Christopher Olivera, former GameStop VP of corporate communications and public affairs plead guilty to embezzlement

Why do good people, well educated people, make unethical choices – in many cases choices that are illegal – knowing that “Every Choice has a Consequence” and the consequences that follow unethical illegal choices are never pleasant?

Frank Christopher Olivera, former GameStop VP of corporate communications and public affairs plead guilty Thursday to one count of mail fraud for embezzling $1,965,900 from the company.

More information is provide on my White Collar Crime Speaker blog. You can read the full post here.

YOUR COMMENTS ARE WELCOME

Texas duo – Silverio Garza, jr. and Joel Javier Garza sentenced to federal prison for embezzlement! Choices and Consequences…

Silverio Garza Jr., 60, and Joel Javier Garza, 42, both of  Rio Grande City, Texas, have been sentenced to prison for embezzlement, United States Attorney José Angel Moreno announced.

U.S. District Judge Randy Crane sentenced Garza Jr. and Garza to two years and four months, respectively, in federal prison without parole at a hearing yesterday afternoon in federal court in McAllen.

Garza Jr. and Garza (not related) pleaded guilty on June 7, 2011, to embezzlement – admitting they embezzled and converted property belonging to the United States government over a two-year-period between May 2007 and August 2009. Garza Jr. was the area operations manager for the Falcon Dam Power Plant, while Garza was the superintendent of the plant. The embezzlement was accomplished with the use of a government International Merchant Purchase Authorization Credit (IMPAC) card issued to Garza.

In deciding their sentence, Judge Crane considered the amount of embezzled property and the position held by each defendant at the Falcon Dam and power plant project. Following completion of their term of imprisonment, the court ordered each defendant to serve a three-year-term of supervised release. As part of their sentence, the court ordered Garza Jr. to  pay $31,521.40 in restitution within 30 days, while Garza must pay $64,600.45 in restitution with $10,000 due within 30 days and the balance to paid during the term of supervised release in equal monthly installments.

The defendants have been out on bond since their Dec. 2 and Dec. 3, 2010, arrests. They were allowed to remain on bond pending their surrender to the United States Marshals Service on Aug. 15, 2011, pending transfer to a U.S. Bureau of Prisons facility where they will serve their sentence.

Christopher Blackwell – indicted on Investment Fraud in Colleyville, Texas. Simple fraud will earn a painful consequence!

A classic stupid Ponzi scheme!  It has been said that a sucker is born every day, but I still find myself amazed that otherwise intelligent people would fall for something so blatantly stupid as what Blackwell offered to the fine folks in and around Colleyville, Texas.  As a business ethics and fraud prevention speaker and author, I know first hand about what goes on behind the scenes when such a fraud occurs and how folks fall prey to victimization by perpetrators like Blackwell.

Christopher Blackwell, 32, of Colleyville, Texas, has been indicted by a federal grand jury on two counts of wire fraud in relation to an investment fraud scheme he has operated since January 2007. Blackwell was arrested in Phoenix, Arizona, earlier this month. Blackwell remains in custody. A date has not yet been set for his arraignment in U.S. District Court in Fort Worth.

According to the indictment, Blackwell allegedly deceived investors by falsely telling them that he would invest their money in business ventures that would generate a high rate of return, and by fraudulently assuring them that the investments would involve little to no risk. He told investors that their money would be invested in specific business ventures, but when he received investors’ money, he didn’t invest it and instead used most of it for his own personal benefit. On occasion, he would use some of the funds from new investors to make small payments to earlier investors to convince them that their money was generating a profit. However, not all investors received payments from Blackwell and many lost all of the money they invested.

According to the criminal complaint filed in the case, more than 20 victims, suffering more than $4 million in losses as a result of Blackwell’s scheme, have been identified. One investor, identified only by initials, lost all of the $325,000 he gave Blackwell to invest. In fact, after this investor wired the money as directed to Blackwell’s accounts, agents obtained Blackwell’s bank records and were able to determine that Blackwell didn’t invest the money as promised, but instead used it for personal expenditures including automatic teller machine withdrawals, dining and entertainment, luxury vehicle expenses and payments to family and business associates.

