South Carolina Woman Accused Of Embezzling $1 Million+ From Charter School In Vendor Fraud Scheme; Lived Lavishly

From The State on 2/25/2015:

Federal prosecutors Wednesday said a former public charter school director used shell companies to embezzle more than $1 million in federal funds provided to the school for food and educational purposes.

U.S. Attorney Winston Holliday alleged that 40-year-old Benita Dinkins-Robinson, director of the former Mary L. Dinkins Higher Learning Academy in Bishopville, siphoned off money using four shell companies – J and J Contracting, T and E Catering, New Age Computers and Project Reach – that accepted payments of school money.

The school was a part of the S.C. Public Charter School District – a growing group of 31 public schools with 17,000 students and 500 teachers across South Carolina in more than a dozen counties. The Legislature created the statewide charter school district in 2007 as a way to empower parents and others to set up public schools with different missions. The Dinkins school was closed in 2013 after the charter district voted to stop its funding.

The Dinkins school was in rural Lee County and qualified for Title I funding, which allowed it to receive money for food and education for the students from the U.S. Department of Agriculture and the U.S. Department of Education.

But testimony from Janice Crocco, a former 5th grade teacher at the Dinkins school, suggested that the federal funds never benefited the students.

Crocco, who worked for the school for a little over five months beginning in December 2010, said students would often go without meals at lunch because there was no food. In those instances, students would have to wait until pizza was ordered at the school just before they were dismissed.
Crocco also said the school’s overall cleanliness and organization was in disarray. She said when she would take her 12 students to the bathroom, she often brought toilet paper with her because there wasn’t any in the doorless stalls. She also said that Dinkins-Robinson was at the school only two to three days out of the week and would often not show up for scheduled faculty meetings.

Holliday alleged that Dinkins-Robinson would use the funding from the government to pay for a catering company, T and E Catering, to provide food for students. However, Eleazor Carter, Dinkins-Robinson’s attorney, said that while his client was a business partner in the catering company, the state’s charter school district approved of their services. Carter also conceded that Dinkins-Robinson was a founding member of Project Reach and that her brother owned New Age Computers.

Along with large cash withdrawals from the school’s account, Holliday said Dinkins-Robinson would make out checks to pay rent for the building in which the school operated that were in excess of the rent amount due. He alleged that she would spend the extra money on lavish vacations and shopping sprees.

The Dinkins school at first operated under the Lee County School District. It asked to be authorized as a charter school in Sumter County, reporting to the state charter school district, after receiving pushback and alleged harassment from Lee County, according to Carter.

Clay Eaton, a witness for the prosecution and a former public relations director for the charter school district, said when he inspected the school between 2010 and 2012 after it applied to be authorized by the charter district, he noticed the school would report inflated students numbers to the charter district, sometimes by the dozens.

Each public school and public charter school receives funding from state and federal entities on a per-pupil basis. If a public school has a large amount of special needs students or a large student population in general, it gets a higher per-pupil amount from the federal government.

U.S. Judge Terry Wooten dismissed Wednesday’s hearing early in light of the winter storm moving through the state. Wooten said the next trial session will be held Friday, weather permitting.

Update (3/12/2015):  Benita Dinkins-Robinson found guilty by a jury of embezzling at least $750,000 and as much as $1 million.  Read an update of the story here.

 

Texas Man Pleads Guilty To Embezzling $931K From Contracting Firm

From the St. Joseph News-Press on 1/23/2015:

A Texas man pleaded guilty in federal court to a mail fraud scheme in which he embezzled more than $930,000 from Herzog Contracting Corp. in St. Joseph.

Daniel Reif, 48, of Weatherford, Texas, pleaded guilty Thursday in U.S. District Court to one count of mail fraud and one count of filing a false income tax return.

Mr. Reif admitted that he engaged in a scheme to defraud Herzog from January 2006 through Aug. 26, 2011. The government’s evidence establishes the amount embezzled totaled at least $931,256.

Herzog, which constructs railroads, highways, bridges and airports, has a regional office in Irving, Texas. Mr. Reif began working for Herzog in the Irving office in 2005 as a manager who was responsible for procuring materials and services from vendors.

