Two Chicago-Area Defendants Charged with Alleged Commodities Fraud in Separate Federal Criminal Cases

October 26, 2012

The Federal Bureau of Investigation (FBI) on October 25, 2012 released the following:

“CHICAGO—Two defendants were charged with commodities fraud in unrelated cases, federal law enforcement officials announced today. In one case, an investment firm officer was charged with defrauding customers of approximately $2.5 million. In the other case, a former clerk for a lean hogs futures trader was arrested today and charged with manipulating trades to generate a profit of more than $225,000 for herself.

Joshua T. J. Russo, 30, of Chicago, a former vice president of alternative investments for Olympus Futures Inc. (previously Peak Trading Group), was charged with a single count of commodities fraud in a criminal information filed today. In a separate case, Nicole M. Graziano, 32, of Roselle, a former trading clerk, was charged with four counts of commodities fraud in an indictment returned yesterday by a federal grand jury.

Graziano was arrested this morning and later released on a $10,000 unsecured bond after pleading not guilty before U.S. District Judge James Zagel. Russo was not arrested and will be arraigned at later date in federal court.

The charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and William C. Monroe, Acting Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

Each count of commodities fraud carries a maximum penalty of 10 years in prison and a $1 million fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The government is being represented in both cases by Assistant U.S. Attorney Christopher McFadden.

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 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.

The details of each case follow.

United States. V. Russo, 12 CR 836

Between March 2007 and April 2011, Russo fraudulently obtained approximately $2.5 million from at least six investors and caused losses of more than $1.3 million, including approximately $208,000 in commissions for himself that he spent on gambling, vacations, clothing, theater tickets, meals, and entertainment, the charges allege. Russo obtained the funds by misrepresenting to investors that their funds would be used to purchase various investments, including shares of the Peak Performance Fund, which he knew had never accepted individual investors, and no money was ever invested with the fund. Russo allegedly made false statements about his prior performance investing in commodity futures, the level of risk, the existence and trading performance of the Peak Performance Fund, and the uses of the funds he obtained from investors. He concealed the fraud by creating and distributing false e-mails, spreadsheets, statements, and audit reports, the charges allege.

Instead of investing the funds as he purported, Russo misappropriated the money to make speculative trades—and regularly lost money—in various commodity futures, including energy sources, precious metals, agriculture products, foreign currencies, and stock indices. After providing one investor with false information about positive returns, Russo successfully encouraged that investor to refer friends and relatives to open accounts through him, resulting in additional victims.

The Commodity Futures Trading Commission and the National Futures Association assisted in the investigation.

United States. V. Graziano, 12 CR 834

Between September 2009 and August 2010, Graziano, who was a clerk for a floor trader at the Chicago Mercantile Exchange, now CME Group, secretly inserted trade cards for her own personal orders into the decks of trade cards submitted by public customers that she provided to floor traders to execute during the opening and closing brackets of trading in lean hogs futures contracts, the charges allege. She then fraudulently allocated lower purchase prices to her buy orders, and higher prices to her sell orders, to the detriment of public customers, according to the indictment. Graziano allegedly submitted at least 104 fraudulent trade cards to the appropriate clearing firms, resulting in illegal profits to her of $13,390 during the opening bracket and $213,680 during the closing bracket.

The CME Group assisted in the investigation.”

————————————————————–

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

————————————————————–

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.


7 in Chicago indicted on alleged mortgage fraud charges

May 4, 2012

CBS News on May 4, 2012 released the following:

“CHICAGO — Federal authorities say seven people have been indicted in a mortgage loan fraud scheme worth more than $8.8 million.

Federal prosecutors allege the group fraudulently obtained about 35 mortgage loans from various lenders to buy condominium units in a building on Chicago’s Michigan Avenue. Prosecutors say the defendants disbursed the money among themselves and companies that they owned or controlled.

The defendants are charged with multiple counts of wire fraud. A federal grand jury handed down the indictment Wednesday. Federal authorities say the charges are part of continuing efforts to investigate mortgage fraud in northern Illinois.

The seven defendants will be arraigned later.”

————————————————————–

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

————————————————————–

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.


