Letter of Apology » Other Fraud

White Collar World…..

Solomon Wisenberg — Mon, 20 Jul 2009 14:06:53 +0000

The Washington Post editorializes here for a compromise in the U.S.-Switzerland cold war over UBS’ reluctance to release more names of purported American tax cheats to IRS and DOJ. I understand the Swiss position. It’s tough to be a grown up nation in the 21st Century when a key segment of your economy is devoted to facilitating tax fraud…..Andrew Cuomo is talking to Chuck but in a nasty way, according to this WSJ article. In a Friday letter, the New York AG threatened to sue Charles Schwab & Co. for fraud in connection with its marketing of auction-rate securities. Cuomo is open to a settlement, however, if Schwab buys back the securities from its investor clients. Schwab adamantly denies wrongdoing. Cuomo’s letter provides examples, allegedly supporting his fraud theory. They look pretty weak to me. Let’s see if Andy is as tough on recently departed Auto Task force Chief, and Democratic Party mega-money raiser, Steven Rattner. Fox News reported on his departure, here, last week…..Meanwhile, in the surprise of the century, Neil Barofsky, “the special inspector general overseeing the government’s financial rescue program,” reports that many of the banks receiving TARP money have used those funds for things other than lending! The uses include, investing, repaying debt, and buying other banks. About 80% of the banks spent at least some of their TARP funds in connection with new lending. Barofsky’s report comes out today, according to this Washington Post article. I have an idea to increase employment and reduce waste and fraud. Every company should be required to hire its own special inspector general at inception. Then, after the first special inspector general’s report is issued, the company should be forced to fire the special inspector general on trumped-up charges. We can keep a lot of people employed this way, and generate plenty of news stories about waste and abuse. We should also make every person hire a special inspector general at birth. Then we can ignore virtually every warning the special inspector general gives us and later suffer the consequences. Oh wait–I’ve already done that with Mom and Dad.

Pastor Convicted, Associate Pleads Guilty In Attempted Bankruptcy Fraud

Dave Westheimer — Wed, 26 Nov 2008 05:37:44 +0000

A federal jury in Manhattan last week convicted William Spencer of Oakland, California of bankruptcy fraud in connection with the attempted purchase of Hawaiian Airlines out of bankruptcy in 2003. Spencer is the pastor of the House of Truth in Oakland. He and his associate Paul Boghosian were indicted in April 2005 on charges that they attempted to defraud the US Bankruptcy Court for the District of Hawaii by providing false documentation claiming that their Hawaiian Investment Partners Group could provide $500 million in financing to reorganize the airline. They then allegedly used the false documentation to solicit investors, since they apparently didn’t actually have any money. Boghosian pleaded guilty to bankruptcy fraud on October 29. Sentencing for both men in scheduled for January 30, 2009 before US District Judge Loretta Preska, who presided over the trial (Reuters, DOJ).

More Charges In Rubashkin, Agriprocessors Case

Dave Westheimer — Mon, 24 Nov 2008 06:00:35 +0000

A superseding federal indictment unsealed on Friday afternoon includes the previous immigration and bank fraud charges against former Agriprocesssors CEO Sholom Rubashkin and adds new counts. Rubashkin now faces charges of conspiracy to harbor undocumented aliens for profit, harboring undocumented aliens for profit, conspiracy to commit document fraud, aiding and abetting document fraud, six counts of aiding and abetting aggravated identity theft, and two counts of bank fraud.

Also named are the corporation and four other management team members: Brent Beebe, Hosam Amara, Zeev Levi and Karina Freund. Amara and Levi are believed to have fled to Israel after the May immigration raid at the Postville, Iowa kosher meat processing plant. Amara and Freund were named in an earlier indictment. The Iowa Independent has a full listing of the charges and background.

Big Dig Contractor Sentenced, Fined In Overbilling Scheme

Dave Westheimer — Tue, 11 Nov 2008 07:05:21 +0000

McCourt Construction Company was sentenced on Friday to a $500,000 fine and three years probation by US District Judge Richard Stearns in Boston for its role in an overbilling scheme on Boston’s Big Dig project. Stearns also ordered the company to pay $600,000 restitution to the Massachusetts Turnpike Authority. McCourt pleaded guilty earlier this year to conspiracy to defraud the US government with respect to claims on a federal highway project. Two of its supervisors pleaded guilty conspiracy to commit highway project fraud by making false statements and were sentenced last month. The charges arose from overbilling on the I-93 Tip O’Neill Tunnel project. McCourt admitted participating in over 1500 instances of overbilling between 2002 and 2005 in which subcontractors charged journeyman labor rates for work actually done by apprentices (DOJ, Boston Bizjournal).

