Seventeen Members of an Alleged North Carolina Racketeering Enterprise Indicted on Investment Fraud, Mortgage Fraud, and Related Charges

October 25, 2012

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

“Fourteen Others to Plead Guilty on Related Charges; Total of 81 Defendants Have Been Charged to Date in Operation Wax House

CHARLOTTE, NC— A federal indictment charging 17 defendants in Charlotte and elsewhere with racketeering, investment fraud, mortgage fraud, bank bribery, and money laundering was unsealed today in U.S. District Court, announced the U.S. Attorney’s Office for the Western District of North Carolina. Fourteen additional defendants have agreed to plead guilty in connection with the latest round of criminal charges resulting from Operation Wax House, a mortgage fraud investigation that began in the Western District of North Carolina in 2007.

Chris Briese, Special Agent in Charge of the FBI, Charlotte Division; Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI); and Elaine Marshall, North Carolina Secretary of State join the U.S. Attorney’s Office in making today’s announcement.

The federal racketeering indictment was returned by a federal grand jury sitting in Charlotte on July 26, 2012, but remained sealed until today. The indictment alleges that the 17 defendants and others were part of a criminal organization (the Enterprise) that operated principally in the cities of Charlotte and Waxhaw, North Carolina, and stole more than $75 million from investors and mortgage lenders. The indictment was unsealed following the arrests this week of 11 members of the Enterprise, including three of its leaders, James Tyson, Jr.; his mother, Carrie Tyson; and Victoria Hunt. James Tyson, Jr. was arrested on Sunday, October 21, 2012, at Washington Dulles International Airport upon arrival in the United States from a flight originating in Dakar, Senegal, which is Tyson’s last known residence.

The racketeering charges contained in the indictment are the result of Operation Wax House, an ongoing investigation into securities and mortgage fraud targeting communities in the Mecklenburg and Union Counties of North Carolina’s Western District. The investigation was conducted jointly by the FBI and IRS-CI, along with the North Carolina Secretary of State, Securities Division.

According to allegations contained in the unsealed indictment:

The Enterprise, which operated from about 2005 through the present, engaged in an extensive pattern of racketeering activities, consisting of investment fraud, mortgage fraud, bank fraud, money laundering, and distribution of illegal drugs. Members of the Enterprise also bribed bank officials and committed perjury before the grand jury. The co-conspirators targeted professional athletes and doctors as well as their personal and professional acquaintances and convinced them to invest in a series of sham corporations controlled by the Enterprise. The co-conspirators stole over $27 million from more than 50 investor victims, including money that the investor victims were induced to obtain as loans from financial institutions. Rather than investing victims’ money as promised, the Enterprise diverted victims’ money to finance its mortgage fraud operations and to support its members’ lifestyles. For example, members of the Enterprise used the stolen money to purchase luxury vehicles, take lavish vacations, organize extravagant dinners and parties, and invest in other sham businesses or investments. In addition, the conspirators made Ponzi-style payments to other victims.

The Enterprise’s mortgage fraud operations involved acquiring luxury homes in neighborhoods in Charlotte and Waxhaw. One member of the Enterprise would agree with a builder to purchase a property at the “true price.” The Enterprise would then arrange for a buyer to purchase the property at an inflated price. In most circumstances, the buyer would agree to purchase the property in his or her own name and sign whatever documents were necessary, in exchange for a hidden kickback. The builder would sell the property at the inflated price, the lender would make a mortgage loan on the basis of that inflated price, and the difference between the inflated price and the true price would be extracted at closing by the Enterprise.

The 17 defendants charged in today’s indictment and the 14 defendants who have agreed to plead guilty bring the total number of defendants charged to date in connection with Operation Wax Houseto to 81. Charged in the indictment are:

