Crystal Dawn Bric Pleads Guilty to Theft of more than $300,000 from SC Probation, Pardon and Parole Bank Account!

July 8, 2011

Does it seem that South Carolina has the lock of stupid choices?  First our (former) Governor gets lost on the Appalachian Trail and ends up in Argentina and now we find an individual steals from the SC Dept. or Probation, Pardon and Parole.  Maybe its me, but doesn’t it just seem too close for comfort to steal from an organization that is involved with prisons and inmates?

NEWS RELEASE:

Columbia, South Carolina United States Attorney William N. Nettles stated today that a former resident of the Columbia based Restitution Center, Crystal Dawn Bric, age 31, of Columbia, pled guilty on Wednesday to one count of bank fraud, for her scheme to steal more than $300,000 from a Wachovia bank account owned by the South Carolina Department of Probation, Pardon and Parole.

The facts presented at the plea hearing were that during the year 2007, Crystal Bric was on state probation and was housed at the SC Probation, Pardon and Parole Restitution Center in Columbia, SC. Using a check she received from a Probation Pardon and Parole Wachovia bank account, she obtained the bank account number and routing number. She began using the account number to pay her rent, her utilities, and for cell phones for herself and others. She did this using a telephone and making electronic payments. She also used friends social security numbers to open credit card accounts and then electronically paid for the credit cards using these Wachovia account numbers. The scheme was executed from approximately December 2007 through October 2009. Auditors have concluded that Ms. Bric wrongfully took approx. $337,944 in state funds from this Wachovia bank account.

The maximum possible penalty for bank fraud is thirty years and a fine of $1,000,000.00.

Mr. Nettles stated that the case is being investigated by agents of the United States Secret Service and that he has assigned the case to Assistant United States Attorney Debbie Barbier of the Columbia office for prosecution.

As I begin every speech as a business ethics and fraud prevention speaker – “Every Choice Has A Consequence!”

YOUR COMMENTS ARE WELCOME!


America’s Most Famous Jailhouse lawyer – Michael Ray – wins verdict!

August 17, 2010

From time to time I have the opportunity to report on interesting issues that arise as I review reports for my ethics and fraud prevention blog.  Michael Ray is a unique individual who has quite the story to tell.  Below is a report issued in South Carolina Lawyers Weekly that I have reprinted with permission from Michael Ray.

A former prison law clerk who was once investigated for practicing law without a license and who calls himself “America’s Most Famous Jailhouse Lawyer” is basking in the limelight of a $23,000 verdict.

Michael R. Ray said an Horry County jury took about an hour to return the verdict in Ray v. Park, case No. 2007-CP-26-00922. Circuit Court Judge Larry B. Hyman presided.

Ray, a former federal inmate who provided legal assistance to other prisoners for 29 cents an hour, made national headlines in 2008 when he got the U.S. Supreme Court to hear arguments in one of his cases. The court ruled against his client, Ray said.

Today, Ray works at a retail store, handles what he calls “freelance work” for lawyers and enjoys his notoriety as a former jailhouse lawyer.

Submitting information about the verdict to Lawyers Weekly, he included the title “America’s Most Famous Jailhouse Lawyer” along with his name and contact info.

He said he received the moniker from The Associated Press, which covered the Supreme Court case and a subsequent state investigation into whether Ray was practicing law without a license.

“The case took on a life of its own, and the AP ran with it,” Ray said. “It was run internationally, and I still get letters today from people all over the place trying to get me to help on their cases.” In the July 28 Horry County verdict, Ray won $8,000 in punitives and $15,000 in actual damages. Both he and the defendant were pro se, raising some unusual procedural issues for Judge Hyman, Ray said.

“It’s a difficult thing for a judge to have one pro se party, let alone two pro se parties. Testimony becomes a problem. Evidence becomes a problem. So he relaxed all the rules with our agreement, and we proceeded,” Ray said.

The case revolved around Ray’s claims that the defendant violated an agreement to store and care for Ray’s belongings while Ray was serving a six-year prison sentence in connection with a real estate scheme in Myrtle Beach. Ray, who completed the sentence in April 2008, was still in prison when he sued on a variety of claims, including breach of contract and conversion.

