Saturday, June 30, 2012

Clayton A. Coe Convicted of Bank Fraud and Cheating on His Taxes


Source-  http://www.fbi.gov/atlanta/press-releases/2012/former-top-loan-officer-of-failed-bank-convicted-of-bank-fraud-and-cheating-on-his-taxes 

ATLANTA—The former senior commercial loan officer for FirstCity Bank of Stockbridge, Georgia, which failed and was seized by the FDIC and state banking authorities in March 2009, pleaded guilty today to bank fraud in connection with an $800,000 loan that he tricked FirstCity Bank’s Board of Directors into approving and from which he personally profited. He also pleaded guilty to filing a false federal income tax return with the IRS that omitted nearly a half-million dollars of income from his job at the bank, announced United States Attorney Sally Quillian Yates. Clayton A. Coe, 45, of McDonough, Georgia, was previously indicted by a federal grand jury on March 16, 2011.

“Today’s guilty plea demonstrates that corrupt bank insiders will be held accountable for the damage they cause to their financial institutions and the country’s economy,” said U.S. Attorney Sally Quillian Yates. “This defendant used his position to make a bad bank loan to fund a one-day land flip from which he personally profited. This type of fraud involving inflated real estate prices did tremendous damage to our economy. He will now be punished accordingly.”

“The FDIC Office of Inspector General is pleased to have played a role in the investigation involving FirstCity Bank of Stockbridge,” said FDIC Inspector General Jon T. Rymer. “We are particularly concerned when bank officials in positions of public trust abuse their authority to carry out fraudulent activities that harm their banks and contribute to losses to the Deposit Insurance Fund. We are committed to working with our law enforcement partners in helping to maintain stability and public confidence in our nation’s banks and bringing unscrupulous individuals like Mr. Coe to justice.”

“Mr. Coe not only exploited his position as vice president and senior commercial loan officer for his own personal financial gain, he also utilized the financial system of the nation to conceal income and evade his taxes,” stated Rodney E. Clarke, Special Agent in Charge with IRS Criminal Investigation. “The IRS is committed to addressing financial fraud at every level and is pleased to have been instrumental in this case.”

Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office, stated, “The public expects rogue bank officials to be held accountable for their actions. The defendant in this matter chose to abandon the trust bestowed upon him by FirstCity Bank of Stockbridge, Georgia, an FDIC-insured institution, for reasons of personal greed and is being held accountable for those actions today.”

“Coe’s greed helped drive FirstCity Bank into the ground,” said Special Inspector General Christy Romero of Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). “He defrauded the bank to fund his ultimate payday and placed his interest in ill-gotten personal gain ahead of the interests of the bank, its customers, its investors, and the community the bank served. It’s precisely that sort of behavior that has robbed the public of its confidence in the banking industry and its institutions, and for his fraud, Coe will be banned for life from ever again practicing banking.”

According to United States Attorney Yates, the charges, and other information presented in court: Coe served as a vice president and as senior commercial loan officer at FirstCity Bank between 2003 and its failure in March 2009. In this position, Coe was primarily responsible for recommending to the bank’s loan committee approval of commercial loans to real estate developers.

In January 2005, Coe recommended that the bank’s loan committee approve a loan for $800,000 to a borrower to purchase and develop 16 lots in a DeKalb County subdivision. Coe concealed from the bank’s loan committee that this loan was part of the funding for a one-day land flip involving these and other lots in the subdivision from which he and his wife would make approximately $100,000. When the bank’s loan closed on January 12, 2005, the borrower used the loan proceeds to purchase the 16 lots from a company that Coe and his wife owned and controlled. Coe and his wife used this company to purchase these lots earlier that same day from the true owner for a lower sales price. In addition, although Coe misrepresented to the bank that the borrower would make a down payment; in reality, the borrower received approximately $35,000 back when the one-day land flip closed.

Coe caused FirstCity Bank to sell, or “participate,” this loan to two other Georgia banks without disclosing his personal interest, the one-day flip, or that the borrower had received money back at closing. FirstCity Bank eventually repurchased this loan from the two participating banks. Coe eventually paid off FirstCity Bank’s loan to this borrower by causing the borrower to quitclaim the property to Coe in December 2006 and obtaining additional loans from other Georgia banks to retire the debt owed FirstCity Bank. Coe received approximately $100,000 in additional funds in connection with this round of financing.

With respect to the tax charge, during 2007 Coe received approximately $476,000 in commissions from FirstCity Bank from the loans that he originated as FirstCity Bank’s senior commercial loan officer. Coe did not report these commissions, which were paid outside of the bank’s payroll process, on his 2007 tax return. Coe knew that these commissions were taxable income because he had reported to the IRS commissions that he had received in prior years. In 2010, upon being informed that he was a target of the criminal investigation, Coe amended his tax returns twice—once falsely—in a belated attempt to report this income. Coe would have owed an additional $122,000 in federal taxes in 2007 if he had reported them as he was required on his 2007 federal tax return.




