Florida Man Arrested, Charged with Bankruptcy Fraud

February 29, 2012

The Federal Bureau of Investigation (FBI) on February 28, 2012 released the following:

“Allegedly Concealed More Than $1.5 Million in Personal Assets

NEWARK, NJ—A former Ocean County, N.J., resident was arrested today and charged with hiding hundreds of thousands of dollars in assets in connection with his November 2008 personal bankruptcy petition, U.S. Attorney Paul J. Fishman announced.

Bryan Young, 39, formerly of Toms River, N.J., and now living in Venice, Fla., turned himself in to agents of the FBI in Newark. He is charged by complaint with two counts of bankruptcy fraud and is scheduled to make his initial appearance today before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.

According to the criminal complaint unsealed today:

On Nov. 5, 2008, Young, who was then living in New Jersey, filed for individual Chapter 7 bankruptcy protection with the U.S. Bankruptcy Court for the District of New Jersey. In his petition, Young concealed more than $1.5 million in personal assets, failing to disclose the existence of four financial accounts—or that any of these accounts were closed as of the date of the filing of his petition—with total balances of more than $650,000. Young failed to disclose the purchase of approximately $13,000 worth of furniture or the sale of a 2003 Ford truck, worth approximately $10,000, within months of the filing. He listed no income other than from employment or the operation of a business. However, according to documents obtained from eBay Inc., Young had eBay sales totaling more than $250,000 in 2007 and 2008. Young failed to disclose transfers of more than $250,000 into a bank account in the name of his son, and approximately $248,000 into an account controlled by Young himself.

Young also made numerous materially false statements under oath in relation to his bankruptcy petition. On Dec. 12, 2008, Young testified that he did not own any stocks, bonds, or mutual funds. However, at the time of the filing of his petition, one of Young’s financial account investment statements showed investments in stocks, bonds, and mutual funds that were worth approximately $100,000 within months of the filing. On Feb. 13, 2009, Young claimed he had only one bank account, but at the time of his filing had at least four bank accounts. Young claimed that he owned only one motor vehicle, a 2006 Ford F-350, but N.J. Department of Motor Vehicle records show he also owned a 1993 Mitsubishi GT and a 2003 Ford truck. Young claimed he had no assets over and above the amount listed in his petition, but had at least $13,000 worth of furniture that was not disclosed in his petition.

The bankruptcy fraud charge carries a maximum potential penalty of five years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark; IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge JoAnn Zuniga, and Region 3 U.S. Trustee Roberta DeAngelis and the Newark office of the U.S. Trustee, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorney Aaron Mendelsohn of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

The charges and allegations contained in the complaint are merely accusations and the defendant is considered innocent unless and until proven guilty.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The 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.”

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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.


Manhattan U.S. Attorney Announces Guilty Plea of Former Controller at Bernard L. Madoff Investment Securities LLC

December 20, 2011

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

“Preet Bharara, the United States Attorney for the Southern District of New York, announced today that ENRICA COTELLESSA-PITZ, the former Controller at Bernard L. Madoff Investment Securities LLC (“BLMIS”), pled guilty in Manhattan federal court to a fourcount Superseding Information charging her with conspiracy, as well as substantive counts of falsifying books and records of a broker-dealer, falsifying books and records of an investment adviser, and making false filings to the Securities and Exchange Commission (“SEC”). COTELLESSA-PITZ pled guilty before U.S. District Judge Laura Taylor Swain. As part of her guilty plea, COTELLESSA-PITZ has agreed to cooperate with the Government in its ongoing investigation of the fraud that occurred at BLMIS.

According to the Superseding Information, plea agreement and other documents filed in connection with the case:

COTELLESSA-PITZ was employed at BLMIS from 1978 through December 11, 2008. In 1998, COTELLESSA-PITZ became the Controller of BLMIS. Beginning in the late 1990s until the collapse of BLMIS in 2008, COTELLESSA-PITZ, allegedly along with other coconspirators, created false and misleading entries in the books and records of BLMIS and in reports filed with the SEC. The false and misleading entries were used to disguise transfers of funds from the BLMIS Investment Advisory (“IA”) business to BLMIS’s Market Making and Proprietary Trading operations. The transfers made the Market Making and Proprietary Trading operations of BLMIS appear profitable when they were not.

