Category Archives: Rap Sheet

Former Real Estate Developer Pleads Guilty to Bank Fraud

By Vijay Daundkar

The plea deal of Roger Pollock, 54, revolves around a construction loan he had taken in 2008 for an office building in downtown Lake Oswego.

Pollock is a real estate developer living in Lake Oswego. He had obtained a construction Roger Pollockloan from a federal bank in 2008 for an office building he wanted to build on A Avenue. Pollock agreed to a plea deal in connection with federal bank fraud charges related to the construction loan.

Pollock once owned the now-defunct Buena Vista Homes. Its projects included 141 houses built in Happy Valley. Pollock obtained a construction loan for but never built the office building, which was supposed to be built at 412 A Avenue.

Pollock routed the loan funds from Banner Bank into another bank account at Northwest Bank in July 2008 according to the grand jury indictment that was handed down in May 2014. He then sent the two loans out of the United States. The loans, in the amount of $489,924 and $183,949, were then used for projects that were in no way related to the office construction in Lake Oswego, the indictment further says.

Pollock received more than $7 million from Banner Bank in loan funds according to then U.S. Attorney S. Amanda Marshall.

Pollock agreed to plead guilty to making false statements to a bank. The charge carries a maximum sentence of 20 years of imprisonment, a $1 million fine and five years of supervised release.

U.S. Attorney’s Office will bring no additional charges regarding the financial fraud investigation in exchange. A charge of making a false statement to a bank and an additional charge of bank fraud will also be dismissed.

Pollock is also likely to be ordered to pay up to $1.5 million in restitution. He will also be required to forfeit $183,949, under the plea agreement–the value of the amount obtained as a result of the fraud.

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Federal Judge Sentences Woman for $3.7 Million in Fraud

By Vijay Daundkar

Erika Rae Brown, 44, of San Diego, California, was sentenced to 56 months in prison by a federal judge and ordered to pay approximately $3.7 million dollars in restitution in a bank fraud related money laundering case. Brown was also sentenced to three years of supervised release following her prison sentence. Brown changed her plea on March 19, 2015 and pleaded guilty to money laundering.

Brown made a series of fraudulent representations to lenders in order to obtain a four-
Laundered Moneymillion dollar bank loan. She lied about a data storage facility on the loan applications. She claimed that she worked on the data storage facility located on a property in Darby, Montana. The loan application of the data company was then forwarded to United States Department of Agriculture (USDA). USDA committed to guarantee the loan following a representation by one of Brown’s associates regarding the project.

To fulfill the parameters for the loan, Brown provided fraudulent letters claiming to be authored by several well-known national companies saying that they wanted to use the data storage. Brian also provided a number of cashier’s checks and invoices to show that the money was indeed being spent on the project. In fact, those were the checks Brown had written for other expenses.

USDA employees were also assured by Brown that her grandfather was able to fund the project. The loan disbursements were in fact not used for the business projects, and what represented the work done on the project was office renovation and a bathroom. The companies that were allegedly involved in working on the project revealed later that they had not done any work on it. Brown had submitted fabricated invoices to the bank. A bank employee visited the property after the loan defaulted in October 2011. The bank employee discovered that the only work done was a bathroom and office renovation. Following a financial analysis, it was revealed that Brown had used the money for personal expenses that included $5,825 for two Rolex watches and $128,135 in rent for a Laguna Beach house.

Federal Bureau of Investigation, the U.S. Department of Agriculture, Internal Revenue Service, and, Office of Inspector General investigated the case. Assistant U.S. Attorney Chad C. Spraker was the prosecutor in the case. Brown will not be released from prison until she serves at least 85% of her sentence.

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Not Guilty Pleads Former Officer of Wilmington Trust

By Ogozi John

The former chief credit officer of Wilmington Trust has pleaded not guilty to charges of loan fraud, conspiracy, and making false statements to federal regulators.

