Credit Card Fraud Earns Julia N. Bell Prison and Substantial Restitution! Comments by Fraud Speaker Chuck Gallagher

Wow…every choice has a consequence.  Every presentation I make that statement is made.  And, sure enough it is true!

Take, for example, Julia N. Bell.  Seems that she went shopping, took vacations, and ate in restaurants.  She did what normal people do every day.  The only difference is that she did all of these things using the credit card of the company she worked for. 

Now, most would think that when the bill came it, such a simple fraud would be caught.  But alas…no.  Seems that Bell was the office manager.  So, not only did she use the card for her personal gain, but she paid the card from the company’s funds that she controlled.

Guess she thought as long as she controlled it…no one would notice.

Now in order for most white collar crimes to exist there has to be three things: (1) need; (2) opportunity and (3) rationalization.  While I can’t speak to #1 or #3 - the clear lack of internal controls allowed for #2 to work in Bell’s favor.  As a white collar crime and fraud speaker, more times than not it is #2 that has the greatest potential to either allow or prevent white collar crime.

In Bell’s case, she was sentenced in federal court for wire fraud.    United States District Judge Cameron McGowan Currie sentenced Bell to 21 months in prison and ordered her to pay more than $140,000.00 in restitution.

If you know Julia N. Bell, feel free to comment.  My guess is that she is a nice lady who got caught up in her own illusion.  Now she will find that nothing she bought will be worth the time she will spend in prison.

White Collar Crime Speaker - Chuck Gallagher - signing off…

Facing Federal Prosecution - Here’s a Book You Might Need! White Collar Crime Speaker Chuck Gallagher makes Recommendation.

Let me say on the front end, as a business ethics speaker, I try to make sure that when I write I do so in an ethical manner. Full disclosure is critical to living an honest and ethical life. So with that said, I am exposing a book here that I am told that it is the best of its kind. I have no financial interest in this book, the publisher of this book or the author, so my recommendation is based on value. So here goes…

Whether you are facing federal charges or are being sentenced into federal prison, this book provides helpful information that can help provide a successful outcome.

About the Author of Busted By the Feds: A Manual for Defendants Facing Federal Prosectuion -

The federal sentencing guidelines took effect in November 1987. I spent the following two years working with inmates at the federal prison in Phoenix, Arizona helping with appeals and post-conviction motions.

The inmates at Phoenix in those years came from all over the country (and all over the world), and I heard hundreds of stories from my clients about how they had been mistreated, tricked, lied to, and just generally screwed by the system as they tried to defend themselves against federal charges under the new guidelines system.

Although I tended to believe their stories, I also found it hard to completely accept many of the tales that I heard, and I always took them with at least a grain of salt. Then I moved to Tucson, where I spent 1990, ‘91 and ‘92 working with inmates in that federal prison.

F.C.I. Tucson is unusual in the federal system in that it was originally built as an M.C.C., essentially a local jail to house pre-trial prisoners, then was changed over to an F.C.I. for sentenced inmates before it even opened its doors. As a result, it continued in both roles: a mix of sentenced prisoners serving their sentences there and pre-trial prisoners held in the Yucca Unit while they fought their cases.

As I had in Phoenix, I began to help sentenced inmates with their appeals and writs, but very quickly the pre-trial inmates began coming to me for help. As word got around, hundreds of them sought me out for advice.

During the 2-1/2 years I worked in the law library at F.C.I. Tucson, I assisted over 500 pre-trial inmates who were fighting their cases. It was during this period that I began to experience, first-hand, many of the tricks and deceits that I had been hearing about in Phoenix.

Prison inmates who read Busted by the Feds invariably tell me, “That’s exactly what happened to me!” By now I have personally experienced everything that I describe in this book many times over, albeit vicariously.

From 1987 through 2008, I have worked with pre-trial inmates fighting their cases in Louisiana, Arizona, New Mexico, Texas, and Colorado, in addition to more than a thousand sentenced inmates from all over the country, and everything that I describe in this book has occurred time after time after time in every federal district in the nation.

Larry Fassler,
Tucson Arizona, 2008

If you wish to obtain a copy…e-mail: sales@bustedbythefeds.com

White Collar Crime Speaker - Chuck Gallagher - signing off…

William J. Trier, II Faces Retirement in Prison for $5.2 Embezzlement - Comments by Chuck Gallagher White Collar Crime Speaker

The first step to a new life is to accept responsibility for your actions. Every choice has a consequence and after ten years of admitted fraud, William J. Trier, II has made a life changing choice - he plead guilty to an embezzlement scheme that lasted for ten years.

