Minnesota Businessman Charged In Alleged $190 Million Ponzi Scheme Fraud

Trevor Gibson Cook, 37, of Apple Valley, Minnesota, was charged yesterday with operating a Ponzi-type investment fraud scheme that allegedly bilked as many as 1,000 investors out of at least $190 million. He faces one count of mail fraud and one count of tax evasion. Cook's scheme, which operated from January 2007 through July 2009, offered returns of as much as 12 percent on investments in a foreign-currency trading program with little or no risk, according to prosecutors. Instead of investing the funds as promised, Cook reportedly spent investment funds to pay returns to earlier investors in classic Ponzi style and used the rest to enrich himself with personal investments, real estate and to pay off large gambling debts. Cook was originally charged last November, along with Patrick "Pat" J. Kiley, 71, of Burnsville, Minnesota and a local conservative radio talk show host, of selling unregistered securities through a series of shell companies. The companies named in the SEC's original complaint include UBS Diversified Growth LLC, Universal Brokerage FX Management LLC, Oxford Global Advisors LLC, Oxford Global Partners LLC and four shell companies.

Read the story here and here.

Update (4/13/10): Cook plead guilty today to operating a $190 million Ponzi scheme.

Vermont Bookkeeper Sentenced For Embezzling $180K From 2 Employers

Melanie McDonald, 43, of Thetford, Vermont, was sentenced on Monday to 18 months in prison for embezzling some $180,000 from two businesses, Dowd's Country Inn of Lyme, New Hampshire, and Wilder Business Services, in Wilder, Vermont, where she had been employed as a part-time bookkeeper. In 2007, McDonald pleaded guilty to interstate transportation of stolen property. Prosecutors alleged that McDonald's schemes lasted from 2001 until 2006.

Read the story here, here and here.

Co-Founder Of Washington State Company Charged With Misappropriating As Much As $524K

Mark E. Phillips, 35, of Seattle, Washington, has been charged with two counts of wire fraud in connection with the alleged misappropriation of as much as $524,000 from MOD Systems, Inc., a Seattle-based company he co-founded and served as CEO until last year. According to prosecutors, Phillips submitted fraudulent expense reimbursements for personal expenses and personal luxury items and otherwise misappropriated company funds for personal use. The complaint resulted from an internal investigation initiated by an angel investor, Robert Arnold, into the apparent misappropriations. Bitter civil litigation has ensued between all of the parties.

Read the story here and here.

Read the criminal complaint here.

Hat Tip: Reader Joe

Former Louisiana Banker Pleads Guilty To Embezzling $231K From Client Accounts

Christopher P. Smith, 30, of Lafayette, Louisiana, pleaded guilty yesterday to charges he embezzled some $231,000 from customer accounts at Chase Bank where he was employed as a personal banker. Specifically, Smith pleaded guilty to one count of misapplication of bank funds resulting from unauthorized withdrawals from September 2007 through August 2009. The bank customers have all been reimbursed, according to reports. Smith faces up to 30 years in prison, plus a fine of up to $1 million and restitution.

Read the story here.

Update (8/10/10): Smith was sentenced to 41 months in prison for his embezzlement scheme. Smith was also ordered to pay $228,350.60 in restitution and will serve five years of supervised release after his prison sentence. He had plead guilty to misapplication of bank funds.

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.

Small Business Fraud Prevention ToolKit Available

Marquet International, Ltd. has joined with Business Fraud Prevention, LLC, to distribute the Small Business Fraud Prevention ToolKit," an educational program for small businesses to help identify, prevent and respond to internal fraud situations. The toolkit, which was authored by certified fraud examiner, Julie A. Mucha-Audlott, includes a two-hour instructional DVD and accompanying 72-page workbook. It is available for purchase online for $169. “We are very pleased to be able to offer the Small Business Fraud Prevention Toolkit,” said Christopher T. Marquet, CEO of Marquet International, Ltd. “Small businesses are particularly at risk for internal fraud and employee misconduct simply as a result of generally having a less robust control structure compared to larger organizations. Non-profits also face a high risk of fraud, waste and abuse,” said Marquet.

To order the Small Business Fraud Prevention ToolKit, visit our website here.

Former Virginia Bookkeeper Pleads Guilty To Embezzling $157K From Dollar Tree

Jenene Burgess Rodgers, 39, of Chesapeake, Virginia, pleaded guilty yesterday to six counts of embezzlement, admitting she stole about $157,000 from Dollar Tree Inc., where she had been employed as a clerk in the finance department handling company vendors. According to prosecutors, Rodgers created fake accounts to misappropriate company funds to pay her personal expenses, including a student loan, make online purchases and to take cash, over a nearly three year period between February 2007 and December 2009. All in, Rodgers, who must make restitution as part of the plea agreement, stole $157,588.19, according to authorities. She was arrested last December.

