Hussein Ali Mehdi Sentenced to 51 Months’ Incarceration for $840,000 Investment Scheme and Tax Fraud

Source- http://www.fbi.gov/portland/press-releases/2011/eugene-man-sentenced-to-51-months-incarceration-for-840-000-investment-scheme-and-tax-fraud

EUGENE, OR—Today, U.S. District Judge Michael R. Hogan sentenced Hussein Ali Mehdi, 48, of Eugene, Oregon, to serve 51 months in prison and ordered him to pay more than $840,000 in restitution for his role in an investment scheme and tax fraud.

According to court documents, defendant submitted more than 192 fraudulent claims in more than 70 class-action settlements associated with various securities litigation and received more than $740,000 of fraudulent proceeds through this fraudulent investment scheme.

In the fraudulent claims, defendant falsely asserted that he and others held stock in the companies subject to the class-action settlements. To support the false claims, defendant created fraudulent brokerage account statements purported to be from various investment brokerage firms, including Charles Schwab, TD Waterhouse, and Ameritrade, that falsely represented that he and others owned shares of the securities covered by the settlements. To pull off this sophisticated scheme, defendant used several nominees, including his wife, sister, and father, at least eight different addresses in three different states, and 14 different bank accounts.

In connection with the investment fraud scheme, defendant also admitted filing a false federal income tax return on which he severely understated his income. On the false tax return, defendant claimed his taxable income was only $58,241, when, in reality, he knew it was more than $290,000.

U.S. Attorney Dwight C. Holton said, “Sophisticated fraud schemes like this hit hardworking people in their pocketbooks—forcing them to absorb the costs of phony claims. Tax fraud costs us all dearly. We take these schemes with the utmost seriousness.”

“All income, including illegally obtained income, is taxable unless specifically exempted by Congress,” said Marcus Williams, the IRS Special Agent in Charge of the Pacific Northwest.

“Hiding income from the taxman seldom works for long and when you get caught, the consequences are severe.

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