Former Natural Gas Trader Sentenced To Prison In False Reporting Case

Dave Westheimer — Fri, 07 Nov 2008 07:33:33 +0000

Another former natural gas trader has been sentenced to prison for reporting false prices to industry publications in order to influence pricing. Donald Burwell of Richardson, Texas, a former El Paso Corporation trader, was sentenced to 10 months in prison on Monday by US District Judge Vanessa Gilmore in Houston. He pleaded guilty in 2006 to one count of reporting fictitious natural gas trades (Reuters, DOJ). See earlier here and here for other prosecutions.

Kroger VP, Three Supermarket Managers Plead Not Guilty In Labor Fraud Case

Dave Westheimer — Mon, 03 Nov 2008 06:49:54 +0000

In US District Court in Los Angeles last week, four officials connected with Ralph’s Supermarket pleaded not guilty to labor fraud charges in connection with the 2003-2004 California supermarket strike and lockout. Scott Drew, a vice president with Cincinnati-based Kroger, which owns Ralph’s, and former Ralph’s managers Charles Vance, Randall Kruska and Karen Montoya were indicted in September on charges that they participated in a conspiracy to secretly rehire hundreds of locked-out employees under false names and false social security numbers during the 2003-2004 labor dispute. A December 23 trial date has been scheduled (Supermarket News, LA Times/AP). There’s no word about former Ralph’s vice president Patrick McGowan, who was indicted on the same charges.

Two Big Dig Managers Sentenced

Dave Westheimer — Wed, 22 Oct 2008 05:40:33 +0000

Ryan McCourt and Kenneth Hartley, both former managers for McCourt Construction Company, were sentenced on October 16 by US District Judge Joseph Tauro in Boston for their roles in an overbilling scheme on Boston’s Big Dig project. Ryan McCourt was sentenced to two years probation, while Kenneth Hartley was sentenced to six months in prison and two years of supervised release. Both men pleaded guilty in July to a single-count information charging conspiracy to commit highway project fraud by making false statements regarding the cost of work performed on a federal highway project, admitting that they took part in overbilling the I-93 Tip O’Neill Tunnel project in a scheme where subcontractors charged journeyman labor rates for work actually done by apprentices (earlier). McCourt Construction also pleaded guilty and will be sentenced on November 7 (Boston Globe, DOJ).

Texas Appeals Court Upholds Ted H.Roberts’ Conviction

Dave Westheimer — Fri, 10 Oct 2008 04:41:11 +0000

A three-judge panel of Texas’ Fourth Court of Appeals on Wednesday unanimously upheld the conviction and sentence (.pdf) of suspended attorney Ted H. Roberts of San Antonio. Roberts was convicted in March 2007 on three counts of theft by deception and coercion and sentenced to five years in prison; he was acquitted on two other counts. His wife Mary, also an attorney, was convicted on five counts at her trial and sentenced to 10 years probation. Ted Roberts was accused of using Rule 202 petitions threatening civil litigation to coerce payments from men who had affairs with Mary; the deception was telling them the money would go to charity when it actually went to him and his wife. Roberts’ primary argument was that his actions were lawful and that the petitions were legally valid. Justice Alma Lopez, who wrote the opinion, stated: “We fail to see how Roberts’s use of his law license to draft Rule 202 petitions in his efforts to get the men to ‘contribute to his favorite charity: me’ converts criminal extortion into lawful conduct.” Roberts has been free on bond pending appeal; his attorney indicated he would probably continue his appeal (Express-News).

Prominent LA Trial Lawyer Pleads Not Guilty To Making Illegal Campaign Contributions

Dave Westheimer — Thu, 28 Aug 2008 07:01:51 +0000

Los Angeles-based class action attorney Pierce O’Donnell on Wednesday pleaded not guilty to charges that he funneled $26,000 in contributions through his employees to a PAC supporting a presidential candidate. The candidate was apparently John Edwards and the contributions were allegedly made in 2003. O’Donnell was indicted July 24 on three counts, including conspiracy, causing illegal contributions to be made and causing the campaign to make false statements to the FEC. His trial is scheduled to begin on October 21 (National Law Journal).

Two Plead Guilty In Counterfeit Colgate Case

Dave Westheimer — Tue, 26 Aug 2008 06:53:54 +0000

Saifoulaye Diallo and Habib Bah of New York City pleaded guilty on Thursday before US District Judge Brian Cogan in Brooklyn to to trafficking in counterfeit goods in violation of criminal trademark laws. The men admitted to distributing over 500,000 tubes of counterfeit Colgate toothpaste from China to discount stores in the US, who were no doubt trying to squeeze out a little extra profit. The retail value of the toothpaste was $730,000. The fake Colgate had no fluoride but came with a bonus of bacillus spores and diethylene glycol at no extra charge, although no illnesses were reported. Diallo and Bah face a statutory maximum of 10 years in prison; sentencing has been scheduled for January 9, 2009 (Newsday, DOJ).