Financial Fraud Case Filings

2/20/2013 North Carolina Commodities Firm Owner Sentenced to 36 Months in Prison for Multimillion-dollar Fraud (USAO-WDNC, CRM-FRD)

1/13/2013 Former Financial Services Broker Sentenced to 10 Months in MuniBonds

1/10/2013 Former Xpress Flex, Inc. And Payroll America, Inc. Owner Sentenced To 51 Months For Fraud And Filing A False Tax Return (USAO-DOD, TAX)

12/19/2012 – UBS Securities Japan to Plead Guilty to Felony Wire Fraud For Long Running Manipulation of LIBOR Benchmark Interest Rates

12/19/2012 – NJ Company Pleads Guilty For Role in Bid Rigging Scheme at Municipal Tax Lien Auctions


12/12/2012: Two Alabama real estate investors and their company pleaded guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced.

 
Department of Justice
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Friday, November 30, 2012
Former Fair Financial Company CEO Sentenced In Indianapolis to 50 Years in Prison for Role in $200 Million Fraud Scheme
Two Other Fair Financial Executives Sentenced Today for Roles in Scheme

WASHINGTON – The former chief executive officer of Fair Financial Company, an Ohio financial services business, was sentenced today to serve 50 years in prison for his role in a scheme to defraud approximately 5,000 investors of more than $200 million, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Southern District of Indiana Joseph H. Hogsett.

Timothy S. Durham, 50, of Fortville, Ind., was sentenced today by U.S. District Judge Jane Magnus-Stinson.  In addition to his prison term, Durham was sentenced to serve two years supervised release.

James F. Cochran, the former chairman of the board of Fair, was sentenced today by Judge Magnus-Stinson to serve 25 years in prison and three years of supervised release.

Rick D. Snow, the former chief financial officer of Fair, was sentenced today by Judge Magnus-Stinson to ten years in prison and two years of supervised release.

Judge Snow also ordered Durham, Cochran and Snow to pay restitution in the amount of $208 million.

“The lengthy prison sentences handed down today are just punishment for a group of executives who built a business on smoke and mirrors,” said Assistant Attorney General Breuer.  “By deliberately misleading their investors and state regulators, Mr. Durham and his co-conspirators were able defraud thousands of innocent investors.  The Justice Department will continue to devote considerable time and resources to ensure that fraudsters like Mr. Durham, Mr. Cochran and Mr . Snow are brought to justice for their crimes.”

“This ordeal is truly a tragedy for all families involved,” said U.S. Attorney Hogsett.  “All we can do is ask that today’s decision send a warning to others in Indiana that if you sacrifice truth in the name of greed, if you steal from another’s American dream to enhance your own, you will be caught and you will pay a significant price.”

“The FBI will continue to aggressively pursue financial crimes investigations,” said Special Agent in Charge Robert A. Jones of the FBI Indianapolis Division.  “Today’s sentencing represents a significant step toward justice.  We must remain mindful that the victims of this crime still suffer.”

On June 20, 2012, following an eight-day trial, a federal jury in the Southern District of Indiana convicted Durham and two co-conspirators for their roles in this scheme. Durham was convicted of one count of conspiracy to commit wire and securities fraud, 10 counts of wire fraud and one count of securities fraud.  James F. Cochran, 57, of McCordsville, Ind., was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud and six counts of wire fraud.  Rick D. Snow, 49, Fishers, Ind., was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud and three counts of wire fraud.

Durham and Cochran purchased Fair, whose headquarters was in Akron, Ohio, in 2002.  According to evidence presented at trial, between approximately February 2005 through November 2009, Durham, Cochran and Snow executed a scheme to defraud Fair’s investors by making and causing others to make false and misleading statements about Fair’s financial condition and about the manner in which they were using Fair investor money. The evidence also established that Durham, Cochran and Snow executed the scheme to enrich themselves, to obtain millions of dollars of investors’ funds through false representations and promises and to conceal from the investing public Fair’s true financial condition and the manner in which Fair was using investor money.

