CEO of publicly traded company along with two others sent to federal prison

Defrauded biodiesel purchasers and shareholders

INDIANAPOLIS – United States Attorney Josh Minkler and Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division announced today the sentencing of two individuals who defrauded investors and biodiesel purchases of millions of dollars.

“Indiana is not the place to try to fool the investing public,” said U.S. Attorney Minkler, “Here, we expect executives to care about shareholders and to be upfront and honest about what the companies they manage are doing. They are simply thieves with fancy titles and they will now spend time in a federal prison.”

Jeffrey Wilson and Craig Ducey were sentenced to serve prison terms of 120 months and 74 months, respectively, for their roles in multi-million-dollar fraud schemes involving: biodiesel tax credits, renewable fuel credits, and shares of Imperial Petroleum Inc. Yesterday, Chad Ducey was sentenced to an 84-month prison term for his role in the same schemes. These defendants were the last to be sentenced from a gaggle of seven charged co-conspirators. The others, Joseph Furando, Katirina Tracy, Brian Carmichael and Chris Ducey were sentenced at prior hearings. Although charged in three separate cases, all the defendants were involved in fraud involving federal incentives to produce renewable fuels, specifically biodiesel.

Today’s sentences were the first to address securities fraud charges leveled against Wilson and Craig Ducey. That fraud stemmed from lies those defendants told in the course of their dealings with investors, auditors and the Securities and Exchange Commission while representing Imperial Petroleum. Wilson, the President and Chief Executive Officer of Imperial Petroleum, was the person who drafted and certified the accuracy of Imperial’s quarterly and annual reports and made those reports available to the investing public through filings with the Securities and Exchange Commission (SEC). He also lied to the company’s outside auditor to keep him from learning of the scheme. At a jury trial in July 2016, he was convicted for his role in the fraud. In April 2015, Craig Ducey admitted to related crimes and began cooperating with the United States; he testified at Wilson’s at trial and the court recognized his substantial assistance in giving him a lower sentence than Wilson.

“Biodiesel has the potential to make the nation’s transportation sector more sustainable, while decreasing our dependence on foreign energy sources, but only if done right,” said Assistant Attorney General Cruden. “The defendants’ fraud in these cases not only cheated customers, investors and taxpayers, it set renewable fuel efforts back for the entire nation. At a time when Americans should have been working together to have clean, sustainable and safe energy, the defendants chose to line their own pockets. Prison is the appropriate consequence.”

“Today’s sentencing is the final chapter in a complex scheme involving phony renewable fuel credits,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “The Renewable Fuel Standard is designed to reduce greenhouse gasses, fight climate change and reduce our dependence on foreign oil. EPA and its partners are committed to protecting the integrity of this important program and to ensuring a level playing field for honest companies.”

As shown at Wilson’s trial, the securities fraud began when Wilson learned that e-biofuels LLC—a business that Wilson arranged for Imperial Petroleum to buy—was faking paperwork to claim incentives for biodiesel it had not manufactured. Put another way, Wilson learned that the e-biofuels managers fraudulently claimed millions in federal tax rebates and other incentives that had no basis in real manufacturing. Knowing that it was much more profitable for e-biofuels to fraudulently claim government incentives on biodiesel that had been made by somebody else, Wilson directed the e‑biofuels managers to move more and more gallons of such fuel rather than incur the cost associated with legitimate biodiesel production. Despite their knowledge that the e-biofuels facility was dormant, Wilson and Craig Ducey told investors, auditors, and SEC that it made millions of gallons a month from raw materials like chicken fat. This defrauded biodiesel buyers—who were duped into taking bad tax credits and renewable fuel credits—and also defrauded investors, who would never have invested in Imperial Petroleum had they known its profits were based on sham manufacturing.

On Thursday, Chad Ducey was sentenced for his role in the underlying wire, tax fraud and environmental crime that were hidden by the securities fraud (he was not charged with securities fraud). Chad Ducey owned e-biofuels, together with his brother Craig Ducey, until they sold it to Imperial Petroleum in a deal that Wilson organized. Chad Ducey was intimately familiar with how the e-biofuels facility worked and knew that it was not manufacturing biodiesel between July 2010 and June 2011. Nevertheless, he twice persuaded an outside engineer that the facility was a biodiesel producer as essential steps to registering and claiming renewable fuel incentives.

In addition, as shown during Wilson’s trial, Chad Ducey worked with Wilson and others to try to establish “beachheads” in Texas. A beachhead would have been a fuel trans-load facility used to disguise the transfer of biodiesel to an e-biofuels customer from a Texas fuel terminal where it was purchased. Essentially, a brief stop at the beachhead would have stood in for actual biodiesel production. Chad Ducey traveled to Texas in order to scout sites for the trans-load facility. Workers at e-biofuels called these remote, no-production transfers “ghost loads” and the trans-load facility were planned to hide those loads. Ghost loads occurred in Texas and between fuel terminals and e-biofuels customers in Illinois, Indiana and Pennsylvania.

“Today’s sentencing represents the culmination of a five-year investigation of the largest tax and securities fraud scheme in Indiana history,” said Special Agent in Charge W. Jay Abbott of the Indianapolis Office of the Federal Bureau of Investigation (FBI). “The FBI collaborated with our partner agencies from the beginning to uncover the significant and widespread fraudulent activity. The complexity and magnitude of this scheme required extensive forensic accounting and computer forensic work. The FBI will continue to thoroughly investigate individuals that commit illegal acts by stealing money from individuals, businesses, and government programs.”

