Wednesday, December 31, 2008

Massachusetts Man Accused Of Defrauding Celebrity Client Out Of Millions

Darryl McCauley, 43, of Wilmington, Massachusetts, was arrested early this morning on charges of larceny, forgery, and larceny by continuous scheme. McCauley is accused of stealing "millions" of dollars from his comedian/actor younger half brother, Dane Cook (pictured left). According to reports, McCauley had been employed as the business manager for Cook's company, Great Dane Enterprises, Inc., since the early 1990s. According to prosecutors, since July 2007, McCauley began transferring funds from the company into his own accounts. McCauley is accused in one instance of forging a signature on a $3 million check and depositing it into his own account.

Read the story here, here and here.

Washington State Former Municipal Finance Worker Pleads Guilty To Fraud

Terry L. Davis, 57, of Seattle, Washington and a former Assistant Finance Director for the City of Arlington, plead guilty today to felony charges she embezzled more than $1.3 million from the municipality. Specifically, Davis plead guilty to wire fraud and filing a false tax return in connection. According to prosecutors, Davis wrote more than 100 checks to herself between 2000 and 2008. She was a 32-year veteran employee of the city. She will be sentenced on March 27, 2009 and faces up to 20 years in prison, a fine of up to $250,000, plus restitution.

Read FraudTalk's original post on this story here.

Read the story here and here.

Tuesday, December 30, 2008

Florida Keys Store Manager Sentenced In $1.4 Million Embezzlement Case

George Ganem Jr., 62, of Key West, Florida, was sentenced today to 9 months in prison for embezzling $1.2 million from Dion's Quik Mart where he had been employed as general manager. Ganem pleaded guilty to one felony count of grand theft of more than $100,000 and agreed to restitution of $1.2 million although it is believed he stole more than $1.4 million. He has reportedly repaid $522,000 to date. According to prosecutors, Ganem created a front company Tank Test Inc., and submitted fraudulent invoices to Dion's Quick Mart, where his wife worked in the accounting department, receiving and depositing checks worth an average of $6,000 per week. The scam went on for seven years.

Read the story here.

Former North Carolina Attorney Pleads Guilty To $800+K Embezzlement - Was On The Run For More Than A Year

John Gregory McCormick, 60, of Chapel Hill, North Carolina and a former practicing attorney in North Carolina, plead guilty last week to charges he embezzled more than $800,000 from his clients. McCormick, who had been on the run for 13 months before he was arrested by police in Phoenix last year, was sentenced to 108 to 139 months in prison. He disappeared on July 13, 2006, when his car was found abandoned near a North Carolina State park and allegations of missing funds were being investigated. A Phoenix policeman arrested him on a park bench with two homeless men and six cents in his pocket. McCormick was disbarred by the North Carolina Bar last year as well for ethics violations. He is actually believed to have embezzled more than $1.6 million from his clients.

Read the story here, here and here.


Watch the video of his story while on the run on NC Wanted here.

Monday, December 29, 2008

Yet Another Ponzi Scheme Busted - Salvadoran In California Defrauds Investors $62 Million

Milton Retana, 43, of Norwalk, California and an El Salvadoran national, was arrested Christmas morning on charges he orchestrated a Ponzi-type investment fraud scheme bilking more than 2,000 investors out of some $62 million, according to prosecutors. Retana's scheme involved luring investors to his Best Diamond Funding company which purportedly used profits from diamond sales to purchase and resell real estate and promised up to 84 percent returns. He targeted largely Hispanic investors, according to prosecutors. When authorities raided his wife's religious bookstore, they found in excess of $3 million in cash. Retana faces up to 65 years in prison on the fraud and false statements charges, plus restitution and fines.

Read the story here, here and here.

Auditors For Oregon Town That Missed Embezzlement Agree To Pay $385K

The accounting firm of Pauly Rogers and Co., which had served as the auditors for the Oregon town of West Linn from 2002 to 2005, agreed to pay the town $385,000 to settle a negligence lawsuit. The action claimed the firm should have caught a $1.4 million embezzlement by the town's finance director during that period when instead it gave the town a "clean bill of health" financially. Elma Sandoval Magkamit (pictured left), 53, and West Linn's former finance director, plead guilty in 2006 to embezzling $1.4 million from the town. Specifically, Magkamit pleaded guilty to five counts of theft in the first degree and 52 counts of aggravated theft in the first degree. She was sentenced to nearly 8 1/2 years in prison and ordered to pay restitution of more than $1.8 million in damages and costs. Magkamit reportedly had a serious gambling addiction.

Read the story here, here, here and here.

Update On Fry's Embezzlement Case: Company Sues Siddiqui

Recall from FraudTalk's original post on this story that Ausaf Umar Siddiqui, aka "Omar Siddiqui," 42, of Palo Alto, California and the former vice president of merchandising and operations for Fry's Electronics, Inc., was arrested recently on charges he engaged in a $65.6 million kickback scheme with certain of the company's suppliers. Fry's is now suing Siddiqui in a civil recovery action in Santa Clara County Superior Court over an unpaid promissory note from the company. The civil case seeks to recover some $10 million, plus compounded interest and the forfeiture of two luxury vehicles and a condominium used as collateral.

Read the story here.


Sunday, December 28, 2008

Montana Regulators Charge 5 Residents With Ponzi Scheme Investment Fraud

The Securities Department of the Montana State Auditor's office has filed an amended Notice of Proposed Agency Disciplinary Action against several Montana residents and a corporate entity alleged to have engaged in a Ponzi-type investment fraud scheme. Shawn Swor, of Missoula, Montana and Dan Two Feathers, aka Dan Latham, of Hamilton, Montana, were the original respondents in the action which alleged the sale of "zero coupon bonds" that promised extraordinary returns. Their companies, DTF Consulting Group Trust and TLT Holdings Corporation were also named in the original Notice. The amended Notice adds Eric Schultz, a Bozeman, Montana mortgage broker and his business Big Sky Equity, Inc., Terrence Paulin, a Florida resident and Andre Curtis, a Bermuda resident as respondents. The Notice alleges that the respondents committed securities fraud against at least thirteen investors, defrauding them for nearly $4 million. According to the Notice, the Montana Securities Department alleges "multiple counts of fraud, unethical and dishonest practices, as well as selling unregistered securities and conducting securities business in Montana while not properly registered to do so." Further, the Securities Department has obtained 4 injunctions, freezing assets in accounts used by Swor, Two Feathers, Paulin and Curtis and their companies. We note that Dan Two Feathers was previously convicted in New York State on felony charges of fraud and money laundering in 1999 and was sentenced to more than 3 years in prison.

Read the Better Business Bureau's notice here.

Read the story from the Bermuda perspective here.

FBI Sets Up Mortgage Fraud Task Force In New Jersey

The FBI is setting up a mortgage fraud task force out of its Newark, New Jersey field office, according to reports. The task force is in response to the large number of complaints coupled with recent high profile cases in the state. Read the story here.

Former Treasurer For Nevada Municipal Utility Suspected In $2 Million Embezzlement

Robert Klein, the former treasurer for the Panther Valley Water Users Association is being investigated for the possible embezzlement of as much as $2 million from the municipal utility, according to authorities. According to reports, Klein sold water rights to developers that the utility did not have, among other things. Klein has fled and authorities are seeking to apprehend him.

Read the story here and here.

