":FE.NDANT INFORllliA', ' , ' rlELATIVE TO A CRIMINAL AC'~ IN U.S. DISTRICT COURT
,·c,y. OCOMp'LAIr-.rr 0lNFORMA110 f]lINDICTMENT Name 01 O"U.ct Court .• noIO' JUdge'p-'I"tc'E'tj
--uFFENSECHARGED NORTHERN DISTRICT OF CALIFORNIA

18 U.S.C. § 2314 - STOLEN PROPERTY;
18 U. S "C. § 1343 - WIRE FRAUD; ~ __ DEFENDANT - U.S.•s.
18 U. S .:C. § 2 - AIDING AND L.-I Pmy
ABETTING
meanor
JFelonv
PENALTY See Attachment
/" PRDCEEOING _
R94
".- OEFENOANT _ _..' _
Name of Complainant Agency. or Person (& Title, if any) IS NOT IN CUSTODY

1) Ii{] Has not been arrested, pending outcome this proceeding
FBI 1f not detained give date any prior summons ~
was served on above charges [ _
o oerson is awaitina rnal in another Federal or State COlJrt.

give name of coun
Is a Fugitive
Is an Bailor Rpi-ease from (show District) .......
L--,- .---l
o this p~rson/Dror.eedingIS transferred from another district

per (circle one) FRCrP 20. 21 or 40. Show District IS IN CUSTODY
4) 0 On this charge
5) 0 On another conviction
o Fed'l OSt
610 Awaiting trial on other charges
..J this is a reprosecutlon of charges
previously dismissed which were SHOW
If answer to (6l is "Yes", show name of institution
dismissed on motion of:
o U.S. Alt'y ODefense
DOCKET NO.
o this prosecution relates to a pending

case involving this same defendant
Has detainer
been filed?
l..--l Yes
L...J No
If "Yes"
give date.
filed
o
L!- - - - -
MAGISTRATE Day Year
prior proceedings or appearance(s) CASE NO. Mo.
before U.S. Magistrate regarding ... DATE OF Ii.
this defendant were recorded under ~ ARREST' LI_ _-C- _
Or... if Arresting Agency &. Warrant were not Federal

Naml! and Office at Perlon Day
Futml","g Informallon on
DATE TRANSFERREDf) Mo.
THIS FORM !
MICHAEL J. YAMAGUCHI ----I
TO U,S. CUSTODY V, _
~u S. AU'y "---JOIMer u.s. Agency
Name 01 Aut. U.S. Alt"y

(If aSSl9neoi
Eb F. Luckel
o ThIS report amends AO 257 prevloully lubmltted
, . . - - - - - - - - - - - - - A D D I T I O N A L INFORMA TlON OR COMMENTS - - - - - - - - - - - -

PROCESS: Connie C. Armstrong, Jr. Request summons
c/o John Milano return date of 7/20/94
SUMMONS 507 Polk Street
San Francisco, CA 94102
BAIL (AMT).
NO PROCESS*
*WHERE DEFENDANT PREVIOUSLY APPREHENDED ON COMPLAINT, NO NEW SUMMONS
OR , WARRANT NEEDED, SINCE MAGISTRATE HAS SCHEDULED ARRAIGNMENT
;: ,
"
• •
M~imun pena~ty each count
l8 U.S.C. § 2314 - lO years imprisonment
Supervised release of at least two years

but not more than three years. c,~
'A1I"'-/
$50 special assessment "
l8 U.S.C. l343 - 5 years imprisonment
1) ('"'-' 7 6
§
$250,000 fine
At least two years~,t...not mo
than three yea~1 \.1 I' ~
$50 special as~ V '£.
Cpmbined maximum penalty F'\LEO
Armstrong 130 years imprisonment
$5.25 million fine
63 years supervised release
$1050 special assessments
Fowles 60 years imprisonment

$2.25 million fine
27 years supervised release
$450 special assessment
\1'
_I~ -
1 ORIGINAL
MICHAEL J. YAMAGUCHI
2 United states Attorney F I LED
3 Attorney for Plaintiff JUN 27 1994

4 nlCHARD w, WIEKING
tIERK;U,S;DlsTRlcrcoVRT
5 NDI~lIi[liN DISTRICT OF CALIFORNIII
7 UNITED STATES DISTRICT COURT
6 NORTHERN DISTRICT OF CALIFORllIA ',CAL'

