Six Face Federal Wire Fraud Charges in an Alleged Real Estate Flipping Scheme That Cost Victims More Than $4 Million

April 25, 2012

The Federal Bureau of Investigation (FBI) on April 24, 2012 released the following:

“SANTA ANA, CA— Federal prosecutors have charged six people—including women from Orange County and Tennessee who were arrested this week—in relation to a multi-million-dollar real estate flipping scheme in which investors were promised titles to homes that could be easily resold but in fact did not have “clean” titles, were uninhabitable, or were simply worthless.

According to an indictment returned by a federal grand jury on April 18, the six defendants participated in a real estate scheme in which they sold victims Real Estate Owned—REO, or bank owned—properties for as much as $45,000. Even though the defendants had paid less than $10,000 per property, they told buyers that the properties were valuable and could be resold—or flipped—for a profit within a year.

During a scheme that ran from mid-2009 through mid-2010, victims were promised that the properties came with clean titles, property management services, and guaranteed rentals for the first three months, according to the indictment. Furthermore, the defendants allegedly claimed they had an “exit strategy” in which buyers could choose to sell the properties back to them for $60,000.

In some cases, victims did not receive the properties because they simply did not exist. In other cases, the properties were condemned or other issues with the titles meant victims were not able to take control of the properties. Of those victims who did receive titles, some found that the titles were encumbered by tax liens, fines, or building code violations. Furthermore, the indictment alleges that investor funds were immediately disbursed upon receipt, rather than being held in escrow.

The indictment alleges that there are more than three dozen victims who suffered losses of at least $4.2 million.

The defendants solicited investors to purchase properties at seminars held in Irvine and Costa Mesa; Orlando, Florida; Dallas, Texas; and in “webinars” conducted on the Internet.

This six defendants named in the indictment are:

Sylvia Melkonian, 48, of Laguna Beach, who was arrested yesterday morning by special agents with the FBI;

Sheridan Snyder, 65, of Turtletown, Tennessee, who was also arrested yesterday by the FBI;

Andrew Wardein, 38, of Irvine, who surrendered to authorities on April 20 and was released on a $25,000 bond after a judge scheduled a trial in the case for June 12;

Craig Shults, 41, of Huntington Beach, who has agreed to appear for an arraignment in federal court tomorrow afternoon;

Paul LiCausi, 47, of Fort Pierce, Florida, who is expect to appear in court in Santa Ana on April 30; and

Joseph Haymore, 31, of Port St. Lucie, Florida, who is also expected to appear in court in Santa Ana on April 30.

After being arrested yesterday, Melkonian was arraigned in federal court in Santa Ana, where she pleaded not guilty and was released on a $20,000 bond. Snyder appeared yesterday in United States District Court in Tennessee and was released on a $30,000 bond with instructions to appear in federal court in Santa Ana on May 14 for an arraignment.

All of the defendants named in the indictment are named in at least five counts of wire fraud. Therefore, if they are convicted, each defendant would face statutory maximum sentences of at least 100 years in federal prison.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

This case was investigated by the Federal Bureau of Investigation and investigators from the California Department of Justice, Office of the Attorney General. The case is being prosecuted by Assistant United States Attorney Greg Staples and Special Assistant United States Attorney Patricia Fusco of the California Attorney General’s Office (619-645-3035).”

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

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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 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.


California Woman Indicted on Charges of Allegedly Giving Money to Terrorists

December 22, 2011

CNN on December 22, 2011 released the following:

“By Chelsea J. Carter, CNN

(CNN) — A California woman was indicted late Wednesday on charges of sending money to Pakistan to help fund terrorist attacks against U.S. military personnel, federal officials said.

Oytun Ayse Mihalik, 39, of La Palma was charged with three counts of giving money to someone in Pakistan who knew the funds would be used to prepare and carry out attacks against American troops, the U.S. Attorney’s Office in Los Angeles said in a statement.

Mihalik, a native of Turkey, was accused of sending $2,050 in three wire transfers to a person in Pakistan over a period of three weeks in late 2010 and early 2011, the statement said.

Thom Mrozek, a spokesman for the attorney’s office, would not comment on the identity of the person in Pakistan.

A telephone message left late Wednesday by CNN for Mihalik’s attorney, Alan Eisner, was not immediately returned.

Mihalik has been in U.S. custody since August 27, 2011, after she was detained at Los Angeles International Airport where she was preparing to board a flight to Turkey, the statement said. She had a one-way ticket, it said.

Federal authorities say they first questioned Mihalik on August 8 at the airport where she had just arrived from a six-month trip to Turkey. At that time, they allege she lied to agents, saying she had never used an alias to send money via Western Union to a person overseas, authorities said.

It was unclear how authorities linked Mihalik to the alleged payments, and they did not say how they identified her alleged use of an alias.

Mihalik was initially indicted on August 30 on one count of making a false statement.

A federal grand jury returned a superseding indictment Wednesday, charging Mihalik with three counts of providing material support to terrorists and one count of making a false statement.

The charge of providing material support to terrorists carries a maximum penalty of 15 years in prison; the charge of making a false statement in a matter involving international terrorism carries a maximum penalty of eight years.

