The following examples of Financial Institution Fraud investigations are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.

Ben Alan Diveley Sentenced In U.S. District Court

On September 24, 2010, in Missoula, Mont., Ben Alan Diveley, of Helena, was sentenced to 12 months and one day in prison, five years of supervised release, and ordered to pay restitution of $88,818. Diveley was sentenced in connection with his guilty plea to credit union embezzlement, money laundering and identity theft. According to documents filed with the court, Diveley had been employed as a loan officer with the Helena Community Credit Union (HCCU) for five years.   During his employment, he had applied for and been approved for a line of credit from which he was allowed to make withdrawals anytime he wished up to the amount of the credit line.  An auditor discovered in April of 2010 that Diveley had written himself a check off this line of credit by circumventing security software designed to prevent employees from issuing checks to themselves. Diveley was terminated after confessing. After Diveley’s departure, HCCU officers discovered two suspicious loan files where it appeared that the funds from at least one of these loans had been deposited in an account belonging to or controlled by Diveley.  The HCCU officers also discovered that Diveley had forged an HCCU customer’s signature to use that customer's CD as collateral for the loans. In addition to the two fraudulent loans, HCCU also determined that Diveley had misdirected a number of “loan origination fees” and “loan payoff fees” to his own account.  In total, it was determined that Diveley had embezzled at least $76,962 from the Credit Union.  

Mortgage Broker Who Played Key Role in Massive Real Estate Fraud Sentenced To 78 Months in Prison

On August 27, 2010, in Los Angeles, Calif., Mark Alan Abrams, of Los Angeles, was sentenced to 78 months in federal prison for helping to orchestrate a massive mortgage fraud scheme that caused well over $40 million in losses.   In addition to the prison term, the judge ordered Abrams to pay more than $41 million in restitution to two federally insured banks. Abrams’ sentencing followed his guilty pleas to conspiracy to commit bank fraud and loan fraud, bank fraud, making a false statement on a tax return and obstruction of justice. Abrams was one of two men who led a massive mortgage fraud that involved properties across California. In addition to being a leader of the scheme, Abrams engaged in active efforts to cover up his role and destroy evidence when the fraud started to come to light.  A real estate developer, Charles Elliott Fitzgerald, who along with Abrams ran the fraud scheme, was previously sentenced to 168 months in federal prison. Abrams and Fitzgerald ran a wide-ranging and sophisticated scheme that obtained inflated mortgage loans on homes in some of California’s most expensive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. Members of the conspiracy – real estate brokers, appraisers and mortgage bankers, who all shared in the profits from the fraudulent sales – sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into funding mortgage loans that were hundreds of thousands of dollars more than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses. A total of 11 real estate professionals have been convicted of federal charges related to the scheme.

Phoenix Couple Sentenced to 27 Months for Mortgage Fraud

On August 12, 2010, in Phoenix, Ariz., Samuel T. Dobos and Georgiana Dobos were each sentenced to 27 months in prison for their roles in a mortgage fraud scheme. The judge also ordered Georgiana Dobos to serve two years of supervised release and Samuel Dobos to serve five years of supervised release. The couple has also been ordered to pay $220,000 in restitution. In October 2009, the Dobos’ pleaded guilty to conspiracy to commit wire fraud after they facilitated the sale of 25 properties to unqualified straw buyers. Six other co-conspirators have pleaded guilty for their involvement in the conspiracy. Several are expected to be sentenced within the next few weeks. Among the co-defendants is Georgiana Dobos’s father, Gheorge Babeti, who was sentenced in August 2009 to 15 months in prison. He was used by both Samuel and Georgiana as a straw buyer on nine properties. Investor Brandon Azedgean was sentenced in November 2009 to 18 months for facilitating the sale of four Phoenix-area homes to straw buyers. Natasha Swallows, who was involved in the conspiracy as a real estate agent, pleaded guilty to a felony and was sentenced to probation in April 2010. The United States is also seeking the extradition of co-conspirators Daniel Morar and Cosmina Bunea, both of Romania.

Loan Officer Sentenced for Role in Million Dollar Mortgage Fraud Scheme

On August 2, 2010, in Columbus, Ohio, Laura S. Lassiter, of Pataskala, was sentenced to 24 months in prison, to be followed by five years of supervised release, and ordered to pay $1,160,301 in restitution to the victim financial institutions in this case.  Lassiter pleaded guilty on June 19, 2009, to wire fraud, bank fraud, and money laundering. According to court documents, Lassiter worked as a loan officer at various mortgage companies in the Columbus area until 2006 when she began working as a loan officer at the now-defunct Sunrise Mortgage Company.  Without the buyers’ knowledge, Lassiter prepared loan applications for the buyers using false information which included false income, employment and liability figures. She also frequently provided the down payment money for the buyer, unbeknownst to the lender. Lassiter would also provide money after closing, in addition to or in lieu of the down payment, to the buyer as an enticement for the buyer to purchase the home. In order to disguise the fact that she was the loan officer on the properties she was selling, she would use the names of other loan officers as the “preparer” of the application.  Court documents showed that Lassiter was involved in the sale of 14 properties where false information was used to obtain loans through various lending and financial institutions. She derived $745,905 as a result of the scheme.

Seven More Defendants Sentenced for Mortgage Fraud $12.6 Million Scheme Involved New, Upscale Homes in Lee’s Summit, Raymore

On July 23, 2010, in Kansas City, Mo., seven defendants were sentenced for their roles in a $12.6 million mortgage fraud conspiracy.   The seven defendants are Stefan Guerra sentenced to 12 months and a day in prison and $2,426,000 in restitution; Jerome Howard sentenced to 36 months in prison, $5,946,000 in restitution and order to forfeit $901,000; Michael Smith sentenced to 60 months probation, six months home detention, 4000 hours of community service and $640,000 in restitution; Gerald Williams sentenced to 60 months probation, six months home detention, 2000 hours of community service, and $238,000 in restitution; Judith Williams sentenced to 60 months probation, four months home detention, 100 hours of community service and $238,000 in restitution; James Simpson sentenced to 12 months and a day in prison, $496,000 in restitution; and Cheryl Romero sentenced to 60 months probation, six months home detention, 4000 hours of community service and $488,00 in restitution. According to court documents these defendants are among 18 who pleaded guilty in connection with a conspiracy to defraud mortgage lenders from June 2005 to May 2007. Eleven co-defendants have now been sentenced. Conspirators were involved in buying and selling new homes in the Raintree and Belmont Farms subdivisions in Lee’s Summit and the Eagle Glen subdivision in Raymore. Buyers purchased the homes at inflated prices, obtaining mortgage loans by providing false information to mortgage lenders, then keeping the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from the builder, Jerry Emerick. Kickbacks ranged from $60,000 to $125,000 on each house. Emerick pleaded guilty to conspiracy to commit mortgage fraud and wire fraud and to transfer funds obtained by fraud across state lines.  Angela R. Clark, a real estate agent who sold new homes for Emerick, has also pleaded guilty to her role in the conspiracy and awaits sentencing. Co-defendant Cynthia Jordan, 43, of Lee’s Summit, another mortgage broker, has also pleaded guilty and awaits sentencing. In total during the course of the conspiracy, mortgage lenders approved 25 loans totaling nearly $12,617,000.  From that total, buyers received more than $2,343,000 without the lenders’ knowledge.  Lenders losses exceeded $6,434,000.

