Letter of Apology » Other Fraud

Big Dig Contractor Indicted, Promptly Declares Chapter 11

Dave Westheimer — Wed, 25 Jun 2008 06:18:31 +0000

Modern Continental Corporation, the largest contractor on Boston’s Big Dig project, was charged late last Friday in US District Court in Boston with making false statements in connection with its execution of construction documents certifying the quality of the work it performed on certain contracts, submitting false time and materials slips on contracts, and with wire fraud. The DOJ press release alleges that the company was aware of numerous defects including the one that caused the accident which killed a motorist in 2006 after a ceiling panel fell. The company called the charges “completely unfounded and without merit.” The charges were in the form of a 49-count information. Although an information usually indicates a forthcoming plea, in this case it came after negotiations broke down (Boston Globe).

Yesterday Modern Continental filed Chapter 11 bankruptcy in Boston. A bankruptcy lawyer not involved in the case called the filing “skeletal” and believes it was rushed because of the criminal charges (Boston Globe).

Dallas Activist Convicted Of Section 8 Fraud

Dave Westheimer — Thu, 19 Jun 2008 05:26:34 +0000

A federal jury in Dallas on Friday convicted longtime ~~blowhard~~ self-proclaimed civil rights activist Darren Reagan on five counts of theft of public money for collecting $45,000 in rent subsidies from the Dallas Housing Authority which he wasn’t entitled to. Despite signing documents stating that renting to a relative is prohibited under Section 8 rules and affirming that he had no blood, marital, or other familiar relationship to his tenant, Reagan rented a house to his mother-in-law and collected rent subsidies from 2002 to 2007. He claimed he never read the fine print. Then when investigators approached his mother-in-law and she admitted they knew what they were doing was illegal, the Housing Authority notified him in early 2007 that benefits were terminated. Reagan claimed he never got the letter although he admitted receiving every check sent to the same PO box address. And when checks were mistakenly sent for several months after the termination, Reagan cashed them instead of depositing them. Reagan faces a statutory maximum of 10 years on each count. Sentencing is scheduled for October 4 before US District Judge Barbara Lynn (Dallas Morning News, DOJ).

But this is only the beginning of Reagan’s legal woes. He is one of 14 persons indicted last fall in a major bribery and extortion scandal at Dallas City Hall. He is charged with one count of conspiracy to commit extortion, two counts of extortion by public officials, one count of conspiracy to commit money laundering and four counts of tax evasion for allegedly helping extort money from a developer on behalf of former Dallas Mayor Pro Tem Don Hill. That trial is scheduled to begin in January 2009.

Three Relatives Of Rep. Jefferson Indicted

Dave Westheimer — Thu, 05 Jun 2008 04:54:31 +0000

One day after indicted Rep. William Jefferson (D-La.) endorsed Sen. Barack Obama for President, three of Jefferson’s relatives were charged in a 31-count federal indictment made public on Wednesday in New Orleans. Betty Jefferson, a publicly elected district tax assessor, her brother Mose Jefferson and her daughter Angela Coleman have been indicted on counts of conspiracy to commit mail fraud, federal program fraud, aggravated identity theft, substantive program fraud, mail fraud and conspiracy to commit money laundering, for allegedly looting charitable organizations under their control (Times-Picayune, DOJ).

No Poker For Harry Siskind

Dave Westheimer — Sun, 01 Jun 2008 21:19:30 +0000

Harry Siskind, the former Mark Nutritionals CEO who pleaded guilty on May 19 to making a false statement to the FTC for lying about the value of his assets (earlier), is in more hot water. He was back in court on Thursday in San Antonio before US District Judge Orlando Garcia, who demanded to know why Siskind got a public defender when he appears to have the means to pay for his own attorney. It turns out that at the time he was pleading indigence, he was traveling around the country playing in high stakes poker tournaments which had $10,000 to $25,000 entry fees. And he owns a house valued at over $500,000 with no mortgage. Judge Garcia has not yet ruled whether Siskind will be required to reimburse taxpayers for the cost of his public defender, but he did tell Siskind that he is to “have nothing to do with poker whatsoever” and that he no longer can travel freely about the country. His sentencing hearing is scheduled for August 28 (Express-News).

Pop Promoter Pearlman Sentenced To 25 Years In Prison

Dave Westheimer — Thu, 22 May 2008 06:28:49 +0000

Lou Pearlman, the sadist pop music promoter who gave the world N’Sync and the Backstreet Boys, was sentenced on Wednesday to 300 months in prison by US District Judge G. Kendall Sharp in Orlando. Pearlman pleaded guilty in March (earlier) to two counts of conspiracy, one count of money laundering and one count of making a false claim in a bankruptcy in connection with a series of long-running fraud schemes which caused losses to 250 investors estimated at $200 million and losses to 10 financial institutions estimated at $100 million. His schemes included enticing individuals and banks to invest millions of dollars in two airline companies which existed only on paper, a Ponzi scheme involving the sale of “employee investment savings accounts,” a bank fraud involving faked financial statements, and a plot to siphon frozen assets from a bankruptcy case. Sharp offered Pearlman the opportunity to shorten his sentence by one month for every $1 million repaid to his bankruptcy trustee, but the assets recovered to date (including his mansion and Rolls) will not count toward the incentive (Reuters, MTV).

