UK Citizen & 2 Americans Charged for Conspiring to Defraud US Govt.

United Kingdom Citizen and Two Americans Charged in Alabama for Allegedly Conspiring to Defraud the United States Government 

U.S. Department of JusticeMarch 13, 2012

Office of Public Affairs(202) 514-2007/TDD (202) 514-1888

WASHINGTON—United Kingdom citizen Ahmed Sarchil Kazzaz and his company, Leadstay Company, were charged in an indictment unsealed today in the Northern District of Alabama for their roles in a conspiracy to defraud the United States and pay kickbacks in exchange for receiving subcontracts for a Department of Defense program in Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Joyce White Vance of the Northern District of Alabama.

Kazzaz, 45, and Leadstay were charged with one count of conspiracy to defraud and commit offenses against the United States; six counts of unlawful kickbacks; one count of wire fraud; and three counts of mail fraud. Kazzaz was arrested on February 14, 2012 in Los Angeles. In addition, two informations filed in the Northern District of Alabama were unsealed today, charging Gaines R. Newell Jr., 52, and Billy Joe Hunt, 57, with conspiracy to commit the federal offenses of kickbacks, wire fraud, and mail fraud, and with filing false tax returns.

According to the indictment, Kazzaz paid more than $947,500 in unlawful kickbacks to two employees of a prime contractor to the United States government in order to obtain lucrative subcontracts for himself and Leadstay, in connection with the Coalition Munitions Clearance Program (CMCP). CMCP is operated in Iraq by the U.S. Army Corps of Engineers, Huntsville Engineering and Support Center (HESC). HESC, located in the Northern District of Alabama, operated the CMCP to clear out, store, and dispose of weapons that were seized or abandoned in Iraq since the 2003 invasion. HESC awarded a contract to perform this work to an international engineering and construction firm headquartered in Pasadena, California.

The indictment alleges that beginning in about March 2006, Kazzaz entered into a kickback agreement with the California prime contractor’s program manager and deputy program manager, who arranged for the award of subcontracts to Kazzaz and Leadstay to provide materials, heavy equipment and operators for equipment for the CMCP. Kazzaz also allegedly obtained multiple funding increases to those subcontracts. From April 2006 through August 2008, Kazzaz and Leadstay received more than $23 million in U.S. funds for services under the CMCP.

According to the two informations unsealed today, Newell was the program manager in Iraq for the California-based prime contractor to HESC, and Hunt was the deputy program manager. Both are charged with conspiring to solicit and accept kickbacks to award subcontracts under the CMCP program and to commit mail and wire fraud by knowingly and intentionally devising a scheme to defraud the United States. In addition, both are charged with failing to report the kickback income on their federal tax returns.

“Mr. Kazzaz allegedly paid kickbacks to two employees of a California-based contractor in order to secure subcontracts for Department of Defense programs in Iraq,” said Assistant Attorney General Breuer. “Federal contracts must be won or lost based on the merits of the bid, and we will continue to take aggressive steps to hold accountable anyone who tries to play by their own set of rules instead.”

“Government contracts fraud is an insult to all law-abiding taxpayers,” said U.S. Attorney Vance. “These defendants’ conduct was even worse in that they tried to illegally profit from defense contracts in Iraq, where American men and women were willing to put their lives on the line for freedom.”

“These charges clearly demonstrate that we will take firm action against those who make illegal payments while engaged in wartime contracting,” said Stuart W. Bowen, Special Inspector General for Iraq Reconstruction (SIGIR). “SIGIR and its investigative partners will continue our vigorous pursuit of those whose illegal acts undermined the U.S. government’s management of the stabilization and reconstruction effort in Iraq.”

“Individuals and businesses that illegally enrich themselves at the expense of the U.S. taxpayer, especially as wartime profiteers, or those who diminish the combat readiness or effectiveness of the U.S. military, will be aggressively investigated by DCIS and our investigative partners,” said Defense Criminal Investigative Service (DCIS) Special Agent in Charge Chris D. Hendrickson. “The combined investigative effort, the Department of Justice, and the U.S. Attorney’s Office’s work demonstrate the combined federal commitment to combating fraud, waste, and abuse.”

