Examples of Money Laundering Investigations - Fiscal Year 2010
The following examples of Money Laundering investigations are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Last of Three Defendants Sentenced For Role in Fraudulent Billing Scheme
On January 20, 2011, in San Jose, Calif., Carlos Ivan Vargas, of San Mateo, California, was sentenced to 37 months in prison for his role in a fraudulent office supply billing scheme that netted more than $1 million. Vargas pleaded guilty on September 16, 2010, to conspiracy to commit mail and wire fraud and conspiracy to commit money laundering. According to the plea agreement, Vargas, the President of Attorney’s Printing Supply (APS), a printing business located in San Francisco, admitted to conspiring with Daniel Dominguez, an accounting manager at APS, and John Tashiro, a purchasing specialist at the Palo Alto office of the law firm Wilson, Sonsini, Goodrich & Rosati, to commit mail fraud, wire fraud, and money laundering. Between 2002 and 2006, Tashiro submitted fraudulent orders for tab dividers from Wilson, Sonsini, Goodrich & Rosati to Vargas and Dominguez at APS. After receiving the fraudulent orders, Vargas and Dominguez billed Tashiro at Wilson, Sonsini, Goodrich & Rosati as if the orders had in fact been delivered. Vargas and Dominguez paid Tashiro for approving the fraudulent orders from both APS business accounts and personal bank accounts. The total amount that Wilson, Sonsini, Goodrich & Rosati overpaid APS for tab dividers that were never ordered nor delivered was more than $1 million. Wilson, Sonsini, Goodrich & Rosati has been reimbursed for all but $73,037 of its losses. Tashiro and Dominguez each pleaded guilty to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to commit money laundering. Both were sentenced on October 14, 2010. Dominguez was sentenced to 12 months and one day in custody, followed by three years of supervised release. Tashiro was sentenced to 24 months in custody, followed by three years of supervised release. Both were also ordered to jointly pay with Vargas $73,037 in restitution to Wilson, Sonsini, Goodrich & Rosati.
California Woman Sentenced to Prison for Defrauding New Mexico Company
On January 18, 2011, in Albuquerque, N.M., Flavia Bolourchi, of Sacramento, California, was sentenced to 37 months in prison, three years of supervised release, and ordered to pay restitution of $856,000. Bolourchi pleaded guilty on March 10, 2010, to mail fraud, interstate transportation of stolen property, money laundering and tax evasion. According to court documents, between January 3, 1997, and August 20, 1999, Bolourchi was employed as the financial officer of Spartan Health Sciences School of Medicine (“Spartan”). In March 1998, Spartan moved its corporate headquarters to El Paso, Texas and Santa Teresa, New Mexico. As part of her duties, Bolourchi received student loan checks and disbursed them to students to cover tuition and other expenses. Instead of depositing funds from these checks into Spartan’s bank account, Bolourchi deposited the funds into her own bank account in Santa Teresa, New Mexico. To conceal her fraud, Bolourchi made false entries in Spartan’s financial records. Bolourchi also failed to pay $320,483 in federal income taxes on the income she obtained by defrauding Spartan.
Kansas Woman Sentenced To 8+ Years for Selling Stolen Goods On ebay
On January 12, 2011, in Kansas City, Kan., Carrie Neighbors was sentenced to 97 months in prison and ordered to forfeit more than $616,000 for mail fraud and money laundering. According to court documents, Neighbors operated a business called Yellow House Quality Appliances that bought and sold items like power tools, clothing, appliances and electronics. Neighbors sold many of the items on the eBay Web site. From January 2004 through July 2006, Neighbors took part in a conspiracy to purchase stolen items and sell them on eBay. Many of the items purchased were new and still in the box. Neighbors paid about 50 percent of their retail value and resold the items for a profit. Once Neighbors received payment through Pay Pal accounts or received payment directly from the purchaser she would mail the stolen items to purchasers. She used some of the proceeds from the sale of stolen items to purchase other items that had been stolen and to make payments on her residence.
Oregon Woman Sentenced for Drug Distribution and Money Laundering
On January 12, 2011, in Eugene, Ore., Suzan Dione, of Eugene, was sentenced to 24 months in prison for conspiracy to manufacture and distribute marijuana, psilocybin mushrooms, and ecstasy, and for laundering money and structuring currency transactions. She also forfeited two homes and over $30,000 in currency. This sentencing followed Ms. Dione’s guilty plea on October 25, 2010. According to court documents, Ms. Dione was a distributor to people in multiple states and controlled a bank account into which more than $605,000 was deposited. All of the deposits were derived from the distribution of marijuana, psilocybin mushrooms, and ecstasy. She used some of this money to purchase a home located at 86151 Cherokee Drive in Eugene and to pay mortgages on a home located at 2143 Dakota Street in Eugene. In November 2008, a search warrant was served at both homes and $4,045 in currency and a variety of narcotics-related paraphernalia were seized. Over $26,000 was seized from various bank accounts. In pleading guilty, Ms. Dione admitted that she conspired with others to manufacture and distribute marijuana, psilocybin mushrooms, and ecstasy, and that she laundered over $700,000 of the proceeds of that operation in numerous financial transactions. She also admitted that she structured over $32,000 in currency transactions to evade financial institution reporting requirements, and that this currency was derived from the distribution of the marijuana, psilocybin mushrooms, and ecstasy.
Anchorage Man Sentenced to Five Years in Federal Prison for Drug and Money Laundering Crimes
On January 12, 2011, in Anchorage, Alaska, Daryl Hunter, of Anchorage, was sentenced to 60 months in prison to be followed by 36 months of supervised release after pleading guilty to 20 counts of money laundering and one count of maintaining a place for the distribution of controlled substances. Hunter will also forfeit approximately $1 million in proceeds from the sale of heroin, including five golf simulators, two Rolex watches, and a 1947 Stinson aircraft. According to court documents, Hunter traveled to Portland, Oregon to purchase heroin that he then sold in Anchorage. Hunter used the profits from this distribution to purchase a 2007 Cadillac Escalade for $70,517; five golf simulators, each for $54,500; two Rolex watches for a total price of $18,475; a 1947 Stinson aircraft for a $30,000 down payment; and “Wings N Things,” a local business, using a $200,000 cash down payment. In addition, prior to March 2007, Hunter rented 7035 Redhawk Circle in Anchorage. While he lived there, Hunter knowingly allowed the residence to be used to receive or store heroin for distribution.
Husband, Wife and a Co-Conspirator Sentenced for Participation in $23 Million Fraud and Money Laundering Scheme
On September 29, 2010, in Raleigh, N.C., three individuals were sentenced for their part in a scheme that bilked Cisco Systems, Inc., out of over $20 million. Mario Easevoli, of Port Charlotte, Florida, was sentenced to 151 months in prison followed by three years of supervised release. His wife, Jennifer Easevoli, of Oro Valley, Arizona, was sentenced to 108 months in prison followed by three years of supervised release. Jason Allan Conway, of Hendersonville, North Carolina, was sentenced to 48 months in prison followed by three years of supervised release. All three defendants were ordered to pay $21,715,844 in restitution. According to court documents, Mario and Jennifer Easevoli, aka Jennifer Leigh Harmon, were doing business as Synergy Communications Corporation. Mario was founder and president of Synergy; Jennifer served as vice president of the company. Conway was an agent and employee of Synergy. According to the Indictment, from approximately January 2003 to July 2005 the defendants submitted fraudulent claims to Cisco in order to receive replacement parts under the SMARTnet contract. SMARTnet is a contract service covering Cisco equipment that allows end users to obtain technical support and advance replacement parts. Advance replacement allows end users to obtain replacement parts immediately without having to return the failed or defective part first. After obtaining the replacement parts, the defendants sold them on the grey market to downstream customers, depositing the payments into a Synergy bank account. After creating more than 50 fictitious company names and 35 fictitious personal names, the defendants instructed Cisco to ship replacement parts to private mailboxes as well as residential and commercial addresses in seven states.
Owner of Pharmacy Services Company Sentenced on Drug and Money Laundering Charges
On September 24, 2010, in Mobile, Ala., Jason R. Kelley was sentenced to 120 months in prison, to be followed by three years of supervised release, and to pay a $12,600 special assessment. Kelley was convicted in February 2010 on 127 counts of conspiracy to commit money laundering, money laundering, unlawful distribution and dispensing of controlled substances, and unlawful distribution of controlled substances to persons under 21 years of age. Kelley was the owner of Applied Pharmacy Services, Inc. (APS). According to the indictment, Kelley participated in a conspiracy that dispensed and sold thousands of dosages of anabolic steroids – including powerful veterinary steroids approved for animal use only – to users throughout the United States, including teenagers.
Colorado Man Sentenced to Prison for Currency Structuring
On September 23, 2010, in Anchorage, Alaska, Esteban Lane Stubbs, of Kremmling, Colorado, was sentenced to 12 months in prison, three years of supervised release, and ordered to forfeit $336,753. Stubbs pleaded guilty to one count of structuring a financial transaction. According to court documents, Stubbs owned Stubbs Enterprises, doing business as Lobo Drywall, which he operated in the greater Anchorage area. Stubbs employed undocumented aliens for drywall labor who were not lawfully permitted to work in the United States. Stubbs paid them sub-market wages in cash and failed to withhold and pay employment taxes. These low wages and the absence of costs for income taxes, employment taxes, worker’s compensation, unemployment insurance, and other benefits paid by legitimate employers allowed Stubbs to underbid fellow contractors and gain a significant share of the drywall business in Anchorage and the Matanuska-Susitna Valley. The defendant acknowledged that to conceal his activities from the federal government, he obtained large amounts of currency by making multiple withdrawals under $10,000 from different branches of First National Bank Alaska. Between November 2004 and January 2007 Stubbs structured withdrawals of $336,753 to pay his employees in cash, thereby evading employment taxes due and owing to the Internal Revenue Service.
Connecticut Developer Sentenced to Six Years on Currency Structuring Charges
On September 17, 2010, in New Haven, Conn., James Botti, of Shelton, was sentenced to 72 months in prison, followed by three years of supervised release, and ordered to pay a $25,000 fine for public corruption and currency structuring offenses. Botti was convicted in November 2009 of one count of conspiracy to structure cash transactions and one count of structuring cash transactions. According to the evidence presented during the trial, Botti conspired with his father, Peter C. Botti, to structure cash deposits to hide the existence of a large amount of cash from the IRS and federal law enforcement authorities. From approximately June 2006 through January 2007, James Botti, or Peter Botti at his son's direction, made numerous deposits of cash in amounts less than $10,000 at various financial institutions to evade the requirement that financial institutions file currency transaction reports. The cash was deposited into bank accounts in the name of either James or Peter Botti. The cash that was deposited into Peter Botti’s accounts was distributed by check for the benefit of James Botti, to an account controlled by James, or to a person associated with James. As a result of his conviction of these currency structuring offenses, James Botti was ordered to forfeit $120,500 to the government. In addition, on April 1, 2010, a federal jury found Botti guilty of executing a scheme to defraud the citizens of Shelton of the honest services relating to a project that Botti was developing at 828 Bridgeport Avenue in Shelton.
Baltimore Car Dealers Sentenced for Laundering Money and Defrauding IRS
On September 17, 2010, in Baltimore, Md., Larry Young was sentenced to 18 months in prison, to be followed by three years of supervised release; his brother, Damon Young, was sentenced to 12 months and a day in prison, to be followed by three years of supervised release, with the first six months to be served in home detention. Damon Young was also ordered to pay restitution of $129,272, which represents the full amount of taxes due on his personal tax returns. The Youngs, both of North Carolina and formerly of Baltimore, Maryland, owned Platinum Motors located in Baltimore. According to court documents, the Youngs met with an individual who purchased a 1998 BMW 528 automobile with $19,000 in cash, which the individual stated was the proceeds from illegal activity. In an attempt to avoid the filing of a currency transaction report, the paperwork reflected the purchase price to be $19,000, but showed a down payment of $9,000 and an amount financed of $10,000, with the lien holder being Platinum Motors. Although Damon Young and Larry Young received $19,000 in cash, the required IRS Form 8300 was never filed in connection with this vehicle purchase. Also, according to Damon Young’s plea agreement, he had gross income of $322,874 during 2005; however, he failed to file a tax return for calendar year 2005. Damon Young further admitted that he failed to file personal income tax returns for calendar years 2002, 2003, and 2004, even though he had over $323,000 in gross income for those three years. Furthermore, as an officer and owner of Platinum Motors, Damon Young failed to file corporate tax returns for Platinum Motors for calendar years 2003 through 2005, even though the business had gross receipts of $21,234,382. According to Larry Young’s plea agreement, in another incident, he created false documentation to make it appear as if Platinum Motors had a lien on a another vehicle which was really purchased with cash from drug proceeds.
