Category Archives: Rap Sheet

Former Developer Pleads Guilty to $2.6 Million Fraud

By Vijay Daundkar

Eight years after real estate CM Development collapsed, the former president of the firm pleaded guilty to perpetrating a $2.6 million fraud. Cary McEntee, age 58, of Virginia Beach, VA pleaded guilty to one count of conspiracy to commit bank fraud. More than 250 properties across Hampton Roads were owned by CM Development in early 2007. The goal of the company, according to McEntee, was to buy old houses in struggling neighborhood and renovate them for resale.

Though half of the properties bought by the company were vacant and rotting, a group Cary McEnteeof investors continued to buy them from McEntee and signed for ever larger bank loans. McEntee made large amounts of money through the scam. He bought several luxury cars and a million-dollar house in Virginia Beach with the money.

After a newspaper report, an investigation was launched by the FBI. No charges were filed until April of this year. One of McEntee’s co-conspirators worked and lived in the Western District of Michigan where the case was also prosecuted. According to Assistant U.S. Attorney Timothy VerHey, the case was taken up by his office because it would have a “shorter turn-around time” than the Eastern District of Virginia.

VerHey praised the FBI and said that the FBI investigation was so solid that he was able to secure a guilty plea quickly, without sending the case to the grand jury.

The court documents show that the bank industry was manipulated by McEntee to secure loans between 2005 and 2007.  Money was paid to straw buyers who pretended to buy the properties and signed papers. The members of the conspiracy received the loan proceeds according to the documents. The lenders issued almost $4.2 million after the scheme was repeated at least 35 times. The final loss has been put at about $2.6 million according to the documents.

McEntee and his company were forced to bankruptcy court by investors soon after the news reports became public. Some of the investors had invested millions in the scheme. The investors and creators of CM Development received less than a penny for every dollar owed after the $9 million case ended in 2010.

Trustee R. Clinton Stackhouse sorted out the company’s complicated finances and oversaw the bankruptcy case. Due to the nature of McEntee’s scheme, he was left with only $104,000 to divvy up among several people and businesses owed money. Stackhouse said, “There was no equity in any of the properties”. McEntee always borrowed more than the homes were worth and most of the homes ended up in foreclosure. “I couldn’t get any money out of them,” Stackhouse said.

Share This
Twitter LinkedIn Digg Reddit StumbleUpon  

Attorney Indicted for Bank Fraud, Embezzlement

By Vijay Daundkar

According to information released by the U.S. Attorney’s Office, Richard Michael Colbert, 54, is accused of participating in “a scheme to defraud and obtain money and/or property by fraudulent means from federally insured financial institutions,” while he was the manager of Beach Title Services, a subsidiary of Beach Community Bank. It’s been alleged that Bank of America and Beach Community Bank received false settlement statements signed and submitted by Colbert. The indictment was issued on June 19, 2015.

The federal grand jury charged him with 15 felony counts that included one count of Department of Justiceconspiracy to commit bank fraud and/or mail fraud affecting a financial institution, four counts of false statement to a federally insured financial institution, one count of theft, embezzlement or misapplication by a person connected with a financial institution, and nine counts of money laundering.

The indictment further alleges that Colbert, in order to help former builder Lawerence Wright to obtain a loan, signed and submitted a false settlement statement to GulfSouth Private Bank which has since been closed.

According to the court documents, Colbert is also accused of embezzling and misapplying funds held at Beach Community Bank while working as an escrow agent for the bank. Colbert also allegedly conducted a series of financial transactions in an effort to launder the embezzled funds.

Colbert’s initial appearance was at the U.S. Courthouse in Pensacola on June 21, 2015 after he was arrested in the morning. The case is being investigated by the Internal Revenue Service-Criminal Investigation, the Federal Deposit Insurance Corporation-Office of Inspector General, the Federal Bureau of Investigation, and the Okaloosa County Sheriff’s Office. Assistant U.S. Attorney Tiffany H. Eggers is acting as the prosecutor of the case.