In addition, COTELLESSA-PITZ, allegedly along with other co-conspirators, created false and fraudulent documents that were given to the SEC in connection with its audit of BLMIS. COTELLESSA-PITZ, and allegedly other co-conspirators, also created false and fraudulent documents in connection with tax audits of Bernard L. Madoff.

* * *

COTELLESSA-PITZ, 53, faces a statutory maximum sentence of 50 years in prison. The statutory maximum sentences for each of the charged offenses are set forth in the attached chart. COTELLESSA-PITZ is also subject to mandatory restitution and criminal forfeiture and faces criminal fines up to twice the gross gain or loss derived from the offense. Pursuant to the agreements entered into with the Government, COTELLESSA-PITZ has agreed to forfeiture of more than $97 billion. The net proceeds from the sale of the forfeited property will be used to compensate victims of the fraud, consistent with applicable Department of Justice regulations.

Following the guilty plea, Judge SWAIN released COTELLESSA-PITZ on a $2.5 million bond on the condition that the bond be co-signed by eight financially responsible individuals and secured by $800,000 in cash and property. In addition, COTELLSSA-PITZ’s travel is restricted to the Southern and Eastern Districts of New York. COTELLESSA-PITZ has surrendered her passport.

Judge Swain set a sentencing date for COTELLESSA-PITZ of June 22, 2012.

Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Securities and Exchange Commission and the Internal Revenue Service, Criminal Investigations Division for their assistance.

These cases were brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The 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.

The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorneys Lisa A. Baroni, Julian J. Moore, Arlo Devlin-Brown, Barbara A. Ward, and Matthew L. Schwartz are in charge of the prosecution.”

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

Federal Crimes – Appeal

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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.


Eliyahu Weinstein Indicted by a Federal Grand Jury for Conspiracy to Commit Wire Fraud, Wire Fraud, Bank Fraud, and Money Laundering

October 28, 2011

The Federal Bureau of Investigation (FBI) on October 27, 2011 released the following:

“Leader of $200 Million Real Estate Investment Scam Charged in 45-Count Indictment with Fraud and Money Laundering

Alleged Scheme Defrauded Investors in Multiple States and Abroad

NEWARK, NJ— Eliyahu Weinstein, a/k/a “Eli Weinstein,” a/k/a “Edward Weinstein,” a/k/a “Eddie Weinstein,” was indicted today by a federal grand jury in Newark on charges alleging he ran an investment fraud scheme causing losses of at least $200 million, New Jersey U.S. Attorney Paul J. Fishman announced.

The 45-count Indictment charges Weinstein, 36, of Lakewood, N.J., with one count of conspiracy to commit wire fraud, 29 counts of wire fraud, two counts of wire fraud while on pretrial release, one count of bank fraud and 12 counts of money laundering. Weinstein will be arraigned on the Indictment on a date to be determined.

Weinstein was previously charged by Complaint on Aug. 12, 2010, along with then Manalapan, N.J., resident Vladimir Siforov, 44. Both defendants were charged with one count of wire fraud and Weinstein was charged with one count of bank fraud. Siforov, who remains a fugitive, is named in three wire fraud counts in the Indictment.

“According to the Indictment, Weinstein’s exploitation of investors’ trust was so shameless he used doctored documents for properties he didn’t own—including in a town that doesn’t exist—and continued to commit crimes while out on bail,” said U.S. Attorney Fishman. “With promises of sound investments and charitable donations, he allegedly stole $200 million, spending freely on fancy cars, jewelry and gambling trips. And in using victims’ money to collect Judaica, Weinstein robbed from his own community’s present to stockpile artifacts of its past.”

According to the Indictment and other documents filed in Newark federal court:

From at least as early as June 2004 through August 2011, Weinstein, with the help of Siforov and others, orchestrated a real estate investment fraud scheme out of Lakewood that has resulted in losses to victim investors of at least $200 million.

To induce victims to invest, Weinstein and others made various types of materially false and misleading statements and omissions. For example, Weinstein and others represented to victims that Weinstein’s inside access to certain real estate opportunities allowed him to buy particular properties at below-market prices. Weinstein and others also told victims that their money would be used to purchase a specific property, and the property would be quickly resold—or “flipped”—to a third-party purchaser lined up by Weinstein. Victims were also told that their money would be held in escrow until the closing of a purported real estate transaction.

