Former Part-Owner of Litigation Funding Company Admits Defrauding Business Partners www.privateofficer.com
NEWARK, NJ June 19 2013—The former part-owner and underwriter for New York-based litigation funding company The Law Funder LLC admitted today in Newark federal court to participating in a secret kickback scheme that defrauded his former business partners of approximately $869,492, U.S. Attorney Paul J. Fishman announced.
Mathew Sheldon, 39, of New York, pleaded guilty today before U.S. District Judge Dennis M. Cavanaugh to a superseding information charging him with conspiracy to commit wire fraud through the deprivation of honest services.
According to documents filed in this case and statements in court:
The Law Funder, which extends loans to plaintiffs in pending civil litigation, did business with Montclair Funding Group LLC (“MFG”)—at one time headquartered in Union City, New Jersey—and its owner Rory Donadio, 43, of New York. MFG was a broker between plaintiffs seeking advances against potential recoveries in pending litigation and private entities such as Law Funder. In exchange for a broker’s fee, MFG would, among other things, gather necessary information and documents in support of funding opportunities so Law Funder could evaluate whether to fund a case and for how much. Sheldon was a 25 percent owner in Law Funder and supervised the underwriting process for the company.
Sheldon admitted that from approximately February 2005 through July 2009, he conspired with Donadio to design and execute a secret kickback scheme. Sheldon would offer certain of Law Funder’s investment opportunities to MFG in exchange for personally receiving a portion of each broker’s commission Law Funder paid MFG. Sheldon and Donadio agreed to conceal their fee-splitting arrangement from Law Funder and Sheldon’s three partners. The kickback scheme resulted in approximately $869,492 in fraudulent payments to Sheldon, which were paid by wire transfer and other means.
Sheldon also admitted that he and Donadio concealed the scheme by, among other methods, using code such as “Giants” or the letter “G” in records referring to related transactions. He acknowledged he regularly communicated with Donadio to identify the coded transactions and calculate the amount payable to Sheldon pursuant to the kickback scheme.
The conspiracy count to which Sheldon pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine or twice the gross amount of pecuniary gain or loss resulting from the offense. Sentencing is scheduled for October 7, 2013.
Donadio also has pleaded guilty in connection with the scheme and awaits sentencing.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and inspectors of the United States Postal Inspection Service, Newark Division, under the direction of Maria L. Kelokates, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorneys Joseph B. Shumofsky, Mala Ahuja Harker, and Jenny Kramer of the U.S. Attorney’s Office Economic Crimes Unit and Evan Weitz of the office’s Asset Forfeiture and Money Laundering Unit.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit http://www.stopfraud.gov.
U.S. Attorney’s Office
New Haven CT June 19 2013
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, announced that Jonathan Gracia, 24, formerly of Middletown, waived his right to indictment and pleaded guilty today before United States Magistrate Judge Thomas P. Smith in Hartford to one count of wire fraud stemming from an investment fraud scheme.
According to court documents and statements made in court, Gracia falsely told friends and acquaintances that he was developing a website for which he had potential buyers and that he had developed an app for the iPhone and then solicited investments and loans from his victims in connection with both of these purported ventures. Gracia regularly told the victims that they would receive outsized returns on their investments. As part of the scheme, Gracia created bogus documents to deceive his victims, including fake checks, bogus bank account statements, and a letter that he created on what appeared to be the letterhead of a prominent Connecticut hedge fund management company. Through this scheme, Gracia defrauded his victims of at least $200,000.
Gracia is scheduled to be sentenced by United States District Judge Vanessa L. Bryant on September 10, 2013, at which time he faces a maximum term of imprisonment of 20 years.
Gracia has been detained since his arrest on March 18, 2013.
This matter is being investigated by the Federal Bureau of Investigation, with the assistance of the Branford and Stamford Police Departments. The case is being prosecuted by Assistant United States Attorney Paul A. Murphy.
In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement. The task force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich Police Department; and Stamford Police Department.
Citizens are encouraged to report any financial fraud schemes by calling, toll-free, 855-236-9740, or by sending an e-mail to email@example.com.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit http://www.stopfraud.gov.
U.S. Attorney’s Office
Hartford CT June 19 2013
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that Michelle Laudato, 35, of Farmington, waived her right to indictment and pleaded guilty today before United States Magistrate Judge Donna F. Martinez in Hartford to one count of bank fraud.
According to court documents and statements made in court, between July 2009 and June 2010, Laudato used her position as a teller supervisor at a branch of Webster Bank in Bristol to steal more than $178,000 from the CD accounts of at least 18 bank customers. Thirteen of the 18 bank customers were between the ages of 79 and 99.
As part of the scheme, Laudato sometimes withdrew funds from certain CD accounts to replace funds in the CD accounts she had previously accessed. She also withdrew funds in increments of $10,000 or less to avoid currency transaction reporting requirements.
Laudato is scheduled to be sentenced by Chief United States District Judge Alvin W. Thompson on September 6, 2013, at which time she faces a maximum term of imprisonment of 30 years and a fine of up to $1 million.
This matter has been investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Felice M. Duffy.
U.S. Attorney’s Office
ATLANTA GA June 19 2013 —Jennifer C. Alsdorf has been indicted on charges of health care fraud and wire fraud for filing over $500,000 in fraudulent claims with the Georgia Medicaid program.
“This defendant is charged with robbing Medicaid of over half-a-million dollars intended for children in need. Her alleged fraud includes billing for medical services never performed, for patients never seen, and in the names of medical professionals who were not working for the defendant,” United States Attorney Sally Quillian Yates. “Medicaid fraud affects individuals, families, and communities in higher costs, and, as this case shows, we have a strong federal-state alliance intent on combating this serious crime.”
“The FBI continues to work hard in ensuring that federal Medicaid funds are used in the manner intended by law and will continue to work with its various law enforcement partners in identifying, investigating, and presenting for prosecution those individuals who abuse the system,” stated Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office. “Anyone with information regarding health care fraud should contact their nearest FBI field office immediately.”
“It appears that Ms. Alsdorf viewed Medicaid as a slush fund to enrich herself,” said Attorney General Sam Olens. “This case sends a strong message that the federal and state governments will work together to aggressively prosecute Medicaid fraud in Georgia.”
According to United States Attorney Yates, the charges, and other information presented in court: Jennifer C. Alsdorf, 43, of Tampa, Florida, is the owner, president, and CEO of Hand in Hand Speech & Language Services Inc. The medical business is located in Tampa, Florida (and prior to 2005 in Vidalia, Georgia) and offers speech-language therapy services for children covered by Medicaid. Acting on behalf of Hand in Hand, Alsdorf contracted with speech-language pathologists to perform services under independent contractor agreements. Alsdorf would bill Medicaid for the services provided by the pathologists and then send a portion of the amount she received from Medicaid to them.
In the contracts, Alsdorf agreed to pay a set fee to the pathologists for each initial evaluation and each subsequent therapy visit rendered by the pathologists to Medicaid recipients. The fees that Alsdorf paid to the pathologists for those two services were less than, but based on, the amounts that Medicaid reimbursed for the services. Alsdorf made a profit by keeping the difference between what Medicaid paid and what she remitted to the pathologists.
After rendering services to patients, the pathologists would send Alsdorf treatment notes showing which patients they had seen, how long they had provided therapy, and which services they had provided. Alsdorf was supposed to use these notes to prepare the claims to submit to Medicaid. Unbeknownst to the speech-language pathologists, however, in addition to billing Medicaid for initial evaluations and therapy visits, Alsdorf also billed Medicaid for “sensory integration” therapy, a service the pathologists had not provided. Many of the pathologists did not even know what sensory integration therapy was and had never heard of such a service. Alsdorf did not send any of the money she received from Medicaid for this service to the pathologists. She instead kept all the money she received for sensory integration therapy.
Alsdorf also submitted claims to Medicaid for patient visits that never occurred. She submitted claims under pathologists’ names for services during times when they were not working with Hand in Hand. She also submitted claims representing that the pathologists had treated certain patients when, in fact, the pathologists had never seen or treated the patients at any time. Alsdorf is alleged to have submitted over $500,000 in fraudulent claims to Medicaid.
A federal grand jury indicted the defendant on May 21, 2013, who was arraigned today on the charges before United States Magistrate Judge Justin S. Anand.
The indictment charges 74 counts of health care fraud and 10 counts of wire fraud. Each health care fraud count carries a maximum sentence of 10 years in prison, and each wire fraud count carries a maximum sentence of 20 years in prison. Each count also carries a fine of up to $250,000. In determining the actual sentence, the court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.
Members of the public are reminded that the indictment contains only allegations. The defendant is presumed innocent of the charges, and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by special agents of the Federal Bureau of Investigation and Investigators from the Georgia Medicaid Fraud Control Unit and the Georgia Department of Community Health.
Assistant United States Attorney Stephen H. McClain and Georgia Assistant Attorney General Henry A. Hibbert are prosecuting the case.
For further information please contact the U.S. Attorney’s Public Information Office at USAGAN.Pressemails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao/gan.
