Examples of Money Laundering Investigations - Fiscal Year 2011
The following examples of money laundering investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Florida Man Sentenced in Separate Wire and Mortgage Fraud Conspiracies
On September 30, 2011, in Miami, Fla., Manetirony Clervrain, also known as “Kevin Rusell,” of Broward County, Florida was sentenced to 108 months in prison and three years of supervised release. On July 22, 2011, Clervrain pleaded guilty to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to commit wire and bank fraud in connection with two separate fraudulent schemes. According to court documents, between December 2005 and February 2006, Clervrain and his co-conspirators defrauded a number of companies by impersonating other victim companies and individuals to obtain lines of credit and goods and services from the retailers, resulting in losses of over $300,000. In the second scheme, between February 2007 and June 2007, Clervrain and his co-conspirators purchased 25 units at the Club Caribe Project, using bank loans obtained through fraud. Clervrain and his co-conspirators obtained more than $5.7 million in fraudulent mortgage loans and diverted the proceeds for their personal use, with one of Clervrain’s companies collecting $50,000 as “contractor dues” and “assignment fees” at the closing of each property.
Former County Sheriff Sentenced on Federal Charges
On September 28, 2011, in London, Ky., Lawrence Hodge, former Whitley County Sheriff, was sentenced to 186 months in federal prison and ordered to pay $50,000 in restitution. In addition, Hodge was ordered to forfeit $64,897. Hodge pleaded guilty in May 2011 to conspiracy to commit extortion under color of official right, conspiracy to distribute oxycodone, and conspiracy to commit money laundering. According to court documents, Hodge admitted that on at least three separate occasions between 2004 and 2007, he conspired with Williamsburg defense attorney Ron Reynolds to extort money from individuals that the Whitley County Sheriff’s Department charged with felony drug trafficking offenses. Specifically, Hodge referred criminal defendants to Reynolds for representation. Reynolds, acting on behalf of Hodge, encouraged these same clients to make forfeiture payments and/or cash donations to the Whitley County Sheriff’s Department. The department received more than $55,000 through this scheme. Reynolds was sentenced in July 2011 to 27 months in prison. Hodge also acknowledged that he conspired with numerous drug dealers in the Whitley County area to distribute prescription pills over a seven year period. In addition, Hodge admitted to conspiring with a former bookkeeper for the Whitley County Sheriff’s Department to embezzle and launder nearly $65,000 of funds belonging to the department. The money in this fund was supposed to be used to make controlled drug buys, pay informants, and to further other similar law enforcement objectives. Instead, Hodge told the bookkeeper to write him a check from the fund for one of these legitimate purposes, when in reality he was using the money to fund his own drug habit and for other personal expenditures. To cover up for the missing funds, Hodge permitted the bookkeeper to alter the Sheriff Department’s accounting records and to falsify reports and other required paperwork.
Georgia Man Sentenced on Drug and Money Laundering Charges
On September 15, 2011, in Atlanta, Ga., Ismael Estrada was sentenced to 360 months in prison and 10 years of supervised release for his part in a conspiracy to distribute cocaine and marijuana and 13 counts of money laundering. Estrada was also ordered to pay a special assessment of $1,400 and a $25,000 fine. According to the criminal indictment and other information presented in court, beginning in or about 2004, and continuing until on or about April 2006, Estrada would negotiate with others to purchase multiple kilograms of cocaine for distribution. Further, it was part of the conspiracy that Estrada and others would distribute and assist in the distribution of kilogram quantities of cocaine to various buyers in Atlanta, Georgia and elsewhere. Estrada and his conspirators generated large sums of cash relating to their distribution of narcotics. During this same period, a co-conspirator wrote $1.1 million in checks payable to Estrada, Estrada’s businesses and even Estrada’s 15-year-old daughter.
Defendant Sentenced on Money Laundering Charges
On September 8, 2011, in Saipan, Guam, Gilbert Ladonga was sentenced to 78 months in prison, three years of supervised release and ordered to pay a $600 special assessment. Ladonga was convicted in October 2010 on five counts of international money laundering and one count of conspiracy. Evidence at trial showed that Ladonga transmitted more than $21,000 by wire from Guam to various individuals in the Philippines in January and February 2010. The money represented the proceeds of methamphetamine hydrochloride (“ice”) distribution.
Man Sentenced on Watermark Ponzi Scheme
On September 14, 2011, in Buffalo, N.Y., Guy W. Gane, Jr., of Williamsville, N.Y., was sentenced to 156 months in prison and ordered to pay $6,000,000 in restitution to the victims of his scheme. Gane was convicted on mail fraud and money laundering charges. According to court documents, Gane was President of Watermark M One Financial Services, which was shut down in May 2008 as a result of action by the United States Postal Inspection Service and the Securities and Exchange Commission. The scheme began in early 2006 when Gane and his employees began selling "debentures" to trusting clients, claiming to be using the money to invest in waterfront real estate. The defendant promised a 10 percent return after a year to his investors. However, no investments were ever made. Gane used new investor funds to pay off the earlier investors. Ninety-four victims lost over $6,000,000.
Canadian National Sentenced for Role in Fraud and Money Laundering Conspiracies Involving New Jersey Environmental Protection Agency
On September 12, 2011, in Newark, N.J., Robert P. Griffiths, former executive at Bennett Environmental Inc. (BEI), a Canada-based company that treats and disposes of contaminated soil, was sentenced to 50 months in prison for participating in money-laundering and fraud conspiracies in connection with contracts at a Superfund site in New Jersey, as well as impeding a proceeding before the U.S. Securities and Exchange Commission (SEC). Griffiths was also sentenced to pay a $15,000 criminal fine and to pay $4,644,378 in restitution to the victim, the EPA. On July 6, 2009, Griffiths pleaded guilty to defrauding the EPA with others by inflating the prices he charged to a prime contractor of the EPA and providing kickbacks to employees of that prime contractor from approximately December 2001 until approximately August 2004 at the Federal Creosote site. Griffiths and his co-conspirators were given the bid prices of BEI's competitors, which allowed BEI to submit the highest possible bid prices and still be awarded the sub-contracts. On one occasion, Griffiths and his co-conspirators inflated the bid prices to cover approximately $1.3 million in kickbacks and amounts BEI kept for itself. The kickbacks were in the form of money transferred by wire to a co-conspirator’s shell company, lavish cruises for senior officials of the prime contractor, various entertainment tickets, pharmaceuticals and home entertainment electronics. The department said that the co-conspirators were able to allocate at least $43 million in fraudulently awarded sub-contracts to BEI for the removal, treatment and disposal of contaminated soil at the Federal Creosote site and to fraudulently conceal from the U.S. Army Corps of Engineers that BEI had submitted false invoices for the disposal of approximately 20,000 tons of soil. Griffiths and his co-conspirators also conspired to commit international money laundering so Griffiths could profit personally from the fraud and kickback scheme. From approximately February 2003 through approximately September 2004, Griffiths and a co-conspirator, who received more than $1 million in kickbacks through his shell company, laundered approximately $207,000 of the kickback proceeds from the co-conspirators bank account in New Jersey to a bank account controlled by Griffiths in Ontario, Canada. Three companies and 10 individuals have been charged as part of the investigation. More than $6 million in criminal fines and restitution have been imposed and five individuals have been sentenced to serve prison time.
California Man Sentenced on Drug and Money Laundering Charges
On September 7, 2011, in Sacramento, Calif., Miguel Vasquez, formerly of Cameron Park, was sentenced to 174 months in prison for conspiring to distribute methamphetamine and for money laundering. According to court documents, Vasquez was a major source of supply of methamphetamine in the Sacramento area and to persons shipping and selling significant quantities of methamphetamine to the Midwest and Hawaii. On April 24, 2008, agents searched a car registered to Vasquez and found 3½ pounds of crystal methamphetamine. In a search of Vasquez's house, agents found $118,000 in a metal safe and three firearms (including an assault rifle). In total, Vasquez forfeited a total of more than $700,000, mostly in the form of seized bank accounts, two parcels of land, and two vehicles. Vasquez is the latest defendant sentenced in this case. Sixteen defendants have already been sentenced between October 2008 and December 2009 to terms of between 144 months and 36 months in prison.
Former Minnesota Department of Revenue Employee Sentenced For Stealing $1.9 Million in State Funds
On September 7, 2011, in Minneapolis, Minn., Pamela Marie Dellis, of Lindstrom, was sentenced to 60 months in prison for conspiracy to commit mail fraud and money laundering. Dellis was charged along with two co-defendants on January 7, 2011, and pleaded guilty on March 7, 2011. On August 9, 2011, Dellis’s niece, Laurie R. Sondrall, of Minneapolis, was sentenced to 27 months on one count of conspiracy. Dellis’s sister, Nancy T. Sondrall, of Brooklyn Center, awaits sentencing. All three defendants will be required to pay back more than $1.9 million in restitution. In their plea agreements, the defendants admitted that from January 12, 2005, through September 17, 2010, they conspired to defraud the State of Minnesota by embezzling funds by creating false tax refund checks. According to court documents, as an auditor with the Minnesota Department of Revenue, Dellis’s job, in part, was to process tax overpayments. In numerous instances, however, she falsified records to create the impression that a taxpayer was owed a refund due to an overpayment when, in fact, that was not the case. Then, she drafted a refund check or a “transfer of funds,” made payable to her sister or niece, for the false refund amount. Dellis admitted using variations of her co-conspirators’ names on the checks and transfers to make it more difficult to detect that the refunds were not legitimate. To cash the checks, Dellis and her co-conspirators sometimes sought the services of a check-cashing business and then divided the check proceeds. On other occasions, the checks were deposited into an account, in an effort to conceal the source of the funds, and then withdrawn and shared by the co-conspirators. In all, Dellis was responsible for more than 200 fraudulent tax refund payments, totaling approximately $1.9 million.
California Source of Supply in “Operation Budapest” Sentenced
On September 6, 2011, in Fargo, N.D., Victor Espinoza, of Piru, California, was sentenced to 222 months in prison for his role in a large-scale drug trafficking and money laundering conspiracy that was the subject of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation titled “Operation Budapest.” During the course of the conspiracy, the targeted drug trafficking organization transported over 50 pounds of methamphetamine from California to North Dakota, Minnesota and Nebraska. Cocaine and marijuana were also distributed as part of the conspiracy. According to court documents, Espinoza was indicted in September 2010 and pleaded guilty to drug trafficking and money laundering charges in March 2011. To date, 26 defendants that have been sentenced in Operation Budapest on various offenses, including drug conspiracy, firearms charges, and money laundering. Assets seized during the investigation included a residence in Avoca, Minnesota, a residence in Worthington, a 2001 Mercedes Benz, a 2000 Cadillac STS and approximately $22,000 in cash.
Iowa Business and Businessman Sentenced For Structuring Cash
On August 24, 2011, in Cedar Rapids, Iowa, Terry Neal, of Ely, Iowa, was sentenced to 24 months in prison, three years of supervised release and fined $25,000 after pleading guilty in March to structuring monetary transactions and willfully failing to file a currency transaction reporting form. Neal’s company, Neal Enterprises of Marion, Iowa, also pleaded guilty in March to one count of structuring monetary transactions. According to information disclosed in court, on October 9, 2008, an undercover officer purchased a vehicle from Neal for $10,400 cash. Neal thought the undercover officer was a drug distributor so he did not report the cash sale of over $10,000 on a currency transaction reporting form. Neal then wrote up the sale for less than $10,000 in cash and structured the cash into his business bank account. Neal structured up to $200,000 in 11 months. Neal Enterprises was sentenced to five years of probation and fined $100,000. The company was also ordered to forfeit $312,000.
Texas Man Sentenced For Drug Crimes
On August 31, 2011, in Tyler, Texas, Hector Nieto, of Mt. Pleasant, Texas, was sentenced to 135 months in prison and ordered to forfeit ownership of commercial property in Mt. Pleasant valued at $93,000, a 2005 GMC pickup truck and $21,473 in US currency. Nieto pleaded guilty on November 2, 2010, to conspiracy to possess with intent to distribute cocaine and money laundering. According to information presented in court, in July 2009, Nieto knowingly delivered approximately three kilograms of cocaine to others with instructions to transport the cocaine to Chicago, Illinois, for sale and distribution. He further acknowledged using $49,000 in cash that was part of the proceeds of the drug conspiracy to pay for the construction of a swimming pool at his residence.
Maryland Woman Sentenced for Laundering Over $400,000 in Drug Proceeds
On August 26, 2011 in Baltimore, Md., Joy Edison, of Elkton, Maryland, was sentenced to 70 months in prison, followed by two years of supervised release for conspiring to launder over $400,000 in drug proceeds. Edison was also ordered to forfeit her interest in eight properties purchased with drug proceeds, her interest in JJM Realty and J. Edison Properties (front companies formed by Edison and her co-conspirators through which many of the properties were purchased) and any other property purchased with the drug trafficking proceeds. According to Edison’s plea agreement, from December 2003 to August 2010, Edison and her co-conspirators conducted financial transactions to conceal over $400,000 generated from the sale of heroin in Baltimore City. Edison and her co-conspirators used the cash proceeds of drug sales to: gamble at Las Vegas casinos, for which the “cash-outs” exceeded $184,000; purchase “winning” Maryland lottery tickets in amounts exceeding $138,000 in order to disguise drug proceeds as legitimate lottery winnings; deposit over $79,000 in cash into Edison’s bank accounts during 2007 and 2008; give hundreds of thousands of dollars in cash to individuals operating a used car businesses; and buy a residence for Edison in Elkton and at least seven properties in Baltimore. In addition, according to court documents, while Edison was maintaining a lavish lifestyle using drug proceeds, she submitted fraudulent applications to the Maryland Department of Human Services for community medical assistance, food stamps and the child care subsidy program. After misrepresenting her address and financial condition, Edison was granted the requested public assistance.
Texas Fraudster Sentenced to Federal Prison
On August 26, 2011, in Dallas, Texas, James A. Testa, of Carrollton, Texas, was sentenced to 84 months in prison and ordered to pay $1.9 million in restitution to the victims of his crime. Testa pleaded guilty in April 2009 to one count of engaging in monetary transactions in criminally derived property. According to information presented to the court, Testa and convicted co-conspirator, Michael R. Rouse, were co-founders and trustees of the Golden Gate Real Estate Investment Trust (REIT). During 2003 and 2004, Testa and Rouse, acting personally and through brokers, raised more than $2 million from investors by claiming that the REIT was a safe investment in real estate and real estate related assets. In fact, virtually none of the money was ever invested in anything connected with real estate. The only investments Testa and Rouse ever made were in foreign currency trading, and those investments failed completely. The investors lost most or all of their money, while Testa and Rouse paid themselves handsome salaries and spent the investors’ funds on business and personal expenses, including Mercedes Benz automobiles that cost more than $125,000 each. Rouse, formerly of Wellington, Florida, was sentenced last month, in absentia, to 210 months in prison and ordered to pay $1.9 million in restitution. He is a fugitive.
Minnesota Man Sentenced In Connection to $2 Million Fraudulent Loan Scheme
On August 25, 2011, in Minneapolis, Minn., Richard A. Sand, of White Bear Township was sentenced to 30 months in prison for his role in a $2 million fraudulent loan scheme. Sand, an attorney, pleaded guilty on March 28, 2011, to wire fraud and money laundering charges. He and two co-defendants were charged in a superseding indictment on July 13, 2011. On August 9, 2011, one of those co-defendants, Brenda Epperly, of Oak Grove, was sentenced to six months in prison on one count of aiding and abetting wire fraud. The third defendant, Donald W. Krause, of Plymouth, awaits sentencing. In their respective plea agreements, the defendants admitted using property transactions to defraud a lending institution. Specifically, on February 21, 2008, a purchase agreement was executed for the $1.6 million sale of an Orono residence to a corporation, RSN Companies, at which Krause was a general partner. The next day Krause sold that residence to Sand’s 86-year old mother for $2.6 million, $1 million more than RSN paid for the property the previous day. Under the terms of that transaction, Sand’s mother was to pay approximately $600,000 in cash, and the balance of the purchase price was to be financed through a bank loan. A false loan application was submitted to Bank of America, which approved a $2 million loan. On March 20, 2008, Bank of America wired the loan proceeds to Epperly, a closing agent at a title company, for distribution at the time of closing. However, the following day, Epperly dispersed $900,000 of the loan funds to RSN Companies. Then, on March 22, 2008, the defendants used some of that money to purchase a cashier’s check for $602,018 which was subsequently submitted as the cash payment Sand’s mother was to make as her equity contribution to the property purchase. Epperly then falsified the HUD-1 Settlement Statement provided to the lending institution, indicating that Sand’s mother had provided over $600,000 in cash. As a result, the bank mistakenly believed Sand’s mother had a financial stake in the purchase. On March 22, 2008, Krause purchased another cashier’s check with the loan proceeds. This $224,371 check was made payable to the Ramsey County Sheriff’s Department and was used by Krause and Sand to redeem a foreclosed property Sand owned in St. Paul. In addition, Sand used an additional $170,000 in loan proceeds for his own benefit. At their plea hearings, Krause admitted receiving approximately $50,000 because of this fraud.