“IRS Criminal Investigation provides financial expertise with our law enforcement partners,” said Special Agent in Charge Leslie P. DeMarco of the Internal Revenue Service Criminal Investigations (IRS-CI) Los Angeles Field Office. “Today’s unsealing of these charges demonstrates our collective efforts in tracing illicit funds internationally to enforce the laws and ensure public trust.”

Kazzaz, Newell and Hunt are also facing criminal forfeiture proceedings.

The cases were investigated by the DCIS, IRS-CI, SIGIR, the FBI, and the U.S. Army Criminal Investigations Division. The cases are being prosecuted by Trial Attorney Catherine Votaw, on detail from SIGIR to the Fraud Section of the Justice Department’s Criminal Division, and Assistant U.S. Attorney David Estes of the Northern District of Alabama.

An indictment and information contain charges, and defendants are innocent until proven guilty.

Husband & Wife Plead Guilty in $3 M Fraud Scheme

Husband and Wife Plead Guilty to Roles in $3 Million Fraud Scheme Using Art as Collateral 

U.S. Attorney’s OfficeMarch 07, 2012

Northern District of Texas(214) 659-8600

DALLAS—Eugenio D. Leo and his wife Jody L. Meyer, formerly of Allen, Texas, pleaded guilty yesterday before U.S. District Judge Ed Kinkeade to their respective roles in a $3 million fraud scheme they ran from February 2004 to November 2004, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Leo, 30, pleaded guilty to one count of wire fraud and faces five years in prison and a fine of up to $250,000 or twice the loss to the victims. Meyer, 46, pleaded guilty to one count of mail fraud and faces a five-year term of probation and a fine of up to $250,000 or twice the loss to the victims. Both Leo and Meyer, who now reside in Harwood Heights, Illinois, will remain on bond pending sentencing, which is set for June 20, 2012 before Judge Kinkeade.

According to documents filed in the case, during the time of the fraud, Leo worked as a commodities broker at Compass Financial, a commodities brokerage firm located in Richardson, Texas. He devised a mail and wire fraud scheme that involved inducing the victims, K.P. and L.P., to invest their money by making short-term loans to museums in Europe. These loans would be secured by pieces of artwork worth significantly more than the loan value. At Leo’s request, K.P. provided a power of attorney to Leo so that he could make the necessary arrangements for the short-term loan. Leo falsely reported to K.P. that K.P.’s loan was repaid plus interest.

Instead of a short-term museum loan, however, Leo actually purchased art with K.P.’s money, and then sold that art to K.P., never disclosing that he put himself in the purchase chain and made more than $800,000 from the sale. Leo, aided and abetted by Meyer, falsely represented that Leo owned K.P.’s artwork so that Leo could obtain a loan (using the art as collateral) from Art Capital Group for approximately $300,000.

Leo made material misrepresentations to facilitate the scheme to defraud his victims. He used his authority under a power of attorney from the victim to act contrary to the victim’s instructions, contrary to the victim’s best interest and for his own personal benefit. Leo and Meyer defrauded K.P. and L.P. of more than $3 million.

The case was investigated by the FBI. Assistant U.S. Attorneys Aisha Saleem, Paul Yanowitch and Dayle Elieson are prosecuting.

News Release from the FBI, Houston Division

Former Chairman and CEO of Kellogg, Brown & Root Inc. Sentenced to 30 Months in Prison for Foreign Bribery and Kickback Schemes 
U.K. Solicitor and Former Salesman Also Sentenced for Participation in Scheme to Bribe Nigerian Government Officials

U.S. Department of JusticeFebruary 23, 2012

Office of Public Affairs(202) 514-2007/TDD (202) 514-1888

WASHINGTON—Albert “Jack” Stanley, a former chairman and chief executive officer of Kellogg, Brown & Root Inc. (KBR), was sentenced today to 30 months in prison for conspiring to violate the Foreign Corrupt Practices Act (FCPA) by participating in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts and for conspiring to commit mail and wire fraud as part of a separate kickback scheme, the Justice Department’s Criminal Division today announced.

