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Sunday, May 30, 2010

Vice President of A&B Check Cashing in Maryland Sentenced to Three Years in Prison in $12.4 Million Check Kiting Scheme

U.S. District Judge Benson E. Legg, Jr. sentenced Brian I. Satisky, age 56, of Pikesville, Maryland, today to three years in prison, followed by four years of supervised release, for bank fraud in connection with a check kiting scheme in which his check cashing service business withdrew money based upon inflated balances in its business accounts. Judge Legg also ordered Satisky to pay restitution totaling $12.4 million to the victim banks. The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.
“Mr. Satisky did not use a weapon, but his specialty was stealing money from banks,” said U.S. Attorney Rod J. Rosenstein. “This was essentially a bank robbery scheme carried out by con artists who caused one of the largest fraud losses ever prosecuted in Maryland, resulting in actual losses of more than $12 million to local banks.”
Brian Satisky became the President of the Maryland Association of Financial Service Centers, Inc., a trade group. He served on the board of directors of Financial Service Centers of America (FiSCA) which is a national trade group representing more than 5,000 money service businesses. In June 2003, Satisky testified before Congress on behalf of FiSCA. According to the plea agreement, the check kite fraud scheme described below began in June 2003.
According to Satisky’s plea agreement, Brian Satisky and his brother Alec owned and operated Colleen, Inc., which their parents began as a family shoe store in the Hollingswood Shopping Center. The shoe store became their secondary business and their primary business became A&B Check Cashing, a money services company operating from 21 locations in the Baltimore metropolitan area. For a fee, A&B Check Cashing: cashed checks; sold money orders, transit passes, prepaid phone and calling card products and lottery tickets; transferred money; and provided bill payer services for Verizon and BGE. Many of its customers were “unbanked” individuals who did not have access to traditional forms of banking, credit, or traditional loans.
In 2001, the business was sued in a class action law suit alleging that one of its products constituted a payday loan in violation of Maryland law. Brian Satisky and his brother settled the law suit in 2003, agreeing that they would not collect some $1.6 million in customers’ checks which had been received to repay the alleged payday loans. This caused a significant and immediate shortfall for the business.
In an effort to stay ahead of the business’s debt, the brothers began to “kite” checks between two of the business’s bank accounts. Each day, checks were drawn on two of the business’s bank accounts when the brothers knew A&B Check Cashing had insufficient funds to cover the checks. The checks, when cross-deposited into the two bank accounts, artificially inflated the balances of the accounts and enabled the brothers to write checks to the operating account and to third party vendors and creditors in excess of the amounts of cash their business actually had.
The scheme required that either Alec or Brian write fraudulently inflated checks every day to cross deposit into the business’s bank accounts. Whomever was to write the checks that day calculated the amount needed for the kited checks by examining the day’s legitimate deposits, the online bank balance and outstanding checks for the account at Carrollton Bank. A telephone call would then be made to the Baltimore County Savings Bank (BCSB) to obtain a telephonic message of the bank balance and outstanding checks there. Eighty percent of the checks were written by Alec, with Brian writing checks on days when Alec had his regularly scheduled day off or was on vacation. While Alec was on vacation from October 18 - 26, 2005, Brian wrote in excess of $10 million of kited checks daily to keep the kite going. The kited amounts gradually increased as A&B Check Cashing used kited funds to cover business expenses, including paying their own salaries and the costs of opening new locations.
The kite continued until it collapsed in June 2006. At that time, Alec Satisky committed suicide. A&B Check Cashing is no longer in business. BCSB lost $10.6 million and Carrollton Bank lost $1.8 million.
United States Attorney Rod J. Rosenstein thanked Assistant United States Attorney Joyce K. McDonald, who prosecuted the case.

Friday, May 28, 2010

Migues pleads guilty to embezzling $2.4 million in Mississippi

Margaret Migues, a former branch operations manager at Hancock Bank in Ocean Springs, pleaded guilty in federal court Wednesday to embezzling $2.4 million from her former customers. Federal prosecutor Ruth Morgan said in court Wednesday that two other bank employees are under investigation for the missing money, but she did not name the individuals.
Migues will be sentenced at 9 a.m. Aug. 24 in U.S. District Court in Gulfport. She faces up to 30 years in prison and $1 million fine.
District Judge Louis Guirola Jr. said restitution could be part of Migues' sentencing.
Migues reportedly stole the money during a period from 1980 through July 2009 from the accounts of about 20 different elderly customers.
Originally, bank officials said she embezzled only $1 million, and called the FBI to take over the case in July.
Restitution was made to the customer accounts in July, bank officials have said.
Migues and Doris Willie Burney were fired from the bank in July after an internal investigation revealed the women were altering accounts, bank officials have said.
Burney has not been arrested, according to court records.
FBI agents discovered the amount was more than the initial report, and Migues was indicted in March.
Morgan said in court in March that bank auditors and employees were willing to testify against Migues.
At Migues' initial court appearance in March, a federal judge set an unsecured bail at $25,000. Guirola said Wednesday that the bail stands until Migues returns to court for sentencing.

Thursday, May 27, 2010

Former Missouri Mortgage Brokers Sentenced for $1.2 Million Mortgage Fraud Scheme

Beth Phillips, United States Attorney for the Western District of Missouri, announced today that three former mortgage brokers were among five co-defendants sentenced in federal court for their roles in a $1.2 million mortgage fraud scheme.

