FBI: “Former NBA Player and CEO of the George Group Convicted on all Counts in $2 Million Ponzi Scheme”

October 2, 2013

The Federal Bureau of Investigation on September 30, 2013 released the following:

“TRENTON, NJ— C. Tate George, former NBA basketball player and the CEO of purported real estate development firm The George Group, was convicted today on all counts on which he was indicted in connection with his role in orchestrating a $2 million investment fraud scheme, U.S. Attorney Paul J. Fishman announced.

The jury deliberated four hours before convicting George, 45, of Newark, of four counts of wire fraud after a three-week trial before U.S. District Judge Mary L. Cooper. George was immediately remanded into federal custody to await sentencing, which is scheduled for Jan. 16, 2014.

According to documents filed in this case and evidence presented at trial:

George, a former player for the New Jersey Nets and Milwaukee Bucks professional basketball teams, held himself out as the CEO of The George Group and claimed to have more than $500 million in assets under management. He pitched prospective investors, including several former professional athletes, to invest with the firm and told them their money would be used to fund The George Group’s purchase and development of real estate development projects, including projects in Connecticut and New Jersey. George represented to some prospective investors that their funds would be held in an attorney trust account and personally guaranteed the return of their investments, with interest.

Based on George’s representations, investors invested more than $2 million in The George Group between 2005 and 2011, which he deposited in both the firm’s and his personal bank account. Instead of using investments to fund real estate development projects as promised, George used the money from new investors to pay existing investors in Ponzi-scheme fashion, as well as paying for his daughter’s Sweet 16, extensive renovations on his New Jersey home (that has since been foreclosed), the mortgage on a New Jersey home, the mortgage on a Florida home, taxes to the IRS, and traffic tickets. The defendant gave money to family members and friends. He also spent $2,905 for a reality video about himself (a “sizzle reel” for “The Tate Show,” is available on YouTube). The George Group had virtually no income-generating operations.

Each of the wire fraud counts on which he was convicted is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; postal inspectors of the USPIS, under the direction of Postal Inspector in Charge Maria L. Kelokates; and criminal investigators with the U.S. Attorney’s Office, with the investigation leading to today’s conviction.

The government is represented by Assistant U.S. Attorneys Joseph B. Shumofsky and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit http://www.stopfraud.gov.”;

Federal Wire Fraud Crimes – 18 U.S.C. § 1343

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

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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 and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

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.


Gershon Barkany Charged by a Criminal Complaint Alleging He Defrauded Investors of $50 Million in a Real Estate Ponzi Scheme

March 29, 2013

The Federal Bureau of Investigation (FBI) on March 28, 2013 released the following:

“Far Rockaway Man Charged with Defrauding Victims of $50 Million in a Real Estate Ponzi Scheme

Earlier today, FBI agents arrested Gershon Barkany based on a criminal complaint alleging that the Far Rockaway man defrauded investors by promising to use their money in “risk-free” deals to purchase and then immediately re-sell at a profit large real estate properties located in New York City and New Jersey. In fact, the complaint alleges that no such deals existed and the defendant defrauded victims of more than $50 million.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office. The defendant’s initial appearance is scheduled for this afternoon before United States Magistrate Judge A. Kathleen Tomlinson at the United States Courthouse in Central Islip, New York.

According to the criminal complaint that was unsealed this morning, Barkany induced at least five investors to wire transfer large sums of money supposedly to purchase real estate in Manhattan, Queens, the Bronx, and Atlantic City, New Jersey. According to one of the investor victims, Barkany claimed that the sellers of these properties would only close on the real estate sales contracts after Barkany had located a purchaser who would be willing to buy the property from Barkany at a higher price. In that way, Barkany assured the victim that the real estate deals would be “risk free.”

In fact, the real estate deals did not exist. As part of Barkany’s Ponzi scheme, he diverted some of the funds he received to pay investors whom he had earlier defrauded. The defendant also lost some of the funds in gambling and otherwise used the money for his own benefit.

“Barkany’s victims sought the security of investing in real estate. Instead, they were taken for millions by the defendant’s lies and deception,” stated United States Attorney Lynch. “As alleged, the promised high returns were only for him, as he used his victims’ money to gamble and keep his scheme afloat. Today’s arrest demonstrates the Department of Justice’s commitment to investigate and prosecute financial crimes.” Ms. Lynch added that the government’s investigation is continuing.

FBI Assistant Director in Charge Venizelos stated, “As alleged, Barkany promised a get-rich-quick investment scheme that really had potential to enrich only him. There were no investment properties, just a house of cards built on a foundation of lies. There may be no truly risk-free investments, but investors are entitled to honesty.”

