Local Businessman Charged with Wire Fraud for Using Investors’ Funds for His Personal Use

ATLANTA—The co—founder of Geometrix has been charged in a federal criminal information with defrauding business investors of approximately $800,000. Kevin Patrick Loughery, 49, of Atlanta, Georgia, who co-founded Geometrix in 2007, was arraigned today before United States Magistrate Judge Alan J. Baverman on the federal charge of wire fraud and was released on bond.
“Instead of keeping his business investors’ funds secure in an escrow account, the defendant is charged with using hundreds of thousands of dollars to support his lavish lifestyle,” stated United States Attorney Sally Quillian Yates. “The charges against Loughery reflect our ongoing commitment to crack down on investment fraud.”
Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated, “When the defendant diverted investor funds to his personal account, he left behind his multiple investors-turned-victims now suffering substantial financial losses while he pursued a life of affluence. The FBI remains well-suited and committed to investigating such cases of wire fraud that often significantly impact many victims.”
According to United States Attorney Yates, the charges, and other information presented in court: In 2008, Kevin Patrick Loughery began soliciting investments from his friends and business associates in Geometrix, a Georgia start-up company that he co-founded in 2007. Loughery assured investors both telephonically and via e-mail that their investment would remain in escrow until the completion of Geometrix’s issuance of stock and accompanying documentation.
In an e-mail to one such investor, Loughery assured the investor that the money would be kept in an escrow account, and Loughery instructed the investor to wire the money into such an account. However, the money never went to an escrow account because Loughery’s wiring instruction was not for an escrow account but rather was for Loughery’s own account for a separate business, KLM Investments, of which Loughery was the sole proprietor. The investor wired over $300,000 into the account. Loughery then sent the investor an e-mail stating that the investor would receive 400,000 shares of Geometrix for his investment. The investor never received those shares.
In total, Loughery solicited $780,000 in investments from various investors that were supposed to be kept in escrow but instead were spent by Loughery. Loughery subsequently declared bankruptcy.
This case was investigated by special agents of the Federal Bureau of Investigation.
Assistant United States Attorney Karlyn J. Hunter is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Information Office at USAGAN.Pressemails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.

Walker County Man Sentenced to Two Years in Prison for Disaster Fraud

BIRMINGHAM—A federal judge today sentenced a Walker County man to two years in prison for fraudulently claiming $30,200 in federal disaster relief funds following the April 2011 tornadoes across North Alabama, announced U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Richard D. Schwein, Jr., and Department of Homeland Security, Office of the Inspector General Special Agent in Charge James E. Ward.
Donnie Lee Burleson, 38, must pay $30,200 in restitution to the Federal Emergency Management Agency and serve five years of supervised release after completing his prison term, according to the sentence imposed by U.S. District Judge Sharon Lovelace Blackburn.
Burleson pleaded guilty in June to one count of disaster benefit fraud for falsely representing to FEMA on May 3, 2011, that he owned a residence in Hackleburg that was destroyed by an April 27, 2011 tornado. Based on Burleson’s fraudulent claim, FEMA paid him $30,200 in disaster relief benefits. The federal funds were paid in connection with the presidential disaster declaration for Alabama that followed the deadly April tornadoes that raked the state, destroying communities in Tuscaloosa, Birmingham, Hackleburg, and elsewhere.
Burleson, through his false claim to FEMA, fraudulently diverted disaster benefits to himself that were meant for honest citizens genuinely affected by the storm, the government said in its Sentencing Memorandum. “He sought to parlay the community’s devastation and distress into a financial windfall for himself,” the memo said.
The FBI and DHS-OIG investigated the case, which was prosecuted by the U.S. Attorney’s Office for the Northern District of Alabama.

Former President of SEIU Local Found Guilty of Stealing Tens of Thousands of Dollars from Union and Failing to Report Income