Weinstein bolstered his lies by creating, and causing to be created, various types of fraudulent documents, including “show checks,” which Weinstein led victims to believe represented Weinstein’s investments in specific transactions but were never deposited; forged checks, which had actually been negotiated for small amounts, but Weinstein altered to appear worth millions of dollars; operating agreements, which showed that victims had ownership interests in specific properties they did not; and various kinds of forged legal documents, including leases, mortgages, and deeds.

Weinstein initially targeted victims from the Orthodox Jewish community, of which he was a member, exploiting his standing in and knowledge of the customs and practices of the community to further the scheme. Weinstein abused the community’s practice of engaging in transactions based on trust and without paperwork to obtain money from his victims without substantial written records. Weinstein would then falsely represent that specific real estate transactions existed, that the victims’ monies were used to fund those transactions, or that the victims’ profits from those transactions were being “rolled” into new investments.

By 2010, Weinstein had tarnished his reputation in the community due to the massive losses caused by the scheme. In April 2010, Weinstein and others began soliciting victims from outside of the Orthodox Jewish community, whom they defrauded out of millions of dollars.

Weinstein then took significant portions of his victims’ money, which had been provided for specific real estate transactions, and used it for other purposes he did not disclose to victims. These included funding unrelated real estate transactions in which Weinstein was engaged; paying prior victims; and making charitable and religious contributions which he used to elevate his reputation within the Orthodox Jewish community.

Weinstein also used millions of dollars fraudulently obtained from his victims to fund his own lavish spending, including millions of dollars worth of antique Judaica and other artwork; a multimillion-dollar collection of jewelry and watches; gambling in Las Vegas and elsewhere; and his personal expenses, including millions of dollars in credit card bills, millions of dollars in legal bills, and luxury car lease payments.

If convicted of the wire fraud charges, Weinstein and Siforov each face a maximum potential penalty of 20 years in prison and a $250,000 fine per count. If convicted on the wire fraud while on pretrial release charges, Weinstein faces a maximum potential penalty of 30 years in prison per count. Weinstein also faces a maximum potential penalty of 20 years in prison and a $250,000 fine on the wire fraud conspiracy charge; 30 years in prison and a $1 million fine on the bank fraud charge; and a maximum potential penalty of 10 years in prison and a $250,000 fine on each of the money laundering charges.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark, for their work leading the investigation of this case. He also credited special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Victor W. Lessoff, for their important contributions to the investigation.

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

The charges and allegations contained in the Indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.

If you believe you are a victim of or otherwise have information concerning this alleged scheme, you are encouraged to contact the FBI at 973-792-3000.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The 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.”

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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

————————————————————–

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.


Michael Wilkerson, Joyce Wilkerson, Lee Garell, and Denise Haines Indicted by a Philadelphia Federal Grand Jury in an Alleged Mortgage Fraud Scheme

September 30, 2011

The Federal Bureau of Investigation (FBI) on September 29, 2011 released the following:

“Pennsylvania Pastor Charged in Mortgage Fraud Scheme

PHILADELPHIA— Michael Wilkerson, Joyce Wilkerson, Lee Garell, and Denise Haines were charged today with engaging in a scheme to defraud JP Morgan Chase’s predecessor, Chase Manhattan Bank, by fraudulently obtaining home loans valued at more than $6 million for properties located in Schwenksville and Glenmoore, Montgomery County, Penn., announced U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger.

According to the indictment, Michael Wilkerson, pastor of New Life Millennium Life Restoration Fellowship in Montgomery County, recruited several of his congregants and the congregants’ families and friends to participate in a number of real estate transactions. If they had good credit and acted as “straw purchasers”—meaning they would sign loan documents as the purchaser of a house and attend the property settlement—Michael Wilkerson would pay them $15,000. Wilkerson would allegedly pay another $5,000 if they referred other straw purchasers to him. Wilkerson recruited at least five individuals who agreed to be straw purchasers of homes. The indictment alleges that Joyce Wilkerson participated in the fraud scheme by assisting Michael Wilkerson, explaining the transactions to the “straws,” paying the “straws” and also pretending to be a co-purchaser of each of the homes at the time of settlement. The indictment alleges that Garell, a real estate broker with Long & Foster Companies, prepared the sales paperwork for each of the homes that was sold to the “straws” and, along with Michael Wilkerson, dictated the fraudulent terms set out in the settlement sheets.