William B. North, 55, of Mawr, Pennsylvania, served as chief credit officer of the bank Wilmington Trustfrom 2004 until his resignation in July 2010, when the bank was acquired by M&T Bank Corp.

According to court documents, North, who had the responsibilities of monitoring and managing past-due loans and the bank’s loan recovery and collection efforts, is alleged to have approved the waiver of matured loans even when he knew that majority of these loans were of poor quality.

A matured loan is a loan that has reached the end of its term without the principal being paid off or its term being extended.

In October 2009, North approved a delinquency report that waived about $351 million in matured, interest-current loans that were past due 90 days or more, according to the SEC complaint.

And in the first two months of 2010, when Wilmington Trust issued its 2009 year-end earnings release and SEC filings, the bank disclosed only $30.6 million in interest-accruing loans 90 days or more past due. This figure actually represented a $330.2 million understatement of the banks interest-accruing loans that were past due 90 days or more, the SEC alleged in its lawsuit.

Many were astounded in 2010 when Wilmington Trust, a 107-year-old institution and an epitome of conservative banking, announced that it was being acquired by M&T Bank Corp. By 2011 when the merger was completed, investors lost millions of dollars and about 1,000 employees lost their jobs.

The failure of Wilmington Trust was largely due to the “exceeding high volume of mature loans” that it struggled with during the period of economic recession that began in 2007, according to court documents.

Apart from North, four other executives are also being charged in related cases. They include; former Wilmington Trust controller Kevyn N. Rakowski, former bank president Robert V.A. Harra Jr., former chief financial officer David R. Gibson and former Delaware market manager Brian D. Bailey.

North now faces a maximum of 20 years in prison if found guilty on all the charges in the indictment. U.S. Magistrate Judge Sherry R. Fallon also ordered an unsecured bail bond of $25,000 for North.

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Auto Loan Fraud Case May be Dismissed

By Vijay Daundkar

The charges against Shaun Mehdi Habibian, 35, one of the ringleaders in an auto subleasing scheme, might be dismissed if a key witness doesn’t appear in the court. The fraudulent scheme of using false information resulted in local banks issuing loans of thousands of dollars.

Habibian is facing fraud and racketeering charges. He allegedly hatched a conspiracy with gaveltwo other businessmen to fool the banks by using straw borrowers for the purpose of obtaining high-end vehicle loans.

The straw borrowers were expecting to use the newly bought vehicles as investment properties and rent them to wealthy business professionals. But they found themselves in trouble when the vehicles started disappearing and they owed bank payments on costly cars they longer owned or had control of.

The vehicles brought under this scheme included a number of Mercedes-Benzes, Maserati, and a Bentley. A South Utah owner was surprised when the vehicle was recovered from New York after a suspect was arrested there.

The Maserati was recovered following the death of an aspiring rapper, killed in a drive-by shootout in Las Vegas Strip. Carson Price of St. George had purchased the car.

Gary Pendleton, the defense attorney of Habibian claimed that no evidence supporting the allegations of the prosecution was produced during the preliminary hearing last year.

According to the testimonies of some of the straw buyers, Habibian was present when loans were executed through the now-defunct Bluff Street dealership Executive Auto.

Habibian and Micah Dean Pilkey, 28, allegedly used Pilkey’s company, Highline Management Group, to help the straw borrowers rent the vehicles in Las Vegas. They are also accused of working with Richard “”Rabbit” Downward, the owner of Executive Auto to arrange the loans.

State Motor Vehicle Enforcement Division closed Executive Auto in 2013 after the charges were made against them.

Downward was sentenced to three years of probation after he pleaded guilty to two counts of equity skimming. Nine other charges against Downward were dismissed according to the plea deal.

The charges against Pilkey were dismissed in November 2013 following an undisclosed arrangement with federal prosecutors.