LOS ANGELES—Tyrone Ricky Freeman, the former president of Service Employees International Union (SEIU) Locals 6434 and 434-B, was convicted late this afternoon of federal charges of embezzling tens of thousands of dollars from the union that represents home healthcare workers.
Freeman, 43, who is currently residing in Pittsburgh, Pennsylvania, was found guilty of four counts of mail fraud, seven counts of embezzlement and/or theft of labor union assets, one count of making a false statement to a federally insured financial institution, and two counts of subscribing to a false tax return.
The evidence presented during a 10-day jury trial showed that Freeman pilfered money from SEIU Locals 6434 and 434-B by diverting reimbursement payments from a public-sector union that had close ties to the SEIU locals. Freeman collected $2,500 per month from Local 6434 and the California United Homecare Workers (CUHW), which was established in 2005 by SEIU and the American Federation of State, County, and Municipal Employees to represent public sector employees working in the homecare industry in California. From the beginning of 2007 through the summer of 2008, Freeman concealed from the Local 6434 Executive Board and the CUHW Executive Board that he was receiving payments of $2,500 per month in addition to the regular salary that he received from Local 6434.
Freeman also used a Local 434-B credit card to pay $8,105 in personal expenses he incurred during a 2006 trip to Honolulu, Hawaii, which included expenses related to Freeman’s wedding ceremony.
Freeman also stole money from Local 6434 by routing funds through another entity closely aligned with the union—the Long Term Care Housing Corporation (LTCHC), which was a not-for-profit corporation organized in 2004 for the purpose of developing affordable housing for members of Locals 6434 and Local 434-B. The indictment alleges that Freeman took nearly $17,000 from Local 6434 in June 2008 by requesting the Local 6434 Executive Board to make payments to LTCHC without disclosing to the Executive Board that Freeman would then divert those funds to himself.
The false statement charges relate to lies that Freeman told to Countrywide Bank when he told a bank representative that Local 6434 paid for his personal American Express credit card debt and the monthly lease payments for his Land Rover.
Freeman was also found guilty of subscribing to false tax returns in 2006 and 2007 when he failed to report approximately $63,000 in income he received during those tax years.
“This was a case about abuse and betrayal,” said United States Attorney André Birotte, Jr. “Freeman abused his position as leader of the SEIU, and he betrayed the hardworking people whose interests he was supposed to represent.”
Each count of mail fraud carries a statutory maximum sentence of 20 years in federal prison. Each count of making a false statement to a federal insured financial institution carries a statutory maximum sentence of 30 years in federal prison. Each count of embezzlement and/or theft of labor union assets carries a statutory maximum penalty of 10 years in prison. The charge of subscribing to a false tax return carries a statutory maximum penalty of three years in prison.
Freeman is scheduled to be sentenced by United States District Judge Audrey B. Collins on April 22.
The case against Freeman was investigated by the U.S. Department of Labor, Office of Inspector General; the U.S. Department of Labor, Office of Labor Management Standards; the U.S. Department of Labor, Employee Benefits Security Administration; the Federal Bureau of Investigation; and IRS-Criminal Investigation.

Stockton Woman Sentenced to Prison for Online Sales of More Than $1 Million in Stolen Merchandise

FRESNO, CA—Thuy Vi Thi Wagner, 34, of Stockton, was sentenced on Monday, January 28, 2013, by United States District Judge Anthony W. Ishii to four years and three months in federal prison for mail fraud and aiding and assisting in the filing of a false tax return, U.S. Attorney Benjamin B. Wagner announced today.
According to court documents, between 2002 and September 2010, Wagner personally shoplifted large amounts of women’s designer clothing from department stores. She then sold these stolen items at approximately one-third of the retail price to buyers in California and other states through an online auction website. Wagner did not disclose to unsuspecting buyers that the merchandise was stolen. Once buyers made payments to her Internet-based account, she mailed them the merchandise. Wagner obtained more than $400,000 from buyers of the stolen merchandise. The retail value of merchandise Wagner shoplifted from department stores in furtherance of the fraud scheme exceeded $1 million.
Wagner also aided and assisted in preparing and presenting a false tax return for tax year 2007 that did not disclose approximately $105,056 of net income from the sale of approximately 2,236 items of stolen clothing in 2007.
This case is the product of an investigation by the Internal Revenue Service, Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorney Henry Z. Carbajal, III prosecuted the case.

Colorado Man Sentenced for Scheming Investors Out of $7 Million

MINNEAPOLIS—Earlier today in federal court, a 37-year-old Colorado man was sentenced for scheming investors out of more than $7 million. United States District Court Judge Patrick J. Schiltz sentenced Evan Matthew Flaxman, of Silverthorne, Colorado, to 52 months in prison on one count of mail fraud in connection to the crime. Flaxman was charged on June 14, 2012, and pleaded guilty on July 25, 2012.
In his plea agreement, Flaxman admitted that from December 2009 through March 2012, he induced investors to give him money, telling them he had extensive financial expertise and personal wealth and resources. That was not the case. He subsequently provided one investor with documents indicating investment gains. In reality, however, Flaxman had used investment funds for personal use, including the purchase of a Ferraris and Porsche automobiles and a Rolex watch. He also paid his taxes with the money.
This case was the result of an investigation by the U.S. Postal Inspection Service and the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorney Thomas Calhoun-Lopez.

Jacksonville Man Indicted for Operating Fraudulent Investment Scheme

JACKSONVILLE, FL—U.S. Attorney Robert E. O’Neill announces today the arrest and unsealing of a federal indictment charging Anderson Scott Hall (48, Jacksonville) with 10 counts of mail fraud and 10 counts of wire fraud in connection with his operation of a fraudulent investment scheme. If convicted, Hall faces a maximum penalty of 20 years in federal prison for each count of mail and wire fraud and fines up to $5 million. His initial appearance is scheduled today at 2:30 p.m. in Jacksonville before U.S. Magistrate Judge Thomas Morris.
According to the indictment, while working for a national investment services company, Hall operated a sham company (Abaco Securities International Ltd.), which he held out to be a legitimate international investment company. It is alleged that Hall was the mastermind behind a complex scheme to defraud numerous investors, including Duval County school teachers and administrators. Hall would allegedly induce victim investors into transferring their retirement savings from legitimate life insurance companies and investment companies over to his control. It is further alleged that instead of investing victim investors’ funds as promised, Hall would use the funds for his own personal use, including purchasing high value luxury items and commercial and residential real estate. On occasion, as part of the fraud scheme, Hall would use money taken from new investors to pay earlier investors. In total, Hall allegedly defrauded investors of more than $4 million.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by the Federal Bureau of Investigation and the state of Florida’s Department of Financial Services and the Florida Office of Financial Regulation. The case is being prosecuted by Assistant United States Attorney Mark Devereaux.