McKenzie J. Carson is Charged in a Federal Criminal Complaint in the U.S. District Court in Chicago

January 4, 2012

The Federal Bureau of Investigation (FBI) on January 3, 2012 released the following:

“Bolingbrook Man Arrested for Sex Trafficking of Minor

A 39-year-old Bolingbrook man was arrested earlier today on charges he recruited and forced a minor female to engage in prostitution. The arrest was announced by Robert D. Grant, Special Agent in Charge of the Chicago office of the Federal Bureau of Investigation (FBI), and Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois.

MCKENZIE J. CARSON, also known as “Casino,” whose last known address was 200 Campbell Drive in the western suburb, was arrested early this morning at his residence by FBI special agents and local police, without incident. CARSON was charged in a criminal complaint filed last week in U.S. District Court in Chicago with one count of sexual trafficking of children by force, fraud, or coercion, which is a felony offense.

According to the complaint, CARSON has been actively recruiting young females, including minors under the age of 18, to work for him as prostitutes in and around the Chicago area since at least 2010. CARSON advertised their services over the Internet and used cellular telephones to schedule and book “dates” for the girls. CARSON is believed to have employed others to assist him with running his prostitution operation, driving the girls to motels, hotels, and other locations to meet with customers.

It is also alleged that CARSON used violence and threats of violence, including sexual assault, to force the women and young girls to work for him. One of the victims, a then-17-year-old female, was allegedly raped by CARSON and forced to perform oral sex the first time they met. Afterwards, CARSON then sent the victim out that same night to engage in prostitution.

A second victim, who was 20 years old at the time, claimed that she was beaten and raped by CARSON on numerous occasions, including once when she told CARSON that she no longer wanted to work for him.

CARSON appeared before Magistrate Judge Young B. Kim this afternoon, at which time he was formally charged. CARSON was ordered held without bond pending his next court appearance, which is scheduled for Friday at 1:30 p.m.. Until then, CARSON will be held at the Metropolitan Correctional Center (MCC) in Chicago. If convicted of the charge filed against him, CARSON faces a mandatory minimum sentence of 15 years’ incarceration to a maximum of life in prison and a fine of up to $250,000.

This case was investigated by a multi-agency task force, led by the Chicago FBI, and assisted by the Cook County Sheriff’s Department, the DuPage Metropolitan Enforcement Group, and the Bolingbrook, Channahon, Downers Grove, Joliet, Marseilles, Naperville, Oswego, Romeoville, Shorewood, and Westmont Police Departments.

The public is reminded that a complaint is not evidence of guilt and that all defendants in a criminal case are presumed innocent until proven guilty in a court of law.”

————————————————————–

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

————————————————————–

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.


Fabrieal Delaney Charged by a Criminal Complaint for Allegedly Engaging in Sex-trafficking of a Minor in Violation of 18 U.S.C. 2423(a)

July 26, 2011

The U.S. Attorney’s Office Northern District of Illinois on July 25, 2011 released the following:

“MICHIGAN MAN CHARGED WITH FEDERAL SEX-TRAFFICKING OF A MINOR

CHICAGO — A Michigan man is facing a federal detention hearing today after he was arrested late last week for allegedly engaging in sex-trafficking of a minor, federal law enforcement officials announced today. The defendant, Fabrieal Delaney, was arrested by FBI agents early Friday morning outside a hotel in south suburban Tinley Park where he allegedly brought three females, two of whom were under age 18, from Michigan to engage in prostitution. The charges allege that Delaney believed he was transporting the two youths and a young woman to engage in commercial sex acts at a purported bachelor party at the hotel, but which, in fact, was a sting operation designed to arrest him following a long-term investigation.

Delaney, also known as “Face,” 25, of Kalamazoo, was charged with transporting a minor across state lines for prostitution in a complaint filed in U.S. District Court. He is scheduled to return to court at 11:30 a.m. today for a detention, or bond, hearing before U.S. Magistrate Judge Jeffrey Cole, after an initial appearance before Magistrate Judge Cole on Friday.

The charge carries a mandatory minimum penalty of 10 years and a maximum of life in prison upon conviction. The arrest and charge 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 investigation is continuing, they said. The Cook County Sheriff’s Police Department, the Illinois State Police, the police departments in Kalamazoo and Battle Creek, Mich., and the Will County State’s Attorney’s Office are assisting in the investigation.

