<h2>First of Five Sentenced to Federal Prison in Large Fraud Scheme</h2>
<p>HOUSTON – The first of five people from three different states has been ordered to federal prison following their convictions related to a $23 million nonexistent commercial accounts receivable scheme, announced U.S. Attorney Kenneth Magidson along with Special Agent in Charge Rick Goss of IRS-Criminal Investigation (CI).</p>
<p>Stefano Guido Vitale, 40, of Scottsdale, Arizona, pleaded guilty March 21, 2016, while Alan Leschyshyn, 53, of Cave Creek, Arizona; Bree Ann Davis, 40, of Lakewood, Colorado, and Tammie Roth Hanania, 59, and Edward Peter Hanania, 64, both of Folsom, California, all had previously entered their respective pleas. All were convicted of conspiring to engage a scheme to defraud and conspiracy to commit money laundering. Vitale and Leschyshyn were also convicted of eight additional counts of wire fraud.</p>
<p>Today, U.S. District Judge Vanessa Gilmore ordered Leschyshyn to serve a total of 235 months in federal prison to be followed by five years of supervised release. He was also ordered to pay restitution in the amount of $6,477,451.85.</p>
<p>Tammie and Edward Hanania are set for sentencing later this month, while Davis and Vitale will be sentenced in January 2017.</p>
<p>“Today’s sentencing of Leschyshyn for his role in a $6 million fraud scheme is well deserved,” said Goss. “Leschyshyn abused his training and expertise by creating convincing false documents and information to support this massive fraud. The jail time handed down to Leschyshyn attests that no matter how sophisticated the fraud is, IRS-CI Agents will uncover the crimes and pursue those responsible.”</p>
<p>&#8220;>;The scheme produced approximately $6.4 million in fraudulently obtained proceeds which the defendants agreed to launder through various bank accounts. They executed the scheme to defraud by using and establishing various business entities to sell, at a discount, nonexistent commercial accounts receivable. The defendants would approach factoring companies as sellers of customized gaming vault bundles and present fabricated invoices as evidence the defendants were owed a certain amount of money for goods provided to another one of their business entities. To establish creditworthiness of these companies and to convince the factoring company the credit risk was minimal, the defendants fabricated and/or altered documents and provided them to the factoring company.</p>
<p>The fraud conspiracy also proved that Vitale and Leschyshyn defrauded BOKF, NA, doing business as Bank of Arizona, when they applied for and received a $1 million line of credit secured by the Export Import Bank of the United States.</p>
<p>Leschyshyn was previously released on bond but ordered into custody following the hearing today. Vitale has been and remains in custody, while the remaining defendants are on bond pending their sentencing hearings.</p>
<p>The investigation leading to the charges was conducted by IRS &#8211; CI. Assistant U.S. Attorney Melissa Annis is prosecuting the case.</p>
<p><a href="https://www.justice.gov/usao-sdtx/pr/first-five-sentenced-federal-prison-large-fraud-scheme">Original PressReleases&#8230;</a></p>

Category Archives: Fraud News From World
A “Fraud News From World” directory is a collection of news articles about fraud and scams from around the world. These directories can be a valuable resource for staying informed about the latest scams and how to protect yourself from them. The directory typically includes information about the scam, such as the type of scam, the target audience, the location of the scam, and the date of the scam. It may also include information about how to protect yourself from the scam, such as how to identify a phishing email or how to report a scam to the authorities.
Financial Fraud: A Group of Individuals Charged With International Money Laundering and Wire Fraud
<h2>Manhattan U.S. Attorney Announces Charges Against Six Individuals For Their Role In International Money Laundering Scheme Involving Over $100 Million</h2>
<p><strong>Defendants Transferred Funds Through Dozens Of Shell Companies In The United States and Mexico As Part Of A Scheme To Fraudulently Obtain Tax Refunds From the Government of Mexico</strong></p>
<p>Preet Bharara, the United States Attorney for the Southern District of New York, William J. Cotter, Special Agent-in-Charge of the San Antonio Field Office of the Internal Revenue Service, Criminal Investigations (“IRS-CI”), and Terence S. Opiola, Special Agent in Charge of the Newark Field Office of the Department of Homeland Security, Homeland Security Investigations (“HSI”), announced today a <strong>complaint charging CARLOS DJEMAL, ISIDORO </strong>HAIAT<strong>, BRAULIO LOPEZ, MAX FRAENKEL, DANIEL BLITZER, and ROBERT MORENO with international money laundering and wire fraud</strong> as well as conspiracies to commit these same offenses. DJEMAL was arrested in Chicago, Illinois; MORENO was arrested in Dallas, Texas; FRAENKEL was arrested in Austin, Texas. BLITZER will be presented this afternoon in Manhattan federal court before U.S. Magistrate Judge Andrew J. Peck. HAIAT and LOPEZ have not been apprehended.</p>
<p>Manhattan U.S. Attorney Preet Bharara said: “As alleged, Carlos Djemal, Isidoro Haiat, and their co-defendants used the U.S. banking system to commit an international fraud scheme that deprived the Mexican government of substantial tax revenue and involved the laundering of over $100 million. Thanks to the outstanding investigative work of HSI and the IRS, these alleged criminals will now face charges in an American court.”</p>
<p>IRS-CI Special Agent-in-Charge William J. Cotter said: “This investigation took law enforcement above and beyond its traditional role in <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="633">financial</a> crimes. In effect, it put us squarely in the middle of the high-tech world of banking and the sophisticated electronic movement of money. This investigation serves to remind us that there is no such thing as free money and there are no awards or incentives for creativity when it comes to crime.”</p>
<p>According to the allegations in the Complaint unsealed today in Manhattan federal court:</p>
<p>Beginning in or about June 2011 through in or about at least May 2016, CARLOS DJEMAL, ISIDORO HAIAT, BRAULIO LOPEZ, MAX FRAENKEL, DANIEL BLITZER, and ROBERT MORENO were engaged in a scheme to defraud the Mexican government of tax revenue relating to Mexico’s value added tax (“VAT”) and then launder the proceeds of the scheme throughout the United States and Mexico. The Mexican government imposes VAT on goods sold from one Mexican company to another; however, when certain goods (such as cellular phones) are exported from Mexico, the previously-paid VAT is refunded to the exporter. DJEMAL, HAIAT, LOPEZ, MORENO, FRAENKEL, and BLITZER created and controlled dozens of companies (the “Front Companies”) purportedly doing business as importers and exporters of cellular phones in order to fraudulently obtain VAT refunds from the Mexican government.</p>
<p>In order to carry out the scheme, DJEMAL and HAIAT caused Front Companies in Mexico to purchase outdated cellular phones from other companies seeking to sell outdated inventory. DJEMAL and HAIAT then caused these phones to be exported to Front Companies in the United States owned and operated by others involved in the scheme. During the export process, DJEMAL and HAIAT obtained fraudulent invoices and created export documents that each falsely inflated the value of the phones being exported, thereby enabling them to fraudulently seek inflated VAT refunds from the Mexican tax authority.</p>
<p>Once the phones were shipped to the United States, they were transferred to one or more Front Companies in the United States created by LOPEZ, MORENO, FRAENKEL, or BLITZER, and then shipped back to a different Front Company in Mexico. Through this process, the phones were shipped repeatedly in a circular fashion between Front Companies controlled by the defendants and their co-conspirators in Mexico and the United States, enabling DJEMAL and HAIAT, to obtain multiple fraudulent VAT refunds for the same phones.</p>
<p>In order to create the appearance of legitimate cell phone sales, each transfer of phones was generally accompanied by a transfer of funds to and from accounts held in the name of the relevant Front Companies and owned and controlled by the defendants or their co-conspirators. As part of the scheme, each defendant or co-conspirator who controlled a Front Company receiving funds as part of the scheme retained approximately 1% for his participation in the scheme.</p>
<p>Between approximately June 2011 to approximately May 2016, DJEMAL, HAIAT, LOPEZ, MORENO, FRAENKEL, and BLITZER moved more than $100 million dollars through dozens of accounts maintained by Front Companies in this fashion, including through accounts maintained at a financial institution in the Southern District of New York.</p>
<hr />
<p>Mr. Bharara praised the outstanding work of HSI and IRS-CI for their investigative efforts and ongoing support and assistance with the case.</p>
<p>The prosecution of this case is being overseen by the Office’s Money Laundering and Asset Forfeiture Unit. Assistant U.S. Attorney Jaimie L. Nawaday is in charge of the case.</p>
<p>The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.</p>
<p><a href="https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-charges-against-six-individuals-their-role">Original PressReleases&#8230;</a></p>