If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment.

The government’s case is being prosecuted by Assistant United States Attorney Christopher C. Caffarone.

Defendant
Gershon Barkany
Far Rockaway
Age: 29″

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

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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 and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

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.


Three Coachella Valley Residents Arrested for Alleged Detroit-Area Ponzi Scheme After Successful Joint Operations with Cathedral City and Palm Springs Police

September 15, 2012

The Federal Bureau of Investigation (FBI) on September 14, 2012 released the following:

“Three individuals wanted on federal fraud charges alleging they victimized hundreds while operating an alleged $25 million investment scheme were arrested in the Coachella Valley, announced Timothy Delaney, Special Agent in Charge of the FBI’s Los Angeles Field Office.

Mr. Delaney made the announcement on behalf of the FBI’s Detroit Field Office, the Cathedral City Police Department, and the Palms Springs Police Department.

An indictment filed in March 2012 in the Eastern District of Michigan charged five defendants with conspiracy to commit wire fraud for their alleged roles in an investment scheme where hundreds of victims were allegedly defrauded of millions of dollars. Three of the defendants are Coachella Valley residents. Agents with the FBI’s Palm Springs Resident Agency, part of the FBI’s Los Angeles Division, assisted the FBI’s Detroit Field Office in locating the three Coachella Valley-based defendants following the indictment. Agents in Palm Springs requested assistance from the Cathedral City (California) and Palm Springs (California) Police Departments in locating and apprehending the fugitives.

Ronald Lee Brito, 61, and Bonnie Brito, 66, both of Rancho Mirage, California, were taken into custody on August 10, 2010, by officers with the Cathedral City Police Department after a safely executed vehicle-stop in Cathedral City.

Thomas Winston Moore, 68, of Palm Springs, California, was arrested at his residence on September 8 by officers with the Palm Springs Police Department.

The 64-count indictment alleges defendants participated in the Ponzi scheme between 2005 and 2012 and outlines an investment scheme where victims were promised lucrative returns on their investments in, among other things, valuable minerals extracted from a gold mine in Arizona. The indictment alleges the defendants used various corporate names, including Infinity Trading, LLC; GetMoni.com; and PJM

Kingman Mine to lure approximately 500 investors. The government has stated that the scheme brought in investments totaling more than $25 million.

Ronald and Bonnie Brito had an initial appearance in California and in the Eastern District of Michigan once they were returned to Detroit. Ronald Brito was remanded to federal custody and Bonnie Brito was released on bond.

Thomas Moore had an initial appearance in U.S. District Court in Riverside on Monday, September 10, and was remanded to federal custody pending removal to Detroit.

This investigation is being conducted by the FBI’s Detroit Field Office and will be prosecuted by the United States Attorney’s Office in the Eastern District of Michigan.

The fugitive investigation involving defendants Ronald Brito, Bonnie Brito, and Thomas Winston Moore was conducted by officers with the Cathedral City Police Department; Palm Springs Police Department; and agents with the FBI in Palm Springs and Detroit. The United States Attorney’s Office in Los Angeles (Central District of California) provided considerable assistance during the California portion of this investigation.”

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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

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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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 and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

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.


Federal indictment charges 7 people in alleged $17 million multistate mortgage scams, Ponzi schemes

September 15, 2012

OregonLive.com on September 14, 2012 released the following:

“By The Associated Press

A federal indictment unsealed Friday charged seven people with running a multistate Ponzi scheme and related mortgage fraud scams that prosecutors said cost investors and lenders a combined $17 million.

The years-long investigation resulted in the arrest of 55-year-old Lawrence Leland Loomis. He and his father-in-law, John Hagener, 76, were charged with operating a fraudulent California-based investment fund that cost more than 100 investors more than $7 million.

Both men are from Granite Bay, a wealthy Sacramento suburb.

Hagener’s attorney, William Portanova, said his client would plead not guilty in federal court in Sacramento. It was not immediately clear if the others had retained attorneys.

Loomis and five other defendants are also charged in a 50-count indictment with costing lenders $10 million in losses through two mortgage fraud schemes.

Prosecutors said all three frauds were operated through Loomis Wealth Solutions, which was based in California and also worked with investors in Illinois, Washington and elsewhere from 2006 through 2008.

“We are bringing to justice some of those who are responsible for the mortgage crisis in this district and elsewhere,” U.S. Attorney Benjamin Wagner said in a statement announcing the indictments.

Portanova said the investigation was under way for at least four years before his client was charged.

