202245433
BOKONON LLC vs. KEN INC
JUL 28, 2022 | REPUBLISHED BY LIT: JUL 28, 2022
LIT was initially attracted to this case because of Buck Keenan’s representation of a felon in the sex industry.
You will also note that Keenan’s appointed counsel attacks Kenneth Coils’ criminal history and legal disbarment but forgets to mention his own client, Altaire Coil was also convicted at the same time as his father.
Is that zealous advocacy, or lack of candor toward the tribunal? Leave your comments below.
JUL 29: ORDER SIGNED BY JUDGE MIKE ENGELHART, GRANTING TEMPORARY RESTRAINING ORDER.
If you think MTV’s foul-mouthed Osbourne clan pushes the boundaries of taste, meet the Coils of Texas. Patriarch John Kenneth Coil, 61, runs a three-state, 27-store, $10 million porn empire, peddling such raunchy titles as Nympho Bride and Strangelove’s Sex Stories. Helping out are his wife, Paula Katherine Coil, 42; a daughter, Katherine Dagnino, 34; a son, John Altair Coil, 23; and another father-son team.
The details of this family saga are revealed in a 30-count indictment returned in September against the Coils by a Waco, Tex. federal grand jury. It charges the family with tax evasion, transporting obscene materials, mail fraud and other mischief (they’ve plead not guilty). What’s significant, though, is that the U.S. Attorney in western Texas also leveled multiple Racketeer Influenced & Corrupt Organizations counts against the Coils. A successful RICO prosecution could result in the confiscation of the Coils’ entire business and 20 years–per RICO count–in prison.
It marks the first RICO charge in a porn case in more than a decade, reflecting how Attorney General John Ashcroft is stepping up obscenity prosecutions following several years of lax enforcement during the Clinton Administration. And its real target might not be folks like the Coils but the credit card processors, banks, hosting companies and Internet service providers that enable porn to thrive (FORBES, June 23 and Nov. 10). RICO, which allows the government to confiscate any assets and profits associated with crime, should make these companies think twice about their dealings with the porn peddlers.
At last count the Justice Department had at least 49 active investigations into obscenity cases. “The real problem is the chilling effect,” says Lawrence Walters, an Orlando, Fla. attorney who is warning his many clients in porn and peripheral businesses. “Even if no one is convicted, many will be scared off by the threat of prosecution.” Exactly what Ashcroft wants to hear.
AUSTIN — Dozens of adult video stores across Texas will be shut down by the U.S. government after a porn mogul and his son pleaded guilty to charges that their empire skirted millions of dollars in taxes, federal officials said.
John K. Coil, 62 — accused of avoiding between $2.5 million and $5 million in corporate and income taxes — admitted mailing fraudulent tax returns and transporting obscene materials, specifically a video titled “Nympho Bride.”
His 23-year-old son, John A. Coil, admitted making false statements on a tax return.
Both Highland Village men entered their pleas Friday in U.S. District Court in Austin.
The sprawling federal case, which was scheduled to go to trial next week, dismantled the bulk of a porn empire that Coil has built throughout the Southwest over three decades, the Austin American-Statesman reported Saturday.
The enterprise included 45 adult video stores in Texas, including Houston.
Public tax records indicate Coil’s son owns the “24-Hour News Stand” at West Mount Houston and the North Freeway.
Porn moguls’ plea to close adult bookstores
At least 12 of the stores listed under the name “Adult Video” in the local Yellow Pages also list the same U.S. Post Office box number in Lewisville as the 24-Hour News Stand owned by the younger Coil.
Though they all share the same business address in Lewisville, the business owner is listed as either Rex Temple Inc. or Nobby Lobby Inc.
Some of the local business include B.J.’s Adult Video at 6314 Gulf Freeway, Zone D’Erotica at 1463 FM 1960, Pinemont Video at 7700 Pinemont, and Far West News and Video at 12911 Westheimer.