Share This
Twitter LinkedIn Digg Reddit StumbleUpon  

Former Loan Officer Gets Prison Sentence for Bank Fraud

By Ogozi John

A former loan officer of a TARP-recipient bank in Great Bend has been sentenced to six months in federal prison with an additional six months of home detention for bank fraud.

According to a release by Barry Grissom, United States attorney for Farmers Bank & Trustthe District of Kansas, Brian W. Harrison, 56, of Great Bend, Kan., who served as the Vice President and loan officer for Farmers Bank and Trust in Great Bend from 2004 to 2012, pleaded guilty to one count charge of bank fraud and in exchange for his plea, prosecutors dismissed 21 other counts that included multiple charges of embezzlement, money laundering, and falsifying bank records and loan applications.

Harrison was originally indicted for making false statements to the bank in order to conceal the poor performance of loans he had approved and maintained using funds from the federal government’s Troubled Asset Relief Program (TARP) and deliberately failed to disclose the performance of his portfolio. Also, prosecutors alleged that he made false credit and loan applications, promissory notes and security agreements on behalf of a purported debtor without the debtor’s proper authority.

In 2009, Farmers Enterprises Inc., the parent company of Farmers Bank and Trust received $12 million in tax payer’s funds through the U.S. Department of Treasury Troubled Asset Relief Program. Later in 2012, the bank exited TARP by purchasing the Treasury Department’s stake in the company at a discount, leading to a loss of $560,748 on the TARP investment.

Apart from the prison sentence, Harrison was also ordered to pay $124,000 in restitution and $50,000 in a personal forfeiture judgment.

 

Share This
Twitter LinkedIn Digg Reddit StumbleUpon  

Five Men Involved in Seven Falls Scheme Sentenced

Jill Westmoreland Rose, acting U.S. attorney for the Western District of North Carolina announced that five of the 11 defendants in a case related to the development of Seven Falls, a golf course and luxury residential community in Henderson County, were sentenced.

Avery Ted “Buck” Cashion, III, 61, of Lake Luke and Raymond M. “”Ray” Chapman, 68, of SevenFallsSignBrevard were both sentenced to 36 months in prison and three years of supervised release by U.S. District Judge Martin Reidinger. Thomas E. “Ted” Durham, Jr., 60, of Fletcher was also sentenced to 30 months of imprisonment and three years of supervised release. Whereas, Aaron Ollis, 68, was sentenced to two years of probation, that included 12 months and 1 day of home detention. Durham is the former president of Pisgah Community Bank that failed recently. Aaron Ollis is a former licensed real estate appraiser. All four of them pleaded guilty to conspiracy to defraud the United States. Cashion was ordered to pay $14,266,256.47 in restitution, Chapman, $14,266,256.47, Durham, $ 6,237,453.37 and Ollis $10,199,106.87.

Sixty year old George M. Gabler, of Fletcher was also convicted of one count of willfully failing to report misconduct related to two Seven Falls lot loans in March 2010.  Gabler admitted in court documents that he withheld documents from a federal grand jury despite being aware that the documents were related to the fraudulent loans taken out for conspirator Keith Vinson. Gabler is a former certified public accountant. He was sentenced to two years of probation that includes 500 hours of community service as well as a $5,000 fine.  Keith Vinson will be sentenced on June 25, 2015, in Asheville. He was convicted in October 2013 of conspiracy, bank fraud, wire fraud, and money laundering.

According to court documents, the defendants conspired and started to borrow money from several banks through straw borrowers to help Vinson in his failing development of Seven Falls in 2008. A straw borrower is someone whose name is used to obtain a loan from a bank but the actual borrower is somebody else. The bank was not aware of the actual circumstances of the loans and thus failed to assess the risk of making such loans.

