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Saturday, December 14, 2019

“THE FLOWER SHOP IS FOUNDERING.” The Daze Of Whine And Rosé, Where Claiming Victimization (“Poor, Poor Pitiful Me”) Is A Criminal Defense



It's all Robert Buckhannon's fault.

No, really.

Buckhanon, Demoss at On Deck grand opening
An attorney for Kelly Demoss, (who now prefers her most recent married name, Flees), asserts in a December 10, 2019 federal sentencing memorandum that Buckhannon “abused Kelly both emotionally and physically” in 2013 during the months leading up to the April 2013 opening of Battle Creek's On Deck Bar.

Flees is scheduled to be sentenced on Monday, December 16, in federal court in Grand Rapids. 

Misprision of a felony in the federal system is a felony punishable by a fine and up to three years in prison, Flees is seeking no prison time. The sentencing memorandum requests the imposition of a sentence consisting of probation, community service, a fine as recommended by the Probation Department, and apportioned restitution. 

Opting for a deal instead of a criminal trial, Flees pleaded guilty to one count of misprision of a felony, per a formal plea deal made public on August 19, 2019

She and Buckhannon were originally charged on August 8, 2018 with a total of five counts: one count of conspiracy to commit wire fraud, one count of wire fraud and three counts of money laundering. If convicted, maximum penalties ranged from 10 to 20 years, plus mandatory restitution. 

Buckhannon is scheduled to be sentenced in February 2020, after cutting his own deal on May 30, 2019. The U. S. Attorney’s Office agreed to drop the other charges against Buckhannon contained in the original indictment, including one count of wire fraud and three counts of money laundering.

On June 6, 2018, Buckhannon was sentenced to a three-year probation sentence in exchange for an August 1, 2017 guilty plea on one count of conspiracy to commit wire fraud.

According to a criminal indictment filed on September 24, 2014 in U. S. District Court in Nevada against Buckhannon and co-defendant Terry Rawstern, the “objective of the conspiracy and scheme were to obtain money from investors by making false representations about the performance and profitability of hedge funds, their commissions and the safeguards over investors’ money. As a result of their misrepresentations, the defendants and their co-conspirators misappropriated $34 million they raised in hedge funds.”

If convicted on the conspiracy charge, Buckhannon faced up to 30 years in federal prison.

According to the indictment, from April 2008 through April 2010, Buckhannon and Rawstern and co-conspirators were managing members of two Bradenton, Florida-based hedge funds, Arcanum Equity Fund, LLC and Vestium Equity Fund, LLC. The defendants allegedly engaged in a fraudulent scheme to misappropriate $34 million they raised from investors by misrepresenting how they would use the investors’ funds and misrepresenting that there were safeguards over the investors’ money, such as an independent trustee and independent fund administrator. The defendants then looted and bankrupted the hedge funds by taking payments on false and fictitious profits and taking improper and undisclosed loans. The indictment states that as a result of the defendants’ conduct, investors lost approximately $13.1 million.

Yeah, Robert Buckhannon is a con man, and anyone with half a brain could have easily searched court records and found his extensive, and sleazy, history.

I know, because I did.

On June 13, 2013, I published my first story about the man I cheekily dubbed the “Crooked Chiropractor”, and I've ridden him like a broken bicycle ever since—and the Kelly Flees defense team members are clearly fans of my work.

How do I know?

My blog is repeatedly cited in the December 10 sentencing memorandum:




However, the defense selectively cherry-picks posts that highlight Buckhannon's ongoing shady behavior (from 2019) as a way to support its (in my opinion) specious assertion that Kelly Flees was “easy prey for Buckhannon”. 

“Robert Buckhannon and Kelly Flees were high school classmates at Michigan Center High School. They graduated in 1979. They re-connected in 2009 at their 30-year reunion. A long-distance relationship started because Buckhannon lived in Nevada, where, unbeknownst to Ms. Flees, he was committing fraud against a number of people, resulting in a Federal criminal conviction. The relationship started casually: Buckhannon told Kelly that he was travelling the world, conducting business. 

In 2011, Buckhannon showed up with his teenage son at Kelly’s home, pulling a U-Haul, and announced his plan to move in with her. A closer relationship developed and lasted until their joint business venture, a Battle Creek sports bar named “On Deck”, burned down on December 30, 2013. The cause was arson. Shortly thereafter, Buckhannon left town.” 

The defense sentencing memorandum continues, stating “Kelly had been married twice to abusive men. The pattern continued with Buckhannon.”

Let's take a closer look at some of these claims, beginning with the  “unbeknownst to Ms. Flees” claim about Buckhannon’s fraudulent investment scheme. 

Nearly a year before Buckhannon reportedly showed up on her doorstep with his son in tow, Kelly Flees could have done a simple Google search and found the December 20, 2010 Securities and Exchange Commission (SEC) complaint detailing multiple fraud allegations against Robert Buckhannon.

The 25-page complaint, still available online at no charge, reveals the SEC filed suit in federal court in Tampa, Florida, against the crooked chiropractor, Robert Buckhannon, and codefendants involved with two now-defunct Bradenton, Florida-based hedge funds, Arcanum Equity Fund LLC and Vestium Equity Fund LLC. 