Update On Dreier Fraud Case: Broker Arrested For Conspiring With Dreier

Kosta S. Kovachev, 57, formerly a registered broker with the NASD was arrested December 22 on charges he conspired with previously charged, Marc Dreier, pictured left, to sell fictitious promissory notes. Kovachev is charged with one count of conspiracy to commit wire fraud and faces up to 5 years in prison and a fine of $250,000 if convicted. He is alleged to have acted as the middleman between Dreier and three separate hedge funds in selling the fraudulent notes. We note that Kovachev was charged by the SEC with being part of a separate Ponzi-type fraud scheme with other co-defendants. Recall that Dreier was charged on December 8th with securities and wire fraud in connection with the sale of those phony promissory notes that resulted in investor losses of at least $380 million.


Read the story here, here and here.

Saturday, December 27, 2008

Warning Signs For Investment Fraud Schemes

The Palm Beach Post published a handy Christmas-day list of warning signs for avoiding investment fraud schemes. The signs are as follows:
  • Warning sign No. 1: Consistent success.
  • Warning sign No. 2: Money managers who also act as brokers, and issue their own statements to clients.
  • Warning sign No. 3: Managers who use a one-size-fits-all investment strategy.
  • Warning sign No. 4: Your friend uses him, so he must be good.
  • Warning sign No 5: Your manager has put your entire nest egg under one chicken.
  • Warning sign No. 6: Your money manager's supposedly independent audit is done by the unknown Acme Auditors Inc., which has one employee, Wyle E. Coyote.
Read the whole article here.

Friday, December 26, 2008

Maine Town Files Suit To Recovered Embezzled Monies

The town of Gardiner, Maine, has civil filed a lawsuit against Patricia Coty, 55, also of Gardiner, to recover funds she embezzled. Coty pleaded guilty in September to stealing $195,000 from the municipality between 2002 and 2008. She was the former finance administrator for the town which said it had already recovered about $100,000 in restitution. Coty was originally indicted in June on one count of felony theft.

Read the story here, here, here and here.

Study Shows Drop In Securities Fraud Prosecutions

The New York Times published an article Tuesday describing the drop in federal stock fraud prosecutions based on data from an analysis done at Syracuse University. According to the article, there were 133 prosecutions for securities fraud in the first 11 months of 2008, down from 437 cases in 2000 and from a high of 513 cases in 2002. Further, SEC prosecutions for securities fraud dropped from 69 in 2000 to 9 in 2007. Meanwhile, the article states that civil and adminstrative actions brought by the SEC have increase from 503 in 2000 to 636 in 2008.

Is this really a case of the SEC and DOJ having a policy to be more lenient on securities fraud? Or are there other factors, such as possibly fewer cases resulting from stricter regulations, i.e. Sarbanes Oxley and the excesses of the tech bubble of the late 90s?

Read the story here.

Indiana Attorney Faces More Charges In $2.2 Million Ponzi-Type Fraud

William G. Crabtree II, an attorney from Schererville , Indiana faces additional charges of mail fraud and tax evasion in what prosecutors described as an elaborate scheme to defraud clients out of funds they entrusted to him. Crabtree's fraud was a Ponzi-type scheme whereby he misappropriated funds from new clients, paid back older clients the money he had spent on himself. He is accused in the new indictment also of convincing a client to invest in a real estate development that would pay back 20 percent returns, but instead Crabtree used the money for personal expenditures. He was originally indicted in October on two counts of mail fraud and one count of wire fraud. He has relinquished his law license.

Read the story here, here and here.

Thursday, December 25, 2008

Merry Christmas, Happy Hannukah & Happy Holidays

To all our readers: Merry Christmas & Happy Hannukah.

Have a wonderful (fraud free) holiday season!

Former Minnesota Insurance Agent Gets Off With Probation In $250+K Embezzlement/Theft Case

Wanda Jane Schafer, 54, of Mazeppa, Minnesota and a former insurance agent with Gillford Mutual Fire Insurance Co. of Lake City, Minnesota, was sentenced yesterday to 5 years probation and ordered to pay some $164,000 in restitution for the theft/embezzlement of about $259,000 from the company between 2002 and 2006. Schafer, who was indicted in June, plead guilty to insurance fraud and agreed to forfeit her license. Further, her plea agreement stipulated that Schafer could not obtain new credit or open new credit lines nor take any position requiring a fiduciary responsibility, among other things. It has been reported that she has already made restitution.

Read the story here, here and here.

Again, this seems like a light sentence, considering the amount stolen.

Wednesday, December 24, 2008

Maryland Woman Gets Probation As Accomplice in Embezzlement Case

Teresa Ann White, 42 of Annapolis, Maryland, was sentenced to 36 months probation recently for serving as an accomplice in an embezzlement scheme that bilked at least $195,000 from the S Storage Company in Washington, DC. An unnamed co-conspirator, who was in charge of much of the accounting functions at the company, issued at 9 unauthorized checks totalling $195,862.73 which White deposited in a special account she had set up and then the two shared the ill-gotten proceeds, according to prosecutors.

Presumably the co-conspirator, who was the employee and issued the actual fraudulent checks, will get actual jail time.

Read the DOJ press release here.

Cabal Of 6 Arrested In $13 Million Embezzlement & Bribery Scheme At California Landfill

Authorities arrested six individuals, five employees of Waste Management, Inc.'s Morgan Hill, California landfill and one "commercial waste broker" in an embezzlement and bribery scheme that reportedly lasted a decade and cost the company some $13 million in the past two years alone. James Phillip Lucero, of Carmel, California, pictured left, is alleged to have bribed Waste Management employees at the landfill in exchange for dumping construction debris while keeping much of the fees for himself paid by the construction companies that hired him. Investigators claim that as much as $20,000 in bribes were being paid per month in recent months through Lucero's firm, Resource Development Service. Those Waste Management employees arrested include Richard Marvin Andrade, 62; Joseph Morse, 49, and Daniel Sanchez, 49, all of San Jose, as well as Jose Edmundo Salvatier, 31, of Los Banos; and Charles Thomas Overton, 40, of Shingleton. Waste Management says that a total of 9 employees have been fired as a result of their own investigation. Lucero reportedly has been living an opulent lifestyle in Carmel, a tony seaside village that boasts onetime mayor Clint Eastwood, owning a Bentley automobile and an Andalusian show horse named, ironically, "Fugitivo." Lucero could face up to 15 years in prison and the other defendants as much as 7 years each.

Read the story here, here and here.

Yale University Pays $7.6 Million To Settle False Claims Charges

The Department of Justice announced yesterday that Yale University had agreed to pay $7.6 million to settle civil charges it had violated the False Claims Act related to grants it had received in prior years. Specifically, the settlement was made for its handling of federally-funded research grants awarded to the university between January 2000 and December 2006. The $7.6 million consists of two parts: $3.8 million in actual damages for the false claims; and $3.8 million assessed as penalties for the false claims. According to investigators, Yale researchers "at times improperly transferred charges to a federal grant account to which those charges were not allocable" under specified grants. Yale was also charged with over allocating researcher salaries to specified grants. The DOJ suggests that Yale researchers involved in the over charging/over allocating were motivated in part to use up unused portions of grants toward the end of grant terms.

