Examples of Money Laundering Investigations

Three Florida Residents Sentenced for Mortgage Fraud

On December 1, 2008, in Miami, Fla., Berry Louidort received a 37 month prison sentence for his participation in a $6.5 million mortgage fraud scheme. His co-defendant, Lauren Jasky, was sentenced to 36 months imprisonment on December 4, 2008. Another co-defendant, Ralph Michel, aka Ralph Duverneau, was sentenced to 30 months imprisonment. The three defendants previously pleaded guilty to conspiracy to commit bank fraud and mail fraud. Michel and Louidort also pleaded guilty to a money laundering charge. According to court documents and court testimony, the Florida Office of Financial Regulation audited 24 sub-prime mortgage loans initiated by Compass Mortgage Service, Inc. (Compass Mortgage), in Boca Raton, Florida. The initial audit revealed that the loans included excessively large fees paid to defendants Louidort and Michel. The fees, ranging from $29,000 to $650,000, were described as marketing and/or assignment fees. However, the fees were kickbacks based on inflated sales prices. The audit also revealed that the majority of the suspect loans were originated by Jasky, who was the company’s senior vice president. The defendants fraudulently bought and sold residential property in Palm Beach County, Florida. Louidort and Michel received large assignment and marketing fees and Jasky received mortgage brokerage fees. The defendants prepared fraudulent loan applications for the purchasers and submitted them to lenders. The applications included false information about the borrowers’ employment verification, income, funds on deposit, and rent history.

Mortgage Fraud Scheme in Texas Results in Prison Term for Florida Man

On November 24, 2008, in Sherman, Texas, Michael Guy Cary, Sr., of Hollywood, Florida, was sentenced to 60 months in prison and ordered to pay $5 million for money laundering, bank fraud and conspiracy to commit mail fraud. Cary and his co-defendant, Richard Kirkpatrick, were convicted earlier for their roles in a mortgage fraud scheme. According to court testimony, Cary’s scheme involved the purchase and sale of 211 homes in Texas involving a variety of fraudulent transactions. Cary purchased the homes directly from home builders and then arranged the transfers of the deeds into names deceptively similar to that of the home builders. Upon completion of the transfers, Cary had real estate appraisers artificially inflate the values of the homes and arranged their subsequent sales to out-of-state investors who believed that they were purchasing the homes directly from the home builders and who qualified for mortgage loans on the inflated amounts based on fraudulent loan applications. Kirkpatrick provided the inflated appraisals on 89 of the 211 homes.

Former Houston Physician Sentenced for Illegally Distributing Prescription Drugs and Money Laundering

On November 20, 2008, in Houston, Texas, Alonzo Peters III, a former physician who practiced in Houston until his license was revoked by the Texas State Board of Medicine, was sentenced to 60 months in prison and fined $10,000 for conspiring to illegally distribute prescription drugs and money laundering. Peters and three local pharmacists, Ansa Hogan, Dennis Martin George and Terry Green, pleaded guilty to various charges in October 2007 arising from their illegal actions to distribute prescription drugs without a legitimate medical purpose and outside the course of professional practice, knowing the drugs were being sold on the streets. Peters and his co-defendants were paid cash for the prescriptions. He directed recipients of the unlawfully issued prescription to go to his co-defendant’s pharmacies to have the prescriptions filled. Each defendant was enriched with large amounts of cash as a result of the illegal distribution of prescription drugs. The cash proceeds provided the basis for money laundering charges against Peters and his conviction. The court also ordered the forfeiture of various assets identified as having been purchased by Peters with the proceeds of the unlawful activity, including two condominium units and a Cadillac Escalade automobile, as well as $6,990 in cash.

Two Men Sentenced in $32 Million Scam that Bilked more than 500 Victims

On November 19, 2008, in Los Angeles, Calif., Pastor Robert Jennings was sentenced to 12 years in prison for his role in an investment scam that led more than 500 victims to lose over $28 million after being told they could make money in coal mines and a gold transaction. A second man involved in the scheme, Arthur Simburg, of Portland, Oregon, was sentenced on November 17, 2008, to nine years in federal prison. The two were ordered to pay $28 million in restitution. While the scheme collected more than $32 million, some of the money was returned to investors as part of the Ponzi scheme. A third defendant involved in the plot, Henry Jones, a record company executive, will be sentenced at a later date. The three men were convicted of bilking more than 500 investors out of more than $32 million. Jennings was found guilty in July following a three-week jury trial. The evidence at trial showed that Jones, Simburg and Jennings solicited investors for a coal mine venture and an alleged international gold transaction that purportedly involved the sale of 20,000 tons of gold between Israel and the United Arab Emirates. They duped investors largely through nightly conference calls in which investors were promised huge rates of return on their investments – as much as 300 percent within 60 days. Most of the conference calls included group prayer, during which investors were told that the gold transaction was “divinely inspired” and that it was God’s will for it to come to fruition. Jones spent more than $21 million of the victims’ money on his own extravagant personal expenses and to fund his music business.

Nine Individuals Sentenced for Conspiracy to Structure over $4.5 Million and to Commit Tobacco Fraud

On November 19, 2008, in Nashville, Tenn., Ronald D. Bowen, of Ayden, North Carolina, was sentenced to 51 months in prison for his role in a conspiracy to structure cash transactions. In October 2007, after a seven-day jury trial, Bowen decided to plead guilty of conspiring to structure over $4.5 million in cash to evade reporting requirements. On November 12, 2008, co-conspirators Christopher L. Sutton and Rennie Turner were also sentenced to prison. Sutton was sentenced to 60 months in prison and ordered to forfeit $4.5 million for conspiring to structure currency, and Turner was sentenced to 51 months in prison and ordered to forfeit $4.5 million for conspiring to structure currency. On November 10, 2008, another co-conspirator, Robert D. Oldham, was sentenced to five years probation, ordered to pay $18,633 in restitution, and ordered to forfeit $4.5 million for conspiring to structure currency, conspiring to make false statements to the U.S. Department of Agriculture (USDA), and money laundering.

Previously, in 2007, five other conspirators in this same case received sentences.