According to the complaint affidavit, late last Thursday and early Friday, Delaney drove the three females from the Kalamazoo area to the Tinley Park hotel, expecting to take them to a bachelor party where they would engages in sexual activity with 10 to 12 men and charge between $150 and $300 per customer for various sex acts. The three females were Victim 1, age 17; Victim 2, age 16; and Individual B, who is Victim’s 1 sister and over age 18. Victim 2 told agents that she met Delaney earlier this month and since then, at his direction, had gone on 20 to 24 calls for commercial sex, providing him with half the money she had received.

The charges detail the investigation, which began in September 2010 when state police made a traffic stop in Will County and found Delaney driving with three female passengers, including Victim 1. The charges allege that Delaney was sex-trafficking Victim 1, who was then 16 and later turned 17, at a hotel in the Joliet area. Delaney allegedly used various Internet web sites to advertise prostitution services. Delaney typically met customers in a hotel parking lot to ensure they were not undercover police before sending them to Victim 1’s hotel room and he received a portion of the money she was paid.

The government is being represented by Assistant U.S. Attorneys Halley B. Guren and Rajnath Laud.

The public is reminded that a complaint contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the United States has the burden of proving guilt beyond a reasonable doubt.”

Attached is a copy of Fabrieal_Delaney_Federal_Criminal_Complaint

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.

Bookmark and Share


Federal Judge Sets $450,000 Bond for Former Gov. Rod Blagojevich

July 17, 2011

Chicago Tribune on July 15, 2011 released the following:

“By Jeff Coen | Tribune reporter

Judge sets $450,000 bail for Blagojevich, lower than feds sought

A federal judge today set bond at $450,000 for former Gov. Rod Blagojevich and ordered him to post his North Side house and Washington condo as collateral despite the defense declaring that the Chicago residence is up for sale.

U.S. District Judge James Zagel then called Blagojevich and his wife Patti before him to issue the standard warning that they could lose both properties if the former governor violated bond conditions.”

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.

Bookmark and Share


Chicago Federal Grand Jury Indicted Five Chicago Individuals on Federal Fraud Charges for Allegedly Receiving Kickbacks totaling at least $800,000

July 15, 2011

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

“FORMER NORTH CHICAGO SCHOOL BOARD MEMBER AND TRANSPORTATION DIRECTOR AMONG FIVE DEFENDANTS INDICTED FOR ALLEGED ROLES IN $800,000 KICKBACK SCHEME INVOLVING STUDENT BUSING CONTRACTS

CHICAGO — A former North Chicago school board member and the district’s former transportation director were indicted on federal fraud charges for allegedly receiving kickbacks totaling at least $800,000 from three co-defendants who controlled several different companies that received at least $21 million in student bus contracts over nearly a decade. All five defendants were charged in a 26-count indictment alleging that, between 2001 and August 2010, they schemed to defraud and deprive the citizens of North Chicago, located in Lake County, and the approximately 4,000-student North Chicago Community Unit School District 187 (NCSD) of the honest services of former school board member Gloria Harper and former transportation director Alice Sherrod. The indictment was returned by a federal grand jury late yesterday and announced today by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Alvin Patton, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. The North Chicago School District cooperated with the investigation.

Harper, 59, of North Chicago, who was a member of the NCSD board from 1999 to May 2009, and Sherrod, 59, of Gurnee, who was District 187’s transportation director from 2001 to July 2010, allegedly used their positions to enrich themselves secretly by soliciting and accepting gifts and cash from their three co-defendants in exchange for favorable official action regarding student transportation contracts. Initially, Harper and Sherrod allegedly received kickbacks of approximately $4,000 to $5,000 a month but, by 2003, they were collecting approximately $20,000 a month, the indictment alleges.

Also indicted were: Derrick Eubanks, 47, of Lake Villa; Tommie Boddie, 66, of Wadsworth; and Barrett White, 52, of Matteson. All five defendants were each charged with six counts of wire fraud and various counts of soliciting or paying bribes. All but White were also charged with multiple counts of filing false federal income tax returns. All five defendants will be arraigned on dates still to be determined in U.S. District Court.

