Herbert Jena will remember April 15th for years to come – likely from Federal Prison

Herbert Jena, the former owner of Montfort Tax Services and Jackson Hubbert tax preparation business in Dallas and Fort Worth, Texas, was on April 15th  (TAX DAY) convicted on one count of conspiracy to defraud the Internal Revenue Service (IRS) and one count of obstruction of justice.  He faces a maximum statutory sentence of 15 years in prison, a $500,000 fine and restitution.

In addition to owning Montfort and Jackson Hubbert, Jena also worked as a tax preparer at the businesses. Co-defendants Aurora Perez and Nancy Munoz, who worked for Jena as tax preparers, each pleaded guilty in 2007 to a conspiracy charge and testified for the government at his trial. According to the indictment, both Perez and Munoz are Irving, Texas, residents; Jena resided in Dallas. A sentencing date has not been set for the defendants.

The government presented evidence at trial that from December of 2006 through February 2007, Jena, 33, conspired with Perez, Munoz and others to defraud the U.S. by impeding, impairing, obstructing and defeating the lawful functions of the IRS. From 2004 through 2006, Jena obtained and used approximately 15 Electronic Filer Identification Numbers (EFINs) to electronically file tax returns. Jena and his co-conspirators submitted fraudulent income tax returns to the IRS that included false claims for refunds and credits. Witnesses testified that Jena instructed his employees to “make up” numbers for the Telephone Excise Tax Refund (TETR) and false Fuel Tax Credit (FTC) claims, which resulted in false credits and fraudulent refunds. The scheme also resulted in refund and credit overpayments by the IRS and unearned and fraudulent tax preparation fees paid to Jena. Jena directed his co-conspirators and others to hide the portions of the tax returns that showed the true amount of Jena’s tax preparation fees from the taxpayers.

According to evidence presented, for the 2006 tax season, Jena and his co-conspirators solicited and recruited approximately 1600 individual taxpayers to file returns with Jena’s tax preparation businesses. Between January 12, 2007, and February 29, 2007, Jena used his multiple EFINs to electronically file a total of approximately 1681 individual tax returns. Of that amount, approximately 1400 contained fraudulent and false information. Approximately 1236 contained requests for false TETR credits, totaling approximately $1,618,267. Approximately 774 of the tax returns contained requests for false FTC credits, totaling approximately $1,165,758. The government also presented evidence that during the conspiracy, Jena earned more than $500,000 in tax return preparation fees.

With regard to the obstruction of justice charge, the government presented evidence that in June 2007, during the pre-trial discovery process, Jena caused his attorney to produce fraudulent documents to the government. Trial testimony showed that these documents were fictitious employee termination letters and altered employee training records.

Louis Simpson – 15 Years in Prison for a $948,500 fraud. The cost of white collar crime is rising!

150 years for Bernie Madoff and that just seems to be the start when it comes to substantial sentences for white collar crime.  It seems that judges are becoming tired of people being ripped off.  In fact, now a white collar criminal could receive a sentence longer than another person convicted of manslaughter.  The times they are a changing.

Take the example of Louis Simpson. a 60-year-old Indianapolis, Indiana man who was sentenced to federal prison for his role in an investment fraud scheme in the Eastern District of Texas.  SIMPSON was sentenced to 183 months in federal prison on Apr. 29, 2010 and ordered to pay restitution in an amount to be determined at a later date.

According to information presented in court, beginning in 2006, Simpson devised a marketing scheme to defraud investors by claiming to operate a fraudulent program that he had with the Department of Housing and Urban Development (HUD).  Simpson marketed the fraudulent program to investors and obtained approximately $948,500 in wired funds from these investors.  To facilitate the scheme, Simpson provided investors with fraudulent letters from HUD officials and false bank documents from financial institutions.  Simpson was indicted by a federal grand jury on June 11, 2008 and charged with federal violations.  After a five-day trial, a jury found Simpson guilty on Oct. 29, 2009 of seven counts of wire fraud and two counts of aggravated identity theft.

The Financial Fraud Enforcement Task Force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Every choice has a consequence.  As a business ethics and fraud prevention speaker, I know too well that unethical choices can have disastrous consequences that can be life changing.  In this case Louis Simpson will have plenty of time to evaluate his choices.

Sex after Prostate Cancer – is there hope for a normal life?

I’ll never forget the day when my primary care physician said, “You’re PSA a bit high.  I’m sending you to a Urologist.”  My first question – “What’s a PSA?”  Needless to say, I quickly learned.  In the two weeks following I found that my trips to the Urologist brought the news that no man wants to hear.  “You’ve got Prostate Cancer.”

Cancer – that’s a word that no one wants to hear about themselves or those they love.  Yet, like over 200,000 men each year in the US I was faced with the issue of treatment choices and the consequences that followed.  My diagnosis age – 47.  My treatment age 48.  My age today…soon to be 53.  My motive for writing this blog…to offer practical information and hope.

