The following excerpt is from the Department of Justice website:
Wednesday, October 26, 2011
“WASHINGTON – Kevin A. Ring, a former lobbyist who worked with Jack A. Abramoff, was sentenced today to 20 months in prison for his role in a scheme to corrupt public officials by providing an illegal stream of things of value, including vacations, employment for a congressman’s wife, meals, drinks, and high-priced tickets to exclusive concerts and sporting events, the Department of Justice announced.
Ring, 41, was sentenced by U.S. District Judge Ellen S. Huvelle in the District of Columbia. Judge Huvelle also sentenced Ring to 30 months of supervised release following his prison term.
On Nov. 15, 2010, a jury convicted former lobbyist Ring of corrupting public officials. The jury found Ring guilty on one count of conspiring to corrupt congressional and executive branch officials by providing things of value to them and their staff members in order to induce or reward those who took official actions benefitting Ring and his clients. In addition, Ring was convicted of one count of paying a gratuity to a public official and three counts of honest services wire fraud for engaging in a scheme to deprive U.S. citizens of their right to the honest services of certain public officials. The jury acquitted Ring on three counts of honest services fraud. A previous federal jury failed to reach a verdict in the case and the court declared a mistrial.
According to evidence presented at trial, as a lobbyist working in Washington, D.C., Ring solicited and obtained business throughout the United States, including with Native American tribal governments operating and interested in operating gambling casinos. Trial testimony established that Ring sought to further his clients’ interests by lobbying public officials in the legislative and executive branches of the federal government. Evidence at trial established Ring to be the “COO of Team Abramoff,” and at one of his sentencing hearings, the court also found that evidence at trial established that Ring was a supervisor of the conspiracy.
Ring and his co-conspirators identified public officials who would perform official actions that would assist Ring and his clients, and then groomed those public officials by providing things of value with the intent of making those public officials more receptive to requests on behalf of their clients in the future. These things of value included all-expenses-paid travel, meals, drinks, golf outings, tickets to professional sporting events, concerts and other events, and an employment opportunity for the wife of a congressman. According to evidence introduced at trial, these things of value were often billed to Ring’s and Abramoff’s clients. Evidence established that Ring and his co-conspirators engaged in this illegal conduct with current and former congressional staff members, including chiefs of staff, as well as officials at the Department of Justice and the White House.
Evidence at trial demonstrated the nature of Ring’s lobbying efforts and his attempts to corrupt and reward public officials. In one e-mail message, Ring instructed his co-conspirators to “thank your friends on the Hill and in the Administration. In fact, thank them over and over again this week – preferably for long periods of time and at expensive establishments.” On another occasion, Ring described to a co-conspirator lobbyist what he expected of a public official who had attended a sporting event: “Glad he got a chance to relax. Now he can pay us back.” Similarly, Ring e-mailed a co-conspirator public official and stated: “You are going to eat free off our clients. Need to get us some [appropriations] money.” Testimony at trial from Ring’s co-conspirators described Ring joking about corrupting public officials by saying, “Hello quid, where’s the pro quo.”
Evidence presented at trial demonstrated that Ring corruptly sought assistance from public officials on numerous client projects, such as appropriations and authorizations, congressional letters to executive branch entities, as well as meetings and other legislative and official actions. Evidence at trial showed that Ring corruptly sought, among other actions, $14 million in congressional transportation appropriations and an additional $7 million from the Department of Justice to build a jail.
Ring remains charged with an additional two counts of obstructing justice. Those charges stem from alleged efforts by Ring to thwart criminal and congressional investigations by preventing the reporting of his criminal conduct to federal authorities. The court severed those two counts and Ring is scheduled to stand trial at a later date. Ring is presumed innocent of these charges until proven guilty in a court of law.
To date, 20 individuals, including lobbyists and public officials, have pleaded guilty or have been convicted at trial in connection with the investigation into the activities of Abramoff and his associates. Abramoff pleaded guilty in January 2006 to conspiracy to commit honest services fraud, honest services fraud and tax evasion. He was sentenced in September 2008 to 48 months in prison.
The case is being prosecuted by Assistant Chief Nathaniel B. Edmonds of the Criminal Division’s Fraud Section and Deputy Chief Peter Koski of the Criminal Division’s Public Integrity Section. The investigation of this case is being conducted by the FBI’s Washington Field Office and the Department of Justice Office of the Inspector General.”
Monday, October 31, 2011
Sunday, October 30, 2011
QUANTITATIVE HEDGE FUND COMPANY HAS ASSETS FROZEN BY SEC
The following is an excerpt from the SEC website:
“Washington, D.C., Oct. 26, 2011 — The Securities and Exchange Commission today obtained an asset freeze against a Boston-area money manager and his investment advisory firm charged with misleading investors in a supposed quantitative hedge fund and diverting portions of investor money into his personal bank account.
The SEC alleges that Andrey C. Hicks and Locust Offshore Management LLC made false representations to create an aura of legitimacy when soliciting individuals to invest in a purported billion dollar hedge fund that Hicks controlled called Locust Offshore Fund Ltd. Hicks raised at least $1.7 million from several investors for the hedge fund. Among the false claims made to investors were that Hicks obtained undergraduate and graduate degrees at Harvard University, and that he previously worked for Barclays Capital, and that the hedge fund held more than $1.2 billion in assets.
“Hicks lied to investors about virtually every aspect of his fictitious hedge fund. This brazen web of lies to investors constituted an outright fraud,” said David P. Bergers, Director of the SEC’s Boston Regional Office.
“Hicks and Locust Offshore Management created this intricate scheme in order to gain credibility with investors,” said Robert Kaplan, Co-Chief of the Asset Management Unit in the SEC’s Division of Enforcement. “Even hedge fund managers who claim affiliations with well-known institutions should be thoroughly researched before making an investment.”
At the SEC’s request, Judge Richard Stearns of the U.S. District Court in Massachusetts issued a temporary restraining order that freezes the assets of Hicks, his firm, and the hedge fund.
According to the SEC’s complaint, Hicks and his firm falsely claimed that the firm’s quantitative strategies were based on mathematical models that Hicks developed while at Harvard, where he purportedly received his undergraduate degree in 2005 and a graduate degree in 2007. Unbeknownst to investors, Hicks only attended Harvard’s undergraduate college for three semesters and never graduated after twice being required to withdraw for failing to perform academically. Hicks only took one mathematics course during his time at Harvard, receiving a D- for a grade.
The SEC alleges that Hicks and his firm misrepresented in offering materials to potential investors that while purportedly at Barclays Capital, Hicks “grew his book nearly two-fold and expanded his group’s assets under management to roughly $16 [billion].” According to a search of records at Barclays Capital, the firm has no record of employing Hicks.
According to the SEC’s complaint, Hicks and his firm also falsely claimed that Ernst & Young served as the fund’s auditor, Credit Suisse served as the fund’s prime broker and custodian, and the fund was a business company incorporated under the laws of the British Virgin Islands.
The SEC’s complaint charges Hicks and Locust Offshore Management with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint also names the Locust Offshore Fund as a relief defendant, alleging that it received investor funds to which it had no right.
The SEC’s expedited investigation was conducted by Boston Regional Office staff including Michele T. Perillo and Kevin M. Kelcourse of the Asset Management Unit and Amy S. Gwiazda. Richard M. Harper II will lead the SEC’s litigation. The SEC acknowledges the assistance of the Swiss Financial Market Supervisory Authority and the British Virgin Islands Financial Services Commission. The SEC’s investigation is continuing.”
“Washington, D.C., Oct. 26, 2011 — The Securities and Exchange Commission today obtained an asset freeze against a Boston-area money manager and his investment advisory firm charged with misleading investors in a supposed quantitative hedge fund and diverting portions of investor money into his personal bank account.
The SEC alleges that Andrey C. Hicks and Locust Offshore Management LLC made false representations to create an aura of legitimacy when soliciting individuals to invest in a purported billion dollar hedge fund that Hicks controlled called Locust Offshore Fund Ltd. Hicks raised at least $1.7 million from several investors for the hedge fund. Among the false claims made to investors were that Hicks obtained undergraduate and graduate degrees at Harvard University, and that he previously worked for Barclays Capital, and that the hedge fund held more than $1.2 billion in assets.
“Hicks lied to investors about virtually every aspect of his fictitious hedge fund. This brazen web of lies to investors constituted an outright fraud,” said David P. Bergers, Director of the SEC’s Boston Regional Office.
“Hicks and Locust Offshore Management created this intricate scheme in order to gain credibility with investors,” said Robert Kaplan, Co-Chief of the Asset Management Unit in the SEC’s Division of Enforcement. “Even hedge fund managers who claim affiliations with well-known institutions should be thoroughly researched before making an investment.”
At the SEC’s request, Judge Richard Stearns of the U.S. District Court in Massachusetts issued a temporary restraining order that freezes the assets of Hicks, his firm, and the hedge fund.
According to the SEC’s complaint, Hicks and his firm falsely claimed that the firm’s quantitative strategies were based on mathematical models that Hicks developed while at Harvard, where he purportedly received his undergraduate degree in 2005 and a graduate degree in 2007. Unbeknownst to investors, Hicks only attended Harvard’s undergraduate college for three semesters and never graduated after twice being required to withdraw for failing to perform academically. Hicks only took one mathematics course during his time at Harvard, receiving a D- for a grade.
The SEC alleges that Hicks and his firm misrepresented in offering materials to potential investors that while purportedly at Barclays Capital, Hicks “grew his book nearly two-fold and expanded his group’s assets under management to roughly $16 [billion].” According to a search of records at Barclays Capital, the firm has no record of employing Hicks.
According to the SEC’s complaint, Hicks and his firm also falsely claimed that Ernst & Young served as the fund’s auditor, Credit Suisse served as the fund’s prime broker and custodian, and the fund was a business company incorporated under the laws of the British Virgin Islands.
The SEC’s complaint charges Hicks and Locust Offshore Management with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint also names the Locust Offshore Fund as a relief defendant, alleging that it received investor funds to which it had no right.
The SEC’s expedited investigation was conducted by Boston Regional Office staff including Michele T. Perillo and Kevin M. Kelcourse of the Asset Management Unit and Amy S. Gwiazda. Richard M. Harper II will lead the SEC’s litigation. The SEC acknowledges the assistance of the Swiss Financial Market Supervisory Authority and the British Virgin Islands Financial Services Commission. The SEC’s investigation is continuing.”
Friday, October 28, 2011
THE ATTORNEY GENERAL AND OTHER OFFICIALS GO AFTER ILLEGAL PRESCRIPTION DRUG DISTRIBUTORS IN FLORIDA
The following is from the Department of Justice website:
“Friday, October 28, 2011
Attorney General Holder, Federal and State Officials Announce Enforcement Efforts Against Illegal Prescription Drug Distributors in Florida
More Than 100 Individuals Arrested to Date in Operations Targeting Pill Mills in Florida
WASHINGTON – Federal authorities, along with state and local law enforcement partners, conducted coordinated enforcement actions today against 22 individuals and one pharmacy allegedly involved in the illegal distribution of prescription drugs. This enforcement action, known as Operation Pill Nation II, was announced by Attorney General Eric Holder, U.S. Drug Enforcement Administration (DEA) Administrator Michele M. Leonhart and U.S. Attorney Robert E. O’Neill for the Middle District of Florida.
“Today’s actions mark important progress in our ongoing fight against one of the nation’s greatest public safety and public health epidemics: prescription drug abuse,” said Attorney General Holder. “Our targeted, aggressive enforcement actions are sending a clear message that in Florida, which has long been an epicenter for the illegal use and distribution of prescription drugs, the days of easily acquiring these drugs from corrupt doctors and pharmacists are numbered.”
“The days of going to Florida to easily obtain dangerous prescription controlled substances from corrupt medical professionals are coming to an end,” said DEA Administrator Leonhart. “DEA, in conjunction with its federal, state and local law enforcement partners, has implemented an aggressive and comprehensive strategy in Florida and throughout the United States to stop the diversion of prescription controlled substances that is fueling our country’s epidemic of prescription drug abuse. Operations such as Pill Nation II illustrate the steadfast determination of DEA and its law enforcement partners in ending Florida’s role as the epicenter for rogue pain clinics in the United States.”
“The heightened cooperation among local, state and federal law enforcement agencies over the past several months demonstrates the commitment to combat this growing problem,” said U.S. Attorney O’Neill. “Those involved in these types of illegal activities should know that we will continue to investigate, enforce and prosecute those responsible for violating their professional oaths and putting lives in danger.”
Among the 22 people arrested today in Orlando and Tampa, Fla., were five doctors and two pharmacists, who have been charged for their alleged roles in illegally distributing prescription drugs. The court documents unsealed and filed today allege the individuals charged illegally diverted controlled substances.
DEA agents, working alongside state and local law enforcement partners, also executed six search warrants in the Tampa area and served two immediate suspension orders to a doctor and a pharmacy. These orders revoke their authority to dispense or prescribe controlled substances. In addition, approximately $500,000 in U.S. currency and assets were seized today.
Prior to today’s actions, efforts undertaken as part of Operation Pill Nation II have led to the arrest of 49 individuals. In addition, the DEA today announced the addition of a third Tactical Diversion Squad in Florida. This new group will be in Orlando and responsible for investigating prescription drug diversion in Central Florida.
Operation Pill Nation I, which was announced in February 2011 in South Florida, has resulted in the arrest of 47 people to date, including 17 doctors and five clinic owners, and the seizure of more than $18.9 million in cash and assets. In addition, more than 70 doctors, six pharmacy owners and five DEA Registered Controlled Substance Distributors have been stripped of their DEA registrations.
Pill mills are operations in which physicians, pharmacies or clinics prescribe controlled substances, without the proper assessment or due care to legitimate patients.
As part of continuing efforts to protect people – especially children and teens – from the dangers of misused or abused prescription drugs, DEA is sponsoring its third National Prescription Drug Take Back Day tomorrow, Oct. 29, 2011. This event allows people to dispose of expired, unused and unwanted prescription drugs at more than 5,000 collection sites throughout the United States, including 17 sites in Tampa and Orlando. During the previous two national Prescription Drug Take Back events, a total of more than 309 tons of prescription drugs were collected nationwide. To learn more about the program or find a Saturday collection site near you, go to: www.deadiversion.usdoj.gov/NTBI/ntbi-pub.pub?_flowId=public-flow.
The cases announced today were investigated by the DEA; the Tampa Police Department; the Manatee County, Fla., Sheriff’s Office; the Lakeland, Fla., Police Department; the Pinellas County, Fla., Sheriff’s Office; the New Port Richey, Fla., Police Department; the Naples, Fla., Police Department; the Fort Myers, Fla., Police Department; the Hillsborough County, Fla., Sheriff’s Office; and the Florida Department of Law Enforcement. The cases are being prosecuted by Assistant U.S. Attorneys for the Middle District of Florida.”
“Friday, October 28, 2011
Attorney General Holder, Federal and State Officials Announce Enforcement Efforts Against Illegal Prescription Drug Distributors in Florida
More Than 100 Individuals Arrested to Date in Operations Targeting Pill Mills in Florida
WASHINGTON – Federal authorities, along with state and local law enforcement partners, conducted coordinated enforcement actions today against 22 individuals and one pharmacy allegedly involved in the illegal distribution of prescription drugs. This enforcement action, known as Operation Pill Nation II, was announced by Attorney General Eric Holder, U.S. Drug Enforcement Administration (DEA) Administrator Michele M. Leonhart and U.S. Attorney Robert E. O’Neill for the Middle District of Florida.
“Today’s actions mark important progress in our ongoing fight against one of the nation’s greatest public safety and public health epidemics: prescription drug abuse,” said Attorney General Holder. “Our targeted, aggressive enforcement actions are sending a clear message that in Florida, which has long been an epicenter for the illegal use and distribution of prescription drugs, the days of easily acquiring these drugs from corrupt doctors and pharmacists are numbered.”
“The days of going to Florida to easily obtain dangerous prescription controlled substances from corrupt medical professionals are coming to an end,” said DEA Administrator Leonhart. “DEA, in conjunction with its federal, state and local law enforcement partners, has implemented an aggressive and comprehensive strategy in Florida and throughout the United States to stop the diversion of prescription controlled substances that is fueling our country’s epidemic of prescription drug abuse. Operations such as Pill Nation II illustrate the steadfast determination of DEA and its law enforcement partners in ending Florida’s role as the epicenter for rogue pain clinics in the United States.”
“The heightened cooperation among local, state and federal law enforcement agencies over the past several months demonstrates the commitment to combat this growing problem,” said U.S. Attorney O’Neill. “Those involved in these types of illegal activities should know that we will continue to investigate, enforce and prosecute those responsible for violating their professional oaths and putting lives in danger.”
Among the 22 people arrested today in Orlando and Tampa, Fla., were five doctors and two pharmacists, who have been charged for their alleged roles in illegally distributing prescription drugs. The court documents unsealed and filed today allege the individuals charged illegally diverted controlled substances.
DEA agents, working alongside state and local law enforcement partners, also executed six search warrants in the Tampa area and served two immediate suspension orders to a doctor and a pharmacy. These orders revoke their authority to dispense or prescribe controlled substances. In addition, approximately $500,000 in U.S. currency and assets were seized today.
Prior to today’s actions, efforts undertaken as part of Operation Pill Nation II have led to the arrest of 49 individuals. In addition, the DEA today announced the addition of a third Tactical Diversion Squad in Florida. This new group will be in Orlando and responsible for investigating prescription drug diversion in Central Florida.
Operation Pill Nation I, which was announced in February 2011 in South Florida, has resulted in the arrest of 47 people to date, including 17 doctors and five clinic owners, and the seizure of more than $18.9 million in cash and assets. In addition, more than 70 doctors, six pharmacy owners and five DEA Registered Controlled Substance Distributors have been stripped of their DEA registrations.
Pill mills are operations in which physicians, pharmacies or clinics prescribe controlled substances, without the proper assessment or due care to legitimate patients.
