New York State Politician Embroiled In Scandal Is Alleged To Have Embezzled $440K From Escrow Accounts

From ABC News on 5/6/13:

A prominent New York state senator pleaded not guilty on Monday to embezzlement and other charges alleging he brazenly tried to sabotage a federal fraud investigation of his law practice by seeking inside information from an employee of the Brooklyn U.S. attorney's office.

Sen. John Sampson told the employee — who has since been fired — that he wanted to identify cooperators in his case so he could arrange to "take them out," prosecutors said in announcing an indictment against the former Democratic leader in the Senate.

The indictment alleges that Sampson embezzled $440,000 from escrow accounts under his supervision as a court-appointed referee for foreclosures. It says some of the funds were funneled into his losing campaign to become Brooklyn district attorney in 2005.
...

Update (2/4/14): NY State Senator John Sampson has now been indicted on two counts of embezzlement, five counts of obstruction of justice and two counts of making false statements to the FBI.

According to the Brooklyn Daily Eagle:

Beginning in the late 1990s, Sampson served as a court-appointed referee for foreclosure proceedings conducted by the Kings County Supreme Court.

As referee, Sampson controlled escrow accounts holding proceeds of foreclosure sales of Brooklyn properties.  It is alleged that between 1998 and 2008, Sampson embezzled approximately $440,000 in surplus funds from the foreclosure sales of four Brooklyn properties. The prior owners of the Brooklyn properties, and other parties with a lawful interest, had a right to receive the funds allegedly embezzled by Sampson. 

It is reported that Sampson indicated that he had illegally diverted the stolen funds to pay expenses arising from his unsuccessful run for Kings County District Attorney in 2005. ...

Arkansas Man Sentenced For Embezzling $200K From Louisiana Pharmacy

Michael A. Wallace, 44, of Crossett, Arkansas, was sentenced to 37 months in prison for embezzling more than $200,000 from Hardin's Compounding Pharmacy in West Monroe, Louisiana where he had been employed as a pharmacy tech.  According to authorities, over a period of at least 3 years, from 2007 to 2010, Wallace wrote forged checks for his own benefit.  He was charged with bank fraud and obstruction of justice.  Wallace has also been ordered to pay full restitution. 

Read the story here and here.

Former North Carolina Sheriff Lieutenant Accused Of Embezzling Nearly $100K

Derek Jackson O'Mary, 43, of Durham County, North Carolina, has been charged with embezzling nearly $100,000 from the Durham County Sheriff's Department where he had served as a Lieutenant. According to authorities, O'Mary is alleged to have taken a total of $97,976 in county funds intended to make undercover drug busts and to pay confidential informants. O'Mary is charged with 37 embezzlement charges and one count each of obstruction of justice and cocaine possession. His scheme spanned nearly six years, from July 2003 through April 2009, according to authorities. O'Mary was fired in April 2009 after evidence was presented that he had misappropriated from the funds.

Read the story here and here.

Execs At NYC-Based Spongetech Charged With Financial Statement Fraud & Obstruction

Two top executives of New York City-based Spongetech Delivery Systems Inc. were arrested Wednesday and charged with fraud in an alleged scheme to defraud investors by reporting false financials and grossly overstated sales figures. Steven Y. Moskowitz, 45, of Flushing, New York, Spongetech's chief operating officer and chief financial officer, together with Michael Metter, 58, of Greenwich, Connecticut, its chief executive officer, were charged with conspiracy to commit securities fraud and with obstruction of justice by federal authorities. They are alleged to have engaged in a "pump and dump" scheme and falsified company financials by claiming revenues from nonexistent companies. Prosecutors claim that SpongeTech created five phony companies that accounted for 99 percent of its sales, including: SA Trading Co., USA Asia Trading, Dubai Export Import Co., New Century Media and Fresco Sales Corp.

Read the story here and here.

