Steven R. Hinz Pleads Guilty in Ohio Federal Court to Tax and Mortgage Fraud Conspiracies

Source- http://www.justice.gov/opa/pr/2012/October/12-tax-1237.html

Steven R. Hinz pleaded guilty today to tax fraud and mortgage fraud charges in Cleveland federal court, the Justice Department and Internal Revenue Service (IRS) announced. Hinz’s guilty pleas followed recent guilty pleas of three other defendants – Heather L. English, Patricia A. Polk and William E. Phillips III – who were charged in indictment in December 2011 on a tax conspiracy and various false return charges. The case is assigned to U.S. District Judge Patricia A. Gaughan, who scheduled the sentencing for January 2013.

Hinz pleaded guilty to one count of conspiracy to defraud the United States, one count of making a false 2008 income tax return, fifteen counts of aiding and assisting the preparation of false income tax returns and one count of conspiracy to commit bank fraud involving a mortgage fraud scheme. On Oct. 11, 2012, co-defendant Polk also pleaded guilty to the tax fraud conspiracy and the bank fraud conspiracy. On Oct. 4, 2012, co-defendant English pleaded guilty to tax fraud conspiracy and one count of aiding and assisting the preparation and presentation of Hinz’s false 2008 tax return. Also on Oct. 4, 2012, co-defendant Phillips pleaded guilty to the tax fraud conspiracy. Hinz was arrested in Miami in January 2012 and Polk was arrested in Sarasota, Fla., in February 2012. Phillips was arrested in Los Angeles in June 2012, after being deported from the Philippines upon request of the U.S. government. Hinz and Polk were also charged with the bank fraud conspiracy in supplemental information that was filed with the district court yesterday.

According to the indictment and documents submitted to the court, Hinz promoted a scheme to defraud the United States by filing false federal income tax returns claiming large tax refunds using the so-called Original Issue Discount (OID) process. The OID process involved the preparation of fictitious IRS Forms 1099-OID, falsely reporting that financial institutions, creditors and other entities had withheld large amounts of federal income tax on behalf of the defendants and other taxpayers, with respect to fictitious income. Hinz and English recruited potential clients by promoting the OID scheme to investors and employees of Hinz’s real estate business in Youngstown, Ohio. English prepared or directed the preparation of the 1099-OID forms and prepared and electronically filed the tax returns. Based on these fictitious withholdings, at least 17 false income tax returns for the year 2008 were filed with the IRS, claiming false refunds totaling over $3 million dollars. Under the scheme, taxpayers recruited by Hinz were to pay 20 percent of their refunds to Hinz and English, split equally between the two.

According to the supplemental information and other documents filed with the court, from approximately December 2006 through May 2009, Hinz conducted his real estate business in part through a scheme to defraud two federally-insured banks, Wells Fargo Bank and Huntington National Bank, which provided mortgage loans to the investors. The scheme was carried out through the filing of false mechanic’s liens for work not actually done and the providing of undisclosed down payment assistance to the investors. The scheme was designed to induce the banks to make mortgage loans based on false representations concerning the true price and value of the properties, the sources of down payments, and the disposition of loan proceeds. According to court documents, Polk began conspiring with Hinz to conduct the scheme beginning approximately April 2008.

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Billy Joe Hunt and Gaines R. Newell Jr. were Sentenced for Kickback Conspiracy and Tax Crimes Related to Iraq Reconstruction Efforts

Source- http://www.justice.gov/opa/pr/2012/October/12-crm-1220.html

WASHINGTON – Two former employees of The Parsons Company, an international engineering and construction firm, were sentenced in federal court in the Northern District of Alabama for their participation in a kickback conspiracy in Iraq and related tax crimes, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Northern District of Alabama Joyce White Vance.

Billy Joe Hunt, 57, was sentenced today by U.S. District Judge Abdul Kallon in federal court in Huntsville, Ala., to 15 months in prison, three years of supervised release, $66,212 in restitution to the Internal Revenue Service (IRS) and forfeiture of $236,472. Gaines R. Newell Jr., 53, was sentenced yesterday by U.S. District Judge Virginia Hopkins in federal court in Birmingham, Ala., to 27 months in prison, three years of supervised release, $1,102,115 in restitution ($861,027 to the U.S. Army Corps of Engineers and $241,088 to the IRS) and forfeiture of $861,027.

On May 8, 2012, Hunt pleaded guilty to one count of conspiracy to commit mail and wire fraud and pay kickbacks, and one count of subscribing a false tax return. On April 10, 2012, Newell pleaded guilty to one count of conspiracy to commit mail and wire fraud and to pay kickbacks, and one count of subscribing a false tax return.