As part of continuing efforts to protect people – especially children and teens – from the dangers of misused or abused prescription drugs, DEA is sponsoring its third National Prescription Drug Take Back Day tomorrow, Oct. 29, 2011. This event allows people to dispose of expired, unused and unwanted prescription drugs at more than 5,000 collection sites throughout the United States, including 17 sites in Tampa and Orlando. During the previous two national Prescription Drug Take Back events, a total of more than 309 tons of prescription drugs were collected nationwide. To learn more about the program or find a Saturday collection site near you, go to: www.deadiversion.usdoj.gov/NTBI/ntbi-pub.pub?_flowId=public-flow.
The cases announced today were investigated by the DEA; the Tampa Police Department; the Manatee County, Fla., Sheriff’s Office; the Lakeland, Fla., Police Department; the Pinellas County, Fla., Sheriff’s Office; the New Port Richey, Fla., Police Department; the Naples, Fla., Police Department; the Fort Myers, Fla., Police Department; the Hillsborough County, Fla., Sheriff’s Office; and the Florida Department of Law Enforcement. The cases are being prosecuted by Assistant U.S. Attorneys for the Middle District of Florida.”
SEC SETTLES WITH FORMER CEO OF VERITAS SOFTWARE CORP.
The following excerpt is from the SEC website:
“The U.S. Securities and Exchange Commission today announced that, on October 21, 2011, the United States District Court for the Northern District of California entered a settled final judgment against Mark Leslie, the former Chief Executive Officer of Veritas Software Corporation, in SEC v. Mark Leslie, Kenneth E. Lonchar, Paul A. Sallaberry, Michael M. Cully, and Douglas S. Newton, Civil Action No. 07 CV 3444 (JF) (PSG) (N.D. Cal. filed July 2, 2007).
The final judgment resolves the Commission's case against Leslie. The Commission's amended complaint alleges that Leslie and the remaining defendants in this action inflated Veritas' reported revenues by approximately $20 million in connection with a software sale to AOL. The complaint further alleges that Leslie failed to disclose material information to Veritas' independent auditors in violation of the federal securities laws.
Without admitting or denying the allegations in the complaint, Leslie consented to entry of a final judgment permanently enjoining him from future violations of Rule 13b2-2(a)(2)of the Securities Exchange Act of 1934 and ordering him to pay disgorgement and prejudgment interest of $1,550,000 and a civil penalty of $25,000.
Kenneth E. Lonchar and Paul A. Sallaberry remain as defendants in the Commission's action.”
“The U.S. Securities and Exchange Commission today announced that, on October 21, 2011, the United States District Court for the Northern District of California entered a settled final judgment against Mark Leslie, the former Chief Executive Officer of Veritas Software Corporation, in SEC v. Mark Leslie, Kenneth E. Lonchar, Paul A. Sallaberry, Michael M. Cully, and Douglas S. Newton, Civil Action No. 07 CV 3444 (JF) (PSG) (N.D. Cal. filed July 2, 2007).
The final judgment resolves the Commission's case against Leslie. The Commission's amended complaint alleges that Leslie and the remaining defendants in this action inflated Veritas' reported revenues by approximately $20 million in connection with a software sale to AOL. The complaint further alleges that Leslie failed to disclose material information to Veritas' independent auditors in violation of the federal securities laws.
Without admitting or denying the allegations in the complaint, Leslie consented to entry of a final judgment permanently enjoining him from future violations of Rule 13b2-2(a)(2)of the Securities Exchange Act of 1934 and ordering him to pay disgorgement and prejudgment interest of $1,550,000 and a civil penalty of $25,000.
Kenneth E. Lonchar and Paul A. Sallaberry remain as defendants in the Commission's action.”
AMERICAN EXECUTIVE GETS 15 YEARS IN PRISON FOR HAITIAN BRIBE SCHEME
The following excerpt is from the Department of Justice website:
Tuesday, October 25, 2011
Longest Prison Term Ever Imposed in an FCPA Case
WASHINGTON – The former president of Terra Telecommunications Corp. was sentenced today to 15 years in prison for his role in a scheme to pay bribes to Haitian government officials at Telecommunications D’Haiti S.A.M. (Haiti Teleco), a state-owned telecommunications company. This is the longest sentence ever imposed in a case involving the Foreign Corrupt Practices Act (FCPA). The former executive vice president of Terra was also sentenced today to 84 months in prison for his role in the bribery scheme.
The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida; and Special Agent in Charge Jose A. Gonzalez of Internal Revenue Service, Criminal Investigation Division (IRS-CID), Miami Field Office.
Joel Esquenazi, 52, of Miami, and Carlos Rodriguez, 55, of Davie, Fla., were sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida. Judge Martinez also ordered the defendants to forfeit $3.09 million.
Esquenazi and Rodriguez were convicted in August 2011 of one count of conspiracy to violate the FCPA and wire fraud; seven counts of FCPA violations; one count of money laundering conspiracy; and 12 counts of money laundering.
“This sentence – the longest sentence ever imposed in an FCPA case – is a stark reminder to executives that bribing government officials to secure business advantages is a serious crime with serious consequences,” said Assistant Attorney General Breuer. “A company’s profits should be driven by the quality of its goods and services, and not by its ability and willingness to pay bribes to corrupt officials to get business. As today’s sentence shows, we will continue to hold accountable individuals and companies who engage in such corruption.”
“Today’s long prison sentences confirm the serious consequences of ignoring corporate ethics when doing business abroad,” said U.S. Attorney Ferrer. “The FCPA ensures that American businesses are not up for sale.”
“These individuals created a sophisticated way to launder funds by creating shell corporations and false records to conceal bribe payments to foreign government officials,” said IRS Special Agent in Charge Gonzalez. “No matter how sophisticated the scheme, IRS special agents will uncover it and unscrupulous individuals and businesses will be held accountable for their actions as indicated by these sentences.”
According to the evidence presented at trial, Esquenazi was the president and Rodriguez was the executive vice president of Terra, which was headquartered in Miami-Dade County, Fla. Haiti Teleco was the sole provider of land line telephone service in Haiti. Terra had a series of contracts with Teleco that allowed the company’s customers to place telephone calls to Haiti.
At trial, the evidence showed that the defendants participated in a scheme to commit foreign bribery and money laundering from November 2001 through March 2005, during which time the telecommunications company paid more than $890,000 to shell companies to be used for bribes to Teleco officials. Esquenazi and Rodriguez authorized these bribe payments to successive directors of international relations at Teleco.
The purpose of these bribes, according to the evidence presented at trial, was to obtain various business advantages from the Haitian officials for Terra, including the issuance of preferred telecommunications rates, reductions in the number of minutes for which payment was owed, and the continuance of Terra’s telecommunications connection with Haiti. To conceal the bribe payments, the defendants used various shell companies to receive and forward the payments. In addition, they created false records claiming that the payments were for “consulting services,” which were never intended to be performed or actually performed.
Four other individuals were previously convicted and sentenced for their roles in the bribery scheme.
On April 27, 2009, Antonio Perez, a former controller at Terra, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. On Jan. 12, 2010, he was sentenced to 24 months in prison, which he is currently serving.
On May 15, 2009, Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. He admitted to receiving more than $1 million in bribe money from telecommunications companies. On July 30, 2010, he was sentenced to 57 months in prison, which he is currently serving.
On Feb. 19, 2010, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the scheme. On May 5, 2010, he was sentenced to six months in prison.
On March 12, 2010, Robert Antoine, a former director of international affairs for Haiti Teleco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted to receiving more than $1 million in bribes from Miami-based telecommunications companies. On June 2, 2010, he was sentenced to 48 months in prison, which he is currently serving.
In a superseding indictment, Washington Vasconez Cruz, Amadeus Richers, Cinergy Telecommunications Inc., Patrick Joseph, Jean Rene Duperval and Marguerite Grandison are charged in a related scheme to commit foreign bribery and money laundering from December 2001 through January 2006. No trial date is currently set. An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
The government’s investigation is ongoing. The Department of Justice is grateful to the government of Haiti for continuing to provide substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.”
Tuesday, October 25, 2011
Longest Prison Term Ever Imposed in an FCPA Case
WASHINGTON – The former president of Terra Telecommunications Corp. was sentenced today to 15 years in prison for his role in a scheme to pay bribes to Haitian government officials at Telecommunications D’Haiti S.A.M. (Haiti Teleco), a state-owned telecommunications company. This is the longest sentence ever imposed in a case involving the Foreign Corrupt Practices Act (FCPA). The former executive vice president of Terra was also sentenced today to 84 months in prison for his role in the bribery scheme.
The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida; and Special Agent in Charge Jose A. Gonzalez of Internal Revenue Service, Criminal Investigation Division (IRS-CID), Miami Field Office.
Joel Esquenazi, 52, of Miami, and Carlos Rodriguez, 55, of Davie, Fla., were sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida. Judge Martinez also ordered the defendants to forfeit $3.09 million.
Esquenazi and Rodriguez were convicted in August 2011 of one count of conspiracy to violate the FCPA and wire fraud; seven counts of FCPA violations; one count of money laundering conspiracy; and 12 counts of money laundering.
“This sentence – the longest sentence ever imposed in an FCPA case – is a stark reminder to executives that bribing government officials to secure business advantages is a serious crime with serious consequences,” said Assistant Attorney General Breuer. “A company’s profits should be driven by the quality of its goods and services, and not by its ability and willingness to pay bribes to corrupt officials to get business. As today’s sentence shows, we will continue to hold accountable individuals and companies who engage in such corruption.”
“Today’s long prison sentences confirm the serious consequences of ignoring corporate ethics when doing business abroad,” said U.S. Attorney Ferrer. “The FCPA ensures that American businesses are not up for sale.”
“These individuals created a sophisticated way to launder funds by creating shell corporations and false records to conceal bribe payments to foreign government officials,” said IRS Special Agent in Charge Gonzalez. “No matter how sophisticated the scheme, IRS special agents will uncover it and unscrupulous individuals and businesses will be held accountable for their actions as indicated by these sentences.”
According to the evidence presented at trial, Esquenazi was the president and Rodriguez was the executive vice president of Terra, which was headquartered in Miami-Dade County, Fla. Haiti Teleco was the sole provider of land line telephone service in Haiti. Terra had a series of contracts with Teleco that allowed the company’s customers to place telephone calls to Haiti.
At trial, the evidence showed that the defendants participated in a scheme to commit foreign bribery and money laundering from November 2001 through March 2005, during which time the telecommunications company paid more than $890,000 to shell companies to be used for bribes to Teleco officials. Esquenazi and Rodriguez authorized these bribe payments to successive directors of international relations at Teleco.
The purpose of these bribes, according to the evidence presented at trial, was to obtain various business advantages from the Haitian officials for Terra, including the issuance of preferred telecommunications rates, reductions in the number of minutes for which payment was owed, and the continuance of Terra’s telecommunications connection with Haiti. To conceal the bribe payments, the defendants used various shell companies to receive and forward the payments. In addition, they created false records claiming that the payments were for “consulting services,” which were never intended to be performed or actually performed.
Four other individuals were previously convicted and sentenced for their roles in the bribery scheme.
On April 27, 2009, Antonio Perez, a former controller at Terra, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. On Jan. 12, 2010, he was sentenced to 24 months in prison, which he is currently serving.
On May 15, 2009, Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. He admitted to receiving more than $1 million in bribe money from telecommunications companies. On July 30, 2010, he was sentenced to 57 months in prison, which he is currently serving.
On Feb. 19, 2010, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the scheme. On May 5, 2010, he was sentenced to six months in prison.
On March 12, 2010, Robert Antoine, a former director of international affairs for Haiti Teleco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted to receiving more than $1 million in bribes from Miami-based telecommunications companies. On June 2, 2010, he was sentenced to 48 months in prison, which he is currently serving.
In a superseding indictment, Washington Vasconez Cruz, Amadeus Richers, Cinergy Telecommunications Inc., Patrick Joseph, Jean Rene Duperval and Marguerite Grandison are charged in a related scheme to commit foreign bribery and money laundering from December 2001 through January 2006. No trial date is currently set. An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
The government’s investigation is ongoing. The Department of Justice is grateful to the government of Haiti for continuing to provide substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.”
DOJ SUES FORMER NY CORRECTIONS OFFICIAL AND FDA EMPLOYEE TO BLOCK TAX-FRAUD SCHEME
The following excerpt is from the Department of Justice website:
Friday, October 21, 2011
“New York-Area Pair Allegedly Help Customers Submit Fraudulent Refund Claims
WASHINGTON - The United States has sued Rodney Chestnut and Nafeesah Hines to bar them from promoting an alleged tax fraud scheme, the Justice Department announced today. According to the civil injunction complaint, the scheme is based on a frivolous “redemption” theory, which promoters falsely claim allows taxpayers to obtain funds from supposed secret U.S. Treasury accounts. Scheme participants allegedly use Internal Revenue Service (IRS) forms, including Forms 1099-OID and 1099-A, to report large amounts of fictitious income tax withholding, in order to claim large tax refunds.
According to the complaint, Chestnut, of Middle Island, N.Y., is a former corrections captain who promotes the scheme and recruits participants, including some of his former co-workers at the New York City Department of Corrections. He allegedly prepares tax returns for his customers that fraudulently claim huge tax refunds based on the redemption theory.
The complaint also states that Hines, of Jamaica, N.Y., is an employee of the U.S. Food and Drug Administration who prepares or files false forms with the IRS, both for Chestnut’s customers as well as for others. According to the complaint, in 2009 and 2010 Hines prepared or filed more than 3,000 fraudulent forms that falsely reported over $54 million of purportedly withheld income taxes.”
Friday, October 21, 2011
“New York-Area Pair Allegedly Help Customers Submit Fraudulent Refund Claims
WASHINGTON - The United States has sued Rodney Chestnut and Nafeesah Hines to bar them from promoting an alleged tax fraud scheme, the Justice Department announced today. According to the civil injunction complaint, the scheme is based on a frivolous “redemption” theory, which promoters falsely claim allows taxpayers to obtain funds from supposed secret U.S. Treasury accounts. Scheme participants allegedly use Internal Revenue Service (IRS) forms, including Forms 1099-OID and 1099-A, to report large amounts of fictitious income tax withholding, in order to claim large tax refunds.
According to the complaint, Chestnut, of Middle Island, N.Y., is a former corrections captain who promotes the scheme and recruits participants, including some of his former co-workers at the New York City Department of Corrections. He allegedly prepares tax returns for his customers that fraudulently claim huge tax refunds based on the redemption theory.
The complaint also states that Hines, of Jamaica, N.Y., is an employee of the U.S. Food and Drug Administration who prepares or files false forms with the IRS, both for Chestnut’s customers as well as for others. According to the complaint, in 2009 and 2010 Hines prepared or filed more than 3,000 fraudulent forms that falsely reported over $54 million of purportedly withheld income taxes.”
Thursday, October 27, 2011
HALFWAY HOUSE OWNER PLEADS GUILTY TO FRAUD AND KICKBACKS
Wednesday, October 19, 2011
The following excerpt is from the Department of Justice website:
"WASHINGTON – The owner and president of a Miami-area halfway house company pleaded guilty today for her role in a kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), and its related company, the American Sleep Institute (ASI), announced the Department of Justice, FBI and Department of Health and Human Services (HHS).
Natalie Evans, 50, pleaded guilty before U.S. District Judge Jose E. Martinez in Miami to one count of conspiracy to commit health care fraud. Evans was the president of Vision of Hope Recovery Inc., which operated five halfway houses in Fort Lauderdale, Fla.
According to court documents, most of the residents at Evans’s halfway houses were recovering from drug and/or alcohol addictions, and some had recently been released from prison. ATC purported to operate partial hospitalization programs (PHPs) in seven different locations throughout south Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness.
According to court documents, Evans agreed to provide Medicare beneficiaries from Vision of Hope halfway houses to ATC for PHP services. Evans admitted that she knew the beneficiaries at her halfway houses needed day treatment for addiction and not PHP services. Evans also knew that ATC fraudulently billed the Medicare program for the PHP services provided to the beneficiaries she referred to ATC. According to court documents, Evans gave patient information, such as Medicare numbers, to a co-conspirator and the patients were then transported to and from ATC by ATC employees.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC and ASI could bill Medicare for more than $200 million in medically unnecessary services.
According to the plea agreement, Evans’s participation in the fraud resulted in more than $645,975 in fraudulent billing to the Medicare program. At sentencing, scheduled for Jan. 19, 2012, Evans faces a maximum of 10 years in prison and a $250,000 fine.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and nine of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case is being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers“.
The following excerpt is from the Department of Justice website:
"WASHINGTON – The owner and president of a Miami-area halfway house company pleaded guilty today for her role in a kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), and its related company, the American Sleep Institute (ASI), announced the Department of Justice, FBI and Department of Health and Human Services (HHS).
Natalie Evans, 50, pleaded guilty before U.S. District Judge Jose E. Martinez in Miami to one count of conspiracy to commit health care fraud. Evans was the president of Vision of Hope Recovery Inc., which operated five halfway houses in Fort Lauderdale, Fla.
According to court documents, most of the residents at Evans’s halfway houses were recovering from drug and/or alcohol addictions, and some had recently been released from prison. ATC purported to operate partial hospitalization programs (PHPs) in seven different locations throughout south Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness.
According to court documents, Evans agreed to provide Medicare beneficiaries from Vision of Hope halfway houses to ATC for PHP services. Evans admitted that she knew the beneficiaries at her halfway houses needed day treatment for addiction and not PHP services. Evans also knew that ATC fraudulently billed the Medicare program for the PHP services provided to the beneficiaries she referred to ATC. According to court documents, Evans gave patient information, such as Medicare numbers, to a co-conspirator and the patients were then transported to and from ATC by ATC employees.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC and ASI could bill Medicare for more than $200 million in medically unnecessary services.
According to the plea agreement, Evans’s participation in the fraud resulted in more than $645,975 in fraudulent billing to the Medicare program. At sentencing, scheduled for Jan. 19, 2012, Evans faces a maximum of 10 years in prison and a $250,000 fine.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and nine of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case is being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers“.
