Leon Benzer Indicted by a Federal Grand Jury of Tax Evasion By Alleging He Was Evading Federal Income and Employment Taxes

May 15, 2013

The Federal Bureau of Investigation (FBI) on May 14, 2013 released the following:

“Former Construction Company Owner Indicted in Nevada for Income Tax Evasion

WASHINGTON—A federal grand jury in Nevada today returned an indictment against a former construction company owner for evading federal income and employment taxes, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber, FBI Acting Special Agent in Charge William C. Woerner of the Las Vegas Field Office, and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.

Leon Benzer, 46, of Las Vegas, was charged in U.S. District Court in the District of Nevada with two counts of tax evasion.

In January 2013, Benzer was indicted in a related case on charges of wire fraud and conspiracy to commit wire and mail fraud. According to court documents, from approximately August 2003 through February 2009, Benzer orchestrated a scheme to direct construction defect litigation and repairs at condominium complexes to a conspiring law firm and Benzer’s construction company, Silver Lining Construction (SLC). As a result of this scheme, the indictment alleges that SLC was awarded a contract worth over $7 million for work at the Vistana Homeowner’s Association (Vistana HOA) in Las Vegas. The case is pending.

According to the indictment returned today, in August 2006, Benzer filed five years’ worth of personal tax forms and business tax returns without any payments accompanying those returns. As of April 2007, Benzer had allegedly failed to pay his personal tax liability of approximately $459,000 and SLC’s employment tax liability of approximately $687,000 and unemployment tax liability of approximately $18,000. In May 2007, the IRS issued a notice of intent to file a levy; Benzer subsequently appealed this process and indicated that he wanted to enter into an “offer-in-compromise” with the IRS to pay a portion of what was owed in full satisfaction of all his tax liabilities. According to the indictment, during this offer-in-compromise process, the IRS requested detailed financial information from Benzer.

Between March 2005 and January 2008, the indictment alleges that Benzer and SLC received over $7 million from the Vistana HOA contract, including a wire transfer of over $1 million on September 21, 2007, to a personal U.S. Bank account that Benzer opened in August 2007. The indictment alleges that when Benzer filed certain IRS forms related to the offer-in-compromise process on September 25, 2007, he failed to disclose this personal U.S. Bank account or the assets contained in it.

The maximum prison sentence for each count of tax evasion is five years in prison and a maximum fine of $100,000.

The charges and allegations against the indicted defendant are merely accusations, and the defendant is considered innocent unless and until proven guilty.

The case is being prosecuted by Senior Deputy Chief Kathleen McGovern, Deputy Chief Charles La Bella, and Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section. The case is being investigated by IRS-CI, the FBI, and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions; and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit http://www.stopfraud.gov.”

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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.


Feds Demand Convicted Con Man Serve 30 Years

April 30, 2012

ABC News on April 30, 2012 released the following:

“By PAUL ELIAS Associated Press

Federal prosecutors are demanding that a man they call a “congenital liar and serial fraudster” serve 30 years in prison and pay a $60 million fine after a jury convicted him of defrauding actors Danny Glover, Harry Belafonte and others out of more than $35 million.

If U.S. District Judge Charles Breyer agrees to the sentence on Monday, it would represent one of the harshest penalties ever meted out in a white collar case. Not even Jeff Skilling, the architect of Enron Corp.’s criminal collapse, was sentenced to that much prison time. Skilling is currently serving a 24-year, four-month sentence.

Assistant U.S. attorneys W. Douglas Sprague and Hallie Mitchell argue in court papers that the harsh sentence is warranted because of the financial and emotional toll the fraud had on the victims, the extent Samuel “Mouli” Cohen went to cover up his scam and his refusal to accept responsibility.

“This unrepentant con man with a militant lack of responsibility has blamed everyone—the victims, the Court, his attorneys, the government, the Probation Officer, and the Court reporter—for his actions and their consequences except the person responsible for it,” prosecutors write in a court filing.

Most notably, Cohen’s fraud caused the collapse of the Vanguard Public Foundation, a nonprofit launched in 1972 that awarded grants to a vast array of social causes. Many of Cohen’s victims, including Glover and Belafonte, were associated with the foundation, which supported anti-war causes, environmental groups and other politically liberal issues. Prosecutors said Cohen even preyed on his father-in-law, looting his retirement account.