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Friday, June 29, 2012

Dr. Ellen Meredith Stubenhaus Pleads Guilty to Tax Fraud Conspiracy


Source-  http://www.justice.gov/tax/2012/txdv12833.htm 

WASHINGTON – Dr. Ellen Meredith Stubenhaus, previously of Lake Worth, Fla., and later an expatriate living in Costa Rica, was sentenced to 60 months in prison today by U.S. District Judge M. Casey Rodgers in Tallahassee, Fla., the Justice Department and Internal Revenue Service (IRS) announced. Stubenhaus, who was extradited from Costa Rica to the United States in September 2011, had previously pleaded guilty to conspiracy to defraud the United States. In addition to her jail sentence, Stubenhaus was sentenced to three years of supervised release and ordered to pay restitution of $373,549 to the IRS.

According to the plea agreement and court records, Stubenhaus was a salesperson with Pinnacle Quest International (also known as PQI or Quest International). PQI was a multi-level marketing organization that operated a marketplace for a variety of vendors. Trial evidence in related cases showed that over a six year period between 2002 and 2008, PQI had over 11,000 members throughout the United States.

Stubenhaus admitted in court records that several PQI vendors sold bogus theories and strategies for tax evasion. She utilized the services and schemes of these fraudulent vendors to conceal her own income from selling PQI vendor products and PQI memberships. She also admitted to helping the principals of PQI conceal PQI’s income.

As Stubenhaus admitted in the statement of facts, one of the vendors operating under the PQI umbrella was the Southern Oregon Resource Center for Education (SORCE), which assisted its customers in the creation of a series of nominee business entities in the United States and Panama. The CEO of SORCE, Eugene “Gino” Casternovia, is serving a seven year prison sentence after being convicted at trial of conspiracy to defraud the United States and to commit wire fraud and conspiracy to commit money laundering. His case is currently on appeal.

Court documents also showed that another PQI vendor was MYICIS, a computerized “warehouse bank.” MYICIS was a single bank account in which customers secretly pooled their money under the control of a single individual, Wayne Hicks. MYICIS had 3,000 clients and approximately $100 million in deposits over a three-year period. MYICIS was promoted to PQI’s clients as a method to hide their assets from the IRS as a result of the secret, pooled nature of the account. Wayne Hicks is currently serving a five year sentence after pleading guilty to conspiracy to defraud the United States.

According to the plea agreement and statement of facts, Stubenhaus established nominee corporations in Panama using the services of SORCE. She then opened a sub-account within the MYICIS warehouse bank in the name of one of her offshore corporations. Substantial portions of the income Stubenhaus earned from selling PQI memberships and PQI’s various vendor products was routed through the warehouse bank account, thereby concealing it from the depository bank and from the IRS. From there, Stubenhaus wired significant amounts of money offshore. She also used the warehouse bank to transfer significant sums to the principals of PQI, representing the organization’s share of the profits from Stubenhaus’s sales of PQI memberships. Stubenhaus also did not file federal income tax returns nor pay income taxes while she was affiliated with PQI.




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Thursday, June 28, 2012

Immigration Services Provider Kenia Marrero, Allegedly Files Fraudulent Tax Returns for Customers


Source-  http://www.justice.gov/tax/2012/txdv12817.htm 

WASHINGTON РA federal court in Miami has permanently barred Kenia Marrero of Miami, and her company, Kenia Immigration Services, from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Marrero consented without admitting the allegations against her, was signed by Judge Jos̩ E. Martinez of the U.S. District Court for the Southern District of Florida.

The government complaint in the case alleged that Marrero prepared federal income tax returns for customers that fraudulently understated their tax liabilities by using fabricated deductions, business expenses, and first-time-homebuyer credits. The complaint alleged that Marrero offered immigration services, including obtaining work permits and visas, and used that customer base to obtain tax-preparation customers. According to the complaint, the harm to the United States from Marrero’s misconduct could be as much as $1.4 million.




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Wednesday, June 27, 2012

William R. Herder Indicted for Impairing and Impeding the IRS


Source-  http://www.justice.gov/opa/pr/2012/June/12-tax-805.html 

William R. Herder of Bellville, Ohio, was arrested today on federal tax charges, Assistant Attorney General of the Justice Department’s Tax Division Kathryn Keneally, U.S. Attorney for the Northern District of Ohio Stephen M. Dettelbach and Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, Cincinnati Field Office, Darryl K. Williams announced. On June 19, 2012, a federal grand jury sitting in Cleveland returned an indictment against Herder, charging him with corruptly endeavoring to impair and impede the due administration of the Internal Revenue laws, failure to file tax returns, failure to pay taxes, and structuring transactions to evade currency reporting requirements.

According to the indictment, Herder, an insurance salesman, failed to file timely and accurate income tax returns for the years 2000-2009 despite earning substantial insurance commissions and receiving warnings and notices from the IRS. Herder filed returns for the years 2010 and 2011 on which he reported that he owed taxes to the government, but failed to pay the almost $50,000 in taxes that he owed for those years.

The indictment further alleges that, to prevent the IRS from collecting his unpaid taxes, Herder attempted to conceal his assets and income. In 2004, Herder formed two entities in Nevada--one for the purpose of hiding his automobiles and another for the purpose of hiding his insurance business. Herder also began converting his insurance commission checks to cash and paying his expenses in cash to prevent the IRS from collecting his taxes from his bank account.