Read the story here and here.

Former Union Bookkeeper In California Sentenced For Embezzling $100+K

Rosa Della Porta, 45, of Highland Park, California, was sentenced yesterday to 21 months in prison for embezzling some $108,000 from the International Longshore and Warehouse Union, Local 26 (ILWU), where she had been employed as a bookkeeper. According to prosecutors, Porta handled incoming monies for union dues, but kept a portion of the cash that was meant to be deposited for the union. Porta's scheme lasted from January 2003 until June 2006. She was fired in November 2006 and ultimately arrested in August 2008. Porta plead guilty last year to one count of embezzlement.

Read the story here and here.

Michigan Man Sentenced In $13.2 Million Ponzi Scheme

Richard Taft Johnson, 67, of Bloomfield Hills, Michigan, was sentenced to 8 years in prison for bilking investors out of some $13.2 million in a Ponzi-type investment fraud scheme. Prosecutors alleged that Johnson, through his company, Investor Planning Services, promised investors returns of as much as 40 percent per year through a low-risk program called the American Charitable Program. The scheme began in 1998 and lasted until 2009. There are about 130 known victims of Johnson's fraud. He plead guilty to "devising a Ponzi scheme and committing mail fraud in carrying it out."

Read the story here and here.

Read the DOJ announcements here and here.

Former Missouri Controller Indicted For Allegedly Embezzling $400K

Joseph B. Van Gronigen, 41, of Hillsboro, Missouri, was indicted yesterday on charges he embezzled more than $400,000 from Cepia, LLC, a Clayton, Missouri-based company that makes Zhu Zhu pets, for whom he had been employed as company controller. According to the indictment, Van Gronigen's scheme lasted from September 2007 to January 2010. He faces up to 20 years in prison, plus fines up to $250,000 for each of the two counts of mail fraud he has been indicted on, plus restitution.

Read the story here and here.

Update (6/18/11): Van Gronigen has been sentenced to 20 months in prison for embezzling what is now believed to be $500,000 from Cepia, LLC, the maker of Zhu Zhu pets.  He had plead guilty last January to one felony count of mail fraud.

International Embezzlement Beat

Some of the prominent embezzlement cases in the news from around the globe recently include:

People's Republic of China

Li Shubiao, 46, and the former director of the Chenzhou Housing Provident Fund Centre, was executed yesterday by Chinese authorities. He was reportedly found guilty of having embezzled some 120 million yuan (US$18 million) in public funds over a five year period during his tenure. He is reported to have invested most of the money in personal investments or "squandered" it gambling.


France

Jacques Chirac, 77, and the former president of France, has been ordered to stand trial for embezzlement. Chirac was forced to step down in 2007 resulting from accusations he created fictitious jobs to pay his political cronies during his time as Paris mayor between 1992 and 1995. This case is noteworthy in that it marks the first time a modern French leader has appeared in the dock in a public court. The investigation took 3 years to complete and Chirac has avoided prosecution due to his immunity in public office until he stepped down.


Rwanda

An investigation lead by the Office of the Prosecutor General has resulted the arrest of a number of leaders and members of various cooperatives in the country for alleged embezzlement of at least Rwf 889m. Those arrested include, Jeanne Mukandamage, Claude Nzaramba, Odeth Mukamana (Codevram), Anastase Murego, Andre Nzabamwita, and Boniface Uwimana.


Republic of Korea

Official crime reports indicate that embezzlement cases are on the rise in South Korea. According to the National Police Agency, the number of embezzlement cases reported was 23,830 last year, up 17 percent over the past five years. An article in the Korea Herald reported that many of the perpetrators involve "financial experts" and "other professionals. The article cited three recent cases, including the following:

• Last October, the 49-year-old manager of a company under court receivership was arrested on charges of embezzling 190 billion won (US$160 million) from his company. The man, named Park, allegedly squandered all the money that he stole for six years on stock investments, plus gambling and "other extravagancies."


• On March 19, an official at Gangnam District Office in southern Seoul committed suicide after being found to have appropriated 770 million won (US$650,000) in state funds.


• Officials at Yonsei University in Seoul reported Wednesday that they were investigating a campus employee suspected of embezzling research fees worth of "tens of millions of won."

Kazakhstan

Mukhtar Dzhakishev, a former president of state-run nuclear energy company Kazatomprom, was recently convicted of embezzling some 99.8 million tenge (US$679,000) by misappropriating state shares in uranium deposits to offshore accounts. He was sentenced to 14 years in prison and barred for 7 years from holding government posts.

