FROM: U.S. JUSTICE DEPARTMENT
Wednesday, September 18, 2013
Six Individuals, Three Corporations Charged in Indiana-based Biofuels Fraud Scheme
The Justice Department’s Environment and Natural Resources Division and the U.S. Attorney’s Office for the Southern District of Indiana announced today the return of two indictments against six individuals and three companies for offenses involving federal renewable fuel programs, allegedly creating losses to victims totaling more than $100 million. The 88 counts included in the three charging documents include allegations of conspiracy, wire fraud, false tax claims, false statements under the Clean Air Act, obstruction of justice, money laundering and securities fraud.
“Congress enacted incentives for the production of biofuels to make the United States stronger and more energy independent,” said Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Fraud by parties claiming such incentives threatens these important public policies. The Justice Department will vigorously prosecute those seeking to line their pockets using scams like those alleged in this indictment.”
“This morning, federal agents brought into custody individuals who allegedly operated the largest tax and securities fraud scheme in Indiana history,” said U.S. Attorney for the Southern District of Indiana Joseph H. Hogsett. “This case represents a collaborative effort on the part of law enforcement to hold fully accountable those who seek personal profit at the taxpayer’s expense.”
“The Renewable Fuel Standard Program was designed to achieve greenhouse gas emission reductions, promote energy independence and expand our nation’s renewable fuels sector,” said Cynthia Giles, Assistant Administrator for Enforcement and Compliance Assurance, Environmental Protection Agency (EPA). “Today’s action supports these goals by protecting the integrity of the biofuel market. Those that cheat the system are breaking the law, and undermine our commitment to protect public health and the environment.”
“We are proud to work with our federal partners to identify and investigate groups that manipulate and utilize federal government programs to line their pockets by fraud,” said Robert A. Jones, Special Agent in Charge of the FBI Indianapolis Division. “In doing so, they deceive their customers, their shareholders, and the American public. The FBI will continue the fight against this dishonest and fraudulent behavior which harms the American people and the American economy.”
“The indictments returned today send a loud message that IRS Criminal Investigation operates year round to protect the integrity of our tax system and today is a victory for the American people,” said James C. Lee, Special Agent in Charge, IRS Criminal Investigation. “Together with the cooperative efforts of our law enforcement partners, we were able to identify and vigorously investigate the fraud involved in this scheme.”
The Energy Independence and Security Act of 2007 created a number of federally-funded programs that provided monetary incentives for the production of biodiesel. A dollar-per-gallon tax credit was available only to the first person to blend the pure biodiesel (known as B100) with petroleum diesel. After the biodiesel was blended and the tax credit claimed, the resulting product was generally known in the industry as B99, meaning that it was approximately 99 percent biodiesel and 1 percent petroleum diesel. Additionally, biodiesel producers could generate and attach credits known as “renewable identification numbers” or RINs to biodiesel they produced. Because certain companies need RINs to comply with regulatory obligations, RINs have significant market value. These two incentives were available only once for any given volume of biodiesel. For these reasons, a gallon of B100 with RINs and an available tax credit was worth much more than a gallon of RIN-stripped B99. At times during the conspiracy, a gallon of B100 was worth up to $2.50 more than an equivalent gallon of B99.
Four of the defendants—Craig Ducey, Chad Ducey, Chris Ducey and Brian Carmichael— operated E Biofuels, a Middletown, Indiana company that held itself out as a producer of biodiesel from “feedstocks” such as animal fat and vegetable oils. The government alleges that these defendants conspired with Joseph Furando and Evelyn Katirina Pattison—two executives with a pair of related New Jersey-based companies that operated under the names Caravan Trading Company and CIMA Green—to purchase RIN-stripped B99 from third parties, pretend that E-Biofuels had produced that fuel at its Middletown facility and fraudulently resell that fuel to customers as B100 with RINs and an available tax credit. While the E-Biofuels facility was capable of producing B100, at times during the conspiracy it was producing no fuel of its own, but instead was simply acting as a pass-through facility for fuel purchased elsewhere.
The indictment alleges that beginning in July 2009 and continuing until May 2012, these defendants fraudulently sold more than 35 million gallons of RIN-stripped B99 to unwitting customers who paid an inflated price, thinking they were purchasing B100 with RINs and an available tax credit. All told, the customers were allegedly defrauded of more than $55 million as a result of these activities and the Internal Revenue Service was exposed to as much as $35 million in false claims.
The government alleges that the defendants delivered the fraudulently mislabeled fuel to the victims in one of three ways. In some cases, the biodiesel was transported from fuel terminals to the E-Biofuels facility in Middletown where it was unloaded into a holding tank. A short time later, the biodiesel would be reloaded into tanker trucks and delivered to unsuspecting customers along with fraudulent paperwork that misidentified it as B100 with RINs produced by E-Biofuels. On other occasions, the truck drivers did not unload the fuel when they arrived at Middletown plant. Instead, they simply picked up paperwork falsely stating that the truck contained a load of B100 with RINs that originated at the E-Biofuels facility. The truck drivers referred to this procedure as “flipping a load.”
Finally, in the most egregious instances, the truck drivers hauled RIN-stripped B99 from fuel terminals directly to customers. Because these loads never went to the E-Biofuels facility they were known as “ghost loads” or “phantom loads.” In those cases, the defendants faxed or e-mailed the false paperwork to the truck drivers along their routes between the fuel terminals and the customer locations.
In May 2010, E-Biofuels was purchased by Imperial Petroleum, a publicly traded company based in Evansville. After the acquisition, E-Biofuels accounted for more than 97% of Imperial Petroleum’s operating income. Defendant Jeffrey Wilson was the president and chief executive officer of Imperial Petroleum.
The government alleges that Jeffrey Wilson and Craig Ducey knew that E-Biofuels was purchasing biodiesel from third parties instead of making its own biodiesel. They hid this fact from Imperial’s investors, shareholders and outside auditors by falsely stating that E-Biofuels produced biodiesel from chicken fat and other feedstocks. They made these and other related false statements and omissions in Imperial Petroleum’s annual and quarterly reports filed with the Securities and Exchange Commission and in written and oral communications with Imperial Petroleum’s investors and outside auditors.
If found guilty, the six individuals charged by indictment face up to 20 years in federal prison on some counts, as well as significant fines. The three companies indicted today also face significant fines and other regulatory action. The defendants were scheduled for initial appearances before a federal magistrate judge today.
An additional defendant was charged today by federal information, and has petitioned the court to enter a plea of guilty and cooperate with investigators. Brian Carmichael was charged with one count of conspiracy to defraud the United States. Carmichael has filed a petition with the court indicating his willingness to plead guilty to this charge. Carmichael faces up to five years in federal prison if convicted.
The case is being prosecuted by Senior Litigation Counsel Steven D. DeBrota of the U.S. Attorney’s Office, along with Senior Counsel Thomas Ballantine of the Environmental Crimes Section in the Department of Justice’s Environment and Natural Resources Division, and Jake Schmidt, a Special Assistant U.S. Attorney of the U.S. Attorney’s Office and Senior Attorney for the Securities and Exchange Commission.
An indictment is only a charge and is not evidence of guilt. All defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
The collaborative investigation that led to today’s arrests was the result of work by the EPA’s Criminal Investigation Division, the Internal Revenue Service Criminal Investigation, the FBI, the Securities and Exchange Commission, as well as the U.S. Department of Agriculture and the Indiana Department of Environmental Management.