Financial Fraud: Patrick Emanuel Sutherland Convicted Of Filing False Tax Returns And Obstructing a Federal Grand Jury
<h2>Federal Jury Convicts Charlotte Insurance &; Financial Executive Of Filing False Tax Returns And Obstruction of Grand Jury Investigation</h2>
<p>CHARLOTTE, N.C. – A federal jury convicted Patrick Emanuel Sutherland, 48, of Charlotte, of filing false tax returns and obstructing a federal grand jury investigation charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.</p>
<p>U.S. Attorney Rose is joined in making today’s announcement by Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).</p>
<p>According to filed court documents and evidence presented at trial, from at least 2007 to 2015, Sutherland was an actuary and the owner and operator of numerous companies in the insurance and <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="631">financial</a> industries. Between 2007 and 2010, Sutherland engaged in an elaborate scheme to conceal a substantial amount of income. Trial evidence established that Sutherland filed false tax returns with the IRS which underreported business receipts and personal income of approximately $2 million in income received from an offshore bank account in Bermuda, as well as from domestic sources. For example, according to the evidence, despite receiving substantial income for the relevant time period, Sutherland reported a combined income of approximately $276,697, and paid less than a mere $10,000 in total federal income taxes. During the same four-year period, Sutherland’s lifestyle and expenditures for personal living expenses far exceeded his total income reported on his individual tax returns, including over $80,000 in private school tuition for his daughter and high-end jewelry purchases.</p>
<p>According to evidence presented at trial, witness testimony, and filed court documents, to conceal the fraud, Sutherland falsely claimed that international wires to his domestic bank accounts were loans from his sister’s company. In reality, most of these funds were insurance commissions due to Sutherland or were funds obtained from a brokerage account in Bermuda which Sutherland controlled.</p>
<p>Trial evidence established that Sutherland worked with offshore insurance companies and some of his commissions had to be paid to an offshore intermediary. Sutherland used his Bermuda-based shell company, Steward Technology Services Limited (STS) to funnel personal and business funds to Sutherland’s U.S. bank accounts. On numerous occasions, Sutherland mischaracterized the wire transfers from STS’s bank account in Bermuda to Sutherland’s various domestic accounts as capital contributions and loans.</p>
<p>Evidence presented at trial demonstrated that on several occasions between June 2012 and September 2012, Sutherland sought to obstruct a federal investigation by providing fraudulent documents, including records of sham loans and documents purportedly reflecting his lack of control over his foreign business bank account in Bermuda.</p>
<p>The federal jury delivered the guilty verdict following a five-day trial. Sutherland is currently released on bond. The penalty for filing a false tax return is a maximum term of three years in prison and a $250,000 fine per count. The obstruction of official proceedings charge carries a maximum term of 20 years in prison and a $250,000 fine.</p>
<p>IRS-CI led the investigation. Assistant United States Attorneys Jenny G. Sugar and Daniel Ryan of the U.S. Attorney’s Office in Charlotte prosecuted the case.</p>
<p><a href="https://www.justice.gov/usao-wdnc/pr/federal-jury-convicts-charlotte-insurance-financial-executive-filing-false-tax-returns">Original PressReleases&#8230;</a></p>

Financial Fraud: CARLTON P. CABOT Sentenced For Defrauding Of Elderly Investors With Manipulated Financial Statements
<h2>Owner Of Real Estate Investment Firm Sentenced In Manhattan Federal Court To 10 Years In Prison For $17 Million Securities Fraud</h2>
<p>Preet Bharara, the United States Attorney for the Southern District of New York, announced that CARLTON P. CABOT, the former owner and chief executive officer of Cabot Investment Properties LLC (“CIP”), was sentenced today in Manhattan federal court to 10 years in prison for defrauding hundreds of elderly investors in numerous CIP-sponsored real estate investments. As part of the fraud, CABOT and his co-defendant misappropriated approximately $17 million of investor funds to pay for personal and business expenses, and concealed the fraud from the investors with manipulated financial statements. CABOT pled guilty to one count of securities fraud on May 31, 2016, before U.S. District Judge Jesse M. Furman who imposed today’s sentence.</p>
<p>U.S. Attorney Preet Bharara said: “Carlton Cabot took $17 million from vulnerable investors and spent it lavishly on himself, and then lied to cover it up. The victims, many of whom were in their 70s and 80s, were simply looking for a steady income stream to sustain them in their retirement. Now, instead of economic safety and security, they are faced with <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="630">financial</a> ruin. Cabot has rightfully been held to account for his selfish and criminal acts.”</p>
<p>According to the allegations contained in the criminal complaint against CABOT, the indictment to which CABOT pled guilty and Cabot’s admissions during his plea allocution, and the statements made by the victims of CABOT’s fraud:</p>
<p>From 2003 through 2012, CIP – which was controlled by CABOT – sponsored and oversaw approximately 18 so-called tenants-in-common (“TIC”) securities offerings to investors located all over the United States (collectively, the “TIC Investments” and the “TIC Investors”). A TIC investment is a real estate investment in which investors collectively own a piece of commercial real estate and are entitled to receive a portion of the rental income from the property.</p>
<p>From 2008 through 2012, CABOT engaged in a scheme to defraud the TIC Investors by misappropriating funds belonging to the TIC Investments and concealing his misappropriations by knowingly providing false and misleading financial reports and other information to the TIC Investors.</p>
<p>According to the representations in the offering prospectuses for the TIC Investments, CIP was allowed to collect only “excess” rental income from the TIC Investments – i.e., any additional money left over after the TIC Investments had paid the operating expenses for the properties and the disbursements due to the TIC Investors. Despite these representations, CABOT repeatedly transferred money out of bank accounts belonging to the TIC Investments and into CIP bank accounts that he controlled (the “CIP Operating Accounts”) before these funds could be used to pay for operating expenses and disbursements to the TIC Investors.</p>
<p>CABOT then used these funds to pay for unauthorized purposes without the knowledge or authorization of the TIC Investors, including: (1) to cover the operating expenses and investor distributions of other TIC Investments that had no available funds; (2) to pay for millions of dollars of personal expenses, including expensive cars, rental apartments, and private school tuition; and (3) to pay for CIP business expenses, including an approximately $1,125,651 civil settlement to certain TIC Investors who had sued CABOT and others.</p>
<p>To conceal the misappropriation of TIC Investment funds from the TIC Investors, CABOT and his co-defendant, Timothy J. Kroll, CIP’s chief operating officer, provided false and misleading financial reports to the TIC Investors that intentionally hid the fact that CIP owed large sums of money to the TIC Investments.</p>
<p>By the end of 2012, when CIP ceased its day-to-day operations, CIP and its principals, CABOT and Kroll, owed approximately $17 million to the TIC Investments, which has never been repaid.</p>
<hr />
<p>In addition to his prison sentence, CABOT, 54, of Stamford, Connecticut, was sentenced to three years of supervised release and ordered to pay $17 million in restitution and forfeiture.</p>
<p>On October 7, 2015, Kroll pled guilty before Judge Furman for his role in the scheme.</p>
<p>Mr. Bharara praised the outstanding efforts of the U.S. Postal Inspection Service and Internal Revenue Service’s Criminal Investigation Division. He also thanked the Office of the Secretary, William F. Galvin, Massachusetts Securities Division, for its assistance with the investigation of this case.</p>
<p>The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Christian R. Everdell and Edward A. Imperatore are in charge of the prosecution.</p>
<p><a href="https://www.justice.gov/usao-sdny/pr/owner-real-estate-investment-firm-sentenced-manhattan-federal-court-10-years-prison-17">Original PressReleases&#8230;</a></p>

Healthcare Fraud: Richard E. Paulus Guilty Of Health Care Fraud And Making False Statements Relating To Health Care Matters
<h2>Ashland Cardiologist Convicted Of Health Care Fraud</h2>
<p><b>COVINGTON, Ky.</b> — A federal jury has found a cardiologist from Ashland, Ky., guilty of charges that he <em>fraudulently billed Medicare</em>, Medicaid, and private insurers for invasive heart procedures that were medically unnecessary.</p>
<p>On Thursday afternoon, Richard E. Paulus was found guilty of <strong>health care fraud</strong> and making false statements relating to <em>health care matters</em>, following a seven-week trial. According to evidence presented at trial, from 2008 to 2013, Paulus performed numerous invasive heart procedures on patients who did not need them. In order to justify these unnecessary procedures, Paulus falsified patients’ medical records, to exaggerate their medical condition and to make it appear that the heart procedures were necessary and qualified for payment.</p>
<p>Specifically, Paulus was convicted of placing unnecessary coronary stents and performing unnecessary diagnostic catheterizations in patients. Medicare, Medicaid, and private insurers will only reimburse for medically necessary procedures. Under medical standards of care, government and private insurers generally reimburse medical providers who place coronary stents in patients whose arteries are at least 70 percent blocked plus symptoms. According to the evidence, Paulus placed stents in over seventy patients whose blockages were significantly less than 70 percent – in some cases very little blockage at all; but Paulus recorded them at or near 70 percent in the records, in order to get paid for the procedures. Ten cardiologists testified on behalf of the United States. These medically unnecessary procedures were performed during his tenure at King’s Daughters Medical Center in Ashland.</p>
<p>“All of us rely on our healthcare providers to make treatment decisions based solely on medical considerations, untainted by <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="629">financial</a> considerations,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. The jury determined that Dr. Paulus dishonored this fundamental duty to many of his patients in order to defraud federal healthcare programs. This is entirely unacceptable conduct, particularly in relation to invasive medical procedures, and justice has been served in this case. The overwhelming majority of healthcare providers put the best interest of their patients first; the failure to do so in this matter demands accountability. This victory is a milestone in an investigation spanning several years – the citizens of the United States have been well-served by our extraordinary trial team, law enforcement partners, and all of our staff who contributed to this result.”</p>
<p>From 2006 to 2012, Paulus billed Medicare for more heart procedures than any other cardiologist in Kentucky and was number 5 in the nation in terms of amount paid by Medicare for stent procedures.</p>
<p>In May of 2014, King’s Daughters Medical Center agreed to pay the U.S. Government $40.9 million to resolve civil allegations that it made millions of dollars by falsely billing federal health care programs for performing medically unnecessary heart procedures on patients.</p>
<p>Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Jennifer Moore, Acting Special Agent in Charge, FBI; and Derrick Jackson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General, Atlanta Region; and Andy Beshear, Kentucky Attorney General, jointly announced the verdict.</p>
<p>The investigation was conducted by FBI and the Department of Health and Human Services, and the Kentucky Office of Attorney General-Medicaid Fraud and Abuse Control Unit. Assistant United States Attorneys Andrew Sparks and Kate Smith prosecuted the case on behalf of the federal government. Paulus is scheduled to be sentenced on April 25, 2017. He faces a maximum of 20 years for health care fraud and up to five years for making false statements.</p>
<p><a href="https://www.justice.gov/usao-edky/pr/ashland-cardiologist-convicted-health-care-fraud">Original PressReleases&#8230;</a></p>