9
10
UNITED STATES OF AMERICA,
Plaintiff, ~GRt94: 0276 •
\
IVIOLATION: Title lSi un!t~·f •
11 v. } States Code, Section 2314 -'
} STOLEN PROPERTY; Title 18,
12 CONNIE C. ARMSTRONG, JR. and .} United States Code,
nICHARD A. FOWLES, } Section 1343 - .WIRE FRAUD
13 } Title 16, United States Code
Defendants. ) Section 2 - AIDING AND
14 } ABETTING
15 I N D I C T MEN T
•
16
INTRODUCTORY ALLEGAtIONS •
17
The Grand Jury charges that:
16
1. Hamilton Taft § Company, Inc. ("Hamilton Taft")
19
was incorporated in California in 1979. Its business was to
20
provide payroll tax services to companies ("clients") with
2l
large payrolls. Clients transferred funds to pay their payroll
22
taxes to Hamilton Taft, and Hamilton Taft was, in turn,
23
oblig~ted to pay the 'taxes to the Internal Revenue Service and
24 . .
·to-other taxing authorities when they were due.
25
2. .Funds for federal income and social .security
26
taxes withheld from employees' wages accounted for mos~ of the
Exhibit "A"
000001
I '
-'
1
funds transferred to Hamilton Taft~__ A company with a large
2
payroll is required to pay these federal taxes to the IRS each
3
time its employees are paid, commonly twice a month.
4
-i" .
.'. . 3• HamiltOriTaTt had· the use of funds it received
~ .. "".5. ",'
fram clients for limited periods of time before the taxes were
6
due. In the case of federal income and social security taxes,
7
Hamilton Taft had use of the funds for a day or less, except
8
for the "safe haven," an amount equal to five percent of the
9
tax, which was due as much as sixty days later. Most of
10
Hamilton Taft's income was earned by investing the funds it
11
received to pay its clients' taxes in risk-free, short term,
12
liquid investments.
13
4. In addition to paying taxes, Hamilton Taft often
14
provided other services, such as preparing and filing Quarterly
15
Employer Tax Returns, Forms 941. These tax returns are due the
16
last day of the month following the end of each quarter.
17
5. The IRS assesses penalties for payroll taxes
18
that are not paid when due, c£illed "failure to deposit"
19
penalties. Absent reasonable cause, when any tax payment is
20
missed, a failure to deposit penalty will be assessed, even'if
21
the tax has been paid by the time the quarterly tax return is
22
due. The IRS usually bills a taxpayer for a failure to deposit
23
penalty several months after the tax return for the quarter is
24
filed. If taxes remain unpaid after the quarterly tax return
25
26 I N DIe T MEN T -.
(Armstrong & ,Fowles) 2
000002
• ..-&
1
is filed, an additional penalty, called a "failure to pay"
2
penalty, of one-half percent per month, is assessed and
3
interest is charged on the unpaid balance. The IRS usually
4
bills a taxpayer for a failure to pay penalty shortly after the
5
quarterly tax return is filed. Thus, failure to pay penalties
6
are typically due months earlier than failure to deposit .
7
penalties.
8
6. Connie C. Armstrong, Jr. ("Armstrong") acquired
9
Hamilton Taft on or about March 31, 1989. At that time,
10
Hamilton Taft had a working capital deficit of over $14 million
11
due to misappropriations by prior owners of funds received from.
12
clients. The deficit-created a shortage of funds to p~y taxes,
13
but taxes could still be paid on time because some of the funds
14
received, such as funds for the five percent safe-haven and for
15
various state and local taxes, were not due immediately. This
16 ..o
enabled Hamilton Taft to cover shortages from later collections

