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.

Russian Citizen Sentenced in Manhattan Federal Court to Three Years in Prison for Sophisticated International Cyber Crimes

Preet Bharara, the United States Attorney for the Southern District of New York, announced that Vladimir Zdorovenin, a Russian national, was sentenced today in Manhattan federal court to three years in prison in connection with a series of sophisticated international cyber crimes. Zdorovenin, who was initially charged in January 2012 with his son, Kirill Zdorovenin, pled guilty in February 2012 to one count of conspiracy to commit wire fraud and one count of wire fraud for his involvement in the schemes. He was sentenced today by U.S. District Judge Paul G. Gardephe.
Manhattan U.S. Attorney Preet Bharara said, “From his perch halfway across the globe, Vladimir Zdorovenin engaged in a slew of cyber crimes that left multiple victims in the United States. Cyber crime is particularly insidious because there is no need for geographic proximity between perpetrators and their victims, and Zdorovenin’s sentence today should serve as a reminder to others that law enforcement does not require geographic proximity to prosecute these crimes either.”
According to documents filed in Manhattan federal court and statements made during court proceedings:
While in Russia between 2004 and 2005, Zdorovenin engaged in a series of crimes that victimized citizens of the United States through the use of stolen credit card information, multiple phony websites, and bank accounts in Russia and Latvia. Specifically, he conspired to steal victims’ personal identification information, including credit card numbers, through the use of computer programs that were surreptitiously installed on victims’ computers and that recorded the information as it was entered by the victims. He also conspired to purchase stolen credit card numbers from other individuals and to use the stolen credit card information to make what appeared to be legitimate purchases of goods from various Internet businesses, including Sofeco LLC, Pintado LLC, and Tallit LLC. However, the purchases were fraudulent and were used as a means of deceiving banks, credit card service processors, credit card holders, and others. In fact, Zdorovenin stole the money directed to the websites through the fraudulent and unauthorized charges he and a co-conspirator caused to be made on the stolen credit cards.
Additionally, Zdorovenin conspired to use the Internet to unlawfully access the financial services accounts of victims located in the United States and then transferred or attempted to transfer hundreds of thousands of dollars from those accounts to bank accounts under his and a co-conspirator’s control. Finally, after taking over victims’ online brokerage accounts, Zdorovenin and a co-conspirator bought and sold thousands of shares of certain companies’ stock in an effort to manipulate the prices of those stocks. Zdorovenin and the co-conspirator realized profits through this scheme by simultaneously purchasing or selling shares of the same stocks through an online brokerage account maintained in the name of Rim Investment Management Ltd.

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In addition to his prison term, Zdorovenin, 55, of Moscow, Russia, was ordered to forfeit up to $1 million and pay restitution in an amount to be determined within 90 days.
Mr. Bharara praised the outstanding investigative work of the FBI.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys James J. Pastore, Jr. and Thomas G.A. Brown are in charge of the prosecution.
Kirill Zdorovenin, Zdorovenin’s son and co-conspirator, remains at large. The charges against Kirill Zdorovenin are merely accusations, and he is presumed innocent unless and until proven guilty.

Man Indicted for Obstructing and Impeding the IRS by Filing False IRS Forms Claiming $36 Million in Refunds

Richard S. Hartunian, United States Attorney, Northern District of New York, announces that a federal grand jury in Syracuse has returned a seven-count indictment charging Glenn Richard Unger (62, of Ogdensburg, New York) with obstructing and impeding the Internal Revenue Service (IRS) by filing numerous false and fraudulent IRS forms seeking refunds. Specifically, the indictment alleges that Glenn Richard Unger obstructed and impeded the IRS between 2007 and 2011 by filing numerous false and fraudulent claims with the IRS for payment of a refund of taxes totaling approximately 36 million dollars. Upon receiving the false IRS forms, the IRS realized that they were fraudulent and did not issue any refund checks to Glenn Richard Unger. The indictment also alleges that the defendant filed false claims for refunds, evaded paying income taxes, and filed a fictitious obligation. If found guilty, the defendant faces a statutory maximum sentence of 20 years, a term of supervised release of up to three years, and a maximum fine of $250,000. The defendant was arraigned in Albany, New York, on January 2, 2013, before United States Magistrate Judge Randolph F. Treece and is currently detained.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
This prosecution resulted from an investigation conducted by the Internal Revenue Service, Criminal Investigation, New York Field Office; the Federal Bureau of Investigation, Albany Field Office; the New York State Police; and the Treasury Inspector General for Tax Administration. The case is being prosecuted by Assistant United States Attorney Ransom P. Reynolds. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315) 448-0672.