Beyond surviving prostate cancer – which detected early – is quite survivable, the main question that I hear from men – either after diagnosis or soon after treatment – relates to the return of sexual function.  Frankly, that question is often a matter of concern to their partner as well.  Since I have been open and quite transparent about my experiences, I often get calls from partners and prostate cancer survivors asking for help in know what to expect and when.  And, frankly, in just about every case I’ll pose a few questions and now, I’ve come to expect, a routine set of predictable answers.  So, I’m taking the time to deviate from my normal blog entries to address some practical answers to questions related to sex following prostate cancer – is there hope for a normal life.

So we don’t rehash old news I am providing links to prior posts that are still relevant today.

http://chuckgallagher.wordpress.com/2008/02/23/sex-after-prostate-cancer-surgery-what-can-you-expect-comments-by-motivational-speaker-and-cancer-survivor-chuck-gallagher/

http://chuckgallagher.wordpress.com/2008/10/04/sex-following-prostate-cancer-the-real-truth-from-a-prostate-cancer-survivor/

LET’S BE PRACTICAL…

First, I’m not a doctor, so please understand that my approach here is to help from a layman’s perspective and one who has personally been through want many are experiencing and/or asking today.

Assuming we are NOT dealing with advanced prostate cancer, the likelihood of survival is good and the treatment options aren’t bad.  I elected to use the DaVinci Surgical Method and am very pleased with the results.  But, immediately following surgery and for sometime thereafter I have to admit (as you can read in the blog entries above) I was less that pleased with my sexual function – or lack thereof.  So let’s look at what is realistic first.

Think of your prostate as a small balloon and the nerves that allow for an erection to take place as silly string that has been squirted on the balloon.  Get that picture in your mind clearly and then (I’ll use my case) understand that for 47 years (in my case) my body has had that little balloon inflated inside of me with the nerves (silly strong) laying on top of the balloon for all that time.  That (to our bodies) is normal.

OOPS…then someone comes along and says “You’ve got cancer.” In other words the air inside your balloon is defective and needs to be removed – after all you don’t need it anyway.  Then…the surgeon (assuming that’s the treatment route you take – but my example is not limited to that treatment) pops the balloon (removes the air) and all that is left is a thin shell of what the balloon used to be.  In effect, that’s what’s left of your prostate following surgery (assuming the use of the nerve sparing technique).  Ah…and those (formerly comfortable nerves) and now completely disturbed – crushed if you will – on the shell of the balloon that for so long was nicely inflated.

Put yourself in the nerves place…  For 47 years they existed in the comfort of your body doing just what they were supposed to do – provide a signal that allowed for an erection.  Then…one day, their world changes and no longer are they comfortable.  Their world has been substantially destroyed and, frankly, they don’t know what to do.  For those who find this too simplistic…sorry, the example here is practical, understandable and it works.  Anything that is changed that much fails to function normally.  It’s no different that if you experienced the loss of your home in a hurricane.  Life dramatically changed and you can’t go back to your old routines with any ease.  That, my friends, is where your body is following prostate cancer treatment.

SO WHERE FROM HERE…?

Now, let me be quite candid, I’m speaking to men and their partners from here forward in an honest and forthright way.  The remainder is an adult conversation so understand that as you read.  If you do not wish to talk about sexual function in a direct way…STOP READING.  Go do something else, this blog is not for you.  Otherwise, I will hold nothing back and do my best to provide honest practical advice that can help the reader in the long run.

MEN…it’s time for rehabilitation.  Before  you or your partner laugh, ask yourself this question.  If you had a knee replaced or a hip replaced, after the surgery would you participate in extensive rehabilitation or would you sit on the couch and assume that with time it would just get better?  I can’t speak for all folks, but those that I know who have had either – hip or knee replacement have said that rehabilitation (no matter how initially uncomfortable) was worth it in the end.  Why?  They regained primary function of their legs, etc. if they relearned how to use their body following the trauma of surgery.

Guys…the same is true with your nerves and penis.  STOP…THINK ABOUT IT… You must take the time and put forth the effort to relearn to use your dramatically disturbed nerves and relearn how to regain sexual function.  It isn’t easy, but it can be done…I’m living proof.

STEP ONE:

I recall a physician at Johns Hopkins sitting with me and having a frank conversation regarding sexual function following prostate cancer surgery.  He stated (and this isn’t verbatim) the following:

• Your nerves have been damaged.  They were saved, but the no longer rest comfortably on your prostate…
• Any time your body suffers trauma it takes time for it to recover.  You’ll feel better on the outside and, likely in fact, find that most functions return to good working order sooner – much sooner – than your sexual function…
• Expect it to take 18 months before you can expect to have a normal sexual function…
• The more you put your sexual function into “rehab” the greater the likelihood that you’ll re-gain normal function…

The “Rehab” was a new concept to me.  But, as he explained it, it really all made sense.  So…STEP ONE:  Recognize your age and understand that sexual function for me tends to decrease with a natural decrease in testosterone as we age.  We aren’t 17 so quit thinking we are and accept that there is a natural decline in erectile function with age.

STEP TWO:

My Doc preceded to share some practical wisdom.  He said, something to the effect, that when (prior to surgery) you and your wife had sex – you were making love.  It was an experience of pleasure between two people.  It was not clinical.  Now, however, the Doc proceeded to share – you need clinical help – rehab of sorts.  No…you don’t need an “escort clinician” to rehab your penis.  Rather, you need to understand that the more you exercise the entire sexual function, including your penis, the greater the chance of a complete recovery.

