Multi-Million Dollar Mortgage Fraud Scheme Verdicts - GUILTY! Austin, Texas Jury Finds Five Guilty

Every choice has a consequence. The rampant spread of mortgage fraud is no different. Unethical practices and outright blatant fraud brought a guilty verdict to several Texas area individuals.

• Cornelius Robinson, age 47, of Austin, Texas, who was the leader and organizer of the fraud scheme. Robinson was convicted of conspiracy to make false statements related to a loan, conspiracy to commit wire fraud, five substantive counts of wire fraud, 9 substantive counts of false statements related to a loan, one count of aiding and abetting the receipt of commissions or gifts from loans by a bank employee, conspiracy to commit money laundering and 7 substantive counts of money laundering.
• Michael Breon, age 39, formerly of Austin and a current resident of McKinney, Texas, and a straw purchaser. Breon was convicted of conspiracy to make false statements related to a loan, one count of wire fraud and one count of conspiracy to commit money laundering. Breon, a licensed loan officer and mortgage broker, was employed by several different loan origination and mortgage companies during the conspiracy.
• Sindu Sukumaran, age 36, wife of Michael Breon and a straw purchaser. Sukumaran was convicted of wire fraud.
• Marlon Nathan Torres, age 45, of Hutto, Texas, a licensed real estate agent and buyer and seller of real estate in the Austin area. Torres was convicted of one count each of conspiracy to commit money laundering and money laundering.
• Jeffrey Andre Wilkins, age 46, of Austin, a cousin of Cornelius Robinson and a straw purchaser. Wilkins was convicted of one count each of conspiracy to make false statements related to a loan, conspiracy to commit wire fraud, false statement related to a loan, conspiracy to commit money laundering and money laundering.

Eleven co-defendants plead guilty to other mortgage fraud related charges. They are:

• Silvia Seelig, age 45, of Austin, and wife of Cornelius Robinson who during the conspiracy, was a licensed real estate agent and a straw buyer;

• George H. Watson, age 55, of Austin, a licensed attorney who specializes in real estate transactions. Watson served as the closing attorney on most of the real estate transactions described in the Indictment;

• James Douglas Atwood, age 51, of Austin, Cornelius Robinson’s uncle and a straw buyer;

• Doris Ann Hill, age 40, of Austin, a personal banker employed at Wells Fargo Bank. For a fee, Hill agreed to provide a false verification of deposit to loan underwriters in relation to three real estate transactions involving defendant Snead;

• Julius Meyers Lofton, a 45-year-old licensed real estate agent living in Austin and a straw buyer;

• Roy Rivers, age 52, of Austin, and a straw buyer;

• Danielle Guice Rosas, age 40, of Austin, and a straw buyer;

• Stanley Ma, age 27, of Honolulu, Hawaii and a straw buyer;

• Leonard Brown, age 38, of Houston, Texas, who provided a false verification of employment in association with Onyx Consulting and defendant Ma;

• Russell Snead, age 43, of the Seattle, Washington area and a straw buyer; and,

• Leroy Williams, age 46, of Austin and a straw buyer.

According to the US Attorney’s office: From September 1999 to present, the defendants participated in a scheme to defraud mortgage lenders, including federally insured financial institutions, with regard to loans acquired to purchase 25 properties in the Austin and San Antonio area. The scheme centered upon the use of real estate “flips.” That is, the defendants purchased property at one price and would immediately sell, or “flip,” the property to a “straw buyer” at a higher price. In doing so, the mortgage lenders were deceived as to the true nature of the transaction and the financial status of the “straw buyer.” The straw buyers did not make the subsequent monthly mortgage payments
and all of the loans have gone into default. All of loans have been either foreclosed upon or are the subject of current foreclosure proceedings.

As previously reported on this blog - The Mostly Texas Sixteen have now seen the indictment turn into either guilty pleas or guilty verdicts. My guess is that most will face active prison sentences with the longest sentence being reserved for Cornelius Robinson who I suspect will face 10+ years - perhaps longer.