Pennsylvania Women Sentenced for Bank Fraud and Tax Fraud

On July 14, 2010, in Philadelphia, Pa., Roberta Stutzman was sentenced to 75 months in prison and ordered to pay over $4 million in restitution for defrauding National Penn Bank, in Boyertown, Pa.  Stutzman pleaded guilty in March 2010 to bank fraud, bank embezzlement, and tax fraud.  According to her plea agreement, Stutzman admitted that while employed at National Penn Bank, she misappropriated $4,414,538 of the Bank’s money. Stutzman spent much of the embezzled funds on expensive vehicles, a vacation home, real estate, costly jewelry, paid vacations, and gifts, as well as transferred hundreds of thousands of dollars to third parties. Stutzman also filed a false tax return in calendar year 2007 by not reporting approximately $719,571 in additional income from the embezzled funds.

Two Sentenced In Fraud Scheme

On March 18, 2010 in Chicago, Ill., George Konjuch and Armanda Naverrete were each sentenced to 96 months in prison and 3 years supervised release for bank fraud, bribery of a bank official, and tax fraud.  According to court documents, Armando Naverrete was the President and part owner of Naverette Industries.  Naverrete Industries Inc., d/b/a Integrated Security Solutions provided physical security to LaSalle Bank.  George Konjuch was the First Vice President of Physical Security at LaSalle Bank.  Together, Naverrete and Konjuch entered into a scheme to defraud LaSalle Bank out of $30 millions dollars.  Konjuch, in his position as Vice President of Physical Security, held the authority to grant physical security contracts at numerous branches of LaSalle Bank.  Konjuch granted Naverrete Industries an inflated contract to provide security at all the Illinois branches of LaSalle Bank and was paid $650,000 a month by LaSalle Bank.  Naverrete was receiving 12 times the amount of the normal industry practice for his services.   In exchange for the inflated contracts, Konjuch received $44,000 in cash a month in kickbacks from Naverrette.  In addition to the cash, Konjuch also received gifts and vacations from Naverrete.  Naverrete Industries was ordered to forfeit nearly $17,245,000. 

Owner of Several San Diego Telemarketing Companies Involved in a Real Estate Investment Fraud Scheme Sentenced

On April 19, 2010, in San Diego, Calif., Michael Alexander was sentenced to 30 months in prison; three years supervised release and ordered to pay more nearly $1.8 million in restitution for mail and tax fraud.  According to court documents, Alexander admitted that he formed the Rose Fund, LLC, to solicit investor money to fund loans secured by real property and that he formed TRF Holdings, Inc., a related entity, to provide “seed money” to capitalize the Rose Fund. Alexander hired a convicted felon, William Wright, to be his lead salesman.  Alexander further admitted that, in order to make sales, they misrepresented to investors that funds were safe and would be used to make loans secured by real estate; they would receive a five percent sales commission; and that the businesses were well-established, successful, and operated by experienced real estate professionals. Alexander also intentionally misled TRF Holdings, Inc. investors into believing that their investments would be used to fund real estate loans rather than provide seed money for the Rose Fund. In addition, Alexander and Wright concealed from investors that Wright had been previously convicted of mail and wire fraud and that the Securities and Exchange Commission (SEC) had begun an investigation of the Rose Fund in April 2003. After learning of the April 2003 SEC investigation, Alexander solicited more than $2 million from new and existing investors by concealing the existence of the SEC investigation. In pleading guilty, Alexander admitted that he fraudulently obtained more than $4 million from more than 100 investors during the one year that the fraud scheme operated between October 2002 and October 2003. Although investors were promised that their investments would be used to make secured real estate loans, Alexander funded only 16 loans totaling $1.8 million. By contrast, Alexander fraudulently diverted more than $1.4 million of investor funds to himself and $665,000 to Wright. In May 2008, Wright was indicted on federal fraud charges stemming from his involvement in the Rose Fund/TRF fraud scheme. In February 2010, Wright pleaded guilty to conspiracy to commit mail and wire fraud and is awaiting sentencing.

Connecticut Woman Sentenced for Laundering Drug Money and Defrauding Financial Lenders

On April 12, 2010, in New Haven, Conn., Diana Gjuraj, of Stamford, was sentenced to 51 months in prison, to be followed by three years of supervised release.  A hearing to determine restitution to the lending institutions will take place at a later date. Gjuraj pleaded guilty in December 2009, to conspiracy to commit money laundering and fraud in loan and credit applications. According to court documents and statements made in court, Gjuraj’s brother, Isni Gjuraj, was the lead supplier of narcotics to a Norwalk-based narcotics trafficking gang known alternately as the Goonies and the Washington Village Bloods.  Between 2003 and 2008, Isni Gjuraj provided Diana Gjuraj with more than $70,000 in cash derived from narcotics trafficking activity, which she deposited into several bank accounts in her own name. She then wrote checks drawn from funds in her bank accounts to make payments for Isni Gjuraj’s expenses, including automobile payments, rent payments, medical bills and legal expenses.  In addition, Diana Gjuraj defrauded several lenders.  Specifically, in approximately June 2006, she knowingly submitted to Fremont Investment & Loan a false document purported to be a rental agreement, false statements regarding rental income and a false document purported to be a 2005 W-2 form in connection with her application for a $551,000 mortgage loan for a residence located in Stamford.  In approximately December 2006, Gjuraj submitted to Corporate America Family Credit Union (CAFCU) a false document purported to be a rental agreement in connection with her application for a loan in the amount of approximately $2,500.  In April and May 2007, Gjuraj submitted to Chase Bank USA, N.A., false rental agreements, false statements regarding rental income, a false document concerning the purported business plans of her employer and false statements concerning her purported intent to reside at a house in Bridgeport, in connection with applications for two mortgage loans in the amounts of approximately $156,800 and $39,200.  Finally, in approximately July 2007, Gjuraj submitted to CAFCU, false documents purporting to be rental agreements in connection with her application for an automobile loan in the amount of $26,795 for a BMW Model 745. Isni Gjuraj was sentenced to 320 months in prison on August 5, 2009.