Two Sentenced in Wisconsin in Million Dollar Ponzi Scheme
On September 14, 2010, in Milwaukee, Wis., Jeff Stadelmann was sentenced to 108 months in prison, to be followed by three years of supervised release for wire fraud and money laundering. Donna Kay Lonzo was sentenced to 12 months and a day in prison and three years of supervised release. In addition, Stadelmann and Lonza were ordered to jointly pay $5,383,019 in restitution. According to court documents, from 2002 thru 2008 Stadelmann, a securities broker and owner of Li’L Bear, LLC, and Donna Lonzo bilked investors of $3.2 million by selling them unregistered securities. To keep his scheme going, Stadelmann used investors’ money to pay dividends to other investors, stating it was returns on their investments.
Three Sentenced for Their Roles in $3.7 Billion Ponzi Scheme
During the week of September 13, 2010, in Minneapolis, Minn., three individuals were sentenced for their roles in the Tom Petter’s $3.7 billion Ponzi scheme. Larry Reynolds was sentenced to 130 months in prison; Michael Catain was sentenced to 90 months in prison; and Robert Dean White was sentenced to 60 months in prison. According to court documents, Reynolds and Catain admitted that from 2002 through September of 2008, they conspired to launder the proceeds of the Ponzi scheme. Catain started a business called Enchanted Family Buying Co. (EFBC) while Reynolds started Nationwide International Resources, Inc (NIR), which were nothing more than shell corporations. The defendants use the bank accounts of these shell corporations to deposit investor money which was in the accounts of Petters Company, Inc. (PCI). Investors were falsely advised that the money would be used for the purchase of consumer electronics, which, in turn, would be sold by PCI to big-box retail stores for a profit. In reality, however, the funds were simply wired back to PCI and then used to further the fraud scheme and support the lavish lifestyle of Tom Petters. Court documents showed that White fabricated documents to make it appear to investors that PCI was purchasing merchandise from two suppliers when that was not the case. From 2002 through September of 2008, approximately $12 billion was routed through the EFBC and NIR accounts then back to PCI again. Multiple times each month wire transfers were made in amounts ranging from approximately $2 million to $25 million. Based on an agreement with PCI, Catain and Reynolds kept a percentage of the funds as their “commission.” That commission totaled more than $3 million for Catain and $9 million for Reynolds. Catain and Reynolds admitted they knew the wired funds came from investors, and that PCI had made false representations to those investors as to why they needed to send money to EFBC and NIR. They also admitted they knew the real reason for depositing the funds into the EFBC and NIR accounts was to conceal and disguise the true nature, source, ownership and control of that money.
Owner of New Jersey Car Dealership Sentenced to 33 Months in Prison
On September 13, 2010, in Trenton, N.J., Denis Kelliher, the former owner and operator of Cartec Motors, LLC, in Bordentown, N.J., was sentenced to 33 months in prison to be followed by five years of supervised release. In addition, he was ordered to pay $6,945,096 in restitution to KeyBank and $660,000 to two victims. Kelliher, of Toms River, New Jersey, pleaded guilty to a multimillion-dollar bank fraud, wire fraud, and money laundering scheme. According to court documents, Kelliher was involved in a check kiting scheme that caused a $7.4 million overdraft in a Cartec checking account. In addition, Kelliher admitted laundering the proceeds of a fraudulently-obtained loan from an individual. In January 2008, Cartec opened a checking account at KeyBank on which he was the only signer. In addition, Cartec had an electronic terminal, provided by the bank, that allowed Kelliher to scan checks and deposit them into and initiate wire transfers out of the business account. Kelliher admitted that he knew that the proceeds of checks he deposited in this fashion would be made available for withdrawal before they cleared the banking system. Kelliher also controlled Cartec accounts at several other area banks. Between March 2008 and July 2008, he engaged in a check kiting scheme by writing checks against these accounts, as well as his personal account, when he knew that those accounts did not contain sufficient funds to cover the checks – and then deposited those checks into Cartec’s KeyBank account. Kelliher did this with approximately 125 such checks, with a total face value in excess of $117 million.
Buffalo Man Sentenced for Structuring Proceeds of Drug Sales
On September 13, 2010, in Buffalo, N.Y., Roman A. Dunnigan was sentenced to 18 months in prison following his guilty plea to a violation of the Bank Secrecy Laws that prohibit the structuring of currency transactions. According to court documents, on June 25, 2008 at the Seneca Niagara Casino, Dunnigan and a companion attempted to change small bills into $100 bills at various slot machines. They inserted a total of $24,000 and then “cashed out” without playing the slot machines. For every $1000 “cash out ticket,” Dunnigan and his companion received ten $100 bills from the casino cage. Dunnigan was attempting to prevent the preparation of Currency Transaction Reports by the Seneca Niagara Casino and the transmission of the those reports to the Internal Revenue Service (IRS). As a part of the plea proceedings, Dunnigan conceded that the entire $24,000 represented proceeds of narcotics transactions.
Nine Individuals Sentenced in Contraband Cigarette Conspiracy
On September 10, 2010, in Greenville, N.C., nine individuals were sentenced for conspiring to sell large quantities of contraband cigarettes with a retail value of approximately $4.2 million and money laundering charges. Ana Rodriguez received 78 months in prison and was ordered to pay $5,159,337 in restitution; Kenny Salcedo, 30 months in prison and $60,000 in restitution; Ghassan Dahir, 20 months in prison and $500,000 restitution; Nicholas Oxendine,16 months in prison and $250,000 in restitution; Willard Perez, 16 months in prison and $20,000 in restitution; Alphonso Rodriguez, 8 months in prison and $20,000 in restitution; Carlos Rodriguez, 6 months in prison and $20,000 in restitution; Darrell Brigman, three years probation and $250,000 in restitution; and Heidi Rodriguez, three years probation and $20,000 in restitution. According to court documents, Salcedo, Perez, and the Rodriguez's were "the buyers" who repeatedly traveled from the Northeastern United States to North Carolina for the purpose of purchasing large quantities of cigarettes outside the normal flow of commerce. The buyers would arrive at a pre-determined time and location carrying large quantities of cash to complete the purchase. Dahir, Brigman, and Oxendine were "the suppliers" who would supply the cigarettes and accept payment in cash. The buyers would then promptly return to the northeastern part of the United States to distribute the cigarettes. The buyers repeatedly re-invested their profits from the scheme in the purchase of additional cigarettes, which was always done in cash. Shortly after selling the cigarettes to the buyers, Oxendine would structure the deposits of cash he received from the buyers into his bank account in amounts less than $10,000 in an effort to avoid triggering the bank's obligation to file Currency Transaction Reports (CTRs).
Florida Man Sentenced to Prison and Ordered to Forfeit $1.49 Million in Securities Fraud Case
On September 8, 2010, in Wilmington, Del., Gerard D’Amaro, of Lighthouse Point, Florida, was sentenced to 36 months in prison and ordered to forfeit $1,490,610 to the United States for his role in a securities fraud and money laundering scheme. According to court documents, D'Amaro and others manipulated so-called “penny stocks” traded through over-the-counter stock markets. The prices of publicly traded stocks were manipulated to create the illusion of market interest in those securities. The goal was to induce the investing public to purchase a stock based on the artificial trading volume, and thus increase the price of the stock. D'Amaro and his co-conspirators were able to sell off significant holdings in these stocks, generating in excess of $1.3 million in illicit gains.
Cigarette Wholesaler Sentenced for Trafficking in Untaxed Cigarettes
On September 3, 2010, in Seattle, Wash., Matthew M. Cunningham, a tobacco products distributor in New Mexico, was sentenced to 18 months in prison, three years of supervised release and ordered to pay $21,545,000 in restitution. Cunningham was indicted in September 2009 for conspiracy to traffic in contraband cigarettes and conspiracy to launder monetary instruments in connection with a scheme to sell contraband cigarettes to Blue Stilly Smoke Shop in Arlington, Washington. Cunningham pleaded guilty in January 2010, admitting illegally selling untaxed cigarettes to smoke shops in the Frank’s Landing Indian Community and on the Swinomish Indian Reservation. Cunningham was part of a conspiracy with the owner of Cowlitz Candy & Tobacco and the owners of the Blue Stilly Smoke Shop to ship more than a million cartons of untaxed cigarettes to the Snohomish County smoke shop. The conspirators took steps to disguise the ownership of the shipments and created false invoices to further their scheme to avoid more than $20 million in cigarette taxes.
Missouri Man Sentenced to More Than 12 Years in Mortgage Fraud Case
On August 31, 2010 in Kansas City, Kan., Ryan Miller was sentenced to 145 months in prison and ordered to pay more than $5.8 million in restitution for mortgage fraud. According to court documents, Miller pleaded to conspiracy to commit mortgage fraud, wire fraud, money laundering, and aggravated identity theft. In his plea agreement, Miller admitted he conspired with others to fraudulently obtain mortgage loans by submitting fraudulent loan applications and property appraisals to lenders to obtain money and then transferred the proceeds to bank accounts they controlled for their own use. The conspirators obtained loans for purchasing and refinancing properties by submitting fraudulent loan applications that contained false statements of borrowers’ incomes and employment, false lien information, false statements of occupancy, false sales contracts and false notarization of loan documents. They submitted appraisal reports containing inflated property values and forged signatures of licensed appraisers. Miller also participated in fraudulent activities causing wire transfers to be made of proceeds. As part of the transaction he unlawfully made use of the identity of a licensed appraiser.
California Attorney Sentenced For Laundering Drug Money
On August 31, 2010, in Boise, Idaho, Lawrence Edward Weitzman, a practicing attorney from Placerville, California, was sentenced to 27 months in prison for his role in laundering $2,960,000 in drug proceeds for four-time convicted drug trafficker Gregory Sperow of Los Angeles, California. The court also fined Weitzman $25,000 in addition to asset forfeitures totaling $175,000. Weitzman was the fifteenth defendant sentenced in a multi-year prosecution of the Kent Jones organization, which had been identified as a Regional Priority Target by the Federal Organized Crime and Drug Enforcement Task Force (OCDETF) in Idaho. The investigation resulted in a series of indictments against defendants who operated throughout the United States, importing drugs from Mexico to Southern California. The drugs were then typically transported to the Portland, Oregon, area before being shipped to Idaho, Washington, and other places in the Midwest and East Coast, including Colorado, Ohio, North Dakota, Nebraska, Kentucky, Pennsylvania, Massachusetts, Vermont, New Jersey, and New York. In addition to the importation and transportation of marijuana, the group was heavily involved in growing marijuana in Oregon in the 1990's, both indoors and on public lands. Fourteen other defendants have been sentenced in this case.
Pharmacy Owner Sentenced to Ten Years in Anabolic Steroids Probe
On August 26, 2010, in Mobile, Ala., A. Samuel “Sam” Kelley, II, the president and chief executive officer of Applied Pharmacy Services, Inc. (APS), was sentenced to 120 months in prison following his conviction on 130 counts of drug and money laundering offenses. According to the indictment, Kelley participated in a conspiracy that dispensed and sold thousands of dosages of anabolic steroids – including powerful veterinary steroids approved for animal use only – to users throughout the United States. Pharmacists at APS illegally dispensed these steroids and other drugs to doctors and steroid dealers for unlawful distribution to hundreds of users in nearly every state across the nation, including teenagers. The judge also imposed a $30,000 fine, and Kelley is obligated to pay a $2.6 million forfeiture in the case.
Tennessee Man Sentenced to Over 27 Years for Operating Million Dollar Ponzi Scheme
On August 26, 2010, in Knoxville, Tenn., Dennis R. Bolze, formerly of Gatlinburg, Tennessee, was sentenced to 327 months in prison, followed by three years of supervised release, and ordered to pay over $12 million in restitution. Bolze pleaded guilty in November 2009, to wire fraud and money laundering charges arising from a Ponzi scheme he operated between April 2002 and December 2008. According to court documents, Bolze defrauded individuals who invested millions of dollars with him and his companies, Centurion Asset Management, Inc. (CAM) and Advanced Trading Services, Inc. (ATS), by fraudulently representing that he would invest all of the funds entrusted to him in CAM’s and ATS’s day-trading of E-mini NASDAQ futures contracts and E-mini S&P 500 futures contracts. He provided fabricated documents to investors entitled “Trader’s Invoices” that fraudulently represented to investors that he, CAM, and ATS had generated profitable returns on their investments. Bolze also caused fabricated day-trading results to be posted on the website www.accesscam.net for the purpose of fraudulently representing to investors that he had generated returns on their investments. Bolze admitted that he received $21,584,189 from investors, but actually invested only $1,601,188 on their behalf, and returned $9,626,620 to existing investors for the purpose of lulling them into believing that their investments with him were both safe and generating a profitable return.
