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December 23, 2014

Kentucky Businessman Pleads Guilty in Manhattan Federal Court to $53 Million Tax Scheme and Massive Fraud That Involved the Bribery of Bank Officials

Preet Bharara, the United States Attorney for the Southern District of New York, and David A. Hubbert, Deputy Assistant Attorney General for the Tax Division of the Department of Justice, announced that WILBUR ANTHONY HUFF, a Kentucky businessman, pled guilty today in Manhattan federal court to various tax crimes that caused more than $50 million in losses to the Internal Revenue Service (“IRS”), and a massive fraud that involved the bribery of bank officials, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators. HUFF pled guilty this afternoon before U.S. District Judge Naomi Reice Buchwald.

Manhattan U.S. Attorney Preet Bharara said: “Today’s guilty plea ensures that Wilbur Huff will be punished for perpetuating a vortex of fraud—complete with bribery, tax crimes that caused $53 million in losses to the IRS, the fraudulent purchase of a company, and the defrauding of insurance regulators. Those who might be tempted to follow in Huff’s criminal footsteps should understand that this Office and our law enforcement partners will aggressively pursue and root out fraud wherever we find it.”

According to the information, plea agreement, and statements made during court proceedings:

Background

HUFF was a businessman who controlled numerous entities located throughout the United States (“HUFF-Controlled Entities”). HUFF controlled the companies and their finances, using them to orchestrate a $53 million fraud on the IRS as well as other illegal schemes. However, rather than exercise control of these companies openly, HUFF concealed his control by installing other individuals to oversee the companies’ day-to-day functions and to serve as the companies’ titular owners, directors, or officers. HUFF also maintained a corrupt relationship with Park Avenue Bank and its executives, Charles J. Antonucci, Sr., the President and Chief Executive Officer, and Matthew L. Morris, the Senior Vice President.

Tax Crimes

From 2008 to 2010, HUFF controlled O2HR, a professional employer organization (“PEO”) located in Tampa, Florida. Like other PEOs, O2HR was paid to manage the payroll, tax, and workers’ compensation insurance obligations of its client companies. However, instead of paying $53 million in taxes that O2HR’s clients owed the IRS, and instead of paying $5 million to Providence Property and Casualty Insurance Company (“Providence P&C”)—an Oklahoma-based insurance company—for workers’ compensation coverage expenses for O2HR clients, HUFF stole the money that his client companies had paid O2HR for those purposes. Among other things, HUFF diverted millions of dollars from O2HR to fund his investments in unrelated business ventures, and to pay his family members’ personal expenses. The expenses included mortgages on HUFF’s homes, rent payments for his children’s apartments, staff and equipment for HUFF’s farm, designer clothing, jewelry, and luxury cars.

Conspiracy to Commit Bank Bribery, Defraud Bank Regulators, and Fraudulently Purchase an Oklahoma Insurance Company

From 2007 up to and including 2010, HUFF engaged in a massive multi-faceted conspiracy, in which he schemed to (i) bribe executives of Park Avenue Bank, (ii) defraud bank regulators and the board and shareholders of a publicly-traded company and (iii) fraudulently purchase an Oklahoma insurance company. As described in more detail below, HUFF paid bribes totaling hundreds of thousands of dollars in cash and other items to Morris and Antonucci, in exchange for their favorable treatment at Park Avenue Bank.

As part of the corrupt relationship between HUFF and the bank executives, HUFF, Morris, Antonucci, and others conspired to defraud various entities and regulators during the relevant time period. Specifically, Huff conspired with Morris and Antonucci to falsely bolster Park Avenue Bank’s capital, by orchestrating a series of fraudulent transactions to make it appear that Park Avenue Bank had received an outside infusion of $6.5 million, and engaged in a series of further fraudulent actions to conceal from bank regulators the true source of the funds.

HUFF further conspired with Morris, Antonucci, and others to defraud Oklahoma insurance regulators and others by making material misrepresentations and omissions regarding the source of $37.5 million used to purchase Providence Property and Casualty Insurance Company, an Oklahoma insurance company that provided workers’ compensation insurance for O2HR’s clients, and to whom O2HR owed a significant debt.

Bribery of Park Avenue Bank Executives

From 2007 to 2009, HUFF paid Morris and Antonucci at least $400,000 in exchange for which they: (1) provided HUFF with fraudulent letters of credit obligating Park Avenue Bank to pay an investor in one of HUFF’s businesses $1.75 million if HUFF failed to pay the investor back himself; (2) allowed the HUFF-Controlled Entities to accrue $9 million in overdrafts; (3) facilitated intra-bank transfers in furtherance of HUFF’s frauds; and (4) fraudulently caused Park Avenue Bank to issue at least $4.5 million in loans to the HUFF-Controlled Entities.

Fraud on Bank Regulators and a Publicly-Traded Company

From 2008 to 2009, HUFF, Morris, and Antonucci engaged in a scheme to prevent Park Avenue Bank from being designated as “undercapitalized” by regulators—a designation that would prohibit the Bank from engaging in certain types of banking transactions, and that would subject the Bank to a range of potential enforcement actions by regulators. Specifically, they engaged in a series of deceptive, “round-trip” financial transactions to make it appear that Antonucci had infused the Bank with $6.5 million in new capital when, in actuality, the $6.5 million was part of the Bank’s pre-existing capital. HUFF, Morris, and Antonucci funneled the $6.5 million from the Bank through accounts controlled by HUFF to Antonucci. This was done to make it appear as though Antonucci was helping to stabilize the Bank’s capitalization problem, so the Bank could continue engaging in certain banking transactions that it would otherwise have been prohibited from doing, and to put the Bank in a better posture to receive $11 million from the Troubled Asset Relief Program. To conceal their unlawful financial maneuvering, HUFF created, or directed the creation of, documents falsely suggesting that Antonucci had earned the $6.5 million through a bogus transaction involving another company Antonucci owned. HUFF, Morris, and Antonucci further concealed their scheme by stealing $2.3 million from General Employment Enterprises, Inc., a publicly-traded temporary staffing company, in order to pay Park Avenue Bank back for monies used in connection with the $6.5 million transaction.

Fraud on Insurance Regulators and the Investment Firm

From July 2008 to November 2009, HUFF, Morris, Antonucci, and Allen Reichman, an executive at an investment bank and financial services company headquartered in New York, New York (the “Investment Firm”), conspired to (i) defraud Oklahoma insurance regulators into allowing Antonucci to purchase the assets of Providence P&C—the Oklahoma insurance company that was owed $5 million by O2HR and (ii) defraud the Investment firm into providing a $30 million loan to finance the purchase. Specifically, HUFF and Antonucci devised a scheme in which Antonucci would purchase Providence P&C’s assets by obtaining a $30 million loan from the “Investment Firm,” which used Providence P&C’s own assets as collateral for the loan. However, because Oklahoma insurance regulators had to approve any sale of Providence P&C, and because Oklahoma law forbade the use of Providence P&C’s assets as collateral for such a loan, HUFF, Morris, Antonucci, and Reichman made, and conspired to make, a number of material misstatements and material omissions to the Investment Firm and Oklahoma insurance regulators concerning the true nature of the financing for Antonucci’s purchase of Providence P&C. Among other things, Reichman directed Antonucci to sign a letter that provided false information regarding the collateral that would be used for the loan, and HUFF, Morris, and Antonucci conspired to falsely represent to Oklahoma insurance regulators that Park Avenue Bank—not the Investment Firm—was funding the purchase of Providence P&C.

After deceiving Oklahoma regulators into approving the sale of Providence P&C, HUFF took $4 million dollars of the company’s assets, which he used to continue the scheme to defraud O2HR’s clients. Ultimately, in November 2009, the insurance company became insolvent and was placed in receivership after HUFF, Morris, and Antonucci had pilfered its remaining assets.

* * *

HUFF, 53, of Caneyville and Louisville, Kentucky, pleaded guilty to one count of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, which carries a maximum penalty of three years in prison, one count of aiding and assisting with the preparation and presentation of false and fraudulent tax returns, which carries a maximum penalty of three years in prison, one count of failing and causing the failure to pay taxes to the IRS, which carries a maximum penalty of one year in prison, and one count of conspiracy to (a) commit bank bribery, (b) commit fraud on bank regulators and the board and shareholders of a publicly-traded company, and (c) fraudulently purchase an Oklahoma insurance company, which carries a maximum penalty of five years in prison. He is scheduled to be sentenced by Judge Buchwald on April 8, 2015, at 2:30 p.m. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. As part of his plea, Huff also agreed to forfeit $10.8 million to the United States and to provide restitution in the following amounts to victims of his crimes: $70,100,000 to the Receiver for Park Avenue Property and Casualty Insurance Company; $4,857,266.62 to the Federal Deposit Insurance Corporation (“FDIC”); $597,420.29 to Valley National Bank (the successor of Park Avenue Bank); and $53,094,219 to the Internal Revenue Service.

