FBI: “Former Executive at First Command Financial Services Pleads Guilty”

August 26, 2014

The Federal Bureau of Investigation (FBI) on August 25, 2014 released the following:

“FORT WORTH, TX—A former executive at First Command Financial Services, an investment advisor and financial planning firm located in Fort Worth, Texas, pleaded guilty this morning before U.S. District Judge Reed C. O’Connor to a felony offense stemming from a fraud scheme she ran while employed there, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Redonda Russell, 66, of Fort Worth, pleaded guilty to a felony Information charging one count of wire fraud. She faces a maximum statutory penalty of 20 years in federal prison, a $250,000 fine, and restitution. She will remain on bond pending sentencing, which is set for December 8, 2014.

Russell worked for First Command for 22 years, before leaving the company in the spring of 2013. She is a registered Investment Advisory Representative and Broker-Dealer Agent. She is able to buy and sell securities, and she is authorized to give investment advice to clients. She is a Chartered Financial Consultant (ChFC), a designation she earned by completing a comprehensive course of financial education, examinations, and practical experience. Through First Command’s client database, Russell had access to clients’ personal identifying information (PII), investment/insurance account numbers, and balances for the account holder and beneficiaries.

According to plea documents filed in the case, beginning on approximately April 3, 2012, and continuing through April 18, 2013, Russell obtained PII for at least 18 First Command clients, eight of whom were deceased. Russell admitted using that information to forge, or otherwise present claims as the account holder, beneficiary, or legal representative of the account holder/beneficiary, to First Command’s affiliated investment and insurance partners to liquidate the targeted accounts.

Russell admitted that part of her scheme was to steal funds from inactive clients’ accounts, thus making the fraud harder to detect. She also targeted accounts that were maintained by First Command’s business partners that were part of an industry-standard, paperless signature program that eliminated the need for the verifying entity to send additional substantiating paperwork to the receiver. After Russell altered ownership/control of the targeted customers’ accounts, Russell sent a policy cancellation/disbursement form and W-9 tax withholding form and instructed the affiliated partner to either liquidate or take a loan against the targeted accounts.

Funds were subsequently wired into one of Russell’s 12 bank accounts or, if checks were mailed, Russell would endorse and deposit them. Checks were endorsed by Russell, Russell signing as her husband, Russell signing as her daughter-in-law, or an amalgam of signatures she used to perpetuate the scheme usually having the surname “Russell.”

Russell’s scheme resulted in the liquidation of more than $316,000 from First Command’s clients’ accounts.

The FBI investigated the case; Assistant U.S. Attorney Nancy Larson is in charge of the prosecution.”

More Information on Federal Wire Fraud Statutes, Jury Instructions, and Crimes
Federal Wire Fraud Crimes – 18 U.S.C. § 1343

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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

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.


FBI: Paul Mancuso and Disbarred New York Attorney Pasquale Stiso Indicted by a Federal Grand Jury in an Alleged Real Estate Investment Fraud Scheme Charging Wire Fraud and Wire Fraud Conspiracy

August 25, 2014

The Federal Bureau of Investigation (FBI) on August 21, 2014 released the following:

“NEWARK, NJ—Two men were indicted by a federal grand jury today for allegedly using a real estate investment scheme to defraud 15 victims of more than $3 million, U.S. Attorney Paul J. Fishman announced.

Paul Mancuso, 46, of Glen Rock, New Jersey, is charged by indictment with one count of conspiracy to commit wire fraud and five counts of wire fraud. Pasquale Stiso, 52, of West Harrison, New York, is charged by indictment with one count of conspiracy to commit wire fraud and one count of wire fraud.

According to documents filed in this case:

Since 2009, Mancuso posed as a real estate investor, broker and developer, as well as a “hard money” lender for other investments. Stiso, a disbarred attorney, held himself out as an individual working with Mancuso on various investment projects.

Mancuso and Stiso fraudulently obtained financing for projects that did not exist or in which they had no actual involvement. Some of the purported projects touted by Mancuso, Stiso, and other conspirators included investments in a phony ticket scam, the development of a pizzeria at a resort in the Bahamas, the development of a casino in Atlantic City, the development of a commercial shopping center, and the “flipping” of a piece of real estate in Matawan.

Victims lost all of their investments or life savings in Mancuso’s schemes. Instead of funding the purported projects, Mancuso and Stiso used the money for personal expenses and financing their involvement in illegal gambling pursuits.