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Tuesday, June 26, 2012

Jack Ray Carr Pleas Guilty to Four Counts of filing False Income Tax Returns and One Count of Aiding and Assisting in the Preparation of a False Income Tax Return


Source-  http://www.justice.gov/usao/lam/press/press1204.html#f10 

WASHINGTON – Jack Ray Carr, of Baton Rouge, La., was convicted today after a three-day jury trial of one count of corruptly interfering with the due administration of the Internal Revenue laws, four counts of filing false income tax returns and one count of aiding and assisting in the preparation of a false income tax return, the Justice Department, Internal Revenue Service (IRS) and Treasury Inspector General for Tax Administration (TIGTA) announced.

The evidence at trial established that Carr threatened violence against a federal agent, filed false documents and tax returns with the IRS, and attempted to pay his tax debt with fraudulent bonds, fictitious money orders and a fake check. On three successive personal income tax returns, Carr falsely reported that his and his wife’s income was “$0.00,” despite earning hundreds of thousands of dollars in total during the 2001, 2002 and 2003 tax years. In 2009, on two tax returns, Carr falsely reported more than $100,000 of federal income tax withholdings based on fictitious IRS Forms 1099-OID attached to the tax returns that Carr filed in his own name and in the name of his wife. In doing so, Carr claimed more than $150,000 of fraudulent tax refunds from the U.S. government.

Carr faces a potential maximum sentence of 18 years in federal prison and a fine of up to $1.5 million.




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Monday, June 25, 2012

Kelly Doll Pleads Guilty to Filing False Tax Return


Source- http://www.justice.gov/tax/2012/txdv12792.htm

WASHINGTON – Kelly Doll, formerly a VIP host at the Pure Nightclub located within the Caesars Palace Hotel and Casino in Las Vegas, pleaded guilty in federal court Thursday to one count of filing a false federal income tax return for the 2006 tax year, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Court Judge Miranda Du presided over the plea hearing.

According to information disclosed at the plea hearing, during the years 2005, 2006 and 2007, some of Pure’s patrons made cash payments to Pure door personnel and “VIP hosts” to bypass the general admissions line and to obtain more desirable seating. This money was collected, pooled and generally distributed on a weekly basis to the door personnel and VIP hosts, as well as to managers of Pure. Distributions from this “tip pool” comprised the bulk of Doll’s compensation during the time he worked at the nightclub. Doll concealed large amounts of this income from the IRS.

Pure’s former managing owner, Steve Davidovici, has also pleaded guilty to tax fraud for failing to report income earned at Pure, as have Doll’s former co-workers, Mikel Hasen, Ali (Sean) Olyaie and Richard Chu. Each of these individuals likewise admitted filing false federal income tax returns for 2006. Doll’s sentencing is set for Nov. 24, 2012.




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Saturday, June 23, 2012

Raghuveer Nayak, Owner of Area Surgery Centers, Charged with Fraud and Tax Offenses for Allegedly Paying Physicians Hundreds of Thousands of Dollars in Bribes for Patient Referrals


Source- http://www.fbi.gov/chicago/press-releases/2012/raghuveer-nayak-owner-of-area-surgery-centers-charged-with-fraud-and-tax-offenses-for-allegedly-paying-physicians-hundreds-of-thousands-of-dollars-in-bribes-for-patient-referrals

CHICAGO—The owner of multiple area outpatient surgery centers was arrested today on federal fraud and tax charges alleging that he paid bribes and kickbacks to physicians for patient referrals and filed false federal income tax returns that understated his income. The defendant, Raghuveer Nayak, was charged in a 19-count indictment that was returned by a federal grand jury last week and unsealed today following his arrest, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Robert D. Grant, Special Agent in Charge of the Chicago Office of Federal Bureau of Investigation; and Thomas Jankowski, Acting Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division.

Nayak, 57, of Oak Brook, is scheduled to appear at 11:00 a.m. today before Magistrate Judge Maria Valdez in U.S. District Court.

He was charged with 10 counts of mail fraud, five counts of interstate travel in aid of racketeering, and four counts of filing false income tax returns for the years 2005-2008. The indictment seeks forfeiture of at least $1.8 million in alleged fraud proceeds, or substitute assets, including Nayak’s Oak Brook residence, the Rogers Park One Day Surgery Center Inc., located at 7616 North Paulina St., and the Lakeshore Surgery Center LLC, located at 7200 North Western Ave.

In addition to those two facilities, Nayak owned and/or controlled the following health care-related businesses in Illinois and Indiana: Lakeside Surgery Center LLC, Merillville Plaza Surgery Center LLC, Lincoln Park Open MRI, Delaware Place MRI LLC, Paulina Anesthesia Inc., Illiana Anesthesia, Western Touhy Anesthesia Inc., and Division Medical Diagnostics Inc., according to the indictment.

Nayak’s facilities did not accept patients covered public health insurance programs, such as Medicare and Medicaid, and instead accepted patients insured by private health insurers, such as BlueCross BlueShield, or patients who agreed to pay the entire fees themselves. Private insurers treated Nayak’s facilities as “out-of-network” when paying bills submitted for patient services.