Now, as a white collar crime speaker, I must admit that it is generally unheard of for a white collar crime to last for that period of time. More times than not they fall apart before a decade passes.

William J. Trier, II, 57, of Williston, South Carolina, pled guilty today to embezzling approximately $5,200,000.00 from his former employer and to money laundering.

Trier worked at Crane Co., a vending machine manufacturing company in Barnwell County, as the director of logistics in the shipping department. From 1997 through October 2007, Trier embezzled funds from Crane by creating phony invoices from two fictitious freight transport companies and submitting them to Crane for
payment. He used his position to approve the payment of the fraudulent invoices, and received company payments mailed to a Post Office box he had opened as the mailing address for the phantom companies. Over a ten year period, Trier collected approximately $5,200,000.00 using the false invoice scam.

The maximum penalty Trier faces is twenty years imprisonment and a fine of $250,000. Trier must also make full restitution and has agreed to forfeit millions of dollars in assets towards restitution.

Wow…$5.2 million over ten years. This case is a classic example of lack of effective internal control. The ability to create an invoice and approve said invoice enabled Trier to effect this fraud. White collar crime consists of three parts: (1) need; (2) opportunity and (3) rationalization. While I can’t speak to Trier’s need, the opportunity was created thru simple lack of controls. Crane could have at any time thwarted the fraud with effective auditing and control mechanisms in place. As to “rationalization” - who knows, other than the longer a white collar criminal gets by with the crime, the greater the chance the white collar criminal thinks that the action is actually O.K. If I don’t get caught, I won’t get caught is the idea.

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 Trier may have enjoyed his good for a time and avoided the consequences - he did not avoid the consequences all together. Prison is no fun and Trier is facing many 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 Trier - 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…

A Ferrari, A Bentley and a Federal Indictment - Andrew Maxwell Parker Finds Himself on the Wrong Side of the Law!

Every choice has a consequence! May 2008 will be remembered by 40-year-old Andrew Maxwell Parker, owner of San Antonio Trade Group, Inc., since he was indicted on conspiracy, wire fraud, money laundering, false statements and tax charges. It appears that Parker’s choices may be having unexpected consequences.

Parker’s indictment alleges that from February 2003 to November 2006, Parker schemed to defraud the Export-Import Bank of the United States (Ex-Im Bank) by stealing millions of dollars in loan proceeds from private U.S. lenders to Mexican business owners and causing multi-million dollar losses to Ex-Im Bank who guaranteed or insured those loans based on false applications and support documentation submitted by Parker. The indictment also charges Parker with defrauding lenders in transactions not insured or guaranteed by the Ex-Im Bank.

The indictment further alleges that Parker attempted to evade paying taxes owed in calendar years 2003 and 2004 by disguising account transfers of $588,000 and $816,720.55, respectively. Parker allegedly claimed the money was used to purchase equipment being exported to Mexico when in fact, he used the $588,000 to purchase a house in Dallas, Texas, and the $816,720.55 to purchase two Ferrari automobiles and one Bentley automobile for himself. He also funneled money to relatives, all from nominee accounts. Furthermore, the indictment alleges that he under-reported his actual income on his 2003 and 2004 tax returns.

In all, Parker is charged with conspiracy, nine counts of wire fraud, two counts of use of a false document, 12 counts of money laundering, two counts of tax evasion, and two counts of filing a false income tax return. The indictment also seeks the criminal forfeiture of his San Antonio residence at 407 E. Wildwood Dr. and his 2004 GMC Hummer H2, plus a monetary judgement in the amount of $10 million representing proceeds obtained directly or indirectly as a result of Parker’s alleged scheme.

While an indictment is only a formal accusation of criminal conduct and not evidence of guilt, rarely does the US Attorney’s office lose a case like this. More than likely this will be an open and shut case. The government may not get a conviction on all charges, but they will get a conviction. Considering the recency of the indictment, my guess is that Parker will use his resources to secure legal help in reaching a plea agreement that will minimize his prison time. Although Parker’s lawyer, John Pinckney, said Parker denies the allegations and wants a jury trial. If convicted he will likely spend substantial time in federal prison.