Employees contacted at the local stores said they had not heard that their stores might be closing.
Attorneys for both Coils could not be reached for comment Saturday. A lawyer for the elder Coil’s daughter, Katherine Coil Dagnino, 35, could not confirm how many stores in Houston might be affected.
Gerhard Kleinschmidt, Dagnino’s lawyer, said said the case against the family seemed to be motivated for political reasons. He also said Attorney General John Ashcroft had actually announced the indictment last September against the Coils.
“In my 30 years as a lawyer, it was a first to see the U.S. attorney general announcing what seems to me like a local issue case,” Kleinschmidt said. “You don’t normally have the attorney general of the U.S. making an announcement when a U.S. attorney somewhere brings an indictment.”
Dagnino, who lives in Dallas, kept books for the business. She entered a guilty plea to tax fraud.
Four other people, including the elder Coil’s wife, have entered guilty pleas on tax fraud or evasion charges in the case. Sentencing for some of them is scheduled for August. John K. Coil faces the most severe sentence — up to 10 years in prison.
“This case was based on religion,” Coil said of the obscenity charge. “There are people in our community who want to control what other people watch.”
Tim Gallagher, a prosecutor from the Dallas County district attorney’s office who helped on the case, said the obscenity charge hinged on the line between legal and illegal pornography under federal law.
“It’s not that it portrays sexual conduct; it’s that it portrays it in a patently offensive way,” Gallagher said.
After originally seeking to seize 58 Coil-owned properties in seven states — worth about $9.7 million — the government agreed in plea negotiations to reduce that to just the 45 Texas properties on the list.
Those properties include houses, offices, at least two dozen adult video stores and vacant pieces of land. Prosecutors said the video stores, in cities including San Antonio, College Station, El Paso and Houston, could be closed within months.
The buildings and land will be sold and most of the pornography destroyed, officials said. The Coils will be allowed to keep the contents of about 10 stores, mostly in Houston.
The investigation into the adult video and novelty store businesses began in Austin in the mid-1990s when police vice detectives noticed financial irregularities and passed the case to federal agents, Assistant U.S. Attorney Mark Marshall said.
Corporations were held in various names, including trusts set up for the elder Coil’s children, to hide income, to avoid paying taxes and to insulate him from law enforcement, court documents say.
In 1988, according to the court papers, Coil created a nonprofit religious corporation, Trinity Christians of America Inc., which operated adult-oriented stores in Louisiana for a profit. The corporation transferred $1.5 million in “rent” and “loan” payments to other corporations Coil created, but Trinity Christian never filed a tax return, according to prosecutors. The corporation did no religious work, Marshall said.
U.S. Department of Justice
U.S. Attorney’s Office Western District of Texas
FOR IMMEDIATE RELEASE
September 17, 2004
REPUBLISHED BY LIT: JUL 28, 2022
View the above PDF pages 4-6 to see the millions of dollar in real property which was to be forfeited.
JOHN KENNETH COIL SENTENCED TO FEDERAL PRISON IN MULTI-MILLION DOLLAR RACKETEERING, OBSCENITY, FRAUD AND TAX EVASION SCHEME
United States Attorney Johnny Sutton, Martin J. Sheil, Acting Special Agent in Charge, Internal Revenue Service – Criminal Investigation, Alonzo R. Pena, Special Agent in Charge, United States Immigration and Customs Enforcement and Dallas County District Attorney Bill Hill announced that 61-year-old John Kenneth Coil, owner and operator (directly and indirectly through nominees) of 27 adult-oriented businesses in Texas, New Mexico and Arizona, was sentenced earlier today to 63 months in federal prison after pleading guilty to federal charges in connection with a racketeering, obscenity, fraud and income tax evasion scheme. In addition to the prison term, United States District Judge Harry Lee Hudspeth ordered that Coil pay a $ 5,000 fine, forfeit an estimated $8.1 million in property to the government and be placed under supervised release for a period of three years after completing his prison term.
