Two Former Directors of Rosebud Tribal Ranch Appear in Federal Court on Embezzlement Charges

Defendants Prosecuted as Part of the Guardians Project, a Federal Law Enforcement Initiative to Combat Corruption, Fraud, and Abuse in South Dakota

United States Attorney Randolph J. Seiler announced that two former directors of the Rosebud Sioux Tribe’s Tribal Ranch appeared in federal court on September 26, 2017, in Pierre, South Dakota, with one defendant pleading guilty at his initial appearance. Patricia Elaine Jones and Stormy Halligan, both former directors of the Rosebud Tribal Ranch, were separately charged with Embezzlement and Theft from an Indian Tribal Organization.

Patricia Elaine Jones, 65, of Rosebud, South Dakota, appeared in federal court on the indictment charging her with one count of embezzlement. The maximum term of imprisonment upon conviction is up to 5 years, a $250,000 fine, or both, a period of supervised release, and a special assessment of $100 to the Federal Crime Victims Fund. Restitution may also be ordered.

According to the indictment filed against Jones, between April 1, 2015, and March 31, 2016, Jones willfully and knowingly embezzled, misapplied, and converted to her own use more than $1,000 of monies, funds, credits, goods, assets, and other property belonging to the Rosebud Sioux Tribe Tribal Ranch, an Indian Tribal Organization.

During his initial appearance, Stormy Halligan, 42, of Winner, South Dakota, entered his guilty plea before U.S. Magistrate Judge Mark A. Moreno. Halligan faces a maximum term of imprisonment of 1 year, a $100,000 fine, or both, a period of 1 year of supervised release, and a special assessment of $25 to the Federal Crime Victims Fund. Restitution will also be ordered.

According to Halligan’s plea agreement, between April 1, 2015, and March 31, 2016, he willfully and knowingly embezzled, misapplied, and converted to his own use monies, funds, credits, goods, assets, and other property belonging to the Rosebud Sioux Tribe Tribal Ranch, an Indian Tribal Organization. Halligan pleaded guilty to a federal misdemeanor and has agreed to pay restitution.

The investigation is being conducted by the Federal Bureau of Investigation and the Department of Interior, Office of Inspector General. Assistant U.S. Attorney Jeremy R. Jehangiri is prosecuting the case.

The case was brought pursuant to The Guardians Project, a federal law enforcement initiative to coordinate efforts between participating agencies, to promote citizen disclosure of public corruption, fraud, and embezzlement involving federal program funds, contracts, and grants, and to hold accountable those who are responsible for adversely affecting those living in South Dakota’s Indian country communities. The Guardians Project is another step of federal law enforcement’s on-going efforts to increase engagement, coordination, and positive action on behalf of tribal communities. Led by the United States Attorney’s Office, the participating agencies include: Federal Bureau of Investigation; the Offices of Inspector General for the Departments of Interior, Health and Human Services, Social Security Administration, Agriculture, Transportation, Education, Justice, and Housing and Urban Development; Internal Revenue Service, Criminal Investigation Division; U.S. Postal Inspector Service; U.S. Postal Service, Office of Inspector General.

For additional information about The Guardians Project, please contact the United States Attorney’s Office at (605)330-4400. To report a suspected crime, please contact law enforcement at the federal agency’s locally listed telephone number.

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Burlington County, New Jersey Man Sentenced to One Year in Prison for Sale of Counterfeit Computer Components

CAMDEN, N.J. — A Burlington County, New Jersey, man was sentenced today to 12 months in prison for buying counterfeit computer components from a factory in China for sale in the United States, Acting U.S. Attorney William E. Fitzpatrick announced.

Ronald Graban, 58, of Columbus, N.J., previously pleaded guilty before U.S. District Judge Noel L. Hillman to an information charging him with mail fraud and money laundering. Judge Hillman imposed the sentence today in Camden federal court.

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

Beginning in 2000, Graban was in the business of buying and reselling computer parts. He operated his business using various entities that he had set up, including, RPR International LLC, Graham Enterprises International, Innovative Technology Group, MT Loveland Corp., Golden Eagle Property Management, Andy Lee Inc., and Andy Lee Electronics. From early 2006 to mid-2007, Graban purchased counterfeit Cisco and Nortel components from a factory in China and then resold them to an Internet retailer, who sold them to the public.

In December 2004, he began buying computer parts from a company in China named GigaLight Electronic (HK) Co. Ltd., a/k/a Eflow (GigaLight/Eflow). These parts were mostly network connecting parts, and appeared identical to parts manufactured by Cisco Systems Inc. and Nortel Networks, two large computer parts and services companies. ­Graban represented to certain persons at the Intern­et retailer that the parts were genuine Cisco and Nortel parts.

