Archive for the ‘in the news’ Category

Evasion Will Get You Every Time

Posted by on March 10th, 2014

Examples of Desperate Cons
Caught because of tax evasion

General Fraud Investigations: Fiscal Year 2014

This FBI report is here only to illustrate that it isn’t only a few percent on top of the financial help trying to get all of our hard-earned money. Theft of YOUR dollars is rife throughout our society: the people at your local 7-11, your friendly realtor, someone stealing your mail, the people who run the senior care center . . . perhaps this will help save you or a loved one from financial ruin, which often leads to loss of a home.

They are all nationalities and from all walks of life. Many of these con artists ruin lives for a few thousand dollars a year, most of which they probably spend foolishly in any case.

Note how these people got caught: tax evasion. Many of the stories read the same; they have been excerpted from general fraud investigations on public record documents on file in the courts within the judicial district where the cases were prosecuted. The FBI on-line records cite the real names and homes of these people.

Evasion.Financial frauds.Leader of Massive Real Estate Fraud Scheme Sentenced for Fraud and Money Laundering: On Feb. 19, 2014, in Trenton, N.J., E. W. was sentenced to 264 months in prison, three years of supervised release and ordered to pay $215.4 million in restitution and forfeiture of $215.4 million. According to court documents, from June 2004 through August 2011, he orchestrated, with the help of others, a real estate investment fraud scheme that resulted in multimillion-dollar losses to victim investors. To induce victims to invest, E. W. and others made various types of materially false and misleading statements and omissions, told victims that they had inside access to certain real estate opportunities and “allowed” them to buy a particular piece of property at a below-market price. They told victims that their money would be used to purchase a specific property, and the property would be quickly resold –  “flipped” – to a third-party purchaser that had been lined up. Victims were also told that the their money would be held in escrow until the closing of a purported real estate transaction. The con  used millions of dollars fraudulently obtained from his victims to fund his own lavish spending including millions of dollars’ worth of antiques, artwork, a multimillion-dollar collection of jewelry and watches, gambling and personal expenses.

Business Owner Sentenced for Tax and Structuring Violations: On Feb. 18, 2014, in Los Angeles, Calif., a Newport Beach man was sentenced to 18 months in prison and ordered to pay $300,000 in restitution to the IRS.  He pleaded guilty in June 2013 to one count of subscribing to a false tax return for the 2010 tax year and one count of structuring a cash transaction and failed to report all of the business receipts of JSL on the individual and corporate income tax returns. During the years 2006 through 2010, he cashed JSL customer checks, totaling approximately $2 million. For the years 2006 through 2009, JSL failed to report $1,498,907 in income resulting in a tax due and owing to the government of approximately $300,000.

New York Man Sentenced for Tax Crimes: On Feb. 14, 2014, in Rochester, N.Y., G. was sentenced to 12 months of home confinement, 5 years of probation and ordered to pay a $15,000 fine. On July 30, 2013, he pleaded guilty to filing false tax returns in 2008 and 2009 . . . cheating the United States out of $1,901,633 in federal income taxes by using entities he owned to conceal income and artificially inflate expenses in several complex schemes. He was fined $500,000.

Con artists.Donald L. Barlett, James B. SteeleIn The Great American Tax Dodge: How Spiraling Fraud and Avoidance Are Killing Fairness, Destroying the Income Tax, and Costing YouThis selling authors of America: What Went Wrong? expose the millions of Americans who are dodging their income taxes at every honest taxpayer’s expense.With the clarity, insight, and readability that earned them two Pulitzer Prizes, Donald Barlett and James Steele explain how Americans are cheating as never before, and why most are getting away with it.The authors relate the stories of a Manhattan couple who spent $1 million a month to maintain their lifestyle yet never paid income tax, a California couple who provided sport utility vehicles for their children at taxpayers’ expense, an entrepreneur in Costa Rica who shows Americans how to hide their money in clandestine accounts offshore, and computer technicians at America’s largest corporations who live tax-free.Barlett and Steele describe how the Internet has democratized tax cheating, as proliferating Web sites and their often mysterious operators offer every service imaginable to escape taxes.

New York Woman Sentenced for Fraud (against her own family): On Feb. 14, 2014, in Syracuse, N.Y., PH of Liverpool, N.Y., was sentenced to 55 months in prison, three years of supervised release and ordered to pay $19,424 in restitution to the New York State Department of Labor and $28,031 to the IRS, along with interest and penalties. On Sept. 11, 2013, PH pleaded guilty to 11 wire fraud, tax fraud and aggravated identity theft charges. According to court documents, PH submitted six false federal tax refund claims in the name of family members, without their knowledge, during 2011 and 2012. She also fraudulently obtained monies from the New York State Department of Labor in 2011 and 2012 by submitting false claims for unemployment benefits in the name of various family members, again, without their knowledge.

California Man Sentenced for Role in Ponzi Scheme: On Feb. 14, 2014, in Sacramento, Calif., KK was sentenced to 72 months in prison and three years of supervised release. According to court records, beginning in 2006, he ran an Investments Management & Trading firm, claiming that he had developed computer software that enabled him to make profits of approximately 3 percent per month or 36 percent per year. The strategy had been historically unsuccessful, losing money overall . . . More than 300 individuals invested in the scheme, contributing at least $83 million. Of that amount, more than $55 million was returned to investors, although nearly $17 million of that constituted amounts paid to some investors above the amount of their original investments. Thus, actual loss to the investors totaled more than $40 million. His partner was sentenced in June 2013 to 192 months in prison.

Florida Man Sentenced for Tax Evasion and False Statements: On Feb. 14, 2014, a Tallahassee, Fla., man was sentenced to 27 months in prison and ordered to pay $99,126 in restitution. In November 2013, he pleaded guilty to charges of tax evasion and making false statements in a matter involving a health care benefit program. According to court documents, between 2004 and 2008, he earned more than $1.18 million in taxable income. In the fall of 2009, he filed late returns for all four prior tax years. His total tax due, not counting interest and penalties, was more than $472,000. He bailed on a monthly installments agreement of $1,000. He then opened an account under a false social security number at a Tallahassee credit union. One week later, he sold his beach house for more than $1.3 million and his $727,437 in proceeds from the sale into his fraudulently opened credit union account.  In November 2011, the IRS levied his fraudulently opened credit union accounts and obtained approximately $610,000 as payments toward his tax liabilities.

Former Laboratory Executive Sentenced for Tax-Related Crimes: On Feb. 13, 2014, in Boston, Mass., Patrick was sentenced to 18 months in prison and one year of supervised release. In 2013, he plead guilty to four counts of subscribing to false tax returns for tax years 2005 through 2008 by underreporting his income during those tax years.

Former Coroner Sentenced for Conspiracy to Steal Government Funds: On Feb. 12, 2014, in New Orleans, La., a former Parish Coroner was sentenced to 24 months in prison, one year of supervised release and ordered to pay $193,388 in restitution. He pleaded guilty on Oct. 23, 2013 to conspiring to steal government funds from the Parish Coroner’s Office. According to court records, the Coroner earned annual or sick leave to which he was not entitled. He received yearly payments for unused annual and sick leave, totaling $111,376 over a five year period.  Additionally, he conspired with an employee of the coroner’s office to purchase personal items valued at over $16,000 for his personal use, all with Parish Coroner’s Office funds.

Former Nightclub Owners Sentenced for Tax Violations: On Feb. 12, 2014, in Buffalo, N.Y., V. G. was sentenced to 12 months in prison after a previous conviction for tax evasion. His wife was sentenced to three years’ probation after a previous conviction for aiding or assisting in the preparation of a false tax return. The couple was also ordered to pay $671,840 in restitution and have already paid $550,000 to the IRS. According to court documents, the couple owned and operated a bar business for which they maintained two sets of books. One set of books was used for preparing and filing of the corporate tax returns and the other set of books reflected the true receipts and expenses for the business. The total amount of tax loss associated with the evasion is approximately $1,225,651.

Owner of Construction Company Sentenced for Tax Fraud: On Feb. 11, 2014, in San Francisco, Calif., BK was sentenced to six months in prison and six months of home confinement and ordered to pay $199,493 in restitution for aiding and assisting in the preparation and presentation of a false tax return wherein he underreported business gross receipts.

Financial Advisory Sentenced for Investment Fraud Scheme: On Feb. 10, 2014, in Reno, Nev., GHL a former bank financial advisor, was sentenced to 120 months in prison, five years of supervised release and ordered to pay restitution to the victims. THL pleaded guilty to 12 counts of mail fraud and five counts of tax evasion.


Consumer Fraud & Financial Scams Exposed: The Lowdown on 18 Scams You Should Never Fall For
PMM, SJA, Ms. MSC, NJS. With financial hardship facing people everywhere these days, consumer fraud and identity theft are on the rise. Scammers are relentless. They call you on the phone. They email you. They have their own websites and TV commercials, they are your neighbors and some you may even consider friends.These ruthless fraudsters have no conscience and no remorse. They know that the more desperate you are, the more likely you will fall for their deception. So they prey on you when you’re in financial distress, with scams about work-at-home jobs, credit repair, loans, home foreclosures, and cheap medical insurance.They often try to dupe senior citizens, many of whom live on fixed incomes and have the least ability to recover. And they actually keep (and SELL!) lists of names and phone numbers of their victims, which means if you’ve been ripped off once already, you are even more likely to be targeted again.These double-scammers, or “reloaders”, might even offer to help you (for a fee) to recover the money you lost to the first con artist.Here are the 18 scams detailed in the book:

  1. Credit Card Scams
  2. Money Wiring Scams
  3. Economic Stimulus Scams
  4. Phishing Scams Based on Bank Failures and Takeovers
  5. Phony Sweepstakes Prize Scams (that Mention the FTC!)
  6. Tax Relief Scams
  7. Credit Repair Scams
  8. Advance-Fee Loan Scams
  9. Foreclosure Rescue Scams
  10. Rental Listings Scams
  11. Work-from-Home Scams
  12. Business Opportunity Scams
  13. Travel Scams
  14. Free Trial Offer Scams
  15. Charities and Fundraising Scams
  16. Free Government Grant Scams
  17. Medical Discount and Health Insurance Scams
  18. Reloader Scams

According to court documents, he was employed until March 2011 as a financial advisor with Bank of America Investment Services. During the course of employment, he developed a scheme to entice persons to invest monies with him through the use of an E-Trade account rather than through normal bank procedures. He allegedly looked for investors who were elderly or lacked investing experience and who had a desire for high returns and aversion to risk and told the investors that their funds would be invested in United States Treasury Bonds which would pay better than six percent interest and would mature in two years.  After receiving the monies from the victims, he gave them to his spouse who mailed them to her E-Trade account. The monies were then withdrawn for his own use or to pay other investors. Using this scheme, he defrauded approximately six persons of over $2 million between January 2010 and March 2011.

California Man Sentenced in Investment Fraud Scheme: On Feb. 10, 2014, in Los Angeles, Calif., N. S. was sentenced to 41 months in prison and ordered to pay $10.9 million in restitution to victims of his scheme. Taxes.
In October 2013, he pleaded guilty to conspiracy to commit wire fraud and willful failure to file a tax return. Between at least January 2009 through May 2010, with other unidentified co-conspirators, he solicited at least 42 investors seeking loans either in person or by phone. Investors were further told:

  • that they had to pay an upfront lender fee of typically two percent of their requested loan amount prior to the issuance of the loan
  • that their lender fees would be held in a secure “attorney-trust account”
  • that the fees would be returned to the investors if the loans did not fund within 30 days of receipt of the fees.

No loans were funded; he transferred and withdrew the investors’ fees before the expiration of the 30-day periods, and without the investors’ permission. As a result, he received $14,251,939 from 42 investors between January 2009 and May 2010. He failed to timely file a personal federal income tax return for the 2009 tax year claiming this income.

Mississippi Office Manager Sentenced for Tax Evasion, Bank Fraud: On Feb. 4, 2014, in Jackson, Miss., B. C. of Clinton, Miss., was sentenced to 23 months in prison and five years of supervised release. She pleaded guilty in October 2013 to tax evasion and bank fraud. According to court documents, from March 2007 through March 2009, she was employed as an office manager; during her employment, she systematically forged the signatures of the owners of Mid-South Machinery on numerous checks drawn on Mid-South Machinery’s bank accounts, making such forged checks payable to herself and her husband and cashing and depositing funds into her personal bank account. During 2008, she prepared her own income tax return, where she intentionally failed to report over $120,000 in income she had received that year through her fraudulent scheme.

