Prebul to stand trial in New York this week

To an outsider, it might have looked like the typical family feud over money.

But the typical family feud, which has plagued fallen Chattanooga car dealer Joseph Prebul for the better part of a year, normally doesn't end with the prospect of prison time.

On Monday, Mr. Prebul finally will face a jury in New York City on 11 counts of wire fraud and one count of mail fraud, crimes that could land him in a federal prison for years if he is convicted.

The trial is being held in the same federal courthouse where Bernie Madoff, who orchestrated history's largest Ponzi scheme, and Martha Stewart, who got caught in insider stock trading, pleaded guilty to financial fraud. Alleged 9/11 terrorist attack mastermind Khalid Sheikh Mohammed and four alleged co-conspirators also will stand trial there, the government announced on Nov. 13.

With the cases of Mr. Madoff and Ms. Stewart in its history, the courthouse of the U.S. Southern District of New York, in the heart of Wall Street in Manhattan, is considered one of the most aggressive venues in the nation when it comes to prosecuting serious financial crimes.

In Mr. Prebul's case, prosecutors allege he swindled his New York-based brother-in-law out of close to $7 million, making him believe the money was being invested in an interest-bearing account but instead was using it to help his businesses stay afloat.

Mr. Prebul, whose multiple, high-profile dealerships in Chattanooga and North Georgia since have crumbled under bankruptcy because of the criminal allegations, claims the money represented "loans."

In Mr. Prebul's own civil legal battle against brother-in-law Danny Bensusan, documents show that he believes Mr. Bensusan simply became impatient, then conspired to have Mr. Prebul arrested for fraud when it appeared the loans could not be repaid on time.

"We will have (to) do whatever we have to do to protect Danny's interests," an agent for Mr. Bensusan told Mr. Prebul in September 2008, according to court documents. "The time for negotiating has ended and we either get this resolved now, or the chips will start to fall."

Mr. Prebul's lawyers, however, said the Chattanooga businessman will fight just as hard to show he is the victim of family greed on the part of Mr. Bensusan, who is married to Mr. Prebul's sister and owns well-known jazz clubs in Manhattan.

"It's high tension for everybody," said Tom Ray, Mr. Prebul's personal bankruptcy attorney, who will be in the New York court Monday to help with the trial.

Mr. Ray declined to comment about any other aspects of their defense, saying only that several of Mr. Prebul's Chattanooga friends are expected in New York to lend their moral support.

Mr. Prebul never has commented publicly about the scandal that snowballed in early February with his arrest.

"I am sure Mr. Prebul will have something to say when he is acquitted," Mr. Ray said.

FOLLOW THE STORY

Follow the trial developments in print and online with regular updates and stories by Monica Mercer reporting from the courtroom in New York.

THE CASE

* Feb. 9: Criminal complaint filed by federal investigators in U.S. District Court in New York against Joseph Prebul, alleging that he defrauded a then-unnamed victim out of millions of dollars.

* Feb. 10: Mr. Prebul arrested at his home on Signal Mountain, posts bond in U.S. District Court in Chattanooga the same day.

* Feb. 11: Mr. Prebul files for voluntary Chapter 7 bankruptcy on all his auto dealerships in Chattanooga and North Georgia.

* Feb 12: Mr. Prebul's brother-in-law Danny Bensusan files a $32 million civil lawsuit against the businessman in Hamilton County Circuit Court, making himself known as the alleged victim in the criminal case.

* March 11: Mr. Prebul makes first appearance in U.S. District Court in New York regarding the criminal complaint against him. Posts $500,000 bond and must surrender all travel documents, with his travel limited to New York, Tennessee, Georgia, Florida and Pennsylvania.

* March 12: Mr. Prebul files a civil lawsuit in Hamilton County Circuit Court, accusing Mr. Bensusan of extortion and defamation.

* May 7: A federal grand jury in New York formally indicts Mr. Prebul on 11 charges of wire fraud and one charge of mail fraud. Indictment alleges Mr. Prebul orchestrated a scam against Mr. Bensusan in which he used millions of Mr. Bensusan's investment dollars to keep his Chattanooga and North Georgia car dealerships afloat.

*May 15: Mr. Prebul arraigned in federal court in New York, pleads not guilty to all criminal charges.

* June 29: Mr. Prebul forced into involuntary Chapter 7 bankruptcy with regard to his personal finances.

* November 23: Mr. Prebul's trial begins in New York