“We’re looking forward to a resolution of this matter. It’s been a long investigation and we’re all ready to move forward,” Portanova said. “Large-scale, long-term white collar investigations are by their nature measured by calendars, not stopwatches.”

Loomis and Hagener were charged with bilking investors through a program called Naras Funds in 2007 and 2008. The indictment said Loomis encouraged investors to tap their home equity and retirement accounts to buy shares in the funds and to help purchase residential real estate.

He called the investments “simply the best financial plan ever created,” according to prosecutors.

He and his father-in-law allegedly promised 12 percent annual returns and said the funds were guaranteed, but the indictment claims the men used investors’ money to pay themselves, their companies’ operating expenses, and to prop up the scheme by paying later investors with money from earlier victims.

Loomis and Hagener had court appearances Friday, while the others were to appear later.

Loomis and a real estate appraiser, Darren Fehst, 44, of Halifax, Nova Scotia, are also charged in connection with a mortgage fraud scheme in which Loomis is accused of paying Fehst thousands of dollars to overstate appraisals so properties could be sold for inflated prices.

Loomis and four others also are charged with buying about 200 properties in Arizona, California, Florida and elsewhere while falsifying the sales prices and costing lenders about $10 million.

The others are Michael Llamas, 27, of Tracy; Peter Woodard, 54, of Ventura; Joseph A. Gekko, 43, of Yorba Linda; and Dawn C. Powers, 42, of Lincoln.

All are charged with mail and wire fraud. Each fraud charge carries a maximum possible sentence of 20 years in federal prison.”

Federal Mail Fraud Crimes – 18 U.S.C. § 1341

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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

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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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 and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

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.


Prosecutors rest fraud case against alleged Indy financier

June 19, 2012

The Herald Bulletin on June 19, 2012 released the following:

“Associated Press

INDIANAPOLIS — Federal prosecutors wrapped up their case Monday against a prominent Indianapolis businessman who they say bilked investors out of $200 million, much of it life savings.

For the past week, prosecutors have presented evidence against Tim Durham, business partner James F. Cochran and accountant Rick D. Snow. The men are accused of raiding the Akron, Ohio-based Fair Finance Co. and allegedly used a Ponzi scheme to steal the savings from about 5,000 mostly elderly investors. They are charged with 12 felony counts of wire fraud, securities fraud and conspiracy to commit wire and securities fraud.

One of them, Donald Russell of Doylestown, Ohio, testified that he lost $350,000, and his 82-year-old mother lost $125,000 and died a month later. He said he believes the stress of losing her life savings pushed her over the edge.

“They have no hearts or souls,” Russell said of Durham and his partners.

Defense attorney John Tompkins said Durham is innocent, but told The Indianapolis Star that he feels sorry for Russell.

“I don’t think that there are any words that could begin to address the situation that he faces,” Tompkins said. “He had a horrible circumstance, and words cannot console him.”

Prosecutors presented analyses of forensic accountants that showed money from Fair Finance being used to help pay for an expensive Playboy party, Durham’s classic cars and trips to luxury resorts and casinos.

Donald Fair, who sold his company to Durham and Cochran in 2002, testified that the men loaned investors’ money to themselves and their businesses and never repaid it.

Prosecutors played recorded phone calls in which Durham and Cochran allegedly made up excuses to give investors about why their interest checks had stopped and they couldn’t cash in. The men tried to persuade Ohio regulators to allow them to sell another $250 million in investment certificates, prosecutors said, and took cash deposits from investors to whom they promised to issue more investment certificates later.

Cochran doubted regulators would shut down the company, according to recordings played in court.

“If they’re gonna blow us up, we’re gonna blow them up,” Cochran allegedly said in a phone call with Durham on Nov. 13, 2009. “I mean nobody wins and everybody loses, but we lose the worst. … I mean it would be a catastrophic event in the state of Ohio. And I’m sure they don’t want that kind of headline.”

Prosecutors presented emails and recordings in which the men discussed layoffs, selling off assets and other ways to cut costs or conceal the loans, yet Cochran also asked to raise his salary to $1 million a year.

In the weeks before an FBI raid shut down Fair Finance in November 2009, prosecutors said Monday, Durham and his partners transferred $85 million from the parent company, DC Investments, to Fair’s books to show more assets on the company’s balance sheet, the Indianapolis Business Journal reported.

Defense attorneys are expected to present their case Tuesday morning, and closing arguments are scheduled for Tuesday afternoon. Jury deliberations are expected to begin Wednesday.