An arraignment date has not yet been set. A trial on the initial count of making a false statement was previously scheduled for February 14.”

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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

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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 McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Chambers County Woman Charged with Conspiring and Aiding Her Deceased Husband to Make 122 Destructive Devices

October 7, 2011

The Federal Bureau of Investigation (FBI) on October 6, 2011 released the following:

“HOUSTON— A federal grand jury has charged 32-year-old Pamela Leggett of aiding and abetting her deceased common-law husband, Gilbert Ortez, in the making and possessing, along with conspiring to make and possess, destructive devices and firearms, United States Attorney Kenneth Magidson announced today along with Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge J. Dewey Webb.

The six-count indictment returned by the grand jury today alleges that beginning in March 2006 through July 2009, Leggett and her deceased common-law husband, then residents of Baytown, Texas, Chambers County, accumulated a supply of precursor chemicals that they used to assemble a total of 122 destructive devices. In some instances the chemicals were allegedly obtained via eBay. The destructive devices, according to the indictment, were improvised explosives that, in some cases, contained pieces of rebar, nails, and bullets. Leggett is also accused of being in possession of a machine gun, a short-barreled rifle, and three illegal silencers in violation of federal firearms statutes.

The United States has sought a court order to transfer Leggett from state custody into federal custody to face the charges and appear for arraignment on a date to be set by the court.

Each of the four counts accusing Leggett of aiding and abetting the possession or making of destructive devices and firearms, to include the illegal silencers and the short-barreled rifle, carries a maximum penalty of 10 years’ imprisonment and a fine of up to $10,000 upon conviction. Possession of a machine gun carries a maximum penalty of 10 years’ imprisonment and a fine of up to $250,000 upon conviction. The conspiracy charge carries a maximum penalty of five years’ imprisonment as well as a $250,000 fine.

This investigation leading to the federal charges was conducted by the Texas Rangers, FBI, ATF, the Chambers County Sheriff’s Office, the Baytown Police Department, the Bay Area Regional Bomb Squad, the Texas Department of Public Safety, the Houston Police Department, Metro Police Department Bomb Squad and the Pasadena Police Department. Assistant U.S. Attorney John D. Jocher is prosecuting the case.

An indictment is a formal accusation of criminal conduct, not evidence.

A defendant is presumed innocent unless and until proven guilty by due process of law.”

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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Four Chicago-Area Defendants Charged in Nationwide Medicare Fraud Strike Force Takedown; Three Others Charged with Defrauding Private Health Insurers

September 8, 2011

The Federal Bureau of Investigation (FBI) on September 7, 2011 released the following:

Total of 91 Defendants Charged Nationwide for Submitting More Than $295 Million in False Billing to Medicare

CHICAGO— An area vascular surgeon, three chiropractors, a psychologist, and a nursing home admissions director are among seven defendants charged this week with participating in four separate, unrelated health care fraud schemes to defraud the Medicare program or private health insurers of millions of dollars, federal law enforcement officials announced today.

Three of the Chicago cases charging four defendants are part of a nationwide takedown by Medicare Fraud Strike Force operations, announced today by the Departments of Justice and Health and Human Services, that led to charges against 91 defendants for their alleged participation in schemes to collectively submit more than $295 million in fraudulent claims to the Medicare program. This coordinated takedown involved the highest amount of false Medicare billings in a single takedown in Strike Force history.

In Chicago, four defendants were charged in a criminal information and two indictments filed today and three defendants were indicted last week in U.S. District Court. The defendants were charged with various crimes, including health care fraud for allegedly defrauding the Medicare program, and violating the anti-kickback statute, which makes it illegal to offer or solicit kickbacks in exchange for referrals of Medicare patients. The charges involve various medical treatments and services such as surgery, nursing home care, chiropractic, and psychotherapy services.

“The defendants charged in this takedown are accused of stealing precious taxpayer resources and defrauding Medicare—jeopardizing the integrity of our health care system and our nation’s most critical health care program for personal gain,” said Attorney General Eric Holder. “Our highly coordinated, nationwide Strike Force operations are working aggressively to combat Medicare fraud and our anti-health care fraud efforts have never been more innovative, collaborative, aggressive—or effective. We will continue to work with our law enforcement partners and partners across government to fight against health care fraud,” he said.

“Today’s action further demonstrates the commitment we announced earlier this year to ensure that dishonest medical providers do not profit from cheating Medicare and private insurers,” said Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois.

Details of the Chicago cases follow:

United States v. John Natale

Dr. John Natale, a vascular surgeon who had privileges at Northwest Community Hospital in Arlington Heights, was charged in a five-count indictment returned today with defrauding Medicare by submitting false claims and by intentionally preparing fictitious medical reports that detailed medical procedures that he knew did not occur or were more complex than those he actually performed.

Natale, 62, of South Barrington, was charged with two counts of health care fraud, two counts of making false statements involving a health care benefit program and one count of mail fraud. He will be arraigned at a later date in U.S. District Court.

Between August 2002 and October 2004, Natale allegedly falsely sought Medicare reimbursement for aneurysm repairs that he never performed, and falsely claimed to have performed more complicated repair of certain aneurysms, or weakened blood vessels, knowing that the surgeries he had performed involved less complicated procedures. Natale allegedly used the proceeds of the fraudulently obtained Medicare payments for his own personal benefit.