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State Agency Gave Loan to Man Accused of Fraud

By Vijay Daundkar

A Wisconsin businessman received a $1 million loan from the state’s job agency in December 2012. This loan was given nine months after Tim Flaherty, the businessman in question, was accused of being involved in deals which had “all the earmarks of fraud” as mentioned a in a public order by a federal judge.

The Wisconsin Economic Development Corporation (WEDC), the agency which gave Wisconsin Economic Dev CorpFlaherty the loan was aware of the lawsuit and the fact that Flaherty had been added to it as a defendant long before the agency made its loan. Once it was clear that the loans given to Flaherty and his Oconto County business, North American Finishing LLC, was not going to be repaid in time, legal action was initiated and in April a lawsuit was filed in state court to get the money back.

A Milwaukee Journal Sentinel review shows that WEDC had brought lawsuits against six companies in Dane County Circuit Court to collect debts of $3.4 million. In three out of the six cases, including North American Finishing, the people involved have faced allegations of fraud in recent past.

The loan agreement with WEDC was signed by Flaherty on December 27, 2012. Just one day after a federal lawsuit involving Flaherty was dismissed and an undisclosed settlement was reached. Flaherty and one of his associates were accused by Michigan financial institution of hiding the associate’s assets from creditors in this lawsuit. Gary Ort, the associate has been described as either an owner or a consultant to North American. U.S. District Judge William Griesbach wrote in an order in March 2012 that there was a merit in the allegations against Ort and Flaherty.

Lawmaker and Republican Governor Scott Walker created WEDC in July 1011. It has been facing serious questions about its practices since then. In order to distance himself from the agency as he pursues a presidential run, Walker ended his four year tenure as the chairman of WEDC through legislation. According to an email sent by Barb Fleisner, a WEDC official, WEDC was warned by a competitor of North American Finishing LLC that the loan would not be repaid several months before the loan was signed.

WEDC went through the deal with Flaherty, despite the warning signs. It was also announced in 2013 that North American Finishing was “on the verge of full production of customized hardwood flooring.” It was also predicted further that the loan will spur a $27 million investment in the northern Wisconsin village of Suring.

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Loan Broker Charged in Bribery and Kickback Scheme

By Ogozi John

The U.S Attorney’s Office has announced that a San Diego woman accused of giving bribes to the Vice President of a bank and conspiring in a  kickback scheme has surrendered at the FBI office in San Diego and is now being held in custody.

Jocelyn J. Brown, 59, has been indicted by a federal grand jury in San Diego on charges of LaJolla Bankbribery, conspiracy and making a false statement to a federal agent, Assistant U.S Attorney Emily W. Allen said in a statement.

According to the unsealed indictment, Brown was an “unofficial broker” for the La Jolla Bank. Before the bank failed in February 2010, it offered financial services that included the provision of consumer and business loans, and it had a Small Business Administration lending department.

Brown’s work at the bank involved referring business customers to the small business lending department and helping the customers submit loan applications. She earned a commission or referral fee on each referral.

In 2006, Brown and the unnamed vice president, who also served as the manager of the Small Business Lending Department, “made a deal” for Brown to give part of her commission to the manager in return for expedited loan approvals for her clients.

As stated in the release from the U.S Attorney’s Office, Brown received commissions on referrals amounting to “tens of thousands of dollars,” and she paid a part of it to the manager in cash.

At one instance, the manager arranged to pay Brown a $30,000 commission fee on a loan that she did not broker, Brown went ahead to prepare a fake invoice and shared the $30,000 with the bank manager, prosecutors said.

According to the indictment, Brown is also accused of lying to law enforcement agents in order to conceal the fraud.

Deposits in La Jolla Bank were insured by the Federal Deposit Insurance Corporation, and when the bank eventually failed in 2010, more than $1 billion in debt was absorbed by the federal agency and eventually passed on to taxpayers.

“Inside deals like the one alleged in this case undermine our nation’s financial system and cost taxpayers millions of dollars,” FBI Special Agent in Charge Eric S. Birnbaum said in the statement.