In early 2006, Graban became aware that GigaLight/Efl­ow was selling counterfeit computer parts to his companies after U.S. Customs and Border Protection (CBP) seized several shipments of computer parts from GigaLight/Eflow and notified the companies of the seizures and of the fact that the parts seized were counterfeit. Despite being on notice th­at the computer parts he had been buying were counterfeit, Graban continued to buy those parts and resell them to the Internet retailer.

In February 2006, Graban caused the Internet retailer to mail him a check, payable to one of Graban=s companies, for $163,000 in payment for counterfeit parts he sold to the retailer. He deposited that check into the bank account of another one of his companies. In August 2007, approximately $890,000 was seized from various bank accounts that Graban maintained in the name of his companies. Two properties in Florida were seized, but later went into foreclosure. Graban agreed to forfeit the funds seized and the proceeds from the two foreclosure sales, approximately $40,000.

In addition to the prison term, Judge Hillman sentenced Graban to one years of supervised release, fined him $60,000 and ordered him to pay restitution of $927,193.

Acting U.S. Attorney Fitzpatrick credited special agents of Immigration and Customs Enforcement – Homeland Security Investigations, under the direction of Acting Special Agent in Charge Debra Parker; IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; the U.S. Postal Inspection Service, under the direction of Inspector In Charge Daniel B. Brubaker, Philadelphia Division; and CBP, under the direction of under the direction of Director of Field Operations Robert E. Perez, New York Field Office, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Howard Wiener of the U.S. Attorney’s Office Criminal Division in Camden.

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12 Defendants Charged Federally with Collectively Receiving Over $20 Million from USDA by Fraudulently Trading Food Stamps for Cash

Twelve retail store owners, operators, and clerks, have been charged in connection with schemes to illegally redeem food stamp benefits in exchange for cash.

Benjamin G. Greenberg, Acting United States Attorney for the Southern District of Florida, Karen Citizen-Wilcox, Special Agent in Charge, U.S. Department of Agriculture, Office of Inspector General (USDA-OIG), George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Brian Swain, Special Agent in Charge, U.S. Secret Service (USSS), made the announcement.

The indictments allege that the retailers received more than $20 million in federal payments for transactions in which they did not provide any food, a fraud scheme commonly known as “food stamp trafficking.” Stores and vendors allegedly took illicit profits from the fraudulent transactions with food stamp recipients. This operation resulted in the largest combined financial fraud loss for a food stamp trafficking takedown in history.

“The Supplemental Nutrition Assistance Program offers nutrition assistance to millions of eligible, low-income individuals and families while providing economic benefits to communities,” stated Acting United States Attorney Benjamin G. Greenberg. “The exploitation of participants in the program by providing cash instead of nutrition for financial gain is criminal. The U.S. Attorney’s Office and our law enforcement partners are committed to investigating and bringing to justice those who engage in these fraudulent schemes.”

“The USDA-OIG conducts hundreds of criminal investigations relating to SNAP fraud across the nation each year. In this instance, eight small convenience stores in south Florida committed a staggering amount of fraud in a relatively short amount of time. These retailers created an illegal benefits exchange system that defrauded the American taxpayer and denied healthy foods to needy children and their families. The storeowners who allegedly orchestrated this trafficking scheme pocketed millions in “fees” which they charged for converting food assistance benefits into cash. Any retailer who chooses to defraud taxpayers through such schemes will continue to be aggressively investigated and prosecuted by USDA-OIG and its law enforcement partners,” stated Karen Citizen-Wilcox, Special Agent in Charge, USDA-OIG.

The Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, is a federally funded, national program established by the United States government to alleviate hunger and malnutrition among lower income families. The United States Department of Agriculture (USDA) administers SNAP through its agency, the Food and Nutrition Service (FNS). FNS is responsible for the authorization and disqualification of retail food establishments participating in the redemption of SNAP benefits.

In Florida, SNAP is administered by the State of Florida Department of Children and Families (DCF). DCF is responsible for overall program administration, as well as approving, denying or revoking assistance for recipients. FNS and the State of Florida share jointly in the cost of administering the SNAP. In 1998, DCF changed the format of SNAP benefits in Florida from a traditional paper coupon system to an Electronic Benefit Transfer (EBT) card system. Recipients use the EBT card, which contains an embedded magnetic strip, to purchase approved food items from participating retailers. Retailers must apply to and be approved by FNS to participate in the program. Authorized retailers use a point-of-sale (POS) terminal that checks the EBT card information and deducts the cash value of the purchase from the customer’s SNAP benefit balance. SNAP reimbursements are paid to retailers through electronic funds transfers. Retailers bill the government in return for providing approved food items. SNAP retailers, including the defendants, receive instruction regarding the requirements and regulations of the food stamp program, such as that only eligible food items can be exchanged for EBT benefits and that a retailer may never exchange EBT benefits for cash or non-food items.

