Saturday, January 31, 2009

Update: US Interior Department Official Pleads Guilty To Accepting Bribes

Edgar A. Johnson, 60, of Bowie, Maryland, and a former US Department of the Interior official, pleaded guilty Friday to accepting $15,000 in bribes from an unnamed New Jersey-based company seeking to sell insurance to government agencies. Johnson was employed in the Department of the Interior's Office of Insular Affairs. He was charged with accepting bribes from companies seeking to do business in the US Virgin Islands. Johnson, allegedly needed the extra cash to support tuition payments at a private school for one of his children as well as to support a "lavish" lifestyle.

Read FraudTalk's original post on this story here.

Read the story here and here.

Read the criminal information here.

Read his plea agreement here.

Former Congressman Shays Campaign Allegedly Embezzled From By Manager

Michael Sohn, the former campaign manager of former Representative Christopher Shays (R-CT), allegedly embezzled $273,787 from the campaign, according to a report filed with the Federal Elections Commission. The FBI has been informed and has commenced a formal investigation. Details of the case have yet to be released.

Developing story...

Read about it here, here and here.

Arkansas Man Sentenced To 15 Years For $43 Million Ponzi-Type Investment Fraud Scheme

James Blackman Roberts, 71, of Heber Springs, Arkansas, was sentenced last Friday to 15 years in prison for defrauding investors in a Ponzi-type investment fraud scheme. Roberts was charged August 31, 2007 by the SEC of operating the Ponzi scheme through fraudulent investment vehicles, FOMAC International, Inc., and Consultores Las Tres Americas S.A. offering high returns in foreign exchange markets. Instead, authorities alleged that Roberts misappropriated investment funds to enrich himself and paid off earlier investors with later investor funds. Roberts plead guilty in May 2008 to one count of wire fraud in connection with the scheme. Roberts was also ordered to pay $43,456,874.40 in restitution to the victims of his fraud.

Read the story here and here.

Read the DOJ's announcement here.

Read the SEC's original announcement here.

Update: Michican Couple Arraigned In $1.8 Million Embezzlement Case

Amy Lynn McDonald, 36 and Erick Donald McDonald, 38, of Waterford Township, were extradited back to Michigan yesterday from New Orleans where they were arrested and arraigned on charges they embezzled some $1.8 million from the Palace of Auburn Hills. Prosecutors have increased the embezzlement amount, presumably based on further investigation. They are being held in lieu of a $2 million and a $2 1/2 million bond, respectively. Amy McDonald was a longtime accounts payable manager and has denied any wrongdoing. They are suspected of using company credit cards and other means to pay for numerous personal items and expenditures, including motorcycles, vehicles, electronics, sporting goods, luxury vacations and cruises -- even Erick's monthly court-ordered child support to an ex-wife.

Read FraudTalk's original post on this story here.

Former Abramoff Tied Lobbyist Pleads Guilty To Conspiracy To Commit Honest Services Fraud

Todd A. Boulanger, 37, pleaded guilty yesterday to charges he conspired to commit honest services fraud in connection with his lobbying efforts with previously convicted lobbyist, Jack Abramoff. According to the complaint, Boulanger, along with others, gave "numerous things of value" to a number of public officials in an effort to influence them. These items included travel, professional sports tickets, concert tickets, expensive meals, and the like. Abramoff, who plead guilty in January 2006 to honest services fraud and tax evasion, was sentenced to 4 years in prison in September 2008.

Read the story here and here.

Read the DOJ announcement here.

Former Texas Restaurant Manager Sentenced To 2-1/2 Years For Embezzlement

Orchid Lynette Hill, 48, of Midland, Texas, was sentenced yesterday to 2 1/2 years in prison, plus restitution for embezzling $115,000 from the International House of Pancakes where she had worked as the general manager. Hill was convicted November 13th on 11 wire fraud counts for sending false accounting reports to the company's regional headquarters for the period August 2006 to January 2007. The investigation and trial did not reveal how the embezzlement scheme was accomplished as it was done in a "deceptive manner" according to investigators. Nevertheless, Hill prepared the fraudulent financial reports which is what she was convicted on.

Read the story here, here and here.

California Bookkeeper For Internet Security Company Pleads No Contest In $130K Embezzlement

Russell Morita, 48, of Sunnyvale, California, pleaded no contest to charges he embezzled some $130,000 from his former employer, Trend Micro in Cuppertino, California. According to prosecutors, Morita used a company credit card between 2004 to 2007 to buy many electronics items which he had shipped directly to his home. In some instances Morita allegedly charged twice the amount on some items he bought and had the balance refunded to his personal account. Morita was an employee in the accounting department of Micro Trend.

Read the story here and here.

Friday, January 30, 2009

California Bookkeeper Indicted In $130K Embezzlement Case

May Yonzon Torres, 37, of Stockton, California, was indicted Thursday on charges she embezzled some $130,000 from her employer, Architectural Amenities Inc., also of Stockton. Torres, who was charged with grand theft of personal property and falsifying corporate books, also had her Filipino passport was confiscated when released on her own recognizance. Torres allegedly used the company checkbook to fraudulently pay herself and her relatives. The thefts reportedly occurred between February 2005 and October 2008.

Read the story here and here.

Read the indictment here.

Update: California Aviation Company Bookkeeper Indicted

Brenda Kaye Kemper, 57, of Lodi, California, and the former bookkeeper for Big Valley Aviation Inc., was indicted today on charges she embezzled more than $1 million from her employer.

Read FraudTalk's original post on this story here.

North Carolina Volunteer Fire Department Treasurer Charged With Embezzlement

David Lowell Joyner Jr., 28, of Elm City, North Carolina, was charged today with embezzling more than $100,000 from the Coopers Volunteer Fire Department where he had worked as treasurer. According to investigators, Joyner made fraudulent invoices and then wrote bogus checks which he was able to cash. It is still unknown how much was taken as the investigation is continuing.

Developing story...

Read the story here, here and here.