Criminal investigations are still ongoing, and prosecutors are yet to release any further information regarding the identity or charges against the bank manager.

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Father & Son Plead Guilty in Multi-million Fraud Scheme

By Ogozi John

A Springfield businessman and his son have pleaded guilty in two separate cases, both of which are connected to a multi-million dollar bank fraud scheme.

Bruce Swisshelm, 68, of Battlefield, Mo., and his son Bruce Swisshelm II, 43, of Bruce SwisshelmSpringfield, Mo., made separate appearances before U.S. Magistrate Judge David P. Rush where Swisshelm pleaded guilty to bank fraud and money laundering, while Swisshelm II pleaded guilty to misprision of a felony.

Swisshelm owned Horned Frog Deli, Inc., and Swisshelm Properties, Inc. through which he established and operated a chain of restaurants that included; Burger King restaurants, Macaroni Grill restaurants, San Francisco Oven restaurants, Ebbett’s Field restaurants and a Fog City Coffee restaurant, he also developed and owned commercial properties in Springfield and elsewhere. Swisshelm II served as the president of Swisshelm Properties.

Swisshelm admitted in court to have submitted false financial documents in order to obtain loans from Great Southern Bank. In the submitted documents, Swisshelm claimed that his businesses generated a net income of more than $780,000 in 2010, but tax documents submitted to the Internal Revenue Service showed that those businesses had losses that exceeded $1.8 million in 2010.

From February to June 25, 2011, Swisshelm received four commercial loans totaling $5,592,583 from Great Southern Bank.

Swisshelm II, in a separate court appearance, admitted to knowing about his father’s bank fraud scheme and that he was personally involved in communications with Great Southern Bank, attended meetings at the bank and signed bank documents related to the issuance of the commercial loans. Even after the loans were released and he was informed of the scheme, he failed to disclose it to the authorities.

According to the terms of the plea agreement, Swisshelm must forfeit $5,592,583, which is the amount he obtained from the fraud, to the government, .

Swisshelm also faces a sentencing of up to 40 years in federal prison without parole, plus a fine up to $1,250,000 and an order of restitution. While Swisshelm II faces a sentence of up to three years in federal prison without parole, plus a fine up to $250,000.

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Attorney Sentenced in Bank Loan Scheme

By Ogozi John

A court in Santa Ana has sentenced an attorney to two years in prison for his role in a sophisticated bank loan scheme.

According to prosecutors, Gino Paul Pietro, 54, of Newport Beach, CA., facilitated a loan Hana Bankscheme that defrauded Hana Bank of more than $4 million in government-backed commercial loans.

Pietro helped his client to obtain two loans from the bank which were used in the purchase of two gas stations in Anza and Imperial.

Pietro, in trying to conceal his client’s involvement in the scheme created two shell companies; Rock Petroleum Inc. and Golden Oso Group Inc, and then made it seem as if a straw buyer was willing to buy off the properties for over $6 million, using a $2.1 million down payment and $4.5 million in loans from Hana Bank.

Meanwhile, the actual cost of the properties was set at about $3.45 million, and the purported down payment was non-existent. To further increase their chances of getting the loans at very favorable terms, the defendants forged loan guarantee documents from the Small Business Administration.

As stated in court papers, the loan scheme was barely underway when the client Donald Goff, his wife and his stepdaughter were indicted for trying to execute similar schemes in the Central District of California. Pietro, instead of putting an end to the existing scheme at Hana Bank, went ahead to represent his client, while they still continued in defrauding the bank.

In December 2012, the bank loans closed with Pietro and his client allegedly sharing more than $500,000 from the loan proceeds. The loans ultimately went into default, leading to huge losses for Hana Bank that will be borne by the SBA.

Goff was sentenced to 78 months in prison. His wife, Melanie, and stepdaughter, Monty Brown, were ordered to serve eight and 18 months in custody, respectively.