The charge of wire fraud conspiracy and each substantive count of wire fraud carry a maximum potential penalty of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss associated with the offense, whichever is greater. The indictment also includes a notice of forfeiture of $3,425,750, representing the fraudulent payments Mancuso and Stiso received from the scheme.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larson for the investigation leading to today’s indictment.

The government is represented by Assistant U.S. Attorneys Lisa M. Colone and Francisco J. Navarro of the U.S. Attorney’s Office Criminal Division in Newark.

The charges and allegations in the indictment are merely accusations and the defendants are considered 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

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.


FBI Los Angeles: “$11 Million Boiler Room Mail and Wire Fraud Indictment Unsealed Today”

October 2, 2013

The Federal Bureau of Investigation on October 1, 2013 released the following:

Owner, Manager, and Salesperson at Fraudulent Investment Venture Taken into Custody for Mail and Wire Fraud in Connection with $11 Million Fraudulent Oil and Gas Well Investment Scheme.

LOS ANGELES—Two men were taken into custody today by special agents of the FBI for their alleged involvement in an Orange County boiler room operation that defrauded investors by falsely claiming high returns from oil and gas wells and by failing to disclose high sales commissions on investments, announced Bill L. Lewis, Assistant Director in Charge of the FBI’s Los Angeles Field Office and André Birotte Jr., United States Attorney for the Central District of California. A third defendant charged in this indictment is already in custody on unrelated charges.

Jerry Aubrey, 51, already in custody, his brother Timothy Aubrey, 53, of Moreno Valley, who self surrendered to the FBI’s Riverside Resident Agency, and Aaron Glasser, 30, of Mission Viejo, who was arrested without incident, are all in custody today after a federal grand jury indictment that charges them with mail and wire fraud was unsealed.

The indictment alleges Jerry Aubrey founded, managed, and operated the telemarketing investment scheme (also known as a “boiler room”) located in Costa Mesa, CA, doing business as Progressive Energy Partners, LLC (PEP). Timothy Aubrey worked as a PEP manager and salesperson, in addition to preparing, with Aaron Glasser, the sales scripts read to potential investors. Finally, Aaron Glasser was a PEP salesperson who worked as both a sales “fronter” and “closer,” making cold calls and closing deals. In his work as a salesperson, the indictment alleges Glasser raised around a quarter of the total amount of investments.

PEP allegedly employed salespersons called “fronters” and “closers” to raise over $11 million in five unregistered securities offerings for the purported purpose of developing and supporting oil and gas wells. In reality, most of the money was used to pay for the Aubrey brothers’ personal expenses, to pay up to 30% commissions to salespersons, and to make Ponzi-like payments to previous investors.

The defendants directed salespersons to cold call potential investors from purchased lead lists and solicit investments using scripts touting the profitability of investing in PEP. Fronters would pass the names of those who were potentially interested to closers, who could conclude the sale.

As alleged in the indictment, the defendants caused the salespersons to make material misrepresentations and conceal material facts when speaking to investors about, among other things, the percentage of investor money that would be spent on the development and operation of oil and gas wells, the anticipated amount and timing of returns to investors, and the payment of sales commissions to PEP salespersons, i.e., the fronters and closers.

Some of the false and deceptive statements indicated that investors would receive a greater than 50% annual rate of return on their investments; that almost half of the investor funds would be spent on oil and gas wells, and that the remainder of the investor funds would be spent on other business expenses; that salespersons would only receive a sales commission in the form of a share of the investment profits; and that PEP would use the assistance of an “independent CPA firm” to make distributions to investors.

The indictment alleges that, through the scheme, the defendants concealed from investors the material facts that approximately 30% of the investor funds would be spent on the Aubreys’ personal expenditures; that almost 20% of the investor funds would be used to make investor distributions and to return investor principal; that less than 10% of investor funds was spent on oil and gas wells; that investors would not, in fact, earn an annual rate of return of over 50%; and that defendant Jerry Aubrey, rather than an “independent CPA firm,” would determine the distributions to investors. The indictment alleges that by devising, executing, and participating in the above scheme, the defendants induced more than 200 investors to distribute to PEP over $11 million between 2005 and 2010.