Therefore, he warned, don’t assume that your wife’s function is to do your rehab for you.  In fact, he shared, that if you expect your wife to be active in your sexual rehab, you’ll run the risk of changing the experience for her and potentially damage your relationship.  Love making is love making.  Rehab is rehab…and the two don’t mix well together.  You, the Doc stated, are responsible for your own health…don’t place that burden on your partner.

STEP THREE:

My boy.  (I thought it was funny that my Doc call me “My Boy” when I was almost old enough to be his dad)  In order to have effective rehab you need to know some things.

1. Sex starts and ends in the brain…
2. Sexual stimulation begins from some sort of sensory stimulation – visual, auditory, feeling, etc.
3. Once stimulated the message travels through the nerves ACROSS the nerves that have been damaged (that’s where the problem lies) and to the penis…
4. Once the message is properly sent the penis begins the erection process (which for men is the clear indication that sex has the potential for taking place)…

He proceeded to tell me – what you’ve got to do is find sexual stimulation frequently enough to reteach those damaged nerves to carry the signal to your penis so that an erection can take place.  Then he said, (this is verbatim) “I’d suggest you take matters into your own hands.”  And with those comments he shared some practical advice that I know rubs (no pun intended) many folks the wrong way.  Basically, he said, excluding one’s religious belief, etc. that masturbation is an effective method of sexual rehabilitation following prostate cancer treatment.  Keep in mind, the objective is to reteach the nerves to carry the signal from the brain to the penis.  You are rehabbing your body.

STEP FOUR:

There is a difference between sexual stimulation for rehab and intimacy and loving making with your partner.  However, the most important factor is open and honest communication between you both.  Your partner needs to know that your body has changed and that the actions she once took to stimulate you may not work now.  Does that mean you love her any less?  No.  What it does mean is – stimulation is more work now than it was.  Likewise, you both need to know that it will likely take more effort to achieve an orgasm than it once did and that, again, changes the interaction between the two of you and needs (if not requires) honest and open communication.  For example, my wife understands that today sexual stimulation, for me, requires greater tactile touch – which, candidly, is more work on her part.  Further, we have found that my internal thermometer is a bit out of whack…cause if I get the least bit hot, my ability to maintain an erection is diminished greatly.

Honest communication also requires a frank discussion about how one might be stimulated (for rehab) and the frequency of rehab activities.  WARNING…IF YOU DON’T LIKE FRANK…QUIT READING!

I was told that I should work to obtain an erection approximately 4 to 5 times per week.  Now, let’s be honest…most folks don’t make love 4 to 5 times per week (not if your 50 – and I didn’t when I was 25 – so there…the cats out of the bag).  Further, it is unreasonable to assume that your partner (wife, spouse, partner, whatever) should be expected to be there when you feel its time to rehab.  That said, where do you get your stimulation?  Hum…here’s the problem.  You might find it best to dismiss modern misconceptions about sex and sexual stimulation if you truly wish to regain sexual function without injections, pills, or pumps.  Where do you find stimulation?  Pick it – the Victoria Secret catalog – the internet porn sites (free ones) – magazines – sexually oriented videos – whatever.  Just understand that the use of sexual aids doesn’t make you a perv…but rather is – for this purpose – part of the healing process.

FINALLY…

As I close this long blog out…I just realized that I am now 5 years cancer free.  I have to be honest…  for the first year or so I was less than satisfied with my lack of sexual function.  Then I realized that I was expecting too much too soon and the pressure I was placing on myself was a contributing factor in my lack of performance.  Now, looking back, it was just as my doctor had suggested.  It does take time.  And, yes, I followed his orders to participate in sexual rehabilitation and it paid off.  While I have a prescription for Viagra I rarely use it (maybe one pill in the past 18 months).  Does every sexual encounter end with orgasmic ecstasy – no, but then I am fortunate in that my wife and I understand that – that too – is part of life.  We love each other and our time together.

There is hope for a normal life – or shall I say – a normal sex life following prostate cancer.

As a prostate cancer survivor I am writing a book on the subject and including in that a substantial part for the partners of those diagnosed with prostate cancer.  As part of that, I, from time to time counsel with folks (at no charge) to help them open the realities of rehabilitation and communication.  If you feel that a phone conversation (individually or as a couple) would be of benefit…send me an email at chuck@chuckgallagher.com and we’ll schedule a time.  Meanwhile, I hope this helps.

Bryan Scott Behrens pleads guilty to Ponzi Scheme type investment

As I was preparing to post this blog, it became painfully clear that this type of behavior seems to be on the increase or at least it’s becoming more apparent.

Bryan Scott Behrens, 47, of Omaha, Nebraska, pleaded guilty to securities fraud charges admitting he bilked investors out of at least $3.5 million in a Ponzi-type investment fraud scheme. According to prosecutors, Behrens promised to invest client funds in Nevada real estate, but instead used the money for his businesses in Omaha, paid out money to early investments and used the rest for personal expenses.