Vinson, Chapman and Cashion then recruited George Gorden “Buddy” Greenwood and Ted Durham to advance the scheme. Greenwood was president of the Bank of Asheville and Durham was the president of Pisgah Community Bank.

Additional straw borrowers were recruited when the bank officials reached their legal lending limits for some of the straw borrowers. It was also necessary to have more straw borrower loans to keep loans current, something that is known as “loan kiting”. Loan kiting was also required because the conspirators were not able to repay the loans made earlier in the scheme. Soon Seven Falls and Queens Gap, the other luxury residential gold development by Vinson, failed. Bank of Asheville and Pisgah Community Bank too failed soon after and FDIC took over the banks.

Share This
Twitter LinkedIn Digg Reddit StumbleUpon  

Eagle Point Man Indicted on Bank Fraud and Other Charges

By Vijay Daundkar

According to the federal prosecutors, a former president of an Altus bank and a partner were indicted by a federal grand jury on bank fraud and other charges.

U.S. Attorney Sanford Coats said that Harold Doughty, 66, of Edmond, Oklahoma, and Fred Don Anderson, 66, of Eagle Point, Oregon were named in the indictment. Allegations of conspiracy, misapplication of bank funds and making false statements to banks have also been made in the 15-count indictment.

Doughty was president and chairman of First State Bank of Altus and the allegations are littleman14_grn_squaredregarding loans at the bank. Federal Deposit Insurance Corporation was appointed receiver of the bank in July 2009 after the bank was closed because of loan losses.

Doughty and Anderson are accused of committing fraud in three loan schemes that included a number of loans to finance a real estate development project in Colorado.

Buyers were recruited by Doughty and Anderson in 2006 and 2007 for real estate lots. Fourteen loans were then sanctioned and issued by the bank through Doughty. The total loan amount was more than $10 million for a company Anderson indirectly owned. Anderson also worked as president and manager of the company according to the indictment.

The indictment further alleges that the loans exceeded Doughty’s individual lending authority. Also, the loans were issued without the approval of bank loan committee or board of directors. The fraudulent loans also involved a $580,000 loan that was issued in the name of Anderson’s personal company.

The fraudulent loan schemes also involved five $2.5 million loans for the purpose of investing it in Quartz Mountain Aerospace, Inc., a company based in Altus. This loan also exceeded the individual lending authority of Doughty.

Doughty and Anderson are facing a prison sentence of up to 30 years and $1 million fine on each count if proven guilty. Arraignment of Doughty is scheduled to take place on Friday and Anderson’s is on June 10. Robert Wyatt, the attorney for Doughty was not available for comments. It’s not clear from the court records whether Anderson has an attorney yet.

Share This
Twitter LinkedIn Digg Reddit StumbleUpon  

Man Pleads Guilty to Defrauding Cornerstone Community Bank

By Vijay Daundkar

Grady Wayne Fricks, of Nashville pleaded guilty to conspiracy charges in connection with a loan scheme at Cornerstone Community Bank in Dalton, Georgia. Acting U.S. attorney John Horn said, “This defendant used his connection with a bank insider to obtain a fraudulently inflated loan. Fricks’ ability to manipulate people to further his scheme left the bank and its stockholders shouldering the loss.” Special agent of FBI Atlanta Field Office, J. Britt Johnson said, “Bank fraud is not a victimless crime.  With this guilty plea, Mr. Fricks will be held accountable for his criminal actions and a clear message sent to others considering such greed based fraudulent acts that this is a serious crime with serious consequences.”

According to court documents, Fricks, after contacting a senior vice president at littleman9_grn_squareCornerstone Community Bank, asked for a loan of $850,000 to purchase a property in Ringgold, Georgia. Fricks did not reveal the information to the bank that he had already signed a contract to buy the property for only $425,000. Fricks knew the vice president and had done business with him in the past.