  • Ramin Amini, 44, of Tehran, Iran, is charged with racketeering conspiracy, mortgage fraud, and money laundering conspiracy. Role: Leader and promoter in the scheme. Status: Fugitive.
  • Vonetta Tyson Barnes, 38, of Wahiawa, Hawaii, is charged with racketeering conspiracy, securities fraud, wire fraud to defraud investors, and money laundering conspiracy. Role: Promoter. Status: Released following arrest and initial appearance.
  • Travis Bumpers, 36, of Charlotte, is charged with racketeering conspiracy, securities fraud, mortgage fraud, wire fraud to defraud investors, bank bribery, and money laundering conspiracy. Role: Promoter. Status: Fugitive.
  • Glynn Hubbard, 35, of Charlotte, is charged with racketeering conspiracy, mortgage fraud, and money laundering conspiracy. Role: Promoter. Status: In federal custody, pending release on conditions, following arrest and initial appearance.
  • Victoria Hunt, 36, of Charlotte, is charged with racketeering conspiracy, securities fraud, mortgage fraud, wire fraud to defraud investors, and money laundering. Role: Leader and promoter. Status: Currently in federal custody pending detention hearing.
  • Toby Hunter, 37, of Fort Mill, South Carolina, is charged with racketeering conspiracy, securities fraud, wire fraud to defraud investors, and money laundering. Role: Promoter. Status: Released following arrest and initial appearance.
  • Steven Jones, 44, of Waxhaw, is charged with securities fraud, wire fraud to defraud investors, and money laundering conspiracy. Role: Promoter. Status: Currently in federal custody pending detention hearing.
  • John McDowell, 40, of Dunn, North Carolina, is charged with racketeering conspiracy, securities fraud, mortgage fraud, wire fraud to defraud investors, and money laundering. Role: Promoter. Status: Arrest warrant issued.
  • Kurosh Mehr, 52, of Charlotte, is charged with racketeering conspiracy, mortgage fraud, and money laundering. Role: Promoter and buyer. Status: Currently in federal custody pending detention hearing.
  • Ann Tyson Mitchell, 61, of Charlotte, is charged with racketeering conspiracy, mortgage fraud, and money laundering. Role: Facilitator. Status: Released following arrest and initial appearance.
  • John Wayne Perry, Jr., 31, of Charlotte, is charged with racketeering conspiracy, and money laundering conspiracy. Role: Promoter. Status: Released following arrest and initial appearance.
  • Donte Thorogood, 34, of Durham, North Carolina, is charged with racketeering conspiracy, mortgage fraud, and money laundering. Role: Promoter. Status: To appear for an initial appearance pursuant to a summons.
  • Carrie Tyson, 58, of Winterville, North Carolina, is charged with racketeering conspiracy, securities fraud, mortgage fraud, wire fraud to defraud investors, and money laundering. Role: Leader and promoter. Status: Released following arrest and initial appearance.
  • James Tyson, Jr., 32, of Dakar, Senegal, is charged with racketeering conspiracy, securities fraud, mortgage fraud, wire fraud to defraud investors, bank bribery, and money laundering. Role: Leader and promoter. Status: Currently in federal custody pending detention hearing.
  • James Tyson, Sr., 61, of Charlotte, is charged with racketeering conspiracy, securities fraud, wire fraud to defraud investors, and money laundering. Role: Promoter. Status: Currently in federal custody pending detention hearing.
  • Nathan Shane Wolf, 41, of Charlotte, is charged with racketeering conspiracy, mortgage fraud and money laundering. Role: Real estate agent. Status: To appear for an initial appearance pursuant to a summons.
  • Purnell Wood, 41, of Palmyra, New Jersey, is charged with racketeering conspiracy, mortgage fraud, and money laundering. Role: Promoter. Status: Arrest warrant issued.

Today, the U.S. Attorney’s Office also filed criminal bills of information and plea agreements against 14 other defendants who acted as mortgage brokers, real estate agents, straw buyers, and a home builder in the scheme. They acknowledge taking part in the mortgage fraud conspiracy and have agreed to plead guilty. They are:

  • Crystal Goodson-Hudson, 44, of Kannapolis, North Carolina, is charged with mortgage fraud conspiracy and money laundering conspiracy. Role: Mortgage broker. Status: To appear for initial appearance upon a summons.
  • Shannon Lee (Somer Bey), 47, of Charlotte, is charged with mortgage fraud conspiracy and money laundering conspiracy. Role: Real estate agent. Status: To appear for initial appearance upon a summons.
  • Robert Mahaney, 52, of Ridgeway, South Carolina, is charged with mortgage fraud conspiracy and money laundering conspiracy. Role: Mortgage broker. Status: To appear for initial appearance upon a summons.
  • George Moore, 44, of Charlotte, is charged with mortgage fraud conspiracy. Role: Buyer. Status: To appear for initial appearance upon a summons.
  • Kevin Smith, 46, of Oxford, North Carolina, is charged with mortgage fraud conspiracy. Role: Buyer. Status: To appear for initial appearance upon a summons.
  • Holly Pasut, 56, of Charlotte, is charged with mortgage fraud conspiracy and money laundering conspiracy. Role: Real estate agent. Status: To appear for initial appearance upon a summons.
  • Danielle Vaughn, 34, of Greenbelt, Maryland, is charged with mortgage fraud conspiracy and money laundering conspiracy. Role: Mortgage broker. Status: To appear for initial appearance upon a summons.
  • Mary Vaughn, 58, of Charlotte, is charged with mortgage fraud conspiracy. Role: Buyer. Status: To appear for initial appearance upon a summons.
  • Jamaine Wallace, 41, of Conyers, Georgia, is charged with mortgage fraud conspiracy. Role: Buyer. Status: To appear for initial appearance upon a summons.
  • Phillip Wellington, 46, of Charlotte, is charged with mortgage fraud conspiracy and money laundering conspiracy. Role: Promoter. Status: To appear for initial appearance upon a summons.
  • William Wellington, 30, of Amityville, New York, is charged with mortgage fraud conspiracy. Role: Buyer. Status: To appear for initial appearance upon a summons.
  • Marcia Williams, 36, of York, South Carolina, is charged with mortgage fraud conspiracy and money laundering conspiracy. Role: Mortgage broker. Status: To appear for initial appearance upon a summons.
  • Sean Williams, 41, of Orangeburg, South Carolina, is charged with mortgage fraud conspiracy and money laundering conspiracy. Role: Mortgage broker. Status: To appear for initial appearance upon a summons.
  • Mark, Wittig, 41, of Matthews, North Carolina, is charged with mortgage fraud conspiracy. Role: Builder. Status: To appear for initial appearance upon a summons.

