Kevin Leonard Shaffer Sentenced Today to 51 Months in Prison for Engaging in Mortage and Tax Fraud

Source- http://www.justice.gov/tax/txdv11159.htm

WASHINGTON - Kevin Leonard Shaffer, 40, of Sarasota, Fla., and Washington, D.C., was sentenced today to 51 months in prison, followed by five years of supervised release, for engaging in mortgage and tax fraud, announced John A. DiCicco, Acting Assistant Attorney General for the Justice Department's Tax Division and Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia.

On Nov. 9, 2010, Shaffer pleaded guilty to one count of bank fraud, one count of tax evasion and one count of willful failure to collect and pay over payroll taxes. Schaffer was sentenced today by U.S. District Judge Gerald Bruce Lee.

Shaffer was the president and a co-owner of Matrix-DSS, Inc., a subchapter S corporation, based in Manassas, Va., that offered consulting services in Northern Virginia. The mortgage fraud charge to which Shaffer pleaded guilty related to a fraud he perpetrated upon BB&T Corporation. In connection with a $5.6 million construction loan for a home in McLean, Va., Shaffer signed a loan application that contained false information. To substantiate this false information, Shaffer submitted to BB&T fictitious documents which falsely created the appearance that he and his wife were regular wage earners with overstated assets. Such documents included fictitious Internal Revenue Service (IRS) Forms W-2, pay stubs, bank statements and retirement account statements. BB&T Corporation sustained a loss of $1,815,612 as a result of this fraud. The total bank fraud loss, which included relevant conduct stemming from additional frauds that Shaffer perpetrated upon other banks, was $2,688,571.93.

The tax evasion count to which Shaffer pleaded guilty involved tax year 2005. Shaffer did not file a timely tax return for that year, nor did he pay the associated taxes. However, during an interview with IRS agents in December 2008, he told agents that he had electronically filed an income tax return for that year and paid the associated taxes by credit card. The IRS finally received a delinquent 2005 tax return from Shaffer in January 2009. This return substantially understated the flow-through income that Shaffer received from Matrix-DSS. The government sustained a $211,865.86 tax loss associated with this conduct. Including relevant conduct pertaining to Shaffer's tax evasion for tax years 2004, 2006 and 2007, the total tax loss associated with Shaffer's evasion of taxes was $536,228.77.

Finally, Shaffer willfully failed to collect, account for, and pay over to the IRS employment taxes for Matrix-DSS for the quarters ending Sept. 30, 2006, through Dec. 31, 2007. In June 2006, Shaffer terminated Matrix-DSS's contract with the company's payroll services provider. During the quarters at issue, Shaffer withheld tax payments from the paychecks of Matrix-DSS's employees. However, he failed to file the requisite IRS Forms 941 or pay the withheld tax payments or employer's FICA portions to the IRS. The tax loss associated with the willful failure to collect and pay over payroll taxes count to which Shaffer pleaded guilty was $42,320.66. Including relevant conduct, the total tax loss associated with this conduct was $272,209.14.

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Federal Court Shuts Down Colorado Tax Preparer Curtis L. Morris

Source- http://www.justice.gov/opa/pr/2011/February/11-tax-157.html

WASHINGTON – A federal court in Denver has permanently barred Curtis L. Morris of Elizabeth, Colo., from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, entered by Chief U.S. District Judge Wiley Y. Daniel, approves a magistrate judge’s decision that found that Morris, who operates a business called Numbers & Beyond, prepares federal tax returns claiming large, fraudulent tax refunds.

The court found that Morris prepares various false Internal Revenue Service (IRS) forms, such as Form 1099-OID, to request fraudulent refunds based on phony claims of large income tax withholding. The court order says the scheme is rooted in the long-discredited "redemption" theory which, according to its proponents, allows taxpayers to access secret Treasury accounts to satisfy their tax liabilities. According to the court, proponents of the frivolous scheme claim that phony IRS forms can be used to access these fictitious Treasury accounts. The court found that Morris made fraudulent refund claims exceeding $56 million.

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Former Pastor of North County Church Danny O'Guin, Sentenced on Fraud Charges

Source- http://stlouis.fbi.gov/dojpressrel/pressrel11/sl020411a.htm

ST. LOUIS, MO—The United States Attorney's Office announced today that Danny O'Guin was sentenced to eight months in prison involving a scheme to get loans from church members between April 2006 and March 2009. O'Guin exploited his position as a religious leader to the members of the church who felt compelled to agree to the loans despite their reservations about the transactions. At various times, O'Guin falsely stated that he needed money for a particular purpose and then would use the borrowed money for another purpose. He also used false pretenses to put off or lull members asking for their money back. In addition to his prison sentence, the defendant will be ordered to pay restitution as determined by the court, in an amount in excess of $100,000.

DANNY O'GUIN, formerly of Florissant, MO, pled guilty in November to one felony count of mail fraud and appeared today for sentencing before United States District Judge Henry Autrey.

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Wilson Nicolas Admits Role in Mortgage Fraud Scheme

Source- http://newhaven.fbi.gov/dojpressrel/pressrel11/nh020411.htm

David B. Fein, United States Attorney for the District of Connecticut, announced that WILSON NICOLAS, 28, of Groton, pleaded guilty today before Chief United States District Judge Alvin W. Thompson in Hartford to one count of conspiracy to commit wire fraud stemming from his participation in a mortgage fraud conspiracy.