According to the indictment, surgical insertion of a graft above or in the immediate vicinity of the kidneys to repair a supra-renal or juxta-renal aneurysm is generally more complex than the surgical insertion of a graft below the kidneys to repair an infra-renal aneurysm. For at least five patients, Natale also allegedly prepared false medical reports that, among other things, contained extensive details about aneurysm repairs that he never performed, and falsely described the surgeries he did perform as being more complex and elaborate than they actually were.

The government is represented by Assistant U.S. Attorney Amarjeet Bhachu. The case was investigated by the U.S. Postal Inspection Service and the Health and Human Services Office of Inspector General (HHS-OIG.)

United States v. Keenan Ferrell and Bryce Woods

Keenan R. Ferrell, a licensed psychologist in Illinois and at least a half-dozen other states, and Bryce Woods, who was not a medical professional in any field, owned and operated Take Action, Inc., and Inner Arts, Inc., which claimed to provide psychotherapy services to Medicare beneficiaries residing in skilled nursing homes in the Chicago area and elsewhere. Between September 2003 and July 2011, Ferrell and Woods allegedly submitted false claims totaling more than $4.4 million to Medicare for psychotherapy services, and fraudulently obtained approximately $1,863,415 million.

Ferrell, 51, and Woods, 34, both of Chicago, were each charged with nine counts of health care fraud in an indictment returned today. The indictment also seeks forfeiture of more than $1.8 million in alleged illegal proceeds. They will be arraigned at a later date in U.S. District Court.

According to the indictment, Ferrell and Woods submitted false claims to Medicare on behalf of patients living in skilled nursing homes under a Medicare provider number belonging to Ferrell claiming that he had provided 45-50 minutes of one-on-one psychotherapy to patients, when in fact, the treatment sessions were done by Woods, psychology graduate students recruited by Ferrell, or others with limited or no physician supervision.

Knowing that psychotherapy services were reimbursable by Medicare only when performed by an enrolled provider or when “incident to” the services of an enrolled provider, Ferrell and Woods allegedly arranged for Ferrell, who was an enrolled Medicare provider and licensed medical doctor, to authorize Inner Arts and Take Action to accept assignment of his claims to Medicare. Ferrell and Woods allegedly arranged with psychology graduate students and others to see patients at various skilled nursing facilities.

Ferrell, knowing that he needed to be present at nursing homes whenever a therapist conducted a session for Ferrell to be entitled to bill Medicare for services “incident to” his care, did not attend or otherwise participate in therapy sessions in the nursing homes, according to the indictment. As a result, Ferrell was not physically present and immediately available when Take Action and Inner Arts therapists purportedly were in nursing homes to render psychotherapy services, it adds.

As part of the scheme, Ferrell and Woods allegedly billed Medicare for more psychotherapy sessions than had actually been performed, regardless of the reimbursement code that was used. The indictment also alleges that they billed for services provided to deceased individuals.

The government is represented by Assistant U.S. Attorney Paul Tzur. The case was investigated by the FBI and the HHS-OIG.

United States v. Bradley Mattson, Steven Paul, and Neelesh Patel

Three chiropractors, Bradley Mattson, Steven Paul, and Neelesh Patel, who owned suburban clinics that provided chiropractic, medical, and physical therapy services, were charged in a 23-count indictment with defrauding three private health insurance companies for more than a decade beginning in 1999. Mattson, Paul, and Patel owned and operated Hawthorn Physical medicine in Vernon Hills, Woodfield Physical Medicine in Schaumburg, Stratford Physical Medicine in Bloomingdale, and Algonquin Physical Medicine in Lake-in-The-Hills, while Mattson and Paul also owned and operated Northshore Physical Medicine in Niles and Cumberland Physical Medicine in Norridge.

Mattson, 49, of Lake Forest, was charged with 19 counts of health care fraud; Paul, 40, of Northbrook, was charged with four counts of health care fraud; and Patel, 36, of Glenview, was charged with 15 counts of health care fraud. Mattson is scheduled to be arraigned next Tuesday and Paul and Patel are scheduled to be arraigned next Wednesday in U.S. District Court in Chicago.

According to the indictment, the defendants submitted false insurance claims to Blue Cross and Blue Shield of Illinois, Aetna and Humana for services that either were not medically necessary or that they did not provide to patients, including x-rays, MRIs, neurological diagnostic testing, and physical therapy services. Between 1999 and 2008, the defendants billed Blue Cross alone more than $18 million. The indictment does not specify the amount of the allegedly fraudulent claims or the amount that was fraudulently obtained from any of the three insurance carriers.

The defendants allegedly marketed the clinics through their company, ARC Health, at malls and employee health fairs that targeted individuals insured by certain health care benefit programs. They instructed ARC Health marketing employees to offer potential patients coupons that falsely advertised a free x-ray exam and a discounted office visit, which they actually later billed to the patients’ insurance companies, the indictment alleges. As part of the fraud scheme, the defendants allegedly instructed their clinics’ chiropractors to order neurological diagnostic testing and MRIs for patients, regardless of medical necessity, and then to falsify the patients’ diagnoses so their health plans would cover additional visits for treatment.