The SEC charged that from 2002 to 2007, Behrens operated a Ponzi-like investment scheme, raising $6.5 million from investors, including senior citizens, and misappropriating more than $3.5 million of those funds. He promised investors returns of up to 9 percent per year. Behrens was the owner of Bryan Behrens Company, Inc., 21st Century Financial Group and National Investments, Inc., as well as the owner of a local flower shop.

Read the original complaint here.  comp20427

What motivated this behavior?  If you know Behrens – feel free to share your thoughts on his motivation to effect such a crime.

YOUR COMMENTS ARE WELCOME

Ethics Training – An Effective Defense According to New Sentencing Guidelines – Comments By Business Ethics Speaker Chuck Gallagher

At the risk on the front end of sounding self serving as an ethics speaker and trainer, the reality is – interest in ethics training and compliance programs  – is increasing and I’m not so sure it is solely for reasons of the common good.  Ethics, by their nature, are hard to define as they are not objective in nature.  However, ethics training and compliance programs effectively implemented in a company serve as an excellent defense when there is a breach of ethics by an employee.

New guidelines have been issued that raises the stakes and clarifies the role of ethics training and compliance.  The Sentencing Commission has introduced four new requirements for the receipt of the compliance and ethics program credit:

(1) those with operational responsibility of the compliance and ethics program must report directly to the governing authority or its subgroup, such as an audit committee of the board of directors;

The question I often face in my ethics and compliance work is – short of a Chief Ethics Officer – who has the operational responsibility for compliance and ethics training?  More times that not, this role is combined with HR in smaller operations.  Yet, the combination of that role creates reporting problems.  It’s clear that, in order for the program to work, whomever is charged with the operation of the program must have direct access to those whose roles are deemed independent enough to take ethics issues seriously.

(2) the compliance and ethics program must detect the offense before its discovery outside the organization or before such discovery was reasonably likely;

As the requirements provide – the program must be effective in detection.  More times that not, as I evaluate ethics programs of client companies, I find that detection is given “lip service”.  Honestly, most program in ineffective on that front.  Having a program is not enough, rather, the detection factor is a critical component.  In many cases the most effective way to evaluate detection is to test the system for failures.  Breaches in the system – detected early on – can be corrected so this component of the ethics defense can be utilized.

(3) the organization must promptly report the offense to the proper governmental authorities; and

I am not an attorney, but often I find that organizations weigh the legality of the ethics or misconduct breach with the PR implications of a potentially public disclosure.  Organizations are finding the reality of reporting a practical necessity and, now, a needed part of an effective program.

(4) no person with operational responsibility in the compliance program participated in, condoned, or was willfully ignorant of the offense. If these requirements are met, corporations may receive credit for their compliance and ethics program.

Furthermore, the Sentencing Commission has clarified the definition of an effective compliance and ethics program for the purposes of the culpability score reduction. The Commission elaborates upon the previous requirement of the Guidelines that, after criminal conduct has been detected, the organization must take reasonable steps to respond appropriately and to prevent similar criminal conduct in the future. Specifically, newly added language to the Guidelines clarifies that an appropriate response to criminal conduct is to remedy the conduct’s harm through, for example, restitution to victims, and that the organization must assess its compliance program, potentially with the assistance of an outside professional advisor.

Most companies now need the services of an independent professional adviser in order to evaluate their current program, test the effectiveness there of and help craft any solutions to weaknesses found therein.  Again, at the risk of sounding self-serving, regardless of whom you select, it is important evaluate and potentially shore up ethics and compliance programs.

These recent changes appear to shift the inquiry from an organization’s high-level personnel to the effectiveness of its compliance and ethics program. The changes also clarify the reasonable steps that an organization must take to respond appropriately to criminal conduct and to prevent similar criminal conduct in the future. Organizations may, therefore, choose to tailor their approach to their compliance and ethics programs based on these modifications, unless Congress prevents the changes from taking effect on November 1, 2010.

Whether the changes take effect on November 2010 or not, the guidance provided for Corporate Governance is valid and worth action.

Corporate – White Collar Crime Sentences May be changed. New Guidelines on Prison Alternatives Approved

While on one hand I expect a bit of an outcry from the public that, at times, seems to have a taste for blood, the alternative prison sentence possibilities that have been approved are long over due.  Yes…White Collar Crime does create victims and the pain that people feel at the hand of a fraudster is very real, however, the real travesty is that many who have committed white collar crimes and have the ability to work (in some capacity) to make restitution, are disallowed that due to the practicality of an active prison sentence.

The information is listed below in blue:

After considerable public input, the U.S. Sentencing Commission recently voted to send Congress amendments to the federal sentencing guidelines that, among other changes, would increase the availability of alternatives to prison and would alter the sentencing of corporate offenders.

Although the sentencing guidelines are no longer mandatory, judges continue to look to them on a regular basis in determining appropriate punishment.

Under the alternatives-to-prison proposal, courts could depart from the guidelines when an offender’s criminal activity was related to drug or alcohol abuse or significant mental illness and when sentencing options, such as home or community confinement or intermittent confinement, would serve a specific treatment purpose. The commission also recommends that courts consider the effectiveness of residential treatment programs as part of their decision to impose community confinement.

