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


Jailhouse Lawyer Being Investigated – Guess He Ticked Off the South Carolina Attorney General

February 27, 2008

Just when you think you’ve made history – some “better than thou” Attorney General steps up to put you back down again. Any surprise that this is coming from South Carolina. Somehow I don’t see that as a tolerant state – at least not for Michael Ray!

Michael Ray – not a household name – is a federal inmate in the State of South Carolina. What is significant about Mr. Ray – he helped fellow inmate Lavon Burgess appeal his conviction for possession of crack cocaine with the intent to distribute. O.K., so Ray is a “jailhouse lawyer” – not a lawyer by license, but a lay person who has a knack for the law.

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Oh, but there’s more! The U.S. Supreme Court is scheduled to hear on March 24, the appeal where Burgess is arguing that a prior drug conviction prosecutors used to get him the 20-year minimum prison sentence shouldn’t have applied because it was a misdemeanor instead of a felony. Conflicting court rulings have required 10-year sentences for people already convicted of misdemeanors, so a successful appeal could trim Burgess’ sentence in half.

Stop! So let this sink in – a 29 cent an hour felon who is a member of the American Bar Association and a certified paralegal, helped another inmate file an appeal that is being heard by the United States Supreme Court! Is that cool or what?

Stanford University law professor Jeff Fisher will argue Burgess’ case before the U.S. Supreme Court. Legal experts estimate the high court agrees to hear less than 1 percent of the thousands of cases it receives each year.

Now, according to Rauch Wise, a South Carolina lawyer who represents Ray, the authorities are looking into whether Ray is guilty of unauthorized practice, a crime that carries up to two years in prison and a $5,000 fine. South Carolina’s Attorney General Henry McMaster is investigating Ray for practicing law without a license.

Sorry, but McMaster is just wrong – both legally and ethically!

Federal Bureau of Prison regulations state, “an inmate may assist another inmate … with legal research and the preparation of legal documents for submission to a court or other judicial body.” And in his letters, Ray cited a U.S. Supreme Court case he said illustrated rights bestowed upon prison law clerks.

In Johnson v. Avery, the court in 1969 sided with a Tennessee prisoner who argued he had been improperly disciplined for helping another inmate prepare legal documents, ruling that prison officials could not deprive prisoners of such assistance.

A September Ohio Supreme Court decision could foreshadow Ray’s fate, said Michael Frisch, ethics counsel and adjunct professor at Georgetown University Law Center. The justices narrowly upheld an inmate’s right to draft legal documents for other prisoners because there was no “reasonable alternative” to their services.

As an ethics speaker, I am not proud of my past – I did spend time in federal prison – and if it were not for prison “jailhouse” lawyers, many would have no chance at any reasonable legal representation. Not that all jailhouse lawyers are good, but how, otherwise, would an inmate gain protection of their rights?

Oh…stop. I can hear some saying…what rights? Inmates are inmates and have no rights! Right? Wrong!

What if Burgess is overturned…then with Ray’s help many will find that they will have reduced sentences based on the opinion of the highest court in the land.

My suggestion…leave Ray alone and give him the benefit of seeing where this Supreme Court ruling lands.

Your Comments?


Lawyer Out Of Luck – $700,000+ In Restitution and 41 Months In Prison – Choices and Consequences Says Business Ethics Speaker Chuck Gallagher

January 21, 2008

Straight from the Western District of Louisiana – Mel Credeur, a former attorney, was sentenced to 41 months in federal prison – five years of supervised release to follow – and payment of $769,055 in restitution including not being able to accrue any new lines of credit without approval from his probation officer. That’s a large sum…especially for someone who has been disbarred.

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U.S. Attorney Donald W. Washington stated: “By position, oath, and responsibility, lawyers are bound to obey the law and serve as examples for others. This defendant broke the law and now faces severe consequences a
long prison term. Hopefully, this tragedy will serve to remind us all that no one is above the law.”

CREDEUR pleaded guilty to one count of making false statements to a bank and one count of forging securities of private entities. A superseding indictment was returned in June 2007 charging CREDEUR, age 52, with 9 counts of making false statements to a bank and 24 counts of forged securities of private entities. An investigation by the FBI revealed that beginning in 2002 while practicing law in Lafayette, CREDEUR established attorney/client lines of credit at a local bank which he used to finance is personal injury lawsuits. CREDEUR was obligated to pay off the bank’s line of credit after receiving funds generated by settling civil cases. On numerous occasions, when settlement proceeds were received by CREDEUR, instead of repaying the bank’s line of credit, he requested extensions of time with the local bank and gave false reasons as to why the extensions were needed. In some instances, CREDEUR never repaid the line of credit.

Further investigation revealed that in 2003, CREDEUR opened several business accounts at another local bank, including a trust account, checking and payroll checking account, and personal accounts. CREDEUR admitted to forging the settlement checks from insurance companies received for certain clients and depositing the proceeds into his account without the client’s knowledge or consent.

Chuck Gallagher - The Ethics Expert

As a business ethics speaker (http://www.chuckgallagher.com), I often address audiences sharing the line – Every choice has a consequence. It is said, you reap what you sow. That is true. I know from experience. Because, like Credeur, who in a few days will report to federal prison, I, too, spent time in federal prison for my crimes.

All too often, people feel that if they do something that is wrong or against moral or human law – and don’t get caught – well they feel they won’t get caught. That is stinkin thinkin! Just plain wrong. When it is said you reap what you sow…it is true. In fact, in my opinion, the longer you go without being caught the more severe the consequences you will face.

Credeur will learn quickly that his life will change. Prison will change a person. Some for the better. Some of us realize that an experience in prison will create an opportunity to help others learn. That’s been my lesson and the passion I follow today.

I wish Credeur the best. For the rest who read this…remember Choices: Negative Consequences – Positive Results – you choose!