Attorneys for Cochran and Snow have declined to talk about the trial, and Tompkins refused to discuss his defense strategy. He said he didn’t know if Durham would testify in his own defense.

“That will be his decision, but I will advise him,” Tompkins said. “We haven’t had our discussion.””

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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

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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 and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

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.


Allen Stanford sentenced to 110 years in prison

June 14, 2012

Reuters on June 14, 2012 released the following:

“By Anna Driver and Eileen O’Grady

(Reuters) – Allen Stanford, the former Texas billionaire convicted of an $7 billion Ponzi scheme, was sentenced to 110 years in prison by a U.S. federal judge on Thursday.

Stanford, who was convicted of 13 felony counts of fraud and conspiracy and obstruction by a Houston jury in March, used fraudulent certificates of deposit issued by his offshore bank in Antigua to bilk thousands of investors out of their savings.

In sentencing Stanford, U.S. District Judge David Hittner, who presided over his six-week trial earlier this year, called Stanford’s actions one of the most “egregious criminal frauds.”

The 110-year sentence compared with 150 years handed down to Bernard Madoff, who pleaded guilty in March 2009 to running a Ponzi scheme.

Speaking before his sentencing on Thursday, Stanford denied defrauding anyone and blamed the U.S. government for ruining his business by seizing his assets. “They destroyed it and turned it to nothing,” he said. “Stanford was a real brick-and-mortar global financial empire.”

Prosecutors had asked for a 230-year sentence, arguing in court papers that Stanford’s crime was “one of the most egregious frauds in history.”

Stanford’s attorneys had asked for a sentence of about three years, or the same amount of time the 62-year-old has been in federal custody.”

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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

Federal Crimes – Appeal

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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 and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

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.


Virginia Attorney Charged in Alleged South African Ponzi Scheme

June 7, 2012

The Federal Bureau of Investigation (FBI) on June 6, 2012 released the following:

“NORFOLK, VA— Brian Ray Dinning, 47, of Toronto, Canada, has been indicted by a federal grand jury on wire fraud charges.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement after the indictment was returned by the grand jury. Dinning has been charged with 25 counts of wire fraud, which each carry a maximum penalty of 20 years in prison, if convicted.

According to the indictment, Dinning was a graduate of Regent University Law School and also obtained an LL.M in tax from the Georgetown University Law Center. From early 2005 until the present, Dinning allegedly recruited approximately 23 individuals to invest in his numerous “for-profit” corporations that he had established. He did this by falsely advising investors that they would accrue significant financial gains from South African projects, such as a luxury Oceanside housing development, a luxury Oceanside hotel and private residence club, as well as diamond and gold mining operations. The indictment alleges that Dinning also used “not-for-profit” corporations to obtain donations purportedly for charitable, environmental, agricultural medical and community projects for the tribal people of South Africa, as well as developing wildlife habitats for native African species.

Regardless of whether his investors made investments for profit or donations for charitable causes to Dinning’s various corporations, upon receipt of these funds from his investors, Dinning is alleged to have immediately used their money for personal and family gain, for payment of his and his family’s expenses, for payment of alimony and child support to his ex-wife, for payment of private school tuition for his children, and to make the down payment and subsequent mortgage payments on his new $975,000 home in Suffolk. As a result, Dinning allegedly obtained more than $2.9 million from his investors, of which he retained more than $2 million for his and his family’s benefit.

This case was investigated by the Norfolk Division of the FBI. Assistant United States Attorney Steve Haynie is prosecuting the case on behalf of the United States.

Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.”

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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

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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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 and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

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.


Stanford Should Get 230-Year Term in Ponzi Scheme, U.S. Says

June 7, 2012

San Francisco Chronicle on June 6, 2012 released the following:

“Laurel Brubaker Calkins,

June 6 (Bloomberg) — Convicted Ponzi scheme operator R. Allen Stanford should be sentenced to the maximum allowable term of 230 years in prison, federal prosecutors argued in court papers.

Stanford, who the government said is seeking a sentence of “time served,” is to be sentenced next week in U.S. District Court in Houston.

“Robert Allen Stanford is a ruthless predator responsible for one of the most egregious frauds in history,” the Justice Department said in a 34-page filing. “Displaying an audacity that only further illustrates his depravity, Stanford seeks a sentence of time served, brazenly arguing that there are no losses” and rehashing arguments rejected by the jury that convicted him in March.

Stanford, 62, was found guilty of defrauding more than 20,000 investors through the sale of what the government called bogus certificates of deposit at his Antigua-based Stanford International Bank Ltd. A court-appointed receiver marshalling the ex-billionaire’s assets has located less than $500 million in cash and assets that can be used to repay investors.