According to court documents, Newell and Hunt were employed by Parsons in Iraq as program manager and deputy program manager, respectively, under a contract that Parsons held to support the Coalition Munitions Clearance Program operated by the U.S. Army Corps of Engineers in Huntsville. The Coalition Munitions Program sought to preclude insurgents and other unfriendly groups from getting munitions that had been stockpiled, abandoned or seized, and using them against Coalition forces or the Iraqi public. In their plea proceedings, Newell and Hunt admitted taking over $1 million in kickbacks from subcontractors from 2005 to 2007, in return for arranging to award contracts on the munitions clearance program to subcontractors. Newell and Hunt also admitted filing false federal income tax returns by not disclosing kickback income.

On May 21, 2012, Hunt and Newell’s co-conspirator Ahmed Sarchil Kazzaz, 45, pleaded guilty for his role in the scheme. Kazzaz and his business, Leadstay Company, were indicted in the Northern District of Alabama in September 2011 for paying over $947,000 in kickbacks to Newell and Hunt. According to the plea agreement, between March 2006 and June 2007, Kazzaz agreed to pay kickbacks to Newell and Hunt totaling 13 percent of the amounts paid by Parsons, and thus obtained over $23 million in subcontracts providing materials and equipment to Parsons. After Kazzaz’s arrest in Los Angeles on Dec. 2, 2011, this case was transferred to the Central District of California, where Kazzaz pleaded guilty. His sentencing is set for Oct. 29, 2012 before U.S. District Judge R. Gary Klausner in the Central District of California.

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Brendan McGrath aka Benny McGrath was Sentenced To Prison For Filing False Tax Return

Source- http://www.justice.gov/usao/can/news/2012/2012_10_05_mcgrath.sentenced.press.html

SAN FRANCISCO - Brendan McGrath aka Benny McGrath, of San Francisco, was sentenced yesterday to four months in prison and a $10,000 fine, United States Attorney Melinda Haag announced.

McGrath pleaded guilty on June 4, 2012, to filing a false federal income tax return for the 2006 tax year. According to the plea agreement, McGrath admitted to owning and operating a business, McGrath Construction, Benny McGrath Construction, and Kelly Construction, located in San Francisco, during 2006 and 2007, through which he provided general contracting services throughout the San Francisco Bay area.

Under the plea agreement, McGrath admitted he received $272,900 in gross receipts from his construction business during 2006, that he did not provide his income tax return preparer with accurate and complete information to prepare his 2006 tax return and that he knew his tax return was false when he signed and filed it with the Internal Revenue Service because it did not report his construction business or the gross receipts he derived from that business.

McGrath, 32, of San Francisco, was indicted by a federal Grand Jury on March 17, 2011. McGrath was charged with two counts of failure to file federal income tax returns for the 2004 and 2005 tax years in violation of 26 U.S.C. §7203 and two counts of filing a false federal income tax return for 2006 and 2007 in violation of 26 U.S.C. §7206(1).

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Barbara Perry was Indicted In Tax Refund Scheme, Identity Theft and Bank Fraud

Source- http://www.justice.gov/usao/cae/news/docs/2012/10-2012/10-04-12Perry.html

SACRAMENTO, Calif. — A federal grand jury returned a 30-count indictment today charging Barbara Perry, 45, of Vallejo, with false claims on tax returns, identity theft, and bank fraud, United States Attorney Benjamin B. Wagner announced.

According to the indictment, Perry submitted tax returns in the names of 18 individuals in order to collect tax refunds. She also used closed bank accounts to fraudulently obtain money from a bank.

This case is the product of an investigation by the Internal Revenue Service-Criminal Investigation and the United States Secret Service. Assistant United States Attorney Michael D. Anderson is prosecuting the case.

Perry faces a maximum statutory penalty for false claims of five years in prison and a $250,000 fine. The maximum penalty for identity theft is 15 years in prison and a $250,000 fine, and the maximum penalty for bank fraud is 30 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.

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Taneshia Stephenson Pleads Guilty To Filing Tax Returns Using Stolen Identities

Source- http://www.justice.gov/usao/can/news/2012/2012_10_05_stephenson.guiltyplea.press.html

SAN FRANCISCO, Calif. – Taneshia Stephenson pleaded guilty yesterday to conspiracy to file false claims United States Attorney Melinda Haag and Internal Revenue Service Criminal Investigation (IRS-CI) Special Agent in Charge Marcus Williams announced.

According to her plea agreement, beginning in July 2008, Stephenson helped other individuals obtain fraudulent tax refunds from the Internal Revenue Service based on false tax returns that were filed using stolen identities. Each of the tax returns that she assisted in filing were transmitted electronically, claimed no dependents, and listed Social Security payments as the only source of income. The false tax returns asked for a refund of all of the tax reported as withheld. As part of the scheme, the individuals Stephenson conspired with asked the IRS to directly deposit the fraudulent refund into a bank account that she could access. In 2008, Stephenson allowed her bank account to be used by co-conspirators for that purpose.

On February 28, 2012, Stephenson, 24, of Pittsburg, Calif., was charged with conspiracy to file false claims and three counts of filing a false claim. She pleaded guilty to conspiracy to file a false claim. Sentencing is scheduled for December 12, 2012.