Louisiana Lawyer Sentenced for False Tax Claims: On Feb. 4, 2014, in Monroe, La., F. C. B. was sentenced to 28 months in prison and three years of supervised release for making false, fictitious, and fraudulent claims to the IRS. He pleaded guilty on April 19, 2013.

Missouri Apartment Manager Sentenced for Fraud Scheme: On December 5, 2013, in Springfield, Mo., BJE, of Carthage, was sentenced to 41 months in prison and ordered to pay approximately $206,000 in restitution. She pleaded guilty on October 3, 2012 to wire fraud, money laundering and filing a false tax return. According to court documents, she was employed as a property manager for Preservation Housing Management (PHM), which owned the Deerfield Village, Highland Acres, and Highland Meadows. From 2003 through 2011, when a low-income tenant rented an apartment and qualified for Section 8 rental assistance/subsidies, BJE generally calculated the move-in rent amounts correctly. However, when tenants reported an increase in income, instead of reflecting the increased rent in the computer system, she delayed reporting the increased rent to PHM. As a result, tenants would pay the higher rent amount to her, but she continued to provide the lower rent payments to PHM, pocketing the difference. In addition, she filed false federal income tax returns for the years 2006 through 2010 by failing to report $171,790 on her individual income tax returns, resulting in a total tax loss of $28,737.

Florida Woman Sentenced for Tax and Student Loan Fraud: On January 9, 2014, in Tampa, Fla., KR was sentenced to 48 months in prison and ordered to pay $110,971 in restitution to the IRS and to pay $22,350 to the Federal Stafford Loan Program. She pleaded guilty on October 10, 2013 to defrauding student financial aid and filing false claims with the IRS. According to court documents, she had procured several student loans with outstanding balances, then had the balances discharged due to a disability. In order to obtain further student loans, she submitted physician forms, with the physician’s signature forged by her, saying that her condition had improved, and agreeing to repay her prior loan balances. She then applied for additional student loans to attend a University, which she did not attend, and obtained over $27,000 in loans, from which a total of $22,350 was disbursed to her. In addition, she created four fictitious Florida corporations and then filed corporate tax returns claiming over $500,000 in refundable tax credits on behalf of the corporations. Also, she opened bank accounts in the names of the corporations, where refunds from the fraudulent corporate tax returns were directly deposited. She used these funds for personal expenses and admitted that these corporations were created solely for the purpose of filing false corporate tax returns and were not operational in any manner.

Former County Sheriff Deputy Sentenced for Role in Ponzi Scheme: On Feb. 4, 2014, in Denver, Colo., D. N. H. was sentenced to 30 months in prison, three years of supervised release and ordered to pay $204,348 in restitution and to forfeit $17,000. He pleaded guilty on March 15, 2013 to one count of wire fraud and one count of money laundering. According to court documents, he was employed as a deputy sheriff. In 2006, D. N. H. attended training courses on how to trade profitably in foreign currencies and the exchanges of foreign currencies (FOREX). From in or about November 2009, and continuing through early December 2011, he obtained in excess of $1.2 million from his colleagues, other law enforcement officers, and their respective friends and relatives for the purpose of trading these funds in the FOREX markets on their behalf. He had approximately 73 investors, most using personal savings or retirement funds accumulated over the years. Estimated losses to investors collectively total approximately $204,349. Over time he removed investor funds from FOREX trading accounts into bank accounts he controlled and use them for his own personal expenses, for personal investments unrelated to FOREX investments or to fund payments to those of his investors who requested to withdraw their principal investments.

Attorney Sentenced for Unlawfully Intercepting Telephone Conversations and Tax Evasion: On Feb. 3, 2014, in San Francisco, Calif., M. N., a divorce and family law attorney was sentenced to 24 months in prison, three years of supervised release and ordered to pay $468,918 in restitution. In addition, the court ordered the resignation of her bar license. She pleaded guilty to four counts of tax evasion. According to court documents, she caused her staff to illegally intercept telephone conversations by accessing a listening device that a private investigator had installed in a victim’s vehicle. She also willfully evaded more than $400,000 in federal taxes between 2005 and 2009, and obstructed justice by submitting false contracts to the IRS during an audit.

Illinois Businessman Sentenced for Tax Evasion and Unemployment Benefits Fraud: On January 31, 2014, in Chicago, Ill., JLQ was sentenced to 27 months in prison, three years of supervised release and ordered to pay $384,780 in restitution to the IRS and $44,670 to the Unemployment Compensation Fund. He previously pleaded guilty to one count of theft of government funds, three counts of tax evasion and one count of filing a false tax return. According to court documents, he applied for unemployment insurance benefits in February 2009, even though he was a gainfully employed businessman receiving significant income. He also evaded payment of substantial income tax for 2008 and 2010. On July 13, 2010, he made and filed an income tax return for 2009 in which he understated the gross receipts of his business by over $100,000.

Former Developer of Condo-Hotels Sentenced for Tax Evasion: On January 31, 2014, in Chicago, Ill., R. D. F. was sentenced to 74 months in prison and ordered to pay $1,752,948 in restitution to the IRS. R. D. F. pleaded guilty in May 2013 to two counts of income tax evasion. According to court documents, he was the chief operator and manager of hotel properties which ceased operating in 2006.  He attempted to convert hotels to condo-hotels by selling individual guest rooms to investors as separately titled condominium units. He then rented the units through a related hotel management company to other guests when the owner was not in residence. The owner received a percentage of the rental fee. From 2006 through June 2008, one of the hotels generated hundreds of thousands of dollars per month in revenues. But instead of paying debts to the hotel’s creditors, F. plundered approximately $5.7 million from the hotel and diverted the cash to himself. His father and brother were also found guilty to tax evasion.

Russian National Sentenced for Role in Securities Fraud Scheme: On January 31, 2014, in Newark, N.J., P. M. was sentenced to 30 months in prison, three years of supervised release and ordered to pay $505,357 in restitution. P. M., a Russian national, previously pleaded guilty to conspiracy to commit securities fraud. According to court documents, he participated in a conspiracy to steal from online trading accounts. The conspiracy first gained unauthorized access to the online accounts of brokerage firm customers, then used stolen identities to open additional accounts referred to as “Profit Accounts” at other brokerage houses. They then caused the victims’ accounts to make unprofitable and illogical securities trades with the Profit Accounts, leading to losses in the victims’ accounts and gains in the Profit Accounts. One version of the fraud involved causing the victims’ accounts to sell options contracts to the Profit Accounts, then to purchase the same contracts back minutes later for many times the price. The members of the conspiracy recruited foreign nationals visiting, studying, and living in the United States to open bank accounts into which illegal proceeds could be deposited. The conspirators then caused the proceeds of the sham trades to be transferred from the Profit Accounts into those accounts, where the stolen money could be withdrawn. The scheme caused combined losses of approximately $1 million.

Ohio Financial Planner Sentenced for Filing False Tax Returns, Wire Fraud and Money Laundering: On January 29, 2014, in Dayton, Ohio, J. E. K. was sentenced to 15 months in prison, five years of supervised release and ordered to forfeit a 2006 Jeep Commander. He pleaded guilty on June 7, 2013 to willfully filing a false federal income tax return with the IRS, wire fraud, and money laundering. According to court documents, between January 2007 and June 2011, K. was a business partner with an individual in a retail boat business. He was also a financial advisor for several individuals, engaging in an extensive scheme to defraud his financial clients and the IRS by creating false documents, including business checks, personal financial statements, purchase agreements, business sales reports, and other financial documents.  The total tax loss to the IRS by false filings was approximately $66,908 for the 2007 through 2009 tax years and federal employment tax losses to the IRS in the amount of approximately $68,239 for 2008 through 2011 tax years.

Illinois Farmer and Former Elevator Manager Sentenced for Money Laundering and Wire Fraud: On January 29, 2014, in Peoria, Ill., R. J. P. and T. B. were sentenced to 121 months and 72 months in prison, respectively, and five years of supervised release. P., who pleaded guilty to money laundering and wire fraud charges, was also ordered pay $7,038,537 in restitution. B., who pleaded guilty to wire fraud, was also ordered to pay restitution of $6,730,594.  P. admitted that he continued to obtain advances from B., at more than twice the value of the grain  delivered. From October 2009 to April 2010, P. received a total of approximately $13.1 million from Towanda Grain. P. subsequently made repayments to Towanda Grain of approximately $6.1 million. To conceal the payments, B made false entries in the records of Towanda Grain and provided false statements to the bank.

CEO of Free Truth Enterprises Sentenced for Tax Fraud and Mortgage Loan Fraud: On January 29, 2014, in Cincinnati, Ohio, Regina was sentenced to 12 months and one day in prison and ordered to pay $202,806 in restitution for filing a false tax return and wire fraud. 50 Ways to Protect Your Identity in a Digital Age.According to court documents, S. formed a non-profit corporation and has served as the President and CEO since 2000. From 2007 through 2010, she filed federal income tax returns with the IRS claiming $61,315 in false claims for income tax refunds. She also bid for and won an auction for a property in foreclosure. She then paid for the property using a check that had insufficient funds. Using this temporary appearance of title she applied for a sizable loan, in excess of $140,000, and used the proceeds to purchase a luxury car.

Virginia Businessman Sentenced for Role in Contracting Scheme Involving United States Army: On January 27, 2014, in Washington, D.C., O. S. K. was sentenced to 46 months in prison, three years of supervised release and ordered to pay $1,188,500 in restitution and the same amount in a forfeiture money judgment. He also pleaded guilty in September 2012 to one count each of bribery, conspiracy to commit bank fraud and willful failure to file a tax return. According to court documents, O. S. K. is among 17 people and one corporation that pleaded guilty to federal charges for their roles in the largest domestic bribery and bid-rigging scheme in the history of federal contracting. Schemes involved contracts and subcontracts awarded through the United States Army Corps of Engineers in return for hundreds of thousands of dollars in payments to a program manager at the Army Corps of Engineers. He was also an operations manager for a mortgage broker and admitted involvement in at least six fraudulent real estate sales and refinances in northern Virginia, with loan amounts of about $1.8 million. Finally, he pleaded guilty and was sentenced for the willful failure to file a tax return.

Former Executive Director of Halfway House Sentenced on Embezzlement and Tax Charges: On January 22, 2014, in Albuquerque, N.M., Robin was sentenced to 24 months in prison, three years of supervised release and ordered to pay $202,775 in restitution to the victim of her criminal conduct and $66,575 to the IRS. On May 15, 2013, she pleaded guilty to four counts of theft concerning programs receiving federal funds and three counts of willful failure to file a tax return. According to her plea agreement, Robin was employed as the Executive Director of a halfway house. Court filings reflect that the Pretrial Services Office (PTS) of the U.S. District Court for the District of New Mexico contracted with the not-for-profit corporation that operates the halfway house to cover the costs of providing a custodial residential environment for federal defendants. PTS made monthly payments of approximately $60,000 to $80,000 to the halfway house to cover these costs, and the halfway house deposited the funds in its business bank account. After she became Executive Director of the halfway house in April 2008, she was added as a signatory on the halfway house’s business bank account and received a debit card for the account. Between September 2008 and January 2011, she made unauthorized debits to the business bank account and used the proceeds for her own benefit. In April 2010, she opened a checking account and corresponding bank account in the name of halfway house without authorization. Thereafter and until February 2011, she regularly took funds that the halfway house residents were required to pay to defray their housing costs and deposited the funds into the unauthorized account. She then used the funds to pay for personal expenses. In addition, she failed to file federal income returns for calendar years 2008, 2009 and 2010.

