Former Gunnison County Man Charged in Alleged Scheme to Defraud Investors in NASCAR Business

June 6, 2012

The Federal Bureau of Investigation (FBI) on June 5, 2012 released the following:

“DENVER— Michael Patrick Corrigan, age 57, formerly of Gunnison County, Colorado, was arrested early this morning without incident in Tuscaloosa, Alabama for mail and wire fraud offenses related to his fraudulent actions involving the sale of investment opportunities in a NASCAR memorabilia company, U.S. Attorney John Walsh and FBI Special Agent in Charge James Yacone announced today. Corrigan appeared in U.S. District Court in Birmingham, Alabama, where he was advised of the charged pending against him and the penalties related to those charges. A detention hearing is scheduled to take place later this week in Birmingham. He will eventually come to Colorado so that he can face the charges here, where he was indicted.

According to the indictment, Racezing Mania Corporation (RZM) was incorporated in Colorado in April 2006. Michael Patrick Corrigan was the registered agent. The purpose of RZM was to be a distributor of NASCAR memorabilia, specifically, die-cast cars and apparel. The business was registered to an address in Crested Butte. There was also a P.O. box in Clarksville, Indiana. NascarMania LLC was the parent company of RZM. NascarMania was incorporated under the laws of the Nevada in 2005. This company was also controlled by Corrigan. In addition, Markettron Holdings LLC was also controlled by Corrigan. From the companies’ inceptions, until the latter part of 2007, Corrigan was president of NascarMania and treasurer of RZM. Corrigan maintained his position as treasurer of RZM, and he and his wife had sole control of RZM finances of RZM.

The stated purpose of RZM was to specialize in racecar team sponsorships, custom-die cast car sales, and Internet marketing sales. RZM also offered “investment opportunity and value to both current and potential investors.” Between 2005 and 2008, Corrigan, using material misrepresentations and omissions, fraudulently solicited investors into his NASCAR memorabilia business. To create an appearance of credibility, the defendant created a RZM board of directors, which included several investors of RZM.

Corrigan solicited and interacted with investors through e-mail, telephone calls, mailings, and Internet websites. He also initiated a “club concept” in which investors contributed $500 for a membership position. Corrigan promised every investor a percentage of the sales of the NASCAR-related merchandise. He also sold membership to “affiliate sites,” or websites available for purchase by investors, for $1,250. The purpose of these sites was to sell NASCAR memorabilia through “spam” e-mails sent by RZM, which directed potential customers to the affiliate’s website. Corrigan guaranteed investors would receive a minimum of $100 weekly net profit, as well as 10,000 leads per week a $250 commissions for every affiliate site sale. An “E-Commerce” club offered membership positions for $5,000. Investors involved in this club were promised a percentage of the company’s returns from the Internet sales of NASCAR-related merchandise.

During the course of the scheme, Corrigan claimed to have the ability to generate income and profits through his three business units. He claimed to be expecting first-year sales totaling $38,500,000, netting $15,409.688 in profit. By 2011, Corrigan projected sales totaling $308,336,426, netting $135,852,298 in profit. Corrigan also informed investors and potential investors that RZM stock would be publicly traded, and, as a result, depending on the amount of the initial investment with RZM, several investors would become millionaires. The defendant was never authorized to use investor funds for his or his family’s personal use. Between 2005 and 2008, he obtained approximately $950,000.

“Combating investment fraud is one of this office’s top priorities: scamming investors out of their hard-earned dollars has criminal consequences, including potential prison time,” said U.S. Attorney John Walsh.

“The FBI does not take white-collar crime lightly and will aggressively pursue those that take advantage of hard working Americans,” said FBI Special Agent in Charge James Yacone. “The FBI will continue to protect the financial wealth of individuals enabling our economy to continue to grow safely and securely.”

Corrigan faces four counts of mail fraud and four counts of wire fraud. If convicted, he faces not more than 20 years in federal prison and up to a $250,000 fine, per count. He could also be ordered to pay restitution.

This case was investigated by the Federal Bureau of Investigation.

Corrigan is being prosecuted by Assistant U.S. Attorney Michelle Heldmyer.

