Former Lincoln-Way School Superintendent Indicted on Fraud Charges for Allegedly Misappropriating School Funds for His Own Benefit

CHICAGO — The former superintendent of Lincoln-Way Community High School District 210 has been indicted on federal fraud charges for allegedly misappropriating school funds for his own benefit and concealing the district’s true financial deficit from the public.

LAWRENCE WYLLIE fraudulently used at least $50,000 in school district funds to build and operate Superdog, a dog obedience training school that provided no benefit to the four high schools in the southwest suburban district, according to the indictment. Wyllie also misappropriated at least $16,500 of school district funds by paying himself a retirement stipend that was not in his employment contract, the indictment states. Wyllie fraudulently pocketed another $14,000 of school district funds by falsely describing it as compensation for unused vacation days – another benefit that was not in his contract, the charges state.

Wyllie also fraudulently inflated the district’s financial health by using bond funds to pay the district’s general operating expenses, causing the district to assume at least $7 million in additional debt.

The indictment was returned Wednesday in federal court in Chicago. It charges Wyllie, 79, of Naperville, with five counts of wire fraud and one count of embezzlement. Arraignment in U.S. District Court has not yet been scheduled.

The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; and Kathleen S. Tighe, Inspector General of the U.S. Department of Education.

District 210 operated four high schools that drew students from New Lenox, Frankfort, Mokena, Manhattan, Tinley Park and Orland Park. According to the indictment, one of the factors the district’s seven-member school board considered in renewing Wyllie’s employment contract was the financial performance of the district. In 2009, at the request of Wyllie and with approval of the school board, the district issued $29 million in bonds. Wyllie represented to the school board and bond purchasers that $10 million of the bond proceeds would be used for capital expenditures, including construction or renovation of the high schools, when in fact Wyllie knew that he would spend the money on the district’s general operating expenses and payroll, the charges allege. Wyllie transferred millions of dollars from a bank account where the district maintained its bond funds to a separate account that the district used for paying general operating expenses.

As a result, the district’s net operating expenditures and cost-per-pupil calculation appeared lower than they actually were, thus fraudulently inflating the district’s financial health, the charges state. Wyllie’s fraud scheme caused the district to assume at least $7 million in additional debt from the bond issuance, on which Lincoln-Way continues to pay interest, the indictment states.

Wyllie retired as district superintendent in June 2013.

The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Each count of wire fraud is punishable by up to 20 years in prison, while embezzlement carries a maximum sentence of ten years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant U.S. Attorney Sunil Harjani.

Original PressReleases…

Florida Woman Found Guilty in Gas Station Debit Card Skimming Operation that Involved Multiple States

Montgomery, Alabama- Eunises Llorca-Menses (30), of Naples, Florida, was found guilty by a federal jury Friday for her part in a scheme to use skimming devices on gas pumps to steal credit and debit card numbers, announced A. Clark Morris, Acting U.S. Attorney for the Middle District of Alabama, and Steven T. Marshall, Attorney General for the State of Alabama. The guilty verdict follows a multi-agency investigation that was initiated by the Ozark Police Department, the Alabama Attorney General’s Office, the United States Secret Service, and the Baldwin County Sheriff’s Office.

On February 15, 2017, Llorca Menses and her co-defendant Reiner Perez-Rives (34), of Houston, Texas, were charged by a federal grand jury with conspiracy to commit wire fraud, wire fraud, and aggravated identity theft. Perez-Rives pled guilty in July to conspiracy and identity theft charges.

As part of the scheme, Llorca-Menses and Perez-Rives, would rent vehicles and travel between Florida, Alabama, Tennessee and Virginia. During their travels, they would visit several gas stations and install a skimming device inside gas pumps. Through the skimming device, they collected gas station customers’ credit/debit card information and used that information to activate or reactivate credit, debit, or gift cards, and make unauthorized ATM cash withdrawals at gas stations and purchases at several places around the Southeast.

Law enforcement was able to uncover this scheme following multiple reports from victims concerning the unauthorized use of their debit cards. Working with financial institutions, the Ozark Police Department, along with state and federal partners, discovered that many of the victims had used their cards at the same gas station in Ozark, Alabama. At this station, they found a skimming device with Bluetooth capability installed on a gas pump. The Bluetooth technology allowed the defendants to collect a gas customer’s credit/debit information while sitting up to thirty-feet away from the gas pump.

At the time of their arrest on December 21, 2016, Llorca-Meneses and Peres-Rives were found to be in possession of thirty-nine credit/debit cards that had been re-encoded with stolen credit/debit card numbers, along with an additional 317 gift cards. A Wal-Mart gift card that contained the stolen account information from a victim’s Capital One credit card and a key used to gain access to the inside of a gas pump was found in Llorca-Meneses’ purse. Law enforcement also found a homemade device with connectors that matched the connections on the skimming device found in the gas pump in Ozark in their luggage.

Llorca-Menses and Perez-Rives each face a maximum sentence of 30 years in prison and payment of restitution to their victims. Their sentencings will take place within the next few months.

“It is incredibly difficult for the average person to determine if a gas pump has a skimmer,” stated Acting U.S Attorney Morris. “This is because many are placed inside the gas pump with no visible evidence of tampering. While the crooks may be getting smarter, law enforcement continues to work hard to stay a step ahead. This conviction shows that our office will continue to work with our partners to identify criminals that seek to victimize our citizens.”