According to some of the indictments listed below, the defendants owned, operated, or worked at stores in the Southern District of Florida that were authorized to accept SNAP. In other indictments, the defendants owned, operated, or worked at stores in the Southern District of Florida who were not authorized to accept SNAP but instead unlawfully utilized the POS terminals of authorized retailers. The defendants received instruction regarding the requirements and regulations of the food stamp program. The defendants allegedly exchanged EBT benefits for cash, in violation of the food stamp program rules. The defendants and/or their co-conspirators/employees swiped the recipient’s EBT card at a POS machine for an inflated amount, and paid the recipient, in cash, a reduced percentage of the value of food stamp benefits charged on the card. The defendants would realize a guaranteed, significant profit from each fraudulent transaction. In most situations, the recipient did not actually receive any food or eligible items in return for their food stamp benefits. As a result of the unlawful cash transactions, the defendants fraudulently obtained more than $20 million dollars in EBT deposits for transactions in which the stores did not provide food.

1. United States v. Hasan Saleh, et al., Case No. 17-20653-CR-Moreno

According to the indictment, Hasan Saleh, 59, managed a convenience store, Four Corners, located at 821 Northwest 6th Street, Fort Lauderdale, Florida. Despite not being authorized to participate in SNAP, Four Corners employees, including Saleh, were involved in a scheme in which they exchanged food stamp benefits for cash. These transactions were carried out using equipment registered to the convenience store Sparkle, located at 6530 NW 18th Avenue, Miami, Florida. Defendant Mohammad Alobaisi, 37, was the sole officer, director, and registered agent of Sparkle. Additionally, employees of Sparkle participated in the scheme by exchanging food stamp benefits for cash. Between April 2015 and August 2017, Saleh and Alobaisi, together with their employees, Reynold Francois, 38, Ihab Hassouna, 44, Mohammad Alteen, 33, Maria Jerdana, 36, and Joe Ann Baker, 56, redeemed and caused to be redeemed approximately $2 million in EBT food stamp benefits from the FNS.

2. United States v. Yousef Homedan Zahran, Case No. 17-60241-CR-Ungaro

On September 20, 2017, Yousef Homedan Zahran, a/k/a “Yuousef Hussein,” a/k/a “Joe,” 60, of Pompano Beach, was charged by complaint in connection with a food stamp fraud scheme. According to court documents, Zahran, worked as a clerk at a convenience store, Muna & Mona Inc., d/b/a Community Food Store #5, located at 401 NW 27th Avenue, in Pompano Beach, Florida. On multiple occasions between November 3, 2016, and January 11, 2017, Zahran illegally sold food stamp benefits in exchange for cash.

3. United States v. Omar Hajje and Jalal Hajyousef, Case No. 17-20622-CR-Gayles

According to the indictment, Omar Hajje, 43, of Miami, and Jalal Hajyousef, 42, of Miami, owned and operated convenience and grocery stores in Miami known as Steve Market 2 and Yum-Yum’s Grocery, located at 6804 NW 15th Avenue and 6813 NW 15th Ave in Miami, respectively. Omar Hajje applied for and obtained authorization for each of the two stores to participate in SNAP. From July 2014 through the date of the indictment, September 2017, Omar Hajje and Jalal Hajyousef were involved in a fraud and money laundering conspiracy in which they exchanged food stamp benefits for cash and fraudulently redeemed approximately $4.2 million in EBT food stamp benefits. Hajje and Hajyousef laundered the fraud proceeds through various accounts, by writing cashier’s checks, and by converting EBT funds to cash.

4. United States v. Andy Javier Herrera and Javier Herrera, Case No.17-20663-CR-Moore

According to the indictment, Andy Javier Herrera, 24, of Little Havana, owned a small grocery store, Santa Ana Market II, located at 1832 NW 17th Ave., Miami, Florida. Herrera applied for, and obtained, authorization to participate in SNAP. Javier Herrera, 49, of Coral Way, was a clerk that worked at both Santa Ana Market II, and a nearby convenience store named Santa Ana Market, located at 3000 NW 12th Avenue, Miami, Florida. Between April 2012 and September 2017, Andy Herrera and Javier Herrera were involved in a scheme in which they exchanged food stamp benefits for cash. During that time, Andy Herrera and Javier Herrera fraudulently redeemed approximately $10,000,000 in EBT food stamp benefits.

If convicted of the charged conduct, a defendant faces a possible maximum statutory sentence of 20 years’ imprisonment for conspiracy to commit wire fraud; 20 years’ imprisonment for wire fraud; and 5 years’ imprisonment for food stamp/EBT fraud.