In 2011, the Securities and Exchange Commission (SEC) obtained summary judgment against these defendants in connection with the PEP investment scheme. Additionally, Jerry Aubrey was charged in 1998 by the SEC with violating the broker-dealer registration provisions of the Securities Exchange Act of 1934 in connection with an offering fraud in which he sold securities in a fictitious cruise ship. The following year, he was permanently enjoined from future violations of Section 15(a)(1) of the Exchange Act (failure to register as a broker dealer), a permanent injunction he has violated through his alleged activities in PEP.

If convicted on all eight counts of Mail Fraud and two counts of Wire Fraud, the defendants face a maximum statutory penalty of 200 years in federal prison.

The criminal investigation was conducted by the FBI. The Securities and Exchange Commission conducted the civil investigation.

An indictment itself is not evidence that the defendants committed the crimes charged. Every defendant is presumed to be innocent until and unless proven guilty in court.”

More Information on Federal Mail Fraud Statutes, Jury Instructions, and Crimes
Federal Mail Fraud Crimes – 18 U.S.C. § 1341

Video on Federal Mail Fraud Crimes

More Information on Federal Wire Fraud Statutes, Jury Instructions, and Crimes
Federal Wire Fraud Crimes – 18 U.S.C. § 1343

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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.


FBI: “Former NBA Player and CEO of the George Group Convicted on all Counts in $2 Million Ponzi Scheme”

October 2, 2013

The Federal Bureau of Investigation on September 30, 2013 released the following:

“TRENTON, NJ— C. Tate George, former NBA basketball player and the CEO of purported real estate development firm The George Group, was convicted today on all counts on which he was indicted in connection with his role in orchestrating a $2 million investment fraud scheme, U.S. Attorney Paul J. Fishman announced.

The jury deliberated four hours before convicting George, 45, of Newark, of four counts of wire fraud after a three-week trial before U.S. District Judge Mary L. Cooper. George was immediately remanded into federal custody to await sentencing, which is scheduled for Jan. 16, 2014.

According to documents filed in this case and evidence presented at trial:

George, a former player for the New Jersey Nets and Milwaukee Bucks professional basketball teams, held himself out as the CEO of The George Group and claimed to have more than $500 million in assets under management. He pitched prospective investors, including several former professional athletes, to invest with the firm and told them their money would be used to fund The George Group’s purchase and development of real estate development projects, including projects in Connecticut and New Jersey. George represented to some prospective investors that their funds would be held in an attorney trust account and personally guaranteed the return of their investments, with interest.

Based on George’s representations, investors invested more than $2 million in The George Group between 2005 and 2011, which he deposited in both the firm’s and his personal bank account. Instead of using investments to fund real estate development projects as promised, George used the money from new investors to pay existing investors in Ponzi-scheme fashion, as well as paying for his daughter’s Sweet 16, extensive renovations on his New Jersey home (that has since been foreclosed), the mortgage on a New Jersey home, the mortgage on a Florida home, taxes to the IRS, and traffic tickets. The defendant gave money to family members and friends. He also spent $2,905 for a reality video about himself (a “sizzle reel” for “The Tate Show,” is available on YouTube). The George Group had virtually no income-generating operations.

Each of the wire fraud counts on which he was convicted is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; postal inspectors of the USPIS, under the direction of Postal Inspector in Charge Maria L. Kelokates; and criminal investigators with the U.S. Attorney’s Office, with the investigation leading to today’s conviction.

The government is represented by Assistant U.S. Attorneys Joseph B. Shumofsky and Zach Intrater 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. 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’s 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.”

Federal Wire Fraud Crimes – 18 U.S.C. § 1343

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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.


“First Amendment rights not enough to stop feds from prosecuting polygraph operators”

August 19, 2013

RT on August 17, 2013 released the following:

“US federal officials are investigating polygraph teachers who supposedly help job applicants fib their way through government lie detector tests. The criminal inquiry is seen as the Obama administration’s latest attempt to preserve government secrecy.

Law enforcement has targeted at least two people who claim that their methods of breath control, muscle tensing, facial tics, and other techniques are reliable enough that an individual with a nefarious background will be capable of gaining employment with the US government.

Investigators accessed business records belonging to the two men, according to a McClatchy report, and then used those documents to identify roughly 5,000 people who sought advice on how to beat the test. Of that sum, 20 people applied for government and federal contracting jobs. At least ten of the 20 applicants were eventually hired by various federal entities, including the National Security Agency.

The machines were introduced in the early 20th Century, quickly gaining favor with police who observed a suspect’s physiological responses – including blood pressure, pulse, and perspiration – when questioning an individual about a crime. Multiple research studies held over the past 50 years have debated the polygraph’s dependability, though, with a 1998 Supreme Court ruling declaring, “There is simply no consensus that polygraph evidence is reliable.”