U.S. District Judge Keith P. Ellison for the Southern District of Texas also ordered Stanley to serve three years of supervised release following the prison term and to pay $10.8 million in restitution to KBR, the victim of the separate kickback scheme. Stanley, 69, pleaded guilty on Sept. 3, 2008, to a two-count criminal information charging him with one count of conspiracy to violate the FCPA and one count of conspiracy to commit mail and wire fraud.

Two of Stanley’s co-conspirators also were sentenced by Judge Ellison. Today, Jeffrey Tesler, 63, a United Kingdom citizen and licensed solicitor, was sentenced to 21 months in prison, followed by two years of supervised release. Tesler also was ordered to pay a $25,000 fine and previously was ordered to forfeit $148,964,568. Yesterday, Wojciech J. Chodan, 74, a United Kingdom citizen and former salesman at KBR’s U.K. subsidiary, was sentenced to one year of probation and ordered to pay a $20,000 fine. Chodan previously was ordered to forfeit $726,885.

Tesler and Chodan were indicted on Feb. 17, 2009, and subsequently extradited to the United States from the United Kingdom. On Dec. 6, 2011, Chodan pleaded guilty to count one of the indictment charging him with conspiring to violate the FCPA. On March 11, 2011, Tesler pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA.

All three defendants fully cooperated with the department’s investigation, which resulted in more than $1.7 billion in penalties, disgorgement and forfeitures. The defendants’ substantial assistance in the investigation and prosecution of other defendants was reflected in the sentences the court imposed.

“Today’s prison sentences for Mr. Stanley and Mr. Tesler mark another important step in our prosecution of those responsible for a massive bribery scheme involving engineering, procurement and construction contracts in Nigeria,” said Mythili Raman, Principal Deputy Assistant Attorney General for the Criminal Division. “These sentences reflect not only the defendants’ illegal acts, but also their substantial cooperation with the government. As a result of this investigation, three individuals have been convicted of FCPA-related crimes, and five companies in four countries have paid substantial penalties and undertaken significant efforts to enhance their compliance programs. This case shows the importance the department places on putting an end to foreign bribery.”

According to court documents, KBR was a member of the TSKJ joint venture (named for the first letters of the names of the companies involved), along with Technip S.A., Snamprogetti Netherlands B.V., and JGC Corporation. Between 1995 and 2004, TSKJ was awarded four EPC contracts, valued at more than $6 billion, by Nigeria Liquefied Natural Gas (NLNG) Ltd. to build the LNG facilities on Bonny Island. The government-owned Nigerian National Petroleum Corporation was the largest shareholder of NLNG, owning 49 percent of the company.

From approximately 1994 through June 2004, the joint venture companies, Stanley, Tesler, Chodan and others agreed to pay bribes to a wide range of Nigerian government officials in order to obtain and retain the EPC contracts. To pay the bribes, the joint venture hired two agents—Tesler and Marubeni Corporation, a Japanese trading company headquartered in Tokyo. The joint venture hired Tesler as a consultant to pay bribes to high-level Nigerian government officials, including top-level executive branch officials, and hired Marubeni to pay bribes to lower-level Nigerian government officials. At crucial junctures preceding the award of the EPC contracts, Stanley and other co-conspirators met with successive holders of a top-level office in the executive branch of the Nigerian government to ask the office holders to designate a representative with whom TSKJ should negotiate bribes to Nigerian government officials. TSKJ paid approximately $132 million to a Gibraltar corporation controlled by Tesler and $51 million to Marubeni during the course of the bribery scheme for use, in part, to pay bribes to Nigerian government officials.

In a related criminal case, KBR’s successor company, Kellogg Brown & Root LLC, pleaded guilty in February 2009 to FCPA-related charges for its participation in the scheme to bribe Nigerian government officials. Kellogg Brown & Root LLC was ordered to pay a $402 million fine and to retain an independent compliance monitor for a three-year period to review the design and implementation of its compliance program.