A federal jury in November convicted Cohen of 15 counts of wire fraud, 11 counts of money laundering and three counts of tax evasion after a three week trial in San Francisco federal court. His lawyer said Cohen will appeal the conviction.

Cohen, 53, is a son of Russian immigrants who was raised in Jerusalem. He moved to the United States in 1987 and became a United States citizen, though prosecutors allege he falsely told victims that the first President Bush personally granted him citizenship.

Cohen was convicted of falsely telling investors beginning in 2002 that a company he launched called Ecast that made electronic jukeboxes for bars was about to be acquired by Microsoft Corp. Prosecutors said Cohen kept the scheme going by soliciting more money from victims with complaints that U.S. and then European regulators were holding up the deal, which required additional investments to pay nonexistent fees and bonds needed to push the deal to approval.

Prosecutors say none of that was true. Instead, they said Cohen used the millions to fund an “absurd lifestyle” that included helping his wife publish a cookbook called “The Kosher Billionaire’s Secret Recipe.”

Prosecutors allege that he jetted around the country in a rented private jet that he to claim to have owned, giving rides to the likes of singer Elton John and actress Jennifer Lopez, neither of which are included on the victims list.

Prosecutors say that Cohen rented a mansion in the wealthy enclave of Belvedere just north of San Francisco and decorated the house with copies of famous paintings from Picasso, Miro and Matisse and other noted artists. But prosecutors said he solicited investments during parties at his house, which he told victims he owned while showing them the artwork he deemed were originals. Prosecutors said that was all part of a ruse to portray himself as a wealthy and savvy businessman.

Cohen’s attorney is asking for a sentence of less than nine years.

“A 30 year sentence is excessive for a 53-year old first-time offender, who has a long history of selfless acts and entrepreneurial innovation,” Cohen’s attorney Marcus S. Topel wrote in a court filing, pointing out that his client has donated at least $2 million to charity.”

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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 Mail Fraud Crimes

Federal Crimes – Appeal

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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.


Making Crime Pay

April 9, 2012

The New York Times on April 7, 2012 released the following:

“By MATT RICHTEL

LARRY LEVINE, heavyset and bald, runs a thriving business out of a gated apartment complex in Ventura County, Calif., a setting that’s not at all bad for a home office considering some of the prison cells he’s lived in. But as he drops into his plush beige and white sectional couch to talk business, something is nagging at him.

The trouble is the new competition. All these guys are setting up shop, marketing themselves on the Internet, claiming they know the ropes and cutting into his market share.

To Mr. Levine, they’re a bunch of poseurs, with no street cred. After all, they’ve barely spent any time behind bars.

“Look at my résumé, I’ve got 10 years: high-security, medium, low,” said Mr. Levine, 50, who was in jail until 2007 on narcotics trafficking, counterfeiting and weapons charges. “These guys go in for a year and a half, maybe two. I’ve got more experience than all the rest of these guys combined.”

Mr. Levine is a prison consultant. The business — which entails advising people who are facing jail time on how to prepare for life on the inside, deal with medical issues, transfer to other prisons and even reduce their sentences — has been around for decades. It enjoys a burst of publicity when a boldface name like Bernie Madoff or Michael Vick hires a consultant.

But the business is changing. Behind the scenes, the profession is attracting a new crop of ex-cons who believe they can put their experience to work, rather than have it burden them in a tough job market.

And more competition means rising tempers and flying accusations. Some prison consultants say that others are so lacking in expertise that their businesses are practically criminal enterprises. Rancor among thieves.

“This industry’s exploding,” mourned Mr. Levine, who operates two Web sites, American Prison Consultants and Wall Street Prison Consultants. He reached to a nearby coffee table and picked up a piece of paper listing the names of several dozen competitors and the length of their prison sentences. This is not a rap sheet, it’s market research.

The business, he said, is “becoming saturated with people who don’t know what they’re doing.”