The court documents show that the senior vice president did not ask for a copy of the sales contract between the seller of the property and Fricks to verify the actual contract price before the loan was approved, which was in violation with the bank’s policies. The appraiser who appraised the value of the property was also selected by Fricks with permission from the senior vice president. The appraiser was paid a bribe of $1,000 to inflate the value of the property in order to get the $850,000 loan approved by the bank. Fricks also gave $100 cash as a tip to the appraiser. Fricks received in return a fraudulently inflated appraisal report which claimed that the market value of the property was $1,010,000.

Fricks contacted the senior vice president before the loan closing and asked him whether he cared if Fricks got some money back at closing. The senior vice president replied that all the bank cared about was that HUD-1 settlement statement shows a sales price of $850,000.

Fricks got two HUD-I settlement statements created through a real estate closing agent; one that correctly listed the property price as $425,000 and a fraudulent one that listed the purchase price of the property as $850,000. Fricks got the seller’s signature forged on the HUD-I settlement statement and also got the fraudulent HUD-I statement and the inflated appraisal report submitted to Cornerstone. The bank loaned $850,000 to purchase the property on the basis of the false information. Upon receiving the approval, Fricks used only half of the money to purchase the property and the rest of the money for purposes that were not authorized by the bank.

Fricks used the same appraiser and other contacts to acquire several additional loans on the same property. The bank foreclosed on the property when Fricks failed to repay the loans.

Fricks pleaded guilty before U.S. District Court Judge Harold L. Murphy. Sentencing for Fricks will be Aug. 14 at 1:30 p.m. FBI is investigating the case with assistance from the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). The case is being prosecuted by Attorney Russell Phillips.

Share This
Twitter LinkedIn Digg Reddit StumbleUpon  

Couple Sentenced to Prison for Massive Bank Loan Fraud

By Ogozi John

The U.S. attorney office for the Western District of Washington have announced that a couple in King County, WA., are to serve varying sentences in prison for their role in a scheme that defrauded Westsound Bank in Bremerton of more than $10 million, leading to the bank’s subsequent failure.

According to the sentence issued by a United States District court in Seattle, Aleksandr

Aleksandr Kravchenko

Aleksandr Kravchenko

Kravchenko, 36, will spend five years in prison and three years of supervised release. His wife, Galina Kravchenko, 35, will spend five months in prison and one year of supervised release.

In May 2009, the Kravchenkos were indicted by a grand jury for conspiring with others to carryout an extensive scheme that involved using straw buyers and false statements to fraudulently obtain more than $49 million in construction loans from Westsound Bank.

Aleksandr Kravchenko admitted that he used his wife Galina, a real estate agent, to source for vacant plots on sale. He then recruited unqualified buyers to purchase and build on the plots. Using false construction documents and several misrepresentations, Aleksander Kravchenko submitted 55 fraudulent loan applications to Westsound Bank for the buyers, and diverted a portion of the proceeds from each loan. His wife also received real estate commissions on the transactions.

Westsound Bank suffered losses of more than $10 million from the scheme and was eventually closed by regulators in 2009 and investigations were launched into the cause of the bank’s failure.

During the investigations, the Kravchenko’s fled to Moldova where Aleksandr holds a citizenship. The pair remained there until in 2014 when Galina was extradited to the United States after being arrested for possessing fake Russian and Moldovan passports. Aleksandr Kravchenko returned voluntarily in 2015 to face the charges.

Chief United States District Judge Marsha J Pechman has ordered  Aleksandr Kravchenko to pay $10,759,722 in restitution to the bank and $370,541 for filing a false tax return. Galina Kravchenko has also been ordered to pay back the $370,541 in tax loss caused by filing a false tax return.

Also, the Federal Deposit Insurance corp. has banned the loan officer that took Krevchenko’s applications from the industry for life and the bank’s board and executives are to pay a fine of $1.7 million.

 

 

 

 

 

Share This
Twitter LinkedIn Digg Reddit StumbleUpon  

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.