The conspiracy to participate in the racketeering activities charge carries a maximum term of 20 years in prison and a $250,000 fine or twice the gross profits or other proceeds. The securities fraud charge carries a maximum term of 20 years in prison and a $250,000 fine. The bank fraud charge carries a maximum term of 30 years in prison and a $1 million fine. The wire fraud charge carries a maximum term of 20 years in prison and a $250,000 fine. The money laundering conspiracy charge carries a maximum term of 20 years in prison and a $500,000 fine or twice the amount of criminally derived proceeds. The bank bribery conspiracy charge carries a maximum term of five years in prison and a $250,000 fine.

An indictment is merely an allegation, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. In addition, the guilty plea of any other person is not relevant to the guilt of any indicted person.

Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI, the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, and the Securities Division of the North Carolina Secretary of State. The prosecution for the government is being handled by Assistant United States Attorneys Kurt W. Meyers and Maria K. Vento and Special Assistant United States Attorney Kevin M. Harrington.

The President’s 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.

The names and case numbers of all the defendants charged to date in Operation Wax House are listed below, organized by their alleged role in the scheme.

Attorneys and Paralegals
Crawford/Mallard, Michelle 3:11cr374
Gates, Christine 3:09cr100
Norwood, Kelli, 3:09cr162
Rainer, Demetrius 3:08cr239/241
Smith, Troy, 3:08cr264

Bank Insiders
Brown, Jamilia, 3:10cr124
Eason, Danyelle, 3:10cr116
Henson, Vic. F., 3:10cr124
Jackson, Mitzi, 3:11cr374
Ramey, Bonnie Sue, 3:10cr124

Builders and Sellers
Fink, James, 3:11cr374
Jackson, Jennifer, 3:09cr241
Smith, Kelvis, 3:12cr238
Viegas, Jeffrey, 3:12cr298
Wittig, Mark, 3:12cr335
Wood, Gary, 3:09cr208

Facilitators and Financiers
Hickey, Denis, 3:09cr103
McClain, Landrick, 3:10cr124
Mitchell, Ann Tyson, 3:12cr239
Panayoton, Sherrill, 3:11cr176
Taylor, Alicia Renee, 3:10cr124
Wilson, Willard, 3:09cr161

Buyers
Banks, Arketa, 3:12cr297
Hillian, Kirk, 3:12cr83
Mathis, Charles, 3:10cr1
Mobley, Sarena, 3:10cr124
Moore, George, 3:12cr337
Richards, Dan, 3:10cr119
Smith, Kevin, 3:12cr341
Tyler, Glenna, 3:11cr200
Vaughn, Mary, 3:12cr329
Wallace, Jamaine, 3:12cr330
Wellington, William, 3:12cr333

Notary Public
Willis, Anthony, 3:09cr218

Appraiser
Darden, Clinton 3:10cr108

Mortgage Brokers
Bradley, Bonnette, 3:12cr299
Clarke, Linda, 3:10cr120
Flood, Ericka, 3:10cr124
Goodson-Hudson, Crystal, 3:12cr339
Mahaney, Robert, 3:12cr34-0
Scagliarini, Coley, 3:11cr374
Staton, Walter, 3:10cr113
Vaughn, Danielle, 3:12cr329
Williams, Marcia, 3:12cr334
Williams, Sean, 3:12cr336

Woods, Joseph, 3:09cr178

Real Estate Agents
Belin, Chris, 3:11cr374
Clark, Christina, 3:09cr44
Lee, Shannon, 3:12cr338
Pasut, Holly Hardy, 3:12cr331
Wolf, Nathan Shane, 3:12cr239
Wood, Gary, 3:09cr208

Promoters
Amini, Ramin, 3:12cr239
Barnes, Vonetta Tyson, 3:12cr239
Bumpers, Travis, 3:12cr239
Carr, Stephen, 3:10cr124
Clarke, Reuben, 3:10cr120
Coleman, Gregory, 3:10cr118
Hitchcock, Jimmy, 3:11cr374
Hubbard, Glynn, 3:12cr239
Hunt, Victoria, 3:12cr239
Hunter, Toby, 3:12cr239
Jones, Steven, 3:12cr239
Jones, Tyree, 3:10cr230
Marshall, Michael, 3:07cr283
McDowell, John, 3:12cr239
McPhaul, Elizabeth, 3:10cr114
Mehr, Kurosh, 3:12cr239
Mitchell, Ann Tyson, 3:12cr239
Perry, John Wayne, Jr., 3:12cr239
Perry, Kim, 3:10cr25
Phillips, Rick, 3:10cr115
Sharreff-El, Drew, 3:10cr124
Sherald, Kiki, 3:10cr117
Simmons, Aaron, 3:09cr240
Snead, Todd, 3:10cr124
Staton, Lisa, 3:10cr113
Thorogood, Donte, 3:12cr239
Tyson, Carrie, 3:12cr239
Tyson, James, Jr. 3:12cr239
Tyson, James, Sr., 3:12cr239
Wellington, Phillip, 3:12cr332
Wood, Purnell, 3:12cr239″

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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

Federal Mail Fraud Crimes

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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.