The maximum statutory penalty for conspiracy to file false claims in violation of Title 18, U.S.C. § 286, is 10 years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

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Hausmann-Alain Banet was Charged For Fraud And Money Laundering

Source- http://www.justice.gov/usao/can/news/2012/2012_10_03_banet.charged.press.html

SAN FRANCISCO - A federal grand jury in San Francisco indicted Hausmann-Alain Banet (a/k/a Anzoumana Ousmann Gbane, a/k/a Gbane Anzoumana a/k/a Ousmann Gbane, a/k/a Ousmann Gbane Anzounan Banet, a/k/a Ousmann-Alain Gbane) of San Francisco, on Oct. 2, 2012, with multiple counts of wire fraud, mail fraud, and money laundering, United States Attorney Melinda Haag announced.

According to the Indictment, which was under seal until this morning, Banet, 49, the Chief Executive Officer and President of Lion Capital Management, LLC, in San Francisco, allegedly defrauded a client of approximately $544,000 by falsely claiming that he invested her money in a hedge fund, the Lion Absolute Value Fund, L.P. The Indictment alleges that Banet never invested the money received from the victim; that he created false account statements that he sent to the victim in which he stated that her investment accounts had sustained training gains, when in fact no such gains existed; and that he spent money received from the victim on personal and business expenses unrelated to the victim’s investment. In addition, the Indictment alleges that when the victim requested the return of her investment, Banet failed to return the full amount of her investment.

Banet was arrested this morning at his residence in San Francisco. He made his initial appearance this morning in federal court in San Francisco before the Honorable Joseph C. Spero. Today, following a bail hearing, Judge Spero ordered him remanded to the custody of the United States Marshal until Oct. 9, 2012, when a further bail hearing will be held.

The maximum statutory penalty for each count of wire fraud and mail fraud, in violation of 18 U.S.C. § 1343 and 1341, respectively, is 20 years imprisonment and a fine of $250,000 or twice the amount of the fraud. The maximum statutory penalty for each count of money laundering, in violation of 18 U.S.C. § 1957, is 10 years imprisonment and a fine of twice the amount of the fraud. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

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Mizanur Rahman was Charged with Filing False Tax Returns

Source- http://www.fbi.gov/washingtondc/press-releases/2012/leesburg-telecommunications-consultant-charged-with-filing-false-tax-returns

WASHINGTON—Mizanur Rahman, of Leesburg, Virginia, was indicted by a federal grand jury today on charges of filing false tax returns with the Internal Revenue Service (IRS) in 2005 and 2006.

Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; Kathryn Keneally, Assistant Attorney General for the Tax Division; Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Rick A. Raven, Special Agent in Charge of the Internal Revenue Service Criminal Investigation’s Washington, D.C. Field Office; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after the indictment was returned.

According to the indictment, Rahman worked as a consultant for an “International Corporation” that contracted for and managed projects in Bangladesh. Rahman, through E-ssn High Tech and Environment Ltd. (“E-ssn”), contracted with the International Corporation to provide consulting services to the International Corporation to assist in obtaining telecommunications contracts in Bangladesh. Between November 2004 and September 2006, the International Corporation paid Rahman approximately $1.7 million. Rahman allegedly deposited his consulting fee into a bank account in Hong Kong under the name of Jupiter International, a company that Rahman owned. The indictment further alleges that for tax years 2005 and 2006, Rahman willfully filed false individual income tax returns with the IRS that substantially underreported his total income.

Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty. Rahman faces a maximum potential sentence of six years in prison, if convicted.

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Indiana Public Officials Indicted for Tax Fraud and Other Offenses

Source- http://www.fbi.gov/indianapolis/press-releases/2012/indiana-public-officials-indicted-for-tax-fraud-and-other-offenses

HAMMOND, IN—Six individuals have been indicted as a result of investigations conducted by the Northern District of Indiana’s Public Corruption Task Force, announced U.S. Attorney David Capp. The Public Corruption Task Force is a multi-agency effort whose primary participants are the FBI, the Indiana State Police, and the Internal Revenue Service (IRS).

Indictments announced today:

Virlissa Crenshaw, 42, of East Chicago, Indiana, was charged in an indictment with theft from a local government entity and with filing a false tax return. Crenshaw was a clerk with the Merrillville, Indiana town court at the time of the alleged offenses. The offense conduct relates to Crenshaw’s theft of cash bonds while working for the Merrillville Town Court. Crenshaw signed a plea agreement that was filed in conjunction with the indictment admitting her guilt to all charges. The loss to Merrillville is $176,763 and the tax loss to the United States is $55,203.

Marilyn Krusas, 69, of Gary, Indiana, was charged by indictment with one count of tax evasion. Krusas is a Gary City Councilwoman and has held that office since 2000. Specifically, the indictment alleges that Krusas has failed to file tax returns since 1991. In addition to her failure to file, Krusas allegedly committed a number of acts of evasion in connection with an inheritance of $230,000 she received in 2009-2010.Krusas is scheduled for her initial appearance before Magistrate Judge Andrew Rodovich.