Mattson alone allegedly received kickbacks from unnamed Individual A, who owned an unnamed MRI facility, in exchange for Mattson sending patients from the six clinics to Individual A’s facility for MRI exams.

The government is represented by Assistant U.S. Attorney Renai Rodney. The case was investigated by the FBI and the U.S. Department of Labor Office of Inspector General.

United States v. Jay Canastra

Jay Canastra, the director of admissions at The Wealshire, a nursing home in northwest suburban Lincolnshire, was charged with accepting a $1,600 kickback in exchange for referring nursing home Medicare patients to a home health care agency in West Dundee.

Canastra, 38, of Vernon Hills, was charged with one count of violating the anti-kickback statute in a criminal information filed today in U.S. District Court. He will be arraigned at a later date.

According to the charge, on Dec. 4, 2009, Canastra received the $1,600 cash kickback from unnamed Individual A, who was a representative of unnamed Agency A, which was authorized by Medicare to provide home heath services. Canastra allegedly accepted the payment in exchange for referring Medicare beneficiaries at his nursing home to Agency A, in violation of the federal law that makes it illegal to exchange kickbacks in return for Medicare referrals. There is no allegation that the nursing home or any other official there were aware of the alleged kickback.

The government is represented by Assistant U.S. Attorney Dylan Smith. The case was investigated by the FBI and the HHS-OIG.

The charges in these cases carry the following maximum penalties on each count: health care fraud—10 years in prison, and mail fraud—20 years in prison, and both carry a $250,000 maximum fine, or an alternate fine totaling twice the loss or twice the gain, whichever is greater; and making false statements regarding a health care matter, and violating the anti-kickback statute—five years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

The Medicare Fraud Strike Force operations, which expanded to Chicago in February 2011, are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The results of the nationwide takedown were announced today by Attorney General Holder, HHS Secretary Kathleen Sebelius, FBI Director Robert S. Mueller, Assistant Attorney General Lanny A. Breuer of the Criminal Division, and Inspector General Daniel R. Levinson of the HHS-OIG. Mr. Fitzgerald announced the Chicago charges together with Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; Lamont Pugh III, Special Agent in Charge of the Chicago Regional Office of the HHS-OIG, James Vanderberg, Special Agent in Charge of the Labor Department Office of Inspector General in Chicago; and Thomas P. Brady, Inspector in Charge of the Chicago Office of the U.S. Postal Inspection Service.

The public is reminded that indictments and informations contain only charges and are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.”

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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HOA fraud cases may be merged

September 5, 2011

Las Vegas Review-Journal on September 4, 2011 released the following:

“By Jeff German
LAS VEGAS REVIEW-JOURNAL

Federal prosecutors are moving to consolidate all of the cases under one judge in the massive investigation into fraud and corruption at homeowners associations.

Senior U.S. District Judge Lloyd George is considering handling as many as two dozen plea deals prosecutors intend to file over the next six weeks in what may be the most far-reaching criminal fraud case ever in Nevada.

All of the targets striking deals are expected to testify in a push by prosecutors to obtain indictments against higher-level players. Prosecutors have identified as many as 100 co-conspirators at various levels of the scheme, including lawyers, judges and former police officers.

“This case sounds huge,” said Douglas McNabb, a seasoned Washington, D.C., defense lawyer who has battled the Justice Department in court over the years. “We’re talking about some 24 people who have already flipped and are cooperating against many more defendants. It’s clear the government has started at the bottom and is working its way up.”

Records show that the Justice Department’s Fraud Section in Washington has brought in four trial attorneys to prosecute the criminal cases. A motion by prosecutors to consolidate the cases has been filed under seal in federal court.

The lead prosecutor is Charles La Bella, a Fraud Section deputy chief who oversees investigations on the West Coast. La Bella, based in San Diego, attracted national attention following the 1996 presidential race when then-Attorney General Janet Reno appointed him to head a task force to investigate possible Democratic fundraising abuses during the campaign.

Christopher Blakesley, a University of Nevada, Las Vegas law professor who specializes in criminal law, said the homeowners association investigation is as “massive and far-reaching” as any case he has seen here.

“The complexity sort of lends itself to wanting it before one judge,” he said.

A former federal prosecutor agreed, saying, “The large number of voluntary guilty pleas suggests a criminal case that is unprecedented in size and scope in Nevada. From the prosecutors’ perspective, the judge will understand the history of the case instead of having to explain it to a half-dozen different judges.”

Last week, longtime Republican strategist Steve Wark became the first target to plead guilty in the scheme. George accepted his guilty plea to one count of conspiring to commit mail and wire fraud, and set a Dec. 16 sentencing.

At the hearing, La Bella said Wark’s case was one of four prosecutors had filed under seal. Four more cases were expected to be filed in the coming days, with as many as 15 more by mid-October, he said.

George promised a quick decision on whether he would hear all of the cases. He hinted that he would take on the assignment, saying his senior status gives him more time to deal with the cases than his full-time colleagues who have busy court calendars.

Wark, 54, who is cooperating with prosecutors, admitted to participating in a sweeping conspiracy to stack homeowners association boards with members who then pushed for construction defect lawsuits against builders.