The indictment alleges that Haines, a mortgage broker with American Group Mortgage Corporation, submitted fraudulent loan applications in the transactions to Chase Manhattan Bank. These fraudulent loan applications falsely represented the appraised value of the homes, the identification of the “straws,” the source of funds, the borrower’s income and assets, and their intent to take possession of the homes as their primary residence. Based on the representations made in the loan documents, Haines knew she could get Chase Manhattan Bank to approve the loans with little verification of the information on the loan applications.

When the loans were funded at the time of settlement, Michael Wilkerson, Joyce Wilkerson, Garell and Haines allegedly manipulated the documents prepared at settlement and, later, forwarded the settlement documents to Chase Manhattan Bank to make it appear to the bank that the “straws” brought considerable cash to the closings, when, in fact, all of the money involved at the settlement actually came from Chase Manhattan Bank. The defendants allegedly shared in the profits from the fraudulent sales.

According to the indictment, after settlement on the homes, Michael Wilkerson took possession of all of the homes, rented four of them and lived in another. He paid the mortgages with rental income for approximately six months then told the “straw” purchasers that they had to pay the mortgages. This last act led to the loans falling into default and then foreclosure, resulting in a loss of approximately $3 million.

If convicted, each defendant faces a maximum possible sentence of 180 years in prison, five years’ supervised release, a fine of up to $6 million, and a $600 special assessment.

The case was investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Anita Eve.

An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.

President Obama established the Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The 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.”

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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Twenty South Florida Residents Charged in $40 Million Bank and Mortgage Fraud Scheme

September 29, 2011

The Federal Bureau of Investigation (FBI) on September 29, 2011 released the following:

“MIAMI— Twenty individuals, including numerous licensed real estate industry professionals, have been charged with conspiracy to commit bank fraud and bank fraud in connection with their alleged participation in a $40 million mortgage fraud scheme. According to the indictment, from March 2006 through June 2008, the defendants conspired to submit false loan applications and related documents to multiple banks for the purpose of obtaining approximately $40 million in mortgage loans and home equity lines of credit (HELOC). This resulted in approximately $20 million in losses to the banks.

The indictment was announced today by Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, FBI Miami Field Office; Michael K. Fithen, Special Agent in Charge, U.S. Secret Service (USSS); Jon T. Rymer, Inspector General, Federal Deposit Insurance Corporation (FDIC-OIG); and James K. Loftus, Director, Miami-Dade Police Department (MDPD), along with members of the Federal-State Mortgage Fraud Strike Force.

The 25-count indictment charges the following defendants: Alina Rubi, 45, of Miami (mortgage broker); Camilo Garcia, 39, of Miami (mortgage broker and realtor); Sylvia M. Zagales, 48, of Miami Lakes, Fla., (title agent); Ivette Carreno, 34, of Miami (bank manager); Pedro Rubi, 42, of Miami (mortgage broker); Dianelys Garcia, 37, of Miami (mortgage broker and realtor); Luis Pardo Dieguez, 51, of Miami (realtor); Galia Fernandez, Jr., 50, of Miami (mortgage broker and realtor); Sheena Eizmendiz, 36, of Miami; Ivis R. Hernandez, 41, of Miami (realtor); Jose Raul Hernandez, 52, of Miami (realtor); Yovanis Obregon Jimenez, 38, of Key Largo (real estate appraiser); Jose Manuel Pardo, 49, of Miami (realtor); Sandra M. Rodriguez, 50, of Miami, Mayra Martinez Suarez, 46, of Miami (mortgage broker); Laura E. Diaz, 57, of Hialeah, Fla.; Juan R. Prieto, 49, of Miami (realtor); Flavia E. Perez, 52, of Miami (mortgage broker); Jose Antonio Diaz, 75, of Miami, and Johny Hernandez, 25, of Miami (mortgage broker).