Brooklyn Man Sentenced for Illegally Transmitting Case to Rabbi and Cooperating Witness
On August 24, 2010, in Trenton, N.J., Schmuel Cohen, aka Schmulik Cohen, a citizen of Israel, was sentenced to 18 months in prison to be followed by one year of supervised release. Cohen pleaded guilty in April 2010 to an Information charging him with operating an unlicensed money transmitting businesses, or “cash houses,” out of locations in Brooklyn. According to court documents and statements made in court, from June 2007 to July 2009, Cohen operated an unlicensed money transmitting business with individuals residing in Israel. Along with co-conspirators Yeshaye Ehrental and Akiva Aryeh Weiss, Cohen transferred thousands of dollars in cash to Rabbi Eliahu Ben Haim, the then-principal rabbi of Congregation Ohel Yaacob in Deal, New Jersey. Cash was also transferred to a cooperating witness who was acting for Ben Haim. Cohen admitted that he transferred between $400,000 and $1 million. Ehrental and Weiss each pleaded guilty in April 2010 to a charge of operating an unlicensed money transmitting business. Ben Haim pleaded guilty in June 2010 to a money laundering conspiracy.
Four Defendants Sentenced In Internet Pharmacy Case
On August 20, 2010, in Salt Lake City, Utah, four defendants in an internet pharmacy case involving the distribution of prescription drugs smuggled into the country from Mexico were sentenced to federal prison. Noah Sifuentes, of Orem, who pleaded guilty to one count of conspiracy to distribute Phentermine and one count of conspiracy to commit international money laundering, was sentenced to 21 months. Kenneth E. Forrest, of Provo, who pleaded to one count of conspiracy to distribute a controlled substance and one count of conspiracy to commit money laundering, was sentenced to 36 months. Timothy Shields, of Provo, was sentenced to 24 months after pleading guilty to conspiracy to distribute a controlled substance and one count of conspiracy to commit money laundering. Sifuentes, Forrest, and Shields were also sentenced to 36 months of supervised release when they finish their prison sentences. Another defendant in the case, Gregory J. Crosby, of Provo, was sentenced on August 19, 2010, to one year in federal prison. He pleaded guilty to conspiracy to distribute Phentermine and conspiracy to commit international money laundering. Shields and Forrest admitted that they conspired with other defendants in the case to distribute controlled substances, including Ritalin, Xanax, Valium, and Phentermine. During the course of the conspiracy, they imported these controlled substances into the United States from Mexico without permission. Thereafter, without the requisite authority from the Drug Enforcement Administration, they sold the drugs over the internet to customers who did not possess valid prescriptions for the drugs. Sifuentes and Crosby admitted conspiring with James Brinton and others to distribute Phentermine imported from Mexico without DEA approval. They admitted selling approximately 8 million Phentermine pills over the internet to customers without a valid prescription.
Three Sentenced as Part of Ohio Bureau of Motor Vehicle Fraud
On August 19, 2010, in Cleveland, Ohio, three individuals in the Cleveland Ukrainian community were sentenced for their roles in a scheme that brought foreign nationals to Cleveland and, for a fee, helped them fraudulently obtain real Ohio driver’s licenses. Vitaly Fedorchuk, who was identified as the leader of the criminal organization, was sentenced to 46 months in prison; Pavlo Mostranskyy and Sonya Hilaszek were each sentenced to 33 months in prison. According to court documents, Hilaszek worked at the Deputy Registrars Office for the Ohio Bureau of Motor Vehicles and Mostranskyy, who acted as a middle-man, brought foreign nationals to Cleveland and arranged for Hilaszek to issue Ohio driver's licenses or state identification cards. Other members of the organization were based in several cities throughout the United States and worked with and for Fedorchuk and Mostranskyy to identify and facilitate customers through the operation. The criminal organization operated for at least four years, charging foreign nationals, most of whom are unlawfully present, between $1,500 and $3,000 for Ohio driver’s licenses, and Ohio state identification cards using either fraudulent documentation or none at all.
Three from New Jersey Sentenced in $10 Million Investment Fraud Scheme
On August 18, 2010, in Newark, N.J., three members of an investment fraud ring were sentenced for their roles in defrauding investors out of more than $10 million and laundering the proceeds of their fraud. Radcliffe Bent was sentenced to 110 months in prison; Michael Berteletti and Alexander Klepach were each sentenced to 60 months in prison. In addition to the prison terms, Bent was ordered to pay $7,399,396 and Berteletti was ordered to pay $10,264,396 in restitution. According to court documents, Bent was the Chief Operating Officer and sole owner of Covenant Consulting Company. Covenant was purportedly in the business of consulting and venture capitalism, but was actually a shell corporation with no legitimate business operations. Berteletti was a licensed stock broker who solicited investors for Covenant. Bent and his co-conspirators induced investors to purchase shares of stock and promissory notes in Covenant and two other shell companies, Cambridge Berkshire Group and Crown Estates Development Corporation. From September 1997 to July 2007, Bent and his co-conspirators stole millions of dollars from dozens of victims by making false statements and failing to disclose material information. Klepach, who generated large sums of cash as proceeds of his illegal drug distribution business, conspired to launder the proceeds by transferring investor funds to bank accounts controlled by co-conspirators. Klepach gave Bent, Berteletti, and others cash in exchange for wire transfers and checks constituting Covenant investor proceeds. In addition to the investment fraud, Bent admitted that during calendar year 2003, he received approximately $1 million in taxable income from investors and failed to include the income on his tax return. Three other co-conspirators have pleaded guilty in connection to the fraud and await sentencing.
Former New Jersey Company President Sentenced on Securities Fraud and Money Laundering Charges
On August 4, 2010, in Camden, N.J., John P. Sgarlat, former president of publicly-traded company eContent, Inc., was sentenced to 66 months in prison and ordered to pay $1.5 million in restitution to the victims of his offenses. In addition, Sgarlat was ordered to forfeit $320,000 in U.S. currency, as well as a vehicle, certain artwork, and an autographed Tiger Woods caddie coverall from the 2001 Masters golf tournament. According to court documents and statements made in court: from October 1999 to April 2001, Sgarlat was the president of eContent, Inc., and remained a company shareholder after his departure in April 2001. Sgarlat admitted that while he was the company president, he and other officers and directors of eContent misused company funds for personal expenses, which included using corporate American Express cards to pay for personal items. Sgarlat fraudulently issued company stock to alleged “consultants” to the company. However, these individuals never performed the services for eContent. Sgarlat also used Form S-8 to issue free-trading company stock, with a market value of approximately $559,000, to firms and individuals who performed securities-related services for eContent. Sgarlat admitted that in February 2002, he sold 435,125 shares of eContent stock to a stock promoter at a substantial discount. This stock was then used in connection with illegal promotional activities. Additionally, Sgarlat laundered the proceeds of a separate fraud scheme. Specifically, in February 2002, Sgarlat opened a bank account at a Wachovia Bank in Wellington, Florida, in the name of “Convergiton, Inc.,” which he used to pay his personal living expenses. Between February 2003 and September 2005, Sgarlat solicited certain people to invest in two companies, and told these people to send money to him for investment. Sgarlat then deposited the money into the Convergiton account and use the money for his personal expenses.
Former County Police Officer Sentenced to 121 Months for $10 Million Investment Scheme
On August 3, 2010, in Richmond, Va., Donald C. Lacey, former Henrico County Police Officer, was sentenced to 121 months in prison, followed by three years of supervised release, for carrying out an investment and Ponzi scheme that stole more than $10 million from more than 100 victims. According to court documents, in October 2006, Lacey formed Capital Funding & Consulting, LLC (CFC), headquartered in Henrico County, and promoted CFC as a private real estate lending company that provided short-term loans to qualified borrowers for various real estate projects. Lacey solicited individuals to invest in CFC, promising them a 12.5% rate of return on their investments derived from the loans made to the borrowers. Lacey pleaded guilty in March 2010 and admitted that he failed to provide material information to potential investors about the business practices of CFC. Lacey caused the transfer of the majority of CFC funds to his other investment companies which Lacey had complete and sole control. Once funds were loaned or otherwise disbursed to his companies, Lacey utilized those funds in a manner inconsistent with the representations he made to investors. Only a relatively small portion of the funds were actually used to rehabilitate the properties for which the funds were borrowed. In fact, from October 2006 until November 2008, over $5,000,000 of investor funds transferred to the investment companies was further transferred to another company to pay pre-existing debt-service on properties with no connection to CFC. During that same time period, over $1,000,000 of the investor funds transferred to the investment companies was further transferred to Lacey’s personal accounts and used for personal and business expenses unrelated to CFC. Lacey also transferred funds directly from CFC’s Escrow account into his own personal accounts and used those funds for personal and business expenses unrelated to CFC. The combined loss to the victims is more than $10 million.
Florida Businessman Sentenced for Role in Foreign Bribery Scheme and Money Laundering
On July 30, 2010, in Miami, Fla., Juan Diaz, a Miami businessman, was sentenced to 57 months in prison, to be followed by three years of supervised release, and ordered to pay $73,824 in restitution and to forfeit $1,028,851. Diaz pleaded guilty on May 15, 2009, to a one-count Information charging him with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and money laundering. At his plea hearing, Diaz admitted to conspiring to make corrupt payments to foreign government officials for the purpose of securing business advantages for three different Miami-Dade County telecommunications companies from the Republic of Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti. Diaz concealed these payments in part by laundering the funds through his company, J.D. Locator Services. According to court documents, Diaz paid and concealed $1,028,851 in bribes to former Haitian government officials while serving as an intermediary for three private telecommunications companies.
CEO of Missouri “Duncan Group” Sentenced to Prison on Multi-Million Dollar Ponzi Scheme
On July 29, 2010, in St. Louis, Mo., Aaron Duncan was sentenced to 53 months in prison and ordered to pay $3.8 million in restitution for mail fraud and money laundering. According to court documents, Duncan represented that The Duncan Group was involved in real estate investments, including buying, rehabilitating and selling residential real estate. Duncan solicited investors in Missouri and around the United States to participate in his real estate projects through The Duncan Group by making false representations regarding the security of investments and the rates of returns promised. Bank records revealed that The Duncan Group investment program was a Ponzi scheme. Investors who were repaid on their principal investments were paid from funds obtained from other investors, rather than from returns on investments in real estate projects as promised and represented Duncan falsely told investors that their principal investments were secured by a specific property. For example, some investors were told that an investor's name would be placed on a particular deed or that investors were "securitized" by first mortgages on properties. Bank records also show that beginning in December 2005, Duncan was experiencing personal financial problems and was often late on his home mortgage payments. The scheme operated from January 2006 until Duncan advised investors of his intention to declare bankruptcy in October 2008. During the scheme, Duncan received investment principal from more than 50 investors who ultimately lost a total of approximately $3.9 million. Records recovered during the investigation revealed that Duncan only bought approximately ten (10) properties, and that these ten properties lost money in total. Investor money was not used as promised and represented; instead, investor money was routinely used to pay other investors, pay routine expenses of the business, and to pay Duncan's personal expenses.
Mortgage Fraud Sends Kansas City Two to Prison
On July 27, 2010, in Kansas City, Kan., Emma Holmes was sentenced to 12 months and a day in prison for mortgage fraud. According to court documents, Holmes was tried and found guilty of conspiracy to commit mortgage fraud, mail fraud and money laundering. Co-defendant Wildor Washington, Sr., was sentenced to serve 36 months in prison. During trial, prosecutors presented evidence that Holmes and Washington devised a scheme to obtain mortgage loans by submitting loan applications that grossly overstated Holmes’ income, falsely stated that Holmes intended to live in the homes, and falsely stated Holmes was using her own money to make the down payment. In fact, Holmes never intended to occupy the properties and the money for the down payment was coming from other conspirators. Washington aided Holmes in submitting fraudulent applications for loans to purchase several in Overland Park, Kansas. On the applications, Holmes claimed to have a monthly income of more than $7,800 to $8,300 when in fact her income was approximately $3,000 a month.
Five Individuals Sentenced in Arkansas for Unlawfully Employing Illegal Aliens and Money Laundering Charges
On July 19, 2010, in Fort Smith and Fayetteville, Ark., the United States Attorney announced the sentencing of five individuals for their roles in a conspiracy to employ illegal aliens and money laundering. Luis Felipe Martinez was sentenced to 30 months in prison; Leoncio Amador-Villanueva was sentenced to 18 months in prison; Jose “Manuel” Amador-Villanueva was sentenced to 12 months in prison; and Juan Amador-Villanueva was sentenced to 15 months in prison. All four defendants were also order to serve three years of supervised release following their release from prison. Kelle Stubbs-Amador was sentenced to time already served and three years probation. According to court documents, the defendants employed and transported illegal aliens for Amador Poultry Contracting and J&A Loading, businesses owned or controlled by the defendants. The illegal aliens were hired to work on chicken catching crews at various work sites and were paid in cash. Leoncio Amador-Villanueva, Jose “Manuel” Amador-Villanueva, Kelle Stubbs-Amador, and Juan Amador-Villanueva pleaded guilty in October 2009 to conspiracy to harbor, transport, and employ illegal aliens. In addition, Leoncio and Juan pleaded guilty to money laundering. Martinez pleaded guilty in December 2009 to one count of causing a financial institution to file a false Currency Transaction Report (CTR). The defendants also agreed to forfeit to the United States $1,246,206 in U.S. currency, and real and personal property valued at $631,000.
