Stephen Jacobs Chiropractor – Guilty of being Stupid by Bribing an IRS Official

January 23, 2015

Stephen Jacobs, 56, of Lowell, was sentenced to nine months in prison, two years of supervised release, and ordered to pay a $10,000 fine.  Jacobs must report to the custody of the Bureau of Prisons by Feb. 24, 2015.  In October 2014, Jacobs pleaded guilty before U.S. District Court Judge William G. Young to bribery of a public official.

Stephen JacobsIn August 2013, an IRS auditor met with Jacobs, a chiropractor, to examine numerous issues with his federal income tax forms for 2011.  During the initial interview, the auditor advised Jacobs that two $5,000 payments were not allowable deductions after Jacobs admitted that each was a payment to two different women after they accused him of touching them inappropriately during medical treatments.  Jacobs told the auditor that he paid the women because he was concerned that they would report him to the police or to the chiropractic board.  Jacobs admitted that he had begun kissing one woman’s feet while he was treating her.  He also admitted to other inappropriate contact when he was giving the second woman a massage.

Jacobs asked the IRS auditor if there was anything he could do to “just deal with this…”  When the agent said he could not “just deal with this,” Jacobs became agitated and combative, ultimately threatening the agent that he would “ruin [his] career.”

The following month, after several electronically monitored discussions regarding his non-deductible expenses, Jacobs offered to bribe the auditor in exchange for terminating the examination, saying, “. . . you want a bribe? You want me to pay you?…”  The auditor, acting under the direction of law enforcement, then accepted Jacobs’s offer of $5,000 to give Jacobs a favorable audit letter showing no additional tax for one year and a small refund for the next year.  Jacobs paid the auditor $5,000 in cash for the favorable treatment.


Don Hill who claimed his innocence – Found guilty faces 18 years in Federal Prison! Government Corruption doesn’t pay…

February 28, 2010

Restitution of $112,500 and 18 years in prison.  That’s $6,250 per year.  Was it worth it?  Clearly this is a message and with that length of time in federal prison Hill will clearly get the picture that life inside the hallowed halls of a prison make a lasting impression and are life changing.  Wonder, as he was “wheeling and dealing” if he ever thought that the outcome would be this dramatic?

Former Mayor Pro Tem Don Hill, 57, was sentenced to18 years in federal prison and ordered to pay $112,500 in restitution. He must surrender to the Bureau of Prisons on April 27, 2010, to begin serving his sentence. Hill, who was on the witness stand for nearly six days during the June – October 2009 trial, was convicted on seven of nine counts charged, including one count of conspiracy to commit bribery concerning a local government receiving federal benefits; two counts of bribery concerning a local government receiving federal benefits; one count of conspiracy to commit extortion; one count of extortion by a public official; and one count of conspiracy to commit money laundering.

“The sentences imposed today on Mr. Hill, his wife and his plan commission appointee hopefully will serve as a powerful reminder to all public officials and those who work with them, that seeking to personally profit by abusing the power given them by the voters can and will result in a long prison sentence,” said U.S. Attorney Jacks. “Public corruption is one of the most insidious crimes confronting our communities today. It contributes to the cynicism we are seeing today from the public who feel as though all politicians are corrupt and the government does not serve the needs of those citizens who can’t pay for access to their elected officials.”

Jacks continued, “The investigation into the actions of these defendants was lengthy and complicated. Many questioned why the investigation was taking so long. Hopefully, the verdict and the sentences handed down today and in the future, will serve as proof of the quality of the work done by the FBI, the IRS and the prosecutors assigned to this case. Throughout the investigation, amid all the questions and criticism, they remained focused on their mission, to thoroughly examine the evidence and to present their findings in a court of law before an impartial jury. The jury’s verdict demonstrates that the facts as revealed by their investigation conclusively showed the guilt of the defendants and was not a matter of interpretation or misunderstanding or selective prosecution. When corrupt politicians are exposed and punished, the entire community reaps the benefits.”