North Carolina Woman Sentenced for Wire Fraud: On January 22, 2014, in Greensboro, N.C., A. W. was sentenced to 70 months in prison, three years of supervised release and ordered to pay $2,857,201 in restitution. Fraud Prevention and  Internal Control.She pleaded guilty on August 30, 2013 to wire fraud and money laundering. As Accounts Payable Manager for a steel group, she prepared the company’s reports to provide that vendors would be paid. She also opened non-profit accounts in the name of “IBOCF.” Unbeknownst to her employer, she created vendor checks payable to “International BOCF” even though this company was not a vendor to Carolina Steel Group. She also caused additional checks payable to “International BOCF” to be included on the company’s vendor reports. Womack then ensured that banks would honor the company’s checks (including the fraudulent ones) by uploading additional fraudulent reports to a financial clearinghouse website. In an attempt to hide her scheme, Womack changed internal accounting entries so that the checks to “International BOCF” appeared to be written to legitimate vendors of Carolina Steel Group and altered internal accounting data using another employee’s access codes. Womack deposited fraudulently obtained checks into the “IBOCF” account she controlled, and used the funds from that account for her own benefit.

Pennsylvania Couple Sentenced on Tax Evasion and Bribery Charges: On January 21, 2014, in Harrisburg, Pa., I. G. of Etters, Pa., was sentenced to 18 months in prison, one year of supervised release and ordered to pay a $7,700 fine. M. G. was sentenced to 12 months and one day in prison, one year of supervised release and ordered to pay a $7,700 fine. They pleaded guilty to tax evasion and bribery of a public official in May 2013. According to court documents, on September 27, 2011, the G’s offered to pay a Revenue Agent, who was conducting an audit, $50,000 if the agent would reduce their tax liability and not expand the audit to include the years before and after the current audit. On November 10, 2011, during an undercover operation, the couple paid the Revenue Agent $50,000 in cash. A review of the couples’ business records established that the couple intentionally failed to report $1,091,267 in income for the years 2008, 2009 and 2010. The couple has paid the IRS a total of $843,866 in penalties, back taxes and interest. The $50,000 used for the bribe was relinquished to the United States Treasury.

The Exercise Yard.
The Exercise Yard. Convict Prison.

Missouri Man Sentenced for Investment Fraud Scheme: On January 21, 2014, in Kansas City, Mo., R. J. G.  was sentenced to 46 months in prison and ordered to pay $722,326 in restitution. On July 26, 2013, he pleaded guilty to one count of mail fraud and one count of filing a false income tax return. According to court documents, he stole at least $724,000 from investors from 2007 through December 2011, using investor funds for personal living expenses, to pay other investors and in other businesses he owned. He is not registered as a broker-dealer agent, investment adviser representative, or issuer agent in the state of Missouri, nor has he ever been, yet he investments with the GTC Trading Fund. Between January 1992 and December 2010, individuals and groups invested more than $948,000 in the GTC Trading Fund. He told investors that the GTC Trading Fund pooled investor funds to trade in the commodities futures market and he mailed statements to investors listing a fictional ending balance, fictional “interest” earned and a fictional rate of return on investment. Investors paid taxes on interest they had not earned. also failed to declare income he had obtained by fraud. He stated that his taxable income was $42,534 in 2010; however, his taxable income was actually $248,350. The total tax loss from G’s false tax returns was $96,635.

Former Loan Officer Sentenced for Investment Fraud Scheme: On January 17, 2014, in Las Vegas, Nev., KG. was sentenced to 78 months in prison, five years of supervised release and ordered to pay over $830,000 in restitution. Identity Theft. He pleaded guilty in August 2013 to two counts of mail fraud, six counts of wire fraud and two counts of money laundering. According to court documents, he worked as a loan officer in Henderson where he helped persons refinance their homes by placing false information in the loan applications so the individuals could obtain refinancing and cash to which they would not have otherwise been entitled. In addition, he told individuals that he was a successful investor and trader in the foreign currency exchange market. He recruited individuals to invest with him in the market, telling them that they could earn high rates of return on their investments in a short period of time. Some of the victims wired him money and others borrowed money from their retirement funds or lines of credit. He also convinced some of the persons who refinanced their houses to give him some of the cash they received from refinancing for his investment fraud scheme. None of the victims agreed to pay KG any commissions or fees, or agreed that he could use their investments for personal or business expenses or to pay other investors. KG lied to the victims repeatedly and told them their investments were doing well. He also made payments to some of the victims using monies he received from other victims. He received approximately $1 million total from at least 16 victims in 2007 and 2008. KG did not invest the victims’ funds as promised and diverted approximately $410,000 for his own personal purposes.

Former Social Security Administrator Sentenced on Federal Charges: On January 10, 2014, in Providence, R.I., RH was sentenced to 39 months in prison, three years of supervised release and ordered to pay $245,299. As a former Assistant District Manager for the Social Security Administration in Rhode Island, he pleaded guilty on October 9, 2013, to one count each of aggravated identity theft, transportation of stolen securities and tax evasion; two counts of mail fraud; and three counts of filing a false tax return. According to court documents, he admitted to stealing the identity of a Coventry, R.I., man and using his identity to fraudulently sell more than $160,000 worth of stock certificates belonging to the victim, and for failing to pay $61,999 in taxes owed the IRS. He stole personal identifying information of the victim and used it to open a joint account at a brokerage firm in his name and in the name of the victim without the victim’s permission. He then provided documentation purportedly authored and signed by the victim, requesting the deposit of stock certificates owned by the victim.  Without the victim’s knowledge, the stocks were sold. He deposited two checks totaling $161,727 which represented the proceeds of the stock sales into a bank account owned jointly with his wife. He admitted to the court that he and his wife spent the proceeds of the stock sales on personal items and personal expenses.

Naval Pharmacy Technicians Sentenced for Fraud: On January 9, 2014, in Albany, Ga., ADO was sentenced to 55 months in prison for conspiracy to commit wire fraud and filing a false tax return. His co-defendant, PEK was sentenced to 33 months in prison for conspiracy to commit wire fraud. Both defendants pleaded guilty on September 27, 2013. In their plea agreements, they admitted that from approximately 1999 to 2009, they were active duty sailors or otherwise employed by the United States Navy at pharmacy technicians. The pair stole insulin and diabetic test strips and sold them to an unlicensed drug wholesaler in Florida. Payments for the products were delivered by electronic funds transfers or credit card payments. PayPal records show that from January 2005 through October 2009, ADO received approximately $1,037,458 for insulin and diabetic test strips which he and his partner stole from their respective pharmacies.

Illinois Woman Sentenced for Tax Fraud: On January 9, 2014, in Chicago, Ill., Sharon A. of Elmwood Park, was sentenced to 63 months in prison and ordered to pay $851,142 in restitution for filing false income tax returns. According to court documents, she filed 13 federal tax returns for herself, friends, and family that fraudulently claimed refunds totaling more than $8 million. Also convicted and sentenced as part of the scheme with her, were her son, who received 30 months in prison and another man who received 18 months in prison.

Virgin Islands Man Sentenced for Tax Fraud:  On January 7, 2014, in St. Thomas, U.S. Virgin Islands, R. E. M., Sr., former Chief Executive Officer (CEO) of a Regional Medical Center, was sentenced to 21 months in prison, one year of supervised release and ordered to pay $86,798 in restitution to the Virgin Islands Bureau of Internal Revenue, for income tax fraud. According to the evidence presented at trial, in 2006, he received $510,947 in taxable income and compensation from his position as CEO of  the Regional Medical Center. When he filed his 2006 income tax return, he only reported income in the amount of $265,198, and a tax owing of $39,810. However, his tax liability was actually $126,608.

Former County Commissioner Sentenced for Ponzi Schemes: On December 19, 2013, in Nashville, Tenn., E. S. P. was sentenced to 71 months in prison and five years of supervised release. ESP, a former Robertson County Commissioner, pleaded guilty in December 2012. Criminology.Theft.
According to court documents, between January 2007 and about March 2011, Polen operated three investment Ponzi schemes in which he solicited and received approximately $16,000,000 from more than fifty investors. The three investment schemes were totally fraudulent and Polen never intended to invest any of the funds he received from investor-victims. At the time of investment, he provided investors with a minimum of two post-dated checks, one for the principal amount of their investment and the other for the profit that their investment was expected to produce. He used the post-dated checks as a ruse to create the illusion for investors that their investments were safe and secure. Polen assured the investors that the post-dated checks could be cashed at any time; however, the accounts upon which the checks were drawn had either been closed or did not, and would never, contain funds sufficient to cover the amounts of the checks.

Rhode Island Convenience Store Owner Sentenced for Defrauding the Food Stamp Program: On December 19, 2013, in Providence, R.I., Cristina R. was sentenced to 12 months and one day in prison and three years of supervised release, the first eight months to be served in home confinement. Cristina was also ordered to pay $399,000 in restitution to the Food Stamp Program. Cristina, the owner of Cristina’s Market, pleaded guilty on October 4, 2013, to conspiracy to commit food stamp fraud and money laundering. According to court documents, beginning in at least October 2010, she stole nearly $400,000 from the Food Stamp Program. Ramirez allowed Supplemental Nutrition Assistance Program (SNAP) benefit recipients to use their Electronic Benefit Transfer (EBT) cards to exchange their SNAP benefits for cash, a violation of the program’s laws and regulations. She then added a surcharge to the recipients’ withdrawal of SNAP benefits, usually an amount equal to half that of the amount of cash benefit received by the recipient. With her two employees, her ex-husband and another person, conducted the illicit business transactions. She repeatedly withdrew the proceeds of her fraud in a manner that was designed to disguise its source, avoiding reporting requirements for transactions in excess of $10,000. She conducted $362,000 worth of transactions in this manner. The funds were used for personal and other non-business related expenses.

Prison Camp Bed.
Prison Camp Bed

Trustee Sentenced for Tax Evasion: On October 3, 2013, in Lubbock, Texas, R. L. W. was sentenced to 33 months in prison, three years of supervised release and ordered to pay $211,165 in restitution. He pleaded guilty in June 2013 to an Information charging one count of tax evasion. According to the factual resume filed in the case, He admitted that he intentionally and willfully did not file required tax returns for 2007, 2008 and 2009 in order to evade the payment of taxes due and owing to the United States. He falsely indicated that he was using the money for ranch operating expenses, when, in fact, the Trust did not operate any ranch.

Zimbabwe Native Sentenced for Filing False Income Tax Returns: On December 19, 2013, M. G., a native of Zimbabwe, was sentenced to 132 months in prison, five years of supervised release and ordered to pay $202,667 in restitution. According to evidence presented at trial, beginning in 2010, he used several entities he controlled to file fraudulent claims for tax refunds. He filed individual income tax returns falsely claiming that from 2007 to 2011, he earned wages from two of his companies and was entitled to tax refunds totaling more the $417,000 . . . He also:

  • filed tax returns falsely claiming that a third company had sustained losses in 2007 through 2009 which entitled him to more than $76,000 in tax refunds
  • From October 31, 2011 to February 17, 2012, he also filed false excise tax returns claiming that a fourth company was entitled to approximately $22,657,137 in alternative fuel tax refunds and credits based on having purchased or used over 39 million gallons of alternative fuel. The entities were all sham businesses that existed in name only.
  • Between July and September 2010, he defrauded several credit unions to obtain fraudulent automobile and business loans. He submitted four loan applications to the credit unions in which he misrepresented his income and employment in order to buy luxury automobiles that he never actually purchased.
  • He also submitted a fraudulent loan application for a $3 million business loan in the name of another one of his sham companies. On the business loan application, he made fraudulent statements about the financial and business affairs of the company in order to make it appear financially successful, and submitted several false corporate tax returns claiming that the company controlled millions of dollars in assets.

Former Vice President of Construction Company and Subcontractor Sentenced on Fraud Charges:  On December 19, 2013, in St. Louis, Mo., CJO was sentenced to 60 months in prison after pleading guilty to mail fraud, wire fraud and money laundering. He will be liable to pay the full $6.8 million in restitution and forfeit property and assets acquired with the stolen money. According to court documents, he was the project manager for Alberici on a project to build a water treatment plant in Arlington County, Virginia. A subcontractor on the project participated in a scheme to defraud Alberici through the preparation and submission of inflated invoices and false change orders for materials provided to the project by IMS. When IMS received payment on the inflated invoices, IMS kept a share and then forwarded money in the nature of kickbacks to C. J. O.  Alberici was over-billed in the amount of $4.8 million from 2006 through 2011. The principal of IMS was sentenced on December 18, 2013, to 24 months prison and ordered to pay restitution of $4.8 million.