Legal work and multimillion-dollar repair contracts were funneled to lawyers and companies associated with the scheme at the expense of the home­owners, who were deprived of honest voting on their boards.

The board members friendly to the co-conspirators were “straw purchasers” in the various developments and elected by the co-conspirators through classic dirty campaigning that included conducting phony polling, hiring private investigators to dig up dirt on candidates and rigging the balloting, according to federal court documents unsealed last week.

“This process created the appearance of legitimacy, since bona fide home­owners believed the elected board members … were, as fiduciaries, acting in their best interest rather than to advance the financial interests of the co-conspirators,” the documents alleged.

“In fact, defendant Wark and others were paid by or on behalf of their co-conspirators … for their assistance in purchasing the properties, obtaining HOA membership status, rigging elections and manipulating their votes to further the goals of the conspiracy and to enrich the co-conspirators at the expense of the HOA and bona fide homeowners.”

One association dragged into the investigation, Vistana, alleges in civil court papers that it overpaid the company that did construction repairs and has suffered more than $3 million in damages.

The company, Silver Lining Construction, was one of the businesses the FBI raided in 2008, when it went public with the investigation.

Search warrants also were executed at law firms, homeowners association offices and other businesses across the valley. Since then, nearly a dozen associations have become embroiled in the investigation.

Anti-homeowners association activists were elated last week after hearing the news of Wark’s guilty plea.

“I was hoping I would live long enough to see this day,” said Jonathan Friedrich, a 65-year-old former general contractor who has been fighting to expose corruption at homeowners associations across the Las Vegas Valley since 2007. “I’m delighted that the light is finally shining on the cockroaches that have been bleeding homeowners.”

Added Bob Robey, 72, who also has been fighting homeowners associations the past several years: “It’s about time. I hope they continue their investigations, and I hope they uncover more.”

Rana Goodman, 70, another activist, said she hopes the long-running FBI investigation will start to bring “some justice” to the homeowners.

“It’s taken way too long, but we’re thrilled,” Goodman said. “We’d like to see the stranglehold that some of these attorneys have on a large group of associations broken. There’s finally light at the end of the tunnel — maybe.”

But defense lawyer Thomas Pitaro, who represents construction defects attorney Nancy Quon, one of the key targets in the homeowners investigation, thinks the criminal case has veered off course.

“If this is such a big investigation, I hope they investigate the developers who ravaged this community with their shoddy construction of residential homes,” Pitaro said. “They should be looking at the primary cause of the problem, and that is the substandard housing developments.”

Blakesley said he is not surprised that it has taken three years for the federal investigation to result in criminal charges.

He said it likely took investigators a lot of time to gather and sort out the evidence.

“It has so many sidebars,” Blakesley said. “It looks like there are all sorts of avenues to travel to establish the case.”

He said George, namesake of the federal courthouse, is perfectly suited to handle the consolidated cases.

“He’s almost like the father of the federal system here,” Blakesley said. “He’s respected. He’s appreciated. He’s smart. On top of that, his experience gives him a lot of credibility in whatever he decides.”

What makes this investigation even more intriguing is that, despite the magnitude and deep impact it is having on the community, the Las Vegas U.S. attorney’s office will play no role in it.

When U.S. attorney Dan Bogden returned to take the reins of the office in October 2009, he removed himself from making any administrative decisions in the case because of a potential conflict of interest. He owns a condominium at one of the developments under investigation, Park Avenue.

In October, the U.S. attorney’s office asked to be removed entirely from the case to avoid the appearance of a conflict, a Justice Department spokeswoman said last week.

The Fraud Section took over the case in November. Late last year, the Justice Department’s Public Integrity Section in Washington also began investigating whether the U.S. attorney’s office was leaking information about the homeowners investigation. Allegations had surfaced that Quon was getting information from the office.

The Justice Department steadfastly refused to comment on that investigation until last week after Wark pleaded guilty. A spokeswoman said the department had “completed its review and determined no further action is necessary.”

Quon’s saga has turned into one of the more bizarre twists in the homeowners association investigation. Her law office was searched in the 2008 FBI raids.

She denies it, but Las Vegas police believe she has tried to kill herself to escape the pressure of the federal investigation.

Her boyfriend, former Las Vegas police officer William Ronald Webb, was charged in November in a scheme to arrange her death using what the couple thought were undetectable illegal drugs.

Then on Aug. 17, both Quon, 51, and Webb, 43, were indicted in what prosecutors say was a botched suicide attempt that involved setting fire to her Rhodes Ranch home.

Both Quon and Webb pleaded not guilty in District Court in the alleged scheme last week. The lead investigators in the federal case were on hand for their arraignments.”

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 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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Robert D. Falor Indicited by a Chicago Federal Grand Jury for Alleged Federal Tax Evasion

September 2, 2011

The U.S. Attorney’s Office Northern District of Illinois on September 1, 2011 released the following:

“FORMER CONDO-HOTEL DEVELOPER ARRESTED ON FEDERAL CHARGES ALLEGING EVASION OF MORE THAN $1.75 MILLION IN INCOME TAXES

CHICAGO — A former real estate developer who attempted to convert hotels in Chicago, Miami Beach and elsewhere into condominium-hotels was arrested today on federal tax evasion charges alleging that he failed to pay more than $1.75 million in taxes covering three years between 2004 and 2007. The defendant, Robert D. Falor, who was the chief operator and manager of The Falor Companies, Inc. (TFC), was charged with three counts of federal income tax evasion in an indictment that was returned by a federal grand jury on Tuesday and unsealed today following his arrest.