17
of funds without falling behind in the payment of taxes and
18
incurring penalties.
19
7. From Armstrong's acquisltion of Hamilton Taft in
20
March 1989, to March 1991, when a trustee in bankruptcy was
21 .
appointed to run Hamilton Taft, Armstrong was Hamilton Taft's
22
chief executive officer and its sole director and shareholder.
23
During much of this time, Richard A. Fowles ("Fowles") was
. 24
president of Hamilton Taft. At other times, Fowles served".
25
26 I N DIe T MEN T
(Armstrong & Fowles) 3
000003
1
Hamilton Taft or a related entity ~~_other capacities.
2
PREAMBLE TO COUNTS ONE THROUGH TWENTY-ONE
3
The Grand Jury £urther charges that:
4
8; Beginning around March 31,1989, ·andcontinuing
5
thereafter to around the end of March, 1991, in the City and
6
County of San Francisco, State and Northern District of
7
California, and elsewhere,
8
CONNIE C. ARMSTRONG, JR.,
9
defendant herein, knowingly aided and abetted by
10
RICHARD A. FOWLES,
11
defendant herein, devised and intended to devise a scheme-and
12
artifice to defraud and to obtain money from companies that had
13
contracted with Hamilton Taft for payroll tax services by means
14
of false and fraudulent pretenses, representations, and
15
promises. The. scheme is described in paragraphs 9-23.
16
The Diversions
17 "
9. Armst~ong caused funds received by Hamilton Taft
18
for the payment of taxes to b~ diverted to companies he
19
controlled for investment purposes and operati~g costs, or to
20
himself for personal expenditures. In less than two years,
21
approximately $55 million (net) was taken out of Hamilton Taft
22
for these purposes and replaced with various
, notes and bonds.
23
10. The investments made with the diverted funds
24
included the purchase of oil and ~as leases, participation in a
25
26 I N D I C'~'M EN T
. ,
,"
000004
... r '.
1
shopping center joint venture, and_p~rchases of various real
2
estate interests. The operating costs paid with diverted funds
3
included skyboxes at Texas Stadium and a lavish Fourth of July
4
party. The personalexpendIEiiresofdTverfedfuridsTricTuded
5
the purchase of a ranch and political and charitable
6
contributions.
7
The Holding Back of Tax Payments
8
iQll. As a result of the diversions, Hamilto~ Taft was
9
unable to pay all of its clients' taxes when they were due~
10
wnen tax paYIl~nts were not made ~hen due, penalties: which
11 '.
Hamilton Taft was responsible for paying, were incurred. This
12
increased the need to hold back more taxes because more funds
13
were needed to pay the penalties.
14
12. The non-payment of taxes began in the third
15
quarter of 1989 when approximately $25.• 3 million in tax
16
payments were held back. Beginning in the first quarter of
17
1990, Armstrong caused taxes to be held back each quarter. The
18
holding back of taxes increas§d as follows:
19
First Quarter 1990 $19.4 million
20
Second Quarter 1990 --- $37.8 million
21
Third Quarter 1990 ---- $45.0 million
22
Fourth Quarter 1990 --- $57.0 million
23
First Quarter 1991 ---- $68.2 million
24
13. As time passed, Hamilton Taft became
25
26 I N .0 leT MEN T
(Arms trong & Fowles'). 5
-
000005
\i
1
~ncreaSing1Y dependent o~ the rece~p~ of additional funds from
2
clients to pay the taxes of clients whose taxes had been held
3
back earlier and to pay penaltiesl By the time the trustee in
~
4
bankruptcy was ·appofntedtotakeover····HamiltonTaft 'in 'March
5
1991, the cash shortage to pay taxes had increased to
6
approximately $85 million and the unpaid penalty liability was
7
approximately $8 million more.
8
The Penalties
9
14. The holding back of taxes resulted in a penalty
10
liability to Hamilton Taft of approximately $15 million. By
11
the time the trustee in bankruptcy was appointed, approximately
12
$7 million of this liability had been paid. The penalty
13
liability alone. vastly' 'exceeded Hamilton Taft's income, even
14
without consideration o{ its othel:" operating expenses.
,15
The Fraud in the Inducement
16
15. It was part of the scheme to fraudulently induce
17
companies to enter into tax service agreements ("contracts")
18
with Hamlltorr Taft:}
19
16. Acting through regional sales representatives,
20
Armstrong attempted to sell Hamilton Taft's payroll tax
21
services to large companies throughout the United states.
22
During initial contacts and throughout the negotiations,
23
prospective clients were assured that Hamilton Taft was capable
24
of professionally and reliably providing all the payroll tax
25
26 I N DIe T MEN T
(Armstrong & Fowles) ,. 1)
000006
tj
1
services it offered including, most_)mportantly, the timely
2
payment of payroll taxes. Potential clients were encouraged to
3
contact existing Hamilton Taft clients as references and were
4
led to believe thatHamlitonTaftwasfTnancTaIIy secure.
5
17. As a result, between June 1969 and early 1991,
6
Hamilton Taft~ntered into new customer contracts with clients
7
whose aggregate annual payroll tax liability exceeded $1
8
billionj Each contract provided that Hamilton Taft would pay
9
the client's payroll taxes when they were due provided certain
10
conditions ~ere met.
11
116.
, As Armstrong and Fowles knew, these contracts
12
were f!audulently induced, because Armstrong had already begun
13
to divert funds needed for taxes and~e:~ad no intention of
14
paying all the clients' taxes when the; were due.l MoreJver, as
15
time passed and the capital deficit of Hamilton Taft
16
dramatically increased. Armstrong and Fowles knew that it would
17
be impossible to pay all the taxes Hamilton Taft was
16
responsible for paying. By t~e time the trustee in bankruptcy
19
was appointed, the overdue payroll tax liability was
20
approximately $91 million, of which over half was for clients
21
who signed contracts after Armstrong's acquisition of Hamilton
22
Taft. Hamilton Taft had only approximately $6 million to pay
23
these taxes.
24
II
25
26 I N 0 leT MEN T
_ (Armstrong & Fowles) 7
000007
.. , ,
Li
\
1
"inC' The Coyer-up
2
19. It was also part of the scheme to fraudulently
3
conceal the diversions, the systematic holding back of tax
4
paymerits,themagriltudeofthe-res ultingpen alt leSt -and
5
lJ Hamilton Taft's ever-increasing dependence on recently received
6
funds for taxes to pay the taxes of clients whose taxes had
7
been held back earlier. This concealment enabled Hamilton Taft
8
to continue to"receive funds from its clients, to avoid massive
9
cancellations of its contracts, and to preserve the opportunity
10
for new business.
11
False"Tax Retu~ns are-Filed
12
x' 20. In the third quarter of 1989, when approximately
13
~
$25.3 million in f~deral payroll taxes were not paid, Armstrong
14
'same and Fowles approved the filing of approximately one hundred
15
false Employer'S Quarterly Tax Returns, Forms 941, for the
16
'", calendar quarter ending September 3D, 1989. Each return
17 ,
falsely stated that all the taxes for the quarteihad been
18
paid. The- clients who receiv~d these returns were thereby
19
)"e falsely led to believe that all their taxes had been paid.
20
Later, when the IRS discovered the shortage and notified the
21
clients and Hamilton Taft, the clients who inquired were again
22
:1 deceived when Hamilton Taft employees, at Armstrong and Fowles'
23
direction, falsely stated that the reason for the non-payments
24
was a temporary problem with Hamilton Taft's computer software
25
T 26 I N-D I C % MEN T
s (Armstrong & Fowles) 8
000008
1
selected Clients' Taxes ~ere Not Held Back
2
22. Some of Hamilton Taft's clients had contracts
3
that required Hamilton Taft to verify each deposit of federal
4 •
taxes during a quarter. To ensurethesuccessofth~cover"'up,
5
Armstrong and Fowles directed that the taxes 'of these clients .
6 '. • .' ..'>
not be held back. The remaining clients would receive notice~'
.7
of late payments (typically, about six months after they had
8
transferred funds to Hamilton Taft); but Ha~il-to9".Tatt:-J1ou~".' -
.'
9 'r: . : .. l> ':', ", .' .": .-,:". ...:' • Q •
pay the late penalties and. i t would appear to ·theGlIi!ft.t.!,til\~·tQ:':·./.:

