Former hospital exec wants acquittal, new trail

March 20, 2012

WJTV on March 20, 2012 released the following:

“By: | Associated Press

OXFORD, Miss. (AP) A former Mississippi hospital executive wants a federal judge to acquit him or grant a new trial in an alleged medical kickback and bribery scheme.

Raymond Lamont Shoemaker of Tupelo was charged last year with receiving kickbacks for nursing services, conspiracy, embezzlement and other charges last year at Tri-Lakes Medical Center in Batesville.

Shoemaker was convicted March 2 with co-defendant Earnest Levi Garner Jr. of Batesville.

Shoemaker’s lawyers said in a court filing Friday that “the government’s evidence was insufficient to support the verdict.”

The indictment said Garner agreed to pay a kickback and bribe of $5 per hour for every hour of nursing services that Garner’s companies billed the medical center.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

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Federal Crimes – Be Proactive

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Denver FBI office investigating more cases of public corruption

January 22, 2012

Denver Post on January 22, 2012 released the following:

“By Felisa Cardona
The Denver Post

The Denver FBI is investigating more than a dozen cases of public corruption in Colorado, Wyoming and Indian country.

The number of investigations is up from three years ago, when agents in the public-corruption unit launched a special hotline urging people to come forward with information.

At the time, the FBI said either no public corruption existed in the region, which was unlikely, or it was underreported. But things have changed.

“We are very busy right now,” said Supervising Special Agent Brian Schmitt. “I don’t know if it is a result of the down economy or if there are more avenues to report.”

Public corruption is defined as an abuse of public office or position within the government for personal gain.

Agents won’t provide details about pending cases but say theft and mishandling of stimulus funds, legislative corruption and law enforcement corruption are the types of crimes they look into.

White-collar crimes such as bribery, fraud, extortion, embezzlement, insider trading and influence peddling take a long time to investigate and require agents who have special skills.

In 2010, the FBI opened an investigation into a Denver driving-school instructor who was taking bribes in exchange for passing tests.

Criminal charges haven’t been filed against Sikiru Fadeyi, the owner of Ola’s Driving School, but undercover agents infiltrated his business and recorded him accepting bribes, court records show.

The reason charges have not materialized against Fadeyi — who was an agent of the state because he was licensed to administer tests — is because of the complex nature of the investigation. Leads from that case extend to other states as far away as New York and Hawaii.

For now, Fadeyi’s license is suspended and he is not allowed to operate the driving school.

FBI agents routinely work cases with local law enforcement, but when it comes to corruption investigations, the agents tackle them alone. They don’t want local officers with ties to a particular city or agency in conflict with the investigation.

Public-corruption cases — such as the charges against former Democratic Illinois Gov. Rod Blagojevich — receive intense coverage by the media and are followed closely by the public, which can complicate investigations for the FBI.

Witnesses are less likely to come forward when there is too much attention on a case, Schmitt said.

Also, agents and federal prosecutors are aware that the targets of white-collar investigations typically hire top-notch defense lawyers to fight the charges.

“The cases we put together have to be rock solid,” he said.

Schmitt said corruption in the region isn’t rampant as it is in places such as Detroit and New Orleans, but that doesn’t mean it doesn’t exist.

“Anywhere you have money and power, corruption follows,” he said.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Madison Federal Grand Jury Returns Indictments

September 29, 2011

The Federal Bureau of Investigation (FBI) on September 28, 2011 released the following:

“MADISON, WI— A federal grand jury in the Western District of Wisconsin, sitting in Madison, returned the following indictments today. You are advised that a charge is merely an accusation and that a defendant is presumed innocent until and unless proven guilty.

Eau Claire Man Charged with Child Pornography Crimes

David J. Kmetz, 43, Eau Claire, Wis., is charged with one count of distributing child pornography and one count of possessing a computer hard drive containing child pornography. The indictment alleges that on July 26, 2010, he distributed computer images and video files containing visual depictions involving the use of minors engaged in sexually explicit conduct, and that he possessed the computer hard drive on January 11, 2011.

If convicted, Kmetz faces a penalty of at least five years and up to 20 years in federal prison on the distribution count, and 10 years on the possession count. The charges against him are the result of an investigation by the Federal Bureau of Investigation. The prosecution of this case has been assigned to Assistant U.S. Attorney Peter M. Jarosz.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.projectsafechildhood.gov.