2 Federal Judges In Pennsylvania Plead Guilty To Honest Services Fraud In Receipt Of $2.6 Million "Finder's Fees"

President Judge Mark A. Ciavarella, age 58, and former President Judge Michael T. Conahan, age 56, both of the Luzerne County Court of Common Pleas, pleaded guilty Monday with conspiring to defraud the IRS, in connection with a multimillion honest services fraud scheme involving the placement of juveniles in juvenile detention facilities. According to prosecutors, Ciavarella (pictured on the left) and Conahan (on the right) concealed their receipt of more than $2.6 million between January 2003 and April 2007 from 2 unnamed individuals as "finders fees" in placing juveniles. In their plea agreement, the two judges agreed to resign their positions, immediate disbarment, spend 87 months in prison and make restitution.

Read the story here, here and here.

Read the DOJ's announcement here.

Update: Marc Dreier Indicted On Conspiracy & Fraud Charges

Marc S. Dreier, 58, of Manhattan, and the former founding partner of the law firm that bears his name, was indicted yesterday on conspiracy and securities fraud and wire fraud charges in connection with the alleged sale of fraudulent promissory notes to hedge funds. The scheme, which reportedly cost investors some $400 million in losses, allegedly ran from 2004 to 2008, and promised returns of 8 to 12 percent on 2 year notes owed by real estate developers. Instead, prosecutors allege Dreier used the funds to pay earlier investors in a Ponzi-type scheme and to finance a lavish lifestyle. Drier allegedly fooled the due diligence of hedge funds by hiring impersonators to pose as representatives of the real estate developer, including its CEO. He is represented by noted New York-based defense attorney, Gerald L. Shargel, Esq. Held in jail on $20 million bail, Dreier faces up to 20 years in prison, plus fines and restitution, if convicted.

Read FraudTalk's earlier posts on this story here, here and here.

Read the story here and here.

Montana Woman Sentenced For Embezzling $730K From Bank

Kari L. Alfred, 25, of Lolo, Montana, was sentenced yesterday to one year in prison, plus restitution for embezzling some $730,000 from Farmers State Bank where she had been employed as a bank teller. According to prosecutors, Alfred began stealing in late 2006 and was able to defeat the security cameras by turning her back to them. According to reports, Alfred started by takins small amounts of cash but soon graduated to taking as much as $2,000 per day, "force-balancing" the bank's computer system to cover her tracks. The fraud was uncovered by a routine audit while she was on leave, revealing $73,000 missing. She plead guilty to embezzlement from a bank on October 1, 2008.

Read the story here and here.

Read the DOJ's announcement of her arraignment here and her guilty plea here.

Embezzlement Suspect Surrenders After Standoff In Atlantic City, New Jersey

William Serrano, 53, of Corum, New York, wanted for embezzlement by Suffolk County, New York authorities, held off police for 11 hours while in a holding cell at the Trump Taj Mahal Casino Resort in Atlantic City, New Jersey before surrendering. The suspect, who allegedly embezzled an undisclosed amount, had been detailed in the security office at the hotel when he pulled a gun and threatened to kill himself during the standoff. Negotiators convinced him to surrender.

Developing...

Read the story here and here.

Florida Woman Sentenced To Nearly 6 Years For $12.7 Million Embezzlement

Yolanda Serrano, 45, was sentenced last week to 5 years and 10 months in prison for embezzling $12.7 million from her former employer, Cocoa, Florida-based Southeast Petro Distributors, Inc., a gasoline distributor. Serrano, who pleaded guilty to wire fraud last September 30th, also must forfeit $455,000 in bank assets, under the plea agreement. She was originally arrested in April 2008 and charged with grand theft and "scheming to defraud" by state authorities, but indicted in August on federal wire fraud charges. Serrano worked for Southeast Petro Distributors, owned by Mike Shah and his family, since 1992, becoming the controller in 1998. From 2000 - 2007, Serrano embezzling from the company by transferring funds from corporate accounts to her own at SunTrust Bank. She used the funds to purchase a number of properties in Florida, Georgia and North Carolina. It was reported that she spent 3 million to build a waterfront pagoda in Florida.

Read the story here, here and here.

Thursday, January 29, 2009

Blagojevich Removed As Governor By State Senate

Rod Blagojevich has been removed as governor of the State of Illinois by a unanimous 59-0 vote of the State Senate late this afternoon. Following revelations from his public corruption investigation that he allegedly attempted to sell President Obama's former US Senate seat, the embattled Blagojevich was impeached on January 9th by the Illinois House in a vote of 114-1. He is the first Illinois governor ever and the first US governor in more than 20 years to be removed by impeachment. Lt. Governor Patrick Quinn was immediately sworn in as the new governor.

Read FraudTalk's original post on this case here.

Read the story here, here and here.

Hartford Mayor Arrested For Bribery

Eddie A. Perez, the Mayor of Hartford, Connecticut, was arrested today on bribery and fabricating evidence charges. The arrest follows nearly a two year investigation into public corruption. Perez allegedly had renovations done at his home by contractor Carlos Costa, who in turn, has reportedly done millions of dollars in contracting work for the city. Further, according to the arrest warrant, there have been “numerous instances where Mayor Perez [in his official capacities as mayor] apparently intervened in matters to benefit Carlos Costa or Carlos Costa obtained assistance from Mayor Perez to benefit himself (Costa).”

Read the story here, here and here.

Read the Connecticut Criminal Justice press release here.

Read the arrest warrant here.

Former Accountant Of Massachusetts Based Public Television Station Charged With Embezzling Nearly $500K

Philip McCabe, age 48, of Reading, Massachusetts, and the former accounting manager for WGBH public television in Boston, was indicted today on charges he embezzled nearly half a million dollars from the station. According to prosecutors, McCabe, who had control over corporate accounts to pay vendors, used those accounts to pay personal expenses on corporate and personal credit cards for such things as vacations, golf outings, restaurant tabs, liquor, clothes, household goods, gas and many other personal expenses over a nine year period from 1998 to 2007. He has been indicted on two counts of making false entries in corporate books and two counts of larceny. McCabe, who was a 20 year veteran employee of station, is scheduled to be arraigned on February 6th.