Charles Antonucci, who was charged separately by complaint on March 15, 2010, pleaded guilty to his role in the crimes described above on October 8, 2010. Matthew L. Morris and Allen Reichman were charged by Indictment with HUFF on October 1, 2012. Morris pleaded guilty in connection with the case on October 17, 2014.

Reichman is currently scheduled to go to trial before Judge Buchwald beginning on March 2, 2015. The charges against Reichman are allegations and he is presumed innocent unless and until proven guilty beyond a reasonable doubt.

Mr. Bharara praised the investigative work of the Special Inspector General for the Troubled Asset Relief Program, the Federal Bureau of Investigation, the IRS, the New York State Department of Financial Services, Immigration and Customs Enforcement’s Homeland Security Investigations, and the Office of Inspector General of the FDIC. Mr. Bharara also thanked the Department of Justice’s Tax Division and the United States Attorney’s Office for the Southern District of Florida for their assistance.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Janis Echenberg and Daniel Tehrani and Special Assistant U.S. Attorney Tino Lisella are in charge of the criminal case.

Posted By: Ralph Roberts @ 1:01 pm | | Comments Off on Kentucky Businessman Pleads Guilty in Manhattan Federal Court to $53 Million Tax Scheme and Massive Fraud That Involved the Bribery of Bank Officials | Trackback |
Filed under: Bank Fraud,Loan Fraud,Wire Fraud

December 22, 2014

Canadian Man Sentenced to Seven Years in Prison for Swindling Elderly Victims in $8 Million Telemarketing Scam from the Philippines

CHICAGO—A Canadian man who cooperated with U.S. law enforcement and voluntarily traveled from the Philippines to face federal prosecution was sentenced to seven years in prison for swindling 168 elderly victims nationwide of approximately $8 million in a telemarketing fraud scheme, federal law enforcement officials announced today.

The defendant, AUSTIN ETCHES, 56, “was up to his eyeballs” in the “heinous” crime, U.S. District Judge Thomas Durkin said in imposing the sentence on Friday in Federal Court. Etches, who has remained in federal custody since he voluntarily traveled to the United States in June 2013, was also ordered to pay restitution totaling approximately $8 million.

Etches, who last resided in Toronto before Manila, pleaded guilty to mail fraud in June of this year and cooperated in the investigation, which has resulted in pending charges against two alleged co-schemers, who are believed to be outside the United States.

Citing letters to the judge from widows and retirees who were among the victims, Assistant U.S. Attorney Rachel Cannon argued in a sentencing memo, “Many of the victims were at the most vulnerable point of their lives, between their advanced ages, the death of their spouses, and their or their spouse’s health issues, not to mention their need for income.”

According to court documents, Etches and two co-schemers operated a series of companies through telemarketing call centers located in and around Manila. Between 2008 and 2012, they raised more than $8 million by fraudulently selling phony certificates of deposit and non-existent real estate investments to American senior citizens. They made false statements about the risks of the investments, the expected and actual rates of return, and the ways in which investors’ funds would be used. They provided investors with fraudulent account statements purporting to show that investments had increased in value, knowing that they had misappropriated the funds and the investments were worthless.

One elderly victim attended Etches’ sentencing with her son, who spoke on her behalf. He noted that his mother was an emigrant from Yugoslavia, and his parents had worked their entire lives in factory jobs. They managed to save $161,000, all of which Etches and others stole. The son described how the schemers hounded his mother with repeated phone calls, and they stopped calling her only when her son intervened.

In late 2013, related federal fraud charges were filed in Chicago against JONATHAN PAPA, 42, who is believed to be in the Philippines, and METHSIRI PALLIYAGURU, 56, who was formerly in the Philippines and is now believed to be in Canada. The charges are not evidence of guilt and they are presumed innocent.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Tony Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.

Posted By: Ralph Roberts @ 1:03 pm | | Comments Off on Canadian Man Sentenced to Seven Years in Prison for Swindling Elderly Victims in $8 Million Telemarketing Scam from the Philippines | Trackback |
Filed under: Wire Fraud

December 18, 2014

Chicago Travel Agent Arrested on Federal Fraud Charge for Allegedly Swindling Muslim Pilgrims of Hajj Travel Packages

CHICAGO—A Chicago travel agent was arrested today on a federal fraud charge for allegedly cheating at least 50 customers of approximately $525,000 by misrepresenting his ability to sell travel packages for the Hajj that included the visa required to enter Saudi Arabia.

The defendant, RASHID MINHAS, 42, of Chicago, was charged with mail fraud in a criminal complaint that was filed yesterday in U.S. District Court and unsealed this morning following his arrest. He was scheduled to appear at 1:30 p.m. today before U.S. Magistrate Judge Sheila Finnegan in Federal Court.

Minhas was arrested without incident by FBI agents at his residence on the north side of Chicago. Agents also executed a federal search warrant at his business, Light Star Hajj Group, located at 5801 Northwest Hwy., Chicago. Minhas previously operated a travel agency in Chicago called City Travel & Tours.

According to the complaint affidavit, between March and November 2014, Minhas falsely represented that Hajj travel packages for September and October of this year included required Saudi Arabia entry visas. Minhas allegedly knew that Light Star Hajj was not authorized by Saudi Arabia to obtain visas and that he did not intend to obtain the required Hajj visas. He sold travel deals to at least 50 customers and deposited approximately $525,000 he collected into Light Star’s bank accounts, and then commingled those funds with other deposits and used the money to make partial refunds to customers, to transfer funds to Pakistan, and to pay personal expenses, the complaint alleges.

The affidavit describes the Hajj as an annual Islamic pilgrimage to Mecca, Saudi Arabia. The Hajj is a mandatory religious duty for Muslims, and must be carried out at least once in a lifetime by all adult Muslims who are physically and financially capable of undertaking the journey. This year, the Hajj pilgrimage was from Oct. 2-7, and each year, approximately two million pilgrims attend the Hajj.

The complaint states that agents reviewed Light Star’s bank records and determined that approximately $525,000 was deposited this year from the sale of Hajj travel packages. An additional $586,000 was deposited from other sources, including the sale of Umrah travel packages, cash deposits and transfers. Agents determined that approximately $745,000 was spent on expenditures that were not related to Hajj travel packages, including $159,000 in checks to cash, $339,000 in transfers to individuals in Pakistan, approximately $49,000 in checks to Minhas’ former wife, and other expenses.

The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

Mail fraud carries a maximum sentence of 20 years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant United States Attorneys Kenneth E. Yeadon and Kathryn Malizia.

A complaint contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Posted By: Ralph Roberts @ 3:23 pm | | Comments Off on Chicago Travel Agent Arrested on Federal Fraud Charge for Allegedly Swindling Muslim Pilgrims of Hajj Travel Packages | Trackback |
Filed under: Chicago

December 16, 2014

Former North Miami Mayor Convicted for Her Involvement in a Multi-Million-Dollar Mortgage Fraud Scheme

After a 12-day trial, a federal jury convicted former North Miami Mayor Marie Lucie Tondreau, a/k/a “Lucie Tondreau,” 54, for her recruitment of straw buyers and other conduct in an $8,000,000 mortgage fraud scheme.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Drew J. Breakspear, Commissioner, Florida Office of Financial Regulation, made the announcement.

As shown at trial, between December 2005 and May 2008, co-defendant Karl Oreste, 56, of Miramar, Florida, president of KMC Mortgage Corporation of Florida (KMC Mortgage), a mortgage lending business in North Miami Beach, identified residential properties in South Florida that were for sale. Oreste and Tondreau, who at the time was a community activist, hosted several radio show programs in the South Florida area in which they advertised the services offered by KMC Mortgage. Oreste and Tondreau recruited and paid some of the listeners who responded to those advertisements, as well as other individuals, to pose as borrowers and purchase properties identified by Oreste.

Oreste and co-defendant Okechukwu Josiah Odunna, a/k/a “O.J. Odunna,” 49, of Lauderdale Lakes, Florida, as well as other co-conspirators, prepared or caused to be prepared loan applications on behalf of straw borrowers recruited by Oreste and Tondreau. Odunna was an attorney previously licensed to practice law in Florida, and president of O.J. Odunna, P.A. and Direct Title and Escrow Services (Direct Title). These loan applications included false information relating to employment, wages, assets and intent to make the property being purchased a primary residence. The loan applications and documents were submitted by co-conspirators to various mortgage lenders throughout the United States. Once the loan applications were approved, the lenders wired funds to O.J. Odunna, P.A., Direct Title or other title companies for closing.

In some instances Oreste, Odunna and other co-conspirators created and submitted duplicate HUD-1 Settlement Statement Forms, which grossly inflated the true purchase price of the properties. HUD-1 Settlement Statements also falsely and fraudulently represented to the mortgage lenders that the straw borrowers had met their down payment and cash to close obligations, when, in fact, the straw borrowers had never made any such payments.