Every choice has a consequence. As a white collar crime and mortgage fraud speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. While Robinson and others may have avoided the consequences of their actions for a time, they did not avoid the consequences all together. One thing is for sure, you do reap what you sow.

As those who pleaded guilty will be sentenced on June 6th and those just found guilty will be sentenced on June 20th - they will soon know just what their fraudulent actions will bring to them in the form of prison consequences.

If anyone reading has any background on Robinson - feel free to comment as I study the behaviors and backgrounds of those who are accused of unethical conduct and white collar crime.

White Collar Crime and Business Ethics Speaker - Chuck Gallagher - signing off…

National Ethics Survey Released for Non-Profit Workers

Recently the Ethics Resource Center conducted a survey of nonprofit workers at the same time that public and private sector employees were asked to assess their ethical environments.

ERC’s 2007 National Nonprofit Ethics Survey, recently released, showed:

• As in the past, nonprofit organizations’ ethical standing remains superior to the other sectors.
• Nevertheless, integrity in the nonprofit sector is eroding; misconduct is rising — particularly financial fraud, which now is more prevalent among nonprofits than in business or government.
• Size makes a difference, with mid-sized nonprofits at greatest risk for misconduct.
• Boards, while very important in shaping the perceptions of employees with regard to ethics, are not taking advantage of their influence to set clear ethics standards for their nonprofit organizations. Where boards have heavy influence, there also are high levels of misconduct and lower perceptions that top leaders prioritize ethics.

“One would think that freed from the pressure to generate and distribute profits to shareholders, nonprofit organizations would rise high above the myriad ethics and compliance issues that have plagued the public and private sectors over the years,” said ERC President Patricia Harned, Ph.D. “Unfortunately, the 2007 National Nonprofit Ethics Survey (2007 NNES) paints a very different picture. The nonprofit sector that for so long enjoyed a better reputation with regard to its ethics now exhibits many of the shortcomings ERC found in its companion surveys of the public and private sectors.”

ERC found that the key ethical challenges for nonprofits fall along the same lines as for the private and public sectors. In 2007, the types of misconduct most widely observed by nonprofit employees were: putting one’s own interests ahead of the organization’s — 24%; lying to employees — 21%; abusive behavior and misreporting hours worked — each 19%.

For more information about Ethics Resource Center, visit http://www.ethics.org

Every choice has a consequence. As a business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. Many major ethics lapses wind up with a conviction and possible prison sentence. Prison is no fun! You do reap what you sow.

As with most of my blogs - COMMENTS ARE WELCOME.

Have you witnessed any unethical behavior as a result participation in a non-profit organization.

Business Ethics Speaker - Chuck Gallagher - signing off…

Mortgage Fraud Crisis and House Stealing - How Widespread is the Criminal Activity?

Over the past several months I have written a number of blog articles about the consequences of what appears to be rampant mortgage fraud - especially in the subprime lending arena.

A wonderful article was written a week or so ago by Robert Schmidt, writer for Bloomberg.com. The article appears in full here. In the article Schmidt writes:

The U.S. Justice Department is conducting a broad review of the subprime lending crisis to see if there is a “larger criminal story” to the mortgage meltdown, Attorney General Michael Mukasey said.

Mukasey said the agency hasn’t decided if the turmoil merits a response similar to the Bush administration’s corporate fraud crackdown that began in 2002 after the collapse of Enron Corp. Still, he told reporters in Washington today, the department’s criminal division is now weighing how to address the issue.

“We’re considering information that’s coming in and possible legal theories,” Mukasey said. “People are looking at the law to see to what and to whom it might apply.”

The FBI, the Justice Department’s investigative arm, announced earlier this year it was investigating 14 corporations for possible accounting fraud related to the mortgage rout; the number now is almost 20. The collapse in the credit markets has forced people from their homes, shaken Wall Street and become a major issue in Congress and the presidential campaign.