In another related criminal case, the department filed a deferred prosecution agreement and criminal information against Technip in June 2010. According to that agreement, Technip agreed to pay a $240 million criminal penalty and to retain an independent compliance monitor for two years. In July 2010, the department filed a deferred prosecution agreement and criminal information against Snamprogetti, which also agreed to pay a $240 million criminal penalty. In April 2011, the department filed a deferred prosecution agreement and criminal information against JGC, in which JGC agreed to pay a $218.8 million criminal penalty and to retain an independent compliance consultant for two years. In January 2012, the department filed a deferred prosecution agreement and criminal information against Marubeni, in which Marubeni agreed to pay a $54.6 million criminal penalty and to retain a corporate compliance consultant for two years.

The criminal cases were prosecuted by Assistant Chief William J. Stuckwisch and Deputy Chief Patrick F. Stokes of the Criminal Division’s Fraud Section, with investigative assistance from the FBI-Houston Division. The Criminal Division’s Office of International Affairs and the SEC’s Division of Enforcement provided substantial assistance. Significant assistance was provided by authorities in France, Italy, Switzerland and the United Kingdom. Investigative assistance with the prosecution of Stanley was also provided by the Internal Revenue Service’s Criminal Investigations Division in Houston.

News Release from the FBI, Kansas City Division

Owner, Managers of Sedalia Firm Indicted for Defrauding Customers by Selling Immigration Forms Available for Free from the Government

U.S. Attorney’s Office February 21, 2012

Western District of Missouri (816) 426-3122

— filed under: Fraud, Press Release

JEFFERSON CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced today that the owner and two managers of a Sedalia, Mo., business have been indicted by a federal grand jury for their roles in a conspiracy to defraud consumers who purchased immigration forms that were available at no charge from the federal government.

Thomas Joseph Strawbridge, 49, Thomas Barret Laurence, also known as Thomas Barnes, Thomas Laurente and Thomas Johnson, 30, and Elizabeth Lindsey Meredith, 24, all formerly of Sedalia, were charged in a 14-count indictment returned under seal by a federal grand jury in Jefferson City, Mo., on Thursday, Feb. 16, 2012. That indictment was unsealed and made public today upon Strawbridge’s arrest and initial court appearance.

According to the federal indictment, Strawbridge founded and owned Immigration Forms and Publications (IFP) in Sedalia. Laurence managed the day-to-day operations of IFP and Meredith assisted Laurence.
The indictment alleges that, from March 2009 to April 2011, Strawbridge, Laurence and Meredith participated in a conspiracy to defraud consumers who were seeking assistance with immigration-related matters by inducing them to purchase government immigration forms that were available from U.S. Citizenship and Immigration Services (USCIS) at no charge. They allegedly gave consumers the false impression that the company was affiliated with the federal government and that sales representatives were government agents.
IFP advertised immigration services on the Internet, the indictment says, particularly through search engines such as Google. Websites directed consumers to call a toll-free number, where they were connected to IFP sales representatives, including Laurence and Meredith. IFP sales representatives allegedly answered calls by saying “agent” followed by their first name. IFP employees, in subsequent conversations with customers, allegedly referred to a sales representative as an “immigration agent.”

Sales representatives spoke with potential customers and attempted to determine which government form best matched each caller’s immigration situation. According to the indictment, these sales representatives had no particular expertise in immigration matters and sometimes sent customers the wrong form for their situation. Other customers allegedly received none of the promised assistance from IFP in completing their immigration forms.

IFP sales representatives, including Laurence and Meredith, allegedly made materially false statements to customers, including claims that IFP handled excess call volume related to immigration matters for USCIS, that fees paid to IFP included government application and processing fees, and that forms purchased through IFP would be processed more quickly than if customers dealt directly with USCIS.

According to the indictment, IFP sales representatives explained that the company would send the forms via FedEx to the customer’s address and help the customer correctly fill out the forms. The customer would pay IFP up front by giving a money order to FedEx upon receipt of the forms. IFP sales representatives allegedly quoted prices for the various immigration forms that were the same or similar to government processing fees for the same forms. For example, the USCIS fee to process an Application to Replace Permanent Resident Card (I-90 form) was $290. IFP charged $290 to send customers an I-90 form, according to the indictment.
Many customers who sent their forms to USCIS were surprised to learn that the fees they already paid IFP did not cover government processing charges. None of the money that customers sent to IFP went toward government processing fees, the indictment says, and IFP sales representatives did not inform consumers that USCIS routinely charged processing fees, which they would be required to pay in addition to IFP charges.
In addition to the conspiracy, Strawbridge, Laurence and Meredith are charged with six counts of mail fraud and seven counts of wire fraud.