Real Estate Developer Sentenced for His Role in a Multi-Million Dollar Fraud Scheme

On April 12, 2010, in St. Louis, Mo., Brian Rickert, of Creve Coeur, was sentenced to 27 months in prison for his role in a real estate development fraud scheme that took place in 2006 and 2007.  According to information presented in court, Rickert assisted his father, Gary, in fraudulently obtaining financing for a number of high-end homes in Ladue and Town & Country that they intended to rehab.  In all, the Rickerts submitted fraudulent loan applications - including phony tax returns and profit/loss statements - for five different loans at five different area financial institutions.  In addition to his prison sentence, Rickert was ordered to pay in excess of $700,000 in criminal restitution.  Gary Rickert awaits sentencing.

Colorado Man Sentenced for His Involvement in a Scheme to Steal Over $800,000 from Great-West Insurance

On April 9, 2010, in Denver, Colo., David I. Hillman, of Aurora, was sentenced to 60 months in prison, to be followed by three years of supervised release, and ordered to pay $809,578 in restitution to the victim, Great-West Life and Annuity Insurance Company.  According to the Indictment, as well as facts presented to the jury during trial, in September 2001 and continuing through early 2006, David Hillman conspired with Hillary Shaffer to receive and spend hundreds of thousands of dollars stolen from Great-West, an insurance company located in Greenwood Village, Colorado.  Hillman was employed at Great-West from 1999 through March 2001.  Shaffer similarly worked as an employee of Great-West during the period 1999 through 2005.  Over the course of her employment, Shaffer stole over $800,000 from annuity accounts controlled by Great-West.  On numerous occasions Shaffer diverted payments from Great-West to herself and Hillman.  Shaffer carried out her scheme to steal Great-West funds by causing checks to be issued from a Great-West operating account to the benefit of “David Hillman,” using a stolen computer passcode.  In addition, Shaffer caused wire transfers of stolen funds to be directly deposited into one of two joint accounts controlled by her and Hillman.  During the course of the conspiracy, both individuals jointly accessed the accounts and spent the stolen funds.  The investigation revealed that Hillman was aware that the money was stolen from Great-West.  He also admitted to lying to federal agents when asked about the source of the funds.  Shaffer was previously sentenced to 22 months imprisonment.

Kansas Broker Sentenced to 200 Months in Mortgage Fraud Case

On April 6, 2010, in Kansas City, Kan., Wildor Washington, Jr., of Leawood, was sentenced to 200 months in prison and ordered to pay more than $3.7 million in restitution after his conviction on mortgage fraud charges.  Washington pleaded guilty to one count of conspiracy, seven counts of wire fraud and three counts of money laundering. In his plea, he admitted in 2003 he conspired with other defendants to obtain mortgage loans by submitting inflated property appraisals and other false information to lenders.  Washington pleaded guilty to wire fraud counts involving the sale of several properties in Kansas City, Mo., Liberty, Mo., and Leawood, Kan. Four other co-defendants in this case have also been sentenced:  Kara E. Robinson-Franks was sentenced to 36 months; Scott Alexander received 12 months and a day; Victoria Bennett was sentenced 24 months; and Terrence Cole received 37 months. One co-defendant, Maurice Ragland, awaits sentencing.

Suspended Certified Public Accountant Sentenced to Federal Prison After Admitting Guilt in Mortgage Fraud

On April 6, 2010, in Portland, Ore., Morton Daniel Bohn, of Tigard, Oregon, was sentenced to twelve months and one day in federal prison on charges of bank fraud and money laundering. Bohn was also ordered to pay restitution of $288,171.  Bohn, a former Certified Public Accountant whose license has been suspended by the Oregon Board of Accountancy, previously admitted guilt in a scheme to defraud Countrywide Financial Corporation (“Countrywide”) and Silver Falls Bank. According court documents, Bohn used his financial expertise as an accountant to defraud Countrywide and Silver Falls Bank of funds by fabricating and submitting fraudulent individual income tax returns, between the years of 2003 and 2007, to his mortgage broker in support of applications to the financial institutions. The Silver Falls Bank has since been closed by the Federal Deposit Insurance Corporation (FDIC).

Florida Residents Sentenced for Their Roles in Laundering Drug Money and Mortgage Fraud

On March 31, 2010, in Miami, Fla., Garry Souffrant, a licensed real estate broker in the State of Florida, and his wife, Yvonne Souffrant, were sentenced to 240 months and 54 months in prison, respectively.  In November 2009, Garry Souffrant was convicted after a five-week jury trial of 46 counts, including conspiracy to commit mortgage fraud, conspiracy to commit drug money laundering, mail fraud, making false statements to mortgage lenders, bank fraud, bank theft, and receipt of stolen bank funds.  At the same trial, Yvonne Souffrant was convicted of conspiracy and making a false statement to mortgage lenders.  According to the Indictment and evidence presented during the trial, from 2002 to 2008, Garry and Yvonne Souffrant used their family business, called Progressive Real Estate of Broward, Inc., to launder millions of dollars in drug proceeds through an extensive mortgage fraud scheme. The defendants assisted drug traffickers in purchasing homes and luxury automobiles. To execute the scheme, the defendants arranged for and/or acted as straw buyers on behalf of the drug traffickers. This allowed the traffickers to use their drug proceeds to purchase homes and lease automobiles, while concealing the source of the income.  The Souffrants also diverted several million dollars of mortgage loan proceeds to continue to fund the scheme and for their personal use.

Former Portland Loan Officer Charged with Aggravated Identity Theft

On March 29, 2010, in Portland, Ore, Kamau Herndon was sentenced to 24 months in prison, to be followed by one year of supervised release.  Herndon, a former loan officer at Lighthouse Financial Group in Vancouver, Washington, was indicted in February 2009, on aggravated identity theft charges after he submitted three materially false loan applications to purchase homes for his girlfriend. The applications totaled more than $1.5 million for homes located in Milwaukee and Portland, Oregon and Edmonds, Washington.  In July 2009, Herndon pleaded guilty to the charge of aggravated identity theft. 