In the White Collar Crime Blog the question has been asked if Mukasey will appoint a Mortgage Fraud Task Force much like the Corporate Fraud Task Force that was set up after the Enron - Worldcom - scandals? According to a report from the New York Times, “LAST month, almost 225,000 properties in the United States were in some stage of foreclosure, up nearly 60 percent from the period a year earlier, according to RealtyTrac, an online foreclosure research firm and marketplace.”

As a white collar crime and business ethics speaker, I have seen a dramatic up tick in the number of requests for information about this form of white collar crime. It seems that every week there is a new form of fraud revealed.

On March 25, 2008 the FBI issued an interesting article on one of the latest scams: HOUSE STEALING. The report reads as follows:

What do you get when you combine two popular rackets these days—identity theft and mortgage fraud? A totally new kind of crime: house stealing.

Here’s how it generally works:

… The con artists start by picking out a house to steal—say, YOURS.

… Next, they assume your identity—getting a hold of your name and personal information (easy enough to do off the Internet) and using that to create fake IDs, social security cards, etc.

… Then, they go to an office supply store and purchase forms that transfer property.

… After forging your signature and using the fake IDs, they file these deeds with the proper authorities, and lo and behold, your house is now THEIRS.

There are some variations on this theme…

… Con artists look for a vacant house—say, a vacation home or rental property—and do a little research to find out who owns it. Then, they steal the owner’s identity, go through the same process of transferring the deed, put the empty house on the market, and pocket the profits.

… Or, the fraudsters steal a house a family is still living in…find a buyer (someone, say, who is satisfied with a few online photos)…and sell the house without the family even knowing. In fact, the rightful owners continue right on paying the mortgage for a house they no longer own.

It can get even more complicated than this, as we learned in a recent case out of Los Angeles that we investigated with the IRS. Last year, a real estate business owner in southeast Los Angeles pled guilty to leading a scam that defrauded more than 100 homeowners and lenders out of some $12 million. She promised to help struggling homeowners pay their mortgages by refinancing their loans. Instead, she and her partners in crime used stolen identities or “straw buyers” (people who are paid for the illegal use of their personal information) to purchase these homes. They then pocketed the money they borrowed but never made any mortgage payments. In the process, the true owners lost the title to their homes and the banks were out the money they had loaned to fake buyers.

So how can prevent your house from getting stolen? Not easily, we’re sorry to say. The best you can do at this point is to stay vigilant. A few suggestions:

If you receive a payment book or information from a mortgage company that’s not yours, whether your name is on the envelope or not, don’t just throw it away. Open it, figure out what it says, and follow up with the company that sent it.

From time to time, it’s also a good idea to check all information pertaining to your house through your county’s deeds office. If you see any paperwork you don’t recognize or any signature that is not yours, look into it.

House-stealing is not too common at this point, but we’re keeping an eye out for any major cases or developing trends. Please contact us or your local police if you think you’ve been victimized.

If you think you’ve been a victim of mortgage fraud, feel free to comment and keep in mind report in appropriate activity to law enforcement.

Hurricane Rita Fraud - Bob Allen Hayes, Jr. Sentenced to Prison

Every choice has a consequence. Seems that some people feel that major disasters are the open door to make choices that they otherwise might not make. Perhaps this is the case with Bob Allen Hayes, Jr. who plead guilty to making false statements to FEMA when he applied for disaster relief.

Hayes, a 32 year old Houston, Texas man was sentenced to 6 months in federal prison and ordered to make restitution in the amount of $19,784.27.

According to the US Attorney’s office: Hayes claimed his primary residence in Port Arthur, Texas sustained damage during Hurricane Rita in September 2005. Hayes also claimed his personal property sustained damage during the hurricane. In fact, Hayes did not live at the residence in Port Arthur during the storm and did not suffer losses which entitled him to receive FEMA assistance. An investigation revealed that the residence in question was owned by the Port Author Housing Authority and was vacant at the time of the storm. Hayes fraudulently received approximately $20,000.00 in disaster related assistance for his claims.

