Less than a month before her trial date on charges that she operated one of the West Coast's priciest call-girl rings, Heidi Fleiss was indicted Thursday on federal charges of tax evasion and money laundering.
In a 14-count indictment, a federal grand jury accused Fleiss and her father, Dr. Paul Fleiss, a prominent Los Feliz pediatrician, of conspiring to hide hundreds of thousands of dollars amassed during her tenure as an alleged "madam to the stars."
The indictment also alleges that the father and daughter lied on tax returns, and on loan applications connected with the purchase of various properties, including her former home, a $1.6-million house on Tower Grove Drive once owned by actor Michael Douglas.
An attorney for Paul Fleiss reacted angrily to the indictment, calling the allegations "scurrilous and totally without merit."
"The story portrayed in the indictment does not bear any resemblance to reality in terms of Paul Fleiss," said lawyer Philip Heller.
"This is a man who has dedicated his life to his medical practice, one of the county's finest pediatricians. He has been a model citizen, and to suggest these horrible actions on his part, in conspiracy with his daughter, is just ludicrous."
Heidi Fleiss' lawyers castigated the indictment as "unnecessary and vindictive," and questioned the timing of its announcement so soon before her scheduled trial in state court.
Fleiss, 28, was arrested last summer after an undercover police sting, and is scheduled to go to trial Aug. 27 in Los Angeles Superior Court on five counts of pandering and one count of selling cocaine.
She has pleaded not guilty to those charges, and relatives have asserted that until her arrest, her parents had believed she sold real estate for a living.
However, the federal indictment filed by Assistant U.S. Attys. Mark C. Holscher and Charles L. Kreindler, alleges that she "operated a prostitution ring . . . throughout the United States and in other countries," and that her father helped her hide the income by depositing the profits in his bank account and others to which he had access.
The indictment cites instances in which checks--for $7,000 and $2,000, respectively--were presented to Fleiss in January, 1992, "for providing the services of prostitutes to a client," and then endorsed by her father and deposited into his personal bank account. In a third instance, prosecutors allege, a check for $8,000 was signed over to Fleiss' younger sister, Shana, who endorsed it and deposited it in her bank account.
Holscher would not divulge the names of the alleged clients who wrote the checks, or comment on what led authorities to believe the payments were for the services of prostitutes. Women who claim to have worked for Fleiss have told The Times in past interviews that clients who paid them by check typically wrote out the check to "cash."
The indictment also charges that Paul Fleiss listed Heidi on his 1992 tax return as a dependent, with a $33,000 income that he said was composed of $12,000 earned as a counselor and $21,000 in wages as his employee, and that she submitted the same information on her tax return.
Moreover, it alleges, the father and daughter lied on the loan papers for the Tower Grove house, inflating his income, misrepresenting the source of the $605,000 down payment and saying that he would be living in the house when his true home was a condominium on Main Street in Venice.
The Tower Grove house, tucked into a hillside off a winding road just beyond the city limits of Beverly Hills, was sold this year; court papers allege that the Fleisses netted about $375,000 on the sale.
However, if they are convicted, that profit and more than $170,000 in their bank accounts can be seized by the federal government, according to the indictment.
The father and daughter are scheduled to be arraigned Monday before U.S. Magistrate Judge Brian Q. Robbins. They are free on a joint $50,000 bond.