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.


Ex-Detroit mayor Kilpatrick released from state prison – what next?

August 6, 2011

Still facing a host of federal charges – Southlake, Texas resident and former Detroit Mayor Kwame Kilpatrick walked out of prison a free man after serving just over 14 months of a 5-year sentence at a state facility in Jackson, Michigan.

Kilpatrick had been serving time for violating probation related to a 2008 case against him. He is to check in with a Texas parole officer on his arrival as he is required to serve two years of parole.

As you might remember , Kilpatrick pleaded guilty in September 2008 to two felony counts of obstruction of justice stemming from his efforts to cover up an extramarital affair.  Following his plea, he spent more than three months in jail before being released in February 2009 on five years of probation.  However, in May 25, 2010, Wayne County Judge David Groner sentenced Kilpatrick to five years in prison for failing to report assets that could be used to pay the restitution, a violation of his probation.

Kilpatrick will be subject to usual restrictions for parolees, plus an order to pay back what his lawyer called $860,000 in restitution.

YOUR COMMENTS ARE WELCOME


Lee B Farkas – Received a 30 Year Prison Sentence – But “I did nothing wrong!”

July 7, 2011
Convicted of orchestrating a $3 billion fraud as chairman of one of America’s largest private mortgage companies, Taylor Bean & Whitaker, Lee B Frakas was sentenced to 30 years in prison.  Prosecutors sought a life sentence Farkas calling the case against him one of the most significant arising from the nation’s financial meltdown.
A jury convicted Farkas of all 14 counts leveled against him, including securities fraud and conspiracy. Farkas testified that he had done nothing wrong.  Nothing wrong?  Surely by the time he found himself facing a jury and judge he might have concluded that something was wrong – and the common denominator was him!
According to news reports the Farkas fraud began in 2002 and took multiple forms, according to prosecutors.   Taylor Bean overdrew its main account with Colonial Bank by several million dollars and eventually double- and triple-pledged mortgages it held to a variety of investors. Prosecutors also alleged that Taylor Bean sold hundreds of million in worthless mortgages to Colonial.

Prosecutors say Farkas led a lavish lifestyle that included multiple houses — including one on Key West — several dozen classic cars, a private jet and a seaplane.

Farkas, of Ocala, Fla., is the last of seven employees and executives from Taylor Bean and from Colonial to be sentenced. Taylor Bean collapsed in 2009 when the scheme unraveled, putting 2,000 employees out of work.

When the house of cards begins to fall – all I can say is get out of the way!  Reports states that Colonial and two other major banks — Deutsche Bank and BNP Paribas — were collectively cheated out of nearly $3 billion during a scheme that spanned more than seven years.

According to a Time Magazine report: Farkas and his co-defendants also tried to fraudulently obtain more than $500 million in taxpayer-funded relief from the government’s bank bailout program, the Troubled Asset Relief Program (TARP). Neither Taylor Bean nor Colonial ever received any TARP money, even though TARP at one point gave conditional approval to a payment of roughly $550 million, investigators say.

U.S. District Judge Leonie Brinkema told Farkas she detected no remorse as she sentenced him to 30 years — twice the 15-year sentence requested by his attorneys.
QUESTION:
How is it that someone who has some obvious intelligence can be so caught up in the illusion of their actions that they fail to accept reality and comprehend the gravity of their choices?
If you have insight into the mind of Farkas or were caught up in the inner operations of what brought down the private mortgage company…feel free to comment!
YOUR COMMENTS ARE WELCOME!

Tim Masters Finds Justice – at least $4.1 million of it! How do we answer the question now – Victim or Victor?

February 16, 2010

Almost one year ago I wrote the following related to a story that caught national headlines.  Tim Masters – wrongly imprisoned was angry and bitter.  Then I wrote:

As I rose this a.m. – checking e-mail, CNN – just checking in with the world I was faced with another article on Tim Masters – the Fort Collins, Colorado man who was wrongly imprisoned for 9 years.  This must have been an eternity, especially for an innocent man.  Having spent time in federal prison (justly deserved – as I was guilty), I know that prison can change you.  But, as a business ethics and fraud prevention speaker, it wasn’t the wrongful imprisonment that caught my attention, it was the lead line of the article.