“Imperial Petroleum’s top executive played a key role in this massive scheme to deceive investors,” said Regional Director David Glockner of the SEC Chicago Regional Office. “The SEC was pleased to participate in a multi-agency effort to hold him accountable.”

“The sentencings handed down send a loud message that IRS Criminal Investigation operates year round to protect the integrity of our tax system and today is a victory for the American people ” said Special Agent in Charge James Robnett for the Internal Revenue Service-Criminal Investigation (IRS-CI). “The object of the defendant’s schemes was to defraud the government, the IRS and the taxpaying public. IRS-CI together with the cooperative efforts of our law enforcement partners identified and vigorously investigated and put a stop to the fraud and those involved in this scheme.”

The wire fraud, tax fraud, securities fraud and environmental crime investigation that culminated in this week’s sentencing hearings began in January 2012, when investigators from the FBI, the Environmental Protection Agency’s (EPA) Criminal Investigation Division, IRS-CI and the SEC began meeting with a whistleblower whose statements were corroborated by government agency data. That led the investigative team to conclude that e-biofuels had engaged in sham manufacturing and tax fraud. Based on intense work at the beginning of the investigation, the team obtained a multi-state search warrant in May 2012, which yielded substantial additional evidence and witness accounts. For over a year, prosecutors and attorneys from the U.S. Attorney’s Office for the Southern District of Indiana, the Environmental Crimes Section of the Department of Justice and SEC pursued the investigation of this matter with special agents of the FBI, EPA, and IRS. Their work involved nearly 100 witness interviews and the review of millions of documents.

The United States approached targets of the investigation and sought pre-indictment plea agreements with them. Ultimately, one defendant, Brian Carmichael, entered into a plea agreement before indictment. The others were indicted in September of 2013. After multiple continuances sought by the defendants and one additional plea, the first case, involving tax fraud, wire fraud and false statements under the Clean Air Act, was set for a final trial date of May 2015. Ultimately, all of the defendants, in that case, pleaded guilty before trial. The second case, which was the case against Jeffrey Wilson for securities fraud, was scheduled for trial and then continued at the defendant’s request. It was continued and ultimately set for a final trial date of July 2016. In a two-week trial, the United States presented evidence that Wilson had lied to investors in person, through filings he created for his publicly traded company and indirectly through company auditors. Wilson was convicted of fraud in the offer and sale of securities, falsely certifying annual and quarterly reports filed with SEC, lying to a public company’s outside auditor and making false statements to investigators. Today’s sentencing hearing establishes Wilson’s punishment for those convictions.

According to Steven DeBrota, Senior Litigation Counsel for the Southern District of Indiana, Thomas Ballantine, Assistant Section Chief of the Environmental Crimes Section for the DOJ and Jake Schmidt, SEC Senior Attorney, all who prosecuted this case for the government, Wilson must also make $16 million in restitution.

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CEO of Schaumburg Consulting Firm Arrested on Fraud Charges for Misrepresenting Company’s Financial Condition

CHICAGO — The chief executive of a publicly-traded consulting firm has been charged in federal court with fraudulently misrepresenting the company’s financial condition and lying to regulators.

NANDU THONDAVADI, the CEO of Schaumburg-based Quadrant 4 System Corp., intentionally misrepresented the firm’s cash flow and concealed its liabilities in filings with the U.S. Securities and Exchange Commission, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago. Thondavadi certified filings that misrepresented and concealed from the company’s auditors and shareholders the terms of certain acquisitions and the amount of a liability stemming from a lawsuit, the complaint states. The misrepresentations and concealments were intended to artificially inflate the company’s share price, according to the complaint.

The complaint charges Thondavadi and Quadrant 4’s chief financial officer, DHRU DESAI, with one count of wire fraud and one count of willfully certifying false financial reports. Thondavadi faces an additional charge of making false statements to the SEC.

Thondavadi, 62, of North Barrington, and Desai, 55, of Barrington, were arrested this morning. They are scheduled to make initial court appearances today at 11:30 a.m. before U.S. Magistrate Judge Michael T. Mason.

Also this morning, federal authorities executed a search warrant at Quadrant 4’s corporate headquarters in the 1500 block of East Woodfield Road in Schaumburg.

The complaint and arrests were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent in Charge of the Chicago office of the Federal Bureau of Investigation. The SEC assisted in the investigation.

Quadrant 4 has offices in seven U.S. states as well as India. It provides software products, platforms and consulting services to customers in the healthcare and education sectors. As a publicly traded company, Quadrant 4 is required to provide to the SEC on a quarterly and annual basis a detailed report of its financial condition.

Federal authorities launched an investigation of the company earlier this year based on indications that the firm’s recent annual reports to the SEC contained false information, the complaint states. The investigation revealed that Thondavadi and Desai certified the reports even though they knew the documents did not fairly present the true financial condition of the company, according to the complaint. Thondavadi then lied under oath when questioned by the SEC in May about some of the falsehoods, the complaint states.