U.S. District Judge Andrew Guilford has ordered that Pietro appears in court on October 26 for a ruling on how much restitution he must pay the victims of the bank loan scheme.

 

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Warren Man Indicted in Attempted Bank Swindle

By Vijay Daundkar

A federal court indicted Shaukat Sindhu, 55, on six counts in connection with his attempts to swindle several banks out of millions of dollars. Sindhu was indicted by a federal grand jury on one count each of corrupt interference with the administration of the IRS and making false statements to a financial institution and two counts each of bank fraud and conspiracy to commit bank fraud.

According to the court documents, Sindhu operated under two false identities and used Shaukat Sindhuthe false identities to either reduce or eliminate completely the principal he owed on the mortgages for the several gas stations he operated between August 2010 and February 2014.

Sindhu purchased 12 gas stations in 2006. Some of the gas stations he bought were in the Youngstown area. He used a loan from an Illinois bank for the purpose according to the indictment. Though he controlled the financial dealings of the gas stations, Sindhu made use of his family members and friends along with fake identities to sign on loan applications and other paperwork.

“Shawn Chaudhary” and “Mohammad El Hafiz” were the two fake identities used by Sindhu to deceive the banks according to the indictment. The court documents show that “Mohammad El Hafiz” was made to look like an overseas businessman.

The agent who investigated the case claimed that it was revealed through Google that “El Hafiz” could not have been outside the U.S. and thus it was proved to be a fake identity. Sindhu also allegedly misspelled “El Hafiz” as “Al-Hafiz” in some of the emails he wrote.

Sindhu presented himself as “Shawn Chaudhry”, the officials at Consumers National Bank in Minerva, Ohio told the FBI

The FBI investigation further revealed that one of the companies set up by Sindhu could not make payments on the loan obtained for some of the gas stations. Sindhu then presented the concocted email correspondence between himself and “El Hafiz,” to a bank to prove that El Hafiz” was interested in buying the loan notes at a discounted price, according to the FBI

Some of the emails sent by Sindhu are also said to have an IP address that traces bank to Warren in Trumbull County.

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Seven Accused in New Central Valley Mortgage Fraud Scheme

By Vijay Daundkar

In Fresno, Calif., a federal grand jury indicted seven individuals on 15 counts of conspiracy to commit mail fraud and bank fraud, aiding and abetting mail fraud, and making false statements to a bank in a mortgage fraud scheme. U.S. Attorney Benjamin Wagner made the announcement.

Mahendra Prasad, 53, was arrested at his home in Fremont on Friday morning; and Bankboth Praveen Singh, 36, and Jyoteshna Karan, 43, were  arrested at their homes in Modesto Friday morning.

A summons to appear for arraignment was sent to the remaining defendants: Sunita Singh, 60, and Phul Singh, 79, both of Modesto, Martin Bahrami, 42 of Turlock and Nani Isaac, 69, of Ceres.

The defendants made false statements on loan applications and short-sale applications after conspiring to defraud mortgage lending companies. They did this in order to acquire properties under their names and the names of others. They provided false information on loan applications about their familial relationships, employment, income, and their intent to occupy the home as their primary residence.

According to the grand jury, at least 25 properties were encompassed from Sacramento to Modesto by the conspiracy. According to the prosecutors, mortgage lenders lost more than $3 million as a result of the scheme.

Leslie DeMarco, Special Agent In Charge, Federal Housing Finance Agency Office of Inspector General, said, “Our investigation disclosed that Karan and others manipulated the process for their personal gain, rather than assisting legitimately distressed homeowners.”

“The seven allegedly conspired to falsify information on mortgage loan and short-sale applications submitted to multiple financial institutions in order to obtain properties across Eastern California,” said Christy Romero, special inspector general for the U.S. Treasury Department’s Troubled Asset Relief Program. Although the sentence would be determined at the court’s discretion, if proven guilty, the defendants  could receive a maximum statutory penalty of 30 years in prison.

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