Falor, 43, of Chicago and formerly of Glencoe, pleaded not guilty at his arraignment this morning before U.S. District Judge Virginia Kendall, who scheduled a detention hearing for 10 a.m. tomorrow in Federal Court in Chicago.

The arrest and charges were announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Alvin Patton, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The investigation is continuing, they said.

According to the indictment, Falor was an owner of multiple businesses, including limited liability companies, that he and others created to own and manage the affairs of various TFC condohotel properties. In converting hotels to condo-hotels, individual guest rooms would be sold to investors as separately titled condominium units and rented by a TFC-related hotel management company to guests when the owner was not in residence, with the owner receiving a percentage of the rental fee.

Falor operated multiple condo-hotel ventures in the mid-2000s, including the Blake Hotel, located at 500 S. Dearborn St., in Chicago, and the Tides Hotel on Ocean Drive in Miami Beach, but TFC ceased business operations in 2006, according to the indictment.

The tax evasion counts allege that Falor failed to pay the following amounts in federal income taxes: $189,246 for calendar year 2004; $494,261 for calendar year 2006; and $1,091,216 for calendar year 2007, resulting in a total of $1,774,723 in unpaid taxes. For 2006 and 2007, Falor allegedly evaded taxes, in part, by failing to file federal individual income tax returns. For 2004, he filed a tax return in October 2007 that allegedly under-reported his income and the amount of taxes he owed.

During 2007, the indictment alleges that Falor had two sources of unreported taxable income: more than $2.3 million from the Blake Hotel and more than $2.9 million in capital gains resulting from the dissolution of certain limited liability companies. Falor allegedly deposited the $2.3 million of income from the Blake Hotel into various bank accounts through a series of more than 200 banking transactions. During 2007, he had taxable income of approximately $4,837,308, on which he owed income tax of approximately $1,091,216, the indictment charges, adding that he failed to file a return or pay any taxes by the deadline.

During 2006, Falor allegedly received taxable income of more than $1.25 million from the Blake Hotel. In addition, more than $1.65 million in loans from TFC became taxable income to Falor in 2006 because he failed to repay the loans when TFC ceased operations. The loans had accrued to Falor between 2003 and 2006 when he directed TFC employees to pay his personal expenses from company accounts and to record the payments as loans, the indictment states. During 2006, he had taxable income of approximately $1,825,326, on which he owed income tax of approximately $494,261, the indictment charges, adding that he failed to file a return or pay any taxes by the deadline.

During 2004, the indictment alleges that Falor had three sources of unreported taxable income: approximately $1,294,424 in capital gains from the sale of certain interests in limited liability companies; approximately $472,955 in capital gains from a distribution from a limited liability company that participate din the management of the Tides Hotel; and at least $201,485 from certain companies that he deposited into a bank account he controlled. During 2004, he had taxable income of approximately $1,332,391, on which he owed income tax of approximately $189,246, the indictment charges. On Oct. 3, 2007, Falor allegedly filed an income tax return for 2004 that reported no capital gains and under-reported his income from various companies, resulting in a tax due of only $2,102, when he actually owed the greater amount of approximately $189,246.

The government is being represented by Assistant U.S. Attorneys Ryan S. Hedges and Barry Jonas.

Each count of tax evasion carries a maximum penalty of five years in prison and a $250,000 fine. In addition, defendants convicted of tax offenses face mandatory costs of prosecution and remain civilly liable to the Government for any and all back taxes, as well as a civil fraud penalty of 75 percent of the underpayment plus interest. If convicted, the Court, must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

The public is reminded that 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.”

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 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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Zacchaeus Andrew Crawford Indicted by a Jacksonville Federal Grand Jury on Federal Child Pornography Charges

August 19, 2011

The Federal Bureau of Investigation (FBI) on August 19, 2011 released the following:

“Jacksonville Man Indicted on Federal Child Pornography Charges

JACKSONVILLE, FL— United States Attorney Robert E. O’Neill announced today that Zacchaeus Andrew Crawford (25, Jacksonville) has been indicted by a federal grand jury in Jacksonville on child pornography charges. Crawford is charged with receipt, transportation, and possession of child pornography. On each of the receipt and transportation counts, Crawford faces at least five years and up to 20 years in prison and a $250,000 fine. On the possession count, Crawford faces a maximum penalty of 10 years in prison and a $250,000 fine. Crawford was arrested and had his initial appearance in federal court today. His arraignment and detention hearing will be held in federal court in Jacksonville before United States Magistrate Judge Monte C. Richardson on August 24, 2011 at 10:30 a.m. Until that time, Crawford remains in the custody of the U.S. Marshals Service.

This case was investigated by the Federal Bureau of Investigation in Jacksonville and Phoenix, Arizona. It is being prosecuted by Assistant United States Attorney D. Rodney Brown.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States 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.

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent until, and unless, proven guilty.”