The charges contained in the indictment are allegations, and the defendant is 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

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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.


Richard Bell, Robert Rogers, Jackiem Wright, and Reginald Berry are Charged in Separate Federal Criminal Informations with Alleged Wire Fraud, and Mr. Bell is Additionally Charged with Alleged Willfully Filing a False Federal Income Tax Return

December 1, 2011

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

“Four Charged with Fraud on City Sheriff’s Department

PHILADELPHIA— Charges were filed today against four people involved in an alleged scheme to defraud the Philadelphia Sheriff’s Office, announced United States Attorney Zane David Memeger. Separate informations[1] were filed against Richard Bell, Robert Rogers, Jackiem Wright, and Reginald Berry. Each of the defendants is charged with one count of wire fraud; Bell is additionally charged with willfully filing a false federal income tax return.

Bell was employed in the accounting department of the Philadelphia Sheriff’s Office. According to the information, between 2007 and 2010, Bell wrote fraudulent checks drawn on bank accounts of the Philadelphia Sheriff’s Office to unauthorized individuals and companies. Bell forwarded over $400,000 of those checks to Rogers. Rogers cashed the checks made payable to himself. Rogers forwarded the other checks to other individuals to cash or deposit. In particular, Rogers forwarded over $147,000 in checks made payable to one company to Wright and Berry. Wright and Berry deposited those checks into the company bank account, and withdrew or attempted to withdraw the proceeds. Bell, Rogers, Wright, and Berry shared the proceeds from their fraudulent checks.

It is further alleged that Bell assisted a person known to the United States Attorney in fraudulently purchasing properties at Sheriff’s sale for only 10 percent of the bid price. Bell carried out the scheme by removing the checks that the person submitted to the Philadelphia Sheriff’s Office for the remaining ninety percent before the checks were deposited. For this, Bell allegedly charged and received a fee from the person.

Information Regarding the Defendants

Name Address Age
Richard Bell Philadelphia, PA 36
Reginald Berry Philadelphia, PA 29
Robert Rogers Philadelphia, PA 44
Jackiem Wright Philadelphia, PA 29

If convicted, Bell faces an advisory sentencing guideline range of 33 to 41 months in prison; Rogers faces an advisory sentencing guideline range of 27 to 33 months in prison; Wright and Berry each face an advisory sentencing guideline range of 15 to 21 months in prison.

The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, the Philadelphia District Attorney’s Office, and the City of Philadelphia Office of Inspector General. The City of Philadelphia Office of the Controller has also assisted the investigation. The case is being prosecuted by Assistant United States Attorney Sarah L. Grieb, Assistant United States Attorney Christopher Diviny, and Special Assistant United States Attorney Meriah Russell.

1 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

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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.


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

September 30, 2011

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

“Pennsylvania Pastor Charged in Mortgage Fraud Scheme

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

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

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

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

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

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

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

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

President Obama established the Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.”

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

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

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

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Former President of Registered Investment Adviser Firm Charged with Allegedly Committing Mail Fraud and Obstruction

September 29, 2011

The Federal Bureau of Investigation (FBI) on September 28, 2011 released the following:

“SAN FRANCISCO— Today the United States Attorney’s Office for the Northern District of California charged Kurt S. Hovan, of Belvedere, Calif., with mail fraud and obstruction, United States Attorney Melinda Haag announced. The charges result from Hovan’s alleged fraudulent use of “soft dollars” and his subsequent obstruction of an investigation being conducted by the Securities and Exchange Commission (SEC).

According to the information filed today, Hovan, 43, is alleged to have created a scheme to defraud brokerage firms into paying “soft dollars” to Hovan’s brother, who then funneled the money back to benefit Hovan’s company, Hovan Capital Management, LLC (HCM). “Soft dollars” are credits from a brokerage firm on commissions generated by client trades in brokerage firm accounts. Brokerage firm clients, such as a registered investment adviser firm like HCM, are allowed to use those credits to pay for research services to benefit the investment adviser’s clients. The investment adviser, however, must disclose its use of these “soft dollar” credits, and the investment adviser is prohibited from using these credits to pay for its own benefit instead of its clients’ benefit.