Showing posts with label WIRE FRAUD. Show all posts
Showing posts with label WIRE FRAUD. Show all posts
Tuesday, September 24, 2013
Sunday, June 30, 2013
SINOVEL CORP. AND THREE INDIVIDUALS CHARGED WITH THEFT OF TRADE SECRETS
FROM: U.S. JUSTICE DEPARTMENT
Thursday, June 27, 2013
Sinovel Corporation and Three Individuals Charged in Wisconsin with Theft of Amsc Trade Secrets
Theft of Trade Secrets Allegedly Cheated Amsc of More Than $800 Million
A manufacturer and exporter of wind turbines based in the People’s Republic of China, two employees of that manufacturer and a former employee of a subsidiary of AMSC, a United States-based company formerly known as American Superconductor Inc., were charged today with stealing trade secrets from AMSC causing an alleged loss of more than $800 million to the company, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Wisconsin John W. Vaudreuil.
A federal grand jury in the Western District of Wisconsin returned an indictment charging Sinovel Wind Group Co. Ltd., dba Sinovel Wind Group (USA) Co. Ltd.; Su Liying, 36, the deputy director of Sinovel’s Research and Development Department; Zhao Haichun, 33, a technology manager for Sinovel; and Dejan Karabasevic, 40, a former employee of AMSC Windtec GmbH, a wholly-owned subsidiary of AMSC, with one count each of conspiracy to commit trade secret theft, theft of trade secrets and wire fraud.
"Today, we announce charges against Sinovel and three individuals for stealing proprietary wind turbine technology from AMSC in order to produce their own turbines powered by stolen intellectual property," said Acting Assistant Attorney General Raman. "This charged IP theft caused significant harm to a domestic company that develops cutting edge technology and employs Americans throughout the country. Stamping out intellectual property theft is a top priority for this administration, and we will continue to work with our IP Task Force partners to ensure that American ingenuity is protected."
"The allegations in this indictment describe a well-planned attack on an American business by international defendants--nothing short of attempted corporate homicide," said U.S. Attorney Vaudreuil. "The Department of Justice and this office are committed to protecting American commerce and aggressively prosecuting those who seek to steal and use our intellectual property. I commend the efforts of the FBI and their Austrian counterparts in this long-term international investigation, and the assistance provided by the owners and operators of the Massachusetts turbines."
"The Sinovel case is a classic example of the growing insider threat facing our nation's corporations and their intellectual property," said FBI Executive Assistant Director Richard McFeely. "The FBI will not stand by and watch the hemorrhage of U.S. intellectual property to foreign countries who seek to gain an unfair advantage for their military and their industries. We are actively working with our private sector and government partners to disrupt and impact those who have made it their mission to steal U.S. military and corporate secrets. Since 2008, our economic espionage arrests have doubled; indictments have increased five-fold; and convictions have risen eight-fold."
Karabasevic headed the automation engineering department at AMSC Windtec in Klagenfurt, Austria. Su and Zhao are Chinese nationals living in China, and Karabasevic is a Serbian national who lived in Austria, but now lives in Serbia.
According to the indictment, AMSC developed and sold software and equipment to regulate the flow of electricity from wind turbines to electrical grids, and it considered the software and equipment to be trade secrets and proprietary information. The software that runs the PM3000, a part of AMSC’s wind turbine electrical control system, was developed in Wisconsin and was stored on a computer in AMSC’s office in Middleton, Wis. The PM3000 worked with other products, including AMSC’s Low Voltage Ride Through (LVRT) software. The LVRT system is designed to keep a wind turbine operational when there is a temporary sag or dip in flow of electricity in the electrical grid.
Sinovel purchased software and equipment from AMSC for the wind turbines that Sinovel manufactured, sold and serviced. According to the indictment, in March 2011, Sinovel owed AMSC more than $100 million for products and services previously delivered and had entered into contracts to purchase more than $700 million in products and services from AMSC in the future.
The indictment alleges that the four defendants conspired to obtain AMSC’s copyrighted information and trade secrets in order to produce wind turbines and to retrofit existing wind turbines with LVRT technology, without having to pay AMSC for previously-delivered products and services, thereby cheating AMSC out of more than $800 million.
The indictment alleges that Sinovel, through Su and Zhao, recruited Karabasevic to leave AMSC Windtec and join Sinovel, and to secretly copy intellectual property from the AMSC computer system. The four defendants are charged with stealing the PM3000 source code from AMSC on March 7, 2011, and transmitting it by downloading it from an AMSC computer in Wisconsin to a computer in Klagenfurt.
The indictment alleges that following the theft of AMSC’s intellectual property, Sinovel commissioned several wind turbines in Massachusetts and copied into the turbines software compiled from the software stolen from AMSC. The U.S.-based builders and operators of these Massachusetts turbines have cooperated in this investigation.
If convicted, Sinovel faces a maximum penalty on each count of five years of probation and a fine of twice the gross gain or loss, meaning Sinovel would face a fine for each count charged of up to twice the alleged loss of more than $800 million.
If convicted, Su, Zhao and Karabasevic each face a maximum penalty of five years in prison on the conspiracy charge, 10 years in prison for theft of a trade secret and 20 years in prison for wire fraud.
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case is being investigated by the Madison, Milwaukee and Boston offices of the FBI; the FBI Legal Attachés’ Offices in Vienna, Austria and Beijing; the FBI Criminal Investigative Division; the FBI Intellectual Property Rights Unit; the Bundeskriminalamt (Federal Criminal Intelligence Service) and the Bundesministerium Fuer Justiz (Federal Ministry of Justice) in Austria; the Landeskriminalamt - Klagenfurt and the Staatsanwaltschaft - Klagenfurt (Criminal Investigative Police and State Prosecutor's Office – Klagenfurt, Austria); and with the assistance of the Justice Department’s Office of International Affairs. The case is being prosecuted by Assistant U.S. Attorneys Timothy M. O’Shea and Munish Sharda, and Trial Attorney Brian Levine of the Criminal Division’s Computer Crime and Intellectual Property Section.
Thursday, June 27, 2013
Sinovel Corporation and Three Individuals Charged in Wisconsin with Theft of Amsc Trade Secrets
Theft of Trade Secrets Allegedly Cheated Amsc of More Than $800 Million
A manufacturer and exporter of wind turbines based in the People’s Republic of China, two employees of that manufacturer and a former employee of a subsidiary of AMSC, a United States-based company formerly known as American Superconductor Inc., were charged today with stealing trade secrets from AMSC causing an alleged loss of more than $800 million to the company, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Wisconsin John W. Vaudreuil.
A federal grand jury in the Western District of Wisconsin returned an indictment charging Sinovel Wind Group Co. Ltd., dba Sinovel Wind Group (USA) Co. Ltd.; Su Liying, 36, the deputy director of Sinovel’s Research and Development Department; Zhao Haichun, 33, a technology manager for Sinovel; and Dejan Karabasevic, 40, a former employee of AMSC Windtec GmbH, a wholly-owned subsidiary of AMSC, with one count each of conspiracy to commit trade secret theft, theft of trade secrets and wire fraud.
"Today, we announce charges against Sinovel and three individuals for stealing proprietary wind turbine technology from AMSC in order to produce their own turbines powered by stolen intellectual property," said Acting Assistant Attorney General Raman. "This charged IP theft caused significant harm to a domestic company that develops cutting edge technology and employs Americans throughout the country. Stamping out intellectual property theft is a top priority for this administration, and we will continue to work with our IP Task Force partners to ensure that American ingenuity is protected."
"The allegations in this indictment describe a well-planned attack on an American business by international defendants--nothing short of attempted corporate homicide," said U.S. Attorney Vaudreuil. "The Department of Justice and this office are committed to protecting American commerce and aggressively prosecuting those who seek to steal and use our intellectual property. I commend the efforts of the FBI and their Austrian counterparts in this long-term international investigation, and the assistance provided by the owners and operators of the Massachusetts turbines."