10 '. .. :'" ! : ··:: ~lJ. ~:. -
the late payment was an isolated, innocent ,pc~l,IJ:'renca~~·•. · ,,7,'
11
Moreover, as Armstrong and Fowles
..
knew,
.
... '.,
."..
,. ,,:;:,
Hamiltori Taft.e~mpIOY~~·~
I :".... . ,--
'-'
. •
12
who responded to inquires did not know the re~soTb~o~ t~ l~e
13 . " t·· • ;;.
penalties and could only give misleading responses •. ":l.'
14 .,:::.:. ;.f!', ~.: :.:F!~
•
Armstrong stonewalls' ",F) •
<),_
15 . 0 ·... D"
23 • Finally, in early March 1991 ,Wh,E!h .~:. Ham~.l tc?n·_··....... '.

16 ':'.[ j?!~.;;:~.. -... . ~" "'::. (':.~~. ~.t; 0'"' •• 0
Taft employee notified some of the clients of the S'ys~em.,!,~i:o.:.~ : .",.. ~
17
diversion o of funds and the non-payment of taxes, Armstrong . , '
18
falsely represented·tq many ~lients that th~ allega~ions were
.
19
false and that taxes had been paid iate·:·ohly- ocqasioaalJ.y.·
20 '" .- o ~" ...
Armstrong also attempted. to disseminate this false account·
21
through the media.
22
24. The language contained· ih' piuagraphs'..8 -: i~ is: .
23
incorporated by reference in Counts One through twenty-One , ..
24
25
26
:. .. ": ,," • '". -
- . ,
1
COUNTS RELATING TO THE PAYROL} TAX SERYICE PROPOSALS
2
COUNT ONE: (18 U.S.C. §§ 2314, 2)
3
4
5 -----
6noraboi.ifsepEeiiiber11, 1989;· iii
.... -_.- . _- -
District of California and elsewhere.,

.. '-. .--_.-.~ ~
the NOfEhefri
6
CONNIE C. ARMSTRONG, JR., and
7 RICHARD A. FOWLES,
8 defendant herein, having devised and intending-to devise a
9 scheme and artifice to defraud and to obtain money by means of
10 false and fraudulent pretenses, representations and promises,
11 did knowingly and for the purpose of executing the scheme,
12 cause and induce representatives of Commercial Credit Group,
13 Inc. to travel in interstate commerce from Baltimore, MD, to
14 San Francisco, CA,·for a meeting with Hamilton Taft
15 representatives concerning Hamilton Taft's proposal to provide
16 payroll tax services to Commercial Credit.
17 QQUNT TWO: (18 U.S.C. § 2314, 2)
18 The Grand Jury further charges that:
19 On or about April 26, 1990, in the Northern District
. r---- - - --.----.... -.
20 of California and elsewhere,
21 CONNIE C. ARMSTRONG, JR. and
RICHARD A. FOWLES,
22
defendants herein, having devised and intending to devise a
23
scheme and artifice to defraud and to obtain money by means of
24
.false and fraudulent.. pretenses, representations and promises,
': - 25
o. .. •
(Armstrong & Fowles) __ 11 ,.
..
. ...,-,,"' ......'''t>o '.."" •
. . ~.::,;-:-!~•. : ~. ~ .
'•• t/"tII"':_"'-~'.
~-;'"
, .
... • '.J ..... "
,"
000011
LI
1
did knowingly and for the purpose ~f-executing the scheme,
2
3
cause and induce representatives of R. R. Donne1ley & Sons
--- .. _---'- ..- --- .. -. _.'
Company to travel in interstate commerce from Chicago, IL, to
4
San· Francisco,CA, fora·· meetlngwlthHamiltonTaft
5
representatives concerning Hamilton Taft's proposal to provide
6
payroll tax services 'to R. R. DonnelleY., -"-.,.'
7 ,
COUNT THREE: (18 U.S.C. § 2314)
8
The Grand Jury further charges that:
9
On or about June 6, 1990, in the Northern District of
10
California and elsewhere,
11
12
defendant herein, having devised and intending to devise a
13
scheme and artifice to defraud and to obtain money by means of
14
false and fraudulent pretense~, representations and promises,
15
did knowingly and for the purpose of executing the scheme,
16
17
cause and induce representatives of Scott Paeer Company to
. -- ----_.- '-'-
travel in interstate commerce from Philadelphia, PA, to San