Mr. Reif founded his own company, Railway Signal Solutions, in February 2005.
 

He began ordering project materials and services from supply vendors through RSS, then resold those products and services to Herzog at inflated prices. The RSS invoices made it appear as though the materials and services were being provided directly by RSS, an ostensibly independent supply vendor.

Under the terms of the plea agreement, Mr. Reif will be sentenced to 36 to 38 months in federal prison without parole and must pay restitution in an amount to be determined by the court. He must forfeit to the government $105,000 seized from his TD Ameritrade account and a 2010 Tige boat and trailer.

Read the whole story here.

Wyoming Man Sentenced For Embezzling More Than $1 Million From Energy Company

From the Sheridan Press on 1/16/15:

Judge William Edelman of 4th Judicial District Court heard testimony from investigators, victims and character witnesses Thursday before sentencing Ronald Barnes for felony fraud and larceny. Barnes, 55, had been charged with five counts of felony fraud and two counts of felony larceny in a case in which he embezzled more than $1 million in royalties from local company Summit Gas Resources between 2004 and 2012. Barnes received six to 10 years in prison for one count of obtaining property under false pretenses. Edelman sentenced Barnes to eight to 10 years in prison for each of the other six counts against him — another four counts of obtaining property under false pretenses and two counts of larceny — but those sentences were suspended, and Barnes was given eight to 10 years of supervised probation instead, set to run consecutively to his prison sentence. In addition to about $2,500 in court costs and fees, Barnes must pay restitution of the $1 million stolen from Summit Gas Resources, Inc., during the nine years that he was employed with the company. Barnes had originally pled not guilty to all charges but then changed his plea several months ago to guilty. Fake companies used Summit was operating as Pinnacle Gas Resources, Inc., when it hired Barnes in January 2004. He became the chief financial officer in April 2004 and was also named senior vice president. The company was preparing to go public, and Barnes’ duties involved setting up an accounting department in preparation for that move. Investigators found, though, that within 90 days of being hired, Barnes began stealing from the company using both his position and the accounting software with which he had trained. He set up fake companies or, in some cases, used companies that already had accounts in the software, and submitted false evidence that Summit owed these companies royalty money. He presented this evidence to Summit CEO Pete Schoonmaker, who signed checks believing he was making payments his company owed. Forrest Williams, from the Wyoming Division of Criminal Investigation, said the checks would be addressed to fake addresses, but Barnes would intercept them before they were sent out and deposit them in a bank in Montana. Barnes and his now ex-wife Jayne owned a company called Bellcamp, and royalty checks stolen from Summit were deposited into that account. Barnes said he hid the money from his wife and never claimed it on his taxes. State’s attorney Christopher LaRosa told the court that Barnes adjusted his patterns of stealing to account for problems that arose over the course of his time with Summit. In 2011, when the bank in Montana would no longer take checks that were not made out to Bellcamp, Barnes created a limited liability corporation called BK Energy, LLC, and set up a bank account and post office box in Denver. He, again, produced evidence that Summit owed this company royalties money and that he had negotiated payments. Despite a fiduciary contract with Summit, he never revealed that he was the sole proprietor and member of BK Energy in any of the five reports he filed with the U.S. Securities and Exchange Commission. LaRosa also told the court that Barnes did not stop stealing money from Summit when gas prices dropped and the company began to struggle in 2009. “The company was buffeted by forces beyond control,” LaRosa said. “There was less money to steal, but Mr. Barnes did not cease.” Summit CEO asks for restitution Barnes’ attorney, John Robinson, told the court that, while what Barnes was doing was wrong, the money stolen came from suspense accounts used for royalties and not accounts used for the operation of the company, suggesting that Barnes’ activities had not resulted in harm to the company. He asked Williams, of the Wyoming Division of Criminal Investigation, if the falling gas prices and not Barnes had done more harm to the company. Williams said it was apparent to investigators that Barnes spent more time trying to get away with his crime than working to offset problems due to those falling gas prices, which, in turn, caused harm to Summit. Schoonmaker gave a victim’s impact statement, telling the court how proud he had been to be CEO of the only NASDAQ listed company in Sheridan, but how Barnes’ actions had caused Summit to lose the support of investors. Schoonmaker called Barnes the “Bernie Madoff of Sheridan” and said Summit had to lay off half of its employees because Barnes failed to do his job properly. Summit is no longer a publicly traded company. “I want pay back,” Schoonmaker said. “But it is equally important that (Barnes) is made an example of.” Schoonmaker asked the court to sentence Barnes to at least eight to 10 years in prison.

