Lorn Leitman, CPA and Attorney sentenced to 17 1/2 years in Federal Prison for a Ponzi Scheme!

July 14, 2011

Lorn Leitman, attorney and CPA, of Miami, Florida, to 210 months’ incarceration for his role in a 10-year Ponzi scheme. In an unusual decision, the court departed upward from a sentencing guideline range of 121-151 months, commenting, “this case is exceptional.”

A federal grand jury charged the defendant with violating the mail fraud statute for defrauding elderly victims and retirees, among others, through the operation of a Ponzi scheme which sought investments in either phantom residential mortgages or a separate venture burdening U.S. military personnel with predatory and usurious loans. The defendant pled guilty to one count of mail fraud on April 6, 2011 and faced a maximum possible sentence of imprisonment for 20 years. Several victims appeared in court to address the impact of the fraud. As one victim explained, losses from the Ponzi scheme forced the end of his retirement and his return to work. He commented, “my dreams are dead.”

The court explained that the decision to sentence above the guidelines resulted from the defendant’s conduct preying upon his closest friends, fellow servicemen, the elderly and retirees, and noted that the defendant breached codes of conduct applicable to members of the Florida Bar and certified public accountants. In addition to the enhanced sentence, the court ordered the defendant to pay $3,308,435.03 in restitution to victims.

OBSERVATION:

From personal and past experience in dealing with fraud and now fraud prevention, the most likely target of those scammed are folks who are close to the perpetrator.  Reality is, in this case, the time in prison will leave Leitman a changed man and the chance of seeing any restitution is slim.

If you were a victim of this crime, please take a moment and share how you were lured into Leitman’s trap.  Your comments may help others recognize and avoid a similar fate.

YOUR COMMENTS ARE WELCOME!


Lawyer – Ted Russell Schwartz Murray – Guilty! White Collar Crime Speaker Chuck Gallagher Comments

October 26, 2008

As the time of decision grew near, the only thing that Ted Russell Schwartz Murray could likely have wished for is another storm.

The trial which began on Sept. 8, 2008, was interrupted by Hurricane Ike, and concluded with the return of the guilty verdicts yesterday.  A Houston federal jury has convicted Ted Russell Schwartz Murray, a lawyer licensed in Texas and Florida, of conspiracy to commit mail fraud and securities fraud in connection with the operation of Money Mortgage Corporation of America, a subsidiary of Premiere Holdings, LP, a real estate investment program.  Murray was also convicted Murray of making a False Statement on Tax Returns for the years 1999 and 2000.

Murray and co-defendants David Isaac Lapin and Jeffrey Carl Wigginton, Sr. were all charged by indictment in August, 2006. Lapin and Wigginton pleaded guilty in August 2008 to the conspiracy to commit mail fraud and securities fraud for their roles in the scheme and are pending sentencing in Nov. 2008.  Murray was charged separately in a second indictment with the tax offenses.

Every choice has a consequence.  As a business ethics and white collar crime speaker I have seen over and over the consequences of greed motivated actions.  For a fraud to exist three things exit: (1) need; (2) opportunity and (3) rationalization.  The verdict was guilty.  The question is what was the motivation of Murray and his co-conspirators.

According to the US Attorney’s news release:

During trial, the United States presented its evidence proving that between 1996 and 2001, Murray, 57, conspired to commit mail fraud and securities fraud in the promotion and marketing of the Premiere 72 or “P72″ mortgage investment program. Murray testified at trial and denied he had made false representations to investors when the program was promoted with promises of (1) 12% interest; (2) 1st liens on real estate; (3) 72 hour liquidity; and (4) 70% loan to value ratio. However, the evidence proved that so-called interest payments were actually set aside from a portion of the investor’s principle and returned to them as interest; many loans were not secured by 1st liens on real estate; and many loans were not based on a 70% loan to value ratio. Lapin, a co-conspirator in the scheme, testified that he and his co-defendants failed to disclose to investors the fact that loans on certain projects were actually in default at the time the funds of new investors were placed in these loans. An expert witness, qualified in forensic accounting, testified that the Premiere 72 program was conducted like a Ponzi scheme, where the money from new investors is used to pay earlier investors.

Mortgage Crisis – no wonder.  With practically free money and a country that seemed to believe that real estate had no ceiling, the opportunity was right the perpetration of such a fraud.  Likewise, in the current economic climate with fear leading the way, others will rise to fill the void.

While admitting that the above material facts were not disclosed to investors, Murray blamed his partners claiming Lapin had failed to live up to his fiduciary duties and both Lapin and Wigginton failed to disclose to investors that Premiere Holdings charged fees ranging from 15 -25% from investor funds. Murray denied any responsibility to disclose any material facts to investors.

With sentencing following in March 2009 the failure to accept personal accountability will no doubt play a role in the length of sentence.