Attorney Lisa Carol Ross Pleads Guilty in Federal Court to Conspiracy to Commit Wire Fraud After Investigation and Charges Brought by IRS-CI and the FBI

August 30, 2012

U.S. Attorney’s Office News Release on August 29, 2012 released the following:

“Title Company Attorney Convicted in Multi-Million Dollar Mortgage Fraud Scheme

HOUSTON – Lisa Carol Ross, 50, of Missouri City, Texas, has pleaded guilty today to conspiracy to commit wire fraud, United States Attorney Kenneth Magidson announced today along with FBI Special Agent in Charge Stephen L. Morris and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Lucy Cruz.

Ross, an attorney and escrow officer for Vision Title LLC, and three others were indicted in 2011 for a scheme to defraud residential mortgage lenders. According to the indictment, the conspirators allegedly used fraudulent documents to help borrowers qualify for mortgage loans to purchase condominium units in the Commerce Towers building located on Main Street in downtown Houston as well as residential homes in the Houston area. The indictment indicates the documents had false and misleading information about the borrowers’ income, assets, liabilities, employment status, bank deposits, rental payments, intent to use properties as a primary residence and source of funds used to close the real estate transactions. Today, Ross admitted that she arranged for disbursements from the title company to be turned into cash and money orders and secretly distributed to the involved parties.

Ross is currently in custody on unrelated state charges where she will remain pending sentencing in this case by U.S. District Judge Gray Miller on Jan. 25, 2013. At that time, Ross faces a maximum penalty of 20 years in prison and a $250,000 fine.

The others charged in relation to this case are set to begin trial on Dec. 3, 2012. They are presumed innocent unless and until convicted through due process of law.

The investigation leading to the charges was conducted by the FBI, IRS-CI, Federal Deposit Insurance Corporation – Office of Inspector General and Houston Police Department. Assistant United States Attorney John Lewis is prosecuting the case.”

A previous post concerning this case may be found here.

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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

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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.


Four Indicted in Alleged Mortgage Fraud Scheme

June 4, 2012

The Federal Bureau of Investigation (FBI) on June 1, 2012 released the following:

“Defendants Allegedly Exploited Immigrant Straw Buyers to Defraud Multiple Banks

Four Seattle-area residents were arrested today on a 21-count indictment charging them with conspiracy, bank fraud, wire fraud, and mail fraud, announced U.S. Attorney Jenny A. Durkan. The mortgage fraud scheme ran from 2006 to 2008 and defrauded more than 10 banks, financial institutions, and mortgage lenders of more than $8.6 million. More than 50 mortgages were involved on properties in a variety of communities around Puget Sound including Medina, Renton, South Seattle, Bellevue, Redmond, and Kirkland. Jonathan Mendoza Martinez, 34, of Bellevue, Washington; his sister, Jazmin Villalba Martinez=, 30, of Seattle, Washington; Celia Perez Morales, 35, of Kirkland, Washington; and Jorge Castrejon Pichardo, 41, of Mountlake Terrace, Washington, made their initial appearances in U.S. District Court in Seattle today.

According to the indictment, three of the defendants worked at Emerald City Escrow and at Nationwide Home Mortgage and conspired to use straw buyers to defraud banks. The fourth defendant worked at a tax preparation business and provided some of the false documentation submitted with the loan applications. The conspirators submitted false financial, employment, and tax information to apply for residential mortgage loans. They falsely inflated the sale price of the properties. After the lenders funded the loans, the conspirators kept the excess proceeds, and the straw buyers quickly defaulted on the mortgages. The victim banks included Washington Mutual (now JPM Chase), Bank of America, American Sterling Bank, ING Bank, IndyMac Bank, and Merrill Lynch & Co. Inc., among others. Documents in the scheme were submitted via mail and wire. In all, the defendants secured, or aided and abetted in securing, through unqualified buyers, at least 50 mortgage loans, representing approximately $22,396,660 in loan proceeds, based on false and fraudulent representations, resulting in a loss to financial institutions and mortgage lenders totaling approximately $8,672,330.

Each count in the indictment is punishable by up to 30 years in prison and a $1 million fine.

The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the Internal Revenue Service Criminal Investigation (IRS-CI), the U.S. Postal Inspection Service (USPIS), and the Federal Bureau of Investigation (FBI). The case is being prosecuted by Assistant United States Attorneys Mike Lang and James Oesterle.”

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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

Federal Mail Fraud Crimes

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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.