Between 2000 and December 2010, Nayak allegedly defrauded patients by paying and arranging to pay bribes and kickbacks in the form of cash and other hidden payments to physicians who would refer their patients to Nayak’s facilities for medical treatment. Nayak paid hundreds of thousands of dollars to different physicians in exchange for patient referrals, the charges allege, adding that the physicians deceived their patients by not disclosing that they were being paid for making referrals to Nayak’s facilities.

At times, the indictment alleges that Nayak paid bribes and kickbacks to physicians to begin referring patients, while at other times he did so to ensure that they continued to refer patients to his facilities. He allegedly offered to pay physicians a set amount of money for each patient referral. Nayak allegedly concealed and attempted to conceal the scheme by making payments in cash, disguising the payments as advertising, or by disguising the true purpose of the payments through fraudulent agreements and contracts, including contracts purporting to pay physicians for performing services that Nayak knew they had not provided.

Between 2002 and December 2008, Nayak allegedly obtained cash to pay bribes and kickbacks by giving Individual A more than $2 million in checks drawn on his facilities’ accounts and, in exchange, at Nayak’s direction, Individual A gave Nayak cash equaling approximately 70 percent of the value of the checks. Nayak allegedly indicated to his tax preparer that the checks to Individual A were for advertising and should be treated as a business expense on tax returns for Nayak and his facilities. After he was interviewed by law enforcement agents in December 2008, Nayak allegedly took additional steps to hide the scheme by executing fraudulent contracts and by warning physicians not to speak with agents about the payments.

The tax counts allege that Nayak caused the preparation of false individual federal income tax returns that understated his true income because he claimed that the checks to Individual A should be treated as advertising expenses when he knew they were not. As a result, Nayak allegedly understated his gross income when he reported the following amounts: $4,643,916 for 2005; $6,471,865 for 2006; $5,791,109 for 2007; and $9,362,647 for 2008.




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Friday, June 22, 2012

Former New York State Senator Nicholas A. Spano Sentenced in White Plains Federal Court for Filing Fraudulent Tax Returns


Source- http://www.fbi.gov/newyork/press-releases/2012/former-new-york-state-senator-nicholas-a.-spano-sentenced-in-white-plains-federal-court-for-filing-fraudulent-tax-returns


Preet Bharara, the United States Attorney for the Southern District of New York, announced that former New York State Senator NICHOLAS A. SPANO was sentenced today in White Plains federal court to a year and a day in prison for obstructing the ability of the Internal Revenue Service to assess and collect U.S. income taxes by concealing illegal income and filing fraudulent tax returns. SPANO pled guilty on February 10, 2012 to one count of obstructing and impeding the due administration of the Internal Revenue Laws before United States District Judge Cathy Seibel, who also imposed today’s sentence.


Manhattan U.S. Attorney Preet Bharara stated: “When Nicholas Spano took the oath of office, he swore to uphold the law, and yet he did exactly the opposite. There is absolutely no place in government for lawbreakers, and we will continue to do everything within our power to prosecute and punish them.”


According to the information and statements made during court proceedings:


Background


From 1987 until 2006, SPANO served as a New York state senator for the 35th district, which encompassed most of Westchester County. In that capacity, SPANO was responsible for voting on and approving the operating budget for New York state. A portion of the budget included funding for the Office of General Services (“OGS”).


In 1993, a White Plains-based insurance company began paying SPANO a $1,500 monthly fee to act as an outside consultant. In 1996, after the insurance company was awarded a lucrative contract by OGS to become the broker of record for New York state, the payments increased to $5,000 per month. The payments subsequently increased to $6,000 per month in 1999 and $8,333.33 per month, or $100,000 per year, in 2002. The payments terminated in 2008 when the insurance company ceased to be OGS’s broker of record.


The payments from the insurance company were made through various corporate entities controlled by SPANO, including “ONAPS, Inc.” (“ONAPS”), which later changed its name to HVM Corp (“HVM”). ONAPS had no employees or offices and was used almost exclusively to receive money paid to SPANO by the insurance company.


Spano’s Concealment of Illegal Income


From 2000 through 2008, SPANO engaged in a scheme to impede and impair the due administration of the Internal Revenue Laws by filing false federal income tax returns that mischaracterized income he received from the insurance company and other sources to unlawfully reduce his tax burden. SPANO wrote checks that totaled more than $180,000 from HVM to a real estate holding company he owned, 221 Ridge Ave. Corp. These checks were for non-existent rental expenses at a rental property owned by the holding company that was located at the 221 Ridge Avenue address. SPANO falsely advised his tax return preparer that HVM conducted business at 221 Ridge Avenue, had an office at that location, and paid rent to the holding company. As a result, HVM deducted more than $180,000 in false and fraudulent rental expenses on its tax returns.


In 2004, SPANO also failed to report to the IRS a $45,000 commission he received from the sale of a building to a White Plains real estate developer. Between 2005 and 2006, he also failed to report cash rental payments he received from residential real estate tenants.



