Letter of Apology » Dave Westheimer

Two Defendants In Securities Fraud Case Get 60 Month Sentences, Well Below Guidelines

Dave Westheimer — Tue, 19 Aug 2008 06:08:25 +0000

Lennox and Lester Parris, brothers and principals of now-defunct Jericho, New York-based bottled water distributor Queénch, Inc., were each sentenced last Wednesday in Brooklyn to 60 months in prison for securities fraud in connection with the manipulation of stock prices which allegedly cost investors over $2.5 million. They were convicted in 2007 on six counts including securities fraud, conspiracy to commit securities fraud, witness tampering and conspiracy to commit witness tampering. What’s unusual here, although the DOJ press release fails to mention it, is that US District Judge Frederic Block departed sharply downward from federal sentencing guidelines, which called for a recommended sentences of 30 years to life based on offense levels of 42 for both men. Block criticized the guidelines’ “fetish with absolute arithmetic”, writing that while the sentences were well-deserved, the crimes did not rise to the level of Enron, WorldCom and Computer Associates. Mark Fass’ NY Law Journal story has more, including a link to the decision.

Two Wextrust Principals Indicted In $9.2 Million Securities Fraud

Dave Westheimer — Tue, 19 Aug 2008 05:23:26 +0000

Steven Byers and Joseph Shereshevsky, principals of WexTrust Capital LLC, were arrested last week and charged in the Southern District of New York with conspiracy to commit secuties fraud. The DOJ Press Release alleges a particular scheme in which $9.2 million was raised from investors to buy certain GSA properties, but the properties were never purchased and the funds were used for other purposes including paying off investors in other schemes. However, this indictment may well be a prelude to more criminal counts, because the SEC unveiled massive civil fraud charges against Byers, Shereshevsky and Wextrust entities, alleging a Ponzi scheme involving $255 million raised from approximately 1,200 investors, largely from Shereshevsky’s contacts in the Orthodox Jewish community. Over $100 million was allegedly diverted. The scheme outlined in the criminal case is included. The assets of the Wextrust companies have been frozen.

Shereshevsky, of Norfolk, Virginia was ordered held without bond last Wednesday by US Magistrate Judge Tommy Miller in Norfolk, pending his arraignment on the criminal charges; Miller called Shereshevsky a thief and a thug (Virginian-Pilot). Shereshevsky was convicted on a federal bank fraud charge in 2003. Bloomberg has more.

Pennsylvania Man Indicted In Online Auction Fraud

Dave Westheimer — Mon, 18 Aug 2008 06:58:28 +0000

A Uniontown, Pennsylvania man already indicted in state court for identity theft was indicted Wednesday by a federal grand jury in Pittsburgh on eight counts of mail fraud. Jason Joy, a former math professor, allegedly collected money for merchandise he sold on eBay and Yahoo Auctions but never delivered the goods. He allegedly told the buyers he was the victim of identity theft, but prosecutors claim he was actually using the identity of one of his students and that he stole his sister-in-law’s identity and used her check card to pay eBay seller’s fees. The loss involved in the charged counts totals over $38,000 (Pittsburgh Post-Gazette, DOJ).

Oregon Woman Indicted In Nigerian Check Scam

Dave Westheimer — Mon, 18 Aug 2008 06:41:26 +0000

Ella Mae Letellier of Ontario, Oregon has been indicted by a federal grand jury in Boise on 29 counts of mail and wire fraud in connection with a Nigerian check scam she allegedly helped run out of Payette, Idaho. It’s a rerun of the scheme for which a Washington woman was sentenced to prison in June (earlier): a seller is paid with a phony check for more than the amount of the goods, returns the excess money and winds up liable for the entire amount when the counterfeit check is eventually returned. Letellier allegedly acted as an accomplice for Patrick Anthony of Nigeria by sending out counterfeit checks on his behalf (Idaho Statesman). This scheme has been so well publicized online that it boggles the mind that people still bite. David Hannum was right.

Teenage Hacker Pleads Guilty To Federal Computer Fraud Charge

Dave Westheimer — Mon, 18 Aug 2008 06:20:26 +0000

In Casper, Wyoming on Wednesday, 19-year-old Jason Milmont of Cheyenne pleaded guilty before US Magistrate Judge Michael Shickich to one count of unauthorized access to a computer to conduct fraud. Milmont admitted creating a botnet of 5,000 to 15,000 computers by modifying the Nugache Worm to infect Limewire users in order to steal credit card and banking information. It’s the first case nationally in which a defendant has been charged with using P2P software to infect users. Milmont agreed to plead guilty in June in Los Angeles where the case originated but it was transferred to Wyoming last month. Milmont will be sentenced on October 23 by US District Judge William Downes. He faces a statutory maximum of five years in prison (Casper Star-Tribune).