The defendant denied the claims in his answer.

Ray said the trial judge didn’t know about his activities as a jailhouse lawyer or a state investigation into whether Ray was practicing law without a license in the U.S. Supreme Court appeal. The state later dropped the probe, he said.

“Judge Hyman was not aware of any of that going into the trial,” Ray said. “He just thought he had two pro se litigants that were going to try a case. He did commend me after the trial on my conduct.”

VERDICT REPORT

Brief statement of claim: Breach of contract, conversion

Principal injuries (in order of severity): $15,000. Loss of property, loss of money/valuables

Special damages: $8,000 punitives

Tried or settled: Tried

County and court where tried or settled: Horry County Court of Common Pleas

Case name and number: Ray v. Park, case No. 2007-CP-26-00922

Date concluded: July 28, 2010

Name of judge: Hon. Larry B. Hyman

Amount: $23,000

Insurance carrier: None

Attorney for plaintiff: Michael R. Ray, pro se (Myrtle Beach)

Other useful info: This case was tried in the circuit court without counsel on either side, which the trial judge described as a “very rare occurrence,” according to the plaintiff. After a two-day jury trial, the verdict finding in favor of the plaintiff on all grounds was rendered in about an hour.

Summer intern law students from both the University of South Carolina and the Charleston School of Law attended the trial and watched as the plaintiff presented his case and examined and cross-examined the witnesses. After the trial, one of the students said he had automatically assumed that the plaintiff was a licensed attorney simply prosecuting the case himself, according to the plaintiff’s report.

The plaintiff claimed that the defendant was entrusted with the plaintiff’s property and that the defendant agreed to sell some of the property to protect the remainder. The plaintiff claimed that, after he verbally and formally demanded the return of the property, the defendant either destroyed or sold the remainder.

The jury found that there was not only a verbal contract, but that its terms were clear, there was an offer, an acceptance and, foremost, a definite agreement by the parties. They further found that the defendant acted maliciously and with fraudulent intent, and they awarded punitive damages.

Judge Hyman thanked the plaintiff for his professionalism and conduct during the trial, even though it was difficult for the judge to preside over non-attorneys, the plaintiff said. The judge relaxed some of the procedural requirements, etc., according to the plaintiff.

Submitted by: Michael R. Ray

Editor’s note: The information in Lawyers Weekly’s verdicts and settlements reports was submitted by the counsel for the prevailing party and represents the attorney’s characterization of the case.


South Carolina Govenor Mark Sanford ethics probe; was state asleep at the wheel?

November 25, 2009
One of the more curious things about the Mark Sanford case is how long it took for him to get caught. Here was a guy using taxpayer money to pay for high-priced airline tickets to see his mistress down in Argentina — a total of 18 times. (The law requires state officials to use the lowest-cost airline tickets; we assume that extends to trips to see the mistress.) The question is, how was the governor able to pull off  so many trips without getting caught? Was there no one at the state level to say, “Hey, Gov, you’re supposed to be flying coach, you put in a bill here for business class …”

In my experience, I’ve found three things have to be in place for any fraud to occur: Need, Opportunity, and Rationalization. Sanford’s Need was clear: He wanted to see the chick in Argentina. The Rationalization bit, we’ll leave that to Sanford to answer. As for the Opportunity: Somewhere a flaw existed in the system. Somewhere, at the state level, a loophole allowed a sitting governor to flagrantly violate what now amount to 37 ethics violations.

And what was that loophole? Power and popularity. Mark Sanford was a rising star of the GOP. Clearly, that status helped override ethics. When all is said and done, the current ethics probe of Sanford will amount to further waste of taxpayers’ money if it doesn’t answer one central question: Who else aided and abetted a sitting governor to get away with such egregious abuses of power?

