August 8, 2020

The Untouchables

Sept. 6, 2006
There’s a saying that the “best revenge is success.” It’s likely the philosophy of John Jarema who rode an extremely bumpy road to the seat of prosecutor for Charlevoix County. But now that he’s there, he has wasted no time tackling some extremely tough cases in Northern Michigan.
And he’s winning. Jarema, who has the good looks of a Kennedy, isn’t afraid of hard work and gets visibly excited talking about the cases he scored. The first year in office, he handled the trial of David Goldstick, who shot the elderly leader of the Charlevoix VFW post. The jury delivered a verdict in 49 minutes flat for first-degree, premeditated murder.
Crime is the natural province of a prosecutor, but Jarema (pronounced Jareema) and his staff have tackled cases involving mind-bending finances. In the recent investigation of China One restaurants, for example, he decided on a rarely-used Michigan racketeering law to pursue this case of tax evasion over four counties and involving hundreds of thousands of dollars and virtual slavery of employees.
Jarema gives credits to Chief Assistant Prosecutor Shaynee Fanara and Assistant Prosecutor Mark Muniak, who are not afraid to take on complicated cases.
“I put the time into cases like I would expect if I were the victim,” said Jarema, who worked construction and summers as a busboy/host at Boyne Mountain to put himself through college.
Sheriff George Lasatar said that Jarema, like most public officials, is as good as the people he surrounds himself with -- and his staff is excellent. “I feel Shaynee, on a scale of one to 10, is a 10 plus. And Mark is solid, with down-to earth common sense.”

TOUGH ROAD
Jarema almost didn’t get to this position of power. His problems with former prosecutor Mary Beth Kur are legendary. He signed on as her assistant prosecutor in 1995 and became her chief assistant prosecutor in 1999. But over time, he questioned her work ethic. He felt that many of those in her office weren’t working full days and began recording the offending employees’ actual hours. She confiscated his notes just before firing him in February of 2002. She defended the move, saying that his attacks on her were destroying the morale of the office,
He filed a whistleblower’s lawsuit against the county, which resulted in a judgment before the case went to trial. The county agreed to a stipulated judgment against itself and a $50,000 payment to Jarema. Kur said she didn’t support the decision to settle, which she said was pushed by the county’s insurance company.
Vindicated, Jarema decided to run against Kur for the position of prosecutor in 2004. He narrowly won the primary in August, and had no real contest against a Green party candidate in the November election.
Kur, knowing that Jarema would replace her, left him a good-bye gift. Her budget for the next year proposed a $63,000 salary, about $20,000 less than what she was earning. She also proposed big reductions for his support staff: $40,000 for the position of chief assistant prosecutor, down from $56,100, and $32,000 for the assistant prosecutors’ salaries, an $8,000 cut.
Five of the six commissioners, who openly endorsed and campaigned for Kur, approved the $63,000 salary. Fortunately, Jarema and his supporters persuaded the commissioners to raise his salary to $74,000.
“Sour grapes would describe the situation and I am still digging out of the hole. It was a mess,” he said, referring to other problems with a notebook computer and missing legal books. “On a side note, three of the six commissioners were just defeated so I will have a new board to work with.  It should be better.”
And it has been better, with Jarema and his staff focusing on some pretty tough cases. Here are a few of his team’s greatest hits:


Never Enough for Karla:
John Taylor regrets the day he hired Karla Lockman, an attractive blonde in her mid-30s. She didn’t come with much of a resume, having worked for her parents, but he trusted she could do the job to close mortgages in the Boyne City office of Northern Preferred Title Company.
Taylor, who was caught up in the remodeling of an office in Charlevoix and consolidating his three offices, didn’t notice anything was wrong at first. He never received calls from the bank about overdrafts, he never heard complaints from his customers. But, by January 31, 2005, Lockman had robbed the company of more than $850,000, cost Taylor his business and his livelihood, and the loss of jobs for nearly 20 of his employees.
Jarema said that Lockman loved to spend money and apparently loved to steal it. One strategy: if a pay-off on a mortgage was $20,000, she would tell the client it was $24,000 and pocket the extra $4,000. As time went on, she became bolder. She would short a deposit to an escrow account by $75,000, pocket the difference, and take the same amount from the next customer to replace it. When she met with Taylor on a weekly basis, she made excuses for showing up without the necessary bank reports or gave what seemed reasonable excuses for discrepancies that he did notice.
As the money flowed in, Lockman bought stuff. Lots of stuff. A nice house for $262,000 in cash, $67,000 for an Envoy and heavy-duty pick-up, $50,000 to appoint her house, three horses (one costing $25,000—she boarded them at the Walloon Equestrian Center), two horse trailers for $18,500 and $6,500, both complete with a bedroom and changing room.
She explained to people, including her husband, that she had received a pre-inheritance from her parents, who, in actuality didn’t have that much cash. Her father owns a real estate company, her mother owns a fabric store, and together they own a 600-acre game ranch in Hillman, Jarema said.