Wednesday, October 26, 2011
PFIZER TO PAY $14.5 MILLION TO RESOLVE ALLEGATIONS RELATED TO DETROL
The following excerpt is from the Department of Justice website:
Friday, October 21, 2011
“Pfizer to Pay $14.5 Million for Illegal Marketing of Drug Detrol
Settlement Involves False Claims Act Lawsuit Not Resolved at the Time of the Government’s $2.3 Billion Dollar Settlement with Pfizer in 2009
WASHINGTON – American pharmaceutical company Pfizer Inc. has agreed to pay $14.5 million to resolve False Claims Act allegations related to its marketing of the drug Detrol, the Justice Department announced today. The settlement resolves the last of a group of 10 qui tam, or whistleblower, suits that were filed in the District of Massachusetts and two other districts, beginning in 2003. The other nine suits were settled or dismissed in 2009 as part of the government’s global resolution with Pfizer, under which the company agreed to pay $2.3 billion dollars to resolve civil claims and criminal charges regarding multiple drugs.
The current settlement addresses allegations that Pfizer illegally marketed Detrol, a drug for the treatment of overactive bladder, for use in male patients suffering from benign prostatic hypertrophy and several allied conditions, notably lower urinary tract symptoms and bladder outlet obstruction – all uses for which the Food and Drug Administration (FDA) had not approved the drug as safe and effective. Under the terms of the settlement, the $14.5 million recovery will be divided between the United States and participating state Medicaid programs, with $11,878,846 going to the federal government and $2,621,154 going to state Medicaid programs. Under the qui tam provisions of the False Claims Act, whistleblowers will receive a $3,282,019 share of the federal recovery.
“Whistleblowers play an important role in protecting taxpayer funds from fraud and abuse,” said Tony West, Assistant Attorney General of the Justice Department’s Civil Division. “Settlements like this one help maintain the integrity of FDA’s drug approval process and support important federal and state health care programs.”
“The United States is pleased that Pfizer has agreed to resolve the last of the pending cases that were not settled as part of the 2009 resolution and plea,” said Carmen Ortiz, U.S. Attorney for the District of Massachusetts. “We hope and expect that this is indicative of a commitment to move forward in compliance with the law, and we will continue to watch vigilantly to ensure that Pfizer complies with the law in its sales and marketing of drugs sold to the public.”
The case is U.S. ex rel. Wetherholt and Drimer v. Pfizer, which the United States declined to intervene in and was independently litigated by the relators. The United States subsequently participated closely in efforts to resolve the case.
This settlement is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $6.3 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 exceed $8.1 billion.”
Friday, October 21, 2011
“Pfizer to Pay $14.5 Million for Illegal Marketing of Drug Detrol
Settlement Involves False Claims Act Lawsuit Not Resolved at the Time of the Government’s $2.3 Billion Dollar Settlement with Pfizer in 2009
WASHINGTON – American pharmaceutical company Pfizer Inc. has agreed to pay $14.5 million to resolve False Claims Act allegations related to its marketing of the drug Detrol, the Justice Department announced today. The settlement resolves the last of a group of 10 qui tam, or whistleblower, suits that were filed in the District of Massachusetts and two other districts, beginning in 2003. The other nine suits were settled or dismissed in 2009 as part of the government’s global resolution with Pfizer, under which the company agreed to pay $2.3 billion dollars to resolve civil claims and criminal charges regarding multiple drugs.
The current settlement addresses allegations that Pfizer illegally marketed Detrol, a drug for the treatment of overactive bladder, for use in male patients suffering from benign prostatic hypertrophy and several allied conditions, notably lower urinary tract symptoms and bladder outlet obstruction – all uses for which the Food and Drug Administration (FDA) had not approved the drug as safe and effective. Under the terms of the settlement, the $14.5 million recovery will be divided between the United States and participating state Medicaid programs, with $11,878,846 going to the federal government and $2,621,154 going to state Medicaid programs. Under the qui tam provisions of the False Claims Act, whistleblowers will receive a $3,282,019 share of the federal recovery.
“Whistleblowers play an important role in protecting taxpayer funds from fraud and abuse,” said Tony West, Assistant Attorney General of the Justice Department’s Civil Division. “Settlements like this one help maintain the integrity of FDA’s drug approval process and support important federal and state health care programs.”
“The United States is pleased that Pfizer has agreed to resolve the last of the pending cases that were not settled as part of the 2009 resolution and plea,” said Carmen Ortiz, U.S. Attorney for the District of Massachusetts. “We hope and expect that this is indicative of a commitment to move forward in compliance with the law, and we will continue to watch vigilantly to ensure that Pfizer complies with the law in its sales and marketing of drugs sold to the public.”
The case is U.S. ex rel. Wetherholt and Drimer v. Pfizer, which the United States declined to intervene in and was independently litigated by the relators. The United States subsequently participated closely in efforts to resolve the case.
This settlement is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $6.3 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 exceed $8.1 billion.”
Tuesday, October 25, 2011
CALIFORNIA WORMAN SETTLES INSIDER TRADING CHARGES WITH SEC
The following excerpt is from the SEC website:
October 25, 2011
“The United States District Court for the Northern District of California approved a proposed settlement of the Securities and Exchange Commission’s insider trading claims against Annabel McClellan. The Commission alleged that Ms. McClellan obtained confidential information about pending mergers and acquisitions from her husband, a former partner in the San Francisco offices of Deloitte Tax LLP, to tip her sister and brother-in-law in London. As alleged by the Commission, Ms. McClellan’s relatives used the information to place trades in advance of the public announcements of the transaction, making millions of dollars in illicit profits.
Without admitting or denying the Commission’s allegations, Ms. McClellan consented to pay a $1 million civil money penalty. Ms. McClellan also consented to the entry of a final judgment that will enjoin her permanently from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The court entered the final judgment against Ms. McClellan on October 25, 2011.
Ms. McClellan previously pleaded guilty to one count of obstructing the Commission’s investigation into the insider trading scheme. The United Kingdom Financial Services Authority filed insider trading charges against Ms. McClellan’s relatives and three others in November 2010.
In a related action, the Commission requested the dismissal of the insider trading claims against Ms. McClellan’s husband, Arnold A. McClellan.”
October 25, 2011
“The United States District Court for the Northern District of California approved a proposed settlement of the Securities and Exchange Commission’s insider trading claims against Annabel McClellan. The Commission alleged that Ms. McClellan obtained confidential information about pending mergers and acquisitions from her husband, a former partner in the San Francisco offices of Deloitte Tax LLP, to tip her sister and brother-in-law in London. As alleged by the Commission, Ms. McClellan’s relatives used the information to place trades in advance of the public announcements of the transaction, making millions of dollars in illicit profits.
Without admitting or denying the Commission’s allegations, Ms. McClellan consented to pay a $1 million civil money penalty. Ms. McClellan also consented to the entry of a final judgment that will enjoin her permanently from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The court entered the final judgment against Ms. McClellan on October 25, 2011.
Ms. McClellan previously pleaded guilty to one count of obstructing the Commission’s investigation into the insider trading scheme. The United Kingdom Financial Services Authority filed insider trading charges against Ms. McClellan’s relatives and three others in November 2010.
In a related action, the Commission requested the dismissal of the insider trading claims against Ms. McClellan’s husband, Arnold A. McClellan.”
TX RESIDENT SENTENCED TO 24 MONTHS IN PRISON FOR SCHEME TO DEFRAUD THE U.S. EXPORT-IMORT BANK
The following excerpt is from the Department of Justice website:
Thursday, October 20, 2011
"WASHINGTON – An El Paso, Texas, resident was sentenced today to 24 months in prison for his role in a scheme to defraud the Export-Import Bank of the United States (Ex-Im Bank) of more than $3.6 million.
The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Robert Pitman of the Western District of Texas; Osvaldo L. Gratacos, Inspector General of the Ex-Im Bank; Special Agent in Charge Manuel Oyola-Torres of Homeland Security Investigations (HSI) in El Paso; Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service-Criminal Investigation (IRS-CI) in Washington, D.C.; and Inspector in Charge Daniel S. Cortez of the U.S. Postal Inspection Service (USPIS) in Washington, D.C.
Gilberto Baez-Garcia, 35, was also sentenced by Judge Kathleen Cardone in U.S. District Court in El Paso to five years of supervised release and was ordered to pay $ 3,614,594 in restitution and $ 3,614,977 in forfeiture. Baez pleaded guilty on May 11, 2011, to conspiracy to commit wire and bank fraud, conspiracy to launder money and bank fraud. Baez admitted that he participated in a scheme to defraud the Ex-Im Bank of more than $3.6 million. Baez most recently resided in El Paso. He was arrested on June 4, 2010.
According to court documents, Baez was the co-owner of Valcomar Inc., an export company located in El Paso that purported to be in the business of exporting U.S. manufactured goods to Mexico. During his plea hearing, Baez admitted that he and another El Paso exporter created false documents so Baez could obtain a fraudulent Ex-Im Bank loan, which resulted in a $1,016,126 loss to the government. Baez also admitted that he and his co-conspirators assisted others to obtain fraudulent Ex-Im loans, which resulted in more than $2 million in losses to the government. According to court records, all of the Ex-Im loans involving Baez were fraudulent and Baez and others stole the loan proceeds by transferring funds to Mexico and elsewhere. As a result, the loans went into default and caused the Ex-Im Bank to pay claims losses to the lending banks in the amount of $3,614,594.
Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing. Ex-Im Bank provides a variety of financing mechanisms to help foreign buyers purchase U.S. goods and services.
The case is being prosecuted by Trial Attorneys Patrick Donley and William Bowne of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Steven Spitzer of the Western District of Texas, El Paso Office. The case was investigated by the Ex-Im Bank Office of Inspector General, HSI, IRS-CI and USPIS."
Thursday, October 20, 2011
"WASHINGTON – An El Paso, Texas, resident was sentenced today to 24 months in prison for his role in a scheme to defraud the Export-Import Bank of the United States (Ex-Im Bank) of more than $3.6 million.
The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Robert Pitman of the Western District of Texas; Osvaldo L. Gratacos, Inspector General of the Ex-Im Bank; Special Agent in Charge Manuel Oyola-Torres of Homeland Security Investigations (HSI) in El Paso; Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service-Criminal Investigation (IRS-CI) in Washington, D.C.; and Inspector in Charge Daniel S. Cortez of the U.S. Postal Inspection Service (USPIS) in Washington, D.C.
Gilberto Baez-Garcia, 35, was also sentenced by Judge Kathleen Cardone in U.S. District Court in El Paso to five years of supervised release and was ordered to pay $ 3,614,594 in restitution and $ 3,614,977 in forfeiture. Baez pleaded guilty on May 11, 2011, to conspiracy to commit wire and bank fraud, conspiracy to launder money and bank fraud. Baez admitted that he participated in a scheme to defraud the Ex-Im Bank of more than $3.6 million. Baez most recently resided in El Paso. He was arrested on June 4, 2010.
According to court documents, Baez was the co-owner of Valcomar Inc., an export company located in El Paso that purported to be in the business of exporting U.S. manufactured goods to Mexico. During his plea hearing, Baez admitted that he and another El Paso exporter created false documents so Baez could obtain a fraudulent Ex-Im Bank loan, which resulted in a $1,016,126 loss to the government. Baez also admitted that he and his co-conspirators assisted others to obtain fraudulent Ex-Im loans, which resulted in more than $2 million in losses to the government. According to court records, all of the Ex-Im loans involving Baez were fraudulent and Baez and others stole the loan proceeds by transferring funds to Mexico and elsewhere. As a result, the loans went into default and caused the Ex-Im Bank to pay claims losses to the lending banks in the amount of $3,614,594.
Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing. Ex-Im Bank provides a variety of financing mechanisms to help foreign buyers purchase U.S. goods and services.
The case is being prosecuted by Trial Attorneys Patrick Donley and William Bowne of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Steven Spitzer of the Western District of Texas, El Paso Office. The case was investigated by the Ex-Im Bank Office of Inspector General, HSI, IRS-CI and USPIS."
Monday, October 24, 2011
$185 MILLION WILL MAKE CITIGROUP'S SEC PROBLEMS GO AWAY
CITIGROUP TO PAY $185 MILLION TO SETTLE CHARGES
The following excerpt is from the SEC website:
“Washington, D.C., Oct. 19, 2011 – The Securities and Exchange Commission today charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion collateralized debt obligation (CDO) tied to the U.S. housing market in which Citigroup bet against investors as the housing market showed signs of distress. The CDO defaulted within months, leaving investors with losses while Citigroup made $160 million in fees and trading profits.
The SEC alleges that Citigroup Global Markets structured and marketed a CDO called Class V Funding III and exercised significant influence over the selection of $500 million of the assets included in the CDO portfolio. Citigroup then took a proprietary short position against those mortgage-related assets from which it would profit if the assets declined in value. Citigroup did not disclose to investors its role in the asset selection process or that it took a short position against the assets it helped select.
Citigroup has agreed to settle the SEC’s charges by paying a total of $285 million, which will be returned to investors.
The SEC also charged Brian Stoker, the Citigroup employee primarily responsible for structuring the CDO transaction. The agency brought separate settled charges against Credit Suisse’s asset management unit, which served as the collateral manager for the CDO transaction, as well as the Credit Suisse portfolio manager primarily responsible for the transaction, Samir H. Bhatt.
“The securities laws demand that investors receive more care and candor than Citigroup provided to these CDO investors,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Investors were not informed that Citgroup had decided to bet against them and had helped choose the assets that would determine who won or lost.”
Kenneth R. Lench, Chief of the Structured and New Products Unit in the SEC Division of Enforcement, added, “As the collateral manager, Credit Suisse also was responsible for the disclosure failures and breached its fiduciary duty to investors when it allowed Citigroup to significantly influence the portfolio selection process.”
According to the SEC’s complaints filed in U.S. District Court for the Southern District of New York, personnel from Citigroup’s CDO trading and structuring desks had discussions around October 2006 about the possibility of establishing a short position in a specific group of assets by using credit default swaps (CDS) to buy protection on those assets from a CDO that Citigroup would structure and market. After discussions began with Credit Suisse Alternative Capital (CSAC) about acting as the collateral manager for a proposed CDO transaction, Stoker sent an e-mail to his supervisor. He wrote that he hoped the transaction would go forward and described it as the Citigroup trading desk head’s “prop trade (don’t tell CSAC). CSAC agreed to terms even though they don’t get to pick the assets.”
The SEC alleges that during the time when the transaction was being structured, CSAC allowed Citigroup to exercise significant influence over the selection of assets included in the Class V III portfolio. The transaction was marketed primarily through a pitch book and an offering circular for which Stoker was chiefly responsible. The pitch book and the offering circular were materially misleading because they failed to disclose that Citigroup had played a substantial role in selecting the assets and had taken a $500 million short position that was comprised of names it had been allowed to select. Citigroup did not short names that it had no role in selecting. Nothing in the disclosures put investors on notice that Citigroup had interests that were adverse to the interests of CDO investors.
According to the SEC’s complaints, the Class V III transaction closed on Feb. 28, 2007. One experienced CDO trader characterized the Class V III portfolio in an e-mail as “dogsh!t” and “possibly the best short EVER!” An experienced collateral manager commented that “the portfolio is horrible.” On Nov. 7, 2007, a credit rating agency downgraded every tranche of Class V III, and on Nov. 19, 2007, Class V III was declared to be in an Event of Default. The approximately 15 investors in the Class V III transaction lost virtually their entire investments while Citigroup received fees of approximately $34 million for structuring and marketing the transaction and additionally realized net profits of at least $126 million from its short position.
The SEC alleges that Citigroup and Stoker each violated Sections 17(a)(2) and (3) of the Securities Act of 1933. While the SEC’s litigation continues against Stoker, Citigroup has consented to settle the SEC’s charges without admitting or denying the SEC’s allegations. The settlement is subject to court approval. Citigroup consented to the entry of a final judgment that enjoins it from violating these provisions. The settlement requires Citigroup to pay $160 million in disgorgement plus $30 million in prejudgment interest and a $95 million penalty for a total of $285 million that will be returned to investors through a Fair Fund distribution. The settlement also requires remedial action by Citigroup in its review and approval of offerings of certain mortgage-related securities.
The SEC instituted related administrative proceedings against CSAC, its successor in interest Credit Suisse Asset Management (CSAM), and Bhatt. The SEC found that as a result of the roles that they played in the asset selection process and the preparation of the pitch book and the offering circular for the Class V III transaction, CSAM and CSAC violated Section 206(2) of the Investment Advisers Act of 1940 (Advisers Act) and Section 17(a)(2) of the Securities Act and that Bhatt violated Section 17(a)(2) of the Securities Act and caused the violations of Section 206(2) of the Advisers Act by CSAC.
Without admitting or denying the SEC’s findings, CSAM and CSAC consented to the issuance of an order directing each of them to cease and desist from committing or causing any violations, or future violations, of Section 206(2) of the Advisers Act and Section 17(a)(2) of the Securities Act and requiring them to pay disgorgement of $1 million in fees that it received from the Class V III transaction plus $250,000 in prejudgment interest, and requiring them to pay a penalty of $1.25 million. Without admitting or denying the SEC’s findings, Bhatt consented to the issuance of an order directing him to cease and desist from committing or causing any violations or future violations of Section 206(2) of the Advisers Act and Section 17(a)(2) of the Securities Act and suspending him from association with any investment adviser for a period of six months.”
The following excerpt is from the SEC website:
“Washington, D.C., Oct. 19, 2011 – The Securities and Exchange Commission today charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion collateralized debt obligation (CDO) tied to the U.S. housing market in which Citigroup bet against investors as the housing market showed signs of distress. The CDO defaulted within months, leaving investors with losses while Citigroup made $160 million in fees and trading profits.
The SEC alleges that Citigroup Global Markets structured and marketed a CDO called Class V Funding III and exercised significant influence over the selection of $500 million of the assets included in the CDO portfolio. Citigroup then took a proprietary short position against those mortgage-related assets from which it would profit if the assets declined in value. Citigroup did not disclose to investors its role in the asset selection process or that it took a short position against the assets it helped select.
Citigroup has agreed to settle the SEC’s charges by paying a total of $285 million, which will be returned to investors.
