Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, October 6, 1993 TAG: 9310060261
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: By DAVID M. POOLE STAFF WRITER
DATELINE: LENGTH: Long
"I want to set the record straight," Selbe said in an interview on the steps of the Roanoke City Courthouse. "I'm tired of Cranwell lying about everything. I'm tired of being the goat."
Cranwell called the lawsuit "pure, raw revenge."
"This is an attempt by Frank Selbe to hurt me in a political campaign," said Cranwell, a Roanoke County Democrat who faces his first re-election challenge in 12 years.
"I'm angry that I continually have to deal through the media with something that has been wrung out, strung out and taken care of in the federal courts to everyone's satisfaction but Frank's."
Selbe, who is seeking $10 million in damages, said he wanted to wait until after the November election to file the lawsuit. But he changed his mind last week after he emerged as an issue in the race between Cranwell and Republican Bud Brumitt.
"The suit speaks for itself, before or after the election," he said.
To Selbe, the lawsuit is his chance to tell his side of what happened at American Chemical Co., a janitorial supply company that Selbe, Cranwell and three other partners bought in 1979.
Federal prosecutors contended that Selbe, who ran the day-to-day affairs of the company until he was fired in 1984, took more than $200,000 from American Chemical bank accounts without authorization and then failed to report the income on his tax returns.
Selbe countered that he withdrew the money with his partners' knowledge and blessing. The money, he claimed, did not go into his pocket, but into other business ventures in which some or all of the partners were involved.
Despite his claims of innocence, Selbe pleaded guilty in August 1991 to tax evasion and spent 75 days in a federal correctional facility in West Virginia.
Selbe now says he pleaded guilty because he feared he could not get a fair trial in federal District Court.
The lawsuit alleges a far-reaching conspiracy in which the American Chemical partners defrauded the Internal Revenue Service of $160,000 and, when confronted, fed the government evidence that made Selbe the scapegoat. Selbe also contends that the IRS and the U.S. Attorney's Office in Roanoke played along by hiding or otherwise disregarding evidence contrary to their case against Selbe.
Selbe included more than 700 pages of exhibits with the lawsuit in an effort to convince those who would dismiss his claims as those of a convicted felon.
"You say they [federal authorities] are telling the truth, because they say I'm the bad guy? The truth is the truth," he said.
The defendants named in the lawsuit are Selbe's four partners in American Chemical - Barry L. Flora, Carl B. Flora, Gary R. Flora and Cranwell; James F. Bell, who took over as American Chemical president after Selbe left; and William C. Roberts, the owner of Camden Amusement Park in Huntington, W.Va.
Claims in Selbe's lawsuit include:
Cranwell and the three Floras took several hundred thousand dollars' worth of untaxed benefits from American Chemical. The lawsuit claims that Cranwell got more than $215,000 in untaxed benefits that included three Cadillacs, a $5,000 family vacation to the Cayman Islands, free janitorial services for his law office in Vinton and free janitorial supplies for his house.
Tuesday, Cranwell said all directors had company cars, and that he reimbursed American Chemical for personal expenses on the company credit card, including the Cayman Islands trip.
Cranwell and the Floras paid off loans for which they were personally liable, instead of settling a bill for more than $250,000 in unpaid federal employment taxes, when they sold the business in 1988.
The partners are contesting efforts by the IRS to collect the unpaid taxes.
When the IRS sought to collect the unpaid taxes by attaching liens to property owned by American Chemical, Cranwell and the Floras used "strawman" purchasers to erase the liens with foreclosure sales.
Asked about that claim, Cranwell said, "My response is that I'm tired of having to respond to charges of a person who has already been convicted of this stuff."
Gary and Carl Flora declined comment Tuesday. Barry Flora, Bell and Roberts could not be reached for comment.
Selbe, a former tax lawyer whose license no longer is in good standing with the Virginia State Bar, filed the lawsuit without an attorney. He said he would get an attorney before the case goes to trial in Roanoke Circuit Court.
Selbe became an issue in last year's congressional campaign when it was disclosed that Democratic candidate Steve Musselwhite of Roanoke had written letters on Selbe's behalf asking for leniency in his sentencing.
Selbe's name came up again last week, when Brumitt blasted Cranwell for citing the Fifth Amendment in 1990 when subpoenaed to testify before a federal grand jury investigating Selbe.
In a news release sent to reports Tuesday, Selbe asserted that Cranwell invoked his constitutional right to avoid self-incrimination in order to hide his "massive civil and criminal fraud against the federal government."
Cranwell said he had nothing to hide, but said he took his lawyer's advice to avoid the grand jury appearance because he feared the Republican-appointed U.S. attorney could spring a trap on a politically powerful Democrat such as Cranwell.
"Make no mistake," said Cranwell, the majority leader in the House of Delegates, "prosecutors are human like anybody else, and they'd probably like to have my scalp on their belt."
by CNB