DeKalb County CEO Burrell Ellis indicted for theft, extortion, false statements www.privateofficer.com
DeKalb District Attorney Robert James announced a grand jury indicted Ellis Tuesday on 15 counts that included charges of theft, extortion, false statements and writings, conspiracy to defraud a political subdivision and coercion of another employee to give anything of value for political purposes.
James announced during a news conference that an arrest warrant was issued for Ellis and he had up to 48 hours to turn himself in. The CEO surrendered to authorities almost immediately after.
According to the indictment, Ellis asked the county’s director of purchasing and contracting to create a list of vendors with county contracts so Ellis could solicit campaign contributions from them. It said Ellis threatened to cut business ties with vendors and report at least one employee for poor customer service after there was no response to his solicitations.
Channel 2 Action News had the only crew there when Ellis walked out of the DeKalb County Jail at about 8 p.m. Tuesday night after posting a $25,000 bond.
Channel 2′s Amy Napier Viteri tried to ask Ellis questions, but he would not stop to answer any.
Channel 2′s Ashley Swann was at Ellis’ home when he arrived there from the jail, where he gave a brief statement.
“I do want to make one statement emphatically to the good people of DeKalb County, that I’ve done nothing wrong, as I’ve said from the very beginning. (I’ve) Done nothing wrong and I would never, ever, ever do anything to violate the public trust,” Ellis said, talking to reporters in the driveway of his Stone Mountain home.
Earlier this year, agents took computers and other evidence from his home and county office. The district attorney’s office was also looking into campaign financial records.
At the time, Ellis denied any wrongdoing.
Ellis could be potentially removed from office as a result of the indictment. Gov. Nathan Deal’s office told Channel 2′s Erica Byfield the governor will receive the indictment and assemble a three-person panel to review the case. Based on the panel’s recommendation, the governor may remove Ellis. In that case, the county commission’s presiding officer, Lee May, would become the interim CEO.
“This is a sad day for DeKalb County. While every person is clearly innocent until proven guilty, this ongoing saga has been a distraction and continues to bring unwelcome negative publicity to our county and government,” May said.
Ellis’ indictment comes just months after Gov. Nathan Deal removed five DeKalb school board members for mismanagement.
“Businesses shy away from a county that’s in disrepair when they have that many problems, and they smell bad with all these problems,” he said. “Why go and put your headquarters in a county which resonates with bad press? It breaks your heart.”
But those close to Ellis still say Tuesday’s indictment doesn’t square with the man they know, who was elected to DeKalb’s top job promising reform.
“I don’t know of any forced campaign contribution that Ellis ever attempted, and I worked in all his campaigns,” said Oliver Brown, a DeKalb political operative. “I’d be shocked (if this is true).”
Should Ellis get suspended, he’ll be the seventh elected official in DeKalb to meet that fate since March. That’s when a federal judge allowed Deal to suspend two-thirds of the county school board over an accreditation agency’s allegations about nepotism, financial mismanagement and other concerns.
U.S. Attorney’s Office
Hartford CT June 18 2013 Deirdre M. Daly, Acting United States Attorney for the District of Connecticut; Susan J. Waddell, Special Agent in Charge of U.S. Health and Human Services, Office of Inspector General for New England; and Kimberly K. Mertz, Special Agent in Charge of the Federal Bureau of Investigation, today announced that a federal jury in Hartford has found Samir Zaky, 38, of Brookfield, guilty of 14 counts of health care fraud and 14 counts of making false statements relating to health care matters. The trial before Senior U.S. District Judge Alfred V. Covello began on June 10 and the jury returned its verdict this afternoon.
“Health care fraud is a serious crime that undermines our ability to provide care to those who need it most,” stated Acting U.S. Attorney Daly. “Our office is committed to protecting Medicare beneficiaries and taxpayers from all unscrupulous health care providers in Connecticut.”
“When health providers put personal greed ahead of the provision of quality patient services, they should expect intense scrutiny by law enforcement officials,” stated HHS-OIG Special Agent in Charge Waddell. “Dr. Zaky recklessly ignored the consequences, insisting on cheating taxpayers, patients, and the Medicare program. Now, he is paying the price.”
“Medicare is in place for our nation’s elderly to receive important and often vital health care services,” stated FBI Special Agent in Charge Mertz. “It is not for unscrupulous doctors and health care professionals to use as a personal slush fund. The FBI is committed to investigating fraud in both government-sponsored and private health insurance programs and urges anyone with information on a health care fraud to report it their local FBI office.”
According to the evidence at trial, Zaky is a podiatrist who operated Affiliated Podiatrists LLC in Brookfield. From August 2010 to July 2011, Zaky submitted numerous claims to the Medicare program stating that he had performed nail avulsions, a surgical procedure that requires use of an injectable anesthetic and removes the entire border of a patient’s toenail. In fact, Zaky had only clipped or trimmed the patient’s toenails.
Judge Covello has scheduled sentencing for September 10, 2013, at which time Zaky faces a maximum term of imprisonment of 10 years on each count of health care fraud and a maximum term of imprisonment of five years of each count of making a false statement.
The government also is seeking to forfeit more than $29,000 in cash found during a search of Zaky’s residence in August 2010.
Zaky has been released on bond since his arrest on November 29, 2012.
This matter is being investigated by the U.S. Department of Health and Human Services-Office of the Inspector General (HHS-OIG) and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorneys David J. Sheldon and Christopher W. Schmeisser and Auditor Kevin Saunders.
Acting U.S. Attorney Daly encouraged individuals who suspect health care fraud to report it by calling the Health Care Fraud Task Force at 203-777-6311 or 1-800-HHS-TIPS.
WASHINGTON DC June 18 2013 —Jonathan Womble, 36, a former corrections officer at the District of Columbia Jail, pled guilty today to a federal charge of conspiracy to commit bribery for accepting $400 in cash in return for smuggling drugs and other contraband into the facility, announced U.S. Attorney Ronald C. Machen, Jr. and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office.
Womble pled guilty in the U.S. District Court for the District of Columbia. The Honorable Reggie B. Walton ordered him detained pending sentencing on September 13, 2013. The charge carries a statutory maximum of five years in prison and financial penalties.
According to the government’s evidence, the FBI received information in January 2013 that a corrections officer was providing narcotics and other contraband to an inmate at the D.C. Jail. An investigation revealed that the inmate was working with co-conspirators outside the jail to assemble, deliver, receive, and distribute narcotics intended for inmates at the jail and that they were paying an individual to get the drugs into the facility.
On January 27, 2013, Womble met with one of the co-conspirators in the parking lot of a carry-out restaurant in the District of Columbia. The co-conspirator gave Womble a plastic bag, which contained a powdery substance consistent with heroin and marijuana. The bag also contained a cell phone, cell phone charger, and $400 in cash. Womble understood that the cash was in exchange for him getting the drugs, cell phone, and charger to the inmate in the jail. Two days later, he smuggled the items into the jail and provided them to the inmate.
Plans were subsequently made for another delivery of contraband. However, on February 12, 2013, multiple bags of marijuana were discovered and intercepted inside Womble’s locker at the jail by the District of Columbia Department of Corrections and one of its K-9 dogs. The marijuana had been provided to Womble by a person who wanted it delivered to another inmate.
In announcing the guilty plea, U.S. Attorney Machen and Assistant Director in Charge Parlave commended the work of the three agencies who jointly worked the case, including agents from the FBI’s Washington Field Office, an FBI task force officer from Metropolitan Police Department (MPD) and investigators from the District of Columbia Department of Corrections Office of Investigative Services. Finally, they commended the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Lenisse Edloe, Legal Assistant Angela Lawrence, and Assistant U.S. Attorneys Richard E. DiZinno and Christopher R. Kavanaugh, who are prosecuting the case.
U.S. Attorney’s Office
CHICAGO IL June 18 2013—A former Chicago alderman, the head of a $1 billion Nebraska-based prescription medication provider, and another man were convicted today of conspiracy to commit bribery of a fictitious public official to purportedly obtain business from the Los Angeles County hospital system after a two-week trial. A federal jury deliberated several hours today before returning guilty verdicts against all three defendants.
The defendants, Ambrosio Medrano, 59, of Chicago; James Barta, 71, of Fremont, Nebraska; and Gustavo Buenrostro, 50, of Arlington Heights, were each convicted of the single count against them. They each face a maximum penalty of five years in prison and a $250,000 fine. They remain free on bond pending sentencing, which U.S. District Judge John J. Tharp, Jr., scheduled for 1p.m. on September 24.
According to the trial evidence, which included numerous audio and video recordings of conversations with the defendants, Medrano introduced an undercover FBI agent, who was posing as a purchasing agent, to Barta, the president of family-owned Sav-Rx, and Buenrostro, an associate of Barta and a former Sav-Rx employee. Barta, Buenrostro, and Medrano allegedly agreed to bribe the undercover agent and the fictitious Los Angeles County hospital official—with Barta handing a $6,500 check to the undercover agent on June 22, 2012—to do business with Sav-Rx, a Fremont, Nebraska-based national provider of managed care prescription medication services.
