Forget Disneyworld. The real excitement in Orlando, Fla., this fall likely will be in a federal courtroom, where Carmel native James T. O’Neal Jr. is scheduled to stand trial on charges he swindled millions of dollars from the rich and famous, including high-profile Indianapolis businesspeople.
A federal grand jury indicted O’Neal a year ago on 82 felony counts of money laundering, mail fraud and filing false tax returns. If the 12-person jury finds the 60-year-old Orlando resident guilty, he could face up to 769 years in prison and a fine of $25 million.
The trial begins Oct. 6 and is scheduled to last at least six weeks. In that span, jurors likely will hear testimony from a long list of business heavyweights from both Indianapolis and central Florida.
They’ll also hear a lot about golfing legend Arnold Palmer, who once was a pal of O’Neal’s but now thinks O’Neal betrayed him. Among the potential witnesses is another golfing icon, Greg Norman, who, court papers suggest, rejected O’Neal’s overtures in the 1990s to invest in his startup Carmel-based company.
But many others bit the hook, including the Simon family, real estate developer Michael Browning, City Securities Corp. executive James Merten, music promoter David Lucas and professional golfer Scott Hoch.
The business plan for American Public Automotive Group: to create a publicly traded company that would open auto dealerships nationwide selling major American brands under one roof. The dealerships would be adjacent to shopping malls, capitalizing on their huge base of customers.
But it never happened. After raising $18 million from 58 investors in the early and mid-1990s, the company in 1998 ran out of money and slid into bankruptcy court-without owning a single dealership.
According to bankruptcy court records and the indictment handed up by a federal grand jury in July 2004, O’Neal used more than $7 million of the money to support a lavish lifestyle for himself and his family.
For Christmas one year, court records say, O’Neal gave his wife a $50,000 check and his four sons $10,000 apiece. Bankruptcy attorneys have spent years trying to recover assets from the business. They estimate investors ultimately will get back less than one-quarter of what they put in.
Assistant U.S. Attorney Randy Gold last week declined to say how many witnesses he might call during the trial or to detail the government’s trial strategy. Because O’Neal says he’s now broke, he’s represented by public defender Peter Kenny, who did not return calls.
Perhaps that’s understandable. Last month, in an unsuccessful motion to delay the trial, Kenny sounded as if he was drowning in documents and had no hope of being ready.
He noted that the paper records amassed during the discovery process filled 114 bankers’ boxes and a dozen filing cabinets. Adding to the challenge: Many of the company records are no longer organized the way O’Neal kept them.
“The defense still has to find, read and organize tens of thousands of documents in the basement of this courthouse, in bankruptcy court in Indiana, and in lawyers’ offices in Indiana,” Kenny wrote Aug. 20. “It has not yet had the chance to interview witnesses either for or against Mr. O’Neal.”
American Public was the second O’Neal-led auto-dealership company to run aground amid charges he diverted millions of dollars for personal use. The first-backed by Palmer, godfather to O’Neal’s youngest son-collapsed in 1990.
O’Neal had met Palmer in the 1970s after he moved from Carmel to Orlando and into the residential community surrounding Palmer’s Bay Hill Golf Club. Palmer’s advisers told IBJ in 2000 that O’Neal used millions from that business to build himself a 30,000-square-foot Orlando mansion modeled after the clubhouse at Augusta National Golf Club, home of the Masters tournament.
In an interview with IBJ that same year, O’Neal admitted taking money out of both American Public and the Palmer company but said the withdrawals were loans he intended to repay. He said he’d planned to take the firms public, creating a windfall that would have allowed him to repay his debts. But he said both firms ran into financial trouble before he could do so.
Sounds plausible, perhaps. But investors say that’s the way it goes with O’Neal. He knows what to say to win people’s trust. But then he abuses it.
“I bought it, foolish as I was,” Randy Foxworthy, a Simon executive who invested in American Public, told IBJ last year. “I believed everything he was saying. It turned out next to none of what he was saying was true.”