Cigarette Broker and Warehouse Co-Owner Sentenced for Trafficking in Untaxed Cigarettes
On July 9, 2010, in Seattle, Wash., Rick Conn, a cigarette broker based in California, was sentenced to 20 months in prison, three years of supervised release, and ordered to pay more than $20 million in restitution for conspiracy to traffic in contraband cigarettes and conspiracy to launder monetary instruments. Carol M. Silverman, who owned a cigarette distribution business and controlled a Clackamas, Oregon warehouse, was sentenced to 12 months and a day in prison, three years of supervised release and ordered to pay more than $18 million in restitution. Conn and Silverman were indicted in September 2009, in connection with a scheme to sell contraband (untaxed) cigarettes to Blue Stilly Smoke Shop, located on the Stillaguamish reservation, near Arlington, Washington. In the statement of facts in his plea agreement, Conn admitted to brokering a cigarette deal between Cowlitz Candy & Tobacco and Blue Stilly Smoke Shop, where Cowlitz Candy illegally sold untaxed cigarettes to Blue Stilly. Conn conspired with the owner of Cowlitz Candy & Tobacco, the owners of the Blue Stilly Smoke Shop, Carol Silverman and her then-husband and co-defendant Jay Silverman, to ship more than a million cartons of untaxed cigarettes to Blue Stilly. Robert Stuber, who owned Cowlitz Candy & Tobacco Co., Inc, was sentenced to nine months in prison for his role in the conspiracy. The former owners of the Blue Stilly Smoke Shop were sentenced to prison in March 2009 for their scheme to profit from selling untaxed cigarettes. Edward Leverne Goodridge, Sr., and Edward Goodridge, Jr., both of Arlington, Washington, and Sara Lee Schroedl, now of Prescott, Arizona, pleaded guilty in November 2008, to conspiracy to traffic in contraband cigarettes and engaging in monetary transactions involving criminal proceeds. The Goodridges were each sentenced to 14 months in prison and two years of supervised release. Schroedl was sentenced to eight months in prison and two years of supervised release. The Silvermans were also involved in selling contraband cigarettes to the operators of Frank’s Landing smoke shop. The Silvermans collected cash payments, as much as $70,000 at a time, from the owners of Frank’s Landing to pay for the untaxed cigarettes they supplied. The cash was deposited in amounts under $10,000 to avoid currency reporting requirements.
New Jersey Man Sentenced for Role in International Drug and Money Laundering Conspiracy
On July 7, 2010, in Camden, N.J., Fabio Garcia, of Egg Harbor Township, New Jersey, was sentenced to 87 months in prison, to be followed by five years of supervised release, and ordered to forfeit $120,810 to the United States. Garcia pleaded guilty in January 2010, to one count of heroin distribution conspiracy and one count of conspiracy to commit money laundering. According to documents, Garcia conspired with others from January 2004 through December 2007 to smuggle heroin from Colombia for distribution in New York City and Atlantic County, New Jersey. The bulk quantities of heroin were often concealed in machine or vehicle parts transported on planes flying into Miami International Airport; then transported to stash houses in New York and New Jersey. At his plea hearing, Garcia admitted that once in New Jersey, the Colombians unpacked the heroin from motorcycle parts in Garcia’s garage. They then packed money in the motorcycle parts and sent it via FedEx to Miami en route to Colombia. Garcia also admitted that the Colombians would leave drug money with him, which he hid in his safe deposit box.
Defendants Sentenced in Scheme to Defraud Factoring Companies of Over $1 Million
On June 15, 2010, in Greenbelt, Md., Rodney A. Mathis, of Stafford, Virginia, was sentenced to 27 months in prison followed by three years of supervised release, and ordered to pay $1,109,835 in restitution. On June 7, 2010, Rafael Simmons, of Laurel, Maryland and Texas, was sentenced to 41 months in prison, to be followed by three years of supervised release, and ordered to pay $1,109,835 in restitution. Simmons pleaded guilty in February 2010 to wire fraud and money laundering in connection with a scheme to defraud accounts receivables finance companies, known as factoring companies, of more than $1 million. According to his plea agreement, from November 2007 through July 2009, Simmons, Rodney Mathis and DeJuan Fountain, engaged in a scheme to defraud factoring companies, which purchase account receivables from federal government contractors and others. Simmons contacted Federal National Payables (FNP), a factoring company, and held himself out as the Director of Omega Rho International (ORI), a management consultant company located in Odenton, Maryland. Simmons falsely represented that ORI had a lucrative contract to supply telecommunications services to the U.S. government and that ORI was willing to assign its rights to payments under the contract to FNP, in exchange for advances on those payments. Rodney Mathis falsely held himself out as a contracting officer for the U.S. Army in order to convince FNP that ORI had a genuine government contract and that government payments would be made to FNP. DeJuan Fountain, who was a warrant officer in the U.S. Army, held himself out to be a disbursement officer and sent e-mails to the Vice President of FNP purportedly providing information about disbursement of the government payments on the contract to FNP, when in fact; he had no disbursement or fiscal authority. As part of the scheme, Simmons submitted a fictitious financial statement to FNP reflecting that Simmons’ net worth was $12 million and that he had more than $1.9 million in cash available in banks in the Philippines and in the United Arab Emirates. Mathis and Simmons also created a fraudulent classified version of a government contract which they faxed to FNP to further convince FNP that the contract was genuine. As a result, Simmons, Mathis and Fountain caused FNP to make several wire transfers, including a wire transfer of approximately $315,124 to a bank account controlled by Simmons. Simmons subsequently laundered the payment through other accounts he controlled. The total loss resulting from the scheme was between $1 million and $2.5 million. DeJuan Fountain was sentenced in May 2010 to one year probation, with the first three months to be served on home detention with electronic monitoring and ordered to pay a $1,000 fine.
Skylynx Communications Corporate Chairman and CEO Sentenced to Five Years in Prison in Multi-Million Dollar Stock Scheme
On June 17, 2010, in Camden, N.J., Gary L. Brown, the former corporate chairman and CEO of Skylynx Communications, Inc., was sentenced to 60 months in prison, followed by three years of supervised release, and ordered to forfeit $651,750 to be paid to the victims of his scheme and to pay restitution in an amount to be determined. Brown, of Ellenton, Florida, pleaded guilty on January 21, 2010, to a criminal Information charging him with conspiracy to commit securities fraud, wire fraud, and money laundering. At his plea hearing, Brown admitted that he and others acquired ownership and control of a substantial number of Skylynx stock shares without disclosing their ownership and control to the investing public. Brown further admitted that he and his co-conspirators paid bribes to securities brokers in the form of cash and Skylynx stock. In exchange for the bribes, brokers purchased Skylynx stock in their retail customers’ brokerage accounts. Brown also admitted that he and his co-conspirators caused false and fraudulent consulting agreements to be issued which were designed to allow the stock promoters to receive free-trading Skylynx shares which they could later sell for substantial profit and to artificially inflate the price of the stock. Brown and his co-conspirators secretly sold their shares into the manipulated market, making millions of dollars.
Two Men Sentenced for Narcotics Distribution and Money Laundering
On May 21, 2010 in Muskogee, Okla., Jeffery Pierce and Charles Todd were sentenced to prison for their role in a large drug distribution and money laundering activity in southeast Oklahoma and northeast Texas. According to court documents Pierce received 60 months in prison followed by five years of supervised release while Todd received 110 months in prison and three years supervised release. Both defendants pleaded guilty to conspiracy to possess with intent to distribute methamphetamine, cocaine, cocaine base, Oxycodone, other narcotics and marijuana and conspiracy to money laundering. Pierce was a distributor of illegal prescription drugs and methamphetamine in and around Hugo, Oklahoma, while Todd was a large scale distributor of methamphetamine and cocaine in McCurtain and Choctaw Counties in Oklahoma.
Former Mortgage Brokers Sentenced for $1.2 Million Mortgage Fraud Scheme
On May 18, 2010 in Springfield, Mo., five people were sentenced to prison and ordered to pay restitution for their roles in a mortgage fraud scheme: Charles Davis was sentenced to 51 months in prison and ordered to pay nearly $1.3 million in restitution; Scott Kassebaum received 24 months in prison and ordered to pay over $200,000; Cheryl Kassebaum was sentenced to 15 months and nearly $500,000; Steven Spencer received 30 months and nearly $437,000; and Shanda Moore was sentenced to three years probation of which six months will be served in home confinement and ordered to pay nearly $253,000. According to court documents, Davis, a former mortgage broker who was the owner of Master Marketing Consultants, pleaded guilty to his participation in two separate conspiracies to obtain mortgage loans for the purchase of homes based on false loan applications. Davis knew that the loan applications he prepared and submitted were false because the loan applications included overstatements of income and understatements or omissions of liabilities, falsely represented that the purchaser/borrower intended to reside in the home to be purchased, and, in some cases, stated a false place of employment for the purchaser/borrower. A significant portion of the loan proceeds was returned to the purchasers of the homes without the lender’s knowledge. Davis facilitated these kickbacks to the purchasers by routing the proceeds through Master Marketing Consultants and, in some cases, through Metro Consulting Group, which was owned by the Kassebaums. The mortgage fraud schemes involved a total of 20 houses with home mortgage loans ranging from approximately $200,000 to $500,000. The amount of loan proceeds returned to the borrowers ranged from less than $30,000 to more than $100,000. Some of the home purchasers subsequently defaulted on the loans, and the homes have been foreclosed or are in the process of being foreclosed.
Army Officer Sentenced after Admitting Theft of Government Property Related to DOD Contracts in Support of Iraq War
On May 3, 2010, in Portland, Ore., Captian Michael Dung Nguyen, of Ft. Lewis, Washington, was sentenced to 30 months in prison following his guilty pleas to theft of government property and structuring financial transactions. Nguyen was also ordered to serve three years of supervised release, pay $200,000 in restitution, and forfeit his interest in all personal property he bought with the stolen money, as well as the remaining funds seized by the government at the time of his arrest. According to court documents, Nguyen admitted that while on deployment to Iraq, he stole and converted to his own use approximately $690,000 in United States currency. Nguyen gained access to the funds in his capacity as the Project Purchasing Officer in the 1st Battalion, 23rd Infantry Regiment of the U.S. Army. The money was derived from Commander's Emergency Response Program (CERP) funds. CERP funds are the property of the United States and are managed by the Department of Defense (DOD). The currency was intended as payment for security contracts with the Sons of Iraq, as well as humanitarian relief and reconstruction programs. Nguyen transported the stolen CERP funds by mailing the stolen money to himself at his family’s Oregon residence prior to his return from Iraq. Shortly after his return from Iraq, Nguyen opened new bank accounts at several banks and proceeded to deposit $387,550 of the stolen CERP money into those accounts. Between June 9, 2008 and September 26, 2008, Nguyen made repeated deposits of the stolen CERP funds in a manner that was intended to evade federal reporting requirements for the deposit of large amounts of currency. After depositing the money in the accounts, Nguyen purchased a 2008 BMW and a 2009 Hummer H3T, in addition to purchasing computers, firearms, electronics and furniture. During the execution of a search warrant, investigators discovered over $300,000 in stolen CERP funds hidden in the attic of Nguyen’s Portland family home.
Mortgage Fraud Defendant Sentenced to 37 Months in Prison
On April 27, 2010, in Portland, Ore., Jeremy Richardson, of Vancouver, Washington, was sentenced to 37 months in prison, to be followed by three years of supervised release, for his 2008 guilty plea to money laundering. Richardson was also ordered to pay more than $496,000 in restitution to various individuals and four title companies directly harmed by his fraud scheme. Richardson’s money laundering activity related to a mortgage fraud scheme which affected approximately 100 properties in Oregon and southwest Washington. During his plea hearing, Richardson admitted that he advertised and solicited persons interested in buying real estate, either to live in or as an investment. If an investor was not able to qualify for the necessary mortgage financing, Richardson would falsify the buyer/investor qualifications and information provided to the lender. If the home was being purchased as an investment, Richardson would advertise for persons interested in participating in a “rent to own” program to live in the home purchased by the investor. Richardson admitted that he inflated the property transaction price on certain transactions in order to get extra money to use to pay business expenses including required mortgage payments on purchased real estate. He created false invoices purporting to represent repairs performed on certain properties in support of the falsely inflated prices. He also induced some customers to advance him money which he represented would be used to make a down payment on certain properties, but which he instead used to pay personal and business expenses.