Charles M. Davis, 35, of Rogersville, Mo., was sentenced by U.S. District Judge Gary A. Fenner on Monday, May 17, 2010, to four years and three months in federal prison without parole. The court also ordered Davis to pay $1,271,590 in restitution. Scott Allen Kassebaum, 42, of Ozark, Mo., was sentenced to two years in federal prison without parole and ordered to pay $209,100 in restitution; his wife, Cheryl Joan Kassebaum, 43, was sentenced to 15 months in federal prison without parole and ordered to pay $497,200 in restitution. Steven Ray Spencer, 49, of Carl Junction, Mo., was sentenced to two years and six months in federal prison without parole and ordered to pay $436,556 in restitution. Shanda Lynn Moore, 45, of Springfield, Mo., was sentenced to three years of probation, including six months of home confinement and a $3,000 fine and restitution of $262,755.
Davis, a former mortgage broker who was the owner of Master Marketing Consultants, pleaded guilty to his participation in two separate conspiracies to obtain mortgage loans for the purchase of homes based on false loan applications. Davis knew that the loan applications he prepared and submitted were false because the loan applications included overstatements of income and understatements or omissions of liabilities, falsely represented that the purchaser/borrower intended to reside in the home to be purchased, and, in some cases, stated a false place of employment for the purchaser/borrower.
A significant portion of the loan proceeds was returned to the purchasers of the homes (who also were the borrowers) without the lender’s knowledge. Davis facilitated these kickbacks to the purchasers by routing the proceeds through Master Marketing Consultants and, in some cases, through Metro Consulting Group, which was owned by the Kassebaums.
The mortgage fraud schemes involved a total of 20 houses with home mortgage loans ranging from approximately $200,000 to $500,000. The amount of loan proceeds returned to the borrowers ranged from less than $30,000 to more than $100,000. Some of the home purchasers subsequently defaulted on the loans, and the homes have been foreclosed or are in the process of being foreclosed.
In addition to the two conspiracy charges, Davis pleaded guilty to two counts of wire fraud and two counts of money laundering.
Scott and Cheryl Kassebaum, former mortgage brokers and co-owners of Metro Consulting Group, pleaded guilty to their roles in one of the mortgage fraud conspiracies with Davis that involved seven houses with home mortgage loans ranging from approximately $200,000 to more than $400,000. The Kassebaums prepared and submitted fraudulent loan applications to lenders and facilitated the return of a significant portion of the loan proceeds to themselves and other purchasers without the lender’s knowledge and outside the closing of the home purchase.
Cheryl Kassebaum also pleaded guilty to one count of wire fraud and one count of money laundering. Scott Kassebaum also pleaded guilty to one count of wire fraud and one count of money laundering.
Spencer pleaded guilty to his role in both of the mortgage fraud conspiracies. In each conspiracy, he was a purchaser and solicited other purchasers for the schemes. Spencer also pleaded guilty to one count of wire fraud and one count of money laundering.
Moore pleaded guilty to her role in one of the mortgage fraud conspiracies with Davis and Spencer. Moore admitted that she provided false employment verification for Spencer and another individual.
This case was prosecuted by Assistant U.S. Attorney Douglas C. Bunch. It was investigated by the Federal Bureau of Investigation and IRS-Criminal Investigation.

Wednesday, May 26, 2010

Vermont bank teller charged with embezzling $13k

A Vermont bank teller has pleaded not guilty to charges she embezzled $13,049 from the Newport branch of the Community National Bank.

Thirty-nine-year-old Tina Bowen Brasseur, of Newport Center, entered the pleas Tuesday in Vermont District Court in Newport to four felony embezzlement counts.
The Caledonian Record says bank officials told police several large dollar amounts were recordered as debits on the Canadian exchange ledger that had been done by Brasseur.
Newport police say a series of credits and debits were not recorded, meaning the exchange money was not being deposited with the bank but was going in Brasseur's pocket.
Police say they spoke with Brasseur last year and she denied taking the money.

Tuesday, May 25, 2010

Missing Soledad, California man named 'person of interest' in credit union embezzlement

Soledad police said a 30-year-old musician reported missing by his family last week is being sought as a “person of interest” in an embezzlement investigation.Lt. Jaime Fernandez said this morning that officers are seeking Chris Alcaraz to interview him about“quite a bit of money” that was stolen from the Unified Correctional Federal Credit Union in Soledad.Alcaraz was last seen at 5 a.m. May 12 leaving forwork in his white 1996 Ford Crown Victoria with a California license plate of #6EFG029. He is described as 5-feet-7 inches tall and 200 pounds. Alcaraz was reported missing on Friday.Cindy Enriquez, his cousin, said Sunday that Alcaraz had not taken any personal belongings with himwhen he left.A Facebook page called ‘Missing Chris Alcaraz,’ was set up by the family in hopes of spreading the message of their missing loved one.
Fernandez said they are not calling Alcaraz a suspect in the embezzlement case, which was opened at least two days before his disappearance.To report information about Chris Alcaraz, 30, of Soledad, contact 911 or the Soledad Police Department at 831-682-1701.

Monday, May 24, 2010

Former North Carolina Banker Charged In Fraudulent Invoice Scheme That Bilked Wachovia Out Of $11.2 Million Over 9 Years

Terry Scott Welch, 47, of Mooresville, North Carolina, was charged with misappropriating $11.2 million from Wachovia Bank where he had been employed as a vice president in charge of overseeing vendor payments. According to prosecutors, Welch conspired with a series of vendors to submit false invoices for goods and services the bank never received and received kickbacks in exchange. Specifically, Welch was arrainged on charges of mail fraud and tax evasion. Two other co-conspirators, John Cousar Jr., 47, of Albemarle and Delmar Dove, 59, of Charlotte were also charged with mail fraud and tax evasion. Other vendors provided goods and services to Welch, including renovations to his home and his relatives' homes, purchased golf carts, televisions, jet skis and gas grills, among other items. Authorities allege that Welch's scheme spanned 9 years.

Sunday, May 23, 2010

Racine, Wisconsin man charged with withdrawing from wrong account, going back for $800 more

A Racine man withdrew $70 from somebody else's account, one number off from his, and returned twice for more money, police said.

He now faces up to 19 years in prison.
Jeff Solis, 27, 206 15th St., was charged with two counts of personal identity theft for financial gain and two counts of fraud against financial institution, according to a criminal complaint. He was given a $3,000 signature bond Tuesday.
The victim reported to Mount Pleasant police on Jan. 8 that unbeknownst to him, a total of $870 in three separate cash withdrawals had been made from his primary savings account at the Educators Credit Union, 1400 N. Newman Road, on Dec. 31.
His account transactions reportedly showed an initial $70 withdrawal at 10:23 a.m., followed by another withdrawal of $500 within minutes and an additional $300 withdrawal almost 20 minutes later.
The initial withdrawal was due to a transposed number, the complaint said. An ECU security officer told police she suspected Solis realized the funds were withdrawn from the wrong account before he returned to make additional withdrawals.
Investigators reportedly identified Solis as the one who made the transactions based on the suspect's photo and driver's license provided by the credit union.
Solis later returned to ECU to make a transaction on his account but left after he was told his account had been frozen until he talked with a security officer, according to the complaint.
In general, anyone making a withdrawal is required to show a valid form of identification, usually a driver's license, said Jim Henderson, ECU senior vice president. Sometimes, he said, tellers may recognize the members and will go ahead and make the transactions without requiring IDs.
If members have security concerns, Henderson noted they can put passwords on their accounts as an additional security check before authorizing withdrawals.
"We take great security lengths to make sure our members' dollars are protected," he said, adding he had not heard of such an incident occurring before.
ECU officials declined to provide additional details regarding the allegations.
If convicted of the four felony counts, Solis faces up to 19 years imprisonment and/or fines up to $40,000

Thursday, May 20, 2010

Deal gives missing money back to Bull's Eye credit union in Wisconsin Rapids

MADISON -- Bull's Eye Credit Union will get back nearly $85,000 of the $540,000 authorities say was embezzled by the former president of Rapids Municipal Credit Union.