Between December 2011 and March 2012, Medrano, Buenrostro, and a cooperating witness discussed the scheme, resulting in a meeting attended by those three, Barta, and the undercover agent at a Chicago restaurant on March 21. During the meeting, Barta discussed Sav-Rx’s business, including a contract with Cook County. The undercover agent explained a kickback arrangement for him and the fictitious Los Angeles County hospital official if they were to succeed in expanding Sav-Rx’s services into the Los Angeles County hospital system. Barta replied that the arrangement was okay with him. In subsequent conversations, Medrano allegedly assured the cooperating witness and undercover agent that Barta and Buenrostro wanted to do a deal with the agent and were willing to provide an initial $10,000 payment in good faith.
The same group of individuals met again on May 9 at a Chicago restaurant and continued discussing steering Sav-Rx’s services to Los Angeles County, including using Medrano and Buenrostro to be the minority participants in a contract, with Barta endorsing that idea. Barta directed Buenrostro to do research on Los Angeles County and paid the lunch bill. The undercover agent said that the fictitious hospital official was not going to take any action until there was an agreement and the official saw some money. “We understand that and that’s not the problem,” Barta replied.
On June 22, 2012, Barta, Buenrostro, and Medrano met with the undercover agent at a restaurant in Omaha. The undercover agent explained that half the good faith money they had been discussing was for his role in brokering the contract, and half was for the fictitious Los Angeles County official. The undercover agent assured Barta that the good faith payment would be refunded if Sav-Rx did not obtain a contract from the hospital system. After further discussion about the indirect manner that Barta’s payment would be funneled to the fictitious official, Barta wrote a check on a Sav-Rx operations account, payable to the undercover agent for $6,500, and gave it to the undercover agent.
The guilty verdict was announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.
The government is being represented by Assistant U.S. Attorneys Christopher J. Stetler and Steven Grimes.
U.S. Attorney’s Office
Bridgeport CT June18 2013
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that Patrick Pinto, 44, of Bohemia, New York, waived his right to indictment and pleaded guilty today before United States District Judge Stefan R. Underhill in Bridgeport to one count of conspiring to commit bank bribery while he was an executive of Oxford Collection Agency.
According to court documents and statements made in court, Oxford Collection Agency (Oxford) was a private financial services company that engaged in accounts receivables management, primarily debt collecting, with offices in New York, Pennsylvania, and Florida. Between 2007 and 2011, Oxford executives engaged in a multi-year scheme to defraud its lender, Connecticut-based Webster Bank, as well as its investors, clients, and the commercial debtors that Oxford collected from. Oxford’s victims lost more than $12 million as a result of this scheme.
The investigation also revealed that Oxford sometimes obtained and retained business with its banking clients by paying bribes and kickbacks to bank officials. As part of the scheme, Pinto, a vice president of Oxford, and other Oxford executives made monthly payments of between $2,500 and $3,500, which were hidden in cigar boxes, to an assistant vice president of U.S. Bank in Ohio.
U.S. Bank and Webster Bank received funds through the U.S. Department of the Treasury Troubled Asset Relief Program (TARP).
Judge Underhill has scheduled sentencing for September 9, 2013, at which time Pinto faces a maximum term of imprisonment of five years and a fine of up to $250,000.
Pinto has been released on a $50,000 bond since his arrest on December 7, 2012.
In May 2012, Richard Pinto, Oxford Collection Agency’s chairman of the Board, and his son, Peter Pinto, Oxford’s president and chief executive officer, each pleaded guilty to one count of conspiracy to commit wire fraud, bank fraud, and money laundering and one count of wire fraud stemming from this scheme. In December 2012, Oxford Vice President of Finance and Chief Financial Officer Randall Silver, Executive Vice President Charles Harris, and Chief Operations Officer Carlos Novelli also pleaded guilty to various charges.
On January 30, 2013, Richard Pinto, who is now deceased, was sentenced to 60 months of imprisonment. The other defendants await sentencing.
Patrick Pinto is the son of the late Richard Pinto.
This matter is being investigated by the Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Connecticut Securities, Commodities, and Investor Fraud Task Force. The case is being prosecuted by Assistant U.S. Attorney Liam Brennan and Special U.S. Attorney John McReynolds.
In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities, and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement. The task force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich Police Department and Stamford Police Department.
Citizens are encouraged to report any financial fraud schemes by calling, toll-free, 855-236-9740 or by sending an e-mail to firstname.lastname@example.org.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.
To report financial fraud crimes and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit http://www.stopfraud.gov.
Athens GA June 18 2013 University of Georgia police have charged an employee with 22 felony counts of theft and 47 misdemeanor counts of “Unlawful Use of State Resources”, according to the UGA PD website.
Johnny Preston Whiddon was arrested after three and a half months of investigation into a “misuse of funds at the Brooks County Cooperative Extension Office,” University of Georgia police said.
Whiddon, the coordinator at the Brooks County Cooperative Extension, had a warrant issued for his arrest on June 12 in the Brooks County Magistrate Court after the report of misusing funds on February 27.
There was no report of bond amount or of Whiddon had an attorney in this matter
KANSAS CITY, Kansas June 16 2013 — A former employee in a southwest Kansas prosecutor’s office has been sentenced to 16 months in federal prison for theft.
The U.S. Attorney’s office says 35-year-old Pedro A. Castro, of Garden City, must also pay nearly $52,000 in restitution under the sentence he received Monday in federal court.
Castro was indicted last November and pleaded guilty in March to theft of public funds.
The crimes took place in 2010 and 2011 when Castro worked as a diversion coordinator for the Garden City prosecutor’s office. The office received more than $10,000 from the federal government during those two years as diversion funds.
Castro admitted in his plea that he stole more than $5,000 of the money. The total amount he stole wasn’t clear from federal court records available online.
RUSSELLVILLE, AL June 16 2013
A former Russellville city employee has been indicted on theft of property charges.
Ladonna Hitt Montgomery is accused of taking more than $25,000 dollars from the city’s municipal court system.
The ABI launched an investigation against Montgomery last May, after the city noticed a discrepancy in financial records.
According to investigators Montgomery took cash payments from inmates made to pay fines and she would change court documents to cover her tracks.
Montgomery turned herself in last night and is out on a $5,000 bond.
If convicted she could face up to 20 years in jail. An arraignment date has not yet been set.
Former Loan Officer at Pampa Teachers Federal Credit Union Sentenced to 36 Months www.privateofficer.com
AMARILLO, TX June 15 2013—Erin Dawn Trevathan, 26, of Amarillo, Texas, was sentenced this afternoon by U.S. District Judge Mary Lou Robinson to 36 months in federal prison and ordered to pay $442,297 in restitution following her guilty plea April 2013 to one count of fraud in connection with federal credit union entries. She was remanded to custody. Today’s announcement was made U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
According to documents filed in the case, Trevathan was employed by the Pampa Teachers Federal Credit Union as a loan officer from July 2008 until early December 2010, and during that time, she was the sole loan officer at the credit union. Her job consisted of processing personal loans and auto loans.
During an audit, irregularities were noticed. When confronted, Trevathan admitted that she had been making false entries and stealing cash from the credit union’s main account for her personal use. As a result of her false entries, loan manipulations, and unauthorized activity, the Pampa Teachers Federal Credit Union suffered a loss of approximately $422,973.
The case was investigated by the FBI, with assistance from the National Credit Union Administration. Assistant U.S. Attorney Christy Drake was in charge of the prosecution.
Anchorage AK June 15 2013 An Anchorage bookkeeper is charged with stealing more than $90,000 from her nonprofit employer’s disabled clients, including money for their rent and funds set aside for their funerals.
Alleged embezzler Ruby Monilla Brooks, 35, faces several felony counts of theft, fraud and impersonation, among other charges.Brooks worked for Assets Inc. and pilfered the bank accounts of the developmentally disabled and mentally ill people the nonprofit serves, according to a charging document filed in court earlier this month. The nonprofit manages its clients’ accounts and issues checks for things like rent.
The charges, written by Anchorage Detective Darren Hernandez, lay out the case against Brooks:
Assets’ director of administrative services, Susan Newsome, called police on April 30. Newsome said Brooks, the bookkeeper since 2008, admitted to “gross mismanagement of funds” when Newsome asked her about a client’s unpaid rent. Brooks wrote a three-page confession saying she had been stealing clients’ money to pay her own bills, well aware that what she was doing was illegal. Newsome also found out that Brooks had drained accounts set aside to pay for the clients’ burials when they die.
Bank statements showed Brooks took almost $52,693 from nearly 28 accounts in 2013 alone, the charges say. Newsome initially thought that was all the money stolen, but the detective learned through further investigating that it was far more. (Police, in a written statement, said detectives have since found out she took $93,603). Brooks had used methods other than simply transferring the funds or depositing checks she wrote herself.
For example, in one case Brooks signed up a client for an Old Navy credit card, on which she made fraudulent charges. In an interview, Brooks also told the detective she took vacations to Las Vegas twice while the theft was ongoing and would access clients’ accounts to get cash when her money was running low.
That alleged admission came when detectives went to Brooks’ home to talk to her in May. Brooks told them the theft started in 2011 when she was going broke.