Identity Theft Alive and Well! Levander and Rita McLean of Garland Texas Convicted

September 19, 2008

There are times when I read of people who have been convicted and I wonder how good people got caught up in a crime and ended up with unfortunate consequences.  Often, as an ethics speaker, I have said that – Every Choice Has A Consequence.  That is a true statement.  And at times it is true that otherwise good people make bad choices and find out the hard way about the consequences that follow.  But in this case – well read for yourself.

According to the US Attorney’s office: Levander Carlton McLean, 66, and his wife, Rita Murphy McLean, 45, of Garland, Texas, were convicted by a federal jury following a three-day trial on conspiracy to unlawfully use identification documents.  They each face a maximum statutory sentence of five years in prison, a $250,000 fine and restitution. They are scheduled to be sentenced by Judge Kinkeade on December 3, 2008.

The government presented evidence at trial that in July 2001, Levander and Rita Murphy McLean were able to convince their nephew, a Texas Department of Public Safety driver’s license technician, to make them a fraudulent Texas driver’s license and a fraudulent Texas identification card in the names of two innocent people living in North Carolina and South Carolina. The McLeans used these identification documents, as well as a fraudulent Michigan driver’s license that Rita McLean obtained in the name of an innocent Texas resident, to open several fraudulent bank accounts in Dallas, Michigan, and North Carolina.
Now I have to ask here…wonder what the nephew thought when dear old Aunt and Uncle were asking for the fake ID’s?  In order for a fraud to happen three things must be present: (1) need; (2) opportunity and (3) rationalization.  In this case the Nephew provided the opportunity.  Had the Nephew just said now – which is the logical answer, this couple could not have carried out this fraud. 
From 2002 through 2004, the McLeans deposited more than $200,000 in proceeds from more than 130 false federal income tax returns, which had been filed in the names of real taxpayers using stolen W-2s, into these fraudulent accounts. 
While bluntly put this is just dumb fraud pure and simple, there are many other circumstances where good people make bad choices and find out the hard way about consequences.  In this case, I would wager that they both will serve some time in federal prison.  Meanwhile, while I have no idea about the nephew…I would suspect that at a minimum he’s lost his job and perhaps is subject of an investigation for conspiracy.
For information about ethics and choices presentations, visit my web site and remember – Every Choice Does Have A Consequence.

William J. Trier, II Faces Retirement in Prison for $5.2 Embezzlement – Comments by Chuck Gallagher White Collar Crime Speaker

May 2, 2008

The first step to a new life is to accept responsibility for your actions. Every choice has a consequence and after ten years of admitted fraud, William J. Trier, II has made a life changing choice – he plead guilty to an embezzlement scheme that lasted for ten years.

Now, as a white collar crime speaker, I must admit that it is generally unheard of for a white collar crime to last for that period of time. More times than not they fall apart before a decade passes.

William J. Trier, II, 57, of Williston, South Carolina, pled guilty today to embezzling approximately $5,200,000.00 from his former employer and to money laundering.

Trier worked at Crane Co., a vending machine manufacturing company in Barnwell County, as the director of logistics in the shipping department. From 1997 through October 2007, Trier embezzled funds from Crane by creating phony invoices from two fictitious freight transport companies and submitting them to Crane for
payment. He used his position to approve the payment of the fraudulent invoices, and received company payments mailed to a Post Office box he had opened as the mailing address for the phantom companies. Over a ten year period, Trier collected approximately $5,200,000.00 using the false invoice scam.

The maximum penalty Trier faces is twenty years imprisonment and a fine of $250,000. Trier must also make full restitution and has agreed to forfeit millions of dollars in assets towards restitution.

Wow…$5.2 million over ten years. This case is a classic example of lack of effective internal control. The ability to create an invoice and approve said invoice enabled Trier to effect this fraud. White collar crime consists of three parts: (1) need; (2) opportunity and (3) rationalization. While I can’t speak to Trier’s need, the opportunity was created thru simple lack of controls. Crane could have at any time thwarted the fraud with effective auditing and control mechanisms in place. As to “rationalization” – who knows, other than the longer a white collar criminal gets by with the crime, the greater the chance the white collar criminal thinks that the action is actually O.K. If I don’t get caught, I won’t get caught is the idea.

