Glock Ex-General Counsel Under the Gun in Racketeering Trial
(www.law.com)-R. Robin McDonald-Glock Inc.'s former general counsel goes to trial Oct. 24 in Cobb County Superior Court on theft and racketeering charges related to allegations that he misappropriated millions of dollars from the international firearms maker. Paul F. Jannuzzo, a former New Jersey prosecutor who served as Austria-based Glock's general counsel and top executive in the U.S. from 1991 to 2003, was extradited earlier this year from Amsterdam, where he fled in 2009 shortly before he was scheduled to go to trial on the charges.
The indictment accuses Jannuzzo of engaging in a racketeering scheme to siphon corporate funds with the help of Dunwoody lawyer Peter S. Manown, a former senior vice president of the company. Manown, at one time an attorney with the defunct Atlanta law firm Cofer Beauchamp Stradley & Hicks, earlier pleaded guilty to three counts of felony theft and was sentenced on Jan. 7, 2008 to 10 years of probation. He is expected to be the state's primary witness against Jannuzzo.
Glock, which manufactures semi-automatic, polymer handguns, supplies firearms to the majority of law enforcement agencies in the U.S. The closely held company is controlled by 82-year-old Austrian founder Gaston Glock. Its U.S. headquarters is in Smyrna, where the firearms are assembled.
Jannuzzo's indictment stems from Manown's decision in October 2003 to confess to Gaston Glock that he and Jannuzzo had, for years, skimmed funds from Glock companies in the U.S. and abroad.
In October 2009, as Jannuzzo's scheduled trial on theft and racketeering charges was approaching, he jumped bail and fled to Mexico, according to court records. His failure to appear in Cobb County Superior Court on Oct. 23, 2009 led to state and federal warrants for his arrest on charges of flight to avoid prosecution. The FBI and U.S. marshals tracked Jannuzzo to Amsterdam in December 2009. He was extradited to the U.S. last May and is awaiting trial in the Cobb County Jail.
Jannuzzo's attorney, Robert H. Citronberg, didn't respond to multiple calls and emails. Cobb County District Attorney Pat Head also declined to discuss the case.
When Jannuzzo resigned from Glock in February 2003, he was the company's chief operating officer and general counsel in the U.S. Beginning in 1991, when Glock hired him, Jannuzzo was a visible presence in the national debate over gun control as firearms manufacturers fought restrictions on ownership and sales. He led the industry's defense against a string of product liability suits filed by shooting victims and municipalities, and he became one of its most outspoken advocates.
"Paul Jannuzzo was the face of the American gun industry in the late 1990s and the early years of the 21st century," said Richard Feldman, the former executive director of the industry trade association, the American Shooting Sports Council, and a former a Glock consultant.
A Villanova graduate who earned his law degree at Vermont Law School in 1982, Jannuzzo spent three years as an assistant county prosecutor in Monmouth County, N.J., before joining McKenna, Liska & Leone in Red Bank, N.J., in 1985. In 1991, Jannuzzo was hired by Glock as general counsel in Smyrna and later given additional responsibility as COO in the U.S.
When Jannuzzo left Glock in February 2003, he characterized it as a retirement, telling The Wall Street Journal that he was "in the process of discussing a consulting contract with Glock."
According to Jannuzzo's LinkedIn profile, after leaving Glock he worked from April 2004 to Sept. 2008 as chief operating officer and general counsel for CheyTac USA, a Georgia company that manufactures sniper rifles. In response to a query from the Daily Report, CheyTac COO Pat Savanella expressed dismay over Jannuzzo's claims. According to Savanella, Jannuzzo did some consulting work for CheyTac after he left Glock, but was not a corporate officer. She said Jannuzzo was terminated at the end of 2007.
Jannuzzo's LinkedIn profile also claims he is currently a principal of Kronstadt Advisory Services Group in metro Atlanta, which provides "management consultant and advisory services to investment banking firms in regard to the defense space and adjacent markets." The Daily Report was unable to verify the existence of Kronstadt.