When Durham and Cochran purchased Fair in 2002, Fair reported debts to investors from the sale of investment certificates of approximately $37 million and income producing assets in the form of finance receivables of approximately $48 million. By November 2009, after Durham and Cochran had owned the company for seven years, Fair’s debts to investors from the sale of investment certificates had grown to more than $200 million, while Fair’s income producing assets consisted only of the loans to Durham and Cochran, their associates and the businesses they owned or controlled.

Durham, Cochran and Snow terminated Fair’s independent accountants who, at various points during 2005 and 2006, told the defendants that many of Fair’s loans were impaired or did not have sufficient collateral.  After firing the accountants, the defendants never released audited financial statements for 2005, and never obtained or released audited financial statements for 2006 through September 2009.  With independent accountants no longer auditing Fair’s financial statements, the defendants were able to conceal from investors Fair’s true financial condition.

Evidence introduced at trial showed that the defendants engaged in a variety of other fraudulent activities to conceal from the State of Ohio Division of Securities and from investors Fair’s true financial health and cash flow problems.  Evidence showed that the defendants made false and misleading statements to concerned investors who either had not received principal or interest payments on their certificates from Fair or who were worried about Fair’s financial health.  The defendants also directed employees of Fair not to pay investors who were owed interest or principal payments on their certificates.

Even though Fair’s financial condition had deteriorated and Fair was experiencing severe cash flow problems, Durham and Cochran continued to funnel Fair investor money to themselves for their personal expenses, to their family, friends and acquaintances, and to the struggling businesses that they owned or controlled.

This case is being prosecuted by Trial Attorney Henry P. Van Dyck and Senior Deputy Chief for Litigation Kathleen McGovern of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Winfield D. Ong and Nicholas E. Surmacz of the Southern District of Indiana. The investigation was led by the FBI in Indianapolis.

This case is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.  For more information on the task force, visit www.stopfraud.gov .

Former Mortgage Pool Servicer Indicted on Federal Wire Fraud and Money Laundering Charges

DAVENPORT, IA—On November 19, 2012, Thomas Richard Jager, age 64, of Bettendorf, Iowa, made an initial appearance in federal court on an indictment charging 32 counts of wire fraud and one count of money laundering, announced United States Attorney Nicholas A. Klinefeldt. United States Magistrate Judge Thomas J. Shields set trial for January 7, 2013, and the case was assigned for trial to Chief United States District Judge James E. Gritzner.

The indictment alleges that starting on approximately January 1, 2008, and continuing to on or about July 31, 2010, Jager and his mortgage servicing company, Whitehall Funding Inc., then located in Davenport, Iowa, devised and participated in a scheme to defraud in connection with his certain mortgage pools serviced by Jager and Whitehall. The indictment further alleges that Jager drafted and faxed false remittance reports to investors in the mortgage pools and submitted false end of the year reports to mortgagors. The indictment also alleges that Jager improperly transferred funds received from mortgagors to Jager’s personal accounts and in one instance used mortgagor and investor funds to make a payment of $137,660.97 to pay off Jager’s own home equity loan. The indictment also seeks forfeiture of certain real and personal property.

The indictment is merely a charging instrument. Jager is presumed innocent until proven guilty.

If convicted, Jager faces a penalty on each wire fraud count of up to 30 years’ imprisonment, a $1,000,000 fine, or both fine and imprisonment; a period of supervised release of up to five years; a special assessment of $100; restitution to victims; and forfeiture of assets. If convicted on the money laundering count, Jager faces a penalty of up to 10 years’ imprisonment, a $250,000 fine, or both fine and imprisonment; a period of supervised release of not more than three years; a special assessment of $100; restitution; and forfeiture.

This case is being prosecuted by the United States Attorney’s Office for the Southern District of Iowa and is being investigated by the Federal Bureau of Investigation and the United States Department of Housing and Urban Development.