Co-Defendants in Health Care Fraud and Money Laundering Scheme Sentenced
On August 24, 2011, in Nashville, Tenn., Glenesha Bowling-Moye was sentenced to 18 months in prison, followed by two years of supervised release and ordered to pay $1,245,002 in restitution ($1,166,696 of the restitution is due jointly and severally with her co-defendant). Tabitha Jones was sentenced to 12 months and a day, followed by two years of supervised release and ordered to pay $1,166,696 in restitution (owed jointly and severally with Moye). According to court documents, Moye and Jones were joint owners and operators of EBC Healthcare (EBC), a company that operated in the Middle District of Tennessee and elsewhere. EBC was both a Medicare Provider and TennCare Participating Provider engaged primarily in the business of submitting claims to Medicare and TennCare for services purportedly provided to Medicare beneficiaries and TennCare beneficiaries. Through EBC, Moye and Jones regularly caused claims to be submitted to, and received payments from, Medicare and TennCare. Moye and Jones, through EBC, caused fraudulent claims, totaling approximately $1,144,025, to be submitted to Medicare and TennCare for psychotherapy and other services that were either never provided or provided by personnel not licensed by the State of Tennessee to perform the services. Moye also owned GEMM Senior Services (GEMM) and executed the health care fraud scheme through that company as well causing fraudulent claims totaling approximately $78,306.
Tennessee Man Sentenced to Prison
On August 19, 2011, in Nashville, Tenn., James Christopher Rowland was sentenced to 28 months in prison, followed by two years of supervised release. On February 28, 2011, Rowland pleaded guilty to a conspiracy to commit money laundering. According to the plea agreement, Rowland purchased a house on Teresa Lane in Rutherford County, Tennessee. The house was purchased by means of a mortgage and public documents reflected that the house was owned by Rowland. In the spring of 2004, Rowland conspired with a drug dealer to purchase the home. The drug dealer paid Rowland $10,000 and later $25,000 as down payments for the purchase of the house – all in cash. In 2004 and before, the drug dealer was engaged in the illegal distribution of controlled substances, primarily cocaine. Since the drug sales were always in cash, over the years the dealer amassed a large sum of currency. The drug dealer did not use banks to deposit the currency or buy property in his own name for fear of alerting law enforcement officials to his illegal activities. Rowland continued to accept cash from the drug dealer to make the mortgage payments on the house, however, all public records still showed that the house was owned by Rowland. Rowland knew that all of the mortgage payments on the house were from the proceeds of the illegal distribution of controlled substances. Rowland was ordered to forfeit real estate in Tennessee and a Rock River Arms machine gun. Rowland previously forfeited $22,050 in a related civil case.
Defendant in Texas Drug Conspiracy is Sentenced to Prison
On August 17, 2011, in Waco, Texas, Blas Stephen Marquez was sentenced to 168 months in prison, five years of supervised release, and ordered to pay a $2000 fine. Marquez pleaded guilty in March 2011 to conspiracy to distribute methamphetamine and cocaine and conspiracy to commit money laundering. According to the Factual Basis, from at least January 2005, Blas Stephen Marquez and others, including his father, Jose Marquez, engaged in a conspiracy to distribute methamphetamine and cocaine. The money that was collected from this illegal distribution of drugs was laundered to make it appear to be from legitimate sources. Blas Stephen Marquez and others knew that the bulk currency that was being generated and collected was used to further the on-going illegal activity by acquiring more controlled substances for distribution. The currency was also used to purchase assets, some of which were used to further the on-going illegal activity. Some assets were placed in nominee names and businesses in order conceal their true ownership and control.
Leader of Drug Conspiracy Sentenced to 30 Years in Prison
On August 17, 2011, in Covington, Ky., Jay A. Shephard, of Ohio, was sentenced to 360 months in prison followed by six years of supervised release for conspiracy to distribute controlled substances and money laundering. Shephard, who owned residences in Dayton, Ohio, and Detroit, Michigan, led a drug conspiracy that was responsible for the distribution of at least 40,000 prescription pills in parts of Eastern Kentucky. In addition to the prison sentence, Shephard was ordered to forfeit five pieces of real estate located in Dayton, pay a money judgment of $225,000, and forfeit approximately $83,000 in cash that represented proceeds from the conspiracy. According to evidence at his trial, from May of 2006 until May of 2009, Shephard directed others to distribute thousands of Oxycodone 80 mg tablets. Shephard was the last of 21 individuals involved in a large drug ring to be convicted. He and the others all conspired to distribute prescription pills in Eastern Kentucky and West Virginia.
International Narcotics Trafficker and Money Launderer Sentenced to 20 Years in Prison
On August 12, 2011, in Manhattan, N.Y., Hector Dominguez-Gabriel, an international narcotics trafficker and money launderer based in Mexico, was sentenced to 240 months in prison, followed by five years supervised release and ordered to pay a $300 special assessment as a result of his conviction in December 2010 on narcotics importation and money laundering charges. Forfeiture, to be paid to the United States, will be determined at a later date. According to court documents, evidence presented at trial, and statements made at the sentencing, from 2006 to June 2009, Dominguez-Gabriel orchestrated an extensive narcotics-trafficking and money laundering organization that imported and distributed hundreds of kilograms of cocaine into the United States and then laundered millions of dollars of narcotics proceeds back into Mexico where his company was based. Working from Mexico, Dominguez-Gabriel sent at least 300 kilograms of cocaine into the United States using a variety of means, including secreting it aboard cruise ships and in hidden compartments of vehicles, as well as hiding it within flower shipments. Additionally, Dominguez-Gabriel directed his associates to pick up millions of dollars of narcotics proceeds in locations throughout the United States, including Atlanta, Georgia, Winston-Salem, North Carolina, and New York City, and then make small, structured deposits into U.S. bank accounts. This was done to evade the Internal Revenue Service’s reporting requirements and thereby launder the drug proceeds back to Mexico. In February 2007, Dominguez-Gabriel even attempted to bribe a federal agent after an associate, who picked up $1.5 million in cash, was arrested in New York City.
Jamaican Citizen Sentenced on Fraud and Money Laundering Charges
On August 11, 2011, in Orlando, Fla., David A. Smith, a Jamaican citizen, who was living in the Turks and Caicos Islands, was sentenced to 360 months in prison for wire fraud, conspiracy to commit money laundering and money laundering offenses. As part of his sentence, the court entered a money judgment of $128 million. According to court documents, for more than three years, Smith executed a scheme to defraud more than six thousand investors located in Florida and elsewhere out of more than $220 million. Smith led investors to believe that he was investing their money in foreign currency trading and earning, on average, 10 percent per month, when in fact he was not trading their funds. Smith also conspired with others to launder approximately $128 million of proceeds that were obtained from the wire fraud scheme.
Man Sentenced for Structuring Currency Transactions
On August 3, 2011, in Chicago, Ill., Thomas Spellman was sentenced to 18 months in prison and two years of supervised release after pleading guilty in March 2011 to structuring currency deposits. The court also entered a forfeiture judgment against Spellman of $50,000. Spellman was indicted in July 2009. According to the indictment, Spellman conspired with Mathieu Reyna and others to evade currency reporting requirements by structuring and helping to structure bank deposits in amounts under $10,000. Beginning no later than 2002 and continuing through about November 2004 in Illinois and Virginia, Spellman directed Reyna and others to deposit cash into bank accounts, controlled individually and jointly by Spellman and Reyna, in amounts under $10,000 at different bank branches and different times of day to avoid Currency Transaction Reporting requirements. Together, Spellman and Reyna structured over $1.3 million.
Iowa Couple Sentenced To Prison On Federal Immigration, Tax and Fraud Charges
On August 3, 2011, in Cedar Rapids, Iowa, Chan Duong and Phung Ca “Polly” Long, both from Vinton, Iowa, were sentenced to prison for harboring illegal aliens and other tax and fraud charges. Duong was sentenced to 78 months in prison and three years of supervised release after pleading guilty in December 2010 to harboring illegal aliens and filing a false 2007 federal income tax return. Long was sentenced to 30 months in prison, three years of supervised release and ordered to pay $22,695 in restitution to Iowa Medicaid after pleading guilty in November 2010 to harboring illegal aliens and health care fraud. In their plea and sentencing agreements, Long and Duong admitted they engaged in criminal activity that included wire fraud, mail fraud, health care fraud, filing false federal income tax returns, hiring illegal aliens, money laundering, and harboring and transporting illegal aliens. Chan Duong filed false federal income tax returns resulting in a tax loss of over $400,000 over four years. The pair operated the Peony Chinese Restaurants in Vinton and Tama, Iowa and routinely hid their personal income and business earnings from state and federal authorities, paid their employees in cash to avoid taxes, purchased property to house the illegal aliens that worked for them, and hired, harbored and transported illegal aliens as a principle means of operating their restaurant. Following their guilty pleas, the couple continued their previous criminal activity. A second set of search warrants, issued in May 2011 for their home and businesses, found evidence of money laundering, mail fraud and state sales tax evasion. In related forfeiture actions, Long and Duong have forfeited or agreed to forfeit cash, vehicles and real property worth more than $1.5 million.
Nebraska Woman Sentenced to Prison
On July 28, 2011, in Omaha, Neb., Deshawn Hernandez, of Omaha, was sentenced to 170 months in prison and five years of supervised release for her involvement in marijuana trafficking and money laundering activities that extended from Omaha to Arizona. Hernandez also waived any interest she had in nine pieces of real property and over $100,000 in cash seized by law enforcement. Hernandez was one of 11 people indicted with Shannon Williams in December 2009. Hernandez was a girlfriend of Williams and recruited drivers for his marijuana business while he was incarcerated in the Douglas County jail. She also stored marijuana for him and used the proceeds from the drug trafficking to purchase real estate and other items of value. The case involved the distribution of over 15,000 pounds of marijuana valued at $1,500,000 to $3,000,000. A jury convicted Hernandez, Sara Jarrett and Shannon Williams on April 28, 2011. Jarrett was previously sentenced to 120 months in prison and Williams awaits sentencing.
New Mexico Man Sentenced for Defrauding Insurance Company
On July 28, 2011, in Las Cruces, N.M., Joseph Reyes Montes was sentenced to 12 months and one day in prison, followed by three years of supervised release, and ordered to pay $149,779 in restitution to Farmer’s Insurance Company. Montes, a claims supervisor for Farmer's Insurance Company, pleaded guilty in October 2010 to conspiracy to launder money obtained by making fraudulent insurance claims. According to court documents, between March 2007 and August 2009, Montes conspired with his co-defendant, Deniece Sanchez, to submit $150,000 in fraudulent insurance claims to Farmer’s Insurance Agency on approximately 30 separate occasions. Montes laundered the stolen money through Sanchez’ business bank account to give the funds the appearance of legitimate business income. Sanchez also pleaded guilty in October 2010 to conspiracy to launder money and is awaiting sentencing.
Federal Judge Sentences Fugitive Fraudster to Prison
On July 22, 2011, in Dallas, Texas, Michael R. Rouse, formerly of Wellington, Florida, was sentenced in absentia to 210 months in federal prison and ordered to pay $1.9 million in restitution to the 62 identified victims of his crime. Rouse was convicted in April 2011 on all nine counts of a superseding indictment charging various felony offenses, including money laundering, related to his operation of the Golden Gate Real Estate Investment Trust (REIT). Rouse is a fugitive. The government presented evidence at trial that, during 2003 and 2004, Rouse and convicted co-conspirator James A. Testa, of Carrollton, Texas, were founders and trustees of the Golden Gate REIT. During that period, Rouse and Testa, acting personally and through brokers, raised more than $2 million from investors by claiming that the REIT was a safe investment in real estate and real estate related assets. In fact, virtually none of the money was ever invested in anything connected with real estate. The only investments Rouse and Testa ever made were in foreign currency trading, and those investments failed completely. The investors lost most or all of their money, while Testa and Rouse paid themselves handsome salaries and spent the investors’ funds on business and personal expenses, including Mercedes Benz automobiles that cost more than $125,000 each. Testa, who testified for the government at trial, pleaded guilty to one count of money laundering in 2009; he is scheduled to be sentenced on August 26, 2011.
Attorney Sentenced to Prison for Multi-Million Dollar Mortgage Fraud Scheme
On July 22, 2011 in Houston, Texas, Vincent Wallace Aldridge, of Fresno, Texas, was sentenced to 63 months in prison, three years of supervised release, and ordered to pay $891,000 in restitution and a special assessment of $1900. Aldridge and his wife, Tori Aldridge, were found guilty at the end of January of 19 counts, including conspiracy to commit money laundering and money laundering charges. Gilbert Isgar, a co-owner of Waterford Homes, was found guilty of 13 counts, including conspiracy to commit money laundering. Both Aldridges’ and Isgar were convicted of conspiring during 2004 and 2005 to receive proceeds from real estate transactions based upon materially fraudulent information that was intentionally supplied to at least four lending institutions. According to court documents, Vincent Aldridge was a fee attorney for First Southwestern Title Company and Tori Aldridge was also employed by the same company. They lured borrowers by representing the scheme as an investment opportunity. For the use of their credit to obtain mortgage loans, the borrowers were promised $10,000 after the closing of their respective properties and that the property would be sold after a year for a profit. Vincent Aldridge and Tori Aldridge - acting as both an escrow officer and as a loan processor – modified the lending packages they submitted to lending institutions to enhance borrowers’ ability to qualify for the requested loans. These enhancements included fraudulently overstating the borrower’s income, misrepresenting the borrower’s principal residence as rental property and misrepresenting the purchase property as the principal residence. The mortgage loans totaled approximately $3,700,000. As a part of the scheme, Isgar inflated the sales price of the properties to be purchased by the recruited borrowers. As a part of the agreement between the Aldridges and Isgar, Isgar signed disbursement authorizations for attorney’s fees and additional contractor fees on brand new homes for amounts of $60,000 to more than $80,000 that were in addition to the attorney’s fees stated on the HUD settlement statements and did not appear on the settlement statements. Once the loans were funded to the title company, the Aldridges caused several checks to be drawn on the account of the title company, each totaling amounts of $60,000 to more than $80,000, to Aldridge & Associates IOLTA bank account. The checks totaled approximately $442,089 and represented a portion of the illicit proceeds obtained through the mortgage fraud scheme. The total amount of the money laundering was more than $500,000. On June 29, 2011, Isgar was sentenced to 24 months in prison, three years of supervised release and ordered to pay restitution. Tori Aldridge will be sentenced later this year.
