GRAND RAPIDS, MI—Roger Lee Clark, 66, formerly of Wyoming, Michigan, received a sentence of 6 ½ years in prison for committing a multi-million-dollar Ponzi scheme and filing false income tax returns, U.S. Attorney Donald A. Davis announced today. U.S. Attorney Davis was joined in the announcement by FBI Special Agent in Charge Andrew Arena and IRS Criminal Investigation Special Agent in Charge Erick Martinez. Special agents of the FBI and of the IRS Criminal Investigation Division had investigated the case.

The Honorable Janet T. Neff, U.S. District Judge, presided over the sentencing. Judge Neff expressed her concern regarding the seriousness of the “knowing and willing theft” by Clark and the trail of financial ruin he left behind. “The pain of that financial ruin for older people is particularly reprehensible.” In a terse attempt to explain the $9.3 million fraud, Clark said, “things happened.” Judge Neff replied, “Wow, that takes the cake.” Judge Neff also ordered Clark to pay restitution to the victims and serve a combined total of four years of supervised release. Clark also agreed to a money judgment of $9,162,380.99 and the forfeiture of undeveloped real property in Byron Center as well as numerous vehicles.

Clark claimed that he owned and operated CRM Investors Corporation for the past 16 years, despite never having any training in financial planning or any related financial fields. Clark used CRM, along with other fictitious businesses that he created, to hide money and assets from victims and evade his income taxes.

In 2007, Clark instructed a California investor to wire transfer $1,001,500 into a bank account controlled by him. Clark explained to the investor that she was investing in the T-Bill trading program and that her investment was 100 percent secure. Clark admitted that in September and October of 2007, he sent the victim two wire transfers of $180,000 each and lied to her that the payments represented earnings from her investment, when in fact, the first payment came from her own principle and the second payment was from the principle of another investor. On January 29, 2009, Clark e-mailed the California investor indicating that all of her money was lost, but never stated where the money actually went.

Clark filed a 2007 tax return that reported his total income to be slightly over $11,000 when he knew that his actual total income was significantly higher. As part of his sentence, Clark was also ordered to pay total of $163,646.00 in back taxes.

“Investment fraudsters prey on trusting investors by enticing them with a ‘can’t miss’ deal and then stealing their hard earned money,” said Special Agent in Charge Erick Martinez.

“IRS Criminal Investigation is committed to investigating investment schemes in an effort to protect the financial well being of the American investor.”

FBI Special Agent in Charge Andrew G. Arena added, “The public should be aware that even though the FBI continues to vigilantly pursue these types of criminal violations, we live in a buyer-beware investment environment. Investors should vigorously investigate the background information of all investments and the individuals handling them.”

Failed Stockbridge Bank Allegedly Fleeced Before Being Seized By Feds

ATLANTA—An indictment unsealed today charges two former top officers of FirstCity Bank of Stockbridge, Georgia—MARK A. CONNER, 44, formerly of Canton, Georgia, and CLAYTON A. COE, 44, of McDonough, Georgia—with a variety of offenses, including conspiracy to commit bank fraud and bank fraud in connection with misconduct at FirstCity Bank in the years before the bank’s seizure by state and federal authorities on March 20, 2009. In addition to the conspiracy and bank fraud charges, the indictment charges CONNER with conducting a continuing financial crimes enterprise at the bank between February 2006 and February 2008, during which CONNER’s and his co-conspirators’ crimes allegedly generated over $5 million in unlawful gross proceeds.

A federal grand jury in Atlanta returned the sealed indictment against CONNER and COE on March 16, 2011. CONNER was arrested on the charges and taken into custody by federal agents at Miami International Airport yesterday morning, the two-year anniversary of FirstCity Bank’s failure, upon his arrival in Miami from the Turks and Caicos Islands in the West Indies. CONNER made his initial appearance today before a federal magistrate judge in Miami, who preliminarily ordered CONNER to be detained as a flight risk pending his transfer by Deputy U.S. Marshals from Miami to Atlanta for trial. A formal detention hearing will take place in Miami on Thursday, March 24, 2011, at 1:30 p.m. COE’s initial appearance on the indictment in the Northern District of Georgia has not yet been scheduled.

United States Attorney Sally Quillian Yates said, “The entire country has felt the deep economic impact of failed banks. At the heart of this indictment is an abuse of power by key insiders, who are charged with tricking their own colleagues into approving millions of dollars in commercial loans to fund the defendants’ own personal business activities, and to enrich themselves at the bank’s expense. Along the way, these defendants also allegedly defrauded state and federal bank regulators and examiners, and at least 10 other federally insured banks in Florida and Georgia that invested in the fraudulent multi-million-dollar loans.”

FDIC Inspector General Jon Rymer said, “The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General (OIG) is pleased to join the United States Attorney’s Office for the Northern District of Georgia and our law enforcement colleagues in announcing this indictment. We are particularly concerned when former senior bank officials, who have held positions of trust within their institutions, are alleged to have been involved in criminal activity. We will continue to aggressively pursue bank officials and others who victimize financial institutions.”

