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

————————————————————–

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.


Members of Alleged Sports Betting Ring Charged with Racketeering

August 8, 2012

The Federal Bureau of Investigation (FBI) on August 8, 2012 released the following:

“PHILADELPHIA—A 23-count indictment was unsealed today charging 16 defendants in a conspiracy case involving the Mastronardo Bookmaking Organization, a multi-million-dollar sports betting operation with bettors throughout the U.S. At its peak, the alleged organization had more than 1,000 bettors and was generating millions of dollars a year. All but one defendant (Joanna Mastronardo) are charged with conspiracy to participate in a racketeering enterprise (RICO) and conducting an illegal gambling business. The indictment alleges that between January 1, 2005 and January 1, 2011, the organization utilized Internet websites and telephone numbers that allowed bettors to place sports bets on football, baseball, basketball, golf, horse racing, and other sporting events. Residents of Costa Rica staffed the Internet and telephone sites. The defendants allegedly hid more than $1 million in and around their homes, including in specially-built compartments and in PVC pipes that were buried in a yard.

Charged are Joseph Vito Mastronardo, Jr. and John Mastronardo, the two alleged leaders; Joseph F. Mastronardo, Eric Woehlcke, Harry Murray, Joseph Vitelli, Anna Rose Vitelli, Patrick Tronoski, Edward Feighan, Kenneth Cohen, Schuyler Twaddle, Michael Loftus, Michael Squillante, David Rounick, Ronald Gendrachi; and Joanna Mastronardo, the wife of Joseph Mastronardo, Jr. All, with the exception of Twaddle, were arrested this morning.

The indictment was announced by U.S. Attorney Zane David Memeger, FBI Special Agent in Charge George C. Venizelos of the Philadelphia Field Office, Special Agent in Charge Eric Hylton of the Internal Revenue Service Criminal Investigation, and Montgomery County District Attorney Risa Ferman.

The indictment alleges that the defendants ran the organization using telephone, Skype, e-mail, text messaging, and in-person communication. They allegedly met bettors in-person, often in public buildings and parking lots, to collect or deliver payments that ranged from $1,000 to more than $100,000. The organization also allegedly used a gas station on Norristown Road in Blue Bell, Pennsylvania, as a mailing address and drop-off site to collect gambling payments.

According to the indictment, members of the Mastronardo Bookmaking Organization laundered the gambling proceeds using check cashing agencies, private bank accounts, and international bank accounts and provided instructions so that a losing bettor could pay a gambling debt through a charitable donation.

According to the indictment, leader Joseph V. Mastronardo, Jr. supervised the agents, sub-agents, websites (www.betroma.com and http://www.betrose.com), office employees; laundered some of the betting proceeds; collected debts; and instructed others to collect debts. Mastronardo’s brother, John, also a leader in the organization, supervised agents and sub-agents, laundered proceeds, and collected debts. John’s son, Joseph F. Mastronardo, worked as an office employee, collected debts, and performed other financial duties. Eric Woehlcke was initially a bookmaker and office employee, then worked as an office manager, and eventually became a leader supervising agents and sub-agents and laundering proceeds. Harry Murray was a bookmaker who resided in Florida and laundered proceeds in and outside the U.S. Joseph and Anna Rose Vitelli owned J&A Check Cashing where, in 2006, they allowed the organization to occupy an office for the illegal gambling business and which was also used to aid in the laundering of proceeds. Tronoski, Feighan, Cohen, Twaddle, Loftus, Squillante, Rounick, and Gendrachi were all bookmakers.

The indictment alleges that in March 2010, Joseph V. Mastronardo, Jr., in a conversation with bookmaker Harry Murray, commented, “Well, times like this I’m happy I’m a bookmaker,” to which Murray responded, “Me too.”

“Technology allowed the defendants to allegedly expand their gambling and money laundering operation far beyond the borders of Pennsylvania,” said Memeger. “Unfortunately for the defendants, however, we have the necessary statutory tools to investigate and prosecute those who openly flout our illegal gambling and financial reporting laws.”

“Illegal gambling and money laundering are the financial engines that help drive criminal enterprises like the one alleged today,” said Special Agent in Charge Venizelos. “The type of gambling activity charged here is illegal. These types of extensive and long-term joint investigative efforts, worked with our partners like the IRS and Montgomery County Detectives, are intended to dismantle criminal organizations that profit from illegal activities.”

“This alleged racketeering operation was anchored in Montgomery County but had tentacles spreading across the U.S. and beyond,” said D.A. Ferman. “Despite our attempt to shut it down in 2006-2007 with a Montgomery County prosecution, my office discovered that the defendants, as is alleged in the indictment, were back in business. We partnered with our federal counterparts to examine the full scope of the alleged illegal gambling operation. Today’s indictment reflects the work of many law enforcement agents across multiple agencies. These defendants tried to ‘game’ the system. Today, they crapped out.”