Manuel Montalvo, 38, of East Chicago, Indiana, was charged in an indictment with two counts of filing false tax returns for the tax years 2009 and 2010. The indictment alleges that Montalvo, the former Director of the East Chicago Public Library, overstated unreimbursed business expenses and medical/dental expenses that he knew were substantially less than reported.

Juda Parks, 40, of East Chicago, was charged by indictment with two counts of failure to file income tax returns for the tax years 2008 and 2009. Parks is an East Chicago city councilman since 2008 as well as an East Chicago Police officer. Parks signed a plea agreement that was filed in conjunction with the indictment admitting his guilt to all charges and agreeing to cooperate with the government.

Alfonso Salinas, 52, of Hammond, is the Second District Councilman for Hammond and has held that office since 1995. Salinas was charged with receipt of a bribe by an agent of a local government receiving federal funds. David Johnson, 56, of Munster, Indiana, owner of 
Dave’s Tree Service, was charged with payment of a bribe to an agent of a local government receiving federal funds. The indictment alleges that Salinas, using his allotment of funds derived from casino revenue received by the city of Hammond, accepted at least $10,500 from David Johnson as payment for hiring Dave’s Tree Service to work in Hammond’s Second District. Salinas is also charged with four counts of willful failure to file tax returns for tax years 2006 through 2009.

“The individuals charged today hold positions of public trust. Failure to file tax returns and the filing of false tax returns by public officials will not be tolerated. Those who disobey the tax laws will be held accountable,” said Richard Weber, Chief, IRS-Criminal Investigation.

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Jobson Cenor Pleads Guilty in Identity Theft Tax Refund Fraud Scheme Targeting U.S. Marines

Source- http://www.fbi.gov/miami/press-releases/2012/u.s.-marine-pleads-guilty-in-identity-theft-tax-refund-fraud-scheme-targeting-u.s.-marines

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; and José A. Gonzalez, Special Agent in Charge, Internal Revenue Service-Criminal Investigation Division (IRS-CI), Miami Field Office, announced that Jobson Cenor, 23, of North Miami, pled guilty before U.S. District Judge Robert N. Scola to one count of wire fraud and one count of aggravated identity theft in connection with an identity theft tax refund fraud scheme. Sentencing for Cenor is scheduled for December 14, 2012. He faces a possible maximum statutory sentence of 22 years in prison.

According to documents filed in court, in 2011, Cenor and co-conspirator Dorothy Boulin agreed on a plan to use stolen personal identifying information (names, dates of birth, and Social Security numbers) of individuals to file fraudulent tax returns seeking refunds. On July 12, 2012, Dorothy Boulin was sentenced to 70 months’ imprisonment by U.S. District Judge K. Michael Moore.

According to documents filed and statements made in court, in late 2011 and early 2012, defendant Cenor provided Boulin with more than a hundred names, dates of birth, and Social Security numbers of U.S. Marines, many of whom were serving in Cenor’s unit in Afghanistan. Cenor provided the personal identity information to Boulin by creating draft messages in e-mail accounts with the personal identifying information and then sending Boulin the log-in information for the e-mail accounts.

On January 17 and January 19, 2012, Boulin used the personal identifying information of several Marines to submit fraudulent tax returns seeking refunds. On February 9, 2012, law enforcement searched Boulin’s residence and found several lists that had the names, dates of birth, and Social Security numbers of U.S. Marines. Boulin identified Cenor as the individual who had provided the lists. On that same day, Cenor and Boulin had a telephone conversation in which they discussed splitting the proceeds of the identity theft tax refund scheme. During that call, Cenor directed Boulin could keep his share of the proceeds until he returned from overseas.

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Mary Novak Thompson was Charged for Fraud and Money Laundering

Source- http://www.fbi.gov/richmond/press-releases/2012/forest-woman-sentenced-on-false-statement-charge

LYNCHBURG, VA—A former financial specialist who falsified documents to support a broader mortgage fraud scheme was sentenced this morning in the United States District Court for the Western District of Virginia in Lynchburg.

Mary Novak Thompson, 44, of Forest, Virginia, previously waived her right to be indicted and pleaded guilty to a one-count Information charging her with making a false statement for the purpose of influencing the action of National City Mortgage. This morning, Thompson was sentenced to one day in prison and three months of home confinement. In addition, Thompson, a 25-year veteran of the banking industry, was barred from working in banking for 10 years.

“Ms. Thompson used her position at Wachovia Bank to facilitate a substantial mortgage fraud scheme,” United States Attorney Timothy J. Heaphy said today. “This case demonstrates our commitment to identifying and prosecuting financial fraud. We will continue to pursue those who attempt to manipulate the financial system through deception.”

According to evidence presented at previous hearings by Assistant United States Attorney Charlene Day, Thompson was involved with Timothy Scott Brooks and Adam Spruill in a scheme to commit mortgage fraud. Thompson admitted that her role in the scheme was to falsely filling out verifications of deposits for Brooks and Spruill while she was employed as a financial specialist at Wachovia Bank.