CNN’s writer states:  “Tim Masters squarely blames Fort Collins, Colorado, police and prosecutors for his inability to land gainful employment and for his not having a wife and kids at this stage in his life.”  The full CNN article can be found here.

Today, February 16, 2010 – some 10 days short of a year – CNN reports that Tim Masters may never get his life back (not completely), but $4.1 million as a settlement of a suit for wrongful imprisonment helps.  CNN reports:

It won’t make up for almost a decade of imprisonment, but a $4.1 million settlement is a “good start,” one of Tim Masters’ attorneys said Tuesday.

The Larimer County, Colorado, Board of Commissioners voted earlier Tuesday to settle a lawsuit that Masters filed after a judge exonerated him on a murder charge that put him behind bars in 1999.

“There’s no dollar figure that’s going to give him back his 10 years,” said David Wymore, one of the attorneys who represented Masters in the case. “Tim just wishes this never happened to him, but it did.”

Masters’ co-counsel David Lane emphasized there is still a lawsuit pending against the city and that Tuesday’s settlement represented only a “good start” to compensating a man who was “framed for a crime he did not commit.”

One year ago I wrote – Every choice has a consequence.  There must have been reasons that Tim was considered a suspect in the first place.  Not that it was his fault, but evaluating those actions (way back then) might prove to be powerful lessons to youth today.    Tim has a powerful story.  He can have an impact.  He will be heard.  The power to reach out to others and help them discover what and/or who they are and how their choices can shape their life is powerful.

I hope that as the issues with his suits against those involved in his wrongful imprisonment wind down that Tim can find some peace and channel his energy into using his experience to help others.  Tim has been a victim of a judicial system gone bad.  Yet, Tim has also emerged victorious in that truth came to light and (in a sense) he’s having his day in court.  No…money cannot replace the time lost, but then was it lost or has his experience created a foundation for him that can help others?

Tim…are you a victim or a victor?  Money aside…which is it?

YOUR COMMENTS ARE WELCOME!


Teddy Gatamba Sentenced to 81 months in federal prison for Tax Law Violations

January 24, 2010

Teddy Gatamba sentenced to 81 months in federal prison for tax law violations.

Seem that Gatamba, a citizen of either Rwanda or Burundi, used the names of Grand Place Management, UST Tax Service, and Dendy Tax Service to obtain electronic filing identification numbers, obtained the names and social security numbers of numerous individuals and used that personal information to prepare false income tax returns, without the knowledge or consent of the individuals. Gatamba prepared the returns using bogus employer names and making bogus claims of overpayment of taxes, and then filed the returns electronically. Refund Anticipation Loans, in the form of checks and Refund Anticipation Value Cards, were issued, based on the false income tax returns, in the names of the individuals on the bogus tax returns. Gatamba and others cashed the checks and withdrew funds from ATMs using the Refund Anticipation Value Cards. Evidence presented at trial showed that there was an intended loss of more than $2 million.

Comments?


Jimmy Choo shoes and Million Dollar Home – Chad Read and Emily Read now sentenced to Federal Prison!

January 5, 2010

From California to Lubbock, Texas – Chad and Emily Read lived a modest life.  Then Emily began working for Reaction Fitness Clubs (a modest health club chain) – and things changed.

From living with Emily’s mother to owning a series of large homes and a condo in Dallas, the Reads had a dramatic change in lifestyle.  From a $1.2 million home, to expensive cars, to a recreational vehicle, to designer clothes and Jimmy Choo shoes – the Reads enjoyed life in a way few experience.  But where did the money come from?  According to the Reads their new found wealth came from a trust fund her father left to her.  Reality…well there was no trust fund only embezzlement or theft!

Seems that Emily worked as a bookeeper for the fitness clubs referred to as the Reaction Fitness Clubs.  During that time she wrote a large number of checks from the club and either would cash the checks or deposit them into their personal accounts.  Likewise, they used funds from the club accounts to pay for their personal credit cards and purchase other luxury items.

EVERY CHOICE HAS A CONSEQUENCE!

Emily J. Read – now Chad Read’s ex-wife – was sentenced in September 2009 to 41 months in federal prison and ordered to pay more than $670,000 in restitution.