Parker has been the target of the FBI and criminal investigators of the Internal Revenue Service over more than $163 million in loans backed by the Export-Import Bank of the United States. The bank is a little-known federal agency that is supposed to help American companies export their products by backing high-risk loans to foreign businesses that are supposed to buy the products. It works with some private commercial lenders to get the loans and has to pay with taxpayer funds if the borrower defaults. Court records allege millions of dollars of loans handled through Parker defaulted and the bank had to cover them.

“I have been calling for a (Congressional) investigation because there is ample evidence that hundreds of millions of dollars of taxpayer money is simply disappearing from the Export-Import Bank as they appear to be guaranteeing loans to businesses that don’t exist,” said Congressman Jeb Hensarling of Dallas. “A lot of money was provided to companies and they never, ever repaid the loans. The bottom line is this a mess, it deserves a full investigation. I don’t know of the particulars of the case in San Antonio, but it is further evidence of federal program that has run amok and needs accountability and an investigation.”

“It started out as a well-intentioned program… but there is no oversight, like a board of directors in private (banking), to ensure that things aren’t hinky,” said David Williams, vice president of policy for Washington-D.C.-based watchdog Citizens Against Government Waste. “The federal government has been notorious about its lack of oversight. The last thing we need is a corporate welfare program that has no oversight on it.”

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 Parker may have looked good for a time and avoided the consequences - he did not avoid the consequences all together. If convicted Parker will find that prison is no fun and likely will be facing many years plus substantial restitution for his conviction. Serving time will prove to be a dramatic change from his prior activities. You do reap what you sow.

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

White Collar Crime Speaker - Chuck Gallagher - signing off…

THIS JUST IN…another reader provided these links related to Export-Import Bank frauds and sentences. See here and here.

Thanks!!!

Just Pay Me “Cash” - Local Dentist Dr. Brian G. Martinez Pleads Guilty to Tax Evasion!

As a former CPA, I can’t tell how many times I’ve heard clients say that since they received money in cash “it wasn’t taxable.” WRONG! Not only did I correct that impression for my clients, I would not keep them as clients if they insisted on being a part of what is obviously tax fraud.

Now, I went to prison for tax evasion, so I am not lily white. In fact, while I am not proud of my past, I have a unique perspective from which to write and comment. Perhaps my comments will be the foundation that might help others.

According to the US Attorney’s office, a practicing Houston area dentist has pleaded guilty to filing a false income tax return and evading more than $145,000 in federal income taxes between 1999 and 2003. Dr. Brian G. Martinez, 51, a practicing dentist in Houston, pleaded guilty to the federal felony tax charge Thursday, May 1, 2008. At the hearing, Martinez admitted that between Jan. 1, 1999, and April 15, 2004, while engaged in the commercial practice of dentistry, he received payment for services rendered to patients in the form of cash and/or by credit card, check or money order. Although books and records for the practice recording the payments made by patients for services rendered were maintained, not all payments were recorded in the books and records that were disclosed to those who prepared Dr. Martinez’s tax returns for calendar years 1999 through 2003. In some instances, Martinez was handed both cash receipts and checks which he personally cashed, which would not be disclosed, documented or disclosed to the tax return preparers.

COMMENT: The practice of not keeping accurate records is common. In fact, the fact that Dr. Martinez went to the trouble to keep inaccurate records show deliberate intent and, likely will pay against him at his sentencing hearing.

Martinez concealed from his tax preparers a total of $533,048 in revenue or gross receipts received from patients during calendar years 1999 through 2003 – all taxable income – causing materially false income tax returns to be filed with the IRS and evading the payment of a total of $149,253 in income taxes for those tax years.

COMMENT: When cash receipts are concealed the question often arises, what to do with the cash. More times than not, the IRS can recreate accurate income records by looking at lifestyle. Rarely does a person hide the cash. Most of the time they spend it and that’s the one activity that creates the trail for a conviction.

To help with sentencing, Martinez paid restitution - delivering a check in the amount of $149,253 payable to the IRS. Sentencing is set for July 25, 2008. Martinez faces a maximum of five years in prison and a $250,000 fine. Additionally, the court may impose up to three years of court supervision to follow any term of imprisonment imposed. I suspect that Martinez will face 12 months in prison!

Comments are welcome!

White Collar Crime Speaker - Chuck Gallagher - signing off…

Texas D.O. - Daniel Andrew Maynard - Pays $253,000 to Resolve Allegations of False Health Care Claims!

As an ethics speaker, I am not sure why. Perhaps the US Attorney’s office didn’t have enough to convict. Whatever the reason, there was resolution in a case in the Northern District of Texas from a Texas D.O. - Daniel Andrew Maynard and the US Attorney’s office.