West Virginians Sentenced in Scheme to Steal Federal Funds
On April 19, 2010, in Huntington, W.Va., Heidi C. Laughery was sentenced to 18 months in prison, followed by three years of supervised release, and ordered to pay $848,871 in restitution to the U.S. Department of Agriculture (USDA), Rural Development Utilities Program. Also sentenced was R. Scott Truslow to six months home confinement, followed by two years of supervised release, and ordered to pay $548,571 in restitution to the USDA, Rural Development Utilities Program. According to court documents, from about September 2001 until about March 2005, Laughery served as President and Chief Executive Officer (CEO) of Sequelle Communications Alliance, Inc. Sequelle’s primary business purpose was to provide cost-effective, high-speed broadband access to businesses, educational institutions, and consumers in West Virginia and Ohio rural areas. In March 2002, Laughery, acting in her capacity of President and CEO of Sequelle, entered into a $3.295 million broadband loan agreement with the USDA. These funds were to be used solely for the project of providing broadband services. From about December 2003 through September 2004, Laughery, Truslow, and others agreed to transfer more than $240,000 of USDA funds from the Sequelle business account to a personal bank account of Laughery.
Kansas City Builder Sentenced in Mortgage Fraud Case
On April 19, 2010, in Wichita, Kan., F. Jeffery Miller was sentenced to 108 months in prison and ordered to pay $2.67 million in restitution for bank fraud and money laundering in a $5 million mortgage fraud scheme. According to court documents, Miller, a building contractor in Kansas, Missouri and other states, conspired with co-defendants to commit bank fraud. The conspiracy involved defrauding financial institutions that loaned money to people who purchased houses built by Miller or other home builders on lots owned and developed by Miller, who operated under the name Star Land Development. The lenders were defrauded by loan applications and house appraisals that overstated the borrower’s income, overstated the borrowers’ financial history and strength, inflated the value of the house through manipulated appraisals and overstated the contract price. The fraud also involved failing to inform lenders that the builders rather than the borrowers paid the down payments and/or closing costs for some buyers and covered the cost with a second mortgage. The result was lenders extended loans, at a higher loan-to-value ratio than their loan documentation indicated, to borrowers whose incomes could not support the loan payments and whose credit history indicated that they were poor risks for payment. Most of the borrowers ultimately defaulted on the loans and foreclosure proceedings followed. Also sentenced was co-defendant Hallie Irvin to serve 24 months in prison.
Loan Officer Sentenced to Prison for Mortgage Fraud
On April 16, 2010, in Denver, Colo., Stafford A. Hilaire, of Aurora, was sentenced to 32 months in prison, to be followed by two years of supervised release, and ordered to pay $397,237 in restitution for his conviction on conspiracy to defraud the United States and money laundering. According to the indictments, as well as evidence presented during trial, Hilaire was a loan officer as well as the President of Catalina Century Mortgage, located in Englewood, Colorado. Starting in February 1999 and continuing through July 2004, Hilaire conspired with others to falsified information in loan applications and supporting documentation submitted to mortgage companies and to FHA/HUD to obtain mortgage loans and FHA/HUD mortgage insurance. Hilaire and others would illegally assist by buyers by falsifying the borrowers’ social security numbers, verifications of employment, and prepare and submit false income information, including false W2's, pay stubs, and other false documents. Hilaire and others would take the false information about the borrowers and submit it to the mortgage companies, and thereafter forwarded to FHA/HUD, for the purpose of falsely representing that the borrowers were financially qualified to undertake their mortgage obligations. In addition, Hilaire and his co-conspirators received commission payments and fees associated with the fraudulent mortgage loans which were used to promote the scheme by making mortgage, rent, vehicle, and other payments associated with their businesses.
Iowa Man Sentenced for $400,000 Fraud
On April, 16, 2010, in Cedar Rapids, Iowa, Marty Hess was sentenced to 37 months in prison, three years of supervised release, and ordered to pay more than $465,000 in restitution for wire fraud and money laundering. According to court documents, Hess admitted he worked for a building supply company and faxed false invoices for 31 loads of rebar and then received checks for the rebar. He deposited the checks into his personal bank account and then occasionally obtained cashiers checks from the illicit funds to pay down the false invoices to prevent being discovered. The fraud cost the company more than $400,000.
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.
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.
Minneapolis Men Sentenced to 50 Years in Prison for Orchestrating $3.7 Billion Ponzi Scheme
On April 8, 2010, in Minneapolis, Minn., Thomas Joseph Petters, of Wayzata, was sentenced to 600 months in prison for orchestrating a $3.7 billion Ponzi scheme. Following a month-long trial, Petters was convicted on December 2, 2009, charges of wire fraud, mail fraud, conspiracy to commit mail and wire fraud, conspiracy to commit money laundering, and money laundering. According to the evidence presented at trial, Petters, assisted by others, defrauded and obtained billions of dollars in money and property by inducing investors to provide Petters Company, Inc., (PCI) funds to purchase merchandise that was to be resold to retailers at a profit. However, no such purchases were made. Instead, the defendants and co-conspirators diverted the funds for other purposes, such as making lulling payments to investors, paying off those who assisted in the fraud scheme, funding businesses owned or controlled by the defendants, and financing Tom Petters’s extravagant lifestyle. Other participants in the conspiracy have pleaded guilty and are awaiting sentencing.
Leader of Central Texas Drug Ring Sentenced to 30 Years
On April 8, 2010, in Waco, Texas, Jose "Joey" Padron was sentenced to 360 months in prison, to be followed by five years of supervised release for conspiracy to distribute a controlled substance and conspiracy to commit money laundering. According to information presented in court, beginning in July 2007, Padron and others conspired to distribute methamphetamines in north and central Texas, Oklahoma, Louisiana and elsewhere. Padron, along with his wife, Patricia Solares, purchased numerous assets, including vehicles, real estate located in Waxahachie, Texas, and improvements to real estate. These assets were purchased with currency generated in part from the sale of methamphetamines.
Suspended Certified Public Accountant Sentenced to Prison after Admitting Guilt in Mortgage Fraud
On April 6, 2010, in Portland, Ore., Morton Daniel Bohn, of Tigard, was sentenced to twelve months and one day in prison on charges of bank fraud and money laundering. Bohn was also ordered to pay $288,171 in restitution. 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.
Colorado Restaurateur Sentenced to Prison for Laundering Illegal Marijuana Proceeds
On March 31, 2010, in Denver, Colo., Dan Khau Tang, of Thornton, was sentenced to serve 18 months in prison, followed by three years of supervised release for laundering illegal marijuana proceeds. The judge also ordered Tang to forfeit nearly $1 million. Tang was charged by Information on June 18, 2009; he pleaded guilty on November 20, 2009. According to court documents, between January 2007 and February 16, 2008, Tang and others conspired to conduct a series of financial transactions involving the proceeds from a specified unlawful activity, namely the cultivation and distribution of marijuana. Tang’s plea agreement states that upon conviction of the money laundering charge, he will forfeit to the United States all his rights, title and interest in all property, including over $1.8 million in cash or money from bank accounts seized by the government. As part of the agreement, his wife also forfeited any right she may have had to the money. The investigation into Tang started in September 2007 and targeted a large-scale Asian indoor marijuana cultivation and distribution organization in Metro Denver. The operation was spearheaded by members of Tang’s immediate family, and employees of Tang’s restaurant, the Heaven Dragon. This investigation ultimately led to the dismantling of 25 indoor marijuana grows, and the seizure of 24,056 marijuana plants, and the recovery of more than $1,000,000 in U.S. currency. The investigation also showed that Tang provided some of the financial assistance to organization members to purchase homes in the Denver Metro area. Some of the homes were then quickly converted into sophisticated marijuana grow operations.
Texas Couple Who Ran Prostitution Ring Sentenced on Money Laundering Charges
On March 19, 2010, in Amarillo, Texas, Kelly Marie Jellison, of Arlington, was sentenced to 24 months in prison and ordered to pay a $5,000 fine. Jellison pleaded guilty in November 2009 to charges of money laundering and aiding and abetting. Jellison’s co-defendant and business partner, Byron Dale Johnson, pleaded guilty to the same offense and was sentenced last week to 60 months in prison and ordered to pay a $20,000 fine. According to court documents, from May 2004 to approximately August 1, 2008, Johnson and Jellison were partners in an interstate prostitution ring, advertising their business on the Internet under the guise of an escort service. The prostitutes were paid for their services by credit cards and cash which were deposited into a Bank of America account which both Johnson and Jellison controlled. The proceeds from the accounts were used to promote and perpetuate the interstate prostitution enterprise. Proceeds were also used to make a $10,000 down payment on a luxury automobile and to make payments on a home located in Arlington, Texas. Both the automobile and the home were used by Johnson and Jellison as a backdrop for photos used for Internet ads that promoted their prostitution services.
California Man Sentenced in Scheme Affecting Thousands of American Express Cards
On March 16, 2010, in Sacramento, Calif., Alexsandr Bernik, of Roseville, California, was sentenced to 70 months in prison to be followed by three years of supervised release for a scheme that assessed small fraudulent charges on thousands of American Express cards. According to information presented in court, Bernik admitted that from October 2005 through November 2006, he obtained at least 11,800 individual American Express credit card numbers and fraudulently charged each of them via interstate wires in amounts ranging from $9 to $15 under the name of his fictitious business, “Lexbay Limited.” Many of Bernik’s victims were in the Sacramento area or in nearby Northern California locations. None of the American Express cardholders whose accounts were charged under the scheme had purchased anything from Bernik or Lexbay Limited. As a result of this scheme, Bernik obtained over $177,000. The funds ended up in the account of Lexbay Limited, controlled by Bernik, and were subsequently laundered by wiring funds overseas or withdrawing funds.
New Jersey Financial Advisor Sentenced to 97 Months for Defrauding Clients of $1.2 Million
On March 12, 2010, in Camden, N.J., Phillip D'Hedouville, an Atlantic County financial advisor, of Galloway Township, was sentenced to 97 months in prison for defrauding clients out of more than $1.2 million. D'Hedouville was ordered to pay restitution to over 60 victims in an amount that will be determined at a future date. In July 2009, D'Hedouville pleaded guilty to mail fraud and money laundering. As part of his guilty plea, D'Hedouville acknowledged that, from as early as August 2006 until January 2008, he was employed as a financial representative or account manager for companies that specialized in managing client retirement accounts. As such, D'Hedouville's duties included managing the retirement accounts of scores of clients, many of whom were teachers or otherwise employed in, or retired from, the education field. D'Hedouville admitted that, during that time period, he solicited money from his clients by telling them that they could receive better investment returns if they would withdraw money from their retirement accounts and let him place that money in stock market investments. Despite D'Hedouville's representations, he did not invest his clients' money as promised. Instead, D'Hedouville used his clients' money for his own personal benefit. D'Hedouville also admitted that on June 25, 2007, he engaged in a transaction involving criminally derived property when he submitted a $90,000 check to a real estate developer for the purchase of a new house. D'Hedouville admitted that the funds used to back the check were some of the ill-gotten gains of his fraudulent investment scheme.
Former Broward County Vice-Mayor and Commissioner Sentenced for Conspiring to Launder Money and to Filing a False Tax Return
On March 12, 2010, in West Palm Beach, Fla., Josephus “Joe” Eggelletion, of Lauderdale Lakes, was sentenced to 30 months in prison. Eggelletion, a former Vice-Mayor and Commissioner in Broward County, pleaded guilty in December 2009 to conspiring to commit money laundering and filing a false tax return. During his plea hearing, Eggelletion admitted to conspiring with others to assist in the laundering of money represented by FBI undercover agents as coming from a purported high yield investment “Ponzi” scheme, and to evading federal income taxes on the cash fees he received for laundering this money. More specifically, Eggelletion admitted that he introduced the FBI undercover agents to co-conspirators Ronald Owens and Joel Williams, who assisted the undercover agents in meeting with Bahamian attorney Sidney Cambridge to open a Bahamian bank account to launder their money. According to statements made in court, in February 2008, Owens informed Eggelletion that the undercover agents were laundering another $200,000 and pursuant to their agreement, Eggelletion and his associates would receive a fee equal to seven percent of funds laundered. The fees were received as cash payments.