At closing, a portion of loan proceeds were disbursed to Oreste through his corporation, JR Investment and Mortgage Corporation, or other bank accounts controlled by him. In some instances, a portion of the loan proceeds was diverted to O.J. Odunna, P.A. or Direct Title accounts. Oreste disbursed some of the proceeds he received to pay Tondreau and other, as well as to pay the straw borrowers. Oreste also transferred a substantial portion of the funds to bank accounts of LTO Investment Corporation, a corporation controlled by Tondreau. Tondreau used funds deposited in LTO Investment Corporation’s bank accounts to make payments on the falsely and fraudulently obtained mortgages in order to maintain the loans, and to conceal and further the fraud. She also used a portion of the funds deposited into LTO Investment Corporation’s bank accounts for her own personal use and benefit. Finally, Tondreau also rented out the properties and collected rent for her own personal use and to further the conspiracy.

As further demonstrated at trial, over the course of the mortgage fraud scheme, Tondreau was involved in obtaining 13 fraudulent loans, for which the lenders have suffered losses in the amount of approximately $8,000,000.00. Tondreau received in excess of $300,000 into a business account controlled by her, and in excess of $100,000 into her personal bank accounts.

“Today’s conviction against Marie Lucie Tondreau is a success in our continuing efforts to fight mortgage fraud that jeopardizes our nation’s financial institutions,” said U.S. Attorney Wifredo A. Ferrer. “Tondreau abused her prominence in the community to perpetrate the $8,000,000 mortgage fraud scheme, which thanks to the efforts of my Office’s prosecutors and federal and state law enforcement we successfully unraveled. We will continue to investigate and prosecute individuals who engage in deceptive and fraudulent behavior, fueled by greed.”

“Exploiting the trust of Floridians is atrocious,” said OFR Commissioner Drew J. Breakspear. “We thank the FBI and the United States Attorney’s Office of the Southern District of Florida for their hard work, which has led to this positive outcome. The Florida Office of Financial Regulation remains dedicated to thoroughly investigating those who prey upon others for illegal financial gain.”

Tondreau, who was remanded into custody, is scheduled to be sentenced on March 20, 2015, at 8:30 a.m., before U.S. District Judge Robert N. Scola, Jr. She faces a maximum term of 30 years in prison.

Oreste previously pled guilty to conspiracy to commit wire fraud and is scheduled to be sentenced on January 12, 2015, at 8:30 a.m., before Judge Scola.

Mr. Ferrer commended the investigative efforts of the FBI and Florida’s Office of Financial Regulation. The case is being prosecuted by Assistant U.S. Attorneys Lois Foster-Steers and Gera R. Peoples.

Posted By: Ralph Roberts @ 9:41 am | | Comments Off on Former North Miami Mayor Convicted for Her Involvement in a Multi-Million-Dollar Mortgage Fraud Scheme | Trackback |
Filed under: Florida,Loan Fraud,Mortgage Fraud,Mortgage Fraud Scheme,Mortgage Loan Fraud,Real Estate Fraud

December 12, 2014

Warren Man Sentenced to 10 Years in Prison for $15 Million Ponzi Scheme

A Warren man was sentenced to 10 years in prison for his role in operating a $15 million Ponzi scheme, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Office.

Keelan Harris, 38, was convicted earlier this year on charges of conspiracy, wire fraud, and money laundering. U.S. District Judge Christopher A. Boyko also ordered Harris to pay $15,596,345 in restitution to over 300 victims of the investment fraud scheme conducted by Harris, his brother Kevin Harris, and Karen Starr, who is a federal fugitive.

The sentence follows Harris’s pleas of guilty to conspiracy to commit wire fraud, seven counts of wire fraud and four counts of money laundering. These crimes arose out of Harris’s role in operating a Ponzi-style investment fraud from 2006 through on or about November 23, 2009, under the business names of Complete Developments LLC (CDL) and later, Investment International Inc. (I3). Offices for these businesses were maintained in Warren, according to court documents.

Kevin Harris is currently serving an 87-month term of imprisonment following his earlier conviction for this same scheme. He and Karen Starr recruited investors, while Keelan Harris opened and managed the business bank accounts. Investors in CDL expected profits from foreign currency exchange trading, and I3 was to generate profits from commercial real estate, high-yield investments, start-up companies, and inventions, according to court documents.

Investors were promised returns of 7 to 12 percent per month, over short-term periods, and were also assured that 80 percent of each investment would be held in secure accounts, and returned at the end of the contracted periods, according to court documents.

Kevin Harris and Karen Starr conducted limited foreign exchange currency trading, and lost money. Thereafter, CDL and I3 were operated as a Ponzi scheme, with Keelan Harris sending purported interest payments to early investors from funds obtained not from profits, but from later investor victims. Over $20 million was raised from over 400 investor victims, and ultimately approximately $15.6 million was lost, according to court documents.

More than $1.9 million was withdrawn from the CDL and I3 accounts in cash by Kevin and Keelan Harris. Approximately $400,000 was used by Kevin and Keelan Harris for personal expenditures, at stores, restaurants, for mortgage payments, car leases, and cell phone bills. Approximately $306,000 was diverted to low-value rental properties in the Warren area, and $308,000 was transferred to Starr in Canada. Approximately $760,000 was diverted to UCAN, another shell company for CDL, and $3.5 million was allegedly invested in a business in the United Arab Emirates. Additional investor funds were used for salaries and commissions, travel expenses, diversions to other investments by the Harrises, and payments to friends and family members, according to court documents.

This case was investigated by the Youngstown Resident Agency of the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorneys Lauren Bell, James V. Moroney, and David Toepfer.

Posted By: Ralph Roberts @ 1:11 pm | | Comments Off on Warren Man Sentenced to 10 Years in Prison for $15 Million Ponzi Scheme | Trackback |
Filed under: Mortgage Fraud,Mortgage Fraud Scheme,Real Estate Fraud,Wire Fraud

Former Corporate Lawyer Arrested and Charged in Manhattan Federal Court in Connection with Multi-Million-Dollar Ponzi Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that CHARLES A. BENNETT was arrested this morning on securities and wire fraud charges stemming from his scheme to defraud over 30 investors of more than $5 million through a Ponzi scheme that he perpetrated for more than five years. Among other false and misleading statements, BENNETT lied to investors by claiming to have exclusive access to a highly successful privately held investment fund in which he would purportedly invest the investors’ money. BENNETT solicited millions of dollars from over 30 investors, including his close friends and family members, but never actually invested any of the money in the investment fund or any other investment vehicle. Instead, BENNETT used the investors’ money for his own personal benefit and to pay back other investors.

BENNETT is expected to be presented today before United States Magistrate Judge Kevin Nathaniel Fox.

U.S. Attorney Preet Bharara said: “As alleged, Charles Bennett built a Ponzi scheme with money from friends and family, among others. The scheme, in which he allegedly told lie upon lie, lasted over five years and defrauded investors of over $5 million.”

FBI Assistant Director-in-Charge George Venizelos said: “All attorneys take an oath to deal honestly and promote their client’s best interests. As alleged, Bennett appeared to his clients to be a reputable attorney whom they could trust to invest their hard-earned money. Instead, he breached his oath and leveraged relationships he had with clients, some of whom he identified as close friends and family members, for personal financial gain. The FBI will continue to work with its law enforcement and private sector partners to investigate those whose greed-based schemes rob individuals of their hard-earned money.”

In a separate action, the U.S. Securities and Exchange Commission (“SEC”) announced civil charges against BENNETT.

According to the two-count Complaint unsealed today in Manhattan federal court:

From 2008 through November 2014, BENNETT, a former corporate lawyer at a law firm based in New York City, was engaged in a multimillion-dollar Ponzi scheme, during which he solicited money from investors based on materially false and misleading representations. Specifically, BENNETT told the investors that he himself had invested money in a highly successful privately held investment fund, and that, should they choose to invest, the investors’ money would be held in BENNETT’s account. BENNETT communicated by e-mail and telephone with many of the investors in order to tell them about the purported status of their investments, including their purported returns. BENNETT also led most of the investors to believe that they were the only individuals to whom he had extended the offer to invest with him.

BENNETT created false and misleading paperwork in furtherance of the scheme, including “promissory notes” that he provided to the investors as a record of the amounts of money they had given to BENNETT to invest. BENNETT also provided certain investors with account statements that purported to show the amount that BENNETT (and the investors, through BENNETT) had invested. In fact, BENNETT never invested any of the investors’ money in the investment fund or in any other investment vehicle, but instead spent the money on his own personal expenses and to repay other investors.

During the course of the fraudulent scheme, BENNETT solicited more than $5 million from more than 30 investors.

BENNETT, 56, of Manhattan, is charged with one count of wire fraud and one count of securities fraud. The securities fraud count and the wire fraud count each carry a maximum sentence of 20 years in prison; and the charges carry a maximum fine of $5 million, or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Bharara praised the work of the Federal Bureau of Investigation, and thanked the SEC for its assistance. He added that the investigation is continuing.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Amy Lester is in charge of the prosecution.

The allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Posted By: Ralph Roberts @ 1:00 pm | | Comments Off on Former Corporate Lawyer Arrested and Charged in Manhattan Federal Court in Connection with Multi-Million-Dollar Ponzi Scheme | Trackback |
Filed under: New York,Ponzi Scheme

December 11, 2014

Unlicensed Detroit Investment Adviser Sentenced to 64 Months in Ponzi Scheme

A 37—year-old Brighton man was sentenced today in federal court to 64 months in prison for running a $3.8-million Ponzi scheme, United States Attorney Barbara L. McQuade announced.

Joining in the announcement was Paul M. Abbate, Special Agent in Charge of the Federal Bureau of Investigation.

U.S. District Judge Nancy G. Edmunds sentenced Sachin Uppal today, following his August guilty plea to wire fraud charges. According to court documents, Uppal ran the Jefferson Smith Trading Company LLC (“JSTCO”) from July 2007 through September 2013. Uppal, who was not a licensed investment advisor, marketed JSTCO to potential investors and solicited investor funds, describing it as a “hedge fund.” Uppal told investors that he was a “day trader,” who would use investor funds to buy and sell financial instruments within the same trading day, which he said would reduce risk to investors.

Several of Uppal’s victims were family friends. This phenomenon, known as ‘affinity fraud,’ often targets members of identifiable groups, such as a religious or ethnic communities or clubs. Judge Edmunds ordered Uppal to pay restitution to his victims in the amount of $3,867,187.

Uppal promised a return of 18 to 20 percent per year, with a minimum investment commitment of only 12 months. Once he secured the initial investment, Uppal e-mailed his victims false monthly “year-to-date investment summaries” to make them believe that their accounts were performing well, and to persuade them to invest additional funds. Sometimes, Uppal traded and lost funds during the relevant period. Other times, Uppal simply pocketed the money without conducting any trades at all. When investors asked to close their accounts and withdraw their investment funds, Uppal attempted to lull them with various excuses.

“Some people use guns to steal money. Other people use lies,” McQuade said. “Investors should not be lulled into trusting an investment advisor just because they know him or because he is a fellow member of an organization to which they belong. Criminals take advantage of those relationships as cover to commit fraud.”

“Mr. Uppal took advantage of trusting relationships with family, friends, and associates, breached their confidence, and stole their money,” stated Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “Criminals like this use every means of deceit available to further their selfish goals, and investors need to exercise great caution so as not to become victimized.”

Investors are encouraged to consult with the Financial Industry Regulatory Authority (FINRA) website (http://www.finra.org/) and its BrokerCheck resource before investing.

The case was investigated by the FBI and prosecuted by Assistant United States Attorney Erin Shaw.

Posted By: Ralph Roberts @ 9:50 am | | Comments Off on Unlicensed Detroit Investment Adviser Sentenced to 64 Months in Ponzi Scheme | Trackback |
Filed under: Bank Fraud,Loan Fraud,Ponzi Scheme

December 10, 2014

Vehicle Dealer and Accountant Sentenced to Prison in $75.9 Million Financing Fraud Scheme That Caused 18 Lenders to Lose $58.8 Million

CHICAGO—A former area motorcycle and recreational vehicle dealer and his accountant were sentenced to 13½ and 2½ years, respectively, in federal prison for a $75.9 million fraudulent financing scheme that resulted in 18 lenders losing more than $58.8 million, federal law enforcement officials announced today.

RUSSELL S. OTT, 51, of Oswego, who pleaded guilty to bank fraud and tax evasion, was sentenced on Dec. 3 to 13½ years in prison, beginning Jan. 20, 2015, and ordered to pay approximately $61.16 million in restitution to the victim financial institutions and the United States Treasury. Ott was the owner of Emily, Inc., which did business as Pro Source Motorsports and was located last in Morris, Ill. Between 1995 and October 2008, Pro Source, the dealership at the center of the scheme, sold new and used motorcycles, luxury motor homes, recreational vehicles, all-terrain vehicles, boats and jet skis. In 2007 and 2008, Ott also had ownership interests in Liberty Cycle in Libertyville, and Huntley Chevrolet in Libertyville.

BRIAN McMAHON, 55, of Naperville, who pleaded guilty to two counts of aiding and assisting the filing of Ott’s false tax returns, was sentenced today to 2½ years in prison, beginning Jan. 21, 2015, and ordered to pay $396,829 restitution to the U.S. Treasury. McMahon was Ott and Emily, Inc.’s certified public accountant, and he also owned Triumph Suzuki in Naperville between 2001 and 2004 when he sold it to Ott.

The sentences were imposed by U.S. District Judge Edmond E. Chang in Federal Court in Chicago.

Eight other co-defendants who acted as straw buyers in sham vehicle sales were charged with Ott and McMahon in August 2013. All eight have pleaded guilty and have been sentenced or are awaiting sentencing.

According to court documents, Ott’s bank fraud scheme involved two prongs: in one, Pro Source Motorsports fraudulently obtained more than $31.3 million in direct financing through five lines of credit from Fifth Third Bank, which lost more than $27.1 million; and, in the second, individual straw borrowers obtained just under 200 fraudulent loans totaling more than $44.58 million, which resulted in 18 financial institutions losing more than $31.66 million.

Ott and the straw buyers fraudulently obtained money for their personal use and benefit, enabling them to maintain lavish lifestyles, operate various businesses, and/or make investments. The money they obtained created the false appearance of personal wealth and helped induce the lenders to advance funds more readily due to their misplaced confidence that the defendants had sufficient personal wealth to repay the loans.

Ott and McMahon fabricated false personal and business tax documents and financial statements and provided them to Fifth Third Bank, which funded traditional “floor plan loans.” Ott faxed false flooring requests with fictitious vehicle identification numbers for non-existent recreational vehicles, or real VINs for actual RVs but with dramatically inflated values. Ott sometimes “double floored” vehicles by obtaining separate financing from Fifth Third and a different lender for the same vehicle.

Ott enlisted the eight straw borrowers to obtain fraudulent loan proceeds to share with him even though they did not actually purchase the vehicles ― usually very expensive RVs ― for which the loans were made and the vehicles generally did not exist. The lenders generally deposited the loan funds into Emily, Inc.’s bank account, and then Ott periodically disbursed the proceeds to straw borrowers to operate and support their own businesses and lifestyles, make investments, and make monthly payments on some of the loans to perpetuate the scheme.

Ott used fraudulently obtained funds to operate Pro Source, which lost money from approximately 2001 through 2008; and to make lavish purchases, including a house in Elburn for approximately $679,491 and subsequent improvements that increased the home’s cost to more than $1.1 million; a $258,000 vacation home in Butternut, Wis.; a $350,000 rental home in South Elgin; a Sky Hawk 172 Cessna airplane and hanger for approximately $200,000; and pick-up trucks and other vehicles for family members and employees of Pro Source. He also used the money to invest in and purchase other vehicle dealerships, including more than $3.6 million in Huntley Chevrolet, and more than $1 million in Liberty Cycle.

The sentences were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

The government is being represented by Assistant U.S. Attorney William Hogan.

Posted By: Ralph Roberts @ 2:08 pm | | Comments Off on Vehicle Dealer and Accountant Sentenced to Prison in $75.9 Million Financing Fraud Scheme That Caused 18 Lenders to Lose $58.8 Million | Trackback |
Filed under: Chicago,Straw Buyer,Straw Buyers,Straw Purchaser

December 9, 2014

Entertainment Promoter Extradited from Brazil to Face Charges in $300 Million Securities Fraud Scheme

John P. (Jack) Utsick, who in 2005, according to Billboard Magazine, was the third-largest concert promoter and entertainment manager, made his initial appearance today. Utsick was extradited from Brazil to the United States as a result of his alleged involvement in a Ponzi scheme that defrauded investors out of approximately $300 million.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.

In 2006, John P. (Jack) Utsick, 72, formerly of Miami Beach, fled South Florida to Brazil after the U.S. Securities and Exchange Commission (SEC) filed civil securities fraud charges against him, and after he became aware of a related FBI investigation.

According to a Superseding Indictment filed November 30, 2010, that was unsealed by court order on August 26, 2014, and documents filed in the SEC’s fraud case:

Utsick engaged in a scheme that defrauded more than 3,300 investors out of approximately $300 million. These investors believed that their monies were used to fund Utsick’s concert promotion business, Worldwide Entertainment, Inc. and The Entertainment Group Fund, Inc. (Worldwide), which Utsick operated from at least 1998 through late 2005. As alleged in court documents, Utsick promised investors fixed rates of return ranging from 15% to 25% and, in some instances, an additional percentage of the profits generated by Utsick and his companies related to specific concert events or tours of specific artists. Many investors were encouraged to roll over their principal and purported “profits” from project to project.