By adjusting offense levels, the proposed amendments would make more offenders eligible for alternative sentencing options, such as split sentences (half in prison, half in alternative), home or community confinement.

“The commission has heard from virtually every sector of the criminal justice community that there is a great need for alternatives to incarceration,” said Chairman William Sessions III in an April 19 statement. “Providing flexibility in sentencing for certain low-level, non-violent offenders helps lower recidivism, is cost effective, and protects the public.” Sessions called the changes a “very modest step” in the right direction.

The commission also has proposed changes on the sentencing of organizations. Most importantly for corporations, a larger number of offending organizations would be eligible for a credit for having an effective ethics and compliance program.

In a firm memo discussing the proposed changes, Gibson, Dunn & Crutcher noted that a number of groups had urged the commission to eliminate the “absolute bar” to getting that credit if “high-level personnel” had participated in, condoned, or were willfully ignorant of the offense. The term “high-level personnel” is defined to include a director, an executive officer, and “an individual in charge of a major business or functional unit of the organization.”

Although no statistics are available, the law firm noted that the per se disqualification applies to several convicted corporations annually. David Debold, of counsel to Gibson Dunn, is co-chair of the Sentencing Commission’s Practitioners Advisory Group.

The commission eliminated the per se bar but attached certain conditions for the credit to apply, the most important of which is that “the individual or individuals with operational responsibility for the compliance and ethics program … have direct reporting obligations to the governing authority or an appropriate subgroup thereof (for example, an audit committee of the board of directors).”

The change, according to Gibson Dunn, would expand the direct reporting required between the person with day-to-day responsibility for compliance—often the general counsel—and the members of the board.

In other changes, it would be appropriate to consider such factors as an offender’s age, physical, mental and emotion conditions, and military service—currently considered “not ordinarily relevant”—in determining whether to sentence outside the guidelines. However, the factors in the particular case would have to be relevant to an unusual degree and distinguish the case from the typical case.

“Through this amendment, the commission is providing the criminal justice system, and particularly judges, with the information they have long sought,” said Sessions. “The more information we can provide on the use of specific offender characteristics during the sentencing process, the more consistency and uniformity will result and the more justice will be served.”

Another amendment responds to the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act of 2009 by broadening the guideline for offenses involving individual rights to include the new hate crime offense. The act makes it unlawful to willfully cause bodily injury to a person because of the person’s race, color, religion, national origin, gender, sexual orientation, gender identity, or disability. The act also made it unlawful to attack a U.S. serviceman on account of his service, and the sentencing amendment would incorporate this new offense. The commission also expanded the definition of a hate crime in its penalty enhancement for hate crimes to include victims who were targeted because of their “gender identity.”

The amendments must be submitted to Congress by May 1 and will become effective Nov. 1 unless Congress rejects them.

For those who are active readers of this blog, I would suspect that many attorneys representing those who have been convicted of white collar crime will be either working to postpone their sentence or looking for alternative sentencing options which it appears will be available later this year.

I would love to hear your comments on whether you agree or disagree with this new approach to sentencing.

YOUR COMMENTS ARE WELCOME.

Dan Frishberg – The Money Man – touts structured bonds and notes. Is that what he should be talking about?

Just the other day, when all the hoopla about Dan Frishberg seemed to be dying down (of course we all knew that was a momentary lapse), I received another of Dan’s famous emails.

Chuck,

Trillions of dollars of savings have been wiped out over the last ten years. Sadly, much of it has been lost through trying to “make it back” after the multiyear bear market that started in year 2000.

Here’s one good reason for the frustration.

The first time I saw this picture, I immediately understood the problem.

Up until that time, I thought of our country as having had some “ups and downs.” But measured in the global reserve currency, gold, you can see that even when we feel we are doing well, we are losing ground.

The fact is, even if you had better than average results investing in the U.S. over the past decade, you’ve gotten poorer than you were ten years ago. You’ve lost purchasing power, and now, just when we are really getting a handle on what’s happening to us, we are reluctant to do anything different, because most of us just can’t afford any more mistakes.

As always…I am amazed that I, of all people, am included in his infamous investor rants about where the market is going and how he can help you with your investments.  In fact, if you follow the link provided by Dan you’ll find six opportunities to give him your information so he can help you through touting the fact that he is a Registered Investment Adviser.

Don’t know about you, but here are some questions I think Dan would be better advised to raise and answer:

• Since you touted the revenue generated from your RIA as the economic way for BizRadio investors to finally receive a return from their investment in December of 2009 – what have you done with earning from your RIA to help BizRadio investors?
• Do you really think that you currently have the credibility to continue to tout your role as a Registered Investment Adviser considering the investigations that are currently underway?
• It would appear that www.bizradio.com is an asset of the former BizRadio.  Why do you use that asset as if it were your own to tout your own venture and radio show?  Should that not be abandoned since it appears that you have abandoned the investors of BizRadio?
• Knowing that Al Kaleta was banished (so to speak) from investments and BizRadio by the SEC, what motivated you to continue to allow him to be a part of BizRadio?
• What effort, if any, have you made to pay back Rahan Siddiqi – since he advanced you six months lease on 1110 AM – the station you kicked him off of?