The SEC also charged Brian Stoker, the Citigroup employee primarily responsible for structuring the CDO transaction. The agency brought separate settled charges against Credit Suisse’s asset management unit, which served as the collateral manager for the CDO transaction, as well as the Credit Suisse portfolio manager primarily responsible for the transaction, Samir H. Bhatt.
“The securities laws demand that investors receive more care and candor than Citigroup provided to these CDO investors,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Investors were not informed that Citgroup had decided to bet against them and had helped choose the assets that would determine who won or lost.”
Kenneth R. Lench, Chief of the Structured and New Products Unit in the SEC Division of Enforcement, added, “As the collateral manager, Credit Suisse also was responsible for the disclosure failures and breached its fiduciary duty to investors when it allowed Citigroup to significantly influence the portfolio selection process.”
According to the SEC’s complaints filed in U.S. District Court for the Southern District of New York, personnel from Citigroup’s CDO trading and structuring desks had discussions around October 2006 about the possibility of establishing a short position in a specific group of assets by using credit default swaps (CDS) to buy protection on those assets from a CDO that Citigroup would structure and market. After discussions began with Credit Suisse Alternative Capital (CSAC) about acting as the collateral manager for a proposed CDO transaction, Stoker sent an e-mail to his supervisor. He wrote that he hoped the transaction would go forward and described it as the Citigroup trading desk head’s “prop trade (don’t tell CSAC). CSAC agreed to terms even though they don’t get to pick the assets.”
The SEC alleges that during the time when the transaction was being structured, CSAC allowed Citigroup to exercise significant influence over the selection of assets included in the Class V III portfolio. The transaction was marketed primarily through a pitch book and an offering circular for which Stoker was chiefly responsible. The pitch book and the offering circular were materially misleading because they failed to disclose that Citigroup had played a substantial role in selecting the assets and had taken a $500 million short position that was comprised of names it had been allowed to select. Citigroup did not short names that it had no role in selecting. Nothing in the disclosures put investors on notice that Citigroup had interests that were adverse to the interests of CDO investors.
According to the SEC’s complaints, the Class V III transaction closed on Feb. 28, 2007. One experienced CDO trader characterized the Class V III portfolio in an e-mail as “dogsh!t” and “possibly the best short EVER!” An experienced collateral manager commented that “the portfolio is horrible.” On Nov. 7, 2007, a credit rating agency downgraded every tranche of Class V III, and on Nov. 19, 2007, Class V III was declared to be in an Event of Default. The approximately 15 investors in the Class V III transaction lost virtually their entire investments while Citigroup received fees of approximately $34 million for structuring and marketing the transaction and additionally realized net profits of at least $126 million from its short position.
The SEC alleges that Citigroup and Stoker each violated Sections 17(a)(2) and (3) of the Securities Act of 1933. While the SEC’s litigation continues against Stoker, Citigroup has consented to settle the SEC’s charges without admitting or denying the SEC’s allegations. The settlement is subject to court approval. Citigroup consented to the entry of a final judgment that enjoins it from violating these provisions. The settlement requires Citigroup to pay $160 million in disgorgement plus $30 million in prejudgment interest and a $95 million penalty for a total of $285 million that will be returned to investors through a Fair Fund distribution. The settlement also requires remedial action by Citigroup in its review and approval of offerings of certain mortgage-related securities.
The SEC instituted related administrative proceedings against CSAC, its successor in interest Credit Suisse Asset Management (CSAM), and Bhatt. The SEC found that as a result of the roles that they played in the asset selection process and the preparation of the pitch book and the offering circular for the Class V III transaction, CSAM and CSAC violated Section 206(2) of the Investment Advisers Act of 1940 (Advisers Act) and Section 17(a)(2) of the Securities Act and that Bhatt violated Section 17(a)(2) of the Securities Act and caused the violations of Section 206(2) of the Advisers Act by CSAC.
Without admitting or denying the SEC’s findings, CSAM and CSAC consented to the issuance of an order directing each of them to cease and desist from committing or causing any violations, or future violations, of Section 206(2) of the Advisers Act and Section 17(a)(2) of the Securities Act and requiring them to pay disgorgement of $1 million in fees that it received from the Class V III transaction plus $250,000 in prejudgment interest, and requiring them to pay a penalty of $1.25 million. Without admitting or denying the SEC’s findings, Bhatt consented to the issuance of an order directing him to cease and desist from committing or causing any violations or future violations of Section 206(2) of the Advisers Act and Section 17(a)(2) of the Securities Act and suspending him from association with any investment adviser for a period of six months.”
Sunday, October 23, 2011
FLORIDA FUGITIVE ARRESTED AFTER SENDING THREATENING MESSAGES
The following is an excerpt from the U.S. Marshals service website:
“U.S. Marshals Task Force Arrests Wanted Pace Man who Threatened to Kill Wife, Cops
Pace, FL – The U.S. Marshals Florida Regional Fugitive Task Force (FRFTF) from Pensacola apprehended a man who according to police reports said he would kill his wife, her family and law enforcement should they try to stop him. According to a report taken by the Sheriff’s Office in Santa Rosa taken earlier this week James Walter Robinson told his wife, “…tell them cops to come on, I have lots of guns and if they come over here someone is going to die.” Robinson, 34, was advised by a deputy in Santa Rosa to stop sending harassing and threatening messages to his wife from whom he is separated. Robinson reportedly continued to send her messages which included one where he allegedly stated “…I have nothing to lose, game on, I’m packing a .44 Caliber revolver…” Later on that night Robinson supposedly entered his wife’s grandparents home while they slept. It is also reported that Robinson had sent his wife a photo of her parent’s home out of state and said he “…had been outside their house.”
The Task Force received information around noon today that Robinson may be at his father’s house in Pace. Members from the Task Force from Santa Rosa and Okaloosa County Sheriff’s Offices, the State Attorney’s Office, Florida Department of Law Enforcement and Patrol Deputies from Santa Rosa County then converged on the home on the 5000 Block of Todd Street. The Task Force was unable to determine if Robinson was in fact inside the house. During their investigation they also learned that Robinson like to spend a lot of time in the woods behind the home. While trying to determine if Robinson was inside, Task Force members also began concentrating their focus on the woods. Around 4 p.m. Robinson did emerge from those woods and was immediately spotted by officers first and arrested him without any incident. No weapon was found on or near Robinson.
Robinson was booked into the Santa Rosa County Jail on charges of Aggravated Stalking, Cyber Stalking w/Death or Injury, Harassing Communication, Burglary of an Occupied Dwelling, Criminal Mischief and Petty Theft. Robinson has no bond for the Stalking and Harassment charges.”
“U.S. Marshals Task Force Arrests Wanted Pace Man who Threatened to Kill Wife, Cops
Pace, FL – The U.S. Marshals Florida Regional Fugitive Task Force (FRFTF) from Pensacola apprehended a man who according to police reports said he would kill his wife, her family and law enforcement should they try to stop him. According to a report taken by the Sheriff’s Office in Santa Rosa taken earlier this week James Walter Robinson told his wife, “…tell them cops to come on, I have lots of guns and if they come over here someone is going to die.” Robinson, 34, was advised by a deputy in Santa Rosa to stop sending harassing and threatening messages to his wife from whom he is separated. Robinson reportedly continued to send her messages which included one where he allegedly stated “…I have nothing to lose, game on, I’m packing a .44 Caliber revolver…” Later on that night Robinson supposedly entered his wife’s grandparents home while they slept. It is also reported that Robinson had sent his wife a photo of her parent’s home out of state and said he “…had been outside their house.”
The Task Force received information around noon today that Robinson may be at his father’s house in Pace. Members from the Task Force from Santa Rosa and Okaloosa County Sheriff’s Offices, the State Attorney’s Office, Florida Department of Law Enforcement and Patrol Deputies from Santa Rosa County then converged on the home on the 5000 Block of Todd Street. The Task Force was unable to determine if Robinson was in fact inside the house. During their investigation they also learned that Robinson like to spend a lot of time in the woods behind the home. While trying to determine if Robinson was inside, Task Force members also began concentrating their focus on the woods. Around 4 p.m. Robinson did emerge from those woods and was immediately spotted by officers first and arrested him without any incident. No weapon was found on or near Robinson.
Robinson was booked into the Santa Rosa County Jail on charges of Aggravated Stalking, Cyber Stalking w/Death or Injury, Harassing Communication, Burglary of an Occupied Dwelling, Criminal Mischief and Petty Theft. Robinson has no bond for the Stalking and Harassment charges.”
Saturday, October 22, 2011
SUSPECT WHO ALLEGEDLY SEXUALLY ASSAULTED A DISABLED FEMALE OFFENDER IS APPREHENDED
The following excerpt is from the U.S. Marshals Service website:
“On October 6, 2011 the Fond du Lac County Sheriff’s Office requested the assistance of the U.S. Marshals Service in locating and apprehending Rhoades. Rhoades is alleged to have sexually assaulted a disabled female and is a suspect in another sexual assault that occurred on a running trail in the Fond du Lac area.
Investigation by Deputy Marshals led them to concentrate their search in the city of Green Bay. At approximately noon today Rhoades was spotted exiting a local soup kitchen and was taken into custody in the 1200 block of Velp Avenue. Marshal Carr stated that the alleged conduct in this case made Rhoades’ apprehension a priority for his office.
To search for sex offenders in Wisconsin, please visit http://wisconsindoc.familywatchdog.us/ by clicking on the tab indicated as “National Sex Offender Registry”. Searches can be done for all 50 states, the District of Columbia, Puerto Rico, Guam, and Indian Country.
The U.S. Marshals Service is the lead law enforcement agency responsible for investigating sex offender registration violations and related offenses in connection with violations of the Adam Walsh Child Protection and Safety Act. Enacted on July 27, 2006, this Act directed the United States Marshals to assist state, local, tribal and territorial authorities in locating and apprehending non-compliant and fugitive sex offenders. Offenders who are found residing out of state can be charged federally and, often times, those charges carry more severe penalties. To ensure the safety of children across the country, the U.S. Marshals implemented an aggressive enforcement strategy. Since the law was enacted, the United States Marshals have arrested more than 34,000 fugitives for Sex Offenses, Failure to Register and Failure to Comply with Sex Offenders Registration Requirements. This resulted in the closure of more than 42,000 warrants.”
“On October 6, 2011 the Fond du Lac County Sheriff’s Office requested the assistance of the U.S. Marshals Service in locating and apprehending Rhoades. Rhoades is alleged to have sexually assaulted a disabled female and is a suspect in another sexual assault that occurred on a running trail in the Fond du Lac area.
Investigation by Deputy Marshals led them to concentrate their search in the city of Green Bay. At approximately noon today Rhoades was spotted exiting a local soup kitchen and was taken into custody in the 1200 block of Velp Avenue. Marshal Carr stated that the alleged conduct in this case made Rhoades’ apprehension a priority for his office.
To search for sex offenders in Wisconsin, please visit http://wisconsindoc.familywatchdog.us/ by clicking on the tab indicated as “National Sex Offender Registry”. Searches can be done for all 50 states, the District of Columbia, Puerto Rico, Guam, and Indian Country.
The U.S. Marshals Service is the lead law enforcement agency responsible for investigating sex offender registration violations and related offenses in connection with violations of the Adam Walsh Child Protection and Safety Act. Enacted on July 27, 2006, this Act directed the United States Marshals to assist state, local, tribal and territorial authorities in locating and apprehending non-compliant and fugitive sex offenders. Offenders who are found residing out of state can be charged federally and, often times, those charges carry more severe penalties. To ensure the safety of children across the country, the U.S. Marshals implemented an aggressive enforcement strategy. Since the law was enacted, the United States Marshals have arrested more than 34,000 fugitives for Sex Offenses, Failure to Register and Failure to Comply with Sex Offenders Registration Requirements. This resulted in the closure of more than 42,000 warrants.”
Friday, October 21, 2011
THREE ARRESTED FOR ALLEGEDLY IMPERSONATING FEDERAL LAW ENFORCEMENT OFFICERS
The following is from the U.S. Marshal website:
"Youngstown, OH – Peter J. Elliott, United States Marshal for the Northern District of Ohio, is announcing the arrests of three individuals who are suspected of impersonating federal law enforcement officers. On July 27, 2011 witnesses observed several subjects in downtown Youngstown wearing clothing and badges that identified them as “Special Police Constables” for the United States Government. The U.S. Marshals Service was contacted and an investigation was initiated.
As a result of the investigation the United States Attorney’s Office for the Northern District of Ohio secured indictments for Leroy Dock, Milton Willis, and Quin Willis charging them with Impersonation of a Federal Law Enforcement Officer.
The indictment alleges that beginning around June 2009 these subjects portrayed themselves as federal law enforcement officers and possessed badges, identifications, and other law enforcement type clothing and equipment. All three subjects have previously been investigated by the Boardman and Youngstown Police Departments for offenses relating to the impersonation of police officers.
On October 20, 2011, at approximately 6:30 p.m., the U.S. Marshals Northern Ohio Violent Fugitive Task Force arrested the three subjects at various locations in Youngstown and Boardman. The U.S. Marshals Service was assisted by the Boardman Police Department, the Youngstown Police Department, the Federal Bureau of Investigation and the Defense Criminal Investigation Service.
U.S. Marshal Pete Elliott stated, “These are serious allegations and the community should be comforted to know that we will pursue anyone that violates the trust of the public by falsely portraying themselves as law enforcement officers.”
Anyone with information regarding the whereabouts of a known fugitive is encouraged to contact the U.S. Marshals Northern Ohio Violent Fugitive Task Force at: 1-866-4-WANTED. Callers may remain anonymous and reward money is available.
The Northern Ohio Violent Fugitive Task Force in the greater Warren/Youngstown area is composed of the following federal, state and local agencies: Boardman Township Police Department, Bureau of Immigration and Customs Enforcement, Columbiana County Sheriff’s Office, Dalton Police Department, East Liverpool Police Department, Girard Police Department, Goshen Township Police Department, Hubbard Township Police Department, Liberty Township Police Department, Lisbon Police Department, Lordstown Police Department, McDonald Police Department, New Waterford Police Department, Newton Falls Police Department, Niles Police Department, Ohio Adult Parole Authority, Ohio Bureau of Criminal Identification, Ohio State Highway Patrol, Salem Police Department, Trumbull County Probation Office, Trumbull County Sheriff’s Office, U.S. Marshals Service, Warren Municipal Courts, Warren Police Department, Washingtonville Police Department, Weathersfield Township Police Department, and the Youngstown Police Department."
"Youngstown, OH – Peter J. Elliott, United States Marshal for the Northern District of Ohio, is announcing the arrests of three individuals who are suspected of impersonating federal law enforcement officers. On July 27, 2011 witnesses observed several subjects in downtown Youngstown wearing clothing and badges that identified them as “Special Police Constables” for the United States Government. The U.S. Marshals Service was contacted and an investigation was initiated.
As a result of the investigation the United States Attorney’s Office for the Northern District of Ohio secured indictments for Leroy Dock, Milton Willis, and Quin Willis charging them with Impersonation of a Federal Law Enforcement Officer.
The indictment alleges that beginning around June 2009 these subjects portrayed themselves as federal law enforcement officers and possessed badges, identifications, and other law enforcement type clothing and equipment. All three subjects have previously been investigated by the Boardman and Youngstown Police Departments for offenses relating to the impersonation of police officers.
On October 20, 2011, at approximately 6:30 p.m., the U.S. Marshals Northern Ohio Violent Fugitive Task Force arrested the three subjects at various locations in Youngstown and Boardman. The U.S. Marshals Service was assisted by the Boardman Police Department, the Youngstown Police Department, the Federal Bureau of Investigation and the Defense Criminal Investigation Service.
U.S. Marshal Pete Elliott stated, “These are serious allegations and the community should be comforted to know that we will pursue anyone that violates the trust of the public by falsely portraying themselves as law enforcement officers.”
Anyone with information regarding the whereabouts of a known fugitive is encouraged to contact the U.S. Marshals Northern Ohio Violent Fugitive Task Force at: 1-866-4-WANTED. Callers may remain anonymous and reward money is available.
The Northern Ohio Violent Fugitive Task Force in the greater Warren/Youngstown area is composed of the following federal, state and local agencies: Boardman Township Police Department, Bureau of Immigration and Customs Enforcement, Columbiana County Sheriff’s Office, Dalton Police Department, East Liverpool Police Department, Girard Police Department, Goshen Township Police Department, Hubbard Township Police Department, Liberty Township Police Department, Lisbon Police Department, Lordstown Police Department, McDonald Police Department, New Waterford Police Department, Newton Falls Police Department, Niles Police Department, Ohio Adult Parole Authority, Ohio Bureau of Criminal Identification, Ohio State Highway Patrol, Salem Police Department, Trumbull County Probation Office, Trumbull County Sheriff’s Office, U.S. Marshals Service, Warren Municipal Courts, Warren Police Department, Washingtonville Police Department, Weathersfield Township Police Department, and the Youngstown Police Department."
WOMAN INVOLVED IN STAGED KIDNAPPING SCHEME IN GUATEMALA GETS 24 MONTHS IN PRISON
The following is an excerpt from the Department of Justice website:
Friday, October 21, 2011
“WASHINGTON – A Virginia woman was sentenced today to 24 months in prison for her role in an extortion scheme involving a staged kidnapping in Guatemala, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and John V. Gillies, Special Agent in Charge of the FBI’s Miami Division.
Sheena Flores, 34, of Manassas, Va., was sentenced by U.S. District Judge Gerald Bruce Lee in the Eastern District of Virginia. Flores pleaded guilty in August 2011 to one count of transmitting in foreign commerce, with intent to extort money, a communication containing a threat to injure another person. Judge Lee also sentenced Flores to three years of supervised release to follow her prison term and ordered her to pay $3,000 in restitution.
According to court documents, in July 2010, Flores was living in Guatemala with a child under the age of two who was born in Guatemala. Although Flores had no legal custody rights over the child, Flores had been taking care of the child in Guatemala while her husband was making arrangements to legally bring the child to the United States to live with him and Flores.
On July 6, 2010, from Guatemala, Flores contacted a family member in Manassas by telephone and reported that she and the child had been kidnapped by three men and that the men wanted $5,000 in two hours or they were going to kill Flores and the child. At the time that Flores reported the kidnapping and the ransom demands, Flores was attempting to extort money from her family with a hoax kidnapping and false threats, as she and the child had not been kidnapped.