“John Kenneth Coil has been a long time pornography merchant who has made millions selling obscenity and cheating on his taxes. He is finally on his way to federal prison for his crimes. American families have won a battle today in the fight against pornography. Today’s sentences should put those in the hard-core pornography business on notice that there will be a price to pay for violating our obscenity and tax laws,” stated United States Attorney Johnny Sutton.
On June 11, 2004, Coil, of Highland Village, Texas, pled guilty to: 1) obscenity involving the interstate transportation of a film entitled “Nympho Bride”1 and; 2) mail fraud for mailing a fraudulent 1040 tax return in furtherance of a scheme to defraud the IRS. Coil also agreed to forfeit all his enterprise properties within the State of Texas, amounting to over 40 pieces of realty and 20 hard-core pornography stores throughout Texas valued at an estimated $8.1 million. The forfeited properties are located in Austin, San Antonio, El Paso, Waco, Dallas, Lubbock, College Station, Houston, Brownsville, Corpus Christi, Beaumont, Longview and elsewhere. Coil admitted to using front companies with names such as Louisiana Development, Rex Temple, and Trinity Christians of America to run his “adult” pornography stores in Texas, Louisiana and other states. Coil put some properties into the names of some of his children and in “trusts” for his children without their knowledge, yet still under his control.
1The obscene materials named in the Indictment and Factual Basis for the Plea were hard- core pornography with penetration clearly visible, depicting adults engaged in ultimate sexual acts.
He also skimmed monies from the stores and failed to file tax returns or disclose such income for tax purposes on returns he did file. The total tax loss as a result of his scheme exceeded $4.5 million for the tax years 1981-2003.
“The coordinated efforts of IRS – Criminal Investigation Division with state, local and other federal law enforcement resulted in the comprehensive ‘decimation’ of this nefarious organization and the fuel that drove it ‘its money’. IRS – CID is dedicated to using its financial investigative expertise to ensure compliance with the tax laws and related financial statutes whether the income is legal or illicit as in this case,” stated Martin J. Sheil, Acting Special Agent in Charge, IRS – Criminal Investigation Division.
“Operation ‘Skimflick’ is just another example of an Immigration and Customs Enforcement investigation culminating in disrupting or dismantling alternative financing mechanisms before criminal organizations are able to exploit them for their own purposes,” explained Alonzo R. Pena, Special Agent in Charge, Immigration and Customs Enforcement (ICE), San Antonio, TX.
“It took years of investigation along with risky undercover work to penetrate this criminal organization,” said Dallas County District Attorney Bill Hill. “Hard work and extensive cooperation between this office and federal authorities brought to justice criminals who believed they were untouchable. They now know otherwise.”
In addition to Coil, Judge Hudspeth sentenced seven other co-defendants. They are:
Yesterday, Coil’s business partner, 48-year-old Charles Phelps, Jr. (a.k.a. “Mr. D” and “Dave Smith”) of San Juan, Texas, received 42 months in federal prison and fined $5,000 for conspiring to defraud the IRS. From 1997 to 2002, Phelps enlisted the assistance of others to conceal from the IRS approximately $400,000 in income derived from AVE, Inc. and Adjust, Inc., companies he co-owned with Coil.
On August 11, 2004, Coil’s son, 24-year-old John Altaire Coil, of Highland Village, Texas, received three years probation and fined $5,000 after pleading guilty to making false statements on his 1999 income tax return. Coil admitted that he under reported his true taxable income for calendar year 1999. He further admitted that he had not earned $196,000 from rental income as stated in the tax return but that the money was unlawfully assigned to him by his father, John Kenneth Coil;
On August 11, 2004, Coil’s business associate and employee, 57-year-old Curtis Wayne Castro, of Dallas, Texas, received one year and one day in federal prison after pleading guilty to income tax evasion. Castro failed to report on his 1995 income tax return $430,000 in income he received when he sold several adult bookstores to Coil’s childrens’ trust.