Waterloo Man Charged with Embezzlement

Allen R. Howe, 63, Waterloo, Wis., is charged with embezzling $56,723.74, from the Allen Howe & Son, Inc. Simple Retirement Account Trust. The indictment alleges that from December 2006 through September 2009, he withheld that amount of Allen Howe & Son, Inc. employee contributions, and failed to make payments to any financial institution on behalf of those employees.

If convicted, Howe faces a maximum penalty of five years in federal prison. The charge against him is the result of an investigation by the U.S. Department of Labor, Employee Benefits Security Administration. The prosecution of this case has been assigned to Assistant U.S. Attorney Peter M. Jarosz.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Barry A. Thomas Pleaded Guilty in Federal Court to Wire Fraud in Connection to a $1.2 Million Embezzlement Scheme

September 22, 2011

The Federal Bureau of Investigation (FBI) on September 21, 2011 released the following:

“Former Central Leasing Corporation Executive Pleads Guilty to Wire Fraud

BIRMINGHAM—A former equipment leasing company executive pleaded guilty today in federal court to wire fraud in connection to a $1.2 million embezzlement scheme, announced U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Patrick Maley, and Vestavia Hills Police Chief Dan Rary.

BARRY A. THOMAS, 48, former chief financial officer for Central Leasing Corporation, entered his plea before U.S. District Court Judge R. David Proctor to one count of wire fraud for embezzling from the Birmingham-based company from July 2003 until his employment was terminated in August 2010. Prosecutors charged Thomas in July. His sentencing date has not been set.

“Companies and the communities in which they operate are harmed when corporate officials choose to defraud and steal from their employers,” Vance said. “These are serious crimes that put the health of the company at risk and, therefore, also put the livelihood of the company’s employees at risk,” she said.

According to the court documents, Thomas carried out his embezzlement as follows:

Part of his responsibilities as CFO was to handle payroll and payment of salaries for Central Leasing employees. In order to do that, he would send electronic communications, via the Internet, from his Birmingham office to the payroll and bookkeeping firm, QuickBooks/Intuit, in San Diego. The electronic file would set out the exact amount of money that was to be directly deposited into the personal accounts of Central Leasing employees. In many of these electronic communications, Thomas would direct the release of money to his personal account that exceeded what he should have received for his salary. The total amount Thomas obtained as a result of his embezzlement was about $1,226,277.

The maximum sentence for the wire fraud is 20 years in prison and a $250,000 fine. The notice of forfeiture specifies a forfeiture amount of $1,126,277. Thomas has already made restitution of about $100,000.

The FBI and the Vestavia Hills Police Department investigated the case. Assistant U.S. Attorney Patrick Carney is prosecuting it.

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Health Insurance Executives Indicted in a Superseding Indictment Unsealed in Boston Federal Court

August 12, 2011

The U.S. Attorney’s Office District of Massachusetts on August 11, 2011 released the following:

“HEALTH INSURANCE EXECUTIVES INDICTED

BOSTON, Mass…Seven men and two women have been indicted for a wide array of crimes committed between 2006 and 2010 through a Massachusetts health insurance company that did business as HMA Direct.

The 29-count superseding indictment unsealed today in Federal court brings charges against several senior executives of the company, including former Chief Executive Officer JEDEDIAH L. BRETTSCHNEIDER, 35, of Phoenix. The indictment also charges several of the principal investors in the company.

At the heart of the conspiracy charged in the indictment was HMA Direct’s practice of excluding from coverage, or “carving out,” clients with health risks so severe that they might interfere with HMA Direct’s bottom line. It is alleged that BRETTSCHNEIDER and many of the other defendants knew, such “carving out” was illegal (albeit not criminal). It is alleged that BRETTSCHNEIDER and the other defendants knew that in order to succeed with a business model that relied on fundamentally unlawful behavior, they needed to conceal important aspects of their business from clients, other health insurance companies and government agencies.

The indictment alleges dozens of false statements and misrepresentations that the conspirators made in furtherance of their scheme. This includes that BRETTSCHNEIDER made false statements to several government agencies about his criminal background in order to obtain insurance producer licenses; after BRETTSCHNEIDER’s criminal history received widespread publicity, he made further false statements about his background to business associates in order to perpetuate the scheme; the conspirators made false statements to clients in order to obtain health information to facilitate the “carving out” employees with expensive medical conditions; the conspirators arranged for two HMA Direct investors, FRANCIS GAETANI, a/k/a “FRAN,” a/k/a “GUIDO” and RONALD ANGER, to pretend that they were satisfied customers of the company and to provide fake references to prospective clients; the conspirators invented fictitious companies and fabricated documents, including employee wage reports, in order to disguise their “carving out” of employees with expensive medical conditions; the conspirators impersonated insured employees in telephone calls.

