Brion Gary Randall facing prison for Financial Crimes… Choices and Consequences: Comments by Business Ethics and Fraud Prevention Speaker Chuck Gallagher

May 10, 2010

A Plano, Texas, man, who has admitted running a fraudulent investment scheme from 2004 through July 2009, will enter his guilty plea before U.S. Magistrate Judge Paul D. Stickney on May 18, 2010, to felony offenses related to that crime, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Brion Gary Randall, 48, has signed documents, filed with the Court, pleading guilty to an Information charging one count of mail fraud and one count of bank fraud. Each count carries a maximum statutory sentence of 30 years in prison and a $1 million fine.

According to filed plea documents, Randall worked as an investment advisor from 2004 through July 2009. During part of that time, he operated, and owned in part, 2Randall Consulting Group, LLP and also owned part of Titan Home Theater, LLC, which designed and installed commercial and residential audio/visual systems. According to a complaint filed by the U.S. Securities and Exchange Commission against Randall and 2Randall in August 2009, the Financial Industry Regulatory Authority (FINRA) suspended and fined Randall for improperly exercising discretion in customer accounts without prior written permission. That case is currently pending.

From 2004 through July 2009, Randall raised more than $6 million from 30 investors through a scheme in which he caused persons to invest in a number of short-term loan participation programs, which in fact, did not exist. He used investors’ funds for his own benefit and not for purposes he represented.

For example, Randall represented that he was pooling money in accounts at Chase Bank and AllianceBernstein for investment in a variety of short-term loan participation programs. Randall represented that an investor’s money in 2Randall Consulting’s account at Alliance and Chase was held in a non-taxable escrow account and fully liquid, with the investor able to withdraw his money at any time. He represented that the 2Randall consulting account at AllianceBernstein had a balance ranging from $25 million to $29 million, and that he had also invested millions of dollars of his own money into the accounts.

In reality, however, the Chase Bank and AllianceBernstein accounts were nonexistent. To further the scheme, Randall created and distributed fraudulent documents to investors, including bogus Chase Bank and AllianceBernstein account statements. He also created bogus 2Randall Consulting accounting statements and portfolio summaries. In meetings with some investors, he would display a false and fictitious computer screen shot of either the Chase Bank or AllianceBernstein account which would show the investor’s money on deposit.

Randall also represented to investors that they could invest in short-term loan participations, usually lasting 45 to 90 days and returning a high rate of interest. He sold loan participation programs in 1) Small Business Administration (SBA) loans; 2) Titan Home Theater project completion loans; and 3) loans to acquire real estate in Galveston, Texas.

For the SBA loans, Randall falsely represented to investors that they could participate with 2Randall Consulting in a short-term loan to a local company seeking an SBA loan. Randall represented that the short-term loan would provide sufficient capital to enable the company to obtain the loan at a discounted rate, and once the SBA loan closed, the company would return to 2Randall Consulting and the participating investors the principal plus 10 percent. He represented that the companies receiving the loans were reputable local businesses, including 84 Lumber, General Packaging Corporation, PerotSystems Vent-A-Hood and Richardson Bike Mart, businesses where Randall’s father had an established relationship. Randall represented that participating in an SBA loan participation program was low risk and that an investor could only lose his money if the company declared bankruptcy during the 45-90 day term of the loan. Randall knew that no such SBA loan participation agreements existed.

With regard to the Titan Home Theater project completion loans, Randall represented that investors could participate in short-term loans to Titan enabling it to complete a number of commercial projects, and that upon completion of the projects, Titan would return the principal plus up to a 22% return. Randall falsely represented that Titan was a subcontractor on several commercial projects including projects at Southern Methodist University, the Bush Library and the Dallas Cowboys stadium.

Randall also represented to investors that they could participate in short-term loans enabling him to finalize the acquisition and sale of real estate in Galveston. Randall promised that on closing, he would return the investor’s principal plus a sizeable rate of interest.

As a further part of his fraud, Randall obtained loans from financial institutions by submitting forged signatures and false and fraudulent documents. The plea documents note that Randall obtained five loans, from Bank of America, Texas Capital Bank and Wells Fargo, that all defaulted, causing a total loss to these financial institutions of nearly $875,000.

COMMENTS:

The question that I often get asked in seminars I conduct is: How can someone with reasonable intelligence get caught up in such a scam?  Answer: They get caught up in the PIT.