The indictment seeks forfeiture of more than $9.67 million, as well as 48 buses and vans and seven personal automobiles.

According to the indictment, from the late 1990s until mid-2003, the NCSD contracted with various companies to provide student transportation, including T&M Transportation, which was owned at least in part and controlled by Boddie, and Eubanks Transportation, which was owned at least in part and controlled by Eubanks. In approximately 2001, Harper and Sherrod met with Boddie and told him they would arrange for the NCSD to increase the number of students that T&M transported if Boddie agreed to pay them in return, and Boddie agreed. At Harper’s request, White began acting as an intermediary, or “bagman,” receiving cash from Boddie, keeping some for himself, and providing the bulk to Harper, who, in turn, shared the money with Sherrod, the indictment alleges.

To facilitate his role as the scheme’s bagman, White established D’Amoto Transportation, which he used to funnel money from Boddie’s T&M company to Harper and Sherrod. Sometime in 2002 or 2003, White established BWT Transportation to replace D’Amoto. In approximately May 2003, Harper allegedly suggested to Boddie and Eubanks that they join together to form one company to bid on NCSD transportation contracts. Both Harper and Sherrod told Boddie and Eubanks that if they won the contract they would have to split the profits with the two school officials, and the two men agreed to do so, the charges allege. As a result, Boddie and Eubanks created Safety First Transportation, Inc., which won the NCSD’s transportation contract in 2003. Once Safety First began to receive school district payments, White allegedly converted Safety First’s funds into cash to pay Harper for her to share with Sherrod, while White kept a portion for himself. Neither White nor his company, BWT, did any work for Safety First and their sole role was to funnel cash to Harper
and Sherrod, according to the indictment.

As a result of an IRS audit of Safety First in 2006-2007, Safety First began providing funds to White as an employee, as well as continuing to provide him with funds as a contractor, in late 2006, even though he continued to provide no service other than paying kickbacks as an intermediary.

Also as a result of the audit, Harper allegedly agreed that White’s portion of the proceeds should be increased to compensate him for the tax debt White owed the IRS. All five defendants agreed that an amount of Safety First’s revenues from the NCSD would be excluded from the profits to be split with Harper and Sherrod and instead would be used to repay tax debts owed by Boddie, Eubanks and White, the charges allege.

The fraud scheme and individual tax counts allege that Boddie and Eubanks filed false federal tax returns for Safety First claiming that they paid White hundreds of thousands of dollars in consulting fees and wages for assisting them in obtaining the transportation contract with NCSD. In fact, the indictment alleges that money paid to White was intended solely to fund the kickbacks to Harper and Sherrod in exchange for helping them win and maintain the transportation contract.

In April 2008, the defendants allegedly agreed to set up a new company, Quality Trans, LLC, to replace Safety First and to assume its contracts with the school district. All five allegedly agreed to split among them Quality Trans’s profits, and Boddie, Eubanks and White continued to make cash payments to Harper and Sherrod. In June 2009, Quality Trans won a five-year contract to provide NCSD with transportation services.

Various tax counts allege that Boddie and Eubanks took false deductions for the money that Safety First paid to White and which White then funneled as kickbacks to Harper and Sherrod. Other tax counts allege that Harper and Sherrod filed false individual tax returns failing to report the kickbacks they received as income.

The government is being represented by Assistant U.S. Attorneys Matthew Getter and Greg Deis.

Each count of wire fraud carries a maximum penalty of 20 years in prison, and each count of soliciting or paying bribes carries a maximum of 10 years in prison, as well as a $250,000 fine. As an alternative, the Court may impose a maximum fine totaling twice the loss to any victim or twice the gain to any defendant, whichever is greater, and restitution is mandatory. Filing a false federal income tax return carries a maximum penalty of three years in prison and a $250,000 fine. In addition, a defendant convicted of tax offenses faces mandatory costs of prosecution and remains 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 determine a reasonable sentence to impose under the advisory United States Sentencing Guidelines.

The public is reminded that an indictment contains only charges and is 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 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.

Bookmark and Share