Penny Jones Pleads Guilty to Conspiracy and Filing False Tax Returns

Source- http://www.justice.gov/opa/pr/2012/October/12-tax-1191.html

Penny Jones of Rigby, Idaho, pleaded guilty before U.S. District Judge William Dimitrouleas in Fort Lauderdale, Fla., to forty-one counts of causing the filing of false claims for income tax refunds and one count of conspiracy to file false claims for tax refunds income tax returns, the Justice Department and the Internal Revenue Service (IRS) announced. Jones entered her guilty plea without the benefit of a plea agreement with the government. Jones faces a maximum potential sentence of 215 years in prison and a fine of up to $10.5 million plus restitution to the IRS.

Jones’s co-defendant, John Michael Smith Jr., also pleaded guilty yesterday before U.S. District Judge William P. Dimitrouleas in Fort Lauderdale to one count of filing a false claim for a tax refund. Smith faces a maximum potential sentence of 5 years in prison and a $250,000 fine plus restitution to the IRS .

According to the indictment, which was returned Nov. 10, 2011, and which Ms. Jones does not contest, she was part of a false tax refund scheme that was national in scope, causing the filing of tax returns for at least 180 clients from 30 different states, requesting more than $120 million worth of fraudulent tax refunds. Clients of the scheme collectively filed more than 380 tax returns, mostly from tax year 2008 but also for other tax years, falsely reporting the amount of their personal debt obligations as both income and as federal tax withholding. They falsely reported this information on IRS Forms 1099-OID, which were filed by Jones based on information provided by the clients. Jones operated her tax return preparation business under the names PMDD Services LLC and Forever Grace LLC.

Smith, a resident of Hidden Hills, Calif., and a former resident of Cincinnati, has admitted that he filed a false 2007 individual income tax return prepared by Jones. He sought a fraudulent tax refund of $208,312, which the IRS mistakenly paid. Previously, another PMDD Services client, Philip Butcher, formerly of Rogers, Ark., pleaded guilty to one count of filing a false claim for a refund. According to court documents in that case, Butcher filed two tax returns reporting his loans as OID income and tax withholding, claiming tax refunds totaling $1,456,696.

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Kenneth L. Richardson Pleads Guilty To Filing a False Federal Income Tax Return and to Willfully Failing to File a Federal Income Tax Return

Source- http://www.justice.gov/usao/tnm/pressReleases/2012/9-26-12.html

Kenneth L. Richardson, 50, of Nashville, Tenn., pleaded guilty on September 24, 2012, to filing a false federal income tax return and to willfully failing to file a federal income tax return, announced Jerry E. Martin, United States Attorney for the Middle District of Tennessee, and Kathryn Keneally, Assistant Attorney General for the Tax Division.

According to the plea agreement, Richardson owned and operated Skyy Bonding Company, a bail bonding company located in Nashville and at the same time, served as a pastor at St. Marks Church and received income from both entities.

Richardson and his wife filed a federal income tax return for tax year 2004, listing an adjusted gross income of $52,714. Richardson admitted during the plea hearing that the 2004 income tax return was false and that he and his wife earned at least $248,174 in adjusted gross income during 2004. Richardson also admitted that he and his wife earned at least $291,174 in adjusted gross income during tax year 2005, but failed to file a federal income tax return as required by law.

Sentencing in the case is set for December 10, 2012, before United States District Judge Todd Campbell. Richardson faces up to 4 years in prison and up to $350,000 in fines. Additionally, Richardson could be ordered to pay restitution to the IRS.

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Eric H. Menden was Sentenced to 138 Months in Prison for Massive Bank and Historic Tax Credit Fraud

Source-  http://www.fbi.gov/norfolk/press-releases/2012/hampton-roads-developer-sentenced-to-138-months-in-prison-for-massive-bank-and-historic-tax-credit-fraud 

NORFOLK, VA—Eric H. Menden, 53, of Chesapeake, Virginia, was sentenced today to 138 months in prison, followed by three years of supervised release, for engaging in a $41 million bank fraud scheme that contributed to the failure of the Bank of the Commonwealth and a separate historic-tax-credit fraud scheme that cost state and federal governments over $12 million and investors more than $8 million.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; John Boles, Special Agent in Charge of the FBI’s Norfolk Field Office; Rick A. Raven, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation’s Washington, D.C. Field Office; Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG), made the announcement after sentencing by United States District Judge Raymond A. Jackson.

“Eric Menden’s crimes have had a devastating impact on the Hampton Roads community,” said U.S. Attorney MacBride. “A high-school drop-out who worked to own a construction company, Mr. Menden was making a good living doing what he loved. Yet he threw it all away by stealing millions from taxpayers, investors, and the Bank of the Commonwealth. Today’s sentence is just punishment for his fraud, along with the steps he’s taken to accept responsibility for his actions.”