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

Wire fraud and willfully certifying false financial reports are each punishable by up to 20 years in prison, while making false statements to the SEC is punishable by up to five 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 Matthew Madden.

Stockton Man Sentenced to 21 Months in Prison for Staging Car Accidents in a Scheme to Defraud Insurance Companies

FRESNO, Calif. — Cristopher Santiago Sanchez-Becerra, 32, of Stockton, was sentenced today to 21 months in prison in connection with his role in a conspiracy to stage car accidents in order to defraud insurance companies, U.S. Attorney Phillip A. Talbert announced.

According to court documents, from October 2011 until August 2014, Sanchez-Becerra conspired with at least six other individuals to stage dozens of car accidents and submit false claims seeking compensation for the damage caused by the staged accidents. As part of the scheme, the defendants would often offer to repair the recruited individual’s vehicle at automobile repair shops that Sanchez-Becerra or a co-defendant owned, usually with less-than-complete repair work, and for a fee that was less than the payment from the insurance company. In all, Sanchez-Becerra caused at least $210,000 in false insurance claims to be paid as a result of the conspiracy to defraud.

In each staged accident, Sanchez-Becerra and other defendants utilized two or three vehicles and caused about $5,000 to $10,000 in damage to each vehicle. After each staged collision, the defendants submitted cover stories to the insurer that concealed the true cause of the accident. The cover story would commonly use aliases, false identities, and false addresses when describing the defendants. The defendants also used different vehicles in the staged collisions. They were able to do this by obtaining many different vehicles and using false identities to both register the vehicles with the Department of Motor Vehicles and obtain insurance policies for the vehicles. The defendants did this to avoid scrutiny by the insurer that reviewed the false claims. The defendants repeated the scheme in dozens of crashes by recruiting other individuals to participate in the staged collisions. These individuals would allow their vehicles to be damaged and would submit their own claim for damages. In many instances, false claims were submitted to the recruited individual’s insurance company.

This case is the product of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the California Department of Insurance, Fraud Division. Assistant United States Attorneys Patrick R. Delahunty and Henry Z. Carbajal III are prosecuting the case.

FRESNO, Calif. — Cristopher Santiago Sanchez-Becerra, 32, of Stockton, was sentenced today to 21 months in prison in connection with his role in a conspiracy to stage car accidents in order to defraud insurance companies, U.S. Attorney Phillip A. Talbert announced.

According to court documents, from October 2011 until August 2014, Sanchez-Becerra conspired with at least six other individuals to stage dozens of car accidents and submit false claims seeking compensation for the damage caused by the staged accidents. As part of the scheme, the defendants would often offer to repair the recruited individual’s vehicle at automobile repair shops that Sanchez-Becerra or a co-defendant owned, usually with less-than-complete repair work, and for a fee that was less than the payment from the insurance company. In all, Sanchez-Becerra caused at least $210,000 in false insurance claims to be paid as a result of the conspiracy to defraud.

In each staged accident, Sanchez-Becerra and other defendants utilized two or three vehicles and caused about $5,000 to $10,000 in damage to each vehicle. After each staged collision, the defendants submitted cover stories to the insurer that concealed the true cause of the accident. The cover story would commonly use aliases, false identities, and false addresses when describing the defendants. The defendants also used different vehicles in the staged collisions. They were able to do this by obtaining many different vehicles and using false identities to both register the vehicles with the Department of Motor Vehicles and obtain insurance policies for the vehicles. The defendants did this to avoid scrutiny by the insurer that reviewed the false claims. The defendants repeated the scheme in dozens of crashes by recruiting other individuals to participate in the staged collisions. These individuals would allow their vehicles to be damaged and would submit their own claim for damages. In many instances, false claims were submitted to the recruited individual’s insurance company.

This case is the product of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the California Department of Insurance, Fraud Division. Assistant United States Attorneys Patrick R. Delahunty and Henry Z. Carbajal III are prosecuting the case.

FRESNO, Calif. — Cristopher Santiago Sanchez-Becerra, 32, of Stockton, was sentenced today to 21 months in prison in connection with his role in a conspiracy to stage car accidents in order to defraud insurance companies, U.S. Attorney Phillip A. Talbert announced.

According to court documents, from October 2011 until August 2014, Sanchez-Becerra conspired with at least six other individuals to stage dozens of car accidents and submit false claims seeking compensation for the damage caused by the staged accidents. As part of the scheme, the defendants would often offer to repair the recruited individual’s vehicle at automobile repair shops that Sanchez-Becerra or a co-defendant owned, usually with less-than-complete repair work, and for a fee that was less than the payment from the insurance company. In all, Sanchez-Becerra caused at least $210,000 in false insurance claims to be paid as a result of the conspiracy to defraud.

In each staged accident, Sanchez-Becerra and other defendants utilized two or three vehicles and caused about $5,000 to $10,000 in damage to each vehicle. After each staged collision, the defendants submitted cover stories to the insurer that concealed the true cause of the accident. The cover story would commonly use aliases, false identities, and false addresses when describing the defendants. The defendants also used different vehicles in the staged collisions. They were able to do this by obtaining many different vehicles and using false identities to both register the vehicles with the Department of Motor Vehicles and obtain insurance policies for the vehicles. The defendants did this to avoid scrutiny by the insurer that reviewed the false claims. The defendants repeated the scheme in dozens of crashes by recruiting other individuals to participate in the staged collisions. These individuals would allow their vehicles to be damaged and would submit their own claim for damages. In many instances, false claims were submitted to the recruited individual’s insurance company.