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Thursday, June 21, 2012

Cory Atkinson and his brother, Darain Atkinson Plead Guilty to Conspiracy and Tax Fraud Charges


Source- http://www.fbi.gov/stlouis/press-releases/2012/u.s.-fidelis-co-owner-pleads-guilty-to-conspiracy-and-tax-fraud-charges

ST. LOUIS, MO—Cory Atkinson pled guilty to conspiracy to commit mail and wire fraud and filing false tax returns.

According to court documents, Cory Atkinson and his brother, Darain Atkinson, owned and operated National Auto Warranty Services Inc., which was structured as a privately held company with each brother owning 50 percent of the business. In January 2009, National Auto Warranty changed its name to U.S. Fidelis Inc. National Auto Warranty/US Fidelis (NAWS) routinely conducted business using the fictitious name of Dealer Services. The brothers also operated related businesses using some form of the name U.S. Fidelis and owned a direct mail business, which was known as DS Direct.

The primary business of NAWS was marketing and selling vehicle service contracts (VSCs) throughout the United States. Typically, NAWS acted as a broker/seller of VSCs on behalf of other VSC administrators. NAWS made a profit and attempted to make a profit by marking up the price of the VSC, which was often more than $1,000. The total purchaser cost for a VSC was often greater than $2,000. NAWS used a variety of techniques to market and sell VSCs, including direct mail to consumers, media advertisements, and unsolicited telephone calls. A VSC was not a warranty or an extended warranty, and NAWS had no affiliation with an automobile manufacturer, no authority to provide an automobile manufacturer’s factory warranty, and no authority or ability to alter or extend a factory warranty, according to the indictment.

According to the plea agreement, as part of the conspiracy, in 2008 Darain and Cory Atkinson made fraudulent payments on behalf of VSC purchasers who were in default or likely to be in default so that NAWS would receive its dealer profit when it was not entitled to receive such profit.

In addition to the conspiracy charge, with his plea, Cory Atkinson also admitted that he filed a false tax return for the tax year 2006 that failed to include millions of dollars in distributions that he received from NAWS. According to the plea agreement, between 2006 and 2008, Darain and Cory Atkinson received millions in distributions from NAWS, a substantial percentage of which funds were used to pay for their personal expenses. For example, records from NAWS indicate that in 2006, Cory Atkinson received distributions in excess of $14 million. In 2007, Cory Atkinson filed a joint federal income tax return that omitted more than $1 million in taxable distributions from NAWS.

“IRS-Criminal Investigation is committed to investigating individuals who use their corporations as personal piggy banks,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation.

Cory Atkinson of Chesterfield, Missouri, pled guilty this morning to one felony count of conspiracy to commit mail and wire fraud and one felony count of filing false tax returns before United States District Judge Catherine D. Perry. Sentencing has been set for September 18, 2012.

Darain Atkinson of St. Louis, Missouri, pled guilty April 9 to one felony count of conspiracy to commit mail and wire fraud and one felony count of filing false tax returns and is scheduled for sentencing July 12, 2012.

Conspiracy count carries a possible penalty of five years in prison and/or fines up to $250,000, and the tax count carries a possible penalty of three years in prison and/or fines up to $250,000. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.




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Wednesday, June 20, 2012

Victor E. Cilli Sentenced to Three Years in Prison for Two Fraud Schemes and Tax Evasion


Source- http://www.fbi.gov/newark/press-releases/2012/commodity-pool-operator-sentenced-to-three-years-in-prison-for-two-fraud-schemes-and-tax-evasion

TRENTON—A commodity pool operator and day trader based in Hackensack, New Jersey, was sentenced today to 36 months in prison for directing two schemes to defraud individual investors and a financial institution of approximately $2 million and to evading more than $150,000 in tax payments, U.S. Attorney Paul J. Fishman announced.

Victor E. Cilli, 46, previously pleaded guilty before U.S. District Judge Garrett E. Brown to an information charging him with one count of securities fraud, one count of conspiracy to commit bank fraud, and one count of tax evasion. U.S. District Judge Anne E. Thompson imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court:

Beginning in August 2006, Cilli was the sole owner and president of Progressive Investment Funds LLC (PIF), a commodity pool operator (CPO) engaged in an investment trust that solicited funds for the purpose of trading commodity futures. PIF was registered with the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) and was the CPO of Progressive Managed Futures Fund LP (PMFF), a commodity pool operated for the purpose of trading commodity futures. Cilli had sole trading authority over PMFF, which remained open until approximately February 2009.

Beginning as early as January 2007 and through September 2007, Cilli engaged in a Ponzi scheme to defraud at least four commodity pool participants of approximately $506,000. Although Cilli returned some funds to the investors, the payments were not from actual trading profits but from funds of existing pool participants. Cilli made false and misleading statements to the pool participants claiming he had made money for them when, in fact, most of his trading resulted in losses. Of the $506,000 invested, Cilli traded approximately $263,000, losing approximately $200,168. Cilli never disclosed to the pool participants that he had traded less than half of their money or that most of his trading had resulted in significant losses.

Cilli also misappropriated thousands of dollars in pool funds for personal expenses—including hair salon visits, skin care treatments, payments on his Harley Davidson motorcycle, and other personal entertainment, meals, and travel expenses.

