Category Archives: IRS CI

Hudson County, New Jersey, Man Sentenced To 63 Months In Prison For Masterminding Fake ID Website And Participating In ‘SIRF’ Scheme

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Thursday, July 27, 2017

NEWARK, N.J. – A Jersey City, New Jersey, man was sentenced today to 63 months in prison for his role in two separate conspiracies: one to create and operate a website that sold high-quality, custom-made fake identification documents, some of which were later used to commit financial crimes, and a second to fraudulently obtain tax refund checks, Acting U.S. Attorney William E. Fitzpatrick announced.

Ricardo Rosario, 34, previously pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to an information charging him with conspiracy to commit fraud in connection with authentication features and conspiracy to submit false claims to the U.S. Government. Judge Linares imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court:

From October 2012 through August 2014, Rosario, with the assistance of Abraham Corcino, 34, of Jersey City, and Alexis Scott Carthens, 38, of Newark, sold fake driver’s licenses over the Internet, running a website that was available at “fakeidstore.com” and “fakedlstore.com.” A number of the fake driver’s licenses sold by Rosario and other conspirators were used in connection with “cash out” schemes, where stolen credit card information, usually obtained through hacking or ATM skimming operations, was encoded on to counterfeit credit cards and used to steal cash from victims’ accounts.

Rosario created and ran the website. Corcino and Carthens assisted him by creating and mailing the fake driver’s licenses purchased through the website. Corcino also maintained an Instagram account to promote the website. The website sold fake New Jersey, Florida, Illinois, Pennsylvania, Rhode Island, and Wisconsin driver’s licenses, and the website boasted that the licenses had “scannable barcodes” and “real” holographic overlays. The price for each fake driver’s license was approximately $150, but the website offered bulk pricing for orders of 10 or more.

The website allowed its users to pay by bitcoin, a cryptographic-based digital currency, or MoneyPak, a type of prepaid payment card that could be purchased at retail stores. The “FAQ” section of the website indicated that orders would be received approximately one to two days after payment was received and described the website’s policy with respect to returns: “No Refunds. No snitching.”

In the Stolen Identity Refund Fraud (SIRF) conspiracy, Rosario assisted Carthens, who obtained stolen personally identifiable information (PII) primarily in the form of lab testing request forms that he purchased from another individual. Rosario provided Carthens with email accounts and drop addresses used in furtherance of the scheme. The email accounts were used to register accounts for online tax filing services and prepaid card accounts used to apply for and receive the tax refunds. The drop addresses were used to physically receive the refunds in the form of prepaid debit cards.

In addition to the prison term, Judge Linares sentenced Rosario to three years of supervised release and ordered forfeiture of $232,660 and restitution of $121,922.

Corcino was sentenced on April 17, 2017, to three years of probation. Carthens pleaded guilty to his role in the scheme on April 25, 2016, and is scheduled to be sentenced Sept. 28, 2017.

Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn, and special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Zach Intrater of the Economic Crimes Unit and Barbara Ward, Acting Chief of the U.S. Attorney’s Office Asset Forfeiture and Money Laundering Unit in Newark.

Defense counsel: Brian Neary Esq., Hackensack, New Jersey

District of Columbia Woman Sentenced to 63 Months in Prison For Her Role in Scheme That Used Stolen Identities To Fraudulently Seek Tax Refunds

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Thursday, July 27, 2017

Wide-Ranging Operation Filed Over 12,000 Fraudulent Tax Returns Seeking More Than $42 Million

WASHINGTON – A District of Columbia woman was sentenced today to 63 months in prison for her involvement in a scheme to fraudulently obtain millions of dollars in income tax refunds, announced U.S. Attorney Channing D. Phillips; Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division; Special Agent in Charge Kimberly Lappin of the Internal Revenue Service Criminal Investigation (IRS-CI) Washington D.C. Field Office; Inspector in Charge Robert B. Wemyss of the U.S. Postal Inspection Service, Washington Division, and Assistant Inspector General for Investigations John L. Phillips of the U.S. Department of the Treasury.

Tarkara Cooper, 34, was convicted by a jury on Feb. 17, 2017, for conspiring to commit theft of government funds and defraud the United States and theft of public money. Two of her co-defendants, Tony Bryant, 55, and his son, Brian Bryant, 29, both of Clinton, Md., were also convicted at trial and are awaiting sentencing.