The indictment also contains a forfeiture allegation, which would require Strawbridge, Laurence and Meredith to forfeit to the government any property derived from the proceeds of the alleged violations.

Phillips cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney Anthony P. Gonzalez and Trial Attorneys Alan Phelps and Adrienne Fowler of the U.S. Department of Justice Consumer Protection Branch. It was investigated by the FBI, the U.S. Postal Inspection Service, the Missouri Secretary of State Corporate Division, the Missouri Secretary of State Securities Division and the Missouri Attorney General’s Office.

New Voice Mail to Text Service

News release from Nuance:


U.S. Cellular Announces New Voice Mail to Text Service Powered by Nuance

U.S. Cellular Subscribers Can Now Experience the Convenience of Reading Voice Mails as Text Messages and Emails, All Powered by Nuance's Dragon Voicemail-to-Text

CHICAGO and BURLINGTON, Mass. February 6, 2012 -- U.S. Cellular and Nuance Communications Inc. (NASDAQ: NUAN) together announced the availability of U.S. Cellular’s new Voice Mail to Text service, powered by Nuance’s fully-automated Dragon Voicemail-to-Text platform. U.S. Cellular’s Voice Mail to Text lets subscribers read their voice messages via text message or email on their mobile phone – any time, any place.

U.S. Cellular’s new fully-automated Voice Mail to Text service was created with today’s mobile consumer in mind – always on the go, but always in demand and connected to friends, family, customers and colleagues. Voice Mail to Text lets users discreetly check their voice mail without the tedious retrieval steps, or having to listen to – and skip – multiple unimportant messages. People can easily respond to voice mail via text or email when calling back isn’t an option. Further, Voice Mail to Text makes searching voice mails incredibly easy. If necessary, Voice Mail to Text also offers the ability to listen to the original audio.

“Our customers are busy and always on the go, and want to stay connected to their friends and family,” said Jennifer Micek, senior director of the product group for U.S. Cellular. “With our new Voice Mail to Text service, our customers can get more done quickly and get back to what’s most important to them.”

“In today’s competitive mobile market, carriers need to offer their subscribers innovative services that deliver tangible, everyday value,” said John Pollard, general manager and vice president, voice to text services, Nuance Mobile. “Dragon Voicemail-to-Text is known for quickly and conveniently making people more responsive, and simply eliminating the need to ever retrieve voice mail. And because it’s powered by Dragon – you always get the message.”

Nuance’s Dragon Voice-to-Text services portfolio features the same core speech technology at the heart of Nuance’s renowned Dragon Mobile apps and Dragon NaturallySpeaking.

U.S. Cellular’s Voice Mail to Text is currently available and free to subscribers as a 30-day trial. The service is $2.99 per month after the 30-day free trial as a subscription service, which includes unlimited transcriptions, and is available as a vertical feature on all price plans. For more information, visit the Voice Mail to Text page on uscellular.com.

For more information on Nuance’s voice-to-text offerings, visit www.nuance.com.

About U.S. Cellular
U.S. Cellular rewards its customers with unmatched benefits and industry-leading innovations designed to elevate the customer experience. The Chicago-based carrier has a strong line-up of cutting-edge devices that are all backed by its high-speed nationwide network that has the highest call quality of any national carrier. U.S. Cellular was named a J.D. Power and Associates 2011 Customer Service Champion and received PC Magazine's 2011 Readers' Choice Award. To learn more about U.S. Cellular, visit one of its retail stores or uscellular.com. To get the latest news, promos and videos, connect with U.S. Cellular on Facebook.com/uscellular, Twitter.com/uscellular and YouTube.com/uscellularcorp.