Acting U.S. Attorney Greenberg acknowledged the dedicated efforts of the Florida Department of Children and Families and the Florida Department of Financial Services to provide services to the community and identify for prosecution those individuals who compromise public benefits. Mr. Greenberg also commended the investigative efforts of USDA-OIG, FBI and USSS, and expressed his gratitude to FLPD, DBPR-ABT, MPD and MDPD for their assistance with the investigation and law enforcement operation. Mr. Greenberg recognized Assistant United States Attorneys Yeney Hernandez, Lisa Miller, Frederic Shadley, and Anne McNamara, who are prosecuting these cases.

A complaint or an indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty in a court of law.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Two Chattanooga Residents Sentenced to Prison for Participating in a Conspiracy to Commit Wire Fraud And For Tax Evasion

CHATTANOOGA, Tenn. – On September 29, 2017, James H. Brennan, 68, and Douglas A. Dyer, 58, both of Chattanooga, Tennessee, were sentenced by the Honorable Travis R. McDonough, U.S. District Court Judge, to respectively serve 48 months and 60 months in federal prison for their roles in a wire fraud and tax evasion conspiracy. Upon their release, U.S. Probation will supervise them for three years. Brennan and Dyer were also ordered to pay over $4.9 million in restitution to over 200 victims in this case. Additionally, Brennan was ordered to pay restitution to the IRS in the amount of $184,022.84. Dyer was ordered to pay restitution to the IRS in the amount of $354,251.58.

In May 2017, both Dyer and Brennan pleaded guilty to conspiring to steal approximately $4.9 million from investors and evading the assessment and payment of their true taxes due and owing by mischaracterizing the stolen money as capital gains instead of income, thus paying at a fraudulently derived lower tax rate. Dyer also pleaded guilty to criminal contempt for dispersing funds contrary to an order in a civil case filed by the Securities and Exchange Commission for securities fraud.

According to documents on file with the U.S. District Court, between 2008 and 2016, Brennan and Dyer sought and received funds from numerous investors by promising them that their money would be used to capitalize limited liability corporations which would merge with companies seeking to transition to public ownership on a public stock exchange. Instead, they diverted the funds to their personal use. Although the general practice is to report stolen funds as income, Brennan and Dyer mischaracterized the funds they stole as capital gains and paid taxes at the lower capital gains rate, effectively evading paying taxes at the correct rate.

The case was investigated by the Federal Bureau of Investigation (FBI) and Internal Revenue Service (IRS) Criminal Investigation. Assistant U.S. Attorneys James T. Brooks and Anne-Marie Svolto represented the United States.

U.S. Attorney Nancy Stallard Harr said, “The U.S. Attorney’s Office will continue to pursue prosecution of fraudulent offenders, such as Brennan and Dyer, who effectively steal money from both innocent individuals and the United States by failing to pay taxes.”

“Fraudulent investment schemes continue to bring financial ruin to many Americans,” stated Tracey D. Montaño, Special Agent in Charge, IRS-Criminal Investigation. “We are proud of the work of our special agents who utilize their specialized forensic accounting skills to unravel complex financial schemes. The prosecution of individuals who intentionally conceal their income and evade taxes is a key priority for IRS Criminal Investigation. Mr. Dyer and Mr. Brennan stole investors’ hard-earned money, used it for their own personal benefit, and evaded the federal tax owed on the stolen funds. This case should serve as a reminder, no matter the source of income, all income is taxable.”

“The public’s faith in the integrity of investment markets, particularly those involving capital for new companies, is essential for the continued success of our country’s economic stability and growth,” stated Renae McDermott Special Agent in Charge of the Knoxville FBI. “The sentencing today demonstrates the commitment of the FBI and our investigative partners to bring to justice those who prey upon unsuspecting investors.”

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Eight from Ohio indicted for Social Securiy fraud after collecting benefits of the deceased

United States Attorneys Justin E. Herdman and Benjamin C. Glassman announced charges brought in eight separate Social Security fraud and other benefits cases statewide.

The cases are part of the national Social Security Administration (SSA) Fraud Prosecution Project, a collaboration with SSA’s Office of the General Counsel, Office of the Inspector General and the Department of Justice. From early 2016 to date, Special Assistant United States Attorneys around the country have secured over 300 federal convictions, leading to judicial orders for more than $34 million in restitution to SSA and other agencies.

In Ohio, eight individuals were charged this month with stealing Social Security and other retirement benefits totaling more than $796,000. The defendants illegally collected Social Security benefits that were paid to a deceased relative or friend in seven of the eight cases. In one case, the defendant stole the identity of a living 65-year-old doctor and used it to collect the doctor’s Social Security benefits.

In the Northern District of Ohio, Special Assistant United States Attorney Lisa J. Sanniti indicted three cases.

Norman C. Thompson, III, 47, of Chagrin Falls, is charged for allegedly wrongfully converted his deceased mother’s Title II disability benefits. Every month after his mother’s death, defendant intercepted checks from the Social Security Administration issued to his mother. Thompson signed his mother’s name and his own to endorse and deposit the checks, causing a total loss of approximately $39,000.