December 17, 2007
Bobby C. Cates was sentenced to 21 months in prison and ordered to forfeit $14,230 for conspiring to structure currency.
November 16, 2007-
Clarence W. Shirk received three years probation and ordered to forfeit $182,865.
Garth E. Middaugh received one year probation and ordered to forfeit $100,571.
Kenneth Swayne was sentenced to two years probation and ordered to forfeit $91,105.
April 13, 2007
o Sam A. Turner was sentenced to two years probation and ordered to pay a fine of $4686 for conspiring to make false statements to the USDA.
According to the Indictment filed in June 2006, the USDA operated a burley tobacco allotment program. This program established quotas to regulate the amount of burley tobacco that could be grown on any particular farm during the yearly tobacco growing season. To ensure compliance with the USDA quotas, each participating farmer was issued a USDA Burley Marketing Card. This card identified the farm on which the burley tobacco was to be grown. The card also stated the maximum number of pounds of tobacco grown on the farm that could be legally marketed or sold within the particular crop year. The term "excess tobacco" referred to when tobacco was sold on a USDA Burley Marketing Card as if it was grown on the farm related to the card utilized but was actually grown elsewhere. Each defendant was engaged in the tobacco industry. Sutton and Oldham knowingly directed and caused Bowen, Cates, Middaugh, Shirk, Swayne, and Turner to conduct financial transactions of over $4.5 million in increments under $10,000 for the purpose of avoiding the federal reporting requirements. The cash obtained through the structured transactions was used, at least in part, for buying and selling tobacco, including excess tobacco.

Defendant Sentenced to 140 Months on Drug and Money Laundering Charges

On November 14, 2008, in Cleveland, Ohio, Kevin Terrell Tyler was sentenced to 140 months in prison, to be followed by three years of supervised release, and ordered to pay a $700 special assessment. Tyler was one of 17 defendants indicted in December 2007 on violations of narcotics and money laundering charges. Specifically, Tyler was charged with receiving and distributing at least 1,800 kilograms of cocaine between May 2004 and February 2006. Tyler insulated himself from the organization, and thus law enforcement, by using others to deliver cocaine and money to the suppliers. The indictment alleged that Kevin Tyler protected himself by speaking guardedly on the telephone and frequently changing his cellular telephones. Tyler and other members of his family and immediate associates conspired to take drug proceeds and invest them in businesses and bank accounts. In May 2006, Kevin Tyler delivered $99,980 in U.S. currency to a person he believed to be a corrupt banker. That person actually was an agent acting in an undercover capacity as a corrupt banker who would take cash proceeds from illegal activity and infuse the proceeds into the banking system.

Former Dallas Independent School District (DISD) Executive Sentenced to 11 Years in Federal Prison

On November 12, 2008, in Dallas, Texas, Ruben B. Bohuchot, a former Dallas Independent School District (DISD) chief technology officer, was sentenced to 132 months in prison for his role in a bribery and money laundering scheme. Bohuchot’s co-defendant, Frankie Logyang Wong, a Houston businessman, was sentenced on November 13, 2008, to 120 months in prison. They were also ordered to forfeit $1.2 million, which represents the proceeds of their conspiracy to commit bribery and money laundering. Bohuchot and Wong were each convicted in July 2008 of conspiracy to commit bribery concerning a program receiving federal funds and conspiracy to launder monetary instruments. In addition, Bohuchot was convicted on one count of obstruction of justice and two counts of making false statements on tax returns. Wong, co-owner and president of computer reseller Micro Systems Engineering, Inc., (MSE), provided computer products and services to large corporations and school districts. Bohuchot, as chief technology officer at DISD, procured technology contracts for DISD. Bohuchot provided Wong and MSE with inside information that enabled MSE to obtain $120 million in contracts with DISD. Bribes to Bohuchot by Wong and MSE included access to a $305,000 sport-fishing vessel and a second, larger yacht purchased for $800,000. In addition, Wong used MSE’s credit card to pay for Bohuchot’s excessive entertainment expenses. Bohuchot failed to report the income he received from this bribery scheme on his 2004 and 2005 federal income tax returns.

Heroin Supplier Sentenced in Ohio

On November 12, 2008, in Columbus, Ohio, Pedro Montan, a/k/a “Cribby”, of Bronx, New York was sentenced to serve 51 months of incarceration, and three years of supervised release for his role in a heroin distribution ring that brought between one and three kilograms of heroin into Columbus, Ohio. Montan pleaded guilty in February 2008 to charges of money laundering and conspiracy to distribute heroin. According to court documents, investigators encountered several individuals trafficking heroin in the Columbus area, and detected an increase in heroin use in the area. Kevin Grant and Dayrel Billingsley were identified as two of the main heroin distributors in the Columbus area. Evidence was developed through monitored conversations and cooperating witnesses indicating that Grant and Billingsley were obtaining their heroin from suppliers in New York, more specifically, Pedro Montan. Billingsley sent monies owed to Montan for the heroin via Western Union. Montan provided Billingsley with names of individuals to be used on money wires. Billingsley used his brother, brother’s girlfriend and his own girlfriend to send the wires.

California Man Who Sold Old Computers as New Sentenced in Tax and Mail Fraud Scheme

On November 4, 2008, in Los Angeles, Calif., Chul Kyoon Han was sentenced to 36 months in prison and ordered to pay $75,036 in restitution for mail fraud and tax fraud. In a plea agreement filed earlier this year, Han admitted that as owner and operator of Unicyber and other business entities, he sold old or out-dated computers as new equipment. He also admitted that he signed a false tax return, for the 2005 tax year, which he filed with the Internal Revenue Service. Han admitted that the return he filed did not include approximately $94,000 he had received from an associate. The source of the money he received in 2005 was from a larger sum of Unicyber receipts that he diverted into cashier’s checks in nominee names in 2003 in attempts to hide the money from the government and creditors. Han used his Spanish language skills and produced Spanish language commercials and infomercials that ran on Spanish language television networks across the country. The advertisements falsely depicted the delivery of the entire computer system upon receipt of a corresponding payment. Shipments were typically sent C.O.D. (Cash on Delivery) and only upon opening the shipment did the recipient realize it was a partial shipment. Advertisements falsely claimed that the computer systems were new and of the highest quality, although the computers were actually old, substandard, and often malfunctioned, or did not work at all. Han purchased old, out-dated, and/or salvaged computers and caused them to be cannibalized for parts, and then caused the parts to be re-assembled into new computer cases, or shells, so that the computers would appear to be new.

Past President and CFO of California Company Sentenced to Prison for Embezzlement and Tax Evasion

On November 03, 2008, in Sacramento, Calif., Peggy Kaye Witts, of Redding, Calif., was sentenced 46 months in prison and ordered to pay $824,333 in restitution to the Voorwood Company and $199,858 to the IRS for federal wire fraud and tax evasion. Witts pleaded guilty in July 2008 admitting that, as Voorwood’s president, she engaged in a scheme to defraud the company by issuing duplicate paychecks to herself for more than four years and by issuing company checks to herself, family members, and others for her personal expenses. She also admitted to tax evasion based on her failure to report the embezzled money as income and to pay taxes on the money. She was ordered to turn over to the Voorwood Company, in partial satisfaction of her restitution obligation, the proceeds from the sale of her house in Redding, other real estate located in Shasta County, as well as all interest in her Voorwood retirement plan, and a Roth IRA. Additionally, because the company is owned entirely by its Employee Stock Ownership Plan (ESOP) and Witts had been the president of the ESOP board of trustees, she is now prohibited for 13 years from participating in any way with administering an employee benefit plan, acting as an adviser to an employee benefit plan, or serving in any capacity that involves control of the assets of any employee benefit plan. The 13-year term is the statutory debarment period under federal law.