18
Francisco, CA, for a meeting yith Hamilton Taft representatives
19
concerning Hamilton Taft's proposal to provide payroll tax
20
services to Scott Paper Company.
21
25
26 'I:~~D I C T M E·N T
000012
Ll
1
COUNTS RELATING TO TAX ~§BVICE AGREEMENTS
2
COUNT FOUB: (18 U.S.C. § 1343, 2)
3
On or about December 5 r 1989, in the Northern
5
District of California, and elsewhere,
6
CONNIE C. ARMSTRONG, JR. and
8 defendants herein: for the purpose of executing the scheme to
9 defraud and to obtain money by means of false and fraudulent
10 pretenses, representations, and promises, and attempting to do
11 so, did knowingly cause to be transmitted by means of wire
12 communication in interstate commerce a facsimile copy of a
13 signed Tax Service Agreement from Sunbelt Beverage in
14 Lutherville, MD, to Hamilton Taft in San Francisco, CA.
15 COUNT FIVE: (18 U.S.C. § 1343, 2)
'°16, The Grand Jury further ,charges that:
~7 On or ~bout December 15, 1989, in the Northern
18. District of California, and elsewhere,
RICHARD A. FOWLES,
20
defendants herein, for the purpose of executing the scheme to
21
defraud and to obtain money by means of false and fraudulent
22
pretenses, representations, and promises, and attempting to do
23
so, did knowingly cause to be transmitted by means of wire
24
communication in interstate commerce a facsimile COpy of a
25
OOOOIS:
... '
r·
1
signed Tax Service Agreement from the Kendall company in
2
Boston, MA, to Hamilton Taft in San Francisco, CA.
3
COUNT SIX: (18 U.S.C. § 1343)
4
5
On or about September 18, 1990, in the Northern
6
District of California, and elsewhere,
7
8
defendant herein, for the purpose of executing the scheme to
9
defraud and to obtain money by means of false and fraudulent
10
pretenses, representations, and promises, and
11
so, did knowingly cause to be transmitted by means of wire
12
communication in interstate commerce a facsimile copy of a
13
signed Tax Service Agreement from Jim Beam Brands Company and
14
JBB Spirits Inc. in Deerfield, IL, to Hamilton Taft in San
15 o
16
Francisco, CA. • Q.
.• ' *,1
.. " o'" •
17
COUNTS
. RELATfN8TQ
. .
THE DIVERSION'OF FUNDS NEEDED FOR TAXES -
•
• -. -- C ' l I · .f
COUNT 'SEVEN:- (18 U.S.C. §. 1343,. ~)

•
-. ~.
18
The Grand Jury futtber charges that:
19
20
District of California and elsewhere,
---
'--'-- .-.---_.-- ."-" -.-
21
CONNIE C. ARMSTRONG, JR., AND
23 defendant herein, for the purpose of executing the scheme to
24 defraud ~nd to obtain money by false and fraudulen~ pretenses,
25 representations, and promises, and attemp~ing to do so, did
.. . .;.-
000014
-
1
knowingly cause to be transmitted ~y_means of wire
2
communication in interstate commerce from a Hamilton Taft Smith
3
Barney account in Newport Beach, CA, to State Street Bank &
4
Trust Company, Boston, MA, flblo Dresdner Enterprises, Inc., a
5
money wire transfer in the amount of $7 million.
6 -----
COUNT EIGHT: (18 U.S.C. §§ 1343, 2)
7
8
On or about November 14, 1989, in the Northern
9
10
12 defendants herein, for the purpose of executing the scheme to
13 defraud and to obtain money by false and fraudulent pretenses,
14 representations, and promises, and attempting to do so, did
15 knowingly cause to be transmitted by means of wire
16 communication in interstate commerce from a Hamilton Taft Bank
17 of America account in San Francisco, CA, to State Street Bank
18 and Trust Company, Boston, MA, f/b/o Dresdner Enterprises,
19 Inc., a money wire transfer in the amount of $1.1 million.
20 II
21 II
22 II
23 II
24 II
25 II
26 I N D i C T MEN T
000015
(j
1
COUNT NINE: (18 U.S.C. §§ 1343, 2L_
2
3
On or about February 8, 1990, in the Northern
4
5
7 defendants herein, for the purpose of executing the scheme to
8 defraud and to obtain money by false and frauQylent pretenses,
9 representations, and promises, and attempting to do so, did
10 knowingly cause to be transmitted by means of wire
11 communication in interstate commerce from a Hamilton Taft Smith
12 Barney account in Newport Beach, CA, to State Street Bank &
13 Trust Company, Boston, MA, f/b/o Winthrop Realty Company, a
_ _- - - - - - ' , •••• 0 ••••
14 money wire transfer in the amount of $9.8