In 2008, more than five years after Jannuzzo left Glock, a Cobb County grand jury indicted him on racketeering charges that included underlying allegations of theft, forgery and obstruction of justice through the use of forged documents, fraudulent billings, cloned bank accounts and fictitious off-shore companies.
The indictment specifies the theft of more than $300,000 in corporate funds and accuses Jannuzzo of using company assets without authorization and forging Gaston Glock's signature to make a $1 million loan to a real estate development company with which Peter Manown was affiliated. It also accuses Jannuzzo of guaranteeing, without authorization, a second loan for $3.4 million and fabricating the accompanying loan documents. In an affidavit in Cobb County court filings, Gaston Glock accused Jannuzzo of stealing "millions."
The charges against Jannuzzo also include the theft of a .45-caliber LaFrance Special semi-automatic custom pistol that the company said it placed in Jannuzzo's "temporary custody" during his tenure at Glock. The firearm, valued at $2,200, according to court records, was recovered by Smyrna police on Aug. 27, 2007 when Jannuzzo was arrested during an alleged incident of domestic violence at his home, according to Smyrna police. The domestic violence charges were dismissed, police said.
If convicted on all counts, Jannuzzo could face up to 20 years in prison.
The indictment tracks Manown's confession to Glock's outside counsel in New York, John Renzulli, and, a few days later, to Gaston Glock and his attorney, Johann Quendler, in Austria during the fall of 2003. At that time, Manown described to Glock's founder and counsel how he and Jannuzzo had misappropriated and stolen company funds, according to a 283-page transcript of a proffer that Manown made to Cobb County prosecutors on Oct. 17, 2007.
Manown made the proffer as part of a binding plea deal, said his attorney, Bruce H. Morris of Morris & Finestone in Atlanta. Morris said that Manown confessed to Gaston Glock and the company's attorneys in 2003, and that he repaid as much as he could of the funds he had stolen. Manown said in his proffer that he can't remember how much money he siphoned from Glock's corporate accounts, but he recounted multiple instances in which he or Jannuzzo misappropriated monies —a total of more than $5 million.
Manown confessed "on his own volition" without counsel because he felt guilty, Morris said."It was eating away at him. He had done something terrible," Morris explained.
Morris said that Manown "was led to believe they would not bring criminal charges." But after Manown was contacted by the FBI and began cooperating with the bureau and the U.S. Internal Revenue Service in a what Morris said was then an investigation involving Glock, Morris said he was contacted by Cobb County Assistant District Attorney Christopher Timmons, who told him Glock had accused Manown of theft. Morris said that Manown agreed to plead guilty to theft charges in return for a probated sentence.
As part of that deal, Manown gave a proffer of his own role as well as Jannuzzo's alleged participation in thethefts. The following account is taken from Manown's proffer.
Manown detailed for Timmons and Glock attorney Renzulli—who handled the bulk of Manown's examination during the proffer—how he and Jannuzzo had misused or stolen corporate funds during their tenure at Glock.
Manown said his decision to confess his role in the thefts was precipitated by Jannuzzo's abrupt departure from Glock in February 2003, Jannuzzo's efforts to enlist Manown in a scheme to repay some of the stolen funds and Glock's decision to begin investigating Jannuzzo after the lawyer resigned.
Manown said he met with Jannuzzo and Gaston Glock the day Jannuzzo quit at Glock's house in Vinings.
Jannuzzo, he said, "rolled in with a stack of files … and threw the things down … and basically said, 'I quit, you son-of-a-bitch.'" Jannuzzo then demanded $4 million, adding that one of Glock's favorite employees was "cleaning out her office because she is quitting, too."
That employee, Manown said, was Monika Bereczky, Glock's human resources director, who later married Jannuzzo.
"Glock stood up and screamed, 'Why are you doing this to me?' and left the room and went into his bedroom," Manown recalled. He and Jannuzzo then heard a sound like that of a gun being cocked, he said. "Mr. Glock always carries a gun with him," he said.