Money Remitter Sentenced to Over Nine Years for Money Laundering Conspiracy and Concealing Terrorist Financing

On November 4, 2008, in Baltimore, Md., Saifullah Anjum Ranjha, a Pakistani national residing in Washington, D.C. and Maryland, was sentenced to 110 months in prison, followed by three years of supervised release, for conspiring to launder money and for concealing terrorist financing. At sentencing, the judge also signed a preliminary order forfeiting $2,208,000 of Ranjha’s assets. According to his guilty plea, Ranjha became a lawful permanent resident of the United States in September 1997. He operated a money remitter business in the District of Columbia known as Hamza, Inc. A cooperating witness, acting at the direction of law enforcement, held himself out to Ranjha and his associates to be involved in large scale international drug trafficking, international smuggling of counterfeit cigarettes and weapons. He also represented that he was providing assistance and financing to members of al Qaeda and its affiliated organizations and their operatives. From October 2003 to September 19, 2007, the cooperating witness gave Ranjha and his associates a total of $2,208,000 in government funds in order to transfer the monies abroad through an informal money transfer system called a “hawala,” using a network of persons and/or businesses to transfer money across domestic and international borders without reliance upon conventional banking systems and regulations. The cooperating witness represented that the monies were the proceeds of, and related to his purported illegal activities and Ranjha laundered these funds believing they were to be used to support those activities. Ranjha was the primary point of contact for the cooperating witness and received the bulk of the monies, for a total of 21 hawala transactions in amounts ranging from $13,000 to $300,000.

Canadian Woman Sentenced for Role in International Narcotics Money Laundering Scheme

On October 31, 2008, in Houston, Texas, Thi Phoung Mai Le, of Ottawa, Ontario, was sentenced to 15 years imprisonment for her role in an international narcotics money laundering scheme. Mai Le pleaded guilty in October 2007 to conspiracy to commit money laundering, violating the money laundering spending statute and conspiring to violate currency transaction reporting requirements. Mai Le facilitated the transfer of millions of dollars in cash from the sale of ecstasy. In some instances, Mai Le had associates smuggle cash in bulk from the U.S. into Canada, while at other times she instructed her associates to purchase cashier’s checks with drug proceeds and surreptitiously mail those checks by hiding them in catalogs and magazines. As drug profits grew and sums of money needing to be laundered reached hundreds of thousands of dollars per month, these methods became impractical and Mai Le utilized the services of a money remittance business to transport the funds first to Vietnam and then on to Canada. Remittance companies are licensed by the IRS and various state agencies and accept cash from individuals in the U.S. for transfer out of the country. Mai Le primarily used U.S. Tours and Remittance (U.S. Tours) in Houston, owned and operated by her co-defendant Dong Dang Huynh (Huynh), of Oakland, Calif. Huynh’s remittance company catered to the Vietnamese community and was exclusively engaged in transferring money from the U.S. to Vietnam. Mai Le, with Huynh’s knowledge and assistance, used U.S. Tours to send drug proceeds to Vietnam under the guise of being legitimate remittance deposits from individuals in the Vietnamese community in Houston and eventually wired the illegal proceeds back to the illicit drug manufacturers in Canada. Between January 2003 and March 2004, Mai Le transmitted more than $7 million in drug proceeds through U.S. Tours in Houston. A final key component of the money laundering operation was Mai Le’s and Huynh’s agreement to violate the federal currency transaction report (CTR) requirements by breaking down the drug deposits, which at times totaled more than $500,000 in a single day, into numerous smaller fictitious deposits. The purpose of this activity was to avoid U.S. Tours having to file a CTR with the IRS for deposits that were more than $10,000 and avoid the collection of customer information as required by Texas law for cash transaction amounts more than $3,000. By circumventing federal and state reporting requirements, Mai Le and Huynh concealed the illegitimate nature of their financial transactions and delayed law enforcement’s efforts to track these large sums of cash.

Former General Services Administration (GSA) Contractor Employee and Four Subcontractors Sentenced in Kickback Scheme

On October 31, 2008, in Washington, DC, Charles Anthony Wehausen, a former General Services Administration (GSA) contractor employee, was sentenced to 33 months in prison, to be followed by three years of supervised release. In addition, Wehausen was also ordered to pay $188,941 in restitution to the GSA and $55,260 for unpaid taxes to the Internal Revenue Service (IRS). The sentence also included an order of forfeiture in the amount of $188,941. Wehausen pleaded guilty in February 2008 to a charge of conspiracy to commit mail fraud and a charge of income tax evasion. According to the government's evidence, from 2000 through mid-2003, Wehausen was a chief engineer and project manager at the Washington, DC office of PM Services, Inc., a building maintenance services company, which provided building maintenance services for the GSA at several federal buildings in Washington, DC. Wehausen's job duties included locating subcontractors to perform more extensive mechanical work outside of the routine maintenance handled by PM Services. He was also responsible for preparing the paperwork necessary to hire and pay the subcontractors. After paying subcontractors for their work, PM Services would obtain reimbursement from GSA. Wehausen conspired with four subcontractors to artificially and fraudulently inflate job costs listed in purchase orders and invoices. These fraudulent documents were sent to the headquarters office of PM Services where company officials sent payments to the subcontractors. The subcontractors, in turn, gave a portion of the payments to Wehausen as kickback payments. The total amount of fraudulent payments as a result of the conspiracy was approximately $384,500, a loss suffered by the GSA. Wehausen also evaded the reporting and payment of Federal income taxes on the payments he received from the subcontractors, resulting in losses to the taxpaying public of $55,260. Earlier in the year, four co-conspirators were sentenced to terms ranging from 60 days in prison to six months home confinement to five years probation. Together they were ordered to pay a total of $198,942 in restitution.

New York Narcotics Trafficker Sentenced to 10 Years in Prison

On October 29, 2008, in Phoenix, Ariz., Frank Nicholas Pellegrino, of Staten Island, N.Y., was sentenced to 10 years in prison, followed by five years of supervised release for marijuana distribution and money laundering. Pellegrino pleaded guilty in August 2008 admitting to arranging for couriers to transport marijuana that he purchased in Arizona. When the drugs arrived in New York, Pellegrino and his associates distributed the drugs in bulk quantity. During a two month period in 2001, Pellegrino shipped more than 3,000 pounds of marijuana into New York. Following those shipments, government agents seized $430,000 from one of his associates.