According to the information, Hovan allegedly caused the creation of Bolton Research, LLC, in Connecticut. Hovan then submitted invoices to brokerage firms to support requests that those firms pay Bolton using HCM’s accumulated soft dollars. Hovan falsely claimed to the brokerage firms that Bolton’s invoices reflected charges for independent research Bolton had conducted to benefit HCM’s clients. The brokerage firms paid the invoices to Bolton, which was, in fact, simply Hovan’s brother. Hovan’s brother then funneled a substantial amount of the payments back to HCM to pay HCM’s rent.

In January 2010, the SEC asked Hovan to provide documentation of the purported independent research Bolton had conducted. In response, Hovan allegedly created false and misleading documents to falsely reflect that Bolton had conducted significant independent research, that Bolton had prepared reports summarizing the research, and that Bolton had done so on a schedule coinciding with the monthly soft dollar payments to Bolton. Hovan then produced these false documents to the SEC, and later falsely stated to the SEC that He did not create them.

Hovan’s initial appearance in federal court has not been scheduled. The maximum statutory penalty for mail fraud, in violation of Title 18, United States Code, Section 1341, is 20 years in prison, a $250,000 fine, and five years of supervised release. The maximum statutory penalty for obstruction is five years in prison, a $250,000 fine, and three years of supervised release. Any sentence following conviction, however, would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Doug Sprague is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rayneisha Booth. The prosecution is the result of a five-month investigation by the Federal Bureau of Investigation, with substantial assistance from the San Francisco Regional Office of the Securities and Exchange Commission.

Please note, an information contains only allegations against an individual and, as with all defendants, Mr. Hovan must be presumed innocent unless and until proven guilty.

Further Information:

Case #: CR 11-0699 RS”

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

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

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

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Bernard Joseph Tully, a Former Massachusetts State Senator, Pleads Guilty to Wire Fraud

September 1, 2011

The Federal Bureau of Investigation (FBI) on August 31, 2011 released the following:

“WASHINGTON— Bernard Joseph Tully, a former Massachusetts state senator, has pleaded guilty for devising a scheme to defraud a Boston-area businessman out of approximately $18,000 by falsely representing that Tully and his co-conspirator were using the funds to bribe public officials. Unbeknownst to Tully, the businessman reported Tully’s overtures to the FBI.

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz for the District of Massachusetts and Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office.

Tully, 84, of Dracut, Mass., pleaded guilty yesterday before U.S. District Judge Patti B. Saris to one count of wire fraud. According to court documents, Tully formerly served as the city manager for Lowell, Mass., from approximately 1979 to 1987. Prior to serving as city manager, Tully was a state senator representing Lowell and other areas.

According to information presented at the plea hearing and in court documents, the Massachusetts Registry of Motor Vehicles (RMV) determined in early 2009 that it needed to discontinue its lease for the Lowell RMV, due to lack of funds. According to court documents, Tully became aware of the possible closure of the Lowell RMV and contacted the Boston-area businessman who owned the space where the Lowell RMV was housed. Tully told the businessman that if he paid Tully, Tully would ensure a state senator would find money in order to keep the RMV in the space owned by the businessman. Later, according to court documents, Tully again contacted the businessman and told him that he need to pay Tully so that Tully could pay the public official, otherwise the RMV would have to move out of the space.

On July 3, 2009, the RMV announced it was closing the Lowell office as well as other RMV offices on July 23, 2009. Tully and a co-conspirator subsequently visited the businessman and told him that he would need to pay $20,000 to keep the RMV in Lowell. The businessman agreed that he wanted the RMV to stay, and Tully said he would start making telephone calls while his co-conspirator said he would talk to the public official.

On July 15, 2009, the businessman gave the co-conspirator a $5,000 check, which the co-conspirator cashed and gave a portion of the funds to Tully. On July 17, 2009, the businessman received a 90-day extension on the lease from the RMV to Oct. 31, 2009.

