Enron - Three British Bankers Sentenced to Prison for Andrew Fastow Conspiracy!

David Bermingham, 44, Gary Mulgrew, 45, and Giles Darby, 44, the so-called “NatWest Three” were sentenced to thirty-seven month prison terms. The three former British investment bankers for NatWest Bank who were charged for their role in helping former Enron CFO Andrew Fastow dress up the company’s balance sheet.

According to a BBC article, they admitted conspiring with ex-Enron staff to defraud NatWest of $19m and then split $7m between themselves. The men they conspired with - Andrew Fastow and Michael Kopper - who are already in jail. According to the charges brought by prosecutors, the three men advised their former employer, NatWest, to sell part of a firm owned by Enron for less than it was worth. The three men then left the bank and bought a stake in the Enron-owned company, before selling it on at a higher price for a profit.

Enron, once the nation’s seventh-largest company, crumbled into bankruptcy in December 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable. The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans according to reports by the Houston Chronicle.

Attorneys for the men asked that they be ordered to a federal prison in Allenwood, Pennsylvania. Allenwood has experience in the Department of Justice’s International Prisoner Transfer Program. If confined in the United States, they would be required to serve at least 85% of their sentence. However, if transferred to a prison in Great Brittain their sentence might be complete at the 50% point. Either way, all three will have direct time in federal prison.

According to the White Collar Crime Prof Blog ( a great source for white collar crime information): Among the criteria considered for authorizing a prisoner transfer are acceptance of responsibility, criminal history, seriousness of the offense, and ties to the two nations. Also considered is whether the prisoner will remain in the home country or return to the United States — rest assured, the NatWest Three are unlikely to darken our shores again any time soon. In addition, according to the Bureau of Prisons Policy Statement on transferring foreign prisoners, the transfer cannot be authorized until the prisoner pays any outstanding fine. In addition to the sentence in this case, U.S. District Court Judge Ewing Werlein ordered the three to repay the $7.3 million they received from the transaction that triggered the charges. While not a fine but restitution, I suspect there won’t be a transfer until that money is repaid. Even then, the application process will take at least a few months to complete ,once they begin their prison terms, as the bureaucracy processes the requests.

Every choice has a consequence! As an ethics and white collar crime speaker, I share that simple five word statement with groups nationwide. So often you find people - from all walks of life - make choices that, to them, seem right at the time - only to find out that the consequences of their actions are far worse than they ever imagined. I imagine this has been true for these three Brits! Not only have they been stuck in Houston for the past three years, but it looks like they will surely taste federal prison for a while.

What did they gain? Nothing! And, that is often the case when it comes to poor choices. The consequences of the choices we make can be far more significant than the short term benefit that one might think you’ll receive.

You Can’t Fool The IRS - Palm Spring Man Convicted in Scheme to Defraud IRS! Choices and Consequences says Ethics Speaker Chuck Gallagher

Surely he didn’t think he’d ever get by with this? I must admit this one caused me to scratch my head. As a white collar crime and business ethics speaker, I’ve heard of a lot of schemes, but this is noteworthy.

Kenneth Gerald Bordewick was convicted of mail fraud and corruptly obstructing or impeding the due administration of the tax laws. Seems that Mr. Bordewick’s mother, Frances Norene Bordewick, operated a beauty salon, Norene and Company, in Antioch, CA. In 1993 and again in 1997, a Notice of Federal Tax Lien was filed against Frances Norene Bordewick/Norene & Co for outstanding employment taxes owed on her beauty salon.

Note: Mama didn’t pay her payroll taxes. Sounds a bit like the Wisconsin man who was indicted for the same thing. But this story isn’t about Ms. Bordewick. No, rather it’s about her “come to the rescue” son!

The Crime: In November 2000, Mr. Bordewick assisted his mother with the sale of her condominium in Antioch. After receiving a preliminary title report, the title company requested a demand of payment from the IRS relating to federal tax liens. A notice of taxes due was submitted by the IRS Collection Division. In December 2000, the escrow company prepared a preliminary closing statement showing an estimated payment to the IRS in the amount of $87,251.30. In late January 2001, Mr. Bordewick told the escrow officer that his mother owed money on a mechanic’s lien.