“This conviction should send a strong message to debit card skimmers seeking to target unsuspecting Alabamians: you will be caught and brought to justice,” said Attorney General Marshall. “Special thanks to agents of the Alabama Attorney General’s Office, the U.S. Secret Service, the Ozark Police Department and the Baldwin County Sheriff’s Office for their teamwork in quickly uncovering this multi-state electronic crime spree and capturing the criminals, and to the U.S. Attorney’s Office for the Middle District of Alabama for this successful prosecution.”

“I would like to thank all law enforcement partners who brought these criminals to justice,” stated Ozark Police Chief Marlos Walker. “This is a win for all our communities as well as the men and women who stand up for justice every day. Teamwork is essential to the very being of a law enforcement professional. The Ozark Police Department was happy to do our part and will continue the fight against crime and disorder.”

Resident Agent in Charge Clayton Slay, with the United States Secret Service Montgomery Resident Office, stated, “the Secret Service has established an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes with local and state law enforcement partners and the U.S. Attorney’s Office. Through this effort, Mrs. Llorca-Menses was successfully prosecuted and found guilty by a jury of her peers.” RAC Slay also stated that he “would like to personally thank the Ozark Police Department, Baldwin County Sheriff’s Department and the Alabama Attorney General’s Office for their work and assistance in this case.”

To avoid becoming a victim of this type of fraud, customers should pay inside the store or use pumps that are visible to store employees and video surveillance cameras. Criminals commonly target pumps that allow them to install skimming devices undetected. Unfortunately, it is impossible to prevent all types of fraudulent charges from taking place. This is why early detection is so important. Citizens are encouraged to monitor their bank and credit card accounts frequently and immediately report any unusual activity to their financial institution.

This case was a joint investigation involving the Ozark Police Department, the Alabama Attorney General’s Office, the United States Secret Service, and the Baldwin County Sheriff’s Office. Assistant United States Attorney Denise O. Simpson and Assistant United States Attorney Steven Lee prosecuted this case.

Original PressReleases…

Philadelphia Man Sentenced to 60 Months for Fraud Scheme Victimizing Homeowners

Zaki M. Bey, 39, of Philadelphia, PA, was sentenced to 60 months in prison, announced Acting United States Attorney for the Eastern District of Pennsylvania Louis D. Lappen. Zaki Bey previously pleaded guilty to one count of conspiracy to commit loan and bank fraud, one count of conspiracy to defraud the Internal Revenue Service, and one count of conspiracy to commit wire fraud.

According to court documents, Bey conspired with others to prepare and submit fraudulent mortgage applications to banks and lending institutions. In 2007 and 2008, BEY successfully secured more than $2 million in residential loans on at least thirteen properties located in the Germantown section of Philadelphia and in New Jersey. Bey and others created fraudulent loan applications on behalf of straw buyers that contained materially false information as to the straw buyers’ income, assets, and intent to occupy the residences. Bey also furnished fraudulent records such as payroll account documents, paystubs, and financial statements to defraud financial institutions and lenders. Bey’s company at the time, Natural Home Builders, was able to receive a payout for purported construction expenses ranging from $17,864.26 to $60,000 at the closing of each settlement. Bey was not completing any construction on these properties, and obtained total settlement proceeds for construction costs of $435,074.26.

In late 2010 and early 2011, Bey filed fraudulent personal income tax returns for tax years 2007, 2008, 2009 and 2010. Bey filed these tax returns claiming false tax withholding payments and false Forms 1099-OID (“Original Issue Discount”) income for his company, Natural Home Builders. Bey attempted to receive total tax refunds from the IRS in the amount of $1,141,677. Bey was only successful in receiving $148,296 from the IRS based on the fraudulent 2009 tax return he submitted. After assessed a tax deficiency by the IRS, Bey mailed checks to the IRS from a closed bank account in an attempt to repay the fraudulent tax refund.

Beginning in 2010 to 2013, Bey engaged in a wire fraud conspiracy involving the submission of fraudulent auto loan applications. Bey furnished fraudulent records such as payroll account documents, paystubs and financial statements to defraud automobile dealerships located in Philadelphia and New Jersey. The false loan applications and fraudulent records caused the automobile dealerships to electronically submit false information to financial institutions and lenders. Through the use of straw buyers, Bey was able to obtain at least 7 automobiles.

In addition to Bey’s 60 month prison sentence, he will also be required to serve 3 years’ supervised release and pay back $705,528.22 in restitution to multiple financial institutions and the Internal Revenue Service.

This case was investigated by the Internal Revenue Service, Criminal Investigation. It was prosecuted by Assistant United States Attorney James Pavlock.

Original PressReleases…

Bates Family Sentenced to 627 Months Imprisonment for Gold and Silver Ponzi Scheme

Memphis, TN – Bates family members have been sentenced for their roles in a Ponzi scheme that defrauded victims of more than twenty-one million dollars. Lawrence J. Laurenzi, Acting U.S. Attorney for the Western District of Tennessee, announced the sentences today.