Loan Broker Sentenced to 30 Months in Fraud Case

On March 22, 2010, in Denver, Colo., Leonor Josue Wong, of Aurora, was sentenced to 30 months in prison, to be followed by five years of supervised release, and ordered to pay $226,583 in restitution to U.S. Bank and $87,659 to Key bank. Wong pleaded guilty in November 2009 to bank fraud. According to her plea agreement, Wong owned and operated a company called Solid Rock Financial Services, Inc. (SRFS), a loan broker that assisted individuals and small businesses with loans and other types of financing.  The company, which was based in Aurora, had offices in Arizona and Las Vegas as well, worked primarily with the Asian community and often with customers who did not speak or read English. Clients in Colorado were typically small business owners or people who wanted to start a business. Wong and SRFS held themselves out as liaisons between their clients and prospective lenders who would help the clients by preparing and completing loan applications; compiling and assembling other information necessary for lenders; explaining and assisting the clients generally with the loan application process; and providing necessary translation services. Wong used her clients’ personal information to open unsecured lines of credit at various banks.  From about 2000 through 2001, Wong obtained loan funds from U.S. Bank, KeyBank and similar lenders, for her own use and benefit. Some clients who initially sought the lines of credit later changed their minds before the funds were disbursed and directed Wong to cancel the credit lines. Wong or her employees told the clients the lines of credit had been cancelled. However, the defendant then caused the addresses on the lines of credit to be changed to addresses that the defendant and SRFS controlled and funds were disbursed for Wong and SRFS's benefit without detection by the client. In addition, Wong provided the banks with various types of false and fictitious information in the credit applications.

Former Principals of Commercial Money Center Sentenced for $70 Million Bank Fraud Conspiracy and Tax Evasion

On March 15, 2010, in San Diego, Calif., Sterling Wayne Pirtle and Ronald Allen Fisher were sentenced to prison for their roles in a $70 million scheme involving fraudulent equipment leases and tax evasion.  Pirtle was sentenced to serve 57 months in prison and Fisher was sentenced to serve 63 months in prison. In addition, they both must serve three years of supervised release and each pay $61,212,047 in restitution to 14 victim banks. The defendants were the former principals at Commercial Money Center (CMC), a now-bankrupt company they operated in Escondido and Las Vegas. According to court documents, the defendants admitted that they engaged in a scheme through CMC that involved the sale of pools of fraudulent sub-prime equipment leases to financial institutions. The defendants included $70 million worth of fraudulent leases in the pools they sold to the financial institutions. Before it declared bankruptcy, CMC obtained over $300 million from financial institutions through its sale of sub-prime equipment lease pools. Each defendant admitted that he evaded payment of approximately $1 million in personal income taxes on the millions of dollars received from CMC.  In connection with the same fraud scheme, Kelly Fisher-Buh, daughter of Ronald Fisher, was sentenced to 12 months and a day for tax evasion, and Ronald Fisher’s wife, Nancy Fisher, was sentenced to serve four months in federal prison for wire fraud.  Both were ordered to serve three years of supervised release, and Nancy was also ordered to pay $119,601 in restitution. Ronald's son, Mark Fisher, is awaiting sentencing for tax evasion and bank fraud.

Pennsylvania Man Sentenced for His Role in Mortgage Fraud Scheme

On March 10, 2010, in Pittsburgh, Pa., Matthew Yurchison, of Champion, Pennsylvania, was sentenced to twelve months and one day in prison on his conviction of wire fraud conspiracy and willful failure to file income tax returns.  According to information presented to the court, Yurchison participated in a mortgage fraud scheme involving closing loans where Yurchison and his co-conspirator were supposed to pay off other mortgages, but instead used that money for their own purposes.  As a result, there ended up being two mortgages on properties when there was only supposed to be one.  Thus, when it came time to foreclose on the properties, the second lending institutions were not in the first lien position and they suffered over $670,000 in losses.  In addition, Yurchison and his co-conspirator applied for, and obtained, loans based on false information and by forging signatures of borrowers and others.  Yurchison also failed to file his tax returns for two years.

Minnesota Man Sentenced for Stealing More Than $400,000 from Mortgage Lenders

On March 8, 2010, in St. Paul, Minn., Micah Beaumia was sentenced to 36 months in prison for wire fraud and money laundering.  According to court documents, Beaumia admitted that from 2005 thru 2006 he devised a scheme concealing payments from mortgage loan proceeds. The proceeds were diverted to Beaumia and another buyer of real properties through the use of fraudulent underwriting and closing documentation. Beaumia acted as a mortgage broker and created fraudulent loan application documents to be provided to potential lenders. These applications overstated the true purchase price of the properties, concealed payments from the loan proceeds to Beaumia and a relative, and, in some instances, misrepresented the identity of the mortgage broker. Based on the fraudulent documentation, the proposed loans totaling more than $2.2 million were approved for 13 Minnesota properties.  After each loan was approved, the lender wire transferred funds to a Minnesota-based title company. Beaumia then worked with Jill M. Lehn, a closing agent, to conceal the payments. Lehn was sentenced to 24 months in prison in January 2008.

Owner of Mortgage Brokerage Company Sentenced for Mortgage Fraud and Tax Evasion

On March 5, 2010, in St. Paul, Minn., Frederick Deen, III was sentenced to 24 months in prison for wire fraud and tax evasion.  According to court documents, Deen admitted that from September 2005 through July 2007, he and others carried out a fraud scheme where mortgage loans were secured by straw purchasers, for amounts exceeding actual purchase prices, based on inflated property appraisals.  Deen also admitted that payments were made out of the loan proceeds to him and other participants in the scheme. Deen was the loan officer for most of the transactions, and provided the fraudulent loan applications to potential lenders where property purchasers were falsely identified and property was falsely described as “owner occupied,” when, in fact, each straw buyer was purchasing multiple properties at the same time. In application materials submitted to lenders, the defendant and others also inflated the income and assets of potential borrowers, and a licensed real estate appraiser involved in the fraud scheme created inflated appraisals of the properties that were provided to the lenders to support the fraudulent loan amounts. Deen admitted that he personally participated in 27 fraudulent real estate transactions, involving approximately $18 million in loan proceeds, from which at least $2 million was received by Deen and his co-conspirators through those concealed payments. Deen also admitted that for tax years 2006 and 2007, he evaded paying federal income taxes on approximately $200,000 in taxable income and owes the Internal Revenue Service more than $50,000 in income taxes. 

Texas Businessman Sentenced to 25 Years in Prison for Causing Nearly $60 Million in Losses to Investors

On March 5, 2010, in Lubbock, Texas, Benny Judah was sentenced to 300 months in prison and ordered to pay nearly $60 million is restitution for defrauding more than 250 investors.  According to court documents, Judah who operated numerous restaurants and related businesses, including Excel Lease Fund, Inc., pleaded guilty to one count of money laundering and one count of sale and delivery after sale of unregistered securities.  Judah is not a licensed securities broker; however, since 2001 he sold Excel debentures, guaranteeing a high rate of return.  Judah admitted that from October 2005 until April 2009, he scammed investors in Excel of nearly $60 million.  As part of his scheme, Judah misrepresented the viability of Excel by failing to disclose the true and actual use of investor funds, and the true financial condition of Excel.  He generated false documents consisting of prospectuses, balance sheets, income statements and interest accrual letters that gave the image of a successful company.  He mailed these fraudulent documents to investors and told investors that Excel was profitable and grossly overstated the value and nature of Excel’s assets.  After an investment was made, Judah would mail the investors the debentures for them to sign and then the investors would mail the signed debentures back to Excel and Judah.  Judah would mail false account statements to the investors showing that their investments were earning interest at a 10 percent rate.  Judah admitted using investor proceeds in a manner grossly inconsistent with representation he had made.  For example, he lost at least $5 million of the proceeds by “day trading” and used investment proceeds to provide related-party loans to himself and to other businesses he controlled.