Bush Pardons 19, Commutes 1 Sentence, Then Revokes 1 Pardon

President George W. Bush yesterday issued 19 pardons and commuted the sentence of one individual, but then later revoked one of the pardons in a rare move. Those pardoned include:
  • William Alvis III of Flushing, Ohio. Possession of an unregistered firearm and cocaine distribution.
  • John Allen Aregood of Riviera, Texas. Conspiracy to harbor and transport illegal immigrants.
  • Eric Charles Blanke of Parker, Colorado. Counterfeiting.
  • Steve Doyle Cavender of The Villages, Florida. Conspiracy to import, possess, distribute and dispense marijuana.
  • Marie Elena Eppens of Lynden, Washington. Conspiracy to distribute and possess with intent to distribute marijuana.
  • Lydia Lee Ferguson of Sun City, Arizona .Aiding and abetting possession of stolen mail.
  • Eduviges Duvi Gonzalez-Matsumura of Clovis, California Aiding and abetting embezzlement of bank funds.
  • George Clarence Greene Jr. of Gray, Georgia. Mail fraud.
  • James Won Hee Kang of South Barrington, Illinois. Trafficking in counterfeit goods.
  • Alan Stephen Maiss of Reno, Nevada. Concealing knowledge of a crime.
  • Richard Harold Miller of Tallahassee, Florida. Conspiracy to defraud the United States.
  • Delano Abraham Nixon of Neosho Rapids, Kansas. Forging the endorsement on a U.S. Treasury check.
  • John H. Overholt of Black Hawk, South Dakota. Concealment of information affecting Social Security benefits.
  • Charles Winters of Miami, posthumously. Conspiracy to export and the exportation of a military aircraft to a foreign country in violation of the Neutrality Act of 1939.
  • Morris Keith Parker of Georgetown, South Carolina. Concealing knowledge of a crime.
  • Robert Truman Reece of Redondo Beach, California. Unauthorized absence and missing the movement of a U.S. Navy ship.
  • Donald Edward Roessler of Harrison, Ohio. Embezzlement of mail matter.
  • David Lane Woolsey of St. George, Utah. Aiding and abetting violation of the Archaeological Resources Protection Act.
Originally on the list was Issac Robert Toussie of Brooklyn, N.Y., who was convicted for making false statements and mail fraud, but this was later revoked by the White House after additional information had "come to light" including his past criminal activities.

The prison sentence of Reed Raymond Prior of Des Moines, Iowa, who was in jail for methamphetamine possession, was also commuted by the President.

Ponzi Schemers Sentenced In $50 Million Fraud Case

Randall T. Treadwell, 51, of Savannah, Georgia and Arnulfo M. Acosta, 45, an attorney based in Edinburg, Texas, were sentenced last week for their parts in a $50 million fraudulent investment scam. Treadwell was sentenced t0 25 years in prison and ordered to pay $44 million in restitution. Acosta, who plead guilty in May 2007 to charges of conspiracy and making a false statement, was sentenced to 87 months in prison and ordered to pay $20 million in restitution. Two other co-conspirators were convicted by a jury along with Treadwell on wire fraud and conspiracy charges in June 2008: Ricky D. Sluder, 51, of Whitehouse, Texas and Larry C. Saturday, 66, of Savannah, Georgia. The four conspirators used three front investment companies, Learn Waterhouse, Inc., Wealth Builders Club, Inc., and Qwest International, Inc., to lure investors with promises of returns of up to 50%. They have admitted to paying earlier investors with "lulling payments" and using investment funds to pay for personal goods and services and generally living lavish lifestyles. Sluder and Saturday are scheduled for sentencing in January. The four were originally indicted in September 2005.

Read the story here, here and here.

Read the DOJ announcement here and here.

Read the SEC litigation release here.

Tuesday, December 23, 2008

Florida City Councilman Pleads Not Guilty In Embezzlement Case

Dan Andrews, 33, City Councilman in Sebring, Florida, pleaded not-guilty to 33 fraud charges yesterday. Andrews was arrested on November 24th on felony counts of grand theft, "scheming to defraud" and "embezzlement by making false entries on the books of a corporation." Andrews was the executive director of the Greater Sebring Chamber of Commerce and used his position to embezzle some $119,000 from operational accounts to pay personal bills and enrich himself, according to prosecutors. Andrews has been suspended from his position on the city council by an executive order by Governor Charlie Crist. Andrews also reportedly looted the chamber's scholarship fund, according to prosecutors.

Read the story here, here and here.

California Electronics Executive Arrested In $65 Million Supplier Kickback Scheme

Ausaf Umar Siddiqui, aka "Omar Siddiqui," 42, of Palo Alto, California and the vice president of merchandising and operations for Fry's Electronics, Inc., was arrested Friday and held on $300,000 bond for an alleged $65.6 million kickback scheme arranged with some of the company's suppliers. The IRS filed a criminal complaint alleging a scheme in which Siddiqui set up a sham company and made side deals to receive kickbacks - "commissions" of up to 31 percent - in exchange for keeping those suppliers' goods on the shelves. Prosecutors are considering adding wire fraud charges to the complaint. The scheme lasted from January 2005 to November 2008, according to the complaint. $17.9 million of the kickback revenue was paid directly to Las Vegas Sands Corp., which operates the Venetian Resort Hotel Casino, which Siddiqui frequented, according to prosecutors. Siddiqui reportedly lived extravagantly and had a major gambling habit. Some of the suppliers named by the IRS as possibly involved in the case include, Phoebe Micro Inc., Lead Data International, U.S. Media Technologies, and Elite Group Computer Systems.

Read the story here and here.

Utah Man Jailed For $140 Million Ponzi Scheme, Is Deined Parole Until At Least 2025

Val E. Southwick, 63, formerly of Ogden, Utah, who is serving 9 consecutive 1 to 15 year terms for perpetrating what is believed to be the largest Ponzi scheme in Utah history, was denied parole yesterday. His next parole hearing will be in 2025. Southwick pleaded guilty on June 12, 2008 to nine counts of securities fraud in connection with a phony investment scheme that defrauded at least 800 investors out of some $140 million. Southwick's front company group, known as VesCor, included some 180 corporate entities and purported to be a real estate investment firm. Southwick had promised investors as much as 24 percent returns, but the scheme collapsed in 2007 and he filed for bankruptcy.

Read the story here with video, here and here.

Florida Bank Exec Sentenced To 3 Years For Money Laundering Role In Healthcare Fraud Scheme

Javier J. Ortiz, 36, of Miami, Florida and a former vice president of Wachovia Bank branch in Miami's West Gables Financial Center, was sentenced yesterday to 3 years in prison for money laundering in connection with a $48 million Medicare fraud case in South Florida. According to prosecutors, Ortiz conspired with Angel Castillo Jr. in defrauding Medicare by opening bank accounts through which fraudulent Medicare reimbursements were deposited by Castillo. Some $400,000 was laundering in this way between 2005 and 2006. Ortiz had plead guilty in October to an information conspiracy to commit money laundering. Castillo was separately charged and was sentenced to 19 years in prison for orchestrating the Medicare fraud.

Read the story here and here.

Monday, December 22, 2008

Industry Study Says Bribery Is Top Corporate Compliance Concern

Integrity Interactive Corporation, a compliance consulting and training firm based in Waltham, Massachusetts, released a study today that says bribery is the top corporate compliance concern for major companies today. David Curran, Integrity Interactive CEO, attributes this shift to the recent spate of high profile bribery and corruption cases. The study lists the top dozen issues as follows:

1. Anti-bribery requirements
2. Conflicts of interest & gifts
3. Antitrust contact with competitors
4. Mutual respect
5. Records management
6. Product safety & liability
7. Privacy
8. Proper use of computers
9. Export controls
10. Careful communication
11. Information security
12. Financial integrity

A copy of the full report may be requested from Mike Wallwork at Integrity Interactive at mwallwork@i2c.com.