According to court documents and statements made in court, NICOLAS, Syed Babar, and others engaged in a scheme to obtain residential real estate loans, including loans insured by the Federal Housing Administration ("FHA"), through the use of sham sales contracts, false loan applications, and fraudulent property appraisals.

As part of the scheme, NICOLAS acted as a straw buyer who allowed his name and identifying information to be used to obtain mortgage loans to purchase two properties in New Haven at fraudulently inflated prices. Specifically, in 2008, NICOLAS worked with Babar and others to obtain FHA-insured loans to buy a house at 243 Starr Street at the fraudulently inflated price of $175,000, and a house at 88 Hazel Street for the fraudulently inflated price of $180,000.

Babar had instructed NICOLAS to open a joint bank account with an individual whom NICOLAS did not know in order to give the appearance NICOLAS had access to more money than he actually had. The loan applications also falsely represented where the defendant worked.

After the closings, NICOLAS received $40,000 in cash from a co-conspirator and later returned $8,000 to the co-conspirator to be used in another real estate transaction. NICOLAS never occupied either of the two houses on which he served as a buyer, and he defaulted on both of them.

The lenders suffered losses of more than $120,000 as a result of these fraudulent transactions.

Judge Thompson has scheduled sentencing for May 6, 2011, at which time NICOLAS faces a maximum term of imprisonment of five years and a fine of up to $250,000.

On February 1, 2011, Babar pleaded guilty to multiple federal charges related to his leadership of this extensive mortgage fraud scheme, which has caused losses in excess of $3.2 million to lenders. He awaits sentencing.

This case is being investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development - Office of Inspector General, and is being prosecuted by Assistant United States Attorneys Eric J. Glover and Susan Wines.

In July 2009, the U.S. Attorney's Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the Task Force will focus on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes and short sale schemes. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an e-mail toctmortgagefraud@ic.fbi.gov.

The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney's Office; Federal Bureau of Investigation; Internal Revenue Service - Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General; and State of Connecticut Department of Banking.

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Guillermo B. Garcia the owner of B. Garcia Income Tax Services in Upland, was Ordered to Stop Preparing Tax Returns for Others

Source- http://www.justice.gov/usao/cac/pressroom/pr2011/014.html

LOS ANGELES – A federal court judge has issued an order that prohibits the operator of an Upland tax service from preparing federal income tax returns and other tax-related documents for clients.

In a permanent injunction filed Monday, Guillermo B. Garcia, the owner of B. Garcia Income Tax Services in Upland, was ordered to stop preparing tax returns for others.

United States District Judge Otis D. Wright II issued the permanent injunction at the request of the United States Attorney’s Office, which had alleged that Garcia prepared income tax returns that contained false or inflated expenses on Schedule A and Schedule C. Additionally, according to the Justice Department’s lawsuit, Garcia filed tax returns for clients that sought refunds that were greater than the tax returns actually signed by his clients, and that Garcia kept the extra money when the Internal Revenue Service issued refund checks.

Garcia submitted thousands of income tax returns over the past four years, and in 183 tax returns that were examined by the government, IRS auditors found that the returns understated taxes due by $784,238 – or approximately $4,300 per return.

“[I]f Guillermo B. Garcia violates this Judgment for Permanent Injunction, he may be subject to civil and criminal sanctions for contempt of court, including imprisonment,” Judge Wright said in his order.

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Mark Jackson Charged with Tax Evasion

Source- http://philadelphia.fbi.gov/dojpressrel/pressrel11/ph020311c.htm

Mark Jackson was charged today by Information with a conspiracy to evade taxes on income earned as an independent contractor in 2004, announced United States Attorney Zane David Memeger.

In criminal cases If convicted the defendant faces a maximum possible sentence of five years’ imprisonment, a $250,000 fine, two years’ supervised release and a $100 special assessment.

The case was investigated by the Internal Revenue Service Criminal Investigation Division, the Federal Bureau of Investigation, and the Drug Enforcement Administration. It is being prosecuted by Assistant United States Attorney Pamela Foa .

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Alfred Eugene Parker Who Collected $2 Million from Victims Sentenced to Nearly Four Years in Federal Prison

Source- http://losangeles.fbi.gov/dojpressrel/pressrel11/la012811b.htm

LOS ANGELES—A Woodland Hills man who bilked more than 20 victims out of approximately $2 million in less than one year has been sentenced to 46 months in federal prison.

Alfred Eugene Parker, 32, was sentenced Monday by United States District Judge R. Gary Klausner, who remanded the defendant into custody at the conclusion of the sentencing hearing. Parker was sentenced after pleading guilty in September 2010 to three counts of wire fraud and one count of making a false statement to a bank.

Parker was a counselor at a non-profit agency that provided credit-repair advise to low-income families. In late 2006, Parker started an investment company—Skyline Investment Group—that he used to solicit investors with promises that their money would be used to help needy homeowners who were facing foreclosure on their homes. Targeting primarily African-American victims, including professional athletes and people in the entertainment industry, Parker and Skyline lured investors with “guaranteed” returns as high as 40 percent in less than three months.

Instead of using investors’ money to help distressed homeowners, Parker used the money to finance a luxurious lifestyle, which included a Rolls-Royce Phantom, two Ferraris, a $2.5 million home, and trips to high-end resorts in Hawaii and Santa Barbara. Parker also used some of the money to make Ponzi payments to earlier investors.

In November 2007, Parker sought a $1 million line of credit from Broadway Federal Bank. When applying for the loan, Parker submitted forged documents to the bank and falsely claimed that he had $2 million in savings and that he owned valuable real estate in Los Angeles and Cleveland. When the bank approved a $200,000 line of credit, Parker drew down the funds in less than two months.