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 Trier may have enjoyed his good for a time and avoided the consequences – he did not avoid the consequences all together. Prison is no fun and Trier is facing many years plus substantial restitution for his conviction. Likely he will serve time and that will prove to be a dramatic change from his prior activities. You do reap what you sow.

If anyone reading has any background on Trierfeel 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…


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?


Sexual Predators Aren’t Always Found On The Internet – South Carolina Teacher Gets 6 Years In Prison for Sex with Teens!

February 19, 2008

Talk about choices and consequences – not far from where I used to live (Greenville, SC) in Laurens, South Carolina a teacher was sentenced to 6 years in prison for having sex with under aged teens. As a teen ethics speaker (www.chuckgallagher.com) I often make presentations to parents about the new jungle for sexual predators – the internet. Whether it’s MySpace or Facebook, many parents aren’t familiar with the territory for predators these days. What most would never suspect is that someone – a teacher – would inflict harm on those close to him or (in this case) her by betraying their trust.

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Allenna Ward, age 24, did that – she was convicted of having sex with 14 and 15 year old boys at the school where she taught. According to a report from CNN, “Police began investigating last year after school officials found a note believed to have been written by Ward to one of the boys. Some of the victims were students at Bell Street Middle School in Clinton, where Ward taught. She was fired about a year ago.”

Every choice has a consequence. So many times people assume that they can avoid the consequences if nothing happens immediately following their choice. Again, according to CNN forensic psychiatrist Donna Schwartz-Watts said Ward is not a pedophile, but rather a childlike victim suffering from personality disorders and a repressed childhood. Schwartz-Watts said the minister’s daughter lived a sheltered life but really was a “free spirit” who never got a chance to break away from her family.

I can’t begin to explain why Ward made the choices she did, but reality is – for the rest of her life she will be marked – not only from her experience in prison, but marked as a sexual predator – which in many ways is far worse than the mark of convicted felon.

According to an AP article, there is a steady drumbeat of sexual misconduct cases involving teachers, at least 15 states are now considering stronger oversight and tougher punishment for educators who take advantage of their students.

A nationwide Associated Press investigation published in October found 2,570 educators whose teaching credentials were revoked, denied, surrendered or sanctioned from 2001 through 2005 following allegations of sexual misconduct. Experts who track sexual abuse say those cases are representative of a much deeper problem because of underreporting.

The states referenced in the article that are considering significant changes are: California, Colorado, Florida, Minnesota, Missouri, Virginia, Washington and West Virginia.

No doubt the issue raising national attention today will fuel the fire in South Carolina. In fact, South Carolina has created a new committee of parents, teachers, social workers and prosecutors to study the problem and come back with new ideas.

Though small statistically, the number of abusive teachers is too high, South Carolina Education Superintendent Jim Rex wrote after reading the AP report.

“I am nonetheless outraged by any incident in which an adult entrusted with the care of one of South Carolina’s students violates that student. The ramifications for that student, his or her family, and the community as a whole are painful and long lasting,” he wrote.

As parents, adults and voters we have an obligation to help protect our children from those who would harm them. I educate adults about the new playground where predators abound – the internet – social networking – MySpace and Facebook, but other places for abuse exist. Children have been abused in their church and their school. Neither should happen, but they do. The question is what will we do to protect them.

As always your comments are welcome.

If you live in the Laurens, South Carolina area especially and would like to comment – please do so.


White Collar Crime is Alive and Well in South Carolina – 1st Week of February Results!

February 11, 2008

From February 1st thru February 6th there were four folks who were sentenced, indicted or convicted of white collar crime in South Carolina.

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Atlanta Man Sentenced: Charles Mahaffey, age 41, of Atlanta, Georgia, was sentenced to 40 months imprisonment for conspiracy to pass counterfeit traveler’s checks. Mahaffey was arrested in a drugstore parking lot after passing several counterfeit Visa $100 traveler’s checks at various Florence businesses. Recovered from his car were 11 additional counterfeit traveler’s checks, each bearing the same serial number. Federal investigators have since discovered that an additional 122 identical checks were successfully passed in 11 states just prior to Mahaffey’s arrest.