From approximately November 2011 through May 2017, James C. Bohanon, Jr., 69, of Cleveland, allegedly wrongfully received and converted to his own use approximately $48,000 from his deceased wife’s Supplemental Security Income. In addition, he received financial assistance from the U.S. Department of Housing and Urban Development, and was obligated to report his income accurately to his residential property management each year. Bohanon concealed his receipt of his deceased wife’s Social Security benefits from HUD, and, as a result, received approximately $38,500 in Housing Assistance Payments to which he was not entitled.

Alturik R. Plummer, 51, of University Heights, allegedly wrongfully converted his deceased grandmother’s Title II Retirement Insurance benefits from approximately August 2013 through October 2016, causing a loss of approximately $45,000.

“These defendants stole tens of thousands of dollars from taxpayers,” said Herdman, the U.S. Attorney for the Northern District of Ohio. “We will continue to work with all our law enforcement partners to root out fraud, including those who steal from Social Security.”

In the Southern District of Ohio, Special Assistant United States Attorney Timothy Landry is prosecuting five cases.

Jesse Larry, 71, of Columbus, Curtis Joash, 73, of Cincinnati and Dolores Stacy, 70, of Hamilton were each charged by criminal complaint for allegedly illegally collecting Social Security benefits paid to their respective mothers after their deaths. Each defendant was a co-signatory on their mother’s savings or checking account, allowing them to withdraw the Social Security money each month.

Larry collected $273,000 in benefits that were paid to his mother after she died in 1993, Joash collected nearly $188,000 since his mother’s death in 1990 and Stacy collected nearly $121,000 since her mother died in 2005.

Era Jenkinson, 42, of Columbus, was also charged by criminal complaint for allegedly illegally collected nearly $29,000 in Social Security benefits that were paid to her for the benefit of another person.

Jenkinson had been serving as the person’s representative payee, and therefore was responsible for notifying Social Security when the person died in 2015. Instead, it is alleged that Jenkinson spent the benefits on her own expenses after the person died. In April 2017, Jenkinson allegedly had a friend pose as the deceased person in a telephone call with a Social Security employee in an attempt to convince Social Security that the person was still alive.

Chucky Scott, 25, of Columbus, was charged by a Bill of Information. Scott is scheduled to plead guilty in U.S. District Court next week, and, according to the plea agreement, filed a claim for retirement benefits using the identity of a 65-year-old doctor, but using Scott’s own address to receive the payments. In this manner, Scott illegally collected approximately $14,500 in Social Security benefits.

“Taking Social Security benefits intended for another is a theft from all of us,” said Glassman, U.S. Attorney for the Southern District of Ohio. “Through our partnership with the Social Security Administration, the Southern District of Ohio is cracking down on this fraud as never before.”

Through its Fraud Prosecution Project, the Department of Justice and SSA pool legal resources to prosecute individuals who defraud Social Security programs. SSA’s Office of the General Counsel currently employs agency attorneys to serve as Special Assistant United States Attorneys in 13 United States Attorney Offices, two of which are located in the Southern and Northern Districts of Ohio, to lead these prosecution efforts.

For more information on SSA’s Fraud Prosecution Project and the agency’s other anti-fraud efforts, please visit https://www.ssa.gov/antifraudfacts/.

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Pennsylvania Tobacco Distributor Agrees to Plead Guilty to Aiding Tobacco Trafficking in Massachusetts

BOSTON – A Pennsylvania wholesale tobacco distributor agreed to plead guilty yesterday in federal court in Boston to aiding and abetting untaxed shipments of tobacco products into Massachusetts and evading financial reporting requirements.

Kamlesh Patel, 60, was charged and agreed to plead guilty to one count of aiding and abetting a large Norwood-based customer to violate the Prevent All Cigarette Trafficking Act (PACT Act) and one count of failing to report large cash transactions to the IRS.

Patel owned and operated RDK Distributors (RDK) and MV Distributors (MV) in Stroudsburg, Penn., through which he distributed wholesale quantities of cigars, smoking tobacco and smokeless tobacco (such as snuff and chewing tobacco), among other products.

Title 15 of the PACT Act requires people who sell, advertise for sale, transfer or ship for profit smokeless tobacco between states to file a statement with the Attorney General and the tobacco tax administrator in the states to which they ship their products. The PACT Act also requires them to file with the tax administrator a monthly record of each shipment of smokeless tobacco that they transport into the state.

Beginning in approximately January 2013, Patel sold large quantities of tobacco products to a Norwood wholesaler, often worth more than $100,000 at a time. The Norwood wholesaler typically paid Patel for tobacco products in cash. To evade financial reporting requirements that would have notified the IRS of the size, nature and income of the Norwood wholesaler’s business, Patel falsely divided among multiple invoices the bulk cash payments he received. Patel created and instructed his employees to record the large cash payments he received as if there had been numerous sales over numerous days among numerous companies, each less than $10,000, rather than the single sale for which he had received one or two sizeable cash payments, often amounting to more than $100,000 at a time.