On July 30, 2004, Phelps’ son, 23-year-old Charles Joseph Phelps, of San Juan, Texas, received three years probation after pleading guilty to two counts of knowingly providing false information to the IRS.
On July 30, 2004, Coil’s wife, 42-year-old Paula Katherine Coil, of Flower Mound, Texas, received three years probation after pleading guilty to making fraudulent and false statements on the their 1999 joint income tax return. Coil admitted failing to report over
$300,000 in income on their tax return.
On July 30, 2004, Coil’s daughter, 35-year-old Katherine Dagnino of Dallas, Texas, received three years probation after pleading guilty to conspiracy to defraud the IRS. Dagnino, as trustee of the childrens’ trust, concealed and disguised over $500,000 of her father’s assets.
On September 9, 2003, Coil’s and Charles Phelps’ bookkeeper, 51-year-old Rhonda K. Tegner, of Flower Mound, Texas, was sentenced to three years probation, fined $1,000 and ordered to pay $43,975.00 restitution after pleading guilty to knowingly filing a fraudulent tax return. Tegner embezzled over $47,000 from Coil and Phelps in 1997 and failed to report that income on her 1997 income tax return.
This case was investigated by the IRS – Criminal Investigation, United States Immigration and Customs Enforcement, Dallas County District Attorney’s Office and the Austin Police Department. Assistant United States Attorney Mark Marshall, Special Assistant United States Attorney N. T. Gallagher of the Dallas County District Attorney’s Office, D.O.J. Child Exploitation and Obscenity Division Attorney Ben Vernia and D.O.J. Senior Counsel Bruce Taylor prosecuted this case on behalf of the government.
Organized Crime in Texas Today = The Judiciary#TxLege #appellatetwitter pic.twitter.com/utUU7jZkTl
— lawsinusa (@lawsinusa) July 22, 2022
Struggle over ownership of Wood River adult boutique litigated in three courts
MAR 2, 2021 | REPUBLISHED BY LIT: JUL 28, 2022
BENTON – In courts of three states, father John Kenneth Coil and son John Altaire Coil both claim full ownership of Dr. John’s adult boutique in Wood River.
Senior U.S. District Judge Phil Gilbert stayed their proceedings in his court on March 1, until another court determines ownership.
Gilbert found his abstention was appropriate to conserve scarce judicial resources and provide a comprehensive dispensation of litigation.
Father John and son John portray each other as crooks on a grand scale.
In January 2019, John Altaire sued John Kenneth in Dallas County, Texas.
He sought to block his father’s sale of property on Anaheim Drive in Dallas, alleging fraud, gross negligence, and breach of fiduciary duty, and seeking direct recovery under Texas business organization code.
His complaint asserted claims for himself and for AVE Inc., a Texas corporation that owns Dr. John’s in Wood River.
On April 26, 2019, John Altaire opened an account at Renasant Bank in Mobile, Ala. with a check for $1,455,497.56.
John Kenneth called the bank three days later and said his son stole the money.
Each man told the bankers he owned AVE Inc.
The bankers placed a hold on the money and tried to figure out who had authority to dispose of it.
On Aug. 5, 2019, John Kenneth sued his son in Madison County circuit court.
He claimed John Altaire stole the check and sought a ruling that he owns ATE Inc. and all corporations within it.
He claimed his son signed an agreement to sell an AVE Inc. property in Austin and tried to sell property of a subsidiary in Tucson, Ariz. He claimed his son took $585,000 from subsidiaries in November 2018.
“John A. Coil suffers from paranoid schizophrenia, and does not let even close family members know where he is,” he wrote.
He stated that his son’s belongings were at 100 North Wood River Avenue, and he could be served there “or wherever he may be found.”
He sued without counsel.
On Oct. 1, 2019, Renasant Bank filed an interpleader action at U.S. district court in Mobile seeking to determine ownership.