“Brooks continued by stating that she did that, and it went to a point where she just kept doing it, and then going from one client’s account to another,” the charges say. “Brooks continued to do it hoping that she would be able to put the money back, but things kept coming up, and the client’s account kept getting messed up, and she would have to go into another client’s account to fix it.”
Her mother and father had been very sick, Brooks explained, and she had to take time off of work to help them get to doctors appointments.
Brooks said she told her husband on April 29 what she had been doing and that the money she was transferring to him and her mother was not hers. Her husband said she needed to tell Assets and drove her to work, where she confessed. Brooks was served this week with a summons to appear in court Tuesday.Source- ADN
Former New York State Senate Majority Leader Sentenced to Five Years’ Imprisonment www.privateofficer.com
U.S. Attorney’s Office
Brooklyn NY June 15 2013 Earlier today, Pedro Espada, Jr. was sentenced before Judge Frederic Block in U.S. District Court in Brooklyn, New York, to five years’ imprisonment, to be followed by three years of supervised release, for theft of federal funds from Bronx-based non-profit health care clinics and lying on his 2005 personal tax return. As part of that sentence, Judge Block ordered Espada to serve 100 hours of community service, restitution to the Internal Revenue Service in the amount of $118,531, restitution to the victims of his thefts in an amount to be determined, and forfeiture of $368,088. The court remanded Espada to the custody of the Bureau of Prisons. Espada is a former New York state senator for the 33rd Senate District in the Bronx who served as the New York State senate majority leader from 2009 to 2010.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office; and Toni Weirauch, Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, New York.
“The people of the Bronx trusted Pedro Espada, Jr. to have their best interests at heart. Instead, he abused that trust to the tune of more than half-a-million dollars. Under obligation to use the funds he received for the benefit of people sorely in need of quality health care, he chose instead to benefit himself and his family at their expense. Espada embezzled funds to finance his personal lifestyle and lavish gifts on friends and family members at the expense of taxpayers and underprivileged members of the Bronx community who were deprived of needed health services and medical equipment. He continued his campaign of lying and fraud on his tax returns,” stated United States Attorney Lynch. “Espada has finally been held to account for his crimes.” Ms. Lynch expressed her grateful appreciation to the FBI and IRS, the agencies responsible for leading the government’s investigation, and thanked the Office of New York State Attorney General Eric T. Schneiderman for its assistance.
On May 14, 2012, a federal jury in Brooklyn returned a guilty verdict against Espada on four counts of stealing from non-profit medical clinics in the Bronx that received federal funding. On October 12, 2012, Espada pled guilty to making false statements on his 2005 personal tax return and agreed not to appeal or otherwise challenge the jury’s verdict. That same day, Espada’s son and co-defendant, Pedro Gautier Espada, pled guilty to guilty to one count of stealing federal funding from non-profit medical clinics and one count of failing to file a tax return in 2009, and his sentencing has been scheduled for June 18, 2013, also before Judge Block.
FBI Assistant Director in Charge Venizelos stated, “Over 30 years ago, Pedro Espada, Jr. helped establish the Soundview Health Center, but his own greed and self-dealing undermined that good work. Espada’s embezzlement of federal funds diverted money meant to serve the health needs of the people of the South Bronx. In lining his own pockets, he betrayed those people and stole from U.S. taxpayers in the process. There is a price to pay for these betrayals.”
The successful outcome of the collaborative effort in this investigation demonstrates the government’s resolve in investigating and prosecuting public corruption. Today’s sentences mark the end of a long period of criminal activity that harmed the patients of the not-for-profit clinics, who depended on the services the clinics provided and law abiding American taxpayers, who have to pick up the slack whenever others deliberately do not pay their fair share. IRS Criminal Investigation is proud of its partnership with the FBI and the U.S. Attorney’s Office,” stated IRS Special Agent in Charge Weirauch.
The government’s case was prosecuted by Assistant United States Attorneys Todd Kaminsky, Carolyn Pokorny, and Claire Kedeshian.
Pedro Espada, Jr.
Mamaroneck, New York
Pedro Gautier Espada
MADISON, WI June 14 2013—John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced that Becky Lynn Ring, formerly known as Becky Lynn Stoltenberg, 38, Madison, Wisconsin, was sentenced yesterday by U.S. District Judge Barbara B. Crabb to 12 months’ probation and ordered to pay $336,100 in restitution for her role in a mortgage fraud scheme.
Stoltenberg was the former owner of JC Mortgage in Madison. She devised a scheme to obtain a residential loan for a client by submitting false documentation to the lender. Stoltenberg was assisted by Edwin P. Gray, an accountant working in Oregon, Wisconsin, who falsified the client’s income on a W-2 form, which allowed the client to qualify for a loan that he otherwise would not have obtained. Gray pleaded guilty to mortgage fraud on August 12, 2012, and was sentenced to three years’ probation on October 11, 2012.
In sentencing Ring, Judge Crabb reduced her sentence from a possible imprisonment range of 27 to 33 months based in part on her cooperation in an ongoing investigation, and noted the serious nature of her crime, and the need to deter others similarly situated from engaging in criminal conduct. Ring paid the remaining restitution owed of $335,400 prior to sentencing. Gray had paid $700 towards restitution since his sentencing.
This case is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The charge in this case are the result of an investigation conducted by the Madison Resident Agency of the Federal Bureau of Investigation. The prosecution of this case is being handled by Assistant U.S. Attorney Peter M. Jarosz.
U.S. Attorney’s Office
WASHINGTON DC June 14 2013—Al J. Hurley, a former county commissioner in Sumter County, Georgia, was sentenced today to 36 months in prison stemming from his acceptance of illicit payments in exchange for his official efforts to secure government contracts for a private contractor, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Middle District of Georgia U.S. Attorney Michael J. Moore announced.
Hurley, 55, of Americus, Georgia, was sentenced today by U.S. District Judge W. Louis Sands. On December 3, 2012, a federal jury sitting in the Albany Division of the Middle District of Georgia found Hurley guilty of one count each of attempted extortion and federal program bribery.
Hurley was first elected to the five-member Sumter County board of commissioners in 1999. As the primary governing body for the county, the board presided over a variety of official matters, including the bidding process for and award of various county contracts.
Evidence at trial showed that from September to December 2011, Hurley, in his capacity as a county commissioner, solicited and agreed to accept cash payments—including $5,000 on October 23, 2011, and $15,000 on December 19, 2011—from a private contractor in exchange for Hurley’s repeated promises to use official action and influence to help facilitate the award of county contracting work to the contractor.
In particular, Hurley told the contractor that he would help him win a $100,000 depot renovation contract in a city within Hurley’s district. Trial testimony also established that, in order to drive up the bribe amount, Hurley invented two inside contacts that he claimed to have at a new racetrack project in his district and claimed the contacts could influence the award of related contracting work in favor of the contractor. Hurley, who testified, admitted the contacts did not exist.
This case was investigated by the FBI. This case was prosecuted by Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia
Former Chief of St. Clair Fire Protection District Sentenced on Federal Fraud and Tax Charges www.privateofficer.com
U.S. Attorney’s Office
ST. LOUIS, MO June 14 2013—Eric Hinson was sentenced to 35 months in prison on mail fraud and multiple tax evasion charges involving his misuse of approximately $593,236 of St. Clair Fire Protection District funds between January 2006 and September 2011. As a result of the federal investigation, Hinson resigned his positions as chief at both the St. Clair Fire Protection District and the Ladue Fire Department. In addition to the prison sentence, he was ordered to pay restitution of $615,298.
“In rural Missouri, volunteer fire personnel are the backbone of public safety when it comes to our homes and property,” said U.S. Attorney Richard Callahan. “Aside from our thanks, they deserve much better than this from their leaders.”
The St. Clair Fire Protection District (district) provides fire protection service for Franklin County, Missouri, and has four fire houses, 18 full-time firefighters, and between 25-50 volunteer firefighters. The district is primarily funded by public funds through real estate tax, personal property tax, and sales tax. Eric Hinson began with the district as a volunteer firefighter during 1985 and was elected to the Board of Directors for the district in 1997 and as treasurer of the district in 1999. During January 2011, he became the fire chief for the district while continuing to perform his duties as treasurer until his resignation from the district on September 28, 2011. As treasurer, Hinson was responsible for preparing the annual budgets, facilitating the annual financial statement audit, gaining approval from the District’s Board of Directors for expenditures, reconciling bank statements, and performing other accounting related activities, in the QuickBooks general ledger system, other than for payroll. He also had the ability to access the QuickBooks system remotely from outside the district offices.
According to court documents, Hinson used the district credit cards to pay for family vacations to Hawaii and Florida and to pay for personal items such as sporting goods and other items, limousine rentals, tickets to Six Flags, Big Surf Water Park, other entertainment expenses, restaurant meals, gasoline, and hotel rooms, as well as to obtain significant cash advances. Without the knowledge and authority of the district, Hinson directed that these personal credit card charges be paid with district funds. Further, on several occasions, Hinson wrote district checks to pay for his own personal expenses, including checks to Ford Credit for a pickup truck, to Macy’s for furniture, to John Deere Credit for tractor parts, and checks to Bank of America and Fifth Third Bank for other personal expenses. In order to conceal his scheme, Hinson accessed the district’s QuickBooks to alter reported general ledger activity by backdating certain of his fraudulent transactions and by changing the payee in order to manipulate the district’s accounting records so as to hide the existence of his fraudulent transactions. Through his fraudulent conduct, Hinson obtained approximately $593,236 from the St. Clair Fire Protection District.
