By Michael J. Tittinger
Daily Press Staff Writer

LOS ANGELES — Venice Civil Rights attorney Stephen G. Yagman, an outspoken critic of the legal system and police brutality, turned himself in to authorities on Friday morning after having been indicted on tax evasion, bankruptcy fraud and 17 counts of money laundering.

Yagman, who practices law on Ocean Front Walk in Venice Beach, is accused of attempting to conceal more than $100,000 owed in federal income taxes.

The indictment, returned under seal by a federal grand jury on June 1, was unsealed on Thursday after the conclusion of a state court jury trial in which the 61-year-old Yagman was representing a criminal defendant, according to the U.S. Attorney’s Office.

The tax evasion and bankruptcy fraud counts each carry with them a maximum of five years in prison, while each of the money laundering counts carry a maximum of 10 years in federal prison.

Yagman surrendered to authorities and made his first court appearance on Friday afternoon in U.S. District Court. He was ordered to surrender his passport before being released on $100,000 bond.

“Mr. Yagman’s pattern of deception and illegal conduct, as alleged in this indictment, discredits those who practice law,” said Kenneth J. Hines, special agent in charge of the IRS criminal investigation which was conducted from the Los Angeles field office. “The public expects attorneys to be honest, to be trustworthy and to show respect for the law.”

Attempts to contact Yagman for comment on Friday at his Venice Beach law firm — Yagman & Yagman & Reichmann — went unreturned.

The IRS, Federal Bureau of Investigation and the U.S. Postal Inspection Service were all said to have been working together on the investigation into Yagman’s financial dealings. The indictment alleges that Yagman filed federal income tax returns for the tax years 1994 through 1997, but paid only a small portion of the taxes that, according to his own returns, were owed to the IRS.

As a result of the underpayment, Yagman accumulated federal income tax liabilities for those four years that, with interest and penalties, totaled more than $158,000. During those same years, Yagman also allegedly failed to pay significant amounts of federal payroll taxes owed by his then-law firm, Yagman & Yagman, P.C.

According to the indictment, rather than paying the overdue taxes, Yagman allegedly tried to conceal his assets and impede the collection efforts of the IRS. For example, Yagman allegedly used various bank and brokerage accounts held in his girlfriend’s name to deposit and disguise his personal funds, including approximately $776,000 that was transferred to him by relatives. Yagman also is believed to have used the accounts to pay for personal purchases and to conduct the majority of his personal financial transactions.

In 1999, Yagman allegedly attempted to subvert the IRS’s collection efforts by filing for both personal and corporate bankruptcy. According to the indictment, Yagman made numerous misrepresentations and omissions in his bankruptcy petitions and in court proceedings.

In his personal bankruptcy petition, Yagman allegedly failed to disclose to the bankruptcy court that he lived in a 2,800-square-foot house near the beach in Venice, for which he made mortgage and property tax payments, as well as claiming the homeowner’s mortgage-interest deduction on his tax returns. Yagman also allegedly failed to disclose in his bankruptcy proceedings various personal bank and brokerage accounts that he controlled, but were in his girlfriend’s name, as well as hundreds of thousands of dollars in legal settlements, client payments and attorney’s fees that he received in 1999 and 2000.

The money laundering charges pertain to his alleged engaging in monetary transactions in criminally-derived property.

“Regardless of one’s position in life, he or she should be held accountable for their actions,” said Robert Malaby, the acting postal inspector in charge in Los Angeles. “The U.S. Postal Inspection Service is committed to ... investigating allegations of criminal misconduct whenever the United States mail is used to perpetuate the crime.”

Friday’s developments are hardly the first time the Brooklyn-born Yagman has made headlines. A champion for the cause of exposing police abuses, he was sworn in as a special prosecutor in the famous Ruby Ridge case following the 1992 government siege.

In December of 1998, according to the California Bar Journal, Yagman was suspended from practice for a year for overcharging his clients — the second time he was suspended for charging “an unconscionable fee.” Yagman also was ordered to make restitution to his clients totaling in excess of $20,000 after having won a judgment against the city of Los Angeles and the LAPD in the wake of a 1982 shooting at a McDonald’s restaurant.

In a 2001 interview, Yagman called the California Supreme Court a “cesspool” and described fellow attorneys as “mostly wimp asses.” He also said he had filed more than 1,500 lawsuits against the LAPD over the years.

Yagman is scheduled to return to court for a hearing on July 3.