The SEC said the funds, which worked with investment advisor Imperium Investment Advisors LLC, told investors they would earn handsome profits through conservative investments. Instead, much of the money was misappropriated, the SEC alleged in its lawsuit. 

For instance, the SEC said Buckhannon was involved in a deal to steer $6 million in investor money to Shea Mining and Milling LLC for a project called the “Tonopah Mine.” Buckhannon, however, didn't disclose he had a conflict of interest because he was a founder of Shea Mining and planned to enter into an employment contract with Shea and receive a share of the firm's revenue, the SEC alleged. The SEC also complained Buckhannon had funneled at least $390,000 of investor money to himself, his father, two brothers, his fiance's cousin and a friend. 

And if you visited the On Deck Sports Bar and Grill before the roof collapsed post-arson fire, you may have enjoyed a bizarre signature cocktail, courtesy of the crooked chiropractor and Kelly. 

That's right, there actually was an Arcanum & Vestium Cocktail on the On Deck menu.  (A better name for the drink may have been “Fuck You, Investors”--made with Angostura bitters, of course.)

On September 27, 2011, shortly after he returned to Battle Creek with his son, Robert Buckhannon unlocked his clinic door for the first time. Located at 2846 Capital Avenue SW, right across the street from Battle Creek's famed Sweetwater's Donuts, the clinic boasted “$20 visits”. 

Buckhannon later held the clinic's formal grand opening on December 11, 2011.


Roughly three weeks before, Kelly and Buckhannon celebrated Thanksgiving, with Kelly gleefully posing for the camera in a photo Buckhannon later posted on his Facebook page.

Asserting that “Kelly did not stand a chance to avoid control by Buckhannon”, the defense suggests she had no responsibility for what happened:

“Kelly Flees’ punishment for this offense started when On Deck reopened and Buckhannon took license to treat Kelly any way he chose. It appears that Buckhannon has engaged in various fraud schemes during his entire adult life. He evaluated how to take advantage of Kelly and set plans in motion. Punishment continued when Kelly was accused of being complicit in Buckhannon’s fraud. She has no criminal record. She worked hard to better the community. The allegations against her have devastated her.” 

The defense memorandum asserts Kelly Flees is suffering from PTSD, attributing the claim (without offering evidence of a clinical diagnosis or any professional treatment) to “35 years of abuse by men”.

Continuing with the chin music, the memorandum claims “Kelly has been through personal bankruptcy and will lose her job. She has, in many ways, “started over.” As she approaches 60 years of age, she does so in financial hardship, as a convicted felon, and bearing the negative emotion associated with these things.” 

Flees, who filed for bankruptcy on February 22, 2019, revealed in a revised financial disclosure (filed on  May 21, 2019) that the Rosé Florist and Wine Room (“The Store With The Pink Door”) is apparently awash with red ink. Compelled to amend her original filing with a business income statement for the business owned by her husband, Greg, Flees acknowledged the business is bleeding cash.

On May 28, 2019, the trustee in Flees' bankruptcy case filed a notice, indicating there was no property available for distribution from Flees, over and above that exempted by law. Nearly $65,000 in creditor claims were discharged without payment, while Flees has $105,114.87 in assets exempt from her creditors. 

According to the sentencing memorandum, the total loss claimed in this matter is $657,286.04. 

Kelly Flees wants the Court to apportion restitution to account for her lesser culpability and her overall financial condition:

“Ms. Flees should be responsible for restitution for the amount paid to Buckhannon from the loan proceeds, an amount consisting of $36,500.00. She contends that the balance of restitution should be the responsibility of Buckhannon.”

Hmmm?

Let's take a close look at that $36,500 ostensibly paid to Robert Buckhannon.

According to her plea agreement, Flees acknowledged that $36,500.00 was funneled back to her for a down payment on a home:

On or about October 12, 2013, Buckhannon instructed Demoss to write a check for $36,500 from On Deck’s Comerica Bank account payable to Buckhannon, using funds from the Blackburne loan to cover the check. 

She did so. 

On or about October 15, 2013, Buckhannon and Demoss signed a document entitled “Gift Letter Affidavit” which represented that Buckhannon had given Demoss $36,000 as a “gift”, without any obligation of repayment at any time, to obtain a residential mortgage on a personal residence in Battle Creek. 

In fact, the source of the funds was Blackburne commercial loan proceeds from the On Deck account. Demoss knew that she, On Deck, and S. G. E were obligated to pay the money back to Blackburne with interest, but instead she assisted Buckhannon in concealing the source of funds and the repayment obligation to Blackburne. (On Deck, formally known as On Deck Sports Bar & Grill LLC, and S. G. E. Investments LLC were two Michigan business entities Kelly Flees formed solely under her name in August 2012.). 

Blackburne was never told that On Deck’s loan proceeds would be used to finance the purchase of that personal residential property, and therefore Blackburne had no mortgage on the residential property to secure repayment of the commercial loan. 


Considering the fact that Flees unloaded the 4,450 square foot home on April 12, 2017 for $259,900, nearly $88,000 more than its original $172,000 2013 purchase price, that's the least she should do.

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