Read the story here, here and here.

Trial Date Set For California Tire Company Embezzlement Case

Michael Bush of Oxnard, California, who has pleaded not guilty to charges he embezzled more than $500,000 from his former employer, Big Brand Tire Co., is scheduled to go on trial April 14 in Ventura County Superior Court. Bush, who was employed as the company's financial controller, is charged with five counts of filing a false state income tax return, three counts of grand theft and one count each of corporate embezzlement and failure to file a state income tax return.

Read the story here.

Update: Former Virginia Banker Pleads Guilty To Embezzling Nearly $500K

Rebecca Dawn Long, 35, of Jonesville, Virginia, pleaded guilty yesterday to charges she embezzled nearly half a million dollars from her employer, People's Bank of Ewing. Long pleaded guilty to five charges including bank fraud and bank embezzlement. According to prosecutors, she set up a phony line of credit and withdrew $487,685 over a four year period. Sentencing is scheduled for April 28th.

Read FraudTalk's original post on this story here.

Read the story here, here and here.

Texas Seminary Sues Former CFO Alleging $165K Embezzlement

The Dallas Theological Seminary has filed a civil suit in Tarrant County, Texas against its former Chief Financial Officer, Rodney Bryant, to recover more than $165,000 the school claims he embezzled. According to the lawsuit, during 2007 and 2008, Bryant wrote checks from the seminary operating accounts to two phony companies he created. Bryant was CFO of the Seminary from 2000 to October 2007.

Read the story here and here.

Another New York Area Ponzi Scheme Investigated

Nicholas Cosmo, 37, and the owner of Agape World Inc. and Agape Merchant Advance LLC, based on Long Island, New York, was arrested Monday night on charges that he ran a $380 million Ponzi-type investment fraud scheme. According to prosecutors, Cosmo offered returns of 48 to 80 percent on "high yield private bridge loans." Specifically, Cosmo was charged with mail fraud. His 1,500 or so victims were mostly middle class investors who, in some cases, lost their life savings. According to reports, Cosmo had gambling debts he owed to the Genovese organized crime family. We note that Cosmo had previously been convicted and spent time in jail for securities fraud.

Read the story here, here and here.

Read the DOJ's announcement here.

Former Louisiana Oil Exec Pleads Guilty To Defrauding Employer

Gregory L. Courtney, 50, formerly of Mandeville, Louisiana and a former engineering executive with Shell Deepwater Development, a subsidiary of Shell Oil Company, pleaded guilty to diverting more than $1 million from a company contract for his own benefit. According to prosecutors, Courtney secretly acquired a Shell Deepwater vendor, Mercury Equipment and Services Inc., and billed his employer under a fraudulent maintenance contract. He also failed to pay more than $400,000 in income to the IRS. Courtney, who pleaded guilty to mail fraud and tax evasion counts, is scheduled to be sentenced on May 6th and faces up to 30 years in prison plus a fine of up to $350,000. The scheme lasted from at least 2001 to 2003.

Read the story here and here.

First Alleged Bailout Fraudster Charged

Gordon Burns Grigg, 46, of Nashville, Tennessee and his firm, ProTrust Management Inc., were charged yesterday with defrauding investors out of $6.5 million with fraudulent investments in the Troubled Asset Relief Program. The SEC has obtained a court order freezing the assets of Grigg and ProTrust. According to the SEC complaint, Grigg represented himself as a financial planner and investment adviser, but neither he nor his firm is registered with the agency or a state regulator. He fraudulently represented to clients, whose funds he had control over, that they were invested in the TARP.

Read the story here, here and here.

Read the SEC complaint here.

Former AIG Exec Gets 4 Years For Financial Statement Fraud

Christian M. Milton, 61, of Wynnewood, Pennsylvania, the former Vice President for Reinsurance at American International Group, was sentenced yesterday to four years in prison and ordered to pay a $200,000 fine for his role in manipulating the financials of the company. Milton, a 23 year veteran of the company, along with four other executives of the company's subsidiary, General Re Corporation, was convicted on charges of conspiracy, securities fraud and making false statements to the SEC. Other executives convicted in the case include: Ronald E. Ferguson, General Re's former CEO, who was sentenced to two years in prison last month; Elizabeth A. Monrad, General Re's former CFO, who is scheduled to be sentenced on February 12th; Christopher P. Garand, General Re's former SVP in charge of reinsurance, who is scheduled to be sentenced March 4th; and Robert D. Graham, Gen Re's former general counsel, who's sentencing has not yet been scheduled.

Read FraudTalk's original posts on this story here, here and here.

Read the story here, here and here.

Read the DOJ's announcement here.

Update On Florida Ponzi Scheme Case: Nadel Surrenders To Authorities

After 2 weeks on the run, 76 year old Arthur G. Nadel surrendered to authorities in Tampa, Florida on Tuesday. He is suspected of bilking investors out of as much as $350 million in a Ponzi-type investment fraud scheme.

Read FraudTalk's original posts on this story here and here.

Wednesday, January 28, 2009

Former Michigan Executive Pleads Guilty To Bribery & Conspiracy

James "Jim" Rosendall, Jr., 44, of Grand Rapids, Michigan and a former executive of Houston, Texas-based Synagro Technologies, Inc., pleaded guilty Monday to charges of bribery and conspiracy in connection with paying a Houston City Councilman to secure a vote in favor of a $1.2 billion sludge contract with the city. Rosendall was president of Synagro's Michican division and a former member of the Michigan Transportation Commission. He admitted that between 2004 and 2008, more than $150,000 was spent on campaign contributions, donations to City Council members' pet projects, churches and community groups in exchange for supporting Synagro.

Read the story here, here and here.