“The indictments announced today are the result of a significant and complex investigation,” said Special Agent in Charge Eric Hylton. “With both law enforcement and financial expertise, our agents are uniquely qualified to assist with these types of cases by following the trail of money. Our office will continue to work aggressively to identify and target illegal financial gains.”

Joanna Mastronardo is charged with one count of structuring in which it is alleged that she participated in making approximately 72 deposits in amounts less than $10,000, totaling more than $500,000 in a 12-month period.

Joseph V. Mastronardo, Jr. is charged in all 23 counts of the indictment. The remaining 14 defendants are each charged with the RICO conspiracy and with prohibition of illegal gambling. The indictment also seeks forfeiture of more than $6.3 million as alleged proceeds of the illegal enterprise.

The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, the Montgomery County Detective Bureau, and the Montgomery County District Attorney’s Office. It is being prosecuted by Assistant United States Attorney Jason P. Bologna.

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

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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 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.


Former Council Chairman Kwame R. Brown Pleads Guilty to Bank Fraud and Campaign Finance Violation

June 11, 2012

7thSpace.com on June 9, 2012 released the following:

“WASHINGTON— Kwame R Brown, the former Chairman of the Council of the District of Columbia, pled guilty today to a federal charge of bank fraud and a second criminal charge involving a violation of the District of Columbia’s campaign finance laws.

The guilty pleas were announced by United States Attorney Ronald C Machen Jr; Ronald T Hosko, Special Agent in Charge of the FBI Washington Field Office’s Criminal Division; and Rick A Raven, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI).

Brown, 41, pled guilty to the bank fraud charge in the United States District Court for the District of Columbia. In a separate proceeding, he pled guilty in the Superior Court of the District of Columbia to the campaign finance violation. As part of the plea agreement, he agreed to submit his immediate resignation from the District of Columbia Council. Brown also has agreed to cooperate as the investigation continues.

The Honorable Richard J Leon scheduled sentencing in the federal case for 11 AM on September 20, 2012.

The Honorable Juliet McKenna scheduled sentencing in the campaign finance case for 2:30 PM on the same date.

The bank fraud charge carries up to 30 years in prison. Under federal sentencing guidelines, the parties have agreed that the applicable range for this offense would be up to six months in prison and a possible fine of up to $5,000. The campaign finance charge carries a maximum of six months of incarceration and a possible fine of up to $5,000.

Brown is the second member of the Council of the District of Columbia to plead guilty to criminal charges this year. In January, in a separate and unrelated case, Harry L Thomas, Jr pled guilty to federal theft and tax charges.

Thomas, who resigned as part of his plea agreement, has since been sentenced to a prison term of 38 months. Thomas was the first sitting member of the DC. Council to be charged with and convicted of a felony.

The charges against Kwame Brown involve two separate matters. In one case, Brown admitted providing false documentation to secure two personal loans, totaling more than $220,000.

In the other, Brown admitted aiding and abetting another individual, a relative, to make a cash payment of $1,500 to a campaign worker for the 2008 council campaign. The relative was a signatory on the campaign’s bank accounts; Brown also admitted failing to disclose the relative’s identity to the District of Columbia Office of Campaign Finance.

“For the second time this year, a member of the DC. Council has pled guilty to a felony offense and been forced to resign,” said United States Attorney Machen. “While sitting on the council, Kwame Brown repeatedly falsified and forged documents to deceive the bank into giving him money, even faxing one of the fraudulent documents from his council office.

Brown also gave a family member free license to make illegal and untraceable cash expenditures from his 2008 campaign in violation of DC. law. The people of the District of Columbia deserve better from their elected officials. Today’s pleas take us one step closer to a culture of integrity and accountability that will not tolerate politicians engaging in dishonesty and self dealing.”

“This week, Mr Brown admitted to forging bank documents and withholding information about his re-election campaign finances,” said Special Agent in Charge Hosko.

“This investigation and today’s guilty pleas demonstrate that the FBI and our law enforcement partners will pursue all allegations of illegal conduct that clouds the judgment of our elected officials and deprives our citizens of the honest government to which they are entitled.”

“No matter what your position, it is unacceptable to submit false information to a financial institution in an effort to secure a loan,” said Special Agent in Charge Raven. “IRS-Criminal Investigation will make every effort to aggressively investigate financial fraud of any kind and not give a free pass to anyone who blatantly fails to comply with the law.”

Brown was elected as an at-large member of the District of Columbia Council in 2004 and took office in January 2005. He was re-elected in 2008, and then, in 2010, he was elected chairman. He took office in that position in January 2011.