"The Sinovel case is a classic example of the growing insider threat facing our nation's corporations and their intellectual property," said FBI Executive Assistant Director Richard McFeely. "The FBI will not stand by and watch the hemorrhage of U.S. intellectual property to foreign countries who seek to gain an unfair advantage for their military and their industries. We are actively working with our private sector and government partners to disrupt and impact those who have made it their mission to steal U.S. military and corporate secrets. Since 2008, our economic espionage arrests have doubled; indictments have increased five-fold; and convictions have risen eight-fold."
Karabasevic headed the automation engineering department at AMSC Windtec in Klagenfurt, Austria. Su and Zhao are Chinese nationals living in China, and Karabasevic is a Serbian national who lived in Austria, but now lives in Serbia.
According to the indictment, AMSC developed and sold software and equipment to regulate the flow of electricity from wind turbines to electrical grids, and it considered the software and equipment to be trade secrets and proprietary information. The software that runs the PM3000, a part of AMSC’s wind turbine electrical control system, was developed in Wisconsin and was stored on a computer in AMSC’s office in Middleton, Wis. The PM3000 worked with other products, including AMSC’s Low Voltage Ride Through (LVRT) software. The LVRT system is designed to keep a wind turbine operational when there is a temporary sag or dip in flow of electricity in the electrical grid.
Sinovel purchased software and equipment from AMSC for the wind turbines that Sinovel manufactured, sold and serviced. According to the indictment, in March 2011, Sinovel owed AMSC more than $100 million for products and services previously delivered and had entered into contracts to purchase more than $700 million in products and services from AMSC in the future.
The indictment alleges that the four defendants conspired to obtain AMSC’s copyrighted information and trade secrets in order to produce wind turbines and to retrofit existing wind turbines with LVRT technology, without having to pay AMSC for previously-delivered products and services, thereby cheating AMSC out of more than $800 million.
The indictment alleges that Sinovel, through Su and Zhao, recruited Karabasevic to leave AMSC Windtec and join Sinovel, and to secretly copy intellectual property from the AMSC computer system. The four defendants are charged with stealing the PM3000 source code from AMSC on March 7, 2011, and transmitting it by downloading it from an AMSC computer in Wisconsin to a computer in Klagenfurt.
The indictment alleges that following the theft of AMSC’s intellectual property, Sinovel commissioned several wind turbines in Massachusetts and copied into the turbines software compiled from the software stolen from AMSC. The U.S.-based builders and operators of these Massachusetts turbines have cooperated in this investigation.
If convicted, Sinovel faces a maximum penalty on each count of five years of probation and a fine of twice the gross gain or loss, meaning Sinovel would face a fine for each count charged of up to twice the alleged loss of more than $800 million.
If convicted, Su, Zhao and Karabasevic each face a maximum penalty of five years in prison on the conspiracy charge, 10 years in prison for theft of a trade secret and 20 years in prison for wire fraud.
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case is being investigated by the Madison, Milwaukee and Boston offices of the FBI; the FBI Legal Attachés’ Offices in Vienna, Austria and Beijing; the FBI Criminal Investigative Division; the FBI Intellectual Property Rights Unit; the Bundeskriminalamt (Federal Criminal Intelligence Service) and the Bundesministerium Fuer Justiz (Federal Ministry of Justice) in Austria; the Landeskriminalamt - Klagenfurt and the Staatsanwaltschaft - Klagenfurt (Criminal Investigative Police and State Prosecutor's Office – Klagenfurt, Austria); and with the assistance of the Justice Department’s Office of International Affairs. The case is being prosecuted by Assistant U.S. Attorneys Timothy M. O’Shea and Munish Sharda, and Trial Attorney Brian Levine of the Criminal Division’s Computer Crime and Intellectual Property Section.
Sunday, November 11, 2012
MONEYGRAM INTERNATIONAL INC., FORFEITS $100 MILLION IN DEFERRED PROSECUTION FOR ANTI-MONEY LAUNDERING AND WIRE FRAUD
FROM: U.S. DEPARTMENT OF JUSTICE
Friday, November 9, 2012
Moneygram International Inc. Admits Anti-Money Laundering and Wire Fraud Violations, Forfeits $100 Million in Deferred Prosecution
Also Agrees to Enhanced Compliance Obligations and Structural Changes in Connection with Five-Year Agreement
WASHINGTON – MoneyGram International Inc. – a global money services business headquartered in Dallas – has agreed to forfeit $100 million and enter into a deferred prosecution agreement (DPA) with the Justice Department in which it admits to criminally aiding and abetting wire fraud and failing to maintain an effective anti-money laundering program, as charged in an information filed today in the Middle District of Pennsylvania.
The announcement was made by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Peter Smith for the Middle District of Pennsylvania; and Karen V. Higgins, Inspector in Charge, Philadelphia Division, U.S. Postal Inspection Service (USPIS).
According to court documents, MoneyGram was involved in mass marketing and consumer fraud phishing schemes, perpetrated by corrupt MoneyGram agents and others, that defrauded tens of thousands of victims in the United States. MoneyGram also failed to maintain an effective anti-money laundering program in violation of the Bank Secrecy Act. The Justice Department will return the forfeited funds to the victims of the fraud scheme through its Victim Asset Recovery Program.
"MoneyGram’s broken corporate culture led the company to privilege profits over everything else," said Assistant Attorney General Breuer. "MoneyGram knowingly turned a blind eye to scam artists and money launderers who used the company to perpetrate fraudulent schemes targeting the elderly and other vulnerable victims. In addition to forfeiting $100 million, which will be used to compensate victims, MoneyGram must for the next five years retain a corporate monitor who will report regularly to the Justice Department."
U.S. Attorney Smith said, "Thousands of citizens in Pennsylvania and other states suffered heartbreaking financial losses for years because of these international telemarketing schemes which depended on MoneyGram’s facilities to give them an electronic highway to move their illegal profits quickly out of the country. The determined work of U.S. Postal Inspectors and federal prosecutors disrupted and closed that electronic highway, hopefully for good. This case provides a way to get restitution for victims and ensure that MoneyGram does its part to deter similar scams in the future."
"This agreement demonstrates the ongoing and important work of the U.S. Postal Inspection Service in protecting consumers all across America," said Karen V. Higgins, Inspector in Charge, Philadelphia Division. "Businesses are supposed to provide their customers with fair and honest services. Today’s agreement reflects the commitment of the U.S. Postal Inspection Service in seeking justice and, to every extent possible, restitution for the most vulnerable in our society."
As part of the DPA, MoneyGram has agreed to enhanced compliance obligations and structural changes to prevent a repeat of the charged conduct, including:
Creation of an independent compliance and ethics committee of the board of directors with direct oversight of the chief compliance officer and the compliance program;
Adoption of a worldwide anti-fraud and anti-money laundering standard to ensure all MoneyGram agents throughout the world will, at a minimum, be required to adhere to U.S. anti-fraud and anti-money laundering standards;
Adoption of a bonus system which rates all executives on success in meeting compliance obligations, with failure making the executive ineligible for any bonus for that year; and
Adoption of enhanced due diligence for agents deemed to be high risk or operating in a high-risk area.
To oversee implementation and maintenance of these enhanced compliance obligations and evaluate the overall effectiveness of its anti-fraud and anti-money laundering programs, MoneyGram has agreed to retain an independent corporate monitor who will report regularly to the Justice Department. Under the DPA, the department will recommend the dismissal of the criminal information in five years, provided MoneyGram fully abides by the DPA’s terms.
The Fraud Scheme
According to court documents, starting in 2004 and continuing until 2009, MoneyGram violated U.S. law by processing thousands of transactions for MoneyGram agents known to be involved in an international scheme to defraud members of the U.S. public. MoneyGram profited from the scheme by collecting fees and other revenues on the fraudulent transactions.