This case is the product of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the California Department of Insurance, Fraud Division. Assistant United States Attorneys Patrick R. Delahunty and Henry Z. Carbajal III are prosecuting the case.

Co-defendants Victor Hugo Soriano-Villafan, 26, of Modesto, and Alfonso Apu, 47, of Modesto, have pleaded guilty and are awaiting sentencing. Charges are pending against co‑defendants Juan Ortiz Rivas, 39, of Ceres; Oscar Diaz Landa, 46, of San Jose; Liobigildo Vargas, 46, of Turlock; and Juan Marquez Cadenas, 30, of Patterson. The charges against them are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

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Founder of Litigation Marketing Company Guilty of Multi-Million Dollar Securities Fraud

Assistant U.S. Attorneys Aaron P. Arnzen (619) 546-8384 and

SAN DIEGO – David Aldrich pleaded guilty in federal court today to defrauding investors through litigation marketing company PLCMGMT LLC dba Prometheus.  Aldrich admitted that he conspired with James Catipay, who pleaded guilty on October 26, 2016, to lie to investors when convincing them to invest.

Specifically, Aldrich and Catipay falsely told investors that they could redeem their investments at any time; that funds were available to pay both redemptions and hefty returns; and that their investments were secured by enforceable liens.  In reality, as Aldrich admitted, the investments were risky and unsecured and there was no existing source of funds to pay investor redemptions or returns.

According to his plea agreement, Aldrich and Catipay established Prometheus in 2013. They then devised a business plan and began soliciting investors.  According to the business plan, Prometheus would use investor funds to pay for marketing efforts to recruit potential plaintiffs for tort actions against the manufacturers of prescription drugs and medical devices.  Any proceeds from those tort actions would fund investor redemptions and returns.

To convince investors to entrust Prometheus with their funds, Aldrich and Catipay created marketing materials for prospective investors.  The marketing materials falsely stated that the tort plaintiffs that Prometheus identified through its legal marketing would, as soon as the claims were filed, be entitled immediately to funds from legal actions that had already been settled and for which funds had been placed on escrow.

In fact, only 1% of the tort plaintiffs’ legal actions had been settled, and an overwhelming majority of the legal actions had not been litigated or successfully negotiated for settlement.  The marketing materials also represented that investor funds, once received by Prometheus, were “100%” secured by a legally enforceable lien and that investors could redeem their investments on demand.  The truth was that investor funds were never secured by a lien, and Prometheus had denied, and would continue to deny, a large majority of redemption demands received from investors.

In exchange for investing in a “Prepaid Forward Contract,” Prometheus promised to pay investors returns ranging from 100% to 300%, depending on the amount invested and the time horizon for the investment.   Based on these lies, and during the time the Aldrich was associated with Prometheus, approximately 200 investors entrusted Prometheus with more than $8.5 million.  Despite the defendant’s promises, Prometheus was only able to pay back approximately $300,000 of this amount.  Most investors, many of them retirees, lost their entire investments.

United States Attorney Laura E. Duffy reminded investors to exercise appropriate caution when presented with unproven investments and promises of exorbitant returns.  In a civil case filed by the Securities and Exchange Commission (SEC v. PLCMGMT LLC, et al., LACV16-02594-TJH), a District Court in the Central District of California has appointed a receiver to take control of Prometheus and recover investor funds.

“The FBI remains committed to uncovering fraud schemes that affect our community,” said FBI Special Agent in Charge Eric S. Birnbaum. “Today’s conviction is a reminder of the financial perils associated with high yield investment fraud scams.” If you believe you are a victim of or otherwise have information concerning an investment fraud scheme, you are encouraged to contact the FBI at 1-800-CALL-FBI.

Aldrich is scheduled to appear before District Judge John A. Houston on February 13, 2017 for sentencing.

DEFENDANT                                   16CR2688-JAH                                            

David Aldrich                                     Age: 43                       San Diego, CA

SUMMARY OF CHARGES

Conspiracy to Commit Securities Fraud, in violation of 18 U.S.C. § 371.

Maximum Penalties: 5 years’ imprisonment, a maximum $250,000 fine (or twice the gross gain or loss caused by the offense), $100 special assessment, restitution.

AGENCIES

Federal Bureau of Investigation

Securities and Exchange Commission

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Former Major and Lt. Col. Convicted of Four-Year Fraud Against the Marine Corps

Assistant U.S. Attorneys Nicholas W. Pilchak (619) 546-9709 and C. Seth Askins (619) 546-6692
SAN DIEGO – A former major in the U.S. Marine Corps Reserves was convicted by a federal jury yesterday for participating in a four-year conspiracy to defraud the Marine Corps out of more than $205,000.

Jason H. Wild pretended to rent the home of his fellow officer, former reservist Lieutenant Colonel Michael K. Strom, in order to claim reimbursements from the Marines when called to active duty at Camp Pendleton.  Strom, in turn, pretended to rent Wild’s home from Wild’s friend.  Both men submitted phony lease agreements and rental receipts to support their false claims.  In truth, each man owned his own home next to Camp Pendleton and never paid any of the claimed rent.

