Former Georgia Tech Employee Donna Renee Gamble Indicted! ‘P-Card’ Fraud - What was She Thinking? Comments by White Collar Crime Speaker Chuck Gallagher

Working for the Parker H. Petit Institute for Bioengineering and Bioscience at Georgia Tech in Atlanta, Donna Renee Gamble, age 43, was indicted by a federal grand jury on charges credit card abuse.

According to United States Attorney Nahmias, and other information presented in court: GAMBLE was employed by Georgia Tech in Atlanta, where she was assigned to the Parker H. Petit Institute for Bioengineering and Bioscience. As an employee of Georgia Tech, GAMBLE had access to one or more Georgia Tech credit cards, also known as Procurement Cards or “P-Cards,” which she was allowed to use for authorized official business purchases only. GAMBLE was prohibited from charging personal purchases on her Georgia Tech P-Cards. From April 2002 through April 2007, GAMBLE allegedly used her Georgia Tech P-Cards to purchase more than 3,800 personal items, at a total cost of more than $316,000. In an effort to conceal and disguise the personal nature of certain charges on her Georgia Tech P-Cards, GAMBLE allegedly created fake receipts, which she submitted to her supervisor, and made false entries in Georgia Tech’s accounting records. Grant money provided to Georgia Tech by the NSF was used to pay for GAMBLE’s personal purchases.

Now, as a white collar crime speaker, there are times when I have the feeling that a person might have gotten caught up in something that might have been unintended. However, in this case, it appears that there was clear thought in how the crime was committed.

Generally there are three components to any fraud: (1) need (or perceived need); (2) opportunity and (3) rationalization. Alleging to have purchased more than 3,800 items for personal use indicates that what might have started as need - grew! The opportunity was there - as often it is with ‘P-Cards’ in that it is difficult to have complete control (effective internal controls) when each person is given a card that is honored.

While most respect the responsibility that comes with such a card, there are always issues of fraud that seem to arise from those who get caught up in the opportunity for abuse. GAMBLE was on of several current and former university employees who have had their card usage scrutinized after an audit. What is astonishing in this case is the effort used to conceal the nature of the alleged fraud.

Gamble is charged with 22 counts of mail fraud and theft each of which carry a maximum sentence of 20 years in prison and a fine up to $250,000.

Stay tuned as I’ll report more later. Business ethics and white collar crime speaker, Chuck Gallagher, signing off…

Your comments welcome!

Child Sexual Predator - CBS Technician Sentenced to 10 Years in Prison!

As a teen ethics speaker, I have found that over time, more and more presentations are centered on sexual predators, the internet and how to protect our youth from folks who mean them harm.

On October 25, 2007, a Ft. Pierce Grand Jury returned an Indictment charging Daniel J. Barron with persuading, inducing, enticing or coercing a person under 18 to engage in sexual activity. Barron, a CBS freelance technician, was in Ft. Lauderdale, Florida covering a Miami Dolphins football game. On September 29, 2007, Barron entered an America Online chat room and began to correspond with an undercover police officer posing as the father of an eleven year old girl. During internet communications, Barron repeatedly expressed his desire to engage in sexual activity with the child. Barron made plans to meet the father and his fictitious 11 year old daughter. Barron later traveled to the meeting location in order to engage in sexual activity with the child.

According to local10.com news: The affidavit alleges that Barron said hello and wrote, “So do you and the kids all enjoy some adventure?” When the detective identified himself as an adult with an 11-year-old daughter, Barron allegedly responded, “Very, very cool. Not a cop.”

According to the affidavit, Barron asked if the undercover detective and his fictitious daughter would visit him. When the detective said he wasn’t interested in fantasy chat, Barron allegedly responded, “I am very serious. You and the dau come down here.”

Every choice has a consequence. On March 3, 2008 Daniel J. Barron was sentenced to 10 years in federal prison followed by 15 years of supervised released. At age 56, Barron will find the final years of his life marred by life in prison.

Sexual predators come from all walks of life and are all ages. One of the major issues that parents face is lack of knowledge of the playing field for sexual predators today.

Questions for Parents:

1. Do you know what sites your children visit?
2. Are you familiar with MySpace - Facebook and how social networking works?
3. Would you know what to look for if your child was viewing inappropriate sites?

Church Fraud - Joann Bollinger Sentenced to Prison for $800,000 Fraud. What was She Thinking?

On a late Friday afternoon in February, a gavel fell and Joann Bolliger was sentenced to federal prison and ordered to repay $800,000. Can you for a moment image what she was thinking as she heard the gavel drop?

History: In late December 2007 Bolliger pled guilty to conspiring to defraud St. Maurice Catholic Church by counterfeiting their checks. Bolliger, who worked as a bookkeeper at St. Maurice Catholic Church, conspired with another church employee to forge and alter payroll and other checks belonging to the church and then negotiated over $800,000 in checks for their personal enrichment.

Lisa Mazurkevitch, another church employee charged in the case, pleaded guilty in March 2006. She was sentenced that same year to six months of house arrest, five years of probation and ordered to pay $40,151 in restitution.

Reality: Every choice has a consequence. One cannot assume that any fraud committed will go unnoticed or that there will be no consequences. I speak from experience, as (although I am not proud of my past) I have spent time in federal prison for white collar crime. For a time, I believed that I was able to perpetrate a fraud that would go undetected. Such a believe is an illusion. You do reap what you sow.

In this case, Bolliger will soon report to federal prison. She will find that, while this experience will be humbling, different, and less than pleasant - it will be a growth opportunity for her should she choose to use it.