Guess here, but since other frauds have been discovered, my educated guess is that Mahaffey will be facing more time.

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Florence, SC Woman Sentenced: Susan Celeste Edwards, age 33, of Florence, South Carolina, was sentenced to 31 months in federal prison for using company credit cards to steal from her employer, Carolinas Refrigeration of Florence. Now…that is bad – but not that unusual. Here’s where the story takes a twist. This wasn’t her first time in prison!
Carolinas Refrigeration hired Edwards as a bookkeeper, unaware of her recent release from federal prison for embezzling from Advance America from 2000-2002. While working in the employee benefits section of that company, Edwards stole more than $243,000.00 from that scheme in which she filed insurance claims for fictitious employees, collecting insurance
payments which she spent for herself. Edwards served 37 months on that conviction.
Edwards admitted in court that from February 2006 to August 2006, she stole company funds and used her employer’s credit cards to make purchases for her personal use. By the time her thefts were detected, she had embezzled approximately $150,000.00.

So much for a background check! While not all people who have committed white collar crime will repeat that offense, it clearly illustrates some simple truths – use internal controls to avoid the likelyhood of abuse.

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Easley, SC Man Guilty: Charles E. Atwell, age 57, of Easley, was found guilty by a jury yesterday in federal court in Anderson of four counts of tax evasion and one count of making false statements in a bankruptcy petition.

Evidence presented at trial revealed that from 2000 to 2003, Atwell made
more than $2,000,000.00 in commissions as a financial planner selling insurance policies, annuities, and mutual funds. Atwell did not file tax returns or pay any income taxes during any of these years. In fact, evidence at the trial revealed that Atwell had not filed personal tax returns since 1995, and that the only tax returns attributed to Atwell during this period were bogus documents he presented when applying for loans. The evidence also showed that Atwell used bank accounts of several entities that he controlled, such as Professional Planning Inc., of Greenville, T and E Associates, and the Atwell Family Trust, to divert income for his personal use.

Evidence was also introduced that Atwell signed and filed a bankruptcy
petition claiming that his income in 2001 was only approximately $17,000.00 dollars, when in fact it was approximately $800,000.00. The petition further stated that his 2002 income was approximately $41,000.00, when in fact it was approximately $400,000.00.

Unlike the Wesley Snipes trial, Atwell could not claim he didn’t know the rules or law. Perhaps an actor could be that ignorant of the law, but a financial planner earning that amount couldn’t claim ignorance as an excuse!

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Chester, SC Woman indicted: Michelle Waters Dawkins, age 37, of Chester, South Carolina, was indicted for embezzling money from First Citizens Bank. The Indictment alleges that while employed at First Citizens between January and June 2007, Dawkins stole more than $1,000 from the bank. Get this…the maximum penalty Michelle Dawkins could receive is a fine of $1 million and imprisonment for 30 years.

Comments: As a business ethics and white collar crime speaker, (www.chuckgallagher.com) I see the effects of choices that are made. Generally when frauds like those mentioned above are effected there are three components: (1) need; (2) opportunity and (3) rationalization. Regardless of what motivates white collar crime, the outcome is always a negative consequence. Every choice has a consequence.

Your comments are welcome!


White Collar Crime – Week In Review From South Carolina to California to Florida – Comments by Ethics Speaker Chuck Gallagher

February 3, 2008

After reviewing the verdict in the Wesley Snipes case – both guilty and innocent – it makes sense to consider what else is taking place on the white collar crime front.

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South Carolina: Christina J. Williams, age 32, of Conway, South Carolina, was sentenced in federal court for aggravated identity theft and credit card fraud.

Williams worked as the office manager in a doctor’s office in Surfside Beach, South Carolina. From August 2003 to July 2004, Williams made unauthorized charges using the doctor’s personal and business credit cards, and used his personal information to secure a card for herself. Williams also embezzled money from the doctor’s office and had her name added to his cellular phone account. Investigators determined that Williams stole more than
$104,000.00 during the course of the scheme.