Bank Fraud Scheme Nets Wisconsin Man 100 Months in Prison

On October 23, 2008, in Madison, Wis., Dennis O. Said was sentenced to 100 months in prison and ordered to pay $3.78 million in restitution to the Federal Deposit Insurance Corporation for bank fraud and money laundering. Said, who operated Trucks-4-U, a used car business, pleaded guilty to engaging in a scheme with Mark R. Hardyman, former president of the First National Bank of Blanchardville (FNBB), to defraud the bank. Said deposited approximately $15 million worth of either insufficient funds or closed account credit card checks into his accounts at FNBB for the purpose of fraudulently reducing substantial overdrafts in the accounts. As a result of the fraud scheme, Said received approximately $6.1 million in fraudulently obtained loans from FNBB and later defaulted on the loans causing a loss to FNBB. Additionally, FNBB lost $250,000 resulting from overdraft Said accounts when FNBB was closed by the Office of the Comptroller of Currency.

Car Dealer Sentenced on Money Laundering Charges

On October 6, 2008, in Rochester, N.Y., Antonio Costa was sentenced to 12 months and one day in prison, to be followed by two years of supervised release. Costa also agreed to forfeit nearly $170,000 in cash and motor vehicles previously seized by the government in connection with the investigation. Costa, a principal owner of Rochester Auto Connection, LLP, pleaded guilty in September 2007 to a felony charge of conspiracy to launder criminal proceeds. According to his plea agreement, Costa admitted that from approximately January 2000 to May 2006, he participated in numerous transactions in which he sold motor vehicles to customers who paid cash for their motor vehicles. The cash Costa received from the customers was derived from criminal activities, including illegal drug trafficking. In entering the plea, Costa admitted that he willfully entered into the transactions and received the cash payments, knowing that the proceeds were in fact derived from unlawful activity. The amount of money laundered by Costa was between $400,000 and $1 million.

Former North Carolina County Sheriff and Co-Defendants Sentenced on Charges of Corruption, Extortion, and Money Laundering

On October 6, 2008, in Asheville, N.C., Bobby Lee Medford, the former sheriff of Buncombe County, was sentenced to 180 months in prison, to be followed by three years of supervised release, and ordered to forfeit $287,776 in proceeds of his criminal activities, and to pay to the court a special assessment of $1,100. Medford was convicted at trial in May 2008 of conspiring to extort money from persons involved in the illegal video poker machine business beginning October 1, 2000 and continuing through December 3, 2006. Medford was convicted of depriving the citizens of Buncombe County of the right to his honest services while employed as sheriff and as a sheriff’s special deputy for Buncombe County. Medford was also convicted of conspiring to obstruct local or state law enforcement and of conspiring to commit money laundering. Also sentenced this week were three of Medford’s codefendants: John David Harrison, Ronnie Eugene Davis, and Guy Kenneth Penland. Harrison, a former lieutenant at the Buncombe County Sheriff’s Office, was sentenced to 30 months in prison, followed by three years of supervised release. Davis was sentenced to 60 months in prison to be followed by three years of supervised release. Penland was sentenced to 60 months in prison to be followed by a three year term of supervised release. Court documents show that Medford and his co-defendants received over $300,000 in bribe payments from various video poker machine operators. According to testimony presented at the trial, the corruption scheme involved multiple methods of extorting cash by Medford and his sheriff’s office co-defendants, including: that companies registering machines in the county pay bribes to get those machines registered; the solicitation of cash payments under the guise that the payers were sponsoring teams at the twice-yearly golf tournaments put on by Medford and his deputies; and more direct demands that the poker operators bring cash in to Medford and his co-defendants. Testimony at trial also established that Medford and several of his deputies engineered a scheme in 2006 to convert cash payments into money orders, in false names, in order to convert these bribes into funds that could be deposited into his re-election campaign account.

Real Estate Developer Sentenced to 14 Years in $50 Million Mortgage Fraud Scam

On October 3, 2008, in Los Angeles, Calif., Charles Elliott Fitzgerald was sentenced to 168 months in prison and ordered to pay $42.7 million in restitution for masterminding a $50 million mortgage fraud scheme. Fitzgerald pleaded guilty in May 2008 to conspiracy to commit bank fraud and loan fraud; bank fraud; organizing, managing, and supervising a continuing financial crimes enterprise; money laundering; and obstruction of justice. Fitzgerald was jailed in December 2006 when he was arrested and deported by authorities in the Independent State of Samoa, a Pacific island nation to which he fled in June 2003 after two victim banks sued him. According to court documents, Fitzgerald and the others were involved in a wide-ranging and sophisticated conspiracy to defraud federally insured mortgage lenders out of tens of millions of dollars. As part of the scam, the co-conspirators obtained inflated mortgage loans on expensive homes in some of California's most exclusive neighborhoods. Court documents charge that the co-conspirators sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into unwittingly funding mortgage loans that were hundreds of thousands of dollars higher than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.

Oklahoma Man Sentenced to 13 Years in Prison for Fraudulent Mortgage Rebate-Coupon Conspiracy

On September 26, 2008, in Oklahoma City, Okla., Terry Hugh Mahon, of Broken Arrow, Oklahoma, was sentenced to 13 years in prison and ordered to pay $3 million in restitution and to forfeit $1 million for conspiracy, mail fraud, and money laundering. He was convicted by a jury on March 26, 2008 for his part in a fraudulent investment scheme that involved rebate coupons and home mortgages. Mahon operated a company named Rebates International, Inc. a Nevada corporation with offices in Missouri. Trial evidence showed that from 2000 to 2003, Mahon and his co-defendant, Grover Harold Phillips, sold “cashback rebate coupons” that supposedly allowed purchasers to pay off their home mortgages in five years. Mahon and other conspirators made false representations that if victims paid 17 percent of the value of their homes to the conspirators, they would receive rebate coupons worth the entire value of their homes. The money that they paid was to be invested in “high-yield” trading programs. At the end of five years, the victims could supposedly redeem these rebate coupons for face value and pay off their mortgages. Many victims re-financed their homes to generate the 17 percent required to participate in the program. Mahon and other conspirators siphoned off hundreds of thousands of dollars that were supposedly to be invested for the benefit of coupon holders.