Consequently, because the polygraph itself is thought to be nonsense, experts say anyone who purports their ability to beat it is themselves lying.

Despite widespread reluctance, including inadmissibility throughout the US court system, the federal government administers lie detector tests on approximately 70,000 job applicants each year. The undercover investigation at hand reportedly seeks to discourage potential whistleblowers, criminals, and spies from obtaining national security clearance and gaining access to state secrets.

“Nothing like this has been done before,” US Customs and Border Protection official Josh Schwartz said during a speech at the professional polygraphers’ conference, as quoted by McClatchy. “Most certainly our nation’s security will be enhanced. There are a lot of bad people out there…this will help us remove some of those pests from society.”

Federal authorities, McClatchy reported, have already arrested Doug Williams – a former polygrapher with the Oklahoma City Police Department who wrote a book on the subject – and Chad Dixon of Indiana, who was the inspiration for the book. Sources told the news agency that prosecutors will attempt to sentence Dixon to two years in prison for wire fraud and obstructing an agency proceeding.

Critics assert that there is simply no crime in teaching methods to defeat the polygraph. Self-proclaimed experts freely advertise their services online, in books, and on television, and have never had the need to hide their services. That is not to mention the First Amendment legal battle over impeding free speech, which government prosecutors would surely face in court.

“If someone stabs a voodoo doll in the heart with a pin and the victim they intended to kill drops dead of a heart attack, are they guilty of murder?” Gene Iredale, an attorney for one of the defendants, asked McClatchy. “What if the person who dropped dead believed in voodoo?”

“These are the types of questions that are generally debated in law school, not inside a courtroom,” Iredale continued. “The real question should be: ‘Does the federal government want to use its resources to pursue this kind of case?’ I would argue it does not.”

Dixon, 34, refused to elaborate on his legal situation but told McClatchy that he began working as a polygrapher because he could not find work as an electrical engineer. The father of four children has seen his home go into foreclosure because of the investigation and, despite having no criminal record, he expects to serve prison time.

“My wife and I are terrified,” he said. “I stumbled into this. I’m a Little League coach in Indiana…never in my wildest dreams did I somehow imagine I was committing a crime.””

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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.


FBI: “Former Studio Assistant to Jasper Johns Charged in Manhattan Federal Court in $6.5 Million Scheme to Sell Stolen Johns Works”

August 16, 2013

The Federal Bureau of Investigation (FBI) on August 15, 2013 released the following:

“Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI), today announced the unsealing of an Indictment charging James Meyer, a former assistant to artist Jasper Johns, with selling 22 works that he stole from Johns’ studio in Sharon, Connecticut. Meyer was arrested yesterday morning at his home in Salisbury, Connecticut, and appeared in federal court in Hartford that afternoon.

Manhattan U.S. Attorney Preet Bharara said, “As alleged, James Meyer is the latest in a long line of thieves who sought to make millions through a fraud on the art world. Meyer, a former assistant to artist Jasper Johns, allegedly stole and resold a number of pieces he was charged with maintaining. His arrest underscores our commitment to exposing deception in this lucrative industry and holding fraudsters to account.”

FBI Assistant Director in Charge George Venizelos said, “As alleged, James Meyer exploited his position of trust to steal repeatedly from his long-time employer. That his employer is a renowned American artist only made the crime more lucrative. To convert the artworks to cash, Meyer allegedly engaged in a serial scheme to deceive the buyers of the art and the gallery through which they bought it.”

According to the allegations in the Indictment unsealed yesterday in Manhattan federal court:

Meyer was a studio assistant for Johns for over 25 years and was responsible for, among other things, maintaining a studio file drawer containing pieces of art that were not yet completed by Johns and not authorized by Johns to be placed in the art market.

Between September 2006 and February 2012, Meyer removed 22 individual pieces of art from the studio file drawer he was responsible for maintaining, and from elsewhere in Johns’ studio, and transported those pieces from the studio in Sharon to an art gallery located in Manhattan for the purpose of selling those works without the knowledge or permission of Johns. Meyer represented both to the owner of the gallery (the “gallery owner”) and to potential purchasers that these pieces had been given to him as gifts by Johns when, in fact, that was not true.

