Category Archives: Rap Sheet

Insurance Agent Pleads Guilty in $6 Million Loan Fraud Case

By Ogozi John

On February 2 Derek Richard Brewart, 53, a former Upland insurance agent pleaded guilty to two federal charges – bank fraud and filing a false tax return before U.S. District Court Judge, Jesus G. Bernal.

Brewart’s scheme garnered nearly $6 million, which was used to pay Hamilton Brewart Insurance Companyoperating expenses and employee payroll for Hamilton Brewart Insurance Agency. HBIA was owned and managed by Brewart. The agency operated business in San Bernardino County, California as well as other locations.

Between 2008 and 2012 and possibly beyond, Brewart is accused of submitting loan applications in the name of his clients to Universal Bank, headquartered in Covina unbeknownst to the clients who had not authorized the applications. According to the federal criminal complaint filed by the U.S. Attorney’s Office, these clients had already financed their premiums through other financial resources or paid their premiums in full. Brewart then requested Universal Bank send loan documents directly to him using a post office box rather than his clients’ mailing address.  In doing so, the clients remained unaware of his actions.

Brewart confessed as part of his guilty plea, that on 2010 and 2011 tax returns, he failed to report approximately $785,922. Both state and federal law enforcement agencies were involved in the investigation including the Federal Bureau of Investigation, the California Department of Insurance and the Internal Revenue Service-Criminal Investigation.

Sentencing by Judge Bernal is scheduled for July 13, at which time Brewart faces three years in federal prison for the tax charge and a statutory maximum sentence of 30 years in federal prison for the bank fraud charges.

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Former Bank Employee Pleads Guilty to Embezzlement and Fraud Charges

By Ogozi John

A former employee of the Bank of New York Mellon Corp. who embezzled more than $2.4 million from the bank has pleaded guilty to charges of fraud and embezzlement, according to an announcement by U.S. Attorney David Hickton.

The announcement further states that Joseph Graziano Jr., from Pittsburgh, will now Joseph Graziano Bank of New York Mellon Corpserve a mandatory minimum sentence of two years and faces a maximum sentence of up to 90 years in prison, and pay a fine of $3 million or both.

At the trial before U.S. District Judge Terrance McVerry, Graziano pleaded guilty to charges of bank embezzlement, bank fraud, conspiracy, mail fraud, aggravated identity theft and filing a false income tax return.

According to the announcement, Graziano who worked as a corporate trust administrator at Bank of New York Mellon Corp. for 3 years, was able to access and wire funds in and out of accounts, and he used this opportunity to embezzle $2.4 million by wiring funds from the corporate trust accounts of the bank into his personal bank accounts, and he also failed to report the embezzled funds as income on his federal income tax returns.

Even before and after his employment at the Bank of New York Mellon Corp., Graziano was also involved in defrauding other banks that included Dollar Bank, First Niagara Bank, First Commonwealth Bank, Ameriserv Financial Bank and PNC Bank, where he submitted fraudulent loan documents in order to obtain extended bank credits. He also engaged in fraud schemes on the online shopping platform www.ebay.com and was part of a conspiracy to acquire counterfeit currency through a source in Uganda.

He is due to be sentenced in May.

 

 

 

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Sentinel Executives Sentenced for $665 MM Collateral Fraud

By Ogozi John

U.S. District Judge Ronald Guzman has sentenced two former executives of the defunct Sentinel Management Group to lengthy prison terms for their role in what is the largest financial fraud case ever prosecuted in the Federal Court in Chicago.

Former CEO of Sentinel, Eric A. Bloom, 49, of Northbrook, IL, and former Scales of Justicehead trader, Charles K. Mosley, 51, of Vernon Hills, IL, were sentenced to 14 and 8 years in prison, respectively.

Bloom misappropriated securities belonging to many customers as he used the funds as collateral for loans that Sentinel obtained from the Bank of New York Mellon Corp. The loan was then used for the purchase of high-risk, illiquid securities running into several millions of dollars and was of no benefit to the customers, instead, it was part of a trading portfolio kept by Bloom and other Sentinel’s officers, his family members and businesses operated by the Bloom family.

In a bid to conceal the scheme, Bloom gave false representations of the returns accrued on securities belonging to customers, and he directed employees to issue misleading account statements that were then sent to their customers.

During the span of January 2003 until August 2007, Sentinel’s daily operations were controlled by Bloom, and he continued misleading customers to invest more than $1 billion, without letting them know the actual risks, value and profitability of their investments. The cover-up continued up until four days prior to the day Sentinel declared bankruptcy on August 17, 2007. At that time Bloom stated that “liquidity crisis” and “investor fear and panic” were responsible for Sentinel’s financial problems. When actually, the problems were due to purchasing high-risk, illiquid, and excessively-leveraged securities and the huge indebtedness to the Bank of New York.

Mosley, former head trader at Sentinel had pleaded guilty to charges of investment fraud. Judge Guzman ordered the pair to pay a total of $665,923,451 in restitution to customers, the bank and others affected by the scheme.