Thereafter, according to court documents, the businessman had a series of meetings and telephone conversations with Tully and his co-conspirator about securing another lease extension from the RMV. During these conversations, Tully and his co-conspirator falsely represented to the businessman that they needed additional money to make payments to various public officials in exchange for their official acts to secure the RMV’s continued presence in the businessman’s building. Between November 2009 and March 2010, the businessman, while cooperating with the FBI, paid Tully and the co-conspirator approximately $18,000 as bribe payments designed to secure the official assistance of various public officials.

In fact, Tully and his co-conspirator never paid any money to any public officials. According to court documents, Tully admitted in a May 2010 interview with FBI agents that he received approximately $12,000 in cash and checks from the businessman, and that he split the money with his co-conspirator. Tully also admitted that he had heard about the RMV’s plan to move the Lowell office out of the businessman’s office building from people who worked in the office, and that the businessman had contacted him for assistance. Tully admitted that he spoke with friends of friends of the Lowell legislative delegation about obtaining a lease extension and preventing the move of the Lowell RMV.

Tully admitted that he told the businessman that he was “throwing money around” at elected officials, but in actuality he did not. He admitted that he did this to give the businessman the impression that he, Tully, was influencing the legislative delegation.

Sentencing is scheduled for Dec. 1, 2011, at 3:00 p.m. According to the plea agreement, the government has agreed not to seek punishment beyond home confinement, 36 months of supervised release, a fine to be calculated under the U.S. Sentencing Guidelines and restitution of $18,000.

The case was investigated by the FBI, with assistance from the Massachusetts Inspector General’s Office and the Lowell Police Department. It is being prosecuted by Senior Litigation Counsel William M. Welch II and Kevin Driscoll of the Criminal Division’s Public Integrity Section, with assistance from the U.S. Attorney’s Office, Public Corruption Unit.”

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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111 Individuals Charged with Alleged Federal Health Care Crimes

February 24, 2011

Last week the Medicare Fraud Strike Force charged 111 individuals in nine cities, including doctors, nurses, health care company owners and executives, and others, for their alleged participation in Medicare fraud schemes involving more than $225 million in false billing. It was also announced the Medicare Fraud Strike Force will expand operations to two additional cities – Dallas and Chicago. The operation is the largest-ever federal health care fraud takedown.

The individuals are accused of various health care fraud-related crimes, including conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes, money laundering and aggravated identity theft. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, physical and occupational therapy, nerve conduction tests and durable medical equipment.

Nine individuals were charged in Houston for alleged schemes involving $8 million in fraudulent Medicare claims for physical therapy, durable medical equipment, home health care and chiropractor services. In Dallas, seven individuals were indicted for allegedly conspiring to submit $2.8 million in false billing to Medicare related to durable medical equipment and home health care.

In Chicago, charges were filed against 11 individuals allegedly associated with businesses that have billed Medicare more than $6 million for home health, diagnostic testing and prescription drugs.

The remaining charges were filed in Miami, Detroit, Brooklyn, Tampa, Los Angeles and Baton Rouge.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Litigation, International Extradition and OFAC SDN Litigation.

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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Costa Rican Company and Executives Charged with Alleged $670 Million Fraud Scheme

January 24, 2011

The president and the auditor of a Costa Rican company selling reinsurance bonds to life settlement companies were arrested and charged, along with the company itself, in a seven-count indictment unsealed today for their alleged role in a $670 million fraud scheme involving victims throughout the United States and abroad.

An indictment unsealed in U.S. District Court for the Eastern District of Virginia charges Costa Rica-based Provident Capital Indemnity Ltd. (PCI), Minor Vargas Calvo, 59, and Jorge Castillo, 55, each with one count of conspiracy to commit mail and wire fraud, three counts of mail fraud, and three counts of wire fraud. The indictment also seeks forfeiture of more than $40 million from Vargas, Castillo and PCI. Vargas was arrested on January 18, 2011, at the John F. Kennedy International Airport, and Castillo was arrested January 19, 2011, in New Jersey.

According to the indictment, Vargas, a citizen and resident of Costa Rica, is the president and majority owner of PCI, an insurance and reinsurance company registered in the Commonwealth of Dominica and doing business in Costa Rica. Castillo, a resident of New Jersey, is the purported independent auditor for PCI. If convicted, Vargas and Castillo face up to 20 years in prison on each count.