As part of his scheme to defraud, Meyer provided sworn, notarized certifications both to the gallery owner and to buyers stating that each piece was an authentic Johns work, that the art had been given to him directly by Johns, that he was the rightful owner of the piece, and that he had the right to sell that particular work. In addition, Meyer conditioned the sale of each of these works on the signed agreement by the purchaser that the art would be kept private for at least eight years, during which time the piece would not be loaned, exhibited, or re-sold.

Meyer also created fictitious inventory numbers for these pieces to give the impression that they were finished works that were authorized by Johns to be sold in the art market. Additionally, and to facilitate certain sales, Meyer created fake pages that he thereafter inserted into a ledger book of registered pieces of art maintained at Johns’ studio, and which he subsequently photographed, to give additional assurances to prospective buyers about the provenance, or history of ownership, of a particular piece.

During the course of his almost six-year scheme, the gallery owner sold 22 works of art on Meyer’s behalf for a total of approximately $6.5 million, of which $3.4 million was remitted directly to Meyer in sales proceeds.

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Meyer, 51, of Salisbury, Connecticut, is charged with one count of interstate transportation of stolen property, which carries a maximum sentence of 10 years in prison, and one count of wire fraud, which carries a maximum sentence of 20 years in prison. U.S. District Judge Alvin K. Hellerstein is assigned to the case.

Mr. Bharara praised the FBI for its outstanding work in the investigation.

This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Christopher D. Frey is in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the 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

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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.


“‘Real Housewives of New Jersey’ stars due back in court to enter plea on federal fraud charges”

August 14, 2013

Fox News on August 14, 2013 released the following:

Associated Press

“Two stars of “The Real Housewives of New Jersey” are due back in court.

Teresa and Guiseppe “Joe” Giudice are scheduled to enter a plea before a federal judge Wednesday afternoon. Lawyers say both are expected to plead not guilty to federal fraud charges.

They were charged last month in a 39-count indictment with conspiracy to commit mail and wire fraud, bank fraud, making false statements on loan applications and bankruptcy fraud.

The couple are accused of exaggerating their income when applying for loans, then hiding their improving fortunes in a bankruptcy filing.

They are also accused of submitting fraudulent mortgage and loan applications and fabricating tax returns and W2 forms.

Prosecutors allege Joe Giudice also failed to file federal tax returns from 2004 to 2008.”

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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.


FBI: Two Men Charged with Allegedly Defrauding Charter Flight Company, Other Luxury Brands of Hundreds of Thousands of Dollars

August 5, 2013

The Federal Bureau of Investigation (FBI) on August 5, 2013 released the following:

“NEWARK, NJ—Two men were arrested by federal agents early this morning in Akron, Ohio for conspiracy to defraud an aviation company out of charter flights and other businesses out of services and luxury goods, U.S. Attorney Paul J. Fishman announced.

Dante G. Dixon, 45, of Miami, Florida, and Christopher L. Henderson, 32, of Akron, Ohio, were charged by complaint with conspiracy to commit wire fraud. They made their initial court appearances before U.S. Magistrate Judge Kathleen Burke in Akron federal court and were ordered held until they can be transported to New Jersey.

According to the complaint:

From May 2013 through June 2013, Dixon and Henderson and others allegedly conspired to fraudulently obtain at least four private charter flights from Jet Aviation, an international business aviation service with its United States’ headquarters in Teterboro, New Jersey. Dixon, Henderson, and others also conspired to obtain tens of thousands of dollars in other luxury goods and services, all via sham lines of credit issued to a well-known financial institution for the defendants and others’ use, by misrepresenting that they and others were employees at the financial institution.

On May 5, 2013, an individual using the name Josh Stevens called Jet Aviation’s offices in Chicago, Illinois and Van Nuys, California to inquire about its private charter flight services. That individual identified himself as being employed as a senior vice president at a well-known financial institution and provided an e-mail address purporting to be affiliated with the financial institution. It was later determined that this e-mail address was not, in fact, affiliated with the financial institution. A Jet Aviation employee sent an e-mail to the provided e-mail address. The e-mail from Jet Aviation contained a draft charter services agreement, which was signed by Josh Stevens and returned to Jet Aviation on May 9, 2013. The agreement falsely listed Josh Stevens as a senior vice president, Dixon as a vice president, and Henderson as a vice president of international affairs at the well-known financial institution.