Kickbacks and Embezzlement Allegations Embroil California Grower

SK Foods LP, a Lemoore, California-based grower and processor of tomato and other food products, has had its share of employee misconduct recently. Robert L. Watson, 59, of White Plains, N.Y., a senior purchasing manager at Illinois-based Kraft Foods Inc.'s, pleaded guilty to charges of receiving $158,000 in bribes from SK executive, Randall Lee Rahal, 59, of Ramsey, New Jersey. In return, Watson ensured that Kraft purchased approximately 230 million pounds of tomato products from SK Foods. Rahal also pleaded guilty last month to charges of racketeering, price fixing, bid rigging, and contract allocation conspiracies on behalf of SK. He agreed to cooperate with the government and forfeit $600,000 in ill-gotten gains. In all, prosecutors contend that representatives of six food companies including Agusa Inc., Kraft Foods Inc., Safeway Inc., B&G Foods Inc., ConAgra Foods Inc., and Frito-Lay, a division of Pepsico Inc., received bribes from Rahal.

Separately, Anthony Ray Manuel, 57, of Turlock, California pleaded guilty yesterday to embezzling some $975,000 from Morning Star Packing Co., for whom he worked until joining SK Foods in 2005. Manuel was terminated by SK Foods on Monday, according to reports. It is unclear whether he was involved in wrongdoing while at SK Foods. Manuel also plead guilty to tax evasion.

Read the story here, here and here.

California Couple Ordered To Pay $4.6 Million In Civil Damages Resulting From Embezzlement

Joyce R. Jaska, 49 and Wesley Jaska, both of Apple Valley, California, have been ordered by a civil court judge to pay $4.6 million to Barstow Truck Parts, Joyce's former employer, from which she and her husband were convicted of embezzling hundreds of thousands of dollars. Joyce Jaska was employed as the company's treasurer and was sentenced with her husband, who was also an employee, to 12 years in prison for the embezzlement and filing false tax returns as well as perjury. The Jaska's were originally arrested in 2002 on embezzlement charges. Their attorney claims the arrest was in retaliation for Joyce blowing the whistle on the company for not paying payroll taxes. For their part in the civil case, Barstow Truck Parts documented in their civil case $2.45 million in losses due to Jaska's theft. The judgement includes punitive damages as well. The scheme lasted at least 3 years, from 1999 to 2002.

Read the story here, here and here.

Tuesday, January 27, 2009

Michigan Embezzlement Trial Gets Underway

Jury selection has commenced in the trial of Hanan Dallo, 42, of Farmington Hills, Michigan, who is accused of embezzling more than $4.6 million from her employer, property manager Hartman & Tyner Inc., for whom she had worked as a bookkeeper for 20 years. According to prosecutors, Dallo conspired with Youssef "Joe" Fakih of Dearborn, Michigan, the owner of USA Construction and USA Holding, whereby Dallo would cause fraudulent invoices to be paid to Fakih's companies and she would get a kickback in return. Prosecutors believe she received at least $1 million from $4.6 million in fraudulent invoices during the scheme which lasted from 2000 until August 2007. Fakih is believed to have fled to Lebanon. Dallo, also known as "Hanna," faces up to 60 years in prison if convicted and more than $13 million in fines. The fraud was uncovered when management received an anonymous letter suggesting the two conspirators were romantically linked and involved in defrauding the company.

Read the story here, here and here.

Former Virginnia Pastor's Trial On Embezzlement Charges Begins Today

The trial for Kenneth L. Montgomery, 49, the former pastor of Hilltop Community Church in Virginia Beach, Virginia, who is accused of embezzling $131,000 from the church, commenced today. Montgomery, who was the pastor from 2004 - 2007, allegedly cashed parishioner's checks instead of depositing them into the Church coffers. Montgomery reportedly stripped his house after it was sold at auction to pay a civil judgment in this case, including its mailbox, a hot tub and kitchen cabinet knobs. He also reportedly removed 10 to 15 shrubs. We note that Montgomery was convicted in 1994 on seven felony counts for embezzlement and theft from his former employer, a painting contractor.

Read the story here, here and here.

Virginia Couple Charged With Embezzling Over $2 Million

Karen A. Hiles, 47, and James G. Hiles, 59, of Suffolk, Virginia, were indicted yesterday on 73 counts alleging they embezzled more than $2 million from an unnamed Virginia Beach-based real estate developer. Karen Hiles was employed as a $19,000 per year part-time bookkeeper for the developer and together with her husband, forged numerous business checks and made fraudulent wire transfers between 2002 to 2007. The indictment alleges that $2.3 million was deposited into bank accounts controlled by Hiles during this period. The pair have been indicted on charges of conspiracy, uttering, mail fraud, wire fraud, bank fraud and aggravated identity theft.

Read the story here, here and here.

Monday, January 26, 2009

Is There A Proliferation Of Ponzi Schemes?

According to Time Magazine, there has been a proliferation of Ponzi schemes which have been uncovered since the Bernie Madoff scandal. These include the $25 million James G. Ossie/CRE Capital Corp. case; the$50 million Joseph S. Forte case; and the $23.4 million George L. Theodule/Creative Capital Consortium LLC case. The article does not suggest why there seems to be a rash of cases as the SEC representative quoted said no official new "push" to go after Ponzi schemers. "We go after them as they come in," according to the article.

Read the full article here.