Healthcare Fraud: Landon Eckles Sentenced Wrongful Disclosure of Protected Health Information, In Violation Of The Criminal Provisions
<h2>Three Warner Chilcott District Managers Sentenced for Healthcare Fraud</h2>
<p>BOSTON –Three former district managers of pharmaceutical giant Warner Chilcott have been sentenced in connection with committing health care fraud and violating HIPAA in order to increase sales of Warner Chilcott osteoporosis drugs.</p>
<p>Landon Eckles, 30, of Huntersville, N.C., was sentenced yesterday by U.S. District Court Judge George A. O’Toole, Jr. to one year of probation and a fine of $10,000. In November 2015, he pleaded guilty to wrongful disclosure of protected health information, in violation of the criminal provisions of the Health Insurance Portability and Accountability Act (HIPAA).</p>
<p>From 2007 to 2012, Eckles served as a Warner Chilcott district manager in the company’s osteoporosis division in a mid-Atlantic district. In 2011, Atelvia®, an osteoporosis drug, was launched, but it was not covered by many insurance companies primarily because a generic alternative was available. Therefore, insurance companies required physician approval, known as a prior authorization, before covering Atelvia®. In order to drive sales, Eckles directed certain sales representatives to fill out Atelvia® prior authorizations even if physicians refused to do so. In doing so, Eckles and his sales representatives accessed patients’ protected health information.</p>
<p>In addition, following directions from his supervisors, Eckles encouraged his sales representatives to ensure that patient medical charts in physicians’ offices were “flagged” with Atelvia® brochures, so that physicians would be reminded to prescribe Atelvia® for their patients. Eckles bragged about this tactic, stating, “I guarantee you that this is going to drive business,” and encouraged his sales representatives to follow suit. In part, as a result of his scheme, Eckles received a bonus of approximately $60,000 in 2011.</p>
<p>Timothy Garcia, 35, of Los Gatos, Calif., was sentenced by U.S. District Court Chief Judge Patti B. Saris on Sept. 27, 2016 to eight months of home confinement and ordered to forfeit $21,500. In October 2016, he pleaded guilty to conspiracy to commit health care fraud.</p>
<p>From 2008 to 2011, Garcia served as a Warner Chilcott district manager in the company’s osteoporosis division managing approximately 12 sales representatives in the San Francisco Bay area. Recognizing that many physicians were hesitant to submit prior authorizations for Atelvia®, Garcia aggressively pushed his sales representatives to prepare prior authorizations themselves. Furthermore, Garcia stressed the importance of concealing the misconduct of his sales representatives.</p>
<p>In 2011, Garcia received a bonus of more than $60,000, and was promoted to senior district manager in Warner Chilcott’s most prestigious sales division. As a result of the scheme, insurance companies, including Medicare, paid Warner Chilcott at least $100,000 for Atelvia® based on prior authorizations that were manipulated by Garcia’s sales representatives.</p>
<p>Jeff Podolsky, 49, of East Meadow, N.Y., was sentenced by Chief Judge Saris on Oct. 11, 2016, to eight months of home confinement and ordered to forfeit $28,237 and pay a fine $10,000. In July 2015, he pleaded guilty to conspiracy to commit health care fraud.</p>
<p>In 2010 and 2011, Podolsky served as a Warner Chilcott district manager in New York City and Long Island, during which time Atelvia®, as well as its predecessor drug, Actonel®, had poor insurance coverage. Podolsky directed the sales representatives in his district to fill out prior authorizations for physicians who prescribed Actonel® and Atelvia®, by using false clinical justifications as to why the patient needed the drugs, and then submit them to health insurance companies.</p>
<p>As a result of the scheme, Podolsky’s district was the top-grossing district in Warner Chilcott’s osteoporosis division. In 2011, Podolsky received a bonus of more than $100,000 and was promoted to senior district manager in a more prestigious sales division. Insurance companies and Medicare paid at least $200,000 for Actonel® and Atelvia® prescriptions that were based on prior authorizations that were manipulated by Podolsky’s sales representatives.</p>
<p>United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Phillip M. Coyne, Special Agent in Charge of the Department of Health and Human Services Office of Inspector General; Leigh-Alistair Barzey, Assistant Special Agent in Charge of the Department of Defense’s Defense, Office of Inspector General, Defense Criminal Investigative Service, Northeast Field Office; Derek Roy, Resident Agent in Charge of the U.S. Food and Drug Administration’s Office of Criminal Investigations; Donna L. Neves, Special Agent in Charge of the Department of Veterans Affairs, Office of Inspector General; and Scott Rezendes, Special Agent in Charge of the Office of Personnel Management’s Office of Inspector General. Assistant U.S. Attorney David Schumacher and Miranda Hooker of Ortiz’s Health Care Fraud Unit prosecuted the case.</p>
<p><a href="https://www.justice.gov/usao-ma/pr/three-warner-chilcott-district-managers-sentenced-healthcare-fraud">Original PressReleases&#8230;</a></p>

Financial Fraud: Freya Pearson Guilty In a Fraud Scheme Of Lottery Winnings
<h2>Jury Convicts Former KC Woman of Fraud Scheme to Steal Victim&#8217;s Lottery Winnings</h2>
<p>KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a former Kansas City, Mo., woman was convicted by a federal jury today of engaging in a fraud scheme in which she stole $440,000 in lottery winnings from her victim as part of a scheme that resulted in a total loss of more than $640,000.</p>
<p>Freya Pearson, 43, of Georgia, formerly of Kansas City, was found guilty of all nine counts contained in an Oct. 28,2014, federal indictment.</p>
<p>According to evidence presented during the trial, Pearson convinced her 61-year-old victim to transfer $480,000 into the bank account of an organization called Recidivism at Work (RAW), a nonprofit entity Pearson established the day before her victim made the first wire transfer. This victim, who had been working as a housekeeper before going on disability and who lived in public housing, won $2.4 million in the Missouri Lottery in 2008. After setting money aside for taxes then purchasing a home for herself, a home for a daughter and a car for another daughter, she established an annuity to provide approximately $30,000 per year for the rest of her life.</p>
<p>Pearson convinced her victim she was a friend and falsely represented herself as a <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="628">financial</a> advisor. Pearson instructed the victim to withdraw her lottery winnings from the annuity account. The victim made three wire transfers in April, May and June 2010 to deposit the funds into Pearson’s RAW checking account. Whether the money was an investment or a business <a class="wpil_keyword_link" href="https://www.fraudswatch.com/category/loans/" title="loan" data-wpil-keyword-link="linked" data-wpil-monitor-id="230">loan</a>, Pearson materially omitted to disclose to the victim that she would use the money to gamble and for her own personal expenses. A partial summary of Pearson’s gambling expenses, which began the day after the first wire transfer, was over $96,000. Pearson also spent $12,000 on travel, purchased three vehicles (a Cadillac Escalade, a Pontiac Sunfire, and a Chevrolet Tahoe) and spent money on restaurants, shopping, and other personal expenses while she lived in the St. Louis, Mo., metropolitan area. Pearson made payments to her victim of approximately $1,200 per month for a little over a year before she quit paying her altogether – a total of approximately $38,000. No identifiable money was used for the nonprofit entity and little for any business purpose.</p>
<p>When she met the victim in 2010, Pearson was unemployed and her only income came from child support and Social Security benefits for one of her children. While she was receiving hundreds of thousands of dollars from her victim’s lottery winnings, Pearson applied for and received federally subsidized housing benefits under the Section 8 program meant to assist low-income residents. In March 2010, Pearson applied with the Weston Housing Authority (in Platte County, Mo.) for Section 8 benefits – claiming that she was unemployed and homeless. Based on these representations, the Weston Housing Authority arranged for the rental of a duplex in Kansas City-North, with housing authority paying $875 per month and Pearson paying $200 per month. Pearson continued to receive federal benefits after moving to Orange County, Calif., in March 2012, until she was terminated from the program for fraud in 2014. Pearson received a total of $76,837 in federal housing benefits over four years. In 2011, Pearson also began receiving welfare and/or food stamp benefits.</p>
<p>Pearson filed for Chapter 7 bankruptcy protection on Dec. 2, 2010, but did not disclose the RAW bank accounts, which had total balances of $56,506. Pearson received a discharge of her debts on March 15, 2011.</p>
<p>Pearson filed no tax return for the tax year 2010, and thus did not pay income taxes of $122,000 that would have been due on the $441,830 of taxable income Pearson received as a result of defrauding her victim.</p>
<p>Pearson defrauded the victim of a total of $441,830. Pearson evaded $122,000 in federal income tax. Pearson defrauded the Weston Housing Authority of $76,837 in housing benefits. Pearson thus caused a total loss of at least $640,667.</p>
<p>Following the presentation of evidence, the jury in the U.S. District Court in Kansas City, Mo., deliberated for about two hours before returning the guilty verdicts to U.S. District Judge Beth Phillips, ending a trial that began Monday, Oct. 24, 2016.</p>
<p>Pearson was convicted of three counts of wire fraud, four counts of money laundering, one count of tax evasion and one count of making false statements to the Department of Housing and Urban Development (related to her application for federal housing benefits).</p>
<p>Under federal statutes, Pearson is subject to a sentence of up to 100 years in federal prison without parole. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.</p>
<p>This case is being prosecuted by Assistant U.S. Attorneys Kathleen D. Mahoney and Jane Pansing Brown. It was investigated by the Kansas City, Mo., Police Department, IRS-Criminal Investigation and the Dept. of Housing and Urban Development, Office of Inspector General.</p>
<p><a href="https://www.justice.gov/usao-wdmo/pr/jury-convicts-former-kc-woman-fraud-scheme-steal-victims-lottery-winnings">Original PressReleasess&#8230;</a></p>