During Monday’s sentencing hearing, victims told Judge Klausner that Parker had preyed on African American victims in their community and that he had presented himself as a religious man who would use their investments to help needy homeowners in the area.

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Carl Lawrence Estep Sentenced in U.S. District Court

Source- http://saltlakecity.fbi.gov/dojpressrel/pressrel11/slc012811.htm

The United States Attorney’s Office announced that during a federal court session in Missoula, on January 27, 2011, before U.S. District Judge Donald W. Molloy, CARL LAWRENCE ESTEP, a 66-year-old resident of Belgrade, appeared for sentencing. ESTEP was sentenced to a term of:

Prison: 48 months
Special Assessment: $200
Restitution: $1,379,700
Supervised Release: Three years

ESTEP was sentenced in connection with his guilty plea to wire and mail fraud.

In an Offer of Proof filed by Assistant U.S. Attorney Ryan M. Archer, the government stated it would have proved at trial the following:

In April 2003, ESTEP moved from Las Vegas, Nevada to the Bozeman area and shortly thereafter engaged in a far-reaching, multi-state investment fraud scheme. The scheme defrauded numerous investors out of significant amounts of money by promising them large returns from overseas investments that were allegedly realized by leveraging “gold ore” as collateral for overseas trading.

In 2003 ESTEP met K.L. who allowed him to store 200 barrels of rock and sand in a Belgrade barn. Along with the barrels, ESTEP obtained an “assay” that purported to show that the rock and sand in the barrels contained large amounts of gold and/or platinum. K.L. provided this assay to ESTEP, which was allegedly done by a company called Rogers Research. Rogers Research was contacted in the investigation and stated that the assay is a forgery.

Nonetheless, when ESTEP obtained access to the 200 barrels, he used them as the basis for his scheme to defraud. He enticed potential investors, often over singles dating web sites, by claiming that he used to work for the Howard Hughes Corporation and operated their mining division. He claimed that he was paid in barrels of gold ore that was worth millions, and often gave them the Rogers Research assay report as proof. He further solicited investors by stating that he owned a gold refinery in Montana and was trying to build others in the area that could refine the gold and investors stood to make large profits by investing in the gold barrels and refinery operations. ESTEP stated that the barrels were in a “warehouse” that was guarded by a private security guard and investor money would be used for business operating expenses and building refiner! ies. He claimed to use the gold barrels as collateral for a unique overseas investment that would make huge profits. He also told investors that the money never left the accounts because the “gold” was being leveraged.

ESTEP gave investors a contract that allowed them to “call” their investment which would be returned in full within 6 months. But when investors did not see their money again, ESTEP made elaborate excuses as to why they could not be paid. He claimed that “Homeland Security has tied the money up overseas due to terrorist related activities around the world.” In reality, ESTEP did not own any refineries. He did not own the barrels of rock and sand. He did not make any expenditures to develop refineries, and he did not invest money overseas. He simply used the money for numerous personal expenditures, including cars, overseas travel, daily expenses, and unreasonably large expenses on his hunting dogs. Agents confirmed that ESTEP never worked for the Howard Hughes Corporation.

V.H. was a victim-investor based out of Florida who was defrauded out of $220,000 in 2008 and 2009. V.H. wired $100,000 to ESTEP to invest in his scheme on December 30, 2008. V.W. was an investor based out of Texas, and she mailed a $100,000 investment to ESTEP on February 6, 2008. Both V.H. and V.W. met ESTEP over the Internet on a church-related dating website.

Through additional investigation, the FBI recorded numerous calls with ESTEP and visited the barn with the 200 barrels of rock and sand. Agents subsequently executed a search warrant and seized several of the barrels and other documentary evidence. Analysis on the barrels indicate that there is no gold value in the barrel samples that were seized, and it would be more profitable to use the rock and sand as road grade rather than attempt to extract any gold.

In speaking with agents, ESTEP acknowledged that he spent investor money on personal items and his statements to investors were not 100% true since they did not know their money was used for his personal gain. ESTEP told investors their funds would be used for operating expenses and trading overseas, and were safe in his account. Although he acknowledged that he pushed the truth and spent money inappropriately, ESTEP said that Count Ugo Di Carpegna from Geneva, Switzerland, will be sending him millions of dollars very soon and he will pay investors back. This has never happened.

Because there is no parole in the federal system, the “truth in sentencing” guidelines mandate that ESTEP will likely serve all of the time imposed by the court. In the federal system, ESTEP does have the opportunity to earn a sentence reduction for “good behavior.” However, this reduction will not exceed 15% of the overall sentence.

The investigation was a cooperative effort between the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service.

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The former owner of Buddy's Carpet, Leif D. Rozin, and Alan W. Koehler, the company's former in-house counsel sentenced to prison for their roles in a tax fraud

Source- http://www.justice.gov/tax/txdv11119.htm

CINCINNATI - The former owner of Buddy's Carpet, Leif D. Rozin, and Alan W. Koehler, the company's former in-house counsel, were sentenced to prison for their roles in a tax fraud scheme for which they were convicted in 2008, the Justice Department announced today. Both men were formerly full-time Cincinnati residents. Rozin now resides in Westchester, Ohio, and Bonita Springs, Fla., and Koehler resides in Purcellville, Va. In 2008, a jury found Rozin and Koehler guilty of a conspiracy to defraud the United States. In addition, the jury found Rozin guilty of filing a false corporate income tax return and tax evasion, and found Koehler guilty of assisting in the filing of a false corporate income tax return. Buddy's Carpet was a retail chain with more than 30 stores in Ohio, Kentucky and Indiana.