“P” – PROMISE – The first step to falling into a scam (especially a financial scam) is the “promise”!

“I” – The second part of falling into the scam is the – ILLUSION!

“T” – In the PIT the third and last component is TRUST.

Combine the three components and you find victim investors falling into the “PIT” as I call it.  When some one promises a 22% return – that PROMISE in and of itself is a warning sign that something is amiss!  It almost makes no difference what else might take place, the unreasonable promise of a return is a clear indication that you might be a fraud victim.  Funny, however, it seems the more focused someone is on getting something that most people can’t have the greater likelihood they will fall prey to a scam artist.

Every choice has a consequence and in this case Randall will have a long time to think about his fraud and the impact it has and will have on his life and the lives of countless others.

If you’re a victim of Randall’s fraud, I’d appreciate your comments on what took place that got you hooked.  Perhaps your comments will help others avoid the consequences of the PIT!

YOUR COMMENTS ARE WELCOME!


O.J. Simpson – “The Theft if Fine if the Stuff is Mine!” – Wrong. He’s GUILTY – 13 Years and a Karmic Outcome!

October 4, 2008

Every choice has a consequence.  No one, I repeat, no one can escape this.  It is a law of the universe!  Those words come from experience, because just like O. J. I, too, faced the consequences of my choices as eighteen years ago plus one day I did what O. J. will soon do – step into prison.

Never once would O J. Simpson have dreamed when he walked free from the courtroom in the trial he faced for the death of Nicole Brown Simpson that thirteen years later he would walk out of a court room found guilty on charges that would potentially send him to prison for the rest of his life.  Yet, late on a friday afternoon in October O. J. was found GUILTY on all charges.  After the charges were read, O. J. was handcuffed and led to a new stage of life – one where freedom alludes you.  Speaking from experience, it is not a pleasant place.

According to reports by CNN:

Simpson arrived at the Clark County Justice Center at around 10:50 p.m. (1:50 a.m. Saturday ET). Simpson told CNN’s Ted Rowlands on the phone before the verdict was read that he was “apprehensive.”

The jury of nine men and three women, none of them African-American, reached its verdict after 13 hours of deliberations Friday. Jurors heard from 22 witnesses over 12 days of testimony. Chief among the witnesses were seven of the nine people inside Room 1203 of the Palace Station Hotel and Casino for the September 13, 2007, confrontation.

In an earlier post I stated, “Have you ever noticed that it’s impossible to avoid outcomes that – on the surface you would think – you want to avoid. Oh, for a time, you might think you could dodge the bullet, but then reality hits and, once again, you are hit squarely in the face with reality. For O. J. Simpson that rings true.  Reality is – O. J. Simpson is sabotaging himself.”  In fact, with this guilty verdict he accomplished his mission.

No I’m no psychologist so I have no formal educational basis for my claim and even though I state that here, I am sure I’ll receive comments to that effect. But, I do have a Ph.D. from the school of practical experience. And, let me say, that is one of the most significant learning environments I’ve ever participated in. So let me state again my premise – O. J. Simpson is sabotaging himself!

The question is why? Why would anyone take actions – either consciously or unconsciously – that would bring about an outcome that, by most standards, people would not want?  Why when at the beginning it would see that all was going your way?

In the article by Time magazine – “The Rise and Fall of O. J. Simpson” the follow is stated:

An All-American Beginning
Orenthal James Simpson rose to national prominence as a football player at the University of Southern California, winning the Heisman Trophy in 1968. He went on to play for the Buffalo Bills and the San Francisco 49ers and retired after the 1979 season. O.J. was inducted into the Pro Football Hall of Fame in 1985.

Murder Charges and One Very Slow Car Chase
On June 12, 1994, O.J.’s ex-wife, Nicole Brown Simpson, and her friend Ronald Goldman were found stabbed to death outside her house in Los Angeles. Three days later, Simpson, who was charged with their murders, failed to turn himself in and led police on a low-speed — and highly televised — pursuit in a white Ford Bronco. He had left what many considered to be a suicide note that asked the media, “as a last wish, please, please, please, leave my children in peace.” The surreal chase ended at Simpson’s home, where he surrendered to authorities.

“If It Doesn’t Fit, You Must Acquit”
A jury acquitted Simpson of double homicide on Oct. 3, 1995, after O.J.’s defense team cast doubt on all the evidence, suggesting it had either been contaminated by bungling lab technicians or planted by police trying to frame Simpson because of his race.