Financial Fraud: Narasimha Bhogavalli Charged With Engaging in Monetary Transactions
<h2>Irving, Texas, Business Owner Arrested on Federal Offense Related to IRS Impersonation/Money Soliciting Scam</h2>
<p><strong>Victims Called and Told to “Pay Money Immediately to IRS or be Arrested in Hours” Defendant Then Wired Collected Money to India</strong></p>
<p><b><strong>DALLAS</strong></b> — An Irving, Texas, businessman, Narasimha Bhogavalli, 50, was arrested yesterday morning by special agents with the Federal Bureau of Investigation on a federal complaint charging him with engaging in monetary transactions in property derived from specified unlawful activity in connection with an Internal Revenue Service (IRS) impersonation scam that defrauded victims of money that Bhogavalli then transferred between accounts and wired to India. The announcement was made today by U.S. Attorney John Parker of the Northern District of Texas.</p>
<p>Bhogavalli made his initial appearance yesterday afternoon before U.S. Magistrate Judge Paul D. Stickney, who ordered him detained pending a detention hearing set for tomorrow, Friday, October 28, 2016, at 2:00 p.m., before U.S. Magistrate Judge Renée Harris Toliver.</p>
<p>According to the complaint, victims from throughout the U.S. were contacted by individuals claiming to be IRS agents. Victims were advised there were outstanding warrants for their arrest and they would be sent to jail unless they deposited money orders, and sometimes cash, into bank accounts controlled by Bhogavalli and other accounts used by co-conspirators in the scam.</p>
<p>Bhogavalli used at least two Bank of America accounts in the scam, one in the name of Tekdynamics, Inc. and one in the name of Touchstone Commodities, Inc. The investigation revealed that Bhogavalli also controlled additional accounts used in the money soliciting scam, including a Citibank account held in the name of Touchstone Commodities.</p>
<p>Between November 5, 2014, and February 2, 2015, approximately 242 deposits of cash and money orders, totaling approximately $1,661,247, which includes at least 2,250 separate money orders totaling $1,493,848 were made in one of the Bank of America accounts. During the two-week period, between approximately January 16, 2015, and January 30, 2015, at least 60 money orders, totaling $37,957 were deposited into the other Bank of America account. Between November 4, 2014, and February 5, 2015, at least 128 money orders, totaling $96,716 were deposited into the Citibank account.</p>
<p>A <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="627">financial</a> analysis of those accounts, according to the complaint, shows that immediately following the deposits made by the victims of the money soliciting scam, the proceeds were wire transferred to other accounts Bhogavalli controlled, where he either spent the funds or wired the funds to accounts in other countries, such as India. Numerous wire transfers were made in amounts greater than $10,000.</p>
<p>Records indicate Bhogavalli was listed as the Director of Touchstone Commodities, located at 1425 Greenway Drive, Suite 650, in Irving. In account opening documents, Bhogavalli characterized Touchstone Commodities as an “import-export” business. On its website, Touchstone Commodities is “experienced in the global sourcing and supply of many valuable commodities,” including iron ore, steel and wood chips. Bhogavalli is listed as Chairman of Touchstone Commodities on its website.</p>
<p>Records indicate Bhogavalli was listed as President of Tekdynamics. According to information on the Tekdynamics website, Tekdynamics is a provider of “technology, outsourcing and consulting needs” with established infrastructure in the U.S. and India. Tekdynamics address is listed as 1425 Greenway Drive, Suite 650, in Irving.</p>
<p>A federal criminal complaint is a written statement of the essential facts of the offense charged, and must be made under oath before a magistrate judge. A defendant is entitled to the presumption of innocence until proven guilty. The U.S. Attorney’s office has 30 days to present the matter to a grand jury for indictment. The maximum statutory penalty for the charged offense is 10 years in federal prison and a $250,000 fine.</p>
<p>The investigation is being conducted by the FBI and the U.S. Treasury Inspector General for Tax Administration (TIGTA). Assistant U.S. Attorney J. Nicholas Bunch is in charge of the prosecution.</p>
<p><a href="https://www.justice.gov/usao-ndtx/pr/irving-texas-business-owner-arrested-federal-offense-related-irs-impersonationmoney">Original PressReleases&#8230; </a></p>

Financial Fraud: Dwayne C. Hans As Cyber Criminal Charging With Wire Fraud, Computer Fraud, And Money Laundering
<h2>Cyber Criminal Charged In Scheme To Steal More Than $1.5 Million From A U.S. Financial Institution</h2>
<p><strong>Defendant Allegedly Conducted Unauthorized Intrusion into a Government Website</strong></p>
<p>Yesterday, a complaint was unsealed charging Dwayne C. Hans, a United States citizen, with wire fraud, computer fraud, and money laundering. According to the complaint, between April 2016 and July 2016, the defendant masterminded a series of frauds against a U.S. <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="626">financial</a> institution in which he masqueraded as an authorized representative of that institution. Using that ruse, he transferred funds from the financial institution’s corporate bank accounts for his own use. The defendant also accessed a website run by the U.S. General Services Administration without authorization and then redirected money intended for the financial institution to his own bank account.</p>
<p>The defendant’s initial appearance was held yesterday before United States District Judge Thomas O. Rice at the U.S. Courthouse in Spokane, Washington. The court scheduled a detention hearing for Monday, October 31, to determine whether the defendant will be held in custody pending his removal to the Eastern District of New York for further proceedings.</p>
<p>The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI).</p>
<p>As alleged in the complaint, the defendant stole $134,000 from the financial institution and attempted to steal approximately $1.5 million more. Posing as someone authorized to conduct financial transactions for the financial institution, the defendant misappropriated money from corporate bank accounts to buy shares of stock in publicly traded companies, invest in a real estate property in Brooklyn, New York, and benefit his family members. He also conducted an unauthorized intrusion into the website SAM.gov, which stores information about companies that provide services to the federal government. During this unauthorized website intrusion, the defendant changed information in entries pertaining to the financial institution, including by replacing the bank account information for the financial institution with the defendant’s personal bank account information. As a result, the Pension Benefit Guarantee Corporation sent more than $1.5 million to the defendant instead of the financial institution. These fraudulent wire transfers were reversed once they were detected.</p>
<p>The defendant was arrested in Richland, Washington, on October 26, 2016, pursuant to a criminal complaint issued in the Eastern District of New York.</p>
<p>“Cybercriminals scour the internet for information they can use to steal with impunity,” stated United States Attorney Capers. “They threaten to undermine our confidence in the internet and in the cyber world, on which we rely each and every day. The arrest announced today sends all would be cyber criminals a message – we will find you, and we will bring you to justice.”</p>
<p>“Criminals who exploit the internet to commit crimes think they can hide behind the virtual veil of a computer screen. But just as today’s charges remind us that everyone is at risk of becoming a victim of cybercrime, so too should the public be reminded that the FBI will continue to be a major force in confronting those who think they can evade the law,” stated FBI Assistant Director in Charge Sweeney.</p>
<p>The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.</p>
<p>The government’s case is being handled by the Office’s National Security &; Cybercrime Section. Assistant United States Attorney David K. Kessler is in charge of the prosecution.</p>
<p><strong><u>The Defendant</u></strong>:</p>
<p>DWAYNE C. HANS<br />
Age: 27</p>
<p>E.D.N.Y. Docket No. 16-MJ-951</p>
<p><a href="https://www.justice.gov/usao-edny/pr/cyber-criminal-charged-scheme-steal-more-15-million-us-financial-institution">Original PressReleases&#8230;</a></p>