Additionally, Hinson filed false tax returns for the years 2006 through 2010, leaving total additional taxes due of $132,383.
“The people of the city of St. Clair should applaud their fire department for their integrity,” said Dean C. Bryant, Special Agent in Charge of the FBI St. Louis Division. “The fire department itself exposed the crime of their former boss at the expense of their department’s reputation knowing it was the right thing to do.”
Hinson, 43, St. Clair, Missouri, pled guilty in February to one felony count of mail fraud and five felony counts of tax evasion and appeared today for sentencing before United States District Judge E. Richard Webber.
This case was investigated by the St. Clair Police Department, Federal Bureau of Investigation, and Internal Revenue Service-Criminal Investigation, with the assistance of the St. Clair Fire Protection District. Assistant United States Attorney Hal Goldsmith handled the case for the U.S. Attorney’s Office.
Orlando FLA June 14 2013
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced the sentencing of George Elia, 69, formerly of Fort Lauderdale. United States District Judge Kathleen Williams sentenced Elia to 12 years’ imprisonment, followed by three years of supervised release.
According to evidence presented during the trial and sentencing, George Elia and his conspirator James “Jim” Ellis, 70, also of Fort Lauderdale, operated a Ponzi scheme. Elia guaranteed that investor money was safe and that he had high rates of returns from his day trading of stock, including Facebook stock. In late 2011, however, payments to investors became irregular, investors filed civil lawsuits against Elia, and in January 2012, Elia sold his home, shipped his belongings to his native Cyprus, and fled. He was arrested returning to Las Vegas with his wife in March 2012.
As a result of his scheme, approximately 50 victims lost approximately $10 million after investing with Elia. Elia used investor money to purchase two Bentleys, a Rolls Royce, approximately $500,000 in jewelry, and Chanel and Hermes items.
On April 30, co-conspirator Ellis was sentenced to 38 months in prison by U.S. District Judge Williams.
Mr. Ferrer commended investigative efforts of the FBI and the cooperation of the Securities and Exchange Commission. This case is being handled by Assistant U.S. Attorneys H. Ron Davidson and Wilfredo Fernandez.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls.
U.S. Department of Justice
WASHINGTON DC June 13 2013—A former U.S. Congressman and a real-estate investor were convicted today by a federal jury in Tucson, Arizona, of conspiring together to extort and bribe individuals seeking a federal land exchange.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney John Leonardo of the District of Arizona, and Special Agent in Charge Douglas F. Price of the FBI’s Phoenix Division.
Richard G. Renzi, 55, of Burke, Virginia, was found guilty of 17 felony offenses, including conspiracy, honest services wire fraud, extortion under color of official right, racketeering, money laundering, and making false statements to insurance regulators.
James W. Sandlin, 62, of Sherman, Texas, was found guilty of 13 felony offenses including conspiracy, honest services wire fraud, extortion under color of official right, and money laundering.
Sentencing is set before U.S. District Judge David C. Bury on August 19, 2013.
“Former Congressman Renzi’s streak of criminal activity was a betrayal of the public trust and abuse of the political process,” said Acting Assistant Attorney General Raman. “After years of misconduct as a businessman, political candidate and member of Congress, Mr. Renzi now faces the consequences for breaking the laws that he took an oath to support and defend.”
“Our democracy is undermined whenever our elected officials misuse the power entrusted to them by the voters to serve their own private interests rather than in the service of the public interest,” said U.S. Attorney Leonardo. “The jury’s verdict reinforces the fundamental principle that our society is governed by the rule of law, and that no citizen, including the most influential and powerful among us, is above the law.”
“Today’s conviction is a culmination of the investigative efforts of the FBI and IRS-Criminal Investigation over a period of several years,” said FBI Special Agent in Charge Price. “Public corruption is one of the top criminal priorities of the FBI, and it is imperative that elected public officials be held accountable to uphold the public’s trust. The FBI remains committed to this criminal priority in combating public corruption at all levels.”
According to evidence at trial, Renzi, then a member of Congress from Arizona’s 1st Congressional District, promised in 2005 to use his legislative influence to profit from a federal land exchange that involved property owned by Sandlin, a real estate investor.
At the time, Sandlin owed Renzi $700,000 in future payments from their business dealings, and Renzi threatened a proponent of the land exchange that he would not support it unless they purchased Sandlin’s property in Cochise County, Arizona. When that individual refused, Renzi promised a second proponent of a land exchange that he would support the exchange if they purchased Sandlin’s property. According to an agreement reached in May 2005, Sandlin was paid $1 million in earnest money, out of which he paid $200,000 to Renzi. Just before Sandlin received the $1.6 million balance owed on the exchange, he paid an additional $533,000 to Renzi.
Evidence at trial further showed that from 2001 to 2003, Renzi engaged in insurance fraud by diverting his clients’ insurance premiums to fund his first campaign for Congress, and he provided false statements to various state regulators who were investigating his activities.
Renzi was indicted in February 2008, and in October 2008, Renzi moved to dismiss the indictment under his rights as a member of Congress under the Speech or Debate Clause. The court denied his motion in February 2010, and Renzi pursued an interlocutory appeal. After Renzi’s appeal was unsuccessful, trial was set for May 2013.
Honest services wire fraud, extortion under color of official right, concealment money laundering, and racketeering each carry maximum penalties of 20 years in prison. Conspiracy carries a maximum penalty of five years in prison and making false statements to insurance regulators and transactional money laundering each carry maximum penalties of 10 years in prison.
This case was investigated by the FBI and the Internal Revenue Service-Criminal Investigation. The prosecution was handled by Trial Attorneys David Harbach and Sean Mulryne of the Department of Justice’s Public Integrity Section and Assistant U.S. Attorneys Gary Restaino and James Knapp of the District of Arizona.
TAMPA FLA June 14 2013—United States Attorney Robert E. O’Neill and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division announce that a federal jury today found four former executives of WellCare Health Plans Inc. (WellCare) guilty of various charges, including health care fraud, making false statements relating to health care matters, and making false statements to a law enforcement officer. Specifically, former WellCare Chief Executive Officer Todd S. Farha (45, Tampa) was convicted of two counts of health care fraud; former WellCare Chief Financial Officer Paul L. Behrens (51, Odessa) was convicted of two counts of making false statements relating to health care matters and two counts of health care fraud; William L. Kale (63, Oldsmar), former vice president of Harmony Behavioral Health Inc. (a wholly-owned subsidiary of WellCare), was found guilty of two counts of health care fraud; and Peter E. Clay (56, Wellesley, Massachusetts), former WellCare vice president of Medical Economics, was found guilty of making false statements to a law enforcement officer. The maximum penalty for each of the health care fraud counts is 10 years’ imprisonment. The maximum penalty for all other counts is five years’ imprisonment. A sentencing date has not yet been set.
The jury returned not guilty verdicts with respect to several counts and was unable to reach a verdict on others. The judge declared a mistrial as to those counts on which the jury was deadlocked. The U.S. Attorney’s Office will decide, at a later date, whether to retry the individuals on those charges.
Thaddeus M.S. Bereday (Tampa), WellCare’s former general counsel, was severed from the trial in February of this year. He will be tried separately, at a later date.
On March 2, 2011, a federal grand jury sitting in Tampa, Florida, returned an indictment charging Farha, Behrens, Kale, and Clay with various federal criminal violations related to a scheme to defraud the Florida Medicaid program, from the summer of 2003 through the fall of 2007, by making false and fraudulent statements relating to expenditure information for behavioral health care services. WellCare operates health maintenance organizations (HMOs) in several states targeted for government-sponsored health care benefit programs like Medicaid. Two WellCare HMOs operating in Florida, StayWell and Healthease, contracted with the Agency for Health Care Administration (AHCA), the Florida agency that administers the Medicaid program, to provide Florida Medicaid program recipients with an array of services, including behavioral health services.
In 2002, Florida enacted a statute that required Florida Medicaid HMOs to expend 80 percent of the Medicaid premium paid for certain behavioral health services upon the provision of those services. In the event that the HMO expended less than 80 percent of the premium, the difference was required to be returned to AHCA. As part of the scheme, the individuals falsely and fraudulently submitted inflated expenditure information in the company’s annual reports to AHCA in order to reduce the WellCare HMOs’ contractual payback obligations for behavioral health care services.
On May 5, 2009, the government filed related charges in an information and Deferred Prosecution Agreement (DPA) against WellCare. Pursuant to that DPA, WellCare was required to pay $40 million in restitution, forfeit another $40 million to the United States, and cooperate with the government’s criminal investigation. The company complied with all of the requirements of the DPA. As a result, the information was later dismissed by the court following a government motion.