Rhode Island: Cory Johnson, the former president of Mixitforme, a company that sold electronic devices over the Internet and by telephone, pleaded guilty today to fraud and money laundering. Johnson admitted that he defrauded a credit card processing firm out of about $2.2 million worth of customer orders that Mixitforme failed to fulfill.

Between November 2005 and March 2006, NOVA processed millions of dollars worth of credit card transactions on behalf of Mixitforme for orders the company received over the Internet and by telephone. In March 2006, Mixitforme ceased operations, and hundreds of customers subsequently complained to NOVA that their credit card accounts had been charged for orders to Mixitforme but the merchandise had not been delivered.

NOVA refunded customers a total of $3,178,347 in charges for unfulfilled orders. NOVA was able to recoup $954,460 from a bank, but was left with a net loss of $2,223,887.

Johnson, 29, of Morrisville, Pennsylvania, pleaded guilty to one count of conspiracy to commit wire fraud and one count of money laundering. He is free on bond pending sentencing, which Judge Smith scheduled for June 20. The maximum prison sentences are: conspiracy — five years, and money laundering — ten years. Each offense also carries a maximum fine of $250,000.

Pennsylvania: William D. Edgar, a resident of Verona, Pennsylvania, has been sentenced in federal court in Pittsburgh, Pennsylvania to 37 months of incarceration and five years supervised release on his conviction of Conspiracy, Bank Fraud, and Wire Fraud.

Edgar, who was a mortgage broker licensed by the Pennsylvania Department of Banking, operated a mortgage brokerage business known as America’s Mortgage Outlet in Monroeville, Pennsylvania. Between May 2001, and October 2003, Edgar participated with loan officers at America’s Mortgage Outlet in a scheme to defraud banks and private lenders by making false representations in more than seventy mortgage loan applications submitted on behalf of his customers.

Two types of fraudulent schemes were used. One form was to falsely represent to the lenders that mortgage loan applications presented to the lenders were for refinance loans, when in actuality the applications were for purchase loans. The refinance scheme deceived the lenders into approving and funding loans on terms and conditions they would not have otherwise approved or funded.

Another form of the scheme was to accurately represent loans as purchase loans, but to falsely inflate the sale prices and values of real properties being purchased in order to cause the lenders to approve larger loans than they would have otherwise approved. This scheme deceived lenders into financing down payments and other cash disbursements from mortgage loan proceeds. In total, more than $3,000,000 worth of loans were issued in connection with this scheme.

California: BARRY HOLLAND, age 60, of Carmichael, entered a guilty plea to accepting unlawful bribes while serving as Superintendent for the City of Sacramento’s Water Distribution Branch. HOLLAND pled guilty to a one count information charging him with bribery in connection with a municipality that receives federal funds.

From at least 1999 through 2005, one Sheldon M. had an oral agreement with the Water Distribution Branch under which he would retrieve used meters from the Water Distribution Branch, transport the same to a recycler, and sell the same for profit. Sheldon M. would then keep a portion of the meter sale proceeds for himself as a fee and would maintain a separate portion of the meter sale proceeds in a “slush fund” which he later would disburse to certain employees of the Water Distribution Branch, including HOLLAND, or utilize to make purchases for the benefit of the Water Distribution Branch. Between October, 1999 and November, 2005, defendant HOLLAND accepted approximately 16 checks and cash totaling approximately $10,371 as rewards from Sheldon M. for allowing Sheldon M. to sell the water meters. HOLLAND also accepted various machinery (then retained by the Water Distribution Branch), including two air motors with a combined value of approximately $7,200, and a tapping machine with an approximate value of $8,000 to $9,000 from Sheldon M., also as rewards from Sheldon M. for allowing Sheldon M. to sell the water meters.

Florida: It was announced that owners of nine separate Miami-based health care corporations have been sentenced to prison terms within the past two weeks. Collectively, the nine defendants filed fraudulent claims with Medicare for $56,599,832 worth of unnecessary durable medical equipment (DME) and infusion therapy.