In May 2017, a federal jury found Larry Bates; his two sons, Chuck and Robert Bates; and Kinsey Bates, the wife of Robert Bates, guilty on all counts set forth in a federal indictment that charged mail and wire fraud and conspiracy. The charges rose out of the defendants running a decade long Ponzi scheme in the buying and selling of gold and silver coins. The proof at trial showed that the defendants were able to accomplish the fraud through First American Monetary Consultants, a Colorado corporation, which had offices in Memphis, Tennessee and Ft. Collins, Colorado. The proof showed that more than three hundred and sixty victims lost more than twenty-one million dollars. The scheme continued from as early as 2002 through October of 2013.

“Today, justice has finally been served to members of the Bates Family as a result of their decade long Ponzi scheme. Their corruption ploy — which devastated and destroyed the lives of many hard-working individuals — ended today. I hope this will serve as a clear –cut message that the United States Attorney’s Office and its law enforcement partners will work tirelessly to expose and bring to justice people responsible for such acts of greed and corruption.” said Larry Laurenzi, Acting United States Attorney, Western District of Tennessee.

At trial, the proof showed that the defendants promoted their business through a variety of Christian television and radio programs, including the Jim Baker Show and Jewish Voice. Larry Bates, a self-proclaimed doctor in economics, held conferences across the United States on the upcoming economic collapse and the need to invest in precious metals. Between 2007 and 2013, customers gave more than eighty-seven million dollars

to First American Monetary Consultants for the purpose of buying precious metals. During this same period, the proof showed the defendants diverted customers’ monies that were to be used to purchase their precious metals to the defendants own use and benefit. By 2009, testimony at trial showed that the company had more than twenty-six million dollars in unfilled customer orders.

The proof showed that the defendants used the customers’ money for a variety of purposes other than purchase of customers’ metals. Larry Bates diverted more than four million dollars to the creation of International Radio Network, a Christian radio network. Other monies were diverted to trading in commodities and the building of a ten-thousand square foot house on three hundred acres in Middleton, Tennessee. Still other customers’ monies were used to fulfill prior orders, which had not been fulfilled.

At trial, the evidence showed that Larry, Chuck and Robert Bates were sales people in the Memphis office and were responsible for taking in victim’s monies. More than forty-five witnesses testified about losing money to Larry Bates and First American Monetary Consultants. The victims, who lived all across the United States, testified that their money was to be used to purchase precious metals that they never received. For example, Judith Ponder, from Kerrville, Texas testified that she and her mother gave Larry Bates more than $1.8 million dollars to purchase precious metals and received little in return. Barbara Santiago, from Washington State, testified that she and her paraplegic son met Larry Bates at one of his conferences in Washington State. Ms. Santiago testified that she later invested more than two hundred and sixty-six thousand dollars from her son’s insurance settlement that was to be used for her son’s care. Ms. Santiago, likewise, received little of her purchase. And, Charles Grimsley, a pastor for the Veteran’s Administration in Mesa, Colorado, testified that he and his wife gave FAMC more than two hundred thousand dollars of their retirement money and received nothing in return.

The proof showed that many of the victims attempted to take possession of their gold and silver coins, only to be put off by the defendants for a variety of reasons. The excuses for the delays included that the gold and silver coins were scarce, the coins were coming from Europe, and the U.S. mint was shut down. In October 2013, a receiver was appointed to take over the affairs of First American Monetary Consultants. The receiver found that the company had few assets and was unable to compensate the hundreds of victims who had given money to Larry Bates and First American Consultants.

On Tuesday, September 5, 2017, U.S. District Judge Sheryl Lipman sentenced both father, and son, Charles Larry Bates and Charles “Chuck” Bates. Charles Larry Bates was sentenced to 262 months’ imprisonment and 3 years’ supervised release to begin after incarceration. He was ordered to pay $21,210,345.39 in restitution and a mandatory special assessment of $4,600. Larry Bates was convicted on all 46 counts in the indictment.

Chuck Bates was sentenced to 151 months’ imprisonment and 3 years supervised release. He was ordered to pay $19,649,731.70 to victims, along with a special assessment of $1,700. Chuck Bates was found guilty of 16 counts of mail and wire fraud, and one count of conspiracy.

On Wednesday, September 6, 2017, U.S. District Judge Sheryl Lipman sentenced Robert Bates and his wife, Kinsey Brown Bates. Robert Bates was convicted on one count of conspiracy and eight counts of mail and wire fraud. Robert Bates received a sentence of 151 months which he will serve consecutively to another criminal sentence, as well as three years supervised release. He was ordered to pay $19,659,911 in restitution, along with a mandatory special assessment of $900. Kinsey Brown Bates was sentenced to 63 months’ imprisonment, $9,526,199.95 in restitution, 3 years supervised release and $300 mandatory special assessment.

Acting United States Attorney Lawrence J. Laurenzi and Assistant United States Attorney David Pritchard prosecuted the case. The United States Postal Service and the Federal Bureau of Investigation investigated the case.

Original PressReleases…

Former Alabama Legislator Pleads Guilty to Bribery Conspiracy, Fraud and Tax Evasion

BIRMINGHAM – A former Alabama legislator pleaded guilty today in federal court to accepting bribes from a Birmingham lawyer and an Alabama coal company executive in exchange for advocating their employers’ opposition to EPA actions in North Birmingham. U.S. Attorney Jay E. Town, FBI Special Agent in Charge Johnnie Sharp Jr. and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge James E. Dorsey announced the plea.