Following a three-day jury trial before U.S. District Judge Anthony Battaglia, the jury deliberated for about 35 minutes before finding Wild guilty of wire fraud and making false claims. Strom pleaded guilty on October 28, 2016 before Judge Battaglia, admitting the wire fraud conspiracy and two counts of false claims.

Wild owned his own home in Oceanside, California throughout the time he claimed rental benefits from the Marine Corps.  Evidence at trial, including witness testimony, credit card statements, tax returns, and bank records, established that Wild lived in his Oceanside home throughout the period he falsely claimed to pay $38,442 to rent Strom’s home in Laguna Niguel, California.

Five months after Wild’s “rental” concluded, Strom was activated at Camp Pendleton and falsely claimed for two years to rent Wild’s Oceanside home from Wild’s friend.  Although Strom told the Marine Corps he paid $98,736 to rent Wild’s home, the evidence at trial demonstrated that Strom lived in his own home in Laguna Niguel throughout the sham “lease” period.

Financial records, including a bank analysis performed by the Naval Audit Service, established at trial that neither defendant had paid a dollar of the claimed rent.

“Military service members who choose to defraud the armed forces deprive our nation—and their fellow soldiers—of the resources they need to complete their difficult mission,” said U.S. Attorney Laura E. Duffy. “This Office will continue to vigorously pursue fraudsters in or out of uniform who seek to enrich themselves by diverting taxpayer money from the men and women defending this country.”

Duffy commended the close coordination between the investigating agencies—the Department of Defense, Defense Criminal Investigative Service; the Naval Criminal Investigative Service; and the Department of Homeland Security, Office of the Inspector General—during the lengthy investigation of this case.  The Internal Revenue Service also provided valuable assistance.

“The successful prosecution in this case was the direct result of collaborative teamwork between the Naval Criminal Investigative Service, its law enforcement partners and the US Attorney’s Office,” said Edward Denion, Assistant Special Agent in Charge of the NCIS Southwest Field Office.  “Convictions like this should serve as a deterrent to those who would put personal gain above their responsibility to American taxpayers and warfighters.”

“Yesterday’s guilty verdict should send a clear message that we intend to stop these types of fraudulent practices,” stated David Canez, Acting Special Agent in Charge for the U.S. Department of Homeland Security, Office of the Inspector General.  “This office will be vigilant in seeking prosecution of any cases in which federal officials and their conspirators cross the line into criminal activity.  DHS OIG and its law enforcement partners will continue to hold these shameless individuals accountable.”

“The guilty verdict of former U.S. Marine Corps Officer, Major Jason Wild, and related guilty plea of former Lieutenant Colonel Michael Strom demonstrates the Department of Defense’s commitment to fight fraud, waste and abuse. This investigation exemplifies the dedication by the Defense Criminal Investigative Service and its law enforcement partners to identify and prosecute those individuals who seek to enrich themselves at the expense of the taxpayer,” said Chris Hendrickson, Special Agent in Charge, Defense Criminal Investigative Service.

Wild was ordered to appear on February 21, 2017 at 9:00 a.m. for sentencing before Judge Battaglia.  Strom was previously ordered to appear for his own sentencing on February 13, 2017.

DEFENDANT                                                                       Case No. 15-cr-2771-AJB

Jason H. Wild                         45 years old                            Oceanside, California

Michael K. Strom                   48 years old                            Laguna Niguel, California

CHARGES

Wire Fraud Conspiracy – 18 U.S.C. § 1349

Maximum penalty: 20 years’ imprisonment and $250,000 fine

False Claim – 18 U.S.C. § 287

Maximum penalty: 5 years’ imprisonment and $250,000 fine

AGENCIES

Department of Defense, Defense Criminal Investigative Service

Naval Criminal Investigative Service

Department of Homeland Security, Office of the Inspector General

Original PressReleases…

Lee’s Summit Woman Pleads Guilty to $1.5 Million Embezzlement Schemes, Identity Theft

KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Lee’s Summit, Mo., woman pleaded guilty in federal court today to a series of embezzlement schemes totaling more than $1.5 million.

Patricia Webb, 44, of Lee’s Summit, pleaded guilty before U.S. District Judge Roseann Ketchmark to three counts of wire fraud and one count of aggravated identity theft. Webb has been in federal custody since her bond was revoked by the court for unrelated fraudulent conduct.

By pleading guilty today, Webb admitted that she embezzled at least $1,526,594 in total from Garmin International, Black and Veatch and TriStar Benefit Administrators.

Garmin Embezzlement Scheme

Webb admitted that she embezzled $1,255,175 million from Garmin while employed as a senior payroll specialist.

Webb caused Garmin to send 16 unauthorized Automated Clearing House payments (fund transfers, such as direct deposits and business-to-business payments) to her own business bank account (under the corporate name Beauty Within Me) from Feb. 24, 2012, to May 30, 2014. The payments were sent on behalf of then-current employees who were utilizing Garmin’s relocation program. Webb caused Garmin funds to be recorded to the in-transit employee’s W-2, under the code “P,” which was inflated to mask Webb’s embezzlement. After the clearing of the ACH payments, Webb would alter Garmin’s general ledger to reflect the fraudulent payments as “Relocation Expenses.”

