Author Archives: Marie Browning

Brandon Mitchell Indicted for Loan Fraud

The former director of Rockbridge County Fire and EMS has been indicted on charges of loan fraud and forgery; authorities have also uncovered several other wrongdoings in connection to the case.

Brandon B. Mitchell, 43, obtained a $30,000 loan from the Bank of Botetourt, using his Brandon Mitchell2016 Porsche Cayenne SUV as collateral for the loan, only to later sell the car without the bank’s knowledge, according court documents.

Further investigations also revealed that the county pay stub which was submitted in the bank loan application was altered to make it seem as if he earned more that he actually did.

As police searched through Mitchell’s office in the county administration building, they uncovered forged court documents that cleared Mitchell of earlier charges he faced for misappropriating more than $2,000 from his previous job as the battalion chief of the Jackson County Fire Department. In a bid to conceal this previous indictment, Mitchell forged the court records and when asked about the case in his job interview at Rockbridge County, he lied, stating that the case had been dismissed and expunged.

Meanwhile, the charges are still pending at the Jackson County Circuit Court in Oregon, where Mitchell is charged with six felony counts of theft, credit card fraud and computer crime. Indictments allege that he stole more than $2, 000 in fire department funds by making personal purchases on a county- issued credit card.

Oblivious of his legal battles, the Rockbridge County hired Mitchell in October 2014 to serve as the Fire and EMS director. It was not until March 2015 when the attention of an investigator with the Virginia Department of Motor Vehicles was attracted to the luxury SUV, a brand-new Porsche Cayenne that is worth about $ 58, 000, being used as collateral in obtaining a $30,000 loan from the Bank of Botetourt.

Shortly after the loan release, two lawsuits were filed by the Bank of Botetourt and the DMV agent, accusing Mitchell of selling or transferring the vehicle while its title was held by the bank. And the whereabouts of the vehicle is still yet to be known.

Mitchell, who is currently free on a $ 20 ,000 bond, had declared on his bail papers that he owns a 2008 Audi , a 1999 Ford and a 2002 Yukon. There is no mention of the Porsche.

Mitchell will be appearing at the General District Court where he will be facing charges of obtaining money by false pretenses, fraudulent conversion of property and four counts of forgery.

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Capano Pleads Guilty to Bank Fraud in Riverbend Project

According to an announcement by the U.S. Attorney’s office for the District of Delaware, a prominent Delaware developer has pleaded guilty to committing federal crimes during the construction of housing units in South New Castle.

Joseph L. Capano Sr., 73, resident of Middletown, admitted to diverting at least Joseph Capano$146,909.96 in loan proceeds from a line of credit that was meant for the construction of the Riverbend at Old New Castle.

Capano, who is from the well-known and influential Delaware family of businessmen, developers and politicians, submitted a guilty plea to one count charge of bank fraud at the U.S. District Court in Wilmington.

According to court documents, the Riverbend construction work was partly funded by a $1.5 million commercial line of credit made available by Cecil Bank headquartered in Elkton, Maryland.

In October 2007, Capano had signed an agreement for the release of the funds, stating that the line of credit would be used to fund construction and other costs associated with the project, but instead, the funds were diverted to cover personal expenses.

From October 2007 to August 2008, Capano made several false statements and representations in funding requests, otherwise known as draw requests, which he submitted to the bank. In one instance, in a draw request seeking for $300,000 to fund a number of Riverbend Development expenses, Capano received the funds only to use them for his personal expenses, including about $63,000 which went for a jewelry purchase, the court documents said.

This plea agreement only means that the last is yet to be heard concerning the under dealings that  went on in the Riverbend project, which is now embroiled in a bankruptcy fight.

Aside from the bank fraud charge, Capano also pleaded guilty to one count of knowingly violating the Clean Water Act. He had directed employees and contractors of his company to expand an entrance road into the development, and place a water main pipe through protected wetlands, this is against the warnings he received in a cease and desist letter issued by the Army Corps of Engineers.

“It is important to the integrity of the land use and development process that all developers operate under the same set of rules,” David C. Weiss, the acting U.S. Attorney for the District of Delaware, said in a statement. “Mr. Capano was determined to make his own rules, and to use whatever means necessary to get the Riverbend Development completed. In so doing, he lied to the bank about the use of project funds and he ignored federal wetland regulations and the directives of the Army Corps of Engineers. Now he stands as a convicted felon.”