The scams – which generally targeted the elderly and other vulnerable groups – included posing as victims’ relatives in urgent need of money and falsely promising victims large cash prizes, various high-ticket items for sale over the Internet at deeply discounted prices or employment opportunities as "secret shoppers." In each case, the perpetrators required the victims to send them funds through MoneyGram’s money transfer system.
Despite thousands of complaints by customers who were victims of fraud, MoneyGram failed to terminate agents that it knew were involved in scams. As early as 2003, MoneyGram’s fraud department would identify specific MoneyGram agents believed to be involved in fraud schemes and recommended termination of those agents to senior management. These termination recommendations were rarely accepted because they were not approved by executives in the sales department and, as a result, fraudulent activity grew from 1,575 reported instances of fraud by customers in the United States and Canada in 2004 to 19,614 reported instances in 2008. Cumulatively, from 2004 through 2009, MoneyGram customers reported instances of fraud totaling at least $100 million.
The USPIS and U.S. Attorney’s Office for the Middle District of Pennsylvania have been investigating and prosecuting telemarketing scams that used MoneyGram’s money transfer system and corrupt MoneyGram agents since 2007. To date, the U.S. Attorney’s Office for the Middle District of Pennsylvania has brought conspiracy, fraud and money laundering charges against 28 former MoneyGram agents.
Ineffective Anti-Money Laundering Program
MoneyGram’s involvement in this international fraud scheme resulted from a systematic, pervasive, and willful failure to meet its anti-money laundering (AML) obligations under the Bank Secrecy Act (BSA), a set of laws and regulations enacted by Congress to strengthen the U.S. financial system’s protections against criminal money laundering activity through financial institutions, including money services businesses like MoneyGram. Court documents show that MoneyGram failed to meet its AML obligations by, among other things, failing to:
Implement policies or procedures governing the termination of agents involved in fraud and/or money laundering;
Implement policies or procedures to file the required Suspicious Activity Reports (SARs) when victims reported fraud to MoneyGram on transactions over $2,000;
File SARs on agents MoneyGram knew were involved in the fraud;
Conduct effective AML audits of its agents and outlets;
Conduct adequate due diligence on prospective and existing MoneyGram Agents by verifying that a legitimate business existed; and
Sufficiently resource and staff its AML program.
MoneyGram’s BSA failures spanned five years, and resulted, among other things, from the failure of its fraud and AML compliance functions to share information and from its regularly resolving disagreements between its sales and fraud departments in the sales department’s favor. One notable such disagreement occurred in April 2007, when, at a meeting attended by senior MoneyGram executives, the fraud department recommended that 32 specific Canadian agents that were characterized as "the worst of the worst" in terms of fraud be immediately closed. The sales department disagreed with the fraud department’s recommendation, and these outlets were not closed; instead, MoneyGram continued to process transactions from the 32 outlets despite continued complaints of fraud.
This case was prosecuted by Money Laundering and Bank Integrity Unit Trial Attorney Craig Timm of the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) and Assistant U.S. Attorney Kim Douglas Daniel of the U.S. Attorney’s Office for the Middle District of Pennsylvania. The forfeiture was handled by Acting Assistant Deputy Chief Jeannette Gunderson of AFMLS’ Forfeiture Unit. The case was investigated by the Harrisburg, Pa., office of the USPIS, Philadelphia Division.
The Money Laundering and Bank Integrity Unit is a corps of prosecutors with a boutique practice aimed at hardening the financial system against criminal money laundering vulnerabilities by investigating and prosecuting financial institutions and professional money launderers for violations of the money laundering statutes, the Bank Secrecy Act and other related statutes.
Information regarding victim compensation through the Victim Asset Recovery Program (VARP) will be posted on the Department of Justice’s victim website at http://www.justice.gov/criminal/vns/caseup/. Persons who believe they were victims of the fraud scheme should visit that site for instructions on how to request compensation.
VARP, operated by AFMLS, is composed of a team of experienced professionals, including attorneys, accountants, auditors and claims analysts. In hundreds of cases, VARP has successfully used its specialized expertise to efficiently convert forfeited assets to victim recoveries.
Friday, November 9, 2012
Moneygram International Inc. Admits Anti-Money Laundering and Wire Fraud Violations, Forfeits $100 Million in Deferred Prosecution
Also Agrees to Enhanced Compliance Obligations and Structural Changes in Connection with Five-Year Agreement
WASHINGTON – MoneyGram International Inc. – a global money services business headquartered in Dallas – has agreed to forfeit $100 million and enter into a deferred prosecution agreement (DPA) with the Justice Department in which it admits to criminally aiding and abetting wire fraud and failing to maintain an effective anti-money laundering program, as charged in an information filed today in the Middle District of Pennsylvania.
The announcement was made by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Peter Smith for the Middle District of Pennsylvania; and Karen V. Higgins, Inspector in Charge, Philadelphia Division, U.S. Postal Inspection Service (USPIS).
According to court documents, MoneyGram was involved in mass marketing and consumer fraud phishing schemes, perpetrated by corrupt MoneyGram agents and others, that defrauded tens of thousands of victims in the United States. MoneyGram also failed to maintain an effective anti-money laundering program in violation of the Bank Secrecy Act. The Justice Department will return the forfeited funds to the victims of the fraud scheme through its Victim Asset Recovery Program.
"MoneyGram’s broken corporate culture led the company to privilege profits over everything else," said Assistant Attorney General Breuer. "MoneyGram knowingly turned a blind eye to scam artists and money launderers who used the company to perpetrate fraudulent schemes targeting the elderly and other vulnerable victims. In addition to forfeiting $100 million, which will be used to compensate victims, MoneyGram must for the next five years retain a corporate monitor who will report regularly to the Justice Department."
U.S. Attorney Smith said, "Thousands of citizens in Pennsylvania and other states suffered heartbreaking financial losses for years because of these international telemarketing schemes which depended on MoneyGram’s facilities to give them an electronic highway to move their illegal profits quickly out of the country. The determined work of U.S. Postal Inspectors and federal prosecutors disrupted and closed that electronic highway, hopefully for good. This case provides a way to get restitution for victims and ensure that MoneyGram does its part to deter similar scams in the future."
"This agreement demonstrates the ongoing and important work of the U.S. Postal Inspection Service in protecting consumers all across America," said Karen V. Higgins, Inspector in Charge, Philadelphia Division. "Businesses are supposed to provide their customers with fair and honest services. Today’s agreement reflects the commitment of the U.S. Postal Inspection Service in seeking justice and, to every extent possible, restitution for the most vulnerable in our society."
As part of the DPA, MoneyGram has agreed to enhanced compliance obligations and structural changes to prevent a repeat of the charged conduct, including:
Creation of an independent compliance and ethics committee of the board of directors with direct oversight of the chief compliance officer and the compliance program;
Adoption of a worldwide anti-fraud and anti-money laundering standard to ensure all MoneyGram agents throughout the world will, at a minimum, be required to adhere to U.S. anti-fraud and anti-money laundering standards;
Adoption of a bonus system which rates all executives on success in meeting compliance obligations, with failure making the executive ineligible for any bonus for that year; and
Adoption of enhanced due diligence for agents deemed to be high risk or operating in a high-risk area.
To oversee implementation and maintenance of these enhanced compliance obligations and evaluate the overall effectiveness of its anti-fraud and anti-money laundering programs, MoneyGram has agreed to retain an independent corporate monitor who will report regularly to the Justice Department. Under the DPA, the department will recommend the dismissal of the criminal information in five years, provided MoneyGram fully abides by the DPA’s terms.