The charge of structuring cash transactions to evade financial reporting requirements provides for a sentence of no greater than 10 years in prison, three years of supervised release, a fine of up to $500,000 and forfeiture. The charge of aiding and abetting violation of the PACT Act provides for a sentence of no greater than three years in prison, up to one year of supervised release, and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

Acting United States Attorney William D. Weinreb and Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston, made the announcement today. The Massachusetts Department of Revenue also provided valuable assistance. Assistant U.S. Attorney Stephen Heymann of Weinreb’s Economic Crimes Unit is prosecuting the case.

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U.S. Attorney Announces $3.6 Million Settlement With Bank Accused Of Consumer Fraud – Zions First National Bank

PHILADELPHIA – ZB, N.A, formerly known as Zions First National Bank, N.A. (Zions), of Salt Lake City, Utah, settled allegations by the United States Attorney’s Office for the Eastern District of Pennsylvania that Zions and its affiliated payment processor facilitated consumer fraud by providing payment processing services to telemarketing and Internet merchants that were debiting money illegally from consumers’ bank accounts. Under a civil settlement reached between ZB and the government, the bank will pay a civil money penalty of $3.6 million to the United States Treasury, announced Acting United States Attorney Louis D. Lappen.

The government alleges that Zions and its affiliate Modern Payments provided ACH debit processing services to a number of telephone and Internet marketing merchants that were engaged in fraud against consumers. The government further alleges that Zions and Modern Payments knew or were willfully blind to the fact that the marketing merchants were engaged in fraud campaigns against consumers. Modern Payments, through Zions, debited money from consumers’ bank accounts and transferred that money to the marketing merchants.

Banks are a critical key in many consumer fraud schemes. After a fraudulent marketer obtains bank account information from a consumer, the fraudulent marketer still needs to gain access to the banking system in order to take the consumer’s money. Fraudulent marketers have a difficult time opening their own bank accounts because of laws designed to prevent criminals from accessing the banking system. To overcome this obstacle, fraudulent marketers often obtain indirect access to the banking system through a third-party payment processor that can more easily establish a relationship with a bank.

The government alleges that Zions and Modern Payments knew of, or were willfully blind to, ten Modern Payment’s telemarketing and Internet marketing clients using Modern Payments to access the banking system through Zions to engage in consumer fraud schemes. Specifically, the government alleges that Zions and Modern Payments knew of or were willfully blind to indicators of consumer fraud, including high rates of ACH debit transactions returned from consumers’ accounts as unauthorized. The government also alleges that Zions and Modern Payments facilitated the fraud campaigns of two marketers by initiating debits against consumers’ bank accounts despite knowledge or being willfully blind to the fact that the debits violated rules that prohibited both processing payments associated with outbound telemarketing, and recurring payments pursuant only to a voice-authorization. The government also alleges that Modern Payments failed to conduct sufficient due diligence of certain of its marketing clients before providing them with access to consumers’ bank accounts — despite Zions’ internal skepticism of the marketers’ business practices and acknowledgement that Zions would be at risk for the marketers’ conduct.

The government contends that Zions and Modern Payments’ conduct violated the Financial Institutions Reform, Recovery and Enforcement Act, 12 U.S.C. § 1833a (“FIRREA”). FIRREA authorizes the imposition of civil monetary penalties for violations of enumerated criminal statutes affecting a federally-insured financial institution. These crimes include mail fraud and wire fraud.

Modern Payments received $1.2 million in fee revenue from the fraudulent marketers. In addition to the $3.6 million penalty paid to the United States Treasury in connection with this settlement, pursuant to a separate class action settlement approved by a Federal court, ZB has established a $37.5 million compensation fund for the victims of the frauds.

The case was handled by Assistant United States Attorney Joel M. Sweet and Investigator Jeffrey R. Braun.

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Law School Dropout Arrested for Impersonating New York Attorney and Defrauding Clients Who Paid for Immigration Services

LOS ANGELES – A Lynwood woman who dropped out of law school – but who later allegedly stole the identity and bar license number of a New York attorney – surrendered herself last night on federal charges that accuse her of filing immigration petitions on behalf of foreign nationals who believed she was a legitimate lawyer.

Jessica Godoy Ramos, 36, was taken into custody pursuant to a criminal complaint that charges her with mail fraud and aggravated identity theft. Ramos is expected to make her initial appearance this afternoon in United States District Court.

According to the criminal complaint, Ramos accepted thousands of dollars from several dozen aliens who sought her services in an attempt to obtain legal status in the United States. The complaint affidavit alleges that Ramos filed immigration petitions on the behalf of some aliens, but in other cases she never performed any services for her clients. In at least one instance, Ramos created counterfeit immigration parole documents which a client was able to use to enter the United States.