The indictment also charges BRETTSCHNEIDER with intentionally misapplying funds that clients had entrusted to HMA Direct to pay health claims. According to the indictment, HMA Direct’s controller calculated that by May 2009, BRETTSCHNEIDER had shortchanged the account that held client claims moneys by more than $1.7 million. At the same time, BRETTSCHNEIDER allegedly used money from HMA Direct to purchase the following: a membership at an exclusive golf club ($86,945); a BMW that he used during personal time ($23,049); clothing from Neiman Marcus, including Armani and Zegna apparel ($13,492); cigars ($3,627 over an 18-month period); and a night at the luxury New York Palace Hotel on New Year’s Eve 2009 ($1,077).

In addition, the indictment charges BRETTSCHNEIDER with embezzling a total of $401,724 from HMA Direct on two occasions in the spring of 2010.

Finally, the indictment charges BRETTSCHNEIDER and co-defendants SHELLEY LENKUTIS and RACHEL ANGER with obstruction of justice. According to the indictment, when HMA Direct came under investigation by various state insurance regulators in the Spring of 2009, the defendants altered, destroyed, mutilated, and concealed documents in the company’s files that referred to “carve-outs.” For example, it is alleged that the defendants moved some incriminating documents – which they referred to as the “secret James Bond files” – to secluded parts of the building or to locations off-site. It is further alleged that the defendants and others also used white-out to cover up the word “carve-out”; shredded incriminating documents; forged signatures; and created fake documents.

U.S. Attorney Carmen M. Ortiz noted, “At a time when health insurance costs are straining American workers and businesses, we put a high priority on those who would profit by manipulating the system and by fraudulently dumping expenses on others.”

“What is noteworthy about this otherwise basic scheme is that when Messrs. Gaetani and Cassandro discovered Mr. Brettschneider’s alleged fraud, instead of reporting his fraud to law enforcement authorities, they allegedly chose to look the other way. By doing so, they, and other employees who also knew of the fraud, placed the health and well-being of those insured by HMA Direct at risk. The joint investigation of the financial fraud aspect of this case should be a warning to managers in private and public companies that not reporting illegal conduct has severe repercussions,” said Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Office.

“This criminal action demonstrates the Labor Department’s resolve to vigorously enforce the laws to ensure that those who scheme, misappropriate, misrepresent and deceive small business self-insured health plans as well as the health insurance market for their own financial gain are brought to justice,” said Edward Maloney, Acting Director of the Boston Regional Office for the U.S. Department of Labor, Employee Benefits Security Administration.

“The U.S. Postal Inspection Service is proud to join our law enforcement partners in announcing this indictment,” said Robert Bethel, Inspector in Charge of the U.S. Postal Inspection Service. “The Postal Inspection Service has a long standing commitment protecting consumers from fraud. This indictment sends a clear message to anyone who would prey on the American consumer: you will be caught and will be prosecuted.”

“Today’s indictment serves as a stern warning to those who would commit health care fraud against Employee Retirement Income Security Act covered employer benefit plans. The OIG remains firmly committed to work with our law enforcement partners to investigate these types of crimes,” stated Robert Panella, Special Agent-in-Charge for the New York Region of the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.

If convicted, BRETTSCHNEIDER faces up to 20 years imprisonment on the obstruction of justice count and on each count of wire fraud; up to 10 years imprisonment for each count of health care fraud, intentional misapplication of funds of a health care benefit program, theft or embezzlement in connection with health care, and making false material statements to an insurance regulatory agency; mandatory two year sentence, consecutive to the sentence he would otherwise receive, for aggravated identity theft; and up to five years imprisonment on each of the remaining crimes.

MICHAEL CASSANDRO, 44, of Middleton, R.I., owned part of HMA Direct and variously oversaw the sales and third party administrative arms of the company. CASSANDRO is charged with health care fraud and conspiracy. If convicted on these charges, he faces up to10 years imprisonment for each count of health care fraud and up to five years imprisonment on the conspiracy count. CASSANDRO is also subject to a fine of up to $250,000 and up to three years of supervised release on each count.