Financial Fraud: DAVID HOBSON Pled Guilty to Engaging In a Scheme To Commit Insider Trading
<h2 class="node-title">Investment Adviser Pleads Guilty In Manhattan Federal Court To Insider Trading</h2>
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<p>Preet Bharara, the United States Attorney for the Southern District of New York, announced that DAVID HOBSON, who served as an investment adviser in the Providence, Rhode Island, offices of two different national broker-dealer and investment advisers (“Brokerage Firm-1” and “Brokerage Firm-2”), pled guilty to engaging in a scheme to commit insider trading in connection with deals involving a pharmaceutical company (the “Pharma Company”) at which Michael Maciocio, HOBSON’s friend and client, worked. Maciocio, who had been employed by the Pharma Company, regularly possessed material, nonpublic information (“Inside Information”) concerning pending acquisitions and transactions under consideration by the Pharma Company. From at least 2008 through April 2014, Maciocio breached his duty of confidentiality to the Pharma Company by providing Inside Information about potential acquisitions and transactions to his friend and long-time broker, HOBSON. HOBSON, in turn, used the Inside Information to execute profitable securities trades for himself, for Maciocio, and for other clients of HOBSON’s.</p>
<p>U.S. Attorney Preet Bharara said: “As he admitted today, David Hobson exploited inside information provided by his friend and client Michael Maciocio to reap illegal profits for both of them. With Maciocio’s earlier guilty plea, both participants in this illegal insider trading scheme have now admitted to their crimes. Insider trading rigs the markets, and through prosecutions like this, we seek to make the securities markets fair.”</p>
<p>According to the allegations in the charging documents, including the Information and Indictment, and statements made in court proceedings:</p>
<p>From in or about May 2008 through in or about April 2014, Maciocio and HOBSON participated in a scheme to commit insider trading in advance of and in connection with acquisitions and transactions under consideration by the Pharma Company. Maciocio and HOBSON were childhood friends and HOBSON had served as Maciocio’s investment adviser and broker for many years.</p>
<p>Maciocio learned about the impending transactions through his role as a Master Planner in the Active Pharmaceutical Ingredient Supply Chain Group at the Pharma Company. In that role, Maciocio was tasked with evaluating manufacturing demands and capacity within the Pharma Company, and was consulted about potential acquisitions, to assist in determining whether the Pharma Company would be able to manufacture any new product in-house. Although Maciocio was not typically provided with the name of the target acquisition, he used the Inside Information he received – including the Pharma Company’s code name of the acquisition, the drug indication, the dosage, the phase of any clinical trial, and the chemical structure of the drug – to uncover the true identity of the target company. He was at times aided in this task by HOBSON.</p>
<p>Having learned the Inside Information about these impending transactions, Maciocio, in breach of fiduciary duties and other duties of trust and confidence owed to the Pharma Company, traded on his own behalf and tipped HOBSON so that HOBSON could use the information to trade both for himself and for Maciocio. HOBSON also used the Inside Information to trade in other of his clients’ accounts, first at Brokerage Firm-1 and later at Brokerage Firm-2.</p>
<p>HOBSON used the Inside Information that he received from Maciocio to make profitable trades in, among other securities: Medivation, Inc., Ardea Biosciences, Inc., and Furiex Pharmaceuticals, Inc. As a result of the scheme, HOBSON reaped more than $350,000 in ill-gotten gains for himself, for Maciocio, and for certain of HOBSON’s other clients.</p>
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<p>HOBSON, 47, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; and to one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million or twice the gross gain or loss from the offense;</p>
<p>Maciocio, 46, pled guilty on May 20, 2016, to one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, and two counts of securities fraud. Count One carries a maximum sentence of five years in prison. Counts Two through Four each carry a maximum sentence of 20 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.</p>
<p>The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentences for the defendants will be determined by the judge.</p>
<p>Mr. Bharara praised the work of the FBI, and thanked the SEC.</p>
<p>The charges were brought in connection with the President’s <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/" title="Financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="625">Financial</a> 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 is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. 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 <a href="http://www.stopfraud.gov/"><u>www.StopFraud.gov</u></a>.</p>
<p>This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Aimee Hector and Rebecca Mermelstein are in charge of the prosecution.</p>
<p><a href="https://www.justice.gov/usao-sdny/pr/investment-adviser-pleads-guilty-manhattan-federal-court-insider-trading">Original PressReleasess&#8230;</a></p>
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Healthcare Fraud: Ronald S. Calderon Sentenced For Health Care Fraud Scheme
<h2>Former State Senator Ronald Calderon Sentenced to 42 Months in Federal Prison for Receiving Over 150,000 Dollars in Bribes</h2>
<p><em>LOS ANGELES</em> – Former California State Senator Ronald S. Calderon was sentenced today to 3½ years in federal prison after pleading guilty to a federal corruption charge and admitting that he accepted tens of thousands of dollars in bribes in exchange for performing official acts as a legislator.</p>
<p>Ron Calderon, 59, of Montebello, received the 42-month sentenced this afternoon from United States District Judge Christina A. Snyder, who also ordered the defendant to serve 150 hours of community service.</p>
<p>Ron Calderon pleaded guilty in June to one count of mail fraud through the deprivation of honest services. In a plea agreement filed in this case, Ron Calderon admitted accepting bribe payments from the owner of a Long Beach hospital who wanted a law to remain in effect so he could continue to reap tens of millions of dollars in illicit profits from a <strong>health care fraud scheme</strong>. Ron Calderon also admitted taking bribes from undercover FBI agents who were posing as independent filmmakers who wanted changes to California’s Film Tax Credit program.</p>
<p>Ron Calderon’s brother, Thomas M. Calderon, 62, also of Montebello, a former member of the California State Assembly who became a political consultant, was sentenced last month to 10 months in custody for his conviction on a <strong>money laundering</strong> charge for allowing <em>bribe money earmarked</em> for his brother to be funneled through his company.</p>
<p>“Former Senator Calderon repeatedly violated the trust of the voters by taking nearly $160,000 in bribes in exchange for abusing his position as an elected official,” said United States Attorney Eileen M. Decker. “The Calderons are now being punished for their roles in a bribery scheme that involved multiple forms of payments, as well as the attempted concealment of the scheme through money laundering and lies made to residents of his district. Politicians who violate their oaths by selling their offices will be discovered and will be prosecuted.”</p>
<p>“Mr. Calderon used the power of the state Senate to dole out favors in exchange for bribe payments and a flashy lifestyle, rather than governing honestly for the people of California,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “I’m proud of the agents and prosecutors who made this case a success using innovative techniques to uncover a variety of <strong>schemes and abject corruption</strong> by a state official.”</p>
<p>“At the heart of this case are two brothers – one a politician, the other the facilitator – who thought they were above the law and could exchange political favors for <em>bribery payments</em>,” stated IRS Criminal Investigation’s Acting Special Agent in Charge, Anthony J. Orlando. “Regardless of circumstances, no one is granted an exemption to commit crimes with impunity. As today’s sentence shows, the government will hold accountable those who use fraud and deceit to line their pockets with money, especially when those individuals are serving the California public.”</p>
<p>Ron Calderon admitted participating in a <strong>bribery scheme</strong> involving two areas of legislation and the hiring of a staffer who was also an undercover FBI agent.</p>
<p>In the first part of the <em>bribery scheme</em>, Ron Calderon took bribes from Michael Drobot, the former owner of Pacific Hospital in Long Beach, which was a major provider of spinal surgeries that were often paid by workers’ compensation programs. The spinal surgeries are at the center of a massive<strong> healthcare fraud scheme</strong> that Drobot orchestrated and to which he previously pleaded guilty. Ron Calderon was not charged in the <em>healthcare fraud scheme</em> that led to well over $500 million in fraudulent billings. Drobot, who was described in court papers filed by prosecutors as “a greedy fraudster robbing taxpayer-funded federal programs,” was a client of Tom Calderon’s political consulting firm.</p>
<p>California law known as the “spinal pass-through” legislation allowed a hospital to pass on to insurance companies the full cost it had paid for medical hardware it used during spinal surgeries. As Drobot admitted in court, his hospital exploited this law, typically by using hardware that had been purchased at highly-inflated prices from companies that Drobot controlled and passing this cost along to insurance providers.</p>
<p>Drobot bribed Ron Calderon so that he would use his public office to preserve this law that helped Drobot maintain a long-running and lucrative healthcare fraud scheme, which included Ron Calderon asking a fellow senator to introduce legislation favorable to Drobot and attempting to recruit other senators to support Drobot. The payments from Drobot came in the form of summer employment for Ron Calderon’s son, who was hired as a summer file clerk at Pacific Hospital and received a total of $30,000 over the course of three years, despite the son doing little actual work at the hospital.</p>
<p>In another part of the bribery scheme, Ron Calderon accepted bribes from people he thought were associated with an independent film studio, but who were in fact undercover FBI agents. In exchange for the payments – including $30,000 in payments to Ron Calderon’s daughter for services she never provided – Ron Calderon agreed to support an expansion of a state law that gave tax credits to studios that produced independent films in California. The Film Tax Credit applied to productions of at least $1 million, but, in exchange for bribes, Ron Calderon agreed to support new legislation to reduce this threshold to $750,000, according to the plea agreement.</p>
<p>Ron Calderon took several official actions with respect to reducing the threshold for the Film Tax Credit. Ron Calderon signed a letter on his official Senate letterhead indicating that he would propose legislation lowering the threshold, introduced a “spot bill” he told an undercover agent would be used to propose such legislation, and promised that he would vote in favor of that proposed legislation.</p>
<p>In addition to the payments to his daughter for work she did not do, Ron Calderon had one of the undercover agents make a $5,000 payment toward his son’s college tuition and a $25,000 payment to Californians for Diversity, a non-profit entity that Ron Calderon and his brother used to improperly pay themselves.</p>
<p>In a sentencing memorandum filed with the court, prosecutors write that Ron Calderon “sold his vote not just to help pay for the expenses of living beyond his means, but for the more banal and predictable aims of corruption -– fancy luxuries, fancy parties, and fancy people.”</p>
<p>The memorandum further argues that a significant term of imprisonment was necessary to send a message to other political officials and the electorate because, without such a sentence, “the trust already eroded by individual detections of corrupt politicians will spread like cancer and threaten the fundamentals of a trusted democracy. It is not hyperbole to insist that nothing less is at stake in defendant’s sentencing.”</p>
<p>As part of the agreement with the undercover agents, Ron Calderon performed official acts that led to the hiring of another undercover agent as a staffer in his district office at an annual salary of $45,105.</p>
<p>Ron Calderon “knowingly concealed his bribery scheme from the public by submitting a false Statement of Economic Interest, California Form 700, to the California Fair Political Practices Commission, which failed to disclose the money and other <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="624">financial</a> benefits defendant he had received from Drobot” and the undercover agents, Ron Calderon admitted in his plea agreement.</p>
<p>Tom Calderon pleaded guilty to money laundering and admitted that he agreed to conceal bribe payments for his brother from the two undercover FBI agents by having the money go through his company, the Calderon Group. Tom Calderon allowed payments to be made to the Calderon Group “to conceal and disguise the fact that the money represented the proceeds of bribery,” according to his plea agreement.</p>
<p>The investigation into the Calderons was conducted by the Federal Bureau of Investigation and IRS Criminal Investigation. The case was prosecuted by Assistant United States Attorney Mack E. Jenkins of the Public Corruption and Civil Rights Section.</p>
<p><a href="https://www.justice.gov/usao-cdca/pr/former-state-senator-ronald-calderon-sentenced-42-months-federal-prison-receiving-over">Original PressReleasess&#8230;</a></p>