The defendants are variously charged with conspiracy to commit bank fraud (count 1); bank fraud (counts 2-21); receipt of gifts for procuring loans (counts 22 and 23); and providing gifts for procuring loans (count 24 and 25). The indictment also seeks the forfeiture of real property and money derived from the fraud. If convicted, the defendants face a maximum statutory penalty of up to 30 years in prison on each count.

U.S. Attorney Ferrer stated, “Even by South Florida fraud standards, today’s prosecution is shocking. Never before have we seen so many real estate and bank industry professionals charged in a single indictment. In addition, the defendants’ $40 million fraud spanned two years and resulted in $20 million in actual losses to the victim banks. Our commitment to stomp out mortgage fraud is unwavering. We will continue to prosecute all those involved in fraud, from straw buyers and sellers, all the way up the chain to corrupt bank officials and mortgage brokers.”

“Combating mortgage fraud continues to be a priority due to the impact of lending and the housing market on the nation’s economy,” said Special Agent in Charge Gillies. “This is a warning to those in the mortgage industry who think they can get away with creating phony documents to line their pockets with stolen loan proceeds. The FBI will continue to work with its federal, state and local law enforcement and regulatory partners to bring the perpetrators of these crimes to justice.”

“The Federal Deposit Insurance Corporation Office of Inspector General is pleased to join the United States Attorney for the Southern District of Florida and our law enforcement colleagues in announcing these indictments today. We are committed to our partnerships with federal, state, and local law enforcement to address mortgage fraud cases throughout the country. The American people need to be assured that their government is working to ensure integrity in the financial services and housing industries and that those involved in criminal misconduct that undermines that integrity will be held accountable,” said Inspector General Rymer.

Miami-Dade Police Director Loftus added, “Though we are pleased with the outcome of this investigation, we recognize that the indictment of this organization is only a small part of a systemic, ongoing criminal enterprise. We will remain vigilant in our pursuit of these offenders.”

As part of the scheme, brother and sister team, Alina Rubi and Camilo Garcia used Ivette Carreno, then a manager at Regions Bank, to obtain approval of nearly 200 fraud-based HELOCs. Alina Rubi, Camilo Garcia and his wife, Dianelys Garcia, and other co-defendants prepared false documents, such as proof of employment, tax returns, and property deeds, to support loan applications that were replete with false statements. Other co-defendants, such as Pedro Rubi, Luis Pardo Dieguez, and Ivis Hernandez, prepared mortgage and HELOC loan applications on behalf of unqualified borrowers and buyers. The loan applications and related documents, which were submitted to lenders, contained numerous false statements regarding the borrowers’ and buyers’ employment, income, deposits, assets, liabilities, and other information necessary for lenders to assess their qualifications to borrow money. Some of the false statements included misrepresentations that the borrowers were doctors, dentists, engineers, or engaged in other high-paying professions, with false yearly incomes, sometimes exceeding $300,000. In many instances, the unqualified buyers lied about property ownership, in that they did not even own the properties for which they received the equity lines of credit. On some occasions, the defendants used the HELOC proceeds to later purchase the very properties for which they had obtained the HELOC loans.

Alina Rubi, Camilo Garcia, Pedro Rubi, Luis Pardo Dieguez, and Galia Fernandez recruited individuals, and paid others to recruit individuals, to fraudulently obtain mortgage and HELOC loans on the properties. Among the individuals recruited to act as unqualified buyers and borrowers were defendants and co-conspirators Sheena Eizmendiz, Yovanis Obregon Jimenez, Jose Manuel Pardo, Sandra M. Rodriguez, Mayra Martinez Suarez, Laura Diaz, Juan Prieto, Flavia Perez, Jose Antonio Diaz, and Johny Hernandez.

To further the fraud scheme, Alina Rubi, Camilo Garcia, and other co-defendants used Silvia Zagales, a title agent, and her company, the Title Services Group, to divide and disburse, among the defendants, millions of dollars in loan proceeds. As part of the closing procedure, Zagales prepared and submitted to lenders documents that falsely stated, among other things, that borrowers supplied their own funds at the closing of the sale transactions; that she had sufficient loan proceeds and cash-to-close funds to cover the disbursements approved by the lender; and that good faith deposits had been provided by borrowers. Zagales and her co-conspirators fraudulently disbursed the loan proceeds to the sellers and others. In some instances, Zagales used the loan proceeds to satisfy the buyers’ cash-to-close obligations, and would often pocket seller proceeds through another company that she owned and operated. In addition, to conceal the fraud and to conduct multiple mortgage loan and HELOC closings with the same properties, Zagales and her co-defendants, in some cases, failed to timely record, and falsely recorded, mortgage deeds and mortgage documentation with State of Florida authorities.