On January 24, 2001, Mr. Bordewick recorded a fraudulent Certificate of Release of Federal Tax Lien at the Contra Costa County Recorder’s Office. Ten minutes later, a fraudulent Mechanic’s Lien against Frances Norene Bordewick’s property, in favor of Robert Morrison, Mr. Bordewick’s partner, was recorded in the amount of $50,000. That same day Mr. Bordewick submitted the fraudulent Certificate of Release of Federal Tax Lien and Mechanic’s Lien to the escrow officer causing her to not pay the IRS lien, but instead to pay Mr. Bordewick’s partner, pursuant to the Mechanic’s Lien. The escrow officer pursuant to Mr. Bordewick’s instructions mailed the proceeds of the sale, approximately $44,000, in nine checks made out to Robert Morrison at his residence with the defendant in Palm Springs.

Dumb…Dumb…Dumb! Every choice has a consequence! I still go back to the question, did he really think the IRS would be that dumb? Bordewick prepares fake paperwork, records it - then creates more fake paperwork in order to steal proceeds from the sales of his mother’s property. Ouch!

In March 2001, an IRS Revenue Officer inquired about the status of the escrow and was advised by the escrow officer that payment had not been remitted to the IRS for the payroll taxes rather payment was made on a Mechanic’s Lien. You gotta know that the IRS was ticked to find this out. Not only did they not get the money due from the lien they filed, but money that was not payable to any other person was paid to Mr. Bordewick.

The outcome: For $44,000 Bordewick may be facing more than 20 years in federal prison. Surely he will go to prison and there learn that every choice has a consequence. No exceptions!

Oh…and wonder what Mama thinks now?

Sex after Prostate Cancer Surgery - What Can You Expect? Comments by Motivational Speaker and Cancer Survivor Chuck Gallagher

Let me begin by saying, this is written with the intent to help those men who have dealt with or are dealing with the issues surrounding prostate cancer. I am not a physician. My perspective is my own and born from my personal experience with prostate cancer at a “relatively” young age.

Background: I was diagnosed with prostate cancer at age 47. There were no warning signs. To all around me I was the picture of health and as far as I was concerned they were right. I had no symptoms. In fact, I felt great.

I went to my family doctor in order to get a prescription for Propecia (a pill to keep your hair from falling out). My hair line was beginning to recede and I wanted to stop its progress. My physician (who in retrospect saved my life) required that I have a blood test before she would prescribe the hair loss drug. As I recall, she said that the drug would artificially lower my PSA and I needed to have it checked first.

Honestly, at the time I didn’t know what a PSA was - the only thing I did know was - I hated needles and the thoughts of giving blood repulsed me. But vanity won and I had the test. Frankly, the rest was history, as the tests revealed an elevated PSA which ultimately lead to the prostate cancer diagnosis.

Treatment Method: While considering many methods, ultimate I selected surgery using the da Vinci method. I could not have been more pleased. The skill of the surgeon from Johns Hopkins and the method used were both outstanding. I highly recommend that men considering surgery consider this method. The recovery time following surgery was substantially reduced and the side effects were non-existent.

Following surgery there were several issues that were of immediate concern:

1. What was in the pathology report (if that was good then the other issues were important)?
2. Were the nerve bundles saved around the prostate (if not, no erection)?
3. How difficult would it be to recover - move, walk, have a bowel movement, etc.?
4. How long would the catheter stay in and would it cause problems?
5. What would the reported incontinence be like (really) and would it last a long time?
6. When could I expect some normalcy in sexual performance?

#1 = great pathology report (whew…that was a relief!)

#2 = nerves were saved; however, the doctor cautioned about expecting too much too soon.

#3 = no great surprise, the hospital got me moving quickly. It was not comfortable, but in the end they were right. Suck it up and get on with it they told me. You’ll appreciate how quickly you’ll recover when you get out of bed and get on with life. They were right. Within three days, I was prepared (moving a bit slowly I might add) to get on a plane and fly back home from Baltimore to North Carolina.

#4 = That was (at the outset) the biggest challenge. While most catheters stay in a week or maybe two, mine was in for three weeks. The physician stated that he wanted to make sure due to my psychology that it healed well, so I got the pleasure (NOT) of an extra week. Frankly, that was annoying and one of the happiest days of my life was when it was removed. Frankly, it was somewhat painful, unpleasant, difficult to keep comfortable, and all around a real pain (both figuratively and literally).