Former New Jersey Law Firm Employee Sentenced to 21 Months in Prison for Stealing More Than $500,000 from Law Firm

TRENTON—The former bookkeeper of a law firm based in Ocean County, New Jersey was sentenced to 21 months for defrauding her former employer by stealing more than $500,000 from the firm, U.S. Attorney Paul J. Fishman announced.
Sharon Wetter, 53, of Forked River, New Jersey, previously pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging her with one count of mail fraud. Judge Cooper imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
Wetter admitted that between 2004 and October 2010, she embezzled from her former employer, referred to in court documents only as the “law firm,” by wrongfully writing checks from the bank accounts of the firm to pay her outstanding personal credit card balances and to make car payments. Wetter concealed those payments by altering the law firm’s electronic books and records to make it appear that the checks were for legitimate business expenses. Wetter, who had access to checks and bank accounts in order to perform her duties as the firm’s bookkeeper, used that access to divert more than $500,000.
In addition to the prison term, Judge Cooper sentenced Wetter to three years of supervised release and ordered Wetter to make restitution in the amount of $521,596.
U.S. Attorney Fishman credited special agents of the Red Bank Resident Agency of the FBI, under the direction of Acting Special Agent in Charge David Velazquez, for their work in the investigation of this case.
The government is represented by Assistant U.S. Attorney Harvey Bartle of the U.S. Attorney’s Trenton Office.

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.

Former Grand Rapids-Area Financial Adviser Sentenced to 54 Months in Prison for Wire Fraud

GRAND RAPIDS, MI—U.S. Attorney Patrick A. Miles, Jr. announced today that Lawrence Maxwell McCoy of Bitely, Michigan, was sentenced by U.S. District Judge Janet T. Neff to 54 months in prison for wire fraud. The U.S. Attorney’s Office filed a one-count felony information on September 7, 2012, charging McCoy with a scheme to defraud. McCoy pled guilty to the charge on September 20, 2012, pursuant to a plea agreement.
McCoy sold mutual funds and insurance in and around Holland and Grand Rapids, doing business as Hallbrook Asset Management and Hallbrook Group LLC. Under these auspices, McCoy provided legitimate investment advice and services but also defrauded six of his clients, causing total losses of $708,267.37 between 1995 and 2009. To perpetrate his fraudulent scheme, McCoy fabricated an investment that he called “Marsico Private Ledger.” He represented to his clients that Marsico Private Ledger was an investment offered through Marsico Capital Management LLC, a real mutual fund provider based in Colorado. McCoy then induced many of his existing clients, who otherwise had legitimate investments managed by McCoy, to invest in Marsico Private Ledger. After McCoy received his clients’ money under these fraudulent pretenses, he diverted it to his own use. To cover up the fraudulent scheme, McCoy fabricated investment return information and published it to his clients by manually entering the phony returns on a legitimate third-party Internet reporting site dedicated to wealth management reporting. McCoy also sent e-mails to his clients to communicate the phony return information and to assure them that their investments in Marsico Private Ledger were safe. McCoy specifically targeted clients that he knew would not have an immediate need for their money. Through his scheme, McCoy stole clients’ nest eggs and money earmarked for college funds.
In handing down McCoy’s sentence, Judge Neff pointed out that McCoy’s behavior was “not aberrant” but, rather, “a thread in his history.” In 2009, McCoy was sentenced in 28th Circuit Court in Cadillac, Michigan, to five years of probation for embezzling money from investments that he managed for a family member. Judge Neff added, “When people fall prey to this type of financial misconduct, it is really devastating.”
U.S. Attorney Miles stated, “Financial fraud often is a silent crime that can go undetected for months, if not years. When that happens, the impact on a victim’s nest egg is truly devastating. The United States Attorney’s Office for the Western District of Michigan is committed to pursuing and bringing to justice financial professionals who defraud their clients.”
In addition to his 54-month prison sentence, McCoy was also sentenced to two years of supervised release and was ordered to pay restitution in the amount of $690,267.37.
The case was prosecuted by Assistant U.S. Attorney Joel Fauson and was investigated by the Federal Bureau of Investigation, Grand Rapids Resident Agency.

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.