Dan…as the wall crumble around you, don’t you now think it time to become ethical and transparent in your financial actions and take steps to right the wrongs that many of your investors feel they’ve been subjected to?

YOUR COMMENTS ARE WELCOME

BizRadio – Dan Frishberg: The Great RIA Hoax… yet, another nail in the coffin…

BizRadio was a “loss leader” – so said Dan Frishberg according to many sources who heard the comments.  Look at the model and there was no way it could ever make money.  Unless…?  Unless the RIA that Frishberg was responsible for was an asset of BizRadio and, therefore, the money it created on a quarterly basis become a resource for paying the overhead.

Makes sense, except that Frishberg, from everything that I have seen, transferred the RIA to another investment firm to protect it and none of the monies it kicked off have been directed back to investors who are stinging from losses.  IF THAT IS NOT TRUE, PLEASE FEEL FREE TO CORRECT ME WITH YOUR COMMENTS BELOW.  I think, however, it is true.

So, what was Dan’s intent?  Next that follows is material prepared by BizRadio for investors.  Read it and let’s look at the content.

Let’s continue to Page 2

Yes…there’s more…Page three

More importantly, we start pulling in assets in the RIA and that’s the most profitable part!  Dan Frishberg told the truth here.  The question is – if that is the most profitable part then why is that conspicuously missing from the apparent assets of BizRadio today?

This document was written in December 09 and was part of a promotion presentation for bringing on line Seattle, Salt Lake City, Charlotte, Indianapolis and St. Louis.  Notice two very obvious things:  (1) the date is confirmed as it mentions Ron Crider and that is the time he was there (ostensibly as CEO) and (2) it touts Al Kaleta (even though by that time he was busted by the SEC and shouldn’t have had any activity with BizRadio).

I may not be the sharpest knife in the drawer, but I can cut butter…and this seems to be a clear statement of Frishberg’s intent to include his prize RIA as part of the BizRadio assets.  Further, this material seems to show his intent to defraud as many of the statements made are just not true, but rather stated in order to increase investments in BizRadio which was headed down the slippery slope of decline in December of 2009.  It’s one thing to make a mistake on an investment – sometimes things just don’t turn out as planned – and quite another to keep up an illusory front in order to gain more money when any other reasonable person could see that most of this is just a sham.

What’s the outcome…?  Who knows today?  But, one thing is for sure.  The cards are falling and the outcome is looking less and less promising.

YOUR COMMENTS WELCOME.

BizRadio – Dan Frishberg: Several Tentacles to a complex story – Every Choice Has A Consequence

One blog.  Three stories – OOPS now four.  All part of the tentacles of Biz Radio.

TENTACLE ONE: The question was asked – what motivated Dan to make the choices he has made?  The answer is not scientific, in fact, the answer may be as varied as the opinions of the readers.  And as for the readers, the comments I am receiving privately and publically via other forums is interesting – to say the least. Here’s a link to one of the forums here.

Allow me the opportunity to speculate for a moment – then we’ll get on to the meat of the blog and other tentacles of substance.

Dan Frishberg did not start off to create a scam or fraud (if you wish to call what has happened either or fraud or scam).  I state that as if I have facts to prove it.  I don’t.  What I do know, however, is the mind of a fraudster.  And, from all that I’ve been involved with in uncovering, discovering or participating in frauds (yes, I would prefer not to have to say that, but it is the truth – at least truth 25 years ago), I know that most people who find themselves in situations like Dan Frishberg, Elisea Frishberg, Al Kaleta and perhaps others – do not start out to defraud.  But how things start and the choices that are made toward the end may be very different.

Speculation:  Dan Frishberg has talent or at the minimum knowledge when it comes to investments and the operations of the equity markets.  Likewise, Dan Frishberg has no fear of putting himself out in the public as an expert in investments which includes broadcast media – radio.  Finally, Dan comes to understand the power of media when it comes to public awareness and the ability that media affords when it growing a business.

Now, all of the above are fine.  Likewise, creating a company to capture the economic benefit of those attributes is fine.  What is not fine is deceiving investors.  The challenge is this: if investors were told by Dan Frishberg and team that BizRadio was a viable investment that should produce a positive investment return on one hand, and on the other Dan Frishberg told people (employees, etc.) that BizRadio was a “loss leader” (I’ve been told this term by a number of people) that was never intended to earn a profit, then it is highly likely that investors were deceived and that may easily be considered fraud.