"And I said, 'Paul, did you hear that?' And he patted his heel. He had a holster down there. So I didn't know if we were going to have a shoot-out at the O.K. Corral or what."
But when Glock emerged, he wasn't brandishing a gun. He and Jannuzzo "screamed at each other," Manown recalled. "Jannuzzo then left … As he left the stairs … and was walking to his car, he turned around and yelled, 'You're history.'
"It turned out that Jannuzzo had had an altercation with Glock's ex-son-in-law at the Glock facility earlier that morning. And that's how he quit," Manown said.
Manown added that Gaston Glock apparently had been "getting overly familiar" with Jannuzzo's girlfriend. "And my guess is that Jannuzzo … just thought he had enough of this dirty old man, and I'm out of here. … I'm sure there was more to it, but I think that's what had pushed him over the edge."
Manown said he never knew what was contained in the files that Jannuzzo slammed down on Glock's kitchen table because Jannuzzo took them when he left.
"I guess it's fair to say that Jannuzzo, and maybe I to some extent, thought we knew where some skeletons of Glock's were, and Jannuzzo was going to use that to quit on his terms, which obviously didn't happen," he said.
Two months later, in April 2003, Manown said Jannuzzo called him, asking for money "to repay his share of some money that we had taken"—about $1 million—from a Cayman Island insurance company owned by Glock Inc. called FAIR. "He came to my office and was very concerned about getting it taken care of immediately," Manown said.
At the time, Manown said he had received word that Glock's Austrian accountants were preparing to do an audit of the Cayman insurance company. "I think that's why he wanted to get that money back in place," he said.
Manown said he "cashed in a number of stocks" to reimburse the insurance company, and then told Jannuzzo to sign a $500,000 promissory note to cover the balance.
The $1 million Jannuzzo had sought Manown's help in repaying was originally a loan from the Glock-owned insurance company, FAIR, to BAITA, a firm owned by Swiss investors of which Manown was vice president. It is also the basis for one of the racketeering counts against Jannuzzo, who sat on the insurance company's board. FAIR a captive insurance company, insured Glock's enterprises and was intended to pay any losses or claims on product liability suits brought against them. BAITA had no affiliation with Glock's companies.
"BAITA was interested in obtaining a $1 million loan that they would pay back with a good interest rate," Manown said in his proffer. "I'm sure it [the interest rate] was in the high teens. I happened to mention that to Jannuzzo, and he said, 'Look, we have this money sitting in the Caymans. We can make the loan, and we can take some of the interest.' And then it was actually going to be done legitimately."
But when the insurance company's manager insisted on having Gaston Glock's approval as well as Jannuzzo's before he would approve the loan, Jannuzzo "signed Gaston Glock's name," Manown said.
"I think he [Jannuzzo] probably thought that he had the authorization to do this without Mr. Glock's signature," Manown said.
Manown said the insurance company made the loan and, for a time, BAITA made payments on the principal. He said he was paid a commission between $15,000 and $20,000 for securing the loan.
He added, "I think Jannuzzo and I siphoned off some of the interest."
Eventually, said Manown, BAITA wasn't able to make the payments. Manown said that assets from another Glock subsidiary—a company known as Consultinvest in which Manown and Jannuzzo were both directors—were used to guarantee another $3.4 million BAITA loan associated with BAITA's development of a Florida shopping center in 2002. The two Glock executives split the fees they were paid to arrange the loan, according to Manown, who said his share was $400,000.
Five months after Jannuzzo signed the promissory note to cover for the $1 million loan from FAIR, Johann Quendler—Glock's Austrian general counsel and the president of Glock's parent company in Austria—warned Manown that the company had begun investigating its former U.S. general counsel. At the time, Jannuzzo was continuing to seek a settlement with Glock associated with his departure, including his demand for $4 million and a consulting contract, according to Manown. Glock's investigation included tapping Jannuzzo's telephones, monitoring his email correspondence and having him followed by detectives, Manown said.