The award is part of an agreement filed in federal court among the deceased president's former spouse, Bull's Eye and the U.S. government.
Bull's Eye, which acquired the credit union in December 2008 after authorities discovered what they believed to be David K. Henke's embezzlement, had sought an $84,686 Primevest investment account that was held by Henke's former spouse, Laurie, until the government seized it last year. Laurie Henke filed for divorce in January 2009.
Henke was indicted by a federal grand jury with bank fraud and embezzlement. In November, Henke was scheduled for a plea hearing in U.S. District Court in Madison but was found dead of a possible suicide after he failed to make the court appearance.
The government seized the investment account, claiming it was subject to forfeiture as it was directly traceable to Henke's fraud. Laurie Henke also filed claim to it, stating in court documents that she was awarded the account in her divorce from Henke and had rights to it as an innocent spouse.
Bull's Eye claimed that as a successor of Rapids Municipal Credit Union, it was entitled to the return of the money because it not only lost $540,000 to embezzlement but spent $166,000 to investigate Henke's banking activities.
Although the recovery suit had been set for trial in February, the proceeding was postponed and the parties on Monday reached an agreement, which remains pending before District Judge William Conley.
In the agreement, Laurie Henke gave up her claim to the account in exchange for the government agreeing not to seek her 950 shares of Coloma Meats Inc. or any other investment, retirement or bank account, held in either Henke's name, or their heirs or assignees.
U.S. Attorney Elizabeth Altman said Wednesday that although Laurie Henke had nothing to do with the fraud allegations against her ex-husband, she isn't entitled to keep stolen money. In agreeing not to seek any other assets of Henke's, Altman said, "we seized what we thought we legally could at the time of the indictment
Bull's Eye has already received $497,246 from its insurer, according to a FBI agent's affidavit filed with the court.

The affidavit also outlined how Henke was believed to have taken the credit union's money:
Before Henke was dismissed as Rapids Municipal Credit Union president, state banking auditors concluded the credit union had "at the very least some serious record-keeping problems." Bull's Eye acquired the credit union and hired private auditors, who initially determined that $323,000 had been embezzled.
The FBI and Wood County Sheriff's Department Investigator-Sgt. Dean F. Berres began investigating Henke in February 2009.
Henke told them he embezzled the money by writing some Rapids Municipal Credit Union checks to his accounts at Wood Trust Bank and other banks, and also took credit union funds and invested them.
David Stark, Bull's Eye's president, told the FBI that Henke also embezzled by adding credit union funds to 22 loan balances that he converted to his own use.
Stark said Wednesday that he hopes the judge will approve the pending agreement, as it and the insurance settlement have "made all member-victims whole."

Wednesday, May 19, 2010

Nebraska Embezzlement charges dropped

A Nebraska man won't go to trial for embezzling money from the bank he worked at.

U.S. Bank dropped the case against 28-year-old Jason Hill. Hill faced felony charges for transferring more $13,600 from customer accounts into his own between June of 2009 to this January. The dropped charges come after Hill repaid all the money.

Monday, May 17, 2010

Banks may be tapped for Ponzi victims

With $3.5 billion in losses, Tom Petters' Minnetonka-based Ponzi scheme was one of the largest the U.S. has seen. But it wasn't unique.

Dozens of other smaller schemes have deflated in recent years, and some attorneys are looking at new ways to get money for victims. Their target: the banks that handled the big inflows and outflows of cash.
Steven Berk, a former federal prosecutor and attorney with the U.S. Securities and Exchange Commission, has four civil cases pending against banks where Ponzi schemers had their accounts. He argues the banks aided the scams that bilked people out of millions of dollars. They knew — or should have known — what was really going on.
"It's not easy to steal that amount of money," he said. "You can't do it alone."
Berk is seeking judgments against Bank of America in three of the cases and JP Morgan Chase in the fourth. Those cases are still moving through the courts and haven't been resolved.
The banks that did business with Petters Co. Inc. aren't facing similar lawsuits, and they haven't been charged with a crime related to the case. At Petters' trial in St. Paul last fall, the banks weren't described as knowing what was going on with the billions flowing through various accounts controlled by Petters' businesses or by him personally.
But the flows of cash were massive, and for victims, getting some money back remains a priority. Petters was convicted and was sentenced to 50 years in prison. He is
appealing both the sentence and conviction.
Victims are waiting to see a final proposed schedule for restitution in the case. They also may receive money from a related bankruptcy case.
At Petters' criminal trial, prosecutors showed that $35.3 billion flowed through a Petters Co. Inc. account at Marshall & Ilsley Bank from 2001 to 2008. Other Petters shell companies that played key roles in the scheme flowed $12 billion each through Anchor Bank in Minnesota and First Regional Bank in California between 2002 and 2008.
The totals for each bank include — at least in part — the same funds that moved through the other banks as the cash was moved around to make Petters Co. Inc. look like a legitimate business.
An MI spokeswoman said that in 2009, the Wisconsin-based bank was a party to civil lawsuits in Texas and Florida, apparently with claims similar to the ones Berk is pursuing. Both cases were dismissed. The bank didn't comment on specific questions about the Petters case.
Anchor Bank didn't return a call seeking comment. First Regional Bank was closed by regulators on Jan. 29, and the Federal Deposit Insurance Corp. was named as its receiver.
The cases Berk is involved with aren't all apples-to-apples comparisons to what was going on in the Petters case. While Petters convinced investors that his companies were dealing in large quantities of consumer electronics, some of the cases Berk is working on describe deeper bank involvement in the day-to-day operations of the suspect businesses.
One of Berk's cases stems from a $370 million Ponzi scheme that Nicholas Cosmo is accused of running in Long Island, N.Y., until it collapsed in early 2009. Cosmo, who is awaiting trial, allegedly told investors he provided short-term loans for construction projects. While he would loan $1 million to a developer in an actual deal, he'd then collect $60 million from investors, giving them all the same investment pitch, according to court documents.
He used the excess money to pay high returns to early investors and reward the brokers who helped him bring in new money.
A federal civil suit in the case targets Cosmo's bank, the Bank of America. The bank assigned one or more of its representatives to work "directly out of Cosmo's office," the civil suit alleges. The suit also claims that Bank of America had "actual knowledge" that Cosmo was commingling investor money, diverting investor money to his own accounts and "not engaging in any legitimate business."
Proving such cases can be difficult, as banks argue they were duped as well. It also can be a challenge to portray investors as victims, experts say.
"Part of the problem with these cases is that victims don't look all that sympathetic, because they're trying to get these high returns," Berk said. "My response is it was part of the culture."
The chance of success for such lawsuits, in general, probably has as much to do with the broader economic climate as it does with any change in how such a claim against a bank would be viewed by a judge or jury, said Ryan Murphy, an attorney with Fredrikson & Byron in Minneapolis.
For example, he said, in good economic times, a jury might decide that a firm is doing well and should have to pay damages. In tough times, they're more familiar with hard-luck stories and may not be so sympathetic.
Berk acknowledges that the types of cases he is pursuing traditionally haven't enjoyed much success, and the banks have been able to avoid liability. "But given the near collapse of the banking system, I think the courts will be more aggressive," he said.
In legal filings related to the Petters case, there have been accusations that some investors must have known how Petters Co. Inc. was able to pay interest rates of 20 percent or better on some if its promissory notes.
And in a proposed restitution order for victims that came out a few weeks ago, it became clear some well-known investors didn't appear on the list because it was determined they had actually made money on the deals. Those gains are expected to be the target of separate "clawback" actions by the court-appointed receiver in the Petters case.
Those clawbacks are seen as one of the best bets to get back significant funds for victims. Some Petters investors have said they're expecting to get back 20 cents to 30 cents on the dollar, at best.
John Welbes can be reached at 651-228-2175.