As alleged in court documents, most of the entertainment projects lost money and, as a result, Utsick paid earlier investors with funds raised from new investors. Utsick also used investor funds for other activities that were not disclosed to investors, including for his own personal stock and options trading, the purchase of two multimillion dollar condominiums in Miami Beach, a yacht, and to fund a motion picture, “National Lampoon’s Pledge This!,” starring Paris Hilton.

Utsick produced events and concert tours for numerous artists, including Coldplay, The Rolling Stones, Elton John, Aerosmith, Luis Miguel, and Juanes.

After the SEC filed its securities fraud action in 2006, and Utsick was made aware of the criminal investigation, he fled to Brazil. According to court filings in the SEC case, Utsick went to great lengths to avoid providing evidence to the SEC or accounting for the disappearance of millions of dollars that had been raised from investors.

After the U.S. Department of Justice initiated extradition proceedings in Brazil, Utsick challenged the validity of the indictment in the Brazilian courts. In August 2014, the Supreme Court of Brazil ordered that Utsick be extradited to the United States. Utsick was extradited from Brazil on December 6, 2014, and was taken into custody by the U.S. Marshal’s Service and transported to Miami. He made his initial appearance today before U.S. Magistrate Judge Jonathan Goodman.

Utsick is charged with eight counts of mail fraud, in violation of Title 18 United States Code, Section 1341. He faces a statutory maximum term of twenty years in prison as to each count. The case is assigned to U.S. District Judge Cecilia M. Altonaga for further proceedings.

Mr. Ferrer commended the investigative efforts of the FBI, the assistance provided by the SEC’s Miami Regional Office, and the efforts of the U.S. Marshal’s Service to assist with the arrest of the defendant. The matter is being prosecuted by Assistant U.S. Attorney Jerrob Duffy.

Posted By: Ralph Roberts @ 10:46 am | | Comments Off on Entertainment Promoter Extradited from Brazil to Face Charges in $300 Million Securities Fraud Scheme | Trackback |
Filed under: Mortgage Fraud,Mortgage Fraud Scheme,Mortgage-backed securities,Securities and Exchange Commission,Securities Fraud

December 8, 2014

Copley Man Charged with Defrauding Investors of $17 Million

A Copley man was charged in federal court with defrauding about 70 investors out of approximately $17 million, law enforcement officials said.

Kenneth A. Grant, 66, was charged in a criminal information with one count of conspiracy to commit wire fraud and securities fraud and one count of money laundering.

The charges were announced by Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office, and Kathy Enstrom, Special Agent in Charge, IRS-Criminal Investigations, Cincinnati Field Office.

“This case is another sad reminder that so-called investment gurus who make promises of big guaranteed returns should send up red flags,” Dettelbach said. “If something seems too good to be true, it usually is.”

“Ken Grant callously preyed on the desires of many to make wise investments for a secure future and duped them out of their life savings,” Anthony said. “Fraudsters such as Mr. Grant remain a top priority of the FBI.”

“Mr. Grant overpromised and then stole his investors’ funds. Investment fraud is not a victimless crime,” Enstrom said. “IRS Criminal Investigation is proud to bring our forensic accounting skills to this joint venture and help put a stop to this and other types of white collar crime.”

Grant and another individual owned and operated KGTA Petroleum, Ltd. Grant and others marketed KGTA as a company that earned profits from buying and selling crude oil and refined fuel products. Grant and others represented to investors that they had relationships with third-party purchasers and investor funds would be used to purchase fuel products at a discount and then resold at substantial profit, according to the information.

KGTA issued investment agreements and promissory notes which offered guaranteed monthly payments up to five percent per month or annual payments of approximately 60 percent per year, according to the information. Grant and others – including three registered representatives with PrimeSolutions Securities Inc. in the Akron area – never filed documentation about KGTA with the Securities and Exchange Commission, according to the information

Grant and others obtained approximately $31 million from about 70 investors between 2010 and 2014 through false and fraudulent pretenses. Grant and others knew KGTA did not have agreements in place to sell oil and fuel, and that investors would not earn 5 percent per month on their investments, according to the information.

Grant and others used investor money for personal expenditures and luxury items including a Mercedes Benz, a boat and mortgage payments on high-end residential property. As a result of the conspiracy, Grant and others defrauded the investors out of approximately $17 million, according to the information.

This case is being prosecuted by Assistant U.S. Attorney Mark S. Bennett and Special Assistant U.S. Attorney Derek Kleinmann following an investigation by the Federal Bureau of Investigation and Internal Revenue Service – Criminal Investigations.

If convicted, the defendants’ sentences will be determined by the court after a review of the federal sentencing guidelines and factors unique to the case, including the defendant’s prior criminal record (if any), the defendant’s role in the offense and the characteristics of the violation.

A criminal information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Posted By: Ralph Roberts @ 4:13 pm | | Comments Off on Copley Man Charged with Defrauding Investors of $17 Million | Trackback |
Filed under: Loan Fraud

December 6, 2014

Three Perpetrators of $49.6 Million Mortgage Fraud Scheme Sentenced

The final three individuals involved in the $49.6 million Hampton Springs mortgage fraud scheme, which was organized and led by Miami resident Domenico “Dom” Rabuffo, were sentenced yesterday. Rabuffo’s ex-wife was sentenced to 14 years in prison, and the other two individuals who acted as recruiters for the scheme were sentenced to 20 years in prison.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Jason T. Moran, Special Agent in Charge, Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG), Atlanta Regional Office, made the announcement.

Chief United States District Judge K. Michael Moore sentenced Mae Rabuffo, 75, of New York, to 14 years in prison, and sentenced Raymond E. “Ray” Olivier, 53, of Land O’ Lakes, Florida, and Curtis Allen Davis, 52, of Tampa, Florida, each to 20 years in prison for their roles in the fraud. Dom Rabuffo, 78, of Miami, Florida, was previously sentenced to 27 years and three months in prison. All four defendants were convicted by a federal jury in Miami, in July, 2014, following an 11-day trial.

According to the indictment and evidence at trial, from 2003 to 2008, Dom Rabuffo and his co-defendants conspired to perpetrate a complex $49.6 million mortgage fraud scheme against various FDIC-insured lenders, including Bank of America, Regions Bank, SunTrust Bank, and Wachovia Bank. Dom Rabuffo and his ex-wife Mae Rabuffo used shell companies to acquire ownership and control of a purported residential property development known as Hampton Springs, located in Cashiers, North Carolina.

Then, Dom Rabuffo, Olivier, and Davis recruited numerous straw borrowers to purchase building lots in the development. Several of the straw borrowers testified at the trial. According to their testimony and other evidence, Dom Rabuffo paid the borrowers to obtain lot purchase loans and construction loans for building lots in Hampton Springs. To obtain the loans, Domenico Rabuffo, Mae Rabuffo, Olivier, Davis, and other conspirators, submitted fraudulent loan applications and related documents to the lenders and the lenders’ closing agents.

Among other things, the loan applications and settlement statements for the lot loans contained fraudulent statements that the borrowers paid earnest money deposits and cash due at the closing. In fact, the deposits and cash-to-close were paid by Dom Rabuffo and Mae Rabuffo using recycled proceeds from the fraudulent scheme. Further, Dom Rabuffo and Mae Rabuffo sent fraudulent correspondence to the closing agents, including letters bearing the forged signatures of borrowers, to create the false impression that the deposits and cash due at closing had been supplied by the borrowers from their own funds.

Olivier and Davis recruited straw borrowers for the fraud scheme and submitted fraudulent loan applications to the lenders. Further, Olivier and Davis caused their private companies to be disclosed as the employers of straw borrowers whose actual employment was inconsistent with the inflated income stated on their loan applications. Then, when contacted by lenders, Olivier and Davis provided fraudulent verifications of employment for those borrowers.

Three other defendants, Diane M. Hayduk, 65, and Victor Miguel Vidal, 49, each of Miami, Florida, and Lazaro Jesus Perez, 44, of Miami Springs, Florida, pled guilty to the charged conspiracy and agreed to assist the United States. Hayduk assisted the Rabuffos with the misappropriation of loan proceeds and the transmission of fraudulent correspondence to the lenders and the closing agents. Vidal served as a loan officer at SunTrust Mortgage, where he sponsored fraudulent loan applications for lots in Hampton Springs, including fraudulent applications for $33 million in construction loans. Perez furnished fictitious accountant letters to Vidal, in support of fraudulent loan applications submitted to SunTrust Mortgage. Hayduk, Vidal, and Perez were sentenced in September, 2014. Hayduk was sentenced to 40 months in prison, Vidal was sentenced to 64 months in prison, and Perez was sentenced to 30 months’ in prison.

Mr. Ferrer commended the investigative efforts of the FBI and FDIC-OIG. The case was prosecuted by Assistant United States Attorneys Dwayne E. Williams and Jerrob Duffy.