Hill’s wife, Sheila D. Farrington, 45, was sentenced to nine years in prison and ordered to surrender to the Bureau of Prisons on the same day as her husband, April 27, 2010. Farrington was convicted at trial on five of six counts charged, including one count of conspiracy to commit bribery concerning a local government receiving federal benefits; one count of aiding and abetting bribery concerning a local government receiving federal benefits; one count of aiding and abetting extortion by public officials; and one count of conspiracy to commit money laundering.

D’Angelo Lee, 43, Hill’s Plan Commission Appointee, was sentenced to 14 years in prison and ordered to pay $112,800 in restitution; he is currently in federal custody. Lee was convicted at trial on all seven of seven counts charged, including one count of conspiracy to commit bribery concerning a local government receiving federal benefits; two counts of bribery concerning a local government receiving federal benefits; one count of conspiracy to commit extortion; one count of extortion by public officials; and one count of conspiracy to commit money laundering.

Robert E. Casey, Jr., Special in Charge, Dallas FBI, said, “Communities have a right to expect that their elected leaders are ethical, trustworthy, and responsible, only representing the best interests of their constituents. Two of today’s defendants betrayed the trust bestowed on them as public officials. The sentences imposed reflect the gravity of their crimes. The FBI, its law enforcement partners, and the U.S. Attorney’s Office will continue to root out such graft in order to ensure that the citizens of Dallas receive honest representation by their elected officials.”

Two other defendants were convicted at trial, Darren L. Reagan, 50, and Rickey Robertson, 43. Both are scheduled to be sentenced by Judge Lynn on March 1, 2010. Reagan, described as a community activist, and the chairman and CEO of the Black State Employees Association, was convicted on two of four counts charged, including one count of conspiracy to commit extortion and one count of aiding and abetting in extortion by public officials.  Robertson, a local businessman/car dealer was convicted on two of three counts charged, including conspiracy to commit extortion. Robertson was also a principal of RA-MILL.

At that trial, the government presented evidence that beginning in 2004, Hill and his co-defendants entered into an association in which thousands of dollars in bribes were paid by co-defendants Brian L. Potashnik and his wife, Cheryl L. Potashnik, owners of Southwest Housing Development Company, Inc., through sham business contracts to the defendants. The government also presented evidence that Hill and Lee were involved in corrupt solicitation from developers in an effort to gain financial benefit. Brian and Cheryl Potashnik pleaded guilty prior to trial; Brian Potashnik pleaded guilty to one count of conspiracy to commit bribery concerning a local government receiving federal benefits and Cheryl Potashnik pleaded guilty to one count of bribery concerning a state government receiving federal benefits. Both are scheduled to be sentenced by Judge Lynn on May 7, 2010.

Other sentencing dates are as follows:

On March 19, 2010, Allen McGill, who pleaded guilty in April 2008 to one count of conspiracy to commit extortion; Andrea Spencer who also pleaded guilty in April 2008 to the same offense; Kevin J. Dean, who pleaded guilty in June 2009 to the same offense; and John J. Lewis, who pleaded guilty in March 2009 to the same offense, are scheduled to be sentenced.

On April 2, 2010, Terri Hodge, who pleaded guilty on February 3, 2010, to fraud and false statements on an income tax return, is scheduled to be sentenced.

On May 7, 2010, Jibreel A. Rashad, a.k.a. Vernon Cooks, Jr., who was convicted on February 10, 2010, following a one-week trial, of conspiracy to commit extortion, is scheduled to be sentenced.

A trial date has not been set for the charges pending against Ronald W. Slovacek. Last week the government filed a motion requesting that some of the counts be dismissed and indicating its intention to proceed to trial on only three counts: one count of conspiracy to commit bribery concerning a local government receiving federal benefits; one count of bribery concerning a local government receiving federal benefits; and one count of conspiracy to commit money laundering.


White Collar Crime – A Week in Review – 1st Week April, 2008. Comments by Business Ethics Speaker Chuck Gallagher

April 4, 2008

Spring has sprung and it seems that white collar crime is in full bloom – either in the form of indictments, convictions or sentences. As a business ethics and white collar crime speaker, I say on a regular basis – Every choice has a consequence. The following demonstrate the effect of choices and consequences.