Former Bank Director Charged with Securities and Wire Fraud

A former director of a Georgia bank who managed two private investment funds has been charged by a federal grand jury in the Eastern District of New York with securities fraud and wire fraud. According to court documents, defendant Aubrey Lee Price sent a letter to acquaintances in mid-June 2012 in which he admitted that he had lost a large amount of investor money through trading activities and that he planned to kill himself by jumping from a ferry boat in Florida. Price remains missing. Anyone with information regarding Price’s whereabouts or the alleged crime is urged to contact the Federal Bureau of Investigation office in New York at (212) 384-1000 or at ny1@ic.fbi.gov.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office.
According to the indictment, Price managed investment funds PFG LLC (PFG) and the Montgomery Growth Fund (Montgomery Growth). Starting in or about June 2009, PFG raised approximately $40 million from approximately 115 investors from across the nation. Price unsuccessfully invested PFG funds in various equity securities, options, and real estate, including farms in South America. To cover up his losses, Price allegedly lied to his investors by posting fake account statements on a secure PFG website that fraudulently reflected fictitious assets and fabricated investment returns.
The indictment also states that, starting in or about January 2011, Price became a director of Montgomery Bank & Trust (MB&T), a financial institution in Ailey, Georgia. Price also invested some of the bank’s capital, which he told the bank’s management he would invest safely in U.S. Treasury securities. Instead, Price lost much of the bank’s money through risky investments in equity securities and options. Price also embezzled MB&T money to pay redemptions to some PFG investors. The indictment charges that Price covered up his embezzlement and losses of MB&T’s funds by giving the bank’s management fabricated documents falsely indicating that approximately $17 million was on deposit in the bank’s name at a large financial services firm in New York.
“As charged in the indictment, this defendant repeatedly abused the trust placed in him by his investors and MB&T by lying about his investment losses, fabricating documents, and embezzling bank funds. Through this web of deception, Price acted to create the image of a successful investor. When that image was shown to be a lie, he then orchestrated his confession and disappearance. We are using every resource available to locate him and recover the funds he stole,” said U.S. Attorney Lynch.
FBI Assistant Director in Charge Venizelos stated, “As alleged, Price lied to investors about where their money would be invested and lied to them about the solvency of his company. He lied to the bank on whose board he served about investment of bank capital and lied again to cover up that lie. It is therefore reasonable to assume that Price’s talk of suicide was also a lie. The FBI is actively looking for Aubrey Lee Price.”
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, the defendant faces a maximum prison sentence of 30 years for wire fraud and 25 years for securities fraud.
The government’s case is being prosecuted by Assistant United States Attorneys David C. Woll, Jr., James McMahon, and Brian Morris.
This case was brought in coordination with 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.
Defendant:Aubrey Lee Price
Age: 46

Federal Grand Jury Indicts Maverick County Commissioner Rodolfo Bainet Heredia in Connection with a Bribery, Kickback, and Bid-Rigging Scheme

In Del Rio this morning, a federal grand jury indicted Maverick County Precinct Two Commissioner Rodolfo Bainet Heredia, age 54, of Eagle Pass, Texas, in connection with an alleged bribery, kickback, and bid-rigging scheme, announced United States Attorney Robert Pitman and FBI Special Agent in Charge Armando Fernandez.
The federal grand jury indictment charges Heredia with six counts of receiving a bribe and one count of paying a bribe to an agent of an organization receiving federal funds. The indictment alleges that in 2010 and 2011, Heredia manipulated the bidding process to guarantee that contractors he chose would be awarded Maverick County construction contracts. Those contractors deposited the checks issued to them by Maverick County and then made cash payments to Heredia. According to the indictment, the private contractors submitted inflated bids to Maverick County in order to ensure the availability of sufficient funds to perform the construction work, make a profit, and also to pay the bribe to Heredia. The indictment further alleges that Heredia gave benefits to a county employee to guarantee that checks were issued to the contractors involved in this scheme.
Upon conviction, Heredia faces up to 10 years in federal prison on each count. Heredia remains in custody following his arrest in October of last year on federal money laundering and bulk cash smuggling charges. A trial on those charges is scheduled for April 16, 2013. No court dates have been scheduled in connection with today’s indictment.
This ongoing investigation is being conducted by the Federal Bureau of Investigation and the Texas Department of Public Safety. Individuals who have first-hand information about corruption, fraud, or bribery related to Maverick County are urged to contact the FBI at (210) 225-6741.
Assistant United States Attorney Michael Galdo is prosecuting this case on behalf of the government.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendant is presumed innocent until proven guilty in a court of law.

Knoxville Woman Sentenced to One Year in Prison for Lying to Court About Cancer Diagnosis

KNOXVILLE—Angela Elwood, 48, of Knoxville, Tennessee, was sentenced on January 17, 2013, by the Honorable Thomas W. Phillips, U.S. District Court Judge, to serve one year in federal prison.
On August 17, 2012, United States Attorney William C. Killian filed an information in U.S. District Court charging Elwood with obstructing justice by lying to the court about having cancer so that she could delay her reporting date to the federal Bureau of Prisons to begin a prison term imposed for a bank fraud conviction.
According to court documents, Elwood admitted that following her bank fraud conviction in 2009, and while awaiting designation and a reporting date to a federal prison facility, she obstructed the due administration of justice by having the court extend her reporting date to federal prison based on medical documents submitted to the court that she fabricated to falsely state that she had been diagnosed with breast cancer and needed immediate medical treatment. At the time Elwood submitted the false medical documents to the court, she already had been told by a medical professional that she did not have breast cancer.
This investigation was conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney F. M. (Trey) Hamilton, III represented the government.