Sunday, May 16, 2010

South Dakota Woman to Repay $166,000 for Bank Embezzlement

A former bank teller has been ordered to serve 33 months in prison and repay $166,834 for money stolen from American Bank and Trust in Miller.

Susan Mareska pleaded guilty in November to a federal bank embezzlement charge as part of a plea agreement in which prosecutors dismissed other charges.
According to court documents, Mareska developed a gambling habit and created false bank transactions to embezzle money over a seven year period.

Saturday, May 15, 2010

Embezzling from Arizona credit union nets 4-year term

The former manager of a Gila County credit
union has been sentenced to over four years
in federal prison for embezzling money that
led to the collapse of the institution.
Marlene Aguilera Pena, 46, also was ordered
by U.S. District Judge David G. Campbell in
Phoenix last week to pay restitution of nearly $
1.2 million and to serve five years of
supervised release after completing her
She previously entered guilty pleas to three
counts of embezzlement.
Prosecutors said the Globe woman, as head
of the Marian Miami Federal Credit Union in
Miami, admitted taking more than $860,000
to benefit herself and family members by
creating roughly 141 fictitious loan
Her actions caused the 2006 closing of the
institution by the National Credit Union
Administration. Depositor losses were
covered by an insurance fund run by the

Friday, May 14, 2010


Eleven individuals have been charged in a multi-count indictment for their alleged role in an automobile loan fraud scheme that resulted in millions of dollar losses to lenders, United States Attorney José Angel Moreno announced today. Richard Wesley Lansdale Jr., 47, of Spring, Texas; Dominic Martinez Dominguez, 36, Alejandro Antonio Barragan, 38, Edgar R. Barragan, 34, Patrick James Batiste, 45, Darick Wayne Coleman, 40, Charles Leonard Turk, 46, and James Eugene Pashia, 51, all of Houston; Paul DeWayne Hamman, 62, of Cleveland, Texas, Kenneth Lee Washington, 33, of Tomball, Texas, and Jason Wade Flanagan, 36, of Cypress, Texas, are charged with conspiring to devise a scheme to defraud federally insured lenders of $7.1 million in auto loan proceeds in a 29-count indictment returned by a Houston grand jury on May 11, 2010.
As of noon today, five of the eleven defendants have been arrested and are expected to make their initial appearance before a U.S. Magistrate Judge later today. Efforts continued to execute the warrants which remain outstanding for the arrest of the remaining six defendants.
According to allegations in the indictment, Lansdale and Dominguez were the president and finance manager, respectively, of two local automobile dealerships - Northwest Suzuki Inc. and Northwest Pre-Owned Inc., while Turk, Batiste, Coleman, Hamman and Washington were all employed as salesmen at the same dealerships. Alejandro Barragan owned and operated “AABBS,” with his brother Edgar R. Barragan. AABBS offices were located in Houston and Pasadena, Texas. Pashia was an independent contractor/agent of Farmers Insurance Group and owned and operated Pashia Insurance Agency located in Houston, while Flanagan owned and operated Direct Insurance Agency in Cypress, Texas.
From May 1, 2005, through May 28, 2009, the defendants allegedly conspired with one another to commit loan application fraud, bank fraud, wire fraud, mail fraud and aggravated identity theft by submitting approximately 507 loan applications to purchase automobiles for customers who were uncreditworthy and who could not otherwise qualify to buy the vehicles. Lansdale and Dominguez allegedly recruited Alejandro and Edgar Barragan and others to provide false employment and income information about customers who did not work at those companies and did not earn the amount of income listed in the loan applications.
The dealership salesmen allegedly coached customers to tell prospective lenders the false names of the companies and the false income amounts when financial institutions would call to verify this information. According to the indictment, the defendants electronically submitted the applications containing the materially false information to approximately 19 different financial institutions located throughout the United States. The loan applications, according to the indictment, contained false employment and income information, fraudulently inflated the value of automobiles and overstated the condition of the automobiles. The financial institutions unwittingly funded approximately $7,190,969.68 in loans to the dealerships. Of these loans approximately 347 defaulted, resulting in approximately $4,112,972.51 in actual cash losses to the financial institutions.
The indictment alleges Pashia and Flanagan, also recruited by Lansdale and Dominguez, permitted their respective insurance companies to be falsely listed as the place of employment for customers and falsely verified employment of the customer when the financial institutions would call. Pashia and Flanagan also wrote insurance policies on the loan applications that were submitted to the financial institutions for funding.
A conviction for any one of the loan fraud or bank fraud, wire fraud or mail fraud counts carries a maximum sentence of 30 years of imprisonment, without parole, and substantial fines. The conspiracy charge carries a maximum penalty of five years imprisonment, without parole, and a $250,000 fine, upon conviction. The indictment also seeks to forfeit from each defendant their interest in undisclosed assets totaling $7.1 million constituting the proceeds of the allegedly fraudulent scheme.
After receiving complaints of fraud from lenders, the United States Secret Service, Houston Area Fraud Task Force and the Jersey Village Police Department investigated the case. The case is being prosecuted by Assistant United States Attorney Quincy L. Ollison.
This indictment is part of 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.