MONTGOMERY, ALABAMA: Seems that John W. Goff decided to use his license and influence to defraud others and then made false statements about his actions. A federal grand jury charged Goff with embezzlement, mail fraud and making false statements. The US Attorneys News Release states: the indictment alleges that from on or about January 1, 2002, through on or about April 30, 2003, Goff, while the sole owner of The Goff Group and the program manager and a fiduciary for XL Speciality Insurance Company (“XL Speciality”) and Greenwich Insurance Company (“Greenwich”), collected worker’s compensation insurance premiums for these insurance companies, but willfully failed to remit to XL Speciality and Greenwich their share of the premiums. Instead, Goff kept the premiums and spent the money for his own personal expenditures, including his exorbitant salary, lavish lifestyle, corporate aircraft, and real estate investments, and the expenses of The Goff Group.

The indictment alleges that Goff unlawfully and illegally withheld approximately $3,000,000 in premiums from XL Speciality and Greenwich. The indictment further provides that Goff unlawfully and illegally withheld approximately $25,000 in commissions he owed to independent agents located throughout the Southeast who Goff had used to sell worker’s compensation insurance policies issued by XL Speciality and Greenwich.

An indictment is merely an accusation of a criminal offense and the charged defendant is
presumed innocent until and unless proven guilty.

SACRAMENTO, CALIFORNIA: I guess there was just not enough profit in death, as former funeral director, Mark Davis, was indicted and arrested for 21 counts of bank fraud. Apparently, Davis formerly with Sacramento Memorial Lawn, stole a series of checks totaling more than $85,000 that had been submitted by customers and deposited them into his bank account at U.S. Bank. Keeping in mind innocence till guilt is proven, Davis plead not guilty.

PHOENIX, ARIZONA: If you’re going to prepare tax returns you need to do them right (at least to the best of your knowledge!) Guess that’s something that Maria Orona missed as a federal grand jury indicted her on charges of Aiding and Assisting in the Presentation of False and Fraudulent Individual Income Tax Returns.

The Indictment also indicates that between March 21, 2006 and April 4, 2006 the Criminal Investigation unit of IRS conducted three separate undercover operations in which IRS agents posed as clients in order to have Orona prepare their Federal Income Tax Returns for the year 2005. The Indictment states that in each undercover contact, Orona prepared tax returns in which she falsely reduced the tax due. These undercover contacts resulted in false returns being prepared that collectively claimed a total of approximately $44,853 in false expenses and a reduced tax liability of approximately $3,406. The undercover agents did not provide Orona with any indication that they had incurred any of the false deductions that were placed upon the completed income tax returns.

While Orona is innocent till proven guilty, I would suspect in this case guilt might not be hard to prove. Wonder if defrauding the government was worth an active prison sentence which could follow a guilty verdict?

MIAMI, FLORDIA: People get older and have health needs – that’s true. But, just because there are needs doesn’t mean you can get by with fraud. Every choice has a consequence and in these cases the consequences are severe. Michael Labrada, 27, of Miami was sentenced to a 97 month prison term and Miguel Castillo, 42, of Miami, to a 57 month prison term for their participation in a multi-million dollar health care fraud and money laundering scheme. OUCH!

Labrada was sentenced in connection with two criminal cases. In the first case, Labrada was convicted of conspiring with Angel Castillo, Jr. to commit health care fraud by serving as a straw owner of a medical equipment company known as JJ & D Medical Equipment, Inc. The company submitted more than $6.8 million dollars in bogus claims and received approximately $1.6 million in payments. In the second case, Labrada was convicted of money laundering charges in connection with a $2.3 million laundering scheme orchestrated by his co-defendant, Angel Castillo, Jr.

Miguel Castillo was also convicted of related health care fraud and money laundering conspiracy charges. In addition to serving as a straw owner of a medical equipment company, Miguel Castillo collected hundreds of thousands of dollars in fraud proceeds from check cashers at the direction of his cousin and co-conspirator, Angel Castillo, Jr.

Last month, Angel Castillo, Jr. was sentenced to a 235 month term in connection with his ownership of more than eight durable medical equipment companies in Miami during 2005 and 2006.

The companies collectively submitted in excess of $48,000,000 in false claims by way of two Miami based medical billing companies. WOW!