Chad Read was sentenced in December 2009 to 18 months in federal prison and ordered to pay restitution remaining of $15,000.

WHAT HAPPENED?

Obviously, both husband and wife were convicted and sentenced.  But, since Chad received a substantially lower sentence (in terms of time spent in prison), was it possible that he was not fully aware of the crime being committed by his (now) ex-wife?  And, what motivated Emily to change her former lifestyle and enter into an obvious life of crime?  Lastly, how was she so easily able to effect the crime?

There are three components of a white collar crime – NEED – OPPORTUNITY and RATIONALIZATION.  In this case, it is clear that Reaction Fitness Clubs did not have sufficient internal controls opening the door to “opportunity”.  Seems that Read had free reign and, management must have been asleep at the wheel in order for a fraud of this magnitude to have gone undetected for so long.

LESSON

To avoid fraud you either have to have someone so strong in their ethical beliefs or foundation that they won’t cross the line or you have to eliminate one of the three components – and in this case the easiest way to have avoided this disastrous consequence would have been the elimination of opportunity.  Any good CPA or business owner knows that internal controls are there to protect the business assets and preclude the likelihood of succumbing to temptation.

I can’t address the Read’s need or rationalization, but had sufficient controls been put in place, Emily would not have easily had the opportunity to effect her massive life changing fraud.

Your comments are welcome!


Brad Stinn Sentenced – Every Choice Has A Consequence – Update by Chuck Gallagher Ethics Speaker

April 29, 2009

On of the most viewed Blog entries was the one about Brad Stinn and Friedman’s Jewelers.

Pump up those sales! We’ve got to make the quarter! How often are those command heard and how tempting is it to make the wrong choices in order to please the investing public and Wall Street?

Following six weeks of trial – Bradley Stinn, age 47, – former CEO of Freidman’s, Inc. and Crescent Jewelers, found himself being convicted of securities fraud, mail fraud and conspiracy. Likewise, in addition to Stinn’s conviction, the former CFO, Victor Suglia and form Controller, John Mauro have entered guilty pleas into what was a massive accounting fraud.

Having been found guilty, the wheels of justice in the federal system move slowly at times.  Many have wondered just what outcome would befall Brad Stinn  prison1who some hated and others sympathized with.  Well, today the verdict has been handed down.

His sentence:

12 years in federal prison

3 years probation

$4M restitution

He should report sometime in the next 60 days

Speaking from experience, Stinn will be required to serve 85% of his active sentence, which means that he’ll serve 122.4 months – which is a long time!

US Attorney’s New Release:

Bradley Stinn, the former Chief Executive Officer of Friedman’s Inc. and its affiliate, Crescent Jewelers, was sentenced today to 12 years’ imprisonment for securities fraud, mail fraud, and conspiracy. On March 24, 2008, following a six-week trial, a federal jury in Brooklyn convicted Stinn on all counts in the indictment and returned a forfeiture verdict against him in the amount of $1,019,000. The trial and sentencing proceeding were held before Senior United States District Judge Nina Gershon.

The sentence was announced by Benton J. Campbell, United States Attorney for the Eastern District of New York.

During the period of the conspiracy, Friedman’s was a national jewelry chain whose shares were traded on the New York Stock Exchange. The evidence at trial established that Stinn led a multi-year securities fraud scheme that inflated Friedman’s reported financial performance and hid from the market the serious problems the company had collecting money owed for hundreds of millions of dollars of jewelry that it had sold on credit. As part of the scheme, Stinn and his co-conspirators repeatedly lied to shareholders and the investing public about Friedman’s financial performance, made false and fraudulent representations to Friedman’s auditors, and manipulated the company’s accounting in order to prevent auditors from discovering the falsity of Friedman’s financial statements. As found by the court at sentencing, Stinn’s fraud scheme resulted in Friedman’s shareholders and other victims of the scheme losing more than $20 million.

Several months after the announcement of the government’s investigation in November 2003, Friedman’s stock was de-listed from the New York Stock Exchange. Friedman’s ultimately filed for bankruptcy in January 2005.

As always, this blog is open for comments.

Do you think that this sentence is fair?

Would you, if you had the opportunity to serve on a jury, have given Brad – more, less or this amount a punishment for his guilty plea?

COMMENTS ARE WELCOME!