FRANCIS GAETANI, a/k/a “FRAN,” a/k/a “GUIDO”, 56, of Sutton, Mass., was an investor in HMA Direct. GAETANI is charged with wire fraud and conspiracy. If convicted on these charges, he faces up to 20 years imprisonment for each count of wire fraud and up to five years imprisonment on the conspiracy count.

RONALD ANGER, 54, of Sutton, was an investor in HMA Direct. He is charged with wire fraud and one count of conspiracy. If convicted on these charges, he faces up to 20 years imprisonment for the wire fraud count and up to five years imprisonment on the conspiracy count.

WILLIAM O’BRIEN, 47, of West Barnstable, Mass. was both a sales agent for HMA Direct and a manager of other sales agents. O’BRIEN is charged with wire fraud, health care fraud, obtaining customer information from a financial institution by false representation, aggravated identity theft, and conspiracy. If convicted, O’BRIEN faces up to 20 years imprisonment on each count of wire fraud; up to10 years imprisonment for each count of health care fraud; a mandatory two year sentence, consecutive to the sentence he would otherwise receive, for aggravated identity theft; and up to five years imprisonment for conspiracy and obtaining customer information from a financial institution by false representation.

MARK CELENTANO, 60, of Ipswich, Mass., was both a sales agent for HMA Direct and a manager of other sales agents. CELENTANO is charged with two counts of health care fraud, one count of obstruction of a criminal investigation of health care offenses and one count of conspiracy. If convicted on these charges, CELENTANO faces up to 10 years imprisonment for each count of health care fraud and up to five years imprisonment on the obstruction and conspiracy counts.

KEVIN BROWN, 46, of Stuart, Fla., oversaw the underwriting arm of HMA Direct. BROWN is charged with two counts of health care fraud, one count of aggravated identity theft and one count of conspiracy. If convicted on these charges, he faces up to 10 years imprisonment for each count of health care fraud, up to five years imprisonment on the conspiracy count and a mandatory two year sentence, consecutive to the sentence he would otherwise receive, for aggravated identity theft.

SHELLEY LENKUTIS, 37, of Waltham, Mass., oversaw the underwriting arm of HMA Direct. LENKUTIS is charged with one count of obstruction of justice and one count of conspiracy. If convicted on these charges, she faces up to 20 years imprisonment for obstruction of justice and up to five years imprisonment for conspiracy.

RACHEL ANGER, 23, of Sutton, worked in the sales, third party administrative, and underwriting arms of the company. She is charged with health care fraud, wire fraud, obstruction of justice and conspiracy. If convicted on these charges, she faces up to 20 years imprisonment for wire fraud and obstruction of justice, up to 10 years imprisonment for health care fraud, and up to five years imprisonment for conspiracy.

U.S. Attorney Ortiz; SAC Panella; Acting Director Maloney; SAC DesLauriers; and Inspector in Charge Bethel made the announcement today.

The details contained in the indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.”

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Ephram Pascall Pleads Guilty in Manhattan Federal Court to Embezzlement

July 7, 2011

The U.S. Attorney’s Office Southern District of New York on July 6, 2011 released the following:

“FORMER HOTEL PAINTERS’ UNION PRESIDENT PLEADS GUILTY IN MANHATTAN FEDERAL COURT TO EMBEZZLEMENT

PREET BHARARA, the United States Attorney for the Southern District of New York, and RALPH E. GERCHAK, the New York District Director of the U.S. Department of Labor’s Office of Labor-Management Standards (“DOL-OLMS”), announced the guilty plea of EPHRAM PASCALL, the former President/Business Manager of the International Union of Painters and Allied Trades, Local 1422 (the “Union”). PASCALL pled guilty today before U.S. District Judge NAOMI REICE BUCHWALD to one count of embezzling funds from the Union.

Manhattan U.S. Attorney PREET BHARARA said: “Ephram Pascall, a corrupt union boss, treated the union’s coffers like his personal piggy bank. Today’s guilty plea underscores this Office’s ongoing commitment to working with DOL-OLMS to root out corruption in our nation’s unions.”

DOL-OLMS New York District Director RALPH E. GERCHAK said: “This arrest is part of the ongoing effort of the United States Department of Labor, Office of Labor-Management Standards to accomplish its mission of protecting union assets by removing unscrupulous, corrupt union officials and thereby strengthening the American labor movement.”