This law enforcement action is sponsored by the Financial Fraud Enforcement Task Force. The interagency Financial Fraud Enforcement Task Force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The 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.

U.S. Attorney Ferrer commended the investigative efforts of the FBI, U.S. Secret Service, the FDIC, and the Miami-Dade Police Department. The case is being prosecuted by Assistant U.S. Attorney Roger Cruz.

An indictment is only an accusation and a defendant is presumed innocent until and unless proven guilty 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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C. Tate George, Former NBA Basketball Player and the Chief Executive Officer (CEO) of The George Group, Charged in a Criminal Complaint with Allegedly Committing Wire Fraud

September 24, 2011

The Federal Bureau of Investigation (FBI) on September 23, 2011 released the following:

“Former NBA Player and CEO of The George Group Charged in Ponzi Scheme

NEWARK, NJ— C. Tate George, former NBA basketball player and the chief executive officer (CEO) of purported real estate development firm The George Group, surrendered this morning to federal authorities for allegedly orchestrating a more than $2 million investment fraud scheme, U.S. Attorney Paul J. Fishman announced.

George, 43, of Newark, surrendered in Newark to special agents of the FBI and postal inspectors of the U.S. Postal Inspection Service (USPIS) on a criminal complaint charging him with one count of wire fraud. He is scheduled to appear this afternoon before U.S. Magistrate Judge Patty Shwartz in Newark federal court.

According to the criminal complaint unsealed today:

George, who once played for the New Jersey Nets and Milwaukee Bucks, held himself out as the CEO of The George Group, claiming to have more than $500 million in assets under management. George pitched prospective investors, including several former professional athletes, to invest with the firm. George represented to these prospective investors that their money would be used to fund The George Group’s purchase and development of real estate development projects, including projects in Florida, Illinois, Connecticut, and New Jersey. George represented to some prospective investors that their funds would be held in an attorney escrow account and personally guaranteed the return of their investments, with interest.

Based on George’s representations, investors invested more than $2 million in The George Group between 2005 and March 2011, which he deposited in both the firm’s and his personal bank account. Instead of using investments to fund real estate development projects as promised, George used the money from new investors to pay existing investors in Ponzi scheme fashion. He also used some of the money for home improvement projects, meals at restaurants, clothing and gas. In reality, The George Group had virtually no income generating operations.

If convicted, George faces a maximum potential penalty of 20 years in prison and a $250,000 fine.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward, and postal inspectors of the USPIS, under the direction of Postal Inspector in Charge Philip R. Bartlett, for their work in the continuing investigation.

The government is represented by Assistant U.S. Attorney Christopher J. Kelly of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

The charge and allegations in the complaint are merely accusations and the defendant is considered innocent unless and until proven guilty.

If you believe you are a victim of or otherwise have information concerning this alleged scheme, you are encouraged to contact the FBI at 973-792-3000.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The 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.”

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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Joseph F. Skowron III Pled Guilty in Manhattan Federal Court to conspiracy to Engage in Insider Trading and Obstruction of Justice

August 16, 2011

The U.S. Attorney’s Office Southern District of New York on August 15, 2011 released the following:

“FORMER HEDGE FUND PORTFOLIO MANAGER JOSEPH “CHIP” SKOWRON PLEADS GUILTY IN MANHATTAN FEDERAL COURT TO INSIDER TRADING SCHEME INVOLVING CLINICAL DRUG TRIAL

Inside Tips Allowed Fund to Avoid $30 Million in Losses

PREET BHARARA, the United States Attorney for the Southern District of New York, announced that JOSEPH F. SKOWRON III, a/k/a “Chip Skowron,” a former portfolio manager of the health care unit of a hedge fund group (the “Hedge Fund”), pled guilty today to conspiracy to engage in insider trading and obstruction of justice. SKOWRON used material, non-public information (“Inside Information”) that he received from YVES BENHAMOU, a doctor who served as an advisor on a clinical drug trial, to avoid approximately $30 million in trading losses. SKOWRON obstructed justice by urging BENHAMOU to lie to the U.S. Securities and Exchange Commission (“SEC”) during an investigation into his trading. SKOWRON pled guilty in Manhattan federal court before U.S. District Judge DENISE L. COTE.