WEST PALM BEACH, FLORIDA: Indicted for a host of crimes related to Mortgage Fraud, it seems that Gregory Claude Brown has also been charged with failing to timely file his federal income tax returns for the 2001 through 2005 tax years, and with income tax evasion with regard to his 1998, 1999, and 2001 through 2005 taxes. According to the superseding indictment, Brown failed to pay his 1998, 1999, and 2001 through 2005 income tax liabilities, which totaled approximately $214,299, and engaged in affirmative acts of evasion, including concealing his income and assets, filing false documents with the Internal Revenue Service, and placing funds and property in the names of nominees.

Should Brown be convicted, he faces up to one year in prison on the failure to timely file federal income tax return counts, and up to five years on the tax evasion count. The conspiracy to commit wire fraud, wire fraud, and mail fraud charges each carry a maximum penalty of 20 years imprisonment.

MARIETTA, GEORGIA: There always has to be a first. In Georgia this is it for Governor’s Secure Identity Initiative. Seems that AL AMIN PATNI, 47, of Marietta, Georgia, has been indicted by a federal grand jury on charges of misuse of a social security number, aggravated identity theft, and illegal reentry. According to the indictment, PATNI, a Pakistani national who illegally reentered the United States after a previous deportation, misused the social security number of someone else to open up a checking account.

It seems that it is alway something simple that is the trigger to catch someone doing wrong. Needless to say, opening that account might have been one of the most costly mistakes of Patni’s life.

ST. TAMMANY PARISH, LOUISIANA: I guess Hurricane Katrina just posed too much of an opportunity in a state known for corruption. Joseph Anthony Impastato, for St. Tammany Parish Councilman, (Yes…a public official), age 36 entered a guilty plea to federal bribery through the illegal solicitation and receipt of payments in connection with a Hurricane Katrina debris removal contract, and making false statements in his 2001 federal income tax return.

Impastato was caught on tape related to conversations and meetings in which he gave instructions for how to disburse payments through a convicted co-conspirator to conceal his share. Likewise, he under-reported his income by 34% in 2001. Impastato is facing a two year prison sentence under a plea agreement.

NEW YORK, NEW YORK: DENNIS PILOTTI, a Certified Public Accountant (“CPA”), pleaded guilty today in White Plains federal court to evading his income taxes for the years 2001through 2004 and making false statements to Merrill Lynch Business Financial Services, Inc. (“Merrill Lynch”) in connection with a $5.1 million loan.

As a result of his tax evasion scheme, PILOTTI understated his taxable income by more than $1,226,284 in total, and understated his tax liability by approximately $365,000 for the years 2001 through 2004. PILOTTI faces five years in prison and substantial fines. He is scheduled to be sentenced on July 8, 2008.

ROCKY MOUNT, NORTH CAROLINA: On April 2, 2008 a 45 count indictment was unsealed charging PAMELA D. EVANS, 33; GWENDOLYN P. EVANS, 49; TASHA BATTLE, 28; and BERTHA BATTLE, 28, all of Rocky Mount, North Carolina, with conspiracy to defraud the United States by obtaining fraudulent claims from the Internal Revenue Service.

According to the US Attorney’s news release – from January, 2004, to April 15, 2004, the defendants, while employees of Independent Tax Service located in Rocky Mount, North Carolina conspired to make, and did make, false claims for refunds from the Internal Revenue Service (“IRS”) by filing or causing others to file false 2003 federal income tax returns. It is alleged that the defendants inflated wages and/or withholdings and listed false dependants and/or false dependant information to qualify clients for the head of household filing status and earned income credit in IRS Forms 1040 and 1040A individual tax returns. It is further alleged the defendants sold fraudulent dependent information to some clients so they would qualify for a larger refund and claimed education credits their clients were not entitled to claim.

“As another year’s tax deadline rapidly approaches, please heed the lesson of this case: knowingly falsifying documents filed with the Internal Revenue Service is a criminal act, and once found, will be prosecuted,” stated United States Attorney George E.B. Holding.

As a side note – Wesley Snipes will be sentenced this month for his conviction for failure to file tax returns.