Stanford’s own sentencing recommendation was filed under seal. Prosecutors said he asked U.S. District Judge David Hittner for leniency, in part because he is a first-time offender.

Stripped of Assets

Stanford also denied that investors suffered any losses while he was running Stanford Financial Group and “complains that he was stripped of all his assets,” by the government, prosecutors said.

The recommended 230 years is at the top of the range of sentences for Stanford’s crime under federal guidelines, the prosecutors said in the filing.

“Nothing speaks more eloquently of Stanford’s character than his sentencing arguments in this case,” the Justice Department lawyers wrote. “After everything that he has done to so many innocent victims, Stanford does not show a hint of remorse for his misconduct, only the same arrogant, narcissistic behavior that led to it.”

Stanford has been incarcerated as a flight risk since his indictment in June 2009. He was charged about three months after U.S. securities regulators seized his companies on suspicion they were a “massive” Ponzi scheme, in which late-arriving investors’ funds were used to pay earlier investors.

Stanford’s Sentence Request

Stanford’s lawyers have requested a prison sentence of 31 to 44 months, prosecutors said.

Robert A. Scardino, one of Stanford’s criminal-defense lawyers, said by phone that his side is “hoping for the best and preparing for the worst” at the June 14 sentencing. Scardino declined to comment further, citing a court order not to speak publicly about the case.

A Justice Department spokeswoman, Alisa Finelli, didn’t immediately reply to e-mail or voice messages seeking comment on the filing.

The case is U.S. v. Stanford, 4:09-cr-0342, U.S. District Court, Southern District of Texas (Houston).”

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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

Federal Crimes – Appeal

————————————————————–

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 and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

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.


Chicago Man Indicted for Allegedly Causing 15 Investors to Lose Approximately $600,000 in Ponzi-Type Fraud Scheme

June 6, 2012

The Federal Bureau of Investigation (FBI) on June 6, 2012 released the following:

“CHICAGO— A Chicago man who operated an investment trading pool allegedly fraudulently obtained approximately $1.4 million and caused some 15 individual investors to lose about $600,000, federal law enforcement officials announced today. The defendant, Christopher Varlesi, was charged with six counts of mail and wire fraud in an indictment returned yesterday by a federal grand jury. Varlesi allegedly misappropriated a substantial portion of investor funds for his own benefit, including misusing $99,750 in May 2010 to pay for a year’s rent for an apartment in the Trump International Hotel and Tower in Chicago and to make Ponzi-type payments to other investors.

Varlesi, 53, of Chicago, will be arraigned at a later date in U.S. District Court. He was the sole proprietor of Gold Coast Futures & Forex, which purported to buy and sell securities and commodities and operate a pool of investor money for trading purposes but was not actually registered or licensed to do so. The indictment seeks forfeiture of approximately $600,000.

The charges were announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The Illinois Securities Department assisted in the investigation, as did the Commodity Futures Trading Commission, which filed a civil enforcement lawsuit against Varlesi in March of this year.

According to the indictment, between July 2008 and January 2012, Varlesi made false representations to clients about using their money to trade gold, commodity futures, and foreign currency, the expected return on their investments, and the security of their money. He fraudulently retained investors’ funds and concealed the scheme by creating and distributing false account statements and making Ponzi-type payments to investors, the charges allege. Varlesi also allegedly told clients that their investments were guaranteed to be profitable, with no risk of losing principal. As part of the scheme, the charges allege that he provided promissory notes to certain investors, falsely promising to return the entire principal amount of their investment, as well as guaranteed interest ranging between five to 7.5 percent per month.

The government is being represented by Assistant U.S. Attorney Sarah E. Streicker.

Each count of wire and mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: http://www.stopfraud.gov.

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

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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

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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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 and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

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.


Southern District of Florida Securities and Investment Fraud Initiative Results in Charges Against 15 Individuals in 12 Separate Cases

June 5, 2012

The Federal Bureau of Investigation (FBI) on June 4, 2012 released the following:

“To Date, 85 Defendants Have Been Charged as Part of the Initiative

Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; Eric I. Bustillo, Regional Director, Securities and Exchange Commission (SEC), Southeast Region; and Linda Charity, Interim Commissioner, State of Florida’s Office of Financial Regulation (OFR), announced the most recent results of the Southern District of Florida Securities and Investment Fraud Initiative (the Initiative), first announced in December 2010 and designed to combat securities and investment fraud and protect the interests of the investing public.

