Financial Fraud: Freya Pearson Guilty In a Fraud Scheme Of Lottery Winnings

Financial Fraud
Financial Fraud: Freya Pearson Guilty In a Fraud Scheme Of Lottery Winnings

Jury Convicts Former KC Woman of Scheme to Steal Victim’s Lottery Winnings

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.

Freya Pearson, 43, of Georgia, formerly of Kansas City, was found guilty of all nine counts contained in an Oct. 28,2014, federal indictment.

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.

Pearson convinced her victim she was a friend and falsely represented herself as a financial 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 , 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.

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.

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.

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.

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.

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.

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).

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.

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.

Original PressReleasess…

FraudsWatch
About FraudsWatch 811 Articles
You've been defrauded? FraudsWatch.com tries to help as to denounce embezzlement, theft or if your identity has been compromised. I put at your disposal example, guide and guidance about fraud, scams and identity theft.

Be the first to comment

Leave a Reply

Your email address will not be published.


*