Nuance Communications, Inc. (NASDAQ: NUAN) is a leading provider of voice and language solutions for businesses and consumers around the world.  Its technologies, applications and services make the user experience more compelling by transforming the way people interact with devices and systems. Every day, millions of users and thousands of businesses experience Nuance’s proven applications.  For more information, please visit www.nuance.com.

Press release from the FBI, Buffalo Division:

Defendant Sentenced for Stealing from 136 Housing Clients

U.S. Attorney’s Office February 02, 2012

Western District of New York (716) 843-5700

— filed under: Buffalo Top Stories, Fraud, Press Release

BUFFALO, NY—U.S. Attorney William J. Hochul, Jr. announced today that Lori J. Macakanja, 35, of Dunkirk, New York, who was convicted of mail fraud and theft of government money, was sentenced to 72 months in prison and three years’ supervised release by U.S. District Court Judge Richard J. Arcara. Judge Arcara also ordered the defendant to pay $298,639.00 in restitution to the victims.

Assistant U.S. Attorney Trini E. Ross, who handled the case, stated that Macakanja, in her capacity as a housing counselor employed by HomeFront, Inc., inappropriately requested money from clients. The defendant told HomeFront clients that the money would be used toward loan modifications to prevent foreclosure on their homes. However, after receiving the funds, Macakanja used the money for her own personal use, including gambling, and failed to obtain the loan modifications for the victims. A total of 136 HomeFront clients were defrauded with losses totaling approximately $300,000. In addition, Macakanja also obtained federal grant monies from the Buffalo Urban Renewal Agency (BURA) for HomeFront clients. On two occasions, she diverted $2,000 worth of BURA money to pay her own personal mortgage.

“Many Americans are struggling to hold on to the American dream, ownership of a home,” said U.S. Attorney Hochul. “The victims turned to the defendant for help in keeping their home. Instead, the defendant abused their trust and stole their money. Unfortunately, because of the defendant’s actions, some of the victims lost their homes. Our office, along with our federal law enforcement partners, will work vigorously to protect federal funding targeted to help those who are struggling. We will also continue to prosecute those, like this defendant, who attempt to take advantage of those who are most vulnerable.”

“Lori Macakanja abused her position and violated the trust of distressed homeowners in the interest of personal gain,” said Cortez Richardson, Special Agent in Charge, U.S. Department of Housing and Urban Development, Office of Inspector General New York Region. “Her actions further jeopardized the assets of the Federal Housing Administration and unnecessarily complicated the lives and financial security of individuals already feeling the adverse impact of a volatile housing crisis. Today’s judicial action signals HUD’s Office of Inspector General’s firm commitment to working with our law enforcement partners to investigate and prosecute any individuals seeking to profit illegally from the nation’s mortgage crisis.”

“Macakanja preyed on the most vulnerable homeowners,” said Christy Romero, Deputy Special Inspector General for SIGTARP. “While an employee of a federally approved housing counselor, she illegally solicited and received payments from 136 homeowners facing foreclosure with the promise that the funds would be used to secure mortgage modifications. Little did the homeowners know, the payments were being used by Macakanja to support her gambling habit and to pay her own mortgage. SIGTARP will aggressively investigate and pursue those who exploit the federal government’s aid to homeowners under TARP and, with the help of its partners in law enforcement, ensure that they are brought to justice.”

SIGTARP investigates fraud, waste, and abuse related to HAMP and all other TARP-funded programs. HAMP encourages loan servicers and investors to modify mortgages to reduce the monthly payments of homeowners who are risk of default. There is no fee to homeowners to apply for a modification under HAMP.

The plea is the result of an investigation by the Mortgage Fraud Task Force of WNY, which includes agents and personnel from the U.S. Postal Inspection Service under the direction of Inspector in Charge Robert Bethel; the Housing and Urban Development Office of Inspector General, under the direction of Cortez Richardson, Special Agent in Charge, New York Region; SIGTARP, under the direction of Special Agent in Charge John Feiter; the United States Secret Service under the direction of Special Agent in Charge Tracy Gast; the Federal Bureau of Investigation under the direction of Special Agent in Charge Christopher M. Piehota; and the Internal Revenue Service under the direction of Special Agent in Charge Charles R. Pine. The Mortgage Fraud Task Force of WNY is led by the U.S. Attorney’s Office and also includes Veterans Affairs Office of Inspector General and the U.S. Bankruptcy Trustee.