The Fraud Scheme
According to court documents, starting in 2004 and continuing until 2009, MoneyGram violated U.S. law by processing thousands of transactions for MoneyGram agents known to be involved in an international scheme to defraud members of the U.S. public. MoneyGram profited from the scheme by collecting fees and other revenues on the fraudulent transactions.
The scams – which generally targeted the elderly and other vulnerable groups – included posing as victims’ relatives in urgent need of money and falsely promising victims large cash prizes, various high-ticket items for sale over the Internet at deeply discounted prices or employment opportunities as "secret shoppers." In each case, the perpetrators required the victims to send them funds through MoneyGram’s money transfer system.
Despite thousands of complaints by customers who were victims of fraud, MoneyGram failed to terminate agents that it knew were involved in scams. As early as 2003, MoneyGram’s fraud department would identify specific MoneyGram agents believed to be involved in fraud schemes and recommended termination of those agents to senior management. These termination recommendations were rarely accepted because they were not approved by executives in the sales department and, as a result, fraudulent activity grew from 1,575 reported instances of fraud by customers in the United States and Canada in 2004 to 19,614 reported instances in 2008. Cumulatively, from 2004 through 2009, MoneyGram customers reported instances of fraud totaling at least $100 million.
The USPIS and U.S. Attorney’s Office for the Middle District of Pennsylvania have been investigating and prosecuting telemarketing scams that used MoneyGram’s money transfer system and corrupt MoneyGram agents since 2007. To date, the U.S. Attorney’s Office for the Middle District of Pennsylvania has brought conspiracy, fraud and money laundering charges against 28 former MoneyGram agents.
Ineffective Anti-Money Laundering Program
MoneyGram’s involvement in this international fraud scheme resulted from a systematic, pervasive, and willful failure to meet its anti-money laundering (AML) obligations under the Bank Secrecy Act (BSA), a set of laws and regulations enacted by Congress to strengthen the U.S. financial system’s protections against criminal money laundering activity through financial institutions, including money services businesses like MoneyGram. Court documents show that MoneyGram failed to meet its AML obligations by, among other things, failing to:
Implement policies or procedures governing the termination of agents involved in fraud and/or money laundering;
Implement policies or procedures to file the required Suspicious Activity Reports (SARs) when victims reported fraud to MoneyGram on transactions over $2,000;
File SARs on agents MoneyGram knew were involved in the fraud;
Conduct effective AML audits of its agents and outlets;
Conduct adequate due diligence on prospective and existing MoneyGram Agents by verifying that a legitimate business existed; and
Sufficiently resource and staff its AML program.
MoneyGram’s BSA failures spanned five years, and resulted, among other things, from the failure of its fraud and AML compliance functions to share information and from its regularly resolving disagreements between its sales and fraud departments in the sales department’s favor. One notable such disagreement occurred in April 2007, when, at a meeting attended by senior MoneyGram executives, the fraud department recommended that 32 specific Canadian agents that were characterized as "the worst of the worst" in terms of fraud be immediately closed. The sales department disagreed with the fraud department’s recommendation, and these outlets were not closed; instead, MoneyGram continued to process transactions from the 32 outlets despite continued complaints of fraud.
This case was prosecuted by Money Laundering and Bank Integrity Unit Trial Attorney Craig Timm of the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) and Assistant U.S. Attorney Kim Douglas Daniel of the U.S. Attorney’s Office for the Middle District of Pennsylvania. The forfeiture was handled by Acting Assistant Deputy Chief Jeannette Gunderson of AFMLS’ Forfeiture Unit. The case was investigated by the Harrisburg, Pa., office of the USPIS, Philadelphia Division.
The Money Laundering and Bank Integrity Unit is a corps of prosecutors with a boutique practice aimed at hardening the financial system against criminal money laundering vulnerabilities by investigating and prosecuting financial institutions and professional money launderers for violations of the money laundering statutes, the Bank Secrecy Act and other related statutes.
Information regarding victim compensation through the Victim Asset Recovery Program (VARP) will be posted on the Department of Justice’s victim website at http://www.justice.gov/criminal/vns/caseup/. Persons who believe they were victims of the fraud scheme should visit that site for instructions on how to request compensation.
VARP, operated by AFMLS, is composed of a team of experienced professionals, including attorneys, accountants, auditors and claims analysts. In hundreds of cases, VARP has successfully used its specialized expertise to efficiently convert forfeited assets to victim recoveries.
Monday, February 27, 2012
CO-FOUNDERS OF CANOPY FINANCIAL, INC., GO TO PRISON FOR FRAUD
The following excerpt is from the Securities and Exchange Commission website:
February 27, 2012
“United States v. Jeremy Blackburn and Anthony Banas, Criminal Action No. 09 CR 976 (N.D. Ill. March 1, 2010)
The U.S. Securities and Exchange Commission (Commission) announced that on February 15, 2012, co-founders of the bankrupt Canopy Financial, Inc., a health care transaction-software company based in Chicago, were sentenced to 15 and 13 years in prison for defrauding investors and clients of more than $93 million. Anthony Banas, Canopy’s chief technology officer, was sentenced to 160 months in prison, while Jeremy Blackburn, Canopy’s former president and chief operating officer, was sentenced to 180 months in prison. Both men pleaded guilty in late 2010 to one count of wire fraud, admitting they engaged in a fraud scheme that cheated investors of approximately $75 million and also misappropriated more than $18 million from customer accounts intended for health care savings and expenses. In imposing sentence, United States District Judge Ruben Castillo of the Northern District of Illinois noted that this case was the most aggravated financial fraud he had seen in his 18 years on the federal bench. The judge ordered both men to pay mandatory restitution and forfeiture totaling $93,125,918.
According to their plea agreements, Blackburn and Banas used false information about Canopy’s financial condition, including a bogus auditor’s report and falsified bank statements, to fraudulently obtain approximately $75 million from several private equity investors in 2009. Approximately $39 million of that money was used to redeem shares of other Canopy investors, including approximately $1.6 million that went to Blackburn and $975,000 that went to Banas, while another $29 million obtained from investors was deposited into Canopy operating accounts.
Also according to their plea agreements, Blackburn and Banas misappropriated Canopy operating funds for their own benefit. Blackburn took approximately $6 million in unauthorized withdrawals and transfers from Canopy bank accounts during 2009. Blackburn typically directed a Canopy employee, or occasionally Banas, to transfer Canopy funds to his bank accounts or to pay for his personal expenses, including credit card balances, luxury car purchases, and travel on a private jet. Blackburn also paid for personal home renovations, bought sports tickets and purchased jewelry and watches using misappropriated Canopy funds. Banas used misappropriated Canopy money to invest $300,000 in a nightclub. Banas also spent $400,000 between 2007 and 2009 on other personal expenses.
Blackburn admitted that he created phony bank statements during 2009 to conceal the transfer of more than $18 million from special health care accounts in which Canopy held funds as custodian for the benefit of more than 1,600 clients and customers to make payments to medical providers. The funds were transferred to Canopy’s own operating accounts, as well as to benefit Blackburn and Banas personally.
The Commission’s cases against Blackburn (SEC v. Canopy Financial, Inc., et al., Case No. 09-CV-7429, USDC, N.D.IL (LR-21324) and Banas (SEC v. Anthony T. Banas, Case No. 10- CV 3877 USDC N.D. IL) (LR-21566) resulted in permanent injunctions against both individuals, by consent, for violating the antifraud provisions of the Securities Act of 1933 [Section 17(a)] and the Securities Exchange Act of 1934 [Section 10(b) and Rule 10b-5 thereunder], ordered disgorgement of $1,779,759.83 and prejudgment interest of $71,182.03 against Blackburn in April 2011 and disgorgement of $975,548.25 and prejudgment interest of $32,910.45 against Banas in June 2010.