New Mexico Woman Charged With 73 Fraud Counts - Relief Funds Stolen

Lori Howard, of Clovis, New Mexico, was arrested today and charged with 73 fraud counts including felony fraud, identity theft and forgery in the theft of some $145,000 in tornado relief funds. According to prosecutors, Howard was a project manager for the Eastern Plains Council of Government and assigned to manage a financial assistance program to help residents in Curry and Roosevelt counties after tornadoes hit the area in March 2007. The program financed the New Mexico Mortgage Finance Authority to assist affected people with rental homes for up to six months. Prosecutors say Howard set up a front rental company, LH Rentals, and submitted fraudulent rental bills for reimbursement, pocketing $145,076 on the scam. She will be arraigned later this week.

Read the story here.
Update (4/1/10): Howard, now 40, was sentenced to 10 years in prison yesterday. She had plead guilty to 72 of the 73 original counts.

Auction To Be Held In Florida Church Lady's $500+K Embezzlement Case

Roseanne Stone, 51, of Tallahassee, Florida, who has plead guilty to embezzling more than $500,000 from the Episcopal Church of the Advent over a four year period, will be sentenced on February 18, 2009. The church plans an auction of storage units full of antiques, jewelry and other goods Stone purchased with the ill-gotten funds. Stone had plead guilty to the charge of grand theft for the embezzlement of some $512,000 from the church where she served as bookkeeper. According to court pleadings, Stone siphoned funds from three separate church accounts and proceeded to fill three storage units full of luxury items and antiques purchased with the funds. For interested parties, the auction is scheduled for January 24, 2009 at noon and will be held at Affiliated Auctions in Tallahassee.

Read the story here, here and here.

Florida Company Profit Down Post $36.6 Million Emebezzlement Settlement

PBSJ Corp., a publicly traded business services company based in Miami, Florida disclosed in its most recent filings with the SEC, that net income for the quarter ending September 30, dropped nearly 20 percent to $2.51 per share compared to $2.99 for the prior period. While much of the revenue drop was blamed on poor market conditions, the company also pointed to the recent settlements following the company's $36.6 million embezzlement fiasco involving its former chief financial officer and two other employees. The former CFO, William Scott Deloach, 50, of Miami, plead guilty to embezzlement charges and campaign contributions violations in September 2006. Deloach's co-defendants, Maria Garcia and Rosario Licata, both longtime employees and subordinates of his, plead guilty to an embezzlement charge. The embezzlement started in 1992 when Deloach was hired as controller and continued through 2005, according to prosecutors. The three were involved in a scheme issuing unauthorized checks from the company's master cash disbursement account, depositing them in personal accounts, splitting the proceeds for their own personal benefit - living lavish lifestyles and supporting personal gambling habits. Deloach was sentenced to 97 months in prison, plus restitution. Licata and Garcia were each sentenced to 63 months in prison, plus restitution.

Read the embezzlement story here, here and here.


Siemens Bribery Case: New York Times Perspective

The New York Times published an excellent article over the weekend about the Siemens A.G. bribery case: At Siemens, Bribery Was Just A Line Item. The article describes the exploits of Reinhard Siekaczek, described as an accountant with Siemens, who between 2002 and 2006, "oversaw an annual bribery budget of about $40 million to $50 million." According to the report, Siekaczek and a "small group" of other accountants directed payments to officials in countries all over the world, particularly third-world countries, in exchange for favorable treatment on contracts for the company. For his part, Siekaczek has cooperated with German authorities since his 2006 arrest and was ordered to pay a $150,000 fine and placed on a 2 year probation by a German court. Incredibly, prior to 1999, bribes were deductible as business expenses under the German tax code - this changed in February 1999 when Germany signed on to the international convention banning bribery of foreign officials. According to the article, Siemens officials continued the practice and worked to try to better disguise the payments to foreign officials, often made via transfers of funds to off-shore accounts. The article describes how at Siemens, bribes were referred to as “NA” - “nützliche Aufwendungen” which means “useful money.” The article went on to describe the "most common method of bribery involved hiring an outside consultant to help “win” a contract. This was typically a local resident with ties to ruling leaders. Siemens paid a fee to the consultant, who in turn delivered the cash to the ultimate recipient."

Sunday, December 21, 2008

New Jersey Man Arrested On Money Laundering/Ponzi Scheme Investment Fraud

Jeffrey Joseph Southard, 44, of Pittsgrove, New Jersey and a local investment broker, was arrested Friday and charged with defrauding investors out of some $1.3 million with a phony bond investment Ponzi-type scheme. Southard allegedly used the money to pay private school tuition, vehicles, mortgage costs and other personal expenses. According to authorities, Southard lured elderly investors in the area with promises of tax-free returns up to 11 percent, paying back some $400,000 on initial investments. Southard is specifically charged with money laundering, theft by deception, securities fraud and misapplication of entrusted property. He operated as a "from home agent" for GunnAllen Financial from 2003 to 2008, but has since been fired. The State of New Jersey has revoked his securities registration. Southard previously worked for American Express Financial Advisors (now Ameriprise), but left for GunnAllen when he faced charged of selling unregistered securities in 2003. Neighbors described him as a "nice, quiet man." Of course.

Read the story here, here and here.

Madoff Victims - A List

The Bernard L. Madoff Investment Securities LLC fraud has caused huge ripples throughout the investment community and far beyond. Many investors, from the large and savvy to the small non-profit, has been affected - in some cases irrevocably. The Wall Street Journal, FinAlternatives and several other media outlets have assembled good lists of individuals and entities that have been defrauded in this case. The Marquet International investigative research staff has attempted to update, combine and edited these lists as best we can - which we post here for our readers benefit (entity, exposure and description, if available):

Fairfield Greenwich Advisors
Investment advisors based in Connecticut
$7,500,000,000
Managed by Walter M. Noel, Jr., Fairfield Sentry Ltd. invested with Madoff.

Grupo Santander
Spanish bank
$3,500,000,000

FIM Ltd.
Funds manager based in London
$3,500,000,000
Investment via Kingate Funds

Tremont Group Holdings
Hedge fund group
$3,300,000,000
Owned by Oppenheimer Funds and Massachusetts Mutual Life Insurance Co. Tremont's Rye Investment Management unit had $3.1 billion invested, and its fund of funds group invested another $200 million.

Kingate Management
Hedge fund
$2,800,000,000
Investment via Kingate Global Fund

Bank Medici
Austrian bank
$2,100,000,000
The bank had two funds with $2.1 billion invested. Bank Medici is 25% owned by Unicredit SpA and 75% owned by chairwoman Sonja Kohn.

Ascot Partners
Hedge fund founded by GMAC chief J. Ezra Merkin
$1,800,000,000

Access International Advisors
New York-based investment firm
$1,400,000,000

Fortis Bank Nederland
Dutch bank
$1,350,000,000
Indirect exposures

HSBC
UK bank
$1,000,000,000

J.P. Jeanneret Associates, Inc.
Investment advisor based in Syracuse, New York
$946,000,000

Genevalor, Benbassat & Cie.
Money manager based in Switzerland run by the Benbassat family.
$935,000,000

Union Bancaire Privee
Swiss bank
$846,000,000

Natixis SA
French investment bank
$614,000,000
Indirect investments

Royal Bank of Scotland Group PLC
British bank
$599,000,000

Carl & Ruth Shapiro
Individuals and foundation investors; Carl Shapiro is the founder and former chairman of apparel company Kay Windsor Inc.
545,000,000
Reportedly $400 million invested individually and $145 million in the Carl and Ruth Shapiro Family Foundation.