According to a statement of offense signed by the government as well as the defendant, Brown submitted false information in securing a $166,000 home equity loan, as well as a $55,335 loan that he used to purchase a boat.

Both loans were issued by Industrial Bank, NA.

In paperwork for the home equity loan, which Brown sent by facsimile from his council office on September 26, 2005, Brown provided a Verification of Employment Form. In it, he falsely wrote that he held the position of “Vice President of Strategy” in an unnamed company; that he earned $3,000 per month; that his probability of continued employment was “great”; that he was projected to earn a $10,000 pay increase on January 3, 2006; and that he was a full-time employee. At the bottom of this form, Brown forged the name and signature of a friend from college who was purportedly the president of the company. In fact, Brown did not have his friend’s permission to sign this form, and his friend was never Brown’s employer.

Brown filed and submitted this form to overstate his annual income in an effort to win approval of his loan application, believing that, without artificially inflating his income, his request would be rejected.

Based on Brown’s purported income, Industrial Bank issued a loan to Brown on October 12, 2005, in the amount of $166,000.

Brown submitted the second loan application on July 25, 2007, this time seeking money for the purpose of purchasing a boat. As part of the application, he submitted an Internal Revenue Service form, purporting to be from a company for which he had worked as a consultant. The form that Brown submitted showed his 2006 income from the company to be $85,000. In fact, Brown’s income from the firm that year totaled $35,000.

Before submitting the form, Brown had altered the “3” on the document to an “8,” so that it appeared he earned $85,000, not $35,000.

As with the 2005 loan, Brown believed that this loan would not be approved without artificially inflating his income. Based on Brown’s purported income, Industrial Bank issued a loan to Brown on August 30, 2007, in the amount of $55,335.

In the campaign finance case, Brown admitted aiding and abetting an unlawful cash campaign expenditure, in excess of the $50 limit imposed on individual cash transactions. According to a statement of offense in that matter, signed by the government as well as the defendant, the “Committee to Re-Elect Kwame Brown” was formed for Brown’s 2008 re-election campaign for the at-large seat on the council.

In or around April 2007, Brown allowed a relative to be a signatory on the committee’s bank account, which was held at Industrial Bank. The relative and the committee’s treasurer jointly opened the account.

In his Statement of Candidacy, filed with the Office of Campaign Finance, Brown listed this account as the committee’s sole bank account. He failed, however, to disclose that his relative was a signatory on the account.

In August 2008, with Brown’s knowledge and permission, the relative opened a second bank account at Industrial Bank, called the “side account,” purportedly to pay for “get-out-the-vote” campaign activities. Brown authorized the relative to make withdrawals on behalf of the committee from the side account. However, he failed to amend his Statement of Candidacy to disclose the existence of the second account.

Later, on or about September 11, 2009, Brown’s relative paid an expense in the amount of $1,500 related to the 2008 re-election campaign, using cash withdrawn from the side account.

This case was investigated by the FBI’s Washington Field Office and the Washington Field Office of IRS-Criminal Investigation.

In announcing the guilty pleas, United States Attorney Machen, Special Agent in Charge Hosko, and Special Agent in Charge Raven commended those who investigated the case for the FBI and IRS-CI.

They also acknowledged the efforts of Assistant United States Attorneys David S Johnson, Maia L Miller, Matt Graves, Ellen Chubin Epstein, and Daniel Butler of the Fraud and Public Corruption Section of the United States Attorney’s Office; Assistant United States Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section of the United States Attorney’s Office; and Trial Attorney Peter Mason of the Public Integrity Section of the Department of Justice’s Criminal Division, who have prosecuted the case.

Finally, they expressed appreciation to Forensic Accountant Crystal Boodoo; Paralegal Specialists Diane Hayes, Lenisse Edloe, Tasha Harris, Shanna Hays, and Sarah Reis; Legal Assistants Krishawn Graham, Nicole Wattelet, and Christopher Samson; former Legal Assistant Jared Forney; Criminal Investigators Matthew Kutz and Duncan Templeton; Litigation Support Services Specialist Thomas Royal; Information Technology Specialist Kimberly Austin; Victim-Witness Coordinator Dawn Tolson-Hightower; former Student Law Clerks Carl Barnes, Iris Postelnicu, and Danielle Rosborough; and Intelligence Specialist Lawrence Grasso, all of the United States Attorney’s Office for the District of Columbia.

Reported by: FBI”

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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.


Current and Former Detroit Housing Commission Employees Charged in Criminal Complaint in Federal Court

May 1, 2012

The Federal Bureau of Investigation (FBI) on April 30, 2012 released the following:

“Special Agent in Charge Andrew G. Arena, HUD-OIG Deputy Special Agent in Charge Breck Nowlin, and U.S. Attorney Barbara McQuade, on behalf of the FBI-led Public Corruption Task Force, announced today the filing of a criminal complaint filed in U.S. District court for the Eastern District of Michigan. According to the affidavit, Alisa Royster and Kim Walton were allegedly involved in the fraudulent acquisition of vouchers valued at more than $5,000 from an agency receiving more than $10,000 under a federal program.