Pennsylvania Man Sentenced for Fraud, Money Laundering and Tax Offenses

On March 5, 2010, in Pittsburgh, Pa., Kenneth Fox, of Irwin, Pennsylvania, was sentenced to 41 months in prison, to be followed by three years of supervised release. Fox pleaded guilty in September 2009 to charges of a wire fraud conspiracy, money laundering conspiracy, and failure to file income tax returns.  According to court documents, while acting as a closing agent for real estate transactions, Fox failed to pay obligations associated with the real estate as directed by the lender. He used those funds for his own benefit and the benefit of his co-conspirator.  In addition, Fox's conspiracy included using the proceeds from more recent transactions to pay liabilities associated with older transactions.  The conspiracy also involved the submission of fraudulent loan applications and other false documents to lenders that overstated the borrowers' income and assets and the value of the properties serving as collateral for the loans.  Fox also willfully failed to file an income tax return for 2005.

Mortgage Broker Sentenced on Charges Related to Mortgage Fraud

On March 2, 2010, in Minneapolis, Minn., Terry Lemke was sentenced to 24 months in prison for wire fraud and money laundering.  According to court documents, Lemke admitted defrauding clients from June 2006 through 2007 by falsely representing that the funds they provided him as owner of All Metro Title, a mortgage brokerage company, were being held for their real estate transactions. Instead, Lemke was using that money for personal benefit. In total, Lemke defrauded clients of more than $800,000. As part of his scheme, Lemke caused a wire transfer of more than $193,000 from Lehman Brothers Bank in Colorado to an All Metro Title account on June 23, 2006. Then, on that same day, he paid nearly $21,000 from the All Metro Title account toward his personal credit card bill.

Massachusetts Man Sentenced for Mortgage Fraud

On February 23, 2010, in Boston, Mass., Michael Hicks, of Quincy, Mass., was sentenced to 42 months in prison, to be followed by three years of supervised release; an order of restitution was deferred for up to 90 days. Hicks pleaded guilty in November 2009 to charges of wire fraud and money laundering in connection to a mortgage fraud scheme in which he recruited straw buyers to purchase two properties which ultimately went into foreclosure, causing a loss to lenders of more than $1 million. According to court documents, if the case would have proceeded to trial, the evidence would have established that in August 2007, Michael Lee purchased a house in Dorchester, Mass., for $400,000 and converted the house into three condominiums, which allowed him to sell the units individually. At Lee’s request, Hicks, through a Pennsylvania associate, recruited a “straw buyer” to purchase all three units. The straw buyer provided his identifying information to the Pennsylvania associate who forwarded it to Hicks. Hicks used this information to apply for mortgages for the purchase of the three units. In the loan applications, Hicks falsely represented that the straw buyer intended to make each unit his primary residence, that he was self-employed as a contractor, and that he had an annual income ranging, in the various applications, from $156,241 to more than $379,152, all in an effort to secure mortgages for $370,000 for each of the three units. Hicks also created a fictitious business for the straw buyer, falsely verified the straw buyer’s employment status for the mortgage applications and arranged for false income tax returns to be submitted with the applications. Hicks also arranged for a straw buyer for another multi-family dwelling.  For recruiting both buyers, Lee paid Hicks a total of $180,500 a sum which Hicks was ordered to forfeit to the United States prior to sentencing. Michael Lee is under indictment and his investigation is pending.

Two South Carolina Men Sentenced in Bank Fraud Conspiracy

On February 23, 2010, in Charleston, S.C., Floyd Hargrove, of Beaufort, South Carolina, and William Toadvine, of Mt. Pleasant, South Carolina, were sentenced for their roles in a conspiracy to commit bank fraud. Hargrove and Toadvine were each sentenced to 40 months in prison and ordered to pay $421,014 in restitution.  According to court documents, from 2003 through 2005, Hargrove and Toadvine owned and operated the Car Connection, a used car business in Beaufort.  They admitted misleading lenders that were making car loans to Car Connection customers by presenting false loan applications on behalf of the customers.  Specifically, Hargrove and Toadvine exaggerated their customers’ income or minimized their debt, so buyers would qualify for loans.  Hargrove and Toadvine also falsified the mileage of the used cars, which overstated the value of the loan collateral.  Many of the car loans that Hargrove and Thomas processed were not repaid, resulting in losses of approximately $421,014 to various financial institutions.

Minnesota Man Sentenced for Defrauding Mortgage Company

On February 18, 2010, in Minneapolis, Minn., Eric Moen was sentenced to 18 months in prison.  According to court documents, Moen, a licensed real estate agent conspired with Kevin Winkelmann from August 2005 to November 2005 in a scheme to defraud GreenPoint Mortgage.  Moen and Winkelmann falsified a loan application to secure a home mortgage for Winkelmann.  They included in the loan application employment verification for Winkelmann, who was not employed at the time. Based on this fraudulent application, GreenPoint Mortgage wired nearly $642,000 to a title company as part of the real estate closing process. On March 3, 2009, Winkelmann was sentenced to six months in federal prison for his role in the mortgage fraud scheme.

Mortgage Fraud Nets 30 Month Prison Sentence

On February 10, 2010, in Las Vegas, Nev., Shauna Labee was sentenced to 30 months in prison, to be followed by three years of supervised release, and ordered to pay $1,123,674 in restitution. Labee pleaded guilty in June 2008 to charges of mail, wire and bank fraud in connection with a conspiracy to defraud financial institutions by submitting mortgage loan applications that contained materially false and fraudulent information.  Beginning on or about April 2005 and ending in or about April 2006, Labee conspired with Steven Grimm, Eve Mazzarella, and others to make materially false and fraudulent representations on mortgage loan applications.  Labee and Grimm recruited straw buyers to pose as property purchasers. Through these straw buyers, Grimm obtained control over numerous properties. Grimm sent straw buyers to Labee to complete mortgage loan applications and related paperwork to finance the property purchases. Labee put false and fraudulent information in the straw buyers’ loan applications and supporting documentation regarding the straw buyers' employment, income and assets. This false information caused the straw buyers to qualify for loans for which they would not have qualified without the false and fraudulent information. The total loss suffered by the financial institutions was greater than $ 17,000,000.