Sterling Equities
New York investment vehicle owned by Fred Wilpon, also owner of New York Mets.
$500,000,000

BNP Paribas
French bank
$431,170,000
Exposure through its trading business and collateralized lending to funds of hedge funds.

BBVA
Spanish bank
$404,000,000
Indirect investment exposure

Fix Asset Management
Hedge fund based in New Jersey
$400,000,000

Man Group PLC
U.K. hedge fund
$360,000,000

Reichmuth & Co.
Swiss private bank
$327,000,000

Nomura Holdings
Japanese brokerage firm
$304,000,000
Exposure Via Fairfield Sentry fund.

Maxam Capital Management
Fund of funds based in Darien, Connecticut
$280,000,000
The fund reported a combined loss of $280 million on funds they had invested. Sandra Manzke, Maxam's founder and chairman, claims they are "wiped out."

Pioneer Alternative Investments
Dublin-based investment firm
$280,000,000

EIM SA
European investment manager
$270,000,000

Ira Rennert
Individual investor
$200,000,000

Bank Austria
Austrian bank
$192,100,000

M&B Capital Advisers
Spanish brokerage run by the son and son-in-law of the chairman of Banco Santander.
$187,900,000

Jerome Fisher
Individual investor and founder of Nine West apparel company
$150,000,000

Aozora Bank Ltd
Japanese bank
$137,000,000
Cerberus Capital Management LP owns a majority stake in Aozora.

AXA SA
French insurance conglomerate
$123,200,000
Credit Industrial et Commercial SA
French bank
$111,000,000
Indirect exposure.

Yeshiva University
Educational institution in New York
$110,000,000
A portion of its endowment had been invested for 15 years with Ascot Partners, which had "substantially all its assets invested with Madoff." J. Ezra Merkin has resigned as University trustee in the wake of the scandal.

Dexia
French bank
$106,900,00
Indirect exposure.

UniCredit SpA
Italian Bank
$92,390,000

Hadassah
The Women's Zionist Organization of America
$90,000,000

UBI Banca
Italian bank
$86,000,000
Investment via UBI entities UBI Pramerica and Capitalgest Alternative Investments.

Swiss Life Holding
Swiss insurer
$78,900,000
Indirect investments

Nordea Bank AB
Swedish Bank
$65,000,000

Great Eastern Holding
Singapore insurer majority owned by Oversea-Chinese Banking Corp.
$64,000,000

Hyposwiss
Swiss private bank owned by St. Galler Kantonalbank
$50,000,000

Korea Life Insurance Co
Korean insurer
$50,000,000

Banque Benedict Hentsch & Cie. SA
Swiss-based private bank
$48,800,000
Benedict Hentsch had also recently agreed to merge with Fairfield Greenwich Group, a major Madoff distributor. It is currently attempting to cancel that deal.

Royal Dutch Shell pension fund
Pension of global energy and petrochemical company
$45,000,000
Indirect investment.

Fairfield, Connecicut pension fund
Municipal pension fund
$42,000,000

Royal Bank of Canada
Canadian Bank
$40,400,000

Wolosoff Foundation
Non-profit foundation
$38,000,000

Bramdean Alternatives
Asset manager run by Nicola Horlick, aka “Superwoman.”
$31,200,000

Sarah Chew family
Individual investors
$30,000,000

Mortimer B. Zuckerman Charitable Remainder Trust
The charitable trust of real-estate magnate, who owns the Daily News and U.S. News & World Report.
$30,000,000

Arthur I. and Sydelle F. Meyer Charitable Foundation
Non-profit foundation based in Florida
$29,200,000

Sumitomo Life Insurance Co.
Japanese insurer
$22,000,000
Indirect investments

Banco Espirito Santa
Portuguese bank
$21,400,000

Tufts University
Educational institution
$20,000,000
Investment via Ascot Partners, which reportedly invested the entire sum with Madoff. Tufts has written off the value of this investment.

The Madoff Family Foundation
Charity run by the Madoff family
$19,000,000

Jewish Community Foundation of Los Angeles
The largest manager of charitable gift assets for Los Angeles Jewish philanthropists
$18,000,000
Support organization for the Madison Cultural Arts District. The group had funds invested with Fairfield Greenwich

Taiyo Life Insurance Co.
Japanese insurer
$17,900,000
Indirect investments

KSM Capital Advisors, LLC
Investment firm based in Indianapolis, Indiana owned by investment firm Katz, Sapper & Miller
$15,000,000

Phoenix Holdings
Israeli financial services company
$15,000,000
Investments via Thema, which made Madoff investments.

Harel Insurance Investments & Financial Services Ltd.
Israel-based insurance firm
$14,200,000

Alicia Koplowitz
Individual investor
$13,700,000

Groupama SA
French insurer
$13,600,000

Baloise Holding AG
Swiss insurer
$13,000,000

Lautenberg Family Trust
Charitable foundation of New Jersey Sen. Frank Lautenberg
$12,800,000

Societe Generale
French Bank
$12,320,000

Credit Agricole SA
French bank
$12,320,000

KAS Bank
European financial company
$12,300,000
Massachusetts Pension Reserves Investment Management
State pension
$12,000,000

Richard Spring
Individual investor based in Florida
$11,000,000
Spring claims he had about 95% of his net worth invested with Mr. Madoff.

Mitsubishi UFJ FInancial Group
Japanese financial institution
$11,000,000

Hampshire County Council
Municipal UK pension
$10,700,000

RAB Capital
Hedge fund
$10,000,000

Richard Roth
Individual investor
$10,000,000

United Jewish Endowment Fund
Jewish non-profit charity
<$10,000,000

Banco Popolare
Italian bank
$9,860,000

Korea Teachers Pension
Korean pension fund
$9,100,000

Mitsui Sumitomo Insurance Co.
Japanese insurance and financial group
$9,000,000
Indirect investments with Madoff

Robert I. Lappin Charitable Foundation
Massachusetts-based Jewish charity forced to close last Friday as a result of Madoff losses.
$8,000,000

Michael Roth
Individual investor
$7,500,000

Chais Family Foundation
Jewish charity based in California forced to shut down last Sunday as a result of losses.
$7,000,000

Technion
Educational institution, aka Israel Institute of Technology in Haifa, Israel
$6,500,000

Jewish Federation of Greater Los Angeles
LA-based non-profit charity
$6,400,000

Ramaz School
Educational institution
$6,000,000

Julian J. Levitt Foundation
Texas-based charity
$6,000,000

Irwin Kellner
Individual investor from Port Washington, NY suing Madoff
$6,000,000

North Shore-Long Island Jewish Health System
Health system
$5,700,000

Stony Brook University Foundation
Educational institution endowment
$5,400,000

Neue Privat Bank
Swiss bank
$5,000,000

Maimonides School
Educational institution in Boston
$5,000,000

David Berger
Individual investor
$5,000,000

International Olympic Committee
The organizer of the Olympic Games
$4,800,000

Credicorp
Peruvian financial services company
$4,500,000
Direct and indirect investments via Credicorp's Atlantic Security Bank.

SAR Academy
Educational institution
$3,700,000

Dorset County Pension Fund
UK municipal pension fund
$3,500,000

Congregation Kehilath Jeshurun
Synagogue in New York
$3,500,000

Caja Madrid
Spanish investment firm
$3,100,000

Merseyside Pension Fund
Municipal UK pension fund
$3,000,000

Roger Peskin
Individual investor
$3,000,000

New York Law School
Law school in New York City
$3,000,000
The school invested the money through its endowment entity. The school filed an investor lawsuit against J. Ezra Merkin, Ascot Partners and BDO Seidman.

