Monday, November 12, 2012

Another Arrest to be Made in Detroit Pension Fund Deal

November 12, 2012 at 3:10 pm

Fugitive tied to failed Detroit pension fund deal expected to turn herself in

By Robert Snell
The Detroit News

Detroit — A fugitive businesswoman accused of stealing $5 million from a Detroit pension fund — and blowing the cash on exotic art and jewelry — is expected to turn herself in Tuesday, ending an eight-month manhunt stretching from Detroit to the Caribbean.

Teresa Kastanes is supposed to surrender to federal agents at 5 a.m. Tuesday after flying from Nicaragua to Fort Lauderdale, Fla. The South Carolina woman is expected to appear in a Florida federal court later Tuesday, her lawyer told The Detroit News.

The return would cap an eight-month odyssey filled with international intrigue, a hunt for missing money and legal drama following a failed $10 million pension fund deal.

Kastanes, 54, agreed to return but does not have the pension fund's money, her lawyer said.

She will face a grilling from a federal judge, who ordered agents to find her earlier this year after she fled the country and failed to turn over files related to the pension deal.

Pension fund lawyers also want to depose her immediately.

"They want to eat her alive," her lawyer, Joseph Brien, told The News.

Kastanes agreed to return after receiving low-cost treatment for the bowel condition Crohn's disease and hepatitis C, which affects the liver, Brien said.

She fled in March to an oceanfront resort on the Caribbean island of St. Kitts before traveling to San Jose, Costa Rica.

It is unclear how long Kastanes has been in Nicaragua.

"Good question," Brien said. "I didn't know she was in Nicaragua."

As recently as July, she reportedly was holed up in a mountainside resort in Costa Rica and protected by armed guards, according to a court filing.

Her return would come six months after her husband flew back to the United States from Costa Rica.

The couple initially fled to the Caribbean island of St. Kitts in March amid a search for missing pension fund money.

The couple was involved in a Detroit Police and Fire pension fund loan in 2008 intended to buy and restore more than 1,400 foreclosed homes in Metro Detroit.

Instead, many of those homes are facing foreclosure, or demolition, after George Kastanes' partner, Detroit businessman Abner McWhorter, committed suicide in August 2011 amid accusations he was involved in a Ponzi scheme that defrauded the pension fund.

Brien expects she will be brought to federal court for a hearing and have her passport seized.

She also likely will be ordered to be deposed by pension fund lawyers.

While holed up in St. Kitts, George Kastanes told The News that McWhorter secured the $10 million pension fund loan by paying a $100,000 bribe to Bernard Kilpatrick, the father of former Detroit Mayor Kwame Kilpatrick.

Bernard Kilpatrick's lawyer previously has said his client had a legitimate business relationship with McWhorter.

The News has learned federal agents are investigating whether the alleged bribe money came from an accused international heroin dealer.

Investigators are probing whether McWhorter borrowed the $100,000 from Macomb County resident Carlos Powell, who was indicted in January and accused of heading a large-scale drug ring, sources said.

George Kastanes has said he didn't flee with any pension fund money.

Pension fund lawyers accuse the couple of shopping for a $1.5 million Caribbean vacation home and splurging on jeweled Russian eggs and statues by famed French sculptor Auguste Rodin.

Not true, Brien said.

"Never happened," he said.
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