Virginia Businessman Pleads Guilty to Federal Money Laundering Charge in Investigation of Federal Government Contracts

April 19, 2012

7thspace.com on April 18, 2012 released the following:

“WASHINGTON— James Edward Miller, 64, the owner of a Virginia-based construction management company, pleaded guilty today to a federal charge of conspiracy to commit money laundering in connection with an ongoing investigation into the awarding of millions of dollars of contracts by the United States Army Corps of Engineers.

The plea was announced by United States Attorney for the District of Columbia Ronald C Machen, Jr; James W McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Eric Hylton, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); Peggy E Gustafson, Inspector General for the Small Business Administration (SBA); Robert E Craig, Special Agent in Charge of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS); and Major General David E Quantock, the Commanding General of the United States Army Criminal Investigation Command (CID).

Miller, formerly of Virginia Beach, Virginia, pleaded guilty in the United States District Court for the District of Columbia. A sentencing date has not been set. The charge carries up to 20 years in prison as well as potential fines and an order of restitution. As part of the plea agreement, Miller must forfeit a money judgment of $4,055,063 and forfeit specific property, including bank account funds, a property in Virginia Beach, three vehicles, diamond rings, and other jewelry.

Miller is the sixth person to plead guilty to charges stemming from an investigation into a scheme that unfolded from 2007 to 2011.

The scheme allegedly involved two former managers for the United States Army Corps of Engineers, various businesses and executives, more than $20 million in bribes and kickback payments, and the planned steering of a government contract that potentially was worth about $1 billion.

Miller’s role in the crimes is described in a statement of offense that he signed as part of his plea agreement. Miller was the owner of Big Surf Construction Management LLC, a company based in Virginia Beach that was involved in residential and commercial construction projects. He was a close friend of another businessman, Harold Babb, the director of contracts at Eyak Technology (EyakTek), a business with an office in Dulles, Virginia.

In 2008, Babb proposed that Miller use Big Surf to obtain government contracts awarded by the United States Army Corps of Engineers. Under the plan, Big Surf would be hired by EyakTek as a subcontractor.

Initially unbeknownst to Miller, Babb was already involved in a conspiracy with, among others, Kerry F Khan, then a program manager for the United States Army Corps of Engineers, and Ananke LLC, a company that was controlled by Khan.

The statement of offense identifies three subcontracts awarded and paid by EyakTek to Big Surf in 2008 and 2009, totaling more than $8 million. Of this money, Big Surf channeled more than $3.6 million from the first two subcontracts to Ananke. According to the statement of offense, Babb directed Miller to pay another $2.9 million, from the third subcontract, to Ananke. However, Miller allegedly reneged on the plan and Big Surf kept the money.

As a result, a fourth intended subcontract, worth about $1.9 million, was canceled.

In the early stages, according to the statement of offense, Miller believed that Ananke was actually providing services for the money. However, by the time of the second contract, he knew that Ananke was not providing services to EyakTek or the Army Corps of Engineers. He also understood that Babb was using his position at EyakTek to facilitate the award of orders to Big Surf in exchange for payments from Big Surf directly and indirectly to Babb.

Indeed, during the scheme, Miller and Big Surf provided a number of benefits to Babb, including cash payments, an investment in real estate, and money for a Porsche.

Babb, 60, pleaded guilty in March 2012 to federal charges of bribery and unlawful kickbacks. He is awaiting sentencing.

Khan, 54, was indicted in September 2011 on one count of conspiracy to commit bribery and wire fraud and aiding and abetting and causing an illegal act to be done, as well as one count of bribery and one count of conspiracy to commit money laundering. He pleaded not guilty.

In the overall investigation, to date, the United States has seized for forfeiture or recovered approximately $7.2 million in bank account funds, cash and repayments, 19 real properties, six luxury cars, and multiple pieces of fine jewelry.

In announcing the plea, United States Attorney Machen, Assistant Director McJunkin, Acting Special Agent in Charge Hylton, Inspector General Gustafson, Special Agent in Charge Craig, and Major General Quantock thanked those who investigated the case from the FBI’s Washington Field Office; the Washington Field Office of IRS-CI; the Office of the Inspector General for the SBA; DCIS; the Defense Contract Audit Agency; and the United States Army CID. They also expressed thanks to the United States Marshals Service for its assistance on the forfeiture matter.

They also praised the efforts of those who worked on the case from the United States Attorney’s Office for the District of Columbia, including Assistant United States Attorneys Michael K Atkinson and Bryan Seeley of the Fraud and Public Corruption Section and Assistant United States Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section. Finally, they expressed thanks for assistance provided by former Special Assistant United States Attorney Christopher Dana; Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Shanna Hays, Taryn McLaughlin, Sarah Reis, Christopher Samson, and Nicole Wattelet and Legal Assistant Krishawn Graham.”