In February 2011, the U.S. Securities and Exchange Commission (SEC) filed a complaint against Christopher Love Blackwell, AV Bar Reg, Inc. and Millers A Game, LLC, two entities he controls, claiming that Blackwell enticed investors by telling them that his trading program would generate highly impressive, guaranteed returns of 25 to 30 percent per month with regularity. He falsely claimed these profits were possible because of his academic pedigree, including Master’s and Ph.D. degrees acquired at a prestigious university in Spain (Blackwell holds no such degrees); his extensive experience as a trader (he has little, if any, such experience); and the know-how and connections he acquired while employed by Goldman Sachs and The Bank of Madrid (he never worked at either firm). In March 2011, the SEC and Blackwell and his entities entered into an agreed judgment.

25 to 30 percent per month with regularity?  Really, in this economy people would believe that?  Whatever happened to due diligence?

An indictment is an accusation by a federal grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty. If convicted, however, each of the wire fraud counts carries a maximum statutory sentence of 20 years in prison and a $250,000 fine. Restitution could be ordered.

If you were a victim of this Ponzi Scheme…perhaps you’d comment on the lure Blackwell used to secure your investment.

YOUR COMMENTS ARE WELCOME!

Jerry Holmes and R. Scott Pace face the Consequences of their Unethical and Illegal Actions. Prison, Probation and Restitution…

Every choice has a consequence.  What started out as a legitimate business turned into an opportunity to meet a need that coupled with individual rationalization became the fertilizer for fraud.  As a business ethics and fraud prevention speaker, I see this frequently…intelligent and well meaning businessmen (or women) meeting a perceived need illegally and likely rationalizing that “they’ll pay it back” thus justifying their soon to be discovered illegal actions and then being forced to face the very real consequences of them.

Here’s the US Attorney’s news release…

DEPARTMENT OF JUSTICE

United States Attorney’s Office
Western District of North Carolina

FOR IMMEDIATE RELEASE
WEDNESDAY, JUNE 8, 2011

CONTACT: Lia Bantavani
704.338.3140
FAX NUMBER: 704.227.0264

OWNERS OF SETTLEMENT COMPANY SENTENCED TO 33 MONTHS IN PRISON FOR EMBEZZLEMENT AND TAX EVASION CHARLOTTE, N.C. – The United States Attorney’s Office for the Western District of North Carolina announced that the owners of the Settlement Source, LLC, were each sentenced to prison terms for their role in embezzling money from the escrow account at the Settlement Source and for tax evasion.

U.S. District Judge Max O. Cogburn, Jr. sentenced Settlement Source owner and former chief executive, Jerry Holmes, 64, of Matthews, N.C., to serve 33 months in federal prison, to be followed by two years of supervised release. The defendant was also ordered to pay restitution in the amount of $1.9 million. Judge Cogburn also sentenced Settlement Source owner R. Scott Pace, 38, of Charlotte, to 33 months in federal prison, two years of supervised release, and ordered to pay restitution in the amount of $1.9 million.

The United States Attorney’s Office is joined in making today’s announcement by Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service (IRS) – Criminal Investigation Division (CID). Holmes and Pace pled guilty to the charges in a criminal bill of information filed on May 19, 2010. According to the bill of information, in or about November 2005 Holmes and Pace discovered that they could embezzle client funds from the escrow account – at least initially – without any customer discovering the embezzlement and without any noticeable effect on operations. Over time, Holmes and Pace, assisted by another defendant not yet sentenced, embezzled substantial amounts of money for, among other things, real estate investments, a box suite for Carolina Panthers football games, personal loans, and a loan for Holmes’ daughter and son-in-law to purchase a house. When the scheme collapsed in or about July 2008, it caused losses to clients and insurers of approximately $2.4 million.

In pronouncing the sentences, Judge Cogburn stressed that the sentences were only as low as they were because the defendants self-reported the fraud, believing it was unknown to the government. Holmes and Pace will be allowed to self report to begin service of their prison terms once the Federal Bureau of Prisons has designated the facilities at which they will serve their respective sentences. All federal prison sentences are served without the possibility of parole.

The investigation was led by the FBI and IRS-CID. The prosecution for the government was handled by Assistant U.S. Attorney Kurt W. Meyers of the U.S. Attorney’s Office in Charlotte.

If you have information that might be helpful in this case in identifying the motives behind the actions taken by Holmes or Pace…please share.

YOUR COMMENTS ARE WELCOME!