Venture Capitalist Sentenced on Tax Charges:  On December 19, 2013, in St. Louis, Mo., BDM was sentenced to 60 months in prison. He pleaded guilty in August 2013 to one count of tax evasion. According to his plea agreement, the tax liability he attempted to evade in 2007 was $2,888,483. The total tax due and owing by for all tax years is $5,559,386. According to court documents, BDMwas a venture capitalist and was versed in tax laws. As a venture capitalist, he would discuss tax consequences of buying and selling investments to sophisticated investors. For the tax year 2007, BDM earned substantial income from his venture capital activities. In order to reduce his tax liability for that year, he claimed $18,160,613 in losses associated with a number of entities, including aircraft and real estate. These entities were established as single member limited liability companies for his mother for which she had already claimed passive losses for her own benefit in previous years. He admitted to evading millions more in taxes on income from his venture capital companies in subsequent tax years; he did not timely file tax returns for 2006 through 2009.

Florida Man Sentenced for Operating Investment Fraud Schemes: On December 18, 2013, in Hartford, Conn., RR, of Wellington, Fla., was sentenced to 144 months in prison and five years of supervised release. On February 25, 2013, RR pleaded guilty to two counts of conspiracy and 16 counts of wire fraud for operating two investment schemes that caused a loss of more than $25 million to individuals and lending institutions. He will be ordered to pay full restitution to the victims of both schemes. According to court documents and statements made in court, with another individual he conspired to defraud several victim investors by misrepresenting that the investors’ monies would be invested in legitimate, high-return investments. Instead of investing the funds as promised, they used the funds to pay their and their extended families’ living expenses, as well as the pre-existing debts of other investors. Through this first scheme, investors lost approximately $2.2 million. In a second scheme, between approximately November 2006 and December 2007, RR and others engaged in a real estate investment conspiracy that defrauded both lenders and individuals they recruited. As part of the scheme, RR and others recruited victim borrowers to take out financing to purchase various investment properties with financing from victim lenders. This scheme involved at least 100 properties. The investigation revealed that the victim lending institutions suffered more than $23 million in losses.

Defendant Sentenced for Multi-Million Dollar Fraud Scheme: On December 18, 2013, in Houston, Texas, CCJ of Los Angeles, Calif., was sentenced to 156 months in prison, three years of supervised release and ordered to pay $9,661,660 in restitution to 503 victims in the case. He pleaded guilty on July 23, 2013 to conspiracy to commit wire and mail fraud. According to court documents, with and his co-defendant, KTG of Rockwall, Texas, devised a scheme to defraud investors from around the United States and Canada. The scheme required people to invest in the life settlement offerings; the men then misappropriated the investor funds by using them for personal purchases and not paying the policy premiums. This ultimately resulted in insurance policies lapsing and the investors losing their money.

Florida Resident Sentenced for Filing False Tax Returns, Access Device Fraud and Identity Theft: On December 16, 2013, in Ft. Lauderdale, Fla., HZ of Boca Raton, Fla., was sentenced to 81 months in prison and three years of supervised release. Restitution will be determined at a later date. HZ was convicted by a jury trial on July 16, 2013 for filing fraudulent tax returns, access device fraud and aggravated identity theft. According to the indictment, he used companies to write checks to friends or acquaintances who cashed the checks and returned the cash to him, which he then failed to declare this income on his tax returns. He also opened credit card accounts in the names of his son and ex-wife, and charged more than $1,000 in a single year on those accounts without their authorization or knowledge.

Three Sentenced in Multi-Million Dollar Fraud Scheme: On December 16, 2013, in Portland, Ore., three defendants were sentenced for lying to and misleading clients about how they held and used millions in client funds while operating Summit Accommodators, Inc. MN was sentenced to 78 months in prison, TL was sentenced to 54 months in prison, and LL was sentenced to 54 months in prison. In addition, the defendants must each serve three years of supervised release. On July 3, 2013, a jury convicted the three former owner/operators of Summit Accommodators, Inc. of conspiracy to commit mail fraud and conspiracy to commit money laundering in connection with a 10-year fraud scheme. About 10,000 clients entrusted them with almost $1 billion from 1999 to 2008. The defendants used $75 million of client funds for undisclosed personal investments in real estate, investments in businesses and loans to business associates and family members. MN and his business partner BS, both Certified Public Accountants, created Summit in 1991 to help customers take advantage of lawful federal income tax deferral transactions. In a typical transaction, a customer would sell income producing property, allow Summit to hold the proceeds of the sale, and then buy another income producing property within 180 days. Federal income tax laws then allowed the customer to defer paying taxes on the profits from sale of the first property.  Trial evidence showed that although MN and BS began using their clients’ exchange funds for personal investments before 1999, they promised their clients their exchange funds would remain in Summit bank accounts and would only be used to complete their tax deferral exchanges. From 2004 through October 2008, Summit held between $49 million and $109 million of its customers’ money in a typical month. The defendants routinely transferred large amounts of client money to Inland Capital Corp., another company they owned and controlled. Through Inland, the conspirators used client funds for over 100 real estate projects in Central Oregon in which one or more of them had direct personal interests. BS was sentenced in May 2012 to 48 months in prison.

Estate Planning CEO and Employee Sentenced for Obtaining Millions in Death Benefits in Names of Terminally-Ill Individuals: On December 16, 2013, in Providence, R.I., JAC was sentenced to 72 months in prison and three years of supervised release. JAC, the president, CEO and majority owner of Estate Planning Resources was sentenced for conspiring to steal and use the identities of terminally-ill patients to obtain millions of dollars in illicit profits from insurance companies and bond issuers. RR, a former employee of JAC, was sentenced to 12 months and one day in prison and three years of supervised release. Restitution for both will be determined at a later date. Both pleaded guilty on November 19, 2012 to conspiracy to commit identity theft and wire fraud. According to court documents, both made misrepresentations to terminally-ill and elderly patients and their family members in order to obtain their personal identifying information. They used the information to obtain more than 200 variable annuities and to open more than 75 brokerage accounts in order to purchase “death-put” bonds in the victims’ names without their knowledge and consent. When the terminally-ill person died, JAC and others reaped substantial profits by exercising death benefits associated with the investments.

New York Man Sentenced for Filing False Tax Returns: On December 12, 2013, in Rochester, N.Y., PD, of Rochester, N.Y., was sentenced to 24 months in prison and ordered to pay $466,007 in restitution. He was previously convicted of filing false tax returns. According to court documents, PD was awarded a contract from Erie County in 2006 to remove damaged trees and branches following a storm. PD received over $5,000,000 in payments which he failed to report on his 2006 and 2007 federal income tax returns resulting in a tax loss of over $460,000. In addition to being responsible for the tax loss, the defendant is also liable for interest payments and penalties of over $265,000 going back to 2006.

Louisiana Motel Owner Sentenced For Tax Fraud: On December 11, 2013, in New Orleans, La., AP, of Metairie, La., was sentenced to 13 months in prison. He pleaded guilty on September 4, 2013 to filing a false income tax return. According to court documents, on August 6, 2009, Patel filed a 2008 federal income tax return but did not report approximately $426,744 in income, which resulted in a $111,378 loss to the IRS. AP was the former owner of motels that were located in Metairie, La. As part of his plea agreement, he agreed to accept responsibility for failing to report $1,373,076 in total unreported income for the tax years 2006 through 2009. As a result, the tax due and owing to the IRS for those years is $393,048. He also agreed to pay both the parish and state taxes due and owing.

Owner of Gourmet Food Markets Sentenced for Participating in Massive Tax Fraud Scheme: On December 9, 2013, in New York, N.Y., AA, of Easton, Conn., was sentenced to 60 months in prison, three years of supervised release and ordered to forfeit $7 million. AA pleaded guilty on June 4, 2013, to one count of conspiracy to commit tax and fraud offenses, four counts of subscribing to false and fraudulent federal personal income tax returns, nine counts of aiding and assisting in the preparation of false and fraudulent federal corporate, partnership, and payroll tax returns, and one count of witness tampering in connection with a federal investigation of individuals engaging in prohibited transactions in which a Cuban national had an interest. According to court documents, AA was one of the leaders in a long-running tax fraud conspiracy in which more than $50 million in gross receipts from six gourmet food markets in New York, New Jersey, and Connecticut was hidden from federal, state, and local tax authorities. AA had an ownership interest in all six markets (The Markets) involved in the conspiracy and played an active management role. Most of the cash payments received from customers were diverted from the books and records of the Markets. The owners of the Markets paid numerous employees, including undocumented foreign citizens, in cash. The owners of the Markets failed to withhold and pay to the IRS the withheld payroll taxes, and caused the preparation and filing of false returns with the IRS. AA also avoided paying over $1 million in personal income taxes. On September 12, 2013, co-defendant JV was sentenced to time served followed by two years of supervised release, and ordered to forfeit $354,166. On October 10, 2013, JC was sentenced to one year of probation, and ordered to forfeit $41,331.

Owner of New York Sportswear Distribution Business Sentenced for Tax Fraud: On December 6, 2013, in Brooklyn, N.Y., HN was sentenced to 12 months and one day in prison and three years of supervised release for tax evasion. According to court documents, HN was the president and an owner of a wholesale distributor of sportswear. From approximately 2006 to 2008, HN manipulated accounts through his accounting software program to delete cash sales from the general ledger accounts maintained on the computer accounting system. As a result, he caused false corporate tax returns to be filed with the IRS that under-reported the company’s gross receipts. During those years, HN’s behavior also resulted in his filing false personal income tax returns with the IRS. According to documents filed with the court, HN under-reported the gross receipts of by at least $1.5 million using computer manipulation.

Virginia Man Sentenced for Wire Fraud and Filing False Income Tax Returns: On December 6, 2013, in Alexandria, Va., DBT, the former chief of the Volunteer Fire & Rescue Department (RVFD), was sentenced to 24 months in prison and three years of supervised release. DBT was also ordered to pay restitution of $70,833 to the Fire Department, $59,419 to the County Schools and $79,576 to the IRS. According to court records, DBT served as the Chief of the RVFD from 1994 through 2011, during a time when the RVFD fire station underwent major renovations and reconstruction with funding, in significant part, from the U.S. Department of Agriculture. DBT, a licensed master electrician, offered to do some of the renovations at the fire station and only seek reimbursement for his out of pocket expenses. He then submitted false invoices which contained charges for materials he did not purchase and charges for labor that, at times, was never performed or was inflated from the hours that were actually performed. DBT also used a County Public Schools System credit card to purchase some of the materials used at the fire station project and elsewhere. Finally, DBT did not disclose the money he fraudulently obtained from the RVFD and winnings from the Virginia lottery on two individual income tax returns filed with the IRS.

Ohio Woman Sentenced for Tax Conviction: On December 3, 2013, in Cleveland, Ohio, MMG, of Willowick, Ohio, was sentenced to 54 months in prison and three years of supervised release for filing false tax returns. According to court documents, she filed income tax returns under her name during a prior marriage, using a “single” filing status, on which she claimed $1,326,671 for 2010 and $3,945,123 for 2011. She fabricated W-2 forms by using the employer information on her husband’s W-2 forms and inserted phony amounts of wages and withholding paid to her. MMG never worked for that employer.

Montana Man Sentenced for Concealing Assets and Making False Statements: On December 3, 2013, in Helena, Mont., BCF, of Kenmore, Wash., was sentenced to 45 months in prison, three years of supervised release and ordered to pay $729,794 in restitution.  According to trial evidence, from April 2006 until January 2008, BCF attempted to evade and defeat the payment of an income tax due and owing by him to the United States for the calendar years 2001 to 2006 by concealing and attempting to conceal from the IRS the nature and extent of his assets and by making false statements to IRS agents. From 2001 through 2006, he earned substantial amounts of income by selling insurance products. However, he did not file any tax returns for these years until mid-2006. After IRS began a civil audit of the 2001 through 2003 tax years, and later sent him a notice of tax deficiency for this period, BCF eventually filed his 2001 through 2006 tax returns. In these tax returns, BCF reported that he earned income and owed tax. However, he only paid a small portion of his tax due. In May 2006, BCF provided an IRS agent with a partially completed Collection Information Statement where he failed to disclose all his assets. As IRS Collections proceeded toward seizure of BCF’s assets, he filed for bankruptcy on November 14, 2007. During a subsequent bankruptcy hearing the IRS learned about all the assets that BCF had previously concealed.