On May 21, 2013, based on the false information provided by Josh Stevens, a Jet Aviation employee created an account and a $350,000 line of credit for the defendants and others. The line of credit was in the name of the financial institution on behalf and for the use of the defendants and others. Dixon and Henderson and others used the sham line of credit to take at least four private charter flights.

On June 7, 2013, a Jet Aviation employee at Teterboro met Dixon and Henderson before they boarded their charter flight to Miami, Florida. During the meeting, the defendants identified themselves as being employees at the financial institution. The Jet Aviation employee then contacted the financial institution and was informed that Dixon and Henderson and others were not, and had never been, employees at the financial institution.

As a result of their misrepresentations to Jet Aviation, Dixon and Henderson and others fraudulently obtained private high-end charter flights and limousine car services with a total value of $175,790. Jet Aviation never received payment from the defendants and others, or from the financial institution’s line of credit, for any of the services provided to the defendants and others, including the approximately $164,911 in charter flights and the approximately $10,879 in limousine services.

Dixon and Henderson and others made similar misrepresentations about their purported employment at the financial institution to other luxury service providers, including to a Tiffany & Co. store in Bal Harbour, Florida, and to The W South Beach Hotel in Miami, Florida. These misrepresentations resulted in the defendants and others fraudulently obtaining, via sham lines of credit with Tiffany and The W, approximately $19,991 in watches, sunglasses, sterling silver and leather business card holders, and men’s cologne from Tiffany, and approximately $25,466 in overnight hotel stays at The W.

The investigation has revealed that the financial institution was not aware that Dixon and Henderson and others were using its corporate identity. As a result of their scheme, Dixon and Henderson and others fraudulently obtained more than $220,000 in luxury goods and services.

The charge of conspiracy to commit wire fraud with which the defendants are charged is punishable by a maximum potential penalty of 20 years in prison, and a maximum fine of $250,000 or twice the gain or loss resulting from the defendants’ crimes.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s arrests.

The government is represented by Assistant U.S. Attorney Aaron Mendelsohn 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. 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’s 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.”

Federal Wire Fraud

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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.


FBI: “Manhattan U.S. Attorney and FBI Assistant Director in Charge Announce Insider Trading Charges Against Four SAC Capital Management Companies and SAC Portfolio Manager”

July 25, 2013

The Federal Bureau of Investigation (FBI) on July 25, 2013 released the following:

SAC Management Companies Allegedly Engaged in Decade-Long Insider Trading Scheme on a Scale Without Known Precedent in Hedge Fund Industry; SAC Portfolio Manager Responsible for $1.25 Billion “Special Situations” Fund Has Pled Guilty to Insider Trading

Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI), announced today the unsealing of insider trading charges against four companies—S.A.C. CAPITAL ADVISORS, L.P. (SAC Capital LP), S.A.C. CAPITAL ADVISORS, LLC (SAC Capital LLC), CR INTRINSIC INVESTORS, LLC (CR Intrinsic), and SIGMA CAPITAL MANAGEMENT, LLC (Sigma Capital); (collectively the SAC Companies). The SAC Companies are responsible for the management of a group of affiliated hedge funds (collectively the SAC Hedge Fund or SAC). Charges were also unsealed today against RICHARD LEE, a portfolio manager employed by SAC Capital LP, who focused on “special situations” like mergers and acquisitions, private equity buy-outs, and corporate restructurings in publicly traded companies across various industry sectors. LEE pled guilty on July 23, 2013, before U.S. District Judge Paul G. Gardephe, to conspiracy and securities fraud charges in connection with his work at SAC Capital LP.

The SAC Companies are charged with criminal responsibility for insider trading offenses. These alleged offenses were committed by numerous employees, occurred over the span of more than a decade, and involved the securities of more than 20 publicly-traded companies across multiple sectors of the economy. It is charged that the acts of these employees were made possible by institutional practices that encouraged the widespread solicitation and use of material, non-public information (Inside Information). This activity allegedly resulted in hundreds of millions of dollars in illegal profits and avoided losses at the expense of members of the investing public. The SAC Companies are expected to be arraigned on the charges on tomorrow at 10:00 a.m. before U.S. District Judge Laura Taylor Swain.

Manhattan U.S. Attorney Preet Bharara said: “A company reaps what it sows, and as alleged, SAC seeded itself with corrupt traders, empowered to engage in criminal acts by a culture that looked the other way despite red flags all around. SAC deliberately encouraged the no-holds-barred pursuit of an ‘edge’ that literally carried it over the edge into corporate criminality. Companies, like individuals, need to be held to account and need to be deterred from becoming dens of corruption. To all those who run companies and value their enterprises, but pay attention only to the money their employees make and not how they make it, today’s indictment hopefully gets your attention.”