Rozin, 68, was sentenced by U.S. District Court Judge Susan J. Dlott to serve 12 months and one day in prison, a three-year period of supervised release, 2,000 hours of community service, and to pay a $30,000 fine as well as the cost of his prosecution and a special assessment. Koehler, age 50, was sentenced to serve 18 months in prison, a three-year period of supervised release, and to pay a $20,000 fine and a special assessment.

Another former owner of the company, Burton B. "Buddy" Kallick; their investment and insurance advisor, Milton Liss, of Cincinnati; and unlicensed financial and insurance salesman Bruce M. Cohen of Louisville, Ky., were indicted along with Rozin and Koehler. Kallick passed away in January 2007, and both Liss and Cohen pleaded guilty to the charged conspiracy to defraud the United States. Cohen was sentenced by Judge Dlott in 2008 to 37 months in prison for his role in the scheme. Liss, 67, was sentenced at the same time as Rozin and Koehler to serve 12 months and one day in prison, a three-year period of supervised release, 1,000 hours of community service, and to pay a $10,000 fine and a special assessment. Although Rozin had already deposited $387,687 with the Internal Revenue Service (IRS), which is the amount he was found guilty of evading on his 1998 income tax return, the court ordered Rozin, Koehler and Liss to pay to the IRS jointly an additional $387,687, which was the amount of Kallick's unpaid 1998 income taxes.

John DiCicco, Acting Assistant Attorney General for the Justice Department's Tax Division; Carter M. Stewart, U.S. Attorney for the Southern District of Ohio; and Jose A. Gonzalez, Special Agent in Charge, IRS-Criminal Investigation, Cincinnati, announced the sentences today.

During the three-week trial, the evidence showed that Rozin and Koehler conspired with Liss, Cohen and others to defraud the United States by having Rozin, Inc., dba Buddy's Carpet, purchase several sham "Loss of Income" insurance policies from an insurance company in the U.S. Virgin Islands. The co-conspirators used these sham insurance policies to evade approximately $775,000 in income taxes on the 1998 tax returns of Rozin and Kallick. In addition, the evidence showed that the co-conspirators intended to evade a similar amount of income taxes for the 1999 tax returns of Rozin and Kallick, but they did not file the returns because the IRS disclosed its criminal investigation.

The evidence showed that, prior to selling the business in 2000, the defendants caused the firm to spend a total of $3.6 million on eight "Loss of Income" insurance policies, the purpose of which was to provide substantial tax deductions to the company and to the owners, Rozin and Kallick. The evidence also demonstrated that these insurance policies were a sham. The evidence further showed that Rozin, Kallick, Koehler, Cohen and Liss attempted to conceal their participation in these sham arrangements by establishing offshore nominee entities in foreign countries, such as Nevis.

The former owners and operators of the source of the "Loss of Income" policies, Security Trust Insurance Company in the U.S. Virgin Islands, along with their attorney, were also prosecuted and convicted in a federal court in Grand Rapids, Mich., in 2009.

During the trial, the evidence revealed that Rozin and Koehler engaged in a series of purchases of these insurance policies and took numerous steps to conceal their scheme, including creating backdated documents. In addition, the evidence showed that Rozin, Koehler and others shared Liss's commissions from their purchases of the policies, as well as the commissions from others' purchases.

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Federal Court Permanently Barred Sidney Dove from Preparing Federal Tax Returns for Others

Source- http://www.justice.gov/opa/pr/2011/January/11-tax-116.html

WASHINGTON – A federal court in Chicago has permanently barred Sidney Dove, a tax-return preparer from Joliet, Ill., from preparing federal income tax returns for others, the Justice Department announced today. U.S. District Judge Charles Kocoras also ordered Dove, who does business under the name "Sid’s Tax," to prepare a list of every person for whom he has prepared a federal income tax return since Jan. 1, 2006, and to provide the list to the government. The court had previously entered a preliminary injunction order against Dove on April 16, 2010.

The court found that an Internal Revenue Service investigation of Dove revealed a pattern of overstated deductions for charitable contributions, employee business expenses and Schedule C business expenses. The court also found that Dove prepared a number of returns that significantly understated individuals’ tax liabilities because they contained positions that had no possibility of being sustained on the merits. For example, according to the court, Dove habitually deducted 10 percent of his customers’ income as charitable donations without ensuring that the customers had documents to support the deductions. The court concluded that a permanent injunction order against Dove was necessary because of his continuous and knowing violations of the tax laws over the last three years and his stated intention to continue preparing tax returns in the future.

The court’s order also requires Dove to mail a copy of the court’s order to all customers for whom he has prepared federal income tax returns.

In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of false tax returns.

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Boulder Man, Mark Yost, Charged with Fraud, False Statements and Money Laundering

Source- http://denver.fbi.gov/dojpressrel/pressrel11/dn012611.htm

DENVER—Mark Yost, manager of Yost Partnership, L.P., based in Boulder, Colorado, was charged today by Information with fraud, false statements to banks and money laundering, the U.S. Attorney’s Office, the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation, and the Federal Deposit Insurance Corporation Office of Inspector General announced today. Yost appeared before a U.S. Magistrate Judge in U.S. District Court in Denver this afternoon, where he was advised of the charges pending against him, as well as the related penalties to those charges. He was also arraigned. At the conclusion of the hearing Yost was released on a personal recognizance bond. A change of plea hearing has been scheduled for February 3rd at 9:30 a.m., where Yost will be given an opportunity to plead guilty.