Former state representative OLIVER L. ROBINSON JR., 57, of Birmingham, entered his guilty pleas before U.S. District Court Judge Abdul K. Kallon to conspiracy, bribery and honest services wire fraud. The U.S. Attorney’s Office charged Robinson in June for accepting a valuable contract between the Birmingham law firm Balch & Bingham and the Oliver Robinson Foundation to influence and reward Robinson for using his position as a member of the Alabama House of Representatives, vice-chairman of the Jefferson County Legislative Delegation, and as an elected representative of citizens of Birmingham to pressure and advise public officials to oppose the Environmental Protection Agency’s prioritization and expansion of a North Birmingham EPA Superfund site.

Robinson represented Alabama’s House District 58 from 1998 until he resigned Nov. 30, 2016. As part of his plea, he agrees never again to seek elected office and to pay restitution and forfeiture in amounts to be determined. He is scheduled for sentencing Dec. 7 and remains free on bond.

“This lamentable pursuit of self-interest masquerading as beneficial for the little guy is more than a violation of our laws. This was a violation of the public trust and among the worst breaches of our social contract,” Town said. “All those engaged in public corruption must be brought to justice, and it matters not their benefactor or station.”

“The FBI’s stance on public corruption is that of zero tolerance and therefore it is one of our highest priorities,” Sharp said. “Public corruption is among the most serious of criminal violations and a betrayal of the public’s sacred trust. If allowed to spread unchecked, it can threaten the foundation of our government. The FBI continues to aggressively pursue those who participate in this type of crime.”

“The enforcement of tax administration is compromised with every attempt to undermine the tax system,” Dorsey said. “Engaging in public corruption does not qualify as a tax exemption. The totalities of Mr. Oliver’s actions are egregious, devastating, and disappointing to the community in which he promised to serve.”

Outside of the bribery charges, Robinson also pleaded guilty today to two counts of wire fraud for spending $17,783 of campaign contributions on personal items unrelated to his legislative campaigns. He pleaded guilty to a third wire fraud count for soliciting money from corporations, representing he would use it to publish a magazine or to defray costs for an annual Partnering for Progress Business Conference or the annual Alabama Black Achievers Awards Gala, which the Oliver Robinson Foundation sponsored. Robinson spent at least $250,000 of those contributions on personal items unrelated to the magazine or the annual events. Robinson also pleaded guilty to one count of tax evasion for the 2015 calendar year.

According to Robinson’s plea, the bribery conspiracy occurred as follows:

EPA designated an area of North Birmingham, including the neighborhoods of Harriman Park, Fairmont and Collegeville, as a Superfund site after finding elevated levels of arsenic, lead and benzo(a)pyrene during soil sampling.

In September 2013, EPA notified five companies, including ABC Coke, a division of Drummond Company, that they could potentially be responsible for the pollution. A company determined to be responsible for pollution within the site, known as the 35th Avenue Superfund Site, potentially faced multi-million dollar clean-up costs and fines.

In July 2014, EPA began considering the petition of a Birmingham environmental advocacy group, GASP, to expand the Superfund site to the Tarrant and Inglenook neighborhoods. EPA granted that petition in October 2014 and contracted with the Alabama Department of Environmental Management to perform the preliminary assessment.

In September 2014, EPA proposed adding the Superfund site to its National Priorities List, signaling that it required priority attention. Placement on the priorities list would allow EPA to use the federal Superfund Trust Fund to conduct long-term cleanup at the site, provided the State of Alabama agreed to pay 10 percent of the costs, which could equal millions of dollars. EPA’s decision on priority listing for the site remained pending throughout the scheme.

Balch & Bingham represented Drummond and ABC Coke in relation to the 35th Avenue site. A partner at Balch & Bingham, identified in the charges as “Attorney #1,” coordinated the response to EPA’s actions on behalf of ABC Coke and Drummond Company. A Drummond Company executive, identified as “Drummond Employee #1,” was involved with the attorney in responding to EPA. They formed the Alliance for Jobs and the Economy as a tax-exempt corporation in 2015 to raise money to help fund their opposition to the EPA actions, according to the charges.

The strategy employed by the attorney and the Drummond executive focused on protecting ABC Coke and Drummond from the tremendous potential costs associated with being held responsible for pollution within the affected areas. They sought to accomplish this goal by working to prevent EPA from listing the 35th Avenue site on the National Priorities List and expanding the Superfund site into Tarrant and Inglenook.

The plan included advising residents of North Birmingham and public officials to oppose EPA’s actions. As part of the overall strategy, Balch & Bingham paid Robinson, through his non-profit foundation, to represent Balch & Bingham’s and its clients’ interests, exclusively, in matters related to EPA’s actions in North Birmingham. Over the course of the contract in 2015 and 2016, Balch & Bingham paid $360,000 to the foundation.

One of the first tasks assigned to Robinson under the contract was to appear before the Alabama Environmental Management Commission and the director of the Alabama Department of Environmental Management in February 2015 to advance Balch & Bingham’s and its clients’ opposition to the Superfund proposals. In that appearance, Robinson said he was “really here today to try to protect the residents of north Birmingham.” He said, “[T]he thing that gets me and what is in the process of hurting the residents in that area is that the EPA has included five other corporations in on this process, but there have been no reports stating that these individuals are culpable in any way. And where that hurts the residents is the fact that we will have decades of litigation that will occur because of these five companies being added.”

