Using what he learned as a personal and business confidante to West Publishing executive Gerard Cafesjian, John Joseph Waters Jr. embezzled $4 million from his boss to finance a double life. Then, as investigators homed in on his scheme, he filed a mean-spirited lawsuit against his former boss, who died last year.
Despite Waters' continued claims of innocence, U.S. District Court Judge Ann Montgomery on Friday sentenced him to nine years in prison for those crimes, one year less than prosecutors sought, but more than the three years Waters' lawyer had asked for.
"You're old enough that I would have thought you'd learned the lesson of Watergate — that the coverup is worse than the crime," Montgomery told Waters during the sentencing hearing in a federal courtroom in Minneapolis.
Still, she was not unsympathetic to his story of working for a difficult and demanding boss. Waters, now 58, worked closely for years with Cafesjian, who earned a fortune at West and was deeply involved in philanthropic projects, especially in support of his family's Armenian heritage.
Waters left West Publishing to work as an aide to Cafesjian at a starting annual salary of $84,000 plus bonuses in the 1990s, eventually earning $250,000 a year with up to $50,000 in bonuses.
Montgomery noted that Waters, at times, was a loyal, hardworking chief of staff to a high-powered man and might have been underpaid. But "at some point around 1999, you made the decision to make your own nest a little better," the judge said, adding, "I bet you sure wish you'd quit or demanded a raise."
Instead, over a decade, Waters stole from Cafesjian, concealing his fraud by making checks out to cash and/or depositing them into the accounts of his mistress (now wife) or a deceased woman named Ani Yeranosyan. He then directed Cafesjian's bookkeepers to make false entries in company ledgers for "household purchases — unallocated," which was the account used for the Cafesjians' personal expenses such as groceries and cable bills.
In 2009, investigators hired by Cafesjian discovered the trail of fraud. Waters quit that year and filed a lawsuit in 2012, claiming his boss had denied him nearly $5 million in deferred compensation that he had promised in a verbal agreement. That lawsuit was eventually dismissed, but not before Waters threatened to reveal embarrassing personal information about Cafesjian and insisted on a humiliating deathbed deposition of his wife, Cleo Cafesjian.