FraudTalk would also add to the list the following Ponzi-type cases that have been in the press recently and chronicled in these pages:

  • Lambert Vander Tuig/Carolina Development Co.; $52 million scheme (read here)
  • Ronald Keith Owens/Executive Investors, Inc./Newlife Trade Group; $2.6 million scheme (read here)
  • Donald John Manning/Cameron Campbell/Joseph Wayne McCool/The Brixton Group, Ltd.; $4.5 million scheme (read here)
  • Gregg Thomas Rennie; $4 million scheme (read here)
  • Frank A. Castaldi; "tens of millions" scheme (read here)
  • Marc S. Dreier; $380 million scheme (read here)
  • James Masat/Stella Levea/Kenneth Mottin/First Americans Insurance Service; $100 million scheme (read here)
  • Rod Cameron Stringer/RCS Hedge Fund; $8.5 million scheme (read here)
  • Michael J. Riolo/LaSalle International Clearing Corp./Sterling Wentworth Currency Group Inc.; $50 million scheme (read here)
  • Jeanetta M. Standefor/Accelerated Funding Group; $18 million scheme (read here)
  • Daren Palmer; $100 million scheme (read here)
  • Edward Anthony Purvis/Nakami Chi Group Ministries International; $8 million scheme (read here)
  • Ricky D. Sluder/Larry C. Saturday/Learn Waterhouse, Inc./Wealth Builders Club, Inc./Qwest International, Inc.; $50 million scheme (read here)
  • Charles G. Martin/John E. Walsh/One World Capital Group, LLC; $15 million scheme (read here)
  • Leonard Adolph Delk/LAD Management Co.; $3 million scheme (read here)
  • Joel Steinger/Steven Steiner/Michael McNerney/Anthony Livoti, Jr./Mutual Benefits Corp.; $1 billion scheme (read here)
  • Richard S. Piccoli/Gen-See Capital Corp; $17 million scheme (read here)

Any way you cut it, that is a lot of Ponzi schemes in the news in recent weeks.

California Authorities Move Against $52 Million Alleged Ponzi Scheme

Six principals of Orange County, California-based Carolina Development Co. were charged Thursday with operating a Ponzi-type investment fraud, offering high returns in purported real estate developments near prestigious golf courses in Southern California. According to prosecutors, Lambert Vander Tuig, 50, of Rancho Santa Margarita, California and the former president of Carolina Development, together with former vice president, Jonathan Carman, 45, of Laguna Hills, were at the center of the fraud that cost more than 1,000 investors at least $52 million. Other co-conspirators in the case include: Mark Sostak, 50, of Ladera Ranch; Soren Svendsen, 43, of Coto de Caza; Scott Yard, 47, of Costa Mesa; Robert Waldman, 48, of Irvine. With the exception of Yard who has not yet been arrested, and Waldman who is expected to turn himself in today, all are being held pending hearings. They have all been charged with grand theft and securities fraud in connection with making unregistered fraudulent offers, sales and purchases of securities. The SEC previously won major judgments against Vander Tuig and Carman. The alleged conspirators played off famous golfing names such as Greg Norman and Arnold Palmer.

Read the story here, here and here.

Read the SEC's original litigation release here.

Update On Military Bribery Scheme Case: Maine Man Pleads Guilty

Maurice Henry Subilia, 64, of Kennebunk, Maine, has agreed to plead guilty in a bribery scheme that bilked the government out of as much as $7 million, according to prosecutors. Subilia is the former president of Fiber Materials Inc. in Biddeford, Maine who is charged with conspiring with Michael Cantrell and Douglas Ennis, two former officials of the US Army Space and Missile Defense Command in Huntsville, Alabama, by paying bribes in exchange for contracts and financing steered toward Lealagi, Inc. and Sage Technologies, entities independently controlled by Subilia and unrelated to Fiber Materials. The scheme went on between 2000 and 2007, according to prosecutors. Both Messrs. Cantrell and Ennis have pleaded guilty and are awaiting sentencing in Alabama. We note that Subilia was previously found guilty in 1995 with exporting restricted missile technology to India.

Please note: we incorrectly related Fiber Materials with Lealagi and Sage and apologize for any confusion.

Read FraudTalk's original post on this story here.


Read the story here.

Sunday, January 25, 2009

New York Utility Employee Sentenced In Bribery & Kickback Scheme

Edward Paul Goldblatt, 57, of Melville, New York and a former employee of the New York Power Authority, was sentenced to 37 months in prison and ordered to pay a $5,000 fine for his role in a bribery and kickback scheme in which he received $167,000 in kickbacks from an unnamed New Jersey-based vendor of the utility. Goldblatt also pleaded guilty to tax evasion for income not reported during the years 2005 through 2007. Goldblatt, together with his unnamed co-conspirator, presumably an individual at the vendor company, have also been ordered to pay restitution in the amount of $253,836. Goldblatt was employed as a "Purchasing Warehouse Assistant" for the utility. Goldblatt received kickback payments from the vendor based upon total sales of the vendor, plus he authorized payment on overinflated invoices, the difference of which he split with the co-conspirator. The scheme lasted 4 1/2 years, according to the Information.

Read the story here, here and here.

Read the DOJ's Criminal Information filed against Goldblatt here.

Texas Man Sentenced To 60 Years For Ponzi Scheme Fraud

Ronald Keith Owens, 73, of Mineral Wells, Texas, was sentenced to 60 years in prison for running a Ponzi-type investment fraud scheme that cost investors at least $2.6 million. The state sentence follows a 63 month federal sentenced handed down last month. Owens was charged with selling fraudulent offshore "Bank Credit Instrument Trading" investments that purportedly earned up to 30 percent returns. Instead, Owens paid earlier investors and used the investment funds to enrich himself and his wife. Owens' scheme, which sold the fraudulent investments through a vehicle he controlled, Executive Investors, Inc. aka Newlife Trade Group, went on from March 2000 to September 2007, according to prosecutors.

Read the story here, here and here.

Read the DOJ's announcement of Owens' sentence here.

Former Iowa Insurance Claims Worker Sentenced To 2 Years In Prison For Fraud

Rachel Lenagh, 39, of Neola, Iowa, was sentenced Friday to 2 years in prison for defrauding her employer, Mutual of Omaha, out of $1.4 million in fraudulent insurance claims. Lenagh, who plead guilty to conspiracy to commit health care fraud in October, processed fraudulent health insurance claims for Sharon Johnson of West Dover, Vermont, who in return, paid Lenagh $95,600 in kickbacks, according to prosecutors. The scheme reportedly went on from 2001 to 2006. Johnson is awaiting her own trial.

