Federal bank fraud cases up in north Alabama

May 14, 2012

Blog.al.com on May 13, 2012 released the following:

By Kent Faulk

“BIRMINGHAM, Alabama — Eight men and women have stood before federal judges in Birmingham the past few weeks on bank fraud charges.

Among them:

• A Mountain Brook man sentenced to four years in prison for embezzling nearly $1.2 million from his former employer by writing checks to himself on the company’s bank account.
• A former Union State Bank branch employee in Trussville sentenced to a month in prison for theft of about $25,000 from the teller drawer and bank vault in 2007 and 2008.
• A former Regions Bank telebanking representative who pleaded guilty to taking $190,000 from a customer’s account during a two-year period, and directing money from the account to pay her bills after she had left her job.

The number of cases being prosecuted for bank fraud by the U.S. Attorneys Office for the Northern District of Alabama has steadily increased in recent years. In 2011 federal prosecutors charged bank fraud in 22 cases, up from 16 cases in 2010, 15 cases in 2009 and 11 cases in 2008. So far, eight cases have been charged this year through May 4.

Some cases include more than one defendant and other charges are also included in some cases.

“I guess it’s a sign of the times,” said James Kendrick, a Birmingham attorney who has represented clients charged with bank fraud.

Rod Pittman, director of corporate security for BBVA Compass, stated in a written response to questions from The Birmingham News that recently they have “seen a significant increase in fraud attempts, the majority of which can be attributed to the economy and technology.”

“In this economy many people are unemployed and more likely to be in a desperate financial situation. This sometimes results in attempted fraud,” Pittman wrote.

Some of those charged with bank fraud in the past year have been bank employees working alone or with help from outside the bank.

Bank employees may be thinking they will pay it back, Kendrick said. “Before you know it, you’ve got more than you can pay,” he said.

Bank fraud isn’t always an inside job.

“The crime of bank fraud is broader than a bank employee stealing money from the bank,” said Peggy Sanford, spokeswoman for the U.S. Attorneys Office in Birmingham.

“The statute allows that if someone makes misrepresentations to a bank in order to get other people’s money held in that bank, then bank fraud has occurred.”

Some attorneys and bank security officials attribute the increase in people being charged by federal prosecutors to a more aggressive stance by the Justice Department on financial fraud.

In many cases the dollar amount is the difference between whether federal prosecutors or state prosecutors will handle a case, said Larry Meredith, director of corporate security for Birmingham-based Cadence Bank.

The U.S. Attorneys Office has been active when it comes to presentations to the banks on various issues, including the importance of the timely sharing of information on possible criminal activity, said Bill Burch, director of corporate security for Regions Bank. “The communication between prosecutors, federal law enforcement offices (and banks) has been enhanced dramatically,” he said.

Sanford said the push by U.S. Attorney Joyce White Vance’s office in north Alabama is consistent with the U.S. Justice Department’s efforts to make financial fraud a top priority and President Barack Obama’s creation of the Financial Fraud Enforcement Task Force.

Banks don’t generally share how much they lose to fraud schemes, but as an industry it’s in the billions of dollars each year, according to some estimates.

But it’s a lot more than the old fashioned way of illegally taking money from a bank.

“The losses are greater than if you had just walked in an robbed the bank with a note,” Meredith said.

While the money lost in a bank robbery may only be a few thousand dollars, the losses from both internal and external fraud is often tens of thousands of dollars and taken over a period of months and years.

The punishment for bank fraud varies. The range of sentences was one month to four years for those charged and sentenced so far in the 2011 cases on just the bank fraud charges. A few had longer sentences because they also had other charges besides bank fraud.

One person also was acquitted and couple had their bank fraud charge dismissed as part of plea deals at sentencing.

Wellington Monroe Phillips II was sentenced to four years in prison for bank fraud for embezzling nearly $1.2 million from a Birmingham-based natural gas supplier.

Twice a month Phillips issued himself an unauthorized check from the corporate bank account held at First Commercial Bank. He would forge the name of the company’s owner on each check and submit them for payment.

Bank corporate security officers say banks have increased security as new fraud schemes surface to tap into bank accounts.

Dan Bailey, chief executive of the Alabama Bankers Association, said that bank customers should take it upon themselves to help secure their accounts, including checking their accounts daily. “Catch it before it goes too far,” he said.”

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Douglas McNabb – McNabb Associates, P.C.’s
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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.


Manuel Garcia Pleads Guilty to a Federal Indictment Charging Him With Federal Bank Fraud Charges

October 17, 2011

The Federal Bureau of Investigation (FBI) on October 14, 2011 released the following:

“California Man Pleads Guilty to Federal Bank Fraud Charges

ALBUQUERQUE— This morning in Albuquerque federal court, Manuel Garcia, 69, who now resides in Los Angeles, California, entered a guilty plea to an indictment charging him with six counts of bank fraud. At sentencing, which has yet to be scheduled, Garcia faces a maximum sentence of 30 years’ imprisonment, five years of supervised release, and a $1,000,000 fine. Under the terms of his plea agreement, Garcia will pay restitution in the amount of $585,243.59 to US Bank of Albuquerque, formerly known as First Community Bank (FCB). Garcia remains on conditions of release under pretrial supervision pending his sentencing hearing.

U.S. Attorney Kenneth J. Gonzales said that Garcia was indicted and charged with six counts of bank fraud on June 7, 2011. At the time of the offenses charged in the indictment, Garcia was president of Keyworth Mortgage Funding Group (Keyworth), a business incorporated in New Mexico and Arizona that originated residential mortgage loans and sold them to investors such as the Federal National Mortgage Association (Fannie Mae). The indictment generally alleged that, between August 2009 and May 2010, Garcia, fraudulently obtained money from FCB by falsely representing that the funds were to be used to finance new residential mortgage loans. According to the indictment, Garcia actually used the funds to pay Keyworth’s debt to Fannie Mae.

In his plea agreement, Garcia acknowledged that Keyworth maintained a line of credit with FCB from which it would obtain money advances to finance the origination of mortgage loans. Garcia admitted that he devised a scheme pursuant to which he submitted requests to FCB for advances for non-existent mortgages, using property addresses of prior clients. Specifically, Garcia submitted the names, addresses, and requested loan amounts of Keyworth’s prior residential mortgage clients to support his requests for advances. By falsely representing the properties as new mortgages, Garcia caused FCB to wire transfer the requested advances to Keyworth’s bank account in Arizona. Garcia admitted receiving six advances in the aggregate amount of $1,279,650 by submitting fraudulent requests. Because Garcia repaid $535,450 with interest to FCB as if they had been legitimate loans, that sum is not included in the restitution that Garcia will have to pay.

This case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Tara C. Neda.”

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.