#5 = Considering I took a good six months from diagnosis to surgery, I had time to work with Kegel exercises. Kegel exercises may be beneficial in treating urinary incontinence in both men and women. Having received wise advice from the folks at Johns Hopkins, I was told that men would be wise to exercise those pubococcygenus muscles in advance of surgery so that they have “muscle memory” after surgery. I was told issues with incontinence would be dramatically reduced and they were right. Within 5 - 6 weeks I was 99% continent.

#6 Sexual Function: Candidly, that returned much slower than I expected.

• Within three weeks of the catheter being removed I wanted to test sexual function. To my pleasant surprise with physical and visual stimulation I was able to achieve a marginal erection and orgasm. I was elated. However, I soon found out that my first experience was not sustainable on a regular basis.
• Like most men, I was given prescriptions for Viagra and informed about other alternatives.
• Within three to six months, I found that achieving an erection was difficult and that any mental distraction would prove to be an impairment.
• Viagra would provide some help, but the side effects were bothersome - especially the flushed feeling I felt in my chest and nasal cavity. Even with Viagra or the other alternatives, I did not feel that the result was successful.
• By the seventh month I was concerned about the lack of consistence in sexual function. That took it’s toll emotionally. While women may not completely understand, men will get it. We are sexual beings and, while we don’t define ourselves by sex, we certainly understand the important role sexual function has in our lives. Inability to perform can have direct effects in other areas of ones life.
• I was told there would be no ejaculate. That was true and false. There was no ejaculate as men generally know it. However, I did leak a fair amount of urine. I think the urine leakage surprises and disturbed me more than it did my partner She understood that urine is harmless. I soon learned that I should empty my bladder before sex otherwise, there would generally be urine leak when orgasm was reached.
• By the ninth month I woke to a nocturnal erection. I must admit I was surprised and elated. However, the natural erection was still missing.
• There had been no significant change from the sixth month through the tenth month, so I was becoming a bit concerned. I sought help in an unusual way, I sought Hypnotherapy as a possible solution. Wow…now that was worth it.

Hypnotherapy: Perhaps for the skeptics I had just healed enough to experience a change, but when I sought help I had the same results. Not knowing what to expect, I was open to anything that would provide some normalcy. I had come to know that things would never be the same. For one thing, I wasn’t 17 years old any more. I had to know that with age sexual performance will change. Likewise, I knew that without a prostate (the old plumbing if you will) I would never have an ejaculation - although an orgasm is quite normal without ejaculation. In any event, I elected this alternative form of therapy. What did I have to lose?

I went through the process feeling quite relaxed. The female hypnotherapist wasn’t sure that it would be comfortable for a man. Frankly, in my mind, if I got the result I didn’t care who provided the service. The process lasted and hour to and hour and one-half.

Within three days it was time to test the program. To my great surprise, I had an erection with less effort than it took over the prior 10 months and the orgasm was powerful. Since that point, there has been a marked difference in sexual function. Why? I’m not sure I know. I feel that two things converged at the same point. One - I had taken time to heal physically and with practice one can achieve a return to normalcy. Two, I feel the hypnotherapy allowed me to by pass my conscious emotional fears and empower my subconscious to know that I was fine and fully functional (within the physical confines of surgery). Either way…the process worked.

Three Years Later: Sexual function is normal - for a 50 year old prostate cancer survivor.

1. I understand that sex will never be the same as before. I accept that knowing that I am living as a result of early detection and appropriate treatment.
2. With the prostate gone, there will not be normal ejaculate during sex. Strange, but as a man I miss that - but I must say, my wife doesn’t.
3. As time goes on natural erections (unassisted) are possible. They are not as frequent as they used to be, but from time to time I will have a nocturnal erection.
4. Orgasm is quite natural, with or without ejaculate. However, expect some urine leakage during sex. Especially early on one might want to keep a towel handy.
5. Libido did not change even right after surgery.

As a motivational speaker, I have become accustom to sharing personal experiences in order to share more universal truths. This entry, however unusual, is not about personal sexual performance, but rather written in order to help other men understand from a first hand perspective what to expect and perhaps to provide hope that sexual performance, so important to most men, can return after experiencing surgery.

If this posting helps or you have comments…PLEASE SHARE!

What do US Representative Richard Renzi, Real Estate Investor James Sandlin, and Andrew Beardall Have in Common? A 35 Count Indictment for Fraud, Extortion and Money Laundering!