Brothers Sentenced on Charges of Steroid Trafficking and Money Laundering

On September 24, 2008, in Boston, Mass., Jonathan DeProspo, of Watertown, was sentenced to 12 months and one day in prison, to be followed by three years of supervised release. DeProspo had pleaded guilty on February 12, 2008, to conspiracy to launder money, conspiracy to possess anabolic steroids with intent to distribute, possession of anabolic steroids with intent to distribute and money laundering. According to court documents, between about October 2003 and June 2007, DeProspo and his brother, Justin DeProspo, ran an anabolic steroid distribution business. The brothers, both of whom were active bodybuilders, ordered various anabolic steroids from international suppliers via the Internet on dozens of occasions, then transmitted payment overseas using Western Union or other wire services. Justin DeProspo pleaded guilty January 10, 2008, to similar charges and was ultimately sentenced to approximately eight months incarceration, followed by three years of supervised release.

Vermont Man Sentenced to 135 Months in Prison

On September 22, 2008, in Burlington, Vt., John Byors, of Essex Junction, was sentenced to 135 months in prison, to be followed by five years of supervised release, and ordered to pay $9,121,487 in restitution. According to court records, in 1999 or 2000, Byors began attempting to raise funds for a number of marble related ventures he was attempting to get off the ground. Until December 2005, when Byors was arrested, he raised more than $10 million from approximately 100 investors. In the course of his fundraising, Byors made numerous false statements and promises about how he was to use the money he raised. Contrary to Byors promises that he would use the funds for various business-related purposes, Byors used a substantial portion of the money to make partial payments to earlier investors and to support a lavish personal life-style. Byors developed a series of promissory notes and security agreements, in which he pledged as collateral various raw blocks of marble that had been extracted from quarries Byors leased. Byors flagrantly overstated the value of the collateral as he tried to induce prospective investors to lend him money. Following his 2005 arrest, Byors was released on certain conditions, but his release was revoked in February 2006 when he improperly tried to solicit more money from investors. Byors pleaded guilty in March 2008 to 16 counts of mail fraud, wire fraud, bank fraud, travel fraud and money laundering.

Drug Trafficking Brothers Sentenced To 30 Years in Prison

On September 12, 2008, in Detroit, Mich., Terry and Demetrius Flenory, were each sentenced to 30 years in prison for cocaine distribution and 20 years for money laundering. The two brothers led a drug trafficking organization known as the Black Mafia Family. They pleaded guilty to being the leaders of a continuing criminal enterprise throughout the United States from 1990 through 2005. According to the charges in the indictment, Terry Flenory and his brother, Demetrius Flenory, dealt in multi-kilogram quantities of cocaine in the Detroit area beginning in the early 1990's. By the mid 1990's, the organization extended its drug trafficking activities to other parts of the country. They used the illegal proceeds of their narcotic sales to buy and lease numerous luxury vehicles, real property and jewelry while hiding the true source and nature of the funds involved in the transaction through false names and nominee purchasers. They deposited cash derived from cocaine sales into various bank accounts and purchased cashier’s checks and money orders. They also used drug proceeds to buy winning lottery tickets from a person who paid cash to the true winners. The winning tickets, worth $1 million, would be redeemed and used to purchase homes, make mortgage payments, and purchase vehicles, hiding the fact that the true source of the money was derived from Flenorys' drug organization cocaine sales.

Alabama Pharmacist Sentenced for Operating an Illegal Internet Pharmacy and Money Laundering

On September 10, 2008, in Birmingham, Ala., Billy Flint East, of Fultondale, Alabama, was sentenced to 24 months in prison, to be followed by three years of supervised release. In addition, East was ordered to forfeit five vehicles; $7,600 in cash; funds in the William & Mary Pharmacy bank accounts; and six parcels of real property. He also will forfeit all interest and control over the athomescripts.com Web site and agrees to forfeit his DEA registrations, pharmacy licenses, and all corporate and business licenses. The value of these properties is over $900,000. In May 2008, East, a pharmacist, pleaded guilty to illegal distribution of a controlled substance and money laundering. According to court documents, East illegally distributed compounded Hydrocodone, a Schedule III controlled substance which is an addictive painkiller, from February 2003 to March 8, 2006. In his plea agreement, East admitted that he distributed the narcotics, through the William & Mary Pharmacy Web site, knowing that the physicians who dispensed the drugs had not had face to face examinations or any legitimate doctor/patient relationship with the ‘customers’. He also admitted to laundering $1,343,878 in illegal proceeds.

Three Defendants Involved in Charlotte Internet-Based Prostitution Business Sentenced and Ordered to Forfeit Cash, Gold Coins, and Other Assets

On August 26, 2008, in Charlotte, N.C., Sallie Wamsley-Saxon, Donald Verdery Saxon, and Glen Fox were sentenced to 24 months in prison, 21 months in prison, and 15 months in prison, respectively. As stated in the Indictment, filed in November 2007, Sallie Wamsley-Saxon, Donald Verdery Saxon, and Glen Fox were charged with one count of conspiracy to cause individuals to travel in interstate commerce to engage in prostitution and to use the mail and other facilities in interstate commerce with the intent to distribute the proceeds of an unlawful activity. In addition, Sallie Wamsley-Saxon and Donald Verdery Saxon were charged with racketeering and conspiracy to commit money laundering. According to official court documents and testimony, Sallie Wamsely-Saxon, her husband, Donald Verdery Saxon, and Taylorsville photographer Glen Fox, owned, controlled, and operated from the Saxon residence in Charlotte, an Internet-based prostitution service, referred to as "HUSHHUSH" that began in January 2001 and continued through October 2007. Also according to information presented to the court, “HUSHHUSH” operated under two shell companies, Soft Touch Promotions, Inc. and SW Associates. Soft Touch was a North Carolina corporation with Wamsley-Saxon being the registered agent. Wamsley-Saxon generally allowed her prostitutes to keep 70 percent of clients’ fees, but required the prostitutes to pay 30 percent to her. Donald Saxon picked up payments from prostitutes at or near the hotels in which they worked, and Fox conducted photo shoots of new “HUSHHUSH” employees for posting on one or more of the Internet sites managed by Wamsley-Saxon. As part of her formal plea agreement, Sallie Wamsley-Saxon agreed to forfeit, and the court entered its judgment of forfeiture, approximately $55,780 in U.S. currency, gold coins, real property, a vehicle and several bank accounts. In addition, a $3 million monetary judgment was filed representing the proceeds obtained from violations of federal law.

Two Women Sentenced in Connection with Mortgage Fraud Scheme

On August 19, 2008, in Minneapolis, Minn., Molly L. Heise was sentenced to 70 months in prison and three years of supervised release in connection with a money laundering scheme involving the theft of more than $2.5 million from the clients of her real estate closing company, Profile Title and Escrow Corp. (Profile). On July 14, 2008, Christine A. Hein was sentenced to two years probation. Heise was also ordered to pay more than $3.9 million in restitution and ordered to pay more than $134,000 in restitution. According to Heise’s plea agreement, she was the sole shareholder and president of Profile, a corporation that closed real estate transactions during 2002 and 2003. Profile, which had offices in Bloomington and New Hope, accepted hundreds of millions of dollars in wire transfers and check deposits from buyers and lenders to be held in an escrow account for the purpose of closing residential real estate transactions. Court documents state that Heise caused $370 million of borrowed funds to be deposited into a secret escrow account which she then used to pay personal expenses. According to Hein’s plea agreement, she was Profile’s chief financial officer during 2002 and 2003. She was responsible for accounting for and reconciling monies held in trust by the company to close real estate transactions. She knew about the secret escrow account and knew that borrowed funds were being deposited into the account. On August 18, 2003, Hein wrote a check from the undisclosed account in the amount of $134,965 and used it to purchase a home in Buffalo.