He and his competitors (some of whom find his prison time equally unimpressive) walk a fine marketing line, bragging about an extensive criminal record to attract customers. That can make it tough for potential clients to choose: How much incarceration time is enough? What kind of experience is right for the job — maximum security, solitary confinement, a knife fight?

To hear the consultants talk, most competitors aren’t worth the time of day.

“Let’s put it this way: If I was in prison, I wouldn’t share a chow table with Larry Levine,” said William Mulholland, who founded the Real Prison Consultant in 2010. He and Mr. Levine have had words about Mr. Mulholland directing people to free online resources about the prison system.

He also said Mr. Levine routinely criticizes lawyers as money pits, which Mr. Mullholland said only alienates lawyers who could be crucial allies for the fledgling industry. (Mr. Levine said Mr. Mulholland is afraid to criticize lawyers.)

“He’s like a used-car salesman,” Mr. Mulholland said of Mr. Levine.

Mr. Mulholland’s Web site identifies him as the “#1 Qualified Federal/State Prison Consultant in the United States.” It adds: “I Challenge any other Consultants as to their ‘So Called Certified Credentials.’ ”

He offers advice free, he said, so he can build credibility. There’s another reason: He’s not allowed to charge for his services. That’s because he remains under supervisory release and faces limitations on interacting with known felons, who could be among his clientele. He spent 21 years in prison for violent crimes; he’s been in gunfights, has beaten people with bats and sold drugs.

He said he is building his brand for when he can begin charging in June 2013. He also has a Twitter feed and a YouTube video. The name of his blog: The God of Time.

The Internet and social media certainly have given the business a boost, and the consultants are go-to guests on cable shows whenever a high-profile personality is indicted. The field includes Felony Prison Consultants, Executive Prison Consulting, the Real Prison Consultant, Faceless Prison Consultants, the Prison Coach, the Prison Doctor and others, around three dozen in all.

Their prices range widely; some charge by the hour, some by the service, from a few hundred dollars to tens of thousands per client, depending partly on the consultant’s experience and work required. It’s not clear whether the number of customers is growing or just the number of people hanging out a shingle is.

The consultants’ Web sites promote a long list of services, including helping people petition to be sent to a jail nearer to home, getting them into a drug-treatment program that can reduce a sentence or transitioning them to a halfway house. Many people hire consultants simply because they’re scared and want to know what to expect. The consultants teach prison etiquette.

For example? “Never walk across a wet floor,” Mr. Mulholland advised, saying you might mess up the work of the prisoner manning the mop. And then he might kill you.

A Web site is where Vickie Skidmore, 58, stumbled onto Michael Frantz, an ex-convict who runs Jail Time Consulting. Ms. Skidmore was seeking help getting a transfer and some medical assistance for her son, Marcus Rosenberger, 36, sentenced recently to 33 months on several counts of wire fraud related to real estate transactions in Florida.

She talked to several consultants and settled on Mr. Frantz, she said, because he listened to her, sounded intelligent and lived in her home state. And he’d done time.

“I asked lawyers to help me, but they don’t understand what goes on in the inside,” she said.

Some consultants rely on testimonials. On its Web site, Executive Prison Consultants gets a shout-out from Tim Donaghy, a former National Basketball Association referee who pleaded guilty to charges related to betting on games. The defrocked referee is quoted as saying, “The professionals at EPC get results!”

The site attracted a potential new client named Jeff, a Missouri resident who last year pleaded guilty to wire fraud and, in a few weeks, will enter a federal prison camp in Kansas City for a one-year sentence. Jeff, who asked that his last name not be used because he did not want to widely publicize his conviction, said that he went looking for a consultant because, “I’m just interested in spending the least amount of time in prison as possible.”

He checked out a few other Web sites and corresponded with a competitor by e-mail, he said, but he was dismayed when the competitor responded with form-letter responses, including one that referred to helping Jeff and “his wife.” Jeff is not married.

Do the consultants make a difference?

They certainly can, according to people who work in the criminal justice system. A sharp consultant, they say, can help with complicated paperwork, in much the same way that a college consultant can help a family navigate complicated financial aid forms. That said, people can also do the work themselves.

Chris Burke, a spokesman for the Federal Bureau of Prisons, declined to comment on the industry.