Cooper was part of a massive sophisticated stolen identity refund fraud scheme that involved a network of more than 130 people, many of whom were receiving public assistance. Conspirators fraudulently claimed refunds for tax years 2005 through 2012, often in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners. Returns were also filed in the names of, and refunds were issued to, willing participants in the scheme. The returns filed listed more than 400 “taxpayer” addresses located in the District of Columbia, Maryland and Virginia. According to court documents, the overall case involved the filing of at least 12,000 fraudulent federal income tax returns that sought at least $42 million in refunds.

Conspirators played various roles in the scheme: stealing identifying information; allowing their personal identifying information to be used; creating and mailing fraudulent federal tax returns; allowing their addresses to be used for receipt of the refund checks; cashing the refund checks; providing bank accounts into which the refund checks were deposited and forging endorsements of identity theft victims on the refund checks. The false returns typically reported inflated or fictitious income from a sole proprietorship and claimed phony dependents to generate an Earned Income Tax Credit, a refundable federal income tax credit for working families with low to moderate incomes. To date, approximately two dozen participants in this scheme have pleaded guilty.

According to the evidence presented at trial, from approximately April 2010 through June 2012, Cooper and the Bryants participated in claiming $4,959,310 in fraudulent refunds, of which the IRS paid out approximately $2,285,717. Cooper agreed to allow her residence to be used for the delivery of tax refund checks, and was paid by a co-conspirator when she provided the tax refund checks to him. The Bryants deposited refund checks fraudulently obtained by others into accounts that they controlled.

In addition to the term of prison imposed, U.S. District Judge Rosemary M. Collyer ordered Cooper to serve three years of supervised release and to pay $1,926,958 in restitution to the IRS. She also ordered a forfeiture money judgment of $16,750.

U.S. Attorney Phillips, Acting Deputy Assistant Attorney General Goldberg, Special Agent in Charge Lappin, Inspector in Charge Wemyss, and Assistant Inspector General Phillips commended the special agents who conducted the investigation and acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office of the District of Columbia, including former Assistant U.S. Attorney Sherri L. Schornstein; Assistant U.S. Attorney Chrisellen Kolb; Paralegal Specialists Jessica Mundi, Aisha Keys, and Donna Galindo; former Paralegal Specialist Julie Dailey; Litigation Technology Specialist Ron Royal; Investigative Analysts William Hamann and Zachary McMenamin, and Victim/Witness Advocate Tonya Jones. They also expressed appreciation for the work of Trial Attorneys Jeffrey B. Bender, Thomas F. Koelbl, and Jessica Moran of the Tax Division, who worked on the case.

Finally, they commended the work of Assistant U.S. Attorneys Ellen Chubin Epstein and Michelle Bradford of the District of Columbia’s Fraud and Public Corruption Section and Trial Attorney Kimberly G. Ang of the Tax Division, who prosecuted the case, as well as Assistant U.S. Attorney Diane Lucas, who assisted with forfeiture issues.

Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.

FinCEN Fines BTC-e Virtual Currency Exchange $110 Million for Facilitating Ransomware, Dark Net Drug Sales

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July 26, 2017

Treasury’s First Action Against a Foreign-Located Money Services Business

WASHINGTON—The Financial Crimes Enforcement Network (FinCEN), working in coordination with the U.S. Attorney’s Office for the Northern District of California, assessed a $110,003,314 civil money penalty today against BTC-e a/k/a Canton Business Corporation (BTC-e) for willfully violating U.S. anti-money laundering (AML) laws. Russian national Alexander Vinnik, one of the operators of BTC-e, was arrested in Greece this week, and FinCEN assessed a $12 million penalty against him for his role in the violations.

BTC-e is an internet-based, foreign-located money transmitter that exchanges fiat currency as well as the convertible virtual currencies Bitcoin, Litecoin, Namecoin, Novacoin, Peercoin, Ethereum, and Dash. It is one of the largest virtual currency exchanges by volume in the world. BTC-e facilitated transactions involving ransomware, computer hacking, identity theft, tax refund fraud schemes, public corruption, and drug trafficking.