Government Filings Reveal New Evidence Against Ted Stevens

Dave Westheimer — Sat, 16 Aug 2008 06:01:08 +0000

In court filings made late Thursday, federal prosecutors laid out more of their case against US Sen. Ted Stevens (R-Alaska) and described several new alleged schemes beyond what was revealed in the indictment. The new evidence was described as part of the government response to a defense motion for dismissal on grounds that the indictment violated the speech and debate clause. The intent is to show that Stevens’ activities had nothing to do with lawmaking.

In one instance, Stevens allegedly turned a $5000 down payment on a Florida condo at a sweetheart price into a net profit of over $100,000 before the condo was ever built, with the aid of an interest-free loan he never reported. Others allegedly involve further entanglements with former VECO CEO Bill Allen, who has pleaded guilty and is expected to testify aganst Stevens. At least two of those allegations came as a result of taped conversations (Anchorage Daily News, WaPo).

Claimed Shopaholic Sentenced To 33 Months In Prison In Theft From Employer

Dave Westheimer — Fri, 15 Aug 2008 06:35:51 +0000

In Pittsburgh on Monday, US District Judge Donetta Ambrose sentenced Mary Beth Klorczyk of North Huntingdon, Pennsylvania to 33 months in prison for embezzling $758,000 from her employer. Klorczyk, a former senior financial analyst for a Westinghouse subsidiary, pleaded guilty in April to mail fraud and interstate transportation of property taken by fraud. She admitted embezzling the money between 2003 and 2007 by using her corporate Amex card for personal expenditures and presenting false expense vouchers to Westinghouse. She used the money for expensive vacations, home improvement, cars and jewelry. Why Westinghouse took nearly four years to notice that it was paying such a large amount of expense reimbursements to a $70,000 per year employee is a mystery. At the sentencing hearing, Klorczyk’s attorney presented her as a victim of multiple mental disorders that turned her into a shopaholic, and Klorczyk testified that she stole because she missed her family when she was on business trips and called her children bigger victims than Westinghouse. Judge Ambrose didn’t buy that at all (Pittsburgh Tribune-Review, DOJ).

More Alaska Corruption: Businessman Pleads Guilty To Structuring

Dave Westheimer — Thu, 14 Aug 2008 06:32:10 +0000

William Weimar, now of Big Arm, Montana but formerly owner of now-defunct Alaska-based Allvest, Inc., pleaded guilty on Tuesday in US District Court in Anchorage to a two count information charging him with conspiracy to commit honest services mail and wire fraud and structuring financial transactions. Weimar admitted conspiring in 2004 with an unnamed consulting firm and an unnamed candidate for the state legislature to structure $20,000 in illegal payments to the candidate, who would support a private prison project in which Weimar held a contingent interest. Veco, the now-defunct oilfiled services company at the center of most of the Alaska corruption cases (including that of now-indicted US Sen.Ted Stevens), was initially a partner with Allvest in the proposed prison project but was apparently no longer involved by 2004. Weimar will be sentenced on October 29; prosecutors estimate a sentence of 10 to 16 months in prison (Anchorage Daily News, DOJ).

California Man Sentenced To 7+ Years In Bust-Out Frauds

Dave Westheimer — Thu, 14 Aug 2008 06:07:10 +0000

Reza Bahram Tabatabai of Beverley Hills was sentenced on Monday to 87 months in prison by US District Judge Florence-Marie Cooper in Los Angeles for operating fraud schemes in three states which cost lenders over $8 million. Tabatabai operated a series of so-called bust-out schemes in which legitimate businesses were taken over and their lines of credit used to purchase large amounts of merchandise which were essentially resold with no intention of repaying the lenders. He was convicted in 2006 on 55 counts including conspiracy, interstate transportation of fraudulently obtained property, mail fraud, wire fraud and money laundering (AP, DOJ).

Computer Tech In Fumo Case Pleads Guilty To Obstruction

Dave Westheimer — Wed, 13 Aug 2008 06:00:07 +0000

Leonard Luchko, a computer tech who worked in the South Philadelphia office of indicted Pennsylvania State Sen. Vincent Fumo, on Monday pleaded guilty to one count of conspiracy and 28 counts of obstruction of justice. Luchko, who was actually employed by Senate Democratic Computer Services, admitted acting at Fumo’s request to delete emails and other evidence from computers used by Fumo, his aides and staffers at Citizens Alliance, a nonprofit involved in the public corruption charges against Fumo. The destruction of evidence allegedly began after Fumo found he was the target of a federal investigation. Luchko is cooperating with prosecutors and will testify against Fumo in exchange for no more than two years in prison (Philadelphia Inquirer, DOJ).

Fumo is charged with using his senate office and staff and Citizens Alliance for his personal gain. His trial begins September 8 before US District Judge William Yohn. Ruth Arnao, his longtime legislative aide, and Mark Eister, a computer tech who worked with Luchko, are co-defendants. Here’s the February 2007 DOJ press release for the superseding indictment.