Not all prison consultants are ex-cons. Some worked as prison guards or employ former prison officials. Others are lawyers. Their clean record is more of an asset than being able to brag about time behind bars, they say.

“You think a warden is going to change a decision based on advice from a former resident? That is just not going to happen,” said Joel Sickler, who runs Justice Advocacy Group and has been a prison consultant for 30 years and, before that, a prison guard. He said his unblemished past would go over better with prison officials when he’s trying to petition for, say, a client transfer.

The ex-convicts in the business see things differently, arguing that relevant experience matters.

Mr. Frantz, of Jail Time Consulting, prefers this metaphor: “If you had to have someone take your appendix out, would you go to a guy that runs a gas station?”

Mr. Frantz, 65, earned his nearly 36 months of experience in a federal prison camp in Miami after pleading guilty to tax evasion and Medicare-fraud charges.

He hired a prison consultant, and the experience led to an epiphany: crime could indeed pay. He decided to become a consultant himself.

Besides, his options were limited. “I knew when I got out, I’d be 62 years old, a convicted felon,” he said. “Who the hell was going to hire me?”

While in prison, he spent time in the law library, learning about penal regulations. He wrote “Jail Time,” a book about what to expect in federal prison that he published in 2009, a year after he was released, and started Jail Time Consulting. It was promptly shut down by a judge, who suspended the operation until Mr. Frantz ended his supervisory release in 2011.

In this business, bad news is just another marketing opportunity. Mr. Frantz’s Web site now reads: “Jail Time — the book a United States District Judge doesn’t want you to read.”

Like other prison consultants, he questions his competitors’ business practices. Their rates, he says, can be outrageous.

“You want a transfer, I’ll charge you $625, for goodness sake,” he said. “Other people are charging $2,500. Come on!”

The business is unregulated, no license required. There is a Web site called the National Registry of Prison Consultants — “the authority on trust in the marketplace.”

It was started last year by Steven Oberfest, the founder of the Prison Coach, who said he served 15 months in the ’90s after taking a plea deal for racketeering. (He said it was related to charges that his piano-moving company was involved in the theft and distribution of stolen grand pianos, accusations he denies.) He said the industry sorely needs self-regulation for it to be taken seriously.

“You can’t just have people popping into the industry,” he said. “Just because you’ve finished doing time, doesn’t mean you’re a better person.”

The registry has a list of the top 10 prison consultants, but lists only two, Mr. Oberfest and Mr. Levine, the consultant from Ventura County.

But Mr. Levine said he considered the registry to be “a hoax.”

“For me, my reputation and my experience is my badge of honor,” he said, not an affiliation with an industry group.

Mr. Levine said he thought the competition would thin out over time because the competitors lack marketing smarts. Besides, he argued, he has the criminal CV to back up the marketing.

If they handed out diplomas for prison savvy, he said, “These guys have maybe an associate degree. I have like a Ph.D. or above.””

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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 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 C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Men Indicted For Allegedly Defrauding Lions Gate Entertainment

March 26, 2012

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

“LOS ANGELES—Two men were arrested Friday by special agents with the Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation after being indicted for their roles in a $2 million kickback scheme involving the Santa Monica-based film and distribution company Lions Gate Entertainment (Lionsgate), announced André Birotte, Jr., United States Attorney for the Central District of California; Steven Martinez, the Assistant Director in Charge of the FBI’s Los Angeles Field Office; and Leslie P. DeMarco, Special Agent in Charge of IRS Criminal Investigation in Los Angeles.

Roccio James Cuccia, 31, of Downey; and Larry D. Collins, 50, of Northridge, were charged in a 14-count indictment returned by a federal grand jury in Los Angeles on Thursday, March 22, 2012. The indictment includes allegations of wire fraud, money laundering, and tax evasion.

According to the indictment, Cuccia started working as a senior buyer at Lionsgate in January 2006 and was responsible for acquiring cardboard advertising used to display Lionsgate DVDs and Blu-ray Discs at retail stores. Cuccia is alleged to have used Collins as a vendor to supply the display cases to retail stores from 2006 through 2011.