The Commission acknowledges the assistance of the U.S. Attorney’s Office of the Northern District of Illinois and the Chicago Regional Office of the U.S. Department of Labor in this matter.”
February 27, 2012
“United States v. Jeremy Blackburn and Anthony Banas, Criminal Action No. 09 CR 976 (N.D. Ill. March 1, 2010)
The U.S. Securities and Exchange Commission (Commission) announced that on February 15, 2012, co-founders of the bankrupt Canopy Financial, Inc., a health care transaction-software company based in Chicago, were sentenced to 15 and 13 years in prison for defrauding investors and clients of more than $93 million. Anthony Banas, Canopy’s chief technology officer, was sentenced to 160 months in prison, while Jeremy Blackburn, Canopy’s former president and chief operating officer, was sentenced to 180 months in prison. Both men pleaded guilty in late 2010 to one count of wire fraud, admitting they engaged in a fraud scheme that cheated investors of approximately $75 million and also misappropriated more than $18 million from customer accounts intended for health care savings and expenses. In imposing sentence, United States District Judge Ruben Castillo of the Northern District of Illinois noted that this case was the most aggravated financial fraud he had seen in his 18 years on the federal bench. The judge ordered both men to pay mandatory restitution and forfeiture totaling $93,125,918.
According to their plea agreements, Blackburn and Banas used false information about Canopy’s financial condition, including a bogus auditor’s report and falsified bank statements, to fraudulently obtain approximately $75 million from several private equity investors in 2009. Approximately $39 million of that money was used to redeem shares of other Canopy investors, including approximately $1.6 million that went to Blackburn and $975,000 that went to Banas, while another $29 million obtained from investors was deposited into Canopy operating accounts.
Also according to their plea agreements, Blackburn and Banas misappropriated Canopy operating funds for their own benefit. Blackburn took approximately $6 million in unauthorized withdrawals and transfers from Canopy bank accounts during 2009. Blackburn typically directed a Canopy employee, or occasionally Banas, to transfer Canopy funds to his bank accounts or to pay for his personal expenses, including credit card balances, luxury car purchases, and travel on a private jet. Blackburn also paid for personal home renovations, bought sports tickets and purchased jewelry and watches using misappropriated Canopy funds. Banas used misappropriated Canopy money to invest $300,000 in a nightclub. Banas also spent $400,000 between 2007 and 2009 on other personal expenses.
Blackburn admitted that he created phony bank statements during 2009 to conceal the transfer of more than $18 million from special health care accounts in which Canopy held funds as custodian for the benefit of more than 1,600 clients and customers to make payments to medical providers. The funds were transferred to Canopy’s own operating accounts, as well as to benefit Blackburn and Banas personally.
The Commission’s cases against Blackburn (SEC v. Canopy Financial, Inc., et al., Case No. 09-CV-7429, USDC, N.D.IL (LR-21324) and Banas (SEC v. Anthony T. Banas, Case No. 10- CV 3877 USDC N.D. IL) (LR-21566) resulted in permanent injunctions against both individuals, by consent, for violating the antifraud provisions of the Securities Act of 1933 [Section 17(a)] and the Securities Exchange Act of 1934 [Section 10(b) and Rule 10b-5 thereunder], ordered disgorgement of $1,779,759.83 and prejudgment interest of $71,182.03 against Blackburn in April 2011 and disgorgement of $975,548.25 and prejudgment interest of $32,910.45 against Banas in June 2010.
The Commission acknowledges the assistance of the U.S. Attorney’s Office of the Northern District of Illinois and the Chicago Regional Office of the U.S. Department of Labor in this matter.”
Monday, January 9, 2012
HEAD OF INVESTMENT FIRM GETS 20 YEAR PRISON SENTENCE FOR MAIL FRAUD AND MONEY LAUNDERING
The following excerpt is from the SEC website:
“The U.S. Securities and Exchange Commission announced today that on December 13, 2011, the Honorable William Stiehl, United States District Court judge, sentenced Edward Lynn Moskop, 64, of Belleville, Illinois, to the maximum statutory penalties of 240 months’ imprisonment on Mail Fraud and 120 months on Money Laundering, to be served concurrently. Judge Stiehl also ordered Moskop to pay more than $1.49 million in restitution to his victims. The sentencing followed Moskop’s August 3, 2011 plea of guilty to the two count indictment.
Moskop's 20-year prison sentence was the culmination of his long-time investment fraud and misappropriation scheme. In the criminal case, the United States Attorney’s office for the Southern District of Illinois alleged that Moskop, operating as Financial Services Moskop and Associates, Inc., acted as a securities broker for several customers by making investments on their behalf. According to the U.S. Attorney’s office, from 1991 to 2010, Moskop persuaded customers to provide him with funds for investment. But, according to the U.S. Attorney’s office, instead of making the investment, Moskop kept the funds for his own use. The U.S. Attorney’s office alleged that Moskop also provided his customers with fraudulent periodic investment statements showing false interest and gains in the investments. According to the U.S. Attorney’s office, Moskop obtained by fraud approximately $2,400,000 from 25 victims. The U.S. Attorney’s office alleged that Moskop’s victims included his relatives, individuals referred by trusted friends and attorneys, a local Veterans of Foreign War Post, and long-time customers of his insurance business.
The criminal charges against Moskop are related to the conduct underlying the SEC’s civil action against Moskop and his company, Financial Services Moskop & Associates. On November 19, 2010, the SEC filed an emergency civil action in the United States District Court for the Northern District of Illinois to halt an ongoing fraud on investors conducted by Moskop and his company. In its complaint, the SEC alleged that from 1989 until the filing of the SEC’s action against Moskop and his company, Moskop misappropriated most of the life savings of at least two elderly investors. On the same day the SEC filed its case, the Honorable Rebecca R. Pallmeyer, United States District Court Judge, granted the SEC’s motion for emergency relief, entering a temporary restraining order against Moskop and his company and an order freezing their assets. On November 27, 2010, the court entered a preliminary injunction against Moskop and his company, and on July 21, 2011, the court entered a permanent injunction against Moskop and his company and continued the order freezing their assets. The SEC's action, which is ongoing, seeks disgorgement of the ill-gotten gains received by Moskop and his company, as well as civil penalties.”
Wednesday, November 2, 2011
COMPANY OWNER CHARGED WITH WIRE FRAUD
October 31, 2011
The following excerpt comes from the SEC website:
“The Securities and Exchange Commission today announced that the U.S. Attorney for the District of Massachusetts has charged Andrey C. Hicks of Boston, Mass., in a criminal complaint unsealed on Friday, October 28, 2011. Hicks was charged with committing wire fraud, attempting to commit wire fraud, and aiding and abetting wire fraud, in violation of 18 U.S.C. Sections 1343, 1349, and 2.
On October 26, 2011, the SEC filed an emergency enforcement action charging Hicks and Locust Offshore Management, LLC, his investment advisory firm, with fraud in connection with misleading prospective investors about their supposed quantitative hedge fund and diverting investor money to the money manager’s personal bank account. The SEC alleges in its complaint that Hicks and his advisory firm made misrepresentations about his education, work experience, and the hedge fund’s auditor, prime broker/custodian, and corporate status when soliciting individuals to invest in the purported hedge fund, called Locust Offshore Fund, Ltd. By making these representations and creating other indicia of legitimacy, the SEC alleged that Hicks may have obtained at least $1.7 million from 10 investors and may have misappropriated at least a portion of these funds for personal expenses. In the Commission’s action, the U.S. District Court in Massachusetts issued a temporary restraining order on October 26 that, among other things, freezes the assets of the money manager, his advisory firm, and the hedge fund. On October 28, 2011, the Court converted the temporary restraining order into a preliminary injunction that will continue the asset freeze and other relief until further order of the Court.”
