Tax Fraud Scheme earns Georgia man Prison Sentence

February 2, 2015

A Georgia man, Sirhon “Ron” Rivers, 40, was sentenced in federal court to eight years and six months in federal prison without parole for a wire fraud scheme in which he used the identity information of deceased persons to obtain more than $2.3 million in tax refunds from several states.  The court also ordered Rivers to pay $2,358,612 in restitution.

Tax FraudOn Sept. 14, 2014, Rivers pleaded guilty to one count of wire fraud, one count of aggravated identity theft, one count of conspiracy to commit money laundering and one count of conspiracy to commit wire fraud and aggravated identity theft.

Rivers admitted that he unlawfully obtained $547,000 from the Missouri Department of Revenue from January 2008 to August 2012 by filing fraudulent tax returns. Rivers used the same scheme in others states—including Kansas, Alabama, Arizona, Connecticut, Delaware, Georgia, Idaho, Louisiana, Michigan, Minnesota, New York, North Carolina, North Dakota, Oklahoma, Rhode Island and Virginia—to unlawfully acquire a total of $2,365,617 in fraudulent state tax refunds.

Rivers obtained personal identification information—including names, Social Security numbers, and dates of birth—from deceased persons. He submitted state tax returns using that information, adding false and fraudulent information such as employment and wages earned. State tax returns were submitted electronically, with the refunds electronically transferred to bank accounts that Rivers opened at several financial institutions.

IRS Tax Fraud – Dewayne Long faces Prison

February 1, 2015

Dewayne K. Long, 53, of Omaha, Nebraska, was sentenced for conspiracy to defraud the United States by filing false federal income tax returns for income tax refunds.  The Honorable Joseph Bataillon sentenced Long to one year and one day in prison, three years of supervised release and restitution in the amount of $440,924.00.

IRS-logoBeginning around December 1, 2008, through March 2010, Dewayne K. Long, and another individual conspired to defraud the Internal Revenue Service by filing false federal income tax returns which contained fraudulent claims for income tax refunds.  These claims were based upon false amounts of federal income tax withheld which were reported on false Forms 1099-0ID.  The Form 1099-OIDs (Original Issue Discount) improperly claimed that the clients had income and corresponding federal income taxes withheld, which resulted in a refund due from the IRS.  Long and his co-conspirator caused nine (9) false claims to be filed with the IRS, totaling $4,701,010.00.

“This defendant filed fraudulent tax returns with bogus claims in an attempt to steal from the U.S. Treasury and the taxpaying public,” said Tanya Brewer, Acting Special Agent in Charge of IRS Criminal Investigation.

Jaime Sanchez sentenced to Prison for Mortgage Fraud – Choices and Consequences

January 31, 2015

An Individual was sentenced for his role in illegal mortgage fraud kick-back scheme, which resulted in his and his co-conspirators fraudulently obtaining $3,000,000 in 12 fraudulent mortgage loans at Marina Oaks Condominiums.

mortgagefraudJaime Sanchez, 43, was sentenced to 168 months in prison, followed by five years of supervised release. On October 29, 2014, Sanchez pled guilty to conspiracy to commit mail and wire fraud affecting a financial institution. Sanchez had been previously charged in connection with fraudulently obtaining mortgages for the purchase of 12 condominium units at Marina Oaks Condominiums in Fort Lauderdale, Florida.

According to the indictment from January 2007 through September 2008, in the Southern District of Florida and elsewhere, Sanchez and others conspired to recruit individuals who would be willing to purchase condominium units at Marina Oaks Condominiums. These buyers were promised a “buyer’s incentive” which in actuality was an indirect payment or “kick-back” to the buyers not disclosed to the lenders or reflected on any of the closing documents. Sanchez and others would then prepare materially false and fraudulent mortgage applications for the buyers on the Uniform Loan Application Form 1003 which contained false and fraudulent information as to material facts about the borrower’s credit worthiness in order to obtain mortgage money from lenders to fund the purchase of the Marina Oaks Condominiums. The conspirators would create false and fraudulent documents to support the mortgage applications. Once the loans closed, the conspirators would fraudulently and unlawfully divert portions of the mortgage proceeds for their own personal use and benefit.