“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate U.S. anti-money laundering laws,” said Jamal El-Hindi, Acting Director for FinCEN. “This action should be a strong deterrent to anyone who thinks that they can facilitate ransomware, dark net drug sales, or conduct other illicit activity using encrypted virtual currency. Treasury’s FinCEN team and our law enforcement partners will work with foreign counterparts across the globe to appropriately oversee virtual currency exchangers and administrators who attempt to subvert U.S. law and avoid complying with U.S. AML safeguards.”

FinCEN acted in coordination with law enforcement’s seizure of BTC-e and Vinnik’s arrest. The Internal Revenue Service-Criminal Investigation Division, Federal Bureau of Investigation, United States Secret Service, and Homeland Security Investigations conducted the criminal investigation.

Among other violations, BTC-e failed to obtain required information from customers beyond a username, a password, and an e-mail address. Instead of acting to prevent money laundering, BTC-e and its operators embraced the pervasive criminal activity conducted at the exchange. Users openly and explicitly discussed criminal activity on BTC-e’s user chat. BTC-e’s customer service representatives offered advice on how to process and access money obtained from illegal drug sales on dark net markets like Silk Road, Hansa Market, and AlphaBay.

BTC-e also processed transactions involving funds stolen between 2011 and 2014 from one of the world’s largest bitcoin exchanges, Mt. Gox. BTC-e processed over 300,000 bitcoin in transactions traceable to the theft. FinCEN has also identified at least $3 million of facilitated transactions tied to ransomware attacks such as “Cryptolocker” and “Locky.” Further, BTC-e shared customers and conducted transactions with the now-defunct money laundering website Liberty Reserve. FinCEN previously issued a finding under Section 311 of the USA PATRIOT Act that identified Liberty Reserve as a financial institution of primary money laundering concern.

BTC-e has conducted over $296 million in transactions of bitcoin alone and tens of thousands of transactions in other convertible virtual currencies. The transactions included funds sent from customers located within the United States to recipients who were also located within the United States. BTC-e also concealed its geographic location and its ownership. Regardless of its ownership or location, the company was required to comply with U.S. AML laws and regulations as a foreign-located MSB including AML program, MSB registration, suspicious activity reporting, and recordkeeping requirements. This is the second supervisory enforcement action FinCEN has taken against a business that operates as an exchanger of virtual currency, and the first it has taken against a foreign-located MSB doing business in the United States.

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FinCEN’s mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.

CONTACT: Steve Hudak 703-905-3770

Assessment:

http://links.govdelivery.com:80/track?type=click&enid=ZWFzPTEmbXNpZD0mYXVpZD0mbWFpbGluZ2lkPTIwMTcwNzI3Ljc2MzQ4NTgxJm1lc3NhZ2VpZD1NREItUFJELUJVTC0yMDE3MDcyNy43NjM0ODU4MSZkYXRhYmFzZWlkPTEwMDEmc2VyaWFsPTE3MDg0NDE4JmVtYWlsaWQ9am9hbi5tYXJzaGFsbEBnZXllcmdvcmV5LmNvbSZ1c2VyaWQ9am9hbi5tYXJzaGFsbEBnZXllcmdvcmV5LmNvbSZ0YXJnZXRpZD0mZmw9Jm12aWQ9JmV4dHJhPSYmJg==&&&102&&&https://www.fincen.gov/sites/default/files/enforcement_action/2017-07-26/Assessment%20for%20BTCeVinnik%20FINAL%20SignDate%2007.26.17.pdf

Bookkeeper Sent to Prison for Embezzling over $400,000 in Just Over a Year

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Tuesday, July 25, 2017

GREAT FALLS – The United States Attorney’s Office announced that Natalee Christine Crumley was sentenced to 38 months in prison, $425,939.80 in restitution, $427,816.17 in forfeiture, and a $100 special assessment.  The sentencing occurred on July 25, 2017, before U.S. District Judge Brian Morris, in Great Falls, Montana.

Crumley worked as a bookkeeper at Junkermier, Clark, Campanella, Stevens P.C. (JCCS), which is a firm providing Certified Public Accountant and business advisory services throughout Montana.  Crumley’s job duties included providing bookkeeping services for Anderson Glass Doors and Windows (“Anderson Glass”) and Doors & Hardware Unlimited, Inc. (Doors & Hardware).

In just over a year, Crumley forged over 100 checks and embezzled $425,939.80 from Anderson Glass and Doors & Hardware.  After embezzling the money, Crumley withdrew over $140,000 in cash, purchased NCAA Final Four Tickets, furniture, clothes, and took trips to Miami, Long Beach, Houston, and Spokane.  Crumley also spent significant sums of money at Victoria’s Secret and even rented a Ferrari while on vacation.