Read the story here.

Indiana Department of Insurance Investigator Unravelled Schrenker Fraud - Report Says

Lisa M. Harpenau, then a 26 year old Indiana Department of Insurance investigator in 2007, began unravelling the fraud allegedly committed by Marcus J. Schrenker, pictured left, who is now held in a Florida prison, pending hearings on his case, according to a report in the Indianapolis Star. When the heat from Harpenau's investigation intensified, Schrenker attempted to fake his own death by parachuting over Alabama from a plane he piloted. Schrenker is suspected of bilking investors out of millions.

Read the story here.

Another Co-Conspirator Pleads Guilty In California Ponzi Investment Fraud Scheme

Donald John Manning , 71, pleaded guilty Friday for his part in an investment fraud conspiracy that bilked mostly elderly investors out of some $4.5 million. Manning, the former president of The Brixton Group, Ltd., pleaded guilty to one count of conspiracy and one count of wire fraud. The conspirators offered "risk free" investment and returns of 10 percent or more to investors, but instead transferred investment funds from account to account, generating large fees, paying off earlier investors and enriching themselves. According to authorities, Manning was apprehended in Nicaragua in late February 2008. One co-conspirator, Cameron Campbell, an attorney from La Jolla, California, has already pleaded guilty in this case and was sentenced to 63 months in prison and ordered to pay $4.5 million in restitution last April. A third co-conspirator, Joseph Wayne McCool, 61, remains at large and is believed to be in the Philippines (pictured right). Manning is scheduled to be sentenced on April 15 and faces up to 10 years in prison, plus fines and restitution.

Read the story here, here and here.

Read the DOJ's press announcements here and here.

See McCool's Wanted poster here.

Saturday, January 24, 2009

Arizona Authorities Investigating Possible $300K Embezzlement At Museum

The Tucson Police Department Fraud Unit and the Arizona Attorney General's Office are investigating a case of possible embezzlement at the Tucson Museum of Art. According to reports, the investigation is focusing on a former accountant at the museum. The embezzlement is believed to have taken place over a nine year period and cost the museum as much as $300,000. The case is ongoing.

Update On Petters Case: Authorities Charge Him & 2 Associates With Hiding Assets

Minnesota businessman Tom Petters, who has been accused in a $3 billion fraud scheme, has now been charged with hiding assets that had been ordered frozen by the court. Petters and two associates, Michael Catain and Deanna Coleman, attempted to "hide or divert" certain assets, including $50,000 from a lodge in Wisconsin, seasons tickets, proceeds from a vehicle that was sold, and other items.

Read FraudTalk's earlier posts on this story here, here and here.

Read the story here.

Massachusetts Man Charged With Defrauding Investors

Gregg Thomas Rennie, 42, of Quincy, Massachusetts, has been charged with securities fraud by state regulators. Rennie is accused of defrauding investors out of as much as $4 million by offering both genuine and phony investment products. Rennie, a former registered broker dealer and recent former principal in Providence, Rhode Island-based Harvest Financial Services, promised investors returns of as much as 13 percent, according to the complaint. When unhappy clients had demanded their money back, Rennie reportedly became "evasive." He allegedly pocketed investor funds for personal expenses and luxury items and a lavish lifestyle. Rennie is a former radio host who had a business program locally in Boston called "Your Money."

This case harkens back to the 2004 fraud case in Massachusetts involving Brad Bleidt who went to prison for defrauding investors out of millions of dollars. Bleidt was the owner of one of the radio stations Rennie appeared on frequently, according to reports. You know, if it smells like a Ponzi-scheme..

Read the story here, here and here.

Friday, January 23, 2009

Illinois Brothers Bilk Home Improvement Company Out Of $1 Million

Louie Filskov, 37, of Lombard, Illinois and his brother, Nick Filskov, 47, of Bloomingdale, Illinois, were charged with embezzling approximately $1 million from Louie Filskov's employer, A Better Crawlspace, Inc., based in Bensenville. According to prosecutors, Louie Filskov, who was General Manager at the company, was responsible for accepting checks written to the company and distributing checks written by the company. The indictment charges him with cashing some of the checks at a currency exchange and pocketing the money for his and his brother's own benefit. According to the prosecutor, the scheme went on over a period of 2 years. They have been charged with theft, theft by deception and money laundering. Louie Filskov also faces identity theft charges.

Read the story here and here.
Read the DuPage County State's Attorney's Office announcement here.

Update (8/18/11): Louie Filskov, now 39, was sentenced to 8 years in prison.  Filskov, who was found guilty in May, was also ordered to pay $830,000 in restitution.  His brother Nick Filskov, pleaded guilty in 2009 and was sentenced to 9 months in prison.

Illinois Businessman Accused Of Running 22 Year Ponzi Scheme

Frank A. Castaldi, 55, of Prospect Heights, Illinois, was charged today with mail fraud, alleging he ran a Ponzi-type investment fraud scheme over a 22 year period. Castaldi allegedly sold investors six-month promissory notes that allegedly paid 10 to 15 percent annual interest. Investment funds were used to pay earlier investors and to enrich Castaldi, according to the complaint. He is also charged with making false statements to investors. The scheme has cost investors "tens of millions of dollars" according to prosecutors. He faces up to 20 years in prison if convicted.

Read the story here, here and here.

Read the DOJ's announcement here.

Michigan Couple Arrested In New Orleans In $1.5 Million Embezlement Case

Amy Lynn McDonald, 36, and Erik Donald McDonald, 38, a married couple from Auburn Hills, Michigan, were arrested today in New Orleans on embezzlement charges. Authorities report that they commenced an investigation into Amy McDonald, who was suspected of embezzling $1.5 million from her employer, Palace Sports and Entertainment Inc., in Auburn Hills over a two and a half year period. She is alleged to have used company credit cards for her own and her husband's benefit. Erik McDonald is alleged to have assisted Amy in her embezzlement scheme and directly benefited. The couple, who were charged in June on 4 felony counts each, are awaiting extradition back to Michigan. Erik McDonald faces an additional felony firearms charge because he has two prior criminal convictions.