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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

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 and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


50 Individuals Charged in Puerto Rico with Allegedly Trafficking Identities of Puerto Rican Us Citizens

January 12, 2012

The U.S. Department of Justice on January 11, 2012 released the following:

“WASHINGTON – Fifty individuals were charged in an indictment unsealed today in Puerto Rico with conspiracy to commit identification fraud in connection with their alleged roles in a scheme to traffic the identities of Puerto Rican U.S. citizens and corresponding identity documents.

The charges were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez for the District of Puerto Rico; Director John Morton of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI); Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS); Scott P. Bultrowicz, Director of the U.S. State Department’s Diplomatic Security Service; and Internal Revenue Service-Criminal Investigation (IRS-CI) Acting Chief Rick Raven.

The one-count indictment was returned by a federal grand jury on Dec. 29, 2011, and unsealed today. Defendants were arrested today in multiple districts throughout the United States and Puerto Rico and will make initial appearances in federal court in the districts in which they were arrested. In addition, law enforcement agents executed searches as part of an ongoing investigation.

“The indictment unsealed today alleges that from April 2009 to December 2011, the defendants operated an extensive black market, identity fraud ring,” said Assistant Attorney General Breuer. “The alleged conspiracy stretched across the United States and Puerto Rico, using suppliers, identity brokers and mail and money runners to fill and deliver orders for the personal identifying information and government-issued identity documents of Puerto Rican U.S. citizens. Those willing to buy and sell personal identifying information and documents should take notice of today’s actions. The department and our law enforcement partners will not allow this kind of illegal activity to continue.”

“Today’s arrests are a reflection of ICE Homeland Security Investigations unrelenting determination to identify and dismantle national smuggling rings engaged in document and identity fraud,” said ICE Director John Morton. “The conspiracy alleged to be perpetrated by those charged undermines the integrity of our national immigration system. We will continue working with our federal partners to protect our homeland from criminals who have no regard for our nation’s safety and security.”

According to the indictment, from at least April 2009 to December 2011, conspirators in 15 states and Puerto Rico, a U.S. territory, trafficked the identities of Puerto Rican U.S. citizens, corresponding Social Security cards, Puerto Rico birth certificates and other identification documents to undocumented aliens and others residing in the United States.

The indictment alleges that conspirators located in the Savarona area of Caguas, Puerto Rico, (Savarona suppliers) obtained the Puerto Rican identities and corresponding identity documents. Conspirators in various locations throughout the United States (identity brokers) solicited customers. The identity brokers allegedly sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The indictment alleges that identity brokers ordered the identity documents from Savarona suppliers, on behalf of the customers, by making coded telephone calls, including using terms such as “shirts,” “uniforms” or “clothes,” to refer to identity documents. Specifically, the brokers asked for “skirts” for female customers and “pants” for male customers in various “sizes,” which referred to the ages of the identities sought by the customers.

According to the indictment, the Savarona suppliers generally requested that customers’ initial payments be sent by the identity brokers through a money transfer service to persons whose names were provided by the Savarona suppliers. Savarona suppliers allegedly retrieved the payments from the money transfer service and then sent the identity documents to the brokers using express, priority or regular U.S. mail. The indictment alleges that various conspirators sent or received money and mail parcels. The conspirators frequently confirmed sender names and addresses, money transfer control numbers and trafficked identities via text messaging.

According to the indictment, once the identity brokers received the identity documents, they delivered the documents to the customers and obtained second payments. The brokers generally kept the second payments for themselves as profit. Some identity brokers allegedly assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation.

As alleged in the indictment, the customers generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.

“From Main Street to Wall Street, identity fraud exacts a devastating toll on American consumers and businesses. U.S. Postal Inspectors will continue to aggressively investigate criminals who use the mail to defraud postal customers,” said Chief Postal Inspector Cottrell.

“The Diplomatic Security Service is firmly committed to working with our law enforcement partners to investigate and bring to justice those who commit document trafficking and identity fraud,” said Director Bultrowicz of the U.S. State Department’s Diplomatic Security Service. “Fraudulently-obtained documents are frequently used to apply for U.S. passports and visas, two of the most coveted travel documents in the world.”

“IRS Criminal Investigation has made investigating identity theft a top priority,” said Acting Chief Raven of the IRS-CI. “We are committed to working with our law enforcement partners to unravel the money trail of criminal enterprises that defraud government and prey on unwitting victims.”

The indictment alleges that various identity brokers were operating in Rockford, Ill.; Indianapolis; DeKalb, Ill.; Columbus and Seymour, Ind.; Aurora, Ill.; Hartford, Conn.; Clewiston, Fla.; Lilburn and Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; and Abingdon, Va.

If convicted, each defendant faces a maximum sentence of 15 years in prison and a $250,000 fine, as well as forfeiture.

The charges announced today are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE-HSI Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic, National Drug Intelligence Center – Document and Media Exploitation Branch and International Organized Crime Intelligence and Operations Center (IOC-2) provided invaluable assistance as well as various ICE, USPIS, DSS and IRS CI offices around the country.