In a sentencing memo filed in federal court, Assistant U.S. Attorney Ryan G. Weldon stated, “Ms. Crumley held a position of trust because she was supposed to know right from wrong.”  This is why the victims of the crime explained, “In today’s world, stealing has become all too common.  Why work when you can just take what you want and hope the punishment will be little more than a slap on the hand.”

As a result, Judge Morris sentenced Crumley to 38 months in prison, $425,939.80 in restitution, and $427,816.17 in forfeiture.  All total, Crumley must now pay the victims and the United States $853,755.97. Because there is no parole in the federal system, the truth in sentencing guidelines mandate that Crumley will likely serve all of the time imposed by the court.  In the federal system, Crumley does have the opportunity to shorten the term of custody by earning credit for good behavior.  However, this reduction will not exceed 15% of the overall sentence.

The Crumley case was investigated by the Internal Revenue Service – Criminal Investigation Division, and the Great Falls Police Department. 

Pharmacist Pleads Guilty to Health Care Fraud Charges for Role in $192 Million Compounded Medication Scheme; Pharmacy Marketer Also Pleads Guilty

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Tuesday, July 25, 2017

The Pharmacist in Charge of a Hattiesburg, Mississippi compounding pharmacy pleaded guilty today to health care fraud charges for his role in a scheme that defrauded TRICARE and private insurance companies out of at least $192 million in payments for medically unnecessary compounded medications.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Harold Brittain of the Southern District of Mississippi, Special Agent in Charge Christopher Freeze of the FBI’s Jackson Division, Special Agent in Charge Jerome R. McDuffie of the Internal Revenue Service – Criminal Investigation’s New Orleans Field Office and John F. Khin and the Defense Criminal Investigative Service Southeast Field Office made the announcement.

May, 40, of Lamar County, Mississippi, pleaded guilty to one count of conspiracy to commit health care fraud and money laundering before U.S. District Judge Keith Starrett of the Southern District of Mississippi. Sentencing has been scheduled for October 17 before Judge Starrett.

As part of his guilty plea, May admitted that he conspired with others to select compounded medication formulas based on profitability, rather than on effectiveness or patient need. He further admitted that he conspired with co-owners of the pharmacy to circumvent fraud prevention measures, such as collecting copayments, so that patients were incentivized to receive, and continue to receive, medically unnecessary medications.  According to plea documents, May dispensed these medically unnecessary compounded medications and caused fraudulent claims to be submitted to TRICARE, a health care program that benefits members of the U.S. armed forces, and other health care benefit programs. Based on these fraudulent claims, May and his co-conspirators received at least $192 million in reimbursements.

In a related case, Gerald Schaar, 46, of Biloxi, Mississippi, pleaded guilty to one count of conspiracy to commit health care fraud for his role in the scheme to defraud TRICARE. According to plea documents, Schaar admitted to soliciting physicians and other medical professionals to write prescriptions without seeing patients for medically unnecessary compounded medications dispensed by the pharmacy. According to the plea documents, Schaar further admitted to conspiring with others to falsify patient records to make it appear as though medical professionals had seen patients prior to the date prescriptions were written, when in reality, no examinations had occurred. As a result of the fraudulent prescriptions obtained by Schaar, and ultimately forwarded to the pharmacy, TRICARE reimbursed approximately $2.3 million in false and fraudulent claims submitted by the pharmacy. Sentencing for Schaar has been scheduled for October 17 before Judge Starrett.

This case was investigated by the FBI Jackson Division’s Hattiesburg Resident Agency, the IRS Criminal Investigation, the Defense Criminal Investigative Service, Health and Human Services Office of Inspector General, the Mississippi Bureau of Narcotics, and other government agencies. Trial Attorneys Dustin Davis and Katherine Payerle of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mary Helen Wall of the Southern District of Mississippi are prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Individuals who believe that they may be a victim in this case should visit the Fraud Section’s Victim Witness website for more information.

