Rutledges plead not guilty
By Jim Dooley
Advertiser Staff Writer
Former Unity House officials Anthony "Tony" Rutledge Sr. and his son Aaron are out of work, cut off from their money, facing life terms in prison and might have to post $1 million bail each to stay out of jail before their trial begins, according to statements in federal court yesterday.
Trial of the two men on a variety of tax and wire fraud and conspiracy charges was supposed to begin next month, but now the government has filed new charges against them, frozen their personal and Unity House bank accounts and wants to disqualify Tony Rutledge's lead attorney from the case.
Aaron Rutledge
Lead prosecutor Edward "Ted" Groves told U.S. Magistrate Leslie Kobayashi yesterday that the Jan. 11 trial date will probably be put off. Groves also filed a motion asking that the defendants be required to post $1 million bail and that they be confined to their homes and subjected to electronic monitoring while awaiting trial.
The motion said that, if convicted, Tony Rutledge would face a maximum sentence of 93 years in prison and Aaron Rutledge 53 years behind bars.
Kobayashi said that motion will be argued in court Dec. 30.
The Rutledges yesterday entered not guilty pleas to the new charges, contained in an indictment returned earlier this month and publicly unsealed last week. Brian DeLima, lawyer for Aaron Rutledge, said his client has done nothing wrong and wants to go to trial next month.
Tony Rutledge's lawyer, Jeff Rawitz, declined to discuss Groves' statement that the government would file a motion to disqualify Rawitz from the case for reasons yet to be made public.
Groves said in a separate court proceeding yesterday that the motion to disqualify Rawitz would be filed under seal until Chief U.S. District Court Judge David Ezra approves public release of certain information related to an "ongoing grand jury investigation" of Unity House and the Rutledges.
The disqualification effort is believed to be related to allegations contained in the new indictment that Tony Rutledge received legal advice on how to transfer some of Unity House's $42 million in assets to an "offshore" tax haven outside the reach of the Internal Revenue Service.
Groves also said that Unity House's tax exempt status may be in jeopardy because of alleged financial abuses discovered during the course of the federal criminal investigation.
The organization manages funds and administers programs for the benefit of some 20,000 current and retired members of the Teamsters and Hotel-Restaurant Employees unions here. Loss of its tax exempt status could mean the assessment of hundreds of thousands of dollars in back taxes, penalties and interest against the company and its officers.
The IRS last week froze all of Unity House's assets and installed an outside expert, EG&G Technical Services, to take control of the 51-year-old nonprofit company pending resolution of the government's charges that the Rutledges were misusing Unity House money for their personal benefit.
Groves said in court that EG&G has uncovered possible new evidence of additional misuse of Unity House money. The lawyer for EG&G, Brook Hart, declined to elaborate on that statement outside of court.
The government also froze some of the defendants' personal bank accounts and John Cline, another Tony Rutledge lawyer, said in court yesterday that his client no longer is able to pay "his living expenses and legal defense expenses."
Cline said when Rutledge tried yesterday morning to withdraw $11,000 from a federal credit union account that has not been frozen by the government, the credit union manager wouldn't authorize the withdrawal.
Groves said that the credit union manager had called him after reading about Rutledge's legal problems, asking if the withdrawal should be approved. Groves said he told the manager the money could be withdrawn and didn't know why it wasn't.
"We're not here to take every last penny of Mr. Rutledge's," Groves told Senior U.S. District Court Judge Samuel King.
King heard arguments on a motion by the Rutledge defense team to dissolve the government's takeover of Unity House and to unfreeze the personal assets of the defendants.
King declined to rule on the motion, deferring it to another hearing on Jan. 12.
In brief comments to reporters after the hearing, Tony Rutledge complained that the government is seeking to put him and his son in prison "for life without parole."
He said he was pleased to learn in court that some of his assets would be "loosened up so at least I can cash a check."