Members of Texas Drug Ring Sentenced to Prison
On July 19 and 20, 2011, in Waco, Texas, 11 defendants in a drug distribution ring were sentenced to prison for conspiracy to distribute at least 1,000 kilograms of marijuana and money laundering. According to the factual basis, David Escobar, Juan Reynaldo Escobar-Sanchez, Ruben Jason Rodriguez,Fabian Artemio Montemayor, James Cornelius, Jr., Josie Jessica Jejia, Priscilla Ann Cadena,Cedric Dwayne Stephens, Edward Lee Curtis, and Albert Janes Hoston and others acquired, transported and distributed controlled substances in Western Texas and elsewhere. Currency was collected from the sale of the controlled substances and was then used to further ongoing illegal activity and to purchase assets. The Escobar organization began to obtain marijuana in at least 2002. The members of the organization would wrap the marijuana at various stash houses and take it to a warehouse or semi trucks for transportation. The loads ranged from 200 pounds to 800 pounds at a time. This happened one to four times per month from October of 2002 through at least January of 2005. In 2004, police raided warehouses on Tesoro Lane in Laredo and seized approximately 8,200 to 8,400 pounds of marijuana. Some of the marijuana belonged to the Escobar organization. Beginning in at least February 2004, members of the Escobar organization began to acquire large quantities of cocaine from sources in Mexico. The cocaine was imported into the United States and transported to Central and North Texas and elsewhere. Once it was re packaged, it would be shipped to parts of Texas, Missouri, Florida, and Mississippi. The defendants were sentenced as follows:
- David Escobar - 121 months in prison and five years of supervised release
- Juan Reynaldo Escobar-Sanchez - 46 months in prison and five years of supervised release
- Ruben Jason Rodriguez - 121 months in prison and five years of supervised release
- Jesus Eduardo Jaramillo - 120 months in prison and three years of supervised release
- Fabian Artemio Montemayor - 120 months in prison and five years of supervised release
- James Cornelius, Jr. - 151 months in prison and five years of supervised release
- Josie Jessica Mejia - 36 months in prison and three years of supervised release
- Priscilla Ann Cadena - 120 months in prison and five years of supervised release
- Cedric Dwayne Stephens - 120 months in prison and five years of supervised release
- Edward Lee Curtis - 120 months in prison and five years of supervised release
- Albert James Holston - 262 months in prison and five years of supervised release
Virginia Businessman Sentenced for Role in Investment Scheme Causing Millions in Losses
On July 19, 2011, in Richmond, Va., Julius Everett “Bud” Johnson was sentenced to 97 months in prison for his role in an investment scheme resulting in millions of dollars in losses. On April 11, 2011, Johnson pleaded guilty to one count of conspiracy to commit mail, wire and bank fraud and one count of engaging in unlawful monetary transactions. A future hearing will be held to determine the amount of restitution, which, according to the plea documents, is currently estimated to be approximately $8.9 million. According to court filings, from prior to July 2009 until at least March 2010, Johnson owned and operated several businesses based in Richmond, including Virginia Group Benefits (VGB); Mid-Atlantic Insurance (MAI); F.I.C. Financial Group Inc.; Benefit Contractors Administrators Inc. (BCA); River City Cleaners LLC; Roberts Awning LLC; Norvell Awning LLC; MHC Linen Services LLC; The Everett Group; and Living Well. Johnson and his co-conspirator offered investments in the different businesses, generally including a promise of returns of up to 10 percent within one to four years. Johnson and his co-conspirator represented to potential investors that their investment funds would be funneled directly into specific companies, which would generate the returns on investment. Instead, a significant portion of the invested funds was used to repay other investors and to cover operating costs for unrelated businesses.
North Carolina Man Sentenced in Rock Hill Mortgage Fraud Case
On July 18, 2011, in Columbia, S.C., Samuel Caleb Cowles, of Kannapolis, North Carolina, was sentenced to fifteen months in prison for participating in a conspiracy to commit money laundering. Cowles was a mortgage broker who owned and ran Prosperity Mortgage. He and a co-conspirator took pre-qualification documents from investors and used them to obtain loans for real estate purchases. Cowles falsified multiple loan applications by submitting to lenders that investment properties were going to be primary residences, which reduced the down payments. Cowles affected loan decisions by inflating incomes, omitting liabilities on loan applications, and making payments outside closing. He received mortgage fees as a return on his activities. He was paid by lenders when loans were executed. Cowles falsified approximately twenty loan applications, resulting in fraudulent loans totaling $2,160,650. During the sentencing hearing, Cowles stated he made approximately $60,000 in fees.
Co-Founder of High Tech Company Sentenced for Embezzling Corporate Funds
On July 15, 2011, in Seattle, Wash., Mark E. Phillips was sentenced to 48 months in prison, three years of supervised release and ordered to pay a $15,000 fine. Phillips was convicted by a trial jury in March 2011 of four counts of wire fraud, one count of mail fraud, and two counts of money laundering. According to filings in the case and testimony at trial, Phillips is a co-founder of MOD Systems, Inc. and served as a director and Chief Executive Officer of MOD from its founding in 2005, until March 27, 2009. MOD is a start-up technology company engaged in the business of developing music and video downloading technology for retail kiosks. Records indicate that Phillips caused company money to be transferred to a bank account controlled by his then-girlfriend. The money was supposed to be used to pay for services provided by the woman’s company, but she never invoiced the company for any services or kept any of the money transferred into her account. Instead, the money was controlled by Phillips, and he directed her to pay for luxuries for himself. Additionally, Phillips transferred $1.5 million out of the company to his personal account in April 2008, as a down payment for a $2.3 million penthouse.
Former Bookkeeper Sentenced To Prison for Embezzlement and Money Laundering
On July 13, 2011, in Oklahoma City, Okla., Amy Joyce Cameron, of Washington, Oklahoma, was sentenced to 30 months in prison, three years of supervised release and was ordered to pay $455,904 in restitution her former employer. Cameron pleaded guilty on February 11, 2011, to mail fraud and money laundering charges. According to court records, Cameron worked as a bookkeeper for Quality Plumbing and Heating, located in Norman, Oklahoma, from 2006 through 2010. Her responsibilities included handling payroll, billing accounts, accounts receivable, and accounts payable. From March 2007 through February 2010, Cameron issued checks payable to herself on company bank accounts and deposited those checks into a personal bank account in Oklahoma City and a personal investment account in Cincinnati, Ohio. Cameron embezzled a total of $455,904.
Nebraska Woman Sentenced to Prison
On July 12, 2011, in Omaha, Neb., Sara Jarrett, of Omaha, was sentenced to 120 months in prison and five years of supervised release for her involvement in marijuana trafficking and money laundering activities that stretched from Omaha to Arizona. Jarrett was one of eleven people indicted with Shannon Williams in December 2009. According to court documents, Jarrett was one of Williams’ drivers who helped him run his marijuana business while he was incarcerated in the Douglas County jail. From June 2008 through January 2009, on at least 19 occasions, Jarrett drove money from Omaha and dropped it off to other drivers in Denver or drove it herself to Mr. Williams in Arizona. The money was proceeds from marijuana trafficking. It is believed throughout the conspiracy Jarrett transported between $1,900,000 and $3,253,161. Williams and co-defendant Deshawn Hernandez await sentencing.
Florida Bank Executive Sentenced for Wire Fraud and Money Laundering
On July 6, 2011, in Tampa, Fla., Philip William Coon was sentenced to 18 months in prison, followed by three years of supervised release. Coon and a co-conspirator were jointly and severally held liable for a money judgment of $1,528,616 which represents the amount of proceeds obtained as a result of the conspiracy to commit wire fraud. Coon was the executive vice-president of the mortgage lending department of a bank. He used his position to request a co-conspirator to charge clients a mortgage brokerage fee that was one percent higher than usual. Coon’s co-conspirator agreed and then paid three-quarters of the excess fee to bank accounts in the name of Solutions Processing, Inc. Solutions Processing, Inc. was not engaged in any business activity. Rather, accounts in the name of Solutions were used to receive the excess fees and transmit the proceeds to Coon and other individuals and entities as designated by Coon. Coon was ordered to forfeit personal assets including investment funds, real property, jewelry and a piano. The net proceeds of the sale of the forfeited assets will be credited towards the total money judgment.
Arkansas Couple Sentenced for Role in Prostitution and Money Laundering Conspiracy
On July 6, 2011, in Fayetteville, Ark., Jason M. Fedele and Tiffney R. Fedele were sentenced for their involvement in a local prostitution ring. Jason M. Fedele was sentenced to 66 months in prison, three years of supervised release for using an interstate facility to distribute proceeds from prostitution, conspiracy to commit money laundering and possession of firearms. Tiffney R. Fedele, was sentenced to 21 months in prison and three years of supervised release for conspiracy to use an interstate facility to distribute proceeds from prostitution and conspiracy to commit money laundering. Five co-defendants, James B. Mitchell, also of Fayetteville, Sherrie Havens-O’Donnell, Sherry Mae Seals, William Marshall and Conrad Dickson have already been sentenced. Mitchell, the Fedeles, and their co-conspirators admitted that the escort service, which Mitchell owned from approximately July 2003 until he was arrested on August 10, 2010, was actually an interstate and intrastate prostitution enterprise which employed escorts to engage in sexual acts with customers for monetary payment. Mitchell and his co-conspirators advertised numerous escort services in the yellow pages of multiple phone books in Arkansas and Missouri. Mitchell hired individuals to answer the service telephone lines and set up appointments for the prostitutes. Prostitutes were paid by customers for sexual services with cash, checks and credit cards. Mitchell hired other individuals to assist with collecting the prostitution proceeds. Mitchell and his co-conspirators used banks and other financial institutions to conduct financial transactions with the prostitution proceeds, both to conceal and disguise the nature, source and ownership of the proceeds and to promote the prostitution enterprise.
Arizona Man Sentenced to Federal Prison for Heroin Trafficking and Money Laundering
On July 6, 2011, in Oklahoma City, Okla., Jesus Morales-Medel, from Phoenix, Arizona, was sentenced to 210 months in prison for conspiracy to possess heroin with intent to distribute and conspiracy to launder drug money. Morales-Medel was indicted along with six other defendants on November 16, 2010. He pleaded guilty on January 10, 2011. According to court records, from June 2008 through September 2010, Morales-Medel and others were responsible for trafficking over 22 kilograms of Mexican black tar heroin into the Oklahoma City area via Phoenix, Arizona. The proceeds from the sale of the heroin were redirected from bank accounts controlled by Morales-Medel to others in multiple locations in the United States and Mexico.
Two Men Sentenced to Prison in Multimillion Dollar Heating Oil Embezzlement and Money Laundering Conspiracy
On June 3 and June 7, 2011, in Central Islip, N.Y., Tonino Solimine and Eston Clare were sentenced for their role in a multimillion dollar heating oil embezzlement and money laundering conspiracy. Solimine was sentenced to 60 months in prison, followed by three years supervised release and a $550,000 fine. He will be deported upon release. Clare was sentenced to 12 months and one day in prison and 3 years supervised release. They were also ordered to pay a joint and several money judgment forfeiture of $7,000,000. These are the latest sentencing’s resulting from investigations into the skimming of home heating oil deliveries in the NY metropolitan area.
Williamsville Couple Sentenced On Money Laundering and Tax Fraud Charges
On June 27, 2011, in Buffalo, N.Y., Ralph S. Guastaferro, Jr. was sentenced to 24 months in prison and fined $100,000 after being convicted of money laundering. Karen Guastaferro, his wife, was sentenced to three years probation, including six months home confinement and ordered to pay restitution in the amount of $56,670 to the IRS following her conviction of failing to collect and pay over taxes. Ralph Guastaferro operated a business called Eclipse Processing, Inc. As part of a money laundering scheme, Guastaferro opened accounts with two payment processing companies in California and Ohio. Those accounts were used by certain unscrupulous telemarketers, many of whom were located in Canada, to process alleged sales of some product or service. Many of the victims whose checking accounts were debited had never purchased any product or service. After the victims accounts were debited, the payment processing companies transferred the funds to bank accounts controlled by the defendant in Buffalo, New York. Guastaferro then wire transferred the funds, less a percentage, to the telemarketers in Canada. This was done in an attempt to conceal the nature and source of the funds. The defendant admitted that the total amount of the funds involved in his criminal conduct was $1.2 million. Karen Guastaferro owned and operated Eclipse Glass Tinting, Inc. From 2004 through 2008, Mrs. Guastaferro employed between five and seven people at the business. Although Guastaferro had a duty to collect and truthfully account for and pay over federal employment taxes for each of her employees, she was convicted of lying to the IRS about how many employees she had and how much she paid them, thus intentionally failing to account for and pay over the required federal employment taxes for those employees.
Four Men Sentenced for Defrauding Government Agency
On June 22, 2011, in San Francisco, Calif., Donald Daniels, of Morgan Hill, and Tapani Koivunen, of Davis, were sentenced to two years in prison, and Martin William Washburn, of Morgan Hill, was sentenced to one year in prison and one year of home detention, for conspiracy to commit mail and wire fraud and conspiracy to commit money laundering. Sergei Shkurkin, of Davis, was sentenced to one year in prison for conspiracy to commit mail and wire fraud. All the defendants were ordered to pay $2,054,698 in restitution. According to the plea agreements and other court documents, the defendants admitted that from 2003 to 2005, they agreed to participate in a fraudulent scheme to defraud the Overseas Private Investment Corporation (“OPIC”) and to obtain a loan of approximately $9.4 million from OPIC to fund a milling and bakery project in Estonia. As part of the defendants’ fraudulent scheme, they submitted documents that contained materially false and fraudulent representations to OPIC, including, among others, that: what was represented to be cash equity in the project was actually a loan from Daniels; the amount spent by the project on equipment was far less than what was reported; and what was to be an arms-length transaction to purchase equipment was in fact a transaction between related parties designed to conceal that the money Daniels had allegedly invested in the project was, in fact, returned to him. Once the loan was approved, the defendants made the following material misrepresentations and omissions, among others, to obtain the loan disbursements from OPIC: provided falsified invoices that contained inflated equipment prices and that concealed the close relationship of the companies involved in the underlying transactions; withheld bank statements that would have demonstrated that the cash equity was immediately returned to Daniels; made false assurances regarding the progress of the project; and affirmed and reaffirmed the accuracy of the completeness and truthfulness of their disclosures. The loan disbursements totaled approximately $7.9 million. Daniels, Washburn, and Koivunen also admitted in their plea agreements that they agreed to have money transferred by wire from an account located in San Francisco, California, to a bank account located in Estonia, to execute the scheme described above.
Ohio Woman Sentenced for Supporting a Designated Terrorist Organization
On June 22, 2011, in Toledo, Ohio, Amera Akl was sentenced to 40 months in prison, followed by three years supervised release and ordered to forfeit a vehicle and $6,629 in cash for her role in a conspiracy to ship hundreds of thousands of dollars to Hizballah in Lebanon. Akl, of Toledo, Ohio, pleaded guilty last month to one count of conspiracy to provide material support and resources to a designated foreign terrorist organization. Her husband, Hor Akl pleaded guilty to a total of five counts: conspiracy to provide material support and resources to a designated foreign terrorist organization; conspiracy to violate money laundering statutes; perjury and two counts of bankruptcy fraud. He will be sentenced later this year. The Akls met multiple times between August 2009 and June 2010 with a confidential source who was working on behalf of the FBI. During those meetings, the Akls discussed ways to secretly send money to Hizballah leaders in Lebanon, according to court documents. Amera Akl told the confidential source during a meeting in Toledo on August 30, 2009, that she dreamed of dressing like Hizballah, carrying a gun and dying as a martyr, according to court documents. Hor Akl, in the presence of his wife, told the confidential source during a September 10, 2009, meeting in Toledo that he understood the money was being transported to “terrorists.” He also stated he understood the funds would be sent to a designated terrorist organization and used to target Israel, according to court documents. Eventually, the Akls agreed to send the money by secreting it inside a 2004 Chevrolet Trailblazer, which they planned to send to Lebanon via a container ship. On June 3, 2010, the confidential source delivered $200,000 to the Akls at their home on Brookfield Drive in Toledo and told them he would return later in the day with more money. Shortly thereafter, the Akls were observed inside their residence wearing latex/rubber gloves, in close proximity to various automobile accessories, plastic wrap, duct tape, latex/rubber gloves and fragrant insect repellant sticks. Hor Akl had prepared a portion of the money for concealment into the auto accessories, wrapped it in plastic and taped into a bundle, according to court documents.
Co-Conspirator Sentenced in North Carolina Marijuana Growing Operation
On June 8, 2011, in Raleigh, N.C., James Leevann Howard, aka Lee Howard, was sentenced to 48 months in prison, followed by five years supervised release. In August 2010, Howard pleaded guilty to conspiring to distribute and possess with the intent to distribute more than 100 kilograms of marijuana and conspiring to commit money laundering. In August 2009, search warrants were executed at two residences in Franklinton and Youngsville. Officers discovered a large indoor marijuana growing operation in the basement of the Franklinton residence, which included a 12,000 gallon watering system. At the Youngsville residence, which was owned by Howard and rented to co-conspirators, David and Whitney Clarke, officers seized 59 firearms, including a machine gun and $63,121 in United States currency. From 2002 until 2008, Howard received proceeds from the sale of the marijuana through regular cash payments by David Clarke. In addition to Howard, five others have been convicted and sentenced in this matter including David Clarke and his wife, Whitney Clarke, who were sentenced for their part in a marijuana growing operation. David Clarke was sentenced to 84 months in prison, followed by five years supervised release; Whitney Clarke was sentenced to 48 months in prison. The arrests ended a seven-year drug conspiracy in which hundreds of pounds of hydroponic marijuana were distributed throughout North Carolina and millions of dollars in illicit gains were made. In addition to marijuana, officers seized numerous motor vehicles, including a 2005 Maserati M138 Coupe, a boat, 59 firearms, real property in Franklin and Wake counties, and cash, bank and investment accounts totaling more than $500,000.
Utah Man Who Embezzled $1.3 Million Sentenced To Federal Prison
On June 7, 2011, in Salt Lake City, Utah, Nathan Lee Kapp, of Syracuse, was sentenced to 30 months in prison and 36 months of supervised release for embezzling $1.3 million from his former employer. Kapp, who pleaded guilty in March to money laundering, admitted embezzling the money from early 2007 to November 2010. According to documents filed by federal prosecutors in the case, Kapp converted the money to his own personal use, including purchasing a $630,000 home; three luxury vehicles; property; basketball tickets; and other personal items.
CEO of Capitol Investments USA, Inc. Sentenced in $930 Million Ponzi Scheme
On June 7, 2011, in Newark, N.J., Nevin Shapiro, the former owner and Chief Executive Officer of Capitol Investments USA, Inc. (Capitol) was sentenced to 240 months in prison, followed by three years of supervised release and ordered to pay $82,657,362 in restitution. Shapiro, of Miami Beach, Fla., pleaded guilty to one count of securities fraud and one count of money laundering for overseeing a $930 million Ponzi scheme linked to his purported wholesale grocery distribution business. According to court documents, Shapiro used Capitol to solicit approximately $930 million between January 2005 and November 2009 from individuals who believed they were investing in Shapiro’s grocery distribution business. Shapiro admitted that Capitol had virtually no income-generating business during that time, and that he used new investor funds to make principal and interest payments to existing investors, as well as to fund his own lavish lifestyle. More than $35 million in investor funds were misappropriated for Shapiro’s personal use. To induce investors, Shapiro directed others to create and show to the investor’s documents fraudulently touting Capitol’s profitability. Shapiro admitted that more than 50 victim investors lost a total of between $50-100 million as a result of the scheme.
California Woman Sentenced in Bribery and Money Laundering Scheme
On June 2, 2011, in Los Angeles, Calif., Maria Gabriela Kallas was sentenced to 48 months in prison followed by two years of supervised release. According to court documents, Maria Kallas and her husband, Constantine Kallas, a senior attorney with U.S. Immigration and Customs Enforcement (ICE), took bribes from immigrants who were promised immigration benefits that would allow them to remain in the United States. Maria and Constantine Kallas told illegal aliens that Constantine Kallas was an immigration official and that he could obtain immigration benefits for the aliens in exchange for bribes. They accepted payments from aliens that totaled at least $425,854. Kallas took bribes from some illegal aliens who were offered “jobs” at companies the couple set up. As part of the scheme, Maria Kallas had three family members open nominee bank accounts in which she and her husband used to launder the bribe payments. According to court documents, the bank records for the Kallases showed that, beyond his salary, approximately $950,000 had been deposited into the couple’s bank accounts since 2000.
Florida Mortgage Fraud Defendant Sentenced to Prison
On May 26, 2011, in Tampa, Fla., Sang Min Kim, aka Sonny Kim, was sentenced to 41 months in prison followed by five years of supervised release. Kim was also ordered to pay $5,826,778 in restitution. Kim pleaded guilty in June 2010, to conspiracy to commit wire, mail, and bank fraud and money laundering in connection with a mortgage fraud scheme. According to court documents, from about January 2005 through October 2008, Kim engaged in numerous residential real estate transactions in the Middle District of Florida, primarily in Hillsborough County, at least 48 of which involved fraud and resulted in losses of approximately $5,826,778. Kim, with the assistance of co-conspirators, purchased residential properties as an “investor” with the intention of “flipping” the properties in subsequent sales. Kim was also aware that his company, SK Investment Group, LLC, was used to provide false employment verifications for other fraudulent transactions from which he did not directly benefit.
Texas Man Sentenced to Prison on Drug and Money Laundering Charges
On May 26, 2011, in Waco, Texas, Justin Trammel was sentenced to 135 months in prison and five years of supervised release on drug conspiracy and money laundering charges. According to the Factual Basis, from at least January 2005, Trammel and others engaged in a conspiracy to distribute methamphetamine and cocaine. The money that was collected from this illegal distribution of drugs was laundered to make it appear to be from legitimate sources. Trammel and others knew that the bulk currency that was being generated and collected was used to further the on-going illegal activity by acquiring more controlled substances for distribution. The currency was also used to purchase assets, some of which were used to further the on-going illegal activity. Some assets were placed in nominee names and businesses in order conceal their true ownership and control.
Oregon Man Sentenced in Marijuana and Money Laundering Case
On May 26, 2011, in Portland, Ore., Jason Joseph Kalenkowitz was sentenced to 51 months in prison on charges of conspiracy to manufacture and distribute marijuana and money laundering. Kalenkowitz was also ordered to forfeit $104,842 in cash assets. According to court documents, Kalenkowitz operated marijuana growing operations in three separate Portland houses which contained sophisticated growing equipment and over 800 marijuana plants. Kalenkowitz admitted that he owned all of the growing operation properties, as well as his southwest Portland residence where $72,000 in cash was seized.
Three Family Members Sentenced for $2.6 Million Food Stamp Fraud
On May 26, 2011, in Sacramento, Calif., Ahmad Khan and his brother, Mumraiz Khan, were sentenced to 70 months and 63 months, respectively, for food stamp fraud and money laundering. Naheed Khan, Ahmad Khan’s daughter, was sentenced to three years probation for assisting her father and uncle in the scheme. According to court documents, the Khans used their small convenience store, Smoke Shop & Snack, in Stockton, as a front to illegally purchase food stamps from customers at approximately 50 cents on the dollar, committing more than $2.6 million in food stamp fraud. According to court documents, in the five and a half years that Smoke Shop was authorized to redeem food stamps, it's food stamp redemptions far exceeded its food sales. The money laundering charges related to the fact that the Khans sent some of the money to Pakistan via wire transfers.
Former Missouri Goodwill Executive Sentenced for Million Dollar Embezzlement
On May 25, 2011, in St. Louis, Mo., Ronald Partee, of St. Louis, was sentenced to 70 months in prison and ordered to pay more than $1 million in restitution. He pleaded guilty in January to one count of embezzlement and one count of money laundering. According to court documents, Partee worked for several years at MERS/Goodwill Industries of Missouri in a variety of capacities, including as benefits coordinator. He eventually became an assistant vice president for human resources. He was routinely involved in matters requiring the payment of expenses, including benefits and unemployment insurance premiums. Between January 2007 and June 30, 2010, Partee embezzled more than $1 million from Goodwill by presenting fraudulent bills, invoices, and letters to Goodwill to dupe employees in the accounts payable department to draft checks which the he took and converted to his own use. Typically, he deposited the checks into one of several bank accounts he controlled. He also set up and registered fictitious business entities, set up a P.O. Box, and obtained a toll-free telephone line to make his scheme less likely to be detected. Partee established fictitious businesses and business banking accounts for use in converting Goodwill checks into funds he could spend. In his plea agreement, Partee admitted that he used the embezzled funds to purchase numerous vehicles, tickets to sporting and concert events, and to travel and pay the expenses of others. Partee used a variety of methods to accomplish his embezzlement scheme and adapted those methods as circumstances at the nonprofit organization changed. .
Second in Command of Texas Drug Trafficking Organization Sentenced on Drug and Money Laundering Charges
On May 24, 2011, in Laredo, Texas, Javier Hugo Perez, of Laredo, was sentenced to 230 months in prison, followed by five years of supervised release, and was fined $250,000. The judge also signed a final order of forfeiture divesting Perez of his ranch and $16 million. Perez, who pleaded guilty in July 2010, was part of a drug and money laundering conspiracy beginning as early as 2005 through the date of his arrest in December 2009. At his re-arraignment hearing, Perez admitted that during the course of the conspiracy, he and other conspirators possessed with intent to distribute a in excess of 10,000 kilograms of marijuana supported by drug ledgers found at Perez’s residence in Laredo in January 2009. Agents also recovered drug ledgers of the Compean Drug Trafficking Organization (DTO) which detailed the distribution of marijuana loads in excess of 15,000 kilograms and payments for the loads in excess of $2.5 million. Perez used his share of the drug proceeds to acquire vehicles, ranch property and to fund four bank accounts. The funds in the bank accounts were to make car payments and purchase personal items and services with the intent to conceal and disguise the source, location and true ownership of the drug proceeds.
Alabama Bookkeeper Sentenced for Embezzlement and Tax Fraud
On May 24, 2011, in Birmingham, Ala., Stacia Woodman, of Leeds, was sentenced to 41 months in prison followed by three years of supervised release. Woodman was also ordered to pay $427,488 in restitution to her former employer and $60,232 for unpaid taxes to the Internal Revenue Service. Woodman pleaded guilty in February 2011 to embezzling more than $400,000 from her former employer. According to court documents, from 2000 to 2009, while Woodman worked as a bookkeeper for a Birmingham landscaping business, she engaged in a scheme to pay some of her personal expenses using her employer’s funds. Woodman concealed her fraud from the company’s owner and manager. Over the course of her scheme, Woodman stole about $427,488. In addition to the theft from her employer, Woodman failed to report on her personal income tax returns for 2006, 2007 and 2008 the income she received as a result of her fraud. The tax loss totaled $60,232 for the three years of under-reported income.
Michigan Drug Trafficker Sentenced to Prison and Forfeits Property Acquired Through Drug-Dealing Profits
On May 23, 2011, in Grand Rapids, Mich., Asante Parker, of Lansing, Michigan, was sentenced to 262 months in prison and five years of supervised release for conspiring to possess with the intent to distribute 1,000 kilograms or more of marijuana and conspiring to launder money. In addition, Parker was ordered to forfeit to the government a home in Munith, Michigan, a substantial amount of jewelry, and automobiles. According to his guilty plea, Parker admitted possessing with intent to distribute and distributing more than 1,000 kilograms of marijuana over a two year period starting in 2008. He and others purchased the marijuana from an Arizona supplier and then re-sold it in West Michigan for substantial profit. Also as part of his plea, Parker admitted to laundering his drug proceeds by soliciting others to take the cash to banks and convert it to cashiers’ checks, which he then used to purchase the home in Munith, all of which concealed and disguised the nature, the source, the ownership, and the control of the marijuana distribution proceeds.
Former Company President and Owner Sentenced to Prison
On May 23, 2011, in Hattiesburg, Miss., Thomas Alan Landon was sentenced to 12 months and one day in prison followed by three years of supervised release. According to court documents, Landon was the president and owner of a company that had been awarded debris removal contracts by the local government, Greene County, Mississippi, Board of Supervisors. On or about January 4, 2006, for the purpose of evading reporting requirements, Landon caused a bank in Lucedale, Mississippi, to file a currency transaction report containing a material omission and misstatement of fact. Federal law requires all financial institutions to file a Currency Transaction Report (CTR) for transactions that exceed $10,000.
Ohio Man Sentenced to Prison for Mortgage Fraud Scheme
On May 19, 2011, in Dayton, Ohio, Gregory S. Chew, formerly of Waynesville, Ohio, was sentenced to 60 months in prison, followed by five years of supervised release as a result of his conviction on one count of money laundering, one count of conspiracy to launder money, and three counts each of mail fraud and wire fraud. Chew was convicted of conspiring with a co-defendant, Richard C. Confer Jr. of West Carrollton, in a scheme to fraudulently obtain more than $4.7 million in mortgage loans from more than 15 victimized mortgage lending institutions. They obtained more than $2.7 million for their personal use from the fraudulent transactions. Evidence was presented at trial indicating that Chew, a real estate facilitator, approached Confer, a mortgage broker, in January, 2003 and agreed to collaborate with him in extensive real estate investments. Further evidence revealed that the pair continued a business relationship for another six years, preparing numerous false, fictitious and forged mortgage loan applications and HUD-1 settlement statements to secure fraudulent loans. Chew deposited over $2.2 million of disbursement checks from various title agencies in his own personal accounts. Chew utilized these ill-gotten funds to pay his co-conspirators, fund fraudulent down-payment checks, and for his own personal use including the purchase of several vehicles.
South Carolina Lawyer Sentenced in Mail Fraud and Money Laundering Conspiracy
On May 17, 2011, in Columbia, S.C., John Fitzgerald O’Connor, Jr. was sentenced to 24 months in prison and ordered to pay $482,250 in restitution. O’Connor pleaded guilty on August 24, 2010, to conspiracy to commit mail fraud and money laundering. Another attorney involved in the same scheme, John W. Harte, was sentenced in October 2010 to 12 months and one day in prison. According to court documents, O’Connor admitted to being involved in a conspiracy to liquidate and conceal monies and property which Harte’s former client, William J. Trier, II, stole from his former employer. Trier served as the director of logistics in the shipping department of a vending machine manufacturing company in Aiken County. Trier embezzled funds from his former employer by creating phony invoices from fictitious freight transport companies and submitting them for payment. Over a ten year period, Trier collected approximately $5,200,000 using the false invoice scam. When Trier learned that he was under investigation, he contacted Harte to help him hide assets. According to Harte, he enlisted the help of O’Connor and others. Trier was previously sentenced to 63 months in prison, ordered to pay $5,272,556 in restitution, and to forfeit millions of dollars in assets.
Former Governor’s Assistant Receives Federal Prison Term
On May 17, 2011, in Raleigh, N.C., Charles Ruffin Poole was sentenced to 12 months and 1 day in prison, followed by two years of supervised release, and ordered to pay $16,629 in restitution for underpaid taxes. In April 2010, Poole pleaded guilty to federal income tax evasion. According to the plea agreement, Poole attempted to evade a portion of his 2005 federal income tax liability by concealing his receipt of $30,000 of income he received in connection with his involvement in the financing of a high-end community in Carteret County. In the sentencing, Poole was also held accountable for an additional $25,000 he received from the same source, which was also not reported on his tax returns. As part of the plea agreement, Poole agreed that he failed to report and correctly identify the source of income from criminal activity.
Colorado Man Sentenced for Fraud, False Statements, and Money Laundering
On May 12, 2011, in Denver, Colo., Mark Yost, manager of Yost Partnership, L.P., based in Boulder, Colorado, was sentenced to 78 months in prison for fraud, followed by five years of supervised release, and ordered to pay $10,880,626 in restitution to the victims. Yost pleaded guilty in February 2011, to one count of wire fraud, four counts of false statements to a financial institution, one count of bank fraud and one count of money laundering. According to his plea agreement, Yost received investor funds to trade in securities and to make other investments. On February 4, 2005, and continuing to on or about July 6, 2010, Yost devised a scheme to defraud Yost Partnership and the limited partners by means of materially false and fraudulent pretenses. As part of the scheme, Yost, at the conclusion of each quarter of each year, beginning with the first quarter of 2005 and continuing through the second quarter of 2010, prepared account statements and caused them to be delivered to the limited partners, knowing each one of the statements to be false in that it overstated the value of the limited partner’s share of the assets of Yost Partnership. Yost failed to disclose to the limited partners that a certified public accountant had not completed an audit because the financial statements included inflated and improperly recorded values of the partnership’s interests in a privately held company and a publicly traded company. During the course of the scheme, Yost diverted money which he was not entitled to and converted those funds for his own use and benefit. He also made multiple false statements to banks and in reports in order to obtain lines of credit.
West Virginia Man Sentenced on Money Laundering Charges and Illegal Gun Possession
On May 5, 2011, in Charleston, W.Va., Jerry Lee Hanna, of Nicholas County, West Virginia, was sentenced to 46 months in prison on possession of firearms by a convicted felon and money laundering charges. Hanna pleaded guilty to the charges in January, admitting that he was a member of an oxycodone distribution enterprise operating in and around Nicholas County from 2007 through September 2008. Hanna admitted that he used cash proceeds obtained from drug trafficking to purchase two properties, approximately 24 acres of real property and approximately 9 acres of unimproved hunting property. He subsequently had the deeds to the properties directed to a third party to conceal the nature, source and ownership of the property and the cash he used to complete the purchase. As a result of his conviction, Hanna will forfeit two pieces of real property, $9,000 cash and his interest in more than 40 firearms.
Last Defendant Sentenced in Elaborate Marijuana Growing Operation in Texas
On May 4, 2011, in Dallas, Texas, Nancy Ann Hargis was sentenced to 42 months in prison following her guilty plea in September 2010 to one count of money laundering. Hargis, aka “Deuce,” and five other defendants were charged in an indictment in June 2010 with felony offenses related to an elaborate operation to cultivate and sell large quantities of marijuana plants. Hargis opened separate bank accounts for three marijuana “grow houses” at three financial institutions. Money generated from the marijuana grow operation was deposited into these bank accounts from which Hargis made payments to cover the operating expenses (e.g., mortgage, property tax and utility payments) of the three houses. All defendants, with the exception of one fugitive, have pleaded guilty and have been sentenced.
Co-Defendants in Mail Fraud and Money Laundering Scheme Sentenced
On May 4, 2011, in Raleigh, N.C., Rebecca Plummer was sentenced to 12 months and one day for conspiring to commit mail fraud, the sale of unregistered securities, and money laundering. She was also ordered to pay over $400,000 in restitution. On May 5, 2011, Darryl Lynn Laws, of La Jolla, California, was sentenced to five years’ probation on one count of false statements to a federal officer and one count of filing a materially false tax return. Laws was ordered to pay $150,000 in restitution. Plummer and Laws were two co-defendants in the mail fraud and money laundering scheme involving Gregory Bartko. A jury convicted Gregory Bartko, a securities attorney, of one count of conspiring to commit mail fraud, the sale of unregistered securities and money laundering, four counts of mail fraud, and one count of the sale of unregistered securities in November 2010; he is awaiting sentencing. According to evidence presented at Bartko’s trial, January 2004, Bartko and Laws had a newly formed fund called the Caledonian Private Equity Bridge and Mezzanine Fund which accepted more than $701,000 in fraudulently raised funds. Of that amount $250,000 was paid to Bartko and Laws as “draws” or compensation for their work as partners in the Caledonian Fund. Laws failed to report or pay taxes on the $125,000 he received. In January 2005, Bartko met with potential investors in the offices of Legacy Resource Management, a business run by Rebecca Plummer and another individual. Bartko asked Legacy Resource Management to allow him to filter money through their bank accounts. This money had also been fraudulently raised and did not comply with registration requirements for securities. Plummer, through Legacy Resource Management, assisted Bartko in the laundering of these fraudulent proceeds.
Georgia Man Sentenced for Multi-Million Dollar Cargo Theft Conspiracy
On May 3, 2011, in Atlanta, Ga., John Raymond Smith, Jr., aka “Johnny Ray Smith,” of Mableton, Georgia, was sentenced to 50 months in prison followed by three years of supervised release and ordered to pay $993,903 in restitution. Smith pleaded guilty in June 2010 to conspiracy; buying, receiving, and possessing stolen goods; and money laundering, in connection with the purchase and distribution of goods traced to interstate tractor trailer and container thefts throughout the southeastern United States. According to court documents, between May 2005 and July 2009, Smith operated “Smith Sales Company” out of warehouses in Mableton and Hiram, Georgia. He conspired with others to buy and receive goods stolen from nearly two dozen interstate tractor trailer and container shipments valued at just under $2 million. The tractor trailers and containers were stolen while parked at truck stops, motels, and container storage facilities, often at night. Smith and others then sold the goods at discounted prices to consumers and wholesalers.
Florida Realtor Sentenced for Tax Evasion
On May 3, 2011, in Fort Myers, Fla., Thomas Daugherty was sentenced to 24 months in prison, followed by three years of supervised release and ordered to pay $2,063,410 in restitution. According to court documents, from 1998 through 2005, Daugherty, who was a real estate agent specializing in commercial real estate transactions, attempted to evade paying approximately $1.6 million in federal income tax. Daugherty placed real properties in the names of others and purchased cashier’s checks with money he earned, rather than depositing the money in a bank account from which the money could have been seized by the IRS. Daugherty cashed the cashier’s checks, as needed, to cover his living expenses.
Tennessee Woman Sentenced for Investment Fraud Ponzi Scheme
On April 27, 2011, in Nashville, Tenn., Donna Jones, of Dickson, Tennessee, was sentenced to 72 months in prison and ordered to pay $8,199,954 in restitution for her role in the operation of a massive ponzi scheme that defrauded investors of more than $12,299,690. Jones was a former office manager of Park Capital Management Group (PCMG) and personal assistant to convicted Brentwood financial advisor Michael J. Park. In January 2011, Jones pleaded guilty to charges of mail fraud and money laundering, admitting that between September 2001 and June 26, 2008, she, along with co-defendant Michael Park, operated a scheme to defraud investors who deposited funds with PCMG for investment in brokered stocks and other marketable securities. Jones fabricated documents designed to deceive investors into believing that their funds were being actively traded and managed, and that PCMG was generating and meeting promised growth expectations. Park and Jones pooled the investor funds and used the funds as their own personal bank account. Jones used investor funds to pay her personal expenses, including the purchase of approximately $19,000 in clothes, home renovations costing more than $300,000, and approximately $225,000 in cash withdrawals that were deposited into defendant's personal bank account.
Three Sentenced for Stealing, Laundering Over $500,000 from New Jersey City University
On April 26, 2011, in Newark, N.J., three co-conspirators were sentenced for their roles in a scheme to steal more than $500,000 in federally subsidized funds. Shaunette Moody, the former office manager for the New Jersey City University (“NJCU”) Student Government Organization (“SGO”) was sentenced to 18 months in prison, followed by two years supervised release; her husband, Alexander Moody, was sentenced to 72 months in prison, followed by three years supervised release. Additionally, they were both order to pay $516,106 in restitution. A third co-conspirator, Kimberly Jackson was also sentenced to three years of probation and ordered to pay $34,315 in restitution. Alexander Moody pleaded guilty to money laundering conspiracy and aiding and abetting theft from an organization receiving federal benefits. Shaunette Moody pleaded guilty to money laundering conspiracy and theft from an organization receiving federal benefits and Jackson pleaded guilty to conspiring to steal from an organization receiving federal benefits. According to court documents, Alexander Moody was the organizer of the criminal scheme to exploit Shaunette Moody’s position as the SGO office manager to steal funds from NJCU by cashing unauthorized checks drawn on the SGO bank account. From January 4, 2007, through July 21, 2010, the two stole approximately 275 checks that were then fraudulently signed and made payable to, among others, the Moodys and co-conspirators Arsenio Willey, Curtis Shearer and Kimberly Jackson. In order to conceal and perpetuate their crime, the Moodys falsified documents, transferred funds among SGO financial accounts, and obtained fraudulent audits of the SGO’s finances. Approximately $516,106 was stolen in the course of the scheme. The stolen money was used to purchase goods and services for the co-conspirators’ benefit, including entertainment and gambling in Atlantic City.
Alabama Woman Sentenced for Fraud Scheme Based on Non-existent Lawsuit
On April 22, 2011, in Birmingham, Ala., Katherine Hope Lane, of Shelby County, Alabama was sentenced to 87 months in prison. Lane was also ordered to pay $368,575 in restitution to victims who thought they were helping her pay the expenses of a personal-injury lawsuit and forfeit proceeds of the fraud totaling $406,500 to the government. Lane pleaded guilty to charges of wire fraud, aggravated identity theft and conspiracy to launder money in August 2011. Lane led family friends and associates to believe they were helping her pursue a lawsuit filed as the result of her suffering a brutal assault while at work. In truth, Lane was never assaulted and there was never a lawsuit. Lane conducted the fraud with her father, Paul H. Lane Jr., of Pelham, from 2004 through at least November 2008. Paul Lane was indicted in October 2009 on mail fraud, wire fraud and money laundering charges. Paul Lane is charged with soliciting money from friends and acquaintances in Michigan, where he once lived, to help pay expenses for the non-existent lawsuit.
Two Alaskans Sentenced on Money Laundering Charges
On April 15, 2011, in Anchorage, Alaska, Justin M. Standefer was sentenced to 18 months in prison, to be followed by three years of supervised release, and ordered to pay a $100 special assessment. Lucas Allen Deweese was sentenced to 12 months and a day in prison, to be followed by two years of supervised release, and ordered to pay a $100 special assessment. According to court documents, Standefer and Deweese pleaded guilty in June 2010 to conspiracy to launder the proceeds of the unlawful distribution of controlled substances. Between December 26, 2008, and April 27, 2009, Standefer either wire transferred or deposited approximately $46,361 representing the proceeds of the unlawful distribution of Oxycontin. Between January 27, 2009, and April 27, 2009, Deweese either wire transferred or deposited approximately $10,200 representing the proceeds of the unlawful distribution of Oxycontin.
Illinois Man Sentenced for Structuring Financial Transactions
On April 13, 2011, in Chicago, Ill, Robert Anthony Bryant was sentenced to 108 months in prison, three years of supervised release, and was ordered to pay $1,131,600 in restitution. Bryant pleaded guilty in August 2010 to one count of structuring financial transactions to avoid the requirement that financial institutions report currency transactions of more than $10,000. According to court documents, Bryant owned and operated Taxbiz, Inc., which bought and sold tax certificates. Bryant offered a guarantee to purchasers of the tax certificates that if the property owner redeemed the property, or the County declared the tax sale void, Bryant would refund 100 percent of the purchase price of the tax certificate. In fact, Bryant was financially unable to refund the purchase price as promised, in part because he frequently used purchasers' money for his personal purposes. In March 2006, Bryant purposefully structured approximately $54,000 by writing six $9,000 checks to cash from three different accounts at two different banks.
New Jersey-Based Real Estate Developer Sentenced for Money Laundering and Corruption
On March 31, 2011, in Newark, N.J., Moshe Altman was sentenced to 41 months in prison, followed by two years of supervised release. Altman pleaded guilty to conspiracy to obstruct commerce by extortion under color of official right and conspiracy to launder money. According to court documents, Altman arranged for payment of a $20,000 bribe to pay a Jersey City Housing Department property improvement field representative. The money laundering charge arose from a scheme in which Altman, along with co-conspirators, used purported charitable, non-profit entities to “wash” approximately $668,000 in dirty checks. Altman admitted that he engaged in approximately 15 transactions between May 2007 and July 2009 in which he accepted checks and returned cash, less a fee for laundering the money, collecting approximately $109,300 in fees over the course of the scheme.
Cigarette Smuggler Sentenced to Prison
On March 29, 2011, in Norfolk, Va., Yong Jin Li was sentenced to 36 months in prison, three years of supervised release, and was ordered to pay $4,593,439 in restitution. In September 2010, Li pleaded guilty to one count of money laundering. According to the Indictment, Li and co-conspirators Fajun Zhang and his daughter, Mei Zhang, were involved in a scheme to purchase contraband cigarettes in Virginia and Maryland that they would sell to purchasers in New York and New Jersey for the purpose of evading state and local taxes in those states. In total, from June 11, 2009, through June 9, 2010, the defendant and his co-conspirators engaged in 63 cigarette transactions with ATF undercover agents from whom they purchased 137,223 cartons of contraband cigarettes. It was further part of the conspiracy that Li and Fajun Zhang knowingly conducted financial transactions affecting interstate and foreign commerce which involved the proceeds of unlawful activity in that they used the proceeds of selling contraband cigarettes to purchase additional contraband cigarettes. On December 21, 2010, Fajun Zhang was sentenced to 48 months in prison; three years supervised release, and was order to pay $4,405,876 in restitution. On that same date, Mei Zhang was sentenced to two years on probation and ordered to pay $4,215,378 in restitution.
Florida Man Sentenced on Conspiracy and Money Laundering Charges
On March 25, 2011, in Pittsburgh, Pa., Yakov Shakhanov, of Delray Beach, Fla., was sentenced to 33 months in prison followed by three years of supervised release on his conviction of conspiracy to harbor illegal aliens and conspiracy to launder monetary instruments. Shakhanov was also ordered to forfeit cash and property to the United States. According to court documents, between approximately 1999 and 2001, and later in 2005, Shakhanov ran the Cleveland and Pittsburgh franchises of ARRA Corporation, a Cincinnati company which leased out-of-status alien employees to hotels. The term “out-of-status” alien refers to aliens who had lawfully entered the US but had exceeded the authorized terms of their stay, thereby converting themselves to out-of-status, meaning, out of legal status. Over 100 out-of-status aliens worked for the company and were charged for housing and transportation to and from jobs. While managing these franchises, Shakhanov paid royalties to ARRA, based on the employee hours worked. Although the client businesses paid over $6.8 million to Shakhanov and others on behalf of all workers, only approximately $4.9 million was paid as wages to the workers.
Pennsylvania Woman Sentenced to Over Five Years for Laundering Drug Money
On March 22, 2011, in Pittsburgh, Pa., Jody Taylor was sentenced to 63 months in prison followed by three years of supervised release on her conviction of money laundering. According to information presented to the court, between 2005 and approximately June 2008, while running a daycare center out of her home, Taylor financed trips to Newark, New Jersey, where drug couriers obtained funds for heroin purchases from Taylor, often $100,000 to $200,000 for each trip. On March 6, 2008, a search warrant was executed at Taylor's residence where $102,535 in drug proceeds were recovered. Taylor also wired drug proceeds to various nominees in the Dominican Republic intended for her sister, Angie Morgan, who was then a fugitive from related drug charges in Allegheny County.
Pennsylvania Man Sentenced for Bank Fraud and Money Laundering
On March 22, 2011, in Pittsburgh, Pa., Nicholas DeRosa, of New Castle, Pa., was sentenced to 41 months in prison, followed by three years of supervised release, and ordered to pay more than $300,000 in restitution. According to information presented to the court, the Lawrence County Housing Authority, under the direction of then Lawrence County Treasurer Gary Felasco, either lent or made a grant of $200,000 to Affordable Housing of Lawrence County, a then newly formed not for profit entity. Affordable Housing's purported purpose was to purchase homes, fix them up, and then rent or sell them to the elderly or disabled. In 2004, Affordable Housing hired Robert Ratkovich, the president of New Castle City Council and a maintenance employee for the Lawrence County Housing Authority. Ratkovich, among other things, was to search for suitable homes for Affordable Housing to purchase as part of its purported mission. After Affordable Housing paid Ratkovich approximately $60,000 in consulting fees, Ratkovich recommended that Affordable Housing purchase seven properties. Four of the seven properties were owned or associated with DeRosa, former member of New Castle City Council, the now retired Assistant Superintendent of the New Castle Area School District. Two of the other properties were owned by DeRosa's cousin, and the seventh property was owned by one of DeRosa's longtime friends. Many of these homes were in dreadful condition, and Ratkovich recommended these homes despite the availability of homes in better condition and for less money. Affordable Housing lacked sufficient funds to purchase these homes, and therefore, through Ratkovich, it applied for a loan through First Commonwealth Bank. Anthony J. Staph, Jr., the son of one of DeRosa's friends, submitted fraudulent appraisals of the properties that drastically overstated the values of the homes. First Commonwealth financed the majority of the purchases through a $250,000 loan, and Affordable Housing contributed approximately $90,000 toward the purchases. By March 2006, Affordable Housing defaulted on the loan. In September 2006 Affordable Housing auctioned all but one of the properties. First Commonwealth received pennies on the dollar when Affordable Housing auctioned off the properties. As far as the money laundering conspiracy charge, DeRosa, Ratkovich and Felasco funneled some of the money from the housing schemes through a series of transactions to Felasco's attorney who did not know that the money was illegally obtained funds. Felasco was, at that time, facing state corruption charges. In summary, the co conspirators arranged for cash from the transactions to be deposited into the account of an individual who ran a business that received cash receipts. That individual then forwarded money to Felasco's attorney. The idea of depositing the money into the account of this individual was to disguise the illegal nature of the funds and its connection to them, and try to make it look like legitimate money.
Tennessee Resident Sentenced in Embezzlement Scheme
On March 21, 2011, in Chattanooga, Tenn., Glenna R. Campbell, of McMinnville, Tenn., was sentenced to 41 months in prison, three years of supervised release, and ordered to pay $119,835 in addition to $100,000 in forfeiture already paid in cash to the victim, Stewart's Pharmacy, McMinnville, Tenn. Campbell was convicted by a federal jury in November 2010 on six counts of mail fraud, one count of wire fraud, and one count of money laundering. Evidence during the trail proved that from 2002 until about July 6, 2009, she devised a scheme to defraud her employer, Stewart Pharmacy, Inc., of approximately $407,000. She embezzled cash and money orders from her employer which she then converted into her own personal use. Campbell used the funds to purchase services, goods, and merchandise, including an Allegro motor home, jewelry, a Tracker Pontoon boat, jet skis, vehicles, Tennessee Titan football tickets, and other luxury items.
Illinois Man Sentenced for Embezzlement, Filing False Tax Returns and Money Laundering
On March 15, 2011, in Urbana, Ill. Kenneth M. Best, Jr., was sentenced to 30 months in prison, ordered to pay a fine of $250,000 and $81,129 in restitution to the Internal Revenue Service. Best, who operated not-for-profit organizations that served the developmentally disabled, pleaded guilty in April 2010 to embezzling approximately $667,000, filing false income tax returns and money laundering. According to court documents, Best admitted that from 2002 to 2006, he embezzled $667,000 from the organization and that he transferred the funds to non-organization bank accounts which he controlled, and used the funds for his personal benefit. Best further admitted that he filed false income tax returns for the federal tax years 2002 through 2006, resulting in failure to pay more than $80,000 in federal income tax.
Liquor Store Operator Sentenced for Structuring
On March 11, 2011, in Peoria, Ill., Mohamed Nimer Asad was sentenced to 36 months in prison, followed by two years supervised release, and ordered to pay $1,476,769 in restitution. In June 2010, a jury convicted Asad of conspiracy to structure and unlawful money structuring of approximately $4.4 million in monetary transactions to avoid reporting requirements related to the business practices of WISAM 1 Inc., doing business as Sheridan Liquors. The government presented evidence that Asad, who was involved in the management and operation of Sheridan Liquors from August 2005 to March 2007, structured cash withdrawals from the business’s bank account for the purpose of evading the requirement of filing currency transaction reports with the U.S. Treasury. According to court documents, Sheridan Liquors’ primary business was the sale of liquor and other products; however the government presented evidence that the business cashed checks for a fee without a license by the State of Illinois to operate a check cashing business. Asad withdrew cash from Sheridan Liquors’ bank account by writing checks payable to cash which were structured to avoid the reporting requirements.
Arizona Man Sentenced in Investment Fraud Scheme
On March 7, 2011, in Phoenix, Ariz., James S. Cundiff was sentenced to 24 months in prison, followed by two years of supervised release, and ordered to pay $313,180 in restitution and a $100 special assessment. Cundiff pleaded guilty to one count of money laundering in November 2010. According to his plea agreement, Cundiff and his two sons operated TransCapital LLC, a company established solely to secure "investment" financing for concerts and tours. Dezert Heat Worldwide, LLC, a joint venture among the Cundiffs and an alleged tour promoter, also was used to obtain victim investor funds to finance purported concerts and tours.. From on or about August 2004 through on or about March 2007, the Cundiffs, through TransCapital or Worldwide, entered into loan and event funding agreements with more than 250 victim investors, and obtained no less than $50,000,000 to finance approximately 150 concerts or concert tours. Because the alleged tour promoter had no association or contractual arrangements with any of the concerts or tours, the investor funds given to the alleged tour promoter from the Cundiffs were not used as represented to the victim investors. Most of the funds were instead returned by the promoter to the Cundiffs within a short period of time under the guise that these repayments represented the net proceeds from some other concert or tour that was recently completed. From in and between January 25, 2007 and February 20, 2007, the alleged tour promoter made four intra-bank electronic transfers totaling $313,180 to the personal checking account of Cundiff’s wife. On March 28, 2007, Cundiff’s wife, at the direction of Cundiff, converted $230,000 of the funds to a cashier's check made payable to the daughter of Cundiff’s wife. The daughter deposited the cashier's check into a savings account held in the name of Splash International, LLC. The next day, March 29, 2007, the daughter obtained a cashier's check in the amount of $57,136 that was used to purchase Cundiff’s residence located in Chandler, Arizona.
New Jersey Man Sentenced to 71 Months in Prison for Scamming Victims with Phony Real Estate, Film and Television Investments
On March 10, 2011, in Trenton, N.J., Martin Gevers was sentenced to 71 months in prison for a scheme in which he sought investments purportedly for real estate, film, and television ventures, then took the money for his personal use. Gevers pleaded guilty on November 9, 2010, to an Information charging one count each of wire fraud and money laundering. According to documents filed in this case and statements made in court, Gevers solicited loans allegedly to fund real estate ventures and movie and television productions, providing false tax returns and false financial statements to potential investors. Those documents purported to show he had an adjusted gross income of more than $1.5 million and a net worth of more than $14 million. Investors were told they would receive returns ranging from twenty-five to seventy percent, or more. However, Gevers did not invest the money he received. Instead, he used it for personal expenditures, including payments to credit card companies, cash withdrawals and payments on personal loans. Gevers fraudulently obtained more than $1.5 million dollars as a result of the scheme. In addition to the prison term, Gevers was sentenced to three years of supervised release and ordered to pay a total of $1,190,272 in restitution to 11 victims of his scheme.
Texas Methamphetamine Distributor Sentenced in Waco
On March 2, 2011, in Waco Texas, John Milligan was sentenced to 262 months in prison, 5 years of supervised release and ordered to pay more than $2,500 in fines for money laundering, distribution of a controlled substance and other charges. According to court documents, Milligan was one of fourteen people indicted in this investigation. Evidence presented at trial revealed that from July 2007 until the spring of 2010, Milligan and others distributed in excess of 300 pounds of methamphetamine. The methamphetamine was often “fronted” to other distributers which is the practice of buying and selling methamphetamine on consignment. Some members of the organization also placed assets in nominee names to hide the true ownership of those assets. Members of the organization distributed in excess of 300 pounds of methamphetamine.
Financial Advisor Kenneth Starr Sentenced to 90 Months in Prison
On March 2, 2011, in Manhattan, N.Y., Kenneth Starr was sentenced to 90 months in prison in connection with a multi-million dollar scheme to defraud his clients. Starr pleaded guilty in September 2010 to one count of wire fraud, one count of money laundering, and one count of fraud by an investment adviser. According to documents filed in federal court and statements Starr made at his guilty plea proceeding, Starr served for decades as a financial planner and investment adviser to numerous clients including high net-worth businessmen and well-known celebrities. Through his two companies, Starr & Company, LLC and Starr Investment Advisers, LLC (collectively, "Starr & Co."), Starr managed his clients' finances, paid their bills, advised them about their taxes, and made investments on their behalf and for their benefit. In some cases, he assumed total control over his clients’ finances by collecting their earnings, investing their savings, and paying their bills. Between 2005 and 2010, Starr participated in fraudulent schemes that involved more than $33 million in actual or intended losses. First, between March 2009 and April 2010, Starr stole millions of dollars from his clients by directing unauthorized transfers of funds from his clients' accounts to one of two attorney escrow accounts, and by causing funds to be transferred from the attorney escrow account for his benefit. Second, between 2005 and 2010, while serving as an investment adviser in Manhattan, Starr made material misstatements and/or material omissions in an effort to fraudulently induce his clients to make certain investments. Under the terms of his plea agreement, Starr admitted that he was responsible for $33,312,782 in actual or intended loss. He further agreed to pay restitution in the amount of $29,112,782. To satisfy his restitution obligation, Starr has already forfeited his interest in a Luxury Apartment. A final restitution amount will be determined at a later date.
Romeo, Michigan Home Builder Gets Jail Time in Mortgage Fraud Scheme
On February 22, 2011, in Detroit, Mich., Giuseppe Cracchiolo was sentenced to six months in prison, six months home confinement, three years of supervised release and ordered to pay nearly $1.7 million in restitution for mortgage fraud. According to court documents, from 2002 through 2005, Atiim Collins, owner of Edgewood Property Management recruited and paid individuals to act as straw buyers in fraudulent mortgage loan transactions. The scheme involved homes built by Cracchiolo, through his company, Mark Christian, Inc (MCI). The straw buyers generally had good credit ratings, but not enough income, and lacked the qualifications necessary to purchase the properties. Ted Carter participated in the conspiracy by creating false documents, including fictitious W-2 forms and pay stubs. These false documents were used by the straw buyers to support the fraudulently inflated asset and income information submitted on their mortgage loan applications. After the loans were approved by the lending companies, Cracchiolo used MCI to receive and disburse the illegally gained proceeds. This scheme resulted in the approval and disbursement of over $4.1 million in fraudulent mortgage loans. Cracchiolo admitted that, during the conspiracy, he arranged to have the illegally obtained loan proceeds transferred back to borrowers and others without the knowledge and approval of the lending companies. All of the properties involved in the fraud went into foreclosure resulting in approximately $2.5 million in losses to the lenders. On December 3, 2010, Carter was sentenced to one year and a day imprisonment, followed by two years supervised release. On December 6, 2010, Collins was sentenced to five years probation, with one year to be served at a residential reentry center and six months home confinement. They must also pay restitution.
Lawrence Man Sentenced to 48 Months for Laundering $315,000 in Drug Money
On February 16, 2011, in Boston, Mass. Freddy Arias-Cartagena was sentenced to 48 months in federal prison for his role in laundering $315,000 in drug money. In July 2010, Arias-Cartagena pleaded guilty to seven separate counts of laundering drug money. Arias-Cartagena’s guilty plea arose from a joint IRS/DEA investigation beginning in 2007, involving the laundering of drug money. In that investigation, law enforcement authorities made extensive use of a cooperating witness (CW). Over the course of the next 14 months, the CW made six separate deliveries of money represented to be drug proceeds to Arias-Cartagena and his co-conspirators, in the Lawrence area, totaling approximately $315,000. Arias-Cartagena then used his shipping business, ARIAS Shipping & Towing to wire the purported drug money to the Dominican Republic. The money was then picked up in the Dominican Republic (minus Arias-Cartagena's percentage fee) by a DEA undercover agent several days after being given to Arias-Cartagena.
Embezzlement by Former Billing Service Employee Results in 27 month Sentence
On February 15, 2011, in Oklahoma City, Okla., Melissa Dover was sentenced to 27 months in prison, three years of supervised release and ordered to pay nearly $374,000 in restitution for tax fraud and wire fraud. According to court documents, Dover was employed as an Accounts Receivable Manager by Comprehensive Medical Billing Solutions, Inc. (CMBS) and had authority to refund overpayments using a credit card terminal. From October 2005 through January 2007, Dover illegally diverted money from CMBS’ bank account to her personal credit and debit card accounts. In addition, Dover pled guilty to filing a false tax return for the 2006 tax year.
Former President and CEO of Charlie Brown's Restaurants Sentenced to Two Years in Prison for Fraud Conspiracy and Tax Evasion
On February 10, 2011, in Trenton N.J., Russell D'Anton was sentenced to 24 months in prison, followed by two years of supervised release for conspiring to defraud the company by accepting more than $1 million in kickbacks in exchange for awarding contracts to vendors. According to court records, from at least as early as 1999 through 2008, D'Anton and a co-conspirator used their positions as executives to direct business to vendors who paid kickbacks in the form of cash, checks and in-kind payments. D'Anton also took steps to conceal the payments from his employer, purposely failing to report the value of the kickbacks as income on his personal federal tax returns.
Springfield Man Sentenced for Internet Fraud; Investors Lost More Than $1 Million
On February 7, 2011, in Springfield, Mo., John Michael Sheehan was sentenced to 64 months in prison and ordered to pay $1,038,670 to 21 individual victim investors for using the Internet to promote a real estate scheme in which investors lost more than $1 million. On August 3, 2010, Sheehan pleaded guilty to conspiracy to commit mail and wire fraud as well as a money laundering conspiracy. Sheehan used his businesses, John Michael Investment, LLC, (JMI) and 3MOM, Inc., to defraud investors who paid to purchase and rehabilitate residential properties from June 1, 2005, through June 30, 2006. Sheehan used a Web site to solicit investments to purchase and rehabilitate single family residential homes, which would then be sold and the proceeds split between the investors and JMI. The Web site promoted John Sheehan (using the name of “John Michael”) as “the King of Bling” and promised investors a 10 to 18 percent return within a year on a minimum investment of $15,000. Investors also attended investment seminars hosted by Sheehan. Although investors were told that they would be the sole investor on each property, Sheehan admitted that he collected investments from multiple investors for the same properties. Sheehan also admitted that he diverted some of these investments and did not actually use the money to purchase or rehabilitate the properties.
Former New Jersey Real Estate Agent Sentenced to 40 Months in Prison for Role in Mortgage Fraud, Property-Flipping Scheme
On January 31, 2011, in Newark, N.J., Michael Eliasof was sentenced to 40 months in prison, three years of supervised release and ordered to pay $8,578,569 in restitution in connection with a mortgage fraud and property-flipping scheme involving rental properties. Eliasof pleaded guilty to one count of money laundering conspiracy. Eliasof conspired with several others to originate mortgage loans fraudulently and to launder proceeds of the loans during 2004 and 2005. According to court documents, from 2002 through 2005, Eliasof obtained mortgage loans for various borrowers to purchase two- and three-family homes, knowing that the borrowers would not qualify for the loans. Eliasof induced the borrowers to buy properties by claiming that the properties would be good investments and that they would not have to pay deposits and closing costs, make monthly mortgage payments, or manage the properties because Eliasof would do that for them. In addition, Eliasof told borrowers they would receive monthly cash payments and a percentage of future sales profits when the properties were sold. To help borrowers qualify for mortgage loans, Eliasof prepared contracts of sale that included fictitious deposits and down payments. He also placed money into their bank accounts to make them appear more creditworthy. During the scheme, Eliasof grossed millions of dollars in real estate commissions and payments to entities that he controlled for supposed repairs to the properties. Eliasof used much of this money to cover carrying costs and to pay kickbacks and bribes. When problems arose with keeping the mortgage loans current, Eliasof would arrange to pay them off by refinancing them with new, fraudulent mortgage loans. In addition, by April 2004, to hide from the lenders how much money he was receiving from these transactions, Eliasof began diverting checks from the closings to himself.
California Man Sentenced on Money Laundering Charges
On January 27, 2011, in Sacramento, Calif., Robert Brogan was sentenced to 37 months in prison, followed by three years of supervised release, and ordered to pay $162,290 in restitution. Robert Brogan pleaded guilty in February 2010 to conspiracy to commit money laundering. According to court documents, Brogan assisted his nephew, Raymond Brogan, in controlling fraudulently obtained life insurance proceeds. The proceeds were from a woman who received approximately $200,000 as the result of the death of her son, a United States Marine. Robert Brogan deposited $31,900 of the fraudulently obtained money into his bank account. He then wrote a check for $13,539 to Norcal Distributing, Inc. At the time he did this, he was aware this check had been fraudulently obtained by Raymond Brogan from the victim’s checkbook. The memo portion of the check written to Norcal states: “Supplies and office equipment.” In fact, the money was used to purchase a number of items including two LG model 77” and 45” flat screen televisions. In all, Raymond and Robert Brogan obtained approximately $163,000 for their own benefit. Raymond Brogan was sentenced in October 2009 to 33 months in prison and ordered to pay $190,747 in restitution to the victim.
North Carolina Attorney Sentenced for Mortgage Fraud
On January 24, 2011, in Charlotte, N.C., Troy Anthony Smith was sentenced to 18 months in prison and three years of supervised release. On December 22, 2008, Smith pleaded guilty to two counts of mortgage fraud conspiracy and two counts of money laundering conspiracy. According to the indictment, Smith was an attorney with an office in Waxhaw, North Carolina. Smith served as a closing attorney for two mortgage fraud cells operating in Union and Mecklenburg Counties in North Carolina. The mortgage fraud cells would agree with a builder to purchase a property at a set price. The cell would then arrange for a buyer to purchase the property at an inflated price, which was usually between $200,000 and $500,000 above the true price. The builder would sell the property to the buyer at the inflated price and the lender would make the mortgage loan on the basis of the inflated price. The difference between the inflated price and the true price would be distributed among the members of the cell. To induce lenders to make the mortgages, cell participants caused loan packages to be prepared and submitted to lenders that contained false and fraudulent information. Smith and other attorneys received the proceeds of the fraud into their trust accounts and distributed the funds to the members of the mortgage fraud cells.
Kansas Man Sentenced to Federal Prison in $3 Million Mortgage Fraud
On January 25, 2011, in Kansas City, Kan., Eric Rabicoff was sentenced to 51 months in prison and ordered to forfeit $50,000 for money laundering. According to court documents, Rabicoff admitted he was the leader of a scheme to defraud mortgage lenders that resulted in more than $3 million in loans to straw buyers who were not qualified to receive them. Rabicoff and his co- conspirators arranged for straw buyers to purchase homes in Olathe, Kan., Kansas City, Mo., and Lee’s Summit, Mo. that were for sale by owners. They obtained financing for the deals by submitting false loan applications to lenders. They provided false information including employment, income and rent history in order for the straw buyers to obtain loans. The scheme also called for contract prices to be increased and for conspirators to receive money by submitting false invoices to title companies for improvements on the houses that never were made. Rabicoff directed conspirators in recruiting straw buyers and assembling fraudulent loan files. He and the conspirators, under his direction, submitted false invoices to title companies for purported improvements made to the properties. The invoices were submitted in the name of MSM Enterprises, a company Rabicoff controlled. The title companies paid MSM Enterprises from the loan proceeds at closing, not knowing that the company made no actual improvements to the properties. On April 5, 2006, Rabicoff committed the crime of money laundering by transferring $50,000 in money criminally derived from the conspiracy from his MSM account to another conspirator’s account held in the name of Cappo Investment Agency.
Former Loan Officer Sentenced for Role in Mortgage Fraud, Property-Flipping Scheme
On January 24, 2011, in Newark, N.J., Gerald Carti, was sentenced to 27 months in prison for wire fraud and money laundering conspiracy in connection with a mortgage fraud and property-flipping scheme involving rental properties in Paterson, N.J. According to court documents and statements made in court, from 2002 through 2004, Carti conspired with several others to obtain mortgage loans for various borrowers to purchase two- and three-family homes in Paterson, knowing that the borrowers would be putting no money down to purchase the properties. Carti further permitted the borrowers to submit loan applications falsely stating that they had made substantial down payments and allowing the mortgage company to fund the loans, even though the borrowers had not made any down payments. At the time of the closings of the loans Carti received as a commission 50 percent of the fees that the mortgage company received for each loan. When many of these loans began defaulting, Carti helped arrange their repayment through new fraudulent loans. In addition to the prison term, Carti was sentenced to three years of supervised release and ordered to pay $1,034,956 in restitution.
Former Controller of a Miami-Dade County Telecommunications Company Sentenced for His Role in Foreign Bribery Scheme
On January 21, 2011, in Miami, Fla., Antonio Perez, of Miami, was sentenced to 24 months in prison for participating in a conspiracy to pay and conceal bribes to former Haitian government officials. Perez was also ordered to serve two years of supervised release and to forfeit $36,375. Perez pleaded guilty on April 27, 2009, to conspiring to making corrupt payments for a Miami-Dade County telecommunications company to officials of the Republic of Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti, in violation of Foreign Corrupt Practices Act (FCPA) and money laundering laws. In his guilty plea, Perez admitted to conspiring to make corrupt payments to foreign government officials to secure business advantages for the telecommunications company from Telecommunications D’Haiti. According to court documents, Perez conspired with Robert Antoine, the former director of international relations for Telecommunications D’Haiti and Juan Diaz, the owner of J.D. Locator Services, along with others. Perez and his co-conspirators concealed the bribe payments in part by conducting financial transactions that involved wiring money to shell companies and mislabeling invoices, checks and ledgers. Perez admitted that he was personally involved with two bribe payments totaling approximately $36,375. On July 30, 2010, Diaz was sentenced to 57 months in prison after pleading guilty to paying and concealing $1,028,851 in bribes to former Haitian government officials while serving as an intermediary for three private telecommunications companies. Antoine admitted accepting bribes, including bribes from Diaz, and pleaded guilty on March 12, 2010, to money laundering conspiracy. Antoine was sentenced to four years in prison.
Marine Major Sentenced On Financial Crimes
On January 10, 2011, in Phoenix, Ariz., Marine Major Richard Fuller, of Yuma, Ariz., was sentenced to 12 months and a day in prison for his role in illegally depositing over $440,000 into U.S. bank accounts. Fuller is a Marine Major who was deployed to Iraq from February 15, 2005, to September 27, 2005. While in Iraq, Fuller served as a Project Purchasing Officer for the Commander’s Emergency Response Program (CERP) assigned to the Fifth Civil Affairs Group, Camp Fallujah. In this capacity, Fuller identified and selected reconstruction projects, awarded reconstruction projects to Iraqi contractors, negotiated contract terms, and verified the completion of projects. CERP funds were distributed to the Iraqi contractors in the form of brand new $100 United States Currency notes. Soon after returning from his deployment in Iraq, Fuller began making cash deposits with brand new $100 U.S. Currency notes. Between October of 2005 to April of 2006, Fuller made 91 cash deposits totaling over $440,000 into bank accounts with Bank of America, Chase Bank and the Navy Federal Credit Union. Fuller made multiple cash deposits under $10,000 into various bank accounts to evade federal currency reporting requirements.
Former Investment Manager Sentenced to 10 Years for Laundering Investor Funds
On December 21, 2010, in Oklahoma City, Okla., Mark Trimble was sentenced to 120 months in prison, two years of supervised release and ordered to pay more than $9,000,000 in restitution for money laundering. Mark Trimble owned and operated Phidippides Capital Management, LLC, an Oklahoma limited liability company with offices in Edmond and Oklahoma City. According to court records, on May 9, 2007, an investor gave Trimble $2,000,000 and was told it would be invested in various securities through Phidippides. The funds were then deposited into the bank account of Phidippides. Five days later, Trimble transferred $1,000,000 of the funds to his personal bank account. Then, on May 17, 2007, Trimble transferred those same funds to his personal investment account. Trimble pleaded guilty to money laundering on April 12, 2010.
Father and Daughter Sentenced in Conspiracy to Purchase and Sell Contraband Cigarettes
On December 21, 2010, in Norfolk, Va., Fajun Zhang and his daughter, Mei Zhang, aka Michelle, were sentenced for their roles in a conspiracy to purchase and sell contraband cigarettes. Fajun Zhang was sentenced to 48 months in prison, followed by three years of supervised release, and ordered to pay $4,405,876 in restitution. He pleaded guilty in September 2010 to one count of money laundering. Mei Zhang was sentenced to two years probation of which 12 months will be served on home detention with electronic monitoring, and ordered to pay $4,215,378 in restitution. She pleaded guilty in September 2010 to one count of conspiracy. According to court documents, Fajun and Mei Zhang and others drove to the Hampton Roads region in Virginia on a regular basis to purchase contraband cigarettes and sell them at a profit. In addition, the defendants sold counterfeit Virginia cigarette tax stamps at a price of 3.8 cents per stamp. The true value of the Virginia cigarette tax stamp is 30 cents. As stated in the indictment, the co-conspirators would pay for a portion of the cost of the contraband cigarettes using counterfeit goods and counterfeit Virginia cigarette tax stamps. The Zhangs and others purchased over $3 million in contraband cigarettes, which they attempted to sell in New York and New Jersey.
Prolific Identity Thief Sentenced For Stealing $1.15 Million
On December 15, 2010, in Portland, Ore., Eduard Anatolyevich Kholstinin (aka Edward Belozor) was sentenced to 22 months in prison to run concurrently with his sentence in a New York State case. In addition, Kholstinin will serve three years of supervised release and pay $1,151,382 in restitution. On September 9, 2010, Kholstinin pleaded guilty to one count each of interstate transportation of stolen property, structuring of monetary transactions, and fraud and misuse of visas, permits, and other documents. Kholstinin, a Russian citizen, also agreed to forfeit $80,000 from the sale of gold coins, along with two automobiles, an ATV and computers. According to court documents, between May 2006 and May 2007, Kholstinin used fraudulent credit cards to gain unauthorized access, via hundreds of ATM machines in California and elsewhere, to bank accounts held by victims in Oregon, Washington, California and elsewhere. This scheme resulted in a loss of over $463,000 to Wells Fargo Bank and over $687,000 to Citibank. In late May 2007, Kholstinin took stolen bank funds from Anderson, California to Oregon where he used phony driver’s licenses, which he created, to wire transfer at least $124,000 to various individuals in Russia. The wire transfers were all made at non-bank locations such as grocery stores, pharmacies, and retail stores. Receipts for 47 of the wire transfers, purchased with currency for between $1,920 and $2,870, show that he structured the transfers and made the transactions at multiple locations on the same date, to not trigger the filing of Suspicious Activity Reports or Currency Transaction Reports with the Internal Revenue Service (IRS).
Minnesota Man Sentenced for Mortgage Fraud
On December 20, 2010, in Minneapolis, Minn., Brett Thielen was sentenced to 27 months in prison on one count of mortgage fraud through the use of interstate wire and one count of engaging in a monetary transaction in criminally derived property. In his plea agreement, Thielen admitted that from August of 2006 through April of 2007, he defrauded certain mortgage lenders by arranging for the fraudulent purchase of condominiums by various unqualified buyers at prices exceeding the true values of the units. According to Thielen’s plea agreement, the recruited buyers paid for the condos entirely with borrowed funds. In order to obtain those funds, the buyers allowed some of Thielen’s accomplices, who were mortgage brokers, to fill out loan applications on their behalf. Those applications contained false information about buyer income and credit worthiness. In addition, they falsely indicated the value of the condos. Thielen and his accomplices, as well as the buyers, received substantial kickbacks out of the funds borrowed from the mortgage lenders, which was not made known to the lenders. From September 2006 through April 2007, 13 condos were purchased by unqualified buyers, resulting in losses to mortgage lenders in excess of $2.5 million.
Real Estate Agent Sentenced to Prison for Fraud
On December 13, 2010, in Tucson, Ariz., Roy Fife was sentenced to 30 months in prison, five years of supervised release, and ordered to pay restitution of $1,820,977. On December 15, 2009, Fife pleaded guilty to wire fraud and conspiracy to commit money laundering. According to his plea agreement, Fife, a licensed real estate agent, participated in a "cash back" mortgage fraud scheme that also involved Chris Nero and others in Arizona. Using his business relationships with local mortgage brokers, he assisted buyers in qualifying for mortgages. Fife admitted that he knew some of these buyers were being paid to be straw buyers and were purchasing multiple properties that they were not going to live in. Further, he knew some of the buyers were submitting materially false loan applications that included false statements regarding assets, liabilities, and the intent to occupy the subject properties as primary residences. As part of the scheme and to hide his involvement, Fife did not receive documented real estate commissions even though he was a licensed realtor at the time of the transactions. All disbursements at the close of a property must be disclosed to the lender. Fife received at least $225,000 in cashier's checks from Chris Nero and his surrogates outside the close of escrow. Chris Nero was previously sentenced to 58 months in prison for his role in the conspiracy and for tax evasion.
Omaha Man Sentenced to Prison
On December 9, 2010, in Omaha, Neb., Lee A. Weinstein, of Omaha, was sentenced to serve 180 months in prison for conspiracy to distribute more than 1,000 kilograms of marijuana and money laundering. Weinstein was the leader/organizer of a drug trafficking operation with ties to Nebraska, Arizona, California and Mexico. At the time of his March 2010 arrest, agents were able to attribute over 13,000 pounds of marijuana and 2.9 million dollars to Weinstein’s drug operation. Agents in Nebraska and Arizona have seized over $400,000 and numerous vehicles, including a 1967 Cessna--U206B, as part of this investigation.
Four Sentenced In Mortgage Fraud
On December 7, 2010, in Kansas City, Kan., four defendants were sentenced on charges of taking part in a $3 million mortgage fraud scheme. Bora Ly, of Raytown, Mo., was sentenced to 18 months in federal prison; Debora Saulmon, of Olathe, Kan., to 15 months; Kong Bun Ly, of Kansas City, Mo., to 12 months; and Rebecca Gelwix, of Des Moines, Iowa, to eight months. Each of the defendants pleaded guilty to one count of conspiracy to commit bank fraud, money laundering and wire fraud. They admitted conspiring with co-defendant Eric M. Rabicoff and others to defraud mortgage lenders and obtain more than $3 million in loans to straw buyers who were not qualified to receive them. They obtained financing by submitting loan applications to lenders that contained false information on employment, income and rent history. The scheme also called for contract prices to be increased and for conspirators to receive money by submitting false invoices to title companies at closing. Two defendants in the scheme have been previously sentenced and four more await sentencing.
North Carolina Man Sentenced on Money Laundering Charges
On December 1, 2010, in Raleigh, N.C., Kimithi L. Davis, of Knightdale, North Carolina, was sentenced to 53 months in prison and ordered to pay $2,045,854 in restitution. According to a Criminal Information filed on April 1, 2010, Davis was charged with conspiracy to commit money laundering. Davis operated a business known as “Pro Bowl Brokerage” and “Pro Bowl Consulting, LLC” that purported to help people secure loans and real estate financing. Though neither Davis nor his business had any relevant brokerage license, they collected a fee from the proceeds of the loans in an amount misrepresented to the victim lenders. During the scheme, Davis and others secured financing for themselves and others based on materially false and fraudulent representations to lending institutions. Davis then engaged in financial transactions with these ill-gotten gains.
Mortgage Fraud Defendant Gets 14 Years in Federal Prison
On November 19, 2010, in Kansas City, Kan., Maurice Ragland was sentenced to 168 months in prison for mortgage fraud. According to court documents, Ragland pleaded guilty to one count of wire fraud and one count of money laundering. In his plea, he admitted that in 2003 and 2004 he conspired with co-defendant Wildor Washington, Jr. and others to obtain mortgage loans by submitting inflated property appraisals and other false information to lenders. The conspirators targeted borrowers with low incomes and little knowledge of the real estate industry. They urged borrowers to apply for real estate loans that were processed through various entities the conspirators controlled including Heritage Financial Investments, Legacy Enterprises, Atlantic Mortgage, Inc., T.E.R.M. Appraisers, the Real Estate Group, J.T.F. Enterprises, Liberty Escrow and AMSTAR Mortgage. Many of the real estate appraisals submitted by Ragland and the conspirators contained inflated property values and forged signatures of licensed appraisers whose identities had been stolen. In addition, Ragland and other conspirators acted as home buyers and submitted loan applications containing false income and asset information, as well as false information about the appraiser of the property and the intended use of the property. Two conspirators, Eryc Reese and Lydell Flowers, are awaiting sentencing. The following co-defendants have been sentenced in the case:
- Wildor Washington, Jr., sentenced to 200 months.
- Terrell Ford sentenced to 135 months.
- Ryan Miller sentenced to 135 months.
- Ron Brown sentenced to 121 months.
- Les Saunders sentenced to 108 months.
- Greg Stevenson sentenced to 97 months.
- Terrence Cole sentenced to 37 months.
- Kara E. Robinson-Franks sentenced to 36 months.
- Victoria Bennett sentenced to 24 months.
- Scott Alexander sentenced to 12 months and a day.
- Emma Holmes sentenced to 12 months and a day.
- Amanda Childs sentenced to 12 months and a day.