Telecom Executive Pleads Guilty to FCPA Charge in Connection With Haitian Bribery Scheme

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Wednesday, July 19, 2017

The former general manager of a Miami-based telecommunications company pleaded guilty today for his role in a scheme to pay $3 million in bribes to various Haitian officials to secure a lucrative contract with Telecommunications D’Haiti (Haiti Teleco), the state-owned and state-controlled telecommunications company in Haiti.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Benjamin G. Greenberg of the Southern District of Florida, Special Agent in Charge Kelly R. Jackson of Internal Revenue Service-Criminal Investigation’s (IRS-CI) Miami Field Office made the announcement.

Amadeus Richers, 66, of Brazil, pleaded guilty in federal court in Miami to count one of a second superseding indictment charging him with conspiracy to violate the Foreign Corrupt Practices Act (FCPA).  According to admissions in the plea documents, beginning in 2001 and lasting until 2004, Richers and his co-conspirators paid roughly $3 million in bribes directly and indirectly to foreign officials employed by Haiti Teleco and to a foreign official in the executive branch of the Haitian government in order to secure a favorable contract and favorable treatment in connection with that contract from Haiti Teleco.  The co-conspirators funneled some of the money through third-party intermediaries and paid other money directly to officials or relatives of officials, Richers admitted.

Richers is the ninth defendant to have pled guilty or to have been convicted at trial in this case.  On April 27, 2009, Antonio Perez, a former controller at one of the Miami-based telecommunications companies, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering.  On May 15, 2009, Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering.  On Feb. 19, 2010, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the scheme.  On March 12, 2010, Robert Antoine, a former director of international affairs for Haiti Teleco, pleaded guilty to one count of conspiracy to commit money laundering.  On Aug. 4, 2011, Joel Esquenazi and Carlos Rodriguez, who were the former president and vice-president, respectively, of one of the telecommunications companies, were convicted by a federal jury of one count of conspiracy to violate the FCPA and wire fraud, seven counts of FCPA violations, one count of money laundering conspiracy and 12 counts of money laundering.  On Feb. 8, 2012, Patrick Joseph, a former executive director of Haiti Teleco, pleaded guilty to one count of conspiracy to commit money laundering.  On March 12, 2012, Jean Rene Duperval, a former director of international relations for Haiti Teleco, was convicted by a federal jury of two counts of conspiracy to commit money laundering and 19 counts of money laundering.

Richers was indicted on July 12, 2011, but remained a fugitive until his arrest and ultimately his extradition from Panama on February 23. Richers will be sentenced on September 20.

The Department of Justice is grateful to the government of Haiti for continuing to provide substantial assistance in gathering evidence during this investigation.  In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.

The Department of Justice also thanks Panama for its significant assistance in this matter.

IRS-CI is conducting the investigation.  Senior Litigation Counsel Nicola Mrazek and Trial Attorney Vanessa Snyder of the Criminal Division’s Fraud Section are prosecuting the case.  The Criminal Division’s Office of International Affairs provided assistance.

The Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.

Guardianship Firm and its Principals Charged with Federal Conspiracy, Fraud, Theft and Money Laundering Offenses

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Wednesday, July 19, 2017

Twenty-Eight Count Indictment Alleges that Co-Founders of Ayudando Guardians, Inc., Embezzled Millions from Client Accounts to Support Lavish Lifestyles

U.S. Marshals Service Assumes Control of Ayudando Guardians, Inc.,

to Ensure Continuity of Services for Special Needs Clients

ALBUQUERQUE – Federal law enforcement officials today announced the filing of conspiracy, fraud, theft and money laundering charges against Ayudando Alpha, Inc., d/b/a “Ayudando Guardians, Inc.” (Ayudando), and its co-founders, Susan Harris, 70, and Sharon Moore, 62, both residents of Albuquerque, N.M. The charges, which are contained in a 28-count indictment, arise out of an alleged decade-long sophisticated scheme to embezzle funds from client trust accounts managed by Ayudando, a non-profit corporation that provides guardianship, conservatorship and financial management services to hundreds of individuals with special needs.

According to the indictment, Ayudando – which means “helping” in Spanish – receives government benefit payments from the U.S. Department of Veterans Affairs (VA) and U.S. Social Security Administration (SSA) on behalf of many of its clients, and acts as a fiduciary or representative payee for these clients by paying their expenses and maintaining the balances for the benefit of the clients. The indictment alleges that Harris and Moore, the primary owners and operators of Ayudando, have embezzled millions of dollars from their special needs clients to support lavish lifestyles for themselves and their families.