Over 500 people invested in the fraudulent mortgage investment program promoted by Murray and his co-conspirators.  During the five year period the scheme operated, Premier Holdings, LP, Murray and his co-conspirators generated more than $200 million in gross receipts. Premier Holdings, LP, filed for bankruptcy in Oct. 2001 at which time the company had more than $160 million of investor funds tied up in the fraudulent scheme.  Murray filed for personal bankruptcy a short time thereafter.

The jury found Murray guilty of all 20 counts submitted to the jury arising from the scheme to defraud investors including the conspiracy charge, 14 counts of mail fraud, and four counts of securities fraud. The conspiracy conviction and each of the convictions for mail fraud carry a maximum statutory penalty of five years imprisonment. The securities fraud counts of conviction each carry a maximum penalty  of  10 years imprisonment.  Each count also carries a maximum fine of $250,000.

In addition to the scheme to defraud, Murray was also charged and convicted in a separate case with two counts of making a false statement on his tax returns based upon evidence which proved that Murray disguised personal expenses as business expenses and deducted a portion of those expenses on his tax returns, including a $29,000 Rolex watch, payments to casinos, a series of payments totaling over $5 million for return of principal to investors, payments for a $1 million ownership interest in the building where Premiere held its offices at 11451 Katy Freeway, and gifts to family members.  Murray faces a maximum of three years imprisonment and a $250,000 fine on each of two counts of conviction.

Considering where we are today – economically – I would not be surprised to see that the sentence would err on the heavy side.  For those who read this – if you know Murray perhaps you could give some clue as to what motivated his behavior.  Obviously, Murray was educated and hence would know the difference between right and wrong, between ethical behavior and unethical behavior.

Comments are welcome


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

May 1, 2008

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

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

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

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

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

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

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

YOUR COMMENTS ARE WELCOME!

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


Cruise Scam Travel Agents – Carol Ribaudo and Sonja Ritz – Sentenced to Federal Prison! No Vacation for Them!

March 27, 2008

White collar crime comes in many forms, but this scam is just blatant and destined to produce negative consequences.

CAROL RIBAUDO, 52, and SONJA RITZ, 28, both of Clearwater, Florida were sentenced to 57 months and 37 months respectively in federal prison for their role in a scheme to sell booking to passengers for a fraudulent cruise.

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According to the US Attorney’s news release: between July 2003 and January of 2004, Ribaudo and Ritz operated Elite Business Services, a travel-related business located in McKinney, Texas. At trial in August 2007, prosecutors presented the testimony of 30 witnesses and introduced almost 200 exhibits establishing that Ribaudo and Ritz made a series of false representations to prospective passengers indicating that they would be booked on a charter cruise scheduled to occur in February 2004 and accepted payments from these prospective passengers, despite the fact that Ribaudo and Ritz had neither contracted with any cruise line for passage nor had they provided payments to any cruise line.

Now, spending time in federal prison is no vacation. So let me get this straight – these two run a scam for less than 12 months and end up spending between 3 and almost 5 years of their life in prison. You’ve gotta wonder if they would say it was worth it today? The answer would have to be – NO!

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 Ribaudo and Ritz avoided the consequences for a time – they did not avoid the consequences all together. Prison is no fun and will prove to be a dramatic change from their prior activities. You do reap what you sow.

If anyone reading has any background on Ribaudo or Ritz or were scammed by them – feel free to comment as I study the behaviors and backgrounds of those convicted of white collar crime.

White Collar Crime Speaker – Chuck Gallagher – signing off…


Child Sexual Predator – CBS Technician Sentenced to 10 Years in Prison!

March 4, 2008

As a teen ethics speaker, I have found that over time, more and more presentations are centered on sexual predators, the internet and how to protect our youth from folks who mean them harm.

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On October 25, 2007, a Ft. Pierce Grand Jury returned an Indictment charging Daniel J. Barron with persuading, inducing, enticing or coercing a person under 18 to engage in sexual activity. Barron, a CBS freelance technician, was in Ft. Lauderdale, Florida covering a Miami Dolphins football game. On September 29, 2007, Barron entered an America Online chat room and began to correspond with an undercover police officer posing as the father of an eleven year old girl. During internet communications, Barron repeatedly expressed his desire to engage in sexual activity with the child. Barron made plans to meet the father and his fictitious 11 year old daughter. Barron later traveled to the meeting location in order to engage in sexual activity with the child.

According to local10.com news: The affidavit alleges that Barron said hello and wrote, “So do you and the kids all enjoy some adventure?” When the detective identified himself as an adult with an 11-year-old daughter, Barron allegedly responded, “Very, very cool. Not a cop.”

According to the affidavit, Barron asked if the undercover detective and his fictitious daughter would visit him. When the detective said he wasn’t interested in fantasy chat, Barron allegedly responded, “I am very serious. You and the dau come down here.”