According to the Information filed today, Yost received investor funds to trade in securities and to make other investments. On February 4, 2005, and continuing thereafter to on or about July 6, 2010, Yost devised and intended to devise a scheme to defraud Yost Partnership and the limited partners by means of materially false and fraudulent pretenses. As part of the scheme, Yost, at the conclusion of each quarter of each year, beginning with the first quarter of 2005 and continuing through the second quarter of 2010, prepared account statements and caused them to be delivered to the limited partners, knowing each one of the statements to be false in that it overstated the value of the limited partner’s share of the assets of Yost Partnership. Yost failed to disclose to the limited partners that a certified public accountant had not completed an audit because the financial statements included inflated and improperly recorded values of the partnership’s interests in a privately held company and a publicly traded company. During the course of the scheme, Yost diverted money which he was not entitled to and converted those funds for his own use and benefit. He also made multiple false statements to banks and in reports.

The Information also alleges that from January 15, 2009 through July 7, 2010, Yost, the acting president of Flatirons Bank at the time, devised a scheme to defraud the bank and to obtain money by and under the control of the bank by means of materially false and fraudulent pretenses. Specifically, on two separate occasions, Yost caused Flatirons Bank to grant lines of credit to two individuals. The defendant ultimately converted those funds to his own use and benefit.

“Financial fraud, like this one have been all too common in recent years, and the U.S. Attorney’s Office is determined to fight them,” sais U.S. Attorney John Walsh. “In many cases investors are misled by unrealistic profit projections and impossibly high returns. This case is yet another reminder that thoroughly checking out an investment is crucial for all investors.”

“Everyday people entrust their hard earned money with banking and investment professionals,” said FBI Special Agent in Charge James Davis. “The FBI will aggressively investigate and pursue prosecution of financial professionals who breach this trust and misuse other people’s money for their own gain.”

“The IRS, along with our law enforcement partners, will pursue corporate officers who victimize their investors and violate the public trust,” said Sean Sowards, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.

Yost faces one count of wire fraud, four counts of false statements or reports to banks, one count of bank fraud, and one count of money laundering. If convicted, the defendant faces not more than 20 years’ imprisonment, and up to a $250,000 fine for wire fraud, not more than 30 years’ imprisonment, and up to a $1,000,000 fine for each false statements or reports to banks, not more than 30 years imprisonment, and up to a $1,000,000 fine for bank fraud, and not more than 20 years imprisonment, and up to a $500,000 fine (or twice the value of the property involved in the transaction) for money laundering.

This case was investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service – Criminal Investigation (IRS CI), and the Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG).

The defendant has been charged by Information, which means he has waived his Constitutional right to be indicted by a federal grand jury.

The charges contained in the Information are only allegations, and the defendant is presumed innocent unless and until proven guilty.

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Jason Eric Fischer Sentenced for Stealing More Than $3 Million in Mortgage Fraud Scheme

Source- http://minneapolis.fbi.gov/dojpressrel/pressrel11/mp012511.htm

A 40-year-old lawyer from Hudson, Wisconsin, was sentenced earlier today in federal court in Minneapolis for stealing more than $3 million in a mortgage fraud scheme. United States District Court Judge Patrick J. Schiltz sentenced Jason Eric Fischer to 50 months in prison on one count of mail fraud and one count of money laundering. Fischer was charged on January 28, 2010, and pleaded guilty on February 9, 2010. Judge Schiltz also ordered Fischer to pay more than $3 million in restitution.

In his plea agreement, Fischer admitted that from 2006 through May of 2009, he orchestrated a scheme to divert funds from the escrow account at Real Source Title, a company he jointly owned and managed. The company, which had offices in Mahtomedi and Burnsville as well as in Illinois and Hudson, Wisconsin, routinely accepted wire transfers and checks from buyers and lenders. Those funds were to be held in escrow for the sole purpose of closing residential real estate transactions. Fischer, however, used the diverted funds for personal benefit.

Following today’s sentencing, Kelly R. Jackson, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division’s St. Paul Field Office, said, “Mortgage fraud causes much harm to individuals, businesses, and our economy; but today’s sentencing is a strong reminder how serious our courts consider this criminal activity. Those who line their pockets with profits from these schemes should know they will be held accountable and brought to justice.”

To further his scheme, Fischer represented to buyers, lenders, underwriters, and others that the money deposited into the company’s escrow account was, in fact, used only to close real estate transactions. He made those representations by producing and mailing false HUD-1 settlement statements to people of interest. In truth, however, Fischer regularly withdrew escrow-account money to pay for personal and business expenses as well as to fund prior company real estate transactions. In 2008, for example, Fischer invested approximately $500,000 in escrow dollars into the opening and operation of a restaurant.

Between 2006 and May of 2009, Fischer diverted approximately $3 million from the escrow account at Real Source Title; and by May 2009, the account was depleted and unable to fund 15 loans. As a result, buyers, sellers, lenders, underwriters, and others suffered significant financial loss.