Former Ohio State Representative Clayton R. Luckie, II Sentenced to Three Years in Prison

COLUMBUS, OH—Edward J. Hanko, Special Agent in Charge (SAC) of the Cincinnati Division of the Federal Bureau of Investigation (FBI), and Franklin County Prosecutor Ron O’Brien today announced that former Dayton-area State Representative Clayton R. Luckie, II pleaded guilty to eight felonies and one misdemeanor and was sentenced to three years in prison in relation to acts committed while serving in the Ohio General Assembly.
Special Agent in Charge Hanko stated, “When public officials betray the trust that has been given to them, it can have a devastating impact on our system of government. These officials are accountable for their actions and when they violate the law, there are very real consequences.” SAC Hanko went on to say, “I would like to thank Prosecutor Ron O’Brien and his staff for their hard work in this investigation and the plea negotiations. This is another example of federal, state, and county officials working together in pursuit of justice.”
Specifically, Luckie pleaded guilty to one count of money laundering, one count of grand theft, six counts of election falsification (one for each year he was in office), and one count of failure to disclose on state ethics disclosure statements. As a part of the plea agreement, Luckie will also have to make restitution in the amount of $11,893 to the State of Ohio Treasury for the salary he received as a state representative following his indictment on October 10, 2012.
Luckie was first appointed to the House of Representatives in 2006 and withdrew his name from the November 2012 ballot when he acknowledged the existence of this criminal investigation. However, he did not resign and served the remainder of his term until December 31, 2012.
The original 49-count indictment against Luckie alleged a pattern of intent to steal campaign funds, spend these funds for personal use, and falsify required financial disclosure forms to cover up these unlawful acts.
SAC Hanko noted that the sentence was the result of a lengthy investigation by FBI special agents with the support of FBI professional staff in the Columbus Resident Agency.

C. Ray Nagin, Former New Orleans Mayor, Indicted on Federal Bribery, Honest Services Wire Fraud, Money Laundering, Conspiracy, and Tax Charges

NEW ORLEANS—C. Ray Nagin, 56, a resident of Frisco, Texas, and formerly the mayor of New Orleans, was charged in a 21-count indictment with bribery, honest service wire fraud, money laundering, conspiracy, and filing false tax returns, announced U.S. Attorney Dana J. Boente, FBI Special Agent in Charge Michael Anderson, and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge James Lee.
According to today’s federal grand jury indictment, between December 2004 and the present, Nagin and several others participated in a conspiracy to commit bribery and honest services wire fraud. The indictment alleges that Nagin, in his role as chief executive, devised a scheme to defraud the city of New Orleans and its citizens of his honest services through bribery and a kickback scheme, whereby Nagin used his public office and official capacity to provide favorable treatment, including awarding contracts, that benefitted business and financial interest of individuals providing him with bribes and kickbacks in the form of checks, cash, granite inventory, wire transfers, personal services, and free travel. The indictment charges Nagin with accepting numerous bribes and payoffs from consultants and contractors, money laundering conspiracy, and filing false tax returns for the years 2005 to 2008.
“This office will continue its history of investigating and prosecuting public corruption,” said U.S. Attorney Dana J. Boente. “This is an important part of the office’s mission to serve the citizens of the Eastern District of Louisiana and make certain they have honest public officials.”
“This indictment should serve as a reminder to current and former public officials that, in the interest of full accountability, the FBI pursues corruption even after an official leaves office,” said Michael Anderson, Special Agent in Charge of the FBI’s New Orleans Field Office.
“IRS will continue to do our part to hold the elected officials of New Orleans accountable for their actions,” stated Damon Rowe, IRS-CI Acting Special Agent-in-Charge. “No one is excused from obeying the laws of this country.”
According to the indictment, in January 2005, Nagin created Stone Age LLC, a granite company based in New Orleans.
The indictment alleges, among other things, that Nagin accepted approximately $72,250 in bribes from Rodney Williams and his company, Three Fold Consultants LLC. The indictment also alleges Nagin accepted bribes from Frank Fradella, including $50,000, granite inventory, and nine payoffs in the form of wire transfers from Fradella totaling $112,500. In some cases, money was deposited into Nagin’s Stone Age corporate account, or free granite inventory was provided to Stone Age.
If convicted of conspiring with others to commit bribery and honest services wire fraud (count one), Nagin faces statutory penalties of up to five years in prison, a $250,000 fine, and three years of supervised release. If convicted of accepting a bribes (counts two through seven), Nagin faces statutory penalties of up to 10 years in prison, a $250,000 fine, and three years of supervised release on each count. If convicted of accepting payoffs that caused interstate wire communications to occur between Louisiana and other states (counts eight through 16), Nagin faces statutory penalties of up to 20 years in prison, a $250,000 fine, and three years of supervised release on each count. If convicted of conspiring to commit money laundering (count 17), Nagin faces statutory penalties of up to 10 years in prison, a $250,000 fine, and three years of supervised release. If convicted of filing false tax returns for years 2005 through 2008 (counts 18 through 21), Nagin faces statutory penalties of up to three years in prison, a $100,000 fine, and three years of supervised release on each count.
The indictment also contains notices of forfeiture which puts the defendant on notice that the government intends on forfeiting any and all property and profits concerned with and/or derived from any illegal activity referenced in the indictment.
U.S. Attorney Boente reiterated that today’s indictment describes allegations and that the guilt of the defendant must be proven beyond a reasonable doubt.
The case was investigated by the FBI, the IRS-CI, and the New Orleans Office of Inspector General. U.S. Attorney Boente would also like to acknowledge the assistance provided by the New Orleans Inspector General’s Office and the Metropolitan Crime Commission. The case is being prosecuted by Assistant U.S. Attorneys Matthew M. Coman and Richard R. Pickens, II.