Neil Barofsky, SIGTARP Special Inspector General for the Troubled Asset Relief Program said, “Today’s indictment marks yet another occasion where bank executives are alleged to have turned to criminal fraud in the midst of the financial crisis, including an attempt to obtain millions of dollars from the American taxpayer through the Troubled Asset Relief Program. SIGTARP will continue to work with our law enforcement partners to bring those who engage in such crimes to justice.”

IRS-Criminal Investigation Special Agent in Charge Reginael McDaniel said of the case, “Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money. Those individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable.”

According to United States Attorney Yates, the charges, and other information presented in court: CONNER served in a variety of top positions at FirstCity Bank between 2004 and 2009, including as vice-chairman of the board of directors, as a member of the banks’ loan committee, as president, and later as acting chairman and chief executive officer. COE served as a vice-president and as FirstCity Bank’s senior commercial loan officer. While serving in these positions, CONNER, COE, and their co-conspirators allegedly conspired to defraud FirstCity Bank’s loan committee and board of directors into approving multiple multi-million-dollar commercial loans to borrowers who, unbeknownst to FirstCity Bank, were actually purchasing property owned by CONNER or COE personally.

The indictment charges that CONNER, COE, and their co-conspirators misrepresented the essential nature, terms, and underlying purpose of the loans and falsified documents and information presented to the loan committee and the Board of Directors. CONNER, COE, and their co-conspirators then allegedly caused at least 10 other federally insured banks to invest in, or “participate in” the fraudulent loans based on these and other fraudulent misrepresentations, shifting all or part of the risk of default to the other banks. COE’s bonus compensation was tied to the origination of FirstCity Bank loans, including the fraudulent loans with which he and CONNER allegedly assisted each other.

In the process of defrauding FirstCity Bank and the “participating” banks, CONNER, COE, and their co-conspirators allegedly routinely misled federal and state bank regulators and examiners to conceal their unlawful scheme. They also unsuccessfully sought federal government assistance through the U.S. Treasury Department’s Troubled Asset Relief Program (“TARP”) and engaged in other misconduct in an attempt to avoid seizure by regulators and prevent the discovery of their fraud.

The charge against CONNER for conducting a continuing financial crimes enterprise carries a mandatory minimum sentence of 10 years in federal prison, a maximum sentence of life in prison, and a potential fine of up to $10 million. The conspiracy and bank fraud charges against CONNER and COE, and a remaining charge against COE for fraudulently influencing the actions of a federally insured bank, carry a maximum sentence of 30 years in prison and a potential fine of up to $1 million on each count. In determining the actual sentences for each defendant, the court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

This case is being investigated by special agents of the FDIC, Office of Inspector General; the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), the Federal Bureau of Investigation, and Internal Revenue Service-Criminal Investigation.

Assistant United States Attorneys Douglas W. Gilfillan and David M. Chaiken are prosecuting the case.

For further information please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.

LOS ANGELES (LoanSafe.org) —Representatives of the Financial Fraud Enforcement Task Force met in Los Angeles today for the latest in a series of Mortgage Fraud Summits. The task force—established by President Barack Obama in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes—is comprised of representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement agencies.

According to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), the Los Angeles metropolitan area now ranks first in the nation for the number of subjects named in Mortgage Fraud Suspicious Activity Reports filed since 2008 by financial institutions.

Today, the task force members met with community members, legal services providers, real estate industry representatives and law enforcement officials to discuss the problem of mortgage fraud from a national, state and local perspective. In the morning, attendees participated in panels on mortgage fraud trends and the community impact of mortgage fraud in the Los Angeles area. In the afternoon, task force representatives will meet privately with law enforcement officials involved in the investigation of mortgage fraud.

“This Administration has made protecting America’s working families from financial fraud a top priority,” said Assistant Attorney General for the Civil Division Tony West. “The President’s Financial Fraud Enforcement Task Force has brought together the government’s civil and criminal capabilities to uncover mortgage fraud schemes and hold those who commit fraud accountable to the fullest extent of the law.”

“White collar financial crimes strike at the economic heart of the American system. To the extent that we can uncover and prosecute these activities, it’s to everyone’s benefit,” said Deputy Inspector General at the Department of Housing and Urban Development (HUD) Michael P. Stephens. “Accordingly, I am happy to lend the HUD Office of Inspector General’s nationwide expertise to this exceptional group of law enforcement agencies.”

“Today’s Mortgage Fraud Summit in Los Angeles is particularly timely because our region is now a national epicenter of mortgage fraud,” said United States Attorney André Birotte Jr. “In the last month alone, my office has indicted two dozen defendants for their involvement in mortgage and real estate fraud, and has pursued civil remedies in other mortgage fraud cases.”