Posted By: Ralph Roberts @ 2:47 am | | Comments Off on Three Perpetrators of $49.6 Million Mortgage Fraud Scheme Sentenced | Trackback |
Filed under: Florida,Mortgage Fraud,Mortgage Fraud Scheme,Real Estate Fraud

December 3, 2014

Byron Center Man Sentenced to 30 Years in Ponzi Scheme

GRAND RAPIDS, MI—The U.S Attorney’s Office announced that David W. McQueen, age 44, of Byron Center, Michigan, was sentenced today to 30 years in prison and ordered to pay 32,036,997.63 in restitution to his victims and $926,787.00 in restitution to the IRS. McQueen was convicted on May 9, 2014 after a six-week jury trial of six counts of mail fraud, six counts of money laundering, and three tax counts stemming from a massive Ponzi scheme that spanned three years. He was acquitted of one fraud count and two money laundering counts. The scheme affected more than 800 families, and preyed upon unsophisticated, often elderly investors.

The evidence at trial showed that, as with many investment frauds, McQueen likely did not set out to create a criminal enterprise that would result in a financial tragedy for his investors. In 2006, McQueen, who made an adequate living in sales, used borrowed funds to invest in a company called Multiple Return Transactions (“MRT”). MRT was owned and operated by Jim Clements. Clements promised returns of 10 percent per month or higher to McQueen. After a few months of making such returns, McQueen decided to capitalize on his apparent investment success and invited others to invest through him. McQueen created a company called Accelerated Income Group (“AIG”), through which he promised returns as high as 5-6% to investors. In addition, McQueen recruited insurance agents to sell his investments to their clients. For a short time, AIG was very successful (at least on paper). McQueen used MRT’s promised returns of 10%, to make AIG’s promised returns of 5%. McQueen could meet his 5% obligations to his investors and then keep 5% for himself.

In mid-2007, MRT stopped making payments and meeting redemption requests. MRT was merely a Ponzi scheme, and their money was gone and would never be recovered. Instead of notifying AIG investors that MRT had failed, however, McQueen continued to tell investors that their money was safe and growing. Without MRT making its monthly payments, McQueen and AIG could not meet their five percent monthly obligations to investors based on investment earnings. Instead, McQueen used the only funds he had available to make promised interest payments—money from new investors.

Instead of shutting down AIG, or at least notifying his investors of MRT’s cessation of interest payments, McQueen falsely touted his investment success and raised millions of dollars of additional money. In addition to AIG, McQueen created three other funds, International Opportunity Consultants (“IOC”), Diversified Liquid Asset Holdings (“DLAH”), and Diversified Global Finance (“DGF”), that were nothing more than sham corporations designed to raise millions of dollars from investors. McQueen commingled the investor money between his various and purportedly distinct funds and used it to make bogus interest payments and redemption requests to investors, pay commissions to agents that sold the funds on McQueen’s behalf, or simply spend the money. Despite knowing that he had absolutely no revenue coming in, McQueen took $100,000 of investor money per month tax free for his own personal use and enjoyment.

Recognizing that his scheme would collapse without actual investment success, McQueen placed approximately 30 percent of the investor funds in a series of highly speculative investments or scams. Unsurprisingly, this effort did not generate significant returns, and many lost all of the funds invested. To perpetuate his fraud, McQueen sent out monthly or quarterly account statements communicating to investors that their investments were safe and growing. Investors relied on those account statements and believed they accurately depicted the balance in their accounts. McQueen promised investors that they could liquidate their accounts at any time, but most did not because they believed that their account statements were accurate and that they had made a solid investment. In July and August 2009, McQueen sent out his final account statements showing that investors had tens of millions of dollars safe and growing in their “separate accounts.” Those statements concealed the truth—that McQueen had nearly run out of money.

On August 24, 2009, the IRS and FBI executed search and seizure warrants signed by Magistrate Judge Hugh W. Brenneman. The government seized approximately $430,000 from McQueen’s accounts. Unbeknownst to the government, McQueen later brought the remaining investor funds (approximately $440,000) back from an account located in New Zealand and used it for personal expenses and to make some last ditch investments, which failed.

McQueen was remanded to the custody of the U.S. Marshals Service after the jury rendered a guilty verdict and has been in the custody of the U.S. Marshals Service awaiting sentencing.

“The extent of this fraud scheme, perpetrated on unsophisticated investors, is staggering. The victims, many elderly, have lost their livelihoods and retirement savings; depriving them of the future they had worked hard to secure. Determined to protect potential victims from these scams, IRS-Criminal Investigation will continue to pursue financial predators like David McQueen and Trent Francke,” said IRS Special Agent in Charge Jarod Koopman.

“David McQueen, Trent Francke, and others swindled an extraordinary amount of money from many innocent investors while perpetrating this criminal fraud scheme,” stated Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “While McQueen and others paid themselves millions from investor funds, their victims, many of whom were elderly and retired, lost everything—their savings, their homes and livelihoods. This investigation, trial, convictions, and prison sentences all reflect the resolve of the FBI, IRS-Criminal Investigation and the U.S. Attorney’s Office to bring justice to bear upon those who would steal from trusting investors and undermine our financial systems.”

This case was investigated by the IRS and FBI and prosecuted by Assistant U.S. Attorneys Matthew G. Borgula, Sally J. Berens, Joel Fauson, and Heath Lynch and Securities and Exchange Commission Trial Attorney Timothy Leiman.

Posted By: Ralph Roberts @ 1:56 am | | Comments Off on Byron Center Man Sentenced to 30 Years in Ponzi Scheme | Trackback |
Filed under: Loan Fraud,Michigan,Mortgage Fraud,Mortgage Fraud Scheme,Ponzi Scheme

December 2, 2014

Cleveland Man Indicted in $270,000 Credit Card Fraud and ID Theft Scheme

A Cleveland man was indicted today for operating an identity theft and credit card fraud scheme in which he defrauded 10 companies out of nearly $270,000, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office.

Paul R. Tomko, 41, was indicted on 10 counts of bank fraud, nine counts of access device or credit card fraud, one count of aggravated identity theft, and one count of wire fraud. Tomko is accused of defrauding nine financial institutions out of $256,797 and one company out of $13,247 in 2013. He did this through the unauthorized use of another’s personal identification to obtain credit cards and lines of credit in that person’s name, according to the indictment.

Tomko approached someone identified as J.S. and sought financial assistance in paying for a lawn mower for the maintenance of property Tomko had in the Cinema Park Development, as required by the city of Warrensville Heights. Tomko obtained J.S.’s personal identification information in the process. Tomko then obtained nine credit cards and opened lines of credit in the name of J.S., and in the name of J.S.’s company, JMS Services Corporation, using the personal information of J.S. without J.S.’s authorization or knowledge, according to the indictment.

Tomko, without the authorization or knowledge of J.S., used the credit cards and lines of credit in the name of J.S. and JMS Services Corporation for Defendant’s own personal use, thereby running up a balance due and owing on each of these credit cards and lines of credit. Once Tomko ran up a balance on these credit cards, he then engaged in a scheme in which he made a payment on each of these credit cards with a worthless check or using an intentionally incorrect account number, thereby keeping the line of credit in place, or even increasing the line of credit with the appearance of a payment. Once Tomko’s check or payment was dishonored or returned, Tomko ceased to make any payments, leaving the financial institutions with a loss.

As a result of this scheme, the indictment charges that Tomko caused losses to the below listed financial institutions in the following approximate amounts:

Financial Institution

Amount

Key Bank

$63,629.72

JPMC

$42,791.35

FNBO

$9,415.00

AmEx

$16,358.16

US Bank

$33,522.02

Barclays

$28,286.74

GE Capital

$10,000.00

Fifth Third

$23,894.84

Capital One

$28,899.67

Total

$256,797.50

Some of the unauthorized charges made by Tomko included payments by Tomko for the Cinema Park development property taxes ($33,882 and $26,252); the payment to Tomko’s defense attorneys to represent him in a criminal case ($8,700, $6,000 and $5,500); the payment of $10,000 to a physician for a medical procedure for Tomko; and numerous payments to Tomko as Dr. Paul Tomko. In the wire fraud charge, Tomko also used e-mail communication to set up an unauthorized account, through JMS Services, to defraud Balboa Capital, an equipment leasing company in California, out of approximate $13,247, according to the indictment.

An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt. If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

The case is being prosecuted by Assistant U.S. Attorney Christian H. Stickan and AUSA Christos N. Georgalis following investigation by Special Agent Sean McGovern of the FBI, Cleveland Office.

Posted By: Ralph Roberts @ 5:15 pm | | Comments Off on Cleveland Man Indicted in $270,000 Credit Card Fraud and ID Theft Scheme | Trackback |
Filed under: Bank Fraud,Wire Fraud

November 24, 2014

Sixteen People Charged in Nationwide Telemarketing Scheme That Involved Thousands of Homes in Detroit

Sixteen people have been charged for operating a fraudulent telemarketing scheme that involved losses of over $20 million to more 290 victims in 46 states and Canada, including Michigan, announced United States Attorney Barbara L. McQuade.

