Witness: McCorkle Already Gave Refunds

By Jim Leusner
The Orlando Sentinel

October 27, 1998

A retired Internal Revenue Service agent testified Monday that William J. McCorkle’s companies refunded millions of dollars to disgruntled customers before state investigators began looking at his real estate infomercial and telemarketing business.

Cashflow System Inc. and other companies operated by the Lake Mary businessman dispensed thousands of check and credit-card refunds before the Florida Attorney General’s Office began a consumer-fraud investigation in mind-1996, former agent Orlan Smith recounted.

That time frame is a key point for lawyers defending McCorkle and others against fraud and money-laundering charges in Orlando. They contend the companies were dealing with unhappy customers before state authorities brought in the IRS and destroyed the business.

Federal agents raided McCorkle’s home and offices in May 1997, seizing records and freezing millions of dollars in assets. McCorkle, with his wife Chantal and three associates were indicted earlier this year.

Defense attorneys have attacked the truthfulness of the affidavit used to obtain the search warrant. It states that no refunds were given to customers unless they complained to the Attorney General or the Better Business Bureau. The IRS agent who wrote the affidavit later revised his statements.

Questioned by defense attorney Mark Horwitz, who hired him to research the records, Smith testified that the companies made 2,941 check refunds for an unspecified amount before the state inquiry began. He also testified that McCorkle’s companies made refunds as early as October 1992, citing records from a credit-card processing company showing that 964 refunds were made from September 1992 to May 1993.

Smith later cited refund records from November 1995 to May 1998 showing the companies made $909,000 in "charge backs" – refunds caused by customer complaints to credit-card companies – and $2.5 million to customers seeking refunds from McCorkle.

Prosecutor Paul Byron, however, countered that most of the refunds were made after the state probe began and after media reports about the complaints. Byron said there were gaps in the refund data and accounting procedures used by McCorkle employees who compiled them.

Smith acknowledged to Byron that the Cayman Islands, where the McCorkles moved $7.1 million during the investigations was noted for bank secrecy.

Howitz, who contends the case, deals largely with common exaggerations, used in the advertising industry, tried unsuccessfully to enter into evidence a photo of a poster hanging at Orlando’s downtown post office.

"For $3.75, I turned my business into a multinational company," read the poster with a man plugging priority mail for U.S. Postal Service.