..
million. .
-"_._-'_._~--
15 COUNT TEN: (18 U.S.C. §§ 1343, 2)

17 On or about May 2, 1990, in the Northern District of
18 Cal iforn.ia and elsewhere,
RICHARD A. FOWLES,
20
defendants herein, for the purpose of executing the scheme to
21
defraud and to obtain money by false and fraudulent pretenses,
22
representations, and promises, and attempting to do so, did
23
. knowingly cause to be transmitted by means of wire
~5. -~ ... t1.
communfcat10n,in interstate commerce from a Hamilton Taft ~ank

,. 25
26 i N D I C T MEN T
OQOOIG
1
of America account in San FranciscQ1_CA, to a Dresdner
2
Petroleum, Inc., Bank One account in Dallas, TX, a money wire
3
transfer in the amount of $4 million.
4
COUNT ELEVEN: (18 U.S.C. § 1343)
5
6
7
8
9
10
defraud and to obtain money by false and fraudulent pretenses:
11
12
knowingly cause to be transmitted by means of wire
13
communication in interstate commerce from a Hamilton Taft Bank
14
of America account in San Francisco, CA, to First National Bank
15
of Chicago, Chicago, Illinois, flblo Winthrop Realty ~ompany, a
16
money wire transfer in the amount of $2 million.
17
COUNT TWELVE: (18 U.S.C. § 1343)
18 •
The Grand Jury furtper charges that:
19
20
21
22
23
.......- .
24
repre,sentations, and promises, ,and attempting to do so, dido':' . ",;,.,,:'".
25
•
-,ll .
000017
C.J
1
knowingly cause to be transmitted ~y_means of wire
2
communication in interstate commerce from a Hamilton Taft
3
Security Pacific account in San Francisco, CA, to a Remington
4
Companies, Inc. Bank One account in Dallas, TX, a money wire
5
transfer in the amount of $1.7 million.
6
COUNT THIRTEEN: (18 U.S.C. § 1343)
7
8
9
District of california and elsewhere,
10
11
qefendant herein, for the purpose of executing the scheme to
12 ;

13
14
15
communication in interstate commerce from a Hamilton Taft
16
Security PacifJc account in San Francisco, Ck, to a Remington
17
Companies Inc. Bank One account in Dallas, TX, a money wire
18
transfer ·in the amount of $3.~ million.
19
COUNT FOURTEEN: (18 U.S.C. § 1343)
20
21
On or about December 5, 1990, in the Northern
22
23
..
24 ._.
defendant hereiri, for the purpose of exec~ting the scheme to
25
26 I N D.I C THE N T
..... 00.0018
~-'
1
2
3
5
Security Pacific account in San Francisco, CA, to a
6
Knightsbridge Treasury Bank One account in Dallas, TX, a money
7
wire transfer in the amount of $1.1 million.
8
COUNTS RELATING TO THE PAYMENT OF LATE TAXES
9 WITH FUNDS RECEIYED FOR CURRENTLY DUE TAXES
10 COUNT FIFTEEN (18 U.S.C. § 2314, 2) JS-kJ',D6-"'J~

12 On or about April 12, 1990, in the Northern District of
13 California, and elsewhere,
14 CONNIE C. ARMSTRONG, JR., and
RICHARD A. FOWLES,
15
defendants herein, did cause to be transported in interstate
16
commerce Hami~ton
17
..- from Taft in San Francisco, CA, to the North
Carolina Natiotlal Bank in Ashville, NC, securities having an