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. While Hayes avoided the consequences for a time - he did not avoid the consequences all together. Prison is no fun and will prove to be a dramatic change from his prior activities. You do reap what you sow.

If anyone reading has any background on Hayes - feel free to comment as I study the behaviors and backgrounds of those convicted of white collar crime.

White Collar Crime Speaker - Chuck Gallagher - signing off…

Ethics Violation Investigations - HUD Secretary Alphonso Jackson Resigns!

Ethics is a major branch of philosophy, encompassing right conduct and good life according to Wikipedia. In the case of someone stepping down from a significant position within the government, the “good life” portion may now be in question.

Having grown weary of multiple ethics investigations, HUD Secretary Alphanso Jackson has been hinting at the possibility of resignation for over a year.

According to a report by CNN: The FBI has been investigating allegations that Jackson steered a federal contract to a golfing buddy based in South Carolina. Jackson has denied wrongdoing and White House officials have said for months that the president still has confidence in Jackson. No charges have been filed against him.

A long time friend of President Bush, before being confirmed head of HUD, Jackson ran Dallas’ housing authority and lead a Texas power company - American Electric Power - Texas in Austin.

Jackson stated speaking to reporters, “As the son of a lead smelter and nurse midwife, and the last of 12 children, never did I imagine I would serve America in such a way. I am truly grateful for the opportunity. We have helped families keep their homes, we have transformed public housing, we have reduced chronic homelessness, and we have preserved affordable housing and increased minority homeownership.”

THE ALLEGATIONS:

Senator Chris Dodd, D-Connecticut, earlier in the month demanded Jackson’s resignation. Dodd said an inspector-general’s report recently stated that Jackson had advised staffers to “take political affiliation into account in awarding contacts,” and “serious allegations about his impropriety” are under investigation in three cases, although Dodd did not name them.

According to a CBS report: Jackson has been involved in a controversy over a Philadelphia redevelopment project, with accusations aired in a lawsuit that Jackson tried to retaliate against a city agency after it refused to award a contract to one of his friends. Jackson and other HUD officials have denied any wrongdoing.

The Washington Post states: The lawsuit alleges that Jackson, in a call to Philadelphia’s mayor in late 2006, demanded that the authority turn over the $2 million property to developer Kenny Gamble. Jackson’s top assistant secretaries insisted in numerous letters and calls in 2007 that, if Philadelphia didn’t give the property to Gamble, the housing authority would be found in violation of a federal contract. The housing authority’s director, Carl R. Greene, repeatedly refused.

Fox News reports: The FBI has been examining the ties between Jackson and a friend who was paid $392,000 by Jackson’s department as a construction manager in New Orleans after Hurricane Katrina.

Again, according to Fox News: Last year, the inspector general at Jackson’s department found what it called “some problematic instances” involving HUD contracts and grants, including Jackson’s opposition to money for a contractor whose executives donated exclusively to Democratic candidates.

The Dallas Business Journal writes: According to an internal copy of the IG’s findings, obtained by the DBJ through a Freedom of Information Act request, top aides to Jackson testified that they and other senior staff members were advised to take political leanings into consideration when awarding discretionary contracts.

ETHICS:

A number of issues surround Jackson’s work while at HUD. Often people find that power corrupts and that corruption can blur moral and ethics boundaries. It has been said that there is no such thing as business or political ethics, there are only ethical people. But “ethics” do exist. It is their application - or lack thereof - that is often called into question. What is being questioned is Jackson’s application of ethical and moral principles as they apply to his job as HUD Secretary.

Increasingly, with every choice being scrutinized, the application of choices in the ethical arena are under the microscope of conscience-focused public demand for fair and right. While politicians routinely make choices that benefit their constituents - it is generally deemed “unethical” to break the law or be so blatant about the political favors granted that one is accused of being “unethical.”

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. While Jackson may have been supported by President Bush he did not avoid the consequences of how he handled his department. His resignation is not all related to personal and family matters - not when you resign under fire. What effect this has on any on-going criminal investigation is unclear at this time. One thing is for sure, you do reap what you sow.