FBI Assistant Director in Charge George Venizelos said: “Our aim all along has been to root out the wrongdoers and send a message to anyone else inclined to break the law. If your information ‘edge’ is inside information, you can’t trade on it.”

According to the allegations in the five-count indictment and the criminal information to which LEE pled guilty, both of which were unsealed today in Manhattan federal court:

The SAC Hedge Fund operated as a collection of dozens of individual trading portfolios that covered nearly every trading sector of the economy. Each portfolio was headed up by a portfolio manager (PM), and supported by one or more research analysts (RAs). SAC PMs had substantial discretion in managing the investments in their own portfolios, and were required by the SAC Companies to share the investment recommendations in which they had the greatest confidence with the owner of the SAC Companies (the SAC Owner). The SAC Owner managed the largest trading portfolio at SAC.

From 1999 through at least 2010, numerous employees of the SAC Companies obtained and traded on Inside Information, or recommended trades based on such information to SAC PMs or the SAC Owner. To date, eight SAC Company PMs and RAs have been charged and/or convicted in insider trading cases involving the SAC Hedge Fund, including LEE, who was charged and pled guilty earlier this week.

The systematic insider trading engaged in by SAC PMs and RAs was the predictable and foreseeable result of an institutional failure. The SAC business culture encouraged and tolerated the relentless pursuit of an information “edge,” with no meaningful commitment to ensuring that such an “edge” came from legitimate research and not Inside Information.

As charged in the indictment, these institutional failings fell into three main categories:

First, the SAC Companies focused on recruiting SAC PMs and SAC RAs who had proven networks of public company contacts. The SAC Companies, however, did not make any corresponding effort to ensure that prospective SAC PMs and SAC RAs did not use these contacts to obtain illegal Inside Information. For example, in a November 16, 2008, e-mail forwarded to the SAC Owner, an SAC PM candidate in the industrial sector was recommended in part because he had “a house in the Hamptons with the CFO” of a Fortune 100 industrial sector company. In another instance, the SAC Companies hired LEE despite a warning to the SAC Owner from LEE’s prior employer, that LEE had been a member of an insider trading group at that hedge fund. LEE ultimately traded on Inside Information in the $1.25 billion “special situations” SAC portfolio he jointly managed with a second SAC PM.

Second, employees of the SAC Companies were financially rewarded for recommending to the SAC Owner “high conviction” trading ideas, in which the SAC PM had an “edge” over other investors. In many cases, the employees were not questioned when making trading recommendations that appeared to be based on Inside Information. On numerous occasions, the SAC Owner failed to follow up with SAC employees who were promoting trading sourced to an “edge” from a contact at a public company or with similar language suggesting potential insider trading. On one occasion, the SAC Owner participated in a discussion with his employees on the topic of confidential information the SAC employees had said that they learned during a paid consultation session from a clinical investigator for a drug trial. During the discussion with his employees, the SAC Owner, a sophisticated trader with over three decades of experience, never questioned whether the drug trial data constituted Inside Information. In addition, the SAC Owner and SAC Companies cultivated an environment that emphasized not discussing Inside Information openly rather than not seeking or trading on it in the first place.

Third, the SAC Companies employed limited compliance measures designed to detect or prevent insider trading by SAC PMs or SAC RAs. They failed to routinely monitor employee e-mails for indications of insider trading until late 2009, even though SAC’s head of compliance had recommended such monitoring to SAC management four years earlier. Indeed, despite numerous documented cases of insider trading at SAC—established by, among other things, guilty pleas of six former SAC PMs and RAs, each predicated upon repeated insider trading over substantial periods of time—SAC’s compliance department contemporaneously identified only a single instance of suspected insider trading by its employees. In that one case, the SAC Companies permitted those involved to continue working at SAC and failed to report the conduct to regulators or law enforcement.

***

In addition to the indictment, today the government filed a civil forfeiture action (the forfeiture complaint) in Manhattan federal court, seeking the forfeiture of assets held by investment funds to which the SAC Companies served as investment advisors, assets held by affiliated investment funds, and assets held by the SAC Companies themselves. The Forfeiture Complaint alleges that the SAC Companies engaged in money laundering by commingling the illegal profits from insider trading with other assets, using the profits to promote additional insider trading, and transferring the profits with the assistance of financial institutions.