Burr Oak Cemetery ex-director – Carolyn Towns – sentenced to 12 Years in Prison! What did she do and Why? Comments are welcome!

Perhaps now this chapter of the history of Burr Oak Cemetery located outside of Chicago can be put to rest – much like people would want for those buried there.  Unfortunately Burr Oak, at least in recent day, has been anything but a place of rest rather it was a place where hundreds of graves were dug up and resold.

The former director of a Chicago-area cemetery Carolyn Towns, 51, who ran the Burr Oak Cemetery when the allegations surfaced in 2009, was sentenced to 12 years in prison after she pleaded guilty to all charges against her, including dismembering a human body and theft from a place of worship, according to state prosecutors in Cook County, Illinois.

WHAT DID THEY DO?

In an effort to sell more property (grave spaces) prosecutors allege the grave diggers would exhume bodies, crushing vaults and caskets before dumping human remains at the cemetery’s trash site.  They then would  “double stack” graves, in other words  they would bury existing remains deeper into the ground before placing new remains in the same grave site.

In a CNN report the following is stated:

Towns “is very remorseful, not only for the pain she caused her family, but the families of people who have loved ones at Burr Oak,” defense attorney Susana Ortiz said, according to CNN affiliate WLS. “She accepted responsibility for the allegations in this case, and she would just like to put this behind her and move on with her life.”

As part of the grueling investigation, the CNN report goes on to say:

At the time, Sheriff Thomas J. Dart said the scene at the cemetery was disturbing. “I found bones out there,” he said. “I found individuals wandering aimlessly looking for their loved ones who can’t find them.”

The investigation also extended into “Babyland,” a section of the cemetery intended for children. Dart said he talked to countless women who could not find their children.

Authorities also discovered the original glass-faced casket belonging to 14-year-old Emmett Till, piled in a garage filled with lawn care equipment.

WHAT MOTIVATES SUCH BEHAVIOR?

An Associated Press article provides a clearer explanation as to the motives behind the Burr Oak debacle.  “Prosecutors say Towns stole more than $100,000 from the corporation that owned Burr Oak by keeping the payments for burials and having workers stack bodies or dump remains in unmarked mass graves.” Some published reports say the amount taken was more than 300,000.

According to the Chicago Sun Times, “Towns’ attorney Richard S. Kling said the money she stole fed a terrible gambling addiction, and blinded her sense of what she knew was right.”

As a business ethics and fraud prevention speaker, and also a person who is actively involved in the Death-Care industry, I see, all to often, that when three things come together: (1) Need; (2) Opportunity and (3) Rationalization – it creates the PERFECT STORM for fraud.  To be clear, just because those three things are present does not mean that Fraud will occur, rather it means that the conditions are right for the ethical person to make the unethical choice that can lead to illegal activities and fraud.  As I speak to groups internationally the significant question that comes up is not what happened – that is generally evident by the facts, but rather what motivated the perpetrators behavior in the first place?

It appears that Towns had a need (according to her attorney – support a gambling habit).  Towns also had opportunity as the director of the cemetery she had the power to authorize the maintenance worker to perform inappropriate and illegal conduct (they could have refused, but often in subordinate roles they will not assuming they are protected by doing what their boss tells them).  Lastly, Towns was so likely caught up in the illusion she created that she had no ability to see reality – hence she could rationalize her behavior.

None of this makes what she did right!  Not at all, but rather it, in simple form, shows what might have contributed to her mindset that what she did was right.

The judge in this case got it right!

“The victims in this case are essentially the public,” he said. “The defendant’s actions in these crimes caused ­­— while not physical harm ­— I believe irreparable emotional and psychological harm.

“There is no way to repair the harm done to those grieving families and friends.”

If you were a victim of Carolyn Town actions…feel free to comment here so others can know your feelings!

YOUR COMMENTS ARE WELCOME!

Daniel Frishberg and the Importance of Money Management – Irony in Deception!

A day or so ago a scammed investor lamenting his/her plight said that the word is Dan Frishberg is growing tired of the negative publicity he’s receiving on the web.  It has become worry some that the choices that he’s made are producing consequences that tarnish his reputation.