Robinson asked the AEMC to help narrow the list of potentially responsible parties if there were no reports or tests implicating the corporations. Concluding, Robinson told the AEMC that if the areas of North Birmingham are designated as a Superfund site or listed on the NPL, the residents are “considered to live in a dump and nothing can happen there until it’s either cleaned up and after that, it will take tremendous investment to get it to move forward.”

Robinson concealed from AEMC and the ADEM director that Balch & Bingham and Drummond were paying the Oliver Robinson Foundation to represent their interests exclusively.

The maximum penalty for conspiracy is five years imprisonment and a $250,000 fine. The maximum penalty for bribery is 10 years imprisonment and a $250,000 fine. The maximum penalty for each count of wire fraud is 20 years imprisonment and a $250,000 fine. The maximum penalty for tax evasion is five years imprisonment and a $100,000 fine, together with the costs of prosecution.

The FBI and IRS investigated the case, which Assistant U.S. Attorneys George Martin, Robin Beardsley Mark and John B. Ward are prosecuting.

Original PressReleases…

Former Financial Advisor Sentenced to 33 Months in Prison For Stealing More Than $1 Million from Clients

Defendant Embezzled Funds from Four Athletes

WASHINGTON – A former financial advisor, who provided services and investment advice to current and former professional athletes, was sentenced today to 33 months in prison for stealing more than $1 million from his clients, announced U.S. Attorney Channing D. Phillips and Andrew W. Vale, Assistant Director in Charge of the FBI’s Washington Field Office.

Brian J. Ourand, 56, now of Chicago, admitted stealing from four athletes, including boxing champion Mike Tyson and former National Basketball Association All-Star Glen Rice. At the time of the offense, Ourand was an executive for a Washington, D.C.-based company.

Ourand pled guilty in February 2017 to a charge of wire fraud in the U.S. District Court for the District of Columbia. In addition to the prison term, the Honorable Tanya S. Chutkan ordered Ourand to pay $1,002,390 in restitution and an identical amount as a forfeiture money judgment. Following his prison term, Ourand will be placed on three years of supervised release. During that time, the judge ordered, he must provide financial disclosure statements and perform 100 hours of community service.

“Brian Ourand’s greed came at a cost to the people who trusted him with their money,” said U.S. Attorney Phillips. “Instead of wisely managing his clients’ funds, as he had promised to do, he used the money for hotels, health care memberships, rental cars and other personal expenses. Today’s sentence holds him accountable for his larcenous acts.”

“Brian Ourand concocted a series of lies with one goal in mind – to enrich himself and others by stealing approximately $1 million and deceiving those who put their trust in him,” said Assistant Director in Charge Vale. “Financial fraud is and continues to be, a high priority for the FBI and we will continue to work closely with our partners to bring these white-collar criminals to justice”

In his plea, Ourand admitted that he embezzled the funds through various means, including numerous fraudulent checks that he made payable in his own name and to cash, which he later deposited into his personal accounts. Ourand also admitted to stealing his clients’ money for the benefit of others, including his girlfriend and another individual identified in court documents as “Person B.” In one such instance, Ourand obtained a cashier’s check using funds from the bank account of Mr. Rice in the amount of $10,000 in order to pay the registration fee of “Person B” to participate in the 2009 World Series of Poker tournament in Las Vegas. Ourand also used client funds to send numerous wire transfers to his girlfriend and “Person B” via Western Union, at least some of which money was used to pay off Ourand’s gambling debts.

According to a statement of offense submitted as part of the plea, the criminal activities began as early as 2006 and continued through July 2011. Ourand’s employer, identified in court documents as “Company A,” terminated his employment in August of 2011, after the scheme was uncovered. The company reimbursed the athletes for their losses.

In his work for the firm, Ourand and the company provided advisory and financial management services to high net-worth individuals, most of whom were current or former professional athletes. For example, Ourand and the company paid invoices and bills, coordinated tax preparation, and provided estate planning on behalf of clients. In that capacity, Ourand managed his clients’ personal and business bank accounts and credit cards, among other financial-related services.

The criminal charges involved Ourand’s work for Mr. Tyson, Mr. Rice, and two other athletes, identified in court documents as “Athlete C” and “Athlete D.” As part of the plea agreement, Ourand agreed that he abused a position of trust in committing the offense.

According to the statement of offense, Ourand deposited nearly 100 checks, drawn on the accounts of the four athletes, into a personal bank account, even though he was not authorized to do so. He also initiated numerous wire transfers, drawn on the bank accounts of Mr. Tyson, Mr. Rice and “Athlete C,” for which he had no authorization. As part of his scheme, Ourand also made numerous unauthorized ATM withdrawals and debit card transactions using funds belonging to Mr. Tyson, and obtained credit cards in his own name on the accounts of Mr. Rice and a foundation formed by “Athlete C,” which Ourand used to make unauthorized purchases.

Ourand sought to conceal his activities by generating documentation falsely claiming the money was used for business-related or otherwise authorized expenses, such as “personal expenses” for the client. His actions caused $546,168 in losses for Mr. Rice; $265,124 for Mr. Tyson; $182,957 for “Athlete C,” and $8,141 for “Athlete D.”

According to the government’s evidence, Ourand used the money for personal expenses, including to pay ordinary, everyday costs such as groceries and gas stations and to cover more expensive purchases, such as stays at high-end hotels, rental cars, health club membership fees, department store purchases, golf course fees, tanning salons, and fancy restaurants.

