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Wednesday, November 28, 2012

2 Mansfielders in Ohio plead guilty in embezzlement of $2 million


Two Mansfield men pleaded guilty Monday in U.S. District Court in Cleveland to charges involving embezzlement and fraud totaling $2.1 million.
Kevin J. Moore, 35, former manager of the Huntington National Bank branch in Ontario and a KeyBank branch in Mansfield, pleaded guilty to one count of bank embezzlement, two counts of wire fraud and three counts of tax evasion.
He was represented at a hearing scheduled for 1:45 p.m. by attorney Roger M. Synenberg of Cleveland.
As part of the plea agreement, Moore agreed to pay an undetermined amount of restitution to victims. Those could include the banks, the Federal Deposit Insurance Corp. (which insures banks) and a man who was defrauded of $360,000 in a phony investment scheme, according to Robert J. Patton and Christian H. Stickan, of the Office of the U.S. Attorney.
While Moore’s assets have not yet been gauged, the probation department will look into that issue.
“He’ll be under an obligation to make that repayment,” Stickan said. “They are going to try to explore what assets are available. I don’t want to give anybody any false hopes that there’s a gold mine.”
During Monday’s 45-minute hearing, Randy L. Meister, 60, a friend of Moore’s, pleaded guilty to one charge, misprision of a felony (becoming aware of a crime and helping to conceal it), with bond set at $10,000. He was represented by a public defender.
The men, both Mansfield residents, were arraigned before Magistrate Nancy A. Vecchiarelli. Sentencing will be March 13, before Judge Christopher Boyko.
Bond was set at $20,000 for Moore and $10,000 for Meister, with both men on supervision until sentencing.
A bill of information filed by the U.S. Attorney’s office charged that Moore, while working as manager of Huntington National Bank on Village Park Court South in Ontario between August 2008 to November 2010, embezzled about $1.7 million from Huntington and its CD and annuity customers.
Moore met with Huntington customers who wanted to open or renew accounts, then pocketed the money — targeting certificates of deposit (CDs) and investments in annuities because the bank did not then send customers monthly statements for those types of accounts. The plea agreement says he offered customer phony inflated interest rates the bank would not actually provide, to entice them to keep their money in those accounts — and “flipped” money from other accounts when customers decided to cash out.
“He was telling (bank tellers) that customers were coming in and taking out the money,” Stickan said. “It’s a pretty sophisticated process. He certainly knew what he was doing when he did it.”
The information also charged Moore with three counts of tax violations for evading taxes for calendar years 2008, 2009, and 2010 in connection with that scheme. The IRS believes Moore owed more $514,720 in taxes on unreported income of $1.72 million from those three years.
Moore also was charged with wire fraud for defrauding a member of a church where he was assistant pastor of $360,000, by persuading him to put money into a phony “day-trading” scheme, then diverting the money for his own use. Moore told the man he could get returns amounting to $5,000 per month. The victim cashed out a 401K and sold stock to “invest” in the scheme.
“He (the victim) was getting small payments back, but that was done in the guise of keeping him quiet,” Stickan said.
Moore, who was manager for the Ontario branch of KeyBank from fall 2007 to spring 2008, also was charged with bank fraud for opening lines of credit in the name of Randy L. Meister, initially without his friend’s knowledge. Prosecutors say he then fraudulently drew on those lines.
The U.S. Attorney’s Office alleged one of the lines of credit was opened against a home at 234 Poplar St. that Meister owned, and that was purchased with cash Moore provided. The loss involved in that incident was $45,400, according to court records.
Meister was charged for allowing his name and real property to be used to establish the lines of credit at KeyBank, allowing Moore to proceed with fraudulent withdrawals from the lines of credit, and concealing Moore’s bank fraud from authorities. The statutory penalty for misprision of a felony is three years and a $250,000 fine.
Under federal law, the bank embezzlement and bank fraud charges against Moore must involve prison time.
“The seriousness of the bank fraud statute is reflected by the fact that those charges are non-probationable,” Patton said. “Those found guilty of those charges will go to prison, even if you have no record.
“The public has to have confidence in the banking system, and the only way to do that is to prosecute people who abuse it.”
Bank embezzlement has a maximum statutory penalty of up to 30 years and a $1 million fine. Maximum penalties for the other charges are 20 years and a $250,000 fine for wire fraud; five years and a $250,000 fine for tax evasion; and 30 years and a $1 million fine for bank fraud.
“Criminal acts are typically not foreseeable,” Patton said. “I don’t think there’s a particular defect in the processes at Huntington. He (Moore) was doing things at KeyBank (also).”
While FDIC insurance prevented bank customers from individually losing money, the U.S. Probation Office will determine what amounts of restitution the FDIC, the banks, or the church member may be owed.
Federal agencies initially began investigating the two men after Meister “came under the radar screen of the FBI” in connection with his home loan, Patton said.
“It’s not unusual for a bank, when they see unusual activity, to make a referral,” Stickan said.
Federal prosecutors said that investigation, which linked the two men, eventually converged with the others. The church member Moore persuaded to put money into the phony investment scheme independently lodged a separate complaint with the FBI in connection with his losses, the U.S. Attorney’s office said.

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