Hat tip: Reader Doug

Florida Man Sentenced In Ponzi Scheme That Targeted Pennsylvania Residents

Sean Nathan Healy, 39, of Weston, Florida, was sentenced to 15 1/2 years in prison for operating a Ponzi-type investment fraud scheme that bilked Pennsylvania investors out of some $16.7 million. According to authorities, over the course of about 5 years, from 2003 until 2008, Healy accepted funds from investors meant to be invested in securities and commodities and used much of it to pay for a lavish lifestyle. Healy reportedly spent investor funds on such personal luxuries as a $2.4 million waterfront mansion with more than $2 million in improvements; $1.5 million in men’s and women’s jewelry; and numerous exotic vehicles and sports cars, including a Bentley and several Ferraris, Lamborghinis and Porsches worth more than $2.3 million. Healy was arrested last October and charged with 55 counts of wire fraud, mail fraud, money laundering and obstruction of justice. Healy plead guilty to two counts of wire fraud and one count of unlawful monetary transactions. Healy, a former bouncer dubbed by the media as the “King of Ponzi Bling,” operated an investment firm called Sand Dollar Investing Partners LLC to defraud approximately 50 investors. Healy's wife, Shalese Rania Healy, 37, also of Weston, Florida, was also named as a defendant in the case (pictured here with Sean Healy) since much of his assets purchased with the ill-gotten gains were put in her name.

Read the story here, here and here.

Read the original SEC complaint here.

Massachusetts Woman Sentenced For Embezzling $240K From Rhode Island Company

Sherrie Gagne, 41, of Seekonk, Massachusetts, was sentenced to 3 1/2 years in prison for embezzling nearly $240,000 from Cranston, Rhode Island-based 4 Seasons Carpet Workshop Inc., where she had been employed as office manager. Prosecutors alleged that from September 2005 until January 2007, Gagne issued 91 checks to herself totaling $237,363 for her own personal benefit. She had pleaded no contest to one count of embezzlement over $100, one count of uttering and publishing a false instrument -- forging and counterfeiting checks -- and one count of obstruction of justice. As part of the sentence, Gagne must also make full restitution and will have 6 1/2 years of probation following her prison term.

Read the story here and here.

Trial For Former South Carolina Mayor & Wife Commences In $243K Embezzlement Case

Alan "Lenneau" Berry, 58, and his wife, Sheila Berry, of Latta, South Carolina, are on trial in federal court on 62 counts of embezzlement of Social Security funds. Lenneau Berry, the former mayor of Latta, previously plead guilty to state charges of one count of common law misconduct in office, four counts of obstruction of justice and one count of making a false statement. The two are accused of embezzling $243,000 from Social Security between 2000 and 2008. Harold J. Kornblut, 56, a local CPA, originally indicted in the case, testified that Lenneau Berry had him issue his paychecks to Sheila Berry since he was receiving disability payments.

Read the story here, here, here and here.

Bernard Kerik, Former NYC Police Commissioner, Sentenced To 48 Months For Frauds

Bernard B. Kerik, 54, of New York City, was sentenced last week to 4 years in prison following his guilty plea on 8 felony counts last November, including one count of obstructing and impeding the due administration of the internal revenue laws, one count of aiding in the preparation of a false tax return, one count of making a false statement on a loan application, and five counts of making false statements to the federal government. Kerik must also pay restitution in the amount of $187,931. Kerik was originally indicted in 2007 following revelations from his 2003 White House vetting for the position of Secretary of Homeland Security.

Read the story here, here, here and here.

Read the DOJ announcement here.

Ohio Man Pleads Guilty In $7.3 Million Real Estate Investment Fraud Scheme

Kevin Miller, 55, of Fairfield, Ohio, pleaded guilty yesterday to one count of conspiracy to commit mail fraud and one count of obstruction of an investigation for his role in a real estate investment fraud scheme between 2005 and 2008 that defrauded approximately 80 victims out of approximately $7.3 million. According to prosecutors, Miller was a salesperson for Capital Investments and "duped" investors into fraudulent real estate investments in Ohio and Florida. He sent letters to investors claiming the investments were safe and secure and a success, earning higher returns than most investments. It turns out that the properties in question were owned by Capital Investments, related entities and family members and were "in foreclosure, disrepair or lacked substantial equity." Prosecutors alleged that many of Miller's victims were people Miller had attended church with at the Princeton Pike Church of God, including elderly and inexperienced investors.

Read the story here and here.