Capano now faces up to 30 years in prison and a fine of $1 million for the bank fraud charge, as well as three years in prison and a $250,000 fine for the Clean Water Act charge.

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Premier Mortgage Co-owner, Lester Soto Sentenced for Fraud

The co-owner of a mortgage company has been sentenced to 21 months in prison for carrying out a large-scale fraud scheme that involved the use of straw buyers to obtain millions of dollars in loans.

Lester Soto, 59, of Freehold, N.J., had previously pleaded guilty to two Department of Justicecounts of conspiring to commit bank fraud before being handed a 21 months prison sentence by U.S. District Judge Esther Salas at the federal high court in Newark, N.J.

From September 2006 to May 2008, Soto used Premier Mortgage Services, a company that he co-owned, to engage in two related mortgage fraud conspiracies that targeted properties in low-income areas of New Jersey using straw buyers, prosecutors said.

Soto and his co-conspirators deceived financial institutions by submitting fraudulent documents in mortgage loan applications, which made it seem as if straw buyers had more assets than they actually did. Relying on this false information, the funds were released for the subject properties.

When the funds were released, Soto and his co-conspirators distributed the money and used fraudulent settlement statements to conceal the sources and destinations of the funds. Since the straw buyers had no means of repaying the loans, most of the houses went into foreclosure proceedings.

Apart from being the part owner of Premier, Soto also acted as the loan officer for some mortgage loan applications and took a percentage of its profits. Besides having people create the fraudulent documents, Soto connected these people with Premier mortgage brokers so that more of the fake documents could be created. He went further to instruct Premier employees to provide him with loan files that were suspected to be fraudulent, and he personally worked to see that they received funding.

Those charged as conspirators include Isaac DePaula, 36, of Brazil; Adilson Silva, 50, of Union, N.J.; Rodrigo Costa, 35, of Brazil; Michael Rumore, 57, of Toms River, N.J.; Antonio Pimenta, 48, of Neshanic Station, N.J.; Klary Arcentales, 47 of Lyndhurst, N.J.; and Linda Cohen, 58, of Orange, N.J.

Arcentales, one of the loan officers who provided fraudulent documents to financial institutions on behalf of straw buyers, was sentenced to 18 months in prison on March 28. Cohen, a paralegal who served as the settlement agent on mortgage loans brokered by Arcentales for various properties, was sentenced to six months in prison on March 30.

In addition to the prison term, Judge Salas ordered Soto to serve five years of supervised release and pay restitution of $3.7 million.

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Robert Lunn Sentenced to Three Years for Bank Fraud

A former Wall Street funds manager has been sentenced to three years in prison on charges of a multi-million dollar scheme in which he forged the signature of Chicago Bulls legend, Scottie Pipen in order to secure bank loans.

Robert Lunn, 66, was a highly successful money manager with Morgan Stanley and Robert LunnLehman Brothers before being hired to serve as the financial adviser to Pippen, who is the current assistant to Chicago Bulls President Jerry Reinsdorf.

According to prosecutors, Lunn fraudulently obtained a total of $3 million in loans from Oak Brook-based Leaders Bank, including $1.4 million which he claimed Pippen needed to invest in a private jet. Instead, Lunn used most of the money for his personal benefit, making mortgage payments and paying other investment clients.

Although he was absent from the sentencing hearing, Pippen had previously testified in court that in 2002 Lunn had sent him loan papers which he signed without asking any questions. Later in 2003, Lunn sent him documents to extend the loan, at this time Pippen said his relationship with Lunn had soured, so he sent him back the documents without signing them. Pippen told the court that his signatures that later appeared on those documents and submitted to the bank must have been forged.

Pippen and his wife sent a letter to the court at the sentencing hearing, calling for maximum sentence to be handed to Lunn.

“(Lunn) lied to us, he manipulated us, and he stole from us,” the letter read. “He took our hard-earned money and acted recklessly and criminally with it and he should be held fully accountable for his actions.”

John Beal, Lunn’s attorney told the judge to take Pippen’s allegations “with a grain of salt,” saying that Pippen had already recouped $8 million in bankruptcy court after a large South Side shopping plaza development where Lunn had invested much of Pippen’s money was sold to another developer.

But prosecutors insisted that Lunn had been telling lies to clients in order to advance his career, for instance, in meetings with prospective clients, including the Pippens, he told them that he graduated from Brother Rice High School on the South Side and earned degrees from Northwestern University and the University of Chicago, all of which were lies he told to boost his academic profile, according to prosecutors.