“The Sentinel case has had an enormous effect on the business and legal community in Chicago for years, and will continue to do so for years to come, and has become an infamous risk management case study.” Assistant U.S. Attorney Clifford C. Histed said during the sentencing.

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Former Tifton Bank CEO Indicted for Bank Fraud

By Ogozi John

According to an announcement by U.S. Attorney General for the Middle District of Georgia Micheal J. Moore, the former President and CEO of Tifton Banking Company (TBC) has been indicted by a U.S. grand jury for allegedly hiding under-performing, high-risk loans from the bank, the Federal Deposit Insurance Corporation (FDIC), state regulators, and others.

Gary Patton Hall Jr., 49, of Tifton, GA, is facing a six-count charge of bank fraud and one-SBFI_sketch dollarstackcount charge of major fraud against the United States.

Hall, who served as President and Chief Executive Officer of TBC for 5 years, is accused of engaging in a long running scheme to mislead the bank and its loan committee by concealing details of loans given to individuals and businesses.

His alleged actions caused TBC to incur losses running into millions of dollars, as the bank approved and renewed delinquent loans, and loans without collateral.

According to the indictment, Hall hid his personal and business interests in the approval of at least two transactions in which he had approval authority. One of them included a number of loan approvals by Hall to the buyer of his condominium in Panama City Beach, Florida. Hall allegedly made several misrepresentations regarding the loans to TBC’s loan committee without letting them know his personal interest in the transaction. Hall then went further to conceal the loan from the FDIC and state regulators after the buyer’s loan payments became delinquent.

Hall allegedly made $50,000 from the sales of his condominium in a transaction that was fully funded by unsecured loans that he approved to the buyer. Meanwhile, TBC experienced losses of over $400,000 from the transaction after the buyer declared bankruptcy.

In November 2010, TBC was still yet to repay the $3.8 million received from the Troubled Asset Relief Program (TARP), when it was closed by the Georgia Department of Banking and Finance due to its poor financial condition.

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Lending Officer Sentenced for Bribery and Bank Fraud

By Ogozi John

The former Chief Lending Officer of Southwest Georgia Farm Credit, Larry Malone, has been sentenced to 48 months in prison for bribery and bank fraud charges.

According to an announcement by Michael J. Moore, United States Attorney for the Farm Credit Southwest GeorgiaMiddle District of Georgia, Malone, 59, of Bainbridge, served as the Chief Lending Officer for the Southwest Georgia Farm Credit for 20 years, and was still occupying that position  when he carried out the fraud.

Malone gave out a total of $25,540,896 in fraudulent loans to different borrowers in both the Middle District of Georgia and the Northern District of Florida. He also received more than $900,000 in bribes and kickbacks from these borrowers.

The Middle District of Georgia and the Northern District of Florida both brought up the charges against him which was heard by Honorable W. Louis Sands, Senior United States Judge in Albany, Georgia.

Malone pleaded guilty to the charges and has now been sentenced to 4 years in prison. The judge also ordered that he pays a total of $25,540,896 in restitution to the Southwest Georgia Farm Credit and its insurers.

“After the financial crisis we experienced, no one can legitimately question the importance of pursuing people like Mr. Malone, who commit bank fraud,” said United States Attorney Michael J. Moore.

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Bank Defrauded: FBI Hunts for Luxary Car Dealer

By Ogozi John

The owner of a luxury car dealership in New Jersey has been implicated in a fraudulent scheme that involved obtaining bank loans for cars that were never delivered to customers.

In an unsealed complaint jointly filed by 75 customers in U.S. District Court, Afzal Afzal Khan“Bobby” Khan, 32, of Egg Harbor Township, faces a one-count charge of wire fraud and is now being hunted by the FBI.

According to prosecutors, Kahn repeatedly defrauded lenders and customers of the Emporio Motor Group in Ramsey. He obtained loans from an undisclosed bank for cars that were never delivered, and also collected loans for cars that were delivered but were not under his title.

These fraudulent actions affected the car buyers, as many of them were held responsible for the bank loans but were not able to register their cars.

In one of the cases,, prosecutors say Kahn allegedly submitted a loan application for $150,000 toward the purchase of a Rolls Royce, but the car was never delivered to the buyer.

Kahn personally sent several loan payment checks that were either stopped or returned due to insufficient funds and he is still yet to pay the balance for the Rolls Royce.

Prosecutors have said that Kahn faces up to 30 years in prison if found guilty of the charge.

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Santander Bank Under Investigation

By Ogozi John

Massachusetts Attorney General Martha Coakley is going through the records of Santander Bank after investigations were opened into suspected cases of auto loan fraud committed by the bank.

According to reports, the Attorney General is looking for possible evidence that shows that Santander BankSantander Bank’s auto finance company deliberately gave out loans to borrowers who could not make payments, and later sold these loans to Wall Street. The loans were again later packaged and resold as securities to unsuspecting investors.

To this effect, Coakley has ordered that Santander Bank’s U.S. auto finance company appears in court with documents showing its borrowers’ credit histories, the interest rates charged on loans and the risks on such loans.

“We are using our experience, gained in holding banks responsible for unfair and predatory mortgage loans, to ensure consumers are protected in other areas of lending,” said the Attorney General’s spokesman Brad Puffer.