Read the DOJ announcement here.

Louisiana Businessman Charged In $20 Million Alleged Ponzi Scheme

Matthew B. Pizzolato, 26, of Tickfaw, Louisiana, has been charged in a 64-count indictment with securities fraud, mail fraud, wire fraud, money laundering, witness tampering and obstruction of justice in connection with an alleged Ponzi-scheme that defrauded investors out of some $19.5 million. About 160 mostly elderly individual investors were defrauded in the scheme, according to prosecutors. According to the criminal complaint, Pizzaloto operated Gulf Region Guaranty, Inc. and numerous related entities by offering certificates of deposit and treasury bills at rates higher than market value and marketed them as "safe," "guaranteed" or "conservative." Instead of investing the funds as advertised, Pizzolato made high-risk futures investments and other risky ventures as well as spent the money on a lavish personal lifestyle and for his own personal use.

Read the story here, here and here.

Update (4/4/10): Pizzolato pleaded guilty Thursday to 27 charges including mail fraud, wire fraud money laundering, securities fraud, and witness tampering.

Former Stanford Financial CFO Pleads Guilty In $7 Billion Ponzi Scheme Case

James M. Davis, 60, the former chief financial officer of Houston-based Stanford Financial Group, pleaded guilty yesterday to fraud and obstruction charges related to a $7 billion scheme to defraud investors. On June 18th, Davis was charged in a criminal Information with conspiracy to commit mail, wire and securities fraud; mail fraud; and conspiracy to obstruct an SEC investigation. The scheme involved the fraudulent misappropriation of some $7 billion in investor funds meant to purchase certificates of deposit. Robert Allen Stanford, chairman; Laura Pendergest-Holt, chief investment officer; Gilberto Lopez, chief accounting officer; Mark Kuhrt, global controller; and Leroy King, the administrator and chief executive officer, were indicted on June 18, 2009, on fraud and obstruction charges related to the scheme. Each are charged with conspiracy to commit mail, wire and securities fraud; wire fraud; mail fraud; and conspiracy to commit money laundering. In addition, Stanford, Pendergest-Holt and King are charged with conspiracy to obstruct an SEC investigation and obstruction of an SEC investigation.

Read FraudTalk's earlier post on the Stanford Financial fraud case here and here.

Read the DOJ announcement here.

Oklahoma Bank Executive Accused In $500K Embezzlement Scheme

Criss Lee McGinty, 51, of Glencoe, Oklahoma, was indicted last week on charges he embezzled $536,995 from a customer's account at the Glencoe State Bank, for whom he had been employed as Executive Vice President. Specifically, he was indicted for embezzlement, misapplication of bank funds, making false statements to FDIC bank examiners and obstructing an FDIC examination. According to prosecutors, McGinty used a variety of means, including executing hand written checks to himself, to transfer funds from the account of Dove Construction, LLC, held at the bank to a personal account in the name of “McGinty House,” which he used to pay for construction of his home and other personal expenses. McGinty has been employed by Glencoe State Bank since 1978.

Read the story here, here and here.

Former Pennsylvania State Senator Convicted Of Public Corruption Charges

Vincent J. Fumo, 65, and a former State Representative, was convicted yesterday on all 137 counts, including conspiracy, fraud, obstruction of justice, and tax violations, by a jury at his public corruption trial in Philadelphia. Fumo (Democrat-South Philadelphia), was convicted of defrauding the state and two non-profit organizations out of $3.5 million as well as using state employees and consultants to do political work and run personal errands. Fumo was accused of helping to defraud a community group he helped found, the Citizens Alliance for Better Neighborhoods, by using $1.4 million of its money to buy tools and other goods, to conduct political polls and to file a lawsuit against a Republican enemy. Fumo is allegedly a member of Mensa, the genius organization.

Read the story here, here and here.

Stanford Financial Exec Arrested & Charged With Obstruction

Laura Pendergest-Holt, 35, and the CFO of Stanford Financial Group, Inc., based in Houston, Texas, has was arrested today and charged with "obstruction of a proceeding before an agency of the United States." According to the complaint, Pendergest-Holt made "several affirmative misrepresentations" to the SEC in order to obstruct its investigation into the alleged fraud involving the company.