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 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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Adam Moellers, Gary Dailey, Perry Bensick Jr., and Mary Dailey Indicted by a Cincinnati Federal Grand Jury for Conspiracy, Mail Fraud, and Wire Fraud

August 19, 2011

The Federal Bureau of Investigation (FBI) on August 18, 2011 released the following:

“Four Charged with Running $13 Million Loan Fraud Scheme

CINCINNATI—A federal grand jury has indicted four people who ran a Cincinnati real estate business known as American Equity Group (AEG) with fraudulently obtaining more than $13 million in loans through a loan fraud scheme that targeted homeowners or builders in or near foreclosure. The scheme allegedly caused a loss of $6 million.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Attorney General Mike DeWine, and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the indictment today. These agencies are members of the Greater Cincinnati Mortgage Fraud Task Force.

The indictment charges Adam Moellers, 33; Gary Dailey, aka Gary Klump, 32; Perry Bensick Jr., 35; and Gary Dailey’s mother, Mary Dailey, 50, all of Cincinnati, with wire fraud, mail fraud, and conspiracy.

The indictment alleges that the four worked together at AEG, which also operated under the names Equity Financial Solutions and Equity Finance Group, and carried out the scheme between July 2006 and October 2007.

According to the indictment, they conspired to locate distressed properties that were in or nearing foreclosure or that needed to be sold quickly. They would typically promise the sellers that they could continue to live in the property as a renter then purchase the property back after AEG assisted the homeowner with repairing their credit. The defendants are accused of finding “investors” to purchase the property, often as inflated values, with the promise that the mortgage would be paid through rent payments from the original seller and that the original seller would purchase the property back within a short period. After the properties were stripped of any equity, they would be back in foreclosure again, and the distressed homeowners wouldn’t have any standing in court because they no longer owned the properties. The “investors” who bought the houses were left with the debt.

In other circumstances, the distressed properties were new homes that were constructed by new home builders, but had not been purchased yet. The four would find “investors” to purchase the property, often at inflated values, with the promise the property would quickly be resold or rented.

The indictment alleges that they fraudulently secured loans totaling more than $13 million and involving 18 properties in Ohio, Indiana, Michigan, and Georgia. They allegedly created loan applications with fraudulent statements about the borrower’s income, employment, assets and liabilities, forged signatures on the applications and submitted fabricated supporting documentation to lenders.

Each count is punishable by up to 20 years in prison, three years of supervised release and a fine of $250,000 or twice the loss.

“Loan fraud can devastate an individual’s bank account, undermine financial institutions, and devalue properties in entire neighborhoods,” Stewart said. “We will continue to build collaborations with law enforcement to investigate and prosecute fraud.”

“As a result of the hard work of the task force, this indictment will help protect Ohioans and bring criminals to justice,” Attorney General DeWine said. “Foreclosure rescue scams remain a major threat to the financial security of Ohio homeowners, and we are committed to doing all we can to put an end to this type of fraud. These operations make false promises to vulnerable homeowners and take money without providing any real help.”

The four will be summoned to federal court for their initial appearance and arraignment

An indictment is merely an accusation. Defendants are presumed innocent unless and until proven guilty in court.”

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 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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Luis Andres Cardona Indicted by a McAllen Federal Grand Jury for Production of Child Pornography

August 10, 2011

The U.S. Attorney’s Office Southern District of Texas on August 9, 2011 released the following:

“McALLEN, Texas – A McAllen grand jury has indicted Luis Andres Cardona, 53, for production of child pornography, United States Attorney José Angel Moreno announced today.

The one-count indictment, returned by the grand jury on Aug. 9, 2011, charges Cardona, of Mission, Texas, with producing images of child pornography beginning in December 2008 through October 2010 of a minor child using materials that had been mailed, shipped or transported in or affecting interstate or foreign commerce.

The federal charges arise from an investigation initiated by the Mission Police Department which culminated in the arrest of Cardona in May 2011 on state charges involving the alleged sexual abuse of a nine-year-old female child. The federal charges are the result of further investigation by the FBI. Presently in state custody, Cardona is expected to be transferred into federal custody for arraignment on the federal charges in the very near future.

If convicted of production of child pornography, Cardona faces no less than 15 years up to life in federal prison without parole, a fine of $250,000 and a term of supervised release of no less than five years up to life during which the court can impose any number of conditions designed to protect children. Additionally, registration as a sex offender is mandatory.

Assistant U.S. Attorneys Juan F. Alanis and Kimberly Bulger Leo are prosecuting the case.

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 United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, 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.

An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless and until convicted through due process 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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Six More Charged in Houston Federal Criminal Court with a Series of Houston Area Armed Bank Robberies

July 15, 2011

The U.S. Attorney’s Office Southern District of Texas on July 14, 2011 released the following:

“HOUSTON – A sealed superseding indictment charging six more Houston area residents for their alleged involvement in a series of Houston area bank robberies including the New Year’s Eve robbery of a Pearland bank was unsealed today, United States Attorney José Angel Moreno announced today along with FBI-Houston acting Special Agent in Charge Russell D. Robinson and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge J. Dewey Webb announced today.