The Securities and Exchange Commission previously announced charges against Ourand, who was later found to have misappropriated funds from client accounts in violation of securities laws. Ourand has been ordered to pay disgorgement of $671,367 plus prejudgment interest and a $300,000 penalty, and he was barred from the securities industry.

In announcing the sentence, U.S. Attorney Phillips and Assistant Director in Charge Vale commended the work of those who investigated the case from the FBI’s Washington Field Office. They also acknowledged the efforts of those who are working on the case from the U.S. Attorney’s Office for the District of Columbia, including Arvind K. Lal, Chief of the Asset Forfeiture and Money Laundering Section; Special Assistant U.S. Attorney Vesna Harasic-Yaksic, also of the Asset Forfeiture and Money Laundering Section; Supervisory Paralegal Specialist Tasha Harris; and former Paralegal Specialists Heather Sales and Angela Lawrence.

Finally, they commended the work of Special Assistant U.S. Attorney David A. Last and Assistant U.S. Attorney Peter C. Lallas, who prosecuted the case.

Original PressReleases…

Colleyville Businessman Sentenced to 84 Months in Federal Prison For Role in a Ponzi Oil and Gas Fraud Scheme

FORT WORTH, Texas — James VanBlaricum, 78, of Colleyville, Texas, was sentenced today before Senior U.S. District Judge Terry R. Means to 84 months in federal prison and ordered to pay $32,222,291 in restitution for participating in a Ponzi oil and gas fraud scheme, announced U.S. Attorney John Parker of the Northern District of Texas.

VanBlaricum, who operated Signal Oil and Gas Company (SOG) and Texas Energy Management, which later became Texas Energy Mutual (TEM), pleaded guilty in February 2017 to one count of mail fraud. He has been in custody since his arrest in mid-August 2016.

According to plea documents, VanBlaricum formed SOG and TEM, ostensibly for the purpose of investing in mineral leases, and oil and gas production and earning a profit from those investments. VanBlaricum ran the fraud scheme from approximately January 2007 to August 2016, from office locations in Grapevine, Texas and Bedford, Texas, as well as from his residence and home office located in Colleyville, Texas, where many of the acts and transactions alleged in the indictment took place. VanBlaricum raised millions of dollars from investors by various means, including selling securities in the form of joint ventures in “programs” offered by SOG and TEM.

VanBlaricum employed sales agents who worked on his behalf to raise money, by selling limited partnership interests in these “programs” offered by SOG and TEM. Both personally and through investors, VanBlaricum deceived investors and potential investors by representing that investors would earn an “assured” rate of return on their initial investment, and they would receive a full refund of their initial investment amount after a defined period of time. He also represented that he intended to use a certain percentage of investors’ money to purchase mineral leases, and oil and gas well projects, when in fact, he intended to spend a substantially smaller percentage on the leases and oil and gas well projects and use a substantial part of investors’ money for purposes they did not authorize or even know about, including paying purported investment returns to other investors, commissions to sales agents, and paying his personal expenses as well as personal expenses for family members, friends, and business associates.

VanBlaricum also represented that he had purchased certain assets, or was in the process of purchasing them, when in fact, he had not purchased the assets and was not in the process of purchasing them. He also represented that the oil and gas well projects were productive and profitable, when in fact, most were “dry holes,” produced oil for a short period of time, or had not been drilled.

When VanBlaricum made promises about the use of investor funds, he failed to state that he had made the same promises to other investors and then used those investors’ funds for purposes they did not authorize or even know about, including paying purported investment returns to other investors, commissions to sales agents, and payment of personal expenses for VanBlaricum and his family, friends, and business associates.

VanBlaricum, according to plea documents, identified himself to investors using a false name. VanBlaricum deposited investors’ funds into, and withdrew and expended investors’ funds, from accounts he controlled in the names of entities he controlled. He caused funds to be transferred to, withdrawn from, and deposited into various accounts to create the appearance of business operations and revenue that he knew did not exist. He also caused “lulling” payments to be paid to investors, ostensibly as returns on investment, when he knew the funds came from other investors rather than from business operations.

VanBlaricum secretly, and without authorization, took and spent money entrusted to him by investors for advertising; vacations and international travel; rent payments; automobile purchases; and payroll and commissions for employees and sales agents.

The U.S. Postal Inspection Service with assistance from U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) investigated, and additional assistance was provided by the Securities and Exchange Commission. Assistant U.S. Attorney Douglas A. Allen prosecuted.

Original PressReleases…

Business Owner Arraigned Following Indictment On Fraud, Perjury and Election-Related Offenses
Defendant Also Faces Charges in Two Separate Federal Indictments

WASHINGTON – Keith D. Forney, 58, of Clinton, Md., was arraigned today on charges of engaging in corrupt election practices, second-degree fraud, perjury, making campaign contributions in excess of legal limits, and making campaign contributions through other persons, announced U.S. Attorney Channing D. Phillips, Andrew Vale, Assistant Director in Charge of the FBI’s Washington Field Office, and Kimberly Lappin, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington D.C. Field Office.

Forney pled not guilty in the Superior Court of the District of Columbia and remains free on personal recognizance. He also recently pled not guilty at his arraignments in the U.S. District Court for the District of Columbia on federal charges in two indictments returned against him there. In the federal cases, Forney is accused of participating in a contract fraud scheme against the Maryland Administrative Office of the Courts and filing fraudulent federal tax returns.

