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…