In an unrelated scheme, from 2002 through September 2006, Cilli and 16 others conspired to defraud KeyBank, a financial institution based in Cleveland, Ohio, of more than $1.5 million in student loans by falsely representing to KeyBank that they would use the funds to attend Tab Express International Inc. (“Tab”), a pilot and flight crew training school in DeLand, Florida, and use the proceeds of student loans for educational expenses at Tab.

Based upon prior agreements between Cilli and his co-conspirators, they never intended to enroll at Tab nor repay principal or interest on the student loans to KeyBank. After KeyBank disbursed the loan proceeds to the school, approximately $600,000 of the loan proceeds were deposited into bank accounts solely owned and operated by Cilli. Cilli then made kickback payments totaling approximately $130,000 to his co-conspirators for signing up for the loans. Tab retained approximately $900,000 of the total loan proceeds. KeyBank was never repaid any of the principal or accrued interest on the loans.

To conceal his fraudulent conduct, Cilli maintained bank accounts in the names of Northeast Flight Training Inc., which was not a flight training school, and United Charities of America Inc., which was not a charitable organization. Both accounts were maintained by Cilli solely to perpetuate his frauds and fund his personal expenditures.

For calendar years 2003 and 2004, Cilli also intentionally failed to provide the IRS with any information regarding the proceeds that he received in connection with his conspiracy to commit bank fraud, totaling $547,705, resulting in a tax loss to the United States of approximately $158,674.

In addition to the prison term, Judge Thompson sentenced Cilli to five years’ supervised release, ordered to pay $710,000 in restitution, and ordered to comply with the IRS in filing amended tax returns and pay more than $410,000 in taxes, penalties, and interest.




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Tuesday, June 19, 2012

Dallen D. Harris Indicted for Evading Taxes by Underreporting $2 Million in Income


Source- http://www.fbi.gov/kansascity/press-releases/2012/wichita-man-indicted-for-evading-taxes-by-underreporting-2-million-in-income

WICHITA—A Wichita man has been indicted on charges of evading more than $800,000 in federal income taxes by failing to report more than $2 million of his income from 2007 to 2010, U.S. Attorney Barry Grissom said today.

Dallen D. Harris, 38, Wichita, Kansas, is charged with four counts of tax evasion. The indictment alleges the following:


In tax year 2007, he underreported his taxable income by $270,772, for which an additional $101,978 was owed.


In tax year 2008, he underreported his taxable income $809,949, for which an additional $295,098 was owed.


In tax year 2009, he underreported his taxable income by $350,204, for which an additional $117,486 was owed.


In tax year 2010, he underreported his taxable income by $881,815, for which an additional $312,654 was owed.

If convicted, he faces a maximum penalty of five years in federal prison and a fine up to $100,000 on each count. The Internal Revenue Service investigated. Assistant U.S. Attorney Alan Metzger is prosecuting.




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Monday, June 18, 2012

Annunziata Germana, Also Known as Annunziata Acquarlo Pleads Guilty to Federal Tax Charges


Source-  http://www.blogger.com/post-create.g?blogID=969208024914575125 

David B. Fein, United States Attorney for the District of Connecticut, announced that ANNUNZIATA GERMANA, also known as Annunziata Acquarlo, 31, of Guilford, pleaded guilty today before United States District Judge Janet Bond Arterton in New Haven to two counts of willfully failing to file a tax return.

According to court documents and statements made in court, GERMANA worked at Shoreline Finance and Marketing Corporation, which was a mortgage brokerage company owned and operated by Domenic Acquarulo, Jr. In 2007 and 2008, GERMANA used corporate credit cards and corporate checks to pay for many of her personal expenses, including rent for her apartment, car lease payments, jewelry, and clothing. She then classified these payments and purchases as business expenses in the bookkeeping records of the business.

GERMANA knew that payment of her personal expenses with Shoreline Finance funds was income to her. By virtue of this and other income she received in 2007 and 2008, GERMANA was required to file U.S. Individual Income Tax Returns, but failed to do so. In 2007 and 2008, GERMANA received approximately $30,835 and $34,382 in gross income, respectively.

Judge Arterton has scheduled sentencing for August 31, 2012, at which time GERMANA faces a maximum term of imprisonment of two years and a fine of up to $200,000. GERMANA also owes back taxes and interest in the total amount of $13,397.70.

On March 13, 2012, Domenic Acquarulo, Jr. pleaded guilty to one count of operating an illegal gambling business, one count of filing a false tax return, and one count of willfully failing to timely file a tax return. He awaits sentencing.




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Sunday, June 17, 2012

Michael Todd Crosswhite Pleads Guilty to Wire Fraud, Money Laundering


Source- http://www.fbi.gov/richmond/press-releases/2012/forest-man-pleads-guilty-to-wire-fraud-money-laundering

LYNCHBURG, VA—A former financial advisor from Forest, Virginia pleaded this morning in the United States District Court for the Western District of Virginia in Lynchburg to charges of wire fraud and money laundering.

Michael Todd Crosswhite, 42, waived his right to be indicted and pleaded guilty this morning to a two-count information charging him with one count of wire fraud and one count of money laundering. The defendant also agreed to pay restitution to his victims in the amount of $943,684.