On Friday, February 22, 2008, a federal grand jury in Arizona returned a 35-count indictment yesterday against Richard G. Renzi, 49, of Flagstaff, Ariz., the U.S. Representative from Arizona’s first congressional district; James W. Sandlin, 56, of Sherman, Texas, a real estate investor and Renzi’s business associate; and Andrew Beardall, 36, of Rockville, Md., Renzi’s business associate.

The news release from the US Attorneys office states the following:

The indictment charges Renzi and Sandlin in 27 counts with honest services wire fraud, extortion and money laundering, and conspiracies to engage in these acts, based on Renzi’s active involvement in the sale of Sandlin’s property in Cochise County, Ariz. to a participant in a federal land exchange proposal. The indictment alleges that Renzi and Sandlin previously owned land together in Kingman, Ariz. and that in 2003, Sandlin bought out Renzi’s interest for $200,000 and a note for $800,000. The indictment further alleges that in 2005, at a time when Sandlin still owed Renzi $700,000 in principal on the note, Renzi insisted that two separate entities doing business in Arizona purchase Sandlin’s property in exchange for his support on land exchange legislation.

The indictment also alleges that Renzi failed to disclose to either entity Sandlin’s $700,000 debt to him; that after the second entity purchased Sandlin’s property, Renzi failed to disclose to that group the $733,000 he received from Sandlin at the commencement and close of escrow in the spring and fall of 2005; and that Renzi failed to disclose to Congress his earnings from Sandlin in his 2005 Financial Disclosure Statement. Finally, the indictment traces the manner in which Renzi and Sandlin used the alleged proceeds of the above unlawful activities for their own personal and business use.

The remaining counts of the indictment charge Renzi and Beardall with violations of federal insurance laws, by embezzling over $400,000 in insurance premiums from the trust account of the Patriot Insurance Agency, Inc., a business owned by the Renzi family in Santa Cruz County, Ariz., to fund his first Congressional campaign in 2001 and 2002, and by subsequently making false statements to influence state regulatory investigations.

As would be expected, Renzi’s attorneys, Reid Weingarten and Kelly Kramer, denied that their client had done anything wrong and vowed to fight, on behalf of their client, the charges.

“Among the allegations contained in the indictment, Congressman Renzi misused his public office by forcing a land sale that would financially benefit himself and a business associate, and in so doing, he betrayed the trust of the citizens of Arizona,” stated U.S. Attorney Diane J. Humetewa.

Did this come as a surprise to those named? Not a chance.

There has been an active question as to Renzi’s ethics ever since the FBI raided a family business last year. Questioned, the FBI said it was investigating whether Representative Renzi used his office for personal gain. Renzi stepped down from the House Intelligence Committee after the raid and has publically stated that he will not seek re-election. The 48-year-old Renzi, once a rising Republican in the nation’s capital, now faces calls for resignation and a possible prison term and fines if he is convicted.

Every choice has a consequence! As an ethics and white collar crime speaker, I share that simple five word statement with groups nationwide. So often you find people - from all walks of life - make choices that, to them, seem right at the time - only to find out that the consequences of their actions are far worse than they ever imagined. Under the circumstances, there are members of congress both democrat and republican who are asking if Renzi should step down as they question his ability to effectively represent his constituents.

A John McCain tie? Yes. According to the Arizona Republic:

Sen. John McCain, on the presidential campaign trail, said he feels for Renzi’s wife and 12 children, adding, “I don’t know any of the facts in the case. . . . I also have faith in the justice system.” Renzi is listed among two dozen co-chairs of McCain’s Arizona campaign. McCain said Renzi may have to step down because he will be tied up with the case.

Personal guess - Renzi will step down from the McCain election committee, not because he’ll be tied up with the case, but because he is now a liability and no presidential candidate needs that!

Outcome? Well, that’s uncertain at this time, but continue to read…as there will be more to come.

Business Ethics Speaker, Chuck Gallagher, welcomes your comments!

Former Auburn University Professor Given Five Years In Prison and Over $1.3 Million in Restitution! Comments by Ethics Speaker Chuck Gallagher

Commit a fraud - make that choice - and a consequence you won’t want - will follow! That’s exactly what happened to a former Auburn University Professor and Army Lt. Col. Loyd Frank Lawing, Jr., age 53, was sentenced to 63 months in federal prison, required to pay nearly $1 million in restitution and over $300,000 to the IRS.