Colorado Man Sentenced for Income Tax Evasion: On December 2, 2013, in Denver, Colo., JGK, of Grand Junction, Colo., was sentenced to 38 months in prison, three years of supervised release and ordered to pay $186,473 in restitution. According to court documents, JGK, through his company and various related entities he owned and/or controlled, engaged in real estate development and construction activities in Southwest Colorado. During 2001 through 2008, JGK devised a scheme to defraud lenders, which included financial institutions, companies, and other persons. Personally and through his companies, JGK repeatedly obtained new loans to service his prior loans, to pay his personal obligations and expenses, and to pay for his real estate purchases and construction activities. To obtain these loans, he routinely made materially false and fraudulent pretenses, representations and promises to financial institutions. By mid-2008, JGK was no longer able to obtain money through new loans to pay previous lenders and others. In 2007 and 2008, JGK’s personal expenses were reflected by the accountant he hired in the company’s general ledger as accounts receivable which showed he took $1,132,917 from his company in 2007, none of which was reported as income on his 2007 tax return. In 2008 he took an additional $248,627, none of which was reported as income on his 2008 tax return. The personal expenses paid by the company in 2007 and 2008 included JGK’s  home mortgage payments for his two homes, his utility payments, his Mercedes Benz payments, his gambling expenses in Las Vegas, and jewelry purchases. JGK paid no income tax to the IRS in 2007 and 2008.

Former Attorney Sentenced for Receiving Stolen Money and Filing False Tax Return: On November 25, 2013, in Buffalo, N.Y., TT of Lewiston, N.Y., was sentenced to 33 months in prison and ordered to pay $540,000 in restitution to the Seneca Nation of Indians and $62,821 to the IRS. TT previously pleaded guilty to receiving money stolen from an Indian Tribal Organization and filing a false tax return. According to court documents, TT’s role was to bring together a land seller and the Seneca Nation of Indians (SNI) as the purchaser of a golf course site. During the course of negotiations leading up to the sale of property, TT and another individual entered into an unlawful agreement whereby each would receive a portion of the sale proceeds. They undertook affirmative measures to conceal their interest in the transaction, including the fact that they were each personally going to receive a portion the sale proceeds. During 2006, TT received approximately $202,000 of the sales proceeds. He failed to report the $202,000 as income on his 2006 tax return.

Pennsylvania Woman Sentenced for Role in Fraud Scheme: On November 25, 2013, in Philadelphia, Pa., LD was sentenced to 18 months in prison, three years of supervised release and ordered to pay $120,865 in restitution for her role in a fraud conspiracy with a Philadelphia Traffic Court Judge, LD pleaded guilty to 36 counts including conspiracy to commit mail and wire fraud, mail fraud, wire fraud, filing false personal income tax returns, and bankruptcy fraud. LD and the Traffic Court Judge, who is awaiting sentencing, carried out a scheme to defraud the Pennsylvania Department of Community and Economic Development (DCED). According to court records, LD helped orchestrate the scheme to fraudulently receive and misuse Pennsylvania state grant funds awarded to non-profit groups. Between 1996 and 2008, the DCED awarded hundreds of thousands of dollars in grants to two community groups with which the pair were associated, including approximately $460,000 in grants to the Friends of Dickinson Square (FDS) to be used for the maintenance of Dickinson Square, and the surrounding neighborhood. Instead of using grant funds exclusively for materials and equipment, they paid tens of thousands of dollars in CPC and FDS grant funds to relatives and associates and life-long friends. They  falsified “close out” reports, improperly paid almost $13,000 in CPC funds to the Representative’s office cleaner and improperly used $4,600 in CPC grant funds over the years to pay for her personal cell phone. LD also filed false personal income tax returns for tax years 2006 through 2009, and concealed her true income for 2008 and 2009 in a 2010 bankruptcy filing.

Restaurant Chain Owners Sentenced for Cheating the IRS Out of Millions of Dollars: On November 21, 2013, in Philadelphia, Pa., BFW, of Springfield, Pa., and EVR, of Drexel Hill, Pa., two of the owners and managers of the restaurant chain “Nifty Fifty’s” were sentenced. Restaurant-ScammersBFW was sentenced to 20 months in prison and two years of supervised release. EVR was sentenced to 12 months and one day in prison, three years of supervised release and fined $7,500. According to court documents, along with three others the owners conspired to commit tax evasion by constructing a long-running scheme to avoid paying millions of dollars in personal and employment taxes related to their restaurant chain. Their co-conspirators have been sentenced as follows:

  • JBD sentenced to 28 months in prison, three years of supervised release and fined $25,000
  •  LTM sentenced to 36 months in prison, three years of supervised release and fined $35,000
  • RDM sentenced to 15 months in prison, three years of supervised release and fined $35,000.

According to court documents, the conspirators not only evaded paying the taxes they owed, they filed income tax returns claiming they were due refunds based on the erroneous reporting of their incomes. The conspirators evaded paying taxes since the restaurant was established in 1986 by, among other things, paying employees a portion of their wages with unreported cash in order to evade payroll taxes; paying suppliers with cash; and having false tax returns prepared that under-reported income and falsely inflated expenses and deductions. Just between the years 2006 and 2010, the conspirators deliberately failed to properly account for $15.6 million in gross receipts, thereby evading $2.2 million in federal employment and personal taxes.

Utah Man Sentenced for Fraud, Money Laundering, and Tax Charges: On November 20, 2013, in Salt Lake City, Utah, JCZ was sentenced to 68 months in prison and ordered to pay $202,543 in restitution. Z. was convicted of mail and wire fraud, money laundering, and willful failure to file tax returns. According to court documents, he began working for the Paiute Tribe around October 1998 as its tribal planner. Around September 2007, Z. convinced the Tribe to hire him as general counsel when, in truth, he did not possess a license to practice law. Beginning in 2005, Z. developed a scheme to divert more than $175,000 for his personal use that had been awarded to the Paiute Tribe through grant proposals the defendant had authored and assisted the tribe in applying for. The grants were awarded for Integrated Resource Management Plans (IRMP), which are long-term plans to balance the use of tribal resources between interests of residents of the reservation and revenue-generating uses of tribal lands. Z. told tribal leaders that he had hired companies in Salt Lake City, Las Vegas, and Provo to act as consultants or facilitators to assist with the creation of the IRMPs. Z. told the tribe that since he would be traveling to work with the consultants or facilitators, he could hand-deliver progress payment checks to the companies. Evidence at trial showed the companies were bogus and created by the Z. to facilitate the fraud. He created fictitious invoices from the companies, submitted them for payment from the Tribe, and then drove to different points between Provo, Utah, and Mesquite, Nevada to deposit the checks into his personal bank accounts. He also drafted quarterly reports for the Bureau of Indian Affairs to show that the money was being spent for facilitators and consultants when, in truth, he had converted grant funds for his own use.

Former Law Enforcement Officer Sentenced for Extortion: On November 19, 2013, in Chicago, Ill., LAD was sentenced to 30 months in prison, one year of supervised release and ordered to forfeit $50,000. ATF-PoliceHe previously pleaded guilty to conspiracy to commit extortion. According to his plea agreement, LAD conspired to commit extortion by obtaining money and contraband cigarettes. He was a law enforcement officer for the Sheriff’s Office and assigned to the Special Operations Division. He used the powers of the office to provide protection for a warehouse that was selling contraband cigarettes, which were cigarette cartons without the required tax stamps form the state and county and were manufactured outside of Illinois. Unbeknownst to LAD, the warehouse was operated by ATF agents conducting an undercover investigation. D. received payments totaling $50,000 as well as cartons of contraband cigarettes from the warehouse as payments for the protection services he offered.

Ohio Man Sentenced for Filing False Income Tax Returns: On November 18, 2013, in Columbus, Ohio, W. D. T. of Ohio, was sentenced to 30 months in prison, one year of supervised release and ordered to pay $46,227 in restitution to the IRS. On July 12, 2013, W. D. T. was convicted of two counts of willfully filing false federal income tax returns with the IRS. According to court documents, during 2006 and 2007, he operated a construction consulting business. Part of his business involved convincing landowners to engage him in development projects that would involve both investors, as well as individuals, who would purchase plots and receive construction loans to build houses. He served as the general contractor and, established business bank accounts that he controlled in order to develop the properties and build the houses. He had failed to report on his federal income tax returns approximately $110,000 in income for 2006 and $189,000 for 2007.

Florida Resident Sentenced for Tax Evasion: On November 18, 2013, in Miami, Fla., Annabel was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay $687,475 in restitution. She previously pleaded guilty to an Information charging her with attempting to evade tax. According to court documents, between 2006 and 2009, she evaded the payment of income taxes to the IRS by failing to accurately report her true income on her Form 1040.

Repeat Offender Sentenced for Tax Obstruction: On November 15, 2013, in Pittsburgh, Pa., M. C. was sentenced to 35 months in prison. On January 4, 2013, he pleaded guilty to tax obstruction. In 1996, he pleaded guilty to bank fraud and tax fraud in federal court and was sentenced to eight years in prison. After his release in 2002, M. C. resided with his girlfriend in Pittsburgh. According to court documents, the IRS assessed more than $6 million in overdue taxes, interest and penalties against M. C. for the years 1992 through 1996. However, from 2000 through 2011, in order to thwart efforts by the IRS to collect what he owed, he concealed his assets and income through his girlfriend and numerous nominee corporations. He also failed to report his ownership and control of corporate assets to the United States Probation Office and the IRS, filed false income tax returns for 2003 through 2006 and failed to file individual income tax returns from 2008 through 2011.

Michigan Couple Sentenced for Theft and Tax Offenses: On November 14, 2013, in Detroit, Mich., J. M. and his wife were sentenced for their roles in a theft and tax scheme. Taxes in America.Taxes in America.
JM was sentenced to 57 months in prison. His wife was sentenced to three years of probation. According to court documents, from August 2006 to October 2007, JM stole six semi-trailers full of new tires and wheels. After breaking the locks and hitching the semi-trailers to their own cabs, he and his accomplices transported the semi-trailers to Knox, Pennsylvania, where they sold them to a wholesale tire dealer. JM failed to declare and pay taxes on approximately $759,000 from the sale of those stolen tires. His wife lied to investigators about the source and purpose of the monies her husband had her deposit into her personal bank accounts to help hide the money.

Six Defendants Sentenced for Prepaid Funeral Scheme: On November 14, 2013, in St. Louis, Mo., six defendants were sentenced on more than 40 counts of fraud, money laundering, and related crimes.

  • JDC was sentenced to 115 months in prison.
  • DW was sentenced to 120 months in prison.
  • RKS was sentenced to 84 months in prison
  • BDC was sentenced to 60 months in prison
  • HAW was sentenced to 36 months in prison
  • SNP was sentenced to 18 months in prison

According to court documents, these defendants had defrauded more than 97,000 customers in more than 16 states, hundreds of funeral homes, and multiple financial institutions, causing more than $450 million in losses. Beginning as early as 1992 and continuing until 2008, NPS sold prearranged funeral contracts in several states, including Missouri, Illinois, and Ohio. During that time, insurance companies affiliated with NPS issued life insurance policies related to those prearranged funeral contacts. As part of the contracts, the total price for funeral services and merchandise for an individual was agreed upon, and that price would remain constant regardless of when the funeral services and merchandise would be needed. Customers entering into prearranged funeral contracts would usually pay a single sum of money up-front to NPS either directly or through a funeral home that was also a party to the contract. Petty Thieves.Fraud against the elderly.
NPS represented to individual customers, funeral homes, and state regulators that funds paid by customers under the prearranged funeral contracts would be kept in a secure trust or insurance policy as required under state law. Court documents disclose, however, that NPS made use of funds paid by customers in ways that were inconsistent both with its prior and continuing representations and with the applicable state laws and regulations. Instead, NPS operated as a fraudulent Ponzi-like scheme, where customer funds were neither kept safe in bank trusts or insurance policies but instead were utilized for unauthorized purposes and the personal enrichment of NPS’s officers and others. In turn, new business became the source of funding for funerals that prior customers had previously paid for in advance. Victims of the scheme include individual customers, funeral homes and state insurance guarantee associations across the country.