Ohio Man Sentenced on Drug and Money Laundering Charges

On August 18, 2008, in Cleveland, Ohio, Lawrence Fassler, author of the book “Busted by the Feds” (a manual for individuals facing federal criminal charges), was sentenced to 135 months in prison for drug trafficking and money laundering. Fassler, of Tucson, Arizona, was the leader of a multi-state organization that was responsible for transporting approximately 400 kilograms of marijuana from Arizona to Ohio between June 2007 and February 2008. According to court documents, Fassler utilized the U.S. mail to send over $30,000 in U.S. currency from Ohio to Arizona. The money was the proceeds of Fassler’s drug trafficking. To date, persons targeted by the investigation have agreed to forfeit U.S. currency and real property to the United States valued at approximately $500,000.

Illinois Counterfeiter and Money Launderer Sentenced to 68 Months in Prison

On August 15, 2008, in Rock Island, Ill., Lawrence D. Kelley was sentenced to 68 months in prison, to be followed by three years of supervised release. Kelley pleaded guilty in September 2007 to two counts of money laundering and one count of passing a counterfeit check. Kelley opened bank accounts at six separate financial institutions from September to December 2005. In November 2005, he deposited a counterfeit $48,000 check in one of his accounts at a Moline bank and transferred $41,500 of that amount into his savings account. The next day, Kelley withdrew more that $13,000 from the savings account. The following month, on December 12, 2005, Kelley deposited a $78,700 counterfeit cashiers check into one of his accounts at an East Moline credit union. Shortly after completing the deposit he withdrew $12,000 in cash. The next day he withdrew $14,105. Within 5 days, Kelley had withdrawn $73,000 of the deposited amount. Judge Michael Mihm ordered Kelley to pay $89,775 in restitution to the financial institutions harmed by his scheme.

Ohio Man Sentenced to 54 Months for Mortgage Fraud Scheme

On August 13, 2008, in Columbus, Ohio, Jason McCord was sentenced to 54 months in prison, to be followed by five years of supervised release, and ordered to pay $756,800 in restitution to LaSalle Bank. McCord pleaded guilty to two counts of bank fraud and one count of money laundering on August 30, 2007. According to court documents, McCord devised a scheme in which he defrauded two banks on a total of 55 mortgage refinancing applications between January 2002 and June 2002. McCord operated two businesses in Central Ohio, J.R. Lending and Q3 Mortgage. Through these businesses, he prepared and submitted false and fraudulent loan applications on behalf of his clients, thereby earning over $358,000 in transaction fees that would not have been otherwise generated.

Beverly Hills Man Sentenced to Over 7 Years in Prison in 'Bust-Out' Schemes that Caused Over $8 Million in Losses

On August 11, 2008, in Los Angeles, Calif., Reza Bahram Tabatabai was sentenced to 87 months in prison and ordered to pay $2,235,801 in restitution. Following a bench trial, Tabatabai was found guilty of conspiracy, interstate transportation of fraudulently obtained property, mail fraud, wire fraud, conspiracy to commit money laundering and money laundering. According to court documents, Tabatabai orchestrated a series of “bust-out” schemes in which the identity and credit line of businesses are used to obtain loans and goods with no intention of paying for the money or merchandise. In this case, Tabatabai, with the help of several others, purchased established businesses so they could make large purchases of goods using the companies’ existing lines of credit. While some payments were made in order to secure larger lines of credit, lenders to the four companies lost more than $8 million. The goods sold to the companies were re-sold at discounted prices to quickly generate profits for the participants in the scheme. The evidence at trial showed that Tabatabai and his co-conspirators engaged in a series of complex monetary transactions to both conceal and promote the fraudulent scheme. Tabatabai controlled numerous bank accounts, held in the names of numerous businesses, in which he concealed the proceeds of the fraudulent conduct.

Organizer in Mortgage Fraud Scheme Sentenced to Another 10 Years in Federal Prison; Defendant Continued Mortgage Fraud from Jail Phone While Awaiting Sentencing

On August 7, 2008, in Atlanta, Ga., Riley Graham, aka Riley Williams, of Detroit, Michigan, was sentenced to 120 months in prison, to be followed by three years of supervised release and ordered to pay $670,000 in restitution. Graham was convicted on charges of conspiracy, mail fraud, wire fraud and money laundering on February 13, 2008. According to court evidence, Graham, aided by his partner Marcus Alcindor, fraudulently obtained a $1.3 million loan in the name of the “Alcindor-Williams Group LLC” for the purchase of residential lots owned by Phillip Hill located in the 4001 Cascade subdivision in Atlanta. In addition, Graham and Alcindor assisted Phillip Hill in the sale of houses in the 4001 Cascade subdivision. Each of these houses was sold at an inflated price to a “straw purchaser” who applied for a mortgage loan based upon the inflated price. Such a fraudulent transaction is called a mortgage “flip.” The straw purchasers who participated in these mortgage flips were paid a kick-back out of the excess loan proceeds for the use of their name and credit. The victim lenders granted the loans based upon numerous false representations and documents regarding the credit qualifications of the straw purchaser, as well as false representations that the straw purchaser had paid a down payment, would reside in the home, and would be responsible for the loan payment. In addition, the lenders were induced to make the loans based on fraudulently inflated appraisals. The court also heard evidence that while Graham was in jail awaiting sentencing in the present case, he continued to contact his associates in an effort to obtain more fraudulent loans.

Former Employee of the North Carolina Department of Environment and Natural Resources is Sentenced to 40 Months in Prison

On August 6, 2008, in Raleigh, N.C., Boyce Allen Hudson was sentenced to 40 months in prison, three years of supervised release, and ordered to pay a $35,000 fine and to pay $15,000 in restitution. Hudson pleaded guilty on May 27, 2008, to one count of extortion under color of official right and one count of money laundering. As disclosed in open court and in court filings, Hudson, while employed as a Senior Field Officer in the Legislative and Intergovernmental Affairs Office of the North Carolina Department of Environment and Natural Resources (DENR), solicited compensation totaling $196,000 for agreeing to help to expedite a Raleigh company’s air and water quality permits from DENR. The company, Agri-Ethanol Products, LLC, (AEP) was trying to construct an ethanol production plant near Aurora, North Carolina. Hudson helped expedite the permits and was to receive the money after he retired on June 30, 2005. In October 2005, Hudson accepted $15,000, from an undercover agent posing as a potential investor in AEP, as a partial payment toward the $196,000 the company had agreed to pay him for expediting the permits while at DENR.