If anyone reading has any background on Jackson - feel free to comment as I study the behaviors and backgrounds of those who are accused of unethical conduct.

Business Ethics Speaker - Chuck Gallagher - signing off…

Mortgage Fruad Nets Randall Aaron Davidson Ten Years In Federal Prison - Comments By Business Ethics Speaker Chuck Gallagher

You reap what you sow. This is a lesson I learned years ago when I stood before a judge and was sentenced to federal prison. I am not proud of my past or the choices I made to get the sentence I received, but one thing I learned clearly is - You reap what you sow.

Randall Aaron Davidson, age 58, of Fairborn, Ohio has now learned that as well as he was sentenced to 10 years imprisonment for his role in a conspiracy that defrauded real estate investors and banks of more than $20 million over a seven year period.

According to the US Attorney’s office, Davidson led a scheme that involved manipulating documents associated with real estate sales and closings in order to obtain excess mortgage loan proceeds generated from the property sales.

Mary J. Donaldson, Michael McWhirter, Jocelyn Hammond and others were charged along with Davidson in a 14-count indictment on September 14, 2005 with multiple felonies, including money laundering, conspiracy to commit money laundering, conspiracy to conduct fraudulent real
estate transactions, bankruptcy fraud, mail fraud, wire fraud, and falsifying loan applications. Davidson pleaded guilty on February 9, 2007 to one count of bankruptcy fraud and one count of conspiracy to commit money laundering, along with one count of income tax evasion charged in a separate bill of
information. Davidson instigated the mortgage fraud scheme in 1998, which continued until his arrest and indictment in 2005.

As is true in many federal cases, from the time of indictment and arrest to the time of sentencing, many years can pass. More about the crime from the US Attorney’s news release:

As leader of the conspiracy, Davidson owned and operated Capital Properties, Knab Mortgage, MJR Telecapital Investments, MTR Property Consultants, and Restoration, Inc. among others. Davidson recruited unsuspecting investors to purchase low income, dilapidated and depressed properties in the Dayton area at prices artificially inflated above legitimate fair-market values. The
mortgages were financed with fraudulent loans facilitated, brokered and closed by Davidson and his conspirators. The conspirators provided the down payments on the properties, paid kick backs to the loan applicants, and opened bank accounts to disguise the true nature, location, source, ownership and
control of the proceeds and profits from the transactions. Davidson also evaded payment of more than $359 thousand in taxes on his $1 million earnings in 2002. At the conclusion of his prison term, Davidson must serve five years on supervised release. He was also ordered to pay a money judgment of $13.1 million.

NOTE: As a speaker on business ethics and white collar crime, I often receive calls from people who have been scammed by activities much like have been reported above. In some cases “straw buyers” are recruited in unsuspecting ways. The call I received just last week reported that he (unnamed for privacy purposes) had been recruited to help out a neighbor - after all had been said and done, his kindness was rewarded by ruining his credit as he was effectively made a straw buyer for a mortgage fraud scheme. REMEMBER: if you don’t know everything that is taking place and why, don’t do it!

Timothy Pearson was charged in a separate bill of information for his role in the conspiracy. Pearson pleaded guilty on March 12, 2007 to one count of conspiracy to commit money laundering and two counts of attempting to evade of defeat federal income tax. According to the statement of facts filed in court, Pearson participated in approximately 365 fraudulent real estate closings, helping his co-conspirators obtain in excess of $13 million in the scheme. Pearson is scheduled for sentencing in April.

Now, you have to know that he’s sweating his sentencing since Davidson got 10 years!

Serving as the closing agent for many of the fraudulent real estate transactions, Jocelyn Hammond was charged in a separate bill of information with conspiracy to commit mail fraud, wire fraud and money laundering. Hammond pleaded to the charges against her on January 29, 2008 and is
scheduled for sentencing in May.