Read the story here and here.

Read the Auburn Hills Police Department wanted poster here.

Former New York State Senate Leader, Joseph Bruno, Indicted For Fraud

Joseph L. Bruno, 79, of Brunswick, New York and the former Republican New York State Senate leader, was indicted today on fraud charges that he failed to disclose several million dollars in income from lobbyists while in office. The eight-count indictment accuses Bruno of violating his fiduciary duty to provide the state and citizens with “honest services." He has pleaded not guilty. According to the indictment, Bruno created two business entities, Capital Business Consultants LLC and at CMA Consulting Services, which collected some $3.2 million between 1993 and 2006 from five groups, including labor unions. The largest contributor was Wright Investors Service of Milford, Connecticut, which paid him nearly $1.4 million over a 12 year period. He faces up to 20 years in prison plus a fine of $250,000 for each count if convicted.

Read the story here, here and here.

Missouri Homebuilder Charged With Bank Fraud

Edward Levinson, 49, of Chesterfield, Missouri, and president of Levinson Homes, was indicted yesterday on bank fraud charges alleging that prospective homeowners, banks and subcontractors were defrauded out of more than $10 million. Prosecutors allege that Levinson obtained construction loans and deposits to build homes, but pocketed the cash instead. The indictment charges 10 felony counts of bank fraud, each carrying up to 30 years in prison and $1 million in fines if convicted.

Read the story here and here.

Georgia Man Charged With Operating Ponzi Scheme

James G. Ossie, 49, of Alpharetta, Georgia, was charged by the SEC last week with operating a Ponzi-type investment fraud through his company, CRE Capital Corporation. The SEC action freezes Ossie's and CRE's assets. According to the SEC's complaint, Ossie's Ponzi scheme, which promised 10 - 20 percent returns every 30 days on a currency trading program, raised at least $25 million from investors. CRE had been planning a public offering to raise as much as $100 million, according to the SEC.

Read the story here and here.

Read the SEC's complaint here.

Update: Dreier Remains In Jail As High Bail Is Set

Marc S. Dreier, 58 and the former founding partner of the Manhattan-based law firm that bears his name, remains in federal custody pending a $20 million bond set by federal Magistrate Judge Douglas F. Eaton in New York. Dreier is accused of bilking hedge funds and investors in a Ponzi-type investment fraud to the tune of $380 million. He has been charged with wire fraud and securities fraud.

Read FraudTalk's original posts on this story here and here.

Former California Banker Pleads Not Guilty To Embezzling Educational Trust Fund

James Lester Harrison, 61, of Ukiah, California has pleaded not guilty to charges he embezzled from an educational trust he managed at the Savings Bank of Mendocino County where he was employed as a vice president until 2005 when allegations surfaced. Harrison is accused of looting the Viola and Oscar Allen Trust, which was set up in 1993 for the benefit of student scholarships at Ukiah High School, to the tune of some $421,000. The Allen's had named Harrison trustee. Prosecutors alleged in their criminal complaint that Harrison used the trust as his "own personal piggy bank" for 14 years. Harrison reportedly used the money to purchase real estate, luxury vehicles, pay credit cards and make personal loans, among other things.

Read the story here, here and here.

Thursday, January 22, 2009

Tennessee Woman Pleads Guilty To Defrauding Texas Medical Center Of More Than $850K; Accomplice Expected To Plead Guilty Next Week

Sheri Lynn Mitchell, 48, of Cleveland, Tennessee, pleaded guilty today to her role in an embezzlement scheme involving Hendrick Medical Center, dba Hendrick Health Services, of Abilene, Texas. Mitchell was the owner/operator of Physician Source, a physician recruiting business. Her accomplice in the scheme, Laura Cullars Minor, 52, of Abilene, Texas is a former employee of the medical center and is expected to plead guilty next week, according to reports. The pair is accused of embezzling at least $850,000 from the company over a five year period. According to prosecutors, Mitchell would submit false invoices to Minor for services not performed, who would then approve the invoices and receive a kickback from Mitchell. Minor was employed as director of physician recruiting and received nearly $300,000 in kickbacks from Mitchell, according to prosecutors. The two were originally indicted in October 2008 on one count of conspiracy to commit mail fraud and health care fraud, eleven counts of mail fraud and aiding and abetting, and eleven counts of theft in connection with health care. Mitchell has several aliases, including Sheri Samuels and Sheri Dawes.


Bipartisan Bill Introduced In Senate To Bolster Anti-White Collar Crime Investigations

Senators Charles Schumer (D-NY) and Richard Shelby (R-Alabama) introduced a bill today that would spend $110 million to hire new prosecutors, investigators and lawyers for the Department of Justice and Securities & Exchange Commission. Specifically, the bill would authorize $80 million for 500 new FBI agents, $20 million for 100 investigators at the Securities and Exchange Commission, and $10 million for 50 new assistant U.S. attorneys.

Florida Ex-Bank Manager Accused Of Bilking $11 Million From Customer Accounts

Ricardo Figueredo, of Miami Beach, Florida and a former manager at Bank of America, NationsBank and Barnett Bank, has been accused in an Information filed today by federal authorities of misappropriating at least $11 million from client accounts. Figueredo's scheme dates back to the mid 1990's and continued through 2008, according to authorities. The complaint charges that Figueredo, who was an assistant vice president at BofA, handled foreign clients who held accounts in the United States. He is alleged to have used the stolen funds to make investments in Guatemala and Spain and "to support his lavish lifestyle.'' He faces up to 30 years in prison if convicted, plus fines and restitution. Figueredo was originally employed by Barnett Bank, which was later acquired by NationsBank and subsequently acquired by BofA.

Read the story here and here.

Read the DOJ's announcement here.