In a statement concerning the investigations, Santander Bank said they are cooperating fully with the Office of the Attorney General as they remain committed to operating their auto financing business in accordance with laid down rules.

“We will comply with all lending and loan servicing laws as well as the rules and guidance of our supervisors and regulators,” the statement read.

 

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Orange County Man Indicted for Fraudulent Loan Applications

By Ogozi John

A man from Orange County is facing charges by a federal grand jury for submitting fraudulent loan applications to three banks in the San Francisco Bay Area.

According to the indictment, the man identified as Daniel Rosenthal, 31, of Yorba Linda, Orange County District Atty SealCA submitted the loan applications using a false name, false bank statements and false financial statements to support the loan applications.

Rosenthal also made false claims of being the owner of an event planning company called Sunshine Daydream. Stating in the applications that loan proceeds would be used to finance the business. But after obtaining the loan, Rosenthal used the money to purchase gold and deposited part of the money with a bank in Cyprus, and gave some to third parties, according to the indictment.

He was arrested last month in Yorba Linda, two days after he was charged in a criminal complaint.

Prosecutors said Rosenthal faces a maximum sentence of 30 years imprisonment for each fraudulent loan application charge, and 10 years for charges of money laundering and identity theft, if convicted. He may also be ordered to serve another mandatory 2 years in prison for each violation in which he is found to be guilty of.

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Real Estate Broker Indicted and Detained on Charges of Bank Fraud

By Ogozi John

A former real-estate broker who fled to Moldova to avoid a possible jail term for bank fraud charges has finally been extradited and is now standing trial in a U.S. District Court in Seattle.

Galina Kravchenko, 35, of Auburn, WA fled to Moldova with her husband and three Galina Kravchenkchildren after a grand jury had indicted the couple on charges of conspiracy, bank fraud and money laundering.

According to the indictment, the Kravchenkos conspired with others, mostly self-employed construction workers, to obtain construction loans which were used to purchase properties that they selected and controlled.

They also connived with a loan officer at the Federal Way branch of Westsound Bank who helped with filing more than 120 fraudulent construction loans worth over $118 million to unqualified borrowers. This represented about 83 percent of the bank’s troubled loans and contributed largely to its failure in May 2009.

The Federal Deposit Insurance Corp. (FDIC) reported that an estimated cost of $82.6 million was incurred by its insurance fund due to the failure of the Bremerton-based Westsound Bank.

Galina Kravchenko, who holds dual citizenship in Russia and America, had briefly worked for the government obtaining a real-estate sales license and began working for Skyline Properties, a real-estate brokerage firm. It was during her time at Skyline that she allegedly conspired with her husband and others to defraud the Westsound Bank. She was later fired from her job, and investigations into the alleged fraud was still ongoing when she fled with her husband and children to Moldova, cashing out about $1 million in refinance loans which the government is yet to track down.

After several failed attempts, Galina voluntarily agreed to be extradited, and was arrested in Moldova traveling with forged identification papers.

Alex Kravchenko remains an international fugitive after several meetings with the State Department persuading him to return voluntarily yielded no results, Moldova does not have an extradition treaty with the U.S. so they have refused to extradite the native Moldovan.

U.S. Magistrate Judge James Donohue declined pleas by Galina’s attorney, Peter Offenbecher to allow her live with her sister while awaiting trial. Donohue ordered that she be detained to prevent her fleeing trial again to Moldova “where her husband is hiding” as she has access to cash and extensive contacts and is “familiar with forged international travel documents,” the judge said.

Her trial on felony charges, which now includes filing false tax returns, will begin next month.

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Great Bend Banker Indicted for Embezzlement and Fraud

By Ogozi John

According to a release from U.S. Attorney Barry Grissom’s office, Brian W. Harrison, 55 a former banker and Vice President of Farmers Bank and Trust in Great bend, Kansas, was arraigned in court on charges that include embezzlement, making false entries in bank records and money laundering.

Harrison who was also the loan officer at the bank is alleged to have falsified financial Farmers Bank & Truststatements in order to cover up the shady loan deals that went on under his supervision.

The cover-up was finally blown to reveal many alleged irregularities including; falsified loan applications and approvals, refinancing and consolidation of loans, instructing borrowers to wrongly dispose of loan collateral, all of which contributed to the poor performance of the bank.

The indictment also alleges that Harrison tampered with funds released by the federal government Troubled Asset Relief program (TARP). Of the $12 million given to Farmers Enterprises Inc., holding company for Farmers Bank, only $11, 439, 252 could be redeemed to TARP after 4 years.

“Harrison’s purported scheme resulted in losses for Farmers Bank, and ultimately, federal taxpayers suffered a $560,000 loss on their TARP investment in the bank,” said Christy Romero, Special Inspector General for TARP.

The indictment – a result of a joint investigation between the FBI and the Special Inspector General for TARP – brought up a 16-count charge of falsifying loan and credit applications, two counts of making false entries in bank records, two counts of embezzlement, and another two-count charge of money laundering.

Harrison faces a maximum sentence of more than 50 years in prison, if found guilty of all the charges.

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