The case is being prosecuted by the Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorneys’ Offices in the Northern District of Illinois, Southern District of Indiana and District of Connecticut provided substantial assistance. The U.S. Attorneys’ Offices in the Middle District of Florida, Southern District of Florida, Northern District of Georgia, Western District of Kentucky, District of Maryland, District of Massachusetts, Western District of Michigan, District of Nebraska, District of New Jersey, Western District of North Carolina, Southern District of Ohio, Eastern District of Pennsylvania, Middle District of Pennsylvania, Southern District of Texas, Eastern District of Virginia, Southern District of Illinois, Western District of Texas, Middle District of Louisiana and Western District of Virginia also provided invaluable support.

A website will be established to provide information about the case to potential victims and the public. Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at http://www.ice.gov/tipline. Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.

Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website, http://www.ftc.gov/idtheft. Additional resources regarding identity theft can be found at http://www.ojp.usdoj.gov/ovc/pubs/ID_theft/idtheft.html; http://www.ssa.gov/pubs/10064.html ; http://www.fbi.gov/about-us/investigate/cyber/identity_theft; and http://www.irs.gov/privacy/article/0,,id=186436,00.html.

An indictment is merely a formal accusation. Defendants are presumed innocent unless proven guilty in a court of law.”

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

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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.


Jason A. Herceg Charged in a Superseding Information with Conspiracy to Commit Bank Fraud, False Statements and Filing a False Tax Return

August 31, 2011

The Federal Bureau of Investigation (FBI) on August 30, 2011 released the following:

“Fairlawn Man Charged in Connection with $20 Million Bank and Mortgage Fraud Schemes

A three-count superseding information was filed against Jason A. Herceg, charging him with two counts of conspiracy to commit bank fraud and false statements to influence a bank to make a loan and one count of filing a false tax return in connection with mortgage and bank fraud schemes that led to a total loss in excess of $20 million, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.

Herceg, 35, resides in the Fairlawn, Ohio area. His schemes defrauded various banks and, in a separate transaction, two elderly investors, according to court documents.

The first conspiracy count of the information charges that Herceg as well as his business partner Andrew Norman, who was charged with similar offenses previously, conspired with a co-conspirator known as J.C. (not charged) in procuring “straw buyers” and submitting false loan documents to banks to purchase J.C.’s lots in Florida (which had already been inflated in value as part of a land flip) in a mortgage fraud scheme.

J.C., with assistance from Herceg and Norman, perpetrated a large mortgage fraud scheme involving numerous straw buyers, who essentially sold their good credit score to J.C. in order for J.C. to secure loans, through straw buyers’ names, for property in Florida, according to court documents.

J.C. promised the straw buyers that if they signed the loan application and paperwork, J.C. would pay them an inducement amount. J.C. then promised them that J.C. would make all the mortgage payments for these straw buyers and would make any down payments that were necessary, and that, once the property was developed, it would be sold and that they would split the profits half and half, according to court documents.

On the face of it, the straw buyers would receive money up front from J.C., make no payments out of pocket and receive 50 percent of the profit from the sale of the property at the tail end of the transaction, according to court documents.

Herceg and Norman were mentored by J.C. in how to recruit and use straw buyers. They assisted J.C. in using their brokerage company, V.P. Equity, located in the Akron, Ohio area, to prepare and submit falsified loan documents to the banks, which fraudulently inflated the income and assets of the straw buyers to qualify them for these loans. Ultimately, J.C. failed to make the mortgage payments on these loans, resulting in a loss of approximately $13.1 million, according to court documents.

In the second conspiracy scheme, Herceg, as well as Norman conspired with J.C. (not charged herein), and others, to defraud two elderly individuals by selling them a piece of Florida property for $7 million, according to court documents.

Moments before the sale, Herceg and Norman, with J.C.’s help, bought the property, through their partnership, 104 Investments, from the original seller and inflated its value by approximately $2.55 million. They then sold this property to these elderly individuals, who were told that they were buying the property from the original seller. These elderly victims were never told of the last-minute “flip” and that they were actually buying the land from Herceg, Norman, and 104 Investments, according to court documents.

Herceg and Norman, and their 104 Investments business partner, Robert Jason Workman, received approximately $2.55 million from this gain, and funneled portions out to themselves and paid $690,000 to J.C. as a kick-back for setting up this fraudulent scheme, which they fraudulently deducted as a business expense, according to court documents

Herceg is charged in a third count of the superseding information with filing a false individual tax return for 2006 because he underreported his portion of the income he received from this transaction because he took a fraudulent business deduction for the funds paid to J.C. as a kick back for setting up this scheme.

Herceg’s business partner Workman, has previously been charged with filing a false individual tax return for 2006 for underreporting his portion of the $690,000 received by the 104 Investments partnership, which was used to then pay J.C., because he took a fraudulent business deduction for his share (1/3) of these proceeds, according to court documents.

At the time Workman received the proceeds from this transaction in 2006, he was not charged with being involved in the fraudulent scheme to defraud the elderly victims. However, by the time he had filed his 2006 tax return in 2007, Workman was aware that funds paid out to J.C. were not business expenses, according to court documents.