Also, in May 2009, an information and plea agreement for Gregory West (55, Tampa) a former WellCare analyst, was unsealed. In his plea agreement, West admitted to participating in the scheme to defraud the Medicaid program and agreed to cooperate in the government’s investigation. At trial, West provided extensive and detailed testimony explaining the complex scheme. Other former WellCare executives provided additional testimony about the four individuals’ roles in the scheme.
“Today’s guilty verdicts send a clear message that health care fraud will not be tolerated in the Middle District of Florida,” said U.S. Attorney Robert O’Neill. “The greed of those who siphon funds from individuals dependent upon federal healthcare programs must be investigated and prosecuted to the full extent of the law.”
“Medicaid recipients deserve quality, honest health care,” said Christopher B. Dennis, Special Agent in Charge, Health and Human Services, Office of Inspector General, Office of Investigations. “Today’s guilty verdicts should serve as a clear warning that anyone—no matter what their status—who defrauds the American people and abuses their trust will be brought to justice.”
This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; and the Florida Attorney General’s Medicaid Fraud Control Unit. It was prosecuted by Assistant United States Attorneys Jay Trezevant and Cherie Krigsman, along with Department of Justice Senior Trial Attorney John Michelich and Special Assistant United States Attorney John Bowers.
Wyoming Woman Charged with Conversion of Money from an Indian Tribal Organization www.privateofficer.com
Washington DC June 13 2013 United States Attorney Christopher A. Crofts announced today that Joanne Lynn Seesequasis, the former executive director for the Eastern Shoshone Housing Authority, appeared in federal court on June 10, 2013, for an arraignment. Ms. Seesequasis appeared with counsel and pled not guilty to the indictment charging conversion of moneys from an Indian Tribal organization, in violation 18 U.S.C. §1163. Ms. Seesequasis’ trial will be held on August 19, 2013, in Cheyenne, Wyoming, before Chief United States District Court Judge Nancy Freudenthal.
This case is being investigated by the Federal Bureau of Investigation and the Office of Inspector General.
An indictment is only an accusation. In every criminal case, the accused is presumed to be innocent until proven guilty, and the government always has the burden of proving guilt at trial beyond a reasonable doubt.
U.S. Attorney’s Office
CHARLOTTESVILLE, VA June 12 2013 —A local insurance agent who pled in March to insurance fraud was sentenced today in the United States District Court for the Western District of Virginia in Charlottesville.
Graham Hutson Messer, 32, of Bremo Bluff, Virginia, was originally charged in September 2012 with 13 counts of mail fraud. In March, Messer waived his right to be indicted and pled guilty to a one count information charging him with insurance fraud. This afternoon in District Court, he was sentenced to seven months of federal incarceration. In addition, Messer will serve three years of supervised release, the first seven months of which must be served on home confinement. He was also ordered to pay $60,019 in restitution to the victims of his fraudulent activity.
“Mr. Messer diverted money from his clients that they had paid in order to obtain insurance,” United States Attorney Timothy J. Heaphy said today. “His criminal conduct left his victims uninsured and placed the financial futures of many local families in jeopardy. A coordinated law enforcement effort uncovered Mr. Messer’s scheme and led to his conviction. This case demonstrates our continuing commitment to investigating and prosecuting all forms of financial fraud.”
Messer operated as an independent agent offering insurance and insurance products for sale to clients throughout Virginia. Messer purported to sell insurance offered by a variety of insurance companies. Though some policies were in fact placed with the proper companies, many were not.
Messer admitted that he would instruct his clients to send payments for insurance premiums directly to him. The defendant told his clients that he would then remit the payments to the insurance companies. However, Messer admitted that he embezzled those funds for his own, personal use, never sending them to the insurance company, while also deceiving his clients into believing they had insurance coverage when they did not.
The investigation of the case was conducted by the Federal Bureau of Investigation, the Albemarle County Police Department, the Virginia Bureau of Insurance, and the Charlottesville City Police Department. Special Assistant United States Attorney Elliott Casey is prosecuting the case for the United States.
WASHINGTON DC June 12 2013 —Michael A. Brown, a former member of the Council of the District of Columbia, pled guilty today to a charge of bribery for a scheme in which he accepted a total of $55,000 in a series of meetings, spanning eight months, with undercover FBI agents posing as officials of a company that purportedly wanted to win government contracting opportunities.
The guilty plea was announced by U.S. Attorney Ronald C. Machen, Jr.; Timothy Gallagher, Special Agent in Charge of the Criminal Division of the FBI’s Washington Field Office; and Thomas J. Kelly, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Brown, 48, pled guilty in the U.S. District Court for the District of Columbia. The Honorable Robert L. Wilkins scheduled sentencing for October 3, 2012. The charge carries a statutory maximum of 15 years in prison and financial penalties. Under federal sentencing guidelines, the parties have agreed that the applicable range would be 37 to 46 months in prison and a possible fine of $7,500 to $75,000. The plea agreement, which is contingent upon the court’s approval, calls for a sentence of up to 37 months, to be followed by up to three years of supervised release.
The plea agreement also calls for Brown to pay a money judgment of $35,000 in forfeiture, covering the amount of money he collected before confronted by law enforcement.
Brown is the third member of the Council of the District of Columbia to plead guilty within the past two years to federal charges involving crimes committed while they were in office. Harry L. Thomas, Jr., who represented Ward 5, pled guilty in January 2012 to federal theft and tax charges in a scheme in which he used more than $350,000 in taxpayer money for his own personal benefit. Kwame R. Brown, the Council’s former chairman, pled guilty in June 2012 to a federal charge of bank fraud, involving two personal loans, and a second criminal charge involving a violation of the District of Columbia’s campaign finance laws.
The charge against Michael A. Brown involves a scheme in which he admitted taking the cash payments in return for his assistance in winning the District of Columbia government’s approval for a company that was seeking to be classified as a Certified Business Enterprise, a designation that would create potentially lucrative business opportunities; Brown also agreed to help the company with government contracting opportunities.
In a second scheme, Brown admitted concealing the true source of $20,000 that was secretly contributed to his failed bid in 2007 for a seat on the District of Columbia Council. Under the plea agreement, Brown will not be criminally prosecuted for this conduct.
* * *
“Today, Michael Brown became the third member of the D.C. Council to plead guilty to a felony in the last 18 months,” said U.S. Attorney Machen. “This prosecution should make clear that we will not allow the politics of pay to play to flourish in the District of Columbia. We will not tolerate the backroom deals, the secret payments, and the unreported cash that corrupt not only our elections and public officials but our entire system of government. Our work will not stop until we stamp out the show-me-the-money culture that has deprived the great citizens of the District of Columbia of the honest government that they so desperately want and deserve.”
“Today, Mr. Brown took responsibility for his actions and admitted to accepting bribes and knowingly circumventing campaign finance laws,” said Special Agent in Charge Gallagher. “This case is not only one more example of an elected official violating the public trust for their own benefit, but it is also another example of the determination and resolve of law enforcement in putting an end to such activity. We will not stop our pursuit until public corruption is a thing of the past within the District of Columbia.”
“IRS-Criminal Investigation is committed to providing its financial investigative expertise to work with our law enforcement partners in order to combat public corruption, such as Mr. Brown’s,” said Special Agent in Charge Kelly. “Today’s plea is a reminder that one’s status as a public official will not protect you from federal prosecution.”
* * *
Brown was elected as an at-large member of the District of Columbia Council in 2008 and took office in January 2009. He left office on January 2, 2013, following his defeat last November for re-election. Brown then launched a bid to win another at-large Council seat in a special election scheduled for April 23, 2013. However, he withdrew his candidacy on April 2, 2013, less than three weeks after he was confronted by law enforcement in the bribery scheme.
According to a statement of offense signed by the government as well as the defendant, Brown’s at-large Council duties included acting as Chair of the Committee on Economic Development and Housing. The committee is responsible for matters related to economic, industrial, and commercial development. The bribery scheme focused largely on a special program run by the District of Columbia government to help its small local businesses become economically viable: the Certified Business Enterprise (CBE) program.
Status as a CBE carries preferential procurement and contracting opportunities. To be eligible for this designation, businesses must meet certain requirements and be certified by the District of Columbia’s Department of Small and Local Business Development (DSLBD).
Prior to July 11, 2012, Brown had discussions about obtaining assistance of $50,000 to $75,000 for Brown from a government contractor. Brown expected to assist the government contractor with its business if the contractor provided such financial assistance to Brown.
These discussions led to a series of meetings with two undercover FBI agents, posing as employees of a Maryland company that wanted CBE approval and contracting opportunities. Between July 2012 and March 2013, Brown met in person with one or both of the undercover agents a total of eight times. He communicated primarily with an agent described in the court documents as “Undercover Employee 1” or “UCE-1.” He was in contact with this undercover agent on more than 30 separate days, in person, by phone, or by text, frequently seeking payment, in whole or in part, for the efforts he was making on the company’s behalf.