Read FraudTalk's original post on this story here.

Read the story here, here and here.

Read the DOJ's announcement of Pendergest-Holt's arrest here.

Federal Judge In Texas Pleads Guilty To Obstruction Of Justice

U.S. District Judge Samuel B. Kent, 59, pleaded guilty today to obstruction of justice by making false statements to a special investigative committee of the U.S. Court of Appeals for the Fifth Circuit. The special investigative committee was investigating a judicial misconduct complaint against Kent that alleged he assaulted two female employees. Kent, who sat on the bench in the Southern District of Texas, had been charged with three counts of abusive sexual contact and two counts of aggravated sexual abuse. Those charges will be dropped and prosecutors will recommend that he serve no more than 3 years in prison for the obstruction count. He has reportedly retired from the bench. Sentencing is scheduled for May 11, 2009.

Read the story here and here.

Read the DOJ's announcement 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.

Former Peregrine CEO Sentenced To 97 Months For Financial Statement Fraud

Stephen Parker Gardner, 54, the former CEO of Peregrine Systems, Inc., was sentenced Friday to serve 97 months in federal prison for his role in perpetuated a financial statement fraud at the company between 1999 and 2002. Gardner pleaded guilty in March 2007 and cooperated with authorities in their case against his co-defendants. According to prosecutors, Gardner and his co-conspirators concealed from investors the fact that millions in accounts receivables had not been collected. Gardner also provided false testimony to the SEC about certain barter transactions, according to authorities. Gardner plead guilty to one count each of conspiracy, securities fraud and obstruction of justice. Prior to the company's stock collapse in 2002, Gardner earned in excess of $9 million in options transactions and bonuses. Shareholders claims losses at $3 billion. The company filed for bankruptcy and Gardner was forced to resign at that time. Other Peregrine officers prosecuted in this case include: Gary L. Lenz, former COO; Douglas S. Powanda, former EVP of Sales; Berdj J. Rassam, former controller; Joseph G. Reichner, former SVP for Alliances and Business Development; and Peter J. O'Brien, former director of Strategic Alliances.

Read the story here, here, here and here.

See the SEC litigation release here.

Former Director Of AMEX Pleads Guilty TO Obstruction Of Justice

Elliot J. Smith, 76, a former director of the American Stock Exchange and a founding member of the Chicago Board Options Exchange, plead guilty to one count of obstructing justice in relation to an insider trading case. Smith, who was also a founding member and former chairman of the Amex Commodities Exchange, was a managing director of Broadband Capital Management LLC, a registered broker-dealer. In July, the SEC began investigating Smith in connection with a possible insider trading case involving the sale of securities in an unnamed pharmaceutical company through Broadband in 2003. According to prosecutors, Smith submitted false documents in relation to the sale of shares in that company and two others. He faces up to 5 years in prison, plus a fine of $250,000 upon sentencing which is scheduled for March 18. 2009.

Read the story here, here and here.

Appeals Court Upholds Rep. Jefferson's Indictment

A federal appeals court today upheld the indictment of U.S. Congressman William J. Jefferson, 61, (D-Louisiana). Jefferson was indicted on 16 felony counts, including bribery, racketeering, obstruction of justice, violating the Foreign Corrupt Practices Act, conspiracy, money laundering and misusing his office. In spite of the criminal charges, Jefferson is running for re-election and is expected to win handily. The appeals court ruling paves the way for a trial in the case, pending further appeal by Jefferson. The indictment, filed last year, alleges that between 2000 and 2005, Jefferson received more than $500,000 in bribes and demanded millions more, including $90,000 he received from an informant that was later found in the freezer of his Washington home. He has pleaded not guilty. Prosecutors also contend that Jefferson used his influence as chairman of the congressional Africa Investment and Trade Caucus to broker deals in Nigeria, Ghana, Cameroon and other African nations on behalf of those who bribed him. He faces up to 235 years in prison if convicted of all charges.

Read the story here and here.

Read background on the story here, here and here.

Read the DOJ announcement here.

As with the case of Senator Ted Stevens, I believe William Jefferson should have the good grace to resign from office.