McQuade was joined in the announcement by Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office.

According to the first superseding indictment, the telemarketers operated from call centers in Florida and New York. The telemarketers made unsolicited calls to individuals across the country offering to sell homes in Detroit. The telemarketers lied about the values of the homes, and told investors that they were purchasing bank-owned homes that previously had mortgages worth many times more than the current sales price. In reality, the homes were oftentimes acquired for no more than $500 before quickly being sold by the telemarketers to victims for between $7,500 and $15,000. After an investor agreed to purchase one home, the telemarketers caused the investor to believe that it was quickly resold to a hedge fund or foreign buyer for a substantial profit. In reality, the property was transferred to a shell company controlled by the telemarketers for no consideration and there were no profits. Based on these sham transactions, which caused investors to believe that there was an established process and market for flipping homes in Detroit, numerous investors purchased multiple additional homes from the telemarketers. After purchasing a substantial number of homes, the investors had difficulty contacting the telemarketers and eventually all communication ceased. The telemarketers utilized aliases and frequently changed the name of their company to avoid disgruntled investors and law enforcement.

The following individuals were charged:

Izhak Halbani (Florida resident)
Antwan Reid (Florida resident)
Scott Amster (Florida resident)
Richard Pierce (Michigan resident)
Matthew Golden (Michigan resident)
Erez Arsoni (New York resident)
Gregory Swarn (New York resident)
Joseph Arsenault (New York resident)
Richard Silverstein (Florida resident)
Michelle Pintado (Florida resident)
John Trumble (Florida resident)
Wayne Scott Simpson (Florida resident)
Theodore Jacobs (Florida resident)
Joseph Haden (Florida resident)
Scott Lipman (Florida resident)
Steven Goldstein (Florida resident)
The charges include a conspiracy to commit mail and wire fraud, 15 underlying wire fraud counts, and a conspiracy to commit international money laundering. Each of the seventeen counts in the first superseding indictment carries a potential sentence of 20 years’ imprisonment. The FBI arrested numerous individuals in Florida on Friday, November 21, 2014, prompting the unsealing of the charges.

“This nationwide telemarketing fraud not only caused millions of dollars in losses to victims of the scheme, but it also contributed to blight in Detroit neighborhoods,” McQuade said. “Thousands of homes were left to fall into decay as a result of these individuals using Detroit real estate as a commodity to accomplish their fraud.”

“The perpetrators in this case stole millions of dollars from hundreds of victims,” stated Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “However, they did more than steal money—their greed and fraud compounded the proliferation of vacant homes left for ruin in far too many Detroit neighborhoods. The FBI is committed to rooting out and bringing to justice those who would commit crimes of this nature and act against the interests of our communities.”

Gregory Swarn was previously arrested in early November after he fled overseas utilizing a fraudulent passport. The U.S. Department of State, Diplomatic Security Service (DSS), with the assistance of the FBI, was able to locate Swarn in Thailand. In cooperation with DSS, Thai officials arrested Swarn and deported him to the United States to face charges for his passport fraud and the telemarketing fraud. At the time of his arrest, Swarn was on DSS’s Most Wanted List. Erez Arsoni likewise fled overseas and is currently on DSS’s Most Wanted List.

During the execution of search warrant and seizure warrants, the FBI has seized over $1 million in proceeds of the fraud.

The case was investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorney Louis Gabel with the United States Attorney’s Office for the Eastern District of Michigan in Detroit.

An indictment is only a charge and is not evidence of guilt. Every defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Posted By: Ralph Roberts @ 12:53 pm | | Comments Off on Sixteen People Charged in Nationwide Telemarketing Scheme That Involved Thousands of Homes in Detroit | Trackback |
Filed under: Conspiracy,Investment Fraud Conspiracy,Wire Fraud

November 5, 2014

Broward Real Estate Broker Charged with Wire Fraud by Taking Client Deposits

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announce the charges filed against Christopher Wayne White, 43, of Fort Lauderdale, Florida, for three counts of wire fraud, in violation of Title 18, United States Code, Section 1343. If convicted, White faces a maximum penalty of twenty years in prison, five years’ supervised release and a fine of up to $250,000 for each count.

According to the criminal complaint, White was a licensed real estate broker and owner and operator of the Christopher White Group in Fort Lauderdale. White obtained three real estate deposits totaling approximately $595,000—in the amounts of $300,000, $150,000 and $145,000—via wire transfers involving properties in Broward County from three individuals and White refused to return the escrow deposits. The Secretary of Florida’s Department of Business and Professional Regulation ordered an emergency suspension of his real estate broker’s license. Any victims or individuals with additional information should contact the FBI Field Office in Miami at 305-944-9101.

Mr. Ferrer commended the investigative efforts of the FBI and thanked Florida’s Department of Business and Professional Regulation for their assistance. The case is being prosecuted by Assistant U.S. Attorneys Randy Katz and Thomas P. Lanigan.

A criminal complaint is merely an accusation and a defendant is presumed innocent unless proven guilty.

Posted By: Ralph Roberts @ 12:40 pm | | Comments Off on Broward Real Estate Broker Charged with Wire Fraud by Taking Client Deposits | Trackback |
Filed under: Florida,Real Estate Fraud,Wire Fraud

October 6, 2014

$49.6 Million Mortgage Fraud Scheme Sentenced to 27 Years

Leader and Organizer of $49.6 Million Mortgage Fraud Scheme Sentenced to 27 Years and Three Months in Prison
October 2014

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Fred W. Gibson, Principal Deputy Inspector General, Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG), Atlanta Regional Office, announce that Domenico “Dom” Rabuffo, 78, of Miami, was sentenced by Chief United States District Judge K. Michael Moore for his role as a leader and organizer of a $49.6 million bank fraud and wire scheme, perpetrated from approximately 2003 through 2008. Domenico Rabuffo was sentenced to 27 years and three months in prison for his role in the fraud scheme.

On July 3, 2014, Domenico Rabuffo and three co-defendants, Mae Rabuffo, 75, of New York, Raymond E. “Ray” Olivier, 52, of Land O’ Lakes, Florida, and Curtis Allen Davis, 52, of Tampa, were convicted of conspiracy to commit bank fraud and wire fraud after an 11 day-jury trial before Chief Judge Moore. Domenico Rabuffo, Olivier, and Davis were also convicted of various bank fraud offenses.

According to the indictment and evidence at trial, from 2003 to 2008, Rabuffo and his co-defendants conspired to perpetrate a complex $49.6 million mortgage fraud scheme against various FDIC-insured lenders, including Bank of America, Regions Bank, SunTrust Bank, and Wachovia Bank. Rabuffo and his ex-wife Mae Rabuffo used shell companies to acquire ownership and control of a purported residential property development known as Hampton Springs, located in Cashiers, North Carolina. Then, Rabuffo, Olivier, and Davis recruited numerous straw borrowers to purchase building lots in the development. Several of the straw borrowers testified at the trial. According to their testimony and other evidence, Domenico Rabuffo paid the borrowers to obtain lot purchase loans and construction loans for building lots in Hampton Springs. To obtain the loans, Domenico Rabuffo, Mae Rabuffo, Olivier, Davis, and other conspirators, submitted fraudulent loan applications and related documents to the lenders and the lenders’ closing agents.

Among other things, the loan applications and settlement statements for the lot loans contained fraudulent statements that the borrowers paid earnest money deposits and cash due at the closing. In fact, the deposits and cash-to-close were paid by Domenico Rabuffo and Mae Rabuffo using proceeds from the fraudulent scheme. Further, Domenico Rabuffo and Mae Rabuffo sent fraudulent correspondence to the closing agents, including letters bearing the forged signatures of borrowers, to create the false impression that the deposits and cash due at closing had been supplied by the borrowers from their own funds.

Olivier and Davis recruited straw borrowers for the fraud scheme and submitted fraudulent loan applications to the lenders. Further, Olivier and Davis caused their private companies to be disclosed as the employers of straw borrowers whose actual employment was inconsistent with the inflated income stated on their loan applications. Then, when they were contacted by the lenders, Olivier and Davis provided fraudulent verifications of employment for those borrowers.

Mae Rabuffo, Davis, and Olivier are scheduled to be sentenced on October 30, 2014, also before Chief Judge Moore.