By entering into a settlement, Maynard admits no wrong-doing and denies all liability. However, the very fact that Maynard is paying over a quarter of a million dollars says something.

According to the US Attorney’s office, in February 2005, the Office of Inspector General for the Department of Health and Human Services (OIG), the Texas Health and Human Services Commission, Office of Inspector General (HHSC), and the Federal Bureau of Investigation referred allegations to the government that Maynard had inflated billings for thousands of physician evaluation and management services submitted to the Medicare and Texas Medicaid programs. The U.S. and Texas allege that on at least 32 separate days, Maynard billed both programs for patient encounters - that if provided as claimed - meant he spent more than 24 hours each day seeing and treating patients. Maynard claimed to have seen more than 100 patients on six of those occasions. The U.S. and Texas contend that contrary to Maynard’s claims, he could not have possibly furnished anything more than the most basic of physician services during those 32 days.

Hum…guess Maynard was a work-a-holic? While, again, according to the settlement there was no admission of wrongdoing, the fact remains that a substantial sum has been paid to correct what appears to be incorrect behavior.

Further, as part of the civil settlement, Maynard agreed to be permanently excluded from participation in Medicare, Texas Medicaid, and all other federal health care programs. Maynard previously pleaded, in October 2007, no contest to several Dallas County criminal counts charging him with delivery of a prescription or prescription form without a valid medical purpose.

According to a 2003 news release, Maynard has had issues with his medical practice. The news release stated: “Dr. Maynard’s office was raided by local, state and federal law enforcement officials based on information regarding non-therapeutic prescribing, medically unnecessary prescribing and possible patient harm, including deaths, as a result of his prescribing activity. The panel determined that Dr. Maynard had violated several provisions of the Medical Practice Act by failing to keep adequate medical records related to treatment of Intractable Pain Patients; failure to practice medicine in an acceptable professional manner consistent with public health and welfare; committing unprofessional or dishonorable conduct that is likely to deceive or defraud the public; and by prescribing dangerous drugs and controlled substances to persons who are known or should have been known to be a drug abuser.”

Every choice has a consequence. So far, Maynard should be pleased that the consequence was civil - not criminal. He may, by agreeing to a civil settlement, be able to keep his medical license. However, since he cannot participate in either federal or Texas state health care programs, his client base will likely be limited.

Feel free to share your comments!

Business Ethics Speaker - Chuck Gallagher - signing off…

Wachovia Pays $125 Million to End Federal Investigation for Telemarketer Fraud!

The Wachovia Corporation, the banking giant, has agreed to pay an estimated $144 million to settle federal accusations that it failed to block telemarketers who took advantage of thousands of elderly bank customers.

The federal Office of the Comptroller of the Currency said Friday that Wachovia, which is based in Charlotte, N.C., had improper relationships with four telemarketers and payment processors who maintained their accounts at the bank. The marketers obtained customers’ bank account information while selling vouchers for discount travel and groceries and other products.

The bank has not admitted any wrongdoing, but will pay up to $125 million in claims, $8.9 million toward consumer education programs and a $10 million fine.

According to the Charlotte Bizjournal: “According to documents obtained by the newspaper, other banks alerted Charlotte-based Wachovia about the activities. However, the Times says, internal memos show Wachovia continued to provide services to companies that helped take as much as $400 million from unauthorized accounts.”

“This situation was unacceptable and we regret it happened, ” a Wachovia spokeswoman, Christy Phillips-Brown, said. “We will work diligently to provide restitution to consumers affected by the situation and to educate consumers.”

She said the settlement was not expected to impact the company’s financial condition.

The Wachovia case, the subject of an 18-month investigation by bank regulators, involved the use of “remotely created checks,” which do not require a customer’s signature.

Regulators said telemarketers would call Wachovia customers, offer them medical discount plans or other services, obtain customers’ bank account information, create a check and withdraw cash from customers’ accounts.

Since the telemarketers and payment processors were Wachovia customers, they could deposit those checks into their own Wachovia bank accounts, allowing money to be withdrawn quickly from consumers’ accounts.

The government said a large percentage” of customers complained, saying they never authorized the payments, or did not receive the products or services offered.

Though the bank became aware of the situation. it “failed to take quick action to terminate these account relationships or otherwise correct the problem,” the O.C.C. said in a statement.