Seems that Lawing embezzled nearly $100,000 from the Small Business Administration (SBA) in 9/11 disaster relief funds and over $940,000 from the Auburn University branch of Alpha Tau Omega (“ATO”). Lawings sentence is the longest sentence handed down for a case arising from fraud involving SBA 9/11 disaster relief loans in the nation, according to SBA’s Office of Inspector General.

“Mr. Lawing misused his fiduciary position with ATO and the SBA to embezzle funds,” said U.S. Attorney leura Canary. “His abuse of trust was reprehensible. Mr. Lawing’s sentence should serve as a warning to anyone else who is tempted to use their position to steal.”

According to a press release from the U.S. Department of Justice, Loyd Frank Lawing used the $940,000 embezzled funds for myriad purposes, such as a luxury SUV and $124,199.63 down payment for his new house. Apparently, Lawing also used the stolen money to help keep Bold Horizon Aerospace, Inc., where he was the president and CEO, afloat. Employees of Bold Horizon had no comment.

As a business ethics speaker, I often get asked the question: Is there a personality flaw that causes someone to engage in white collar crime? My answer: No. There are generally three things needed in order for white collar crime to exist: Need; Opportunity and Rationalization. Apparently, Lawing found one, if not more, of those items in order to pull of a fraud of this magnitude.

Before disbanding, ATO owned property at 730 W. Magnolia Ave. In July 2002, the fraternity sold the property for $1.4 million. ATO retained more than $930,000 from the sale, which was intended to eventually be used to buy or build another house, the warrant stated. That money should have been sitting in the bank, growing,” said Paul Kittle, coordinator of Greek life. “Only one person (Loyd Frank Lawing) was responsible for the account. All this does is sort of reinforces the point that when you have money being controlled, have more than one person in charge of the account.”

Rebecca A. Sparkman, Special Agent in Charge for the IRS, Criminal Investigation Division, stated, “The prosecution of individuals who intentionally conceal their income, even if obtained from an illegal source, is a vital element in maintaining public confidence in our tax system.”

Special Note: The comments by Special Agent Sparkman rings true. Not that I am proud of my past, but having spent time in federal prison for tax fraud - the reality is I embezzled funds and didn’t pay taxes on them. Frankly, it never crossed my mind. Regardless, one is taxed on income from all sources - hence, Lawing, much like I, will spend time thinking about his choices and wondering if was ever worth the price.

It is not worth the price! Every choice has a consequence. Make your choices count!

Business ethics speaker, Chuck Gallagher, signing off…

Over $600,000 Costs Priest Rodney Rodis Five Years In Prison! White Collar Crime By A Priest?

White collar crime is no respecter of persons. It seems that anyone can fall prey. Rev. Rodney Rodis, age 51, a retired Roman Catholic priest was sentenced to 63 months in federal prison. Why? Theft on a grand scale - Rodis plead guilty in October ‘07 to mail fraud and money laundering in a theft that amounted to more than $600,000.

Where did the money come from? Donations. That’s right donations from St. Jude Church and Immaculate Conception Catholic Church. The theft occurred between 2002 and 2006. According to published reports, Rodis set up bank accounts and a post office box where parishioners were directed to send their contributions. Funds from those accounts were then transferred to his personal accounts.

Why? Well, it seems that Rodis actually had a wife and family. Remember, he was a priest. Somehow, wife and family and priest don’t go together in the Roman Catholic Church. Rodis, who was married two years after he became a priest, in violation of church policy, said he was “leading a double life and wanted that to end.”

At sentencing the following was stated, “He did this for five years, systematically, and in a very organized way,” the Rev. Michael Duffy said. “Restitution is what we’re after.” I guess since it says in the Bible, “You reap what you sow,” that Rodis stole for 5 years so he will serve 5 years in prison.

As an ethics speaker, (www.chuckgallagher.com) I often tell audiences that every choice has a consequence. In this case, Rodis, who is also suffering from cancer, will have time to consider the consequences of his choices. Prison is no place to live ones life. While on one hand he made poor choices to provide for his family, he now will understand the long term effects that his choices will have on all.

If there were one thing I wish I could convey to folks - before they suffer the consequences of choices - it would be to think carefully about the choices they make as the consequences affect many surrounding the person making the choices.