Note: The following is claimed in a recently filed lawsuit:

• Breach of Fiduciary Duty
• Fraud
• Fraud by Nondisclosure
• Negligent Misrepresentation

The full suit can be found here Frishberg Lawsuit

While I am not (no do I wish to be) judge and/or jury, I know what happens all too often in situations like this.  So, why?  Simple.  Dan Frishberg – fueled by his ambitious wife Elisea – felt that BizRadio could be his ticket to fame and fortune.  He could be recognized as a household name in the financial community.  The only problem was – in order for BizRadio to work – he needed money to fund the ever expensive cost of being on the air.  At some point, greed had to play into the equation, as he seemed unwilling to allow the profits from his RIA to inure to the benefit of the investors of BizRadio.  It appears that Dan felt that those earnings (substantial in nature – reported to be over $700,000 per quarter) were his – the fruits of his show and therefore, the earnings should support he and his family.  What he appears to have missed is that the investors that funded the BizRadio “loss leader” really were the owners (or should have been) of what came in…  Dan’s fiduciary role is to the investors not to himself.

Beyond the above…Dan Frishberg, in my opinion, became a victim of his own greed which clouded his judgment.  Which brings us to the next Tentacle

TENTACLE TWO: Several investors have filed for involuntary bankruptcy against BizRadio.  Why?  Seems obvious that if they don’t stop the pillaging, then Dan will continue to make ineffective choices and continue to damage the shareholders, lienholders, or investors in, what was formally, BizRadio.

For example…it has been reported that Dan Frishberg is dispersing BizRadio assets at will without regard to investors.  How?  Per the report:

• The BizRadio master control center has been totally dismantled and either dispersed or put in storage.
• Dan is offering for sale via hired contractors, various expensive network systems, studio and office systems.  Question, who will get the proceeds or will the sale of these assets be eaten up by expenses?

BizRadio is over.  Yet an interesting fact remains.  The domain name – bizradio.com – is being used by Dan Frishberg as a link to his personal site for his continued radio show.  Maybe I’m missing something, but to take the BizRadio domain and use it or “convert” it for personal gain, would – once again – be a dumb decision that continues to show a disregard for the investors in what they thought was a viable business enterprise.

Here’s a screen shot of what bizradio.com looks like today.  Clearly, Dan is all about promoting Dan and, unless there is a deal that no one is talking about, no investor, shareholder or lienholder is gaining anything from Dan’s personal show.

BizRadio – estimated by some to be $10,000,000 in the hole and the only folks who seem to have gained were:  Dan Frishberg, Elisea Frishberg (via salary) and Al Kaleta.   With salaries to Dan of $275,000, Elisea $83,000 and Al Kaleta $180,000, and a growing RIA for Dan – life was rosy till the “card” was pulled in this apparent sham and it all began to collapse.  The unfortunate victims – the investors who had no clue.

Now, however, the SEC is seeking assets that Al Kaleta was connected with.  Investors have filed for involuntary bankruptcy to protect their interests.  Several lawsuits have been filed against Dan Frisberg and, at least based on my last conversation, David Wallace – agent for many investors – is sitting on the sideline waiting to see what happens next in bankruptcy court.  Meanwhile, it appears that Dan is continuing to use BizRadio assets for personal gain and liquidating as quickly as possible before being forced into bankruptcy.

And, I have a question that I would love to receive an answer to.  Salem Communications agreed to “buy back” 1110 AM from “BizRadio” and/or Dan Frishberg for $800,000 cash and $1.6 million in radio time for his show.  If the involuntary bankruptcy stops the sale…HOW CAN DAN CONTINUE TO RUN HIS SHOW?  IS SALEM GIVING HIM THAT AIR TIME FREE?  ISN’T THAT A TAXABLE TRANSACTION?  A little help here please!

Before the last tentacle – what happened to Rehan Siddiqi who was willing to purchase the station for $3.5 million?  Wouldn’t that be a better deal (if that can be resurrected) for the shareholders of BizRadio than what Salem is offering to Dan?

TENTACLE THREE: This next area is just being explored.  I can’t draw any conclusions (at least not yet), but as I was researching the other day, I came across something that just caused me to scratch my head.  I have heard since this story broke in the Houston Chronicle (about Kaleta and BizRadio) – that Dan and Elisea Frishberg live in a home that is leased for some $9,000 per month.  Perky little amount per month, but O.K. folks lease homes.  No big deal.  Then…

I noticed that Dan and Elisea sold their home in Houston to Rhonda Hartmann…

Ownership History: 0410280020182
634 VOSS RD HOUSTON TX 77024
Owner	Effective Date
HARTMANN RHONDA	10/30/2009
FRISHBERG DANIEL S FRISHBERG ELISEA T	11/11/2008

So just before Al Kaleta get’s busted (publically) by the SEC…Dan unloads his house – tax value $775,000 (rounded).  Now most readers know that the tax value is lower than the typical true value.  So, best guess, its a $1 million home (give or take a bit due to the current economy).

But here’s whats strange.  In 2008 according to the Harris County records – Rhonda Hartmann lived in a house with a county appraised value of $275,000 (likely a $325,000) home.  She went from 2056 square feet to 4341 square feet and triple the value.  Now I don’t know about the rest of you, but in the worst economic recession we’ve seen since the great depression, I find it interesting (to say the least) that a buyer could be found that would double sq. feet and triple value.

If you don’t take my word…research it for yourself – here’s the link.