My immediate response is “Every choice has a consequence!”  In fact, I shared that if Dan had taken a different path early on most of what he’s experiencing today would be quite different.  For example – had Dan shared with his followers that he’d made mistakes in his vision of BizRadio, that BizRadio was in financial trouble and that he would open the revenue source from his RIA to provide a steady stream of repayment to those who were defrauded or scammed in one way or another, I suspect the outcome would have been much more positive.

Alas…Dan “The Money Man” did not.  Rather he is desperately trying to continue to put out the message that he is “The Money Man” through a series of NEW blogs touting his expertise.  There is IRONY here.  I call it the IRONY of DECEPTION and the likely outcome is that Dan is digging the hole deeper for his ultimate demise.

I am not going to link my blog to his – as that has the effect of drawing attention to his work.  I will, however, share part of his blog comments and, after some comments, ask YOU for yours.  Perhaps I am off base and I’m man enough to accept that – so if your comments reflect a different opinion of Dan and his choices – PLEASE SHARE.

DAN STATES THE FOLLOWING:

Today I’ll share with you two general systems of money management that will help you how complex you want to take your strategy for managing the money even if you do not all. Good management of working capital is necessary to reach a compromise between liquidity and profitability. It is widely believed that if you can not manage your life, you can not begin to manage your money.

Let me repeat his comment: “It is widely believed that if you can not manage your life, you can not begin to manage your money.”  Time after time from numerous emails and phone calls, I have been told that Dan was challenged in managing his life – at least his financial life.  It is not for me to judge, but one might easily come to the conclusion that money management is an issue for Dan considering that investors money funded BizRadio and BizRadio was the “loss leader” (Dan’s comments not mine) that propelled his RIA and earned him personally a reported $700,000 per quarter.  Financial success on Dan’s part or the trappings of a successful scam – using other people’s money to accomplish his personal objective leaving other people victims?

Dan further states:  “You must understand that leveraging your money with good management can turn a relatively low investment business situation / in a dynamic Moneymaker. Wise money management is essential for a balanced and happy life. gives practical advice for managing money among others for gambling and trading of the shares. money management can mean acquiring more control over expenditure and revenue, both personal and business perspective.”

Dan seemed to practice what he preaches here.  Sure enough he turned a low investment into a good business situation (for himself) at least for a time.  Where did the BizRadio money come from?  I suspect that investors (victims) could now come out of the woodwork and share their stories of how they were suckered into believing that Dan “The Money Man” was wise and all knowing – touting the vision and ILLUSION that BizRadio was a good investment for them.  Reality Check:  BizRadio was only good for Dan.

Financial stress resulting from low skills of money management may affect our ability to make good decisions, harm our relations on the physical and mental health, and ultimately to function well in life. Indeed, deficient money management is one of the main causes of bankruptcy among unseasoned traders. Management of financial assets is an effective way to manage financial assets, one that may take place in various forms. Management services for financial assets generally provide include but not limited to, Control services, credit cards, debit cards, margin loans, automatic transfers from one account to another, and same brokerage services.

LET ME ASK A QUESTION:  How many people in the Houston – Dallas markets are suffering (I mean truly suffering) financial stress due to the representations of Al Kaleta and Daniel Frishberg?  Both are shameful representatives of the financial community.  Dan, through his actions, has caused stress to both physical and mental health of many who have lost their life savings, believing that Dan Frishberg lived up to his self proclaimed status as “The Money Man.”  Now, Dan is desperately trying to save his reputation.  What Dan fails to realize is that his actions destroyed his reputation.  Dan is effectively nothing more than a con man who hasn’t yet realized that feeding his ego off of other people’s money is costing him everything.

The sad part is this could have been different.  But then the same could be said for Bernie Madoff.  Both Dan Frishberg and Bernie Maddoff have two things in common: (1) they are both intelligent and (2) they are both crooks.  The only difference – Bernie is in prison.  Dan hasn’t been charged.  YET…

YOUR COMMENTS ARE WELCOME.

White Collar Crime hard to Deter? Perhaps we’re trying the wrong approach says Business Ethics Speaker Chuck Gallagher

How do companies deter White Collar Crime?

With media reports filled with stories of “white collar crime” such as the developing Koss embezzlement story and the on-going reports related to Allen Stanford and recently sentenced Bernie Madoff, it’s no wonder that organizations are seeking to find deterrents to this seemingly growing phenomenon.