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Former Boston City Councilor Charles "Chuck" Turner Sentenced to 36 Months

Source- http://boston.fbi.gov/dojpressrel/pressrel11/bs012511.htm

BOSTON, MA—Former Boston City Councilor CHARLES “CHUCK” TURNER was sentenced today by U.S. District Court Judge Douglas P. Woodlock to 36 months in federal prison to be followed by three years of supervised release and forfeiture of $1,000, after being convicted of taking a $1,000 cash payment in exchange for official acts and then making false statements to FBI.

Turner, 70, of Boston, was convicted in October 2010 by a federal jury following 12 days of trial and one day of deliberations on charges of attempted extortion under color of official right as a Boston City Councilor and making false statements to federal agents.

“Mr. Turner was sentenced to prison today because of the choices he made and the actions he took during the course of this case,” said United States Attorney Carmen M. Ortiz. “In 2008, Mr. Turner had the chance to assist the FBI in an ongoing public corruption investigation. Instead of telling the truth, he lied. He then went on to testify falsely under oath. It is the obligation of every elected official to be ethical and honest, and in this case, Mr. Turner was neither. Public corruption is more than a violation of the law, it erodes the public’s trust in the very system that was designed to protect us.”

FBI Special Agent in Charge Richard DesLauriers said, “Crimes that undermine the public’s trust in the government will remain one of the FBI's top criminal priorities. The FBI’s steadfast commitment and unique ability to pursue any and all corruption in legislatures, courts, city halls, regulatory agencies and other local, state and government agencies is reflected in today’s sentencing.”

During Turner’s trial, it was established that in June 2007, former State Senator Dianne Wilkerson sought Turner’s assistance in obtaining a liquor license for Roxbury businessman Ronald Wilburn. Wilkerson accepted $23,500, in bribes from Wilburn, a witness secretly cooperating with the FBI. In August 2007, Turner called Wilburn and invited him to his district office. Wilburn told the FBI that he believed that Turner was asking him for cash in exchange for official acts. Wilburn suggested to the FBI that he meet with Turner and pay him money. A video recording played at trial showed Turner accepting the $1,000 bribe, while simultaneously discussing his efforts to assist Wilburn in obtaining a liquor license.

On the day of Wilkerson’s arrest, agents visited Turner in his City Hall office to discuss that August 2007 cash payment. The agents wanted Turner to assist them in their ongoing investigation of public corruption and admit taking the cash. However, Turner repeatedly lied to agents to conceal his criminal conduct.

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Robert C. Welti Sentenced for Tax Crimes

Source- http://www.justice.gov/opa/pr/2011/January/11-tax-106.html

CINCINNATI – Robert C. Welti, a resident of Ripley, Ohio, was sentenced today in U.S. District Court for the Southern District of Ohio, the Justice Department announced. Welti previously pleaded guilty to one count of corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue Code.

U.S. District Court Senior Judge Sandra S. Beckwith sentenced Welti to six months in prison and one year of supervised release. The court also ordered Welti to pay $5,000 in fines.

According to court documents, in April of 2002, Welti, who represented Douglas and Donald Frichtl in an Internal Revenue Service (IRS) audit, attempted to obstruct the audit by preventing properly summonsed documents from being turned over to the IRS, preventing the Frichtls from responding to the auditors’ questions, proposing meritless and frivolous questions and arguments to the IRS auditors, and accusing the IRS auditors of engaging in a criminal racketeering conspiracy.

The case resulted from an investigation by the IRS, Criminal Investigation. IRS Special Agent Ankur Arora conducted the investigation. Tax Division attorneys Thomas Voracek and Rita Calvin prosecuted the case.

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Stephen Sparks Pleads Guilty to Defrauding Investors

Source- http://detroit.fbi.gov/dojpressrel/pressrel11/de012511.htm

Stephen Sparks, 37, of Monroe, Michigan, a business partner of Global Points, pleaded guilty to federal fraud offenses, announced United States Attorney Barbara L. McQuade. In December 2010, Sparks was charged with wire fraud and money laundering.

McQuade was joined in the announcement by Erick Martinez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation, and FBI Special Agent in Charge Andrew Arena.

According to court records, during 2006 through 2009, Sparks took part in a scheme that solicited over $1 million from individual investors. Sparks represented to these investors that his business, Global Points, had an opportunity to purchase a warehouse full of Chinese electronic equipment and sell it in the United States at a substantial profit, returning over five times the amount invested. Sparks also represented that Global Point was in a position for a second had a second deal to acquire CD and DVD players that had been seized n Chicago, Illinois, and were being sold for the payment of back taxes. Sparks indicated that there would be a quick turn around and the profit would be twice the original investment.

Court records further showed that Sparks knowingly failed to inform the investors that he gave most of their money to his uncle, Barry Sparks, who had past criminal convictions for fraud. Sparks continued to provide excuses for the failure of the deals to close, and continued to solicit additional funds, claiming that the closings were imminent. Regarding the specific charges, in 2007, Sparks withdrew $12,000 in cash from his bank account knowing that these funds had been wired from Ohio to Michigan by an investor and, therefore, derived from the proceeds of wire fraud.

"Investment fraudsters prey on trusting investors by enticing them with a can't miss deal and then steal their hard earned money," said Special Agent in Charge Erick Martinez. "IRS Criminal Investigation is committed to investigating investment schemes in an effort to protect the financial well being of the American investor."