Likewise, I’m sure there’s concern after seeing a 10 year prison sentence imposed.

The victims in the conspiracy included more than 70 financial institutions located throughout the United States that were tricked into making loans in excess of the true market value of the homes, along with over 38 real estate investors who were left with overvalued, virtually uninhabitable rental property on which they owed more than the property was worth. The conspiracy involved the fraudulent closing and sale of over 350 residential properties, 300 of which were located in Montgomery County, Ohio.

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. While Davidson and others may have looked good for a time and avoided the consequences - they did not avoid the consequences all together. Prison is no fun and Davidson is facing 10 years plus substantial restitution for his conviction. Likely he will serve time and that will prove to be a dramatic change from his prior activities. You do reap what you sow.

If anyone reading has any background on Davidson or was defrauded by him - feel free to comment as I study the behaviors and backgrounds of those convicted of white collar crime.

White Collar Crime Speaker - Chuck Gallagher - signing off…

Health Care Fraud - Indictment - Sam Smith Hill, III Charged with Fraud

Every choice has a consequence. It seems in the case of Sam Smith Hill III, 61, a licensed psychologist with a professional office in Corpus Christi was indicted as a result of a three and a half year joint investigation conducted by the FBI and the State of Texas Office of Attorney General–Medicaid Fraud Control Unit, Corpus Christi Division.

According to the US Attorney’s office the indictment alleges that between Jan. 2001 and Feb. 2008, Hill devised and executed a scheme in which he billed Medicaid and Blue Cross and Blue Shield of Texas through the Federal Employees Health Benefits Program for psychological testing conducted by employees and interns in his office, none of whom were licensed psychologists.

Hill is charged with 15 counts of health care fraud accusing him of fraudulently billing Medicaid and Blue Cross Blue Shield on 15 separate occasions during the relevant time period for services not performed by him. Each count carries a penalty of not more than 10 years imprisonment.

Indictments are formal accusations of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.

Hill’s attorney Keith Gould said his client is completely innocent and intends to vigorously fight the charges. He said it generally is standard operating procedure to have master’s-(degree)-level psychologists assist with testing.

“This whole thing is embarrassing for Doctor Hill and it never should have happened,” Gould said. “Doctor Hill is one of the most honest men I know. We’re looking for our day in court.”

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. Any one charged with fraud has their work cut out for them as they mount their defense. Prison is no fun and will prove to be a dramatic change from his prior activities should he be convicted.

If anyone reading has any background on Hill and the services he provided - feel free to comment as I study the behaviors and backgrounds of those indicted and/or convicted for fraud.

Business Ethics Speaker - Chuck Gallagher - signing off…

Couple Scammed by a Fake IRS Agent! Just Who Can You Trust These Days?

So here you and the family are on a hot August day in Arizona and the IRS (so you think) just comes walking up to your door. You’re being audited - he might have said. Not the kind of thing you ever want to hear. But, Ben Carranza - fake agent for the IRS - presents himself. In your desperation to just make him go away, you give him money. O.K., I know bribery is illegal, but you’re desperate so what the heck.

Turns out - Ben Carranza - was Marco A. Ibarra, age 52, of Phoenix. This week he was indicted by a federal grand jury for Impersonation of an Internal Revenue Service Agent.

The investigation is ongoing and the public’s assistance is requested by the U.S. Department of the Treasury, Inspector General for Tax Administration. Anyone with information regarding Ibarra, or anyone who believes they are a victim of his impersonation scheme, should contact Special Agent Bruce A. Mason at 602-207-8304.

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. You do reap what you sow. While an indictment is not an indication of guilt, rarely does a person indicted for something like this end up being found not-guilty.

Friedman’s Jewelers CEO Bradley Stinn - GUILTY - Accounting Fraud Scheme! Comments by White Collar Crime Speaker Chuck Gallagher

Pump up those sales! We’ve got to make the quarter! How often are those command heard and how tempting is it to make the wrong choices in order to please the investing public and Wall Street?