Perpetrator of $14 Million Investment Fraud Scheme Sentenced to Nearly 10 Years in Prison

On August 4, 2008, in Atlanta, Ga., Anthony G. Christou was sentenced to 117 months in prison, to be followed by three years of supervised release, and ordered to pay $14.3 million in restitution. Christou was found guilty of wire fraud and money laundering following a two week trial in February 2008. According to evidence presented in court, from approximately the late 1990s through 2005, Christou solicited over $30 million from almost 100 people, as part of what turned out to be a phony real estate financing business. At the time, Christou operated a mortgage brokerage firm, Atlas Mortgage. According to the testimony or statements introduced from several victims, Christou told them that he would use their money to fund specialized short term “bridge” loans at high rates of interest, to real estate developers and others who needed such financing. He lured this investment by offering extraordinary interest rates – often as high as 5 percent in 20-30 days. He claimed he could pay these rates because he was earning even higher rates of interest on the bridge loans he was making. Christou claimed that his bridge loan financing business grew out of his brokerage experience and contacts. However, Christou never made any short term loans or used any of the victims’ money for any business purpose. Instead, he used the money for himself. Among other things, evidence at trial showed that he spent more than $7 million alone gambling in just two years. Christou was operating what is often referred to as a “Ponzi” scheme. He paid the money due each month to his investors, not through any actual earnings, but by luring more people to invest every month. He used new investor’s money to immediately pay returns promised to earlier investors; and when the time came to pay the new investor, he would lure new investment money from someone else. In 2004 and 2005 alone, he cycled more than $20 million through his bank account to and from victims. In the end, over 20 victims lost more than $14 million.

Former Auto Body Shop Owner Sentenced to 108 Months in Prison for Auto Insurance and Bank Fraud Schemes

On August 4, 2008, in Trenton, N.J., John V. Cotona, aka John Bruno, owner of a defunct Red Bank auto body shop, was sentenced to 108 months in prison for his leadership role of a million-dollar automobile insurance fraud, bank fraud and money laundering scheme. He was also ordered to pay $1.275 million in restitution and to serve five years of supervised release upon the completion of his prison term. On January 10, 2008, Cotona pleaded guilty to charges of conspiracy to commit mail fraud, conspiracy to launder money and bank fraud. At his plea hearing, Cotona stated that between January 2001 and June 2005, he operated Perfect Touch Auto Body in Red Bank. During this time period, Cotona conspired and agreed with others to submit false automobile property damage claims to various insurance companies. Cotona admitted that the false insurance claims included information that the subject vehicles suffered damage resulting from fictitious accidents. Cotona further admitted that, in addition to making claims for purported repairs, many of the cars involved in the fictitious accidents were actually owned by him and titled in the names of other people or various shell companies that he controlled. Cotona also admitted that he agreed to launder the proceeds of the scheme through bank accounts of the shell companies, which he controlled. In addition, Cotona admitted that from May through June 2005, he defrauded Commerce Bank of approximately $154,950 by depositing bad checks into accounts he controlled and then withdrawing the proceeds of the checks before the checks were returned for insufficient funds.

Three Defendants in Minnesota Mortgage Fraud Scandal Sentenced

On July 31, 2008, in Minneapolis, Minn., the owners of Parish Marketing and Development Corp. (PMDC), a long-time Minnesota homebuilder, were sentenced for conspiring to commit mortgage fraud and money laundering in connection with a scheme involving approximately 200 residences and $100 million in loan proceeds. According to the Minnesota United States Attorney, Michael Alan Parish was sentenced to 156 months in prison; Ardith Ann Parish was sentenced to 60 months in prison; and Christopher David Troup was sentenced to 120 months. According to their November 2007 guilty pleas, PMDC utilized “straw buyers” to buy about 200 properties built by PMDC. Their scheme generated nearly $100 million in loan proceeds, with PMDC receiving in excess of $25 million from these loan proceeds. The defendants acknowledged that they completed loan applications for the straw purchases, which included false information; executed loan documents in the names of the straw buyers; and, manufactured and provided false documentation, such as false representations of employment and false verifications of deposit, to obtain loans to buy the properties from PMDC. Straw buyers did not execute the sales documents and loan documentation, which were instead signed by the defendants, and they made no payments on the mortgages that were taken out in their names. Instead, PMDC made the payments or allowed the mortgages to go into foreclosure. Often, PMDC utilized proceeds from the sale of one residence to a straw buyer to make monthly payments for the mortgages held on other residences in the names of other straw buyers.

South Texas Man Sentenced on Money Laundering and Drug Trafficking Charges

On July 28, 2008, in Houston, Texas, Ricardo Garcia-Heredia, of McAllen, Texas, was sentenced to 360 months in prison for drug trafficking, money laundering and illegal re-entry into the United States after being deported. A jury convicted Garcia-Heredia in May 2008. During the trial, witnesses testified about Garcia-Heredia’s role as manager of the transportation and distribution of cocaine and about his role in managing the flow of drug proceeds from Chicago back to the Rio Grande Valley and, eventually, Mexico. Trial evidence proved Garcia-Heredia used his trucking business, Earth Transportation, in Edinburg, Texas, as a front to recruit drivers who transported the large loads of cocaine.

Oregon Man Sentenced in Mortgage Fraud Scheme

On July 21, 2008, in Portland, Ore., Clifford J. Brigham was sentenced to 120 months in prison and ordered to pay $279,564 in restitution for wire fraud, mail fraud, money laundering, and social security fraud. According to the indictment, Brigham operated Nationwide Investments and Leasing, Global Mortgage and Investments and No Credit Check Home Loans. He used false pretenses to get about $5 million worth of home loans and then diverted loan proceeds to himself. Brigham paid “straw buyers” with good credit ratings to apply for home loans and told them that they did not have to repay the loans. He also falsified loan applications by inflating reported income earned and assets owned by the loan applicants; declaring the loan applicants’ intent to occupy the property; and declaring that the loan applicants would contribute to the down payment for the loan.