Guatemala

Alfonso Portillo, 58, the former president of Guatemala, will faces money laundering and embezzlement charges in the United States after a panel of judges approved his extradition to the U.S. on charges that he laundered tens of millions of dollars that he had embezzled while he was President, between 2000 and 2004, including $2.5 million in donations from the Taiwanese government that was meant for children's schoolbooks. He was apprehended in January after a US indictment was handed down. Portillo claims he is innocent and suggested that the accusations are a political witch hunt by the U.S. and U.N. He faces up to 20 years in prison if convicted.


Taiwan

Sentencing for Hsieh Shih-hung, a bank intern formerly employed by the Bank of Taiwan, who embezzled NT$320 million is recommended by prosecutors to be 15 years in prison. Hsieh reportedly used his manager's identity and the banks newly installed electronic data interchange service to make two transfers of NT$160 each to his own personal bank account. Hsieh, who also conspired with his wife and an aunt to transfer some of the funds to overseas accounts, was originally charged with violating the Banking Act and laundering


Spain

Jaume Matas, the former president of the Balearic Islands, has been accused of embezzlement, false documentation, breach of trust, fraud management and money laundering in connection with the misappropriation of some 41 million euros while he was in government. He faces a maximum of 18 years in prison if convicted on all counts.

California Woman Charged With Embezzling $100K

Debra Davis, 47, of Apple Valley, California, has been arrested and charged with embezzling about $100,000 from an unnamed Hesperia-based auto repair business where she had been employed. Authorities believe Davis stole cash from the business over a period of years and that she had been employed there since 2003. Details of the case are sketchy at this time.

Read the story here.

Developing...

California Couple Indicted In $1/2 Million Embezzlement Case

Benjamin Joseph Chaney, believed to be in his early 30s, and Kara Leigh Brown, believed to be in her early 40s, of Discovery Bay, California, were indicted Wednesday on 7 counts of theft and embezzlement with “Aggravated White Collar Crime” enhancements alleging they stole more than $500,000 from an unnamed business based in Davis. The indictment alleges that Chaney had served as CFO of the company and, over a four year period between 2003 and 2007, used his position to write checks and use the company credit card for "a multitude of personal expenses related to the couple’s home, vehicles and entertainment." The indictment is the culmination of 2 years of investigation and litigation in Yolo County, California. The couple were arrested last weekend.

Read the story here .

Read the DA's announcement here.

Note: We have identified a Benjamin Chaney who has been employed by a manufactured/mobile home real estate concern called East Bay Repos (www.eastbayrepos.com). However, we are not certain that this is one and the same Benjamin Chaney who was indicted in this case.

Update (1/16/13): Brown, now 43, pleaded guilty to Accessory to a Felony.  Chaney, 32, pleaded guilty to embezzling as much as $500,000 from Harper Model Home Maintenance, for which he had been employed as chief financial officer.

New Mexico Real Estate Exec Accused Of Running $80 Million Ponzi Scheme

Douglas F. Vaughan, 62, of Albuquerque, New Mexico, and a prominent local real estate executive, has been accused by the SEC of operating a Ponzi-type investment fraud scheme that bilked investors out of some $80 million. According to the Securities and Exchange Commission, Vaughan, through his companies, The Vaughan Company Realtors and Vaughan Capital LLC, enticed investors with promissory notes with fixed rates of return between 10 and 25 percent for real estate investments involving distressed properties. Some 600 investors were defrauded, according to the SEC, dating back to 1993. Vaughan and his companies have reportedly filed for bankruptcy.

Read the story here and here.

Read the SEC complaint here

Arizona Woman Set To Be Sentenced For Embezzling From Bank

Marlene Aguilera Pena, 46, of Globe, Arizona, is due to be sentenced April 12th for misappropriating more than $860,000 from the Marian Miami Federal Credit Union, where she had been employed. Prosecutors alleged that Pena opened 141 fictitious loans with a total originated loan balance of approximately $2.1 million. Pena plead guilty to three counts of embezzlement, admitting that $860,377 was taken for her and her family's own benefit. The credit union is now defunct. The scheme lasted nearly six years, from January 2001 until November 2006, according to the indictment, which originally had 25 counts of embezzlement. She faces up to 30 years in prison for each of the three counts, plus restitution and a fine of up to $1 million.

Read the story here, here and here.

Read the DOJ announcement of her guilty plea here.

Update (5/14/10): Pena was sentenced to more than 4 years in prison, plus 5 years supervised release and must pay $1.2 million in restitution.

Former New Hampshire Bank Exec Sentenced For Embezzling $120K

Gary K. Ellis, 57, of Newmarket, New Hampshire, was sentenced to six months in prison for embezzling at least $120,000 from River Valley Credit Union in Brattleboro, Vermont, where he had served as chief executive officer. According to prosecutors, Ellis took extra salary and bonus from the bank over a four year period. He was fired in 2005 after the misappropriation came to light and ultimately indicted in December 2008. With the sentence, Ellis must also pay restitution of between $120,000 and $200,000 to be determined in a separate hearing.

Read the story here and here.