Three other defendants, Diane M. Hayduk, 64, of Miami, Victor Miguel Vidal, 49, of Miami, and Lazaro Jesus Perez, 44, of Miami Springs, pled guilty to the charged conspiracy and agreed to assist the United States. Hayduk assisted Domenico Rabuffo and Mae Rabuffo with the misappropriation of loan proceeds and the transmission of fraudulent correspondence to the lenders and the closing agents. Vidal served as a loan officer at SunTrust Mortgage, where he sponsored fraudulent loan applications for lots in Hampton Springs, including fraudulent applications for $33 million in construction loans. Perez furnished fictitious accountant’s letters to Vidal, in support of fraudulent loan applications submitted to SunTrust Mortgage. Hayduk, Vidal, and Perez were sentenced in September, 2014. Hayduk was sentenced to 40 months in prison, Vidal was sentenced to 64 months in prison and Perez was sentenced to 30 months in prison.

Mr. Ferrer commended the investigative efforts of the FBI and FDIC-OIG. This case was prosecuted by Assistant United States Attorneys Dwayne E. Williams and Jerrob Duffy.

Posted By: Ralph Roberts @ 12:47 pm | | Comments Off on $49.6 Million Mortgage Fraud Scheme Sentenced to 27 Years | Trackback |
Filed under: Mortgage Fraud

August 11, 2014

Check out this new portrait of Ralph!

Ralph's high school buddy Dan D'Addario is a professional illustrator, and whipped up this true-to-life portrait on a whim!  Ain't it neat?

Ralph’s high school buddy Dan D’Addario is a professional illustrator, and whipped up this true-to-life portrait on a whim! Ain’t it neat?

For your own caricatures and hilarious drawings, check out Dan D’Addario Illustrations! https://www.facebook.com/illustrationsbydand?fref=ts

Posted By: Ralph Roberts @ 11:57 am | | Comments Off on Check out this new portrait of Ralph! | Trackback |
Filed under: Uncategorized

July 21, 2014

Central Coast Woman Sentenced to Federal Prison for Tax and Loan Fraud Schemes

A Nipomo woman was sentenced today to 36 months in federal prison
for orchestrating a tax scheme involving stolen identities, as well as a loan fraud
scheme in which she submitted false income tax returns that overstated her income in
an effort to obtain a $1.6 million loan.
Imelda Sanchez, 42, was sentenced this morning by United States District Judge Philip
S. Gutierrez, who also ordered the defendant to pay restitution of $124,649 to the
Internal Revenue Service and restitution of $721,000 to Mission Community Bank
(successor to Santa Lucia Bank) due to the loss associated with Sanchez’s defaulted
bank loan.
Sanchez pleaded guilty in February of 2013 to one count of making false claims against
the government and one count of making false statements on a loan application.
According to documents filed with the court, from 2005 to 2009, while working as a
bookkeeper and tax preparer in Santa Maria, California, Sanchez devised a scheme to
defraud the IRS by using the names and Social Security numbers of relatives and
clients to prepare and file fraudulent tax returns which claimed refunds of the Earned
Income Tax Credit that Sanchez deposited into her own bank account.
As part of her scheme, Sanchez created false Forms W-2 and expense schedules,
mixed and matched dependent information, and – in order to avoid detection – told the
people whose information she was using not to file their own tax returns or not to claim all of their dependents. In total, Sanchez filed 39 fraudulent tax returns for the 2004 to
2008 tax years in which she collected $124,649 in total false refunds.
In 2007, Sanchez also used her accounting skills to create false personal income tax
returns which dramatically overstated her income (claiming she earned four to five times
as much money as she claimed on the tax returns she filed with the IRS) in order to
obtain a $1,640,000 construction loan from Santa Lucia Bank.
According to court documents, two years later, Sanchez submitted more fraudulent tax
returns in order to refinance the same loan. Ultimately, Santa Lucia Bank lost $721,000
as a result of Sanchez’ fraud.
Sanchez will surrender to authorities on September 26, 2014 to begin serving her prison
sentence.
The investigation of Sanchez was conducted by IRS Criminal Investigation and the
Federal Bureau of Investigation, in conjunction with the United States Attorney’s Office
for the Central District of California.

Posted By: Ralph Roberts @ 3:22 pm | | Comments Off on Central Coast Woman Sentenced to Federal Prison for Tax and Loan Fraud Schemes | Trackback |
Filed under: Uncategorized

July 20, 2014

Foreclosed Home Sales Declining in Macomb County

The Detroit News reported that the projected number of foreclosed homes sold at auction in 2014 was on track to be the lowest since 2004. If trends for the first six months of 2014 follow to the second, less than 2,000 sheriff’s deeds will be recorded. According to the report, 2010 saw the highest number of homes sold at auction in Macomb, with 7,415 deeds recorded.

So what to make of this good news? What does it mean for the housing market? Ralph put it pretty well himself in the article: “People are back to work, making money. It’s great for the economy of southeast Michigan.”

The article points out that redemption rates, which indicate how many homeowners are able to keep their home after it is listed for auction, have been steadily improving. This indicates that while people are still falling into hard times, as they will in any economy, they are now better able to rescue themselves from those bad spots. According to statistics in the article, less than one percent of foreclosed homeowners in 2008 were able to redeem their properties from auction. In 2013, the redemption rate was nearly 20 percent. In any growth situation, going from nil to 20 percent is fantastic–and hopefully indicates a much stronger housing market on the horizon.

Posted By: Ralph Roberts @ 9:30 am | | Comments Off on Foreclosed Home Sales Declining in Macomb County | Trackback |
Filed under: Foreclosure,Uncategorized

July 16, 2014

Mortgage Lender Pleads Guilty in Multi-Million-Dollar Mortgage Fraud Scheme

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Drew J. Breakspear, Commissioner, Florida Office of Financial Regulation, announce that Karl Oreste, 56, of Miramar, pled guilty today before U.S. District Judge Robert N. Scola, Jr., to one count of conspiracy to commit wire fraud affecting a financial institution, in violation of Title 18, United States Code, Section 1349.

Sentencing has been scheduled for November 14, 2014 at 8:30 a.m. At sentencing, Oreste faces a maximum possible statutory sentence of up to 30 years in prison.

According to documents filed with the court and statements made in court during the plea, Oreste, president of KMC Mortgage Corporation of Florida, a mortgage lending business in North Miami Beach, along with co-defendants, Okechukwu Josiah Odunna, a/k/a “O.J. Odunna,” Marie Lucie Tondreau, a/k/a “Lucie Tondreau”, and Kelly Augustin, operated a multi-million dollar mortgage fraud scheme in Miami-Dade and Broward Counties, between December 2005 and May 2008. Oreste and Tondreau hosted several radio show programs in the South Florida area which catered to the South Florida Haitian community. During these programs they advertised the services offered by KMC Mortgage. Oreste and Tondreau recruited and paid some of the listeners who responded to those advertisements, as well as other individuals, to pose as borrowers to purchase properties identified by Oreste. Augustin, an employee of KMC Mortgage, also recruited straw borrowers.

According to statements made in court, Oreste, Odunna and other co-conspirators prepared or caused to be prepared applications on behalf of straw borrowers. Odunna was an attorney previously licensed to practice law in Florida and president of O.J. Odunna, P.A. and Direct Title and Escrow Services. These loan applications included false information relating to employment, wages, assets and intent to make the property being purchased a primary residence. The loan applications and documents were submitted by co-conspirators to various mortgage lenders throughout the United States. Once the loan applications were approved, the defendant wired loan funds to O.J. Odunna, P.A., Direct Title or other title companies for closing.

In some instances Oreste, Odunna and other co-conspirators created and submitted duplicate HUD-Settlement Statement Forms, which grossly inflated the true purchase price of the properties. Lenders were not told how the loan proceeds were being disbursed.

At closing, a portion of loan proceeds were disbursed to Oreste through his company, JR Investment and Mortgage Corporation, or other bank accounts controlled by him. A portion was in some instances diverted to accounts controlled by O.J. Odunna, P.A. and Direct Title. Oreste disbursed some of the proceeds that he received to pay recruiters, such as Tondreau and Augustin, and straw borrowers. Oreste also transferred a substantial portion of the funds to the bank account of LTO Investment Corporation’s, a company controlled by Tondreau. Tondreau used funds deposited in LTO Investment Corporation’s bank accounts to make payments on the falsely and fraudulently obtained mortgages in order to maintain the loans, and to conceal and further the fraud. She also used a portion of the funds deposited into LTO Investment Corporation’s bank accounts for her own personal use and benefit.

Over the course of the conspiracy, the defendants fraudulently obtained loans on approximately 20 properties, for which the lenders have suffered losses in the amount of approximately $11,000,000.00.

Mr. Ferrer commended the investigative efforts of the FBI and Florida Office of Financial Regulation. The case is being prosecuted by Assistant U.S. Attorney Lois Foster-Steers.

Posted By: Ralph Roberts @ 1:37 pm | | Comments Off on Mortgage Lender Pleads Guilty in Multi-Million-Dollar Mortgage Fraud Scheme | Trackback |
Filed under: Bank Fraud,Florida,Loan Fraud,Mortgage Fraud,Mortgage Fraud Scheme,Mortgage Loan Fraud,Real Estate Fraud,Wire Fraud
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