Upon learning of the kidnapping and believing it to be true, the Flores’ family member called law enforcement authorities in Virginia. Shortly thereafter, FBI agents began investigating the kidnapping and members of the FBI’s Crisis Incident Response Group were dispatched to the family member’s house to monitor the situation and assist the family in negotiating with the kidnappers.
Also on July 6, 2010, Flores’ husband, who was in Manassas, received numerous text messages from Flores’ cellular phone in Guatemala, which repeatedly threatened that Flores and the child would be killed if he did not pay $10,000 in ransom by the next day. Believing that his wife and the child had in fact been kidnapped, Flores’ husband wired a partial ransom payment to Guatemala.
According to court documents, Flores enlisted the help of two men whom she believed were members of the violent gang MS-13 to help carry out the fake kidnapping. Flores and the child were found on July 13, 2010, with the assistance of Guatemalan police.
The case is being prosecuted by Assistant U.S. Attorney Rebeca H. Bellows for the Eastern District of Virginia and Trial Attorney James S. Yoon of the Criminal Division’s Human Rights and Special Prosecutions Section. The Criminal Division’s Office of International Affairs provided assistance.
The case was investigated by the FBI’s Miami Division Extraterritorial Squad, with support from the FBI Legal Attaché Office in San Salvador, El Salvador, and the FBI Transnational Anti-Gang Task Force in Guatemala.”
Friday, October 21, 2011
“WASHINGTON – A Virginia woman was sentenced today to 24 months in prison for her role in an extortion scheme involving a staged kidnapping in Guatemala, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and John V. Gillies, Special Agent in Charge of the FBI’s Miami Division.
Sheena Flores, 34, of Manassas, Va., was sentenced by U.S. District Judge Gerald Bruce Lee in the Eastern District of Virginia. Flores pleaded guilty in August 2011 to one count of transmitting in foreign commerce, with intent to extort money, a communication containing a threat to injure another person. Judge Lee also sentenced Flores to three years of supervised release to follow her prison term and ordered her to pay $3,000 in restitution.
According to court documents, in July 2010, Flores was living in Guatemala with a child under the age of two who was born in Guatemala. Although Flores had no legal custody rights over the child, Flores had been taking care of the child in Guatemala while her husband was making arrangements to legally bring the child to the United States to live with him and Flores.
On July 6, 2010, from Guatemala, Flores contacted a family member in Manassas by telephone and reported that she and the child had been kidnapped by three men and that the men wanted $5,000 in two hours or they were going to kill Flores and the child. At the time that Flores reported the kidnapping and the ransom demands, Flores was attempting to extort money from her family with a hoax kidnapping and false threats, as she and the child had not been kidnapped.
Upon learning of the kidnapping and believing it to be true, the Flores’ family member called law enforcement authorities in Virginia. Shortly thereafter, FBI agents began investigating the kidnapping and members of the FBI’s Crisis Incident Response Group were dispatched to the family member’s house to monitor the situation and assist the family in negotiating with the kidnappers.
Also on July 6, 2010, Flores’ husband, who was in Manassas, received numerous text messages from Flores’ cellular phone in Guatemala, which repeatedly threatened that Flores and the child would be killed if he did not pay $10,000 in ransom by the next day. Believing that his wife and the child had in fact been kidnapped, Flores’ husband wired a partial ransom payment to Guatemala.
According to court documents, Flores enlisted the help of two men whom she believed were members of the violent gang MS-13 to help carry out the fake kidnapping. Flores and the child were found on July 13, 2010, with the assistance of Guatemalan police.
The case is being prosecuted by Assistant U.S. Attorney Rebeca H. Bellows for the Eastern District of Virginia and Trial Attorney James S. Yoon of the Criminal Division’s Human Rights and Special Prosecutions Section. The Criminal Division’s Office of International Affairs provided assistance.
The case was investigated by the FBI’s Miami Division Extraterritorial Squad, with support from the FBI Legal Attaché Office in San Salvador, El Salvador, and the FBI Transnational Anti-Gang Task Force in Guatemala.”
OWNER OF HEALTH CARE COMAPNY GOES TO PRISON FOR MEDICARE FRAUD SCHEME
The following excerpt is from the Department of Justice website:
Wednesday, October 12, 2011
“WASHINGTON – The owner and operator of a Houston durable medical equipment (DME) company was sentenced yesterday in Houston federal court to 33 months in prison for his role in a Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Bassey Monday Idiong, 32, of Humble, Texas, was sentenced by U.S. District Judge Vanessa D. Gilmore. In addition to his prison term, Idiong was sentenced to two years of supervised release and was ordered to pay $527,023 in restitution.
Idiong pleaded guilty on March 1, 2010, to one count of conspiracy to commit health care fraud and five counts of health care fraud. Idiong owned and operated B.I. Medical Supply LLC.
According to court documents, Idiong paid patient recruiters kickbacks in exchange for the names of beneficiaries for whom bills could be submitted to Medicare. B.I. Medical billed Medicare for expensive, rigid orthotics and braces that were packaged together and referred to as an “arthritis kit,” at a cost of approximately $4,000 per kit. B.I. Medical then supplied the beneficiaries with different, less expensive products that were not medically necessary. Court documents indicate that in one instance, B.I. Medical billed Medicare for an arthritis kit that included two knee braces for a beneficiary who had only one leg. In total, B.I. Medical submitted approximately $846,000 in fraudulent claims to Medicare.
The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent-In-Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG), Office of Investigations; Joseph J. Del Favero, Special Agent-in-Charge of the Chicago Field Office of the Railroad Retirement Board Office of Inspector General; and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The case was prosecuted by Trial Attorneys Laura Cordova, Katherine Houston and Jennifer Saulino of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.”
Wednesday, October 12, 2011
“WASHINGTON – The owner and operator of a Houston durable medical equipment (DME) company was sentenced yesterday in Houston federal court to 33 months in prison for his role in a Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Bassey Monday Idiong, 32, of Humble, Texas, was sentenced by U.S. District Judge Vanessa D. Gilmore. In addition to his prison term, Idiong was sentenced to two years of supervised release and was ordered to pay $527,023 in restitution.
Idiong pleaded guilty on March 1, 2010, to one count of conspiracy to commit health care fraud and five counts of health care fraud. Idiong owned and operated B.I. Medical Supply LLC.
According to court documents, Idiong paid patient recruiters kickbacks in exchange for the names of beneficiaries for whom bills could be submitted to Medicare. B.I. Medical billed Medicare for expensive, rigid orthotics and braces that were packaged together and referred to as an “arthritis kit,” at a cost of approximately $4,000 per kit. B.I. Medical then supplied the beneficiaries with different, less expensive products that were not medically necessary. Court documents indicate that in one instance, B.I. Medical billed Medicare for an arthritis kit that included two knee braces for a beneficiary who had only one leg. In total, B.I. Medical submitted approximately $846,000 in fraudulent claims to Medicare.
The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent-In-Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG), Office of Investigations; Joseph J. Del Favero, Special Agent-in-Charge of the Chicago Field Office of the Railroad Retirement Board Office of Inspector General; and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The case was prosecuted by Trial Attorneys Laura Cordova, Katherine Houston and Jennifer Saulino of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.”
Thursday, October 20, 2011
THREE INDICTED FOR ALLEGED PROCUREMENT FRAUD INVOLVING FOREIGN MILITARY MATERIALS
The following excerpt is from the Department of Justice website:
Wednesday, October 12, 2011
“WASHINGTON — Three individuals were charged in an indictment returned today by a federal grand jury in Utah for their alleged roles in a bribery and fraud scheme involving federal procurement contracts, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow for the District of Utah.
The four-count indictment returned today in U.S. District Court in Salt Lake City charges Sylvester Zugrav, 68, and Maria Zugrav, 66, both of Sarasota, Fla., and Jose Mendez, 49, of Farr West, Utah, with conspiracy to commit bribery and procurement fraud. The Zugravs and Mendez also are each charged with bribery. In addition, Mendez is charged with procurement fraud.
According to the indictment, Mendez worked as a program manager for the U.S. Air Force Foreign Materials Acquisition Support Office (FMASO). The mission of FMASO is to purchase foreign military materials on behalf of their customers, which are various U.S. military divisions. The materials are acquired outside of the United States by third party companies, or vendors, and then purchased by FMASO on behalf of its customers. There are a limited number of vendors permitted to contract for the sale of foreign materials to FMASO, one of which is Atlas International Trading Corporation (Atlas). According to the indictment, Sylvester and Maria Zugrav were the principals of Atlas.
According to the indictment, the Zugravs and Mendez conspired to enrich one another by exchanging money and other things of value for non-public information and favorable treatment in the procurement process. The Zugravs allegedly offered Mendez approximately $1,240,500 in payments and other things of value throughout the course of the conspiracy. The Zugravs allegedly made bribe payments to Mendez in three different ways: cash payments via FedEx to Mendez’s home address; in-person payments of cash and other things of value; and electronic wire transfers to a bank account in Mexico opened by and in the name of Mendez’s cousin. According to the indictment, from approximately 2008 to August 2011, the Zugravs gave Mendez and a person close to him more than $185,000 in payments and other things of value, with promises of additional bribe payments if Atlas were to receive future contracts for the sale of foreign materials to FMASO customers.
In return for the bribes offered and paid, Mendez allegedly gave Atlas and the Zugravs favorable treatment during the FMASO procurement process, including disclosing government budget and competitor bid information, which helped Atlas and the Zugravs in winning FMASO contracts.
According to the indictment, Mendez and Sylvester Zugrav allegedly communicated offers and requests for bribes in person and through email, and took steps to conceal their activity, using covert email addresses, password-protected computer documents, code words and false names. Within the encrypted documents, Mendez adopted the name “Chuco” and Sylvester Zugrav used the name “Jugo,” and they referred to cash as “literature.”
The Zugravs and Mendez each are charged with one count of conspiracy to commit bribery and procurement fraud, and one count of bribery. Mendez is also charged with one count of procurement fraud for disclosing non-public information to a separate FMASO vendor other than Atlas.
The maximum penalty for conspiracy is five years in prison and a $250,000 fine. The maximum penalty for procurement fraud is five years in prison and a $250,000 fine, while the maximum penalty for bribery is 15 years in prison and a $250,000 fine, or three times the monetary equivalent of the thing of value, whichever is greater. The indictment also seeks forfeiture from all three defendants, if convicted.
An indictment is merely an allegation and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the FBI and the Air Force Office of Special Investigations, Office of Special Projects. The case is being prosecuted by Trial Attorneys Marquest J. Meeks and Edward P. Sullivan of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Carlos A. Esqueda for the District of Utah.”
Wednesday, October 12, 2011
“WASHINGTON — Three individuals were charged in an indictment returned today by a federal grand jury in Utah for their alleged roles in a bribery and fraud scheme involving federal procurement contracts, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow for the District of Utah.
The four-count indictment returned today in U.S. District Court in Salt Lake City charges Sylvester Zugrav, 68, and Maria Zugrav, 66, both of Sarasota, Fla., and Jose Mendez, 49, of Farr West, Utah, with conspiracy to commit bribery and procurement fraud. The Zugravs and Mendez also are each charged with bribery. In addition, Mendez is charged with procurement fraud.
According to the indictment, Mendez worked as a program manager for the U.S. Air Force Foreign Materials Acquisition Support Office (FMASO). The mission of FMASO is to purchase foreign military materials on behalf of their customers, which are various U.S. military divisions. The materials are acquired outside of the United States by third party companies, or vendors, and then purchased by FMASO on behalf of its customers. There are a limited number of vendors permitted to contract for the sale of foreign materials to FMASO, one of which is Atlas International Trading Corporation (Atlas). According to the indictment, Sylvester and Maria Zugrav were the principals of Atlas.
According to the indictment, the Zugravs and Mendez conspired to enrich one another by exchanging money and other things of value for non-public information and favorable treatment in the procurement process. The Zugravs allegedly offered Mendez approximately $1,240,500 in payments and other things of value throughout the course of the conspiracy. The Zugravs allegedly made bribe payments to Mendez in three different ways: cash payments via FedEx to Mendez’s home address; in-person payments of cash and other things of value; and electronic wire transfers to a bank account in Mexico opened by and in the name of Mendez’s cousin. According to the indictment, from approximately 2008 to August 2011, the Zugravs gave Mendez and a person close to him more than $185,000 in payments and other things of value, with promises of additional bribe payments if Atlas were to receive future contracts for the sale of foreign materials to FMASO customers.
In return for the bribes offered and paid, Mendez allegedly gave Atlas and the Zugravs favorable treatment during the FMASO procurement process, including disclosing government budget and competitor bid information, which helped Atlas and the Zugravs in winning FMASO contracts.
According to the indictment, Mendez and Sylvester Zugrav allegedly communicated offers and requests for bribes in person and through email, and took steps to conceal their activity, using covert email addresses, password-protected computer documents, code words and false names. Within the encrypted documents, Mendez adopted the name “Chuco” and Sylvester Zugrav used the name “Jugo,” and they referred to cash as “literature.”
The Zugravs and Mendez each are charged with one count of conspiracy to commit bribery and procurement fraud, and one count of bribery. Mendez is also charged with one count of procurement fraud for disclosing non-public information to a separate FMASO vendor other than Atlas.
The maximum penalty for conspiracy is five years in prison and a $250,000 fine. The maximum penalty for procurement fraud is five years in prison and a $250,000 fine, while the maximum penalty for bribery is 15 years in prison and a $250,000 fine, or three times the monetary equivalent of the thing of value, whichever is greater. The indictment also seeks forfeiture from all three defendants, if convicted.
An indictment is merely an allegation and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the FBI and the Air Force Office of Special Investigations, Office of Special Projects. The case is being prosecuted by Trial Attorneys Marquest J. Meeks and Edward P. Sullivan of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Carlos A. Esqueda for the District of Utah.”
ANOTHER GUILTY PLEA IN HOMEOWNER’S ASSOCIATION CONDO CONTROL SCHEME
The following excerpt is from the Department of Justice website:
Tuesday, October 11, 2011
“Fifth Guilty Plea in Connection with Scheme to Fraudulently Control Condominium Homeowners' Associations
WASHINGTON – A Las Vegas woman pleaded guilty today for her role in a scheme to fraudulently gain control of condominium homeowners’ associations (HOA) in the Las Vegas area so that the HOAs would direct business to a certain law firm and construction company, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, Special Agent in Charge Kevin Favreau of the FBI Las Vegas Field Office, Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department and Special Agent in Charge Paul Camacho of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Angela Esparza, 24, pleaded guilty before U.S. District Judge Philip M. Pro in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Esparza is the fifth person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area.
Esparza admitted that from approximately July 2006 until February 2009, she participated in a scheme to control various HOA boards of directors so that the HOA boards would award the handling of construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Esparza’s co-conspirators.
According to plea documents, to accomplish the scheme, co-conspirators used straw purchasers to obtain mortgage loans for units within HOA communities. In October 2006, Esparza agreed to act as a straw purchaser at Terrasini, an HOA community. In fact, Esparza’s co-conspirators provided the down payments and monthly payments, including HOA dues and mortgage payments, for this property and were the true owners. Esparza admitted that she signed and submitted a false and fraudulent loan application and closing document to a financial institution to finance and close on this property on behalf of her co-conspirators. Esparza admitted that at the direction of co-conspirators, she used her position at a mortgage company to help process other co-conspirators’ loan applications.
Court documents indicate that the straw purchasers and those who acquired an interest in a unit agreed to run for election to the respective HOA boards. These co-conspirators were paid in cash, check or promised things of value for their participation, all of which resulted in a personal financial benefit to the co-conspirators. Esparza admitted that in November 2007, she ran for election to the Terrasini HOA board, although she was not elected.
Esparza admitted that she and her co-conspirators employed deceitful tactics in their attempts to win the board elections, including creating false phone surveys to gather information about homeowners’ voting intentions, using mailing lists to vote on behalf of out-of-town homeowners unlikely to participate in the elections, and submitting fake and forged ballots. Co-conspirators also hired private investigators to find “dirt” on the bona fide candidates in order to create smear campaigns. Esparza admitted that she created fake ballots and campaign flyers for co-conspirator candidates. Esparza also admitted that she assisted in mailing and tracking forged ballots for out-of-town homeowners.
According to plea documents, c o-conspirators also attempted to create the appearance that the elections were legitimate by hiring independent attorneys, or “special election masters,” to run the HOA board elections. However, these individuals were paid in cash, check and promised things of value, by or on behalf of Esparza’s co-conspirators for their assistance in rigging the elections. Esparza admitted that on several occasions, she was provided access to the special election master’s office to preview the election ballots, and that she also took several ballots that had been mailed by bona fide homeowners so that they were not counted during the election.
Court documents indicate that, once elected, the co-conspirator board members would meet with other co-conspirators to manipulate board votes, including the selection of property managers, contractors and general counsel for the HOA and attorneys to represent the HOA. The co-conspirators created and submitted fake bids for “competitors” to make the process appear to be legitimate while ensuring co-conspirators were awarded contracts.
Esparza admitted that, at the direction of her co-conspirators, she worked at two property management companies. Esparza and other co-conspirator property managers breached their fiduciary duties by receiving and accepting cash, checks or things of value for using their positions to gain inside information and recommend that the HOA board hire a co-conspirator for remediation and construction defect repairs and another co-conspirator for the construction defect litigation.
Esparza’s sentencing is scheduled for Jan. 23, 2011. The maximum sentence for conspiracy to commit mail fraud and wire fraud is 30 years in prison.
The case is being prosecuted by Deputy Chief Charles La Bella and Trial Attorneys Nicole H. Sprinzen and Mary Ann McCarthy of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, IRS-CI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.”
Tuesday, October 11, 2011
“Fifth Guilty Plea in Connection with Scheme to Fraudulently Control Condominium Homeowners' Associations
WASHINGTON – A Las Vegas woman pleaded guilty today for her role in a scheme to fraudulently gain control of condominium homeowners’ associations (HOA) in the Las Vegas area so that the HOAs would direct business to a certain law firm and construction company, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, Special Agent in Charge Kevin Favreau of the FBI Las Vegas Field Office, Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department and Special Agent in Charge Paul Camacho of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Angela Esparza, 24, pleaded guilty before U.S. District Judge Philip M. Pro in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Esparza is the fifth person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area.