Black and Veatch Embezzlement Scheme

Webb admitted that she embezzled $302,183 from Black and Veatch while employed as a global payroll manager. Webb was employed by Black and Veatch from January 2015 until March 4, 2016 and earned $90,000 per year. Webb facilitated unauthorized wire transfers and ACH transactions from the company’s payroll account to her Beauty Within Me business bank account.

An analysis of Webb’s bank account shows a large amount of spending at casinos and cash withdrawals at casinos.

TriStar Embezzlement Scheme

Webb admitted that she stole the identity of another employee while she was working at Garmin in order to embezzle $7,385 from TriStar Benefit Administrators, the company which managed Garmin’s healthcare savings accounts.

Webb used the personal identifiable information of another Garmin employee to create a flexible spending account without his knowledge or consent. Webb submitted a request for reimbursement to TriStar in the name of this employee on July 18, 2011. The request was for hospital treatment in the amount of $7,385 and the payment from TriStar was sent to Webb’s bank account.

Under federal statutes, Webb is subject to a sentence of up to 20 years in federal prison without parole on each count of wire fraud, plus a mandatory consecutive sentence of two years in federal prison for aggravated identity theft. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Paul S. Becker. It was investigated by the FBI.

Two Georgia Men Sentenced for Stealing Government Benefits

ATLANTA – John W.  Jackson, Jr., and Corry Sandlin, have been sentenced in federal district court for stealing their deceased parent’s government benefits.  Each defendant lied to the government about their parent’s deaths, and continued to receive benefits destined for the deceased.

“Both defendants got away with their lies for years, stealing large sums of taxpayer dollars,” said U. S. Attorney John Horn. “Theft like this directly impacts others who receive these types of benefits.  These two together stole over $500,000 of government money, meant to sustain those who have paid into the system, and expect to have something in retirement.”

“The OIG is committed to working with the Social Security Administration to detect and investigate deceased payee fraud cases, in which individuals conceal death information from SSA to fraudulently receive Social Security benefits intended for the deceased. We thank the U.S. Attorney’s Office in Northern Georgia for prosecuting these and other deceased payee fraud cases,” stated Margaret Moore-Jackson, Special Agent-in-Charge of the Social Security Office of the Inspector General’s Atlanta Field Division.

According to U.S. Attorney Horn, the charges and other information presented in court: Defendant Jackson’s father died in 1980 and the Social Security Administration (SSA) continued to pay his retirement benefits until 2014.  When initially questioned in 2015 by Social Security agents about his father’s whereabouts, Jackson told the agents this father had run away with a younger woman a year prior and he did not know where his father was.  Only after interviewing another family member did the SSA learn that Jackson’s father had died decades earlier.  Eventually, the SSA was able to determine that Jackson’s father died in 1980.  In total, Social Security paid out and Jackson improperly received $241,171.60.

Sandlin’s mother died in 2004.  After her death, the SSA continued to pay her spousal retirement benefits and Defense Finance & Accounting Services (DFAS) continued to pay her survivor benefits.  In fact, Sandlin not only never informed the SSA of his mother’s death, he completed and submitted 11 annual certifications to DFAS swearing that she remained eligible for the benefits. The SSA paid out $126,103.00 and DFAS paid out $145,716.00, after Sandlin’s mother’s death.  In total, Sandlin improperly received a total of $271,819.00

John W.  Jackson, Jr., 70, of Decatur, Georgia, has been sentenced to ten months in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $241,171.6.  Jackson has been convicted on these charges on July 25, 2016, after he pleaded guilty.

Corry Sandlin, 68, of Marietta, Georgia, has been sentenced to one year, and three months in prison to be followed by three years of supervised release and ordered to pay restitution in the amount of $254,965.14

This case was investigated by the Social Security Administration – Office of the Inspector General.

Special Assistant United States Attorney Diane C. Schulman prosecuted the case.

For further information, please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov

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.

Former DLT Worker Pleads Guilty to Theft, Computer Fraud Charges

PROVIDENCE, R.I. – Ambulai R. Sheku, 37, of Providence, a former Senior Employment Interviewer with the Rhode Island Department of Labor and Training (DLT), pleaded guilty in federal court in Providence today to conspiring to commit mail fraud, theft of government funds and accessing a protected computer to commit fraud.

Sheku admitted that between June 2009 and February 2015, he used his position at DLT and his authorized access to DLT computer files to participate in a scheme to make unauthorized changes to benefit recipients’ files which resulted in the fraudulent disbursement of more than $508,000 of unemployment insurance benefits.

Sheku’s guilty plea before U.S. District Court Chief Judge William E. Smith is announced by United States Attorney Peter F. Neronha; Colonel Ann C. Assumpico, Acting Superintendent of the Rhode Island State Police; and Michael C. Mikulka, Special Agent in Charge of the New York Region of the Department of Labor – Office of Labor Racketeering and Fraud Investigations.

At the time of his guilty plea, Sheku admitted that he used his authorized access to DLT computers and computer files to obtain unemployment benefits for himself and others to which they were not entitled. As part of the scheme Sheku changed the mailing addresses of legitimate unemployment insurance beneficiaries, thus causing banks to mail unemployment insurance benefits to individuals not entitled to receive them; without authorization, extended the expiration of benefits for members of the conspiracy; caused fraudulent claims, including claims by individuals who were employed and thus ineligible for unemployment benefits, to be approved and dispersed; increased the balance of unemployment insurance benefits; and fraudulently removed blocks or “stops” on benefit payments, thus allowing co-conspirators to continue receiving benefits to which they were not entitled.