In fact an article posted on domainb.com states: Wachovia executives, when quizzed about the lawsuits, pleaded ignorance about the thefts. However, newly released documents from the lawsuit have now established that Wachovia was quite aware about allegations of fraud, but had in effect, chosen to solicit business from companies it knew had been accused of telemarketing crimes.

Wachovia, however, continued processing fraudulent transactions for that account, along with others, as the bank charged fraud artists a fee each time a victim spotted a bogus transaction, and demanded their money back via chargebacks. Investigators indicate that one company alone paid Wachovia about $1.5 million over an 11 month period.

Linda Pera, an executive who left Wachovia in 2006, wrote, “We are making a ton of money from them,” while referring to a company that was later accused by federal prosecutors of abetting in stealing up to $142 million.

Ms. Phillips-Brown said the bank was not directly involved in the telemarketing activity or soliciting of account information from consumers.

The government said many affected consumers have already received reimbursement payments. It said the companies involved were: Payment Processing Center; FTN Promotions; the Netchex Corporation; and Your Money Access.

As of Dec. 31, Wachovia had assets of $782.9 billion and market capitalization of $75.3 billion. The company (NYSE:WB) has 3,400 retail financial centers in 21 states.

COMMENTS: Now, as a business ethics speaker, here’s an ethics question. Do I report on this issue about Wachovia’s settlement related to (their non admission of guilt) telemarketing fraud - and by doing so risk not being hired by Wachovia in the future?

Damn right I do. Ethics are ethics and companies should work hard to have a positive ethical footprint. In this case, while Wachovia did not admit guilt, the writing is on the wall. A profitable, but likely unethical, part of their business was uncovered and has cost them. Although paying $125 million for something that reported generated more than $400 million from unauthorized accounts might not have been so bad…considering the time value of money.

Now the question is…wonder which other banking organizations use their client list to offer other services to unsuspecting customers? Frankly, I can understand offering services to expand your business…that’s just makes good business sense. However, offering the services using in-house support may be more acceptable than farming it out to outside telemarketers. After all, once data is shared outside of the organization issues of privacy may be breached.

ANY COMMENTS ARE WELCOME!

Meanwhile, Business Ethics Speaker - Chuck Gallagher - signing off…

Celebrity Medical Information for Sale - Could Bring Lawanda Jackson 10 Years in Prison

What do Britney Spears, Farrah Fawcett and Maria Shriver have in common? Any or all could have had their medical information leaked to the media.

A Los Angeles woman has been indicted for accessing the private medical records of celebrity patients at the UCLA Medical Center and selling information obtained from those files to a national media outlet.

Lawanda Jackson, 49, was indicted under seal on April 9. That indictment, which alleges one count of illegally obtaining individually identifiable health information for commercial advantage, was unsealed this morning.

Jackson, an administrative specialist at the UCLA Medical Center from 2006 until she was terminated on May 21, 2007, allegedly received at least $4,600 from the media outlet in exchange for providing the private medical information. The media outlet paid Jackson by writing checks to her husband, the indictment alleges.

Jackson, who faces a potential sentence of 10 years in prison if she is convicted of the charge, is expected to be arraigned on the felony count on June 9 in United States District Court in Los Angeles.

According to celebnews: “The hospital has a PIN number system that shows who is looking at medical records, but doesn’t have a system in place to stop people from looking at the records. While it would be great to be able to trust all of the hospital’s employees, someone like Lawanda Jackson might just sell the information if they need the money badly enough. The LA Times reports she was $37,300 in debt in 2001, when she filed for bankruptcy.”

“We are deeply troubled that a former employee may have illegally received payments from a news organization in exchange for providing personal medical information,” Dr. David T. Feinberg, the UCLA hospital system’s chief executive, said in a recent statement.

“Meanwhile, we continue to take steps to improve our staff training and information systems to further strengthen the confidentiality of patient records.”

According to cbc.ca: Jackson quit her job as an administrative specialist at UCLA last May 21 after learning she was to be fired.

UCLA also fired several other employees for peeking at psychiatric information about Britney Spears, 10 months after Jackson left the hospital.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt. Now, that said, as a business ethics speaker and writer about white collar crime, I would predict that Jackson will get prison time if convicted.

Every choice has a consequence. Every group I address as a speaker will be presented that simple comment. The facts are, your choices will either bring you negative consequences or positive results. It seems that Jackson’s choices were at best unethical and at worst will bring her a conviction and prison.