Reward Offered

Press release from the FBI:

FBI Offers Up to $5,000 Reward for Information in Fugitive Case
Rick Hendrix and Sarah Deswert-Hendrix Wanted in Internet Fraud Investigation

FBI Portland January 31, 2012

Beth Anne Steele (503) 552-5238

— filed under: Breaking News, Portland Top Stories, Press Release

The FBI is offering a reward of up to $5,000 for information leading to the arrest and conviction of Rick Devan Hendrix, age 56, and Sarah Candace Deswert-Hendrix, age 30, who are wanted in connection with an alleged Internet fraud scheme. The FBI and U.S. Postal Inspection Service arrested both Hendrix and Deswert at their home in Portland, Oregon in 2005; however, they disappeared while on pre-trial release. Investigators believe Rick Hendrix, at least, may now be living in the Beaverton area.

Hendrix and Deswert face mail and wire fraud charges related to the alleged scheme. They are accused of taking pictures of items in stores, posting the items for sale on an Internet auction site, and collecting money from bidders. Victims in Oregon, Washington, and California suffered more than $300,000 in losses.

The FBI, in conjunction with Clear Channel Outdoor, is also placing information about this case on a new electronic billboard located SW 185th along Highway 26 in Washington County. The FBI, U.S. Postal Inspection Service, and the U.S. Marshals Service are working together to locate the fugitives.

The suspect descriptions are as follows:

Hendrix: White man Age: 56 Height: 6’2” Weight: 220 pounds Eyes: Blue Hair: Brown, graying	Deswert: White woman Age: 30 Height: 5’10” Weight: 180 pounds Eyes: Hazel Hair: Brown

Anyone with information as to the location of Hendrix or Deswert is asked to call the FBI at (503) 224-4181.

Man Indicted for $3 Million Ponzi Scheme

News release from the FBI, Kansas City:

Former Lee’s Summit Man Indicted for $3 Million Ponzi Scheme

U.S. Attorney’s Office February 01, 2012

Western District of Missouri (816) 426-3122

— filed under: Breaking News, Press Release, White-Collar Crime

KANSAS CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced today that a former Lee’s Summit, Mo., man has been indicted by a federal grand jury for defrauding 39 investors in a $3 million Ponzi scheme.

Ronald W. Shepard, 72, formerly of Lee’s Summit, was charged in a 15-count indictment returned by a federal grand jury in Kansas City, Mo., on Tuesday, Jan. 31, 2012.

According to the indictment, Shepard’s company, Safety Solutions USA, LLC, in Lee’s Summit, developed and marketed a trailer hitch called Tow-Safe. A patent request for the trailer hitch safety device was filed, but rejected by the U.S. Patent Office. Shepard also operated a company called The Real Estate in Lee’s Summit.

Shepard received approximately $3,188,765 from approximately 39 investors from January 2006 through December 2009. Shepard returned approximately $1,235,853 to the investors, and lost or spent the rest, resulting in a minimum loss to investors of $1,825,883. Shephard is charged with 13 counts of mail fraud and two counts of money laundering related to the scheme.

Shepard, who prepared tax returns for individuals, discussed their investments and pitched his own companies as investments. Shepard allegedly claimed that investors would make anywhere from a 15 percent to 100 percent annual return on their investment. He allegedly failed to inform potential investors that the state had issued a cease and desist order that barred him from offering or selling any unregistered security.

Shepard allegedly told investors that their money was used to purchase property in Kansas City, the Lake of the Ozarks and Hawaii. Except for purchasing his own personal residence at the Lake of the Ozarks, the indictment says, Shepard did not purchase any real estate. Instead, the indictment alleges that Shepard used investor funds for personal living expenses, to pay other investors, to pay relatives, in disbursements of cash to himself and in real estate ventures.