Manhattan U.S. Attorney PREET BHARARA said: “Chip Skowron is the latest example of a portfolio manager willing to pay for proprietary, non-public information that gave him an illegal trading edge over the average investor. He seized upon the opportunity presented by his advance knowledge to avoid $30 million in losses on the basis of information concerning just one stock. The integrity of our market is damaged by people who, like Chip Skowron, engage in insider trading, and they will continue to be prosecuted by this office.”

According to the Information, a Complaint previously filed in this case, other court filings, and statements made during today’s guilty plea proceeding:

During the period of the insider trading scheme, SKOWRON was responsible for the Hedge Fund’s investment decisions in public companies, including the biopharmaceutical company Human Genome Sciences, Inc. (“HGSI”), that were involved in the development of drugs to treat hepatitis C. BENHAMOU was a medical doctor with an expertise in hepatitis treatment who served on an HGSI steering committee that oversaw a clinical trial of a drug called Albuferon. At the same time, BENHAMOU also worked as a consultant for an expert networking firm that, for a fee, put him in contact with portfolio managers and other investors at hedge funds, including SKOWRON, who purchased and sold securities in the healthcare sector.

Beginning in April 2007, SKOWRON developed a personal and financial relationship with BENHAMOU independent of the expert networking firm. For example, SKOWRON gave BENHAMOU 5,000 euros in cash during a meeting in Barcelona, Spain. He also paid some of BENHAMOU’s expenses, including $4,624.83 in September 2007 for a New York City hotel room for him and his wife. SKOWRON also offered to hire BENHAMOU as a consultant or permanent advisor to a new hedge fund. SKOWRON gave these benefits to BENHAMOU to encourage him to provide Inside Information about the Albuferon clinical drug trial. BENHAMOU understood that SKOWRON would buy or sell HGSI stock on the basis of the Inside Information.

For example, on January 18, 2008, after learning from BENHAMOU that HGSI’s independent safety committee had recommended to discontinue a portion of the clinical trial following serious adverse side effects suffered by two patients, SKOWRON directed a trader at the Hedge Fund to “sell the hgsi,” “all of it.” On January 22, 2008, the day before HGSI announced it would discontinue a portion of the trial, BENHAMOU disclosed this information, as well as the potential of a press release from HGSI, to SKOWRON. While on the phone with BENHAMOU, SKOWRON sent an instant message to a trader at the Hedge Fund, urging him to sell the remaining HGSI shares more quickly. As a result of those communications, SKOWRON caused the Hedge Fund to sell more than 6 million shares of HGSI, thereby avoiding approximately $30 million in losses.

In addition, SKOWRON and BENHAMOU undertook efforts to conceal the insider trading scheme from regulatory authorities. Specifically, beginning in February 2008 after the SEC began investigating the Hedge Fund’s trading in HGSI stock, SKOWRON induced BENHAMOU to lie to the SEC by falsely denying that they had discussed the serious adverse events before they were made public.

SKOWRON, 42, of Greenwich, Connecticut, pled guilty to one count of conspiracy to commit securities fraud and obstruct justice. He faces a maximum penalty of five years in prison and a maximum fine of $250,000 or double the gain or loss arising from his conduct. In addition, he agreed to forfeit $5,000,000 to the United States. He is scheduled to be sentenced by Judge COTE on November 18, 2011, at 10:00 a.m.

BENHAMOU previously pled guilty in April 2011 to charges of conspiracy to commit securities fraud, securities fraud, conspiracy to obstruct justice, and making false statements to the FBI related to the scheme. He is scheduled to be sentenced by U.S. District Judge GEORGE B. DANIELS on October 20, 2011, at 10:00 a.m.

Mr. BHARARA praised the investigative work of the Federal Bureau of Investigation. He also thanked the SEC for its assistance.

This case was brought in coordination with President BARACK OBAMA’s Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage anaggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The 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.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys PABLO QUIÑONES, REED M. BRODSKY, and DAVID B. MASSEY are in charge of the prosecution.”

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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