Workman’s case has been assigned to the Honorable John Adams, U.S. District Court for the Northern District of Ohio, in Akron, Ohio, and is pending sentencing.

A series of straw buyers have been charged to date and entered guilty pleas to a one-count information charging conspiracy to commit loan fraud and bank fraud. The cases are listed below and are also pending sentencing before the Honorable John Adams.

  • Dr. Robert Rosenstein, a straw buyer who caused a loss of $811,087 to the First Horizon Bank and a loss of $1,163,148 to National City Bank, for total losses of $1,974,235.
  • Dr. Stanley Beekman, a straw buyer who caused a loss of $364,533.00 to the First Horizon Bank and a loss of $612,000 to National City Bank, for total losses of $976,533.
  • Lauren May, a straw buyer who caused a loss of $330,000 to the IndyMacBank.
  • David S. Yamokoski, a straw buyer who caused a loss of $942,969 to the Coast Bank of Florida and a loss of $867,000 to National City Bank, for total losses of $1,810,819.
  • Thomas Duke, a straw buyer who caused a loss of $852,067 to the Webster Bank.
  • Robert W. Aikens, a straw buyer who caused a loss of $858,938 to the Webster Bank.
  • Charles E. Rankin, a straw buyer who caused a loss of $351,746 to the IndyMac Bank, F.S.B.

The following individuals listed below have been charged and are waiting arraignment before the Honorable Judge Adams:

  • William P. Zamski, a straw buyer who is accused of causing a loss of $267,032 to IndyMac Bank, F.S.B.
  • Charles Eppinger, a straw buyer who is accused of causing a loss of $268,000 to IndyMac Bank, F.S.B.
  • Delores Matthews-Campbell, a straw buyer who is accused of causing a loss $283,120 to IndyMac Bank, F.S.B.
  • David Cannon, a straw buyer who is accused of causing a loss of $267,013 to IndyMac Bank, F.S.B.

A superseding information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt. If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

The case is being prosecuted by Assistant U.S. Attorneys Christian H. Stickan and Henry F. DeBaggis, following investigation by agents of the IRS-CI and FBI, Akron Office.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Walter Ryan Macapaz, Tony David Maldonado, Buffy Marie Lawrence, and Lisa Carol Ross Indicted by a Houston Federal Grand Jury for Conspiracy to Commit Wire Fraud, Wire Fraud, and Conspiracy to Commit Money Laundering

August 11, 2011

The Federal Bureau of Investigation (FBI) on August 11, 2011 released the following:

“Businessmen, Loan Officer, and Title Company Attorney Indicted for Wire Fraud and Money Laundering in a Multi-Million-Dollar Mortgage Fraud Scheme

HOUSTON— Two Houston businessmen, a mortgage company loan officer, and a title company attorney and escrow officer have been indicted for their alleged involvement in a scheme to defraud residential mortgage lenders of more than $22 million in loans, United States Attorney José Angel Moreno announced today along with FBI Special Agent in Charge Stephen L. Morris and Internal Revenue Service-Criminal Investigations (IRS-CI) Special Agent in Charge Rodney E. Clarke.

A Houston grand jury returned a six-count indictment yesterday charging Walter Ryan Macapaz, 34, Tony David Maldonado, 31, Buffy Marie Lawrence, 40, and Lisa Carol Ross, 49, with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. Macapaz, Maldonado, and Lawrence are expected to surrender themselves to federal authorities next week. Ross is currently being held in the Harris County Jail on unrelated state charges and is expected to be transferred into federal custody to answer the charges in the near future. According to the indictment, from November 2005 through October 2008 Macapaz and Maldonado recruited persons called “straw borrowers” to obtain mortgage loans to purchase condominium units in the Commerce Towers building located on Main Street in downtown Houston as well as residential homes in the Houston area. A straw borrower is paid money to allow his name and credit history to be used to obtain a mortgage loan to purchase a home when the person has no intention of actually living in the home or having any responsibility for making the mortgage payments. Macapaz and Maldonado allegedly used fraudulent documents to help the borrowers qualify for the loans including documents with false and misleading information about the borrowers’ income, assets, liabilities, employment status, bank deposits, rental payments, intent to use properties as a primary residence and source of funds used to close the real estate transactions. Lawrence, a loan officer for mortgage broker Mortgages First Real Estate Services LLC, allegedly assisted the borrowers to obtain the loans. Ross, an attorney and escrow officer for Vision Title LLC, allegedly arranged for disbursements from the title company to be turned into cash and money orders and distributed to the involved parties. According to the indictment, the mortgage loans allegedly totaled more than $22 million.

The maximum penalty for each wire fraud and conspiracy count is 20 years in prison as well as substantial fines. A conviction for money laundering conspiracy carries the most significant fine of $250,000 or twice the amount of the criminally derived property, whichever is greater.

The investigation leading to the charges was conducted by the FBI, IRS-CI, Federal Deposit Insurance Corporation – Office of Inspector General, and Houston Police Department. Assistant United States Attorney John Lewis is prosecuting the case.”

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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