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Phyllis Stevens and Marla Stevens Sentenced for Multi-Million Dollar Embezzlement Scheme and Tax Fraud

Source- http://omaha.fbi.gov/dojpressrel/pressrel11/om012111.htm

DES MOINES, IA—Phyllis Stevens and Marla Stevens were sentenced today for multiple felony offenses, announced United States Attorney Nicholas A. Klinefeldt. Phyllis Stevens was sentenced to a term of 72 months in prison, based upon her earlier guilty pleas to the crimes of conspiracy to commit money laundering, conspiracy to file false income tax returns, wire fraud, computer fraud, and filing a false income tax return. Her term of imprisonment will be followed by three years of supervised release. The judge also imposed a mandatory $600 special assessment payable to the Crime Victim Fund.

Marla Stevens was sentenced to a term of 40 months in prison, based upon her earlier guilty pleas to the crimes of conspiracy to commit money laundering and conspiracy to file false income tax returns. Her term of imprisonment will be followed by three years of supervised release. The judge also imposed a mandatory $200 special assessment payable to the Crime Victim Fund.

The sentences were imposed by Senior District Judge Ronald E. Longstaff, who also ordered restitution to be paid by both defendants in the amount of $6,757,069.62, payable to Aviva USA, the victim of the embezzlement. The defendants also were ordered to forfeit real estate located in Iowa and Indiana, and the balance of a bank account, because these assets were obtained from the crimes alleged against them.

In a written plea agreement, Phyllis Stevens had admitted to a long-time pattern of embezzlement by making false and fraudulent entries into the computer system of her employer. She admitted to using large sums of this money to purchase real estate and for making large payments to American Express. She further admitted to filing false income tax returns which failed to report the embezzled income in her own name, and which sometimes falsely reported the income in the names of other individuals as part of an effort to conceal the fraud. Marla Stevens admitted that she knew or had reason to know that Phyllis Stevens was receiving income from some form of unlawful activity, that she participated in financial transactions with the proceeds of Phyllis Steven's unlawful activity, and that she participated in the filing of false income tax returns.

"These sentences show that so-called 'white collar' offenses are serious crimes, and that committing these crimes can bring severe consequences," stated United States Attorney Nicholas A. Klinefeldt. "I would like to commend the FBI and IRS for their fine work in investigating this case and AUSA Andrew Kahl for his good work in prosecuting it. While this was a complex case, at the end of the day, it came down to one thing: greed. Phyllis and Marla Stevens lived a lavish lifestyle on stolen money, and now they are going to pay the price. Let this case be a lesson to others who might think about stealing from their employer. We will catch you, we will prosecute you, and you will pay the price."

Weysan Dun, Special Agent in Charge of the Omaha Division of the FBI, which covers the states of Iowa and Nebraska stated, "White collar crime is not a victimless crime. Fraud or embezzlement is essentially a robbery committed by paper rather than brute force. It results in financial loss to someone and it ultimately undermines confidence in our nation's economic infrastructure so everyone ends up paying for it in some way. The FBI is committed to investigating white collar crimes and we encourage anyone who has information about fraud or embezzlement to report it to the FBI."

"The role of IRS-Criminal Investigation becomes even more important in embezzlement cases due to the complex financial transactions that can take time to unravel," said Toni Weirauch, Special Agent in Charge of IRS Criminal Investigation. "The Federal Tax laws are normally violated in these cases. As we often see, the victims are not only the taxpayers, but also the entities who suffer financial harm."

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Janika Fernae Bates Charged With Conspiring to use Stolen Identities of Student Loan Borrowers on False Tax Returns

Source- http://www.justice.gov/tax/txdv11087.htm

WASHINGTON – Janika Fernae Bates of Millbrook, Ala., was indicted by a federal grand jury on charges of identity theft, wire fraud and conspiracy to make false claims for tax refunds, the Justice Department and Internal Revenue Service (IRS) announced today. Bates was previously employed at Electronic Data Systems in Montgomery, Ala.

According to the indictment filed against her, Bates obtained the names and Social Security numbers of student loan borrowers from the databases at her employer and conspired to use the stolen identifying information to steal money from the government. The indictment further alleges that Bates and a co-conspirator fraudulently obtained refund anticipation loans from the bank HSBC predicated on the fraudulently filed tax returns.

 An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Janika Fernae Bates faces a minimum of two years in prison, a maximum of 354 years in prison and a maximum fine of $6,250,000.

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Former Webster Bank Employee Susan A. Curtis, Admits Role in $6 Million Embezzlement Scheme

Source- http://newhaven.fbi.gov/dojpressrel/pressrel11/nh012011.htm

David B. Fein, United States Attorney for the District of Connecticut, announced that SUSAN A. CURTIS, 49, of Naugatuck, pled guilty today before United States District Judge Janet C. Hall in Bridgeport to bank fraud and tax charges stemming from CURTIS’ involvement in a scheme to defraud Webster Bank and Bank of America of more than $6 million.

According to court documents and statements made in court, CURTIS was employed in the Property Services Division of Webster Bank with responsibilities that included negotiating and managing bank property leases where Webster Bank was a landlord or tenant. CURTIS and Kevin W. Caffrey, who were married from May 2000 to May 2006, established a company called New House, LLC. Later, CURTIS and a co-defendant established a company called Equity Realty, LLC. CURTIS falsely represented to Webster Bank’s Vendor Management Department that both companies were brokers, an exempted category for due diligence and annual review.

As part of a scheme to defraud Webster Bank, CURTIS submitted paperwork to Webster Bank’s Accounts Payable Department in which she falsely represented that New House and Equity Realty were due fees in approximately 108 real estate related transactions. As a result, Webster Bank made payments of approximately $5.04 million to New House and Equity Realty.