Chief Executive Officer of Superior Discount Coins Appears in Court in Colorado for Defrauding Gold Coin Investors of More Than $2.4 Million

DENVER—James P. Burg, age 61, formerly of Fairplay, Colorado, faces fraud charges related to a scheme to defraud gold coin investors, the U.S. Attorney’s Office, the FBI, the IRS-CI, and the U.S. Postal Inspection Service announced. Burg was indicted by a federal grand jury in Denver on November 6, 2012, for charges of wire fraud, mail fraud, money laundering, and failure to file tax returns. The indictment remained sealed until his arrest in California on November 29, 2012. Burg then appeared in U.S. District Court for the Southern District of California. In court there, Burg was ordered to be detained and transferred by U.S. Marshals from California to Colorado. Burg’s first Colorado court appearance occurred on January 2, 2013, where he was advised of his rights and the charges pending against him. He appeared in court on January 7, 2013, and again on January 14, 2013, for the purpose of a detention hearing. On January 14, 2013, U.S. Magistrate Judge Michael E. Hegarty ordered that Burg could be released prior to trial on a $50,000 secured property or cash bond. Once released on that pre-trial bond, Magistrate Judge Hegarty ordered Burg to a halfway house (once bed space is available), pending the resolution of the criminal case.
According to the indictment, beginning on or about October 1, 2007, and continuing through and including on or about January 12, 2012, in Colorado and elsewhere, James P. Burg devised and intended to devise a scheme to defraud customers that ordered coins from a business known as Superior Discount Coins and Gold Run Investments and for obtaining money from those customers by means of materially false and fraudulent pretenses, representations, and promises. Burg took and received $2,464,099 from customers that ordered coins, and he failed to deliver the coins as promised.
As part of the scheme, Burg represented that he was the chief executive officer of a company known as Superior Discount Coins (SDC) and that SDC was in the business of selling coins. Burg also conducted business using a company known as Gold Run Investments (GRI) and represented that GRI was in the business of selling coins. At times, Burg operated GRI using the alias “Tim Burke.” Burg advertised and solicited customers through radio advertisements and over the Internet using websites he controlled, including; www.superiordiscountcoins.com, www.yourcoinbroker.com, and www.goldruninvestments.net.
Burg misrepresented and promised customers that if they ordered coins from SDC or GRI and paid him for those coins, he would deliver the coins to them or to accounts designated by them. He sent and caused to be sent to customers that ordered coins from SDC or GRI invoices stating amounts of money owed for the coins and, in some cases, providing information about a bank account to which the customers should transfer their money to purchase the coins.
The money Burg received from customers was not used to purchase coins for such customers, but instead he converted the money to his own use and benefit. Burg refused to refund money to customers in several instances where the customers requested a return of their money after he failed to deliver coins as originally promised. To prevent the scheme’s detection, Burg sometimes filled customers’ orders for coins only after such customers threatened to take legal action or report him to law enforcement authorities. Burg used one customer’s payment for coins to refund funds to another customer.
For calendar years 2006, 2007, 2008, and 2009, Burg failed to file income tax returns with the Internal Revenue Service as required by law. These returns were required to be filed with the IRS on April 15 following the subsequent above mentioned years.
“A core mission of the U.S. Attorney’s Office is to protect victims from scam artists who try to trick them out of their hard earned money,” said U.S. Attorney John Walsh.
“The FBI has made protecting innocent investors a priority,” said FBI Special Agent in Charge James Yacone. “As such, we will vigorously investigate those who engage in schemes to swindle and defraud.”
“The U.S. Postal Inspection Service has no shortage of investment investigations and this is another example of greed overcoming honest business practices,” said Adam Behnen, Inspector in Charge, with the U.S. Postal Inspection Service. “These criminal charges illustrate the commitment of the U.S. Postal Inspection Service to protect the American public by investigating individuals who use the U.S. mail to further their schemes.”
“Fraud schemes are often described as a house of cards and will eventually fall apart exposing the individuals responsible,” said Stephen Boyd, Special Agent in Charge, IRS-Criminal Investigation, Denver Field Office. “This is a great example of federal agencies working together.”
Burg was charged with six counts of wire fraud, nine counts of mail fraud, four counts of money laundering, and four counts of willful failure to file tax returns. If convicted of the wire fraud and mail fraud counts, he faces not more than 20 years in federal prison, and a fine of up to $250,000 per count. If convicted of the money laundering counts, he faces not more than 10 years in federal prison and a fine of up to $250,000 per count. If convicted of failing to file tax returns, he faces not more than one year in federal prison and a fine of up to $25,000 per count.
This case was investigated by special agents with the Federal Bureau of Investigation (FBI), the IRS-Criminal Investigation, and the U.S. Postal Inspection Service.
Burg is being prosecuted by Assistant U.S. Attorney Timothy Neff.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.