Simpson Loses Wrongful-Death Suit
In a 1997 civil trial, where the standards for guilt are lower than in criminal proceedings, Simpson was found liable for the deaths of his ex-wife and Goldman. He was ordered to pay $25 million in punitive damages divided between the victims’ families and $8.5 million in compensatory damages to the Goldman estate. Despite efforts by Goldman’s parents, Fred and Pattie, above, much of the judgment remains unpaid.

A Hypothetical Tell-All
In 2006, Simpson collaborated on a hypothetical tell-all titled If I Did It and taped an accompanying TV interview that never aired due to public outrage. The TV and book deal had been announced by ReganBooks but was quickly cancelled by parent company News Corp., whose CEO Rupert Murdoch called it “an ill-considered project.”

Facing a Possible Life Sentence
On Oct. 3, 13 years to the day Simpson was acquitted of double homicide, a jury convicted him of armed robbery and kidnapping charges stemming from a September 2007 incident in Las Vegas. Simpson and five men raided a hotel room and took memorabilia that the Hall of Famer claimed had been stolen from him. He now faces a possible life sentence for the six-minute encounter, which was secretly audio-taped by the auctioneer who arranged the meeting with the unsuspecting collectibles dealers.

Of course the only part of the story yet to be completed is the sentence.

If one is guilty of a crime, then one will continue to do things so that guilt is brought to light. While Simpson got past the murder charge (and perhaps he was innocent), there is something lurking that brings Simpson the need for punishment. So, having avoided what some would call his just reward, O. J. has chosen to act out in different ways so that equilibrium is restored. O. J. is guilty of something and the need for punishment is being manifest by his actions – whether conscious or unconscious.

A universal law is at work here – you will reap what you sow! And, until that law is satisfied, you will continually have the opportunity to reap till there is equilibrium.

The Positive Side of Consequences:

While reaping and sowing, at least in O. J.’s case, seems to focus on the negative, I know from experience that one can experience negative consequences from one’s actions, but likewise, you can enjoy positive results from the seeds you sow. From prison to Senior Sales Executive in a public company – I know that first hand from personal experience and speak about it regularly.

Perhaps, once O. J. is past this phase of his life and has satisfied his need for punishment, he’ll have the time to pay it forward and give back using his celebrity for the benefit of others. Till then – mark my words – a universal law is in play and once started it will find balance.


National Century Financial Enterprises Executives – GUILTY – in $3 Billion Securities Fraud Scheme!

March 16, 2008

It is true – every choice has a consequence! That statement holds true in every choice you make in life. Just like gravity, you can’t avoid the consequences of choices that you make. Now, don’t misread that statement – consequences don’t alway mean “bad” – they are just consequences. Your choices can create – Negative Consequences or Positive Results. By your choices you decide.

The Columbus Dispatch reported that after a day and a half of deliberation, the jury of eight women and four men came back with a determination of “guilty” for every one of the 40 charges against two of the Dublin company’s founders and three of its former executives.

 

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In the case of Donald H. Ayers, age 71, of Fort Meyers, Florida – Rebecca S. Parrett, age 59, of Carefree, Arizona – Randolph H. Speer, age 58, of Peachtree City, Georgia – Roger S. Faulkenberry, age 46, of Dublin, Ohio – and James E. Dierker, age 40, or Powell, Ohio – the choices they made as officers of National Century Financial Enterprises have yielded what will be a certain unpleasant consequence – likely time in federal prison.

Based on charges of conspiracy, fraud and money laundering, the jury returned the guilty verdict on all charges contained in a 27-count superseding indictment stemming from a scheme to deceive investors about the financial health of NCFE. The company, which was based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division. “The FBI continues to leverage its corporate fraud expertise gained through large-scale investigations such as Enron and WorldCom, to ensure that corporations represent their true health. From Dublin, Ohio, to Houston, Texas to New York, New York, the message is clear that the FBI will not stand by as corporate executives manipulate their financial statements and conceal illegal activities from criminal and regulatory authorities.”

According the the news release from the US Attorney’s office:

The government presented evidence that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used. Between May 1998 and May 2001, NCFE sold notes to investors with an aggregate value of $4.4 billion, which evidence presented at trial showed were worth approximately six cents on the dollar at the time of NCFE’s bankruptcy in November 2002.

