Ex-CIA man likely to plead guilty in leak case

October 23, 2012

The Associated Press on October 22, 2012 released the following:

“By MATTHEW BARAKAT
Associated Press

WASHINGTON (AP) — A former CIA officer accused of leaking the names of covert operatives to journalists is expected to enter a guilty plea as part of a plea deal.

A change of plea hearing was scheduled for Tuesday in U.S. District Court in Alexandria, Va., for John Kiriakou. He initially pleaded not guilty to the charges that he disclosed the names of two covert CIA operatives.

The apparent change comes shortly after Kiriakou lost a key pre-trial ruling that established a lower legal burden for prosecutors to prove their case. Kiriakou’s lawyers had argued unsuccessfully that prosecutors should have to prove that Kirkiakou intended to harm the United States through his alleged leaks. Such a strict legal standard had been imposed recently on a leaks prosecution against two pro-Israel lobbyists.

But U.S. District Judge Leonie Brinkema ruled last week that such a high standard should not apply to Kiriakou, a government employee with top-secret security clearances who knew well the dangers of disclosing classified information.

Instead, prosecutors would only have to show that Kiriakou had “reason to believe” that the information could be used to injure the U.S.

Court records do not make clear exactly what charges Kiriakou would plead to. When he was indicted in April, he was charged with one count of disclosing classified information identifying a covert agent, three counts of illegally disclosing national defense information and one count of making false statements. He faced up to 45 years in prison if convicted on all counts in the indictment.

Kiriakou, who wrote a book detailing his CIA career, had tried to argue after the charges were filed that he was a victim of vindictive prosecution by government officials who believed he portrayed the CIA negatively, but the judge rejected those arguments as well.

Peter Carr, a spokesman for U.S. Attorney for the Eastern District of Virginia Neil MacBride, whose office is prosecuting the case, declined comment Monday. Kiriakou’s attorney, Robert Trout, also declined comment.

Kiriakou was a CIA veteran who played a role in the agency’s capture of al-Qaida terrorist Abu Zubaydah in Pakistan in 2002. Abu Zubaydah was waterboarded by government interrogators and eventually revealed information that led to the arrest of “dirty bomb” plotter Jose Padilla and exposed Khalid Sheikh Mohamed as the mastermind of the Sept. 11, 2001 terror attacks.

Accounts conflict, though, over whether the waterboarding was helpful in gleaning intelligence from Zubaydah. Kiriakou, who did not participate in the waterboarding, expressed ambivalence in news media interviews about use of the tactic.

Court papers indicate that the investigation of Kiriakou began in 2009 when authorities became alarmed after discovering that detainees at Guantanamo Bay possessed photographs of CIA and FBI personnel. The investigation eventually led back to the alleged leaks by Kiriakou, according to a government affidavit.

The papers indicate prosecutors believe Kiriakou leaked the name of one covert operative to a journalist, who subsequently disclosed the name to an investigator working for the lawyer of a Guantanamo detainee.

Kiriakou had planned to subpoena three journalists connected to the case. Those journalists had filed motions to quash the subpoenas, but that issue will now be rendered moot by the apparent plea deal.”

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

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To find additional federal criminal news, please read Federal 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.


Ex-CFO at Taylor Bean and Whitaker Pleads Guilty in a $3B Fraud Scheme

March 21, 2012

Boston Globe March 20, 2012 released the following:

“Ex-exec at Taylor Bean pleads guilty in $3B fraud

By Matthew Barakat
AP Business Writer

ALEXANDRIA, Va.—The chief financial officer of what had been one of the nation’s largest private mortgage companies pleaded guilty to charges Tuesday for his role in a $3 billion fraud scheme.

Delton de Armas, 41, of Carrollton, Tex., was CFO of Florida-based Taylor Bean and Whitaker up until its collapse in 2009.

On Tuesday de Armas became the eighth person convicted in one of the biggest fraud schemes to emerge from the nation’s housing crisis. The other seven, including Taylor Bean founder and chairman Lee Farkas, were sentenced last year, with Farkas receiving a 30-year term.

De Armas faces up to 10 years after pleading in U.S. District Court to conspiracy to commit fraud and making false statements.

The company hid billions of dollars in debts with phony accounting and by double- and triple-selling mortgages it held to various financial institutions.

Taylor Bean’s collapse threw its 2,000 employees out of work and also helped bring down Alabama-based Colonial Bank, the sixth-largest bank failure in U.S. history.

At Tuesday’s plea hearing, de Armas first tried to tell the judge that he only became aware of the fraud at the very end of the scheme, but under questioning from U.S. District Judge Leonie Brinkema, he acknowledged that he knowingly signed off on misleading financial statements back to 2006.

Between 2006 and 2009, the “hole” in Taylor Bean’s books for a subsidiary called Ocala Funding grew from $150 million to more than $1 billion.

Regarding the company’s financial statements, de Armas told the judge: “Hindsight has the benefit of clarity. … I regret that I didn’t speak up more.”

He declined comment after Tuesday’s hearing.

Neil MacBride, U.S. Attorney for the Eastern District of Virginia, whose office prosecuted the case, said de Armas could have put a stop to the fraud the moment he discovered it.

“Instead, the hole in Ocala Funding grew to $1.5 billion on his watch, and as it grew, so did his lies to investors and the government,” MacBride added.

While the housing crisis apparently peaked a couple of years ago, prosecutors continue to bring a large number of mortgage fraud cases, with the Taylor Bean case among the most prominent. The FBI says that nearly 1,100 individuals were convicted of mortgage fraud in fiscal 2011 alone.

“The actions of Mr. de Armas and his co-conspirators contributed to the financial crisis and led to the collapse of one of the country’s largest commercial banks. The FBI and our partners remain vigilant in investigating such fraudulent activity in our banking and mortgage industries,” said James McJunkin, assistant director in charge of the FBI’s Washington Field Office.”

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

Federal Crimes – Federal Indictment

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