“Mr. Crosswhite stole over $1,000,000 from customers who trusted him with their money,” United States Attorney Timothy J. Heaphy said today. “His long-running Ponzi scheme defrauded his clients of hard-earned and long-saved investment funds, which they had entrusted to him for protection and growth. This United States Attorney’s Office will vigorously pursue those who defraud individuals in any manner.”

This morning in District Court, Crosswhite admitted that while serving in his role as a financial advisor he defrauded several victims of approximately $1,000,000 by liquidating their investment accounts without their knowledge. The liquidated assets were then transferred, again without the consent or knowledge of the victims, to accounts established by the defendant. Those funds were then lost in risky investments, used by Crosswhite and/or kited between accounts of various victims.

At sentencing, Crosswhite faces a maximum possible penalty of up to 20 years in prison and/or a fine of up to $250,000 on the wire fraud charge and a maximum possible penalty of up to 10 years in prison and/or a fine of up to $250,000 on the money laundering charge.




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Saturday, June 16, 2012

Hamlet Sardariani Pleads Guilty in $5.4 Million Loan Fraud Case and Tax Evasion


Source-  http://www.fbi.gov/losangeles/press-releases/2012/sylmar-man-pleads-guilty-in-5.4-million-loan-fraud-case 

RIVERSIDE, CA—A Sylmar man has pleaded guilty to federal conspiracy and tax evasion charges, admitting that he plotted with others to fraudulently obtain four loans for more than $5 million by pledging houses that they did not own as collateral, falsely claiming that the houses had enough equity to secure the loans, forging documents, and falsifying notary stamps.

Hamlet Sardariani, 42, pleaded guilty yesterday afternoon in United States District Court. Hamlet Sardariani was scheduled to go on trial next week before United States District Judge Virginia A. Phillips.

Three other members of the conspiracy have previously pleaded guilty. Hamlet Sardariani’s brother—Henrik Sardariani, 44, of Glendale—pleaded guilty in January and is scheduled to be sentenced by Judge Phillips on August 6 (see: http://www.justice.gov/usao/cac/Pressroom/2012/004.html). Wanda Tenney, 66, of South Los Angeles, who was an escrow officer, pleaded guilty on December 5, 2011 and is scheduled to be sentenced on October 15. The fourth co-conspirator, Christopher J. Woods, 53, of Beverly Hills, pleaded guilty on November 8, 2011 and is scheduled to be sentenced on July 16.

According to a plea agreement filed in his case, Hamlet Sardariani admitted that he either knew or reasonably should have known of the numerous false statements and falsified documents used to obtain the four loans involved in this case. For instance, to obtain one of the loans, Henrik Sardariani fraudulently claimed to own a Burbank property and created false records to maintain that pretense. In fact, the Burbank house was not owned by Henrik Sardariani, and, although it had previously been owned by Hamlet Sardariani, he had lost the property through foreclosure months before Henrik Sardariani pledged it to the victim lender. Hamlet Sardariani later promised the same property to one of Henrik Sardariani’s creditors, and, a day later, to another victim lender in this case. The Sardariani brothers pledged other properties in Sherman Oaks and Glendale that they did not own and which did not have the equity Henrik Sardariani claimed they had to obtain the other loans.

Hamlet Sardariani also admitted that many of the fraudulent documents used to influence the lenders to lend money contained forged and fraudulent signatures and stamps of notaries public. Furthermore, Hamlet Sardariani distributed many of the loan proceeds to himself, his family members and friends, and Henrik Sardariani’s creditors. Nearly $2 million from the fraud was wired by co-conspirators to Hong Kong to be used to bet on horse races.




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Thursday, June 14, 2012

Silford Warren was Sentenced to 24 Months in Prison for Failure to Pay Over Employment Taxes


Source-  http://www.justice.gov/tax/2012/txdv12745.htm 

WASHINGTON – Silford Warren, a resident of Queens, N.Y., was sentenced today to 24 months in prison for failure to pay over employment taxes in connection with his ownership of Silford Warren, CPA PC., the Justice Department and Internal Revenue Service (IRS) announced today. Judge William F. Kuntz II of the U.S. District Court for the Eastern District of New York also ordered Warren to pay $184,263 in restitution to the IRS.

Warren, a Certified Public Accountant, pleaded guilty on Dec. 9, 2011 to a one-count information charging him with willful failure to pay over employment taxes on behalf of his accounting business. According to the criminal information and court filings, from 2006 through 2008, Warren under-reported his employees’ salaries on tax filings with the IRS. The restitution amount ordered by the court included the employment taxes that he failed to pay over from his employees and his obligation, as an employer, to pay over a matching portion of those employment taxes, as well as the tax loss resulting from his filing false corporate income tax returns for 2005 through 2008.




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Wednesday, June 13, 2012

Jason W. Leas Pleads Guilty to Federal Excise Tax Crimes and Tax Fraud


Source-  http://www.justice.gov/tax/2012/txdv12740.htm 

WASHINGTON – Jason W. Leas, a resident of Crookston, Minn., and co-founder of Best Used Trucks of Minnesota Inc., pleaded guilty today to one count of failing to pay federal excise taxes, one count of failing to file a federal excise tax return and one count of filing a false individual federal income tax return for tax year 2007, the Justice Department and Internal Revenue Service (IRS) announced. Leas was charged by information filed on May 29, 2012. He entered his plea of guilty before U.S. District Court Senior Judge Richard H. Kyle in Duluth, Minn.