California Man Sentenced for Identity Theft and Money Laundering in Connection with Mortgage Loan

On July 18, 2008, in San Diego, Calif., Micah Bachman, also known as Tyler Jefferies, of Lake Forest, California, was sentenced to 61 months in prison and ordered to pay $255,928 in restitution to the financial institutions who were victims of his scheme. Bachman pleaded guilty in April 2008 to money laundering, aggravated identity theft, bank fraud, and false use of a social security account number in connection with a mortgage loan he obtained. According to evidence presented at trial, Bachman admitted to creating an alter ego of “Tyler Jefferies” and built a credit profile for that identity based on a social security number stolen from a child in Kentucky. Using the Jefferies identity, Bachman obtained credit cards and loans and made enough payments, by moving money between and among these accounts and other accounts, to manufacture a credit history and good credit rating for Jefferies. Bachman then obtained a primary mortgage loan and an equity line of credit in the total amount of $960,000 from Chase Bank and Flagstar Bank to buy a residence in Lake Forest, California, through a mortgage broker in San Diego. All of the loans used to create the Jefferies identity and the mortgage loans are in default.

Oklahoma Bank Manager Sentenced for 25 Year Money Laundering and Embezzlement Scheme

On July 15, 2008, Muskogee, Okla., Rhonda Harris was sentenced to 168 months imprisonment and ordered to pay $3.3 million in restitution to Chubb Insurance and $1.9 million to Arvest Bank for money laundering and embezzlement. Harris, a bank manager admitted that she had been stealing from the bank for 25 years. In 2006, a bank customer went to a bank branch in Tulsa to cash a CD she had purchased at the branch. Tulsa branch officers were unable to find evidence that the CD existed. Bank officials researched other accounts and determined that several accounts had been compromised. Harris’ scheme involved pretending to open CDs and giving customers some paperwork, failing to enter the CDs in the bank records system, and diverting the money to her personal use. She paid ‘interest’ to some customers on the non-existent CDs, either in cash or with bank-issued money orders. She also invaded other customers’ CDs to maintain her scheme. In all, at least 82 accounts suffered loss. Harris used the stolen money to start a horse racing business and pay living expenses.

Dallas, Texas Man Sentenced to 17 ½ Years in Federal Prison for Running Investment Fraud Scheme

On July 8, 2008, in Dallas, Texas, Stanley Leitner was sentenced to 210 months in prison and ordered to pay $10 million in restitution to his victims for operating an investment fraud scheme. The Argyle, Texas resident was convicted in January 2008 on all 27 counts of an indictment that charged him with 13 counts of money laundering, six counts of engaging in illegal monetary transactions, wire fraud, securities fraud, and failing to disclose compensation for promoting a security. Leitner was President and CEO of Megafund Corp., an entity he created to solicit investors to participate in a high yield investment program. Leitner raised funds from investors, which he aggregated or “pooled” and sent to another individual’s overseas bank account located in the Antilles. During the year or so Megafund was operating, Leitner raised more than $15 million from investors, many of whom were pastors, their friends and their families. Leitner defrauded his investors by leading investors to believe that there was little or no risk of losing the invested funds. In addition, Leitner failed to inform investors that he was not transferring to the program some of the funds investors sent to him, but instead was using those monies to fund several personal ventures and projects, including, among other things, a movie.

Four Members of a Virginia Cocaine Hydrochloride Distribution Ring Sentenced for Money Laundering

On July 8, 2008, in Danville, Va., Saundra Jean Martin, Hazel Martin Adams, Ronald K. White, Jr., and Kimberly Dayle Hughes were sentenced for their roles in a cocaine hydrochloride distribution ring. Martin was sentenced to 12 months in prison, Adams received a 13 month sentence, White was sentenced to 51 months, and Hughes was sentenced to 24 months in prison. Martin, Adams and Hughes admitted to helping ring leader Clarence James Martin, Jr. launder money from the sale of drugs. They admitted that they knew that the money came from an unlawful activity and bought motor vehicles and real estate for Clarence Martin. Ronald K. White, Jr. also admitted guilt to money laundering and conspiracy to distribute more than 5 kilograms of cocaine.

Chicago Suburban Businessman Sentenced to 168 Months for Bilking Investors of Millions of Dollars

On July 7, 2008 in Chicago, Ill., Anthony Phillips was sentenced to 168 months in prison and ordered to pay $2.1 million in restitution to his victims for using a sham investment scheme to defraud investors. In April 2008, a jury found Phillips guilty on mail fraud and money laundering charges. Phillips operated three companies in Oak Park, Illinois. According to the indictment, from 1997 until about July 2003, Phillips caused over 70 people to give him $2.9 million to invest based on false statements and promises that their money would be invested in high interest earning ventures, knowing that most of the funds would not be invested. Phillips did not disclose to investors that he was the sole shareholder of the company in which they were investing, and that he operated the company primarily for his own personal benefit. Phillips provided investors with fictitious bonds that claimed that their investments were sound, but he knew the bonds were worthless. Investor’s money was used for Phillips' recreation, air travel, his children's tuition, payments to himself, the purchase of a home and the purchase of a $48,000 Mercedes Benz.

Tax Fraud Results in Eight Year Prison Sentence for Company Co-Founder

On June 27, 2008, in Philadelphia, Pa., John Michael Crim was sentenced to eight years in prison for conspiring to defraud the United States and corruptly endeavoring to obstruct/interfere with the Internal Revenue Service, causing tax losses of up to approximately $10 million. In addition to the prison sentence, Crim was ordered to pay $17.2 million restitution, a $175,000 fine, and serve three years supervised release. Crim was co-founder of a Texas-based group called Commonwealth Trust Company (CTC). The group (not affiliated with the Wilmington, DE firm by the same name) persuaded investors to place income and assets into trusts to avoid paying federal income tax. CTC marketed two domestic trust packages and one offshore trust package to its clients. Based on CTC instructions, many of clients did not file tax returns or filed materially false tax returns. As part of the scheme, CTC told clients they could escape paying income taxes by diverting income through a series of trusts. CTC also instructed clients to transfer their assets into CTC’s other domestic fraudulent trust package to conceal and protect real and personal property from IRS liens and seizure attempts.

Miami-Dade Husband and Wife Sentenced for Money Laundering

On June 26 and 27, 2008, in Fort Lauderdale, Fla., Irven Pressley and his ex-wife, Cynthia Pressley, were sentenced for their roles in a drug and money laundering scheme. Cynthia Pressley was sentenced on June 27, to 54 months in prison; Irven Pressley was sentenced to 114 months in prison on June 26. According to the court documents, Irven Pressley distributed cocaine in the Southern District of Florida. In addition, from late 1989 until December 2004, Irven and Cynthia Pressley conspired to launder funds obtained from Irven Pressley’s cocaine sales. In total, the conspiracy laundered more than $1.5 million.

South Bend Man Sentenced to 294 Months for Scams Targeting Seniors

On June 23, 2008, in South Bend, Ind., Perry F. Motolo was sentenced to 294 months i