DAYTON, OHIO: Wow…this deserves a post of its own. Nicole Johnson, age 42, of Trotwood, was sentenced to a total of 100 months imprisonment for stealing millions of dollars from her employer and her employer’s company. Johnson stole millions from J.P. Morgan Bank and its customers between June 2001 and July 2005, using her position as Vice President of Operations to steal customer identity information and secure fraudulent lines of credit in their names, and then diverting the borrowed funds for her own personal use. At least 30 customers were affected by the scheme and more than $1 million was transferred into Johnson’s personal accounts during the four-year period.

Johnson’s sentence reflects the severity of the loss to J.P. Morgan Bank and the complexity of the fraud scheme,” said US Attorney Gregory Lockhart. “White collar criminals must be deterred from committing similar offenses.” Johnson was also ordered to pay restitution of more than $2.8 million to J.P. Morgan Chase Bank, pay $1.067 million in taxes to the IRS, and she must serve three years of supervised release at the conclusion of her prison term.

One reasonable question is, once someone finishing an eight year prison term, how or where would they ever get the funds to make the restitution required? You do reap what you sow.

SALEM, OREGON: Facing up to 10 years in prison, Brent Edward Crosson, 36, of Salem, Oregon admitted stealing $925,000 from the Oregon Department of Education (ODOE) between June 2006 and June 2007. The theft occurred while he was employed as Director of Accounting Services for the ODOE.

Now, as a former CPA and convicted felon, I understand now that every choice has a consequence. However, it makes you wonder what he was thinking about? He had to have known that a theft of almost $1,000,000 would go NOTICED! Then again, while in the midst of the crime you don’t think clearly – I know from experience.

PITTSBURG, PENNSYLVANIA: Mortgage Fraud is rampant these days. Five Pennsylvania individuals have pleaded guilty to mortgage fraud charges. Sharon Chamberlain, age 40, of Pittsburgh, Pennsylvania, and Ericka Stanford, age 35, of Carnegie, Pennsylvania, pleaded guilty to Wire Fraud Conspiracy. Stanford also pleaded guilty to one count of Money Laundering. Likewise, Andrea Revak, age 47, of Pittsburgh, Pennsylvania, Aaron McCarthy, age 43, of Pittsburgh, Pennsylvania, and Marlin Sprouts, Jr., age 52, of Uniontown, Pennsylvania, pleaded guilty to a Wire Fraud Conspiracy.

By pleading guilty they may minimize the overall impact of their sentence. However, the law provides for a total sentence of 20 years in prison, a fine of $250,000, or both for all of the defendants except for Stanford, who faces a maximum possible sentence of 30 years in prison, a fine of $500,000, or both.

SURFSIDE BEACH, SOUTH CAROLINA: Young and foolish, that’s how Meghan Renee Morris, age 23, could be described as she pled guilty to unauthorized use of a credit card. While working at Coastline Reporting in Conway between October 2006 and March 2007, Morris used her employer’s personal information to apply for several credit cards, and charged more than $28,000.00 in personal expenses. She then paid the resulting credit card bills by electronically transferring funds out of the employer’s bank account to the credit card companies. She faces up to 10 years in prison.

MEMPHIS, TENNESSEE: It’s tax time and a Memphis woman just got a prison sentence for her efforts to illegally reduce her taxes. Tanisha Burris, 30, pled guilty to filing false claims against the government. From January 2001 until approximately April 2002, Burris conspired with others to file false, fictitious, and fraudulent claims for payment by causing others to file false 2000 and 2001 federal income tax returns claiming refunds with the Internal Revenue Service. The indictment alleges that Burris prepared the returns that claimed larger refunds than the individuals were entitled to receive. The false returns allegedly contained either inflated or completely bogus W-2 forms, false Education Tax Credits, false Schedule C businesses, false Itemized Deductions, false Child Tax Credit, or false Earned Income Credit to boost the refund amounts.

PLANO, TEXAS: Sherman Ted Solomon, 64, pled guilty to one count of conspiracy to distribute Schedule III and IV controlled substances and one count of conspiracy to launder the illegally obtained proceeds, in relation to his operation of an Internet Facilitation Center (IFC) website.