INSANE DEFENSE
Lockman’s scheme collapsed about 14 weeks later when the bank called Taylor in early June to report overdrafts as high as $500,000.
“You should never have a problem with the escrow account—the way it works is that it should always have a zero balance. She told the bank officer, call me, not my boss, and that’s one reason why it took him so long to find out,” Jarema said.
To prosecute the case, Jarema and his staff examined 14 weeks worth of bank statements and escrow accounts to determine the full extent of the robbery.
His biggest hurtle was to overcome the expert testimony of three mental health professionals—including a state psychiatrist—who concluded that Lockman was afflicted by bipolar disorder, legally insane, and, therefore, not guilty.
Jarema argued that Lockman orchestrated the insanity defense as smoothly as she stole money. He charted her mental health for a jury last week, which began with a visit to a doctor just before she and her husband declared bankruptcy in August 2004. She was prescribed Paxil for anxiety and depression.
Lockman claimed during the trial that when the Paxil dose was increased from 12.5 milligrams to 25 milligrams, she spun into a bipolar state and had a delusion that her mother called her to give her an inheritance. She had another delusion that her boss said it was okay for her to take the money and put it into her account.
After the police showed up at her door in early June of 2005, Lockman knew she was in trouble and held a pow-wow with her husband, Kevin, her parents and his parents. Kevin’s dad began investigating the effects of Paxil and on June 17th, Lockman went to see a psychiatrist. She told him she was suffering from post-traumatic stress disorder (PTSD) because she has been abused by her mom and her ex-husband, and molested at a summer camp. At this point, she was pregnant and taking Zoloft.
Lockman portrayed herself as the victim throughout the case, accusing her ex-husband, for example, of physically abusing her.
“The only thing he said he remembers doing is taking her by the shoulders and saying, “What the hell are you doing!’ She had run up all the bills and he remembers waking up in the middle of the night, and, for some reason, looking under the mattress of the bassinette. He found all the bills he had previously mailed. Karla had taken them, took out the checks, and spent the money. He had a truck. She forged her name on the title, took a loan out on it, and spent the money. …
“My expert said she has a personality disorder, anger issues, but she’s not insane. She probably has a personality disorder, but she’s not insane. It’s scary, it’s sad, and she hasn’t been remorseful, not at all,” Jarema said.

WOULDN’T WORK
Jarema argued that Lockman realized that post traumatic stress disorder wouldn’t work as an insanity defense so she went to a different doctor in Traverse City –Luis Oxholm — on August 3. By this time, she claimed a different set of symptoms that coincided perfectly with symptoms of someone with bipolar disorder—grandiose spending, roller coaster emotions, high energy, and the inability to sleep.
Jarema also argued that her spending patterns didn’t fit with someone who is truly bipolar and spends irrationally, buying 10 pair of shoes, for example. By the time she saw the last doctor at the state’s Center for Forensic Psychology, she said she was hearing voices and seeing things at night.
“She jammed her symptoms down the guy’s throat. I had to show those symptoms, for what they are, and how—if you are truly bipolar with psychotic episodes, you would need to be hospitalized. A bipolar person might walk down the street thinking they’re Jesus Christ. No one ever saw this in Karla.”
Jarema had to go against several forensic psychologists and psychiatrists that the defense team brought in from across the country, including New Mexico and Chicago, said Jeff Gettel, assistand chief of the Boyne City Police Department, who himself worked countless hours on the case with Jarema.
“In order to do that, he had to become almost a psychologist himself - staying up late, reading and researching all the testing and all the terminology and what it means.” Gettel said Lockman’s defense cost an extraordinary amount of money; the New Mexico doctor alone was paid $20,000.
The jury delivered a guilty verdict on August 22—on two counts of embezzlement. Her house and most of her belongings have already been sold to reimburse the victims, but the total is nowhere near enough to repair all of the profound damage done.
The title company’s clients will get reimbursed first, and there are many who are still trying to dig out. In one case, a woman sold a $280,000 piece of lakeside property, took the buyer’s check and put it an escrow account. But because Lockman had robbed so much from that account, the woman was out both money and property. She successfully sued the buyer, a downstate dentist who wanted to build a dream house on a lake, to get the property back. The judge ruled in her favor.
“Now the buyer is out the property he thought he bought and he has been ordered to pay the seller’s legal expenses, and he has done nothing wrong,” Jarema says. “Her actions were like throwing a pebble into a pond and creating hundreds of ripples, creating havoc for so many people.”
LOST EVERYTHING
Last in line for compensation is Taylor, who lost all his savings, his retirement, and is still suffering the emotional and financial costs of fending off lawsuits. Blackballed from the industry, he is working part-time for an abstract company, and working on suing the Bank of Northern Michigan and Bay Winds Federal Credit Union.
Lockman will be sentenced on September 22 in 33rd Circuit court. Jarema will attempt to get Judge Richard Pajtas to go beyond the sentencing guidelines, which Jarema regards as a joke because they pre-establish that there are no victims in a case like this. According to the guidelines, you cannot be a victim if you’ve only suffered financial injury.
In this case, the guidelines suggest up to 12 months in county jail since Lockman had no prior convictions. Jarema will ask for a prison sentence of up to seven years.
Despite her problems, her husband has stood up for her during the trial and said he believed her pre-inheritance story. She is estranged from her parents, and is living with her in-laws, awaiting sentencing.