According to the complaint, Ramos’ clients initially believed she was a legitimate immigration attorney, but several became suspicious when Ramos directed them to appear at U.S. Citizenship and Immigration Services (USCIS) offices for interviews – but they did not have any scheduled appointments.

“The crimes alleged in this case victimized dozens of immigrants who were attempting to realize the American dream by paying someone they thought was a lawyer,” said Acting United States Attorney Sandra R. Brown. “This type of scam, which unfortunately targets new immigrants too often, undermines our immigration system and can shatter dreams of obtaining legal status to remain in the United States.”

“Unscrupulous immigration practitioners not only exploit the trust of their often-unwitting victims, but by filing fraudulent immigration applications they create a security vulnerability and potentially rob deserving immigrants of benefits they rightfully deserve,” said Joseph Macias, Special Agent in Charge for U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Los Angeles. “As these charges makes clear, HSI, in collaboration with its federal partners, is committed to targeting such scams and ensuring that those responsible are held accountable.”

Federal authorities began investigating Ramos in February after the HSI-led Document and Benefit Fraud Task Force received a tip from USCIS about five of Ramos’ clients who went to USCIS offices in downtown Los Angeles expecting to pick up their non-existent “Green Cards.”

“People who wish to file for benefits with U.S. Citizenship and Immigration Services have a right to proper representation,” said USCIS Los Angeles District Director Donna Campagnolo. “This case is a good example of all agencies involved working together to ensure that the integrity of the program is preserved and individuals are able to retain proper representation to aide them through the process.”

A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

If she were to be convicted, Ramos would face a statutory maximum penalty of 20 years in federal prison for the mail fraud count and a mandatory consecutive sentence of two years for the aggravated identity theft charge.

During the investigation into Ramos, HSI received substantial assistance from USCIS’ Fraud Detection and National Security Directorate and the San Gabriel Police Department.

This case is being prosecuted by Assistant United States Attorney Andrew Brown of the Major Frauds Section.

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West Haven Woman Sentenced to Prison for Role in Fraud and Identity Theft Scheme

Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that LORENA COBURN, 43, of West Haven, was sentenced today by U.S. District Judge Victor A. Bolden in Bridgeport to 16 months of imprisonment, followed by three years of supervised release, for her role in a fraud and identity theft scheme.

According to court documents and statements made in court, between approximately 2012 and July 2016, Jamila Williams-Stevenson and COBURN worked together to steal personal identifying information from victims and commit fraud using the stolen information. The sources of the personal identifying information included patients at Yale New Haven Hospital, where Williams-Stevenson worked as a care companion.

As part of the scheme, Williams-Stevenson and COBURN submitted to the U.S. Postal Service change of address applications for their victims so that the victims’ mail, including checks that were intended for the victims, would be diverted from the victims’ true addresses to addresses that were controlled by Williams-Stevenson and COBURN. Williams-Stevenson and COBURN also stole checks from residential and business mailboxes and then counterfeited the checks so that they were payable to their identity theft victims. They then opened bank accounts in the names of identity theft victims, deposited the stolen and counterfeit checks into those accounts, and then withdrew the funds from those accounts.

Williams-Stevenson and COBURN also obtained a life insurance policy in the amount of $75,000 in the name of an identity theft victim, and Williams-Stevenson was named as the beneficiary on the policy. Forensic analysis of Williams-Stevenson’s iPhone, which was seized at the time of her arrest, revealed a series of text messages between Williams-Stevenson and COBURN discussing how they might be able to cause the death of this victim in order to collect on the life insurance policy.

More than 30 individuals were victimized through this scheme, resulting in an attempted loss of more than $150,000 to banks and victims.

Williams-Stevenson was arrested on July 21, 2016. On that date, agents executed searches at her house and storage unit and found more than 200 unique credit and debit cards in the names of various identity theft victims.

COBURN was arrested on July 27, 2016. On November 30, 2016, she pleaded guilty to one count of bank fraud and one count of aggravated identity theft.

Judge Bolden ordered COBURN to pay restitution of $53,365.37 to various financial institutions and a university that suffered financial losses.

On December 12, 2016, Williams-Stevenson pleaded guilty to one count of bank fraud and one count of aggravated identity theft. On August 8, 2017, she was sentenced to 48 months of imprisonment, three years of supervised release, and $53,365.37 in restitution.

This matter was investigated by the U.S. Postal Inspection Service, the Internal Revenue Service – Criminal Investigation Division, the Connecticut Financial Crimes Task Force and the West Haven, New Haven and Orange Police Departments. The case was prosecuted by Assistant U.S. Attorney Sarala V.

