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Ex-Oregon congressman pleads guilty to federal tax charge

Wester Cooley had been charged with seven felonies surrounding the sale of more than $10 million of private stock in Tujunga-based Bidbay.com and related companies from 2000 to 2003.

November 09, 2011|By Stuart Pfeifer, Los Angeles Times

Former Oregon Rep. Wester Cooley pleaded guilty in Los Angeles federal court to a tax charge related to the allegedly fraudulent sale of stock in an online auction site.

Cooley, who served in Congress from 1995 to 1997, had been charged with seven felonies surrounding the sale of more than $10 million of private stock in Tujunga-based Bidbay.com and related companies from 2000 to 2003.

Under an agreement with federal prosecutors, Cooley, 79, pleaded guilty to the single tax fraud charge Monday before U.S. District Judge Dean D. Pregerson.

Cooley, who is free on bond and living in Oregon, agreed to return to court Feb. 27 for sentencing. The charge carries a maximum sentence of three years in federal prison, but defense attorney Steve Escovar said he would request a lesser sentence to be served under house arrest.

The former Republican congressman has a heart condition and dementia, his attorney said.

"I don't think anything would be accomplished by imprisoning Mr. Cooley," Escovar said. "He's demonstrated acceptance of responsibility and remorse.... We're hopeful it will be something less than 12 months."

The plea agreement calls for Cooley to pay $3.6 million in restitution to investors. But Cooley has no assets to repay them, Escovar said.

Prosecutors accused Cooley and two associates, George Tannous and De Elroy Beeler Jr., of falsely telling investors that they could make substantial profits because Bidbay was about to be acquired by EBay. In truth, EBay had no plans to acquire Bidbay and had sued the company for infringing on its trademark, prosecutors said.

About 400 victims invested more than $10 million in Bidbay before the fraud was discovered, prosecutors said.

Cooley was accused of diverting more than $1.1 million of investor funds for his personal use.

Tannous, a former IRS revenue agent, and Beeler have also pleaded guilty to charges related to the scheme. They were listed as potential witnesses against Cooley, according to a government trial brief.

After leaving Congress, Cooley launched a vitamin company called Rose Laboratories Inc. He became a vice president for Bidbay in 2000 and served as a director on the company's board. After allegations of the fraud were leveled in a 2002 lawsuit, Cooley sought to hide his illicit profits by giving the money to a third party to invest, prosecutors alleged.

The tax fraud charge alleged that Cooley claimed a false deduction on his 2001 tax return and failed to report income of $494,000. The guilty plea marked the second time that the former lawmaker has been convicted of a criminal charge. He was previously convicted of making false statements about his military record in an Oregon voter guide.

stuart.pfeifer@latimes.com

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