Owner of Debt Consolidation and Repair Businesses Pleads Guilty to Defrauding Customers

FRESNO, CA—Sharanjit Kaur, 36, of Fresno, pleaded guilty today to conspiring to commit mail and wire fraud, United States Attorney Benjamin B. Wagner announced.
According to the plea agreement, from approximately July 2010 to June 2011, Kaur and co-defendant Baljit Singh owned and operated several companies based in Fresno for the sole purpose of defrauding hundreds of customers located throughout the United States. According to court documents, the defendants, through their companies Consumer Financial Services, Consumer Credit Repair, and Client Financial Services, touted to potential customers that these businesses could provide debt consolidation services. The defendants also falsely promised that they could obtain low-interest loans for customers, assist in avoiding lawsuits, lower car payments, replace high-interest credit cards with low-interest ones, and correct errors in credit reports. The defendants utilized a call center in India from which individuals would call customers under aliases such as “Neil McKenzie” or “Anthony Jones.”
After luring customers into using these purported services, Kaur and his agents instructed customers to send in monthly payments of $500 or more. Even though they collected regular payments from customers, no creditors were contacted on behalf of customers as promised. To mislead customers, forged letters from creditors were sent, indicating that loan modifications had been approved. When customers would contact the debt repair companies about late-payment or default notices they had received from their creditors, the defendant and his agents would either hang up on customers or request that customers continue to make service payments. The funds received from customers were used for their own benefit or wired to an individual located in Kolkata, India.
As part of the plea agreement, Kaur agreed to forfeit $26,943 from bank accounts and a residence owned by him. The U.S. Attorney’s Office has also initiated separate civil actions to recover funds wired by the defendants to India.
Kaur is scheduled to be sentenced on April 8, 2013, at 8:30 a.m. before U.S. District Judge Lawrence J. O’Neill. He faces a maximum sentence of 20 years in prison and a $500,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. Co-defendant Baljit Singh, 47, has a hearing before Judge O’Neill scheduled for February 4, 2013. The charges against him are only allegations, and he is presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
This case is the product of an extensive investigation by the Federal Bureau of Investigation and the Fresno Police Department. Assistant United States Attorney Grant B. Rabenn is prosecuting the case.

Eau Claire Man Found Guilty of Fraud

MADISON, WI—John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced that Bernard C. Seidling, 61, Eau Claire, Wisconsin, was found guilty of 50 counts of mail fraud by Judge Barbara B. Crabb on December 26, 2012. From 2003 through 2009, Seidling engaged in a fraud scheme in which he used the Wisconsin small claims court system to obtain small claims judgments against individuals and corporations based on false representations in lawsuits he filed. Judge Crabb scheduled sentencing for March 21, 2013, at 1:00 p.m. Seidling faces a maximum penalty of 20 years in prison on each of the 50 charges.
The defendant and the United States agreed that the criminal charges could be resolved without a jury trial. The parties stipulated to the facts and disputed only the law that applies to those facts. The defendant acknowledged that he deceived small claims courts, clerks of court, and process servers, but he maintained he did not deceive the actual victims of his scheme to defraud and therefore could not be found guilty. The court accepted the government’s arguments and found Seidling guilty of all 50 fraud charges.
In summary, Seidling filed suits in Wisconsin small claims courts against individuals and corporations in which he lied about their addresses and attempts to serve them. He submitted false documents to convince the small claims courts that he had process servers attempt to serve the defendants when, in fact, those attempts either had not been made or, as Seidling knew, would be unsuccessful because he knew the defendants did not live at the addresses he had provided.
In each of these lawsuits Seidling usually claimed the maximum allowed of $5,000 (as of the time in the indictment). He hid filings of the lawsuits from the victims of his scheme (the defendants in the lawsuits) and then obtained default judgments. Once he obtained these fraudulent default judgments, he filed them in the county where the victims actually lived or owned property and also used them to attempt to file wage garnishments against the victims and the victims’ property.
U.S. Attorney Vaudreuil stated that this successful prosecution is the result of an investigation conducted by the Federal Bureau of Investigation; U.S. Postal Inspection Service; Sheriffs’ Departments of Ashland, Barron, Bayfield, Burnett, Chippewa, Dane, Douglas, Dunn, Eau Claire, Iron, Jackson, Pierce, Polk, Sawyer, and Washburn Counties; and Wisconsin Department of Justice, Division of Criminal Investigation. The prosecution of the case has been handled by United States Attorney Vaudreuil.