The following excerpt comes from the SEC website:
“The Securities and Exchange Commission today announced that the U.S. Attorney for the District of Massachusetts has charged Andrey C. Hicks of Boston, Mass., in a criminal complaint unsealed on Friday, October 28, 2011. Hicks was charged with committing wire fraud, attempting to commit wire fraud, and aiding and abetting wire fraud, in violation of 18 U.S.C. Sections 1343, 1349, and 2.
On October 26, 2011, the SEC filed an emergency enforcement action charging Hicks and Locust Offshore Management, LLC, his investment advisory firm, with fraud in connection with misleading prospective investors about their supposed quantitative hedge fund and diverting investor money to the money manager’s personal bank account. The SEC alleges in its complaint that Hicks and his advisory firm made misrepresentations about his education, work experience, and the hedge fund’s auditor, prime broker/custodian, and corporate status when soliciting individuals to invest in the purported hedge fund, called Locust Offshore Fund, Ltd. By making these representations and creating other indicia of legitimacy, the SEC alleged that Hicks may have obtained at least $1.7 million from 10 investors and may have misappropriated at least a portion of these funds for personal expenses. In the Commission’s action, the U.S. District Court in Massachusetts issued a temporary restraining order on October 26 that, among other things, freezes the assets of the money manager, his advisory firm, and the hedge fund. On October 28, 2011, the Court converted the temporary restraining order into a preliminary injunction that will continue the asset freeze and other relief until further order of the Court.”
Thursday, July 14, 2011
CHARGES BROUGHT AGAINST TELECOM EXECS FOR ALLEGED BRIBERY
The case below is an excerpt from the U.S. Department of Justice website:
“Wednesday, July 13, 2011
Florida Telecommunications Company, Two Executives, an Intermediary and Two Former Haitian Government Officials Indicted for Their Alleged Participation in Foreign Bribery Scheme
WASHINGTON - Cinergy Telecommunications Inc., Cinergy’s president and director, the president of Florida-based Telecom Consulting Services Corp. and two former Haitian government officials have been charged in a superseding indictment for their alleged roles in a foreign bribery, wire fraud and money laundering scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and Special Agent in Charge Jose A. Gonzalez of the Internal Revenue Service - Criminal Investigation’s (IRS-CI) Miami Field Office.
According to the superseding indictment, the defendants allegedly participated in a scheme to commit foreign bribery and money laundering from December 2001 through January 2006. The indictment alleges that during this time period Cinergy and its related company, Uniplex Telecommunications Inc., allegedly paid more than $1.4 million to shell companies to be used for bribes to foreign officials of the Republic of Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti (Haiti Teleco).
According to court documents, Cinergy and Uniplex executed a series of contracts with Haiti Teleco that allowed the companies’ customers to place telephone calls to Haiti. The bribe payments allegedly were authorized by Washington Vasconez Cruz, the telecommunications companies’ president, and Amadeus Richers, the companies’ director, and were allegedly paid to Haitian government officials at Haiti Teleco, including Patrick Joseph and Jean Rene Duperval. According to the superseding indictment, the purpose of these bribes was to obtain various business advantages from the Haitian officials for Cinergy and Uniplex, including preferred telecommunications rates and credits toward sums owed. To conceal the bribe payments, the defendants allegedly used various shell companies to receive and forward the payments, including J.D. Locator Services, Fourcand Enterprises and Telecom Consulting Services.
The six defendants charged in the superseding indictment are:
Washington Vasconez Cruz, 63, of Miami, the president of Cinergy and Uniplex, is charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Amadeus Richers, 60, of Pembroke Pines, Fla., and Brazil, the then-director of Cinergy and Uniplex, is charged with one count of conspiracy to violate the FCPA and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Cinergy Telecommunications Inc., a privately-held telecommunications company incorporated in Florida, is charged with one count of conspiracy to violate the FCPA and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Patrick Joseph, 49, of Miami and Haiti, a former general director for telecommunications at Haiti Teleco, is charged with one count of conspiracy to commit money laundering;
Jean Rene Duperval, 44, of Miramar, Fla., and Haiti, a former director of international relations for telecommunications at Haiti Teleco, is charged with two counts of conspiracy to commit money laundering and 19 counts of money laundering; and
Marguerite Grandison, 42, of Miramar, the former president of Telecom Consulting Services Corp., and Duperval’s sister, is charged with two counts of conspiracy to commit money laundering and 19 counts of money laundering.
The superseding indictment also charges Duperval and Grandison with laundering corrupt payments authorized by Joel Esquenazi and Carlos Rodriguez on behalf of another Florida telecommunications company.
Duperval was charged previously in the indictment returned on Dec. 7, 2009, with one count of conspiracy to commit money laundering and 12 counts of money laundering. Grandison was previously charged with one count of conspiracy to violate the FCPA and to commit wire fraud, seven counts of FCPA violations, one count of conspiracy to commit money laundering and 12 counts of money laundering.
Esquenazi and Rodriguez were charged in the initial December 2009 indictment and are unaffected by the superseding indictment. They are scheduled to stand trial on July 18, 2011.
An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
The conspiracy to commit violations of the FCPA and wire fraud count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The conspiracy to commit money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The superseding indictment also gives notice of criminal forfeiture.
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. He admitted to receiving more than $1 million in bribe money from telecommunications companies. On July 30, 2010, he was sentenced to 57 months in prison.
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 May 5, 2010, he was sentenced to six months in prison.
On March 12, 2010, Robert Antoine, the former director of international affairs for Haiti Telco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted to receiving more than $1 million in bribes from Miami-based telecommunications companies. On June 2, 2010, he was sentenced to 48 months in prison.
The government’s investigation is ongoing. 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 case is being prosecuted by Senior Trial Attorneys Nicola J. Mrazek and James M. Koukios of the Criminal Division’s Fraud Section, with the assistance of the U.S. Attorney’s Office for the Southern District of Florida. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance in this matter. The cases were investigated by the IRS-CI Miami Field Office.
11-910
Criminal Division”
“Wednesday, July 13, 2011
Florida Telecommunications Company, Two Executives, an Intermediary and Two Former Haitian Government Officials Indicted for Their Alleged Participation in Foreign Bribery Scheme
WASHINGTON - Cinergy Telecommunications Inc., Cinergy’s president and director, the president of Florida-based Telecom Consulting Services Corp. and two former Haitian government officials have been charged in a superseding indictment for their alleged roles in a foreign bribery, wire fraud and money laundering scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and Special Agent in Charge Jose A. Gonzalez of the Internal Revenue Service - Criminal Investigation’s (IRS-CI) Miami Field Office.
According to the superseding indictment, the defendants allegedly participated in a scheme to commit foreign bribery and money laundering from December 2001 through January 2006. The indictment alleges that during this time period Cinergy and its related company, Uniplex Telecommunications Inc., allegedly paid more than $1.4 million to shell companies to be used for bribes to foreign officials of the Republic of Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti (Haiti Teleco).
According to court documents, Cinergy and Uniplex executed a series of contracts with Haiti Teleco that allowed the companies’ customers to place telephone calls to Haiti. The bribe payments allegedly were authorized by Washington Vasconez Cruz, the telecommunications companies’ president, and Amadeus Richers, the companies’ director, and were allegedly paid to Haitian government officials at Haiti Teleco, including Patrick Joseph and Jean Rene Duperval. According to the superseding indictment, the purpose of these bribes was to obtain various business advantages from the Haitian officials for Cinergy and Uniplex, including preferred telecommunications rates and credits toward sums owed. To conceal the bribe payments, the defendants allegedly used various shell companies to receive and forward the payments, including J.D. Locator Services, Fourcand Enterprises and Telecom Consulting Services.