Steven Martinez, Assistant Director of the FBI‘s Los Angeles Field Office, said: “As we’ve increased our efforts in addressing mortgage fraud, new challenges arise as the nature of the fraud evolves with the economic situation of homeowners. Our multi-agency partnership has successfully targeted many of these complex schemes but we hope to further educate our seasoned investigators and prosecutors through efforts such as today’s summit. Southern California is dedicated to curbing the abysmal mortgage fraud problem that has victimized tens of thousands of homeowners, a large number of whom reside in and around Los Angeles.”

Summit participants also include Executive Director of the Financial Fraud Enforcement Task Force Robb Adkins and representatives from the Federal Trade Commission, the Treasury Department’s Financial Crimes Enforcement Network, the United States Postal Inspection Service, the U.S. Secret Service, the California Department of Justice and local police agencies.

Mortgage fraud is a key focus of the Financial Fraud Enforcement Task Force’s efforts. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

For more information, visit StopFraud.gov/
By Moe Bedard on October 1, 2010
www.Loan-Safe.org
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(HOUSTON) – Two sealed indictments charging Veronica Frazier, Robert Veazie and Felton Greer with fraudulently obtaining home purchase loans have been unsealed, United States Attorney José Angel Moreno announced today. Both indictments were returned under seal on May 5, 2010, and were unsealed Friday once the three defendants were in custody.

Frazier, 42, of Pearland, was charged in a five-count indictment with conspiracy and wire fraud arising from a scheme to defraud residential lenders in connection with individual condominium purchases in a building located at 917 Main Street in Houston, also known as “The Kirby Lofts.”

Veazie, 35, and Greer, 41, both of Houston, were each charged in a separate but related four-count indictment with conspiracy and wire fraud relating to the Kirby Lofts scheme, as well as in connection with other single-family home purchases in the Houston area.

Greer surrendered to FBI agents Friday morning, while Veazie surrendered to the United States Marshals Service. Both appeared before U.S. Magistrate Judge Mary Milloy who allowed them to be released upon posting $50,000 bond. Frazier was arrested by FBI agents Friday morning and is expected to appear before U.S. Magistrate Judge Nancy K. Johnson at 2:00 p.m. today.

According to the allegations in the indictment returned last week, the Kirby Lofts transactions were sham sales. From about January 2006 to October 2006, Frazier recruited individuals with good credit to act as borrowers in applications for mortgage loans to purchase units in The Kirby Lofts and, with the assistance of co-conspirators, assisted these “straw borrowers” with providing false information and documents to induce lenders to fund purchases of units in The Kirby Lofts. The indictment also alleges Frazier and other co-conspirators submitted invoices for payment from loan proceeds and used the money to pay themselves and straw borrowers from loan proceeds.

The indictment against Veazie and Greer alleges they acted as “straw borrowers” in the Kirby Lofts scheme and also for other residential loans involving single-family residential properties in the Houston area. According to the indictment, Veazie and Greer received kickbacks from loan proceeds and provided false statements and documents to induce lenders to fund the purchase loans.

The maximum penalty, upon conviction, for conspiracy and wire fraud is 20 years in prison and a fine up to $250,000.

The investigation leading to the charges was conducted by the FBI. Assistant United States Attorneys Belinda Beek and Vernon Lewis are prosecuting the case.

This indictment is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.

By Phillip Mcneal

Suspicious activity reports filed in the third quarter of 2009 showed a 7.5 percent increase in possible mortgage loan fraud over a year earlier, the Financial Crimes Enforcement Network (FinCEN) reported on Thursday.

Forty-two percent of the reported activity took place in California and Florida, while the greater Miami, Los Angeles and New York areas topped the list of metropolitan locations.

The Bank Secrecy Act requires financial institutions to file suspicious activity reports, or SARs, with FinCEN when they identify or suspect fraudulent activity.

A unit of the U.S. Treasury Department that provides and analyzes financial intelligence, administers the Bank Secrecy.

The report covered the period from July 1 to Sept. 30, 2009. FinCEN said that 15,697 mortgage loan fraud SARs had been submitted during the quarter, up 7.5 percent over the third quarter of 2008.

But the agency cautioned that the increase did not necessarily reflect an uptick in fraud. It said three-quarters of the suspicious activity reports, which were filed by depository institutions, included activities that were more than a year old, and half included activities that were more than two years old.

But FinCEN said it had received hundreds of reports describing possible loan modification fraud or foreclosure rescue scams since it asked financial institutions in April to look for “red flags” indicating such activities.

The agency said two schemes were most commonly reported in the SARs:

One involved homeowners who were duped into signing quit-claim deeds to their properties. The homes were then sold to straw borrowers and the homeowners received eviction notices.

The other involved scammers who falsely claimed affiliations with lenders to convince distressed homeowners to pay large advance fees for modification services. The scammers then took no action on the homeowners’ behalf.

U.S. Attorney General Eric Holder said last month the FBI was investigating more than 2,800 mortgage fraud cases — up nearly 400 percent from five years ago.

In November, President Barack Obama set up an interagency task force to focus on fraud in mortgages, securities, economic stimulus programs and government bailouts.