Swiss Reinsurance Co.
Swiss insurer
$3,000,000
Indirect exposure through hedge fund investments

Global Specialised Opportunities 1
Hedge fund based in Bermuda
$2,800,000

Banca March
Spanish bank
$2,700,000

American Friends of Yad Sarah
Jewish charity in New York, based in Israel
$1,500,000

Caisse des dépôts et consignations
French government owned bank
$1,380,000

Robert and Sarah Chew
Individual investors
$1,200,000

Ira Roth
Individual investor based in New Jersey
$1,000,000

Harold Roitenberg
Individual investor
$1,000,000

Arnold & Joan Sinkin
Individual investors
$1,000,000

Stephen Abbott
San Francisco attorney
<$1,000,000 Reportedly had "several hundred thousand dollars" in a family trust funds invested’
Allegretto Fund
Hedge fund
$790,000

Clal Insurance Enterprise Holdings
Israel-based financial services company
$778,800

Mediobanca SpA
European bank; invested via its subsidiary Compagnie Monegasque de Banque
$671,000

Betty Greenfield
Individual investor
$400,000
Investment of personal trust account

Other victims with unspecified losses include:

Allianz Global Investors
The asset management unit of German insurer Allianz SE
The unit says exposure "is not significant."

Austin Capital Management
Fund of funds

AWD
Financial services provider

Banco Espanol de Credito SA (Banesto)
Spanish bank controlled by Banco Santander
Its clients have a total 2 million euros exposure

Barclays PLC
UK bank
The bank says it has "minimal" exposure" and is "fully collateralized"

Ed Blumenfield
Individual investor and New York area real estate developer

Norman Braman
Individual investor and former owner of Philadelphia Eagles

Gerald Breslauer
Individual investor and Hollywood financial advisor to Steven Spielberg and Jeffrey Katzenberg. Breslauer himself has likely sustained heavy losses as he typically invests alongside his clients.

Chair Family Foundation
Charity

CNP Assurances
French insurer
Indirect exposure of 3 million euros via a fund of funds

Credit Suisse
Swiss bank
The company says it has "no material direct exposure." It is reviewing if any client funds were affected.

EFG International AG
Swiss private banking and asset management group

Englebardt family
Individual investors from Los Angeles

Erste Bank
Hungarian bank

Fair Food Foundation
Michigan charity

Leonard Feinstein
Individual investor and co-founder of retailer Bed Bath & Beyond

Stephen A. Fine
Individual investor and president of Biltrite Corporation

Fire and Police Pension Association Of Colorado
Pension Fund
It had $60 million invested with Fairfield Greenwich as of six months ago.

Barbara Flood
Individual investor

Fukoku Mutual Life Co.
Japanese insurer
Indirect investments via trust accounts.

Avram and Carol Goldberg
Individual investors and former owners of Stop & Shop Supermarkets

Joyce Z. Greenberg
Individual investor

Gutmann Bank AG
Austrian Bank

Helfman family
Individual investors from Miami

Hillcrest Golf Club of St. Paul
Country club in Minnesota

JEHT Foundation
New York foundation focused on electoral and criminal justice reform says it will close at the end of January 2009 as a result of losses. Donors Jeanne Levy-Church and Kenneth Levy-Church had all their funds managed through Madoff.

Jeffrey Katzenberg
Individual investor and CEO of DreamWorks Animation SKG Inc.
Katzenberg's financial affairs along with those of Steven Spielberg were managed by Gerald Breslauer. Katzenberg’s losses are in the “millions” according to people familiar with the matter.

KBC Group NV
Belgian banking and insurance group
Indirect exposure through collateralized loans.

Knowsley MBC
Municipal UK pension

LLBW
German bank

Leonard Litwin
Individual investor and real estate magnate

Loeb family
Individual investors

Mirabaud & Cie.
Swiss bank

MorseLife
Florida charity

Nipponkoa Insurance
Japanese insurer

Notz, Stucki & Cie
Swiss investment managers

Oak Ridge Country Club
Country club in Minnesota

Palm Beach Country Club
Country club in Palm Beach, Florida

Philoctetes Center for the Multidisciplinary Study of the Imagination
New York non-profit
Reportedly may be forced to close due to losses from Madoff investments

Eric Roth
Individual investor and screenwriter

St. Helens MBC
Municipal UK pension

Sefton MBC
Municipal UK pension

SNS Reaal Groep
Dutch financial services firm

Eliot Spitzer family
Individual investors and former NY Governor

The Elie Wiesel Foundation for Humanity
The charitable foundation of Nobel laureate Elie Wiesel

Thema
European hedge fund

Jeff Tucker
Individual investor and founding partner of Fairfield Greenwich Group; owner of Stone Bridge Horse Farm

Thyssen family
Individual investors

UBS AG
Swiss bank
The bank says is has "no material exposure."

Lawrence Velvel
Individual investor
Velvel is dean of the Massachusetts School of Law who, together with a friend and another investor, "may have lost millions of dollars."

Wunderkinder Foundation
The Steven Spielberg charity reportedly invested some 70% of its assets with Madoff

Sources: Wall Street Journal, Financial Times, New York Times, Bloomberg, Associated Press, MarketWatch, Newsday, CNBC, Boston Globe, Chicago Tribune, Toronto Globe & Mail, Time, Reuters, Palm Beach Post, Fin Alternatives, and other media sources.
We welcome any additions, corrections/edits & comments. Please let us know at fraudtalk@marquetinternational.com.

Saturday, December 20, 2008

Update On California Fire Department Fraud Case: 2nd Defendant Ordered For Trial

Steven Edward Vaughn, 63, a retired sheriff's lieutenant and former paid volunteer for the Riverside County Fire Department, who has been held at the Robert Presley Detention Center since January 2007 on $1.2 million bail, has been ordered for trial. Vaughn and cohort, Michael A. Burton, a former Department employee, have been charged with embezzling some $1.2 million. The judge has ordered that there was enough evidence to proceed to trial on charges of embezzlement, misappropriation of funds and conflict of interest and lowered Vaughn's bail.

Read FraudTalk's original post on this story here.

Update On Utah College Embezzlement Case: $500K Loss; None Recovered

Kathy Valdez, 41, the former Finance Director for Southwest Applied Technology College in Cedar City, Iowa, is out on $100,000 bail while the investigation continues into what happened to the $500,000 she allegedly embezzled from the college. According to prosecutors, Valdez allegedly stole the funds while she was finance manager between June 2007 and December 2008, depositing it into her own private account with Zions Bank. Valdez' statement reportedly claims that her ex-husband has since transferred the money to a different bank. A preliminary hearing is set for January 28, 2009.

Read FraudTalk's original post on this story here.

Update On Connecticut Meetpacking Embezzler: He Surrenders

Philip Friend, 49, of Ridgefield, Connecticut, who was being sought by police in connection with the alleged embezzlement of some $237,000 from New Haven, CT-based Standard Beef where he worked, surrendered to authorities Thursday. Friend is being charged with first-degree larceny and 33 counts of third-degree forgery.

Read FraudTalk's original post on this story here.

North Carolina Bookstore Worker Accused Of $350K Embezzlement

Anna Susan Kosak, 43, of Raleigh, North Carolina, was accused today of embezzling some $350,000 from the Quail Ridge Books & Music store where she worked as a bookkeeper. According to authorities, Kosak stole $348,975 between November 2001 and September 2008. Details on how she took the money have yet to be released.