NCFE presented a business model to investors and rating agencies that called for NCFE to purchase high-quality accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors. The evidence at trial showed that NCFE advanced money to health care providers without receipt of the requisite accounts receivable, oftentimes to healthcare providers that were owned in whole or in part by the defendants. The evidence further showed that the defendants lied to investors and rating agencies in order to cover up this fraud.

Small hospitals, nursing homes and other health care providers sold their accounts receivable to the company, usually getting 80 or 90 cents on the dollar, rather than waiting for insurance payments. National Century then collected the full amount of the payments.

The evidence at trial showed that NCFE concealed from investors the shortfalls produced by this fraud by moving money back and forth between accounts, fabricating data in investor reports, incorporating false information into the accounting system, and making other false statements to investors and rating agencies. Moreover, the defendants’ compensation was tied to the amount of money they advanced to healthcare providers and those providers’ outstanding balance owed to NCFE. The government presented evidence at trial that showed that the defendants knew that the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls and that NCFE was making up the information contained in monthly investor reports to make it appear as though NCFE was in compliance with its own governing documents.

“These convictions send a clear message to corporate America that executives will be brought to justice for lying to investors and misrepresenting the actions taken in their normal course of business,” said Deputy Attorney General Mark Filip, chairman of the President’s Corporate Fraud Task Force. “These are the latest successes in our efforts to improve the integrity of our financial markets.”

“By holding accountable those who break the law, today’s convictions help restore some of the faith and trust the public loses every time corporate executives defraud their investors. The jury’s verdict demonstrates that the public will not stand by while company executives commit billion dollar frauds, leaving the honest investors to bear the losses they create,” said Assistant Attorney General Alice S. Fisher.

Facing millions of dollars in fines and up to 140 years in prison, the corporate officers found guilty here will have time to reflect on the choices they made and the consequences that follow.

White Collar Crime and Business Ethics Speaker – Today, I speak to groups nationwide about Choices and Consequences. Do your employees make the best choices for your company—or for themselves? Are you ready for some straight talk about success, choices, and ethics from a business executive who lost it all…and gained more than he could ever imagine?

In an unusually vulnerable style, I explore the decisions we make through the veil of honesty, integrity, and ethics. Your audience will be touched by this personal story and poignant lessons. Having been where the guilty executives above are going, I know first hand the pain caused by poor choices and practical ways to avoid making poor choices.

For information about my presentations, visit my website – www.chuckgallagher.com

Your comments on this blog are welcome!


20 Minutes and a Guilty Verdict! James Fantroy Former Dallas City Council Member Found Guilty

February 28, 2008

Some predicted a long trial and hung jury – WRONG! In just 20 minutes a federal jury in Dallas, Texas convicted James L. Fantroy, Sr., a former Dallas City Council Member of embezzlement.

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Seems that Fantroy, who also was a former member of the Board of Directors and Treasurer of Paul Quinn College community Development Corporation, embezzled funds from monies that were held in trust for Paul Quinn College.

In 1998, the U.S. Department of Housing and Urban Development (HUD) approved Paul Quinn College for a $250,000 Historical Black Colleges and Universities (HBCU) grant. The college hired Paul Quinn CDC to assist in administering the grant, which included the revitalization of the college’s surrounding area. Paul Quinn College entered into a real estate management agreement with Paul Quinn CDC establishing Paul Quinn CDC as the manager of the Highland Hills Shopping Center, a property owned by Paul Quinn College. It required Paul Quinn CDC to deposit all rental receipts it collected, less any sums properly deducted or otherwise provided for in the agreement, into a trust account for the benefit of Paul Quinn College.

From August 2000 through June 7, 2002, Paul Quinn College received eight disbursements totaling approximately $222,853 from HUD, pursuant to the HBCU grant. During the one year period beginning April 1, 2003, Paul Quinn College received funds from a second HBCU grant, totaling more than $10,000.

The government presented evidence at trial that from April 26, 2003, through July 30, 2003, James L. Fantroy, Sr., acting as an agent for Paul Quinn College, embezzled approximately $21,000 in monies held in trust for Paul Quinn College.

Fantroy faces up to 10 years in federal prison along with a $250,000 fine. He will be sentenced May 21st, 2008.

As a white collar crime and business ethics speaker, I know first hand the impact that choices have. And, as I state to most audiences, every choice has a consequence. The strange thing is – most who make choices like this somehow think that they will get by with the cover up. But you do reap what you sow and there is no hiding from the consequences of the choices you make.