Cuccia and Collins allegedly devised a scheme whereby Lionsgate was overbilled for the number of display cases provided by Collins. The indictment alleges that by accessing Lionsgate’s computer system, Cuccia would inflate the number of previously approved display cases ordered from Collins by Lionsgate. Collins would then generate fraudulent invoices for the inflated purchase orders, the indictment alleges.

Lionsgate sent payment for the inflated purchase orders to a third party, who would then wire a substantial percentage of the Lionsgate funds to Collins. The indictment alleges that Collins would then wire a portion of these funds to Cuccia’s bank account. The indictment alleges that Cuccia and Collins caused losses to Lionsgate totaling approximately $2,064,000.

The indictment lists 10 wire transfers totaling over $745,000, which represents funds received by Collins as part of the scheme, a portion of which were then wired to Cuccia. Cuccia is alleged to have used part of the funds to purchase a 2007 Toyota Camry Hybrid and a 2006 Mercedes Benz R350, both of which were seized on Friday by federal agents. The indictment further alleges that Cuccia failed to report his portion of the fraudulently received funds as income on his 2006 and 2007 federal tax returns.

Cuccia and Collins are each charged with 10 counts of wire fraud. In addition, Cuccia is charged with two counts of conducting a monetary transaction in criminally derived property of a value greater than $10,000 and two counts of subscribing to false tax returns.

Cuccia and Collins had an initial appearance before a federal magistrate in U.S. District Court in Los Angeles Friday afternoon and were granted bond.

If convicted of all charges alleged in the indictment, Cuccia faces a statutory maximum sentence of 226 years in federal prison, and Collins faces 200 years in federal prison.

This investigation was conducted by the Federal Bureau of Investigation, IRS-Criminal Investigation, and the Santa Monica Police Department. Lions Gate Entertainment cooperated with the investigation.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.”

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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 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 C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


A Charlotte Federal Grand Jury Indicted Four in an Alleged $40 Million Ponzi Scheme

February 24, 2012

The Federal Bureau of Investigation (FBI) on February 23, 2012 released the following:

“Four Hedge Fund Managers Indicted in $40 Million Ponzi Scheme

Defendants Join Seven Others and CommunityONE Bank Charged in Connection with the Scheme

CHARLOTTE, NC—A federal grand jury sitting in Charlotte returned an indictment against Jonathan D. Davey, 47, of Newark, Ohio, Jeffrey M. Toft, 49, of Oviedo, Fla., Chad A. Sloat, 33, of Kansas City, Mo., and Michael J. Murphy, 51, of Deep Haven, Minn., on February 22, 2012, on four criminal charges relating to an investment fraud conspiracy, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Joining U.S. Attorney Tompkins in making today’s announcement are Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division (IRS-CI).

According to the criminal indictment, the defendants operated “hedge funds” as part of a conspiracy that took in $40 million from victims for a Ponzi scheme operating under the name Black Diamond Capital Solutions (Black Diamond). The indictment alleges that the conspiracy lasted from about October 2007 through about April 2010. The indictment alleges that the defendants lied to get money from their victims by claiming, among other things, that they had done due diligence on Black Diamond and were operating legitimate hedge funds with significant safeguards, when in reality, neither claim was true. The indictment also alleges that, as Black Diamond began collapsing, the defendants and others created a new Ponzi scheme and with a separate Ponzi account that Davey administered. Thereafter, new victim money was deposited into the Ponzi account and used to make Ponzi payments to other victims and to fund the defendants’ lifestyles.

The indictment also charges Davey with tax evasion for claiming to the IRS on his 2008 tax return that $810,000 that Davey stole from victims was a “loan.” In reality, the indictment charges, Davey stole that $810,000, plus approximately $500,000 in 2009, from victims to build Davey’s personal mansion. Davey attempted to evade the taxes due and owing in 2008 by calling the money a “loan” from his investors to “Sovereign Grace, Inc.,” a Belizian corporation that Davey created as a diversion for his victims and the IRS.