Department of Justice
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Tuesday, November 20, 2012
Former Executive at Florida-Based Lender Processing Services Inc. Admits Role in Mortgage-Related Document Fraud Scheme
Over 1 Million Documents Prepared and Filed with Forged and False Signatures, Fraudulent Notarizations

WASHINGTON – A former executive of Lender Processing Services Inc. (LPS) – a publicly traded company based in Jacksonville, Fla. – pleaded guilty today, admitting her participation in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the United States.

The guilty plea of Lorraine Brown, 56, of Alpharetta, Ga., was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Middle District of Florida Robert E. O’Neill; and Michael Steinbach, Special Agent in Charge of the FBI’s Jacksonville Field Office.

The plea, to conspiracy to commit mail and wire fraud, was entered before U.S. Magistrate Judge Monte C. Richardson in Jacksonville federal court.  Brown faces a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the crime.  The date for sentencing has not yet been set.

“Lorraine Brown participated in a scheme to fabricate mortgage-related documents at the height of the financial crisis,” said Assistant Attorney General Breuer.  “She was responsible for more than a million fraudulent documents entering the system, directing company employees to forge and falsify documents relied on by property recorders, title insurers and others.  Appropriately, she now faces the prospect of prison time.”

“Homeownership is a huge step for American citizens,” said U.S. Attorney O’Neill.  “The process itself is often intimidating and lengthy.  Consumers rely heavily on the integrity and due diligence of those serving as representatives throughout this process to secure their investments.  When the integrity of this process is compromised, illegally, public confidence is eroded.  We must work to assure the public that their investments are sound, worthy, and protected.”

Special Agent in Charge Steinbach stated, “Our country is increasingly faced with more pervasive and sophisticated fraud schemes that have the potential to disrupt entire markets and the economy as a whole.  The FBI, with our partners, is committed to addressing these schemes.  As these schemes continue to evolve and become more sophisticated, so too will we.”

Brown was the chief executive of DocX LLC, which was involved in the preparation and recordation of mortgage-related documents throughout the country since the 1990s.  DocX was acquired by an LPS predecessor company, and was part of LPS’s business when LPS was formed as a stand-alone company in 2008.  At that time, DocX was rebranded as “LPS Document Solutions, a Division of LPS.”  Brown was the president and senior managing director of LPS Document Solutions, which constituted DocX’s operations.

DocX’s main clients were residential mortgage servicers, which typically undertake certain actions for the owners of mortgage-backed promissory notes.  Servicers hired DocX to, among other things, assist in creating and executing mortgage-related documents filed with recorders’ offices.  Only specific personnel at DocX were authorized by the clients to sign the documents.

According to plea documents filed today, employees of DocX, at the direction of Brown and others, began forging and falsifying signatures on the mortgage-related documents that they had been hired to prepare and file with property recorders’ offices.  Unbeknownst to the clients, Brown directed the authorized signers to allow other DocX employees, who were not authorized signers, to sign the mortgage-related documents and have them notarized as if actually executed by the authorized DocX employee.

Also according to plea documents, Brown implemented these signing practices at DocX to enable DocX and Brown to generate greater profit.  Specifically, DocX was able to create, execute and file larger volumes of documents using these signing and notarization practices.  To further increase profits, DocX also hired temporary workers to sign as authorized signers.  These temporary employees worked for much lower costs and without the quality control represented by Brown to DocX’s clients.  Some of these temporary workers were able to sign thousands of mortgage-related instruments a day.  Between 2003 and 2009, DocX generated approximately $60 million in gross revenue.

After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employees to file and record them with local county property records offices across the country.  Many of these documents – particularly mortgage assignments, lost note affidavits and lost assignment affidavits – were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions.  Brown admitted she understood that property recorders, courts, title insurers and homeowners relied upon the documents as genuine.

Brown also admitted that she and others also took various steps to conceal their actions from clients, LPS corporate headquarters, law enforcement authorities and others.  These actions included testing new employees to ensure they could mimic signatures, lying to LPS internal audit personnel during reviews of the operation in 2009, making false exculpatory statements after being confronted by LPS corporate officials about the acts and lying to the FBI during its investigation.  LPS closed DocX in early 2010.