Thursday, May 13, 2010

Alexandria, Minnesota Man Pleads Guilty to $800,000 Mortgage Fraud Scheme

A 61-year-old Alexandria man pleaded guilty today in federal court in Minneapolis to charges connected to a scheme to defraud mortgage lenders and others out of more than $800,000. Appearing before United States District Court Judge Joan N. Ericksen, Dale Charles Dodge, Jr., pleaded guilty to one count of wire fraud and one count of engaging in a monetary transaction with property derived from specified unlawful activity, commonly referred to as money laundering. Dodge was indicted on September 15, 2009. In his plea agreement, Dodge admitted that from 2002 through 2005, he operated a title closing company under the names Premier Title & Abstract, Inc., and Verity Title & Abstract. As part of that operation, he maintained an escrow account, into which mortgage lenders regularly deposited loan proceeds for distribution at transaction closings pursuant to the terms of the real estate agreements. He also contracted the services of a title insurer, who underwrote most of the real estate transactions closed through his company. Title insurers, often called underwriters, are liable to lenders, borrowers, and others if escrow and other transaction funds are improperly disbursed.
The plea agreement goes on to state that between 2002 and 2005, Dodge admittedly executed a scheme to defraud mortgage lenders and others out of large sums of money by diverting loan proceeds from the escrow account at his title company. The money was used for his personal benefit as well as the benefit of his company and others involved in the scheme. Specifically, Dodge fraudulently removed the funds or caused the funds to be removed from the escrow account to pay his salary and the salaries of company employees in addition to other nonescrow business expenses. Frequently, those expenses were paid through wire transfers from the escrow account to other accounts under Dodge’s control. Furthermore, Dodge admitted concealing these actions from his title insurer, mortgage lenders, and property sellers and purchasers.
Dodge’s fraud scheme caused losses of more than $800,000. Approximately $844.561.60 is owed to one specific mortgage lender, who mistakenly deposited money into Dodge’s escrow account. An additional amount is owed to First American Title Insurance Company, Dodge’s title insurer, which was required under law to pay certain outstanding escrow obligations for which Dodge was unable to pay.
For his crimes, Dodge faces a potential maximum penalty of 20 years in prison for wire fraud and ten years for money laundering. Judge Ericksen will determine his sentence at a future hearing, yet to be scheduled.
This case is the result of an investigation by the Internal Revenue Service-Criminal Investigation Division, the U.S. Postal Inspection Service and the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Tracy L. Perzel.

Wednesday, May 12, 2010

Phoenix Loan Officer Sentenced to Prison for Role in Mortgage Fraud Scheme

April J. Lucero, 46, of Phoenix, Ariz. was sentenced on May 10, 2010 to two years in prison for her conviction in August 2009 for her involvement in a mortgage fraud scheme in Phoenix, Ariz. Lucero pleaded guilty to one count of Conspiracy to Commit Mail, Wire and Bank Fraud, a felony, related to her participation in a two year conspiracy involving the purchase of 37 properties using fraudulent loan documents. Seven other co-conspirators were also charged and have pleaded guilty for their involvement in the conspiracy.

“Lucero worked the system by conspiring with home loan straw buyers who had no intention of ever taking up residence,” said Dennis K. Burke. “This type of fraud scheme undermined the Valley housing market leading up to its collapse.”
The case against Lucero was based on an investigation by the FBI, which indicated that from 2005 through March 2007 she conspired to commit mortgage fraud in Phoenix. Lucero fraudulently submitted mortgage loan applications, on behalf of straw buyers, under false pretenses, obtaining and disbursing the proceeds of fraudulently obtained loans, including directing portions of the proceeds in the amount of $735,000 to a bank account in Lucero’s control. Lucero used her skill as a loan officer to prepare the mortgage loan applications for a borrower misrepresenting salary, assets and liabilities. Lucero used the proceeds from the fraud for personal expenses. Lucero received a lesser sentence due to her early guilty plea and cooperation. The entire conspiracy resulted in a loss to lending institutions of approximately $9.5 million.
The investigation in this case was conducted by the FBI. The prosecution is being handled by Kevin M. Rapp and Charles W. Galbraith Assistant U.S. Attorneys, District of Arizona, Phoenix.

Ex-escrow firm chief in Huntington Beach,California embezzled $3.9 million

The ex-president of a Huntington Beach escrow company has agreed to plead guilty to embezzling $3.9 million from 23 California cities — including 5 in Orange County. Among the cities that lost money: Seal Beach, San Juan Capistrano, Fullerton, Buena Park and Westminster.
Belinda Exon, 55, who now lives in Phoenix, Arizona, admitted that she embezzled the money held in escrow by her onetime company, Rehab Financial Services, Inc., according to the U.S. Attorney’s office.
Rehab Financial, no longer in business, was an escrow and loan servicing agent that administered grant money and loans to California cities. The funds came from the federal Department of Housing and Urban Development for programs to fix health and safety hazards in low-income housing, and to pay for upgrades to meet building codes.
Exon used the money held in escrow to buy properties and land in Arizona, as well as finance two companies she owned, prosecutors say.
She agreed to plead guilty to one count of embezzling money from organizations that receive federal funds, a felony carrying a maximum sentence of 10 years in prison.
Under the plea agreement, she would receive a maximum prison term of just under 4 years, and be required to forfeit the properties she bought with the embezzled money and make full restitution to the cities.
She is scheduled to make her initial appearance in federal court on June 7.
What O.C. cities lost:
Seal Beach – $ 481,432

Westminster – $ 223,392

Buena Park – $162,563

Fullerton – $66,453

San Juan Capistrano – $2,055

What other cities lost:
San Francisco – $1,021,000

Pomona – $ 751,000

Huntington Park – $ 478,000

Rosemead – $128,328

Montebello – $125,000

Apple Valley – $95,452

Camarillo – $91,975

Perris – $66,000

Bellflower – $59,140

Calamesa – $42,257

Santa Cruz – $34,784

Encinitas – $29,524

Santa Monica – $26,029

Hollister – $22,195

West Covina – $10,000

Rialto – $8,791

South Gate – $7,603

Hemet – $3,000


Tuesday, May 11, 2010

Wisconsin Bank Vice President Receives Six-Month Sentence for Misapplying Funds

Stephen P. Sinnott, United States Attorney for the Western District of Wisconsin, announced that Margaret L. Hajdas, 39, Necedah, WI was sentenced today by U.S. District Judge Barbara B. Crabb to six months in prison for misapplying money and credit of the Necedah Bank. The District Court also ordered Hajdas to pay $33,400 in restitution.

Hajdas misapplied bank funds by taking money from the bank by using customers’ lines of credit. Judge Crabb indicated what she found most disturbing was that Hajdas had stolen money from bank customers who had come to trust her.
United States Attorney Sinnott stated that the charges followed an investigation conducted by the Federal Bureau of Investigation. The prosecution of this case has been handled by Assistant U.S. Attorney Timothy M. O'Shea.