The Initiative was established to address the increase in securities and investment fraud schemes in the Southern District of Florida. In addition to the U.S. Attorney’s Office, FBI, SEC, and OFR, other participating agencies in the Initiative include the Internal Revenue Service, Criminal Investigation Division (IRS-CID), U.S. Secret Service (USSS), U.S. Postal Inspection Service, Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG), U.S. Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC) Southeast Region. These law enforcement and regulatory agencies have shared intelligence and combined their resources to combat securities and investment fraud, including Ponzi schemes, affinity fraud schemes, prime bank/high-yield investment scams, business opportunity fraud, promoter/micro-cap/“pump and dump” schemes, foreign exchange (FOREX) frauds, false bankruptcy petitions, and other schemes to defraud individual investors. Among the goals of the Initiative are to alert the public about the prevalence of these types of schemes, to educate the public on how to avoid falling prey to these schemes, and to highlight the law enforcement response to the problem.

The Southern District of Florida ranks second in the nation in securities and investment fraud investigations and prosecutions. Using the strike force model successfully developed in the health care and mortgage fraud areas, the Securities and Investment Fraud Initiative has yielded similar success. Since its inception in December 2010, the Initiative has resulted in charges against 85 defendants in the Southern District of Florida, resulting in more than $1.5 billion in restitution ordered. Today, we are announcing charges against 15 individuals in 12 separate cases.

U.S. Attorney Wifredo A. Ferrer stated, “Our primary goal in creating the Securities and Investment Fraud Initiative was to protect investors from fraud and to restore the integrity of the securities market. Too often, we hear from victims who have lost their entire lives’ savings or their retirement nest egg to one of these unscrupulous schemers. Today, we hope to educate the public about the need to be alert and to verify before trusting and investing. If something sounds too good to be true, it usually is.”

“The fraud from these stock market manipulation schemes could have defrauded numerous innocent investors out of millions of dollars. Because the FBI and our partners were able to disrupt these schemes early on through our undercover operations, the investing public was protected,” said John V. Gillies, Special Agent in Charge of the FBI’s Miami Field Office. “The law enforcement efforts announced today also serve to send a message that the FBI and its partners will continue to target those who would chip away at the trust and confidence in the securities markets.”

Eric I. Bustillo, Director of the SEC’s Miami Regional Office, said, “This Initiative is a testament to our allegiance to investors and our commitment to prosecute those who seek to defraud them. When we say we’re determined to stamp out microcap fraud, that’s not a slogan. That’s a pledge.”

“I commend the hard work of investigators from the Florida Office of Financial Regulation, as well as other state and federal regulatory and law enforcement agencies,” said Linda Charity, Interim OFR Commissioner. “These partnerships are essential to effectively combat securities fraud and help protect Florida’s investors.”

Below is a summary of the cases being announced today. These cases involve a variety of frauds, including fraudulent Federal Reserve notes, illegal kickback schemes, market manipulation schemes, and more traditional Ponzi schemes.

Fraudulent Federal Reserve Notes:

U.S. vs. Cleland Ayison, 12-80056-CR-DIMITROULEAS

Ayison, 32, of Tampa, was arrested today on charges of possessing a fraudulent $500,000,000 Federal Reserve Note.

Illegal Kickback Schemes:

U.S. vs. Michael Cimino and Joseph Repko, 12-2733-MJ-GARBER

Cimino, 59, of Philadelphia, Pennsylvania, the director and chairman of the board for Sure Trace Security Corporation (SSTY), and Repko, 63, of Hobe Sound, Florida, SSTY’s chief financial officer and president, were arrested today on a criminal complaint charging them with conspiring to commit mail fraud by paying kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices. SSTY, a Utah corporation, was purportedly involved in the anti-counterfeiting technology business.

U.S. vs. Ryan Coblin, 11-80159-CR-RYSKAMP

Coblin, 41, of Boca Raton, was the president of Delivery Technology Solutions Inc., a domestic and international delivery company catering to corporations. Coblin was charged by information in September 2011 and pled guilty on March 8, 2012 to engaging in a scheme to pay kickbacks to a hedge fund fiduciary to induce the fiduciary to misappropriate money from a hedge fund in order to buy restricted common stock at inflated prices. Sentencing is scheduled for July 13, 2012.

Market Manipulation Schemes:

U.S. vs. Kevin Brennan, Donald Huggins, and Marc Seaver Page, 12-60064-CR-COHN

Today, charges were unsealed against defendants Brennan, 60, of Pittsburgh, Pennsylvania, the CEO of Optimized Transportation Management Inc. (OPTZ), a Delaware freight transportation company; Huggins, 64 of St. Petersburg, Florida, an investor in OPTZ; and Marc Seaver Page, 50, of Tiburon, California. The defendants are charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of OPTZ common stock.