Vargas and Castillo allegedly engaged in a scheme to defraud clients and investors by making misrepresentations about PCI’s reinsurers, PCI’s financial statements and PCI’s Dun and Bradstreet rating, in connection with PCI’s marketing and sale of “financial guarantee bonds” to companies that sold life settlements or securities backed by life settlements to investors. PCI’s bonds were allegedly marketed as a way to eliminate one of the primary risks of investing in life settlements, namely the possibility that the individual insured by the underlying life insurance policy will live beyond his or her life expectancy.

The indictment alleges that from 2004 through 2010, PCI sold approximately $670 million of bonds to life settlement investment companies located in various countries, including the United States, the Netherlands, Germany, Canada, and elsewhere. PCI’s clients, in turn, sold investment offerings backed by PCI’s bonds to thousands of investors around the world. Purchasers of PCI’s bonds were allegedly required to pay up-front payments of 6 to 11 percent of the underlying settlement as “premium” payments to PCI before the company would issue the bonds.

Although a corporation is not a physical person, in the legal sense a corporation can be held criminally and civilly accountable for the actions of its employees, given the employees were acting in the scope of their employment and for the benefit of the corporation. This is possible through the legal doctrine of “respondeat superior.”

In a parallel investigation, the U.S. Securities and Exchange Commission announced its filing of a parallel emergency enforcement action against PCI, Vargas, and Castillo. The press release issued by the SEC is available here.

In cases dealing with financial securities and business transactions, the U.S. federal government has the power to charge individuals and corporations with criminal and civil liability. The Department of Justice handles the criminal aspect of such charges, and other governmental agencies such as the SEC or the FTC will impose civil liability. Criminal charges result in possible imprisonment, fines and forfeiture, whereas civil charges typically result in financial damages.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

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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Executives of Hedge Fund Indicted for Alleged $30 Million International Fraud Scheme

December 31, 2010

Thomas Repke, 57, of Salt Lake City, Utah, was arraigned Monday before a U.S. Magistrate Judge in Atlanta on multiple counts of mail fraud, wire fraud and conspiracy, relating to his operation of the Utah-based investment company, Coadum Capital. Repke was indicted on December 15, 2010, along with an alleged co-conspirator, James Jeffery, 58, of Belleville, Ontario, Canada. Jeffery has not yet made his initial appearance on these charges.

Allegedly, Repke and Jeffery operated Coadum Capital in 2006 and 2007, which at its height attracted over 100 investors and over $30 million in investments. Coadum offered shares in hedge funds and advertised monthly returns of 5 percent. As part of the alleged sales pitch that Coadum made to investors was that their funds would remain protected in an escrow account and would therefore not be at risk.

The indictment in this case alleges that, although investors were instructed to and did transmit much of their funds to one or more escrow accounts, including one in Atlanta, the money did not stay in any such account. Allegedly, Repke and Jeffery transferred over $20 million overseas to accounts in Switzerland and the Mediterranean island of Malta. This money was supposedly invested in a series of hedge funds or other investments operated by a supposed Malta-based trader. The indictment alleges that these investments produced no earnings at all, and by the end of 2007 only a fraction of the transferred funds remained deposited in these European accounts.

The indictment alleges that investors lost approximately $30 million with Coadum.

The indictment charges 22 counts of mail fraud, wire fraud and conspiracy. The charges carry a maximum sentence of 20 years in prison and a fine of up to $250,000 each.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

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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Four Detroit Residents Charged with Alleged Health Care Fraud Scheme

December 8, 2010

Four Detroit-area residents were arrested today by federal agents from the Department of Health and Human Services, Office of the Inspector General (HHS-OIG) and the FBI as part of an ongoing investigation into a $14.5 million home health care fraud scheme, announced the Departments of Justice and HHS.