It is alleged in court documents that the scheme resulted in a loss to the Rhode Island Department of Labor and Training of approximately $508,691, of which approximately $350,606 were federal funds.

Sheku is scheduled to be sentenced on February XX, 2017.

The matter continues to be investigated by the United States Attorney’s Office, Rhode Island State Police and the U.S. Department of Labor, with the assistance of the Rhode Island Department of Labor and Training and the U.S. Postal Inspection Service.

The case is being prosecuted by Assistant U.S. Attorney Terrence P. Donnelly.

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Contact:

Jim Martin (401) 709-5357

email: USARI.Media@usdoj.gov

on Twitter @USAO_RI

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Salesman Sentenced in Scheme to Defraud Consumers Through Debt Relief Firms

A Newport Beach, California, man was sentenced today in connection with a fraudulent debt relief firm, the Justice Department and U.S. Postal Inspection Service announced.  The defendant worked at Nelson Gamble and Associates and Jackson Hunter Morris and Knight, companies that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees.

John Vartanian, 57, was sentenced to serve 27 months in prison, followed by three years of supervised release, and ordered to pay $1,208,086 in restitution.  Vartanian admitted to selling the firm’s fraudulent debt relief services through telephone calls with consumers nationwide.  The sentence was imposed Monday by U.S. District Court Judge Dale Fischer of the Central District of California in Los Angeles.  The defendant previously pleaded guilty for his  role in the scheme.

“These scams take advantage of consumers already struggling with debt,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice will continue to work with its law enforcement partners to protect consumers from fraud, especially when they are targeted based on their financially vulnerable conditions.”

“We are gratified by today’s sentencing, on behalf of the many unsuspecting victims who sought financial relief, only to be further burdened by these criminals,” said Inspector in Charge Regina L. Faulkerson of Criminal Investigations, U.S. Postal Inspection Service. “We applaud the work of the Justice Department’s Consumer Protection Branch in bringing this fraudulent credit repair salesman and his accomplices to justice.”

Vartanian pleaded guilty to one count of conspiracy to commit mail and wire fraud. Four other defendants also pleaded guilty and were sentenced last week in connection with the fraudulent scheme.

Vartanian and other members of the conspiracy at times portrayed Nelson Gamble and Jackson Hunter as law firms or attorney-based companies.  Clients were told the companies would negotiate favorable settlements with creditors.  Clients made monthly payments expecting the money to go toward settlements.  The conspirators instead took at least 15 percent of the total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees.

The scheme ran from February 2010 to September 2012 and, in 2011, changed names from Nelson Gamble to Jackson Hunter. Conspirators told victims that Nelson Gamble had gone bankrupt and that Jackson Hunter was an unrelated company that had taken over some of the accounts. Participants in the scheme blamed past problems on Nelson Gamble and denied requests for refunds of money paid to Nelson Gamble. Some victims who previously demanded refunds accepted the explanation that Nelson Gamble was bankrupt and did not pursue complaints against Jackson Hunter.

In September 2012, the Federal Trade Commission (FTC) brought a civil case against the companies and its principal, Jeremy Nelson, alleging that the defendants misrepresented debt relief services offered to consumers. (See https://www.ftc.gov/enforcement/cases-proceedings/122-3030-x120048/nelson-gamble-associates-llc-et-al). The case was settled by entry of a consent decree in August 2013.

Principal Deputy Assistant Attorney General Mizer commended the Postal Inspection Service team assigned to the Civil Division’s Consumer Protection Branch for their investigative efforts.  Mizer thanked the U.S. Attorney’s Office for the Central District of California for their contributions to the case and expressed appreciation to the FTC for referring the case to the Consumer Protection Branch. The case is being prosecuted by trial attorneys Alan Phelps and James Harlow of the Consumer Protection Branch.

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.

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Four Conspirators Convicted for Defrauding Victims of Millions of Dollars

Members of the Conspiracy Formed Online Romantic Relationships to Entice Victims To Provide Money

Greenbelt, Maryland – A federal jury convicted the following defendants late on November 18, 2016, for conspiracies to commit wire fraud and money laundering arising from a scheme to defraud vulnerable victims of millions of dollars:

Gbenga Benson Ogundele, a/k/a “Benson Ogundele,” age 58, of Laurel, Maryland;
Victor Oyewumi Oloyede, age 42, of Laurel;
Babtunde Emmanuel Popoola, a/k/a “Emmanuel Popoola” and “Tunde Popoola, age 34, of   Bowie, Maryland; and his sister,
Mojisola Tinuola Popoola, a/k/a “Mojisola Oluwakemi Tin Popoola” and “Moji T. Popoola,” age 42, of Laurel.

The conviction was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation.

According to evidence presented at the 17-day trial, from January 2011 to May 18, 2015, members of the conspiracy searched online dating websites to initiate romantic relationships with vulnerable male and female individuals.  They phoned, emailed, texted and used internet chat messenger services to form romantic relationships with the victims, who lived in Maryland and around the country.