In Madison County, Tom Maag of Wood River took John Kenneth’s case and moved for summary judgment last March.
He sought $2.5 million in actual damages and $7.5 million in punitive damages.
Associate Judge Clarence Harrison classified the suit as derivative and found he couldn’t enter judgment.
Maag amended the complaint last Sept. 28, to assert claims for John Kenneth as an individual, for John Kenneth as owner of AVE Inc., and for AVE Inc.
John Altaire removed the action to district court on Nov. 4.
His counsel Rostyslaw Smyk of Chicago proposed to turn AVE Inc. from plaintiff to defendant, “because its interests are aligned with John A. Coil.”
Smyk argued that John Kenneth pleaded guilty to transportation of obscene materials and mail fraud in district court for Western Texas.
“As part of his plea agreement, John Kenneth Coil forfeited any and all ownership in or other interest he had in AVE, including any partnership interest therein, stock, inventory, fixtures,” Smyk wrote.
“Because John Kenneth Coil never owned any stock in AVE, however, the forfeiture of his stock in AVE never actually occurred.”
On Nov. 30, he moved to dismiss John Kenneth’s action, transfer it to district court in Mobile, or stay it pending resolution in Mobile.
Smyk offered as an alternative a transfer to district court in Northern Texas, “where John A. Coil and AVE are citizens, where John Kenneth Coil resided his whole life until fleeing to Illinois in November 2017 as a result of legal issues, and where John Kenneth Coil’s wife continues to live.”
He wrote that in Mobile, John Altaire and AVE Inc. filed a cross claim against John Kenneth and John Altaire’s brother John Asar Coil.
He wrote that a former half owner of AVE Inc. intervened in Mobile to assert an interest under terms of his agreement to sell in 2005.
He wrote that in Dallas, John Kenneth and AVE Inc. filed a counterclaim against John Altaire.
Maag objected to Smyk’s motion on Jan. 27.
He wrote that John Altaire never owned AVE Inc., “but very much wishes he did.”
“Courts in Illinois are entitled to opine and rule on who owns businesses headquartered in their state whether a claimant is located here or not,” Maag wrote.
He claimed that if a court found John Kenneth owned all of AVE Inc. and forfeited all of it, which he disputed, John Altaire doesn’t own it either.
He attached a sworn statement of John Kenneth, stating he didn’t leave Texas due to legal issues of any kind.
“My business has been good in Illinois and surrounding areas, and the cost of living has been much slower,” the statement reads.
He wrote that his son moved to Illinois in 2018, “and I was happy to have him here and hopeful for the future with him.”
He wrote that John Altaire lived in the basement of corporate headquarters, and many of his possessions remained in the basement.
He wrote that it’s easy to live in the basement, as Wood River police rented part of the building and made a full kitchen.
He also wrote that he did in fact forfeit property and the U.S. has no claim on any portion of his property including AVE Inc.
Gilbert found the court in Mobile has devoted significant resources to making sense of the complexities of this case.
He wrote that in December, the court there held that it had jurisdiction.
“While the father argues that the Southern District of Alabama’s finding of jurisdiction was dubious and unlikely to survive appellate review, that is not for this court to decide,” Gilbert wrote.
“The court will therefore stay this case until either the Texas state court or the Southern District of Alabama determines the ownership of AVE Inc.”
Garnishment After Judgment Cases In Harris County Courts (August 2022)
LIT’s Garnishment After Judgment Tracker for the Month of August 2022. We’ll be updating this page frequently.
Buck Keenan Back in Judge Beau Miller’s Court Huntin’ Down the $130K
Texas Attorney ANDREW COULSON WRIGHT of Buck Keenan LLP has been registered with the State Bar of Texas since 2008.
Buck Keenan LLP Wants $130,000 Dollars By Violating Texas Debt Collection Laws
Texas Attorney Grant Harpold of Buck Keenan LLP Harpold has been registered with the State Bar of Texas since 1998 and is Board Certified.