The first charge against all four defendants, alleging conspiracy to commit securities fraud, carries a maximum sentence of five years’ imprisonment and a fine of up to $250,000. The second charge against all four defendants, alleging conspiracy to commit wire fraud, carries a maximum sentence of 20 years’ imprisonment and a fine of up to $250,000. The third charge against all four defendants, alleging a money laundering conspiracy, carries a maximum sentence of 20 years’ imprisonment and a fine of $250,000 or twice the amount of criminally derived proceeds. The final charge against Davey only, alleging tax evasion, carries a maximum sentence of five years’ imprisonment and a fine of up to $250,000.

The defendants will be making their initial appearances in U.S. District Court in the coming weeks.

This indictment follows a series of convictions and other charges in this matter. On December 16, 2010, Keith Simmons was convicted following a jury trial of securities fraud, wire fraud, and money laundering. Simmons is in custody awaiting sentencing.

On April 27, 2011, a criminal bill of information and a Deferred Prosecution Agreement were filed against CommunityONE Bank, N.A., for its failure to maintain an effective anti-money laundering program. As alleged in that bill of information, Simmons was a customer of CommunityONE, and used various accounts with the Bank in furtherance of the Ponzi scheme. However, as alleged in that bill of information, the Bank did not file any suspicious activity reports on Simmons, despite the hundreds of suspicious transactions that took place in his accounts.

Other defendants convicted in this case are set forth below. It should be noted that those defendants already sentenced had their sentences reduced by the Court to reflect their cooperation with the United States in its investigation and prosecution of others.

  • Bryan Keith Coats, 51, of Clayton, N.C., pled guilty on October 24, 2011, to conspiracy to commit securities fraud and money laundering conspiracy. Coats is awaiting sentencing.
  • Deanna Ray Salazar, 54, of Yucca Valley, Calif., pled guilty on December 7, 2010, to conspiracy to commit securities fraud and tax evasion. Salazar is awaiting sentencing.
  • Jeffrey M. Muyres, 36, of Matthews, N.C., pled guilty on May 17, 2011, to conspiracy to commit securities fraud and money laundering conspiracy. Muyres was sentenced to 23 months’ imprisonment by Chief Judge Robert Conrad, Jr., on January 18, 2012.
  • Roy E. Scarboro, 47, of Archdale, N.C., pled guilty on December 3, 2010, to securities fraud, money laundering, and making false statements to the FBI. Scarboro was sentenced to 26 months’ imprisonment by Chief Judge Robert Conrad, Jr., on May 4, 2011.
  • James D. Jordan, 49, of El Paso, Texas, pled guilty on September 14, 2010, to conspiracy to commit securities fraud. Jordan was sentenced to 18 months’ imprisonment by Chief Judge Robert Conrad, Jr., on June 29, 2011.
  • Stephen D. Lacy, 52, of Pawleys Island, S.C., pled guilty on December 9, 2010, to conspiracy to commit securities fraud. Lacy was sentenced to six months’ imprisonment by Chief Judge Robert Conrad, Jr., on May 4, 2011.

The details contained in this indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. The conviction or guilty plea of any other person is not evidence of the guilt of any of the defendants.

This matter is being prosecuted by Assistant United States Attorneys Kurt W. Meyers and Mark T. Odulio of the Western District of North Carolina, and the case against Jeffrey Muyres was prosecuted by Assistant United States Attorney Mark T. Odulio. The investigation is being handled by the FBI and the IRS.”

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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 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.


California Man Pleads Guilty to Million-Dollar Investment Fraud

October 7, 2011

The Federal Bureau of Investigation (FBI) on October 6, 2011 released the following:

“TRENTON, NJ— A California man pleaded guilty today to wire fraud and tax evasion for his role in a $1 million investment fraud scheme, U.S. Attorney Paul J. Fishman announced.

Robert Schroy, 66, of California, pleaded guilty before U.S. District Court Judge Joel A. Pisano in Trenton federal court to a criminal information charging him with one count each of wire fraud and tax evasion.

According to documents filed in the case and statements made in court:

Schroy said from 2004 through 2009 he solicited people to invest in an alleged “international bank trade.” Schroy admitted he and his co-schemers falsely promised prospective investors extraordinary gains—ranging between 10 and 100 percent per week for a minimum period of 25 weeks—plus the return of their principal investment. Based on Schroy’s misrepresentations, numerous investors, including investors in New Jersey, wired investment monies to accounts controlled by Schroy and his co-schemers. The money was wired to the designated accounts, however, Schroy admitted it was not invested in any supposed bank trade. Instead it was used by Schroy and his co-schemers for personal expenditures, including automobiles, vacations, and meals at restaurants. In total, Schroy admitted he and his coschemers misappropriated at least $1 million in investor money.