Pennsylvania Chiropractor Sentenced To 4 Years For Healthcare Fraud

Douglas A. Henderson, 47, of Lower Burrell, Pennsylvania, was sentenced Friday to 4 years in prison and ordered to pay $12.1 million in restitution to Highmark Blue Cross/Blue Shield for fraudulent billings for services never performed. The sentencing had been delayed 10 times. In April 2006, Henderson pleaded guilty to separate felony counts of health care fraud, conspiracy and income tax evasion. According to prosecutors, between January 1995 through 2002, Henderson billed Highmark for services never performed on patients of the now-defunct Burrell Chiropractic Clinic. Fifteen other individuals have been charged in this case. Henderson's fraud allowed him to live lavishly with several homes, a fleet of luxury vehicles and a country club membership, among other things. He did cooperate in the prosecution of the other 15 individuals, who have all been convicted or plead guilty. Henderson, who masterminded the largest health care fraud in Western Pennsylvania history, is quoted as saying, "My actions are inexcusable." I agree.

The Pittsburgh Tribune Review has an excellent article chronicling the case here which includes this list of the other 15 defendants in the case:

Robert Bates, 56, of Lower Burrell was sentenced to serve three years' probation, including 10 months of home detention. He cooperated with Henderson to submit more than $152,600 in false claims, for which he was paid $19,500.
Brandon E. Burns, 31, of Murrysville was placed on probation for three years and ordered to pay restitution of $64,000 for false claims submitted in his name. He received about $17,000 for his participation.
Robert Durcho, 51, Tarentum was sentenced to three years' probation and ordered to make restitution for 147,000 in false claims. He was paid about $51,000 in the scam.
Marilyn Marshall, 56, Murrysville was placed on probation for three years and ordered to make $140,000 in restitution. She received around $58,000 from Henderson for her cooperation.
Tina McCurdy, 42, of North Huntingdon was sentenced to three years' probation and ordered to pay $242,000 in restitution for her role in the scheme that paid her $73,992 in kickbacks.
Eric Ribar, 37, of Apollo must serve three years' probation and pay $146,577 in restitution for claims submitted in his name. He received $49,230, prosecutors said.
John Slimick, 49, of New Eagle in Washington County was placed on probation for three years and ordered to serve six months on house arrest. He must pay $156,000 in restitution for claims filed by Henderson, who paid him about $20,000.
Phillip Swartzlander, 50, of New Kensington was sentenced to five months in prison followed by probation. He must make restitution totaling $138,000 for cooperating with Henderson, who paid him $30,000.
Judith Williamson, 50, of Pittsburgh's South Side was placed on probation for three years and ordered to repay Highmark $316,611 for claims submitted in her name by Henderson, who paid her $46,500.
Heather Layhew, 35, of Rural Valley in Armstrong County, and John Layhew, 40, of Lower Burrell will be sentenced Jan. 9. They admitted helping Henderson to obtain $210,000, for which they received $47,000.
Linda McClafferty, 59, and William McClafferty, 54, of Allegheny Township will be sentenced Jan. 9. The couple said they helped Henderson to collect about $415,000, for which they received about $41,000.
Susie Horning, 56, of Leechburg will be sentenced Jan. 23 for $250,000 in claims submitted in her name. Prosecutors said she received kickbacks of a least $26,000 and free use of a New Kensington residence.
Kendra Huddleston, 45, of Littleton, N.C., will be sentenced Jan. 23 on guilty pleas to health care fraud, conspiracy and income tax evasion for submitting numerous fake medical bills to Highmark and filing a fraudulent tax return for 2000.

Read the story here and here.

Read the plea agreement here.

Read the information here.

Friday, December 19, 2008

Indiana Woman Gets Off Without Prison After $215K Embezzlement

Janet Maye Lazdins, 56, of Indianapolis, Indiana, who pleaded guilty in August to theft and two counts of forgery for stealing some $215,000 from the Bridgestone Firestone Company between 1997 and 2006, will only have to serve a three-year suspended prison term and three years on probation. Lazdins worked in the accounts payable department of the company. In deciding on the sentence, Madison Superior Court 3 Judge Thomas Newman weighed the fact that Lazdins has already made restitution in the case.

Read the story here.

Seems like a pretty light sentence considering she could have received up to 16 years or more.

Hearing Set For South Carolina Jailer Accused Of $360K Embezzlement

Arnold Ramos Pastor, 44, the former Dorchester County Sheriff’s Office jail chief who has been indicted on charges he embezzled nearly $360,000 from the county, will have a hearing on the case in February, according to prosecutors. Pastor was indicted in April on charges of embezzlement of public funds. He faces 10 years in prison, plus fines and restitution if convicted. Pastor has admitted to taking the funds over a 7 year period and plans on paying it back, according to his attorney.

Read the story here, here and here.

2 Arizona Men Arrested For Defrauding Local Candle Company

Donald Elvin Blackburn, 38, of Queen Creek Arizona (near right), and Derek David Gentry, 37, of Peoria, Arizona (far left), were arrested today for allegedly defrauding the Gold Canyon Candle Company out of more than $800,000 by fraudulently billing it for computer equipment that was never delivered. The two are charged with fraud schemes, forgery, felony theft, trafficking stolen property and computer fraud. Gentry is the former IT director for the company who also owned Maverick Development Solutions, Inc. that was already a vendor to the company but he did not disclose when he was hired in 2005. According to reports, Gentry would place orders to his own company, along with Blackburn's D.B. Network Solutions. The equipment was never delivered.

Read the story here and here.

Texas Executive & Consultant Indicted In $6 Million Foreign Bribery Conspiracy

James K. Tillery, 49, the former President of Willbros International, Inc., a unit of WIllbros Group, Inc., based in Houston, Texas, was charged in an indictment today with a conspiracy to pay more than $6 million in bribes to foreign officials in exchange for contracts. Tillery was indicted along with Paul G. Novak, 41, a consultant to the company, on four counts: violation of the anti-bribery provisions of the Foreign Corrupt Practices Act, money laundering, and with two counts of authorizing corrupt payments. The bribes were allegedly made to secure gas-pipeline construction and rehabilitation business from state-owned companies in Nigeria and Ecuador. In May, the company agreed to pay a $22 million criminal penalty to settle related bribery charges. The bribes occurred between late 2003 and March 2005, according to the indictment.

Read the story here, here and here.


Shearman & Sterling has put together a nice Digest of FCPA Cases here, which includes the Willbros case.

Update On Petters Fraud Case: Accountant Pleads Guilty To Tax Fraud

James C. Wehmhoff, 67, of Plymouth, Minnesota, the former Executive Vice President for Petters Group Worldwide, pleaded guilty today to charges of tax fraud. Wehmhoff, the sixth person charged in the Petters ponzi-scheme fraud case, was accused of conspiracy to defraud and assisting in filing of false tax returns. Tom Petters was charged with fraud and money laundering in an alleged $3 billion ponzi scheme.

Read FraudTalk's earlier posts on the Petters case here and here.

Read the story here and here.

South Carolina Bank Manager Pleads Guilty To $600K Embezzlement

Donna B. Beardsley, 46, of Greenwood, South Carolina, the former bank manager at Carolina First Bank, pleaded guilty to embezzling some $600,000 from the financial institution. Beardsley was confronted by US Secret Service Agents and admitted to the thefts, which occurred between April 2007 and July 2008, and that she used the funds to purchase land, make home improvements and pay off credit card debts. She faces up to 30 years in prison, a fine of up to $1 million, plus restitution.