Esparza admitted that from approximately July 2006 until February 2009, she participated in a scheme to control various HOA boards of directors so that the HOA boards would award the handling of construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Esparza’s co-conspirators.
According to plea documents, to accomplish the scheme, co-conspirators used straw purchasers to obtain mortgage loans for units within HOA communities. In October 2006, Esparza agreed to act as a straw purchaser at Terrasini, an HOA community. In fact, Esparza’s co-conspirators provided the down payments and monthly payments, including HOA dues and mortgage payments, for this property and were the true owners. Esparza admitted that she signed and submitted a false and fraudulent loan application and closing document to a financial institution to finance and close on this property on behalf of her co-conspirators. Esparza admitted that at the direction of co-conspirators, she used her position at a mortgage company to help process other co-conspirators’ loan applications.
Court documents indicate that the straw purchasers and those who acquired an interest in a unit agreed to run for election to the respective HOA boards. These co-conspirators were paid in cash, check or promised things of value for their participation, all of which resulted in a personal financial benefit to the co-conspirators. Esparza admitted that in November 2007, she ran for election to the Terrasini HOA board, although she was not elected.
Esparza admitted that she and her co-conspirators employed deceitful tactics in their attempts to win the board elections, including creating false phone surveys to gather information about homeowners’ voting intentions, using mailing lists to vote on behalf of out-of-town homeowners unlikely to participate in the elections, and submitting fake and forged ballots. Co-conspirators also hired private investigators to find “dirt” on the bona fide candidates in order to create smear campaigns. Esparza admitted that she created fake ballots and campaign flyers for co-conspirator candidates. Esparza also admitted that she assisted in mailing and tracking forged ballots for out-of-town homeowners.
According to plea documents, c o-conspirators also attempted to create the appearance that the elections were legitimate by hiring independent attorneys, or “special election masters,” to run the HOA board elections. However, these individuals were paid in cash, check and promised things of value, by or on behalf of Esparza’s co-conspirators for their assistance in rigging the elections. Esparza admitted that on several occasions, she was provided access to the special election master’s office to preview the election ballots, and that she also took several ballots that had been mailed by bona fide homeowners so that they were not counted during the election.
Court documents indicate that, once elected, the co-conspirator board members would meet with other co-conspirators to manipulate board votes, including the selection of property managers, contractors and general counsel for the HOA and attorneys to represent the HOA. The co-conspirators created and submitted fake bids for “competitors” to make the process appear to be legitimate while ensuring co-conspirators were awarded contracts.
Esparza admitted that, at the direction of her co-conspirators, she worked at two property management companies. Esparza and other co-conspirator property managers breached their fiduciary duties by receiving and accepting cash, checks or things of value for using their positions to gain inside information and recommend that the HOA board hire a co-conspirator for remediation and construction defect repairs and another co-conspirator for the construction defect litigation.
Esparza’s sentencing is scheduled for Jan. 23, 2011. The maximum sentence for conspiracy to commit mail fraud and wire fraud is 30 years in prison.
The case is being prosecuted by Deputy Chief Charles La Bella and Trial Attorneys Nicole H. Sprinzen and Mary Ann McCarthy of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, IRS-CI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.”
Wednesday, October 19, 2011
October 11, 2011
MERGER AND AN ALLEGED INSIDE TRADING SCHEME IN HEWITT ASSOCIATES STOCK
The following is an excerpt from the SEC website:
“The Securities and Exchange Commission today filed a civil injunctive action in the U.S. District Court for the Northern District of Illinois charging M. Jason Hanold, a former managing director at an executive search firm in Chicago, with illegal insider trading in Hewitt Associates stock in advance of the July 12, 2010 public announcement of a merger agreement between Aon and Hewitt Associates.
The SEC alleges that on July 7, Hanold bought shares of Hewitt Associates stock after learning of the impending merger from his wife, who was an executive at Aon at the time. He did so despite requests from his wife that he keep this nonpublic information confidential.
According to the SEC’s complaint, Hanold’s wife learned on or about July 6, 2010 that Aon and Hewitt Associates had reached a merger agreement and that a public announcement was imminent. Hanold’s wife shared this information with Hanold in a telephone call that evening. Shortly after the call ended, Hanold’s wife sent him two emails in which she requested that he not share this information. Hanold replied, “I won’t, no need. I only wish we bought their stock!!!” The next day, July 7, 2010, Hanold purchased 831 shares of Hewitt Associate’s stock in advance of the July 12, 2010 public announcement of the agreement between Hewitt Associates and Aon. The announcement caused Hewitt Associates’ stock price to increase by more than 32%. Hanold sold all of his shares on July 12, 2010 for a profit of $10,241.
Without admitting or denying the allegations in the complaint, except as to jurisdiction, Hanold has consented to entry of a final judgment that permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Hanold has also consented to pay $20,766 in disgorgement, prejudgment interest and civil penalties. The settlement is subject to approval by the court.
James G. O’Keefe conducted the SEC’s investigation in this matter. The Commission acknowledges the assistance of FINRA in this investigation.”
MERGER AND AN ALLEGED INSIDE TRADING SCHEME IN HEWITT ASSOCIATES STOCK
The following is an excerpt from the SEC website:
“The Securities and Exchange Commission today filed a civil injunctive action in the U.S. District Court for the Northern District of Illinois charging M. Jason Hanold, a former managing director at an executive search firm in Chicago, with illegal insider trading in Hewitt Associates stock in advance of the July 12, 2010 public announcement of a merger agreement between Aon and Hewitt Associates.
The SEC alleges that on July 7, Hanold bought shares of Hewitt Associates stock after learning of the impending merger from his wife, who was an executive at Aon at the time. He did so despite requests from his wife that he keep this nonpublic information confidential.
According to the SEC’s complaint, Hanold’s wife learned on or about July 6, 2010 that Aon and Hewitt Associates had reached a merger agreement and that a public announcement was imminent. Hanold’s wife shared this information with Hanold in a telephone call that evening. Shortly after the call ended, Hanold’s wife sent him two emails in which she requested that he not share this information. Hanold replied, “I won’t, no need. I only wish we bought their stock!!!” The next day, July 7, 2010, Hanold purchased 831 shares of Hewitt Associate’s stock in advance of the July 12, 2010 public announcement of the agreement between Hewitt Associates and Aon. The announcement caused Hewitt Associates’ stock price to increase by more than 32%. Hanold sold all of his shares on July 12, 2010 for a profit of $10,241.
Without admitting or denying the allegations in the complaint, except as to jurisdiction, Hanold has consented to entry of a final judgment that permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Hanold has also consented to pay $20,766 in disgorgement, prejudgment interest and civil penalties. The settlement is subject to approval by the court.
James G. O’Keefe conducted the SEC’s investigation in this matter. The Commission acknowledges the assistance of FINRA in this investigation.”
Tuesday, October 18, 2011
FDA CHEMIST PLEADS GUILTY TO GETTING RICH TRADING PHARMACEUTICAL STOCKS
The following excerpt is from the Department of Justice website:
Tuesday, October 18, 2011
FDA Chemist Pleads Guilty to Using Insider Information to Trade on Pharmaceutical Stocks Resulting in Almost $4 Million in Profits
Failed to Disclose the Illicit Profits on Financial Forms
“WASHINGTON – A Food and Drug Administration (FDA) chemist pleaded guilty today before U.S. District Court Judge Deborah K. Chasanow in the District of Maryland to one count of securities fraud and one count of making false statements, related to a $3.7 million insider trading scheme that spanned nearly five years.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Elton Malone, Special Agent in Charge of the Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Special Investigations Branch.
According to court documents and statements made during court proceedings, Cheng Yi Liang, 57, of Gaithersburg, Md., has been employed as a chemist since 1996 at the FDA’s Office of New Drug Quality Assessment (NDQA). Through his work at NDQA, Liang had access to the FDA’s password-protected internal tracking system for new drug applications, known as the Document Archiving, Reporting and Regulatory Tracking System (DARRTS), which is used to manage, track, receive and report on new drug applications. Liang reviewed DARRTS for information relating to the progression of experimental drugs through the FDA approval process. Much of the information accessible on the DARRTS system constituted material, non-public information regarding pharmaceutical companies that had submitted their experimental drugs to the FDA for review.
“Mr. Liang used inside information about pharmaceutical companies – information he had access to solely because of his position at the FDA – to pocket millions in illicit profits,” said Assistant Attorney General Breuer. “In a shocking abuse of trust, Mr. Liang exploited his position as a chemist in the FDA’s Office of New Drug Quality Assessment to cash in, using the accounts of relatives and acquaintances to hide his illegal trading. Now, like many others on Wall Street and elsewhere, he is facing the significant consequences of trading stocks on inside information.”
“Those who use privileged and valuable information for personal gain, break the trust placed in them as a government employee and the integrity of the research they conduct on behalf of the U.S. government,” said Assistant Director in Charge McJunkin of the FBI’s Washington Field Office. “This case is the result of long hours and hard work by the FBI and HHS-OIG Special Agents who are tasked with enforcing laws and regulations designed to ensure the fair operation of our financial markets.”
“Profiting based on sensitive, insider information is not only illegal, but taints the image of thousands of hard-working government employees,” said Special Agent in Charge Malone of the HHS-OIG Special Investigations Branch. “We will continue to insist that federal government employee conduct be held to the highest of standards.”
Liang admitted that from approximately July 2006 through March 2011, he used the inside information he learned from DARRTS and other sources to trade in the securities of pharmaceutical companies. Liang used accounts of relatives, including his son, and acquaintances to execute the trades (referred to as the controlled accounts). When the inside information was positive about a company’s product, Liang used the controlled accounts to purchase securities. When the inside information was negative, Liang would make trades in anticipation of the stocks’ downward movement. Liang admitted that he used these controlled accounts to execute trades to profit from the change in the company’s share price after the FDA’s action was made public, resulting in total profits and losses avoided of more than $3.7 million.
For example, on May 21, 2010, the FDA accepted Clinical Data Inc.’s application for Viibryd, an anti-depressant. According to court documents, on Jan. 6, 2011, HHS-OIG installed software on Liang’s work computer, allowing it to collect screen shots from that computer, which revealed Liang regularly accessed the DARRTS system and reviewed information regarding Clinical Data’s drug Viibryd. Between Jan. 6, 2011, and Jan. 20, 2011, Liang purchased a total of 46,875 shares of Clinical Data stock using the controlled accounts. After the markets closed on Friday, Jan. 21, 2011, news of the FDA’s approval of Viibryd was reported. Clinical Data’s stock, which had closed that day at approximately $15.03 per share opened the following Monday, Jan. 24, 2011, at approximately $24.76 per share. Liang then sold all 46,875 shares of Clinical Data stock in the controlled accounts, netting a total profit of approximately $384,300.
During the time he was employed by the FDA, Mr. Liang was required to file a Confidential Financial Disclosure form disclosing, among other things, investment assets with a value greater than $1,000 and sources of income greater than $200. During the time period of his insider trading scheme, Liang annually filed these forms and failed to disclose using the controlled accounts or his income from the illicit securities trading.
Sentencing is scheduled for Jan. 9, 2012, at 12:30 p.m. The maximum penalty for the securities fraud count is 20 years in prison and a fine of $5 million, or twice the gross gain from the offense. The maximum penalty for the false statement count is five years in prison and a fine of $250,000.
As part of his plea agreement, Liang has agreed to forfeit $3,776,152, including a home and condominium in Montgomery County, Md., along with funds held in 10 bank or investment accounts.
The U.S. Securities and Exchange Commission (SEC) is currently pursuing civil charges against Liang and several accounts he controlled. That action is still pending.
This case is being prosecuted by Trial Attorneys Kevin Muhlendorf and Thomas Hall of the Criminal Division’s Fraud Section, Assistant U.S. Attorney David Salem for the District of Maryland and Senior Trial Attorney Pamela J. Hicks of the Criminal Division’s Asset Forfeiture and Money Laundering Section. The case was investigated by the FBI’s Washington Field Office and the HHS-OIG.
This case is an example of the close coordination between the Department of Justice and the SEC. The department recognizes the substantial assistance of the SEC, specifically the Market Abuse Unit of the SEC’s Enforcement Division, which conducted its own investigation and referred the conduct to the department“.
Tuesday, October 18, 2011
FDA Chemist Pleads Guilty to Using Insider Information to Trade on Pharmaceutical Stocks Resulting in Almost $4 Million in Profits
Failed to Disclose the Illicit Profits on Financial Forms
“WASHINGTON – A Food and Drug Administration (FDA) chemist pleaded guilty today before U.S. District Court Judge Deborah K. Chasanow in the District of Maryland to one count of securities fraud and one count of making false statements, related to a $3.7 million insider trading scheme that spanned nearly five years.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Elton Malone, Special Agent in Charge of the Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Special Investigations Branch.
According to court documents and statements made during court proceedings, Cheng Yi Liang, 57, of Gaithersburg, Md., has been employed as a chemist since 1996 at the FDA’s Office of New Drug Quality Assessment (NDQA). Through his work at NDQA, Liang had access to the FDA’s password-protected internal tracking system for new drug applications, known as the Document Archiving, Reporting and Regulatory Tracking System (DARRTS), which is used to manage, track, receive and report on new drug applications. Liang reviewed DARRTS for information relating to the progression of experimental drugs through the FDA approval process. Much of the information accessible on the DARRTS system constituted material, non-public information regarding pharmaceutical companies that had submitted their experimental drugs to the FDA for review.
“Mr. Liang used inside information about pharmaceutical companies – information he had access to solely because of his position at the FDA – to pocket millions in illicit profits,” said Assistant Attorney General Breuer. “In a shocking abuse of trust, Mr. Liang exploited his position as a chemist in the FDA’s Office of New Drug Quality Assessment to cash in, using the accounts of relatives and acquaintances to hide his illegal trading. Now, like many others on Wall Street and elsewhere, he is facing the significant consequences of trading stocks on inside information.”
“Those who use privileged and valuable information for personal gain, break the trust placed in them as a government employee and the integrity of the research they conduct on behalf of the U.S. government,” said Assistant Director in Charge McJunkin of the FBI’s Washington Field Office. “This case is the result of long hours and hard work by the FBI and HHS-OIG Special Agents who are tasked with enforcing laws and regulations designed to ensure the fair operation of our financial markets.”
“Profiting based on sensitive, insider information is not only illegal, but taints the image of thousands of hard-working government employees,” said Special Agent in Charge Malone of the HHS-OIG Special Investigations Branch. “We will continue to insist that federal government employee conduct be held to the highest of standards.”
Liang admitted that from approximately July 2006 through March 2011, he used the inside information he learned from DARRTS and other sources to trade in the securities of pharmaceutical companies. Liang used accounts of relatives, including his son, and acquaintances to execute the trades (referred to as the controlled accounts). When the inside information was positive about a company’s product, Liang used the controlled accounts to purchase securities. When the inside information was negative, Liang would make trades in anticipation of the stocks’ downward movement. Liang admitted that he used these controlled accounts to execute trades to profit from the change in the company’s share price after the FDA’s action was made public, resulting in total profits and losses avoided of more than $3.7 million.
For example, on May 21, 2010, the FDA accepted Clinical Data Inc.’s application for Viibryd, an anti-depressant. According to court documents, on Jan. 6, 2011, HHS-OIG installed software on Liang’s work computer, allowing it to collect screen shots from that computer, which revealed Liang regularly accessed the DARRTS system and reviewed information regarding Clinical Data’s drug Viibryd. Between Jan. 6, 2011, and Jan. 20, 2011, Liang purchased a total of 46,875 shares of Clinical Data stock using the controlled accounts. After the markets closed on Friday, Jan. 21, 2011, news of the FDA’s approval of Viibryd was reported. Clinical Data’s stock, which had closed that day at approximately $15.03 per share opened the following Monday, Jan. 24, 2011, at approximately $24.76 per share. Liang then sold all 46,875 shares of Clinical Data stock in the controlled accounts, netting a total profit of approximately $384,300.
During the time he was employed by the FDA, Mr. Liang was required to file a Confidential Financial Disclosure form disclosing, among other things, investment assets with a value greater than $1,000 and sources of income greater than $200. During the time period of his insider trading scheme, Liang annually filed these forms and failed to disclose using the controlled accounts or his income from the illicit securities trading.
Sentencing is scheduled for Jan. 9, 2012, at 12:30 p.m. The maximum penalty for the securities fraud count is 20 years in prison and a fine of $5 million, or twice the gross gain from the offense. The maximum penalty for the false statement count is five years in prison and a fine of $250,000.
As part of his plea agreement, Liang has agreed to forfeit $3,776,152, including a home and condominium in Montgomery County, Md., along with funds held in 10 bank or investment accounts.
The U.S. Securities and Exchange Commission (SEC) is currently pursuing civil charges against Liang and several accounts he controlled. That action is still pending.
This case is being prosecuted by Trial Attorneys Kevin Muhlendorf and Thomas Hall of the Criminal Division’s Fraud Section, Assistant U.S. Attorney David Salem for the District of Maryland and Senior Trial Attorney Pamela J. Hicks of the Criminal Division’s Asset Forfeiture and Money Laundering Section. The case was investigated by the FBI’s Washington Field Office and the HHS-OIG.
This case is an example of the close coordination between the Department of Justice and the SEC. The department recognizes the substantial assistance of the SEC, specifically the Market Abuse Unit of the SEC’s Enforcement Division, which conducted its own investigation and referred the conduct to the department“.
COUNTERFEIT CASHIER'S CHECKS ARE CIRCULATING IN MISSISSIPPI
The following special alert excerpt was sent out by the FDIC via e-mail:
October 18, 2011
"TO: CHIEF EXECUTIVE OFFICER (also of interest to Security Officer)
SUBJECT: Counterfeit Cashier's Checks
Summary: Counterfeit cashier's checks bearing the name First State Bank, Waynesboro, Mississippi, are reportedly in circulation.