Read the whole story here.

New Jersey Man Accused Of Embezzling $1.6 Million Via Fraudulent Billing Schemes

George Ortega, 50, of Kinnelon, New Jersey, has been charged with embezzling some $1.6 million from ARGIX Direct, doing business as Passport CFS Logistics where he had been employed.  According to authorities, over a period of at least 8 1/2 years, from January 2003 through May 2011, Ortega employed a variety of fraudulent vendor and billing schemes to siphon funds from the company.  For example, Ortega allegedly created a phony vendor to which fraudulent payments were made.  Another scheme involved co-conspirators at actual vendors who were paid or overpaid for work not performed from which Ortega benefited.  Ortega has been charged with one felony count each of financial facilitation of criminal activity, theft by deception, and misconduct by a corporate official.

Read the story here.

Hat tip: FraudTalk reader Joe.

Washington State Man Sentenced For Embezzling $459K From Microsoft Corporation In Vendor Scheme

Robert D. Curry, 41, of Seattle, Washington, has been sentenced to 33 months in prison for embezzling $459,000 from Microsoft Corporation, where he had been employed as director of business development for Microsoft's Strategic Partnerships Team in the Online Audience Business Group.  According to authorities, Curry created a shell company, falsified invoices and ultimately attempted to make off with nearly $2 million from the company.  Curry reportedly used an "unwitting" third party, a legitimate Microsoft vendor, Pentad Solutions, to funnel fraudulent payments for goods and services for his own benefit.  In a letter to the court, Curry apologized for his actions while asserting he was angry at his employer in part because his manager would humiliated him on several occasions.  Curry, who pleaded guilty to wire fraud, has also been ordered to pay restitution in the amount of $459,000.


Read the story here and here.

Minnesota Man Sentenced for Embezzling $660K from Tribe

Eric J. Makowski-Budrow, 31, of Brainerd, Minnesota, has been sentenced to 30 months in prison for embezzling more than $660,000 from the Mille Lacs Band of Ojibwe where he had served as construction project manager. According to prosecutors, Makowski colluded with contractors over a period of about two years, from 2005 and June 13, 2007, charging the tribe excessive amounts and then receiving kickbacks in return. Makowski is also accused of rigging bids and creating false documents to cover up his crimes. One of Makowski's accomplices, Jason Allen Heinlen, 33, of Belle Plaine, Minnesota, was sentenced to 5 years probation for his part in the scheme. Makowski, who is a former fire fighter for the City of Brainerd, was originally charged in November 2009 and plead guilty in December 2009. Makowski was also a member of the Brainerd Housing and Redevelopment Authority and the Brainerd Planning Commission, both of which he resigned from last May.

Read the story here, here, here and here.

Former Accountant for Colorado Company Charged With Embezzling $270K

Sinath Chhim, 30, of Aurora, Colorado, has been charged with embezzling $267,900 from The Weitz Company, a construction company based in Iowa with significant Colorado operations where she had been employed as an accountant. According to authorities, Chhim's scheme involved the forging of checks and fake vendors she created. She has been charged with one count of conspiracy to commit theft, two counts of theft, one count of conspiracy to commit forgery, 17 counts of forgery and one count of computer crime. Chhim's apparent husband, Vann Chea, 35, allegedly was involved in the scheme and has also been charged in the case with one count of conspiracy to commit theft, two counts of theft, one count of conspiracy to commit forgery and two counts of forgery.

Read the story here and here.