Former Strip Club Owner Sentenced on Money Laundering and Other Charges
On March 8, 2010, in Columbia, S.C., Nelson Eddy Barham, Jr., was sentenced to 70 months in prison, to be followed by three years of supervised release, and ordered to pay a $200 assessment. Barham was indicted in March 2009 on charges of conspiracy to launder drug money, money laundering, illegally structuring financial transactions, and making false statements under oath. In addition, Barham was charged with allowing the use and distribution of cocaine on the premises of the Southern Gentlemen’s Restaurant and Club, located in West Columbia, South Carolina. According to court documents, Barham and Kermit D. Laforce conspired with convicted drug dealer Robert Garrick to launder drug money in connection with LaForce’s 2004 sale of the Southern Gentlemen’s nightclub to Garrick and Barham.
Charter Bus Company Owner Sentenced for Transporting Money and Drugs
On March 5, 2010, in Milwaukee, Wis., James E. Washington, Jr., was sentenced to 70 months in prison, followed by two years of supervised release. Washington pleaded guilty to a charge of conspiracy to commit money laundering. According to court documents, Washington operated Jackson Coach Lines in Chicago, Illinois. Beginning in 2006, and continuing through April 2007, he agreed to use his two charter buses as a front for drug trafficking and money laundering for a Detroit, Michigan, organization. Washington delivered millions of dollars from Detroit to Tucson, Arizona, and transported thousands of kilograms of marijuana on the return trip to Detroit. Before each trip, Washington recruited and paid approximately six different people to drive the two buses. He also recruited and paid as many as twenty different individuals to pose as legitimate touring passengers on the buses. Washington structured cash deposits into the bus bank account to pay for bus expenses, and to pay for personal vehicles and jewelry. In early 2007, a driver and passenger staged an armed robbery of one of the buses taking approximately $1.3 million in cash. Over $1.1 million of this amount was seized by law enforcement from a Milwaukee storage facility. In April 2007, case agents followed the buses from Chicago to Detroit, and then to Arizona. The first bus arrived in Tucson and five duffel bags were transferred to a waiting car, which then drove to a drop house. A search warrant was executed at the house. The five bags were located and seized, and contained over $1.4 million in cash. The second bus was stopped in Oklahoma City. Four duffel bags were seized from the bus that contained over $1.3 million in cash.
Florida Man Sentenced to 20 Years for Nutritional Supplement Scam
On March 1, 2010, in West Palm Beach, Fla., Frank Sarcona, aka Frank Sarcone, aka Dave Johnson, of Boca Raton, Florida was sentenced to 240 months in prison for defrauding more than 130,000 customers out of more than $7 million by marketing a purported weigh loss product, called Lipoban. According to court documents and statements made in court, Sarcona marketed Lipoban to consumers across the U.S., inviting customers to participate in “a restricted nationwide test” of a new product that would promote large weight loss without diet and exercise. The study was being conducted in conjunction with a healthcare clinic, the Lipoban Clinic. The mailings to customers included a letter from Dr. Joseph Maya, the purported medical director of the Lipoban Clinic; a false claim that a New York cardiologist endorsed Lipoban; and a false statement that the “clinic” had a team of weight loss and nutrition professionals. According to evidence introduced at trial, the “clinic” was located at the residence of a co-defendant and later at an office in an industrial park. The doctor stated in material to customers was Dr. Jose Maya Behar who was not licensed to practice medicine in the U.S. and who never came to the “clinic” or performed any services. Further, the referenced cardiologist never endorsed Lipoban and stated that diet and exercise was essential in any weight loss program. Sarcona funneled the monies he received from the scam into the bank account of a defunct corporation he maintained solely for personal use. Large sums of money were withdrawn as cash or transferred into other accounts in the name of a nominee. Sarcona was given a signature stamp so that he could write checks on those accounts, and used some checks to purchase real estate. In addition to this scheme, in 1999, a U.S. District Court Judge issued an injunction prohibiting Sarcona from engaging in deceptive sales and marketing practices because of his sale of another weight loss product. Almost immediately after the injunction was issued, Sarcona started the marketing and sale of Lipoban, using the name Dave Johnson to hide his identity.
Leader of Scheme to Steal Excess Government Property Sentenced to 54 Months in Prison
On February 26, 2010, in Seattle, Wash., Bradley A. Garner, a Canadian citizen who resides in Palm Desert, California, was sentenced to 54 months in prison and three years of supervised release for wire fraud and theft of honest services, mail fraud, and unlawful monetary transaction. Garner was convicted in June 2009 of public corruption charges involving a scheme to misappropriate expensive federal property such as boats, planes, vehicles and computers. Garner’s co-conspirator, his half-brother Steven B. Smith, a former employee of the Federal Aviation Administration, is awaiting trial. According to records filed in the case and testimony at trial, Smith misused a government computer to place holds on items meant for transfer to other federal agencies. Smith would place a claim on the property as a representative of the FAA. However, Smith was not authorized to place any holds for the FAA. Garner then traveled the country picking up claimed goods worth thousands of dollars. Some of the items claimed include two 27' Boston Whaler boats, a Cessna airplane, a 50 foot yacht, and a sailing yawl. Prosecutors pointed out that Garner, who ran a limousine service, never obtained title showing the items were legally purchased and never registered the cars, boats or plane with licensing authorities. Garner stored the items at his home or airport hangar. Some of the items, such as the sailboat, were smuggled to Canada.
New York Attorney Sentenced for Defrauding Government Agencies
On February 17, 2010, in Brooklyn, N.Y., Steven Coren, an attorney, was sentenced to 30 months in prison for his role in a scheme to defraud government agencies in connection with his clients’ construction contracts with those agencies. Coren pleaded guilty in March 2009 to conspiring to launder the funds wrongfully obtained from government agencies and obstructing the federal grand jury investigation. According to court documents, from 2000 through 2006, Coren and several of his client-contractors defrauded government agencies by falsely representing that the contractors’ workers were being paid the prevailing wage as required by the federal Davis-Bacon Act and New York State Labor Law. Davis-Bacon requires that contractors on federally funded government contracts pay their workers the prevailing wage rate, as determined by the Secretary of Labor, consisting of a basic hourly rate and fringe benefits, and then certify that they have complied with the law prior to receiving payment from the government. Coren executed the scheme by creating the Contractors Benefit Trust (CBT), a multi-employer entity for which he acted as the trustee. Coren instructed the contractors to deposit the fringe benefit portion of the prevailing wage into the CBT, making it appear as if that they had complied with Davis-Bacon and New York State law. Thereafter, he advised the contractors that they could use the funds for purposes other than providing benefits to the employees on whose behalf the contributions were made. When Coren learned that one of the contractors was under investigation, he obstructed justice by directing the contractor to destroy documents that revealed transfers of funds from the CBT for expenses unrelated to the employees for whom the funds were deposited. Following Coren’s advice, the contractors defrauded various New York government agencies, including the New York City Housing Authority, the New York City School Construction Authority, the Metropolitan Transportation Authority, and the New York City Department of Citywide Administrative Services in connection with more than $10,000,000 in contract payments. Coren’s scheme affected construction projects such as the MetroNorth Larchmont Railroad Station, 18 New York City public schools, and 20 public housing projects. Over the course of the scheme, two of the involved contractors alone diverted more than $750,000 in funds that were rightfully due their employees, with a portion of those funds going to Coren.
Jamaican Labor Broker Sentenced to 45 Months in Prison
On February 1, 2010, in Norfolk, Va., Clover May Robinson-Gordon, from Montego Bay, St. James, Jamaica, was sentenced to 45 months in prison, to be followed by three years of supervised release. Robinson-Gordon was convicted by a jury on October 20, 2009 for conspiracy and money laundering in connection with an immigration fraud enterprise. According to evidence and trial testimony, Robinson-Gordon conspired with the Viktar Krus organization in Virginia Beach, Virginia in visa fraud, and then internationally laundered the unlawful proceeds. Viktar Krus and 21 other foreign nationals and U.S. citizens were indicted on January 13, 2009 for massive immigration-related fraud. Krus, the organizer and leader, was sentenced in July 2009 to 87 months in prison after being convicted on conspiracy, visa fraud and tax evasion charges.
Florida Man Sentenced to 22 Years in Prison in Mortgage Fraud Scheme
On January 22, 2010, in Orlando, Fla., Garry S. Martin was sentenced to 264 months in prison and ordered to pay more than $1 million in restitution to his victims. Martin pleaded guilty in July 2009 to charges of conspiracy to commit money laundering in connection with various mortgage fraud schemes and violating the terms of his supervised release from a prior conviction in 2006 for engaging in mortgage fraud. The terms of Martin’s supervised release for his 2006 conviction prohibited him from offering various real estate services. However, Martin maintained his real estate sales agent license and obtained his real estate brokers license. He also formed various companies, including Antigua Housing and Management, Inc. (Antigua H&M), Antigua Real Estate, Antigua Abstract LLC (Antigua Abstract), GSM Financial LLC, and Savvy Professional Title Company (Savvy), each with its principal office listed at the same address in Orlando, Florida. Through those companies, Martin conducted various schemes, including foreclosure fraud, reverse mortgage fraud, and sham transactions, to defraud financial institutions out of more than $5 million. Through Antigua H&M, Martin obtained money from people facing foreclosure by promising that Antigua would bring their past due mortgages current through refinancing and forward their payments to their lenders. He then used the foreclosure payments himself and did not pay the banks. Through Savvy and Antigua Abstract, Martin marketed reverse mortgages to seniors, sent fraudulent financing packages to support the mortgage applications, arranged the mortgage closings himself, and then diverted mortgage proceeds to his personal use. Martin also created wholly fictitious agreements between fake buyers and fake sellers to receive mortgage proceeds.
Four Sentenced in Mortgage Fraud Scheme
On January 22, 2010, in Dayton, Ohio, four people were sentenced for their roles in an extensive mortgage fraud scheme that affected 210 residential properties. Kenneth O. McGee was sentenced to 32 months in prison and fined $12,500; his father, Edward McGee was sentenced to three years probation and fined $140,000; Robert Mitchell was sentenced to 32 months in prison and fined $12,500; and Kamal J. Gregory was sentenced to 10 months in prison and fined $12,500. All defendants pleaded guilty to various federal charges of conspiracy to commit mail fraud, wire fraud, money laundering, and/or conspiracy to commit money laundering. The defendants were part of a conspiracy that operated and controlled various Dayton-based real estate mortgage and title insurance related businesses and corporations that schemed to defraud 33 mortgage lending institutions out of over $7 million in loan. This scheme involved manipulating documents associated with real estate sales and closings in order to fraudulently obtain excess mortgage loan proceeds generated from the sale of residential properties for the personal benefit of the co-conspirators.
Connecticut Man Sentenced for Operating Illegal Money Remitting Business
On January 20, 2010, in Bridgeport, Conn., Marcio Mansur, of Waterbury, was sentenced to 30 months in prison, followed by two years of supervised release, and ordered to pay a $5,000 fine. Mansur pleaded guilty on October 20, 2008, to one count of operating an illegal money remitting business. According to court documents and statements made in court, from March 2006 to March 2008, Mansur operated Danbury-based Bem Brasil, a business that, among other things, collected funds for remission to Brazil on behalf of Brazilian immigrants in Connecticut. Mansur then paid RM Insurance Services LLC of Danbury, an insurance company that also catered to the Brazilian immigrant community, to wire transfer the funds he had collected at Bem Brasil and other locations. In 2006 and 2007, Mansur had RM Insurance and another unauthorized money remitting business wire more than $18 million.
Maine Man Sentenced to Eight Years in Prison on Bribery and Money Laundering Charges
On January 15, 2010, in Portland, Maine, Maurice H. Subilia, Jr., of Kennebunkport, was sentenced to 96 months in prison, to be followed by three years of supervised release, and ordered to pay $9,238,450 in restitution to the United States Department of Defense, including a forfeiture of $1.2 million of his assets. Subilia pleaded guilty in February 2009 to charges that he bribed and conspired to bribe employees of the United States Army Space and Missile Defense Command in Huntsville, Alabama with regard to contracts issued by that agency, and that he conspired to launder funds paid under those contracts. According to court documents, around the year 2000, Subilia and two employees of the Missile Defense Command, Michael Cantrell and Douglas Ennis, agreed to a scheme by which Cantrell and Ennis would steer Missile Defense Command funds to Lealagi, Inc. and Sage Technologies, Inc., two companies operated by Subilia. In exchange, Subilia would make payments to the two employees. Between 2001 and 2006, roughly $11 million originating from Missile Defense Command contracts was paid to Lealagi and Sage, who in turn provided items and materials to the Missile Defense Command that had little or no value, or at prices which had been substantially inflated. Lealagi and Sage wired substantial amounts of money overseas. Some of these funds were in turn wired back to the United States, and a portion of those funds was used to make bribe payments to Cantrell and Ennis. Subilia paid in excess of $900,000 to Cantrell under this arrangement.