First State Bank, Waynesboro, Mississippi, has contacted the Federal Deposit Insurance Corporation (FDIC) to report that counterfeit cashier's checks bearing the institution's name are in circulation.
The counterfeit items display the routing number 065304084, which is assigned to First State Bank. The items are blue and have ornate top and side borders. The words "CASHIER'S CHECK" are shown inside of a box in the top center. The items display the bank's logo, name, and address are in the top-left corner. The words "AUTHORIZED SIGNATURE" are shown below the signature line in the lower-right corner.
Authentic cashier's checks have the words "CASHIER'S CHECK" in the lower-left corner. The bank's name, logo, and address are in the top-center area. The words "AUTHORIZED SIGNATURE" are shown above the signature line in the lower-right corner.
Copies of a counterfeit item and an authentic check (VOID) are attached for your review. Be aware that the appearance of counterfeit items can be modified and that additional variations may be presented.
Any information you have concerning this matter should be brought to the attention of:
Sharon Beard
Compliance Officer
First State Bank
Information about counterfeit items, cyber-fraud incidents and other fraudulent activity may be forwarded to the FDIC's Cyber-Fraud and Financial Crimes Section, 3501 North Fairfax Drive, CH-11034, Arlington, Virginia 22226, or transmitted electronically to alert@fdic.gov. Questions related to federal deposit insurance or consumer issues should be submitted to the FDIC using an online form that can be accessed at http://www2.fdic.gov/starsmail/index.asp.
For your reference, FDIC Special Alerts may be accessed from the FDIC's website at www.fdic.gov/news/news/SpecialAlert/2011/index.html. To learn how to automatically receive FDIC Special Alerts through e-mail, please visit www.fdic.gov/about/subscriptions/index.html.
NOTE: As a security precaution, the FDIC does not post to its Web site electronic images of fraudulent items or authentic checks that have been counterfeited. This is to avoid attempts by others to use these instruments to facilitate additional fraud. Financial institutions can view images of the fraudulent items and authentic checks (marked as VOID) using the FDIC's free, secure Web site, FDICconnect. (See more information about FDICconnect at http://www.fdic.gov/news/news/financial/2006/fil06032.html.) Printed copies of each Special Alert and its attachment(s) may also be obtained from the FDIC's Public Information Center (telephone: 1-877-275-3342 or 703-562-2200; fax: 703-562-2296; or e-mail: publicinfo@fdic.gov).
Distribution: FDIC-Supervised Banks (Commercial and Savings)
Sandra L. Thompson
Director
Division of Risk Management Supervision"
October 18, 2011
"TO: CHIEF EXECUTIVE OFFICER (also of interest to Security Officer)
SUBJECT: Counterfeit Cashier's Checks
Summary: Counterfeit cashier's checks bearing the name First State Bank, Waynesboro, Mississippi, are reportedly in circulation.
First State Bank, Waynesboro, Mississippi, has contacted the Federal Deposit Insurance Corporation (FDIC) to report that counterfeit cashier's checks bearing the institution's name are in circulation.
The counterfeit items display the routing number 065304084, which is assigned to First State Bank. The items are blue and have ornate top and side borders. The words "CASHIER'S CHECK" are shown inside of a box in the top center. The items display the bank's logo, name, and address are in the top-left corner. The words "AUTHORIZED SIGNATURE" are shown below the signature line in the lower-right corner.
Authentic cashier's checks have the words "CASHIER'S CHECK" in the lower-left corner. The bank's name, logo, and address are in the top-center area. The words "AUTHORIZED SIGNATURE" are shown above the signature line in the lower-right corner.
Copies of a counterfeit item and an authentic check (VOID) are attached for your review. Be aware that the appearance of counterfeit items can be modified and that additional variations may be presented.
Any information you have concerning this matter should be brought to the attention of:
Sharon Beard
Compliance Officer
First State Bank
Information about counterfeit items, cyber-fraud incidents and other fraudulent activity may be forwarded to the FDIC's Cyber-Fraud and Financial Crimes Section, 3501 North Fairfax Drive, CH-11034, Arlington, Virginia 22226, or transmitted electronically to alert@fdic.gov. Questions related to federal deposit insurance or consumer issues should be submitted to the FDIC using an online form that can be accessed at http://www2.fdic.gov/starsmail/index.asp.
For your reference, FDIC Special Alerts may be accessed from the FDIC's website at www.fdic.gov/news/news/SpecialAlert/2011/index.html. To learn how to automatically receive FDIC Special Alerts through e-mail, please visit www.fdic.gov/about/subscriptions/index.html.
NOTE: As a security precaution, the FDIC does not post to its Web site electronic images of fraudulent items or authentic checks that have been counterfeited. This is to avoid attempts by others to use these instruments to facilitate additional fraud. Financial institutions can view images of the fraudulent items and authentic checks (marked as VOID) using the FDIC's free, secure Web site, FDICconnect. (See more information about FDICconnect at http://www.fdic.gov/news/news/financial/2006/fil06032.html.) Printed copies of each Special Alert and its attachment(s) may also be obtained from the FDIC's Public Information Center (telephone: 1-877-275-3342 or 703-562-2200; fax: 703-562-2296; or e-mail: publicinfo@fdic.gov).
Distribution: FDIC-Supervised Banks (Commercial and Savings)
Sandra L. Thompson
Director
Division of Risk Management Supervision"
DRIVE-BY SHOOTING SUSPECT ARRESTED
The following is from the U.S. Marshals service:
“Albuquerque, NM - Deputy United States Marshals in Albuquerque arrested Richard Otero on the 900 block of Valencia Street in SE Albuquerque around 5:00pm Friday October 14, 2011. Otero is wanted for allegedly being the shooter in a drive-by in Roswell, NM on October 5th, 2011. Otero is charged with; Shooting from a motor vehicle, Aggravated assault with a deadly weapon, Aggravated battery with a deadly weapon, felon in possession of a firearm, and Endangering a child. It’s alleged that Otero shot his own cousin in the drive-by and received the child endangerment charge because there were two children nearby at the time of the shooting. The victim was recently released from the hospital.
The Marshals Service in Roswell received the request for assistance in locating Otero shortly after the warrants for Otero were signed. Deputies quickly developed leads that brought the investigation to the Albuquerque Metro Area and neighboring towns of Belen and Los Lunas. Otero known in the law enforcement community as being a skilled evader of law enforcement has several times been able to stay on the run and out of jail. Otero was also believed to be in possession of the firearm he allegedly used in the shooting. Through investigative leads the search for Otero led Deputies to the 900 block Valencia St. in SE Albuquerque where Otero was arrested without incident.
United States Marshal for the District of New Mexico Conrad Candelaria commented "Due to the combined efforts of the United States Marshals Service and many law enforcement agencies, this career criminal that has lived a life of crime is behind bars and will now answer to the many crimes he has committed."
The following is from the U.S. Marshals service:
“Albuquerque, NM - Deputy United States Marshals in Albuquerque arrested Richard Otero on the 900 block of Valencia Street in SE Albuquerque around 5:00pm Friday October 14, 2011. Otero is wanted for allegedly being the shooter in a drive-by in Roswell, NM on October 5th, 2011. Otero is charged with; Shooting from a motor vehicle, Aggravated assault with a deadly weapon, Aggravated battery with a deadly weapon, felon in possession of a firearm, and Endangering a child. It’s alleged that Otero shot his own cousin in the drive-by and received the child endangerment charge because there were two children nearby at the time of the shooting. The victim was recently released from the hospital.
The Marshals Service in Roswell received the request for assistance in locating Otero shortly after the warrants for Otero were signed. Deputies quickly developed leads that brought the investigation to the Albuquerque Metro Area and neighboring towns of Belen and Los Lunas. Otero known in the law enforcement community as being a skilled evader of law enforcement has several times been able to stay on the run and out of jail. Otero was also believed to be in possession of the firearm he allegedly used in the shooting. Through investigative leads the search for Otero led Deputies to the 900 block Valencia St. in SE Albuquerque where Otero was arrested without incident.
United States Marshal for the District of New Mexico Conrad Candelaria commented "Due to the combined efforts of the United States Marshals Service and many law enforcement agencies, this career criminal that has lived a life of crime is behind bars and will now answer to the many crimes he has committed."
SEC GETS JUDGMENTS IN CHINA VOICE HOLDINGS CORP. SCHEME ALLEGING A PONZI GAME
October 4, 2011
The following excerpt is from the SEC website:
“On October 4, 2011, the Securities and Exchange Commission announced that the Honorable Reed O’Connor, United States District Judge for the Northern District of Texas, recently entered orders permanently enjoining multiple defendants in a case involving the co-founder of China Voice Holding Corp.
Without admitting or denying the allegations in the Commission’s complaint, Alex Dowlatshahi and Christopher Mills consented to the entry of judgments that permanently enjoin them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In addition, companies owned and controlled by Dowlatshahi and Mills, including Defendants Integrity Driven Network Corp., Lucrative Enterprises Corp., Synergetic Solutions LLC, Silver Summit Holdings LLC, and Sleeping Bear LLC, were permanently enjoined from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgments also provide that upon motion of the Commission, the Court may order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. The judgments were entered on August 31, 2011, and September 19, 2011.
On September 23, 2011, Defendant Ilya Drapkin was permanently enjoined from violating Section 17(a)(3) of the Securities Act. In addition the judgment permanently bars Drapkin from participating in the offer or sale of penny stocks and provides that, upon motion of the Commission, the Court shall order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. Drapkin’s companies, Defendants MG TK Corp. and SMI Chips, Inc., also shall be ordered to pay disgorgement of ill-gotten gains and prejudgment interest in amounts the Court deems appropriate upon motion of the Commission. The Defendants consented to the entry of the judgment without admitting or denying the allegations in the Commission’s complaint.
On September 26, 2011, Defendant Gerald Patera, and his companies, Defendants Capital Bankers Group Ltd. and Third Securities Corp., were permanently enjoined from violating Section 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. In addition, the judgment permanently bars Patera from participating in the offer or sale of penny stocks and provides that, upon motion of the Commission, the Court shall order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. The Defendants consented to the entry of the judgment without admitting or denying the allegations in the Commission’s complaint.
The Commission filed an emergency action on April 28, 2011, alleging that China Voice’s co-founder and former Chief Financial Officer, David Ronald Allen, with the assistance Dowlatshahi and Mills, and numerous related entities, launched what became a Ponzi scheme that sought to raise at least $8.6 million from investors across the country. The Commission alleged that, contrary to what investors were told, proceeds were used to pay back earlier investors; to make payments to Allen, Dowlatshahi, and Mills; and to make payments to Allen-affiliated business, including China Voice.
On June 5, the Honorable Judge Reed O’Connor, United States District Judge, entered a preliminary injunction, which, along with freezing the assets of multiple defendants and relief defendants, prevents the defendants from violating certain provisions of the securities laws, orders the preservation of documents, and requires the defendants to provide an accounting to determine the disposition of investor funds.
The SEC’s complaint also charges China Voice, its former chairman and CEO William Burbank IV, and Allen for a series of fraudulent statements about China Voice’s financial condition and business prospects, as well as Patera, Drapkin, and Robert Wilson for their roles in the scheme.
The Commission’s case is still pending against remaining defendants Allen, Burbank, Wilson, China Voice, and various of their related entities.”
The following excerpt is from the SEC website:
“On October 4, 2011, the Securities and Exchange Commission announced that the Honorable Reed O’Connor, United States District Judge for the Northern District of Texas, recently entered orders permanently enjoining multiple defendants in a case involving the co-founder of China Voice Holding Corp.
Without admitting or denying the allegations in the Commission’s complaint, Alex Dowlatshahi and Christopher Mills consented to the entry of judgments that permanently enjoin them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In addition, companies owned and controlled by Dowlatshahi and Mills, including Defendants Integrity Driven Network Corp., Lucrative Enterprises Corp., Synergetic Solutions LLC, Silver Summit Holdings LLC, and Sleeping Bear LLC, were permanently enjoined from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgments also provide that upon motion of the Commission, the Court may order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. The judgments were entered on August 31, 2011, and September 19, 2011.
On September 23, 2011, Defendant Ilya Drapkin was permanently enjoined from violating Section 17(a)(3) of the Securities Act. In addition the judgment permanently bars Drapkin from participating in the offer or sale of penny stocks and provides that, upon motion of the Commission, the Court shall order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. Drapkin’s companies, Defendants MG TK Corp. and SMI Chips, Inc., also shall be ordered to pay disgorgement of ill-gotten gains and prejudgment interest in amounts the Court deems appropriate upon motion of the Commission. The Defendants consented to the entry of the judgment without admitting or denying the allegations in the Commission’s complaint.
On September 26, 2011, Defendant Gerald Patera, and his companies, Defendants Capital Bankers Group Ltd. and Third Securities Corp., were permanently enjoined from violating Section 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. In addition, the judgment permanently bars Patera from participating in the offer or sale of penny stocks and provides that, upon motion of the Commission, the Court shall order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. The Defendants consented to the entry of the judgment without admitting or denying the allegations in the Commission’s complaint.
The Commission filed an emergency action on April 28, 2011, alleging that China Voice’s co-founder and former Chief Financial Officer, David Ronald Allen, with the assistance Dowlatshahi and Mills, and numerous related entities, launched what became a Ponzi scheme that sought to raise at least $8.6 million from investors across the country. The Commission alleged that, contrary to what investors were told, proceeds were used to pay back earlier investors; to make payments to Allen, Dowlatshahi, and Mills; and to make payments to Allen-affiliated business, including China Voice.
On June 5, the Honorable Judge Reed O’Connor, United States District Judge, entered a preliminary injunction, which, along with freezing the assets of multiple defendants and relief defendants, prevents the defendants from violating certain provisions of the securities laws, orders the preservation of documents, and requires the defendants to provide an accounting to determine the disposition of investor funds.
The SEC’s complaint also charges China Voice, its former chairman and CEO William Burbank IV, and Allen for a series of fraudulent statements about China Voice’s financial condition and business prospects, as well as Patera, Drapkin, and Robert Wilson for their roles in the scheme.
The Commission’s case is still pending against remaining defendants Allen, Burbank, Wilson, China Voice, and various of their related entities.”
Monday, October 17, 2011
MOST WANTED ARRESTED
The following excerpt is from the U.S. Marshals Service website:
“U.S. Marshals Service Most Wanted Arrested
Albuquerque, NM - On October 8, 2011 Charlie Tapia was arrested by the Albuquerque Police Department after his attempt at a home invasion robbery went wrong. Tapia one of the United States Marshals Service’s New Mexico Most Wanted was wanted for Forced Entry Burglary after Tapia and an accomplice forced entry into a Las Vegas, NM home, kidnapped the residents and stole items from the home including a car. During that home invasion Tapia and his accomplice used a gun and knife to hold their victims hostage.
On October 8, 2011 Tapia attempted another home burglary in Albuquerque. The resident of that home in Albuquerque was able to overpower Tapia and hold him there until police arrived. Tapia was arrested and booked into the Bernalillo County Metropolitan Detention Center. Deputy United States Marshals and Southwest Investigative Fugitive Team (SWIFT) Taskforce Officers (TFO) had been assisting Las Vegas, NM Police since August 2011 with this fugitive investigation.”
“U.S. Marshals Service Most Wanted Arrested
Albuquerque, NM - On October 8, 2011 Charlie Tapia was arrested by the Albuquerque Police Department after his attempt at a home invasion robbery went wrong. Tapia one of the United States Marshals Service’s New Mexico Most Wanted was wanted for Forced Entry Burglary after Tapia and an accomplice forced entry into a Las Vegas, NM home, kidnapped the residents and stole items from the home including a car. During that home invasion Tapia and his accomplice used a gun and knife to hold their victims hostage.
On October 8, 2011 Tapia attempted another home burglary in Albuquerque. The resident of that home in Albuquerque was able to overpower Tapia and hold him there until police arrived. Tapia was arrested and booked into the Bernalillo County Metropolitan Detention Center. Deputy United States Marshals and Southwest Investigative Fugitive Team (SWIFT) Taskforce Officers (TFO) had been assisting Las Vegas, NM Police since August 2011 with this fugitive investigation.”
GANG MEMBERS ARRESTED BUT ONE GOT AWAY
The following excerpt is from the United States Marshals website:
"Sunland Park, NM - In the early morning hours of October 13, 2011 The United States Marshals Service, Sunland Park Police Department, Dona Ana County Sheriff’s Office Special Response Team, Customs and Border Protection Air Wing, and Southern New Mexico Gang Task Force Officers arrested three know “Barrio Azteca” gang Members in Sunland Park, NM. The arrests came after a well-coordinated multi-agency search and arrest warrant was executed in Sunland Park.
The arrests were three of four gang members charged with extortion, robbery and conspiracy in the Sunland Park, NM area. The Fourth “Azteca” Javier Tarango wanted in connection with the crimes is still at large and the Marshals Service along with other State, Local, and Federal agencies are actively investigating his whereabouts. The Marshals Service in New Mexico is also going add Tarango to its New Mexico’s Most Wanted Program hoping to help expedite Tarango’s capture. Trango meets the Marshals Service criteria for addition to their most wanted gang offender category. Tarango a known “Barrio Azteca” gang member has a lengthy criminal history involving assault and aggravated battery.
If you receive any information regarding the above named individual, please contact the United States Marshals Service for the District of New Mexico at (505) 346-6400/Albuquerque or (575) 527-6850/Las Cruces."
"Sunland Park, NM - In the early morning hours of October 13, 2011 The United States Marshals Service, Sunland Park Police Department, Dona Ana County Sheriff’s Office Special Response Team, Customs and Border Protection Air Wing, and Southern New Mexico Gang Task Force Officers arrested three know “Barrio Azteca” gang Members in Sunland Park, NM. The arrests came after a well-coordinated multi-agency search and arrest warrant was executed in Sunland Park.