While the crime was more complicated than we have space for here, according to the US Attorney’s news release during the pendency of the conspiracy and while Solomon was a participant in the conspiracy, the government can readily prove that Solomon could reasonably foresee the possession with intent to distribute or the distribution in excess of two million hydrocodone pills. 2,000,000 – an astonishing amount of drugs distributed which will net Solomon seven years in federal prison.

From October 2004 through September 21, 2005, Solomon’s IFC and affiliates received approximately $13,139,535 from Internet customers for the distribution of controlled substances.

So, at age 64, Solomon who should be facing a pleasant retirement will be spending the latter years of his life in federal prison. Speaking from experience, he will certainly have time to reflect on his activity and will, no doubt, come to the conclusion that the short term gain will not be worth the price.

ALEXANDRIA, VIRGINIA: Sentenced to 16 months in federal prison and $650,000+ in restitution, Khalil Salim Arbid, 35, of Washington, D.C., received his sentence for his role in a mortgage refinancing scheme.

Arbid fraudulently attempted to obtain approximately $1,996,131.02, and successfully obtained $670,132.02, through the refinancing scheme. To carry out the scheme, Arbid took ownership of a residential property located in Vienna, Virginia by deed of gift. When Arbid obtained the property, it was encumbered by a pre-existing mortgage loan. Then, on three occasions, he attempted to obtain additional mortgage loans on the property, using the property as collateral. In applying for the loans, he provided the would-be lenders with false documentation. For example, Arbid provided false loan-payoff statements purporting to be from current mortgagees, and false Certificates and Affidavits of Satisfaction purporting to be from prior mortgagees. On one occasion, he successfully refinanced the property and obtained a loan in the amount of $670,132.02. He then arranged for $376,191.87 of the loan proceeds to be misdirected to himself by causing the title company closing the loan to send a check for the proceeds, which were ostensibly to be used to pay off the pre-existing mortgage on the property, to a false address. In reality, the address was a commercial mail drop located in the District of Columbia. The check was endorsed and deposited into a bank account that Arbid had previously opened.

FINALLY – SEATTLE, WASHINGTON: Now this is priceless. How many times have you flown and due to various reasons you felt you would not make your connections? Weather, a mechanical, a delay in one place causes your flight to be delayed – all have happened to those of us who are road warriors. But this story is a fitting end to a week in review.

Seems that KOU WEI CHIU, 32, of Nashville, Tennessee, was sentenced in Seattle to three years of probation, 500 hours of community service, and $81,249 in restitution for the felony offense of False Information and Threats. On July 25, 2007, CHIU, a physician, (yes a medical doctor) arrived at Sea-Tac airport and was late for his flight home to Memphis, Tennessee. The flight was Northwest Airlines flight 980. CHIU made three calls to 9-1-1 from a payphone near the gate. On each call CHIU falsely reported that there was a bomb on Flight 980. During his first call CHIU told the 9-1-1 operator “Flight 980 Memphis. There may be a bomb on board.” After the first call CHIU saw that the call had “no effect” so he made a second call. When that call too had no effect, CHIU made a third call. At that point, the plane returned to the gate. CHIU admits that he made the calls thinking that the plane would be held in Seattle for a few hours while it was searched, which would allow him to get on the plane.

Hum…guess he had never heard of the three strike and you’re out rule. Northwest Flight 980 was grounded for several hours. CHIU was arrested at the airport after passengers who had been nearby identified him to police as the person who was heard calling in bomb threats from the payphone.

At the sentencing hearing Dr. David L. Dunner, the former Director of the University of Washington Center for Anxiety and Depression, told the court that CHIU had stopped taking an anti-depressant in the days before the incident, and that CHIU entered a manic phase that “impaired his judgement.” CHIU told the court he realized “depression is not the common cold,” and vowed he “will be taking medication for the rest of his life. This will never happen again,” CHIU told the court.

Assistant United States Attorney Mike Lang agreed to recommend a probationary sentence after reviewing CHIU’s mental health history, and his history of service to his community. “Dr. Chiu has a true sense of wrongdoing and a desire to make it right,” Lang said. “This defendant can do a lot more good outside of jail than inside.”

WEEK IN REVIEW:

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. Many have tried to avoid consequences for a time but none avoided the consequences all together. Prison is no fun. Serving time will prove to be a dramatic change from the fraudsters prior activities. You do reap what you sow.

