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4 Oregon men charged in tax-defier case

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MEDFORD (AP) - Friends of an Ashland man charged with money-laundering conspiracy related to an offshore tax-avoidance operation have urged a judge to allow him to remain at home until his trial begins in Florida.

Eugene Casternovia, who turned 60 in jail on Sunday, is one of four Oregonians and 13 people charged in a federal indictment from Florida. He was arrested Thursday and remains in the Jackson County Jail without bail.

The three other Oregonians were identified in a U.S. Justice Department press release as Robert Leighton Pendell, 42, of Ashland, Mark Barry Lyon, 52, of Williams, and Jeffrey Jean Jenks, 50, of Eugene. Pendell and Lyon also are in the Jackson County Jail. Jenks was released from the Lane County Jail in Eugene Aug. 29.

About 20 people attended Tuesday's hearing at the federal courthouse in Medford. Some held Bibles and hugged each other. One small girl held a white teddy bear.

Federal prosecutor Byron Chatfield argued that Casternovia is a flight risk because he moved $3.4 million into offshore accounts, and $1.2 million is unaccounted for.

Friends argued for his release, saying Casternovia is a man of his word. Casternovia said the unaccounted-for money was spent on fees and business expenses and he can't afford a lawyer.

U.S. District Judge Mark Clarke promised a decision within a few days.

Casternovia faces a sentence of as much as 25 years and a fine of up to $750,000.

The indictment says Casternovia employed Lyon and Pendell, and that his company, Southern Oregon Resource Center Educational Services, or SORCE, sold material and services to create a system of offshore entities to conceal assets.

The government says many of the products were sold at pricey resorts around the world, including during a Mediterranean Sea cruise last May attended by 400 people.

The Justice Department said Casternovia told potential customers the federal income tax system is optional and they could opt out by revoking their Social Security numbers.

The injunction said SORCE worked as a vendor for Pinnacle Quest International.

In April, the Justice Department moved to stop Pinnacle Quest International and its agents from selling and marketing products to help customers bilk the IRS though shady tax shelters or fraudulent claims.

Injunctions filed in Portland, Washington state and Florida accused the firm of selling $54 million worth of tax evasion material between 2002 and 2006.

In Ashland, Casternovia's wife, Kathryn, said that he argues against the income tax system but pays other taxes.

She said the couple has lived in Ashland 25 years.

"It's pretty scary to imagine my husband could be gone,'' Kathryn Casternovia said. "But at the same time he knowingly chose this path. It is a moral issue for him.''

Three Washington residents, Dover Perry, 34, and Arnold Ray Manansala, 40, both of Renton, and Arthur Ramirez Merino, 36, of Seattle, were among the 13 indicted, the Justice Department said.

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