“Today’s sentence reaffirms that IRS-Criminal Investigation is committed to ‘following the money trail’ to ensure that those who engage in these illegal activities are vigorously investigated and brought to justice,” said IRS SAC Raven.

“Today’s sentence brings justice and holds Eric Menden accountable for defrauding TARP applicant Bank of the Commonwealth for three years in an elaborate tit-for-tat scheme with bank insiders that contributed to the failure of the bank,” said Christy Romero, Special Inspector General at SIGTARP. “Menden received $35 million in bank loans with such preferential treatment that bank employees referred to the bank as ‘the Bank of Eric and George.’ In return, he conspired with bank insiders to extend-out non-performing loans, masking their past-due status through tricks such as fraudulent construction draws and Menden’s purchase of bank-owned property at inflated prices. I want to thank Neil MacBride and the assistant United States Attorneys on the case who have shown great leadership in holding Menden accountable for his crimes.”

“The Federal Deposit Insurance Corporation Office of Inspector General is especially concerned when fraudulent activities contribute to bank failures causing losses to the Deposit Insurance Fund,” said FDIC Inspector General Rymer. “Today’s sentencing of Mr. Menden reaffirms our commitment to join our law enforcement partners in punishing those who seek to undermine the integrity of our nation’s banks and the viability of the fund.”

On April 20, 2012, Menden pled guilty to conspiracy to commit wire fraud, making false statements, and conspiracy to commit bank fraud. According to the statement of facts filed with his plea agreement, from January 2008 through August 2011, Menden admitted that he and his business partner performed favors for insiders at the Bank of Commonwealth in exchange for preferential lending treatment and assisted insiders in concealing the extent of the bank’s non-performing assets by purchasing bank-owned property.

At the time the bank failed on September 23, 2011, Menden and his business partner owed the bank approximately $41 million and the total approximate loss related solely to the loans outlined in court records is at least $13,263,443.

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John J. McCauley, The Owner and Co-operator of McCauley and L’Europa Public Adjusters LLC and PIA Restoration LLC Pleads Guilty to Federal Tax Charges

Source-  http://www.fbi.gov/boston/press-releases/2012/cranston-businessman-pleads-guilty-to-federal-tax-charges 

PROVIDENCE, RI—John J. McCauley, Jr., 54, of Cranston, the owner and co-operator of McCauley and L’Europa Public Adjusters LLC and PIA Restoration LLC, pleaded guilty in federal court in Providence today to conspiracy to defraud the United States and filing false tax returns. McCauley’s business partner, William L’Europa, 47, of Cranston, pleaded guilty yesterday to the same federal charges. McCauley is scheduled to be sentenced on December 21, 2012. L’Europa is scheduled to be sentenced on December 20, 2012.

Appearing before U.S. District Court Chief Judge Mary M. Lisi, McCauley and L’Europa admitted that they underreported business receipts for tax years 2007-2010 by nearly $1.8 million dollars, resulting in the underpayment of federal taxes to the Internal Revenue Service of more than $500,000.

The guilty pleas were announced by United States Attorney Peter F. Neronha; William P. Offord, Special Agent in Charge of the Boston Office of the Internal Revenue Service (IRS), Criminal Investigation; Richard Deslauriers, Special Agent in Charge of the FBI’s Boston Field Office; Guy N. Thomas, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Boston Field Office; and Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police.

According to signed plea agreements, McCauley and L’Europa must file accurate, amended federal tax returns for tax years 2007-2011.

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Crusader Servicing Corp. Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey

Source-  http://www.fbi.gov/newark/press-releases/2012/pennsylvania-corporation-pleads-guilty-to-bid-rigging-at-municipal-tax-lien-auctions-in-new-jersey 

WASHINGTON—A Pennsylvania corporation pleaded guilty today to participating in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout New Jersey, the Department of Justice announced.

A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, against Crusader Servicing Corp. of Jenkintown, Pennsylvania. According to the felony charge, from at least as early as 1998 until September 2006, Crusader participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on. The department said that Crusader submitted bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“The conspirators agreed to not compete with one another at these tax lien auctions, depriving struggling homeowners of a competitive interest rate,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s guilty plea demonstrates the Antitrust Division’s continuing efforts to prosecute those who manipulate the competitive process in order to harm home and property owners.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Crusader conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

A violation of the Sherman Act carries a maximum penalty of $100 million criminal fine for corporations. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum.

Today’s plea is the 10th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals—Isadore H. May, Richard J. Pisciotta, Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby, and David Butler—and one company, DSBD LLC, have previously pleaded guilty as part of this investigation.

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Genesee Township Tax Preparer and Others Indicted for Ponzi Scheme, Tax Fraud

Source-  http://www.fbi.gov/detroit/press-releases/2012/genesee-township-tax-preparer-and-others-indicted-for-ponzi-scheme-tax-fraud 

FLINT, MI—Ronald Lee Brito and Bonnie Brito of California, John James Missitti of Genesee Township, Thomas Winston Moore of California, and Mark J. Carpenter of Ann Arbor have been indicted for conspiring to commit wire fraud in operating an investment Ponzi scheme, United States Attorney Barbara McQuade announced today. Missitti is also charged with having filed false income tax returns.