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San Diego Finance Executive and Real Estate Broker Charged with $50 Million Fraud

SAN DIEGO – Financial executive Peter Cash Doye and notary public and real estate broker Raquel Reid were indicted today for their alleged roles in a massive scheme that generated nearly $50 million in fraudulently-obtained loan proceeds.

According to the indictment, the defendants defrauded lenders into making enormous loans against four multi-million dollar mansions in La Jolla and Del Mar, then used forged documents to make it appear that the loans had been paid off – thereby enabling them to secure additional loans from new lenders who believed the mansions were owned “free and clear.”

According to the indictment, Doye, a senior executive at the real estate investment firm known both as Conix, Inc. and Variant Commercial Real Estate (“VCRE”), negotiated the financing from unsuspecting lenders and investors based on a host of lies about the collateral used to secure the loans. To pull of the scam, Doye, Reid, and their co-conspirators created forged real estate lien “releases” and recorded fraudulent records at the San Diego County Recorder’s Office, wreaking havoc on the chain of title for these homes. Reid notarized the forged documents, helping to make the fraudulent paperwork appear authentic.

Doye’s business partner Courtland Gettel and Arizona attorney Jeffrey Greenberg have each pleaded guilty to participating in the scheme. According to their plea agreements, Gettel was the owner of Conix and VCRE, which refurbished single-family homes, purchased distressed debt, and purchased and refurbished commercial real estate projects.

As part of his guilty plea in 2016, Gettel admitted that he and Doye acquired the high-end homes in La Jolla and Del Mar by claiming they would be used as luxury rentals and investment properties—although in fact, Gettel and Doye lived in the properties along with their families. When they needed money to fund other business deals, Gettel and Doye began negotiating with new lenders, pretending that the first loans never existed or had already been paid off. Greenberg admitted that he used his expertise as a lawyer to generate and record fraudulent records, making it appear that prior loans were paid off, to help close the fraudulent deals.

In late 2014, the lenders uncovered the fraud, and began to discover that their secured interests in the properties were worthless. In response to questions from these lenders, Doye, Reid and Gettel agreed to falsely deny knowing anything about the fraudulent loans, and created yet more fraudulent documents to cover their tracks. For example, Reid destroyed her notary book and cut up her notary stamp, and then falsely reported to the California Secretary of State that it had been lost.

But the group defaulted on their obligations to repay the loans, leaving the lenders to dispute the validity of their interests and resulting in tens of millions of dollars in losses from unpaid loans. As part of their pleas, Gettel and Greenberg must forfeit the proceeds they stole from the various lenders and pay restitution to the victims. Doye and Reid were charged with criminal forfeiture as part of the indictment.

Gettel has also admitted that after his guilty plea and while he was awaiting sentencing, he arranged even more fraudulent real estate transactions. He has agreed to recommend a correspondingly higher sentence as a result of his ongoing fraud. Gettel is scheduled to be sentenced before U.S. District Judge William Q. Hayes on October 17, 2017, at 10:00 am. Greenberg was disbarred from practicing law in Arizona on October 6, 2016. Greenberg is scheduled to be sentenced before U.S. District Judge William Q. Hayes on October 2, 2017, at 9:00 am.

Doye and Reid are expected to make their initial appearances before U.S. Magistrate Judge Karen S. Crawford on September 21, 2017 at 2:00 pm.

*The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.

DEFENDANTS

Peter Cash Doye                                             Age: 41                       San Diego, CA

Raquel Reid                                                    Age: 38                       San Diego, CA

CHARGES

Count One (both defendants): Wire and Mail Fraud Conspiracy, in violation of 18 U.S.C. § 1349

Counts Two through Six (Doye only; both defendants as to Count Three): Wire Fraud, in violation of 18 U.S.C. § 1343

Counts Seven through Nine (Doye only as to Count Seven, both defendants as to Counts Eight and Nine): Mail Fraud, in violation of 18 U.S.C. § 1341

Maximum Penalties per count: 20 years’ imprisonment, $250,000 fine, $100 special assessment, restitution

Counts Ten and Eleven (both defendants): Aggravated Identity Theft, in violation of 18 U.S.C. § 1028A

Maximum Penalties: mandatory 2 years’ imprisonment, consecutive to any other term of imprisonment, $250,000 fine, $100 special assessment, restitution.

Count Twelve (Reid only): False Statements to Federal Agents, in violation of 18 U.S.C. § 1028A

Maximum Penalties: 5 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.

DEFENDANTS PREVIOUSLY CHARGED

Jeffrey Greenberg, 16CR1076-WQH and 1077-WQH          Age: 67           Tucson, AZ

Courtland Gettel, 16CR1099-WQH                                       Age: 43           Coronado, CA

Wire Fraud Conspiracy, in violation of 18 U.S.C. § 1349

Maximum Penalties: 20 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.

AGENCIES

Federal Bureau of Investigation

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