As I prepare to address a group in just hours, I came across this article in the Charleston Regional Business Journal and it struck me – “We’re going about this all wrong!”  But, before I suggest what’s right let’s look at excerpts from the article featured below.  The whole article is here:

Law school panelists: White collar crime hard to deter

By Andy Owens
aowens@scbiznews.com
Published Feb. 22, 2010

Crime pays, at least if you’re a midlevel executive wearing a white collar.

Panelists at a symposium on crime and punishment said that fraudsters find the risk of being caught typically worth the potential reward for all but the most top-level executives.

Using Enron and WorldCom, along with more recent financial fraud, as examples, the panelists — a federal prosecutor, a CPA and a former Securities and Exchange Commission official — said deterring white collar crime is difficult, partly because criminals are typically caught after years of high living and typically only the top executives receive the harshest penalties.

COMMENT #1: The first problem I see is that none of the panelists have any background as a criminal.  Each represent a segment of society that intellectually is connected with and perhaps understands “white collar crime”, but none are “white collar criminals.”  Therefore, they see things from their perspective but have no practical experience in showing others how to deter crime.  See the list below and then ask yourself, how could any of these folks really identify with the commission of a crime and therefore how to prevent it?

The symposium, held by the Charleston Law Review and the Riley Institute at Furman University, took place Thursday and Friday in downtown Charleston. It included a keynote address by the founder and executive director of the Equal Justice Initiative based in Montgomery, Ala., as well as a series of panel discussions by scholars, judges, lawmakers, lawyers and public advocates.

‘Like the Whac-A-Mole game’

For example, in 2000, the FBI reported that the number of suspicious mortgage fraud cases was 3,515. By 2008, that number had risen to 63,713. Even eliminating false alarms, the numbers are growing at an enormous rate, said Daniel V. Dooley, CPA and a former senior partner with PricewaterhouseCoopers.

“This trend is staggering,” Dooley said. “This is like the Whac-A-Mole game.”

COMMENT #2: Why is this trend up?   To someone who has been involved in white collar crime the answer is obvious.  From 2000 to 2008 we experienced unprecedented economic growth.  Everything was financially rosy.  We acquired more debt.  We lived more extravagant lifestyles.  We created a larger life illusion.  Therefore, two things were present to fuel the white collar crime growth: (1) more money to steal; and (2) greater need (the first component that exists for the creation of a white collar crime).  The crimes have always been there, its the economic decline that has caused them to come to the surface.  Think of white collar criminal as fish (bottom feeders if you will).  When the water is high you don’t see them.  They are there all right, but out of sight.  But in a drought when the water level recedes they come to the surface.  In an economic recession, when the money recedes you see white collar crime come to the light.  The principle is easy.

In a recent paper, Dooley and Mark Radke, a former SEC official and partner with Dewey & LeBoeuf, wrote that this can be a big challenge to the argument that lengthy prison sentences deter fraud.

“Most financial criminals don’t think about it, and they don’t think they’ll get caught,” Dooley said.

The 150 years in jail that Ponzi schemer Bernie Madoff received will likely deter only him from committing similar fraud, Dooley said, and even those who consider they might get caught know that they might have a decade or more to live off ill-gotten gains before anyone notices.

COMMENT #3: Will the long prison sentence deter the crime.  Well with Madoff getting 150 years and a fellow from Maryland sentenced in Texas to 99 years for a $10 million crime – folks are taking notice.  But, Dooley is right.  Most white collar criminals don’t think they will get caught.  Why?  First, once you have satisfied your NEED…you begin to RATIONALIZE your behavior.  That’s the tricky part cause if you can convince yourself that you’re not committing a crime – you begin to believe your own ILLUSION (your own lie).  So…if you can help people understand the impact that PERSONAL RATIONALIZATION has in the commission of the crime, you likely can begin to prevent the behavior that leads to such an ILLUSION.

Radke thinks the SEC should act less like a prosecuting agency and more like a gatekeeper that could shut down rip-off artists even without a case that could go before a court. He said a lot of the damage that’s being done could be stemmed if the SEC would use its regulatory power to freeze assets and bar fraudulent activity from occurring.

“You don’t have to build a case beyond a reasonable doubt” to act, Radke said.

Assistant U.S. Attorney Rhett DeHart agreed that a more regulatory approach would be helpful in stopping financial criminals, but he said it’s impossible to know if large prison sentences deter the trend of financial fraud because you can’t measure the incidence of someone not committing a crime.