United States Attorney Barbara L. McQuade was joined in this announcement by Robert D. Foley, III, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation, and Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation Division.

In the 68-count superseding indictment returned by a grand jury in Flint yesterday, all five defendants are charged with conspiring to solicit investments in GetMoni.com, which was started by the Britos in California. The indictment alleges that Missitti joined the conspiracy by soliciting investors in Michigan in exchange for commissions from Ron Brito, knowing that the majority of the money invested would be used to pay earlier investors in the scheme. Wire transfers of money to GetMoni.com are alleged in 43 counts against Ron Brito and John Missitti.

The indictment alleges that since 2007, the conspirators solicited investments for the ostensible purpose of extracting silver or gold from the “PJM Kingman Mine,” using a prospectus which falsely represented the likely success of such a venture. Carpenter, doing business as TGBG Financial Planning, allegedly joined the conspiracy by making false representations about the Mine and soliciting investments in exchange for commissions from Ron Brito. Wire transfers from TGBG to GetMoni.com are alleged in 20 counts against Carpenter.

The indictment further alleges that John Missitti, who operated Missitti Tax Services for several years, falsified his own individual income tax returns for the years 2006-2009 by deliberately understating his total income during those years in the total amount of about $793,337.25.

Ron Brito and Thomas Moore were arrested in California and are currently being held pending trial. Bonnie Brito and Mark Carpenter have been released on bond. John Missitti is expected to report voluntarily for arraignment during the next few weeks.

The defendants face a maximum term of imprisonment of 20 years and a $250,000 fine on each of the wire fraud charges and the conspiracy charge. Missitti could be sentenced to three years’ imprisonment and a fine of $250,000 on each of the four false tax return charges against him.

“Investment fraud schemes are nothing more than a fancy way to steal people’s money, McQuade said. “They are a form of robbery and they should be treated that way.”

FBI Special Agent in Charge Foley stated, “Those individuals who engage in illegal investment schemes will face severe penalties for their criminal activity. The FBI is committed to vigorously pursuing anyone who commits these crimes.”

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Crusader Servicing Corp. Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey

Source-  http://www.justice.gov/opa/pr/2012/September/12-at-1161.html 

WASHINGTON – A Pennsylvania corporation pleaded guilty today to participating in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout New Jersey, the Department of Justice announced.

A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, against Crusader Servicing Corp., of Jenkintown, Pa. According to the felony charge, from at least as early as 1998 until September 2006, Crusader participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on. The department said that Crusader submitted bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“The conspirators agreed to not compete with one another at these tax lien auctions, depriving struggling homeowners of a competitive interest rate,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s guilty plea demonstrates the Antitrust Division’s continuing efforts to prosecute those who manipulate the competitive process in order to harm home and property owners.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached. 

According to the court documents, Crusader conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

A violation of the Sherman Act carries a maximum penalty of $100 million criminal fine for corporations. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum.

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Lucent Technologies World Services Inc. Agrees to Pay U.S. $4.2 Million to Settle False Claims Act Allegations

Source-  http://www.justice.gov/opa/pr/2012/September/12-civ-1144.html 

WASHINGTON – An Alcatel-Lucent subsidiary, Lucent Technologies World Services Inc. (LTWSI), has agreed to pay the United States $4.2 million to settle False Claims Act allegations that it submitted misleading testing certifications to the Army in connection with the design, construction and modernization of Iraq’s emergency communications system, the Department of Justice announced today. Alcatel-Lucent is a global telecommunications provider.

In March 2004, the U.S. Army awarded LTWSI a $250 million contract to build the Advanced First Responder Network (AFRN), a 911 emergency response and first responder communications system designed to enable Iraqis to summon police, fire and medical assistance in emergencies. Today’s settlement resolves allegations that LTWSI submitted claims for payment for equipment, services and contract performance award fees under the AFRN contract based upon inaccurate certifications that LTWSI, between January and July 2005, had performed and successfully completed certain testing of AFRN radio transmission sites, as well as validation of the network as a whole, to ensure the network’s proper operation prior to acceptance by the United States and transfer to the Iraqi government.

“The integrity of our public contracting system is a matter of paramount concern to the Department of Justice, especially where contractors have been engaged to supply critical support for the work of stabilizing Iraq and Afghanistan,” said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. “The department will seek to recover losses to the American taxpayer when a contractor has claimed money to which it was not entitled.”

“The United States must be able to count upon government contractors to seek payment only for services performed in conformance with their contractual obligations. That is particularly true of contractors performing work for the United States in ‘hot spots’ around the globe where verification of invoiced work can be both difficult and dangerous,” said Jenny Durkan, the U.S. Attorney for the Western District of Washington. “LTWSI’s internal procedures on the AFRN project clearly should have been more robust in this instance.”

