Malibu Man Indicted in Alleged Scam

A federal grand jury on Tuesday indicted a Malibu businessman for allegedly concealing about $23.5 million from U.S. regulators by stashing the money in offshore accounts.

Kenneth H. Taves, who has been accused in a lawsuit of improperly billing 900,000 credit card holders worldwide for adult Web site access they didn’t order, was charged with criminal contempt and making a false statement to a federal agency.

An FBI probe into the alleged credit card scam is continuing. But after the Federal Trade Commission sued Taves for the alleged fraud early last year, a federal judge ordered Taves to reveal and return to the U.S. any assets held in foreign countries.

After Taves filed a financial statement with the FTC making no mention of offshore accounts, investigators found approximately $23.5 million on deposit in Cayman Islands accounts controlled by Taves, the indictment states. Regulators say the money represents the proceeds of the alleged credit card fraud.

Tuesday’s indictment essentially supersedes a similar complaint filed against him in May. He has been in custody since then. He is set to be arraigned Monday. If convicted of the false-statement charge, he faces five years in prison. Taves couldn’t be reached for comment Tuesday, but has denied wrongdoing.

Separately, Taves and eight other people have been charged in the Cayman Islands with a series of charges related to the alleged laundering of the money. Three of the others are former employees of Euro Bank Corp., one of several banks in the Caribbean territory where Taves allegedly secreted funds from his business.

Prosecutors said Taves must face the charges in the U.S. first. Euro Bank was seized by Cayman Islands authorities and is in the process of being liquidated.