This case is being prosecuted by Trial Attorney Ryan Rohlfsen and Assistant Chief Glenn S. Leon of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark B. Devereaux of the U.S. Attorney’s Office for the Middle District of Florida.  This case is being investigated by the FBI, with assistance from the state of Florida’s Department of Financial Services.

Today’s conviction is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants.

Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Monday, November 19, 2012
Former Executives of Stanford Financial Group Entities Convicted for Roles in Fraud Scheme

WASHINGTON – A Houston federal jury has convicted Gilbert T. Lopez Jr., the former chief accounting officer of Stanford Financial Group Company, and Mark J. Kuhrt, the former global controller of Stanford Financial Group Global Management, for their roles in helping Robert Allen Stanford perpetrate a fraud scheme involving Stanford International Bank (SIB).

The guilty verdict was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Kevin Perkins of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell; and Special Agent in Charge Lucy Cruz of IRS-Criminal Investigation.

Stanford, who was convicted in a separate trial held earlier this year, illegally used billions of dollars of SIB’s assets to fund his personal business ventures, to live a lavish lifestyle, and for other improper purposes.

The evidence presented at the trial of Lopez and Kuhrt established that they were aware of and tracked Stanford’s misuse of SIB’s assets, kept the misuse hidden from the public and from almost all of Stanford’s other employees, and worked behind the scenes to prevent the misuse from being discovered.

The trial against Lopez and Kuhrt spanned five weeks.  After approximately three days of deliberations, the jury found both Lopez, 70, and Kuhrt, 40, both of Houston, guilty of 10 of 11 counts in the indictment.  Each defendant was convicted of one count of conspiracy to commit wire fraud and nine counts of wire fraud.  Each was found not guilty on one wire fraud count.

Both defendants were immediately remanded into custody.

U.S. District Judge David Hittner, who presided over the trial, has set sentencing for Feb. 14, 2013.  At sentencing, Lopez and Kuhrt will each face a maximum of 20 years in prison on each count of conviction.

The investigation was conducted by the FBI, U.S. Postal Inspection Service, IRS-CI and the U.S. Department of Labor, Employee Benefits Security Administration.  The case was prosecuted by Deputy Chief Jeffrey Goldberg and Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section, and by Assistant U.S. Attorney Jason Varnado of the Southern District of Texas.

 

Department of Justice
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FOR IMMEDIATE RELEASE
Friday, November 9, 2012
Las Vegas Woman Convicted for Role in Mortgage Fraud Scheme

WASHINGTON – A Las Vegas mortgage agent was found guilty today for participation in a mortgage fraud scheme that netted $1.2 million in fraudulent mortgage loans, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Special Agent in Charge Kevin Favreau of the FBI’s Las Vegas Field Office.

After a four-day trial before U.S. District Judge Miranda Du in the District of Nevada, a federal jury convicted Heidi Haischer, 44, of one count of wire fraud and one count of conspiracy to commit wire fraud for submitting fraudulent loan documents to purchase two homes.

According to court documents and evidence presented at trial, Haischer submitted to lending institutions loan applications in which she misrepresented her income, submitted false verification of employment and misrepresented her intent to reside in one of the properties as her primary residence.  Evidence at trial established that Haischer participated in an illegal property flipping ring that fraudulently obtained properties that Haischer and her co-conspirators intended to sell for a profit.  Haischer and her co-conspirators also enriched themselves by collecting brokerage commissions generated by the sales of the properties.

Co-conspirator Kelly Nunes was convicted in a related case in Las Vegas on Feb. 2, 2012, of one count of bank fraud and one count of conspiracy to commit wire and bank fraud.

This case was investigated by the FBI.  Trial Attorneys Thomas B.W. Hall and Brian R. Young of the Criminal Division’s Fraud Section are prosecuting the case, with assistance from the U.S. Attorney’s Office for the District of Nevada.

Today’s conviction is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants.