The following examples of Financial Institution Fraud Investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.
Stockbroker Sentenced in Connection With $3.2 Million Investment Scheme
On April 24, 2017, in Philadelphia, Pennsylvania, William Bucci was sentenced to 78 months in prison, five years of supervised release and ordered to pay more than $3 million in restitution to the victims and the IRS. On June 8, 2016, Bucci pleaded guilty to securities fraud, mail fraud, and mortgage fraud and entered a plea of nolo contendre to tax charges. According to court documents, Bucci told his victims he was starting a wine and high-end olive oil import business. But Bucci, who was a licensed stockbroker and a non-lawyer elector on the Pennsylvania Court of Judicial Discipline, never had an olive oil and wine business. He promised clients a rate of return of at least 10% on their investment and guaranteed repayment of their principal and interest. Bucci also solicited other individuals to loan him money for the purchase of real estate. Bucci used funds from these individuals to support his lifestyle and to make payments to earlier victims. In total, victims entrusted in excess of $3.2 million to Bucci between November 2003 and December 2011. Bucci filed false federal income tax returns, underreporting his income, for the tax years 2007 through 2011. In 2012, Bucci provided false documents to a bank in connection with a mortgage held on a property that Bucci owned.
Florida Man Sentenced for a Bank Fraud Scheme Involving Over $1.3 Million in Losses
On March 22, 2017, in Orlando, Florida, Mrugesh G. Patel of Edgewater, Florida, was sentenced to 18 in prison for bank fraud and was ordered to pay a money judgment of $405,087. Patel pleaded guilty on December 19, 2016. According to court documents, between February 2011 and December 2012, Patel participated in a scheme to defraud federally insured banks. He opened numerous bank accounts under the names of various Florida-based companies that he had established. He then used these accounts to make bulk deposits of fraudulent bank drafts made payable to his companies. The bank drafts were made using the unauthorized account information of other individuals, businesses, and entities. Patel also made false representations to bank representatives when he opened the accounts and during the time period that he was making the deposits. Patel’s fraud scheme caused more than $1,352,956 in losses to victims whose account information was used to create the fraudulent bank drafts. He used some of this money for personal expenditures and to pay third parties. During the investigation, law enforcement seized over $400,000 in illegal proceeds from bank accounts that Patel controlled.
Former New Jersey Lawyer Sentenced for $40.8 Million Mortgage Fraud Scheme
On March 8, 2017, in Camden, New Jersey, Joseph W. Witkowski, of Flemington, was sentenced to 48 months in prison, three years of supervised release and ordered to pay restitution of $13,105,570. As part of his plea agreement, he must forfeit $2,412,899, representing the proceeds of the fraud. Witkowski previously pleaded guilty to conspiracy to commit wire fraud and conspiracy to commit money laundering. According to court documents, Witkowski and his conspirators located oceanfront condominiums overbuilt by financially distressed developers in Wildwood Crest, New Jersey; premier real estate in vacation destinations in Georgia and South Carolina; and properties in New Jersey owned by financially distressed homeowners facing foreclosure. The conspirators then recruited “straw buyers” to purchase those properties.
Witkowski caused fraudulent mortgage loan applications in the name of the straw buyers and supporting documents, which attributed to the straw buyers inflated income and assets, to be submitted to mortgage lenders. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, Witkowski and his conspirators had some of the funds wired or checks deposited into various accounts that he and his conspirators controlled.
Former Tennessee Bank Employee Sentenced for Embezzlement of Funds and Tax Evasion
On March 6, 2017 in Greenville, Tennessee, Kenneth L Miller, of Greeneville, Tennessee, was sentenced to 36 months in federal prison followed by five years of supervised released and ordered to pay restitution in the amounts of $844,254 to First Tennessee Bank (First Tennessee), $161,018 to the Internal Revenue Service (IRS) and $81,014 to two additional victims of his crimes, for a total of $1,086,286.97 for embezzlement of funds and tax evasion. According to court documents, Miller was an employee of First Tennessee from May 2000 until February 2016. In October 2016, he pleaded guilty to theft by a bank officer or employee and attempting to evade or defeat tax. According to court documents, his scheme involved a variety of techniques, including: earning and then abusing the trust of various clients by telling them falsely that he would engage in financial transactions for their benefit and using his position as a manager of the bank to identify clients who he knew did not review their monthly statements and also to identify inactive accounts from which to embezzle money because he knew the owners of such accounts would be unlikely to detect the embezzlement. Upon learning of the embezzlement by Miller, First Tennessee reimbursed most of the losses to their accountholders. Of the total amount he embezzled, Miller obtained approximately $967,573 for his personal use. He lost or spent most of this through online gambling on various websites and making payments on various personal consumer debts. Miller did not claim any of these funds as income on his tax returns for 2012, 2013, 2014, and 2015, thus evading paying taxes in the approximate amount of $161,018.
California Woman Sentenced to Prison for Mortgage Fraud Scheme and Identity Theft
On February 24, 2017, in Sacramento, California, Alla Samchuk, of Roseville, was sentenced to 114 months in prison for a mortgage fraud scheme and obstruction of justice. Samchuk was found guilty of bank fraud, making a false statement to a financial institution, money laundering, and aggravated identity theft. From 2006 through 2008, Samchuk, a licensed real estate salesperson, orchestrated a mortgage fraud scheme involving three properties in the Sacramento area using straw buyers. Samchuk caused the submission of loan applications containing false representations of income, employment, assets, and a false indication that the straw buyers would occupy the homes as their primary residence. A second objective of the scheme was to obtain HELOC (home equity line of credit) funds. Samchuk diverted or attempted to divert HELOC funds to her own benefit. Samchuk caused the HELOC loans to fund by submitting false statements and documents to the lender regarding the qualifications of the straw buyers. In 2007, Samchuk filed an application for a HELOC on one of the properties without the straw buyer’s knowledge or consent. To obtain the HELOC, she forged the signature of the straw buyer on a short form deed of trust that she caused to be notarized and recorded. The stated purpose of the HELOC was home improvement, but once the line of credit was funded, Samchuk quickly diverted all of the funds to her own use. Samchuk received a higher sentence because the district court found that she obstructed justice when she threatened a witness not to report the crime to federal authorities.
Arizona Man Sentenced to Prison in Mortgage Fraud Investigation
On January 4, 2017, in Tucson, Arizona, Dino Sisneros, of Tucson, was sentenced to 36 months in prison, three years supervised release and ordered to pay $2,606,745 in restitution. Sisneros pleaded guilty to conspiracy to commit wire fraud, on April 1, 2016. The judge ordered that 12 months and one day of the sentence be served consecutively to the 60 month prison sentence Sisneros is currently serving in a related real estate investment fraud scheme, with the other 24 months to be served concurrently. Sisneros and others agreed to commit mortgage fraud relating to various real estate properties. Sisneros knew that as part of this conspiracy, material false statements were submitted on behalf of the loan applicants or straw buyers to the lenders. The co-conspirators obtained mortgage financing from various lenders so that a portion of the loan proceeds could be shared amongst members of this conspiracy, including Sisneros. The amount of cash back received in this conspiracy totaled approximately $2,907,452. Many of the properties relating to this scheme went into foreclosure resulting in significant losses to the lenders.
New Jersey Man Sentenced for Bank Fraud and Money Laundering
On November 30, in Wilmington, Delaware, Akeem Harris, of Newark, New Jersey, was sentenced to 24 months in prison, three years of supervised release and ordered to pay restitution of $422,946. According to court documents, between January and June 2016, Harris engaged in multiple fraud schemes in and around the Wilmington, Delaware area by opening multiple bank accounts in the name of fictitious businesses, and received or deposited stolen funds into those accounts. Harris then liquidated the proceeds of those schemes in a series of transactions before the fraud was detected.
Pennsylvania Bank CEO Sentenced
On November 14, 2016, in Philadelphia, Pennsylvania, Brian Hartline, of Collegeville, was sentenced to 14 months in prison and fined $50,000. According to court documents, Hartline had served as President and Chief Executive Officer of NOVA Bank and co-defendant Barry Bekkedam served as Board Chairman. In October 2008, NOVA Financial Holdings, Inc., of Berwyn, the parent company of NOVA Bank, applied for approximately $13.5 million through the U.S. Department of the Treasury Troubled Asset Relief Program (TARP). In June 2009, NOVA Bank was approved to receive the TARP funds on the condition that the bank raised $15 million in additional, private capital. Bekkedam and Hartline devised a scheme to make NOVA bank appear more financially sound than it was – that new money was being invested in the bank. As part of the scheme, the defendants arranged for NOVA Bank to loan money to three individuals to transfer to NOVA’s parent company so it would appear as though the bank had new capital from an outside investor. In fact, the “new money” investment was the bank’s own money. The bank ultimately did not receive TARP funds, and in October 2012, the bank failed and was closed by state and federal banking regulators. Bekkedam will be sentenced at a later date.
Former Credit Union Commercial Loan Officer Sentenced for Fraud
On November 10, 2016, in Fairview Heights, Illinois, Theodore J. Longust, formerly of Columbia, was sentenced to 121 months in prison and ordered to pay restitution of $5,012,362 to Scott Credit Union and $9,114,560 to CUMIS Mutual, the bonding company for Scott Credit Union. According to court documents, from November 7, 2005 through December 8 2014, Longust was the business relationship manager for Scott Credit Union in the commercial loan department. Longust executed a scheme to defraud through the embezzlement of credit union funds, the creation of fraudulent loans, the payment of loans through the misapplication of funds from other loans, the increase of credit limits on loans that did not have the requisite board approval, the issuance of business loans without the required documentation or security, and the issuance of letters of credit without the required documentation and security. He also knowingly submitted a false report to Scott Credit Union for the 3rd quarter of 2014 that misstated loan balances and omitted loan amounts and underreported loans of over $12 million.
Bank Loan Officer Sentenced in Multi-Million Dollar Mortgage Fraud Scheme
On October 24, 2016, in Los Angeles, California, Paul Ryan, of Torrance, was sentenced to 18 months in prison and ordered to pay $353,925 in restitution to Broadway Federal Bank. According to court documents, Ryan, a former loan officer at Broadway Federal Bank, took more than $350,000 in kickbacks in exchange for considering mortgage applications submitted by churches in relation to a fraud scheme that resulted in losses of at least $4.2 million. Ryan worked with brokers and provided a template for presenting financial information for the churches that ensured the loan applications would be approved. Based on the false information concerning the financial status of the churches, Broadway Federal Bank issued loans to the churches. One of the brokers who paid kickbacks, Chester Peggese, was sentenced in February 2016 to 12 months and one day in prison and ordered to pay $4.2 million in restitution to Broadway Federal Bank. Peggese acted as a “consultant,” meeting with representatives of churches and obtained financial information required for the loan applications, worked with others in the scheme who altered the financial information to make it appear the churches were more financially sound than they actually were, and caused these false loan applications to be submitted to Broadway Federal Bank.