In the Superior Court case, Forney was indicted on Aug. 16, 2017, on two counts of engaging in corrupt election practices; three counts of second-degree fraud; two counts of perjury, three counts of exceeding campaign contribution limitations, and eight counts of making campaign contributions through other persons.

According to the Superior Court indictment, Forney claimed for years that a rental property he owned in the District of Columbia was his sole primary residence, when he actually was residing in Clinton, Md. Forney also filed federal and District of Columbia tax returns using the D.C. address. Additionally, he obtained a District of Columbia driver’s license and registered as a D.C. voter while having a license and being registered to vote in Maryland. By documenting that he resided in the District of Columbia, Forney’s construction business, Forney Enterprises, Inc., (FEI) could qualify as a resident owned business in the District of Columbia and receive preferences in bidding on District of Columbia government contracts. The company got those designations in 2006, 2008, 2010, 2012, 2014 and 2016.

Additionally, under District of Columbia law, individuals may not contribute more than $1,000 in support of a candidate for an at-Large seat on the Council of the District of Columbia and may not contribute more than $500 for a candidate seeking a ward seat. Individuals also may not make or cause contributions to made in the name of others. According to the indictment, Forney violated those laws with contributions to three candidates in the 2012 election.

Both of the federal indictments were returned on Aug. 10, 2017.

In one federal case, Forney and a co-defendant, Riad M. Sleit, were indicted on two counts of fraud stemming from an alleged scheme involving Forney’s company, FEI, and payments it received as a minority business enterprise. Forney was also charged with two counts of money laundering.

The scheme allegedly involved a series of contracts awarded by the Maryland Administrative Office of the Courts to Sharp Business Systems (SBS) for work on copiers throughout the state’s court system. Under contracts issued in 2009, 2010, and 2011, SBS was to meet a requirement that 20 percent of its sub-contracting work be performed by a minority business enterprise, which, in this case, was to be FEI. Sleit was the president of the metropolitan Washington, D.C. branch of SBS and was involved in the contract, the indictment alleges.

However, according to the indictment, FEI never performed any work or provided any services. Forney, Sleit, and an SBS consultant, John N. Vassos, caused SBS to pay $689,800 to FEI from 2009 to 2013 for its purported work. Forney then turned over the money that FEI received from SBS to Vassos.

In addition to his work at FEI, Forney and a business partner owned Stadium Club, an establishment in Southeast Washington. In May 2010, according to the indictment, Vassos provided approximately $2 million to Forney and his partner to finance the purchase of the property where Stadium Club was located. Additionally, from 2011 until 2014, Vassos loaned hundreds of thousands of dollars to Forney and his partner.

Sleit, 60, of Sarasota, Fla., has entered a not guilty plea. Vassos, 55, of Bethesda, Md., pled guilty in June 2017 to one count of conspiracy to commit mail fraud, one count of tax fraud, and one count of conspiracy to commit wire fraud. He is awaiting sentencing.

In the other federal case, Forney was indicted on two counts of tax fraud for allegedly under-reporting his income on federal income tax returns for the 2009 and 2010 calendar years.

An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until, and unless, proven guilty.

The FBI’s Washington Field Office and the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington D.C. Field Office are investigating the cases. The cases are being prosecuted by Assistant U.S. Attorneys Anthony Saler and Michael Marando. Assistance has been provided by Paralegal Specialists C. Rosalind Pressley, Toni Anne Donato, Aisha Keys, and Jessica Mundi; Financial Analyst Bryan J. Snitselaar; Litigation Technology Specialist Kimberly Smith; and former Criminal Investigators Juan Juarez and Stephen Cohen, of the U.S. Attorney’s Office.

Original PressReleases…

Former Gulf Breeze Attorney Sentenced to 40 Months in Prison for Bank Fraud, Embezzlement, and Money Laundering Charges

PENSACOLA, FLORIDA – Richard Michael Colbert, 56, of Pensacola Beach, was sentenced today to 40 months in prison and ordered to pay more than $3.7 million in restitution for conspiracy to commit bank and mail fraud, false statement to a federally insured financial institution, nine counts of money laundering, and two counts of theft, embezzlement or misapplication by a person connected with a financial institution. The sentence was announced by Christopher P. Canova, United States Attorney for the Northern District of Florida.

In 2007, Colbert, while working as a title attorney, signed and submitted a false HUD-1 to the now defunct GulfSouth Private Bank in order for one of his business partners, a former builder, Lawrence Wright, to obtain a million dollar loan from GulfSouth. As a result of Colbert and Wright’s fraudulent conduct, GulfSouth ultimately sustained in excess of $636,000 in losses.

In 2010, Colbert again while working as a title attorney, facilitated a bank and mail fraud conspiracy by handling a number of closings that defrauded Bank of America, Beach Community Bank, and the now defunct Premier Community Bank. Bank of America, Beach Community Bank, and Premier Community Bank sustained losses totaling in excess of $2.3 million from the conspiracy.