Iowa Company Reports $300K Embezzlement

Advanced Automation of Des Moines, Iowa reported to police yesterday that an unnamed female bookkeeper is suspected of embezzling at least $300,000 from the company. The alleged embezzlement dates back some 4 years to 2004, according to police.

Developing...

Read the story here.

Wednesday, January 21, 2009

Nebraska Authorities Investigating Alleged Ponzi Scheme

The Nebraska Attorney General's office announced yesterday that they were investigating First Americans Insurance Service, a Native American insurance company based in Grand Island, Nebraska on suspicion that it has been operating as a Ponzi-type investment fraud scheme. First Americans filed for bankruptcy on January 12, listing up to $500 million in liabilities. The investigation centers on how more than $100 million disappeared. The company's three principals are James Masat, Stella Levea and Kenneth Mottin.

Developing...

Read the story here, here and here.

SEC Charges Texan With Runing Ponzi Scheme

The Securities & Exchange Commission today announced that it has brought an action against Rod Cameron Stringer, 43, of Lamesa, Texas and a former bail bondsman, charging him with running a Ponzi-type investment fraud and misappropriating investor funds. The action also freezes Stringer's assets. According to the complaint, Stringer has been defrauding his clients since at least 2001. Through his purportedly hedge fund, RCS Hedge Fund, Stringer promised returns as high as 61 percent. The SEC alleges that Stringer only invested 20% of the investment funds, the remainder of which he used to pay off older clients and to enrich himself. He raised some $8.5 million since 2007 alone. The complaint alleges Stringer used investment funds to "finance a horse racing partnership, purchase a luxury boat, build a swimming pool at his office, purchase several pieces of jewelry, pay off mortgages on at least two houses, and purchase several expensive cars and trucks," among other things.

Read the SEC's litigation release here.

Read the story here, here and here.

Update On Missing Florida Money Manager Nadel: SEC Charges Him With Fraud

The Securities & Exchange Commission has charged missing Florida money manager Arthur G. Nadel, 76, of Sarasota, with securities fraud, alleging he misled investors by overstated the value of 6 of his funds by some $300 million. Nadel reportedly left a note to his wife when he disappeared on January 14th, suggesting his guilt and contemplating suicide. Authorities believe he staged his disappearance and found evidence that he transferred at least $1.25 million to two secret bank accounts he controlled.

Read FraudTalk's original post on this story here.

South Florida Man Sentenced In $7 Million Healthcare Fraud Case

Remberto Sarmiento, 47, of Miami, Florida, was sentenced to 8 years in prison for his role in a $7 million healthcare fraud scheme. Sarmiento was found guilty of 20 counts of healthcare fraud relating to making fraudulent billings to Medicare resulting from stolen patient information. According to prosecutors, Sarmiento purchased the two medical companies to receive the ill gotten gains, APR Medical Equipment and Super Medical Supply. Those funds were then transferred to a shell construction company.

Read the story here.

Read the original indictment here.

FBI Investigating Another Alleged Ponzi Scheme In South Florida

Michael J. Riolo, 37, of Boca Raton, Florida, is being investigated by the FBI following a civil law suit filed by investors claiming he ran a Ponzi-type investment fraud scheme. Losses could be as high as $50 million, according to one burned investor. Riolo's companies, LaSalle International Clearing Corp. and Sterling Wentworth Currency Group Inc., based in Coral Springs, Florida, purportedly invested in foreign currency arbitrage transactions. We note that Riolo had reportedly been arrested in 2002, by the DEA in connection with illegal Internet trafficking of the "date rape" drug GHB. However, the case was not pursued.

Read the story here and here.

California Woman Sentenced In $18 Million Real Estate Ponzi Investment Fraud Scheme

Jeanetta M. Standefor, 40, of Altadena, California, was sentenced to 151 months (more than 12 and a half years) in prison for operating an $18 million real estate investment scheme targeting the African-American community, according to prosecutors. The Securities & Exchange Commission brought an action against Stendefor and her company, Accelerated Funding Group in May 2008, alleging that between 2005 and 2007, she convinced more than 600 investors to invest $18 million in the scheme which purported to purchase distressed real estate that would bring returns of up to 50% within 30 - 45 days. The complaint also alleged that Standefor misappropriated nearly $2 million in investor funds to pay for personal expenditures, including a lavish wedding and honeymoon. She was originally charged with 11 counts including wire fraud, mail fraud and money laundering

Read the SEC's litigation release here.

Read the story here, here and here.

Missouri Man Pleads Guilty In Church Publishing Embezzlement Case

John F. Gehm, III, 32, of Town and Country, Missouri, pleaded guilty yesterday to stealing some $104,000 from his employer, Pastoral Solutions, Inc., a church bulletin publishing firm based in Ellisville, Missouri for which he was employed as a sales manager. According to prosecutors, Gehm stole checks made out to the company and deposited them into his own accounts and paid for vehicles he purchased. Specifically, Gehm, who was indicted in October 2008, pleaded guilty to one felony count of "interstate transportation of stolen securities and money." He used the proceeds to pay personal expenses and to purchase as many as 5 Lexus vehicles, which he had titled in the name of the company, according to the complaint. The thefts occurred between March 2007 to April 2008.

Read the story here, here and here.

Tuesday, January 20, 2009

California Bookkeeper Arrested On Suspicion Of $1.1 Million Embezzlement

Brenda Kaye Kemper, 57, of Lodi, California was arrested last week on charges of embezzling some $1.1 million from her employer, Big Valley Aviation, Inc., of Stockton, California. Kemper was employed as the company's financial manager and has been charged with grand theft of personal property and falsifying corporate books. Kemper's thefts allegedly span more than 7 years, dating back to 2001, according to investigators. Her allegedly fraud was uncovered when she went to have gastric bypass surgery last summer and left the books and records in disarray. She is also alleged to have opened credit card accounts in the company's name and used them for her own benefit. According to reports, Kemper kept complete control over the company's finances and left everyone else in the dark. She was a 20 year employee of the company.

Read the story here, here and here.