Every choice has a consequence. On March 3, 2008 Daniel J. Barron was sentenced to 10 years in federal prison followed by 15 years of supervised released. At age 56, Barron will find the final years of his life marred by life in prison.

Sexual predators come from all walks of life and are all ages. One of the major issues that parents face is lack of knowledge of the playing field for sexual predators today.

Questions for Parents:

  1. Do you know what sites your children visit?
  2. Are you familiar with MySpace – Facebook and how social networking works?
  3. Would you know what to look for if your child was viewing inappropriate sites?

Church Fraud – Joann Bollinger Sentenced to Prison for $800,000 Fraud. What was She Thinking?

March 4, 2008

On a late Friday afternoon in February, a gavel fell and Joann Bolliger was sentenced to federal prison and ordered to repay $800,000. Can you for a moment image what she was thinking as she heard the gavel drop?

History: In late December 2007 Bolliger pled guilty to conspiring to defraud St. Maurice Catholic Church by counterfeiting their checks. Bolliger, who worked as a bookkeeper at St. Maurice Catholic Church, conspired with another church employee to forge and alter payroll and other checks belonging to the church and then negotiated over $800,000 in checks for their personal enrichment.

Lisa Mazurkevitch, another church employee charged in the case, pleaded guilty in March 2006. She was sentenced that same year to six months of house arrest, five years of probation and ordered to pay $40,151 in restitution.

Reality: Every choice has a consequence. One cannot assume that any fraud committed will go unnoticed or that there will be no consequences. I speak from experience, as (although I am not proud of my past) I have spent time in federal prison for white collar crime. For a time, I believed that I was able to perpetrate a fraud that would go undetected. Such a believe is an illusion. You do reap what you sow.

In this case, Bolliger will soon report to federal prison. She will find that, while this experience will be humbling, different, and less than pleasant – it will be a growth opportunity for her should she choose to use it.

As a business ethics and white collar crime speaker, I know that a conviction and prison sentence does not limit one’s ability to rise above poor choices and make more effective positive choices. Hopefully, Bolliger will see the error of her ways and make use of this time to have a positive impact on the lives of others in the future.


Mortgage Fraud Alive and Well! Justin Barker Sentenced – 7 Years and $2.3 Million in Restitution

February 26, 2008

Mortgage Fraud – this time from Jacksonville, Florida. Seems that Justin Barker, age 31 and Robert Hulbert, age 45, both pled guilty to conspiracy to commit wire and bank fraud. Barker just received his sentence – 7 years in federal prison – $2.3 million in restitution and $4.4 million in forfeited property jointly and severally owned with other conspirators.

Seven years and likely bankruptcy. So what does Barker has to show for his fraudulent activities? A convicted felony record? By it’s end 20% of his life in prison? Both?

The scheme operated in 2005 and 2006. Barker negotiated the purchase of residential real estate properties, either on behalf of himself personally, on behalf of an entity he controlled, or on behalf of a third-party buyer. Barker, the entity, or the buyer entered into a purchase and sale agreement with the seller of the property. Barker then retained a licensed real estate appraiser to appraise the property at a significantly inflated price. The appraiser would appraise the property at the price that Barker requested, using inappropriate comparable properties and other fraudulent methods to obtain the price requested. At the closing on the property, Barker or an entity controlled by him would receive the difference between the loan amount, which was based on the inflated appraisal, and the actual purchase price, usually described with terms such as “assignment fee” or “payoff of second mortgage” that did not exist. This difference was the proceeds of the fraud.

During the course of the scheme, fraudulent loans totaling about $17.7 million were obtained on more than 40 properties. These loans would not have been approved but for the fraud. Barker received approximately $4.4 million in gross proceeds from the fraudulent transactions. To recover some of these illicit proceeds, the government seized from Barker a 2004 Bentley Continental, a 2007 Cadillac Escalade, a 2002 BMW 745Li, a 2005 Chaparral 330 Signature 36’ boat, a 1997 19’ Wellcraft boat, a 2006 Yamaha motorcycle, a 2001 Yamaha motorcycle, a 2-carat loose diamond, a 1-carat diamond necklace, a .5-carat diamond necklace, diamond stud earrings, and two Movado watches.eds of the fraud.

Every choice has a consequence! As a white collar crime and ethics speaker, Barker is a prime example of choices gone bad – very bad! There is a statement that is true – you will reap what you sow. While these next comments I am not proud of, but having spent time in federal prison for poor choices, I know first hand the answer to the question – was it worth it? The answer – a resounding – NO!

Barker will find that federal prison is no fun. Some call it “club fed” – let me say…it is fed – there is no club to it. Working every day for 12 cents per hour cleaning toilets and urinals is nothing that anyone would do at the “club.” My guess – Barker will have time to figure out a lot about himself. Perhaps, like me, when he emerges he will have a different perspective and can use his new found wisdom to benefit others.

More Mortgage Fraud reports to come…

Your comments are welcome!