Additionally, beginning in December 2010, while acting as an escrow agent for Beach Community Bank, Colbert embezzled and misapplied in excess of $400,000 that was being held at Beach Community Bank. Thereafter, between December 2010, and March 2011, Colbert conducted a series of financial transactions laundering the funds he had embezzled. In September 2011, Beach Community Bank personnel contacted Colbert to determine where the money was located. Unbeknownst to Beach Community Bank, Colbert then obtained money from a third party to replace the funds he had embezzled. However, a short time after placing the third party’s money into the Beach Community Bank account, Colbert embezzled in excess of $237,000 from the same account.

In addition to defrauding the financial institutions and embezzling from Beach Community Bank, the government’s evidence also showed that in August 2011, Colbert stole approximately $36,000 from four homeowners/condominium associations that he had been entrusted to oversee.

U.S. Attorney Canova said: “This bank fraud case is a reminder that my office will vigorously prosecute financial representatives who abuse positions of trust for their own gain. This defendant held a responsibility to conduct ethical transactions, and I commend the hard work of the investigators and prosecutors who enforce our federal laws and ensure that justice is served.”

“The role of IRS Criminal Investigation becomes even more important in embezzlement and fraud cases due to the complex financial transactions that take our expertise and skill to unravel,” said Mary Hammond, Special Agent in Charge, Tampa Field Office. “Today’s sentencing of Mr. Colbert is a strong reminder that those who defraud others to enrich themselves will be held accountable.”

The case was investigated by Internal Revenue Service-Criminal Investigation with assistance from the Federal Bureau of Investigation, Federal Deposit Insurance Corporation-Office of Inspector General, and the Okaloosa County Sheriff’s Office.

This case was prosecuted by Assistant U.S. Attorney Tiffany H. Eggers.

The U.S. Attorney’s Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. To access public court documents online, please visit the U.S. District Court for the Northern District of Florida website. For more information about the U.S. Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.

Original PressReleases…

Three sentenced for five million dollar tax fraud

ATLANTA – Kim A. Earlycutt, Shannon A. King, and Marcia Farmer, have been sentenced for conspiring to submit false tax returns totaling more than $5 million over the course of four years.

“The defendants went to great lengths to steal tax money from the IRS, with the twist in this case that they used stolen identities of foreign nationals to seek phony refunds,” said U. S. Attorney John Horn. “It all comes back to basic theft to enrich themselves at the expense of the taxpayers.”

“Identity theft continues to victimize unknowing individuals as well as the Internal Revenue Service. If you steal someone’s identity and file false tax returns, you will be prosecuted,” said Acting Special Agent in Charge, James E. Dorsey, IRS Criminal Investigation. “These sentencings should serve as a clear message to the public, theft will cost you significant jail time.”

“This is a great example of a joint investigation in which the financial footprints of these defendants were uncovered to gather evidence to bring them to justice. The prison sentences sent a strong message that we will continue to aggressively investigate criminals that engage in fraudulent schemes,” said David M. McGinnis, U.S. Postal Inspector in Charge of the Charlotte Division. “Together we will continue to be vigilant in disrupting criminal organizations who illegally utilize the U.S. Postal Service.”

“The United States Secret Service will continue to collaborate with our law enforcement partners and prosecutors to ensure that nefarious individuals who violate their positions of trust to illegally enrich themselves are put behind bars,” said Kenneth Cronin, Special Agent in Charge of the U.S. Secret Service, Atlanta Field Office. “This sentencing should be a warning to other like-minded criminals and their conspirators that stealing from the American people will not go unpunished.”

According to U.S. Attorney Horn, the charges and other information presented in court: The three defendants obtained identity documents of foreign nationals and forged foreign identity documents in connection with their work at T&K Tax Services and More, which Earlycutt partially owned. Using these identity documents, the defendants submitted IRS W-7 forms to get individual taxpayer identification numbers (ITINs). The defendants then created false and fraudulent tax claim forms, specifically Forms 1040, or individual income tax returns, using these ITINs. Included with these Forms 1040 were falsified W-2 forms, which had fraudulent employer information, income, withholding amounts, and deduction amounts.

The defendants filed the fraudulent tax returns with the IRS, by mailing them and by using T&K’s electronic filing number. The tax returns all contained requests for refunds which were not actually due. The defendants enriched themselves by retaining a portion of the tax refunds that had been fraudulently obtained, including in some instances the entire refund. In all, they sought refunds in excess of $7 million and actually received over $5 million in fraudulent refunds. They used these fraudulent funds to pay personal expenses, including paying their personal automobile insurance. One defendant, Kim Earlycutt, used the fraudulent funds for gambling.

Kim A. Earlycutt, 54, of Covington, Georgia, was sentenced to nine years in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $5,222,634. Earlycutt was convicted on these charges on June 15, 2017, after she pleaded guilty.

Shannon A. King, 37, of Lithonia, Georgia, was sentenced to four years, six months in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $2,596,169. King was convicted on these charges on June 15, 2017, after he pleaded guilty.

Marcia Farmer, 51, of Snellville, Georgia, was sentenced to one year, six months in prison to be followed by nine months of home confinement, and three years of supervised release. She was ordered to pay restitution in the amount of $3,370,811. Farmer was convicted on these charges on October 28, 2016, after she pleaded guilty.

All three were sentenced by U.S. District Judge Leigh Martin May.

This case was investigated by the Internal Revenue Service Criminal Investigation, the U.S. Postal Inspection Service, and the U.S. Secret Service.

Assistant U.S. Attorney Christopher J. Huber prosecuted the case.

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov (link sends e-mail) or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.

Original PressReleases…