Long Grove, Illinois former bank VP charged with fraud

A Long Grove man and former bank executive has been charged with fraudulently obtaining a line of credit that resulted in a $2.4 million loss. Francis Alan Schmitz, 58, a former vice president with the Northern Trust Co. until the mid-'90s, was arrested Thursday and charged in U.S. District Court in Chicago with mail fraud, which carries a maximum of 30 years in prison, a $1 million fine and mandatory restitution. He was ordered held pending a detention hearing set for Tuesday.
According to the complaint, Schmitz worked with a loan broker early last year to arrange a $2.85 million line of credit through the First Midwest Bank by maintaining he was going to put it into investment properties in Long Grove. The complaint accuses him of producing account statements supposedly supplied by a Florida trust company, but which he actually produced himself and sent from a mail-drop facility in Arlington Heights.
When he received the line of credit, the complaint says, he put $350,000 in an escrow account, but used the rest to pay off a $1.6 million defaulted loan and make other payments, while putting $380,000 in his personal bank account.
According to the complaint, Schmitz went on to file a voluntary bankruptcy petition late last year.

Monday, May 10, 2010

Ex- St. Joseph, Michigan bank worker admits embezzling

A former employee of Chemical Bank in St. Joseph pleaded guilty Friday to embezzling about $34,000 from customer accounts. Ashley Jones, 19, of Coloma, wrote counter checks on the accounts of at least three customers and cashed them, investigators said.
Jones appeared in Berrien County Trial Court to plead guilty to embezzlement of $20,000 to $50,000, which carries a maximum penalty of 10 years in prison.
Judge Charles LaSata accepted the plea and allowed her to remain free on bond pending sentencing June 18.
St. Joseph police investigated after customers reported account withdrawals that they did not make.
Chief Assistant Prosecutor Michael Sepic said Jones started working as a teller in the bank's drive-up window off Main Street in January.
In February and March she wrote counter checks from the accounts of three older customers and cashed them, embezzling about $34,000, Sepic said.

Sunday, May 9, 2010

Ex Kansas City credit union manager admits embezzling nearly $400,000

A former manager of The Kansas City Star’s credit union pleaded guilty today in federal court to embezzling nearly $400,000 during a four-year period.
Joyce Buchanan, 55, of Kansas City, waived her right to have the case heard by a grand jury, and pleaded guilty in U.S. District Court in Kansas City to charges of bank fraud and theft from a credit union.
The charges carry a maximum sentence of up to 60 years in prison. A sentencing date will be scheduled later.
According to federal prosecutors, Buchanan engaged in the fraud scheme from late 2002 to early 2007 while branch manager at Media First Credit Union, which is now First Financial Credit Union, located in The Star’s building at 1729 Grand Blvd.
She admitted to embezzling nearly $200,000 and falsely telling the credit union that she made another $200,000 in loans to individuals when she actually pocketed the money for her own use.
A federal judge sentenced a Claycomo woman to two years in prison Wednesday for embezzling nearly $400,000 from the credit union that she managed.

Joyce Buchanan, 56, pleaded guilty to theft and bank fraud in May, admitting that she took almost $200,000 from a credit union that serves employees of The Kansas City Star.

She also made $426,678 in improper loans to non-members of the credit union. Of those loans, more than $268,000 is in default. Most of the fraudulent loans were referrals from her son, prosecutors said.

Friday, May 7, 2010

Two Former Bank Executives and Hotel Developer Charged with Frauds Relating to the Collapse of $1 Billion Atlanta Bank

A federal judge in Atlanta unsealed an indictment today charging two former Atlanta-based Integrity Bank executives, Douglas Ballard, 40, and Joseph Todd Foster, 42, both of Atlanta, and hotel developer Guy Mitchell, 50, of Coral Gables, Fla., with various acts of conspiracy, bribery, bank fraud and/or securities fraud relating to over $80 million in loans that Mitchell obtained from Integrity Bank. Mitchell, Ballard and Foster were indicted by a federal grand jury on April 14, 2010, and Mitchell is expected to make his initial appearance before U.S. Magistrate Judge Gerrilyn Brill today. Arraignments are expected to be scheduled shortly in federal court in Atlanta for the three defendants. U.S. Attorney Sally Quillian Yates said, "We have charged two of Integrity Bank's former officers and its largest borrower with various acts of fraud, bribery, and insider trading. These officers of Integrity Bank sure weren't living up to the bank's name. After passing out $80 million to the developer like it was monopoly money, both officers dumped their Integrity stock before the failed loans came to light. While the developer was living the good life, even buying a private island with Integrity's money, and the bank's senior loan officer was making huge commissions and taking payoffs from the developer, the bank was dying a slow death. The defendants were going to leave the bank's shareholders and the FDIC holding the bag, but now they are being held accountable."
Jon T. Rymer, Inspector General, Federal Deposit Insurance Corporation, said, "The Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) is pleased to join the U.S. Attorney's Office for the Northern District of Georgia and our law enforcement colleagues in defending the integrity of the financial services industry. We are particularly concerned when senior bank officials, who are in positions of trust within their institutions, are alleged to be involved in unlawful activity. Prosecutions of individuals and entities involved in criminal misconduct help maintain the safety and soundness of the Nation's financial institutions."
IRS-Criminal Investigation Special Agent in Charge Reginael McDaniel said, "This indictment is an important victory for America's taxpayers who play by the rules and have no tolerance for those who make up their own rules. This investigation serves to remind us that there is no such thing as free money and there are no awards or incentives for creativity when it comes to crime."
According to U.S. Attorney Yates, the charges and other information presented in court: From 2004 to 2007, Mitchell and companies he controlled obtained more than $80 million in various supposed business loans from Integrity Bank, based in Atlanta. He allegedly obtained much of these funds under false pretenses, and deposited nearly $20 million of these business loans in a personal checking account, in which he made millions of dollars worth of personal luxury expenses and withdrew substantial amounts of cash. Among his personal expenses was over $1.5 million spent on a private island in the Bahamas.
While Mitchell was spending much of the loan proceeds on himself, the indictment alleges that he paid little, if any, of his money back to Integrity to satisfy interest payments. Rather, the indictment alleges that with the assistance of individuals within the bank, Mitchell paid interest on existing loans by taking draws or disbursements from other loans, and continually borrowed more and more money to keep paying the ever-increasing interest payments.
The indictment specifically focuses on three loans totaling approximately $20 million in 2006, which the indictment alleges were dispersed under false pretenses at the alleged approval and direction of Ballard, Integrity's former Executive Vice President. In one example charged in the indictment, Mitchell requested and Ballard helped disperse nearly $7 million out of a construction loan relating specifically to supposed construction and renovation at the "Casa Madrona," a luxury hotel owned by Mitchell in Sausalito, Calif. The indictment alleges that none of this money was used for construction, and in fact no renovations had occurred. Rather, most of the funds were wired directly to Mitchell's personal checking account, and used by him for personal purchases or cash, and the remainder was used to pay interest due on older Mitchell loans.
The indictment also alleges several acts of bribery. The indictment charges that Mitchell corruptly paid and Ballard corruptly received over $230,000 in a 9-month period – half in cash and half in a cashier's check – as a reward for Ballard's assistance in Mitchell's fraud. The indictment alleges that both men corruptly discussed other personal business opportunities That Ballard would receive for assisting Mitchell.
The indictment also alleges that Ballard evaded bank reporting requirements to avoid scrutiny of his cash deposits. And the indictment alleges That Ballard and his colleague, fellow bank Vice President Joseph Todd Foster, committed securities fraud by engaging in what is commonly referred to as "insider trading." Specifically, they allegedly sold nearly all of their shares of Integrity stock based on materially adverse secret information about the company – specifically relating to substantial problems with the loans to Mitchell – which they knew was not generally known to the public. The indictment charges that in essence they allegedly took advantage of secret inside information to sell stock that they knew to be overvalued, to others who did not share the same information.
The bank fraud and bribery charges against Mitchell and Ballard each carry a maximum sentence of 30 years in prison, the evasion of reporting requirements charges against Ballard carry a maximum of 10 years in prison, the securities fraud charges against Ballard and Foster carry a maximum of 20 years in prison and the conspiracy charge against Mitchell and Ballard carries a maximum of five years in prison. Each of the charges also carries a potential fine of up to $1 million.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government's burden to prove the defendant's guilt beyond a reasonable doubt at trial.
President Barack 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.
This case is being investigated by the FBI, the FDIC's Inspector General's Office, and the IRS, as part of President Barack Obama's Financial Fraud Enforcement Task Force.
Assistant U.S. Attorneys Justin S. Anand and Christopher C. Bly are prosecuting the case.
“Among the roots of our nation’s financial crisis were criminal acts by bank insiders and major borrowers that contributed to the failures or bailouts of financial institutions previously believed to be secure,” said U.S. Attorney Sally Quillian Yates. “Today we announce that two of these corrupt insiders here in Atlanta will be trading in their corporate offices for federal prison.”