18
aggregate value of approximat~ly $19.4 millon, knowing that the
19
securities were traceable to funds that were wrongfully
20
converted and taken by fraud.
21
26 I N D I C T M~ N T
.. ,
.. .
~
000619
'"'
1
COUNT SIXTEEN: (18 U.S.C. § 2314)
2
3
On or about August 1, 1990, in the Northern District of
4
5
6
defendant herein, did cause to be transported in interstate
7
commerce from Hamilton Taft in San Francisco, CA, to the North
8
Carolina National Bank in Ashville, NC, securities having an
9
aggregate value of approximately $37.8 million, knowing that
10 ... """ .......... •.• __ ... _1: •• ' , ...
the securities were traceable to funds "'~1C.'- .'C~'C W.LUlly.LU..L .... ~
11
converted and taken by_ fraud.
12
COUNT SEVENTEEN: (18 U.S.C. § 2314)
13
14
On or about November 1, 1990, in the Northern District of
15
16
17
18
19
20
aggregate value of approximately $45.0 million, knowing .that
21
the securities were traceable to funds that were wrongfully
22
23
II
24
II
25·
. (Armstrong & Fowles) 20
"
000020
.
'
1
COUNT EIGHTEEN: (18 U.S.C. § 2314L_
2
3
On or about February 1, 1991, in the Northern District of
4
5
CONNIE C. ARMSTRONG,
6
7
8
9
aggregate value of approximately $57.0 million, knowing that
10
the securities were traceable to funds that were wrongfully
11
12
COUNTS RELATING TO THE pENIAL OF SOLODQFF'S ALLEGATIONS
13
COUNT NINETEEN: (18 U.S.C. § 1343)
14
15
On or about March 12, 1991, in the Northern District
16
of California,
17
18
defendant here~n, for the purpose of executing the scheme to
19
20
21
22
communication in interstate commerce from San Francisco, CA, to
23
24
Advo System Inc., Windsor, CT, a facsimile
. .
letter
-'
. - dated'~arch
.- .
•
12, 1991, signed "Connie C. Armstrong, Jr."
25
26 I N D I C T M:E N T
(Armstrong &_Fowl~s) 21
000021
•
1
COUNT TWENTY: (18 U.S.C. § 1343) __
2
3
4
of California,
5
6
7
8
9
10
communication in interstate commerce from San Francisco, CA, to
11
Federal Express Corporation, Memphis, TN, a facsimi~e letter
12
dated March 12, 1991, signed "Connie C. Armstrong, Jr."
13
COUNT TWENTY-ONE: (18 U.S.C. § 1343)
14
15
16
of California,
17
18
19
20
21
25
000022
1
1
AD 2458 (ReI{, alg~
1
knowingly cause to be transmitted ~y_means of wire 1
2
communication in interstate commerce from San Francisco, C, 1
3
Scott Paper Company, Philadelphia, PA, a facsimile letter c1
-4
( March 12, 1991, signed "Connie C. Armstrong, Jr."
5 1
DATED: A TRUE BILL.
6 1
rHE DEf
7
~.
,
~
, pleat
8
===,...--
FOREPERSON
1
1
plea'
O whic
9
7, was
;6,J afte 10 • Y I 1
Title &. at,es ~orney
11 1
18 U.S. 12 Approved as to Form: 4-1V •
1
AUSA: LUCKEL
13
18U.~ 1
14
1
15
16 1
17 1
to th'
18
1
19
1
20
1
21
22 1
23 1
24 1
25
1
(Armstrong & Fowles) 23 1
......
~
1
•
FD-302 (Rov 3-10-82)
• -. :t .-
•
Date Orlrnnscnptlon
6/27/94
On the evening of June 23, 1994,[ ~s

telephonically contacted at her residence, I ::J The
official identity of the interviewing agent was made clear to
I land she provided the following information:
I Iwas advised that the purpose of this telephone
call was to obtain information regarding her former emplo~~e~n~t _
with Hamilton Taft Company in San Francisco, California. L~~ __
revealed that she had, in fact, been employed at Hamilton Taft
in San Francisco as a sales representative and she stated that
it was the custom and habit, that is the practice of Hamilton Taft
company, to mail contracts and proposals to prospective clients.
She was asked as to whether or not she recalls having mailed a
contract to R. R. Donnelley and Son which was headquartered in
Chicago, Illinois, and she was asked the same question for
Sinai Hospital.
b7C She stated that she had made a "cold call" to
R. R. Donnelley while she was stationed in the chicago office of
Hamilton Taft. She stated that this call was made in January of
1990, and she recalls that she personally went to R. R. Donnelley
after calling them and delivered a sales brochure to I I
I IWho was her contact with R. R. Donnelley. She advised
that a big selling point in closing any deal with a client,
especially with R. R. Donnelley, was the fact that Hamilton Taft
had a $50 million fidelity bond in place. She stated that she
recalls having hand-carried a contract to I land having
him execute the contract between Hamilton Taft and his company,
R. R. Donnelley and Sons. She stated that she was very delighted
at having been able to land this contract with R. R. Donnelley
and Sons and stated that she personally flew from Chicago to
San Francisco with the signed contract in her possession.
She volunteered that Hamilton Taft had a common
practice of engaging in mass mailings of promotional sales
packages to prospective clients. She stated that letters were
commonly sent out to prospective clients and that various ads
were placed in trade pUblications. She specifically mentioned a
marketing package which basically was a burgundy colored
InvestigatiOn on ---"6'-"1.02"'3'-"1-"9:..::4'---_ _,,' San Francisco, Califcrmnia 196A-SF-93255-SUBC- I