As alleged in the plea agreement, from 2004 through 2007, Best Used Trucks, which is located in Crookston, was a farm truck dealership that bought and sold used trucks, new trailers, new grain boxes and other heavy farm equipment, primarily to farmers throughout the Red River Valley of Minnesota and North Dakota. Beginning in 2004 and continuing through 2007, Leas and Best Used Trucks purchased and imported new end dump trailers, grain boxes, and gravel boxes from a Canadian manufacturer, which subjected the company to federal excise taxes upon selling them afterward. Leas admitted that he knew of his responsibility for paying the 12 percent federal excise tax on the sale of these trailers and related equipment, and his responsibility to file federal excise tax returns. Leas pleaded guilty to failing to file an IRS Form 720, Quarterly Federal Excise Tax Return for the third quarter of 2005, and failing to pay federal excise taxes of $9,636 for the first quarter of 2006. Leas admitted that he failed to pay over at least $80,088 in total federal excise taxes for ten quarters from 2004 through 2006.

Leas also pleaded guilty to willfully filing a false individual federal income tax return for the tax year 2007, which failed to report at least $120,151 in additional income with an additional tax due and owing of at least $36,872. The plea agreement alleged that from 2004 to 2007 Leas controlled two checking accounts in the name of Best Used Trucks of Minnesota. Leas used one of these accounts to both divert corporate receipts from Best Used Trucks, and to buy and sell equipment that was not part of Best Used Trucks’s ordinary business sales. Leas failed to report this income on his personal tax returns for four years, resulting in a total tax loss of at least $73,361.




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Tuesday, June 12, 2012

David Newmark Sentenced to 54 Months in Prison for Wire Fraud and Tax Evasion


Source-  http://www.fbi.gov/newark/press-releases/2012/former-cfo-of-new-jersey-investment-management-company-sentenced-to-54-months-in-prison-for-wire-fraud-and-tax-evasion 

NEWARK—The former chief financial officer of Columbus Hill Capital Management LP, an investment management firm based in Short Hills, New Jersey, was sentenced today to 54 months in prison for embezzling more than $10.4 million from his employer, U.S. Attorney Paul J. Fishman announced.

David Newmark, 39, of Towaco, New Jersey, previously pleaded guilty before U.S. District Judge William H. Walls to an information charging him with one count of wire fraud and one count of tax evasion. Judge Walls imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court:

Between February 2008 and March 2011, Newmark embezzled from his former employer by requesting checks and wire transfers from custodians of the investment management company accounts and diverting the funds to bank accounts he controlled. Newmark deposited the checks and wires—including a single wire transfer of more than $2.4 million in April 2010—into a bank account he set up with a name similar to that of his employer. The majority of the $10.4 million that Newmark embezzled came from the management company rather than investor funds.

For the 2008 tax year, Newmark did not disclose to the IRS more than $2.8 million he received in connection with the fraudulent scheme. That failure resulted in a tax loss to the United States of $1,012,441.

In addition to the prison term, Judge Walls sentenced Newmark to three years of supervised release and ordered him to pay $10,442,379.90 in restitution. On May 18, 2012, Judge Walls entered a preliminary order of forfeiture and to date, the United States has recovered more than $1.6 million.




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Monday, June 11, 2012

Ocala Police Officer Dana Brown Sentenced for Participating in Tax Fraud


Source-  http://www.fbi.gov/tampa/press-releases/2012/former-ocala-police-officer-sentenced-for-participating-in-tax-fraud 

TAMPA, FL—U.S. District Judge Mary S. Scriven sentenced former Ocala Police Officer Dana Brown (37, Ocala) to six years and five months in federal prison for conspiracy to make false claims, aggravated identity theft, and exceeding authorized access to a protected computer with intent to defraud. The court also ordered Brown to pay restitution in the amount of $874,319.35 to the Internal Revenue Service.

Brown pled guilty on December 20, 2011.

According to court documents, in 2010 and 2011, Brown was employed as a patrol officer for the Ocala Police Department. As part of his employment as a law enforcement officer, Brown had access to the Florida Highway Safety and Motor Vehicles Driver and Vehicle Information Database (“DAVID”). DAVID allows law enforcement officers to retrieve driver and vehicle information for official law enforcement purposes.

During the same time period, Brown was acquainted with Riad Sulaiman, owner of Empire Street Wear, a clothing store located in Tampa. Brown was aware that Sulaiman was in possession of fraudulently obtained U.S. Treasury tax refund checks in the names of various individuals. In order to negotiate the U.S. Treasury checks, check cashing businesses and banks typically require personal identification. For that reason, Sulaiman elicited the help of Brown, as Brown had access to personal identifying information by way of his access to DAVID. Brown knowingly and willingly entered into an agreement with Sulaiman and supplied personal identifying information of Florida driver’s license holders for the purpose of negotiating the fraudulently obtained U.S. Treasury checks. Per the agreement, Brown was to be paid five percent of the face value of each U.S. Treasury check.




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