The six defendants charged in the superseding indictment are:
Washington Vasconez Cruz, 63, of Miami, the president of Cinergy and Uniplex, is charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Amadeus Richers, 60, of Pembroke Pines, Fla., and Brazil, the then-director of Cinergy and Uniplex, is charged with one count of conspiracy to violate the FCPA and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Cinergy Telecommunications Inc., a privately-held telecommunications company incorporated in Florida, is charged with one count of conspiracy to violate the FCPA and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Patrick Joseph, 49, of Miami and Haiti, a former general director for telecommunications at Haiti Teleco, is charged with one count of conspiracy to commit money laundering;
Jean Rene Duperval, 44, of Miramar, Fla., and Haiti, a former director of international relations for telecommunications at Haiti Teleco, is charged with two counts of conspiracy to commit money laundering and 19 counts of money laundering; and
Marguerite Grandison, 42, of Miramar, the former president of Telecom Consulting Services Corp., and Duperval’s sister, is charged with two counts of conspiracy to commit money laundering and 19 counts of money laundering.
The superseding indictment also charges Duperval and Grandison with laundering corrupt payments authorized by Joel Esquenazi and Carlos Rodriguez on behalf of another Florida telecommunications company.
Duperval was charged previously in the indictment returned on Dec. 7, 2009, with one count of conspiracy to commit money laundering and 12 counts of money laundering. Grandison was previously charged with one count of conspiracy to violate the FCPA and to commit wire fraud, seven counts of FCPA violations, one count of conspiracy to commit money laundering and 12 counts of money laundering.
Esquenazi and Rodriguez were charged in the initial December 2009 indictment and are unaffected by the superseding indictment. They are scheduled to stand trial on July 18, 2011.
An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
The conspiracy to commit violations of the FCPA and wire fraud count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The conspiracy to commit money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The superseding indictment also gives notice of criminal forfeiture.
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. He admitted to receiving more than $1 million in bribe money from telecommunications companies. On July 30, 2010, he was sentenced to 57 months in prison.
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 May 5, 2010, he was sentenced to six months in prison.
On March 12, 2010, Robert Antoine, the former director of international affairs for Haiti Telco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted to receiving more than $1 million in bribes from Miami-based telecommunications companies. On June 2, 2010, he was sentenced to 48 months in prison.
The government’s investigation is ongoing. 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 case is being prosecuted by Senior Trial Attorneys Nicola J. Mrazek and James M. Koukios of the Criminal Division’s Fraud Section, with the assistance of the U.S. Attorney’s Office for the Southern District of Florida. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance in this matter. The cases were investigated by the IRS-CI Miami Field Office.
11-910
Criminal Division”
Thursday, May 12, 2011
REFUSE COMPANY PRESIDENT IN ILLIONOIS SENTENCED FOR MAIL AND WIRE FRAUD
Everyone in America knows that local governments and private contractors conspire to steal from the people on a regular basis. We all know it but seldom do these crimes see the light of day. The following case which is quoted from the Department of Justice web site shows in a very concrete way how such crimes are committed:
“WASHINGTON — A former president of an Illinois refuse disposal container repair company was sentenced today for his role in a conspiracy to commit mail and wire fraud in connection with bids on a contract for the repair of refuse carts for the city of Chicago, the Department of Justice announced today.
Douglas E. Ritter, an Illinois resident, was sentenced by U.S. District Court Judge Ruben Castillo to serve 16 months in prison and to pay $35,303 in restitution for his participation in a conspiracy to defraud the city of Chicago on a contract for the repair of refuse carts from as early as November 2004 to as late as September 2008. Ritter, along with his business partner Steven Fenzl, was charged in an indictment filed on April 21, 2009, in U.S. District Court in Chicago. Ritter pleaded guilty to the conspiracy on June 3, 2010. Fenzl, a California resident, was found guilty by a jury on Sept. 28, 2010, of one count of conspiracy to commit mail and wire fraud, two counts of mail fraud and one count of wire fraud. Fenzl is scheduled to be sentenced on June 15, 2011.
According to the indictment, Ritter, Fenzl and their co-conspirator conspired to deceive city of Chicago officials about the number of legitimate, competitive bids submitted for the contract. Specifically, Ritter and his co-conspirators fraudulently induced other companies to submit bids for the contract at prices determined by Ritter and his co-conspirators and greater than the price for which Ritter's company had submitted a bid. The department said that included in these bids were fraudulent documents indicating that, if awarded the contract, the bidder would enter into subcontracts to purchase goods or services for a specified percentage of the contract from a minority-owned business and a women-owned business, as required by the city of Chicago. According to the indictment, Ritter and his co-conspirators also fraudulently certified to the city on Ritter's company's bid that it had not entered an agreement with any other bidder relating to the price named in any other bid submitted to the city for the contract.
Today's sentencing resulted from an ongoing investigation of the refuse cart repair industry being conducted by the Antitrust Division's Chicago Field Office and the city of Chicago's Office of Inspector General.”
Anyone who believes that contracting out public services to private companies leads to free enterprise capitalism full of integrity and a devotion to looking out for the greater good, is not quite right in the head. Business is all about maximizing the profit of the individual no matter what he/she has to do or who he/she has to steal from. I was told when I was a young naive manager at a large retailer that in the world of business there is only one thing to know and that is "Everyone steals if they think they can get away with it".
“WASHINGTON — A former president of an Illinois refuse disposal container repair company was sentenced today for his role in a conspiracy to commit mail and wire fraud in connection with bids on a contract for the repair of refuse carts for the city of Chicago, the Department of Justice announced today.
Douglas E. Ritter, an Illinois resident, was sentenced by U.S. District Court Judge Ruben Castillo to serve 16 months in prison and to pay $35,303 in restitution for his participation in a conspiracy to defraud the city of Chicago on a contract for the repair of refuse carts from as early as November 2004 to as late as September 2008. Ritter, along with his business partner Steven Fenzl, was charged in an indictment filed on April 21, 2009, in U.S. District Court in Chicago. Ritter pleaded guilty to the conspiracy on June 3, 2010. Fenzl, a California resident, was found guilty by a jury on Sept. 28, 2010, of one count of conspiracy to commit mail and wire fraud, two counts of mail fraud and one count of wire fraud. Fenzl is scheduled to be sentenced on June 15, 2011.
According to the indictment, Ritter, Fenzl and their co-conspirator conspired to deceive city of Chicago officials about the number of legitimate, competitive bids submitted for the contract. Specifically, Ritter and his co-conspirators fraudulently induced other companies to submit bids for the contract at prices determined by Ritter and his co-conspirators and greater than the price for which Ritter's company had submitted a bid. The department said that included in these bids were fraudulent documents indicating that, if awarded the contract, the bidder would enter into subcontracts to purchase goods or services for a specified percentage of the contract from a minority-owned business and a women-owned business, as required by the city of Chicago. According to the indictment, Ritter and his co-conspirators also fraudulently certified to the city on Ritter's company's bid that it had not entered an agreement with any other bidder relating to the price named in any other bid submitted to the city for the contract.
Today's sentencing resulted from an ongoing investigation of the refuse cart repair industry being conducted by the Antitrust Division's Chicago Field Office and the city of Chicago's Office of Inspector General.”
Anyone who believes that contracting out public services to private companies leads to free enterprise capitalism full of integrity and a devotion to looking out for the greater good, is not quite right in the head. Business is all about maximizing the profit of the individual no matter what he/she has to do or who he/she has to steal from. I was told when I was a young naive manager at a large retailer that in the world of business there is only one thing to know and that is "Everyone steals if they think they can get away with it".
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