According to the Information, the Complaint, and statements made today in Manhattan federal court:

While PASCALL served as President/Business Manager of the Union, from February 2007 through April 2009, he wrote approximately 92 checks, totaling approximately $34,199, to himself from the Union’s checking account. Almost all of the checks were cashed at a check cashing store.

PASCALL listed in the Union’s records that the purpose of 66 of the checks was payment to various Union members who purportedly attended training with him, and thus had foregone their normal wages for that day. In truth and in fact, however, union members neither attended nor received any reimbursement for such training. The other 26 checks were for alleged union expenses, such as dinners, union member funeral expenses, office supplies, and meeting expenses. None of those expenses actually were incurred by the Union.

PASCALL, 48, of Brooklyn, New York, faces a maximum penalty of five years in prison and a maximum fine of $250,000, or twice the gain or loss from the offense. He will be sentenced by Judge BUCHWALD on October 12, 2011, at 4:45 p.m.

Mr. BHARARA praised the investigative work of the DOL­OLMS and thanked the United States Marshal’s Service for its assistance with PASCALL’s arrest.

This case is being prosecuted by the Office’s Public Corruption Unit. Assistant United States Attorney CARRIE H. COHEN is in charge of the prosecution.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Former Citigroup VP Charged with Bank Fraud for Allegedly Embezzling More Than $19 Million

June 27, 2011

U.S. Attorney’s Office Eastern District of New York on June 27, 2011 released the following press release:

“Gary Foster, a former vice president in Citigroup, Inc.’s treasury finance department has been arrested on bank fraud charges arising from his embezzlement of more than $19 million. Foster was apprehended at John F. Kennedy International Airport Sunday morning when he arrived on a flight from Bangkok.[1]

The defendant’s initial appearance is scheduled this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr. at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges and arrest were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Janice K. Fedarcyk, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.

According to the complaint, Foster transferred money from various Citigroup accounts to Citigroup’s cash account and then to his personal account at a different bank. Between July 2010 and December 2010, he allegedly caused approximately $900,000 to be moved from Citigroup’s interest expense account and approximately $14.4 million from Citigroup’s debt adjustment account to the bank’s cash account, and then caused the money to be wired out of Citigroup’s cash account to his personal account at another bank in eight separate wire transfers. The complaint further charges that Foster caused a fraudulent contract or deal number to be placed in the reference line of the wire transfer instructions to create the appearance that the transfers were in support of an existing contract.

“The defendant allegedly used his knowledge of bank operations to commit the ultimate inside job. We are committed to ensuring the integrity of the banking system and to prosecuting those who would undermine it for their personal gain,” stated United States Attorney Lynch. Ms. Lynch expressed her appreciation to Citigroup, which brought this matter to the attention of the FBI and the U.S. Attorney’s Office.

“The egregious behavior of those who would exploit our banking system for personal and criminal gain will not be tolerated. We remain committed to investigating and apprehending those who cheat the system,” said FBI Assistant Director-in-Charge Fedarcyk.

If convicted, the defendant faces a maximum sentence of 30 years’ imprisonment on the bank fraud charges.

The government’s case is being prosecuted by Assistant United States Attorneys Michael L. Yaeger and Karen Hennigan.

The Defendant:

GARY FOSTER
Age: 35

[1] The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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NY State Senator and Son Indicted for Alleged Fraud Scheme

December 15, 2010

Yesterday a federal grand jury in Brooklyn returned an indictment charging Pedro Espada, Jr., a New York State Senator for the 33rd Senatorial District in the Bronx, New York, and his son, Pedro Gautier Espada, with five counts of embezzlement from a nonprofit health care network receiving federal funding, and one count of conspiracy. The individuals’ initial appearances are scheduled for today at 2:00 p.m. before United States Chief Magistrate Judge Steven M. Gold at the United States Courthouse in Brooklyn, New York.

As detailed in the indictment, from 2005 through 2009, the individuals allegedly abused their positions at Soundview Healthcare Center (Soundview), a network of health care clinics located in the Bronx, through a number of alleged schemes designed to divert Soundview funds to their personal use and for the benefit of favored family members and friends. The total amount allegedly embezzled exceeded $500,000.