Healthcare Fraud: Simon Hong Convicted of Eight Counts of Healthcare Fraud, Nine Counts of Illegal Kickbacks Related to Healthcare Referrals
<h2>Brea Man Who Operated Physical Therapy Clinics Convicted in Scheme that Stole Millions from Medicare Program</h2>
<p><em>SANTA ANA, California</em> – A Brea man who operated rehabilitation clinics in Walnut, Torrance and Los Angeles has been convicted by a federal jury of<strong> defrauding Medicare</strong> out of millions of dollars.</p>
<p>Simon Hong (who is also known as Seong Wook Hong), 54, was convicted Wednesday of <strong>eight counts of healthcare fraud, nine counts of illegal kickbacks related to healthcare referrals</strong> and two counts of aggravated<strong> identity theft</strong>.</p>
<p>The scheme revolved around clinics operated by Hong’s companies called Hong’s Medical Management, Inc., CMH Practice Solution, and HK Practice and Solution, Inc. According to the evidence presented at trial, Hong conspired with others to submit <em>false claims to Medicare</em>. As part of the scheme, Hong recruited Medicare beneficiaries and provided uncovered services like massage and acupuncture for them. Even though the beneficiaries did not receive actual physical therapy, the co-conspirators billed Medicare for physical therapy, and then funneled 56 percent of the reimbursement funds back to Hong.</p>
<p>Through this scheme Hong and his co-conspirators billed Medicare from the spring of 2009 until November 2013 and received approximately $2,929,775 in reimbursements, of which Hong received approximately $1,640,674.</p>
<p>After the jury returned its verdicts, United States District Judge David O. Carter set Hong’s sentencing hearing for January 9, 2017, at which time Hong will face a statutory maximum sentence of 129 years in prison and a mandatory minimum sentence of two years in prison.</p>
<p>“Schemes that steal money from the Medicare program harm taxpayers and raise healthcare costs,” said United States Attorney Eileen M. Decker. “This case is a prime example of the Department of Justice’s focus on protecting the assets of the Medicare program and the health of Americans who participate in it.”</p>
<p>Hong is one of 10 defendants who <a href="https://www.justice.gov/usao-cdca/pr/10-charged-relation-15-million-scheme-defraud-medicare-billing-physical-therapy"><u>were charged</u></a> in 2015 and early 2016 for <em>healthcare fraud</em> related to physical therapy. Eight others have pled guilty, and one, David Y. Kim, 54, of Los Angeles, remains a fugitive. Those previously convicted in the investigation are:</p>
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<li>Joseff Sales, 39, of Buena park, pleaded guilty last January to one count of healthcare fraud and one count of illegal kickbacks;</li>
<li>Danniel Goyena, 39, of Buena Park, pleaded guilty last December to two counts of healthcare fraud;</li>
<li>Marlon Sonco, 39, of Sylmar, pleaded guilty in June 2015 to conspiracy;</li>
<li>Eddieson Legaspi, 40, of Lomita, an employee of Rehab Dynamics, pleaded guilty in August 2015 to conspiracy to commit healthcare fraud;</li>
<li>Ohun Kwon, 50, of Fullerton, the owner/operator of E.K. Medical Management, which referred patients to Rehab Dynamics, pleaded guilty in August 2015 to conspiracy to commit healthcare fraud and was sentenced last week to 27 months in federal prison;</li>
<li>Leovigildo Sayat, 39, of Torrance, an employee of RSG Rehab, pleaded guilty in October 2015 to conspiracy to commit health care fraud;</li>
<li>Byong Chun “David” Min, 68, of Irvine, co-owner/operator of Glory Rehab Team, which operated as Dream Hospital in Orange County, pleaded guilty in May to healthcare fraud and illegal kickbacks; and</li>
<li>Jason S. Min, 35, of Irvine, David Min’s son, who was the other owner/operator of Glory Rehab, pleaded guilty last month to Obstruction of Justice.</li>
</ul>
<p>“Mr. Hong exploited the Medicare system to generate millions in fraudulent proceeds at the expense of honest taxpayers,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This case should serve as a warning to others involved in health care fraud as Mr. Hong faces significant prison time after being found guilty by a jury at trial.”</p>
<p>“Medicare provides legitimate health care services for millions of older Americans,” said Christian J. Schrank, HHS OIG Special Agent in Charge of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG). “Fraudulently billing the program for therapies never provided could cost Mr. Hong years in prison. As this conviction shows, not just providers, but business owners who are partners in these schemes, will pay a price. Together with our law enforcement partners, we will pursue all those involved in stealing from the Medicare trust funds.”</p>
<p>The investigation in these cases was conducted by the FBI and HHS-OIG. This case is being prosecuted by Assistant United States Attorneys Byron J. McLain and Sarah Heidel of the Major Frauds Section.</p>
<p><a href="https://www.justice.gov/usao-cdca/pr/brea-man-who-operated-physical-therapy-clinics-convicted-scheme-stole-millions-medicare">Original PressReleases&#8230;</a></p>

Tax Fraud: Louis Joseph Vadino Convicted Of Tax Evasion and Lying to IRS
<h2>Southern California Man Convicted of Tax Evasion and Lying to IRS After Fraudulently Applying for a Passport While Attempting to Flee</h2>
<p><em>SANTA ANA, California</em> – A former resident of Orange County who now lives in northern San Diego County has been found guilty of tax evasion and lying to the IRS after applying for a passport in a false name as he attempted to flee from the prosecution.</p>
<p>Louis Joseph Vadino, 75, currently of Ramona and formerly of Lake Forest, was convicted yesterday by a federal jury after a five-day trial. He had previously pleaded guilty to failing to appear for court, conspiracy, two counts of passport fraud, and two counts of aggravated identity theft.</p>
<p>From 2002 to 2006, the IRS was actively attempting to audit and assess Vadino’s taxes owed. Vadino had purchased five residential properties in Lake Forest between 1999 and 2002 under the name of a shell company. Vadino, his three adult daughters, and his mother resided in these homes. In the fall of 2006, Vadino directed his daughter to obtain refinance loans on three of the Lake Forest properties and sold a fourth Lake Forest property, resulting in $2.1 million in <a class="wpil_keyword_link" href="https://www.fraudswatch.com/category/loans/" title="loan" data-wpil-keyword-link="linked" data-wpil-monitor-id="229">loan</a> and sale proceeds being wire transferred to a bank account in Greece controlled by Vadino.</p>
<p>From 2006 to 2011, defendant took steps to evade his 1999 taxes, including concealing and attempting to conceal the nature and extent of his assets and the location thereof, lying to Special Agents of the IRS’s Criminal Investigation Division, placing funds and property in the names of others, and using offshore accounts to place funds and property beyond the reach of the IRS.</p>
<p>When scheduled to go to trial in the case, Vadino cut off his ankle bracelet and absconded. In October 2014, he applied for a U.S. passport using another person’s identity. Vadino was captured in December 2014 and has been in custody since then.</p>
<p>“This defendant went to great lengths to hide income from the IRS and to attempt to escape justice,” said United States Attorney Eileen M. Decker. “This case demonstrates the dedication of the IRS and the Department of Justice to ensuring that tax evaders face serious consequences for their actions.”</p>
<p>After the jury returned its verdicts, United States District Judge Andrew Guilford set Vadino’s sentencing for February 6, 2017, at which time Vadino will face a statutory maximum sentence of 44 years in prison and a mandatory minimum sentence of two years in prison.</p>
<p>“As the jury’s verdict shows, this was a well-hidden, but ultimately transparent scheme to defraud the United States government,” stated Acting Special Agent in Charge Anthony J. Orlando for IRS Criminal Investigation. “Mr. Vadino hid assets from the IRS by placing funds and property in the names of family members and shell corporations, and funneling loan proceeds from those properties to an offshore bank account. Using intricate schemes and offshore bank accounts to commit tax evasion is a dangerous shell game played by swindlers like Mr. Vadino. Unfortunately for them, they don’t realize the odds are heavily stacked against them.”</p>
<p>Steven Ness, 44, of Long Beach, was also charged in the case with counts related to assisting Vadino in his attempt to obtain the passport with Ness’s father’s identity. The case against Ness is pending.</p>
<p>The investigation into Vadino and Ness was conducted by IRS Criminal Investigation, and the case is being prosecuted by Assistant United States Attorneys Greg Staples and Daniel Ahn of the Santa Ana Branch.</p>
<p><a href="https://www.justice.gov/usao-cdca/pr/southern-california-man-convicted-tax-evasion-and-lying-irs-after-fraudulently-applying">Original PressReleases&#8230;</a></p>

Mortgage Fraud: Dorothy, Thomas, Jane And Jamie Matsuba Charged In Mortgage Relief Fraud Scheme
<h2>Alleged Architect of $30 Million Mortgage Relief Fraud Scheme and Four Other Los Angeles Residents Indicted in Conspiracy to Defraud Banks and Homeowners</h2>
<p><em>WASHINGTON</em> – The alleged architect of a $30 million mortgage relief fraud scheme and four other former employees of a purported mortgage relief company were charged in an indictment unsealed today for their alleged participation in a conspiracy to defraud banks and homeowners.</p>
<p>Yun Soon Matsuba, aka Dorothy Matsuba, 65; Thomas Matsuba, 64; Jane Matsuba Garcia, 40; and Jamie Matsuba, 31, all of Chatsworth, and Young Park, 53, of Koreatown, were each charged with one count of conspiracy to commit wire fraud, make false statements and commit identity theft. In addition, the 18-count indictment charges Dorothy Matsuba with five counts of wire fraud, five counts of making false statements and six counts of aggravated identity theft; Jane Matsuba Garcia with one count of wire fraud, two counts of making false statements and one count of aggravated identify theft; and Jamie Matsuba with one count of making a false statement.</p>
<p>Dorothy Matsuba, Thomas Matsuba, Jane Matsuba Garcia and Jamie Matsuba were all arrested this morning and are making court appearances this afternoon; Park remains a fugitive. Thomas Matsuba is Dorothy Matsuba’s husband and Jane Matsuba Garcia and Jamie Matsuba are Dorothy Matsuba’s daughters. Young Park is Dorothy Matsuba’s brother.</p>
<p>Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Division, Acting Special Agent in Charge Anthony J. Orlando of IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office, Special Agent in Charge Leslie P. DeMarco of the Federal Housing Finance Agency-Office of Inspector General’s (FHFA-OIG) Western Region and Sheriff Jim McDonnell of the Los Angeles County Sheriff’s Department made the announcement.</p>
<p>“These defendants are charged with preying upon distressed homeowners with false promises of keeping their homes,” said United States Attorney Eileen M. Decker. “Instead, the defendants callously pocketed tens of millions of dollars for themselves while hastening foreclosure of the victim homeowners’ properties.”</p>
<p>“Today’s arrests illustrate the FBI’s commitment to combat fraud targeting homeowners, as in the case of the Matsuba family, whose members are charged in a scheme that targeted emotionally distraught victims, many of whom were losing their jobs and facing the loss of their homes,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “In addition to giving false hope to their victims, the defendants enriched themselves while victims lost their homes and had their credit destroyed.”</p>
<p>The indictment alleges that from 2005 to 2014, the defendants operated an interlocking web of companies, primarily under the names of Ownership Management Service LLC and Trust Holding Service LLC, which purported to help homeowners obtain relief from high <a class="wpil_keyword_link" href="https://www.fraudswatch.com/category/mortgage/" title="mortgage" data-wpil-keyword-link="linked" data-wpil-monitor-id="75">mortgage</a> debt through short sales, in which lenders agree to sell a mortgaged property for less than the amount owed on the mortgage. In a scheme to defraud both the banks and the homeowners the defendants allegedly convinced homeowners to deed their property to trusts set up and controlled by the Matsubas and also promised to pay their mortgages while negotiating with banks to short sell those properties. In the interim, the homeowners either remained in their properties or were relocated to another Matsuba-controlled property. Instead of performing short sales as promised, Dorothy Matsuba and the other defendants failed to make mortgage payments and submitted false and fraudulent short sale purchase offers to the banks in an effort to delay foreclosure and maximize the time period over which the Matsubas could collect rent from the homeowners and other third parties placed in the properties by the Matsubas, the indictment alleges. The Matsubas also routinely forged signatures, used false and stolen identities and filed fraudulent bankruptcy petitions—all in a scheme to delay foreclosure and maximize their profits at the expense of the homeowners and banks, the indictment alleges.</p>
<p>The scheme allegedly netted the defendants more than $30 million in rent during the conspiracy period.</p>
<p><em>An indictment is merely an allegation and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.</em></p>
<p>The FBI’s Los Angeles Division, IRS-CI’s Los Angeles Field Office, FHFA-OIG’s Western Region and the Los Angeles County Sheriff’s Department’s Real Estate Fraud Unit investigated the case. Trial Attorney Niall O’Donnell and Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section are prosecuting the case. Senior Trial Attorney Nicholas Acker previously worked on the investigation.</p>
<p> ;</p>