COMMENTS ARE WELCOME!

White Collar Crime Speaker – Chuck Gallagher – signing off…


El Paso Attorney – Raymond Telles – Guilty of Fraud!

March 18, 2008

Some things in life are obvious – one such thing is don’t bribe elected officials. Apparently Mr. Telles was absent from class in law school the day that was taught. On March 14, 2008 Raymond Telles, age 51, former city representative and unsuccessful mayoral candidate plead guilty to conspiracy to commit mail fraud, wire fraud, and deprivation of honest services – all of the above is basically – bribery.

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Telles admitted to conspiring with others to devise a scheme to defraud the Socorro Independent School District (SISD) and the citizens of El Paso living in the SISD of the right to honest services of elected SISD Trustees in the affairs of the SISD. It further alleges that the defendant attempted to bribe the elected Trustees of SISD, in exchange
for their support and vote in their official capacity as SISD Trustees, in violation of their fiduciary duty as elected SISD Trustees, for agreements between SISD and vendors seeking business with the SISD.

Telles also admitted to conspiring with others to devise a scheme to defraud the County of El Paso and the citizens of the County of El Paso of the right to the honest services of elected members of the El Paso County Commissioner’s Court, in the affairs of El Paso County by also attempting to bribe members of the El Paso County Commissioner’s Court for their support and vote in their official capacity as members of the El Paso County Commissioner’s Court.

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is – no one escapes the consequences of their choices. While Telles might have thought that he could unrightly influence outcomes, there is one fact. You do reap what you sow.

White Collar Crime Speaker – Chuck Gallagher – signing off…


Texas Doctor Sentenced to 97 Months In Federal Prison for Bribery! Samuel M. Theagene What Were You Thinking?

February 2, 2008

You spend year after year in grueling medical school to achieve you life long dream. Then one day you wake up to find that it was only a “dream.” That’s the day you wake up and find yourself in federal prison. And each day there after you find that one day is the same as the next – and so it goes for eight long years.

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That’s exactly what Samuel M. Theagene, M.D. will soon be facing. 8+ years in prison – and for what?

Between October 3, 2006, and February 21, 2007, Theagene, president of the Pain and Neuromuscular Clinic of Texas, P.A., paid a Revenue Officer of the Internal Revenue Service $16,500 in United States currency to absolve his tax liabilities.

Now what was he thinking? Surely a medical doctor has enough common sense to know that bribery of a federal official wouldn’t work? Surely, he would have calculated the risk/reward ratio and figured that he really couldn’t win this battle?

Well, the investigation began in October of 2006, when the Defendant sent $500 cash to the Internal Revenue Officer working on the collections case. Attached to the five one hundred dollar bills was a note which read “A Token.”

Now that was smart (yea right)! However, he might have played that off as a payment toward his bill. Not so fast. His next moves gave away his intent (criminal intent I might add).

Thereafter, the Defendant offered to pay the Revenue Officer 10% of the approximate $160,000 business tax liability to eliminate the debt. Between October of 2006 and February 2007, the Defendant paid the Revenue Officer cash installments of $1500, $5000, $5000 and $4500. At one of the meetings, the Defendant asked for forgiveness of his personal tax liability as well. All of the payments were made by the Defendant to the Revenue Officer in area restaurants.

Not only is Doctor Theagene going to prison, but I’d bet that the IRS is not letting off the hook without paying the liability in question.

Every choice has a consequence. Likewise, you do reap what you sow. Sadly for Dr. Theagene his choices earned him time in the slammer. I do promise this – when he gets out he will wish he’d just paid what he owed.

Business ethics and White Collar Crime speaker – Chuck Gallagher – off for now…


Brent Wilkes Faces Life in Prison – Did All His Politicking Really Pay Off Asks Business Ethics Speaker Chuck Gallagher?

January 22, 2008

Brent Wilkes, founder of ADCS, Inc. devoted much of his career to developing political connections in Washington and elsewhere. It has been reported that he and his associates spent at least $600,000 on political contributions and $1.1 million on lobbying beyond the gifts mentioned in a plea agreement related to former Representative Randy “Duke” Cunningham.