Pedro Espada founded Soundview in 1978 as a charitable not-for-profit organization under Section 501(c)(3) of the Internal Revenue Code. Soundview receives more than $1 million per year in federal grant money from the United States Department of Health and Human Services, as well as millions of dollars more in Medicare and Medicaid reimbursements.

If convicted, the individuals face a maximum sentence of 10 years’ imprisonment on each of the embezzlement counts and five years’ imprisonment for conspiracy, as well as a fine of $250,000 on each count of conviction. Because Pedro Espada is a state senator, and therefore considered a public official, his sentence may be more severe than his son’s.

It is also important to keep in mind that an indictment merely contains allegations. When the government presents its case to the grand jury, legally they are not required to show any evidence or call any witnesses. Further, there is no opportunity for the accused individual(s) to present a defense. Unfortunately, the grand jury hears only one side of the story before granting an indictment.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Alabama Man Pleads Guilty to Bank Embezzlement

July 21, 2010

James E. Goldsborough, age 70, pled guilty today before United States Magistrate Judge Terry F. Moorer to a one-count felony information charging him with embezzling funds of PeoplesSouth Bank (“PSB”), in violation of Title 18, United States Code, Section 656, U.S. Attorney Leura G. Canary announced.

According to the plea agreement, Goldsborough worked for PSB in Dothan since 1992—first as president and, later, executive vice president. In these positions, Goldsborough had the authority to approve loans up to $25,000.

Allegedly, Goldsborough began embezzling in approximately 1992. He accomplished this by opening a bank account in the name of the fictitious entity. He would then approve loans to fictitious borrowers in amounts of $25,000 or less, deposit the loan proceeds in the account, and use the money either for personal expenses or to repay previously obtained fraudulent loans. Goldsborough would occasionally receive the loan proceeds in cash, falsely representing to the teller that he intended to personally deliver the funds to the borrower. Goldsborough classified the loans as commercial loans because there was no minimum monthly payment—the only requirement was that the loan be paid in full when due. When a loan would become due, Goldsborough would arrange for a new fictitious loan and use those funds to pay the loan that was due. Goldsborough also used his knowledge of PSB’s security procedures to avoid certain anti-fraud measures.

At the time Goldsborough’s embezzlement scheme was detected in August 2009, PSB’s records show that approximately 92 fictitious loans were outstanding with a total principal balance of approximately $1,850,999.23. However, under the plea agreement, Goldsborough reserves the right to argue that the amount is less for purposes of computing his sentence and the amount of restitution.

If Goldsborough continues with his plea, during sentencing he will face a statutory maximum sentence of 30 years’ imprisonment, a term of supervised release of no more than five years, a fine of up to $1,000,000 (or, if greater, twice the loss to PSB), and an order of restitution. Goldsborough has been released on a $25,000 unsecured bond pending sentencing.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Virginia Woman Arrested on Embezzlement Charges

March 8, 2010

Susan Thanh Litwin has been arrested on allegations of stealing approximately $279,000 from a Fairfax County magnet school. According to the U.S. Attorney’s Office, “These are difficult financial times for many public institutions, and an employee who breaks that trust needs to be held accountable.”

It was alleged, in a court-filed affidavit, that Litwin served as a finance technician for the school since January 2007 and was responsible for receiving and depositing funds from various sources. These funds were to support student athletics, classes, clubs, and other school activities. Litwin is accused of using the signature authority bestowed upon her to steal funds by writing checks to herself without authorization and by making counter-withdrawals from various  bank accounts and depositing the funds into her personal bank accounts. Litwin is accused of stealing more than $279,000 from March 2008 through January 2010, by writing herself checks or taking out deposits of anywhere from $2,000 to $35,000.

According to court records, Litwin allegedly told law enforcement that the money was used to support a gambling habit that included trips to Las Vegas, Nev., and Atlantic City, N.J. In addition, she allegedly stated that she engaged in this activity as a result of extensive credit card debt and large mortgage payments on her home.

Litwin was formally charged with 18 U.S.C. 666(a)(1)(a), theft or bribery concerning programs receiving federal funds. Under that statute it is a crime to be an agent of an organization that embezzles, steals, or obtains by fraud, or otherwise without authority knowingly converts to the use of any person other than the rightful owner or intentionally misapplies, property that is valued at more than $5,000.00 and is owned or under the care of such an organization. Punishment includes fines or not more than ten years imprisonment, or both.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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