“Who knows whether they deter others or not?” he said. “You can’t measure a crime that’s not committed. I think deterrence may be the least important factor.”

COMMENT #4:  O.K. guys – this is a very nice academic exercise, but beneficial – I doubt it.   So as a start let me provide a list of things that might help to deter white collar crime:

1. Make it known that you, from time to time, will have random auditors reviewing departments, processes and procedures – and THEN DO IT.  For example, you might have a plant (yes, fake employee) come into a department and test the integrity of workers.
2. Post examples of folks who have committed a crime and the punishment that they received, and without violating some perceived right – make sure that those who internally violate are known and prosecuted.  If folks feel that their indiscretion will be swept under the table they are more likely to commit the crime.
3. Self serving statement – but hire someone other than an academic to come in and speak to your folks.  You have no idea the impact it has when employees are faced with someone who committed the crime and then did the time.  I, or folks like me, make it real and the more real you can make it the more someone will think before they take some “white collar crime” action.
4. Consistently keep the message of “choices and consequences” before them.  With companies I consult with, I often find that different mediums shared frequently has a positive impact.  It is said that a person might see an advertisement seven (7) times before they really consider buying.  If that is true in marketing, then aren’t we marketing good behavior.  Yes…of course so!  So, we need to approach behavior marketing the same as product marketing.  All we are looking for is a positive outcome.

FINAL QUESTION:  Do you think that “white collar crime” can be deterred and if so, how?  YOUR COMMENTS ARE WELCOME!

Canadian Financial Advisor Earl Jones sentenced to 11 years in Prison for massive Ponzi scheme!

“He can rot in hell,” said Bevan Jones of his brother Earl Jones who today was sentenced to 11 years in prison for his $50 million Ponzi scheme.  And his brother’s emotional remarks were the only ones heard today as the verdict was handed down.

Jones never invested a cent of the money he collected from his former clients, the Quebec court heard during the criminal proceedings against him.  Rather, in classic Ponzi form, Jones used some of the proceeds to continue the illusion that he created so well and in which many people their life savings.  None of the money has been recovered.

Today, I received a call from a reporter with the CBC regarding Jones sentencing.  Her questions centered around what Jones might have been thinking and if he ever saw an end game other than prison.  She posed those questions of me because, I, like Jones, (not proud of what I’m writing next) too created a Ponzi scheme which left a trail of victims. (Today, some 24 years later I am a business ethics and fraud prevention expert – helping businesses and individuals connect the dots between choices and their consequences).

While what I did in the mid-eighties pails in comparison to Jones and Madoff, the reality is fraud is fraud and theft is theft.  One cannot justify victimizing someone else.  Yet, as evidenced over the past two years…this fraud has come to the forefront almost daily now.  So, her questions were appropriate – like, what was Jones thinking?

Three things come into place for a fraud to occur:  NEED, OPPORTUNITY and RATIONALIZATION.

Now, I can’t begin to predict what Jone’s NEED was, but I suspect that somehow his NEED was beyond the simple NEED for money.  Rather, I suspect that his need was emotionally based.  Madoff, for example, didn’t need the money…he legitimately could earn a handsome income from his legitimate investment advice.  Rather, Madoff seemed to have the need to be RIGHT.  He could not admit that he was fallible.  To Madoff admitting that his investment didn’t always “pay off” would be too difficult to swallow.  Hence his need was emotionally based.  Take to the bank, Jones was likely feeling something that triggered an emotional need when his fraud began.

A report today states:

Some of the victims included Jones’s own relatives, who are no longer speaking to him.

“None of us will ever be the same,” said Bevan Jones who, along with his wife Frances Gordon, was fleeced out of $1 million by his brother. Jones said he would never forgive him for what he’d done.

Both Jones and his financial-services company have been declared bankrupt. He’s been shunned not only by his friends and relatives, but his wife Maxine has also filed for divorce.

Jones saw OPPORTUNITY by taking advantage of his close friends and family.  In my earlier discussion the reporter asked about how or who typically was defrauded.  My answer, those closest to the fraudster.  Most of the time OPPORTUNITY is found in those closest to you – those who trust you!  Now, as a word of caution, if you’re considering investing your retirement…don’t do it with those whom you know best.  Rather, invest with those with whom you have a professional relationship and healthy skepticism.