The settlement resolves a whistleblower suit filed under the False Claims Act in December 2008, by Geoffrey Willson, LTWSI's former contract manager for the project. The False Claims Act permits private parties to sue on behalf of the United States for submission of false claims to the government and to share in any recovery. Willson will receive $758,000 as his statutory share of today’s settlement.

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Catherine June Floyd Sentenced to 5 Years in Prison for Conspiracy to Obstruct and Impede the IRS

Source- http://www.justice.gov/tax/2012/txdv121147.htm

WASHINGTON – A federal judge in Worcester, Mass., sentenced Catherine June Floyd today to 60 months in prison for conspiring to defraud the United States and for obstructing the Internal Revenue Service (IRS), the Justice Department and IRS announced. U.S. District Judge F. Dennis Saylor also ordered Floyd to pay restitution in the amount of $3 million.

On April 2, 2012, a federal jury convicted Catherine Floyd and William Scott Dion, both of Sanbornville, N.H., and Charles Adams, of Norwood, Mass., for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes. The jury convicted all three of conspiracy to defraud the IRS by promoting an “under the table” payroll scheme. Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an “underground warehouse banking” scheme designed to conceal customer income and assets from the IRS. Floyd and Dion were also convicted separately for corruptly endeavoring to obstruct the IRS’s ability to determine their own income. Adams was separately convicted of tax evasion.

On Sept. 6, 2012, Judge Saylor sentenced defendant Dion to 84 months in prison, and ordered him to pay $3 million in restitution as well.

According to the evidence presented at trial, Floyd, Dion and Adams ran a payroll tax scheme in order to pay employees “under the table” without properly accounting for, withholding, and paying over to the IRS the payroll taxes required by law. The three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. They ran the payroll scheme under three different names: Contract America, Talent Management and New Way Enterprises. Approximately 150 individuals subscribed to the payroll scheme and in excess of $2.5 million in unreported wages and compensation were paid through the system.

The evidence at trial also established that Floyd and Dion conspired to defraud the United States by promoting and operating an “underground warehouse banking” scheme which helped subscribers conceal income and assets from the IRS. According to the evidence, the warehouse scheme operated under three different names: Your Virtual Office, Office Services and Calico Management. As part of the warehouse banking scheme, the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds. According to evidence presented at trial, more than $28 million in deposits were made into the various bank accounts used in the scheme.

In August 2009, the three defendants were indicted with four other individuals relating to the promotion and use of these schemes. On Dec. 9, 2011, prior to trial, Gail and Myron Thorick of West Warwick, R.I., pleaded guilty to conspiring to defraud the United States by helping operate the “warehouse banking” scheme, and for filing false tax returns. On that same date, Gary Alcock pleaded guilty to conspiracy by using the payroll scheme, as well as to tax evasion and willful failure to file tax returns. On Jan. 24, 2012, Kenneth Scott Alcock pleaded guilty to conspiracy relating to the payroll scheme and to one count of tax evasion. All four defendants are awaiting sentencing.

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Chiquanta Davis, Terrence Davis and Laurekshia Blakely Were Sentenced in a Multi-Million Dollar Stolen Identity Refund Fraud Scheme

Source- http://www.justice.gov/tax/2012/txdv121136.htm

WASHINGTON – Three defendants involved in a stolen identity refund fraud scheme were sentenced today in the Middle District of Alabama, the Justice Department and the Internal Revenue Service (IRS) announced today. Chiquanta Davis received a prison term of 66 months, Terrence Davis was sentenced to 18 months in jail and Laurekshia Blakely received a six month prison sentence. All three were also sentenced to three years supervised release.

In May 2012, the three defendants had pleaded guilty to various charges in a superseding indictment: Chiquanta Davis pleaded guilty to conspiracy to file false claims, theft of public funds, and aggravated identity theft. Terrence Davis and Blakely each pleaded guilty to one count of theft of public funds.

According to court documents, Chiquanta Davis operated a sham tax business in 2010 called It’s Tax Time out of her home. Davis opened a bank account in the name of It’s Tax Time and directed a total of $1,458,600 in fraudulent refunds to that bank account. Although the IRS intercepted and stopped many of the tax refunds, Davis still received a substantial amount into the bank account. Davis used the funds, among other things, to purchase a Cadillac Escalade. As part of her plea agreement, Davis agreed to forfeit the Cadillac Escalade.

Court records also establish that in 2011, Chiquanta Davis assisted with the filing of false tax using stolen identities. Between January and June of 2011, 192 false returns requesting $769,223 in refunds were filed from her home. These refunds were directed to various bank accounts, including bank accounts controlled by her, her husband Terrence Davis and Laurekshia Blakely. Fraudulent refunds totaling $199,959 from 54 false tax returns were directed to Terrence Davis’s bank accounts. Fraudulent refunds totaling $24,314 from five false tax returns were directed to Laurekshia Blakely’s accounts.

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