Four Charged in Grant Funding Scam

January 30, 2015

Four persons have been charged with conspiracy and fraud for obtaining money from small business owners for grant funding and services that they never provided or intended to provide, announced U.S. Attorney Daniel G. Bogden for the District of FraudNevada and Laura A. Bucheit, Special Agent in Charge of the FBI for Nevada.

Jason Demko, 38, Lorraine Riddiough, 66, Lissette Alvarez, 27, all of Las Vegas, and Mark Jones, 32, of Barberton, Ohio, are charged in a criminal indictment with one count of conspiracy to commit mail fraud and wire fraud, five counts of wire fraud, and criminal forfeiture. Riddiough, Alvarez, and Jones were arrested in Las Vegas.

“Unfortunately, advance fee fraud schemes are very common,” said U.S. Attorney Bogden. “The con artist will ask for money up front before any tangible service or product is provided, and it will be very difficult to get your money back once you have turned it over to the scammers.”

“”These arrests emphasize the FBI’s continued commitment to investigate financial crimes,” said Special Agent in Charge Bucheit. “It also serves as a reminder for consumers to protect themselves, and remember if it seems too good to be true, it almost always is.”

According to the indictment and other court records, from about January 2013 to February 2014, the defendants allegedly made false and fraudulent representations and promises to small business owners to persuade and induce them to pay initial fees, usually between $2,500 and $5,000 for goods and services they thought would help them obtain grants for their businesses. The business owners were told that the total cost for obtaining a grant was between $10,000 and $15,000, depending on the total amount of funding requested, and that the remaining fees would not be charged until the owners received 100 percent of the grant funding. Among other things, the defendants falsely stated that they represented a company named Foundation Processing Center in Wilmington, Del., when in fact, they represented JCD Business Services in Las Vegas; falsely stated that only certain clients had qualified for grants, when in fact anyone who paid the fees were qualified by the defendants; and stated that they had obtained grants for other clients, when in fact they had not done so. The defendants also re-solicited clients for additional fees, including business plans, when they knew that the plans were not going to assist the clients in obtaining any grants. The defendants knew that the true purpose of their solicitations was to obtain funds to personally enrich themselves.

If convicted, the defendants face a maximum of 20 years in prison and a $250,000 fine on all counts.

Identity Theft – Providencia Llanos, Providensia Llanos and Providencia Allison sentenced to Prison

January 30, 2015

Providencia Llanos, a/k/a Providensia Llanos, a/k/a Providencia Allison, 36, of Miami Gardens, was sentenced to 81 months in prison, followed by three years of supervised release, and was ordered to pay $42,828 in restitution.

Identity theftLlanos previously pled guilty to one count of access device fraud, in violation of Title 18 United States Code, Section 1029(a)(3), and one count of aggravated identity theft, in violation of Title 18 United States Code, Section 1028A(a)(1).

According to court documents, on March 18, 2014, IRS-CI and USSS special agents conducted a search warrant at Llanos’ residence where they found numerous prepaid debit cards, multiple computers, and printed lists and notebooks containing the names, date of births, and social security numbers of at least 3,192 individuals. Eighty-six tax returns were filed from the IP address registered to the residence where Llanos lived using the names and social security numbers of individuals listed on the printed lists and notebooks. Numerous taxpayers stated that they did not know Llanos, that they did not authorize Llanos to possess their names, date of births, and social security numbers, and that they did not authorize Llanos to file federal tax returns for the 2013 tax year.

Lawrence B. Iken pleads guilty to Health Care Fraud Sentencing set for April 2015

January 29, 2015

Lawrence B. Iken, DPM, and his company each pled guilty to charges involving the submission of false documents and reimbursement claims related to podiatric services purportedly provided by Dr. Iken, from 2006 through July 2014. As part of his Health Care Fraudplea, Dr. Iken has agreed to a money judgment of $999,170, which represents the amount of reimbursement that he and his company received for the health care claims.