The charges against Ayudando, Harris and Moore are the result of an ongoing multi-agency investigation by the FBI, IRS Criminal Investigation, U.S. Marshals Service (USMS), VA Office of Inspector General and SSA Office of Inspector General. This morning federal law enforcement agents arrested Harris and Moore. Harris and Moore made their initial appearances in federal court in Albuquerque this morning. They are scheduled to return to court at 9:30 a.m. tomorrow, July 20, 2017, to be arraigned on the indictment and for detention hearings.

Federal authorities also enforced a federal court order that authorized the USMS’s Complex Assets Unit to assume control of Ayudando’s business operations. The court order appoints the USMS as the Receiver and Monitor of Ayudando, including all its financial accounts. The order authorizes the USMS to operate the business to ensure that its assets are not improperly spent or removed, and that the interests of Ayudando clients are protected as the prosecution of the criminal case goes forward. The USMS’s operation of Ayudando will ensure continuity of services for Ayudando clients.

The charges against Ayudando, Harris and Moore were announced by Acting U.S. Attorney James D. Tierney, U.S. Marshal Conrad E. Candelaria, Special Agent in Charge Terry Wade of the Albuquerque Division of the FBI, Special Agent in Charge Ismael Nevarez Jr., of the Phoenix Field Office of IRS Criminal Investigation, Special Agent in Charge Carl D. Scott of the Criminal Investigations Division of the VA’s Office of Inspector General, and Special Agent in Charge Robert Feldt of the Dallas Field Division of the SSA’s Office of the Inspector General.

In making the announcement, Acting U.S. Attorney James D. Tierney said, “This case is all about the victims. The victims in this case relied upon Ayudando to manage their finances and meet their needs. If the allegations in the indictment are true, the principals of Ayudando cruelly violated the trust of their clients and looted their benefits. Federal law enforcement has now stepped in to ensure that the looting stops. The U.S. Attorney’s Office and its partners will conduct this prosecution in a manner that provides for the continued receipt of benefits by Ayudando’s clients, while holding the principals of the company accountable for their conduct.”

“This morning the U.S. Marshals Service assumed control of Ayudando’s business operations to ensure that the victims of the crimes charged in the indictment, which include our disabled veterans, and other Ayudando clients will continue to receive the services they deserve and are entitled to,” said U.S. Marshal Conrad E. Candelaria. “The U.S. Marshals Service also will continue to assist its law enforcement partners in the continuing investigation.”

“Many of our most vulnerable Americans, such as those with special needs, trust fiduciaries to handle their government benefits for them. Unfortunately, there are plenty of criminals willing to steal what could be a person’s only source of income, using the money to support a lavish lifestyle,” said Special Agent in Charge Terry Wade of the FBI’s Albuquerque Division. “The FBI, working with our law enforcement and government partners, is committed to bringing to justice those individuals whose greed destroys the lives and dreams of innocent people.”

“The indictment alleges that, instead of helping people with special needs, the defendants were greedy and helped themselves to their clients’ money,” said Special Agent in Charge Ismael Nevarez Jr., of the Phoenix Field Office of IRS Criminal Investigation. “IRS Criminal Investigation will always investigate individuals who misuse non-profit businesses and cause harm to those whose needs are supposed to be served by those businesses.”

“Professional fiduciaries who defraud vulnerable veterans are reprehensible,” said Special Agent in Charge Carl D. Scott of the Criminal Investigations Division of the VA Office of Inspector General. “The VA OIG will continue to work with other law enforcement agencies to expose those who harm veterans or exploit VA benefits systems and bring them to justice.”

“The SSA OIG is committed to investigating cases of suspected representative payee fraud, which can involve the theft of government funds and harm some of our most vulnerable citizens,” said Special Agent in Charge Robert Feldt of the Dallas Field Division of the SSA Office of the Inspector General. “We will continue to work with our law enforcement partners and the U.S. Attorney’s Office on this case.”