Wabaunsee County Woman Pleads Guilty to Mortgage Fraud

TOPEKA, KS—A woman from Wabaunsee County, Kansas, has pleaded guilty to mortgage fraud, U.S. Attorney Barry Grissom said today.
Linda Kay Miller, 50, Alma, Kansas, pleaded guilty to one count of bank fraud. In her plea, she admitted fraudulently submitting false documents to New Century Bank of Manhattan, Kansas, in an effort to obtain a $200,000 mortgage loan. Miller admitted she created documents falsely stating that a $65,000 second mortgage in favor of Landmark National Bank in Manhattan on her home in Wabaunsee County had been paid in full. She filed the false documents with the Wabaunsee County Register of Deeds.
Sentencing is set for April 1. She faces a maximum penalty of 30 years and a fine up to $1 million. Grissom commended the Wabaunsee County Sheriff’s Department, the FBI, and Assistant U.S. Attorney Richard Hathaway for their work on the case.

Jal Accountant Arraigned on Federal Fraud and Identity Theft Charges

ALBUQUERQUE—This morning, Roger L. Baeza, 31, of Jal, New Mexico, was arraigned on an 81-count indictment charging him with 78 counts of securities fraud, one count of access device fraud, and two counts of aggravated identity theft. Baeza entered a not guilty plea to the indictment during his arraignment hearing.
U.S. Attorney Kenneth J. Gonzales said that Baeza is charged with defrauding two Jal-based businesses, Lea Energy Services LLC and Fulfer Oil & Cattle Company LCC, of approximately $572,000 between June 2010 and February 2012. During that period, Baeza was employed as the in-house accountant by the owners of the two businesses.
According to the indictment, from June 4, 2010 to February 27, 2012, Baeza forged checks belonging to Lea Energy Services LLC and the Fulfer Oil & Cattle Company LCC on 78 separate occasions and thus defrauded his employers of an aggregate of $311,960.08. Count 79 of the indictment alleges that, during that same period, Baeza unlawfully used a credit card issued to his employers to defraud his employers of an aggregate of $189,267.02. Counts 80 and 81 each charge Baeza with unlawfully using the identification of one of his employers to unlawfully withdraw money from his employers’ business accounts.
The maximum penalty for a conviction on each of the 78 securities fraud counts and the access device fraud count is 10 years of imprisonment and a $250,000 fine. The maximum penalty for a conviction on each of the two aggravated identity theft counts is a mandatory two-year term of imprisonment, to be served consecutive to any other prison sentence imposed and a $250,000 fine.
Following his arrest on a criminal complaint on November 6, 2012, Baeza is on conditions of release pending trial.
The case was investigated by the Roswell Resident Agency of the FBI and the New Mexico State Police and is being prosecuted by Assistant U.S. Attorney Norman Cairns.
Allegations in criminal complaints and indictments are only accusations. Criminal defendants are presumed innocent unless proven guilty beyond a reasonable doubt.

Promoter of Cincinnati Grand Prix Pleads Guilty to Fraud, Money Laundering

CINCINNATI—Curtis Boggs, 54, formerly of Harrison, Ohio, pleaded guilty in U.S. District Court to wire fraud and money laundering in connection with a scheme he promoted to bring a Grand Prix race to Cincinnati in 2009.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI); and Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), announced the pleas entered today before Senior U.S. District Court Judge Susan J. Dlott.
According to court documents, Boggs was employed by an insurance company as a financial advisor in the Southern District of Ohio from 2000 to 2009. Beginning in approximately October 2008 and continuing through approximately August 2009, Boggs solicited his customers and others to invest in silver and gold, or in a grand prix race, through a corporation called Cincinnati Grand Prix (“CGP”). Today, Boggs admitted that, during that period, he fraudulently obtained investments of at least $352,745 for CGP in exchange for shares in the “stock” of CGP.
Boggs devised and intended to devise a scheme and artifice to defraud through fraudulent pretenses, representations, and promises. Specifically, he fraudulently obtained investment funds from individuals wherein the funds were not invested as represented and were diverted in part for his personal benefit. On or about October 27, 2008, in furtherance of his scheme, Boggs wired proceeds of a check from an investor to his personal account to pay property taxes on his house and pay down his personal mortgage debt. On or about October 21, 2008, Boggs laundered money derived from the fraud scheme by using $27,232.63 to buy a Lincoln MKX vehicle for his personal use.
A federal grand jury indicted Boggs in June. He was arrested on October 8, 2012, when he was stopped trying to enter the U.S. from Mexico.
The plea agreement calls for Boggs to serve a sentence of 27 months in prison, pay $352,745.21 in restitution, and forfeit any assets that he received as proceeds of the crimes. The court will conduct a presentence investigation before deciding whether or not to accept the terms of the plea agreement and schedule a date for sentencing.
Stewart commended the cooperative investigation by FBI and IRS agents, as well as Assistant U.S. Attorney Tim Mangan, who is prosecuting the case.

Former President of International Outdoor Advertising Company Sentenced in Manhattan Federal Court to Four Months in Prison for Orchestrating $19.75 Million Accounting Fraud Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, announced that Todd Hansen, the former president of the United States division of an international outdoor advertising company (the “company”), was sentenced today in Manhattan federal court to four months in prison in connection with his participation in a five-year, $19.75 million accounting fraud scheme designed to make it appear that the company was meeting certain performance targets so that he could receive higher salary increases and bonuses. Hansen pled guilty in June 2012 to one count of conspiracy to commit wire fraud and one substantive count of wire fraud. He was sentenced by U.S. District Judge Jed S. Rakoff.
According to the complaint and the indictment filed in Manhattan federal court:
From 2004 until 2009, Hansen served as president of the company, a wholly owned subsidiary of a United Kingdom corporation, with its common stock listed on the London Stock Exchange. Hansen, together with Finance Director James Buckley, directed the company’s controller (the “controller”) to make fictitious accounting entries in the company’s books and records in order to give the appearance that the company was meeting its monthly performance targets. To create these inflated income figures, Hansen directed the controller to record higher monthly revenues from either false client billings or rebates on certain goods and services that the company was purportedly receiving from some of its vendors.
The false accounting entries resulted in the preparation of financial statements that reflected artificially inflated monthly income amounts for the company. Hansen was thereby able to create the misimpression that the company was meeting its projected financial performance goals. During this five-year period, the fraudulent entries Hansen requested resulted in a total overstatement of the company’s net income by approximately $19.75 million. As a result of meeting these fictitious performance goals, Hansen was paid approximately $1.1 million in salaries and bonuses over the five-year period.
In addition to the accounting fraud scheme, during this same time period, Hansen misused tens of thousands of dollars of company funds to pay for expenses and fees that directly benefitted him, his family, and friends and that were unrelated to the Company’s legitimate business.
In addition to the prison term, Judge Rakoff sentenced Hansen, 49, of Bakersfield, California, to three years of supervised release. Hansen was also ordered to pay $231,000 in restitution and forfeit $173,450.90.
James Buckley, 49, of Westwood, New Jersey, was sentenced by Judge Rakoff on October 16, 2012, to time served, followed by one year of supervised release, and ordered to pay $26,872.22 in restitution.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Christopher D. Frey and Nicole Friedlander are in charge of the prosecution.

Massachusetts Man Sentenced to 24 Months in Federal Prison on Money Laundering, Gambling, and Tax Violations

CONCORD—John Giannelli, Sr., 66, of Danvers, Massachusetts, was sentenced to 24 months in federal prison today after pleading guilty on September 27, 2012, in the United States District Court for the District of New Hampshire to one count of money laundering, one count of operating an illegal gambling business, and five counts of impeding the administration of the Internal Revenue laws, announced United States Attorney John P. Kacavas.
Giannelli operated a computer based sports betting business while he resided in Peabody, Massachusetts, and then Kingston, New Hampshire. Giannelli controlled access, through the use of user identifications and passwords, to a gambling site and granted access to that site to dozens of agents. Approximately 300 customers making sports related wagers were able to gain access to the site through the agents, and Giannelli was able to monitor the overall betting activity. A forensic analysis of betting records obtained from computers seized at Giannelli’s residence in March 2012 established that the operation generated gross profits of approximately $188,000 over a 12-week period.
The money laundering charges arose from a scheme in which Giannelli was listed as an employee on a former sports betting customer’s business. Giannelli provided the business with cash proceeds generated by the gambling business and, in return, the business issued paychecks to Giannelli, thus making it appear that Giannelli’s income was legitimate. The business also caused to be generated false W-2 forms that Giannelli used to support tax returns filed with the IRS. Between 2003 and 2007, Giannelli laundered approximately $452,000 in proceeds through the scheme. The District Court ordered a money judgment forfeiture in the amount of $452,000.
The investigation was conducted by the Federal Bureau of Investigation and the Internal Revenue Service.

Joplin Woman Pleads Guilty to Making False Statements to Receive Tornado Benefits

SPRINGFIELD, MO—David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that a Joplin, Missouri woman pleaded guilty in federal court today to making false statements in order to obtain federal disaster benefits following the May 22, 2011 tornado.
Pamala Ann Shafer, 37, of Joplin, pleaded guilty before U.S. Magistrate Judge David P. Rush to the charges contained in an April 3, 2012 federal indictment.
Shafer admitted that she applied for federal disaster benefits by falsely claiming that her residence had been damaged by the tornado. Shafer also filed an application for temporary rental assistance. On the basis of Shafer’s representations, FEMA authorized a $938 payment. Shafer admitted today she did not reside at that address at the time of the tornado. Rather, the apartment had been owned by another individual, who did not know Shafer.
Shafer is the fifth defendant to plead guilty in cases related to fraudulently receiving federal disaster benefits following the tornado. In separate and unrelated cases, Wanda Gail McBride, Ronald Martell Irby, and Karen Marie Parks, all of Joplin, pleaded guilty and have been sentenced. Amber Nicole Peters of Joplin pleaded guilty and awaits sentencing.
Under federal statutes, Shafer is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
Disaster Fraud Hotline
Anyone with information about disaster fraud related to the Joplin tornado should call the National Center for Disaster Fraud hotline at 866-720-5721, the Joplin Police Department at 417-623-3131, or the FBI’s Joplin Resident Agency at 417-206-5700.
This case is being prosecuted by Assistant U.S. Attorney Steven M. Mohlhenrich. It was investigated by the FBI; Homeland Security Investigations-Office of Inspector General; and the Joplin, Missouri Police Department.
This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available online at http://www.justice.gov/usao/mow/index.html.