Financial Fraud: TRACY MONTI Arrested in $5 Million Fraud Scheme
<h2>Chicago Woman Arrested in $5 Million Fraud Scheme Involving Bogus Business to Re-Sell Tickets to Concerts and Sporting Events</h2>
<p>CHICAGO — A Chicago woman was arrested today for allegedly operating a multi-million dollar fraud scheme that duped investors into believing she could earn profits on the secondary market for concert and sporting event tickets.</p>
<p>TRACY MONTI fraudulently obtained more than $5 million from investors by misrepresenting that she would purchase tickets for sporting events and concerts from primary market sources at face value and then re-sell them for a profit on the secondary market, according to a nine-count indictment returned Thursday in federal court in Chicago. In reality, Monti used the victims’ funds to purchase a house in Chicago and a vehicle, and to make Ponzi-type payments to other investors, according to the indictment.</p>
<p>Monti, 42, of Chicago, was arrested this morning. She pleaded not guilty during an arraignment today before U.S. District Judge Manish S. Shah. Monti was ordered released on a recognizance bond, and a status hearing was scheduled for Nov. 9, 2016.</p>
<p>The indictment charges Monti with seven counts of wire fraud and two counts of money laundering. Each count of wire fraud is punishable by up to 20 years in prison, while each money laundering count carries a maximum sentence of ten years.</p>
<p>The indictment was announced by Zachary T. Fardon, 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 James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division.</p>
<p>According to the indictment, Monti misrepresented to investors that she had business relationships with multiple primary market sources, such as event promoters and venues, through which she purportedly purchased tickets at face value. The indictment alleges that these relationships didn’t actually exist, and that Monti did not purchase tickets at face value.</p>
<p>The indictment seeks forfeiture of a house in the Austin neighborhood of Chicago and approximately $5.02 million in cash.</p>
<p>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. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.</p>
<p>The government is represented by Assistant U.S. Attorney Jessica Romero.</p>

Financial Fraud: JASON CHRISTOPHER DEVILLIER Sentenced For Bank Fraud Scheme
<h2>Baton Rouge Businessman Sentenced To Prison For Bank Fraud Scheme</h2>
<p>BATON ROUGE, LA &#8211; United States Attorney Walt Green announced today that United States District Chief Judge Brian A. Jackson sentenced<strong> JASON CHRISTOPHER DEVILLIER</strong>, age 45, for his convictions in connection with a<strong> scheme to defraud Whitney Bank</strong>. This summer, DEVILLIER pled guilty to <em>bank fraud and fraudulent receipt of bank funds</em>.</p>
<p>Chief Judge Jackson sentenced DEVILLIER to a term of 33 months in the Bureau of Prisons, to be followed by a term of 3 years supervised release. DEVILLIER was also sentenced to pay total restitution of $474,410.74 to Whitney Bank. Additionally, DEVILLIER was ordered to forfeit assets of $474,410.74 and pay a $25,000 fine.</p>
<p>These convictions arose from DEVILLIER’s ownership and operation of ABC123, L.L.C. (“ABC123”), a payment processing company for <em>private and parochial primary and secondary schools</em> located in Baton Rouge, Louisiana. In order for ABC123 to perform its payment processing services for the schools, parents established accounts through ABC123’s website, which enabled parents to send money electronically to the schools for tuition, cafeteria fees, and other school-related fees. ABC123 collected the funds paid by parents and transmitted them to <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="623">financial</a> institutions designated by each respective school. As a result, DEVILLIER had access to the schools’ bank account information, including routing and account numbers.</p>
<p>DEVILLIER accomplished his <strong>scheme to defraud Whitney Bank</strong> through his use of the Automated Clearing House (“ACH”) network. <strong> </strong>DEVILLIER previously admitted that, from November of 2012 through July of 2013, he diverted funds from ABC123’s Whitney Bank account (“the ABC123 account”) into his personal account and other accounts, in amounts ranging from $30 to $50,000, through inappropriate ACH batch transactions. For each <em>fraudulent transaction</em>, DEVILLIER posted <em>numerous and substantial false</em> and <em>fraudulent credits</em> to the ABC123 account, which he falsely represented as authorized withdrawals from accounts belonging to the schools. In effect, these <em>false and fraudulent ACH credits</em> posted by DEVILLIER made it appear as though the ABC123 account had sufficient funds for withdrawals from said account. Before Whitney Bank was able to detect and reverse the<strong> false and fraudulent ACH credits</strong>, Devillier transferred funds through ACH debits from the ABC123 account to various personal and business accounts belonging to him and others. As a result of DEVILLIER’s fraudulent conduct, Whitney Bank suffered substantial losses.</p>
<p>U.S. Attorney Walt Green stated: “Mr. Devillier was sentenced to a significant sentence for his criminal conduct. In lining his own pockets, Mr. Devillier violated the trust of not only Whitney Bank, but also the trust of the schools, students, and families his business was supposed to serve. I also wish to convey my appreciation to the FBI and the prosecutor for their excellent work, as well as to Whitney Bank and the schools for their cooperation and support during the investigation and prosecution of this important matter.”</p>
<p>SAC Jeffrey S. Sallet stated: “I would like to recognize the outstanding work done by the assigned FBI Special Agent and Assistant U.S. Attorney in unraveling this complex bank fraud scheme. The New Orleans Division of the FBI remains committed to working with our law enforcement partners to identify, investigate and prosecute those who would attempt to fraudulently utilize the banking system for personal gain.”</p>
<p>The investigation has been conducted by the Baton Rouge Resident Office of the Federal Bureau of Investigation. The matter is being prosecuted by Assistant United States Attorney Cam T. Le.</p>
<p><a href="https://www.justice.gov/usao-mdla/pr/baton-rouge-businessman-sentenced-prison-bank-fraud-scheme">Original PressReleases&#8230;</a></p>

Financial Fraud: MYONG HWAN HAN Charged For Mail Fraud in Connection With a Scheme
<h2>Queens Man Charged In New York City “Vermin Control” Fraud Scheme</h2>
<p>Preet Bharara, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced the arrest and charges against MYONG HWAN HAN, a/k/a “David Han,” <em><strong>for mail fraud and conspiracy to commit mail fraud in connection with a scheme</strong></em> that sought to defraud thousands of victims out of more than $1 million. From April 2016 through September 2016, HAN and a co-conspirator (“CC-1”) allegedly created and mailed thousands of fraudulent notices of violation, which purported to be official communications from New York City related to vermin control violations. The notices directed the recipients to make immediate payments to a sham entity created by HAN and CC-1. In response, victims mailed checks to the sham entity based on their mistaken belief that the notices of violation were legitimate. HAN was presented today before Magistrate Judge Henry B. Pitman.</p>
<p><strong>According to the Complaint unsealed today in Manhattan federal court:</strong></p>
<p>In April 2016, CC-1 hired a print shop to print approximately 10,000 copies of a fraudulent notice (the “Fraudulent Notice”). The Fraudulent Notice, which included a New York City Department of Health and Mental Hygiene (“NYC Health”) logo and was purportedly signed by the Commissioner of the New York City Department of Buildings, directed immediate payment of $120 to be mailed to an entity called “Vermin Control of New York,” under threat of additional penalties, including fees and property liens. In response to the Fraudulent Notice, approximately 101 victims mailed checks to Vermin Control of New York.</p>
<p>In fact, NYC Health did not authorize the Fraudulent Notice or use of the NYC Health logo. HAN and CC-1 created Vermin Control of New York as part of their scheme and used the location of CC-1’s post office box as the organization’s mailing address. HAN created a bank account for Vermin Control of New York and agreed with CC-1 to share any proceeds from their scam.</p>
<p>HAN, 31, of Queens, New York, is charged with one count of conspiracy to commit mail fraud and one count of mail fraud. Each of the charges carries a maximum term of 20 years in prison.</p>
<p>The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.</p>
<p>Mr. Bharara praised the work of the United States Postal Inspection Service, and thanked the New York City Department of Investigation for its assistance.</p>
<p>This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Timothy V. Capozzi is in charge of the prosecution.</p>
<p>The charges and allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.</p>
<p><a href="https://www.justice.gov/usao-sdny/pr/queens-man-charged-new-york-city-vermin-control-fraud-scheme">Original PressReleases&#8230;</a></p>

