Texas adult entrepreneur John Kenneth Coil has become the fifth defendant to plead to federal charges stemming from a multi-count indictment unsealed last Sept. 25, at least some of which charges may trace back to raids conducted by FBI and IRS agents and federal marshals in August of 2000 on one of Coil’s Texas retail outlets.
But on June 10, according to Coil attorney John Fahle, John K. Coil pled guilty to one count of “substantive mail fraud” and one of “substantive obscenity.” The use of the word “substantive” in this instance indicates that the pleas were without regard to the specifics of any particular act that may have given rise to the charges.
“He and his son both pled,” Fahle said. “Now, his son [John Altaire Coil] had a 50 percent interest in a couple of corporations that own a lot of Texas stores. They [the government] essentially wanted to exile him from Texas. They said, ‘Forfeit everything in Texas.’”
“Now, he [John A. Coil] has a 50 percent interest and Charles Phelps has a 50 percent interest [in the corporations],” Fahle continued. “Charles Phelps absolutely refused to plead because most of the stores that Phelps has any interest in are in Texas, so he’d essentially be giving up everything. And not only that; the evidence in this case was pretty well directed at Coil, and so, the only time Phelps’ name came up was in ownership documents, and when you get to a tax case, when they have to prove a willful violation, it’s got to be an intentional violation of a known legal duty, so they can’t get there by just proving that he should have known. They have to prove that he actually did know about any tax violations, etc.”
“As far as the obscenity case was concerned, we’d be trying this thing in Austin, Texas. Austin’s a real liberal town. They indicted him [John K. Coil] originally in Waco, and when it got transferred to Austin, the prosecutor was hopping mad, and for good reason. You’re going into this university town, very progressive, which most of the residents now are transplanted Californians who came with the tech boom in the ‘90s, so I don’t think the government really had a chance on the obscenity issue.”
But as far as John K. Coil is concerned, “everything in Texas” will include multiple real estate plots, buildings and whole businesses reportedly worth several million dollars – and it appears that the entire object of the multi-count indictment was be able to chalk up another obscenity conviction for the Justice Department.
“We’ve been told that the prosecutors were getting their marching orders directly from Washington,” Fahle disclosed, “and so, I think, truly, the agents were only interested in the tax stuff. Even after he was indicted on the RICO and obscenity counts, they still said, ‘We look at this as a tax case.’”
“But here’s the interesting part,” Fahle continued. “They were insistent in the plea agreement that all transfers of property, etc. had to be completed by August 1. I think – our theory on it has been, they’re trying to get it in under the wire for the Republican National Convention.”
Also charged in the original indictment were John K. Coil’s wife, son, daughter, Phelps and another business associate, Curtis Castro, and all but Phelps have now pled guilty to at least one charge.
“Everybody’s pled,” Fahle summarized. “His wife pled to a tax count with probation [as the agreed sentence]. His son has now pled to a tax count with probation. Curtis Castro pled – I don’t know what his deal is. And Katherine Dagnino, who’s John’s daughter, she was the first to go, and we don’t know what her deal was.”
The maximum prison time John K. Coil could serve under the plea agreement is five years, and Fahle doesn’t know what sentence will be imposed – but that may not be the last of Coil’s problems.
“The IRS can still come after him on the civil side to try to collect,” Fahle observed, “because he did not get credit toward back taxes for any of the forfeited properties.”
However, the IRS will only be able to seek payment of whatever original taxes may be owed on Coil’s holdings, because to try to obtain punitive damages against Coil would legally be considered double jeopardy in light of the plea agreement.
But while the feds may be trying to force Coil out of Texas, President Bush’s home state, their efforts may not lead to that result.
“There’s nothing in the wording of the plea agreement nor I think in the spirit of the plea agreement that would keep these corporations from moving across the street and opening up tomorrow,” Fahle noted.
