Gold River businessman Steven K. Zinnel and his wife split in 1999. As often happens, the divorce got more and more contentious as it dragged on.
In an angry email in July 2001, Zinnel told her he intended to file bankruptcy and she would get nothing, including child support. The couple have two teenage children.
Zinnel was an investor in a Carmichael-based electrical infrastructure company and in real estate. By the time he filed a voluntary bankruptcy petition on July 20, 2005, Zinnel had concealed millions of dollars in assets by putting them in other people’s names.
Even after that, he laundered money through shell corporations in order to disguise income that otherwise would have increased his child support obligation.
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At this point, nobody was onto his scheme. But what happened next comes under the heading of “be careful what you ask for.”
His venom ran deep, so he called the FBI and asked for a bureau investigation of his ex-wife. Following up on his allegations, agents discovered his bankruptcy crimes.
In sentencing the 50-year-old Zinnel Tuesday to 17 years and eight months in prison, imposing a $500,000 fine, and ordering him to forfeit to the United States real estate and corporate assets worth more than $2.8 million, U.S. District Judge Troy L. Nunley had some harsh words.
Describing Zinnel as “narcissistic,” Nunley cited the repeated deception of the U.S. Bankruptcy Court, the court’s trustee, and state family court as evidence of Zinnel’s culpability in the complex fraud and money laundering scheme.
“You don’t lie before a court of law,” Nunley told him. “You don’t continue to lie, which is what you did.”
The judge acknowledged Zinnel as articulate and charismatic, but said they were gifts he used to promote his “own selfish ends.”
The state 3rd District Court of Appeal had an equally negative impression of Zinnel when the divorce case came before it. In a 2008 ruling, the justices commented on Zinnel’s “unstated but apparent view that if he can conceal his finances long enough he will not have to support his children.”
A restitution order is yet to come in federal court. A hearing on that matter is set before Nunley on March 31. At that time, the judge will also sentence Zinnel’s co-defendant, Orange County attorney Derian Eidson, 50, for her role in facilitating his crimes.
After concealment of the property and the discharge of the bankruptcy, Zinnel laundered funds back to himself through Eidson’s company, Done Deal Inc., her attorney-client trust account and her personal bank account.
Assistant U.S. Attorney Matthew Segal argued that federal sentencing guidelines do not anticipate Zinnel’s evil motive, and his punishment should be severe enough to take that into account.
“For Zinnel, this crime was personal,” Segal said. “In these crimes, Zinnel showed his true nature: hateful, vindictive and incorrigible. The court should sentence him in light of his character.”
Prosecutors believe it is the longest prison term for bankruptcy fraud ever meted out in the federal courts that make up the Sacramento-based Eastern District of California.
Following a jury’s guilty verdicts in July, Nunley ordered Zinnel taken into custody pending sentencing. Zinnel phoned his son from jail and, in a recorded conversation, told the boy that “Daddy got railroaded” and “this all started because of your mom.”