The nine defendants sentenced in Miami are: (1) Luis Soto, 41, sentenced to 87 months in prison; (2) Noel Rodriguez, 50, sentenced to 51 months in prison; (3) Rosabel Gonzalez, 32, sentenced to 30 months in prison; (4) Christian Vasquez, 22, sentenced to 41 months in prison; (5) Maria De La Serna, 55, sentenced to 19 months in prison; (6) Ariel Betancourt, 35, sentenced to 24 months in prison; (7) Jose Prieto, 58, sentenced to 41 months in prison; (8) Armando Jorge Herrera, 27, sentenced to 36 months in prison; and (9) Reinaldo Lopez, 40, sentenced to 46 months in prison.

Comments: First, as a business ethics speaker (www.chuckgallagher.com) I often speak to groups about the Truth About Consequences. My workshops on white collar crime and fraud are well attended as it appears that anyone can get caught up in criminal activity – and I speak from experience – the consequences can be devastating.

The Florida issue clearly is one of pure greed and seemingly opportunity. Time after time people (especially in dealing with the government) think that the customer – US Government – is too big and would never catch their “slick” illegal scheme. And, more times than not – they do and the consequences are less than pleasant. Prison terms no matter their length are unpleasant.

In California we see an example of someone being found guilty for participating in a scheme. I would be that this person would have felt that it must be O.K., someone else is making the choice – he was just a recipient. Wrong! Illegal is illegal.

Pennsylvania, Rhode Island and South Carolina – well that was just fraud pure and simple. Most of the time when a fraud is committed there are three components: (1) Need; (2) Opportunity and (3) Rationalization. While I don’t know how the three came together in there cases…you can bet they did.

But, this week has past – Snipes has been found innocent and guilty – and we face another week. Perhaps, it would help if people understood two simple facts:

Every choice has a consequence! and You reap what you sow!

Your thoughts and comments are welcome!

 


Prison – 5 Years – S.C. Man Sentenced for Mortgage Fraud says Ethics Speaker Chuck Gallagher

December 23, 2007

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Kyle Wimmer of Rock Hill, South Carolina was sentenced in Federal Court for bank fraud and money laundering to 63 months in federal prison and was ordered to pay $4 million in restitution.

http://www.mortgagefraudblog.com/images/uploads/SCWimmerIndictment.pdf

A quote from the mortgage fraud blog follows: “According to the Indictment and evidence presented in court established that Wimmer devised a real estate investment scheme to defraud his investors and upstate lending institutions. Wimmer recruited investors to purchase distressed houses that he promised would be fixed up and rented. He then inflated investors’ financial information to make them appear more creditworthy than they really were, in an effort to qualify them for mortgage loans from banks to purchase the investment properties. At the same time, Wimmer grossly inflated the value of the investment properties, so that banks would lend more money than the properties were actually worth. Wimmer then skimmed profits from each deal, failing to repair or rent the properties as he promised. As a result, Wimmer was able to fraudulently obtain over $4 million dollars in illicit profits.”

According to the FBI’s list of typical fraud schemes, Wimmer used several to perpetrate his fraud. Backward Application: Wimmer fraudulently created fake income designed to meet the lenders loan criteria. Nominee Loan: Wimmer used outside borrowers to conceal his identity and hence his fraud.

The FBI states, “Mortgage Fraud is one of the fastest growing white collar crimes in the United States. Mortgage Fraud is defined as a material misstatement, misrepresentation, or omission relied upon by an underwriter or lender to fund, purchase, or insure a loan.”

Every choice has a consequence.

Having suffered the consequences of bad choices, I can say that Wimmer will find his stay in prison eye opening. Having lost everything, Wimmer will get a chance to reflect daily on this seveal year stint of fraud.

Speaking from experience it isn’t worth it.  YouTube   When he first walks into federal prison, goes through processing and is escourted to his cell…he’ll being a soul searching process of understanding that crime doesn’t pay.

Mortgage fraud is rampant. If you have been a victim…your comments are welcome. Likewise, if you’ve been punished for such crimes – share your experience.

Business Ethics Speaker – Chuck Gallagher signing off…