The SAC Companies are charged together in count one of the indictment with wire fraud, and each of the four SAC Companies is charged separately in counts two through five with securities fraud. Each of the SAC Companies faces a maximum fine for the securities fraud charges of the greater of $25 million, or twice the gross gain or loss derived from the offense on each charge.

The criminal information unsealed today, to which RICHARD LEE pled guilty earlier this week, charges LEE with one count of conspiracy and one count of securities fraud in connection with insider trading between April 2009 through 2010, while he was employed by SAC Capital LP. LEE faces a maximum penalty of 20 years in prison for the securities fraud charge and five years in prison for the conspiracy charge. He also faces a maximum fine of $5 million for the securities fraud charge and $250,000 or twice the gross gain or loss derived from the offense on the conspiracy charge.

Of the seven other SAC Company portfolio managers and research analysts previously charged in insider trading cases involving the SAC Hedge Fund, five have pled guilty and await sentencing. They include:

  • Jon Horvath, who pled guilty on September 28, 2012;
  • Wes Wang, who pled guilty on July 13, 2012;
  • Donald Longueuil, who pled guilty on April 28, 2011;
  • Noah Freeman, who pled guilty on February 7, 2011; and
  • Richard Choo-Beng Lee, who pled guilty on October 13, 2009

Charges are still pending against the remaining two defendants previously charged in connection with SAC, Michael Steinberg and Mathew Martoma, who are presumed innocent unless and until proven guilty.

Mr. Bharara praised the efforts of the FBI and also thanked the U.S. Securities and Exchange Commission for its assistance in the investigation. He added that the investigation is continuing.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. 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.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Arlo Devlin-Brown, Antonia M. Apps and John T. Zach are in charge of the prosecution, and Assistant U.S. Attorney Micah Smith is responsible for the forfeiture aspects of the case.

The charges contained in the indictment are merely accusations and the defendants are 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

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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.


Sean E. Wagner, Former Owner of Two Florida Airline Fuel Supply Companies, Charged for Alleged Role in Scheme to Defraud Illinois-Based Ryan International Airlines

July 22, 2013

The U.S. Department of Justice’s Office of Public Affairs on July 22, 2013 released the following:

“A former owner and operator of two Florida-based airline fuel supply service companies made his initial appearance today in the U.S. District Court for the Southern District of Florida in West Palm Beach on charges of participating in a scheme to defraud Illinois-based Ryan International Airlines, the Department of Justice announced.

Sean E. Wagner was arrested on July 19, 2013, in Weston, Fla., on a one-count criminal complaint to commit wire fraud and honest services fraud relating to a scheme to defraud Ryan, a charter airline company based in Rockford, Ill. At today’s hearing, the department said that Wagner was arrested after there were indications that he was a flight risk.

The criminal complaint alleges that Wagner participated in a conspiracy to defraud Ryan by making kickback payments to Wayne Kepple, the former vice president of ground operations for Ryan in charge of contracting with providers of goods and services on behalf of the company. In exchange, Kepple awarded business to Wagner’s fuel supply service companies. According to the criminal complaint, from at least as early as December 2005 through at least August 2009, Wagner, his companies, and others made kickback payments totaling more than $200,000, in the form of checks, wire transfers, gift cards and cash, to Kepple while working at Ryan.

Ryan provided air passenger and cargo services for corporations, private individuals, and the U.S. government, including the U.S. Department of Defense, the U.S. Department of Homeland Security and the U.S. Marshals Service.

“The Antitrust Division will take enforcement action against those who subvert the competitive process by trading contracts for kickbacks, especially where the U.S. government is being victimized,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will hold accountable those who seek to defraud the government and U.S. taxpayers.”

Wagner is charged with one count of conspiracy to commit wire fraud and honest services fraud, which carries a maximum sentence of 20 years in prison and a $250,000 criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.

As a result of this ongoing investigation, four individuals have pleaded guilty to date. Three of the individuals have been ordered to serve sentences ranging from 16 to 24 months in prison and to pay more than $220,000 in restitution. The fourth individual, Wayne Kepple, pleaded guilty and is awaiting sentencing.

This charge is the result of an investigation being conducted by the Antitrust Division’s National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General, with assistance from the U.S. Attorney’s Office for the Southern District of Florida.”

Federal Wire Fraud Crimes – 18 U.S.C. § 1343

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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.