7#/1
b~r-----------IL/~d~m:l::::..-7_C D'" d"""d 6/24/94 I
TIlls document conllllnll neither recommendallons nor conclusIOns orlbe FBI IllS the property orlbe FlU ond IS lonned to your agency. I
It and Its contents are not to be dlslnbuled oUlslde your og~ncy ,
I
196A-SF-93255
\p1cm
twenty spreadsheets. These were merged with approximately 5,000

lines of IRS data. Subsequently, federal grand jury exhibits
were prepared by these analysts and contributed to the
simplification of the data for the members of the grand jury in
their deliberations. It should be noted that our financial
analysts worked on the weekends and on their regular days off in
order to meet the deadline for the presentation of this matter to
the grand jury. All of this effort was done at the request of the
United States Attorney's office.
It is anticipated that this case for

trial, the talen,s an: e:ert~se fA 'S'-::'::"'"====""'l"==~
.....r:::"'-! b7::
I I andL not to men on SpeCl.a gent
Hatcher will once aga n ~ Wl. ness to the fact that success in
the prosecution of major white collar crime cases is truly a team
effort. I landl II thank you for all your
efforts.
2*

CCA Selected 1994 Documents

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---;)

F~-;02 (Rev- 3-10-82)

Date o(lnUlIcnptaon 1/18/94

HT's deficit was approximately 18 million dollars at

InvcstJ.galion on -=1.../,-,1::;4;:..L-/9=4 ." San Francisco, CA F~,' 196A-SF-93255 SUB C-c/

by SA WILLARD L. HATCHER, JR.'WLHW11~ D,.. d"..1cd -,1"',-,1,,,4!.L',,9"'4 _

To SAC, SAN FRANCISCO D.le 1/28/94

From SA WILLARD L. HATCHER, JR. (196A-SF-93255) (P)

Sub"" CONN:q;: CHIP ARMSTORNG, JR;

Enclosed for the file is a facsimle copy of the

,~- File (196A-SF-93255)

FACSIMILE LEAD SHEET

Firm: Federal Bureau of InveslJgalion I

Fromtl.. _ b7C "l

Client: Hamilton Taft & Company I

Please call 415) 574-1900 if an error occurs.

April 1.0, 1.989 Dallas county, Texas $18,962,255.00

roll VlIL'lI1I IUlCBIVlD, the undersi9Jl9d (the "Maker") promises to

Maker hereby pled9~s to Holder, as eecurity for the full and

PROMISSORY NoTE - page 1

DUllDlma IllJi'11lilRftIsBs, :INC ••

PBQM:ISSORX NOTE - Page 3

5 fJf]PPPfYXJPPPFPF 6 InstallatIOn of Equipment (Check) 7 Location where equipment

11 DOJ notification reqUIred 0 Yes It!- No If 'Yes' check reason below

lnvest1gatlon ln San FranC1SCO D1V1Slon W1ere he busted out a company

X__ Emergency Authonty

NOTE, If no confirming communication received from FBIHQ in response to

The followmg mformatlon relates to the use of the equipment'

FD-302 (Rev 3-1(}'82)

On the morning of February 8, 19941~ lwas

interviewed at I__;::========~;--=-~ Present during this

by ~L.. .......;Ii-L{---",g"",l_b_7_C_- De" d"teted 2/16/94

FD-302a (Rev 11·15-83)

been its historical weak management. On the positive side,

L- ~kescribed CHIP ARMSTRONG as a flamboyant,

______~Istated that he was never aware of the

one client, commercial Credit Corporation. He said that Hamilton

~ Istated that any company can save money by

With regard to selling, he stated that the Client

FD-30Z. (ReY 11-15-83)

current financia1s and that the current or standard response from

current financials was that Hamilton Taft was in the process of

According to~I ~lsales grew approximately $1

b7C billion during his tenure at Hamilton Taft. He advised that he

with respect to late payments,I~ lstated it was

there were $8 million in late penalties. I Istated that he

~ Istated that he wouldn't have stayed around

~ Istated that he used CHIP's Turtle Creek office

I..- Iadvised that 1 1 was a client

SAC, De1 J as (196B-DL-66524 )(P)

die CONNIE C.~TRONG Notification of SAC Authority Granted

Reason for Proposed Use (Check) 2 Type of Equipment (Check)

J Lb7E: fdentlty of Gov1 Ally

1. DOJ notrtlcatlon reqUired D Yes IX No If ·Yes· check reason below

X Emergency Authority. Re Dallas FD-759 to FBIHQ dated 3/2/94

NOTE: If no confirming communication received from FBIHQ in response to

____ No confIrmIng commUDlcallon receIved from FBIHQ to date.

The folloWIng Information relates to the use of the equipment

_ _ _ Its use provIded Information which corroborated or assisted In

TransmIt to FBIHQ In a sealed brown envelope labeled "Director, FBI, ELSUR

Title CONNIE C.~STRONG; Notification of SAC AuthOrity Granted

Form must be submitted Within 5 working days of the date

1 Reason ror Proposed Use (Check) 2 Type of Equipment (Check)