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What did Wilkes get in return. Well, Cunningham is reported to have helped in landing millions of dollars in federal contracts. Not bad. But, the question today is – is it worth the rest of your life in prison? At 54 years old…one must wonder what it feels like to face the very real possibility that you will not see another day of freedom.

Finding himself convicted of paying for bribes to former Congressman Randy “Duke” Cunningham, the Presentence Report filed in this case recommends a 720 month sentence. That’s a recommendation of 60 years in prison. According to guidelines, if he were to receive that sentence he would have to serve 51 years – giving him the practical opportunity to exit at death or 105 years old which ever comes first. I’d bet death.

Keep in mind, other note worthy white-collar criminals received the following sentences: (1) CEO Bernie Ebbers (25 years); (2) Jeffrey Skilling (24+ years) and (3) Randy “Duke” Cunningham (100 months or 8.3 years).

If Wilkes gets the max recommended, he would clearly claim the record for the longest prison sentence for a white-collar criminal.

The White Collar Crime Blog outlines how the Presentence Report recommendation was arrived at:

The sentencing recommendation is discussed in a filing by Wilkes (available below). Under the Guidelines, Sec. 2C1.1 governs bribery cases, and the starting point is an offense level of 18 because the bribe was paid to an elected official. The bulk of the sentencing increase comes from the estimation of the gain from the bribe, which requires application of the fraud loss table of Sec. 2B1.1. The PSR recommends a twenty-level enhancement, which means the gain to Wilkes and ADCS from the bribes was between $7 million and $20 million. Throw in a two-level increase for obstruction of justice — Wilkes testified at trial and was convicted on all counts by the jury, so there’s a decent ground for this enhancement — and another four levels for leadership role, and you’ve got the very top of the Guidelines (it only goes to 43) that calls for a life sentence.

The sentencing was originally set for January 28, but the PSR did not arrive in time so Judge Burns has pushed it back to February 19, thus meeting the statutory 35-day period between receipt of the Report and the sentencing. Wilkes’ counsel, Mark Geragos, will have to take aim at the gain amount, and unless that figure is reduced substantially, Wilkes is looking at a sentence that could be greater than any we’ve seen to date in a federal white collar crime case. In its response to the defense motion for a delay in sentencing, the government asked the district court to take Wilkes into custody on the original sentencing date because he is likely to receive a prison term and does not meet the requirements for bail pending appeal. If Judge Burns does sentence Wilkes to a significant prison sentence, it would not surprise me if Wilkes was ordered to be taken into custody immediately because of the severity of the punishment and possible concerns about flight in light of the sentence.

Facing life in prison would be daunting, especially since his former choices and actions allowed Wilkes to live a lavish lifestyle. Less than 10 years ago he purchased at $1.5 million home and a second home in the Virginia suburbs near Washington, D.C. According to an article in the San Deigo Union Tribute:

What landed Wilkes in trouble with federal prosecutors was his gifts to Cunningham. According to Cunningham’s plea agreement, “Co-conspirator No. 1,” gave $525,000 to Cunningham on May 13, 2004, to pay off the second mortgage on Cunningham’s home in Rancho Santa Fe.

Co-conspirator No. 1 also gave $100,000 to Cunningham on May 1, 2000, which went into Cunningham’s personal accounts in San Diego and Washington, D.C. And he paid $11,116.50 to help pay Cunningham’s mortgage on the Kelly C.

The plea agreement charged that in return for the payments, Cunningham “used his public office and took other official action to influence U.S. Department of Defense personnel to award and execute government contracts.”

Every choice has a consequence. It appears in Wilkes case he failed to recognize that only positive ethical choices will yield positive results. As a business ethics speaker (www.chuckgallagher.com) I often have the opportunity to speak to groups or business executives about the choices they make and the consequences that follow. Every choice has a consequence. If the choice is greed filled and lacks an ethical foundation – you can take to the bank (or perhaps prison) that the outcome will be less than desired. Moreover, the longer you go without experiencing a negative consequence, the more devastating the negative consequence will be.

Question:

What do you think about the Presentence Report recommendation for Brent Wilkes prison term? Fair and just?