From on or about July 2008 until on or about September 2010, both of these individuals allegedly conspired to fraudulently issue housing choice vouchers. Through their alleged fraudulent acts, they knowingly stole and obtained thousands of dollars from federal programs designed to help low income families.

The dedication, hard work, and collaboration of all those involved has already resulted in a countless number of violations exposed. The focus of the task force will continue to be on corruption at all levels of local, state, and federal government. With assistance and cooperation, the task force is rooted in its mission to end public corruption in our area.

The FBI-led Public Corruption Task Force consists of the FBI, Office of U.S. Attorney Barbara McQuade, Office of Michigan Attorney General Bill Schuette, IRS-CID, HUD-OIG, EPA-CID, DOT-OIG, Michigan State Police, and Detroit Police.

If you have any information related to these crimes or other public corruption, please contact the FBI Detroit Office at (313) 965-2323.

A complaint is only a charge and is not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed, a determination will be made whether to seek a felony indictment.”

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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

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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 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.


Theodore L. Freedman, a Lawyer, Indicted in Manhattan Federal Court with Four Counts of Tax Fraud in Connection with Alleged False and Fraudulent Statements to the IRS

July 15, 2011

The U.S. Attorney’s Office Southern District of New York on July 14, 2011 released the following:

“FORMER PARTNER AT MAJOR INTERNATIONAL LAW FIRM CHARGED IN MANHATTAN FEDERAL COURT WITH TAX FRAUD VIOLATIONS

PREET BHARARA, the United States Attorney for the Southern District of New York, and CHARLES R. PINE, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal investigation Division (“IRS-CID”), announced that THEODORE L. FREEDMAN, a former senior partner at a major international law firm (the “Law Firm”), was charged yesterday in Manhattan Federal Court with four counts of tax fraud in connection with false and fraudulent statements he allegedly made on his tax returns that resulted in more than $1 million in losses to the IRS. Among other things, FREEDMAN, 63, misrepresented his partnership income at the Law Firm by approximately $2 million, and fraudulently claimed over $500,000 in expenses for a sole proprietorship law practice that did not exist. FREEDMAN voluntarily surrendered to authorities this morning, and will be arraigned before U.S. Magistrate Judge JAMES C. FRANCIS IV later today.

Manhattan U.S. ATTORNEY PREET BHARARA stated: “As alleged, Theodore Freedman, an accomplished and well-compensated attorney, abdicated his legal and ethical responsibilities by cheating on his taxes. Just like every ordinary citizen, privileged professionals have to pay their taxes too, and we will continue working with our partners at the IRS to ensure that they do.”

IRS Special Agent-in-Charge CHARLES R. PINE said: “To build faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share. The IRS-Criminal Investigation Division, together with the Department of Justice will investigate and prosecute those who violate our tax system.”

According to the Indictment filed yesterday:

FREEDMAN was a senior partner in the New York office of a major United States law firm, where he was a member of the Law Firm’s restructuring group. In that capacity, FREEDMAN received income that was calculated as a percentage of the Law Firm’s partnership income for a given year. The Law Firm issued FREEDMAN, the IRS form that reports an individual partner’s share of income or loss from the partnership. According to the form, FREEDMAN’s aggregate income for calendar years 2001 through 2004 was approximately $5,388,699.

As charged in the Indictment, FREEDMAN self-prepared, signed, and filed tax returns for calendar years 2001 through 2004. Rather than reporting the true and correct amount of partnership income he received from the Law Firm for the years in question, FREEDMAN falsely and fraudulently under-reported his income in the aggregate amount of approximately $2,097,211.

In addition, FREEDMAN also attached to each of his tax returns for those same years a Schedule C, which is supposed to report the amounts of income and expenses, and the resulting net profit or loss, for a taxpayer’s self-owned business. On each of the Schedules C for these tax years, he falsely and fraudulently claimed to have sustained significant losses for a fictitious sole proprietorship — a legal practice — in the total aggregate amount of approximately $542,358. That sole proprietorship was fictitious.

In total, FREEDMAN’s false statements on his self-prepared returns resulted in a tax loss to the IRS of more than $1 million.

FREEDMAN faces a maximum sentence of three years in prison on each of the tax fraud counts, for a total maximum of 12 years in prison.

Mr. BHARARA praised the work of the Internal Revenue Service, Criminal Investigation Division.

This case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorney E. DANYA PERRY is in charge of the prosecution.

The charges contained in the Indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.”

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

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

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

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