“Those who line their pockets with profits of bank fraud schemes should know they will not go undetected and they will be held accountable,” said Internal Revenue Service (IRS)-Criminal Investigation Special Agent in Charge Reginael McDaniel. “IRS-Criminal Investigation is proud to be part of the law enforcement dragnet bringing these individuals to justice.”

According to U.S. Attorney Yates, the charges and other information presented in court: Ballard, Integrity Bank’s former executive vice president in charge of lending, admitted that he conspired with the bank’s major customer, co-defendant Guy Mitchell, to receive bribes from Mitchell and to assist Mitchell in receiving millions in loan draws under false pretenses. Ballard admitted in court to receiving over $200,000 in cash and other corrupt payments from Mitchell in exchange for Ballard’s assistance in distributing millions of loan draws. During this same time, Ballard caused Integrity Bank to distribute nearly $20 million in loan proceeds to Mitchell’s personal account, much of which was allegedly used for Mitchell’s personal consumption (including the purchase of a private island in the Bahamas). Mitchell requested and Ballard paid nearly $7 million of these draws out of a construction loan relating specifically to supposed construction and renovation at the “Casa Madrona,” a luxury hotel owned by Mitchell in Sausalito, Calif. The indictment alleges that none of this money was used for construction, and in fact no renovations had occurred.

Foster, Integrity’s former vice president in charge of risk management, pleaded guilty to charges that he committed securities fraud by way of what is commonly referred to as “insider trading.” Specifically, he admitted to having sold nearly all his shares of Integrity’s stock on the basis of material adverse information about the company of which Foster was aware by virtue of his inside position, but of which the public was generally unaware. Specifically, Foster dumped his shares of Integrity stock based on his knowledge that the bank was facing an increasingly substantial but undisclosed risk that its major customer, Mitchell, would default on over $80 million in outstanding loans.
Ballard was indicted in April 2010 on more than 20 counts of bank fraud, receipt of bribes, securities fraud, evasion of currency reporting requirements, and conspiracy. He pleaded guilty to conspiracy and one additional new count of tax evasion. He could receive a maximum sentence of up to 10 years in prison and a fine of up to $500,000. Foster, also indicted in April 2010, was indicted on two counts of securities fraud and today pleaded guilty to one count. He could receive up to 20 years in prison and a fine of up to $5 million. A date for sentencing has not yet been set before U.S. District Judge Julie E. Carnes.
This case is being investigated by Special Agents of the FBI, FDIC-Office of the Inspector General, and the IRS as part of President Barack Obama’s Financial Fraud Enforcement Task Force. The investigation remains ongoing as to other potential misconduct relating to the failure of this major Atlanta bank. Both defendants have agreed to cooperate in that ongoing investigation.
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.

New Hampshire Securities chief quits over scheme

 The state’s securities chief resigned Monday and issued a scathing indictment of the government’s handling of the legal case against Financial Resources Mortgage that’s become a Lakes Region Ponzi scheme robbing investors of up to $100 million.
Mark Connolly, director of the Bureau of Securities Regulation, vowed to press the Legislature to beef up powers to prevent this kind of case from recurring.
“There is a legal concept known as noisy withdrawal whereby someone – typically a lawyer – has knowledge of impropriety in a matter and publicly withdraws from representation when he or she has knowledge of wrongdoing,” Connolly told reporters. “That is what I am doing today through my resignation.”
Connolly contends the Banking Department stonewalled his investigators by not giving them all documents relating to the FRM matter.
Asked if it amounted to a cover-up, Connolly answered, ‘’If someone is not providing the information that is available, then in fact that is a cover-up.”
Banking Commissioner Peter Hildreth has maintained FRM was a securities matter, and as such, subject to Connolly’s jurisdiction. Connolly repeated Monday that fraudulent commercial mortgages don’t come under his realm, and instead, Hildreth should have done a better job of policing the company.
“It is time for the government to come clean and release all the records and stop trying to assign blame,” Connolly said.
Had the banking agency done its job, regulators there could have stepped in before FRM executives took more than $15 million in cash out of the company before going belly up Nov. 6, Connolly said.
“I think the doors should have been shut before Nov. 6,” Connolly said.
Gov. John Lynch repeated Monday that he looks forward to receiving an investigative report on the FRM matter from Attorney General Michael Delaney on May 12. State agencies should be held accountable if there were any shortcomings in regulatory work, Lynch said.
Ryan Williams, communications director for the Republican State Committee, said it’s Lynch’s fault that FRM left investors holding the bag.
“Instead of taking an active role in investigating his administration’s failure to stop this massive fraud, Gov. Lynch has deliberately sat on the sidelines,” Williams claimed.
“The governor has failed to provide any leadership while state officials have engaged in shameful finger pointing and public bickering over responsibility for this fiasco. Gov. Lynch has remained suspiciously silent while senior members of his administration have been accused of deliberately misleading the public about their involvement in this critical investigation.”
Last month, federal authorities indicted FRM and President Scott Farah, of Meredith, on wire fraud charges. They allege that many of the projects that investors contributed to were bogus and that Farah had pooled all the money collected into a single account.
Farah and Donald Dodge, of Belmont, were accused of transferring investment money into a trust that benefited Farah and his family.
Dodge ran CL&M, a mortgage servicing business that worked with FRM to defraud investors, federal prosecutors said.
A trial date is set for June 5 in US District Court in Concord.
House and Senate committees will open their investigation of the FRM matter Friday. Reps. Jim Splaine and Paul McEachern, both D-Portsmouth, sought the probe to determine whether state regulators had been slow to act against FRM.
The quickly convened group of legislators will take public testimony next week and must give recommendations to the Legislature by the end of this month

Thursday, May 6, 2010

Title Company Owner in Birmingham, Alabama Charged in Federal Court with Mail Fraud

Federal prosecutors have charged the owner of a Birmingham property title company with mail fraud in connection to a mortgage fraud scheme, U.S. Attorney Joyce White Vance announced.