Utah Man Sentenced for Investment Fraud Scheme: On November 13, 2013, in Salt Lake City, Utah, John was sentenced to 60 months in prison and ordered to pay $6.8 million in restitution to victims of the fraud scheme. John pleaded guilty in February 2013 to wire fraud in connection with a fraudulent investment scheme. According to court documents, John induced individuals to invest money with him for use in various investment programs. He made a variety of misrepresentations to potential investors, including telling them they could expect monthly returns of 5-10 percent and he had not suffered a trading loss since 1978. In addition, he told investors that their funds would be used exclusively for investment purposes; that he had personally done very well in his investments and had never made less than 5 percent per month over the last 30 years; that investors’ money was backed by a “senior life settlement policy” that reduced or eliminated investors’ risk of loss; and that investing with him was an exclusive opportunity with only a limited number of investors allowed to invest with him at one time.

Indiana Woman Sentenced for Fraud and Tax Evasion On November 13, 2013, in Indianapolis, Ind., Michele was sentenced to 60 months in prison, three years of supervised release and ordered to pay more than $1.7 million in restitution for fraud and tax evasion. According to court documents, she admitted that from 1996 until 2011, she used her position at a Hamilton County business to orchestrate a sophisticated fraud scheme. The defendant would process all checks made payable to the company, but would withhold some of these checks, not depositing them into the company’s bank accounts. Instead, she would deposit these checks into a business account for a fraudulent company that she created as a vehicle for her fraud. Over the course of the scheme, she spent this money on a number of personal items. In addition, she failed to report this additional money to the Internal Revenue Service.

Banker Sentenced for Failing to Report Embezzled Money on Tax Return: On November 12, 2013, in San Diego, Calif., R. A. B., a banker, was sentenced to 27 months in prison, three years of supervised release and ordered to pay $88,952 in restitution to the IRS and to pay $293,023 in restitution to the bank. He pleaded guilty on June 20, 2013 to one count of conspiracy to embezzle and one count of filing a false tax return. According to court documents, in 2009, using his bank privileges, he stole approximately $293,000 from the accounts of four bank customers. In 2010, he filed a personal income tax return for the tax year 2009 which failed to include the money he stole from bank customers. As a result, he was able to avoid approximately $88,952 in personal income taxes.

Income tax evasion.Income tax evasion.
Written by a crook/con-artist, The Art of the Steal: How to Protect Yourself and Your Business from Fraud, America’s #1 Crime
reveals the mind–boggling tricks of the scam trade–with advice that has made him one of America’s most sought–after fraud–prevention experts . . . which is sad. He should be in prison.”I had as much knowledge as any man alive concerning the mechanics of forgery, check swindling, counterfeiting, and other similar crimes. Ever since I’d been released from prison, I’d often felt that if I directed this knowledge into the right channels, I could help people a great deal. Every time I went to the store and wrote a check, I would see two or three mistakes made on the part of the clerk or cashier, mistakes that a flimflam artist would take advantage of. . . . In a certain sense, I’m still a con artist. I’m just putting down a positive con these days, as opposed to the negative con I used in the past. I’ve merely redirected the talents I’ve always possessed. I’ve applied the same relentless attention to working on stopping fraud that I once applied to perpetuating fraud.”

Business Owner Sentenced for Tax Evasion and Structuring: On November 12, 2013, in Honolulu, Hawaii, R. S. was sentenced to 12 months and one day in prison, six months home confinement, three years of supervised release and ordered to pay $317,599 in restitution to the IRS. He pleaded guilty on May 22, 2013 to one count of income tax evasion and one count of structuring. According to court documents, in 2008, Santos diverted approximately $959,883 from the checking account of the business he operated into multiple personal checking accounts. He then reported as income only the money that was deposited into the business account. These actions fraudulently lowered his taxable income by approximately $365,267 for the 2008 tax year. In addition, he deposited $30,000 in currency into multiple bank accounts on the same day in order to evade certain regulations relating to currency transactions.

Arkansas Man Sentenced for Filing False Tax Returns: On November 7, 2013, in Little Rock, Ark., R. M.  was sentenced to 27 months in prison and ordered to pay $56,904 in restitution to the IRS. He was convicted by a jury on July 30, 2013, of five counts of filing false income tax returns and one count of obstructing the IRS laws. According to court documents, he was self-employed and operated a business soliciting members for a $99 joining fee into his system of making money by encouraging more members to join his online multi-level marketing network known as MMS and Wealth Team International (WTIA). He only claimed $22,201o on his federal tax for the five year period from 2004 to 2008, when in fact his bank records showed business deposits of $245,300. During the investigation, he made false statements to and regarding actions taken by IRS agents, created a trust to avoid payment of taxes, and filed false returns.

Former Investment Adviser Sentenced for Fraud and Tax Evasion: On November 7, 2013, in Boston, Mass., J. P. was sentenced to 121 months in prison and three years of supervised release. He was also ordered to pay $3.5 million in restitution to his investment clients and $490,000 in unpaid taxes to the IRS. On April 1, 2013, he pleaded guilty to fraud and tax evasion charges arising from his operation of a financial planning service. According to court documents, he targeted senior citizen investors as his clients and persuaded them to cash out annuities for the supposed purpose of investing with his company. He failed to roll these sums over into annuities, as promised, and instead spent a total of $3.5 million of 70 victims’ retirement savings. He produced bogus account statements and made periodic payments to his victims with money that supposedly represented investment earnings, but which were actually funds stolen from other victims. Furthermore, he filed false individual income tax returns with the IRS which substantially understated his true income.

Ohio Man Sentenced for Filing False Income Tax Returns: On November 7, 2013, in Dayton, Ohio, G. A. J. was sentenced to three years of supervised release, with the first twelve months to be served in home confinement, and ordered to pay $26,369 in restitution to the IRS. Financial Crime Investiation.Financial Crime Investigation. He pleaded guilty on June 11, 2013 to willfully filing false federal income tax returns for the 2005, 2006, and 2007 tax years. According to court documents, in October 2009, he filed his 2005, 2006, and 2007 federal income tax returns with the IRS. He falsely claimed that $75,000 of his income for the 2005 income tax year, $140,000 of his income for the 2006 income tax year, and $120,000 of his income for the 2007 income tax year were earnings from his Ministries which was not subject to self-employment taxes. However, the income was from a settlement of his employment as a chief financial officer with another company. By falsely including that income as income earned from Ministries, he under-reported his tax liability.

Mastermind of Multi-Million Dollar Naval Fraud Scheme Sentenced: On November 1, 2013, in Providence, R.I., R. M. M. was sentenced to 120 months in prison, three years of supervised release and ordered to pay $17,957,000 in restitution to the United States Navy. M. pleaded guilty in May 2013 to conspiracy and theft of government funds. According to court documents, R. M., a former senior systems engineer with the United States Navy’s Naval Sea Systems Command (NAVSEA) in Newport, R.I., and Washington, D.C., was the mastermind behind a kickback scheme which defrauded the United States Navy of nearly $18 million dollars. From 1999 to 2011, he used his position at NAVSEA to direct a computer software specialist in Rhode Island, to submit millions of dollars in fraudulent invoices to Navy contractors and subcontractors. The invoices totaled approximately $17,957,000. In addition to pleading guilty to conspiracy and theft of government funds, R. M. also pleaded guilty to one count of tax evasion, failing to report $1,864,910 in income he received from the scheme.

Woman Sentenced for Role in Scheme to Defraud Philadelphia Sheriff’s Office: On October 30, 2013, in Philadelphia, Pa., A. G. of Houston, Texas was sentenced to 36 months in prison, three years of supervised release and ordered to pay $242,186 in restitution. In June 2013, she was found guilty of conspiracy to commit wire fraud and wire fraud. According to court documents, she was involved in a scheme to steal funds from the Philadelphia Sheriff’s Office (PSO) bank accounts which consists of funds from Sheriff’s sales of real estate. The sales require the PSO to write checks to different entities with regard to the properties sold. One of her co-conspirators was a PSO employee in the Accounting Department. The co-conspirator wrote checks drawn on the PSO’s bank accounts made payable to individuals and companies. G., who had two companies, was recruited to participate in the scheme. During the period from 2009 to 2010, the co-conspirator wrote four checks, totaling $242,186, which G. deposited into her company bank accounts. She then withdrew the proceeds and shared them with co-conspirators.

Georgia Grocery Store Owner Sentenced for Food Stamp Fraud and Money Laundering: On October 18, 2013, in Macon, Ga., E. E. S. of Georgia was sentenced to 40 months in prison and ordered to pay $4,680,557 in restitution to the food stamp program, Department of Health and Services. He pleaded guilty on January 30, 2012 to federal charges of one count each of food stamp fraud and money laundering.

As part of his plea, S. admitted that, as the owner and operator of his Grocery and Meat Market, he illegally conspired with almost 2,000 food stamp recipients to defraud the food stamp program. As part of the scheme each food stamp recipient would provide him with an electronic benefits transfer (EBT) card and personal identification number.

Note the level of fraud. For a few dollars, people are willing to lie to the feds. Federal programs are funded by taxpayers. These pathetic people are stealing, in effect, from their neighbors who DO pay taxes.

S. would then run the EBT card through the point of sale machine administered by the Food Stamp Program as though the cardholder had purchased food when, in fact, the cardholder got cash instead. The illegal EBT debit would include an additional 30 percent of the cash amount as profit for S.

Virginia Bookkeeper Sentenced for Fraud: On October 29, 2013, in Newport News, Va., J. A. S. was sentenced to 24 months in prison, one year of supervised release and ordered to pay $284,695 in restitution. She pleaded guilty in June 2013 to two counts of making false statements on tax returns. According to court documents, she was employed as a bookkeeper by several local businesses. In her capacity as a bookkeeper for these companies, she was responsible for making bank deposits and for writing checks to pay vendors and expenses. Through a combination of financial manipulation, she defrauded the companies for approximately $358,000 from the years 2000 through 2011. In addition, Stratton signed and filed federal tax returns by failing to report the income derived from her embezzlement. Note: For approximately $32,000 a year, she ruined her life and more than likely spent it foolishly and has nothing to show for it in any case.

Illinois Businessman Sentenced for Filing False Tax Returns: On October 18, 2013, in Springfield, Ill., LN was sentenced to 45 months in prison, three years of supervised release and ordered to pay $739,184 in restitution. He previously pleaded guilty to mail fraud and filing false tax returns. According to court documents, he falsely claimed he worked as a cashier at a gas station when, in truth, he owned the gas station and other businesses. He filed a false federal corporate tax return for the gas station for the tax year 2010. He reported the gas station had gross receipts of $3,980,618 whereas, he knew the gas stations actual gross receipts for that year were approximately $4,729,798. He also filed false monthly sales tax returns to the Illinois Department of Revenue understating business sales by approximately $6.3 million.

CEO of Produce Company Sentenced to Prison: On October 29, 2013, in Birmingham, Ala., SDG, chief executive officer of a now-defunct produce company, was sentenced to 16 months in prison and three years of supervised release. He pleaded guilty in April 2013 to misprision of a felony, wire fraud and failure to file federal income tax returns. As part of his plea agreement, SDG agreed to pay $450,000 in restitution to the bankruptcy estate of the produce company to benefit the company’s employees who lost pay when the company closed abruptly and filed for bankruptcy in 2012. Three other officials of the company have also pleaded guilty. They were indicted in August in connection with fraud at the Birmingham-based company that had been a leading distributor of fresh fruits and vegetables across the Southeast for decades. His company entered into contracts with the government worth millions of dollars. He conspired to create false records that reflected a higher purchasing cost for fruits and vegetables from a national distributor than actually paid. Between August 4, 2011, and December 7, 2011, involved employees and officers conspired to conduct at least 82 transactions with the national distributor that were designed to create false invoices and purchase orders. Through those false invoices, the company received about $481,000 from the government. In addition, SGD failed to file income tax returns with the IRS for the calendar years 2009 and 2010 when he had gross income of about $2,627,501.

Ohio Man Sentenced for Fraud and Tax Evasion: On October 23, 2013, in Cleveland, Ohio, AJF, was sentenced to 57 months in prison and ordered to pay $602,420 in restitution.