According to the indictment, many investors liquidated their Individual Retirement accounts or 401(k) accounts and transferred the proceeds to Shepard for investment. Shepard allegedly told investors that if they liquidated retirement funds, thereby incurring penalties, he would refund their initial investment, plus the amount of penalty, plus interest.

The indictment also contains a forfeiture allegation, which would require Shepard to forfeit to the government any property derived from the proceeds of the alleged offenses, including $1,825,883.

Phillips cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

Bid Rigging at Foreclosure Auctions

News release from the FBI, Sacramento Division:

California Investor Pleads Guilty to Bid Rigging and Fraud at Public Real Estate Foreclosure Auctions
Ninth Guilty Plea in the Investigation to Date

U.S. Attorney’s Office January 27, 2012

Eastern District of California (916) 554-2700

— filed under: Fraud, Press Release, Sacramento Top Stories

SACRAMENTO, CA—A real estate investor pleaded guilty today in U.S. District Court in Sacramento to conspiring to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, Calif., Sharis A. Pozen, Acting Assistant Attorney General of the Department of Justice’s Antitrust Division, and Benjamin B. Wagner, U.S. Attorney for the Eastern District of California, announced.

Kenneth A. Swanger pleaded guilty to conspiring with a group of real estate speculators who agreed not to bid against each other at certain public real estate foreclosure auctions in San Joaquin County. The primary purpose of the conspiracy was to suppress and restrain competition and to obtain selected real estate offered at San Joaquin County public foreclosure auctions at noncompetitive prices, the department said in court papers.

According to the court documents, after the conspirators’ designated bidder bought a property at a public auction, they would hold a second, private auction, at which each participating conspirator would bid the amount above the public auction price he or she was willing to pay. The conspirator who bid the highest amount at the end of the private auction won the property. The difference between the price at the public auction and that at the second auction was the group’s illicit profit. The illicit profit was divided among the conspirators in payoffs. According to his plea agreement, Swanger participated in the scheme beginning in or about June 2009 until in or about October 2009.

To date, nine individuals, including Swanger, have pleaded guilty in U.S. District Court for the Eastern District of California in connection with the investigation. They are: Anthony B. Ghio; John R. Vanzetti; Theodore B. Hutz; Richard W. Northcutt; Yama Marifat; Gregory L. Jackson; Walter Daniel Olmstead; and Robert Rose. In addition, four other investors, Wiley C. Chandler, Andrew B. Katakis, Donald M. Parker and Anthony B. Joachim, and one auctioneer, W. Theodore Longley, were indicted by a federal grand jury in Sacramento on Dec. 7, 2011.

“This type of illegal scheme undermines the transparency and integrity of the competitive market for residential real estate. Today’s guilty plea sends a clear message that the Department of Justice does not tolerate anticompetitive conduct that harms consumers,” said Acting Assistant Attorney General Pozen. “The Antitrust Division will continue to work with its law enforcement partners to prosecute the perpetrators of anticompetitive schemes in public real estate foreclosure auctions in the Sacramento area and into northern California.”

“The Department of Justice is bringing greater scrutiny to auctions of foreclosed properties as part of our effort to root out fraud in the real estate industry in all its forms,” said U.S. Attorney Wagner. “The days when a few players could rig these auctions for their own benefit are ending.”

Swanger pleaded guilty to bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either of those amounts is greater than the statutory maximum fine. Swanger also pleaded guilty to conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine.

These charges arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate auctions in San Joaquin County. The investigation is being conducted by the Antitrust Division’s San Francisco Office, the U.S. Attorney’s Office for the Eastern District of California, the FBI’s Sacramento Division and the San Joaquin County District Attorney’s Office. Trial attorneys Anna Pletcher and Tai Milder from the Antitrust Division’s San Francisco Office and Assistant U.S. Attorney Russell L. Carlberg are prosecuting the case.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. One component of the task force is the national Mortgage Fraud Working Group, co-chaired by U.S. Attorney Wagner. For more information on the task force, visit www.StopFraud.gov.

Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm, contact the U.S. Attorney’s Office for the Eastern District of California at 916-554-2700 or contact the FBI’s Sacramento Division at 916-481-9110.