Indeed, over the months, Brown made calls on the company’s behalf to the director of the Department of Small and Local Business Development, introduced the undercover agents to a contractor at a symposium he sponsored, and took other actions meant to speed through the company’s attempts to win approval as a CBE. He continued these efforts even after his defeat in the November 2012 election. In January 2013, the Department of Small and Local Business Development did a site visit for the company’s application.
According to the statement of offense, the payments were made during these meetings:
July 11, 2012: Brown met UCE-1 at a Washington, D.C. restaurant. Brown accepted $15,000 in cash as part of a promised amount of $50,000 for Brown’s efforts to use his official position to assist the company in becoming a CBE and obtaining contracting opportunities. The cash was in denominations of $100 bills and in a duffel bag with a Washington Nationals baseball hat and two Nationals T-shirts. Brown referred to the cash payment as a loan, but UCE-1 said that he could keep the money.
During subsequent discussions with the undercover agents, Brown occasionally referred to the payments as a “loan.” However, Brown understood that he was not expected to repay the money. No loan documents were ever drafted—and no loan terms were ever discussed—between Brown and the undercover agents.
August 7, 2012: Brown met with UCE-1 at the Washington, D.C. restaurant and accepted an additional $10,000 in cash in exchange for continuing to assist the company in obtaining approval of its CBE application and contracting opportunities. The cash was in denominations of $100 bills and placed inside a Washington Redskins coffee mug. UCE-1 stated that Brown would get “the other 25” upon approval, and Brown said, “Or north.” Brown said he would call the Department of Small and Local Business Development after the company submitted the necessary paperwork for the CBE application and aim to have the application moved “to the top of the pile.”
August 28, 2012: Brown again met with UCE-1 at the Washington, D.C. restaurant and accepted $5,000 in cash in exchange for Brown’s assistance with the CBE application and contracting opportunities. The cash was in denominations of $100 bills and in a silver coffee mug. Brown said he would continue efforts to move the company’s application as quickly as possible.
November 29, 2012: Brown hosted his economic development symposium and introduced the two undercover agents to the director of the Department of Small and Local Business Development concerning the company’s CBE application. Brown also introduced the undercover agents to a local businessman, who, according to Brown, facilitated financing for contractors. That night, Brown met UCE-1 at the Washington, D.C. restaurant and accepted another $5,000 in cash as payment for his assistance with the CBE application and contracting opportunities. The cash was in denominations of $100 bills and in an envelope.
March 14, 2013: Brown met the two undercover agents at a conference room at a Washington, D.C. hotel after being told that the company was pleased with how quickly its application was moving along and ready to make its final payment. During the meeting, Brown accepted $15,000 in cash as fulfillment of the company’s promise to pay $50,000 to Brown for assistance in obtaining CBE approval and government contracting opportunities. Brown also accepted a “bonus” of $5,000 cash for Brown’s past official acts on behalf of the company and future influence if Brown were re-elected to public office. The cash was in denominations of $100 bills and wrapped with a rubber band.
At the end of the meeting, law enforcement agents entered the room to announce their presence and seized the $20,000 in cash from Brown. The company subsequently withdrew its CBE application.
Campaign Finance Scheme
In the spring of 2007, Brown was a candidate in a special election for the Ward 4 seat on the D.C. Council. Around that time, he met with a business owner, who is identified as “Co-Conspirator 1” in the statement of offense. Brown sought a campaign contribution but understood that Co-Conspirator 1 would not contribute in a public manner because certain business activities required support for other candidates, based on various political dynamics.
Brown understood that the contribution from Co-Conspirator 1 would be publicly disclosed as having been contributed in the name of another person. He also understood from his discussion that it would exceed the limits on the amount that an individual could contribute to a political campaign committee. At the end of the meeting, Co-Conspirator 1 told Brown that Brown would hear from somebody to arrange the contribution.
Following this meeting, Brown was contacted by Eugenia C. Harris, another business owner, in the District of Columbia. Then, as agreed upon by Brown, Harris, and Co-Conspirator 1, a series of bank transfers began taking place. Brown understood that a total of $20,000 originated from Co-Conspirator 1. Harris sent two wire transfers, of $10,000 each, to Brown’s personal bank account. Brown, in turn, contributed the funds to his campaign.
Brown subsequently caused the campaign committee to file a form with the D.C. Office of Campaign Finance that publicly disclosed that Brown made an individual contribution of $25,000 to his political campaign committee, which Brown knew disguised the fact that Co-Conspirator 1 was the source of most of this money.
Harris pled guilty on July 10, 2012, to conspiring to disguise the source of campaign contributions in federal and local elections, including the 2010 District of Columbia mayoral campaign. She pled guilty to one count of conspiring to violate federal campaign finance law and to obstruct justice; one count of engaging in fraud and making false statements; and one count of conspiring to violate District of Columbia campaign finance law.
In announcing today’s guilty plea, U.S. Attorney Machen, Special Agent in Charge Gallagher, and Special Agent in Charge Kelly commended those who investigated the case for the FBI and IRS-CI.
They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michael K. Atkinson, David A. Last, and Bryan Seeley of the Fraud and Public Corruption Section and Assistant U.S. Attorney Anthony D. Saler, of the Asset Forfeiture and Money Laundering Section. Finally, they expressed thanks for assistance provided by Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Lenisse Edloe, and Nicole Wattelet, and Legal Assistant Angela Lawrence.
U.S. Attorney’s Office
KANSAS CITY, KS June 12 2013—A Colorado couple has been sentenced for operating a $17 million Ponzi scheme that defrauded investors in 13 states and five foreign countries with promises of big returns on investments in diamonds and international notes, U.S. Attorney Barry Grissom said today. Prosecutors from Grissom’s office are serving as special counsel on the case, which was filed in U.S. District Court in Denver.
Richard Dalton, 66, Golden, Colorado, was sentenced to 120 months in federal prison. He pleaded guilty to one count of money laundering. His wife, Marie Dalton, 61, Golden, Colorado, was sentenced to 60 months in federal prison. She pleaded guilty to one count of conspiracy to commit mail fraud. Restitution will be determined by July 24.
In their pleas, the Daltons admitted that from 2007 through 2010, they operated a company called Universal Consulting Resources, soliciting investors to purchase interests in investment contracts. The Daltons falsely told investors they were guaranteed annual returns ranging from 48 to 120 percent on profits generated from trading in diamonds and international notes. The Daltons falsely claimed that the investments were low risk, that investors’ money could be returned at any time, and that the companies’ accounts were evaluated by top professionals and licensed third parties. The Daltons falsely claimed the invested funds would be held safely in an escrow account at a bank in the United States.
In fact, Universal Consulting Resources was operated as a classic Ponzi scheme, wherein investor funds were commingled and used to pay out purported profits to early investors to create the false appearance that the investments were performing as promised.
The Daltons used investor funds to pay personal expenses including the purchase of autos, real estate and $35,000 worth of dental work for Richard Dalton. Family members of the Daltons also received substantial payments from the company.
In 2010 when the Daltons learned they were under investigation by the Securities and Exchange Commission, they discontinued making payments to investors. They attempted to deceive investors by claiming payments would be coming soon and inventing reasons for the delays. In November 2010 they left the United States for South Africa, where they remained until they were forced to return to the United States and arrested in Atlanta on September 30, 2011.
The parties agreed that the net loss to the victims caused by the crimes was more than $2.5 million and less than $7 million.
The FBI, IRS-Criminal Investigations, and the Securities Exchange Commission investigated. Assistant U.S. Attorney Richard Hathaway and Assistant U.S. Attorney Christine Kenney served as special counsels to prosecute the case.
Former Sanger Bank Employee Sentenced to Prison for Embezzling $250,000 from Bank www.privateofficer.com
FRESNO, CA June 12 2013 —Mary Helen Perez, 50, of Sanger, was sentenced today by U.S. District Judge Lawrence J. O’Neill to two years and three months in prison for stealing and embezzling from a federally insured bank, announced United States Attorney Benjamin B. Wagner. Judge O’Neill also ordered Perez to pay $249,793 in restitution to the bank.
According to court documents, Perez was the assistant customer service manager at Westamerica Bank in Sanger, where she had been employed for 29 years. Over a four-year period, Perez made approximately 78 cash withdrawals from seven customers’ bank accounts without their knowledge or authorization. Perez targeted customers she believed trusted her and covertly withdrew funds from their bank accounts by filling out withdrawal slips and forging their signatures or writing an “X” on the signature line. Perez spent the overwhelming majority of the embezzled funds at casinos and for other personal expenses.
Perez took several steps to hide her embezzlement from the bank and her victims, including telling some of the customers who questioned her about the unauthorized withdrawals that there would be fees charged for investigating the account discrepancies. Perez also sought to conceal her embezzlement by putting some of the victims’ bank statements on hold status so she would receive them at the bank, where she destroyed them.
This case was the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney Christopher Baker prosecuted the case.
U.S. Attorney’s Office
ST. LOUIS, MO June 11 2013—Greg J. Campbell pled guilty to diverting over $1.8 million from client retirement accounts to finance his luxury home, cars, and lifestyle.
