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.


Three Defendants Indicted in Alleged $750,000 Mortgage Fraud Scheme Involving Three Residences in Chicago

May 11, 2012

The Federal Bureau of Investigation (FBI) on May 10, 2012 released the following:

“CHICAGO— A Chicago area real estate investor, the president of a Colorado real estate financing company, and a licensed appraiser were indicted for allegedly participating in a scheme to fraudulently attempt to obtain mortgage loans totaling more than $750,000 by selling three residential properties in Chicago to nominee buyers, federal law enforcement officials announced today. The charges result from Operation Madhouse, an undercover investigation in which a cooperating individual posed as someone who could assist in structuring fraudulent loan transactions through a bank contact who would approve bogus loan applications on behalf of nominee buyers.

Defendant Paul Demos, 66, of Chicago, the licensed appraiser, was arrested this morning and was released on his own recognizance after pleading not guilty at his arraignment before U.S. District Judge Amy St. Eve in Federal Court. Co-defendants Michael Fort, 42, of Hazel Crest, an investor who owned multiple properties in Chicago; and Jeffrey Olson, 43, of Lakewood, Colorado, who was president of 1st Funding Source LLC, which engaged in real estate financing, were not arrested and will be arraigned at a later date.

Fort was charged with three counts of bank fraud, and Demos and Olson were each charged with two counts of bank fraud in an indictment returned by a federal grand jury on Tuesday and unsealed today following Demos’ arrest. The arrest and charges were announced 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; Barry McLaughlin, Special Agent in Charge of the U.S. Department of Housing and Urban Development Office of Inspector General in Chicago; and Alvin Patton, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

According to the indictment, the fraud scheme involved a “double-closing” on a residence located at 5517 South Paulina St. and the sale of residences located at 6845 South Morgan St. and 1241 North Monitor Ave., all in Chicago, between June and September 2010. The defendants and others allegedly fraudulently attempted to obtain loans by preparing and submitting to an unnamed bank applications in the names of nominee buyers that contained false information about the borrower’s employment, income, assets, down payment, intention to occupy the residence, and the value of the property.

Regarding the Paulina “double-closing,” the defendants and the undercover cooperating individual allegedly agreed that Fort would “short sell” the residence to a nominee intermediate party, who would immediately resell the property to a nominee buyer, with the second sale financed by a fraudulently-obtained $295,850 loan. Fort allegedly hid information from the short sale lender, including that Fort had arranged for an immediate resale to a nominee buyer at a price significantly higher than the short sale price and based on an inflated appraisal and that he would profit from the resale.

The Morgan Street property was to be sold to a nominee buyer financed by a fraudulently-obtained $300,600 loanand the Monitor Avenue sale by Fort to a nominee buyer financed by a fraudulently-obtained $203,700 loan, the indictment alleges. As part of the scheme, Fort would pay a fee to the nominee buyers of the Paulina and Monitor properties, it adds. In exchange, the nominee buyers would obtain the loans and sign the documents at closings but would not occupy the residences or make payments on the loans. Fort allegedly intended to keep the proceeds of the fraudulently-obtained mortgages.

Demos allegedly provided the bank with false appraisals that inflated the value of the Paulina and Morgan properties. Olson allegedly provided the down payment funds for the nominee buyer of the Morgan property, and agreed to provide the down payment and short sale funds for the Paulina property. In September 2010, Fort and others appeared at the closings for the sale of Paulina and Morgan properties, allegedly intending to receive approximately $596,450 in fraudulently-obtained loan proceeds. Together with the Monitor property, the defendants allegedly intended to fraudulently obtain mortgages totaling more than $750,000.

The government is being represented by Assistant U.S. Attorneys Tyler Murray and Christopher Stetler.

Each count of bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. If convicted, the court may impose an alternate fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. The court must impose a reasonable sentence under federal sentencing statutes and 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.

The charges are part of a continuing effort to investigate and prosecute mortgage fraud in northern Illinois and nationwide under the umbrella of the interagency Financial Fraud Enforcement Task Force, which was established to lead an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.

Since 2008, approximately 200 defendants have been charged in Federal Court in Chicago and Rockford with engaging in various mortgage fraud schemes involving more than 1,000 properties and more than $280 million in potential losses, signifying the high priority that federal law enforcement officials give mortgage fraud in an effort to deter others from engaging in crimes relating to residential and commercial real estate.

The Financial Fraud Enforcement Task Force 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.”

————————————————————–

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.


Robert Maday Indicted in Alleged Escape and Armed Bank Robbery in 2009

December 2, 2011

The Federal Bureau of Investigation (FBI) on December 2, 2011 released the following:

“CHICAGO— A Chicago area man who allegedly escaped from custody in Rolling Meadows and a day later committed an armed bank robbery in Bloomingdale before being recaptured was indicted on federal charges in connection with the alleged series of events in September 2009. The defendant, Robert Maday, was charged with escape, armed bank robbery, being a felon-in-possession of firearms, and two counts of using firearms during violent crimes in a five-count indictment that was returned by a federal grand jury late yesterday, 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, announced today.

Maday, 41, formerly of Elk Grove Village, has remained in federal custody since he was recaptured on Sept. 18, 2009. He will be arraigned on a date still to be determined in U.S. District Court. Maday faces a mandatory minimum of 45 years and a maximum sentence up to life in prison if convicted of the three gun counts alone.

On Sept. 17, 2009, Maday was under a federal detention order when he allegedly escaped from the custody of two Cook County State’s Attorney’s Office investigators who were transporting him to the Cook County Courthouse in Rolling Meadows. One gun count alleges that Maday used two firearms during the escape—a Heckler and Koch USP .40-caliber semi-automatic pistol and a Smith and Wesson .38-caliber SPL revolver.

On Sept. 18, 2009, Maday allegedly took approximately $32,975 in the armed robbery of the First American Bank branch, located at 80 Stratford Dr., in Bloomingdale. A second gun count alleges that Maday used the same two firearms during the bank robbery. A third gun count alleges that Maday illegally possessed both weapons after having previously been convicted of a felony. The indictment seeks forfeiture of both weapons and 18 rounds of ammunition that were seized when Maday was arrested. He was apprehended after leading police on a high-speed chase and crashing a stolen car on Illinois Highway 59 in West Chicago.

The armed bank robbery count carries a maximum sentence of 25 years and the escape count carries a maximum of five years in prison. The felon-in-possession of a firearm count alleges that Maday would be eligible to be sentenced as an armed career criminal, which carries a mandatory minimum 15-year prison term. A first conviction for using a firearm during a violent crime carries a mandatory consecutive term of five years in prison and conviction on a second count carries a mandatory consecutive sentence of 25 years in prison, with a maximum of any number of years up to life. 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 court by Assistant U.S. Attorney Andrianna Kastanek. 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.”

————————————————————–

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.