The price of income tax evasion.
Dutch Schultz Wanted Poster
Issued by the New York City Police Department, 1934.
For Income Tax Evasion
(Obviously some things don’t change.)

According to court documents, he pleaded guilty to three counts of mail fraud, one count of securities fraud, one count of investment adviser fraud and five counts of income tax evasion. According to court documents, he worked for an investment company and defrauded at least 10 clients by misappropriating customer funds for his own personal use. He also contacted a mutual fund company by telephone and, misrepresenting himself as the owner of a trust, caused the mutual fund company to mail payments to his personal residence and then deposited these checks into bank accounts he maintained and controlled. He filed false tax returns for calendar years 2007, 2008, and 2009. He also failed to file an income tax return for 2010 and 2011.

California Man Sentenced for Tax Evasion:  On October 23, 2013, in San Jose, Calif., J. J. J. was sentenced to 16 months in prison, three years of supervised release and ordered to pay $467,336 in restitution. He  also paid his civil tax liability, which includes penalties and interest, of over $3,000,000. On March 3, 2013, he pleaded guilty to one count of income tax evasion for the 2004 tax year. He was the director, president, and sole shareholder of a Cayman Island company, which was sold to a United Kingdom company for at least $8,600,000. He omitted the capital gains from his 2004, 2005 and 2006 federal income tax returns, notwithstanding the fact that he received capital gains of at least $2.9 million between 2004 and 2006 from the sale of SecureM.

The Investigator's Little Black Book.
The Investigator’s
Little Black Book

Robert Scott, Los Angeles private investigator.
This best-selling reference book is used daily by real-life private investigators. Contains thousands of sources of information including resources for criminal records, financial information. finding people and finding assets.

Two Men Sentenced for Their Roles in International High-Yield Investment Scheme: On October 18, 2013, in Boston, Mass., AG, of New Smyrna Beach, Fla., and RAB, of British Columbia, Canada, were sentenced for their roles in a scheme to defraud investors out of millions of dollars. AG was sentenced to 84 months in prison, three years of supervised release and ordered to pay $5.2 million in restitution. RAB was sentenced to 72 months in prison, three years of supervised release and ordered to pay $5.2 million in restitution. AG was convicted of conspiracy, mail fraud, wire fraud and money laundering following a seven-day jury trial. In May 2013, RAB pleaded guilty to wire fraud, mail fraud, and money laundering for his role in the scheme. The men promised extraordinary rates of return on the investments within a short period of time, and also pledged that investors’ principal would be insured or maintained in an escrow account.  In order to lull investors into believing that their funds had been invested as promised, they typically made at least some purported “return” payments using money from other investors. In some instances, they attempted to return principal to frustrated investors by using counterfeit checks.

New Jersey Man Sentenced for Fraud Schemes and Tax Evasion:  On October 18, 2013, in Camden, N.J., GS of Glen Rock, N.J., was sentenced to 100 months in prison, three years of supervised release and ordered to pay $4,985,361 in restitution. He pleaded guilty to wire fraud conspiracy, wire fraud and tax evasion. According to court documents, beginning in 2009, along with two conspirators, he claimed to run a series of hedge funds in New Jersey, making numerous other misrepresentations and omissions to investors. They diverted the vast majority of victims’ investments to pay prior victims in Ponzi-scheme style and to finance extravagant personal expenditures. In a separate fraud scheme, he lied to a former client, an elderly, paraplegic woman with dementia, and her family, telling them he was still authorized to manage the annuity account. When his victim had money to add to the account, he directed her to give him checks made payable to his company. Instead of transferring the money to the annuity account, he spent it on his own expenses. To hide the fraud, he fabricated a bogus account statement showing that the annuity account was worth more than $700,000, when, for the period covered by the statement, it actually contained $16. He also pleaded guilty to tax evasion for the tax year 2010, as he derived income from his fraudulent activities, but did not file a tax return and deposited his victims’ money into his companies’ accounts.

Virginia Man Sentenced for Tax Evasion: On October 3, 2013, in Richmond, Va., J., P. E. was sentenced to 18 months in prison, three years of supervised release and ordered to pay $181,192 in restitution. He agreed that he had regularly and systematically evaded the payment of income taxes by under-reporting income from two contracting businesses he owned.

Your Bank and the Law

Posted by on June 27th, 2013

WELLS FARGO, YOUR BANK, AND THE LAW

Corporate Fraud.
Corporate Fraud Investigated by the FBI: The FBI continues to address corporate fraud cases—specifically involving subprime lending institutions, brokerage houses, home-building firms, hedge funds, and financial institutions—as a result of the financial crisis partly caused by the collapse of the subprime mortgage market in the fall of 2007. As a result of the current financial crisis, trillions of dollars in shareholder value were lost, several prominent companies went out of business, several prominent banks failed, and the federal government provided over a trillion dollars in relief to keep other companies from failing. A subprime mortgage lender is a business that lends to borrowers who do not qualify for loans from mainstream lenders.

Fraud in the Markets: Why It Happens and How to Fight It

Peter Goldmann

From the Inside Flap
The subprime mania that swept the home mortgage and securities markets circa 2002–2003 was the last straw for the U.S. financial system as we knew it from the early years of the twentieth century. Starting with the establishment of central banking in 1913, the American economy has toughed out several recessions, including the devastating years of the Great Depression.
And then came the Great Crash of 2008.

It is no coincidence that the financial services industry was the breeding ground for the deadly forces that brought on the financial crash and its aftershocks. It is also no surprise that fraud played a starring role in the emergence of these dark chapters in American financial history.

Offering a complete perspective on the complicated and sobering impact of fraud in pushing the world’s preeminent financial system to disaster on many occasions, Fraud in the Markets: Why It Happens and How to Fight It reveals:

° The genesis of the culture of “anything goes” on Wall Street that fueled the innovation of super-risky asset-backed securities and the financial devastation suffered by institutions that invested in them.
° The egregiously fraudulent lending practices that engulfed the entire U.S. mortgage industry.
° The reckless and legally questionable conduct of the captains of Lehman Brothers, Countrywide, Washington Mutual, and other major financial firms just before their collapse.
° Ideas for preventing similar disasters from recurring
° Guidelines for protecting your investments from various forms of fraud and deception
° How this perfect storm happened.

Written by a nationally recognized expert in the field of fraud detection and prevention..

Once the subprime loans have been issued, they are bundled and sold as securities—a process known as securitization. Corporate fraud remains one of the highest priorities in CID. At the end of FY 2011, 726 corporate fraud cases were being pursued by FBI field offices throughout the United States, several of which involved losses to public investors that individually exceed $1 billion.

1913:  Mexican revolutionary Pancho Villa stole 122 bars of silver from a Wells Fargo train in 1913, then secretly struck a deal to sell most of the loot back to the bank, according to newly found documents. University of California library curator Walter Brem said that after the robbery, Villa found it impossible to sell the silver, so he arranged to sell it to Wells Fargo for $50,000 in cash. At the time the silver was worth about $160,000. Villa agreed not to steal any more Wells Fargo property, and the bank decided to keep the buyback secret, Brem said. He said he suspects the bank didn’t go public so that it wouldn’t be seen as aiding a revolutionary and so that others wouldn’t copy Villa.

2005: An American Epidemic – Mortgage Fraud
Michael S. Richardson
Epidemic may sound like a strong word, but after considering the latest figures on real estate fraud, you may feel the word isn’t quite strong enough.

February 4, 2009:  Wells Fargo announced it was canceling a business meeting and employee recognition event in Las Vegas due to negative allegations from media, members of Congress/public officials that the trip was a “pricey Las Vegas casino junket” and that the company was misusing taxpayers’ money, since Wells Fargo had been one of the banks that received “bailout” funds from the government a few months earlier.

July 31, 2009:  Illinois Attorney General Lisa Madigan filed suit against Wells Fargo on July 31, 2009, alleging that the bank steers African Americans and Latinos into high-cost sub-prime loans. A Wells Fargo spokesman responded that “The policies, systems, and controls we have in place – including in Illinois – ensure race is not a factor. (Editor’s Note: Given how much damage Wells Fargo has done to homeowners across the Board of all races, it seems they are correct – they are out to shaft everyone. Their bottom line is money; it has nothing to do with anything else.)

March 2010COCAINE TO MEXICO COMPLIMENTS OF WELLS FARGO.  In an agreement with federal prosecutors, Wells Fargo acknowledged that between 2004 and 2007 Wachovia had failed to monitor and report money laundering by narcotics traffickers, including the cash used to buy four planes that shipped a total of 22 tons of cocaine into Mexico.

August 2010:  Wells Fargo was fined by U.S. District Judge William Alsup for overdraft practices designed to “gouge” consumers and “profiteer” at their expense, and for misleading consumers about transactions and overdraft fees.

December 2011:  TAX ADVOIDANCE AND LOBBYING. The non-partisan organization Public Campaign criticized Wells Fargo for spending $11 million on lobbying, not paying any taxes during 2008–10, getting $681 million in tax rebates, despite making a profit of $49 billion, laying off 6,385 workers since 2008, and increasing executive pay by 180% to $49.8 million in 2010 for its top five executives.

April 5, 2012RELIES ON THE IGNORANCE OF BORROWERS/HIDES ERRORS:  A federal judge ordered Wells Fargo to pay $3.1 million in punitive damages over a single loan, one of the largest fines for a bank ever for mortgaging service misconduct. Federal Bankruptcy Judge Elizabeth Magner cited the bank’s behavior as “highly reprehensible,” stating that Wells Fargo has taken advantage of borrowers who rely on the bank’s accurate calculations. She went on to add, “perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge, rather than relinquish gains obtained through improper accounting.”

RACIAL DISCRIMINATION ACT.  The fine has come at a time that the Department of Housing and Urban Development (HUD) has launched an investigation of Wells Fargo into racial discrimination practices, the second federal probe in 2012 of alleged violations of misconduct with regard to race. The other, began in 2011 by the National Fair Housing Alliance has found “overwhelming” evidence that six of the nation’s major banks handle foreclosures in neighborhoods populated primarily by minorities differently than in white communities.

Wells Fargo entered a settlement agreement with the U.S. Department of Justice for allegedly discriminating against African-American and Hispanic borrowers from 2004 to 2009. Wells Fargo will pay $125 million to subprime borrowers and $50 million in direct down payment assistance in certain areas, for a total of $175 million. Wells Fargo spokespersons denied all claims and are settling only to avoid contested litigation.

August 14, 2012:  Wells Fargo agreed to pay around $6.5 million to settle SEC charges that in 2007 it sold risky mortgage-backed securities without fully realizing their dangers.

October 9, 2012:  THIRD ALLEGATION LEVIED AGAINST WELLS FARGO IN 2012.  The United States Federal Government sued the bank under the Federal False Claims Act. The suit alleges that Wells Fargo defrauded the FHA over the past ten years, underwriting over 100,000 FHA backed loans when over half did not qualify for the program.

October 2012:  Wells Fargo sued by U.S. federal attorney Preet Bharara over questionable mortgage deals.

March 8, 2013: Litigation against Freddie Mac and HSBC: The Federal Housing Finance Agency (FHFA), acting as conservator for the Federal Home Loan Mortgage Corporation (Freddie Mac) commenced litigation in the Supreme Court of the State of New York against Decision One Mortgage Company, LLC (Decision One), and HSBC Finance Corporation (HSBC) (as an alleged successor in interest). FHFA’s Summons with Notice alleges claims for breach of contract, damages, specific performance, indemnity, and reimbursement arising out of the banks’ alleged failure to repurchase loans. FHFA alleges that Decision One breached contractual warranties as to the quality of the mortgage loans, including that the loans complied with relevant statutes, complied with underwriting guidelines, and were not predatory. FHFA seeks specific performance of alleged repurchase obligations or equitable damages totaling nearly $165,000,000.

April 2013: Vile Acts of Evil, Michael A. Kirchubel: Quotes from newspapers, historians, economists, bankers, and revered and reviled political figures drive the story line and alternate with Kirchubel’s commentary providing a look at  unseen causes of our nation’s major calamities: recessions, depressions, panics, wars, taxes, foreclosures, and bailouts. This analysis of our American economic and political history, from colonial times to today, includes recommendations for fixing our current mess.  Your ultimate understanding of how the pieces all fit together is well worth the price of your anger.

