Klassy sentenced to 11 years in prison

by Siskiyou Co. Sheriff's Dept. Thomas Klassy

Former Weaverville Chiropractor Thomas M. Klassy was sentenced Monday to serve more than 11 years in federal prison for bankruptcy fraud.

Klassy, 55, was sentenced in the U.S. District Court in Sacramento by Judge Morrison C. England Jr.

Klassy, who owned Klassy Chiropractic Care in Weaverville from the mid-1990s to late 2003, had moved to Weed in Siskiyou County. He opened a chiropractic business there as well.

Many of the federal charges against Klassy stemmed from his handling of the money from the sale of the Weaverville business.

On June 5, 2008, a jury found Klassy guilty of making false declarations under penalty of perjury in a bankruptcy case, fraudulently concealing property in a bankruptcy case, and 26 counts of money laundering. This case is the product of an extensive investigation by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation Division, with assistance from the Siskiyou County Sheriff's Office and the United States Trustee's Office.

According to Assistant U.S. Attorneys Matthew Stegman and Russell Carlberg, who prosecuted the case, Judge England, in sentencing Klassy, found that his crime was sophisticated, due to his use of shell corporations to execute the fraud and money laundering. Judge England also found that Klassy obstructed justice in the case.

According to a news release from the U.S. Attorney's Office, evidence introduced at trial showed Klassy commit- ted perjury in his bankruptcy proceedings and thereby
concealed substantial assets from the bankruptcy court.

Among the false statements he made under oath were that he did not own an airplane, a pickup truck, a one third interest in a 220-acre ranch, $205,000 he received for the sale of his chiropractic business in Weaverville, and two shell corporations named Rose Ventures Inc. and Aromor Inc., which he used to hide much of his assets. As to the sale of his business, Klassy said that he sold it for only $60,000. The evidence showed that he gave the bankruptcy court trustee a forged contract while concealing the true contract of $265,000.

“Today’s lengthy sentence underscores the seriousness of abusing the judicial process to perpetrate a fraud,” said Acting U.S. Attorney Lawrence G. Brown.

Klassy was also convicted of money laundering for funneling the $205,000 through
an attorney’s trust account and then back to Rose Ventures Inc. and Aromor Inc. bank accounts. He held these shell corporations in the names of straw-men to avoid having his name attached to the corporations, the news release states.

Klassy was trying to avoid payment of money owed to his ex-wife, the prosecutors told the Journal after the trial.