In a two-count second superseding indictment returned on December 2, 2010, and unsealed yesterday, four additional individuals are alleged to have participated in a Medicare fraud scheme operated out of Patient Choice Home Healthcare (Patient Choice) and All American Home Care (All American), two Oakland County, Michigan, home health agencies that purported to provide in-home health services. Maira Suleman, 30; John Thomas, 32; Sherry Prescott, 50; and Myra Jones, 50, were each charged with conspiracy to commit health care fraud. Pramod Raval, M.D., 57, who was previously charged with conspiracy to violate the Anti-Kickback Statute, was also charged with conspiracy to commit health care fraud in the indictment unsealed today.

Twenty-one individuals, including the four arrested today, have now been charged for their alleged roles in this health care fraud scheme. The original indictment was returned on January 12, 2010, with the first superseding indictment returned on July 13, 2010. To date, 10 individuals have pleaded guilty for their roles.

Superseding indictments occur when the government discovers addition information they did not have prior to issuing the original indictment. Typically, individuals included in an original indictment will attempt to work out a plea agreement with the government in exchange for names of others that may have been involved in the scheme. However, the trustworthiness of such claims is questionable, yet the government is permitted to use the information to indict others that are allegedly involved.

The indictment alleges that Medicare paid Patient Choice and All American more than $14.5 million for services that were medically unnecessary and/or not provided between August 2007 and September 2009. The charge of health care fraud conspiracy carries a maximum penalty of 10 years in prison and a $250,000 fine. The charge of conspiracy to violate the Anti-Kickback Statute carries a maximum prison sentence of five years and a fine of up to $25,000.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

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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Doctor Charged with Alleged Fen-Phen Scheme

December 2, 2010

Dr. Abdur Razzak Tai was charged on Tuesday by indictment with 13 counts of mail fraud and wire fraud in connection with an alleged scheme to submit fraudulent Fen-Phen claims, announced United States Attorney Zane David Memeger. Dr. Tai was charged in connection with his review of the echocardiograms of more than 1,100 patients who filed claims with the American Home Product Settlement Trust in Philadelphia. The indictment alleges that Dr. Tai falsely certified the patients’ tests to show that they had sustained heart damage.

As set forth in the indictment, Pondimin (also known as fenfluramine), and Redux (also known as dexfenfluramine), were prescription diet drugs that were distributed through doctors and weight loss clinics. When Pondimin and/or Redux were taken in combination with Phentermine, it was popularly referred to as Fen-Phen. On September 15, 1997, American Home Products Corporation, later known as Wyeth (collectively “Wyeth”), withdrew the diet drugs Pondimin and Redux (the “Diet Drugs”) from the market.

Prior to 1997, and continuing to the present, individuals who had ingested Pondimin and/or Redux, alone, or in combination with Phentermine, filed individual lawsuits and class actions in federal and state courts against Wyeth and others, alleging that the use of the Diet Drugs had, or may have, adversely affected their health. To resolve that litigation, Wyeth entered into a class action settlement, which established a Trust to pay benefits to persons injured by Fen-Phen with money contributed by Wyeth.

It is alleged that Dr. Tai entered into agreements with lawyers who represented persons who believed that they had been injured by taking Fen-Phen. Under these agreements, Dr. Tai agreed to read echocardiograms of the lawyers’ clients to determine whether they qualified for compensation from the Trust. The indictment alleges that Dr. Tai wrote reports and signed certifications attesting that claimants had suffered heart damage on some occasions when he knew that the tests showed that they had not and, on other occasions, when he knew that he had not personally reviewed the test results to determine whether they had suffered heart damage. The indictment charges that, despite his knowledge, Dr. Tai certified that these patients qualified for settlement benefits worth up to hundreds of thousands of dollars each.

It would be interesting to know whether any of the lawyers involved in the alleged scheme have also been indicted or questioned. Information provided by others involved in the alleged scheme may have led to the alleged incriminating evidence against Dr. Tai.

The government clearly doesn’t have a significant amount of information on Dr. Tai. Specifically, if Dr. Tai was involved in a scheme involving 1,100 patients, why has the government only indicted him with 13 counts? It seems the government is simply relying on information provided by others and is trying to convict Dr. Tai on minimal evidence.

If convicted, the defendant faces a maximum possible sentence of 260 years’ imprisonment, a $3.25 million fine, three years of supervised release, and $1,300 special assessment.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

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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