May 2013: U. S. Senator Elizabeth Warren (D-Mass.) called out Wall Street regulators for their habit of giving tepid punishments to misbehaving banks, and asked the agencies to justify their policy of settling with the wrongdoers out of court. Elizabeth Warren. Warren’s letter follows a similar request she made to another banking regulator, the Office of the Comptroller of the Currency, at a February Senate Banking Committee hearing. When agency officials couldn’t answer Warren’s question about the last time they took a financial institution to trial—some said it was unnecessary—she asked them to pony up any research it had on the trade-offs of settling versus going to trial. Last week, the OCC responded that it had no such research.

“If you’re caught with an ounce of cocaine, you’re going to go to jail,” Warren said. “But if you launder nearly $1 billion for international cartels . . . you go home.”

May 2013: (MoneyWatch) New York State’s attorney general is suing Bank of America (BAC) and Wells Fargo (WFC) for violating the terms of a $26 billion mortgage settlement.

The banks have not complied with standards established for processing homeowners’ loan modification applications, New York Attorney General Eric Schneiderman said in a statement released today. He said he plans to sue the banks unless a monitoring committee set up to enforce the settlement’s terms takes action.

“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” Schneiderman said.

Wells Fargo has also ignored obligations in California and, presumably, all other states. As noted in the following paragraph, banks use “missing documents” as an excuse to avoid modification and proceed with bankruptcy. All paperwork submitted is via FAX (with confirmation of receipt) and FedEx or UPS (with confirmation of receipt). Yet, every conversation with the bank results in “missing paperwork.”

Schneiderman claims BofA and Wells Fargo failed to acknowledge receipt of loan modification applications within three business days; did not tell homeowners about missing documents in their applications; didn’t give borrowers enough time to correct deficiencies; and failed to take action on loan modification requests within 30 days. He said these delays would result in additional fees and interest and in homeowners’ losing their homes.

Schneiderman said his office had documented 339 of these violations in the past seven months.

Last year five of the nation’s largest banks — including JPMorgan Chase (JPM), Citigroup (C) and Ally Financial — agreed to a sweeping pact with the attorneys general of 49 states over charges the banks evicted people using false or incomplete documentation. The settlement included 304 rules laying out how to respond in a timely fashion to homeowners seeking to modify their mortgages.

America’s Land Grab

Posted by on May 25th, 2013

More than 25 million people have been displaced in America since the current real estate debacle started in 2008. The number reported in newspapers are “about 10 million homes lost.” That is not an accurate picture of how many individuals have had to move under duress as America’s banks took their homes rather than negotiate fairly for modifications per any government program.


Historians and economists report on international large-scale displacements of people, but it seems that America’s ongoing property theft is not viewed in the same light.

Millions Forced to Move

Our homes are being stolen by banks. Millions have been forced to leave their communities in this country without adequate (or any) compensation, in either land or money. These displacements often result loss of livelihoods. On a global scale, the loss is referred to as a loss by “pastoralists, gender-specific erosion of social networks, relocating to land less fertile, loss of historical methods (of farming), severing existing social ties, villagers suffering dislocation.”

None of these reports include the psychological destruction faced by more than 25 million Americans since 2007 as national and international banks continue with America’s real estate grab.
News is now reporting a “housing recovery;” however, the reality of the current real estate “renaissance” is that the rich and those on Wall Street are raking in cash while large segments of the population — especially historically marginalized communities — remain stuck in a downward, alternate housing spiral. Moderate income families are still priced out of the market as investment groups offer all cash and pay above market prices for homes.

Investment groups have edged out working Americans

The Washington Post reported that seven out of ten home sales in states such as Florida are made by these institutional investors. Californians are also being outbid by these same institutional investors. In the past few months of working with real estate agents, dozens of clients have lost to these investors.

Landgrabs then and now.

History Repeats Itself:
Coffee night for the Homeless and Poor
Water Street Mission, New York, 1890s

The irony of this foreclosure crisis, which was caused by Wall Street’s irresponsible behavior, is that it created the massive supply in homes that those very same financial institutions are now profiting from at a record pace. They profited by writing millions of risky mortgages; they then took away the homes; now these same institutional investors are purchasing those same foreclosed houses at rock bottom prices.

These Wall Street minions then flip the homes into rental properties and lease them to the very people they pushed out of the real estate market during the past few years.

Billionaire investor Warren Buffet sums it up this way, “If I had a way of buying a couple-hundred thousand single-family homes, I would load up on them. I could buy them at distressed prices and find renters.” Buffet referred to this as “war” some years ago; he is correct. This is internal displacement of millions of families.

Rather than a renaissance, the current state of America’s real estate market is a catalog of wrongs. Instead of boasting about it, America’s political class needs to find a fairer, new way forward.

However, studies do not address this mass displacement of people in the United States; they invariably refer to poor villagers, agribusiness magnates, ignorant or corrupt governments, petrodollars, commodity traders and hungry multitudes. Studies refer to land grabs relating to farmland. Studies refer to the endless land grabs by the rich in poorer countries. They do not refer to the 10-15% of the American public who have been or are being internally displaced.

In The Land Grabbers: The New Fight over Who Owns the Earth, author Fred Pearce reports on the biggest swindle of the 21st century. With the modern landgrab, the movement has attained vast proportions, resulting in dire consequences for humans, and global environments. However, America is not included and his scale is so large it’s doubtful that the average person can bring this home to realize what is happening in our country by the same world “leaders” that affect the rest of the planet?

Mortgage Violations by Banks

Posted by on May 7th, 2013

Read NOT to make you even more angry, but to understand that YOU did NOTHING wrong; we have been hoodwinked by our own country. At this point millions of people know this, but still we lose our homes.

Excerpted from MONEYWATCH, May 6, 2013
Constantine Von Hofman

New York suing BofA, Wells Fargo Over Mortgage Pact

(MoneyWatch) New York State’s attorney general is suing Bank of America (BAC) and Wells Fargo (WFC) for violating the terms of a $26 billion mortgage settlement.

The banks have not complied with standards established for processing homeowners’ loan modification applications, New York Attorney General Eric Schneiderman said in a statement released today. He said he plans to sue the banks unless a monitoring committee set up to enforce the settlement’s terms takes action.

“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” Schneiderman said.

Wells Fargo has also ignored obligations in California and, presumably, all other states. As noted in the following paragraph, banks — and Wells, specifically — uses “missing documents” as an excuse to avoid modification and proceed with bankruptcy. All paperwork submitted is via FAX (with confirmation of receipt) and FedEx or UPS (with confirmation of receipt). Yet, every conversation with the bank — Wells Fargo in these cases — results in “missing paperwork.”

Thieves in High Places.

Schneiderman claims BofA and Wells Fargo failed to acknowledge receipt of loan modification applications within three business days; did not tell homeowners about missing documents in their applications; didn’t give borrowers enough time to correct deficiencies; and failed to take action on loan modification requests within 30 days. He said these delays would result in additional fees and interest and in homeowners’ losing their homes.

Schneiderman said his office had documented 339 of these violations in the past seven months.

Last year five of the nation’s largest banks — including JPMorgan Chase (JPM), Citigroup (C) and Ally Financial — agreed to a sweeping pact with the attorneys general of 49 states over charges the banks evicted people using false or incomplete documentation. The settlement included 304 rules laying out how to respond in a timely fashion to homeowners seeking to modify their mortgages.

Wells Fargo and Bank of America declined to comment

This lawsuit is the first action by any of the states charging a bank with violating the pact.

While it’s admirable that New York is suing, we have yet to see ANY homeowner benefit from ANY of the billions that have been bandied about during the past several years. Underlying issues include ongoing rule changes, minimally trained intake staff and programs that could help IF anyone knew about them. As I face foreclosure, I just learned of a program that “might” have helped if I contacted them a few months ago. Saving one’s home is a full-time job; those of us that work do not know all the avenues and do not have the time or knowledge on ferreting out resources.

The settlement’s monitor, Joseph Smith, and a monitoring committee were notified of the action by Schneiderman. The committee may also take action against the banks for the alleged violations, according to the statement.

FBI Report: Financial Crimes, Corporate Fraud, Securities and Commodities, Health Care, Mortgage, Insurance, Mass Marketing, Money Laundering, Forensic Accountant, Financial Intelligence
FBI Report.FBI Report.The Federal Bureau of Investigation (FBI) investigates matters relating to fraud, theft, or embezzlement occurring within or against the national and international financial community. These crimes are characterized by deceit, concealment, or violation of trust and are not dependent upon the application or threat of physical force or violence. Such acts are committed by individuals and organizations to obtain personal or business advantage. The FBI focuses its financial crimes investigations on such criminal activities as corporate fraud, securities and commodities fraud, health care fraud, financial institution fraud, mortgage fraud, insurance fraud, mass marketing fraud, and money laundering. These are the identified priority crime problem areas of the Financial Crimes Section (FCS) of the FBI.

Same Old Questions

Posted by on May 3rd, 2013

KEEP FIGHTING? SHORT SALE? BANKRUPTCY?

Short Sale Definition: If you need to sell your home, which is unfortunately “underwater,” you can seek approval from the bank to allow them to sell their home for less than what they owe on their mortgage. The “sales pitch” is usually that you can avoid bankruptcy and preserve your credit score.

Financial Recovery.Short Sale.Short Sale Problems:

  1. The banks simply refuse to work with them. One attorney cites that bankruptcy clients report the same thing: Short sales, just like a loan modification, are extremely hard to come by.
  2. You line up a potential buyer, you submit paper work to the bank countless times, and months later, after many hours of negotiations with the bank, they deny the short sale.
  3. You’re trying to do the “right thing,” but the bank still sues you.
  4. Adding insult to injury; is a false sense of security. You may think that once the short sale is completed that the worst is behind them. You think they can move on with their lives.
  5. However, banks have been known to say they want to recover loses or they will seek a “deficiency judgment” to recover, say, $40,000. If you had a home equity line (HELOC) in addition to your mortgage, it is almost a matter of certainly that you will be getting sued.

The CNN Money article You Lost Your House But You Still Have to Pay explains this issue.

Your credit score takes a serious beating. You would think that by doing a short sale instead of a foreclosure that you would be rewarded with a higher credit score. Not so. The Washington Post article titled Short Sellers May Take a Big Hit On Their Credit Scores reveals that your credit score is pretty severely damaged even if you manage to complete a short sale.

The question: Is there an advantage to filing bankruptcy once you realize the writing is on the wall and you need to let go of the house? Why file for bankruptcy now instead of later?

  1. You can have a solid credit score within 3 years of obtaining a bankruptcy discharge. Hard to believe, but once your credit score has taken a nose dive, nothing will get you to a good credit score faster than a bankruptcy discharge.
  2. Having zero debt reported on your credit report, which is what a bankruptcy discharge does, will do wonders for your credit score. It is the debt-to-income ratio that you may have heard about. Most people thinking about doing a short sale on their home no longer have a good credit score in any case, so the bankruptcy will not ruin your credit.
  3. Avoid having to ruin your credit once again: Banks can sue you years after the short sale has taken place, just when you have a respectable credit score once again. You may be able to still file for bankruptcy, but now you will have to ruin your credit score once again.
  4. Once you come to the realization that you may need bankruptcy relief after all, you may no longer be eligible for a chapter 7 discharge. Typically, when people are thinking about doing a short sale in lieu of walking away from the home, is at a time of a job loss, divorce, or other life-altering event. It is at a time when they would typically qualify for a Chapter 7 discharge. However, nearly 4 years later, when the bank/HELOC files that lawsuit, you have typically bounced back, have a good paying job, and regretfully, may no longer qualify for a Chapter 7 bankruptcy.

Recommendation from the legal profession: In the event you still prefer a short sale, consider hiring an attorney. A lawyer, unlike a realtor, is typically more equipped at negotiation with the bank and obtaining a release from personal liability on your behalf.

Read more: Bounce Back Today From Short Sale Or Foreclosure! Author Jonathan Fleming is a Real Estate Broker in the San Francisco Bay Area. He is an entreprenuer, investor, and philantrophist who believes in empowering and helping people. He can be reached at jonathanfleming.com