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Fraud, Fraud News From World

JOSEPH HAL KINLAW, JR. Pleads Guilty To Bank Fraud

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Bald Head Island Attorney And Real Estate Developer Pleads Guilty To Bank Fraud

RALEIGH – The United States Attorney’s Office announced that today in federal court, JOSEPH HAL KINLAW, JR., 63, of Bald Head Island, North Carolina, pled guilty to Bank Fraud.

Based upon the Criminal Information and evidence offered at the time of KINLAW’s guilty plea, KINLAW was a licensed North Carolina attorney who operated various alleged real estate investment and development entities on behalf of investors.  KINLAW used the entities to obtain real estate development loans from Branch Banking and Trust (BB&T), and First Citizens Bank.  BB&T and First Citizens Bank extended loans to these entities under the auspices that the entities would be engaged in the development of residential real estate in various subdivisions in the area of Camp Lejeune in Onslow County.

Between January of 2011 and April of 2013, KINLAW used the real estate development entities to defraud BB&T and First Citizens Bank by falsifying the legal descriptions of the loan collateral, and by falsifying releases of the collateral.  Bydrafting a false legal description of the property, KINLAW was able to use the collateral for other real estate investment activities and loans. By fraudulently releasing the banks’ collateral before the banks’ loans had been satisfied, KINLAW was able, in several instances, to convey the collateral to third parties for value and continue the scheme.

To perpetuate the scheme and prevent its discovery,KINLAWalso used outside funds, that is, funds unrelated to the real estate development activity that was the subject of each loan, to make ongoing loan interest payments to BB&T and First Citizens Bank.  In some instances,KINLAW used loan proceeds on one transaction to make loan interest payments on another transaction.  In other instances,KINLAW fraudulently extracted funds from other investors and their business interests to make payments on the loans.

Ultimately, banks stopped loaning money toKINLAW and his related companies and investors.  As a result, the existing loans went into default.  BecauseKINLAW had substituted false legal descriptions of bank collateral, and fraudulently conveyed bank collateral, BB&T and First Citizens Bank were unable to capture their loan losses in foreclosure.  Various title insurance companies and investors also lost substantial funds due to the scheme.  While the exact amount of the loss remains the subject of investigation, losses are presently anticipated to exceed $18 Million.

At sentencing,KINLAW faces up to 30 years in prison and 5 years of supervise release.  The defendant also faces a fine of up to $1 Million, and an order of restitution to victims.

The investigation of this case was conducted by the Federal Bureau of Investigation, with assistance of the United States Postal Inspection Service.  Assistant United States Attorney William M. Gilmore of the Economic Crimes Section represents the United States.

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Fraud, Fraud News From World

David Weaver and Crystal Serfass Pleaded Guilty To The Armed Robberies

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Junedale Couple Pleads Guilty To Four Armed Bank Robberies And The Armed Robbery Of A Store

SCRANTON – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that David Weaver, age 41, and Crystal Serfass, age 31, both of Junedale, Carbon County, Pennsylvania, pleaded guilty to the armed robberies of four banks and a store.

Weaver and Serfass pleaded guilty before Senior United States District Court Judge James M. Munley in Federal Court yesterday in Scranton.  During the guilty plea hearing, each admitted to all charges contained in a five-count Criminal Information which alleges that they committed the following armed robberies:

  • the robbery ofthe Jim Thorpe National Bank, Penn Forest Township, on September 17, 2013;
  • the robbery of the National Penn Bank, Drums, on August 8, 2014;
  • the robbery of Jim Thorpe Neighborhood Bank, Penn Forest Township, on November 18, 2014;
  • the robbery of the ESSA Bank and Trust, Brodheadsville, on December 26, 2014;
  • the robbery of the Dollar General, Nesquehoning, on November 16, 2014.

During each of the robberies, Weaver brandished a firearm to intimidate the employees.  Serfass helped plan and acted as a driver for each of the crimes.

The case was investigated by the Federal Bureau of Investigation and the Pennsylvania State Police.  Prosecution is assigned to Assistant United States Attorney John Gurganus.

Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.

A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.

In this particular case, the maximum penalty under the federal statutes is up to 120 years’ imprisonment.  Both face a term of supervised release following imprisonment, and a fine if convicted. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendants, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.

Fraud News From World

SAN DIEGO—The Owner of a Glendale-based Ride-Sharing Business Pleaded Guilty

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L.A. Man Pleads Guilty in $17 Million Scheme to Defraud Verizon by Reselling More Than 30,000 iPhones Obtained at Deeply Discounted Price

 

Scheme to Defraud iPhones

SAN DIEGO—The owner of a Glendale-based ride-sharing business pleaded guilty this afternoon to federal wire fraud charges, admitting that he illegally generated over $13 million in profits by selling more than 30,000 Apple iPhones fraudulently obtained from Verizon Wireless at substantially discounted prices.

Karen “Kevin” Galstian, 37, of Chatsworth, pleaded guilty today in United States District Court in San Diego to one count of wire fraud, and he admitted committing the offense while on pre-trial release in another case filed by prosecutors in San Diego.

Galstian pleaded guilty today in San Diego, where federal prosecutors in the United States Attorney’s office previously obtained a guilty plea in a bank fraud case. Pursuant to a plea agreement in the iPhone case, Galstian will be sentenced in both cases by United States District Judge Barry Ted Moskowitz. Today, Judge Moskowitz scheduled a sentencing hearing for January 11, 2016.

The plea agreement calls for a 100-month sentence on the combined cases.

As part of the scheme involving the iPhones, Galstian admitted that he used

his company, Toro Ride, Inc., to induce Verizon Wireless to provide the business with more than 30,000 iPhones at a substantial discount. He purchased most of the mobile phones that usually sell for more than $500 for only 99 cents each – in connection with a two-year contract. Galstian claimed that the phones would be used by drivers for Toro Ride’s ride-sharing service (a service similar to Uber and Lyft) and that Toro Ride, which had only been operating in the Los Angeles area, was poised to expand nationwide. Galstian falsely told Verizon that Toro Ride had received $20 million from investors. When he brokered the deal with Verizon last year, Galstian failed to disclose the he was awaiting sentencing in the bank fraud case and thus would be incarcerated and unavailable to lead the company in the expansion.

As Verizon provided the iPhones that supposedly would be used by Toro Ride’s drivers, Galstian sold the vast majority of the devices to companies engaged in the international re-sale of consumer electronics. Thousands of the iPhones that Verizon shipped to Toro Ride were never used on its network and instead were activated in countries such as Vietnam, Iraq, China and Saudi Arabia.

Galstian fraudulently convinced Verizon to provide him with iPhones worth more than $19.4 million. In less than six months, Galstian generated illegal proceeds of more than $13 million by re-selling the iPhones. Toro Ride used some of the illicit proceeds derived from iPhone sales to make required monthly payments to Verizon, which enabled Galstian to continue to order thousands of additional iPhones. The plea agreement calls for the defendant to pay $17 million in restitution to Verizon.

Galstian used approximately $2.5 million of the fraud proceeds to purchase several properties, including a penthouse condominium in the Palms Casino in Las Vegas, and a Mercedes S550. In conjunction with today’s guilty plea, Galstian agreed to forfeit assets related to and obtained through the fraud scheme, including real properties in Northridge, Sherman Oaks, Tujunga and Las Vegas, as well as more than $200,000 seized from bank accounts and a number of vehicles.

The investigation into Galstian’s wire scheme was conducted by the Federal Bureau of Investigation.