Credit Card Scheme Nets Redondo Beach Man 63 Months in Federal Prison

On February 9, 2010, in Los Angeles, Calif., Mahmoud Khalid Azzam, of Redondo Beach, California, was sentenced to 63 months in federal prison for his conviction on conspiracy, mail fraud, bank fraud, and money laundering charges. In his plea agreement, Azzam admitted that he, in conjunction with his co-conspirators, obtained point of sale terminals to swipe credit cards to fraudulently obtain money from victim banks. Azzam admitted that he worked with co-conspirators Charles Nix and Shelly Poling, who have both pleaded guilty to participating in the scheme. According to his plea agreement, Azzam and Nix provided Poling with credit card applications that Poling completed using the names of non-existent individuals, as well as people who knew that their names would be used as a part of this scheme.  Poling completed the credit card applications, using false information including names, places of employment, social security numbers, and/or annual salaries. After fraudulently obtaining the credit cards, Azzam and Nix swiped the cards through their point of sale terminals, creating the appearance that goods or services had been paid for with the credit card.  Once the point of sale transaction was approved, the credit card company transferred money into bank accounts controlled by Azzam and his co-conspirators. Azzam admitted that he and his co-conspirators used fraudulently obtained funds in an effort to promote and conceal the scheme.  To do this, Azzam and his co-conspirators would pay for initial purchases of merchandise with checks, in the names of fictitious businesses and individuals, in order to create a good line of credit, enticing the victim companies to increase the line of credit on an account. Azzam and his co-conspirators eventually abandoned the credit cards they established during the course of the scheme and failed to pay the victim companies for all of the transactions conducted.  Azzam admitted that, as a result of the fraudulent transactions, the members of the conspiracy obtained approximately $900,000. In addition to prison, Azzam was also sentenced ordered to pay restitution of $956,718 to victim banks defrauded by his scheme and to spend five years on supervised release after serving his prison sentence. Nix previously pleaded guilty to conspiracy, mail fraud, bank fraud, and wire fraud charges in connection to this scheme.  Poling also pleaded guilty to conspiracy, mail fraud, wire fraud, and money laundering charges in connection to her conduct in this case.  Both Nix and Poling are scheduled to be sentenced later this year.

Former President of Mortgage Company Sentenced to 13 Years in Prison in Fraud Scheme; Nearly $30 Million in Losses At HUD

On February 1, 2010, in Riverside, Calif., John Richard Varner, of Hesperia, California, was sentenced to 156 months in prison for defrauding the United States Department of Housing and Urban Development and private lenders by fraudulently obtaining hundreds of federally insured loans and selling those mortgages to private lenders in a scheme that caused tens of millions of dollars in losses to the federal housing agency. In addition to the prison sentence, Varner was ordered to pay $29,749,239 in restitution. Varner, the former president of Mortgage One Corporation, based in Hesperia, was convicted last April of one count of conspiracy to defraud HUD, one count of bank fraud and two counts of subscribing to false income tax returns. Varner was the fifteenth defendant convicted as a result of the scheme. According to information presented in court, from 1997 until 2002, Mortgage One and M-1 Capital were both in the business of approving, funding and then selling home mortgage loans, typically obtaining mortgage insurance on the loans from the Federal Housing Administration, which is an agency within HUD. Mortgage One and M-1 Capital obtained FHA mortgage insurance for their loans without HUD review due to their status as HUD-approved Direct Endorsement Lenders. They obtained and kept Direct Endorsement Lender status by submitting false documents, including bogus audits, to HUD. Varner and his co-defendants defrauded HUD by submitting fraudulent loan application documents in order to qualify the loans for FHA insurance. The loans went to borrowers who either did not meet the FHA requirements to qualify for the mortgages or were only “straw buyers.” Mortgage One and M-1 Capital sold the funded loans to banks, such as the FDIC-insured Firstar Bank, N.A. and Chase Manhattan Mortgage Corporation, using the same fraudulent documents. As a result of the scheme, HUD lost $23,628,857 on 905 fraudulent loans and a total of $29,638,011 when interest paid by HUD during the foreclosure and resale process is included. Varner was found guilty of filing false tax returns for the years 1999 and 2000 when he failed to report income that he used for personal expenses such as a Corvette, a $153,000 RV, jewelry and more than $150,000 deposited into a personal investment account.

Leader of Bank Initial Public Offerings (IPOs) Scheme Sentenced to Three Years in Prison

On January 13, 2010, in New Haven, Conn., Chaim Citronenbaum, of Monsey, New York, was sentenced to 36 months in prison, followed by two years of supervised release, for his leadership of a scheme to illegally invest in and profit from mutual savings banks that converted to publicly traded entities.  Citronenbaum was ordered to pay a $10,000 fine and to forfeit $1,683,903 to the Government.  On May 11, 2009, Citronenbaum pleaded guilty to conspiracy to commit mail fraud, to defraud the Internal Revenue Service (IRS), and mail fraud.  According to court documents and statements made in court, Citronenbaum devised a scheme to open accounts at numerous mutual savings banks in anticipation of the banks eventually converting to publicly-traded entities in order to purchase shares of stock when the banks converted to stock form.  Citronenbaum and others opened and controlled accounts in his name, in the names of other individuals, and in the names of various entities, including a “foundation” that facilitated the avoidance of taxes. Federal and state banking regulations require converting mutual banks that are conducting Initial Public Offerings (IPOs) to give eligible depositors priority rights in purchasing the newly issued shares, and these priority rights or “subscription rights” that are non-transferable, allow depositors to purchase shares at the “subscription price” or “offering price” generally set at $10. Citronenbaum and others entered into illegal arrangements with the investors and account holders whereby the co-conspirators and the investors would provide funds to finance the purchase of shares in the various IPOs and then share the profits generated by the purchase of and subsequent sale of the shares.  After purchasing the shares, Citronenbaum transferred the shares to brokerage accounts so that the shares could be sold for a profit in the open market, generally at prices above the IPO price.  On a number of transactions, the shares were sold through a brokerage account in the name of “The Citronenbaum Foundation,” thus avoiding the proper reporting to the IRS of the profit.  Citronenbaum made a profit of $1,683,903 from this scheme, all of which he must forfeit.  He also must resolve any tax liability with the Internal Revenue Service.