U.S. vs. Douglas Hague, 12-60124-CR-WILLIAMS

Hague, 65, of Boca Raton, was the President of Clean Coal Technologies Inc., a corporation that purportedly converted low-grade coal to high-grade clean-burning coal. He was charged by information on June 1, 2012 with engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices.

U.S. vs. Harold Steven Bonenberger, 12-60125-CR-COHN

Bonenberger, 56, of Carlsbad, California, was CEO of Angel Acquisition Corp. (AGEL), a Nevada corporation that purportedly managed assets. Bonenberger was charged by information on June 1, 2012 with engaging in a scheme to manipulate the publicly quoted share price and trading volume of AGEL common stock.

U.S. vs. Robert Cotton, 12-60126-CR-DIMITROULEAS

Cotton, 61 of Houston, Texas, was the President of Cotton and Western Mining Inc. (CWRN), a Nevada corporation that purportedly exported and mined iron minerals. Cotton was charged by information on June 1, 2012 with engaging in a scheme to manipulate the publicly quoted share price and trading volume of CWRN common stock.

U.S. vs. Matthew A. Connor, 12-2732-MJ-GARBER

Connor, 36, of Amherst, Virginia, a shareholder of and consultant for KCM Holdings Corporation (KCMH) was arrested today on a criminal complaint charging him with engaging in a scheme to manipulate the publicly quoted share price and trading volume of KCMH stock, in violation of the wire fraud statute. KCMH was purportedly in the business of providing strategic consulting services to clients.

U.S. vs. Scott Haire, 12-2734-MJ-GARBER

Haire, 42, of Coral Springs, President of Wound Management Technologies Inc. (WNDM), a Texas corporation that purportedly developed advanced wound care products. Haire was charged by criminal complaint with engaging in a scheme to manipulate the publicly quoted share price and trading volume of WNDM common stock. Haire is expected to surrender on June 6, 2012.

Ponzi Schemes:

U.S. vs. Juan Carlos Rodriguez, 12-20148-CR-DIMITROULEAS

Rodriguez, 49, of Miami, was indicted on March 6, 2012 for committing wire fraud in the execution of a Ponzi scheme. According to the indictment, Rodriguez was the sole officer and director of MDN Financial Group Inc., a Miami company that solicited approximately $5.2 million from investors with promises that the company would invest in stocks, bonds, and precious metals. Rodriguez would recruit colleagues and friends to invest in MDN Financial, promising them 20, 30, 40, and even 50 percent returns. In fact, Rodriguez did not invest the money he was given by investors. Instead, he used more than $1 million of the money to pay for personal expenses like credit card bills. A calendar call is scheduled for July 20, 2012.

U.S. vs. George Elia, 12-60077-CR-WILLIAMS

Elia, 68, formerly of Fort Lauderdale, is scheduled to be arraigned on June 6, 2012 on charges of operating a Ponzi scheme in which he recruited investors by making false claims about the potential returns on investments. Elia was the president of International Consultants & Investment Group LC., a corporation based in Broward County.

U.S. vs. Aner Menendez, 12-20389-CR-SCOLA

Menendez was arrested today on charges of mail and wire fraud. Menendez was the sole member and manager of De Forcade and recruited investors by claiming he was a skilled foreign currencies trader. Through a series of misrepresentations, he exploited social relationships to convince his victims to invest their savings with him. After receiving their money, Menendez made no investments for victims, instead spending their savings on himself and others.

In addition to the 12 criminal cases announced above, the SEC has filed nine separate civil injunctive actions against 12 individuals and eight microcap companies, charging them with violations of the antifraud provisions of the federal securities laws and seeking, among other relief, permanent injunctions, disgorgement, and financial penalties. These defendants, including several CEOs and their companies and three penny stock promoters, are charged with securities fraud for their roles in various illicit kickback and market manipulation schemes.

Regarding the continued results of the Initiative, other members stated as follows:

IRS Special Agent in Charge José A. Gonzalez stated, “IRS-Criminal Investigation Division is pleased to lend our forensic financial expertise to uncover financial wrongdoings by those who commit investment fraud. Make no mistake, whether on Wall Street or Main Street, swindlers will be thoroughly investigated and swiftly brought to justice.”