According to court documents, from June 2006 until October 2011, Campbell was employed as a financial adviser at Merrill Lynch. Campbell managed clients’ Loan Management Accounts (LMAs), which were lines of credit collateralized by securities. Beginning in September 2007 and continuing until the end of his employment in October 2011, Campbell fraudulently diverted more than $1.4 million from LMAs to his own personal accounts and the accounts of others and for his own personal use. He used the money for a down payment on a personal residence, mortgage payments, lease payments on luxury vehicles, and living expenses.
In November 2011, Campbell began working as a senior wealth manager for Four Seasons Wealth Management (Four Seasons) in Clayton. Four Seasons was a company that offered securities and advisory services to clients through LPL Financial LLC (LPL), a securities broker-dealer. Campbell was employed at Four Seasons until October 2012 and managed clients’ individual retirement accounts (IRAs). Between November 2011 and October 2012, Campbell diverted funds from his clients’ IRAs to his own personal accounts. Campbell took various steps to conceal his fraud. He changed the mailing addresses on clients’ accounts, without their knowledge, to an address to which he had access so that clients would not receive account statements. In at least one instance, Campbell falsely stated on distribution documents that he was the client’s grandson, when he was not related to the client. During his tenure at Four Seasons, Campbell fraudulently diverted more than $360,000 from client accounts.
Campbell used fraudulently diverted funds to pay for personal expenses, including renovations to his personal residence, mortgage payments, vehicle lease payments, and living expenses.
Greg J. Campbell, Ladue, Missouri, pled guilty to two felony counts of wire fraud before United States District Judge Audrey G. Fleissig. Sentencing has been set for September 10, 2013.
Each count of wire fraud carries a maximum penalty of 20 years in prison and/or fines up to $250,000. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by the Federal Bureau of Investigation. Assistant United States Attorney Reginald Harris is handling the case for the U.S. Attorney’s Office.
U.S. Attorney’s Office
New Orleans LA June 11 2013 Stacey Jackson, age 46, a resident of New Orleans, Louisiana, was charged in a four-count indictment by a federal grand jury today with conspiracy, soliciting, and demanding payment in association with a program receiving federal funds, theft of federal funds, and obstruction of justice, announced U. S. Attorney Dana Boente.
According to court documents, Jackson, the executive director of New Orleans Affordable Homeownership (NOAH), a city agency and non-profit corporation, conspired with Earl Myers, Trellis Smith, and others to misuse and personally benefit from federal funds that NOAH had received, in violation of the law. The United States Department of Housing and Urban Development (HUD), both before and after Hurricane Katrina, had provided grant money to the city of New Orleans to address blight within the city and to remediate homes damaged by the storm.
Stacey Jackson, as the executive director of NOAH, was responsible for the day to day management of the agency and determined how much each sub-contractor would be paid. According to the indictment, Jackson arranged for excessive payments to subcontractors with the expectation that those subcontractors would kickback portions of the overpayments to Jackson’s benefit.
Additionally, Jackson is charged with obstructing justice by submitting false and forged invoices to a federal grand jury in response to grand jury subpoenas.
If convicted, Jackson faces a maximum term of imprisonment of five years, along with a fine of $250,000; three years of supervised release on the conspiracy count, and 10 years, a fine of $250,000, and three years of supervised release for the additional counts.
U. S. Attorney Boente reiterated that the indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, and the Department of Housing and Urban Development-Office of Inspector General.
The case is being prosecuted by Assistant U. S. Attorney Dan Friel and First Assistant United States Attorney Fred Harper.
MONTGOMERY, AL June 11 2013 —George L. Beck, Jr., United States Attorney for the Middle District of Alabama, announced today that:
Steven P. Mock, age 69, of Houston, Texas, and Frank J. Teers, age 50, of Montgomery, Texas, were convicted on June 4, 2013, of federal conspiracy, wire fraud, and bank fraud charges after a two-week jury trial.
Paul Hulse, Sr., age 65, of Kingwood, Texas, pled guilty to an information charging interstate transportation of property obtained by fraud.
The recent convictions of Hulse Sr., Mock, and Teers follow the June 5, 2012 guilty plea of Paul Hulse, Jr. to an information charging conspiracy to make a false statement to a bank.
According to court filings, Paul Hulse, Sr. (“Hulse”) was a director of H&H Worldwide Financial Service Inc.; Paul Hulse, Jr. (“Hulse Jr.”) was H&H’s president; Steven P. Mock was an attorney in the Houston area; and Frank J. Teers was a bond broker employed by Tri-Star Financial Services in Houston. Beginning in 2003, Hulse began soliciting various persons and businesses for loans based on the false representation that he controlled a large portfolio of bonds—the amount ranged from tens to hundreds of millions of dollars—that could be used as collateral for the loans. Mock and Teers made false statements to the prospective lenders that supported Hulse’s claim that he owned a substantial bond portfolio. In fact, Hulse did not have a bond portfolio. None of the solicited institutions, which included Western National Bank of Midland, Texas; MetLife; UBS Securities; and Jefferies and Co. agreed to make a loan to Hulse or H&H.
In February 2005, Hulse began soliciting loans from the Federal Land Bank of South Alabama (the bank) in Montgomery, Alabama. During the course of the discussions:
Hulse falsely represented that he had a large bond portfolio that could serve as collateral for the loans to H&H and submitted documents that concealed Hulse’s plan to use approximately half the loan proceeds to purchase the bonds that were going to serve as collateral for the loans.
Mock falsely claimed that he was Hulse’s “senior trust officer” and that the “trust agreements” permitted the use of $15 million of trust bonds in connection with the proposed loan.
Teers falsely represented that he managed a significant bond portfolio for Hulse, provided documents to Hulse that Hulse used to support his claim of ownership, signed documents that represented that bonds were on account at Tri-Star, and failed to disclose to the bank and to Tri-Star that he had been interviewed by IRS criminal investigators about Hulse’s fraudulent activities.
The bank made two loans to H&H totaling $68.5 million in August and December 2005. H&H used more than half the money to buy the bonds that were to serve as collateral for the loan. A significant amount of the loan proceeds were used for the personal benefit of Mock, Hulse, and members of the Hulse family. Teers made more than $600,000 in commissions from the buying and selling of bonds on behalf of H&H. By spring of 2007, the relationship between H&H and the bank had deteriorated. In an effort to convince the bank to allow the principal of the bonds to be used to make the quarterly loan payment, on June 28, 2007, Mock, Hulse, and Hulse, Jr. sent a letter to the bank that (a) falsely claimed that H&H was on the “doorstep” of obtaining a loan from Wells Fargo that would allow bank to be paid in full and (b) described how the loan proceeds had been used without disclosing the fact that more than half the loan proceeds had been used to buy the bond collateral.
“Protecting the people who entrust their money in our banks, credit unions, and other financial institutions is essential to a healthy economy,” stated U.S. Attorney George L. Beck, Jr. “My office will continue work diligently to protect the people who entrust their money to these banks and credit unions. Those criminals who commit frauds and attempt to commit frauds on the banks in the state of Alabama will be prosecuted to the fullest extent of the law.”
“The FBI will continue to ensure that those in a fiduciary position who solicit and handle other people’s money exercise their duties based on legal parameters and obligations, not fraudulently with an intent to illegally profit from their illegal schemes and deceit,” stated Stephen Richardson, FBI Special Agent in Charge, Mobile Field Division.
Mock and Teers face a statutory maximum sentence of 30 years’ imprisonment per count. Hulse, Sr. faces a maximum prison sentence of 10 years; Hulse, Jr. faces up to five years. Hulse, Jr.’s sentencing is set for August 6, 2013. Sentencing for Mock, Teers, and Hulse, Sr. has been scheduled for August 21, 2013.
The case was investigated by the FBI and was prosecuted by Assistant United States Attorneys Andrew O. Schiff and Denise O. Simpson. Assistance was also provided by the Internal Revenue Service, Criminal Investigations in Houston, Texas.
U.S. Attorney’s Office
FBI Press Release
BUFFALO, NY June 11 2013—U.S. Attorney William J. Hochul, Jr. announced today that Alcides Marcelino, a/k/a “Amigo,” was arraigned before United States Magistrate Judge Jeremiah J. McCarthy after an indictment was unsealed charging him with three counts of possession and sale of counterfeit postage stamps. The charge carries a maximum term of imprisonment of five years or a fine of $250,000 or both.
The indictment alleges Marcelino sold counterfeit Lady Liberty and U.S. flag forever postage stamps on multiple occasions between early summer 2010 and July 19, 2011. The investigation began when the main postal facility in Buffalo discovered multiple letters with the counterfeit stamps affixed. Further investigation revealed the stamps were allegedly being sold at several small, retail grocery locations in the Buffalo area. The evidence was presented to the grand jury by Assistant U.S. Attorney Robert C. Moscati, who will handle the trial of the case.
The investigation was conducted by the United States Postal Inspection Service, Boston Division, under the direction of Inspector in Charge Kevin M. Niland; the Federal Bureau of Investigation under the direction of Acting Special Agent in Charge Richard M. Frankel; and the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge James C. Spero.
The fact that a defendant has been charged with a crime is merely an accusation, and the defendant is presumed innocent until and unless proven guilty.