PRESS RELEASE

January 23, 2003

United States Attorney Jim Letten and Michael J. Nelson, Special Agent in Charge of Internal Revenue Service, Criminal Investigation announced today that a federal grand jury has returned a four count indictment against Greek shipping magnate LUCAS N. KTISTAKIS and his wife KATHRYN L. KTISTAKIS for conspiracy to defraud the Internal Revenue Service and filing false federal income tax returns for the years 1995, 1996 and 1997. Arrest warrants have been issued for these defendants.

The case is being investigated by Special Agents of the Internal Revenue Service, Criminal Investigation and is being prosecuted by Trial Attorneys Michael R. Pauze' and Glenn A. Makl from the Tax Division of the Department of Justice, Washington, D.C. under the direction of Assistant Attorney General Eileen J. O'Connor.

The indictment returned today charges that:

LUCAS N. KTISTAKIS and KATHRYN L. KTISTAKIS were residents of Metairie, LA from 1989 through 1997. In 1998 the KTISTAKIS' were residents of Chagrin Falls, Ohio. LUCAS KTISTAKIS owned and controlled the following companies:
• Sunrise Shipping Agency, Inc. – organized under the laws of Louisiana and maintained its principal place of business in New Orleans, LA.
• Efharis Shipping and Trading, S.A. – organized under the laws of Panama and maintained its principal place of business in Piraeus, Greece.
• Harbor Shipping and Trading, S.A. – a corporation organized under the laws of Panama and maintained its principal place of business in Piraeus, Greece.
• Sunalma Shipping Corporation – a corporation organized under the laws of Panama and maintained a bank account in the United States.
• Prosperous Shipping Corporation – a corporation organized under the laws of the British Virgin Islands and maintained a bank account in the United States.
• Ocean Shipping and Trading, S.A. - a corporation that maintained a bank account in the United Kingdom.

Again, the indictment charges that the KTISTAKIS' owned and controlled and international shipping enterprise composed of these foreign and domestic corporations that owned, managed and serviced marine vessels. These vessels were chartered to transport cargo to and from foreign and domestic ports. While these vessels were in the port of New Orleans, they were serviced by Sunrise Shipping.

The companies that chartered these vessels transmitted payments of freight revenue and estimated expenses to a bank account maintained in the names of Sunalma Shipping and Prosperous Shipping in New Orleans and Ocean Shipping and Trading in London, England which were controlled by LUCAS KTISTAKIS. These accounts served merely as conduits through which the payments of freight revenue and other funds flowed before being transferred to other domestic and foreign accounts, including the accounts of Sunrise Shipping and Harbor Shipping which were also controlled by LUCAS KTISTAKIS.

Between 1989 and 1997, over $200 million in freight revenue and other funds was transferred into the accounts of Sunalma Shipping, Prosperous Shipping, and Ocean Shipping and Trading.

LUCAS N. KTISTAKIS and KATHRYN L. KTISTAKIS concealed the ownership and control of the foreign corporations that owned and managed these vessels from their accountant, who prepared their individual income tax returns. Therefore, no financial or other information regarding these foreign corporations was reported to the Internal Revenue Service.

The indictment also charges that in eight separate transactions LUCAS N. KTISTAKIS diverted $388,000 in funds from corporations under his control to purchase property in Greece.

In November 1995, KATHRYN L. KTISTAKIS used approximately $40,000 in funds from Sunrise to purchase a Mercedes Benz C280W automobile for herself.

In August 1996, both LUCAS N. KTISTAKIS and KATHRYN L. KTISTAKIS used approximately $59,087 in funds held by Sunrise to purchase a Mercedes Benz E420 for their daughter.

Also in August 1996, KATHRYN L. KTISTAKIS and another individual paid $27,000 in currency to a hotel for the wedding reception for their daughter and requested three receipts of $9,000 each.

In October 1996, KATHRYN L. KTISTAKIS used approximately $34,991 in funds held by Sunrise to purchase a Volvo automobile for herself.

Should the defendants be convicted on all counts, each defendant faces up to fourteen years imprisonment and fines totaling $1 million.

Members of the public are reminded that the indictment contains only charges. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.