In giving the sentence, Judge Norgle said “This was not a garden variety fraud, the representations that he made along the way were an absolute lie. … He presented himself to the victims here with skill and connivance.”

In addition to the prison time, Norgle also ordered Lunn to forfeit $2.7 million and pay an additional $1.5 million in restitution, including $400,000 directly to Pippen.

Rap-Sheet

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Vera Kuzmenko Gets 14 Years for Mortgage Fraud

A California licensed real estate agent has been sentenced to 14 years in prison for her role in a mortgage scheme that defrauded financial institutions of more than $30 million in loans.

Vera Kuzmenko, 46, of Loomis, CA., was convicted last December for conspiring with FBI SealRachel Siders to carry out a multi-million dollar mortgage fraud scheme. Kuzmenko was sentenced for multiple counts of wire fraud, witness tampering and money laundering.

From 2006 to 2008, Kuzmenko, who was a licensed real estate agent, conspired with Siders to recruit straw buyers that were used to secure more than $30 million in loans for the purported purchase of more than 30 homes.

Kuzmenko helped prepare the fraudulent loan application documents that included false information on the straw buyers’ income, assets and intent to occupy the homes; she even went further to serve as one of the straw buyers in some loan applications. Using the phony documentation, they were also able to conceal the millions of dollars that went into accounts controlled by Kuzmenko, Siders and other co-conspirators.

The scheme was successfully sustained for two years, leading to losses of more than $16 million to financial institutions, until it was eventually uncovered by federal agents.

According to court documents, when Kuzmenko learned of the FBI investigations regarding the scheme, she told witnesses to lie to investigators and blame the fraud on a dead woman.

Four other co-conspirators linked to the scheme have already been handed varying prison sentences that range from eight to 19 years. Siders is scheduled to be sentenced in June 2016.

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Furniture Co Exec Pleads Guilty in $18 million Loan Fraud

A former chief financial officer of a furniture company in New York has pleaded guilty to charges related to his role in a scheme that involved lying about the company’s financial conditions in order to secure $18 million in business loans.

Norman D’Souza, 50, of Monmouth Junction, NJ, who served as the chief financial officer Munire Furnitureof Munire Furniture Inc. has admitted to fraudulently manipulating financial records that were submitted to a bank in Manhattan for loans of $7 million with an additional $10 million in municipal loans from Gas City, Indiana.

In making his guilty plea to U.S. District Judge Ronnie Abrams, D’Souza said starting in 2011, the owner of the company had instructed him to inflate sales and revenue numbers in order to qualify the company for loans.

In 2010, Munire Furniture and Indiana politicians announced plans to establish an Echelon furniture manufacturing facility in Gas City that would employ up to 350 people.

Acting on instructions given by the company’s owner, D’Souza said he inflated sales numbers in financial statements that were submitted to Gas City.

“The owner of the company said if I gave the real numbers, he would be very upset,” D’Souza told Abrams.

The company never repaid the $18 million loan, leading to huge losses for the bank and Gas City municipality.

Munire Furniture headquartered in Piscataway, NJ., distributed baby cribs, dressers and other furniture works to  stores such as Babies R Us and Burlington Coat Factory, but the company was struggling through tough times and sought for bankruptcy protection in 2014. The scheme was devised to borrow money that was needed to keep their business afloat.

In his statement, Diego Rodriguez, head of FBI’s New York office spoke on how accounting frauds like in this case, could lead to huge financial losses for banks.

“Financial fraudsters believe their schemes, whether complex or unsophisticated, will persist undetected. However, when the numbers don’t add up, the FBI will unravel the scheme and root out who is responsible,” Rodriguez said.

D’Souza, who is free on a $100,000 bail, has been ordered to pay $12 million in restitution and must return any assets obtained as a result of the fraud.

Judge Abrams has set sentencing for July 22.

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Penrod Homes Owner Indicted in Multi-Million Fraud Scheme

The owner of a Greenwood-based property construction company has been indicted by a federal grand jury for a multi-million dollar mortgage fraud scheme. Gary Bryan Penrod, 52, of Greenwood, MO, who owned Penrod Homes, Inc., was charged in a 22-count indictment returned by a federal grand jury in Kansas City.

According to the federal indictment, from May 2005 to June 2007, Penrod used his Foreclosuresconstruction firm to defraud mortgage lenders by recruiting straw buyers to submit fraudulent mortgage loan applications for the purchase of homes in Greenwood and Peculiar.