Financial Fraud: Bruce A. Endicott Sentenced For One Count Of Theft Of Government Funds
<h2>Former Government Employee Sentenced for Defrauding Multiple Federal Unemployment and Social Programs</h2>
<p><em><strong>Judge Orders Restitution for Welfare Fraud and Threatens Maximum Sentence if Probation is Violated</strong></em></p>
<p>PORTLAND, Ore. – On Tuesday, October 18, 2016, a former employee of the Deschutes County District Attorney’s Office and the Oregon Department of Justice was sentenced to probation for the theft of more than $56,000 from the U.S. Department of Veterans Affairs (VA), the U.S. Department of Agriculture (USDA), and the U.S. Department of Health and Human Services (HHS).</p>
<p>Bruce A. Endicott, 34, pled guilty in June 2016 to one count of theft of government funds. Endicott’s guilty plea, pursuant to a plea agreement, included an admission of conduct over a three-year period supporting all six counts of his indictment. U.S. District Court Judge Robert E. Jones sentenced Endicott to three years of probation, 250 hours of community service, and payment of full restitution.</p>
<p>According to court records, Endicott began receiving service-connected disability benefits from the VA in 2005, following three years of Navy service in San Diego, Calif. In June 2012, Endicott filed an additional VA claim for Individual Unemployability benefits, claiming he unable to seek employment due to service-connected mental and physical impairments. Endicott submitted an unemployment statement to the VA in February 2013 while employed by the Oregon Department of Justice under a second Social Security number and was awarded additional benefits. He was instructed to notify the VA of any changes in employment status.</p>
<p>Endicott left the Oregon Department of Justice in December 2013, and began working for the Deschutes County District Attorney’s Office, failing once again to notify the VA of his employment. After leaving the District Attorney’s Office in May 2014, he applied for welfare benefits through the Oregon Department of Human Services (Oregon DHS) using his second Social Security number and again claiming unemployment. Endicott failed to disclose to Oregon DHS that he was receiving approximately $2,700 per month in VA benefits. Oregon DHS awarded him Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance to Needy Family (TANF) benefits.</p>
<p>In February 2015, Endicott submitted a statement to the VA regarding his Individual Unemployability claim, failing, yet again, to disclose his former employment with the Deschutes County District Attorney’s Office and falsely asserting that he had not worked in the past year. Between June 2012 and October 2015, Endicott received approximately $47,947 in VA benefits, $5,996 in SNAP benefits, and $2,770 in TANF benefits to which he was not entitled.</p>
<p>During Edicott’s sentencing hearing, the government noted his ongoing and repeated fraud, the purchase of a $65,000 truck while failing to pay child support and restitution, the burden of his repeated false claims on the VA and Oregon DHS systems, and the detrimental effect of his actions on those with legitimate claims on the benefits he illegally sought. Judge Jones warned Endicott that despite receiving probation, further wrongdoing would result in a much harsher sentence. As a condition of his probation, Endicott was ordered to participate in a mental health treatment program.</p>
<p>The case was investigated by the Criminal Investigations Division of the VA Office of Inspector General, Oregon DHS, and the Social Security Administration (SSA) Office of the Inspector General, Office of Investigations and prosecuted by Helen Cooper, Special Assistant United States Attorney, as part of a partnership between the SSA Office of the General Counsel, Seattle Region and the United States Attorney’s Office in Portland, Oregon.</p>
<p><a href="https://www.justice.gov/usao-or/pr/former-government-employee-sentenced-defrauding-multiple-federal-unemployment-and-social">Original PressReleases&#8230;</a></p>

Financial Fraud: Ivan Valdes Pleads Guilty to a One-Count Criminal Information to Fraud and Kickback Scheme
<h2>Former Miami-Dade County Aviation Department Division Director Pleads Guilty to $5,000,000 Fraud and Kickback Scheme</h2>
<p>A former Division Director of the Miami-Dade County Aviation Department pled guilty for his involvement in a $5,000,000 fraud and kickback scheme.</p>
<p>Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.</p>
<p><strong>Ivan Valdes</strong>, 46, of Miami, pled guilty to a one-count criminal Information charging him with theft in programs receiving federal funds, in violation of Title 18, United States Code, Section 666. Valdes is scheduled to be sentenced on January 5, 2017, at 10:30 a.m., before United States District Judge Darrin P. Gayles. Valdes faces a statutory maximum term of 10 years’ imprisonment and fines of up to $250,000.</p>
<p>According to the court record, including a stipulated statement of facts, Valdes, a former Miami-Dade County Aviation Department Division Director was involved in a $5,000,000 fraud and kickback scheme. During in or about 2010, Valdes arranged with a co-conspirator to request that the Miami-Dade County Aviation Department purchase light fixtures for the Miami International Airport, in exchange for Valdes being paid a share of the proceeds. Between 2010 and 2015, the Miami-Dade County Aviation Department issued approximately twenty requests for Invitations to Quote for the purchase of over 9,000 LED light fixtures which cost Miami-Dade County millions of dollars. Valdes was paid in cash by a co-conspirator, with whom he split approximately $2.2 million in fraudulent proceeds from the scheme. Valdes used some of the fraudulent proceeds to pay an employee in the procurement section of the Miami-Dade County Aviation Department, who assisted with the fraud.</p>
<p>On two occasions, Valdes instructed a co-conspirator to bid on an Invitation to Quote for light fixtures, but he further instructed that the light fixtures should not be ordered from the lighting manufacturer. The co-conspirator bid and won the contracts. As a result, Valdes and his co-conspirators were paid approximately $500,000 for light fixtures that were never provided to the Miami-Dade County Aviation Department.</p>
<p>Mr. Ferrer commended the investigative efforts of the FBI and the Miami-Dade County State Attorney’s Office and its Public Corruption Unit in connection with the investigation of this matter. The case is being prosecuted by Assistant U.S. Attorney Jeffrey N. Kaplan.</p>
<p>Related court documents and information may be found on the website of the District Court for the Southern District of Florida at <a href="http://www.flsd.uscourts.gov/"><u>www.flsd.uscourts.gov</u></a> or on <a href="http://pacer.flsd.uscourts.gov/"><u>http://pacer.flsd.uscourts.gov</u></a>.</p>
<p><a href="https://www.justice.gov/usao-sdfl/pr/former-miami-dade-county-aviation-department-division-director-pleads-guilty-5000000">Original PressReleases&#8230;</a></p>

Money Laundering: Corey Earl Engelen Indictment to Money Laundering
<h2>Parker Man Pleads Guilty to Money Laundering in Connection with Stock Trading Scheme</h2>
<p>DENVER – Corey Earl Engelen, age 47, of Parker, Colorado pled guilty last week before U.S. District Court Judge Christine M. Arguello to money laundering announced Acting United States Attorney Robert C. Troyer and IRS Criminal Investigation Special Agent in Charge Steven Osborne. Engelen and his co-defendant Michael Todd Osborn were indicted by a federal grand jury in Denver on February 11, 2015. Engelen is scheduled to be sentenced by Judge Arguello on January 31, 2017.</p>
<p>According to the indictment and plea agreement, Engelen and Osborn were introduced to each other in approximately July 2009. Beginning immediately, Engelen began assisting Osborn by finding and providing funds to pay his bail bondsman on charges in cases unrelated to the crimes charged in the District of Colorado. In October, the two stayed for an extended period in a California hotel. During that time, Engelen helped pay Osborn’s living expenses and began the process of finding an off-shore trust for their future use.</p>
<p>Meanwhile, Osborn developed a scheme to defraud investors. He falsely represented to them that he would use their funds to trade stocks on their behalf. Beginning in December 2009, Osborn instructed investors to wire their funds to accounts held in the name of Infinite One, LLC, which he represented to be the trading accounts he would use for the trades. In fact, the accounts were not trading accounts and were never used for trading. They were merely checking accounts opened and held by Engelen. All of the investors’ funds, $695,000, were deposited directly to Engelen’s Infinite One, LLC accounts, and the investors got nothing in return.</p>
<p>Engelen and Osborn used investors’ funds for their own personal benefit. Engelen used his share of the funds to make his home <a class="wpil_keyword_link" href="https://www.fraudswatch.com/category/mortgage/" title="mortgage" data-wpil-keyword-link="linked" data-wpil-monitor-id="74">mortgage</a> and car payments, to cover his day-to-day living expenses, and to travel to Europe and Africa. In June 2010, Engelen engaged in monetary transactions using the investors’ funds, knowing that the funds were the proceeds of some criminal activity. The funds he used were in fact the proceeds of Osborn’s wire fraud. Engelen admitted that on June 2, 2009, when he wired $44,915.76 from the Infinite One account to the account of Dream Motor Cars for the purchase of a Mercedes Benz for Osborn, he chose to avoid learning about what Osborn was actually doing to acquire those funds, and committed the felony offense of engaging in a monetary transaction in property derived from specified unlawful activity, wire fraud.</p>
<p>“If you buy luxury cars with money you know is criminal proceeds, you are laundering money, and we will prosecute you for it,” said Acting U.S. Attorney Bob Troyer.</p>
<p>&#8220;Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money,&#8221; said Steven Osborne, IRS Criminal Investigation, Special Agent in Charge, Denver Field Office. &#8220;IRS Criminal Investigation is proud to bring our forensic accounting skills to this joint venture and help put a stop to this and other types of white collar crime.&#8221;</p>
<p>Engelen pled guilty to one count of money laundering which carries a penalty of not more than 10 years in federal prison, and a fine of up to $250,000. Osborn pled guilty on February 9, 2016 to wire fraud and money laundering and is scheduled to be sentenced by Judge Arguello on December 1, 2016.</p>
<p>This case was investigated by Internal Revenue Service – Criminal Investigation with assistance from the Special Enforcement Program of the Internal Revenue Service. This case is being prosecuted by Assistant U.S. Attorneys Linda Kaufman and Bishop Grewell.</p>
<p><a href="https://www.justice.gov/usao-co/pr/parker-man-pleads-guilty-money-laundering-connection-stock-trading-scheme">Original PressReleases&#8230;</a></p>