Trial starts for ex-East End investment adviser

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A former East End investment adviser with a history of legal actions against her by clients - such as comedian Lily Tomlin - and financial regulators is "a master of deceit" who supported "an extravagant lifestyle" through fraud and failure to pay taxes, a federal prosecutor charged yesterday.

Evelyn Litwok, who now lives in New Jersey, used her clients' funds to pay for jewelry, limousines and paintings; failed to pay more than $1 million in federal income tax, and defrauded an insurance company when her business began to fail, Assistant U.S. Attorney Burton Ryan said yesterday at the start of Litwok's trial at the U.S. District Court in Central Islip. Litwok is charged with failing to pay taxes in 1995, 1996 and 1997, and falsely claiming severe water damage in her former East Hampton home in order to collect on an insurance policy.

Litwok's attorney, Terrence Buckley, however, said that Litwok's business was handled by a close associate and friend who is responsible for any untoward activity. Buckley said is client did not "willfully" fail to pay income tax.

Among Litwok's clients over the years was Tomlin and her partner, Jane Wagner, according to court records.

Tomlin and Wagner are owed $2.3 million by Litwok, according to court papers. Their financial relationship with Litwok does not figure in the criminal charges against her but is being used to buttress the government's case. The financial relationship is detailed in other court papers, including a bankruptcy filing by Litwok and a separate civil case being brought against Litwok by the Securities and Exchange Commission. That civil case is being stayed, pending the outcome of the criminal case.

Buckley declined to comment on the SEC case.

In that case, the SEC says that from 1986 to 1994, Litwok worked as a stockbroker and "was the subject of numerous customer complaints and arbitration proceedings as well as a disciplinary proceeding."

An attorney for Tomlin and Wagner said that they could not be reached immediately for comment.

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