Former Weight Loss Company CEO Admits Lying To FTC

Dave Westheimer — Wed, 21 May 2008 05:41:31 +0000

Remember Body Solutions? Their Evening Weight Loss Formula, huckstered by radio DJs nationwide, allegedly would let you lose weight while you sleep. All you had to do was drink it and you would burn fat and gain lean muscle without diet or exercise, just like magic! Some dupes people actually believed it for a while, to the tune of $155 million in sales; but Mark Nutritionals Inc. of San Antonio, the company that made it, filed for bankruptcy in 2002 after being sued by the FTC for making false and unsubstantiated claims.

On Monday in San Antonio, former Mark Nutritionals CEO Harry Siskind pleaded guilty before US Magistrate Judge Nancy Nowak to a single count of making a false statement to the FTC. The charge arose from a deposition he gave the FTC in connection with its suit against him and his company and in connection with the bankruptcy. Specifically, he admitted lying about the value of his assets. After being ordered by a federal court to disclose all assets, “under oath, Siskind falsely stated that certain assets owned by him were valueless stock when in fact they were valuable loans owed to him which he expected to be repaid.” Siskind faces up to five years in prison; sentencing is scheduled for August 28 before US District Judge Orlando Garcia (AP, DOJ).

Charges Dismissed Against Two Men Accused Of Falsely Certifying Aircraft Parts

Dave Westheimer — Fri, 16 May 2008 06:20:46 +0000

At the request of the US Attorney’s Office, on Monday in Los Angeles US District Judge Robert Takasugi dismissed all charges against Eutiquio Sauceda of Downey, California and Gabriel Camacho of El Monte, California. The two men had been indicted in 2003 on counts of conspiracy and making false statements to a US government agency for allegedly falsely certifying the quality of parts used by commercial aircraft, NASA and the Pentagon; the alleged incidents date back to 1999. They had been scheduled to go on trial next month. No reason was given for the dismissal, but Camacho had turned down a plea that would have involved no prison time. Both men were managers at Temperform USA, a subsidiary of Hydroform USA. The men had been accused of ordering their employees to falsely state that parts had been properly heat treated. Temperform and Hydroform were also indicted; Temperform pleaded guilty in September 2004, paid a fine and closed down, but all charges against Hydroform were later dropped (San Francisco Chronicle).

Appeals Court Upholds Coca-Cola Trade Secrets Convictions

Dave Westheimer — Wed, 14 May 2008 04:54:12 +0000

In an opinion published Monday, the US Court of Appeals for the Eleventh Circuit upheld the convictions and prison sentences of Joya Williams and Ibrahim Dimson for conspiracy to commit theft of trade secrets. Williams, an executive assistant at Coca-Cola in Atlanta, was convicted in February 2007 of taking confidential trade information from Coke and trying to sell it to Pepsi through her friend Edmund Duhaney and Dimson. Pepsi contacted the FBI after being contacted by Dimson. Williams was sentenced to eight years in prison; Dimson received a five year sentence. Duhaney, who pleaded guilty and cooperated with prosecutors, was sentenced to two years in prison.

The appellate court rejected Williams’ claims that the presiding judge violated her Sixth Amendment rights by limiting her cross-examination of Duhaney and improperly instructed the jury on the meaning of reasonable doubt. The court also rejected Williams’ and Dimson’s claim that their sentences were unreasonable compared to Duhaney’s two-year sentence (AP/Forbes).

Former Bristol Myers-Squibb Exec Indicted For Lying About Plavix Deal

Dave Westheimer — Tue, 29 Apr 2008 06:41:24 +0000

Andrew Bodnar, a doctor and former senior vice president of Bristol Myers-Squibb, on Wednesday was indicted in US District Court in Washington on one count of violating of the Federal False Statements Act for allegedly lying to the FTC about a secret settlement of a challenge to the company’s Plavix patent. The indictment charges that in 2006, he negotiated a secret agreement between Bristol Myers-Squibb and the Canadian generic drug manufacturer Apotex Inc., failed to submit it to the FTC and later lied to the FTC by denying the existence of the agreement. Apotex had filed suit against Bristol Myers challenging the validity of its patent on Plavix and was threatening to market a generic equivalent. In the supposedly undisclosed deal, Bristol Myers allegedly agreed not launch a generic version of Plavix when its patent expires in 2011 if Apotex agreed not to launch its Plavix generic until 2011. The charge carries a maximum sentence of five years in prison. Bristol Myers pleaded guilty to related charges in the case last June and paid a $1 million fine (Reuters, NYT).

Only In Minnesota: Carp Caper Under Investigation

Dave Westheimer — Fri, 25 Apr 2008 06:35:14 +0000

It sounds like the plot for a yet-to-be-written Coen Brothers’ movie: according to a search warrant unsealed earlier this week in US District Court in Minneapolis, a St. Paul area man named Michael Anthony Powell is under investigation for allegedly swindling investors who were told he had contracts to deliver containerloads of carp worldwide for humanitarian purposes. The search warrant affidavit indicates that more than 40 people have invested in “fraudulent humanitarian carp proposals” with Powell since 1992, and six people have invested $694,000 into Powell’s ventures from 2000 through 2005. No one has been repaid, and Powell has allegedly converted the money to personal use. He has operated under a number of different company names. Among the ventures:

[The affidavit] said Powell allegedly told some investors in 2004 that he had a $1.2 million contract to deliver container loads of carp fillets to China; persuaded some business associates in 2005 to buy a fish plant in Pepin, Wis., where they were going to process carp for buyers he had supposedly lined up in Serbia, and pitched a deal as recently as last December to haul carp from Utah Lake that would be shipped as “humanitarian aid to countries around the globe.”

Minnesota is perhaps the only state where a bottom-dwelling sand-sucking primitive life form (the carp, not Powell) could generate such interest from investors (Star Tribune).