WHAT COMMENTS DO YOU HAVE ABOUT THIS INTRUSION INTO CELEB’S PRIVACY?

For now…Business Ethics Speaker - Chuck Gallagher - signing off…

Fake IRS Employee - Morgan Mayfaire a/k/a Elizabeth Valdo - Charged with Prepare Fraudulent Tax Returns

So it’s tax season, the time when all are required to file tax returns. You look for someone who can provide the service correctly. You want someone with experience, someone who knows the law. Hum… I guess a n IRS employee would do?

As it turns out, Morgan Mayfaire, a/k/a/ Elizabeth Valido, age 49, of Davie, Florida, was charged with thirty-five counts of making false and fraudulent statements and eight counts impersonating an employee of the United States. Great! Wonder how the folks who had her fill out their returns feel?

If convicted, Morgan Mayfaire faces a maximum term of imprisonment of 3 years and a $100,000 fine on each of the charges of fraud and false statements, and a maximum term of imprisonment of 3 years and a $250,000 fine on each of the charges of impersonating an employee of the United States.

According to the Indictment, Morgan Mayfaire prepared fraudulent tax returns at her residence in Davie, Florida for several clients. The clients paid Mayfaire a tax return preparation fee of 10% of the refund claimed on their federal tax returns. Mayfaire prepared tax returns and amended tax returns on Forms 1040 and 1040X in which she reported false medical expenses, taxes, charitable contributions, and employee business expenses. The false expenses and deductions listed on the returns resulted in approximately $472,904 in tax refunds to her clients.

NOTICE: If you hire a return preparer who charges based on the refund received…watch out. By any ethical standard you can think of - this is wrong and a clear indication that some sort of fraud is likely.

Moreover, according to the charges, Mayfaire falsely represented to her clients that she was an IRS employee, and, as such, knew ways to increase taxpayer deductions on tax returns that others were unfamiliar with. These false representations induced clients to hire her to prepare their tax returns.

While an indictment is not an indication of guilt, I have found as someone who speaks and writes about white collar crime, that most indictments result in a guilty verdict. As evidenced in the Wesley Snipes sentencing hearing, if convicted, this woman will go to jail.

YOUR COMMENTS ARE WELCOME!

Meanwhile, white collar crime speaker, Chuck Gallagher, signing off…

Mortgage Fraud - A Week in Review April 17- April 24: Comments by Chuck Gallagher

As each week passes the number of indictments and sentencing hearings seem to increase as the mortgage financial system seems to unravel. Some have claimed that the mess today will become larger and more costly than the Savings and Loan crisis of the ’80’s. Here’s a snapshot of the week.

San Franscisco: Mortgage Ponzi Scheme - Cheryl Hernandez Camus of Concord, California is alleged to have made a number of misrepresentations about a money lending investment, where she promised fixed returns and the return of the principle investment within a fixed period of time. The indictment alleges that Ms. Camus made one or more of the following material false representations and promises in order to induce the investor to give her money:

• The investor’s money would be used to help finance real estate transactions, such as payment of closing costs or down payment;
• The investor’s money would be used to pay medical costs;
• The investor would receive a fixed monthly interest payment on the investment;
• The investor would receive the return of the principle investment amount within a fixed period of time;
• The loans would involve “really no risk.”
• Ms. Camus screened the borrowers to ensure that money was only lent to borrowers who had the ability to repay;
• Ms. Camus had been conducting similar transactions for three years and the returns had been “awesome.”
• Ms. Camus would personally guarantee the investment;
• The investment would be secured by a legitimate deed of trust.

Instead, according to the indictment, Ms. Camus used the money she obtained from investors for personal expenses and to pay back prior investors. Camus, if convicted, faces 20+ years in prison.

South Florida: Sentencing for Mortgage Fraud: Richard Weldon Crowder, II and Gary Mark Mills were sentenced to 108 months and 46 months imprisonment respectively for their roles in a multi-million dollar mortgage scheme. Co-defendant Karen Lynn Sullivan was sentenced yesterday to 50 months’ imprisonment.

Crowder is a former licensed mortgage broker and the former owner of America’s Best Mortgage Services, Inc., located in Coconut Creek, Florida. Mills is a former title attorney and the owner of Four Star Title Inc., located in Deerfield Beach, Florida. Sullivan is a former loan officer for Wachovia Bank.