In addition, CURTIS caused persons doing business with Webster Bank to send approximately $723,620 in payments for tenant improvements and reimbursements, which were owed to Webster Bank, directly to CURTIS. Certain of these checks were altered to make them payable to Webster Bank c/o Equity Realty, and then were deposited into an Equity Realty account at another bank.

CURTIS also caused a representative of Webster Bank to send another $450,000 payment, which was owed to Webster Bank, directly to CURTIS. The check was made payable to Equity Realty c/o Webster Bank, and was subsequently deposited into the Equity Realty bank account.

In pleading guilty, CURTIS also admitted that she fraudulently applied for, and received, a $649,000 mortgage loan from Bank of America for a property in East Hampton, Connecticut. CURTIS submitted false loan applications on which she misrepresented and concealed the real source of her income and extent of her liabilities.

Finally, CURTIS admitted that she filed false federal tax returns for the 2006 through 2009 tax years, during which she failed to report more than $3.79 million in embezzled funds.

On November 10, 2010, a federal grand jury in Hartford returned a second superseding indictment charging CURTIS and a co-defendant with various offenses stemming from this embezzlement scheme. Today, CURTIS plead to six of the eight counts in which she is charged, namely two counts of bank fraud and four counts of filing false tax returns. She has plead not guilty to one count of conspiracy to money launder and one count of bank fraud, and a trial on the remaining counts in the indictment is scheduled for April 18, 2011.

Each count of bank fraud carries a maximum term of imprisonment of 30 years, and each count of filing a false tax return carries a maximum term of imprisonment of three years. CURTIS also faces a maximum fine of more than $12 million. She also will be ordered to pay restitution to the victim banks, and back taxes, plus penalties and interest, to the Internal Revenue Service.

In addition, the government is seeking the forfeiture of an interest up to an amount of $1,105,790.79 in real property in East Hampton, several automobiles, two Harley Davidson motorcycles, two boats and boat trailers, approximately $300,000 in artwork, approximately $100,000 in jewelry, and a Steinway piano valued at more than $77,000. The government also is seeking a money judgment in the amount of $7,002,589.85.

U.S. Attorney Fein stressed that, as to the remaining counts against both CURTIS and her co-defendant, an indictment is only a charge and is not evidence of guilt. The defendants are entitled to a fair trial at which it will be the government’s burden to prove guilt beyond a reasonable doubt.

On October 14, 2010, Kevin Caffrey plead guilty to one count of bank fraud and one count of filing a false tax return. He awaits sentencing.

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Inmate Dimorio McDowell Who Ran a Quarter-Million-Dollar Identity Theft Ring from Inside Federal Prison Receives an Additional 14.5 Years in Prison

Source- http://cleveland.fbi.gov/dojpressrel/pressrel11/cl011811.htm

The man who led an identity-theft ring that ran up a quarter-million dollars worth of charges from inside a federal prison was sentenced to more than 14 years in prison, Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced today.

“The defendant thought he found a way to occupy his time in prison,” Dettelbach said. “With this prosecution and this sentence, he’ll have lots more time to learn to follow the rules.”

Dimorio McDowell, age 34, of Atlanta, Georgia, previously pled guilty to aggravated identity theft and conspiracy to commit wire fraud and bank fraud. McDowell was an inmate at Fort Dix Federal Correctional Institution at the time of the scheme, which took place between August 2009 and April 2010. U.S. District Judge Donald Nugent ordered McDowell’s 174-month sentence on this case begin in 2014, when he completes the current sentence that resulted in his incarceration at Fort Dix.

McDowell was the ringleader who obtained personal information on people who had credit card accounts at various retailers, including Best Buy, Home Depot, J.C. Penney, Lowe’s, Macy’s, Nordstrom’s, Saks Fifth Avenue, Sears and Staples, according to court documents.

McDowell contacted the retailers and impersonated the true account holders, store employees, or corporate fraud investigators. He used information about the account holders, such as name, address, or Social Security number during those calls to obtain additional information about them and adding co-conspirators names as authorized users of the accounts, thus taking over the accounts, according to court documents.

After taking over the accounts, adding additional users to the accounts and opening new accounts, McDowell communicated with his co-conspirators, all of whom lived in the Cleveland area.

McDowell continued to run his scheme from prison even after he was charged and after he pled guilty. He also posed as a deputy U.S. Marshal over the telephone and attempted to have prisoners moved, according to information presented during the sentencing hearing.

Overall, the ring purchased more than $254,000 worth of merchandise as part of their scheme, according to court documents.

Also charged in the case are: Andre Reese, 37; Jeffery McClain, 39; Kevin McBride, 34; Michael Sailes, 51; Edwin Peavy, 52; Daniel Ashford, 37; James L. Wiggins, 47, and Jay Williams, 27, all of Cleveland, Ohio. All have entered guilty plea to charges against them.

This prosecution is the result of cooperation from a number of law enforcement agencies who identified the defendants, gathered the evidence and prepared the case for prosecution. The investigative team included the Federal Bureau of Investigation’s Cleveland Division and Trenton Resident Agency, the U.S. Bureau of Prisons, the Postal Inspection Service, Bath Township Police Department, Stow Police Department, Mentor Police Department and other state and local law enforcement agencies. The case was prosecuted by Assistant U.S. Attorney Matthew B. Kall.

“This case is a stark reminder about the need to protect yourself from identity theft and fraud,” Dettelbach said. “I want to thank the FBI, the Bureau of Prisons and all our partners who made prosecuting this case possible.”

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