The 28-count indictment, which was filed under seal on July 11, 2017 and was unsealed and publicly posted earlier today, includes two conspiracy counts, ten counts of mail fraud, nine counts of aggravated identify theft and six counts of money laundering. According to the indictment, from Nov. 2006, when Harris and Moore founded Ayudando, and continuing until July 2017, Ayudando, Harris and Moore embezzled millions of dollars from Ayudando client accounts to cover their personal expenses and support lavish lifestyles for themselves and their families. The indictment alleges that Harris and Moore perpetuated the embezzlement scheme by:

  • Establishing Ayudando as a non-profit corporation in Nov. 2006, to position it as a guardian, conservator, fiduciary and representative payee for individuals needing assistance with their financial affairs;
  • Setting up client trust and company bank accounts which only they controlled;
  • Transferring funds from client accounts to Ayudando company accounts;
  • Using client funds to pay off more than $4 million in charges on a company credit card account used by Harris, Moore and their families for personal purposes;
  • Writing checks from Ayudando company accounts to themselves, cash and to cover personal expenses;
  • Replenishing depleted client accounts with funds taken from other clients;
  • Mailing fraudulent statements and certifications to the VA; and
  • Forging and submitting forged bank statements to the VA.

The indictment identifies some of the ways in which Harris and Moore used the money they allegedly stole from Ayudando clients. For example, the indictment alleges that between June 2011 and March 2014, Harris wrote 12 checks in the total amount of $457,883 on the Ayudando client reimbursement account for personal purpose, including a $50,950 check made out to Mercedes Benz of Albuquerque and a $26,444 check made out to Myers RV Center. It also alleges that between Jan. 2013 and Feb. 2017, Harris used an Ayudando company credit card to pay $140,790 to cover luxury vacations for herself and others, including cruises in the Caribbean isles and a “Final Four” basketball junket, while knowing that Moore would pay off the charges using client funds.

The mail fraud charges in the indictment describe some of the fraudulent documents allegedly mailed by Ayudando, Harris and Moore to the VA to perpetuate and conceal their embezzlement scheme. For example, between Jan. 2016 and Nov. 2016, Moore allegedly mailed fraudulent documents to the VA that falsely represented the balances in ten client accounts. According to the indictment, the documents falsely claimed that the ten client accounts had an aggregate balance of $1,906,908, when the actual value of the ten accounts was only $72,281. The ten client accounts identified in the indictment are examples of the fraud allegedly perpetrated by the defendants as part of their embezzlement scheme.

According to the indictment, Ayudando, Harris and Moore also engaged in aggravated identify theft by using their clients’ names, dates of birth, Social Security Numbers and VA file numbers to commit mail fraud offenses. Harris and Moore also allegedly committed money-laundering offenses by using $392,623 from the Ayudando client reimbursement account to pay off balances on a company credit card used by the defendants and their families for personal purposes. The indictment includes forfeiture provisions that seek forfeiture to the United States of any proceeds and property involved in, or derived from, the defendants’ unlawful conduct.

If the defendants are convicted on the crimes charged in the indictment, they face the following maximum statutory penalties:

  • Count 1, conspiracy – 30 years of imprisonment and a $250,000 fine;
  • Counts 2-11, mail fraud – 30 years of imprisonment and a $250,000 fine;
  • Counts 12-21, aggravated identity theft – a mandatory two-years of imprisonment that must be served consecutive to any other sentence imposed on other counts and a $250,000 fine;
  • Counts 22-27, money laundering – ten years of imprisonment and a $250,000 fine or twice the amount of the property involved in the crime; and
  • Count 28, conspiracy to commit money laundering – ten years of imprisonment and a $250,000 fine or twice the amount of the property involved in the crime.

The Albuquerque offices of the FBI and IRS Criminal Investigation conducted the investigation, which resulted in the charges in the indictment, and are leading the continuing investigation. The Complex Assets Unit and the Albuquerque office of the USMS, the Criminal Investigations Division of the VA Office of Inspector General, and the Dallas Field Division of the SSA Office of Inspector General are assisting in the investigation. Assistant U.S. Attorneys Jeremy Peña and Brandon L. Fyffe are prosecuting the case.

Ayudando clients or family members of Ayudando clients who need to speak with someone about their accounts or expenses should call Ayudando, which is now being operated by the U.S. Marshals Service, at 505-332-4357.

Starting tomorrow, information about the federal investigation into Ayudando, including the indictment and the federal court order, will be available at www.justice.gov/usao-nm/ayudando-guardians. Also starting tomorrow, Ayudando clients can direct their comments or concerns to the U.S. Attorney’s Office at [email protected](link sends e-mail) or 505-346-6902.

