John Bujak says he didn't know his then-wife's bejeweled Rolex was still in their home when the couple filed for bankruptcy in late 2010.
And when he sold that watch for $25,000 the following May, he says, the watch had just come back into their possession and was theirs to sell without disclosure because they received it after they had completed their bankruptcy filings.
But federal prosecutors tell a different story, contending Bujak knowingly concealed ownership of the valuable wristwatch, which if disclosed in his bankruptcy documents would have been claimed to help pay his creditors. They contend that the watch remained the couple's property throughout their bankruptcy, but for a time was held at the home of Bujak's in-laws for safekeeping.
Assistant U.S. Attorney Joshua Hurwit said Bujak went to extremes to keep the Rolex sale secret, cashing the check at a Money Tree for a hefty check-cashing charge rather than using his bank.
In opening arguments Tuesday, Hurwit told the jury that Bujak's ex-wife, Pepper Allen, and other witnesses would establish beyond reasonable doubt that Bujak is guilty of bankruptcy fraud, lying under oath and five other felonies.
Bujak, handling his own defense, told jurors to suspect his ex-spouse's motives.
"In my opinion, the evidence will show this case is not about an abuse of the bankruptcy process, but rather it's a bleed-over of an ugly divorce that happened in Canyon County," he said. "This case is about a jilted ex-wife who wants to see me burn."
Bujak said the white gold and diamond Rolex, which he reportedly bought for Pepper in 2006 for about $50,000, was not among the couple's possessions when they were preparing bankruptcy documents. So he asked Pepper about it, and she said she had given the watch to her mother "years ago," he said.
Bujak also said his ex-wife was the drive behind selling the Rolex, suggesting that they should get the watch back and sell it to pay for dental veneers and help with debts.
He said he cashed the check at Money Tree not to avoid scrutiny from the bankruptcy trustee, but because of another investigation against him. The Idaho State Police was in the midst of a criminal investigation of Bujak, who had resigned as prosecutor amid allegations that he owed Canyon County about $300,000.
The ex-prosecutor and current Libertarian candidate for governor ultimately faced charges including misuse of public funds. Although he stood trial four times in state court, no jury found him guilty. Those trials yielded two acquittals and two hung juries.
The only witness who testified in the federal trial Tuesday was Jeremy Gugino, the Chapter 7 trustee for the Bujaks' bankruptcy case. He said he learned of the Rolex from an August 2011 affidavit filed by Pepper during the divorce case.
He said he met with Bujak, who told him the Rolex had been purchased years earlier as a gift for Pepper's mother, who gave it back to them so they could use the proceeds for living expenses. "I didn't believe him," Gugino said.
Bujak subsequently agreed to waive protection from his creditors, which Gugino said is "the worst possible thing that can happen in a bankruptcy case ... from a debtor's perspective." Bujak also agreed to pay the trustee the $11,000 left over from the Rolex sale to be distributed among his creditors, the trustee said.
He said he believes Bujak made those concessions because he was caught "red-handed" in a fraud.
Bujak will cross-examine Gugino on Wednesday morning. The trial is expected to last about a week at the federal courthouse in Boise.
Kristin Rodine: 377-6447