Pennsylvania Man Sentenced to Four Years for Conducting Illegal Business with Iran

On January 11, 2010, in Philadelphia, Pa., Ali Amirnazmi, of Berwyn, Pa, was sentenced to 48 months in prison, five years supervised release, and ordered to pay $17,277 in restitution to Penn Liberty Bank, as well as forfeit $81,277.  Amirnazmi was convicted in February 2009 on one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA), three counts of violating IEEPA, three counts of making false statements to federal officials, and three counts of bank fraud. The IEEPA makes it a crime to willfully violate U.S. sanctions on designated countries (including Iran). Amirnazmi, a citizen of both the United States and Iran, participated in illegal business transactions with Iran between approximately 1996 and July 2008. According to court documents, Amirnazmi also engaged in investments with companies located in Iran, including companies controlled in whole or in part by the Government of Iran, all of which are prohibited under U.S. government sanctions. The jury convicted Amirnazmi of lying to the Office of Foreign Assets Control, the FBI, and the IRS about business deals with Iran in an attempt to cover up that illegal activity. Amirnazmi also lied to Wachovia and Penn Liberty banks by submitting fake tax returns indicating financial health he did not have, in order to secure loans for which he would not have qualified.

Man Sentenced to Nine Years in Prison in Multi-Million Dollar Mortgage Fraud Scheme

On January 11, 2010, in Brattleboro, Vt., Benjamin Osmanson, former operator of the Highgate Manor, in Highgate, Vermont, was sentenced to 108 months in prison, to be followed by five years of supervised release, and ordered to pay over $12 million in restitution. Osmanson pleaded guilty in September 2009 to three counts of conspiracy, wire fraud, and money laundering related to his scheme to defraud mortgage lenders by submitting false loan applications in the names of “investors.”  Osmanson’s co-defendant, Jillian Protzman pleaded guilty on August 17, 2009, to two counts of conspiracy and money laundering, and was sentenced to six months in prison and ordered to pay 30 percent of $12 million owed in restitution. Former Florida realtor Margaret Giresi, who pleaded guilty in September 2008 to related conspiracy charges, was sentenced to three years of probation. Two mortgage brokers involved in the scheme, Mike Otis and Chris Whitfield,  pleaded guilty earlier this year in Louisville, Kentucky, and are awaiting sentencing. According to court documents, from at least as early as January 2006 through at least April 2007, Osmanson and Protzman orchestrated the purchase of at least 50 properties in California, Florida, Kentucky, and Vermont in the names of at least 10 investors, obtaining more than $26 million in loans to support the purchases. According to the indictment, Osmanson recruited friends, family members, and acquaintances to “invest” in real estate. Osmanson and Protzman then submitted fraudulent loan applications in the names of the investors to obtain fully-financed mortgage loans. The indictment states that Osmanson, Protzman, and others sought loans from multiple lenders, and closed the loans for each investor within a short period of time, in order to preserve the appearance of the investor’s good credit until the transactions were complete. The indictment further alleges that Osmanson and Protzman enriched themselves with “rebates,” “fees,” and commissions connected to the fraudulent property purchases, and continued to recruit investors and submit applications for new loans even after the loans to the initial investors began to fail. The over $12 million in restitution ordered represents the outstanding losses to the lending institutions after foreclosure sales on the involved properties.

Leader of $47 Million Mortgage Fraud Scheme Sentenced to Prison

On January 8, 2010, in Seattle Wash., Viktor Kobzar was sentenced to 60 months in prison, followed by three years supervised release, and along with co-defendants, ordered to forfeit a Lamborghini, two BMWs, a 31-foot yacht and several bank accounts worth $2.4 million  for conspiring to commit bank fraud, mail fraud, wire fraud and filing a false personal income tax return.  According to court documents, Kobzar was a mortgage broker who, with co-defendant Vladislav A. Baydovskiy, operated two brokerage companies, Nationwide Home Lending LLC and Kobay Financial Corporation; and established a third company, Emerald City Escrow, to close transactions involving the fraudulently obtained loans.  The defendants secured through “straw buyers” and otherwise unqualified purchasers at least sixty-eight loans, representing at least $46 million in loan proceeds, based on false and fraudulent representations. Employees and principals at Kobay and Nationwide prepared and submitted falsified loan applications and related verification documents to lenders in a scheme to conceal the fact that buyers were otherwise unqualified to obtain purchase money loans. Relying on the fraudulent information, lenders extended loans that exceeded the value of the property and the borrower’s ability to re-pay the loan. Employees and principals of Emerald City diverted some of the fraudulently obtained loan proceeds to themselves and others associated with the scheme.

Man Sentenced for Participation in Bank Initial Profit Offering (IPO) Fraud Scheme

On December 22, 2009, in New Haven, Conn., Steven E. Schleifer, of Monsey, New York, was sentenced to 12 months and one day in prison, followed by one year of supervised release, and ordered to pay a $10,000 fine.  In addition, Schleifer was ordered to surrender $73,605 in profits from his scheme. He has already paid $48,762 in back taxes, plus penalties and interest.  Schleifer pleaded guilty in September 2009 to corruptly obstructing and impeding the due administration of the Internal Revenue laws.  According to court documents and statements made in court, in 2003, the New Haven Savings Bank (NHSB) adopted a plan to convert from a privately held mutual savings bank to a public capital stock savings bank and, through this conversion, became a subsidiary of NewAlliance Bancshares, Inc. (NAB).  As part of its conversion plan, NHSB offered to sell its shares through a “subscription offering” in which five tiers of buyers would be offered the stock through an initial public offering (IPO) at the price of 10 dollars per share. The number of shares requested by “first-tier” depositors was more than the total number of shares offered, thus the IPO was “oversubscribed” and shares were not sold beyond the first-tier level.  NHSB depositors were prohibited from selling or transferring their subscription rights or entering into agreements or understandings to sell or transfer the shares prior to the offering. An associate of Schleifer’s was issued first-tier subscription rights.  In early 2004, Schliefer and his associate agreed to buy shares of NAB together.  Schleifer would provide funds to the associate using the associate’s subscription rights, and the two would share the profit from the subsequent sale of the NAB shares. On March 9, 2004, Schleifer wired approximately $1.17 million to his associate’s account at Citizens Bank.  On April 1, 2004, NAB issued 61,694 shares of stock to the associate and another 682 shares to her business entity, and refunded a total of $776,508 for the shares that were not allocated.  The associate then wired $776,500 to Schleifer’s account at Bank of America.  Between April 20 and May 3, 2004, Schleifer directed the sale of the NAB shares and profited $137,911.  In order to disguise the nature of the profits and to avoid the payment of federal taxes, Schleifer instructed his associate to write several checks, not only to him, but also to his family members, in amounts of $11,000 or less in order for the payments to appear as “gifts.”  In April 2005, Schleifer failed to declare on his income tax return the $137,911 in profit made from the purchase and subsequent sale of the NAB stock.  