Leader of Multi-Million-Dollar Investment Fraud Sentenced to Over 11 Years in Prison
On November 12, 2010, in Nashville, Tenn., Sheila Kennedy, of Clarksville, was sentenced to 136 months in prison for her part in an elaborate investment-fraud scheme. Kennedy pleaded guilty in March 2009 to one count of wire fraud, one count of mail fraud, and two counts of money laundering. At the plea hearing, Kennedy provided extensive details of investment-fraud schemes spanning several years which included several co-conspirators and at least two separate schemes to defraud investors. Kennedy admitted that between 2005 and 2006, she and co-defendant Ann Scarborough solicited investors to invest in fraudulent real estate opportunities. The real estate scheme required that investors give Kennedy and Scarborough money – often in the form of checks payable to “ASK, LLC,” a company operated by Kennedy and Scarborough, and in return, receive so-called “promissory notes” or “time notes.” Kennedy admitted that, contrary to her representations to the investors, she never intended to invest the funds in real estate and, in fact, no such real estate opportunities had ever existed. She further admitted that, instead of investing the money she received from investors, she converted the funds to her own personal use and for the benefit of her co-conspirators. Kennedy also admitted that, between 2005 and 2009, she and co-defendant Philip Russell solicited investors to invest in additional fraudulent real estate opportunities. Like the earlier scheme, Kennedy admitted that she used the funds received from these investors for her own and other’s benefit as well. Kennedy also admitted that, as a further inducement, she falsely represented to investors that she was about to receive an extremely large inheritance from which she would guaranty each investor’s investment, thus encouraging investors to extend the deadline for receiving the return of their original real estate investment. In addition, Kennedy promised certain investors that if they made a new investment, their new funds would be used to facilitate Kennedy obtaining her purported inheritance, and that those investors would receive an additional return on their new investment from the inheritance funds. Two of Kennedy’s co-defendants – her husband, Kenneth Kennedy, and her former business partner Ann Scarborough, were recently convicted after a jury trial of multiple counts of wire fraud, mail fraud, and money laundering. They await sentencing. A third co-defendant, Philip Russell, who was scheduled to be tried with Kenneth Kennedy and Ann Scarborough, failed to appear and remains a fugitive from justice.
Owner of Residential Roofing Company Sentenced for Illegally Structuring Cash Deposits
On November 15, 2010, in Hartford, Conn., Karl Gagnon, of Winsted, was sentenced to 12 months and one day in prison to be followed by two years of supervised release. Gagnon pleaded guilty on July 22, 2010 to charges of structuring cash transactions for the purpose of evading federal reporting requirements. Federal law requires all financial institutions to file a Currency Transaction Report (CTR) for transactions that exceed $10,000. To evade the filing of a CTR, individuals will often structure their currency transactions so that no single transaction exceeds $10,000. According to court documents and statements made in court, Gagnon was a self-employed general contractor, doing business as Karl Gagnon Construction, specializing in residential roofing. Between September 6 and October 6, 2006, Gagnon deposited approximately $277,306 at various branches of Northwest Community Bank and Webster Bank by making 29 separate cash deposits in amounts equal to or less than $10,000. In addition, Gagnon had not filed federal income tax returns from 1999 to 2006.
Colombian National Sentenced to 80 Months in Prison in Money Laundering Conspiracy
On November 12, 2010, in New Haven, Conn., Francisco Dario Duque-Duque, of Medellin, Colombia, was sentenced to 80 months in prison for his role in an international money laundering conspiracy. According to court documents and statements made in court, a Colombian-based organization employed operatives in the United States and funneled millions of dollars in drug proceeds from the U.S. to Medellin, Colombia. The organization also used “stored value cards,” which function like debit cards and enabled cardholders to deposit U.S. dollars into accounts locally, to be withdrawn later from banks in Medellin as Colombian pesos. More than $7 million in drug proceeds were laundered through this scheme. Duque pleaded guilty in January 2010 to one count of conspiracy to commit money laundering. He will be deported upon completion of his sentence.
Man Sentenced to Two Years in Federal Prison for Laundering Money from Ecstasy Sales
On November 5, 2010, in Las Vegas, Nev., Shawn Ignatious Nunes was sentenced to 24 months in prison, three years of supervised release, and ordered to pay a $3,000 fine and forfeit $2,200. Nunes was charged in June 2009, and pleaded guilty on August 6, 2010, to one count of money laundering. According to the plea memorandum, Nunes received $2,000 in exchange for distributing approximately 500 ecstasy pills in September 2008. In addition, Nunes previously received $200, which he knew were profits from illegal drug dealing.
Owner of Internet-based Business Sentenced in Anabolic Steroids and Money Laundering Conspiracy
On November 3, 2010, in Mobile, Ala., Brett W. Branch was sentenced to 87 months in prison and ordered to pay $4,600 in special assessments. According to the indictment, Branch, of Eaton, Colorado, was charged with drug conspiracy, drug distribution, drug distribution to a person under age 21, and money laundering conspiracy. Branch owned Infinite Health, an Internet-based business, and solicited three doctors in Greeley, Colorado, to write steroid prescriptions for his customers. Many of the prescriptions included veterinary steroids. Branch, who is not a physician, decided what mix of drugs would be prescribed and sold to the user. The doctor signed the prescription form that Branch had prepared and faxed the form to Applied Pharmacy Services, Inc. (APS). APS filled and shipped the orders. The drugs were unlawfully distributed to hundreds of users, including teenagers, in nearly every state across the nation.
Securities Attorney and Former Stock Broker Each Sentenced to More Than 12 Years in Prison for $43 Million Pump-and-Dump Stock Manipulation Scheme
On October, 29, 2010, in Tulsa, Okla., G. David Gordon, a securities attorney, and Richard Clark, a businessman and former stock broker, were sentenced to 188 months and 151 months, respectively and ordered to forfeit more than $43 million for wire fraud, securities fraud and money laundering. According to court documents, between April 2004 and December 2006, Gordon, Clark and other conspirators devised a scheme to defraud investors known as a "pump and dump," in which they manipulated three publicly traded stocks. The evidence at trial established that the conspirators obtained approximately $43 million in proceeds from the manipulation of the three penny stocks. Two companies based in Tulsa at the time of the scheme were among those whose stock was manipulated: Deep Rock Oil & Gas Inc., and Global Beverage Solutions Inc., formerly known as Pacific Peak Investments. Clark is the former chief executive officer of Global Beverage. The third company, National Storm Management Group Inc., is based in Glen Ellyn, Ill. Gordon and Clark executed the scheme by obtaining a majority of the free-trading shares of stock they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained. They hid and "parked" their shares with various nominees, such as friends, relatives or other entities that they owned and controlled. Then they coordinated trading to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and e-mail "blasts" were sent to millions of recipients. These blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting investors to purchase stock in the companies. E-mail and fax blasts promoting two companies, National Storm and Deep Rock Oil & Gas, touted investment opportunities purportedly created by Hurricane Katrina. The defendants and their nominees obtained significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the defendants’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value.
Two Portland Men Sentenced in $1.5 Million Tax Refund Scheme
On October 28, 2010, in Portland, Ore., Lee Vinton Howlett was sentenced to 60 months in prison and Todd Martin Howlett to five years of probation for their roles in a fraudulent tax refund scheme. Lee Howlett, who pleaded guilty to filing false claims on June 30, 2010, was also sentenced to three years of supervised release and was ordered to pay $754,214 in restitution to the Internal Revenue Service (IRS). He had previously returned $341,275 to the IRS, in addition to $285,026 being seized from his bank accounts. In July 2009, while under federal court supervision for his previous conviction for conspiring to make false statements to financial institutions relating to mortgage fraud, Lee Howlett began filing phony corporate income tax returns with the IRS and depositing the resulting refund checks. This continued up to the time of his arrest in February 2010 by IRS agents. Lee Howlett filed corporate tax returns for shell companies he had previously established in Oregon. After being confronted with the phony refunds in October 2009, Lee Howlett repaid more than $340,000 to the IRS. Once the repayments were made, Lee Howlett continued receiving and processing fraudulent refunds. In all, Lee Howlett attempted to defraud the government of over $1.5 million through the filing of two dozen phony corporate tax returns, and did in fact receive over $1.3 million in fraudulent refunds. He used hundreds of thousands of dollars of this stolen money for gambling. Lee Howlett enlisted the assistance of his brother, Todd Howlett, also of Portland, to help carry out his scheme. Todd Howlett pleaded guilty to structuring, which involved him making four $5,000 currency withdrawals from a bank over two days to evade the bank's requirement to report the transactions to the IRS on a Currency Transaction Report. The account from which Todd Howlett withdrew the funds contained the proceeds of one of Lee Howlett’s fraudulent tax refund checks.
Two Defendants Sentenced in $1.2 Million Money Laundering Scheme
On October 26, 2010, in Charlotte, N.C., Donald Eugene Bess, of Bessemer City, North Carolina, was sentenced to 24 months in prison and ordered to pay $549,789 in restitution. On June 7, 2010, Ray Eugene Rohm, of Dallas, North Carolina, was sentenced to 24 months in prison and ordered to pay $842,288 in restitution. In addition, each defendant was ordered to forfeit all property involved in the money laundering conspiracy. According to court documents, Rohm owned and operated Rohm Enterprises, a window treatment services business and Bess operated a body shop business named Bess Used Car Wrecker Service. From in or about April 2001 to in or about January 2007, Bess and Rohm deposited into their respective business accounts $1.2 million in fraudulently obtained checks generated by a former claims manager of Farm Bureau Insurance. Although Rohm and Bess were aware that the checks were obtained through an insurance fraud scheme, they deposited the checks on his behalf and collected a fee in return for conducting the financial transaction.
Mastermind Behind Multimillion-Dollar Stock Manipulation and Money Laundering Scheme is Sentenced to 10 Years in Prison
On October 22, 2010, in Camden, N.J., Alfred P. Avasso, of Port St. Lucie, Fla., was sentenced to 120 months in prison, followed by three years of supervised release and ordered to pay $1,992,862 in restitution. Avasso was also ordered to forfeit $2,101,313 to be paid to the victims of his crimes. According to court documents, Avasso was the mastermind behind a multimillion-dollar stock manipulation and money laundering scheme involving Accident Prevention Plus, Inc. (APP). At his plea hearing, Avasso admitted that from approximately July 1998 to January 31, 2005, he conspired with others to manipulate the price of securities and to conceal the ownership, control, influence, and proceeds from the sale of securities in APP. Avasso also admitted that he laundered the proceeds of the APP fraud. Avasso caused APP to enter into a false and fraudulent consulting agreement with his company, Bristol Consulting. However, the only services Bristol Consulting provided concerned fund-raising, and the real purpose of the consulting agreement was to conceal from the investing public the fact that APP was transferring free-trading shares of APP stock to Avasso for his financial benefit. Avasso admitted that he caused at least 4,129,800 shares of APP stock to be issued to Bristol Consulting under the consulting agreement. Avasso also sold some of the illegally acquired stock and deposited the proceeds into an account in the name of Bristol Consulting, from which he would transfer money for his personal benefit. Over the course of the scheme, Avasso caused over $1 million in unlawful payments to be made to Bristol Consulting. The losses from the fraud exceeded $5 million.
Former Home Depot Employee Sentenced for His Role in Conspiracy; Defendant Took Over $1.4 Million in Bribes
On October 19, 2010, in Atlanta, Ga., Ronald Douglass Matheny, II, of Chattanooga, Tennessee, was sentenced to 27 months in prison, followed by three years of supervised release, and ordered to perform 200 hours of community service. In addition, Matheny was ordered to pay a $7,500 fine and $502,000 in restitution. Matheny pleaded guilty on May 19, 2009 on charges of conspiracy to commit mail fraud and wire fraud and conspiracy to commit money laundering. According to court documents, Matheny was employed by Home Depot from May 1987 until July 2007. From May 2002 through April 2005, Matheny held the position of Product Merchant in Home Depot's Flooring Department. He was responsible for overseeing the location of flooring merchandise in all of Home Depot's retail stores and for locating outside firms to facilitate the display of flooring products within those stores. Matheny and several unnamed co-conspirators arranged for Home Depot to purchase items for resale in Home Depot's retail stores on less than the most advantageous terms to Home Depot, and to have the co-conspirators supply services on less than the most advantageous terms to Home Depot. In return, Matheny's co-conspirators paid him approximately $1,471,467.
Defendant Sentenced to 15 Years on Drug and Money Laundering Charges
On October 13, 2010, in Columbia, S.C., Reginald Christopher Mack, aka Reggie, was sentenced to 180 months in prison, to be followed by ten years of supervised release, and ordered to pay a $200 special assessment. Mack pleaded guilty in May 2009 to conspiracy to possess with intent to distribute cocaine and conspiracy to launder drug proceeds. According to court documents, Mack conspired with others in the distribution of cocaine within South Carolina and other areas. Around May 2007, Mack conspired with others to launder the proceeds from the sale of drugs.
Former South Carolina Lawyer Sentenced in Money Laundering Conspiracy
On October 13, 2010, in Columbia, S.C., John W. Harte, of Aiken, South Carolina, was sentenced to 12 months and a day in prison and ordered to pay $482,000 in restitution. Harte pleaded guilty on September 18, 2009, to money laundering and conspiracy to commit mail fraud. According to court documents, Harte admitted to being involved in a conspiracy to liquidate and conceal monies and property which had been stolen by a former client, William J. Trier, II, from his employer. Two other attorneys involved in the same scheme, John Fitzgerald O’Connor, Jr., and Michael D. Shavo have entered guilty pleas. Harte and O’Connor assisted Trier in laundering embezzled funds. From 1997 through January 2007, Trier served as the director of logistics in the shipping department of Crane, a vending machine manufacturing company in Aiken County. Trier embezzled funds from Crane by creating phony invoices from two fictitious freight transport companies and submitting them to Crane for payment. He used his position to approve the payment of the fraudulent invoices, and received company payments mailed to a post office box he had opened as the mailing address for the phantom companies. Over a ten year period, Trier collected approximately $5,200,000 using the false invoice scam. When Trier learned that he was under investigation, he contacted Harte to help him hide assets. According to Harte, he enlisted the help of O’Connor and others. In January 2007, Trier was terminated from Crane Company. Trier was sentenced to 63 months in prison, ordered to pay $5,272,556 in restitution, and to forfeit millions of dollars in assets.
Former Chief Operating Office of Law Firm Sentenced in Connection with Money Laundering Conspiracy in Ponzi Scheme
On October 8, 2010, in Ft. Lauderdale, Fla., Debra Villegas, former Chief Operating Officer of the law firm of Rothstein, Rosenfeldt & Adler, was sentenced to 120 months in prison. In addition, Villegas was found jointly liable for $363 million in restitution and ordered to forfeit certain assets. Villegas pleaded guilty in June 2010 to a criminal Information charging that she and co-conspirators participated in an investment Ponzi scheme. The scheme involved the sale of purported confidential settlement agreements in sexual harassment and/or whistle blower cases that were purportedly handled by attorneys at Rothstein, Rosenfeldt and Adler, PA. According to the charges and statements made in court during her plea, Villegas participated in the scheme by assisting with the fabrication of names for fictitious plaintiffs and defendants who were purportedly parties in the confidential settlements. In addition, Villegas assisted in the preparation of documents relating to the purported confidential settlements. Criminally derived proceeds from the scheme, in excess of $10,000, were transferred between and among accounts at financial institutions.
Ring Leader of Sophisticated Identity Theft and Money Laundering Scheme Sentenced; Ordered to Pay over $2.7 Million in Restitution
On October 7, 2010, in Newark, N.J., Hakeem Olokodana was sentenced to 69 months in prison, followed by three years of supervised release, and ordered to pay $2,739,874 in restitution. Olokodana, of Queens, N.Y., pleaded guilty in November 2009, to an Information charging him with conspiracy to commit bank fraud, money laundering, and aggravated identity theft. According to court documents, Olokodana was part of a multi-national identity theft ring that operated in the United States, the United Kingdom, Canada, China, Japan, Vietnam, South Korea, and other places. Olokodana acquired identity information of thousands of victims and used that information to conduct numerous fraudulent schemes, including depleting the victims’ home equity lines of credit accounts. Olokodana and his co-conspirators gained access to confidential customer and account information used by customers of banks, credit unions, and credit card issuers to conduct financial transactions in the United States. To further the fraud and to avoid detection, co-conspirators routinely traded confidential customer information over e-mail; impersonated bank customers on the phone with customer service representatives in a process known as “social engineering”; used technology to disguise caller identification information; and changed customer address information in bank files. Proceeds from the scheme were sent to conspirators in Japan, Nigeria, Canada, South Korea, and other countries.