Share This
Twitter LinkedIn Digg Reddit StumbleUpon  

Four Plead Guilty for Indian Ridge Resort Fraud Scheme

By Vijay Daundkar

Four defendants have pleaded guilty to lying to banks to in order to obtain loans in a real estate fraud scheme. David Drake, 56 of Lone Tree and Donald Snider Jr., 55 of Littleton, Colorado both pled guilty to one count of conspiracy to commit bank fraud, and one count of conspiracy to commit money laundering for their role in the scheme. The defendants provided false information to banks to get loans for developing the planned Indian Ridge Resort, near Branson West, Missouri. Vickie Hall, 63 of Lone Tree and Heather Gibbs, 53 of Littleton, Colorado also each pleaded guilty to one count of concealing a felony (misprision) in the same case.

Western Sites Services, a real estate development company that was jointly owned by Indian Ridge ResortDrake and Snider was engaged in developing Indian Ridge Resort. The money required for the project was borrowed from three banks that included Columbian Bank and Trust in Topeka, Kan. Drake and Snider admitted in the plea agreement that they along with other conspirators provided false information on loan applications in order to get the loans approved.

Vickie Hall is the wife of Daivd Drake. Heather Gibbs, the wife of Donald Snider also owned two percent stakes in Western Site Services. Heather Gibbs admitted in her pleas that she was aware of the fact that overhead and profit in the line item costs were included in invoices to the bank and that it was in violation of the terms of the loan agreement. Vicky Hall who is the owner of Colorado Modular Home Finders Service admitted in her plea that she allowed her company to withdraw home deposits from Columbia Bank to help conceal the felonies of Drake and Snider.

It was agreed upon by the prosecutors in the case that five-year prison term be recommended to Drake and Snider and three years on probation for Hall and Gibbs. The sentencing hearing will take place on a later date. The case was investigated by the Internal Revenue Service, the Federal Deposit Insurance Corporation and the U.S. Secret Service.

Share This
Twitter LinkedIn Digg Reddit StumbleUpon  

Two Mecklenburg Men Sentenced in Fraudulent Loan Scheme

Vijay Daundkar

Shawn Davis, 44, of Huntersville, and Darren Eugene Littles, 47 of Charlotte were sentenced to prison, according to Acting U.S. Attorney Jill Westmoreland Rose. Both Davis and Littles were convicted for their role in a scheme that involved more than $1 million in fraudulent automobile and personal loans.

Davis and Littles were sentenced to 30 months and 27 months in prison respectively. The

Darren Eugene Littles

Darren Eugene Littles

prison sentence will be followed by three years of supervised release.  U.S. District Judge Robert Conrad also ordered Davis to pay $45,284.04 and Littles, $394,784.50 in restitution.

Both Davis and Littles each pleaded guilty to bank fraud conspiracy as well as financial institution fraud. There are also two more defendants in the case who were sentenced March 30. Kimberly Arnell Cureton, 45, of Rock Hill pleaded guilty to aggravated identity theft. She was later sentenced to 24 months in prison and a year of supervised release.

Kevin Lamone Desmore, 43, of Durham pleaded guilty to bank fraud conspiracy and making a false statement on a loan application. Desmore was sentenced to 15 months in prison and three years of supervised release.

The four came together and conspired to provide false information and forged documents to obtain automobile and personal loans from financial institutions. According to the court documents they got fraudulent loan packages cleared from financial institutions with the help of forged documents and false information they provided on loan applications.

The court records also show that the prices of the automobiles to be purchased were inflated in the loan packages. There were many instances where the applicants tried to keep the funds obtained with the help of the fraudulent loan applications, even after they failed to make the required loan payments.

The primary facilitator of the conspiracy was Littles according to the prosecutors. He recruited the others and asked them to submit fraudulent loan applications. According to the prosecutors, Littles also contacted financial institutions and submitted fraudulent loan packages. Court documents show that Littles used stolen identities and impersonated other people to facilitate the fraud.

Share This
Twitter LinkedIn Digg Reddit StumbleUpon