New Jersey Man Sentenced to 15 Years in Prison for Operating Unlicensed Money Remitting Business
On January 13, 2010, in Newark, N.J., Syed Azhar, president of Access Inc. of USA, was sentenced to 180 months in prison, to be followed by three years of supervised release, and ordered to pay fines totaling $25,000. Azhar was convicted by a federal jury in June 2009 for operating an unlicensed money transmitting business, conspiracy to operate an unlicensed money transmitting business and conspiracy to cause failure to file currency transaction reports. According to evidence introduced at trial, Access Inc., located in Iselin, New Jersey, was a money transmitting business licensed to do business in the state of New Jersey. Neither Access Inc. nor Syed Azhar had a license from the state of New York authorizing it or him to engage in money transmitting in the state of New York. Link to Link, Inc., Kashmir Money Inc, a business variously known as Fast Money Services or Fast Global Services, and a fourth business (hereinafter collectively referred to as the “New York Businesses”) were engaged in the business of money transmission in the State of New York. None of the New York Businesses had a license from the State of New York or any other state authorizing them to engage in the direct transmission of money. Each of the New York Businesses received currency in the State of New York from customers who wished to transmit funds to persons and entities located in other countries. Each of the New York Businesses delivered currency to Syed Azhar that it had received from its New York customers who wished to transmit funds to persons and entities in other countries, principally Pakistan. From in orabout January 2001 through on or about June 17, 2003, defendant Syed Azhar transmitted to Pakistan over $101 million dollars that he had received from the New York Businesses. In doing so, the jury convicted Syed Azhar of operating and aiding and abetting the operation of an unlicensed money transmitting business or businesses in the State of New York. The jury also convicted Azhar of conspiracy to cause failure to file currency transaction reports.
Minnesotan Sentenced for Wire Fraud, Money Laundering
On January 5, 2010, in St. Paul, Minn., John Jefferson was sentenced to 90 months in prison for orchestrating a scheme to obtain money from others through the use of a fraudulent overseas development project. Jefferson was sentenced on six counts of wire fraud, nine counts of money laundering, and three counts of failure to file tax returns. According to court records, between December 24, 2003 and August 20, 2006, Jefferson told details about his scheme to an unwitting third party, who, in turn, solicited money from others by repeating Jefferson’s false representations. Specifically, potential investors were told Jefferson was working on an overseas development project that involved extracting natural resources from the African nation of Liberia that would yield high returns. To support that assurance, they were told Jefferson had connections to senior U.S. national security officials as well as the governments of various African nations. Victims of the scam sent investment dollars to a third party through wire transfers. The third party then delivered that money to Jefferson by way of other wire transfers or by hand, providing him cash, money orders, and cashier’s checks. The third party believed they would share in the ultimate project payout, which was estimated to be approximately $4.4 billion. In truth, however, there was no development project. Instead, investment money provided to Jefferson was used to support a lavish lifestyle for himself and members of his family. In addition, he failed to file federal tax returns in 2004, 2005 and 2006.
Ohio Lumber Company Owner Sentenced on Fraud Charges; Ordered to Pay $2.4 Million in Restitution
On January 5, 2010, in Columbus, Ohio, Terry A. Robbins, of Waverly, was sentenced to 36 months in prison, followed by five years of supervised release, and ordered to forfeit $99,120. In addition, Robbins was ordered to pay $771,422 in restitution to the Pennsylvania Lumberman's Mutual Insurance Company and $1,701,578 in restitution to Huntington National Bank. Robbins pleaded guilty on August 7, 2009 to one count each of bank fraud, mail fraud and money laundering in connection with lumber businesses he owned in Pike County. According to court documents, Robbins was the president of NKR, Inc. doing business as Ohio Valley Lumber in Piketon. In March 2003, Robbins established a $5 million line of credit with Huntington National Bank to provide operating funds for the lumber company. He was required to submit monthly collateral reports verifying the existence and quality of the company’s inventory. Starting in October 2003, Robbins began submitting false and inflated business records in a scheme to defraud the bank. On March 2, 2004 a fire destroyed Ohio Valley Lumber. Robbins admitted that he inflated the value of the lumber destroyed when he mailed the claim to the insurance company. Robbins committed money laundering in October 2007 when he moved the proceeds of the mail fraud between companies that he and his wife owned in an effort to conceal the origin of the money.
Father and Son Sentenced in Mortgage Fraud Scheme
On January 4, 2010, in Raleigh, N.C., Daniel Adam Rooks, aka Adam Rooks was sentenced to 87 months in prison, to be followed by five years of supervised release. Alford Rooks, Adam's father, was sentenced to five years probation. Adam and Alford Rooks were indicted in December 2008 with others on charges of conspiring to commit wire fraud and mail fraud, aiding and abetting wire fraud, and conspiring to launder money. As stated in the Indictment, from approximately January 1998 until about April, 2004, the defendants devised a scheme to defraud home buyers, banks and other lenders to obtain money and property from the home buyers and lenders by materially false and fraudulent pretenses. Adam Rooks bought about four tracts of land in Whiteville, N.C., subdivided the properties, put trailers on them, and sold them to low income people from around the area. In the beginning, Adam Rooks was selling these properties himself with the aid Alford Rooks and others. He partnered with two mortgage brokers to finance the mobile homes. Adam 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 the other brokers and they would falsify the loan applications, sending them in for approval. Most of the properties initially sold by Adam Rooks were foreclosed by leaders who were co-conspirators. The defendants began purchasing the foreclosed proprieties and solicited others, often times other mortgage brokers, as 'investors' to purchase the new price-depressed foreclosed properties and resell them quickly at prices inflated by false and fraudulent real estate appraisals.
Chicago Firefighter Sentenced to more than 17 Years on Narcotics and Money Laundering Charges
On December 29, 2009, in Urbana, Ill., Sung Jin Jeon was sentenced to 210 months in prison to be followed by five years of supervised release for drug trafficking and money laundering. According to court records, Jeon admitted that from 2004 to December 2007, while he was employed as a fireman in Chicago, he conspired with others to distribute cocaine through a drug trafficking network that sold the drugs in Champaign-Urbana. As part of the conspiracy, he also agreed to launder drug proceeds for a co-conspirator through businesses he owned. To do this, Jeon falsely listed the man as an employee of his company. When the man made payments to Jeon from drug proceeds, Jeon would partially redirected the money back to him by writing payroll checks and falsely claiming the checks were payment of wages.
Four Brothers Sentenced on Drug and Money Laundering Charges
On December 18, 2009, in Miami, Fla., four brothers were sentenced on charges of conspiracy to commit money laundering, conspiracy to commit mail fraud, conspiracy to manufacture and possess with intent to distribute more than 100 marijuana plants, and conspiracy to maintain a place to manufacture and distribute marijuana. Manuel Pupo, aka Tata, was sentenced to 87 months in prison and ordered to pay $416,402 in restitution. Elieser Pupo was sentenced to 63 months in prison and ordered to pay $327,445 in restitution. Serguey Pupo was sentenced to 63 months in prison; a restitution hearing is scheduled in February 2010. Elmer Pupo aka Elmes, was sentenced to 63 months in prison and ordered to pay $327,445 in restitution. All defendants will serve five years of supervised release following their prison terms. According to court documents, the Pupos had houses in St. Lucie County, Miami-Dade County, and other parts of Florida which were set up as marijuana grow houses. The Pupos recruited caretakers/grow farmers, mostly immigrants, to maintain the grow houses. In the purchase of real estate, the Pupos and their associates caused mortgage companies to issue a total of 18 mortgages, by making false representations as to material facts in the mortgage applications. With regards to the money laundering charges, the Pupos conspired with others to conduct financial transactions involving the proceeds from the manufacturing and dealing in marijuana and mail fraud. The value of the laundered funds was between $200,000 and $400,000. The Pupos used the proceeds to pay the mortgages of the marijuana grow houses. In addition, the Pupos would give money to the marijuana grow farmers and request that the farmers return the money in the form of rent checks, which would be deposited into their accounts under the guise of rental income, for the purpose of concealing and disguising the nature, location, source, ownership, and control of the proceeds.
Lead Defendant in Internet Pharmacy Scheme Sentenced to 12 Years; Ordered to Pay $68 Million in Restitution
On December 10, 2009, in Dallas, Texas, Rakesh Jyoti Saran was sentenced to 144 months in prison and ordered to pay $68 million in restitution for his involvement in an elaborate rogue internet pharmacy scheme. According to court documents, Saran and his co-defendants conspired with others to commit health care fraud, wire fraud, mail fraud, and money laundering and to engage in the illegal distribution of controlled substances in a drug diversion scheme. According to plea papers filed in court, Saran operated 23 Texas-incorporated pharmacies and purchased expensive pharmaceuticals at significant discounts from pharmaceutical wholesale suppliers by obtaining fraudulent memberships in Group Purchasing Organizations (GPOs) with restricted distribution. However, Saran sold the significantly-discounted pharmaceuticals outside the scope of the provisions, making substantial profits from the diverted transactions. He also used his pharmacies to operate a “store front” website designed to facilitate the distribution of controlled substances to internet customers who illegally acquired the drugs without valid prescriptions and without doctor intervention, paying up to four times the cost if the substances had been acquired legally. As part of his plea agreement, Saran forfeited assets earned from his illegal activities, including more than $1,000,000 in cash seized at his residence; more than $375,000 found in bank accounts; approximately $390,000 in cashier’s checks and money orders; several vehicles; and a custom home under construction which sold for $1,200,000. On December 9, 2009, co-defendant Sherman Ted Solomon was sentenced to 60 months in federal prison and ordered to forfeit nearly $5.7 million in funds, a vehicle and two pieces of real estate in Florida.
Las Vegas Man Sentenced to Over 17 Years in Prison for Money Laundering and Other Federal Charges
On December 10, 2009, in Las Vegas, Nev., Quinton Williams, aka Goldie, of Chicago, Illinois, was sentenced to 210 months in prison and three years of supervised release. Williams was convicted by a jury on March 6, 2009, on money laundering, interstate travel in aid of racketeering, and other charges related to his prostitution business. According to court documents, during 2001, Williams operated a business involving the transportation of women to various states for the purpose of prostitution. During the 1990's and through 2001, Williams filed only one federal individual income tax return with total reported earnings of less than $500. Williams had no legitimate source of income other than his financial gains from illegal sex trafficking. He used the earnings of his prostitution-related activities to purchase vehicles to transport the females and for other costs associated with perpetuating his illegal prostitution activity.
California Men Sentenced to Federal Prison
On December 2, 2009, in Seattle, Wash., Jesus “Jesse” Deleon, of Irvine, California, was sentenced to 22 months in prison and three years of supervised release for conspiracy to transport individuals in furtherance of prostitution. Deleon and his co-conspirators operated a string of massage parlors and tanning salons that were fronts for prostitution. Deleon was indicted on February 11, 2009, on one count of conspiracy to transport individuals in furtherance of prostitution and one count of conspiracy to engage in money laundering. Earlier this week, a second defendant, Donald Kerry Frey,of South Lake Tahoe, California, was sentenced to 24 months in prison and three years of supervised release. Both Frey and Deleon pleaded guilty to conspiracy to transport individuals in furtherance of prostitution on July 30, 2009. Frey assisted Deleon with the running of the brothels, picking up cash payments of $25,000 or more from the women who operated the businesses. According to court records, Deleon made concerted efforts to conceal the criminal proceeds through the use of multiple bank accounts, and when he believed law enforcement may discover these accounts, he closed the accounts and initiated the physical transportation of thousands of dollars from Washington to California to avoid law enforcement detection.
Owner of Florida Check Cashing Business Sentenced for Filing False Currency Transaction Reports
On December 1, 2009, in Miami, Fla., Munther Duaybes was sentenced to 18 months in prison, to be followed by three years of supervised release. Duaybes pleaded guilty to a criminal Information charging him with causing the filing of false currency transaction reports with the Internal Revenue Service (IRS). According to court documents, Duaybes is the owner and operator of Mark’s Check Cashing Store, a money service business in Palm Beach County. IRS regulations require money service business to file a currency transaction report (CTR) for any financial transaction over $10,000 conducted by a person in a single day. From July 2007 through May 2009, Duaybes filed more than 1,300 CTRs in connection with $42 million in financial transactions on behalf of his customers. Duaybes listed JH American, a shell company, in 128 CTRs in connection with 1,253 separate financial transactions worth more than $7.5 million. However, in at least 45 of these financial transactions, non-disclosed individuals (not JH American) conducted the listed financial transactions. Hence, the defendant concealed the true identity of the persons conducting the transactions.
