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Judge Throws Out Evidence from Plaza Extra Raids

June 21, 2005 – A month after the terrorist attacks on the Twin Towers, a raid on the V.I. Plaza Extra stores sparked rumors that Virgin Islanders were involved in terrorism because the stores were owned by citizens of Arab heritage.
The rumors were so rampant that David Nissman, then U.S. Attorney, went on the radio to try and stop them.
Now, a recent opinion from U.S. District Judge Raymond Finch indicates the raids themselves were sparked by little more than rumors.
The opinion said an FBI affidavit based on a "reckless disregard of the truth" was used to show probable cause for the raids. This opinion invokes the exclusionary rule, making all evidence gained during the raids inadmissible as evidence in the case against Plaza Extra, its owners and some managers.
The raids resulted in a 76-count federal indictment two years later. Indicted were Fathi Yusuf, 62, owner of Plaza Extra Supermarkets; Waleed "Wally" Hamed, 41, and his brother, Waheed "Willie" Hamed, 38; Maher "Mike" Yusuf, Fathi's son; Isam "Sam" Yousuf, a relative and store manager; and United Corp., which does business as Plaza Extra Supermarkets.
In announcing the charges in September of 2003, Nissman said that each Plaza Extra store had a "cash room" where unreported cash was kept and to which only the defendants and certain other employees had access. The conspirators allegedly sent employees to local banks with the unreported money to purchase cashiers' checks, travelers' checks and money orders made out to unrelated individuals or entities. Nissman said they also used unreported currency to cash checks for Plaza Extra customers. According to the indictment, the checks, amounting to at least $2 million, were then transported by Fathi Yusuf and Waleed Hamed to Amman, Jordan, to be deposited in bank accounts at the Cairo Amman Bank.
(See "Bail Denied for Fathi Yusuf and One Associate").
Calls Monday and Tuesday to Nissman, who now works in the private sector, were not returned.
Pamela Lynn Colon, one of the attorneys for the defendants, said, "If the government wants to do the right thing, it will just drop the charges now."
James S. Carroll, a spokesman for the U.S. attorney's office, would only say that the office was studying the ruling.
In the ruling, Finch said the defendants had to prove there were false statements in the warrant and that those false statements had been made recklessly.
One focus of Finch's ruling was a statement in the affidavit that said Plaza Extra claimed only $270,00 in gross receipts to the V.I. Internal Revenue Bureau in 1998, but claimed gross receipts of $41 million on its corporate income tax return. The affidavit also stated that in 1999 and 2000, the company claimed gross receipts to the IRB of $3.7 million and $8.4 million, but when trying to get a loan from the Bank of Nova Scotia, the business submitted documents showing gross receipts of $47 million and $54 million.
The government admitted that the $270,000 figure was wrong by more than $38 million. The defendants presented documents showing that it had reported gross receipts of $44 million and $49 million in 1999 and 2000.
The FBI agent never looked at Plaza Extra's income tax return. Finch's opinion stated that the agent returned to the V.I. Tax Bureau on numerous occasions because he was concerned about what the figures were. However, he included the incorrect figures in the affidavit while holding significant doubt about their accuracy.
The affidavit also reported that Fathi Yusuf had pleaded guilty in June 2000 to employing undocumented aliens. (In September 2001, he was sentenced to a month's home confinement and a year's probation for employing three illegal immigrants.)
However, the judge said that because a person has a criminal record is not probable cause for a search.
A press release from the law office of Richardson, Patrick, Westbrook & Brickman in Charleston, S.C., counsel for the defendants, said, "The affidavit submitted to the magistrate judge who issued the search warrant accused this family business and its principals of a variety of crimes ranging from alien smuggling and terrorist activities to drug trafficking, none of which were supported by reliable information. Based upon this false information, warrants were issued and over 100 FBI, DEA, IRS and INS agents from across the country descended on the Virgin Islands and raided the family houses and stores."
Gordon Rhea, a member of the Charleston law firm, said getting this ruling was the result of a team effort. Besides Colon and Rhea, the lawyers involved were Thomas Alkon, Randall P. Andreozzi, John K. Dema, Leon Friedman, Derek M. Hodge and Henry C. Smock.
The release went on to say, "Judge Finch is to be commended for his courageous support of the Constitution in this post 9/11 climate when the federal government chooses to prosecute persons based upon rumor, falsehoods, and innuendo simply because of their national origin, ethnic background, race and/or religion. His opinion is a victory for the Fourth Amendment's prohibition against unreasonable searches and seizures."
According to Nissman, when the charges were filed, this was the first indictment for violations of federal tax laws in the Virgin Island and resulted from a joint investigation by the FBI and the Internal Revenue Service.
In June of last year, in connection with those indictments, Nissman announced that John Benson Irvin IV had entered guilty pleas to charges of mail fraud and aiding and abetting the filing of a false individual income-tax return. According to the criminal information and plea agreement filed in District Court on St. Thomas, Irvin, who no longer resides in the territory, maintained the corporate books and records. He was responsible for filing gross receipts tax returns with the Internal Revenue Bureau and providing financial information to an outside accountant for Plaza Extra's corporate income-tax returns. "During Irvin's tenure, substantial sales receipts were not deposited into Plaza Extra's bank accounts," a release then issued from the U.S. attorney's office stated. "At the direction of Plaza Extra's management, Irvin did not report the undeposited sales on the gross receipts tax returns … and provided the false sales information to Plaza Extra's outside accountant" for use in the preparation of the enterprise's corporate income-tax returns. "Because Plaza Extra's income flowed through to the owner's individual income-tax returns, the income on owner Fathi Yusuf's 2000 income-tax return was substantially understated," the release said. "According to the plea agreement, the tax loss to the Virgin Islands was more than $10 million."
(See "Former Plaza Extra Controller Pleads Guilty to Fraud").

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