The arrests were three of four gang members charged with extortion, robbery and conspiracy in the Sunland Park, NM area. The Fourth “Azteca” Javier Tarango wanted in connection with the crimes is still at large and the Marshals Service along with other State, Local, and Federal agencies are actively investigating his whereabouts. The Marshals Service in New Mexico is also going add Tarango to its New Mexico’s Most Wanted Program hoping to help expedite Tarango’s capture. Trango meets the Marshals Service criteria for addition to their most wanted gang offender category. Tarango a known “Barrio Azteca” gang member has a lengthy criminal history involving assault and aggravated battery.
If you receive any information regarding the above named individual, please contact the United States Marshals Service for the District of New Mexico at (505) 346-6400/Albuquerque or (575) 527-6850/Las Cruces."
Sunday, October 16, 2011
ALABAMA WOMAN PLEADS GUILTY TO TAX FRAUD AND IDENTITY THEFT CONSPIRACIES
Friday, October 14, 2011
The following excerpt is from the Department of justice website:
“WASHINGTON – Veronica Dale, a resident of Montgomery, Ala., pleaded guilty today to two tax fraud and identity theft conspiracies, the Justice Department and the Internal Revenue Service (IRS) announced. In addition to pleading guilty to two counts of conspiracy to defraud the government with respect to claims, Dale pleaded guilty to two counts of filing false, fictitious or fraudulent claims with the United States; two counts of theft of government money, property or records; one count of wire fraud; and one count of aggravated identity theft.
Along with four other defendants, Dale was indicted by a federal grand jury sitting in Montgomery on Dec. 14, 2010, on a variety of charges stemming from a large-scale tax fraud and identity theft conspiracy based in that city. According to the indictment, plea agreement and other court documents, the conspirators were part of a scheme that spanned from 2009 through 2010 and involved fraudulently obtaining tax refunds by filing false tax returns using stolen identities.
In her plea agreement, Dale admitted that she filed more than 500 fraudulent returns that sought at least $2.5 million in refunds. Dale also admitted that the returns were filed using the names of Medicaid beneficiaries, whose personal information she had obtained earlier when employed by a company that serviced Medicaid programs. According to court documents, Dale directed the refunds claimed by the fraudulent returns to an array of different bank accounts she and various co-conspirators controlled. All four co-defendants charged in the indictment - Alchico Grant, Laquanta Grant, Leroy Howard and Isaac Dailey - have already pleaded guilty, as have two other co-conspirators, Wendy Delbridge and Betty Washington, who pleaded guilty to criminal informations.
Veronica Dale and others were also charged in a separate superseding indictment by a federal grand jury in the Middle District of Alabama unsealed on Sept. 7, 2011, on a variety of counts stemming from another identity theft and tax fraud scheme. According to the indictment, plea agreement and other court documents, in 2011, Dale and others used stolen identities to file false tax returns claiming fraudulent refunds. In her plea agreement, Dale admitted that this scheme involved a fraud loss of between $400,000 and $1 million and that she provided the lists of Medicaid recipients she had obtained to a co-conspirator to use in the conspiracy. All of the co-defendants in this indictment – Alchico Grant, Melinda Clayton and Stephanie Adams, have also pleaded guilty, included most recently Adams, who pleaded guilty on Oct. 13, 2011.
Stephanie Adams pleaded guilty to one count of conspiring to defraud the United States with respect to claims. In her plea agreement, Adams admitted that between January and April 2011 she conspired with others to defraud the United States by filing false tax returns using stolen identities. Adams further admitted that she provided a co-conspirator with two bank accounts to receive the false refunds; almost $140,000 in false refunds were directed by Adams’s co-conspirators to the two bank accounts. When refunds were deposited, Adams retained a portion of the funds and distributed the rest of the money to her co-conspirators.
Sentencing has not yet been scheduled for either Dale or Adams. Dale faces a minimum of two years in prison, a maximum of 62 years in prison, three years of supervised release, restitution and a maximum fine of $1.75 million, or twice the loss caused by the offense. Adams faces a maximum of 10 years in prison, three years of supervised release, restitution and a maximum fine of $250,000, or twice the loss caused by the offense.
The cases were investigated by special agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the U.S. Department of Justice, Tax Division, and Todd Brown, Assistant U.S. Attorney for the Middle District of Alabama are prosecuting the cases.”
The following excerpt is from the Department of justice website:
“WASHINGTON – Veronica Dale, a resident of Montgomery, Ala., pleaded guilty today to two tax fraud and identity theft conspiracies, the Justice Department and the Internal Revenue Service (IRS) announced. In addition to pleading guilty to two counts of conspiracy to defraud the government with respect to claims, Dale pleaded guilty to two counts of filing false, fictitious or fraudulent claims with the United States; two counts of theft of government money, property or records; one count of wire fraud; and one count of aggravated identity theft.
Along with four other defendants, Dale was indicted by a federal grand jury sitting in Montgomery on Dec. 14, 2010, on a variety of charges stemming from a large-scale tax fraud and identity theft conspiracy based in that city. According to the indictment, plea agreement and other court documents, the conspirators were part of a scheme that spanned from 2009 through 2010 and involved fraudulently obtaining tax refunds by filing false tax returns using stolen identities.
In her plea agreement, Dale admitted that she filed more than 500 fraudulent returns that sought at least $2.5 million in refunds. Dale also admitted that the returns were filed using the names of Medicaid beneficiaries, whose personal information she had obtained earlier when employed by a company that serviced Medicaid programs. According to court documents, Dale directed the refunds claimed by the fraudulent returns to an array of different bank accounts she and various co-conspirators controlled. All four co-defendants charged in the indictment - Alchico Grant, Laquanta Grant, Leroy Howard and Isaac Dailey - have already pleaded guilty, as have two other co-conspirators, Wendy Delbridge and Betty Washington, who pleaded guilty to criminal informations.
Veronica Dale and others were also charged in a separate superseding indictment by a federal grand jury in the Middle District of Alabama unsealed on Sept. 7, 2011, on a variety of counts stemming from another identity theft and tax fraud scheme. According to the indictment, plea agreement and other court documents, in 2011, Dale and others used stolen identities to file false tax returns claiming fraudulent refunds. In her plea agreement, Dale admitted that this scheme involved a fraud loss of between $400,000 and $1 million and that she provided the lists of Medicaid recipients she had obtained to a co-conspirator to use in the conspiracy. All of the co-defendants in this indictment – Alchico Grant, Melinda Clayton and Stephanie Adams, have also pleaded guilty, included most recently Adams, who pleaded guilty on Oct. 13, 2011.
Stephanie Adams pleaded guilty to one count of conspiring to defraud the United States with respect to claims. In her plea agreement, Adams admitted that between January and April 2011 she conspired with others to defraud the United States by filing false tax returns using stolen identities. Adams further admitted that she provided a co-conspirator with two bank accounts to receive the false refunds; almost $140,000 in false refunds were directed by Adams’s co-conspirators to the two bank accounts. When refunds were deposited, Adams retained a portion of the funds and distributed the rest of the money to her co-conspirators.
Sentencing has not yet been scheduled for either Dale or Adams. Dale faces a minimum of two years in prison, a maximum of 62 years in prison, three years of supervised release, restitution and a maximum fine of $1.75 million, or twice the loss caused by the offense. Adams faces a maximum of 10 years in prison, three years of supervised release, restitution and a maximum fine of $250,000, or twice the loss caused by the offense.
The cases were investigated by special agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the U.S. Department of Justice, Tax Division, and Todd Brown, Assistant U.S. Attorney for the Middle District of Alabama are prosecuting the cases.”
ALLEGED MANIIPULATION OF STOCK PRICE HAS LEAD TO FRAUD CHARGES AGAINST CORP. EXECUTIVES
October 6, 2011
The following is an excerpt from the SEC website:
“The Securities and Exchange Commission today filed fraud charges against two former sales executives with Mountain View, Calif. medical equipment company Hansen Medical, Inc., alleging they orchestrated fraudulent transactions to inflate the company’s reported revenues. In a separate proceeding, the SEC also filed settled charges against Hansen Medical for providing misleading financial information to public investors.
The SEC’s complaint, filed in federal district court in San Francisco, alleges that Christopher Sells, Hansen Medical’s former Vice President of Commercial Operations, and Timothy Murawski, a former Vice President of Sales who reported to Sells, participated in multiple improper sales transactions in 2008 and 2009. The SEC alleges the individuals engaged in the scheme as Hansen Medical underwent efforts to raise additional capital from investors.
According to the SEC’s complaint, on multiple occasions Sells of Dallas, Tex., and Murawski of Lake Zurich, Ill., schemed to have Hansen Medical personnel temporarily install the company’s robotic catheter system at a customer site before the customer was ready for it so that Hansen Medical could record the product sale. Hansen Medical personnel would then immediately dismantle the equipment and put it in storage until months later, when they would return to reinstall the equipment. The SEC further alleges that, in a sales transaction in the final days of December 2008, Sells and Murawski instructed Hansen Medical personnel to forge a customer signature on certain required documents to allow the company to record the revenue that quarter. According to the SEC, Sells and Murawski’s schemes were intended to circumvent revenue recognition rules and to fool Hansen Medical’s finance personnel and auditors into believing that the sales had been completed and revenue could be recorded.
The SEC’s complaint charges Sells and Murawski with violations of Sections 17(a)(1) and (3) of the Securities Act, and Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5 and 13b2-1 thereunder, aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The SEC also charges Sells with violations of Rules 13b2-2 under the Exchange Act. The SEC seeks permanent injunctions and financial penalties against Sells and Murawski, and also seeks to bar Sells from serving as an officer or director of a public company.
In a separate administrative proceeding, Hansen Medical consented (without admitting or denying the SEC’s findings) to the entry of a Order that requires that Hansen Medical to cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act, and Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. In considering whether to accept Hansen Medical's settlement offer, the Commission took into consideration Hansen Medical’s cooperation with the Commission’s investigation and its remedial efforts once the fraud came to light.”
The following is an excerpt from the SEC website:
“The Securities and Exchange Commission today filed fraud charges against two former sales executives with Mountain View, Calif. medical equipment company Hansen Medical, Inc., alleging they orchestrated fraudulent transactions to inflate the company’s reported revenues. In a separate proceeding, the SEC also filed settled charges against Hansen Medical for providing misleading financial information to public investors.
The SEC’s complaint, filed in federal district court in San Francisco, alleges that Christopher Sells, Hansen Medical’s former Vice President of Commercial Operations, and Timothy Murawski, a former Vice President of Sales who reported to Sells, participated in multiple improper sales transactions in 2008 and 2009. The SEC alleges the individuals engaged in the scheme as Hansen Medical underwent efforts to raise additional capital from investors.
According to the SEC’s complaint, on multiple occasions Sells of Dallas, Tex., and Murawski of Lake Zurich, Ill., schemed to have Hansen Medical personnel temporarily install the company’s robotic catheter system at a customer site before the customer was ready for it so that Hansen Medical could record the product sale. Hansen Medical personnel would then immediately dismantle the equipment and put it in storage until months later, when they would return to reinstall the equipment. The SEC further alleges that, in a sales transaction in the final days of December 2008, Sells and Murawski instructed Hansen Medical personnel to forge a customer signature on certain required documents to allow the company to record the revenue that quarter. According to the SEC, Sells and Murawski’s schemes were intended to circumvent revenue recognition rules and to fool Hansen Medical’s finance personnel and auditors into believing that the sales had been completed and revenue could be recorded.
The SEC’s complaint charges Sells and Murawski with violations of Sections 17(a)(1) and (3) of the Securities Act, and Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5 and 13b2-1 thereunder, aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The SEC also charges Sells with violations of Rules 13b2-2 under the Exchange Act. The SEC seeks permanent injunctions and financial penalties against Sells and Murawski, and also seeks to bar Sells from serving as an officer or director of a public company.
In a separate administrative proceeding, Hansen Medical consented (without admitting or denying the SEC’s findings) to the entry of a Order that requires that Hansen Medical to cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act, and Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. In considering whether to accept Hansen Medical's settlement offer, the Commission took into consideration Hansen Medical’s cooperation with the Commission’s investigation and its remedial efforts once the fraud came to light.”
Saturday, October 15, 2011
FORMER EXEC. AT CHI-TOWN EXEC. SEARCH FIRM GETS INJUNCTION BY SEC REGARDING INSIDER TRADING
October 11, 2011
The following excerpt is from the SEC website:
“The Securities and Exchange Commission today filed a civil injunctive action in the U.S. District Court for the Northern District of Illinois charging M. Jason Hanold, a former managing director at an executive search firm in Chicago, with illegal insider trading in Hewitt Associates stock in advance of the July 12, 2010 public announcement of a merger agreement between Aon and Hewitt Associates.
The SEC alleges that on July 7, Hanold bought shares of Hewitt Associates stock after learning of the impending merger from his wife, who was an executive at Aon at the time. He did so despite requests from his wife that he keep this nonpublic information confidential.
According to the SEC’s complaint, Hanold’s wife learned on or about July 6, 2010 that Aon and Hewitt Associates had reached a merger agreement and that a public announcement was imminent. Hanold’s wife shared this information with Hanold in a telephone call that evening. Shortly after the call ended, Hanold’s wife sent him two emails in which she requested that he not share this information. Hanold replied, “I won’t, no need. I only wish we bought their stock!!!” The next day, July 7, 2010, Hanold purchased 831 shares of Hewitt Associate’s stock in advance of the July 12, 2010 public announcement of the agreement between Hewitt Associates and Aon. The announcement caused Hewitt Associates’ stock price to increase by more than 32%. Hanold sold all of his shares on July 12, 2010 for a profit of $10,241.
Without admitting or denying the allegations in the complaint, except as to jurisdiction, Hanold has consented to entry of a final judgment that permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Hanold has also consented to pay $20,766 in disgorgement, prejudgment interest and civil penalties. The settlement is subject to approval by the court.
James G. O’Keefe conducted the SEC’s investigation in this matter. The Commission acknowledges the assistance of FINRA in this investigation.”
The following excerpt is from the SEC website:
“The Securities and Exchange Commission today filed a civil injunctive action in the U.S. District Court for the Northern District of Illinois charging M. Jason Hanold, a former managing director at an executive search firm in Chicago, with illegal insider trading in Hewitt Associates stock in advance of the July 12, 2010 public announcement of a merger agreement between Aon and Hewitt Associates.
The SEC alleges that on July 7, Hanold bought shares of Hewitt Associates stock after learning of the impending merger from his wife, who was an executive at Aon at the time. He did so despite requests from his wife that he keep this nonpublic information confidential.
According to the SEC’s complaint, Hanold’s wife learned on or about July 6, 2010 that Aon and Hewitt Associates had reached a merger agreement and that a public announcement was imminent. Hanold’s wife shared this information with Hanold in a telephone call that evening. Shortly after the call ended, Hanold’s wife sent him two emails in which she requested that he not share this information. Hanold replied, “I won’t, no need. I only wish we bought their stock!!!” The next day, July 7, 2010, Hanold purchased 831 shares of Hewitt Associate’s stock in advance of the July 12, 2010 public announcement of the agreement between Hewitt Associates and Aon. The announcement caused Hewitt Associates’ stock price to increase by more than 32%. Hanold sold all of his shares on July 12, 2010 for a profit of $10,241.
Without admitting or denying the allegations in the complaint, except as to jurisdiction, Hanold has consented to entry of a final judgment that permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Hanold has also consented to pay $20,766 in disgorgement, prejudgment interest and civil penalties. The settlement is subject to approval by the court.
James G. O’Keefe conducted the SEC’s investigation in this matter. The Commission acknowledges the assistance of FINRA in this investigation.”
Friday, October 14, 2011
TWO ACCUSED OF VIOLATING ANTIFRAUD PROVISIONS OF FEDERAL SECURITIES LAWS
September 29, 2011
The following is an excerpt from the SEC website:
“The Securities and Exchange Commission announced that, on September 28, 2011, it filed a civil action in the United States District Court for the District of Utah against Christopher A. Seeley, a resident of Herriman, Utah, and Justin G. Dickson, a resident of Salt Lake City, Utah, alleging that both of the Defendants violated the antifraud, securities offering registration and broker-dealer registration provisions of the federal securities laws.
In its Complaint, the Commission alleges that Seeley conducted a fraudulent offering through two entities, AVF, Inc. and AV Funding, LLC (collectively, “Alden View”), and that Dickson conducted a fraudulent offering through AV Funding, LLC. According to the Complaint, from 2006 to 2009, Alden View raised $7.9 million from investors through the sale of promissory notes by representing to investors that Alden View was engaged a sophisticated real-estate lending business. In reality, Alden View funneled the majority of its investors’ funds into two Ponzi schemes that were run by its most significant borrowers. In doing so, Seeley and Dickson misled investors regarding, among other things: Alden View’s primary borrower’s loan and payment history, the security obtained by Alden View from its borrowers, and Alden View’s due diligence and knowledge of how its borrowers were using investor funds.
The Complaint alleges that, based on this conduct, Seeley and Dickson violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Commission seeks permanent injunctions, disgorgement, and civil penalties against Seeley and Dickson.”
The following is an excerpt from the SEC website:
“The Securities and Exchange Commission announced that, on September 28, 2011, it filed a civil action in the United States District Court for the District of Utah against Christopher A. Seeley, a resident of Herriman, Utah, and Justin G. Dickson, a resident of Salt Lake City, Utah, alleging that both of the Defendants violated the antifraud, securities offering registration and broker-dealer registration provisions of the federal securities laws.
In its Complaint, the Commission alleges that Seeley conducted a fraudulent offering through two entities, AVF, Inc. and AV Funding, LLC (collectively, “Alden View”), and that Dickson conducted a fraudulent offering through AV Funding, LLC. According to the Complaint, from 2006 to 2009, Alden View raised $7.9 million from investors through the sale of promissory notes by representing to investors that Alden View was engaged a sophisticated real-estate lending business. In reality, Alden View funneled the majority of its investors’ funds into two Ponzi schemes that were run by its most significant borrowers. In doing so, Seeley and Dickson misled investors regarding, among other things: Alden View’s primary borrower’s loan and payment history, the security obtained by Alden View from its borrowers, and Alden View’s due diligence and knowledge of how its borrowers were using investor funds.
The Complaint alleges that, based on this conduct, Seeley and Dickson violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Commission seeks permanent injunctions, disgorgement, and civil penalties against Seeley and Dickson.”
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