Read the story here, here and here.

Arizona Attorney Convicted Of Bilking Clients

Edward P. Bolding, 70, a suspended lawyer from Tucson, Arizona, was convicted yesterday on two charges that he bilked his clients out of more than 750,000. Bolding, who was convicted by a jury verdict specifically on two counts of fraudulent schemes and artifices and one count of obstruction of a criminal investigation, faces up to 27 1/2 years in prison, plus fines and restitution. He was found guilty of stealing client funds awarded in lawsuits and using them for his own personal purposes. Bolding did not show up in court to hear the verdict. He had been suspended on July 24, 2003 by the attorney Board of Disciplinary Appeals.

Read the story here, here and here.

TV Drama Producer Chiklis To Create New Program Involving Investor Frauds

Michael Chiklis, noted television producer, who fell victim to a Ponzi-schme earlier this year, but was spared in the Madoff fraud, has decided to produce a new series based upon that experience and involving investment fraudsters, according to reports. He hopes to soon have a pilot script for "House of Cards." Chiklis was the creator of the tv program, The Shield.

Update: Convicted Philanthropist Fraudster To Be Jailed Until Sentencing

Alberto W. Vilar, 68, who was recently convicted on conspiracy fraud charges was ordered today by New York Judge Richard J. Sullivan, detained in jail until his sentencing on March 20, 2009. According to reports, the good judge feels Vilar is too much of a flight risk to be allowed out on bail. He was convicted of defrauding investors with respect to their investments in Vilar's firm, Amerindo Investment Advisors Inc. Sentencing guidelines would require at least 27 years imprisonment. Read FraudTalk's original post on this story here.

Read the story in the New York Times here and here.

Thursday, December 18, 2008

Maine Man Charged In Military Bribery Scheme

Maurice Henry Subilia, 64, of Kennebunkport, Maine and the former CEO of Fiber Materials Inc., was charged in an information filed in Alabama on 2 felony counts of Conspiracy to Bribe a Public Official and Bribing a Public Official. Specifically, Subilia has been charged with bribing two officials of the Army's Space and Missile Defense Command with payments of at least $1.2 million over a four year period. According to prosecutors, Subilia bribed Michael Cantrell, who until April 2007 was director of the Integrated Capabilities Management Directorate of the space and missile command, and Douglas Ennis, deputy director of the directorate. The two officials have been separately charged, pleaded guilty earlier this year and are awaiting sentencing in Alabama where this case was brought. According to the complaint, the bribes were to secure Army contracts for two related companies, Lealagi Inc. and Sage Technologies, both of which Subilia served as president and director. Fiber Materials is also now suing Subilia in civil court in Maine, claiming that he defrauded the company over a 30 year period. We note also that Subilia was convicted in 1995, along with other defendants, of export violations of missile control technology to India, but was only sentenced to 6 months in a halfway house. However, as a result, he was placed on the Denied Persons List and deprived them of export privileges until November 2015. In this case he faces up to 20 years in prison and $500,000 in fines if convicted on both charges.

Read the story here, here and here.

California Woman Pleads Guilty To Embezzling $283,000 From County Agency

Mary Thongdee, 25, of Stockton, California, pleaded guilty Monday to embezzling more than $283,000 from the San Joaquin Family Resource and Referral Center. Thondgee and a co-conspirator, Laphone Vongkeo, 32, who worked as a payment provider analyst at the center, were alleged to have written checks which Thongdee cashed and the two shared. The thefts occurred between November 2004 and July 2007. Vongkeo's trial is scheduled for April 2009. Sentencing for Thongdee is scheduled for February 23, 2009. She faces up to 10 years in prison and a fine of $250,000, plus restitution.

Read the story here, here and here.

Read the DOJ indictment announcement here.

Update On Cleveland City Councilman Bribery Case

Robert J. White, III, 47, the former Cleveland City Councilman, has pleaded guilty to one count of bribery in violation of the Hobbs Act, it was announced yesterday. White was charged with accepting a $500 bribe in exchange for helping a local businessman.

Read FraudTalk's original post on this story here.

Red the DOJ announcement here.

Miami Physician's Assistant Sentenced To 14 Years For $119 Million Healthcare Fraud

Thomas McKenzie, 53, of Miami, Florida, a physicians assistant, was sentenced today to 14 years in prison for his role in an HIV infusion fraud. McKenzie, a Nicaraguan native, was working in cahoots with the three masterminds, Carlos, Luis and Jose Benitez, along with a number of other conspirators, in orchestrating the fraudulent reimbursement for HIV infusions and other procedures not conducted or needed. McKenzie taught the others how to prescribe ''medically unnecessary'' HIV infusion treatments. In September, McKenzie pleaded guilty to one count of healthcare fraud conspiracy and one count of submitting false Medicare claims. He also became an informant for the authorities and a witness for the prosecution against the other co-defendants. The Benitez brothers owned a number of front HIV infusion clinics, including: AH Medical Office; Advanced Medical Rehabilitation Center; Best Medi Corp.; Physician's Health Med-Care; Physician's Med-Care; Saint Jude Rehab Center; Global Med-Care Corp.; CNC Medical Corp.; G&S Medical Centers; Karla Medical Services; and Best Medicare.

FraudTalk has covered this case before here, here and here.

Read the story here, here and here.

Tennessee Stockbroker Charged In $9 Million Ponzi Fraud

Michael J. Park, of Brentwood, Tennessee, was charged today with three counts of mail fraud and one count of wire fraud in connection with a Ponzi-like investment scheme he allegedly ran. Park was the sole principal of Park Capital Management Group, in which he convinced investors to place funds for investment publicly traded securities. However, prosecutors allege Park used investor funds to pay earlier investors, purchase homes, expensive cars and other personal items. The scam ran from September 2001 toJune 2008, according to the complaint. He had promised investors returns as high as 28 percent. Park has admitted to the SEC that the investments have no value and he reportedly attempted suicide after the business was shut down this summer. He has also filed for bankruptcy and his wife has filed for divorce. Park faces up to 60 years in prison, plus fines and restitution.

According to U.S. Attorney Ed Yarbrough, the prosecutor in this case, a lot of investor fraud schemes are coming to light across the country because of the recession. "What happens when the economy takes a hit like it is now is these schemes can longer stay afloat and people want their money back and suddenly discover there's no money there," he said. "That's why during a period like this you see a rash of these kinds of cases. I don't think we've seen the end of it yet."

I agree wholeheartedly.

See the Nashville Post's series of articles on this cases here.

Read the story here, here and here.

Wednesday, December 17, 2008

2 So-Cal Medical Company Execs Charged With Healthcare Fraud

Kim Jeanette Shittu, 45, and Adekunle Rafiu Shittu, aka "Cooley," 54, were indicted yesterday on charges of defrauding the Medicare program out of some $2.5 million. The pair are alleged to be part of a ring that has defrauded Medicare by recruiting patients for wheelchairs who do not need them and getting reimbursed by the program fraudulently. 18 others have been arrested in the Los Angeles area in connection with this and similar cases. The Shittus operated two entities, Kimco Medical Supply Inc. and K&K Medical Supply Inc., both operating from San Bernardino, California, which billed Medicare over $3.5 million and were fraudulently reimbursed in the amount of $2,517,076. FraudTalk has reported on a similar case in Texas here. The indictments are part of an ongoing prosecutorial effort made by the multi-agency composed Medicare Fraud Strike Force.

Read the story here, here and here.

Read the DOJ press release here.