To effectuate the mortgage scheme, Crowder identified residential properties, including luxury condominiums on South Beach, that were available for purchase. He then recruited buyers for the properties, representing that he could obtain 100% financing for their purchase. After finding a purchaser, Crowder would apply for equity lines of credit on their behalf with Wachovia. To induce Wachovia to issue the equity lines of credit, Crowder and Mills prepared fraudulent HUD-1 settlement forms. The forms falsely stated the buyers already owned the properties and also significantly understated the amount of the first mortgages on the properties. The fraudulent HUD-1 settlement forms were then given to Sullivan, who used the forms to facilitate the issuance of equity lines of credit from Wachovia.

Simultaneously, or shortly after obtaining the equity lines of credit from Wachovia, Crowder applied for the first mortgages on the properties. These applications overstated the buyers’ assets and income, and also included false verification of deposit forms prepared by Sullivan. To further induce the lenders to issue the loans, Mills prepared documents falsely representing that the buyers were using their own money for the down payments and closing costs. In fact, the buyers were using funds from the fraudulently obtained Wachovia equity lines credit or funds provided by Crowder. In total, the defendants caused the fraudulent purchase of seventeen (17) different luxury condominiums at The Continuum on South Beach and at The Point in Adventura using more than $37,000,000 in fraudulently obtained mortgage loans.

Palm Beach Co, Florida: Indictments in Sophisticated Mortgage Fraud Scheme: Berry Louidort, Lauren Jasky, and Ralph Michel, Palm Beach County, Florida were charged in a Criminal Complaint filed in federal court on April 22, 2008. The defendants are charged with bank fraud.

According to the Complaint, defendants Louidort, Michel and Jasky were involved in a sophisticated sub-prime mortgage fraud scheme in South Florida through which they submitted false qualifying information regarding potential borrowers to mortgage lenders. Among the false information the defendants submitted were false verification of earnings and false verification of deposits. As a result of these false submissions, defendants Louidort and Michel received approximately $6 million in loan proceeds.

This investigation began with an audit conducted by the Florida Office of Financial Regulation into 24 sub-prime mortgage loans in the period November 2006 to June 2007. The initial audit showed that the loans included what appeared to be excessively large fees paid to defendants Berry Louidort and Ralph Michel. The fees, ranging from $29,000 to $650,000, were described as marketing and/or assignment fees. In reality, the fees were kickbacks to defendants Louidort and Michel based on inflated sales prices. The audit also revealed that the majority of the suspect loans were originated by defendant Lauren Jasky, Senior Vice President of Compass Mortgage Services, located in Boca Raton, Florida.

Atlanta, GA: 5 Sentenced to Prison for Mortgage Fraud: Virginia Rose Novrit, Hilton Head, SC; Clarence Lorenzo Davis, Hilton Head, SC; Olympia D. Ammons, St. Louis, MO; Jerome Wings, Jr., Atlanta, GA; and Ronald Denzil Martin, Lithonia, GA were sentenced to prison for conspiracy, bank fraud, wire fraud, and money laundering in a multi-million dollar mortgage fraud scheme.

NOVRIT was sentenced to 3 years, 5 months in prison and ordered to pay $839,585 in restitution.

DAVIS was sentenced to 4 years, 3 months in prison and ordered to pay $839,585 in restitution.

WINGS was sentenced to 10 years, 2 months in prison and ordered to pay $8,577,845 in restitution.

AMMONS was sentenced to 5 years, 3 months in prison and ordered to pay $7,549,044 in restitution.

MARTIN was sentenced to 1 year, 1 day in prison and ordered to pay $423,595 in restitution.

From late 2004 through early 2006, NOVRIT, DAVIS, WINGS, AMMONS, and MARTIN participated in a mortgage fraud scheme that involved millions of dollars in fraudulently inflated mortgage loans being provided to unqualified straw borrowers. The straw borrowers were paid as much as $600,000 per property from fraudulently obtained loan proceeds through shell companies. NOVRIT and DAVIS together obtained mortgage loans totaling more than $4 million within a six month period to purchase eight properties. WINGS obtained mortgage loans totaling over $1.2 million to purchase a single property by providing the lender with false qualifying information. WINGS also recruited a number of other unqualified buyers into the scheme and obtained a share of the fraudulently obtained loan proceeds from those transactions for doing so. AMMONS was a loan originator for “Ace Mortgage Funding,” a national mortgage brokerage firm. AMMONS brokered fraudulent mortgages totalling over $7 million. MARTIN was paid $75,000 to act as a straw buyer and submit a fraudulent loan application for one property.