Possible?  Yes.  Fishy (or as I put it “frishy”) – Definitely.  I would venture to say that investigators are looking into that transaction just to see if there is any related party transactions taking place.  The question practically is – Is Dan hiding assets or attempting to protect them by moving them away from himself with hopes that when all of this dies down he can reclaim some of his former possessions.

More to come…

TENTACLE FOUR: Unverified, but it is reported that Dan Frishberg has yet to pay any of his payroll tax this year.  If that is true, that is the kind of thing that raises the ire of the IRS.   Guess the truth will come to light soon.  For Dan’s sake, I hope the payroll tax issue is a non-issue.

For now – YOUR COMMENTS WELCOME

White Collar Crime Update – Week ended April 16, 2010

As the week draws to a close here are some of the items sure to make headlines in the arena of White Collar Crime:

Costa Rica-Based Business Opportunity Fraud Operator Sentenced to 115 Months in Prison by Miami Judge – full story here.

Dilraj “Rosh” Mathauda was sentenced to a term of 115 months in prison and five years of supervised release for illegally operating a series of Costa Rica-based business opportunity fraud ventures.

To fraudulently induce others to purchase the business opportunities, Mathauda and his co-conspirators made, and caused others to make, numerous false statements to potential buyers. Potential purchasers were falsely told that the companies were established years earlier, had a significant number of distributors across the country, and had a track record of success. Potential purchasers were referred to references who told false tales of their success as business opportunity owners. Through these and other misrepresentations, purchasers of the business opportunities were led to believe that they would likely earn substantial profits.

In addition, Titus misappropriated funds given to him by elderly or incapacitated clients who provided him with income intended to be held in trust and took steps to conceal those uses from those who inquired about the management of the trust. Trial evidence showed that Titus failed to make payments for the trust clients’ basic medical and housing needs. Titus engaged in a similar scheme to defraud involving real estate closing funds he held in trust.

Former transit agency official in Cleveland sentenced to 8 years for corruption – full story here.

A former project manager with Cleveland’s mass transit agency was sentenced to more than eight years in prison for corruption.  He was convicted of demanding bribes for contracts with the Greater Cleveland Regional Transit Authority and steering cleaning work to his wife’s business. She was sentenced to nearly two years for lying to the FBI.

Amerifirst Executive Executive, Jeffrey C. Bruteyn, found guilty in securities fraud scheme that targeted Senior Citizens – see full story here.

Following a week-long trial a federal jury has convicted Jeffrey Charles Bruteyn, formerly the managing director of the now-defunct Dallas-based AmeriFirst Funding Corp. and AmeriFirst Acceptance Corp., on charges stemming from his role in fraudulent securities offerings.  He faces a maximum statutory sentence of 20 years in prison and a $5 million fine, per count, and could be ordered to pay restitution. Bruteyn, who is in federal custody, will be sentenced by Judge Lynn on July 23, 2010.

The government presented evidence at trial that Bruteyn’s scheme raised more than $50 million from more than 500 investors living in Texas and Florida, many of whom were retired and all of whom were looking for safe and secure investments. In connection with the sale of securities, Bruteyn misled, deceived and defrauded investors by misrepresenting, and by failing to disclose, material facts concerning the safety of the securities. Bruteyn personally met with investors and he also arranged for his salesmen to sell the securities.

For those that follow my work – this sounds surprising like what is taking place in the BizRadio scandal that is currently unfolding.

Tennessee woman, Robin Smith Lankford, Admits to Falsifying Cancer Diagnosis to Obtain Insurance Benefits- see full report here.

According to court documents, on July 16, 2008, Lankford mailed to Loyal American Life a “Statement of Claim” that falsely represented that she had been diagnosed with ovarian cancer and fraudulently claimed insurance benefits. Shortly thereafter, she mailed to Loyal American Life various false medical records that she had fabricated that falsely stated that she had been diagnosed with and had been receiving treatment for ovarian cancer. Lankford’s fraudulent misrepresentation to Loyal American Life that she had been diagnosed with ovarian cancer induced Loyal American Life to send Lankford a $100,000 check which she deposited into her personal bank account.

She faces up to 20 years in prison.

Real Estate Investor, Disbarred Lawyer, Troy A. Titus, Sentenced 30 Years for Massive Fraud Schemes – see full story here.

On December 18, 2009, a federal jury in Norfolk found Titus guilty of 33 fraud-related charges after a four-week trial. According to court documents and evidence at trial, Titus was a lawyer practicing in Virginia who also conducted investment seminars focusing primarily on real estate and estate planning. Titus approached clients or seminar participants and induced them into investing money with him to purchase and rehabilitate real estate, promising to return the money at a later date with a high rate of interest. However, Titus obtained many of the real properties involved through fraud or transferring the properties into trusts controlled by him. Instead of using the funds as promised, Titus directed the investment income toward paying business or personal expenses, backfill investment losses, and at times to make token payments or repay previous investors.

In addition, Titus misappropriated funds given to him by elderly or incapacitated clients who provided him with income intended to be held in trust and took steps to conceal those uses from those who inquired about the management of the trust. Trial evidence showed that Titus failed to make payments for the trust clients’ basic medical and housing needs. Titus engaged in a similar scheme to defraud involving real estate closing funds he held in trust.