the untouchables
Prosecutor John Jarema fields an ace team of
crimefighters in Charlevoix County

By Anne Stanton

Another Swindler: The Fresh Start Scam
James Michael Frantz, 60, had two homes in Bay Harbor and Florida, but his current home—when Jarema came across his name—was a Florida federal prison. He had been convicted of Medicare fraud, but an Ohio prosecutor called Jarema saying he had also defrauded scores of people throughout Michigan.
Frantz ran a company called Fresh Start Debt Relief Service out of his Bay Harbor condo. He “helped” debt-ridden clients deal with advice that didn’t work. Stop paying bills, send creditors a customized Fresh Start form letter, and when you’re sued, read from a Fresh Start prepared script. There were 27 victims in Charlevoix, 30 in Emmet County, and seven in Grand Traverse. Those who followed his advice ended up getting in hot water with creditors’ fees, exorbitant interest rates, and accidentally perjuring themselves in court. The three victims represented in this case lost in a range of $1,000 to $10,000, said Shaynee Fanara, who initiated the case.
Frantz, who is serving a 51-month sentence, actually started scamming people after pleading guilty to Medicare fraud.
Fanara seized several of Frantz’s assets, including a vehicle and a GEM car (golf cart-style car), and froze the bank accounts of he and his wife. She charged them on six different counts—three counts each of false pretenses, a five-year felony, and debt management act license violation, a two-year charge. The company was not registered with the state under the Debt Management Act.
Now, travel arrangements are all that’s left. Frantz has to be brought from the Florida prison to Charlevoix for his arraignment.


Sex for Drugs
Think fat, short bald guy, 46, his head sort of melting into his shoulders. Now imagine this guy hitting on a young pretty waitress in Boyne City, giving her oxycotin pills for free over a number of months. She gets addicted, needs more, can’t afford to pay, but, hey, he’ll give them to her if she has sex with him. That’s not all. He also videotapes her performing oral sex
on him and the tape gets around. Ouch.
We’re talking Lloyd Waltonen, a Charlevoix resident, who’s been plying young women with drugs for at least three years. He generally targeted young women either in rehab or having problems with drugs, said Fanara, who prosecuted the case.
Fanara was tipped off by a detective, who was tipped off by a women who was in jail on unrelated charges. She had seen the videotape, and she told police, as well as the victim who was in it. Fanara searched out two other victims, both in their 20s, who had the same experience. Waltonen befriended them, handed out free pills, and insisted on sex when they suffered from withdrawal.
He pled guilty on June 15 to two counts of delivery, one count of maintaining a drug house, one count of eavesdropping (related to the videotaping), and one count of prostitution. Judge Richard Pajtas threw out the first degree criminal sexual conduct charge, which Fanara is appealing.
The office also confiscated his jet ski, his jeep, and his video equipment. They would also have gotten his Cadillac, but he allegedly “sold” it to a relative before the prosecutor could get his hands on it. Even worse. He’s on permanent disability.
“He’s on public assistance and you and I and all the other taxpayers are paying for the pills that he used to pay for sex. That’s just wrong,” Jarema said.


I.D. Theft: Your Worst Fear
Have you ever had second thoughts about giving your Social Security number and mother’s maiden name over the phone to a bank teller? Do you imagine that she or he could easily jot down the information and steal your identity?
Well, it does happen. Tony Taylor, a bank teller at a Chase Bank branch in Detroit would target the bank accounts held by the bank’s older customers. He believed that they would be less likely to miss the money. Or if the bank customer did catch the mistake, he knew that Chase would be willing to cover it as a fraudulent transaction. He collected the identity information and passed it on to his two cousins, and his aunt, who made hefty purchases.
The victim here was Isabelle Wells, a 99-year-old woman who lives in East Jordan. Her power of attorney noticed the missing money and bizarre purchases, and contacted the Michigan State Police. Jarema charged Taylor at the end of February, brought him to Charlevoix at the end of March (the first time Taylor had ever traveled out of the Detroit area), and sentenced him in July for attempted racketeering.
Michigan State Police trooper Jim Armstrong of Petoskey was the one who figured out the scam after examining purchases from ABC Warehouse and a car dealership in Illinois. Armstrong worked with Fanara, along with a bank investigator in Detroit.
Wells was robbed of $16,000, yet Taylor only received a sentence of nine months in jail. The judge did not buy Jarema’s argument that the 99-year-old woman was a “vulnerable victim,” which would have allowed a much longer prison sentence.
“I was beside myself because he scored out of a prison sentence. He admitted to over $50,000 originally, but in the end he said $25,000. He was ordered to reimburse Isabella the $2,500 that the bank did not pay,” Jarema said.

Upcoming: A full account of the China One restaurant racketeering scandal.

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