Manown said Quendler told him that some emails Jannuzzo had sent to him had been intercepted, and Quendler warned Manown to cut off all contact with Jannuzzo.
"I just snapped," Manown recalled. "I didn't sleep for three days, and I couldn't think of anything for five seconds other than how to get out of this." On Oct. 24, 2003, Manown placed a call to Renzulli, Glock's outside counsel in New York, to confess. Manown said that he and Jannuzzo also skimmed money from other Glock deals.
In one case, he explained, "Gaston Glock was willing to pay $7.7 million to get a property … that would have been available for $7.5 million. And I think Jannuzzo
and I were at lunch, and just saying, 'Boy, it would be nice to somehow have him happy paying his price, but make some money at the same time. … What ultimately happened was the [real estate] closing occurred and we … put pressure on the broker to share some of his commission."
Jannuzzo hasn't countered Manown's allegations in court filings. But an undated email from Jannuzzo to Manown (addressed to "Dear **** for Brains") that was included in Manown's proffer, mocked Manown as "the man with all the keys to all the accounts" and Gaston Glock's "mouthpiece."
"You kind of work your life around the Goebbels' rule do you not?," he wrote—a reference to Joseph Goebbels, Adolf Hitler's propaganda chief. "Tell a lie, retell it, keep telling it and it becomes the truth. [At] least it does to your cowardly warped mind."
"The amount of people you have dragged into this morass of yours, the amount of mud you have slung at totally innocent and unaware people is mind boggling, Jannuzzo wrote. "I still imagine you are as stupid as I thought you were. I just never realized you had the capability to be so sneaky. I guess when one is lazier than **** that is what happens, what do you think, true or false?
"Go Screw Yourself You Lazy Worthless Piece of ****."
Manown has said he stashed most of the money he stole while working for Glock in a bank in the Cayman islands, where he said Jannuzzo also had an account he used for similar purposes.
"I wasn't buying anything," Manown said when asked to explain what happened to the money he stole. "My lifestyle hasn't changed in 30 years, and I don't have much money in the bank because of what I gave back to Glock. I don't know where it went … but I sure didn't acquire a lot of antiques or assets or property with it. … I guess here and there, maybe we would go out to dinner more often than if I didn't have it. "
Jannuzzo, according to Manown, may have used some of the stolen funds to buy property in Cherokee County as well as an Atlanta condominium. "He's also had a lot more expenses than I have at this point," Manown explained. "He's got three little girls living with his second wife, and he's got financial obligations.
He added: "I knew he was doing a lot with stocks. … I think that he plays the stock market."
Asked by Glock attorney Renzulli why they took the money, Manown replied, "I'll tell you why. … I'll say it as concisely as I can. Glock is not Snow White. He's got a lot of skeletons. He's done, in my mind, a lot of things that are much worse than what Jannuzzo and I did. He makes roughly $200,000 a day, him personally. …He's just a bad guy, and with all this money laying around, he needed it like a hole in the head, and we just, you know, we let greed and our ethical standards slip … It wasn't like we were stealing from Mother Theresa. We were stealing, in my mind and in Jannuzzo's … from a bad guy."
And, he added, '"It was so easy. There was so much money flying around in this company, in this industry. It was like Monopoly money."
Asked about Manown's allegations regarding Gaston Glock and his companies, Renzulli told the Daily Report he had no comment. Carlos Guevara, Glock's general counsel in Smyrna, couldn't be reached.
But during the proffer, Renzulli took issue with Manown's allegations about Gaston Glock.
"I want to make something clear to you," Renzulli said. "I don't think he [Gaston Glock] is a bad guy. And even if he was bad guy, where I grew up that doesn't mean you can steal money from this guy.
"I take offense that you would use this as a defense," he continued. "The problem is, you just said on the record that Mr. Glock is a bad guy, he is an illegal guy, he bribes people and all that."
Replied Manown: "Well, I know that. I did some of them for him, John."