Charges in indictment are merely allegations and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

 

Ayudando Indictment

Florida Businessman Sentenced to Prison for Conspiring to Commit Tax and Bank Fraud

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Monday, July 17, 2017

Concealed Approximately $2.5 Million in Secret Belize Accounts

A Florida businessman was sentenced today to 57 months in prison in U.S. District Court for the Middle District of Florida for conspiring to commit tax and bank fraud, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

According to documents filed with the court, Casey Padula, 48, of Port Charlotte, was the sole shareholder of Demandblox Inc., a marketing and information technology business. Padula conspired with others to move funds for his benefit from Demandblox to offshore accounts in Belize and disguised these transfers as business expenses in Demandblox’s corporate records. Padula created two offshore companies in Belize: Intellectual Property Partners Inc. (IPPI) and Latin American Labor Outsourcing Inc. (LALO). He opened and controlled bank accounts in the names of these entities at Heritage International Bank & Trust Limited (Heritage Bank), a financial institution located in Belize. From 2012 through 2013, Padula caused periodic payments to be sent from Demandblox to his accounts at Heritage Bank and deposited approximately $2,490,688. Padula used the funds to pay for personal expenses and purchase significant personal assets. However, he falsely recorded these payments in Demandblox’s corporate books as intellectual property rights or royalty fees and deducted them as business expenses on Demandblox’s 2012 and 2013 corporate tax returns. As a result of these false deductions, Padula caused a tax loss of more than $728,000.

Padula also conspired with investment advisors Joshua VanDyk and Eric St-Cyr at Clover Asset Management (CAM), a Cayman Islands investment firm, to open and fund an investment account that he would control, but that would not be in his name. Heritage Bank had an account at CAM in its name and its clients could get a subaccount through Heritage Bank that would not be in the client’s name but rather would be a numbered account. Padula transferred $1,000,080 from the IPPI bank account at Heritage Bank in Belize to CAM to fund a numbered account that concealed his financial interest in it. Padula failed to disclose this account to the U.S. Department of Treasury and the Internal Revenue Service (IRS) despite being required to do so under the law.

In addition to the tax fraud, Padula also conspired with others to commit bank fraud. Padula had a mortgage on his Port Charlotte, Florida home of approximately $1.5 million with Bank of America (BoA). In 2012, he sent a letter to the bank stating that he could no longer repay his loan. At the same time, Padula provided Robert Robinson III, 43, who acted as a nominee buyer, with more than $625,000 from his IPPI bank account in Belize to fund a short sale of Padula’s home. Padula and Robinson signed a contract, which falsely represented that the property was sold through an “arms-length transaction,” and agreed that Padula would not be permitted to remain in the property after the sale. Padula in fact never moved from his home and less than two months after the closing, Robinson conveyed it back to Padula by transferring ownership to one of Padula’s Belizean entities for $1. Robinson was also sentenced today to five years of probation for signing a false Form HUD-1 in connection with his role in the scheme.

“Casey Padula used secret numbered bank accounts, foreign shell companies and phony deductions to hide millions and evade U.S. taxes,” said Acting Deputy Assistant Attorney General Goldberg. “His 57 month sentence today makes clear that there is no place safe in the world for tax cheats to hide their money and feel secure that the Department of Justice and the IRS will not uncover their scheme and hold them fully accountable.”

“As Mr. Padula has learned, using shell companies and offshore accounts is not tax planning; it’s tax fraud,” said Chief Don Fort of IRS Criminal Investigation (CI). “The use of sophisticated international financial transactions does not prevent IRS CI from following the trail of money back to the person breaking the law. In conjunction with our law enforcement partners, we will continue our ongoing efforts to pursue individuals who use these offshore schemes to circumvent the law.”

In addition to the term of prison imposed by U.S. District Court Judge Sherri Polster Chappell, Padula was ordered to serve three years of supervised release and to pay a fine of $100,000 and to pay restitution of $728,609 to the IRS and to BoA in the amount of $739,459.90. He was remanded into custody.

Acting Deputy Assistant Attorney General Goldberg thanked special agents of IRS CI, who conducted the investigation, and Assistant Chiefs Todd Ellinwood and Caryn Finley of the Tax Division, who prosecuted this case. Acting Deputy Assistant Attorney General Goldberg also thanked the U.S. Attorney’s Office of the Middle District of Florida for its assistance.

Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.