Kansas City, Kansas: Bonds Revoked in Mortgage Fraud Case: Wildor Washington, Jr. and Victoria Bennett were charged in November 2007 in an indictment alleging that Washington, Bennett and four co-defendants took part in a mortgage fraud scheme through businesses Washington owned including Heritage Financial Investments, Legacy Enterprises, B&L Custom Development and Liberty Escrow. According to the indictment, Hamilton and the conspirators prepared fraudulent loan applications and submitted them to lenders in Kansas, Texas, Ohio, Missouri and Michigan.

On Nov. 8, 2007, Washington and Bennett were released on bond subject to conditions including a prohibition against taking part in any illegal activities while on release. Subsequently, investigators obtained evidence that while on release Washington and Bennett were involved in further incidents of bank fraud and conspiracy to commit mail and wire fraud. Hence the two were taken into custody after their bonds were revoked.

Minnesota: Real Estate Owners Plead Guilty to Mortgage Fraud: Jonathan Edward Helgason, 45, Chisago City, and Thomas Joseph Balko, 37, Rogers, along with their company, TJ Waconia LLC, entered their guilty pleas to a scheme involving at least 162 properties, principally in north Minneapolis, and mortgage proceeds of approximately $35 million.

From approximately 2005 to 2007, Helgason and Balko executed a scheme to defraud and to obtain money by means of false and fraudulent pretenses. Using the TJ Group, Helgason and Balko purchased approximately 162 properties throughout the Twin Cities metropolitan area, principally in north Minneapolis. They would then resell the property within a few weeks to an “investor” who would purchase the property, sight unseen, at a price set by Helgason and Balko without negotiation, oftentimes $20,000 to $60,000 more than that the TJ Group had paid.

People were told by Helgason and Balko that the investors were simply “lending” his or her credit to TJ Waconia. In exchange for “lending” their credit, the investor would receive a kickback payment of about $2,500 and a promise of an additional payment after two years when the TJ Group was to repurchase the property from the investor.

Through the scheme, the defendants perpetrated a fraud on the lenders who were led to believe that the “investors” were the actual owners of the properties, when, in fact, the “investors’” ownership was in name only. During the two-year period during which the investor owned the property, the TJ Group was responsible for all payments and maintenance on the property. In some instances, Helgason and Balko also provided investors with funds to pay the buyer’s portion of the property purchase price and worked with others to provide lenders with false loan applications on behalf of the investors so that they would qualify for the loan.

The two men, on behalf of the investors, obtained approximately $35 million in mortgage proceeds to purchase the properties from the TJ Group. Ultimately, the scheme collapsed, and the TJ Group did not repurchase the properties or continue making payments to the investors in order to pay their mortgages. The investors were left owning properties with mortgages that exceeded their property’s market value.

Newark, New Jersey: Ex-Mayor Convicted of Flipping: As reported earlier, Sharpe James was convicted by a Newark, New Jersey, jury on all corruption charges against him in connection with a scheme that enabled his girlfriend, Tamika Riley, to fraudulently obtain steeply discounted city-owned land and resell it for hundreds of thousands of dollars in profits.

Riley was convicted with James on the same five charges: three counts of mail fraud related to the sale of the city lots to Riley, one count of fraud involving a local government receiving federal funds, and one count of conspiracy to defraud the public of James‘ honest services.

The prosecution was built around the sale to Riley of municipally-owned properties in Newark, New Jersey. The properties, according to evidence and testimony, were steered to Riley by James, who had a long-running romantic relationship with her. Riley paid only $46,000 for a total of nine properties, and then quickly resold, or “flipped” the properties for more than $600,000.

Summary and Comments:

Issues related to the mortgage crisis and melt down of the sub-prime market is all over the media. The FBI has reported that resources are being diverted to handle the up serge of complaints and abuse that seems to arise daily. The map below was provided by the FBI to show the dominate areas for mortgage fraud.

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. More and more, I find that my newest presentation is in demand: MORTGAGE FRAUD: Fact from Fiction. Prison is no fun and most of those mentioned above are facing several years plus substantial restitution for mortgage fraud conviction(s). It is true, you reap what you sow and in the environment we formerly came from, it seemed that the cards were stacked in favor of mortgage fraud.

IF you feel you’ve been a victim of mortgage fraud - please share your experience so other may benefit.

Mortgage Fraud Speaker - Chuck Gallagher - signing off…