Charge Called Retaliation : Jury Acquits Physician in Home-Loan Fraud Case

A San Fernando Valley physician who once claimed that one of his patients, a reputed mobster, was too ill to stand trial, has been acquitted of criminal charges that he intentionally inflated his income on applications for home loans.

After the verdict by a federal court jury in Los Angeles, an attorney for Dr. Peter P. Koenig claimed that prosecutors had secured Koenig’s indictment because he had testified that Jack M. Catain Jr. was too ill to stand trial. Catain was charged in an unrelated counterfeiting scheme.

“I see this as retaliation,” said the attorney, Paul J. Geragos.

U. S. Justice Department attorney Edwin P. Gale, in charge of both the Catain counterfeiting case and the Koenig prosecution, denied the accusation.

Gale, who heads the Organized Crime Strike Force in Los Angeles, obtained an indictment against Koenig in part on the strength of accounts by two Catain associates who had been convicted of counterfeiting.

Prosecutors alleged that Koenig, an Encino internist, got a mortgage loan for his Hidden Hills house in 1984 by telling a lender that his adjusted gross income was $153,000, while reporting to the Internal Revenue Service that it was $119,000.

The indictment also alleged that, the next year, Koenig sought help from Catain, a Tarzana businessman, in refinancing the house. Prosecutors alleged that one of Catain’s associates prepared phony tax returns to submit to lenders on Koenig’s behalf, including a return that showed the doctor’s adjusted gross income was $260,000.

Koenig testified at the trial, which was held in December before U. S. District Judge Edward Rafeedie, that he had not prepared the phony returns and had signed the loan documents hurriedly without knowing that they were false, Geragos said.

The attorney said Koenig never missed a house payment and that the lenders were repaid in full when the doctor sold the house.

Koenig was acquitted Dec. 19.

Catain, 56, was indicted in 1982 on counterfeiting charges. After two major surgeries, two heart attacks and a diagnosis that he was suffering from terminal heart disease, U. S. District Judge William P. Gray dismissed the case early in 1986.

The government indicted Catain in a second counterfeiting case, however, and Gray was then persuaded that Catain was well enough to stand trial. Catain was convicted last November and is awaiting sentencing.