Rancho Cordova Man Sentenced For Fraud Scheme Targeting Over $1 Million from Banks

On November 2, 2009, in Sacramento, Calif., Huyen T. Le, of Rancho Cordova, California, was sentenced to three years and five months in prison followed by five years of supervised release. Le pleaded guilty to bank fraud and structuring financial transactions on May 4, 2009. According to court documents, Le used credit cards belonging to another and his own business’ merchant accounts to force transactions well over the cards’ credit limits. In July and September 2008, Le attempted transactions totaling over $1 million and was successful in fraudulently obtaining over $360,000 from various banks that issued the charge cards. Le then proceeded to shuffle the money among various accounts, invested some of the funds in two homes, and engaged in many cash transactions less than $10,000 with banks in an attempt to avoid mandatory reporting on large value cash transactions.

Montana Woman Sentenced In U.S. District Court

On October 29, 2009, in Missoula, Mont., Leslie Susan Stehr, a resident of Missoula, was sentenced to 44 months in prison, five years of supervised release, and ordered to pay $1,015,374 in restitution. Stehr was sentenced in connection with her guilty plea to embezzlement by a bank employee and income tax evasion. In an Offer of Proof, the government stated it would have proved at trial that Stehr began embezzling money from her employer, First National Bank of Montana, in November 1999.  Stehr’s position as teller supervisor and vault supervisor enabled her to manipulate the bank’s records and reconcile the numbers in the General Ledger with the vault numbers.  According to court documents, from 1999 through 2008, Stehr stole approximately $803,000 in cash.  During the entire period that Stehr embezzled from First National Bank, she failed to report the stolen funds as income and failed to pay federal income taxes on those amounts.  Stehr’s 2007 federal income tax return listed taxable income of $23,681 and tax due and owing in the amount of $3,160.  Had Stehr included the embezzled funds from 2007 on her return, her taxable income would have been $184,948 and her tax due and owing would have been $50,835.       

Montana Woman Sentenced in U.S. District Court

On October 21, 2009, in Billings, Mont., Vickie Diane Becker, a resident of Hardin, Montana, was sentenced to 72 months in prison, to be followed by five years of supervised release, and ordered to pay $1,617,843 in restitution in connection with her guilty plea to bank fraud and money laundering.  In an Offer of Proof filed by the United States, the government stated it would have proved at trial that as Vice President of the Hardin Branch of the First Interstate Bank, beginning on or about September 18, 2002, and continuing into November 2007, Becker used her position at the bank to obtain loans she was not entitled to.  Becker approved and received the proceeds of loans for individuals who could not have legitimately qualified for the loans, keeping the loan proceeds for herself and making all loan payments.  Becker also created, approved and received loans in the names of friends and family members who were not aware of the loan or the loan proceeds.  Becker then engaged in a sophisticated “loan kite” whereby she used proceeds from one loan to pay for personal expenses in addition to making payments on other loans she had benefitted from.  In total, Becker managed payments to and from approximately ten different loans and lines of credit and cycled millions of dollars in loan proceeds.  Money was periodically and systematically moved between the loan accounts and her husband’s business accounts under the name Becker’s Flooring Inc.  Occasionally, Becker claimed that a loan or payment was made for remodeling or other services provided by Becker’s Flooring, when in reality no services were ever provided. The investigation revealed that on November 8, 2007, Becker withdrew $55,000 in an advance on the friend’s line of credit.  Becker transferred this money into the Becker Flooring Inc. checking account.  She subsequently transferred this money once more, after laundering it through the Becker Flooring checking account, to make a $55,000 payment on a Becker Flooring Inc. loan.

Wyoming Securities Adviser Sentenced In Scheme to Defraud Investors

On October 16, 2009, in Cheyenne, Wyo., Leo Timothy Buggy, of Green River, Wyoming was sentenced to 46 months in federal prison, to be followed by three years of supervised release, and ordered to pay $1,232,059 in restitution.  Buggy was also ordered to cooperate with the Internal Revenue Service by providing a full financial disclosure, and to file tax returns timely, and pay back taxes, penalties and interest.  Buggy pleaded guilty on July 17, 2009, to mail fraud, wire fraud and money laundering. According to court documents, Buggy knowingly devised a scheme to defraud and to obtain money by means of false and fraudulent pretenses, representations, and promises, in an amount totaling approximately $1,188,522. Buggy, acting in his capacity as a registered securities adviser with AXA Equitable, LLC, (hereinafter AXA) New York, New York, convinced his clients to liquidate their existing securities accounts with the promise of higher rates of return.  As part of the scheme, Buggy opened two bank accounts under the name: "Leo T. Buggy dba Equitable Life Agency Account" (without AXA's knowledge) in order to receive clients' funds, which were subsequently converted to Buggy's personal use and benefit.  Buggy also caused his clients to incur additional expenses, including early withdrawal penalties, wire transfer fees, and mailing fees. To further the scheme, Buggy caused to be created "AXA Equitable Account Summaries" which purported to show a client's "reinvestment" of funds when in truth the monies had been converted into his personally controlled "Equitable Life Agency" account, for his personal use and benefit. 

Two Individuals Sentenced in Mortgage Fraud Scheme

On October 6, 2009, in Raliegh, N.C., Stanely Garfield Williams, Jr., was sentenced to 70 months in prison to be followed by five years of supervised release.  On October 5, 2009, Cindy Tilley Greer was sentenced to 36 months in prison to be followed by three years of supervised release.  Williams, Greer, and others were indicted in November 2008 on federal charges related to a mortgage fraud scheme to defraud home buyers, banks, and other leaders.  According to court documents, co-defendant Daniel Rooks bought four tracts of land in Whiteville, North Carolina, subdivided the properties, put trailers on them, and sold them to low income people from around the area. Rooks partnered with Williams and another mortgage broker to finance the mobile homes.  Rooks falsely stated to the buyers the estimated cost of the property, the payment amounts and his ability to secure loans. After taking their social security numbers and names, he would then turn the information over to Williams who would falsify the loan applications, sending them in for approval. Greer was employed as a paralegal and notary by a law firm in Whiteville where she prepared and notarized various real estate documents including the HUD-1 settlement statement. She also arranged and conducted real estate closings, sometimes without the borrower’s knowledge or presence, and prepared and disbursed settlement checks. After the first round of sales were foreclosed, because the buyers could not make the payments, Williams began buying up the foreclosed property, finding new buyers or getting straw buyers whose names and Social Security numbers he could use to sell them all over again. Over 100 loans were secured and approximately $6 million in fraudulent funds were received. Daniel Rooks is awaiting sentencing.

Fiscal Year 2011 - Financial Institution Fraud Investigations

Table of Contents - Financial Institution Fraud Investigations

Criminal Investigation (CI) Home Page

How to Report Suspected Tax Fraud Activities?