U.S. Postal Inspector in Charge Henry Gutierrez stated, “The U.S. Postal Inspection Service is committed to working with its law enforcement partners to stop investment fraud. We are particularly focused on fraud committed against often-targeted pension funds, in which victims have deposited their hard-earned money.”

Cindy Liebes, Director of the Federal Trade Commission Southeast Region, stated, “The Federal Trade Commission is also working to stop investment fraud and has filed several actions. Most recently, the FTC has sued Sterling Precious Metals LLC, Matthew Meyer, Francis Ryan Zofay, and Kerry Marshall for operating an investment scheme that allegedly took in almost $10 million by targeting elderly consumers and conning them into buying precious metals on credit without clearly disclosing significant costs and risks. In March, the FTC brought a similar action against Anthony J. Columbo, Premier Precious Metals Inc., Rushmore Consulting Group Inc., and PPM Credit Inc.”

Other Recent Cases Resulting from the Initiative

In addition to the cases announced above, the Initiative boasts a number of other recent cases, a few of which are highlighted below:

U.S. vs. Anthony Zito, 12-20030-CR-WILLIAMS

Zito, 64, of Naples, Florida, was charged in connection with a $7.5 million investment scheme. Zito owned and operated a firm named Gladius Investments (Gladius). Zito founded Gladius in 2004 and acted as the company’s officer, director, and president. Gladius purported to invest in silver on the commodities market on behalf of investors who entrusted Gladius with their money. On June 8, 2010, for example, Gladius’ internal database showed that the company had approximately 130 investors, that Gladius had invested in 1,271,500 ounces of silver on behalf of its investors, and that the total value of that silver was $19,708,250. In fact, however, Gladius’ actual trading account statement showed that Gladius had no more than 50,000 ounces of silver investments that month and that the total value of the trading account was about $672,000. The investors in Gladius lost approximately $7.5 million as a result of Zito’s fraud. On March 30, 2012, Zito was sentenced to five years in prison for conspiring to commit wire fraud in connection with the fraudulent investment scheme. In addition, Zito was ordered to pay $7.5 million in restitution to the victims of his crime. The court also ordered the forfeiture of half the value of Zito’s house, as well as his cars and bank accounts.

U.S. vs. Douglas Newton, 11-60150-CR-COOKE

On May 9, 2012, Newton was convicted after trial of two counts of mail fraud, four counts of securities fraud, and one count of conspiring to commit securities fraud. Sentencing is scheduled for August 29, 2012. According to evidence presented during the trial, Newton operated Billy Martin’s USA, a retail company that was delinquent with its lease payments at the Trump Plaza in New York City. In need of funding, Newton turned to a cooperating defendant who arranged a meeting with an undercover FBI agent. Newton attended a meeting in Broward County, Florida, where he agreed on video to bribe a pension fund manager to invest the pension fund investors’ money in Real American Brands. In addition, to hide the illegal bribes, the defendant entered into a fraudulent consulting agreement and sent fictitious e-mails to the undercover FBI agent. Newton also claimed in the recorded meetings to have business relationships with Jeffrey Sebelia, the winner of the “Project Runway TV” contest, and country singer Carrie Underwood. In total, Newton paid $12,000 in bribes to the purported pension fund and received a total of $40,000 from the fund. The defendant used the money to pay for his golf club, home owner fees, and his utilities.

U.S. vs. Yan Skwara, 11-60294-CR-WILLIAMS

Skwara, 47, of San Diego, California, was the president of U.S. Farms, Inc., a Nevada corporation that promoted wellness-based products. Skwara pled guilty on April 20, 2012 to engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices. Sentencing is scheduled for July 3, 2012.

U.S. vs. Gaston E. Cantens, 12-20005-CR-WILLIAMS

On April 4, 2012, Gaston E. Cantens, 73, of Miami, was sentenced to five years in prison for conspiring to commit mail and wire fraud in connection with a fraud committed at Royal West Properties Inc. (Royal West). According to documents filed with the court and statements made during the sentencing hearing, Cantens was the president of Royal West Properties Inc. and recruited individuals to invest in Royal West by promising investors a fixed rate of return and that their investments would be guaranteed by properties or mortgages that acted as collateral. Cantens used his extensive ties to the South Florida community, including his ties to Belen Jesuit Preparatory School, to recruit investors to the fraud. Cantens told investors that their money were collateralized by individual properties but failed to inform them that the collateralized properties had previously been assigned to other investors. Cantens received moneys from investors based on these misrepresentations, and used the moneys for his personal benefit and to further the fraud scheme.

An indictment or information is merely an accusation and defendants are presumed innocent until proven guilty.”

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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

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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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 and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

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.


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