Witnesses testified that members of the conspiracy used false stories and promises to convince the victims to provide money to the conspirators, including fake hospital bills, plane trips to visit the victims, problems with overseas businesses and foreign taxes.  Ogundele, Oloyede, the Popoolas and other conspirators opened bank accounts, called “drop accounts,” in order to receive millions of dollars from the victims.  Testimony at trial showed that victims provided money to the defendants as a result of the false stories and promises, either depositing money directly into drop accounts controlled by the defendants, or by checks sent to the conspirators.  The payments from victims ranged from $1,720 to $50,000.

Ogundele, Oloyede, the Popoolas, and their co-conspirators dispersed money received from the victims by transferring funds to other accounts controlled by the conspirators, by obtaining cashier’s checks, and by writing checks to individuals or entities, in order to conceal the nature, source, and control of those assets.

The defendants face a maximum sentence of 20 years in prison for conspiring to commit wire fraud, and for conspiring to commit money laundering. Additionally, all of the defendants except for Mojisola Popoola face a mandatory minimum sentence of two years in prison to be served consecutive to any other sentence for aggravated identity theft, arising from the use of a victim’s name, bank account number or driver’s license in furtherance of the fraud scheme. U.S. District Judge Paul W. Grimm has scheduled sentencing for Oloyede on January 25, 2017; for the Popoolas on February 22, 2017; and for Ogundele on February 23, 2017.

The Maryland Identity Theft Working Group has been working since 2006 to foster cooperation among local, state, federal, and institutional fraud investigators and to promote effective prosecution of identity theft schemes by both state and federal prosecutors. This case, as well as other cases brought by members of the Working Group, demonstrates the commitment of law enforcement agencies to work with financial institutions and businesses to address identity fraud, identify those who compromise personal identity information, and protect citizens from identity theft.

Today’s announcement is part of the efforts undertaken in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov.

United States Attorney Rod J. Rosenstein commended the FBI for its work in the investigation and thanked Assistant U.S. Attorneys Thomas P. Windom and Leah Jo Bressack, who are prosecuting the case.

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The former owner of a fortune-teller business Sentenced on Mail Fraud, Money Laundering

In A Separate Hearing, Donnie Marks Pleads Guilty to Same Charges, Both Agree Repay Victims at Least $1.2 Million to

CHARLOTTESVILLE, VIRGINIA – The former owner of a fortune-teller business located on Seminole Trail in Charlottesville was sentenced today in Federal court on charges that she committed mail fraud and laundered more than $1 million in money stolen from her victims, United States Attorney John P. Fishwick Jr. said today. In a separate hearing, the defendant’s husband pled guilty to similar charges today.

Sandra Stevenson Marks, a.k.a. “Catherine Marks,” 42, of Charlottesville, previously pled guilty to one count of mail fraud and one count of money laundering. Today in District Court, Sandra Marks was sentenced to 30 months in federal prison.

In a separate hearing today in Federal Court, Donnie Stephen Marks, 43, formerly of Charlottesville, pled guilty to an Information, charging him with one count of mail fraud and one count of money laundering. Both defendants have agreed to repay at least $1.2 million in restitution to the victims of the scheme.

“These defendants found victims who were at some of the lowest points of their lives and took advantage of that grief for their own financial gain,” United States Attorney Fishwick said today. “Today’s sentence shows the seriousness of the nature of this crime and I hope it brings some level of closure to the victims of this scheme.”

According to evidence presented at previous hearings by Assistant United States Attorney Ronald M. Huber, Sandra Marks and Donnie Marks operated the business “Readings by Catherine” on Seminole Trail in Charlottesville, which offered services such as palm readings, candle readings, tarot card readings, astrological readings and spiritual readings to clients. Sandra Marks provided direct customer services while Donnie Marks managed the affairs of the business.

Sandra Marks has admitted, through a statement of facts submitted to the court and signed by the defendant, that she enriched herself by telling her clients she was clairvoyant and able to see into the past and the future. Marks also said she told her clients she had a “gift from god” and was able to communicate with spirits and guides from god, including the “Prince of Illusion,” who relayed information to her about clients.

Sandra Marks further admitted that she would tell clients that she had learned from the spirits and guides that the client, and/or the client’s family, was suffering from a “curse” and a “dark cloud” that occurred in the past. Marks would tell clients they would need to make a sacrifice of large amounts of money and valuables, whereby she would bury the money and items in a box to be “cleansed.” Marks explained to her clients that the money and property would be returned once the “work” was complete.  Additionally, Marks would tell the clients that the money and property would not be used for Marks’ own personal benefit.

Contrary to her representations to clients, Donnie Marks and Sandra Marks kept and used money and other valuables provided by their clients for their own personal use and enjoyment and that of their family. When Sandra and Donnie Marks had used all of a client’s money, Sandra and Donnie Marks would find new clients to fund the scheme, or tell old clients that additional money was required to continue her “work.”

The investigation of the case was conducted by U.S. Immigration and Custom Enforcement’s Homeland Security Investigations, the United States Postal Inspection Service, the United States Secret Service, the Virginia Attorney General’s Office, the Albemarle County Commonwealth’s Attorney’s Office and the Albemarle County Police Department. Assistant United States Attorney Ronald M. Huber prosecuted the case for the United States.

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