So, she asked me, “Who did you victimize?”  Unfortunately, my response was typical of those who have defrauded others – “I victimized those clients who were closest to me and trusted me the most.”  As I spoke those words I still feel pain today for what they endured at my hand.  Now…to set the record straight, I did make complete restitution plus interest, but that does not justify what I did and will never erase the memory and feeling that those friend and clients felt when I had to tell them that I, their trusted advisor, was nothing more than a liar and a thief.

Jones once lived in the lap of luxury, with several high-end homes in trendy locales. He was a pillar of the community, active in the church, local charities and amateur sports.

The most difficult part for most people to comprehend is the question, “what did you think would happen?”  To rational individuals who clearly see the difference between right and wong…it is clear that Jones choices could lead to no where but prison.  Yet, when one begins to RATIONALIZE one’s behavior, the very act of RATIONALIZATION creates and illusion and the longer the deviant behavior goes undetected the stronger the illusion becomes until eventually the ILLUSION becomes REALITY.

The reporter asked, “What did you think would be the outcome?”  Fair question.  As I thought back for a moment, the answer became crystal clear.  At first I convinced myself that I was borrowing money, not stealing it.  (We all know that money taken from someone without their consent and knowledge isn’t borrowing!)  What I did was theft…!  Yet, at the time, I went to great lengths to create the illusion that it was a loan.  When I put the stolen money back – gave it back to its rightful owner, I solidified the illusion by RATIONALIZING that my actions were consistent with that of borrowing money – a loan.  The illusion was set and RATIONALIZATION established.  Therefore, as time passed and I stole more, I could more easily convince myself that I was “only borrowing”.  A lie, but one that I believed till…

One of her last questions, “So when did you know?”  Each of us…Madoff, Jones and yes, Gallagher, had to face the day when the illusion burst and reality came blindly into view.  In most every case, it is when someone (or perhaps a group) want their funds and you come to realize – you don’t have the funds…in fact, you never did.  That’s reality…

Today…Jones faced what I faced now some 16 years ago.  I now what it’s like to spend time in federal prison.  Jones is now experiencing the consequences of his choices.  And, while the Canadian legal system would have Jones eligible for Parole in 2011, his life has changed forever…although I doubt enough for those he victimized to feel any comfort.

Crown prosecutors and Jones’s lawyer jointly recommended a sentence of 11 years, which Judge Hélène Morin handed down.

“The accused not only robbed the victims of their money, he robbed them of their freedom and self-esteem and of a decent life they expected in their retirement,” Morin said in her comments before delivering the sentence.

YOUR COMMENTS ARE WELCOME

William Murray California CPA Charged with $13 Million Fraud – Former CPA and Business Ethics Speaker Chuck Gallagher comments…

Every choice has a consequence.  I know…as a former CPA charged and convicted of fraud…I understand so well the effect of the choice we make.

Assistant United States Attorney Matthew D. Segal alleges that William Murray used false pretenses and representations to steal $13,357,133 from clients of his tax return preparation business, Murray & Young.  Mr. Murray is well known in the Sacramento area. He had frequently provided tax tips on a local television channel and served on the board of a charitable foundation.

Murray told more than 50 clients that he would pay taxes or make investments on their behalf and that therefore they should write checks to accounts that he controlled.

The information further alleges that Murray actually used the money to finance an extravagant lifestyle: he remodeled his house, funded a limousine business, and purchased things such as luxury automobiles, hand-woven rugs, art, sports memorabilia, wines, and jewelry.

The information also states that Murray used $3,507,502 in client funds to pay other clients’ tax obligations or to purport to return other clients’ investments.

The maximum statutory penalty for a violation of the mail fraud statute is 20 years in prison and a fine equal to the greatest of $250,000, twice the gain, or twice the loss caused by the offense. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.

The charges are only allegations and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

WHERE FROM HERE?

Speaking from person experience, if Mr. Murray is guilty…he would be best advised to surrender his license, plead guilty and make every effort to make restitution.  Facing time in prison is less than pleasant, but survivable.  Perhaps, he, like I, can find the experience in prison one of learning and make a different set of choices following his release.

I recall the best advice I was ever given.  A man once said to me soon after my crime came to light: “Son, you’ve made a terrible mistake, but YOU ARE NOT A MISTAKE.  The Choices you make today will define your life in the future and the legacy you leave for your two sons…  MAKE THOSE CHOICES WISELY!”