JERRY EUGENE PARKER, owner of Central Alabama Title, is charged in an information filed Thursday in U.S. District Court with two counts of mail fraud.
According to the information, PARKER, 59, of Hoover, aided and abetted others to perpetrate a fraud through the mail that assisted in the commission of a larger mortgage fraud.
“Title companies are supposed to protect lenders and property owners by making sure that the person seeking a loan on a property is the rightful owner. They are in a position to catch fraud,” Vance said. “This defendant violated the core of his position of trust by not only allowing a fraud to go unchecked, but by assisting in carrying it out. This type of financial fraud is a priority of this Justice Department. It will be prosecuted,” she said.
The information describes the fraud as follows: PARKER, while owning and operating Central Alabama Title between January 2005 and July 2007, would obtain the title of a property to be sold and apply for a refinance loan on the property. When the time came to close on the refinance loan, PARKER, or an employee of his, would change the title of the property to fraudulently reflect that the person applying for the refinance loan was the current property owner. PARKER also back-dated the title to reflect that the person seeking the refinance loan was the past and current owner of the property.
The information charges that PARKER made the changes so it would appear to the lending institution that the person applying for a refinance loan was the owner who held a legitimate equity in the property. In truth, the person applying for the loan was a new buyer who would not have been eligible to receive a refinance loan.
The maximum sentence for counts one and two is 20 years in prison and a $1 million fine for each count.
Special agents of the Federal Bureau of Investigation and the Department of Housing and Urban Development’s Office of Inspector General investigated the case. Assistant U.S. Attorney Patrick Carney is prosecuting it.
This prosecution is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency 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.
Members of the public are reminded that the information contains only charges. A defendant is presumed innocent of the charges and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.

Wednesday, May 5, 2010

Insider Steals $2 Million from 4 Credit Unions in Utah

In a case of insider fraud, a Utah computer consultant was sentenced to five years in prison for stealing nearly $2 million from four Utah credit unions by programming extra deposits for himself.

On April 27, a judge sentenced 43-year-old Zeldon Thomas Morris to 63 months in prison and ordered he pay back over $1.8 million.
Morris pleaded guilty to taking the funds from Deseret First Credit Union, First Credit Union, Alpine Credit Union and Family First Credit Union in 2008. The FBI says they discovered he was hired to help the credit unions with computer upgrades. Instead, he used the passwords to create accounts for himself.
Morris admitted to transferring the money to his joint business account, Lee and Morris Enterprises LLC. He remodeled his home and paid for two cars with the money. He begins his prison sentence June 18. Morris was investigated after a business partner saw something suspicious and reported it.

Tuesday, May 4, 2010

Former Alaska bank employee sentenced for embezzlement

A former employee of Alaska Pacific Bank has been sentenced for embezzlement. Adam Jay Hendren of Juneau, 36, received five years probation for theft, embezzlement and misapplication of funds by a bank officer. Hendren stole airline miles from the company's corporate mileage account.
The U.S. Attorney's Office in Alaska says Hendren stole more than $8,500 in airline miles to pay for travel to and from the Lower 48 for himself and his family. The miles were supposed to be used for the bank's mortgage loan customers.
U.S. District Court Judge John W. Sedwick also sentenced Hendren to 250 hours of community service.

Monday, May 3, 2010


A former vice president and senior lending officer of Lone Star National Bank (LSNB) has been sentenced to federal prison for bank fraud, United States Attorney José Angel Moreno announced today.

Emma Vigil, of McAllen, was sentenced this afternoon by United States District Judge Randy Crane to 51 months in federal prison, without parole, and ordered to pay a total of $589,494.74 in restitution to her victims. In addition, Judge Crane ordered that Vigil serve a five-year-term of supervised release—a form of probation with stringent conditions—after her release from prison. Vigil has been permitted to remain on bond until May 17, 2010, when she must surrender to the U.S. Marshals Service to begin her prison sentence.
Vigil, 47, pleaded guilty to two counts of bank fraud on Dec. 15, 2009, admitting she used her position as vice president and senior lending officer to conduct hundreds of thousands of dollars in fraudulent debit transactions from her loan customers’ bank accounts. She also admitted to fraudulently inducing the approval of a commercial loan, the proceeds of which were used for her own benefit.
Vigil conducted the fraudulent debit transactions in a variety of ways. In some instances, she would fill out a loan advance slip with her customer’s loan account information and request a teller to generate a cashier’s check made out to the customer. Vigil would later forge the customer’s name on the check’s endorsement line, wait for a period of time and then present the check to a teller for cash. In other cases, Vigil simply filled out a checking or savings account withdrawal slip with her customer’s account information and presented the slip to a teller for cash. Vigil often informed the tellers that the cash from these transactions would be hand-delivered to her customers under a “banking made easy” approach to customer service. Vigil also employed a number of other tactics to conceal her fraud including stealing from customers she knew did not closely monitor their accounts and conducting transactions for amounts that resembled monthly loan payments owed by her customers.
Vigil also admitted to creating and submitting an application for a $179,500 commercial loan under the name of a person she knew did not exist. In addition to manufacturing the applicant’s name, Vigil induced the approval of the loan by using dates of birth, passport numbers and addresses belonging to her legitimate loan customers to fill out the application paperwork. Vigil also copied financial statements from a customer’s loan file and replaced the customer’s name across the top of the document with the fictitious person’s name to make it appear to LSNB as though the person was legitimate and creditworthy. When the loan was approved and funded, Vigil controlled the proceeds.
The FBI’s investigation of Vigil revealed that her four-year bank fraud scheme, beginning in 2005, caused approximately $1,150,000 in financial loss to numerous victims. Vigil was an employee of LSNB for 14 years prior to her termination from the bank in 2008.
Assistant United States Attorney Gregory S. Saikin prosecuted the case for the government.