Following six weeks of trial - Bradley Stinn, age 47, - former CEO of Freidman’s, Inc. and Crescent Jewelers, found himself being convicted of securities fraud, mail fraud and conspiracy. Likewise, in addition to Stinn’s conviction, the former CFO, Victor Suglia and form Controller, John Mauro have entered guilty pleas into what was a massive accounting fraud.

So what happened? According to the US Attorney’s news release:

During the period of the conspiracy, Friedman’s was the third largest specialty retailer of fine jewelry in the United States, operating 686 stores in 20 states. The government’s proof at trial established that Friedman’s encouraged its sales personnel to increase sales by inducing customers to finance their jewelry purchases using the company’s installment credit program, which was used to finance more than half of Friedman’s $400 million in annual net sales. A major aspect of the fraud scheme was concealing that Friedman’s was increasingly unable to collect money owed by customers who bought jewelry on credit. Friedman’s collection problems stemmed from the company’s widespread failure to follow its own credit-granting guidelines – guidelines that STINN falsely told investors were strictly enforced. In fact, STINN and other senior executives encouraged routine violations of the guidelines to increase the company’s reported sales.

To cover up the collection problems, STINN caused Friedman’s quarterly reported credit statistics to understate the delinquency of its credit portfolio, and caused Friedman’s to report false earnings numbers. In some cases, the false earnings reported by Friedman’s met or exceeded the public estimates of professional stock analysts, and resulted in the artificial inflation of Friedman’s stock price.

Between November 2003 and May 2004, Friedman’s stock price lost more than half its value. On November 11, 2003, the stock closed at $11.99 per share. On May 6, 2004, the New York Stock Exchange halted trading in Friedman’s stock, at which time the stock was trading at $4.97 per share. On January 14, 2005, Friedman’s filed for Chapter 11 bankruptcy.

Stinn’s lawyer, David Shapiro, confirmed the verdict. “We’re obviously very disappointed,” Shapiro said. “We think it was against the weight of the evidence. We think that there were some significant appeal issues in the case, and we are going to pursue an appeal.”

Was the pressure of financial performance so great that you would jeopardize your freedom and life to hit the numbers?

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. While Stinn may have looked good hitting the numbers for a time and avoided the consequences - he did not avoid the consequences all together. Prison is no fun and Stinn is facing 25 years for his conviction. Likely he will serve time and that will prove to be a dramatic change from his prior activities. You do reap what you sow.

If anyone reading has any background on Stinn - feel free to comment as I study the behaviors and backgrounds of those convicted of white collar crime.

White Collar Crime Speaker - Chuck Gallagher - signing off…

 

Former Human Resources Director for Sage Telecom - William Chad Mercer - Sentenced to Federal Prison for White Collar Crime

For some reason, as often as I report on white collar crime, I always seem to find myself amazed at where the crime originates from. In this case, the Allen based company that provides telephone and internet services - Sage Telecom - found itself the losing end of a white collar crime scam.

Seems that William Chad Mercer - also known as Bryson Mercer - between March 2004 through November 2005, submitted false invoices to Sage Telecom representing that temporary employment services totaling $5,130,407.48 had been provided when they had not. Mr. Mercer wrote invoices for temporary employment and other employee services. He was authorized to approve payments for the company and made payments to a fake companies he created.

A federal indictment charging Mercer with 10 counts of mail fraud was returned by a federal grand jury on May 10, 2007. Mercer remained a fugitive until he was arrested in August 2007.

Mercer, age 36, from Plano, Texas was sentenced to 78 months in federal prison for mail fraud violations and was also ordered to pay over $2.4 million in restitution and to forfeit almost $2.7 million.

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. While Mercer avoided the consequences for a time - he did not avoid the consequences all together. Prison is no fun and will prove to be a dramatic change from his prior activities. You do reap what you sow.

If anyone reading has any background on Mercer - feel free to comment as I study the behaviors and backgrounds of those convicted of white collar crime.

White Collar Crime Speaker - Chuck Gallagher - signing off…