Comments are welcome.

Reverend Raleigh Trammell – Southern Christian Leadership Conference Dayton head – home raided by FBI on Embezzlement concerns!

Early this month, national officials of the Southern Christian Leadership Conference requested criminal investigations by authorities in Georgia and Alabama, alleging embezzlement from the civil rights organization by Dayton’s Rev. Raleigh Trammell, the national board chairman, and SCLC Treasurer Spiver Gordon.

Today, Agents with the Federal Bureau of Investigation seized a computer and several boxes from the home of Reverend Raleigh Trammell, according to Dayton police.

Agents searched the Dayton offices of the SCLC looking for any information or evidence that could like Trammell to the alleged misuse of the group’s funds. They also raided the home of Trammell’s daughter Angela Goodwine, taking boxes and a computer from her house as well.

Trammell declined comment after the agents left his home. However, neighbor John Wilkins said: “After all of the accusations, I’m not surprised (by the searches). I feel sorry for the family that they have to go through this. Mrs. Trammell is a very nice person and I feel sorry that she has to go through this — she and her husband both.”

According to reports, the group’s treasurer, Spiver Gordon of Alabama, is also under investigation for involvement in the case.

U.S. Justice Department spokesman Fred Alverson said the searches are in relation to an investigation in to SCLC financial activities. No criminal charges have been filed.

“I don’t have any reaction to that nonsense,” said Trammell, chairman of the board of SCLC’s Dayton chapter. “I have nothing to do with the finances of the organization.”

He said the SCLC finance committee is investigating the allegations.

“I’m sure when they make their report it will clearly exonerate me. Until then I’m just prepared to say it’s a bunch of hogwash,” said Trammell, who also is executive director of the Interdenominational Ministerial Alliance in Dayton.

Trammell and Gordon are accused of unauthorized expenditure of SCLC funds in excess of $560,000 since 2006, according to a Jan. 29 letter to Fulton County District Attorney Paul Howard. The letter was written by Dexter M. Wimbish, who is on temporary paid leave as SCLC general counsel.

“The embezzlement includes the use of a board account with Citizens Trust Bank (in Georgia) whereby personal expenses have been paid as well as loans to Raleigh Trammell,” Wimbish wrote in the letter.

“As these persons have been reinstated, there is a fear they will continue to mismanage funds and destroy or alter records to cover up their theft and conversion.”

According to an internal review of the SCLC national board account obtained by the Dayton Daily News in a report issued earlier this month, SCLC officials questioned payments of more than $27,000 to Trammell and the Dayton SCLC chapter he leads between 2006 and 2009, including two wire transfers to a Trammell-controlled National City Bank account.

“I’ve never been paid any $27,000,” Trammell said.

In a Jan. 19 interview he denied the allegations and said “I have absolutely no knowledge” of transfers of SCLC funds to his control and “I don’t believe any such bank accounts exist.”

In a phone interview, Gordon said he only signed checks from the national SCLC account after the expenditures were approved with vouchers signed by other officials, including Trammell.

“Some of the allegations that are being made are just ridiculous,” Gordon said.

In presenting the documents in Alabama, Rocker said he was joined by Wimbish and Ron Woods, who is on temporary leave as SCLC executive director.

The two were placed on leave by the Fulton County judge who on Jan. 20 granted a temporary restraining order restoring Trammell and Gordon to their jobs until the SCLC board could meet. Trammell and Gordon had agreed last year to step aside while the SCLC investigated complaints of financial impropriety against them.

Three SCLC board members, including Rev. Wilburt Shanklin of Dayton, sought the restraining order after the investigation was publicly announced in December. Shanklin is president of the IMA and a member of Dayton Mayor Gary Leitzell’s Leadership Council.

The Dayton SCLC and IMA in 2009 received at least $304,952 in taxpayer funding for local programs, including money from the Montgomery County’s human services levy; county job and family services money funneled through the Dayton Urban League and federal funding for food and emergency shelter, a program administered by the United Way of Greater Dayton.

Every choice has a consequence.  Keep in mind people are innocent until proven guilty.  However, where there is smoke there is fire…so if guilt is established there will likely follow a prison sentence.

COMMENTS ARE WELCOME.