Penrod entered into some dubious deals with buyers which were not disclosed to the mortgage lenders. This included telling prospective buyers that they would receive money back that could be used for closing costs, down payments, or mortgage payments. He then connived with real estate or mortgage brokers to allegedly initiate false sales agreements, false loan applications, false supporting documents, and false settlement and closing documents to be submitted to the mortgage lenders.

Penrod then went on to submit documents that falsely represented the terms of the loan transactions, from the actual sale price of the properties to the kickback payments that he made to buyers, all of which were concealed from lenders.

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Car Dealership Owner Galasso & Employees Charged in Loan Fraud

Six former employees of a Trenton, NJ-based car dealership have been charged for their roles in a fraudulent loan scheme involving about $1.4 million in bank loans to finance the sales of luxury cars.

According to an announcement by Acting Attorney General John J. Hoffman and the Bad IdeaOffice of the Insurance Fraud Prosecutor (OIFP), those indicted in the loan fraud scheme included the owner of the car dealership, D.I.B. Leasing in Teterboro, a bookkeeper and three other employees are facing charges of conspiracy, money laundering and other offenses, while the dealership’s finance officer is charged with financial facilitation and misconduct by a corporate official.

Between August 2012 and February 2015, Patsy Galasso, 75, of Cliffside Park, who owned the dealership conspired with others to submit numerous fraudulent car loan applications. They made fake employment records and employee verifications, inflated incomes, and supplied false pay stubs all in a bid to convince banks to approve car financing for customers whose income levels that did not qualify them for loans.

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Ex-Hoboken Council President Campos Charged in Bank Fraud

A former Hoboken City Council president along with three other conspirators has been arrested in connection with a fraudulent scheme that defrauded banks of $7 million in auto loans, according to an announcement by Preet Bharara, the United States Attorney for the Southern District of New York.

Christopher Campos, 39, of Fort Lee, NJ., served as Hoboken’s 4th Ward councilman Christopher Camposbetween 2001 and 2007 and was recently appointed as the chief of staff to NJ Assemblyman Carmelo Garcia. Campos and three other men were allegedly involved in a scheme that defrauded banks of more than $7 million.

Other charged suspects include Julio Alvarez, 47, of Fort Lee, Marco Blasio, 52, of Commack, N.Y., and Geuris Ramos, 38, of the Bronx, N.Y.

Between October 2012 and September 2013, the four men orchestrated the scheme that involved using 20 straw buyers to obtain more than 200 new automobile loans, in which they falsely represented that the cars were for the buyers’ personal use, when they were actually meant to be leased to livery cab drivers.

 

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New Richmond Businessman Sentenced for Fraud

By Vijay Daundkar

U.S. District Judge James D. Peterson has sentenced James P. Henkel, 44, of Maplewood Minnesota to one year and one day in prison in a case related to a Small Business Administration (SBA) loan. Henkel was accused of providing false information to First National Community Bank of New Richmond. The announcement was made by John W. Vaudreuil, United States Attorney for the Western District of Wisconsin.

Henkel owned and operated Talmage Auto Center, Inc. and a Napa auto parts store in New littleman10_grnRichmond, Wisconsin between 2002 and 2009. He started taking steps to sell the businesses in 2008 and also hired a broker to assist him. In order to maximize the benefit from selling the businesses, Henkel with assistance from his bookkeeper, falsified entries in the business records to make the businesses appear more profitable than they actually were to potential buyers. The ultimate buyer who ended up buying the businesses as well as First National Community Bank of New Richmond had also been provided with the falsified records while obtaining business loan for the purchase of the business.

Henkel who also had other loans with First National Community Bank dealt directly with the bank by providing financial documents for the buyer’s loan packet. He provided an altered tax return for tax year 2008 for Talmage on March 27, 2009. It fraudulently inflated the value of the business by 25% with the help of false information that was deliberately included. The bank submitted the loan package to SBA after considering this information and also recommended approving the loan. The loan was then approved by the SBA based partly on the false information submitted by Henkel.

The business ultimately failed and both the buyer and the bank suffered losses. Judge Peterson underlined the fact that the scheme that was well thought out and complex, with several components, caused “extreme financial damages and hardship” to the buyer. The buyer has already been paid approximately $81,000 in restitution whereas the bank and SBA has been paid over $500,000.

New Richmond Police Department, the Small Business Administration, Office of Inspector General, and the Federal Bureau of Investigation investigated the case. Assistant U.S. Attorney Laura Przybylinski Finn handled the prosecution of the case.

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