With the arrest of these additional six defendants, a total of 13 defendants are now charged with conspiring to and committing a series of armed bank robberies of Houston area banks including the robbery of the Pearland Chase branch bank on Dec. 31, 2010. The 16-count superseding indictment was returned under seal on Wednesday, July 6, 2011, and completely unsealed today following the appearance of the last of the newly charged defendants before U.S. Magistrate Judge Stephen Smith in Houston. The six now charged in the superseding indictment include John Berley Scott aka Fresh, 30, Derrick Lashon Paley aka Crybaby, 33, Michael Maurice Wilson Jr. aka Blue/Mikey Poo, 25, Roderick Marshall Beagle, 39, Michael Dushon Duncan aka Mikey, 19, and Kelvin Dewayne Thomas aka Little Kevin, 21, all of Houston.

One or more new defendants have been added to several of the already existing counts in the original indictment and also charged with new counts. Scott is charged with committing an armed bank robbery on Sept. 15, 2010, of the Amegy Bank located on the 300 block of N. Sam Houston Parkway in Houston; Scott along with Paley is also charged with committing an armed bank robbery on Oct. 12, 2010, of the Comerica Bank located on the 14600 block of Memorial Drive in Houston; Raymond Tierra Johnson aka T, 30, and Samuel Glen Bonner aka Glen, 39, are charged with Hostage Taking for their role in the New Year’s Eve robbery in Pearland.

Three defendants were arrested in the Houston area this week. Paley was arrested on July 12, 2011, while Beagle was arrested the following day. Thomas was arrested today. Paley has made his initial appearances before Judge Smith and been ordered to remain in custody pending a hearing on the government’s motion to detain him without bond pending trial set for tomorrow, July 15, 2011, at 10:00 a.m. before Judge Smith. Beagle’s initial appearance is set for today at 2:00 pm before Judge Smith. Thomas is also expected to make his initial appearance before Judge Smith this afternoon with a setting for his detention hearing to be scheduled at that time.

The fourth newly charged defendant, Duncan, was originally charged by criminal complaint for his role in the New Year’s Eve bank robbery in Pearland. He remains in federal custody without bond by order of the court and is expected to make his initial appearance to answer the charges in the superseding indictment in the near future. The remaining two newly charged defendants, Wilson Jr. and Scott are both presently in state custody on unrelated charges. Both are expected to be transferred into federal custody in the near future to answer the new charges.

The seven others previously charged for their alleged involvement in this bank robbery spree and also named in the superseding indictment are Johnson and Bonner, along with Gregory Wayne Ferguson, 18, Larry Smith, 34, Arlington Davis Wilkes aka AD, 20, Carl Ray Turner Jr. aka CT, 24, and Edward Johnson, 26.

The superseding indictment accuses all 13 defendants of conspiring together to rob several Houston area banks through force and intimidation including Wells Fargo branch banks on Grant Road on Aug. 23, 2010, Memorial Drive and Kimberly Lane on Oct. 7, 2010, the Coamerica Bank branch banks on the NW Freeway and the 14600 block of Memorial Drive, the Citibank Branch on Cypresswood on Sept. 14, the Amegy Bank on N. Sam Houston Parkway on Sept. 15, the Chase Bank branch on the NW Freeway in Cypress, Texas, on Oct. 27 and the Chase branch bank on North Main in Pearland, Texas, on Dec. 31, 2010. Each of these robberies is alleged as an individual substantive count against two or more of the various defendants. The seven other defendants previously charged by indictment for their alleged involvement in the robbery spree are presently in federal custody without bond pending trial.

The conspiracy, according to allegations in the indictment, involved “casing” banks for robberies and the selection of banks that did not have security guards or bullet resistant bandit barriers. The conspirators allegedly used lookouts during robberies and used stolen or “hot” cars as get-a-way vehicles to commit the offenses. According to the indictment, the co-conspirators recruited others to assist them to rob the banks in exchange for a share of the proceeds taken. Bank robberies were effected through the use of demand notes allegedly written by Smith and through the brandishing and firing of firearms during the course of the robbery to ensure compliance with their demands.

Conspiracy to commit a bank robbery carries a maximum punishment of five years imprisonment and/or a $250,000 fine upon conviction. Each count of bank robbery carries a maximum punishment upon conviction of 20 years incarceration or 25 years if a firearms displayed and/or a $250,000 fine. Brandishing or discharging a firearm during and in furtherance of a bank robbery carries a mandatory punishments of seven and 10 years, respectively, which must be served consecutive to any sentences imposed for the underlying bank robbery conviction. hostage taking carries a maximum punishment of up to life in prison and/or a $250,000 fine.

The charges against these defendants are the result of a federal investigation conducted by the FBI and the ATF with the substantial assistance and cooperation of the Houston Police Department, Harris County Sheriff’s Office, Harris County Precinct 4 Constable’s Office, Harris County District Attorney’s Office, Crimestoppers, Friendswood Police Department, Pearland Police Department and the Brazoria County District Attorney’s Office. The United States Attorney wishes to recognizes each of these investigative agencies as well as the security departments of Wells Fargo and JP Morgan Chase for their outstanding efforts.

Assistant U.S. Attorneys Suzanne Elmilady and Kebharu Smith are prosecuting the case.

An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless and until proven guilty through due process of law.”

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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