California Man Sentenced To Six Years in Prison for Marijuana Cultivating Operation
On November 25, 2009, in Oakland, Calif., Jordan Pyhtila, of Rio Dell, California was sentenced to 72 months in prison, followed by three years of supervised release for maintaining a place to manufacture marijuana and conspiracy to launder money. Pyhtila pleaded guilty on May 27, 2009, admitting that he purchased and maintained property located in Humboldt County for the purpose of cultivating marijuana. According to the plea agreement, from 1999 through September 2008, Pyhtila also purchased or maintained pieces of property for the purpose of allowing others to manufacture marijuana. The defendant purchased real estate on which marijuana was cultivated, and financed real estate purchases by others who intended to use the land to cultivate marijuana. Pyhtila also financed many of the marijuana growing operations by providing funding for equipment, building materials, marijuana clones, fertilizer, wages for laborers and other expenses. The defendant received a portion of the profits from the sale of marijuana grown on these properties. The plea agreement also states that, from 1999 through September 2008, Pyhtila agreed to use the net profits from marijuana cultivation to fund the operations of his business, J&J Earthmoving, and to purchase numerous properties throughout Northern California. The purchases of the properties were made to conceal the net profits earned from financing the cultivation of marijuana. Nominee owners were used to hide the true ownership interest in these properties. As part of the plea agreement, Pyhtila agreed to forfeit interest in real property and his interest in a promissory note, in the amount of $945,000, that was obtained from the sale of a subdivision that he was developing in Rio Dell. Phytila’s co-defendant, Jessie Jeffries, of Garberville, Calif., was sentenced on October 28, 2009, to 72 months in prison on the same charges.
Ohio Businessman Sentenced on Money Laundering and Drug Charges
On November 19, 2009, in Columbus, Ohio, Rudy E. Tirado, of Westerville, was sentenced to 46 months in prison for conspiring to distribute more than five kilograms of cocaine and for making false statements to a financial institution to secure two lines of credit to open a spa franchise. Tirado pleaded guilty on June 4, 2008, to one count of money laundering. According to court documents, Tirado admitted that he submitted false financial documents to Chase Bank when he applied for two lines of credit totaling $300,000 in 2005. Tirado claimed the lines of credit would be used to open a new business titled R.E.T. Med Spa, Inc. to provide outpatient cosmetic surgery services. Instead, Tirado used the funds for a bakery and to pay for personal, non-business expenses. In addition, Tirado pleaded guilty on April 8, 2009, to one count of conspiring to distribute more than five kilograms of cocaine. In a statement of facts read during the plea hearing, Tirado admitted that he became involved in a cocaine trafficking conspiracy in 2004.
Two Founders of PBS Global Sentenced in FAX Fraud Case
On November 20, 2009, in Wichita, Kan., two of the founders of PBS Global, Inc., were sentenced to federal prison for defrauding the company’s customers across the nation. John Persaud was sentenced to 90 months in prison and Richard Hagan was sentenced to 68 months in prison. Persaud and Hagan each pleaded guilty to one count of conspiracy to commit wire fraud and one count of money laundering. In their pleas, the two men admitted that in the Spring of 2003 they formed Prudential Business Services, Inc., which later became known as PBS Global, Inc. The company sent notices to small businesses across the nation advertising that the company offered to assist owners in finding buyers for their small businesses. The company’s sales materials contained false and fraudulent claims, including claims that PBS had a successful track record over a period of years, that PBS made money only when a customer’s business was successfully sold, and that PBS sales force members did not depend on commissions for income. Court documents show that from July 8, 2003, through June 2004, PBS did not collect any money from successful sales of clients’ businesses and that during that time, the company collected more than $6.5 million from clients to pay for third party evaluations of their businesses while PBS paid $171,000 to the companies that provided the evaluations.
Former Ukrainian Prime Minister Sentenced to 97 Months in Prison
On November 18, 2009, in San Francisco, Calif., Pavel Ivanovich Lazarenko was sentenced to 97 months in prison, ordered to pay a $9 million fine and forfeit $22,851,000 and various specified assets resulting from his money laundering convictions. The court deferred decision on restitution. Lazarenko was convicted on June 3, 2004, on 29 counts of money laundering, wire fraud and interstate transportation of stolen property. During the trial, evidence showed that starting in the early 1990s, when he was the governor of an industrialized region in Ukraine, Lazarenko abused his official authority to extort Ukrainian businessman Peter Kiritchenko of 50 percent of his profits. Over time, and as Lazarenko rose in office to become the Prime Minister, Kiritchenko paid Lazarenko $30 million, which was half of Kiritchenko’s $60 million in profits. At Lazarenko’s direction, Kiritchenko assisted him in laundering the proceeds of that extortion through accounts in Poland, Switzerland, Antigua, and, ultimately, the United States, where Lazarenko used a shell company to conceal his purchase of a multi-million dollar residence in Marin, Calif. Kiritchenko pleaded guilty to one count of receipt of stolen property and testified against Lazarenko. After trial, the court dismissed fifteen counts and sentenced Lazarenko on fourteen counts. The Ninth Circuit Court of Appeals later affirmed all of Lazarenko’s money laundering convictions (eight counts) dismissed the other charges and vacated the original sentence. This sentencing was on the eight counts of money laundering. This case is the first prosecution of a foreign leader for laundering the proceeds of extortion through financial institutions in the United States.
Georgia Man Sentenced in Investment Fraud Scheme
On November 12, 2009, in Macon, Ga., Gary Hutcheson was sentenced to 60 months in prison, to be followed by three years of supervised release, and ordered to pay $1,618,000 in restitution and a special assessment of $1,000. Hutcheson was indictment in April 2009 on charges of mail fraud and money laundering. According to the indictment, from about May 2006 through July 2008, Hutcheson solicited investors to place funds in what he described as a hedge fund. In soliciting investors, Hutcheson falsely claimed to be an expert in investing money. During this timeframe, Hutcheson received approximately $2.1 million from investors. Hutcheson did invest some of the money with securities brokers/dealers which began losing money. In order to convince investors that their money was successfully invested and to induce new investors, Hutcheson paid "profits" from money gain through new investors, as well as provide false Forms 1066 and Schedule K-1.
Kansas Salesman Sentenced to 30 Months in Prison for Tax Fraud
On November 9, 2009, in Wichita, Kan., Marvin R. Hicks was sentenced to 30 months in prison and ordered to pay more than $400,000 in restitution for his part in a fraudulent scheme in which a company called PBS Global, Inc. collected more than $6.5 million from customers across the nation who were looking for help selling their small businesses. Hicks pleaded guilty to one count of conspiracy to commit wire fraud. In his plea, he admitted that as a salesman for PBS he made sales pitches based on false claims that his company would find buyers for small businesses. In fact, PBS sold no businesses while Hicks worked there. Instead, the company profited from fees that clients paid to have their businesses evaluated. Hicks and other salesmen were paid a commission on those fees. From August 2003 to June 2004, Hicks made sales to 38 victims totaling $407,940.
Oklahoman Sentenced to More Than 24 Years in Bond Scheme
On October 23, 2009, in Tulsa, Okla., Joseph Lynn Thornburgh was sentenced to 292 months in prison and ordered to pay more than $1 million in restitution. Thornburgh was convicted by a trial jury in June 2009 on charges of mail fraud, wire fraud, and money laundering. According to court records, Thornburgh promoted a fraudulent investment scheme in which investors were told “historical bonds,” including bonds issued in the 1850’s by the GH&H Railroad and some issued in early 1900’s by the Republic of China, were the basis for securing lines of credit with European banks. The value of these bonds was falsely represented to be worth hundreds of millions of dollars when in fact they had no value based on interest payments.
Three Sentenced for Conspiring to Commit Terrorist Acts Against Americans Overseas
On October 22, 2009, in Cleveland, Ohio, Mohammad Zaki Amawi, Marwan Othman El-Hindi, and Wassim I. Mazloum were sentenced for conspiring to commit terrorist acts against Americans overseas, including U.S. military personnel in Iraq, and other terrorism-related violations. Amawi received a term of 20 years incarceration followed by life on supervised release. El-Hindi was sentenced to 156 months in prison and Mazloum received a sentence of 100 months in prison followed by life on supervised release. On June 13, 2008, a jury convicted the defendants on the following counts. Amawi, a citizen of Jordan and the United States, and El Hindi, a naturalized U.S. citizen born in Jordan, were each convicted of conspiring to kill or maim persons outside the United States, conspiring to provide material support to terrorists, and of distributing information on explosives. Mazloum, a U.S. legal permanent resident from Lebanon, was convicted of conspiring to kill or maim persons outside the United States and conspiring to provide material support to terrorists. The convictions represented the nation’s first successful trial of a "homegrown terror cell" for terrorism related crimes. At trial the government proved that all defendants conspired to provide material support and resources, including personnel, money, explosives and laptop computers, to terrorists, including a co-conspirator in the Middle East, who had requested such materials for use against U.S. and coalition forces in Iraq.
Money Launderer Sentenced to More than 4 Years in Prison for Laundering Over $1.6 Million
On October 19, 2009, in Phoenix, Ariz., Rastislav Halcin, aka Pawel Okawa, a citizen of Slovakia, was sentenced to 52 months in prison for his role in laundering $1.629 million. Halcin pleaded guilty to conspiracy to commit money laundering. In his plea, Halcin admitted to laundering $390,000, but the court found that he actually laundered more than $1.629 million. According to court documents, Halcin received the funds from bank accounts throughout Europe for the purpose of providing it to other members of the organization to purchase cocaine in Arizona. He attempted to avoid detection by using several different banks in the Phoenix area to move the funds. The cocaine was then shipped from Arizona to the Chicago area. The drugs were either sold in Chicago or smuggled to Europe for distribution. Money would then be sent to Arizona to continue the illegal cycle.
Maryland Jewelry Store Owner Sentenced for Laundering Drug Proceeds
On October 19, 2009, in Baltimore, Md., Eugene Petasky was sentenced to 41 months in prison, followed by five years of supervised release, for conspiracy to launder drug proceeds. Petasky owned and operated a business known as Metro Brokers Jewelers Ltd., in Pikesville, Maryland, which was formerly located in Baltimore. According to his plea agreement, from at least 1982 until November 27, 2006, in the course of operating that business, Petasky knowingly accepted at least $336,000 in cash from drug traffickers in exchange for jewelry. Petasky knew that the money he was accepting was the proceeds of drug trafficking. Drug dealers repeatedly brought drug proceeds to him to disguise the true nature and source of those funds, and Petasky agreed to accept those funds and assist the drug dealers. Petasky intentionally concealed the nature of those transactions (and the money involved) by failing to file required Internal Revenue Service (IRS) Forms 8300, Report of Cash Payment Over $10,000 Received in a Trade or Business, and by structuring certain transactions to make them appear legitimate.
California Man Sentenced To Over Eight Years for Ponzi Scheme Involving Commodities Futures Investments
On October 7, 2009, in Los Angeles, Calif., Robert Bame, of Moreno Valley, California, was sentenced to 97 months in prison and 36 months of supervised release. In addition, Bame was ordered to pay $16,038,568 in restitution to his victims, and a special assessment fee of $300. Bame, who admitted to victimizing over 100 investors in an investment “Ponzi”-style scheme, pleaded guilty in June 2009 to one count of wire fraud and two counts of money laundering. According to court documents, Bame convinced victims to invest in contracts for index-based futures and told investors the contracts were traded using a unique computer program that maximized profits. Most investors were told their money was being invested in the commodities futures market. Bame described these investments as profitable, when the vast majority of investors' money was actually transferred to Bame’s personal bank accounts and diverted for his personal use. Investigators found that Bame used the large majority of investors' funds to charter private jets and for the purchase of multiple vehicles and other personal items.
Top-Ranking Members of the Mexican Mafia are Sentenced to Lengthy Prison Sentences
On October 2, 2009, in Lubbock, Texas, the two top-ranking members in command of the Mexican Mafia that operated in San Angelo and Abilene, Texas, were sentenced to lengthy prison sentences. Eduardo Sosa Martinez, Jr., a/k/a “Roro,” of San Angelo, was sentenced to 120 months in federal prison, to be followed by a lifetime of supervised release. Martinez, who held the ranks of Captain and Lieutenant and was responsible for managing the Mexican Mafia’s distribution of methamphetamine in San Angelo, Abilene, and throughout North Texas, pleaded guilty in June to one count of conspiring to possess with intent to distribute methamphetamine and one count of money laundering. Second in command, Sammy Garcia, a/k/a “Candyman,” of San Angelo, was sentenced to 210 months in federal prison. He pleaded guilty in May to distribution and possession with intent to distribute methamphetamine. Fifteen defendants, mostly members/associates of the Mexican Mafia, were charged in a 15-count federal indictment with various offenses related to their operation of a major methamphetamine trafficking operation in the Abilene and San Angelo, Texas, areas, as well as throughout North Texas. All defendants have pleaded guilty to their roles; two defendants have not yet been sentenced.