In pleading guilty to the tax evasion count, Schroy specifically admitted he failed to file a 2007 U.S. Individual Income Tax Return and failed to report $479,566 of taxable income, upon which an additional tax of $151,781 was owed to the IRS.

The wire fraud charge carries a maximum penalty of 20 years in prison and the tax evasion charge carries a maximum penalty of five years in prison. Both charges carry a maximum fine of $250,000. Sentencing before Judge Pisano is scheduled for Jan 25, 2012.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in charge Michael B. Ward, and special agents of the IRS, under the direction of Special Agent in charge Victor W. Lessoff, and the N.J. Bureau of Securities, under the direction of Bureau Chief Abbe R. Tiger, with the investigation that resulted in today’s guilty plea.

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

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

Defense Counsel: Joshua Markowitz Esq., Lawrenceville, N.J.”

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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Scientist pleads guilty to attempted espionage

September 7, 2011

The Associated Press (AP) on September 7, 2011 released the following:

“By PETE YOST and NEDRA PICKLER
Associated Press

WASHINGTON (AP) — A former government space scientist pleaded guilty Wednesday to one count of attempted espionage for trying to sell classified information to an undercover FBI agent posing as an Israeli spy.

Stewart David Nozette entered the plea in federal court, where both the Justice Department and Nozette’s lawyers agreed to a sentence of 13 years in prison, with credit for two years he has already spent behind bars. U.S. District Judge Paul Friedman said he was prepared to accept the deal, pending Nozette’s cooperation with prosecutors, a procedure expected to last into November.

Nozette has been in jail since he was arrested nearly two years ago after an undercover sting operation. He was accused of seeking millions to sell secrets to an FBI agent posing as an Israeli intelligence officer.

Appearing in court in a prison jumpsuit, Nozette said he understood the charge to which he was pleading. He could have been sentenced to death had he been convicted of all four counts of attempted espionage that he faced.

Just before his arrest, Nozette told an undercover FBI agent in the sting operation that the secrets he was passing to Israel had cost the U.S. government anywhere from $200 million to almost a billion dollars to develop.

“So I tell ya, … theoretically I should charge you certainly, you know, at most” 1 percent, court papers in the case quoted Nozette as telling the agent.

Nozette had high-level security clearances during decades of government work on science and space projects at NASA, the Energy Department and the National Space Council in President George H.W. Bush’s White House. He has a doctorate in planetary sciences from the Massachusetts Institute of Technology and was known primarily as a defense technologist who had worked on the Reagan-era missile defense shield effort formally called the Strategic Defense Initiative. He also helped discover evidence of water on the moon.

Because Nozette knows so many secrets, including about the nation’s nuclear missile program, Attorney General Eric Holder ordered special communications restrictions placed on him in jail.

During a hearing after his arrest, the prosecutor played video from the September 2009 sting in which Nozette lounged on a hotel room couch, eating and laughing with the undercover agent. He discussed the possibility of having to flee the country if he came under scrutiny.

Prosecutors say Nozette agreed to provide regular information to the Israeli intelligence agency, Mossad, through a post office box in exchange for money. They accuse him of asking for an Israeli passport and payments in cash under $10,000 each to avoid reporting it. Authorities said he took two payments – one for $2,000 and another for $9,000 – from the post office box to answer questions about U.S. satellites, including early warning systems, means of defense or retaliation against large-scale attack, communications intelligence information and major elements of defense strategy.

Nozette also ran a nonprofit corporation out of his Chevy Chase, Md., home called the Alliance for Competitive Technology that had several agreements to develop advanced technology for the U.S. government. In January 2009, he pleaded guilty to two counts of tax evasion and admitted overstating his costs for reimbursement and failing to report the income on his tax returns. His sentencing in that case has been held while the espionage charges have been pending.”

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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