As a business ethics and white collar crime speaker, I know that a conviction and prison sentence does not limit one’s ability to rise above poor choices and make more effective positive choices. Hopefully, Bolliger will see the error of her ways and make use of this time to have a positive impact on the lives of others in the future.

Mortgage Fraud Scheme Leader Lazaro Villalba Pleads Guilty to an $8.3 Million Fraud!

Lazaro Villalba recently plead guilty to one count of conspiracy to commit bank fraud, wire fraud and mail fraud.

According to the US Attorneys office, Villalba is one of fifteen defendants previously charged in a wide-ranging mortgage fraud scheme. Lazaro Villalba and other co-conspirators orchestrated a scheme through which they located properties for sale in the Southwest Ranches area of Broward County, then fraudulently purchased the properties through straw buyers and received cash back at the closings.

The defendants include:

Henry Quintero-Lopez;
Lazaro Villalba;
Dahomey Talavera;
Antonio Ramos;
Joaquin M. Perea;
Raul Eric Garcia aka Eric Garcia;
Martine Yanisse Castrillon;
Felipe M. Nunez;
Michelle Volcy;
Luc Bruna;
Maykel Clavero-Gonzalez aka Maykel Clavero;
Iray Ponte;
Nidia Rodriguez-Rial aka Nidia Rodriguez; and
Iliana Lima.

Villalba would offer the owner’s full asking price and then inflate the contract purchase price to allow New World International and D& H Investments of South Florida, in both of which he had an ownership interest, to receive a finder’s fee, assignment fee and/or additional funds to allegedly construct improvements to the properties, thus creating “instant equity.” Villalba and a co-defendant would then recruit individuals, who for a fee acted as straw buyers of the properties. Villalba and a co-defendant would obtain fraudulent pay stubs, IRS Form W-2s, verification of employment and verification of deposit forms. These documents would be submitted to cooperating mortgage brokers and the loans were approved to purchase the properties.

The scheme yielded 12 fraudulent loans, totaling approximately $8,300,000.

Sentencing is set for May 16. Villalba faces up to 20 years in prison and a fine of up to $250,000.

Every choice has a consequence. Mortgage Fraud run rampant, this story includes straw buyers, fraudulent appraisals, and fraudulent loan documentation material (W-2’s, Pay stubs, etc.). Villalba orchestrated the scheme and his guilty plea will soon bring an end to this massive Mortgage Fraud in South Florida.

Mortgage Appraisal Reform - NY Attorney General Pushes for Agreement

Andrew M. Cuomo, New York Attorney General, announced agreement between his office and Freddie Mac and Fannie Mae allowing the two largest purchasers of home loans to buy only from those lenders that meet new standards for appraisals.

An independent organization will be established to implement and monitor new appraisal standards. The following was agreed to:

• Establishment of the “New Home Valuation Protection Code,” which creates requirements governing appraisal selection, solicitation, compensation, conflicts of interest and corporate independence, among other reforms. Under the new code mortgage brokers will be prohibited from selecting appraisers and lenders will be prohibited from using “in-house” staff appraisers to conduct initial appraisals or from using appraisal management companies that they own or control.

• Beginning January 1, 2009, Fannie Mae and Freddie Mac will require that lenders represent and warrant that appraisals related to mortgage loans originated on or after January 1, 2009 conform to the new code or they will not be purchased.

• The new “institute” which will be funded with $24 million from Fannie and Freddie will field complaints from appraisers who believe that their independence has been compromised and will protect those appraisers from retaliation. The institute will also establish a nationwide consumer hotline to manage complaints about appraisal fraud or violations of the new code. The institute will be funded with $24 million from Fannie Mae and Freddie Mac and will be required to report to OFHEO and the Attorney General’s office on a regular basis.

As reported in this blog, many of the mortgage fraud schemes revolve around fraudulent and/or inaccurate appraisals. Many appraisal companies are actively involved in the fraud schemes by inflating the appraisals on the properties in question. In some cases, they are paid a kickback based on the excess funding generated from the bogus loans and mortgage frauds.

The following quotes were from Mortgage Daily News: “Today’s agreement with Fannie Mae and Freddie Mac begins to set right what had gone so horribly wrong in the mortgage industry - rampant appraisal fraud,” said Cuomo. “The integrity of our mortgage system depends on independent appraisals. Again and again our industry-wide investigation found that banks were putting pressure on appraisers to drive up the value of loans just to make a quick buck. We believe the new standards, and the new independent monitor agreed to today, can begin to erase this problem from the industry.”

“Accurate, independent appraisals are very important to ensuring the safety and soundness of Fannie Mae and Freddie Mac and the mortgage market,” said OFHEO Director James Lockhart. “OFHEO is committed to working closely with fellow regulators, the Attorney General, Fannie Mae, Freddie Mac, appraisers, lenders and other market participants to assure that the roll-out of the new code builds upon best practices, recognizes constructive comments to identify further refinements, and avoids unintended consequences.”

According to the Office of Federal Housing Enterprise Oversight, “There are many significant provisions in the agreements that are designed to strengthen the independence of appraisers, including eliminating broker-ordered appraisals, prohibiting appraiser coercion, and reducing the use of appraisals prepared in-house or through captive appraisal management companies in underwriting mortgages.”

Questions:

1. Is this too little too late to correct the seemingly rampant fraud in the mortgage industry?
2. Will agreements like this become the norm as government sets out to ensure against mortgage fraud?
3. Should the industry be allowed to govern itself in light of the issues and mortgage crisis we face?

Your comments are welcome! Ethics and White Collar Crime Speaker - Chuck Gallagher - signing off…