According to court documents, Dr. Iken and his company, Lawrence B. Iken, DPM, LLC., have offices in Manchester and Creve Coeur, MO. Dr. Iken is a sole practitioner who provided podiatry services to patients at his Manchester and at his Creve Coeur offices and at various nursing homes in the St. Louis area. In addition to his office practice, Dr. Iken is an independent contractor for Preferred Podiatry Group, Inc. (PPG). According to its website, PPG provides podiatric care to residents in nursing homes and other long term care facilities in Missouri and five other states. As a PPG contractor, Dr. Iken provided services to nursing home residents on Wednesdays and Thursdays. With his plea, Dr. Iken admitted that on thousands of occasions, he billed Medicare, Medicaid and private insurance companies for the incision and drainage of abscesses and hematomas when he actually only clipped the toenails of the patients.

Iken, 65, of Chesterfield, and his company each pled guilty to one felony count of healthcare fraud before United States District Judge Ronald L. White. Sentencing has been set for April 17, 2015.

Yihao Pu and Sahil Uppal sentenced to Prison for Stealing Trade Secrets

January 29, 2015

A highly-skilled computer science engineer, YIHAO PU, who a prosecutor said “meticulously planned and brazenly executed” stealing sensitive trade secrets from two former employers ― a trading firm in New Jersey and later Citadel, LLC, a trade secretChicago-based financial firm ― was sentenced today to three years in federal prison.  Later today, Pu’s colleague, SAHIL UPPAL, who worked with and aided Pu at both firms, was sentenced to three years’ probation for obstruction of justice.

Pu, 27, currently of Waltham, Mass., and also known as “Ben Pu,” was ordered to begin serving his sentence on May 1, and was placed on three years of court supervision following his release from custody.  Uppal, 27, of Colts Neck, N.J., and also known as “Sonny Uppal,” was placed on three years’ probation.  U.S. District Judge Charles Norgle, who imposed the sentences, also ordered Pu and Uppal each to pay restitution totaling $759,649 to Citadel to cover the cost of its investigation.  Both defendants pleaded guilty last August in Federal Court in Chicago.

“Pu committed theft on a grand scale from not one, but two, employers.  What Pu stole was a proven money-making system from Company A and valuable trade secrets from Citadel.  He stole extremely valuable intellectual property consisting of HFT [high frequency trading] computer code and alpha outputs that generated millions of dollars each year, cost millions of dollars to build, and took teams of professionals years to develop and refine ― all of which generated millions of dollars in profits per year,” Assistant U.S. Attorney Patrick M. Otlewski argued in a sentencing memo.

According to their guilty pleas and court documents, Pu graduated from Cornell University and Uppal graduated from Carnegie Mellon University, and they worked together at Company A in Red Bank, N.J., in 2009 and 2010.  By late 2009, they planned to develop trading strategies for themselves and not for the benefit of their employers.  In March 2010, the day before Pu resigned from Company A, he accessed the firm’s secure internal computer servers and downloaded thousands of files containing Company A’s trade secrets and copied them onto a personal hard drive.

Pu began working at Citadel in May 2010 as a quantitative financial engineer and his responsibilities included working with analysts and researchers to develop and enhance Citadel’s high frequency trading strategies.  As part of his duties, Pu was permitted to use his office computer to access a folder stored on Citadel?s servers that contained information and data related to predictions signals commonly referred to as “alphas,” which are the building blocks of Citadel’s automated electronic trading algorithms and strategies.  The alphas use incoming market data and other information to predict the movement of investment instruments and relevant market activity.

Pu bypassed Citadel’s security measures and stole thousands of files that contained Citadels’ alpha outputs.  Pu then used those alphas in his own high frequency trading strategy for his own personal investment account in an effort to replicate Citadel’s trading for his own benefit.  When Uppal joined Pu at Citadel, they continued their scheme to benefit themselves during the summer of 2011.  Uppal transferred to Pu three computer files containing Citadel trade secrets without Citadel’s authorization.

On Aug. 26, 2011, Citadel confronted Pu about suspicious activity on his work computer, and Pu returned home and began destroying evidence.  With Uppal’s help, Pu took a half dozen hard drives to a friend’s apartment, and a few days later Pu instructed his friend to get rid of them.  The friend discarded six of the hard drives in a sanitary canal in Wilmette, while keeping another one at his apartment.  Uppal obstructed justice by helping Pu conceal evidence and Uppal lied when he too was confronted and questioned by Citadel.