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!


Child Porn Law Upheld by Supreme Court! “Protecting Our Kids” Speaker Chuck Gallagher Comments

May 19, 2008

Justice Antonin Scalia wrote the majority opinion for the Supreme Court in which they upheld the law aimed at preventing child pornography. Scalia called internet child porn a “threat.” He’s right. As a frequent speaker on teen ethics and computer crimes, it is clear that the internet is becoming a distribution haven for child porn and more importantly it is a playground for child predators.

A federal law, the “Protect” Act enacted in 2003 made it a crime not only to produce and possess child porn, but also to “pander” material, conveying the belief that material contains minors engaged in sexually explicit conduct. The pandering provision covers anyone who “advertises, promotes, presents, distributes, or solicits” this material.

According to CNN in a recent report: As part of a 2004 sting operation, an undercover Secret Service agent (using the screen name “Lisa–n–Miami”) communicated with Williams in an Internet chat room. Williams allegedly wrote, “Dad of toddler has ‘good’ pics of her an (sic) me for swap of your toddler pics, or live cam.” He posted nonpornographic photos of a young girl and claimed he had “hc,” or hard-core, kiddie pictures, prosecutors contend.

The man then allegedly posted photos of youngsters involved in “sexually explicit conduct,” according to court records. Twenty-two other child porn images were found on his home computer.

A federal appeals court upheld a possession conviction against Williams, but threw out the separate soliciting charge, which carried a five-year mandatory minimum sentence. A three-judge panel concluded the provision was “substantially overbroad and vague,” and that “non-commercial, non-inciteful promotion of illegal child pornography, even if repugnant, is protected free speech.” In other words, the judges said merely talking about child porn is not necessarily criminal.

Today’s ruling by the high Court upheld the law by ruling that a provision dealing with “pandering” illicit material does not violate constitutional protections on free speech. The ruling was 7 to 2.

Scalia stated, “Child pornography harms and debases the most defenseless of our citizens. This court held unconstitutional Congress’ previous attempt to meet this new threat, and Congress responded with a carefully crafted attempt to eliminate the First Amendment problems we [earlier] identified.”

There has been some concern that some people might be targeted unfairly when engaged in lawful, artistic or editorial free speech. Example were used among them were mainstream movies such as “Lolita,” “Traffic,” and “Titanic,” all of which depicted scenarios in which underage girls were engaging in simulated sex.

According to the AP – Justice David Souter, joined by Justice Ruth Bader Ginsburg, dissented. Souter said promotion of images that are not real children engaging in pornography still could be the basis for prosecution under the law. Possession of those images, on the other hand, may not be prosecuted, Souter said.

“I believe that maintaining the First Amendment protection of expression we have previously held to cover fake child pornography requires a limit to the law’s criminalization of pandering proposals,” Souter said.

The reality is child porn is too easy to get and in so many ways our children aren’t protected. Odd, but the profile of a person convicted of child porn is – ANYONE. Most recently a Plano, Texas minister who was arrested in an internet sex sting operation has resigned his position as a pastor at a Dallas-area megachurch. Joe Barron was charged with solicitation of a minor. The solicitation was via the internet.

As a white collar crime speaker, unlike traditional forms of white collar crime, convictions related to Child Porn seem to carry far greater sentences and long term consequences. One of the most significant things that parents can do is become educated. Child porn is more accessible via the internet and that – THE INTERNET – is where parents need education. Social networking sites such as MySpace, Facebook and others are not dangerous on the whole, but Child Predators can use those mediums as a way to deceive and commit their crimes. I teach seminars and workshops on cyber-crime and what every parent should know to protect their children.

If you or your organization is interested in my newest program – PROTECTING OUR KIDS: What Every Parent Should Know About Computer Crimes – contact me at chuck@chuckgallagher.com.


Former Human Resources Director for Sage Telecom – William Chad Mercer – Sentenced to Federal Prison for White Collar Crime

March 27, 2008

For some reason, as often as I report on white collar crime, I always seem to find myself amazed at where the crime originates from. In this case, the Allen based company that provides telephone and internet services – Sage Telecom – found itself the losing end of a white collar crime scam.

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Seems that William Chad Mercer – also known as Bryson Mercer – between March 2004 through November 2005, submitted false invoices to Sage Telecom representing that temporary employment services totaling $5,130,407.48 had been provided when they had not. Mr. Mercer wrote invoices for temporary employment and other employee services. He was authorized to approve payments for the company and made payments to a fake companies he created.

A federal indictment charging Mercer with 10 counts of mail fraud was returned by a federal grand jury on May 10, 2007. Mercer remained a fugitive until he was arrested in August 2007.

Mercer, age 36, from Plano, Texas was sentenced to 78 months in federal prison for mail fraud violations and was also ordered to pay over $2.4 million in restitution and to forfeit almost $2.7 million.

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

If anyone reading has any background on Mercer – 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…


Ethics and Cars – Now This Is What Gives Used Car Dealers a Bad Name!

January 22, 2008

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In Dallas, Texas and around the nation – everyday, someone is ribbing on used car dealers saying that they are just not trustworthy. Well, in Richardson, TX it was proven to be true. According to the US Attorney’s office, a Plano, Texas resident, Massoud Mortazavi-Koupai pled guilty before U. S. Chief District Judge Sidney A. Fitzwater to false odometer disclosure and failing to provide notice to consumers of vehicles’ structural damage.

Mortazavi-Koupai, age 47, faces a maximum of three years in federal prison and restitution.

The US Attorney’s New Release states the following:

According to documents filed in the case, Mortazavi-Koupai personally purchased, or directed others to purchase, numerous vehicles at automobile auctions with notification that such vehicles had previously sustained substantial structural damage to the frame or the unibody. These auto auctions required selling dealers to provide notification to purchasing dealers that a motor vehicle had previously sustained frame damage or unibody damage, which indicate structural damage. On a substantial number of occasions, after purchasing vehicles with notification that the vehicles had structural damage, Mortazavi-Koupai sold such vehicles without disclosing the damage to purchasers.

Mortazavi-Koupai also purchased vehicles with inaccurate odometers. Federal law requires that, in connection with the sale of a motor vehicle, the seller must disclose the mileage to the purchaser in writing and sign the written disclosure. In addition, the seller must certify that the odometer reading reflects the actual mileage, or, if the transferor knows that the odometer reading reflects the amount of mileage in excess of the designed mechanical odometer limit, he will include a statement to that effect. If the transferor knows that the odometer reading differs from the mileage and that the difference is greater than that caused by odometer calibration error, he will include a statement that the odometer reading does not reflect the actual mileage, and should not be relied upon. On a substantial number of occasions, after purchasing vehicles with certifications from previous owners that the odometer was inaccurate, the Mortazavi-Koupai sold vehicles with a certification made on behalf of his dealership that the vehicles’ odometers were accurate, when in fact they were not.

As a business ethics speaker, I remind every group I speak to that Every Choice Has A Consequence. The question that always seems to loom when reports like this appear is – did it ever occur to the perpetrator of the fraud that the price of the consequence might well outweigh the short term benefit that was received. Amazingly, many (including myself) never calculated that there might be a consequence and that the consequence might be far more severe than could ever be imagined.

On April 25, 2008 Mortazavi-Koupai will be sentenced. I would not be surprises to see a prison sentence here along with substantial restitution.

Your thoughts?