Three Indicted for Bank Fraud and Money Laundering

By Ogozi John

Three people who allegedly took part in the a scheme to defraud banks and the U.S. Department of Agriculture (USDA) have been indicted on charges of fraud and money laundering.

According to an announcement from the office of Deirdre Daly, U.S. attorney for USDAConnecticut, Pablo Calderon, 59, of Darien, Brett C. Lillemoe, 45, and Sarah Zirbes, 39, both of Minneapolis, all took part in the scheme to defraud the USDA and U.S. banks including Deutsche Bank and Colorado-based CoBank.

They did this by misusing funds from the Export Credit Guarantee Program of the USDA, which were meant for financing commercial exports of agricultural products by issuing credits from U.S. financial institutions to foreign banks with the loans guaranteed by the USDA.

Calderon, Lillemoe, and Zirbes created false businesses with fake names and bank accounts and used them to obtain huge amounts of amounts of capital funding from U.S. banks which they then gave to foreign banks, and profited by collecting percentage fees running into millions of dollars.

Lillemoe even entered into an agreement with foreign banks, including the International Industrial Bank of Russia, and she received letters of credit from the banks which were then used to obtain loans from U.S. banks.

Most of these foreign banks failed to repay the loans and the USDA spent over $10 million in fulfilling their loan guarantees.

The accused persons also falsified shipping documents for the shipment of agricultural goods that were not actually shipped. They even had fake “commercial invoices” showing the sales of agricultural commodities.

Each defendant in the case is charged with one count of; conspiracy to commit wire fraud and bank fraud, bank fraud, and money laundering, and multiple counts of wire fraud.

Calderon faces a separate charge of making false statements to federal law enforcement.

They each face a maximum of 50 years in prison if found guilty of the charges.


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Former Labor Union President Arrested for Embezzlement

By Ogozi John

The former president of a local chapter of the American Federation of Government Employees (AFGE) has been arrested and charged with 19 counts of bank fraud, forgery, and aggravated identity theft.

According to a release by Joyce White Vance, the U.S. Attorney for the Northern District of Stepanie HicksAlabama, Stephanie Hicks, 43, of Birmingham, Ala., was arrested by federal law enforcement after she had been indicted by a federal grand jury for allegedly embezzling over $132,000 from the AFGE Local 2207.

Hicks served as president of the local chapter from 2007 to 2013, and used her position to divert money from the union’s bank accounts for her personal use. This included writing checks to herself to cover fictitious travel expenses, making debit card purchases and cash withdrawals without seeking approvals or keeping any records of the transactions. As alleged, she went further with forging the names of members and officials in order to use the funds available in the two bank accounts held by the chapter.

“This particular case was severe in the amount of money stolen and in the degree of concealment,” said Hollis Lindley Jr., an investigator with Labor’s Office of Labor-Management Standards (OLMS).

The local chapter had over 440 members who paid biweekly dues which were then deposited in their bank accounts.

“Union members elect officials to represent them and protect their interests; a labor union official who chooses, instead, to live the high life by stealing from local members has committed a crime and should prepare to go to prison,” White said.

In a statement, the American Federation of Government Employees declined to make specific comments regarding Hick’s case, citing ongoing legal proceedings and investigations. “”We take the stewardship of our members’ resources seriously and, while Local 2207 is a separate legal entity, we will fully cooperate with the U.S. Attorney’s office and OLMS,” the statement read.

If found guilty of the charges, Hicks faces up to 40 years in prison in addition to fines.



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CEO Indicted for Misappropriating $24 Million

By Ogozi John

A Draper-based executive has been indicted on 15 counts of mail fraud and misappropriating more than $24 million.

A release from the U.S. Attorney’s Office for the District of Utah states that Curtis Curtis Lynn DeYoungLynn DeYoung, 58, who served as the president and CEO of American Pension Services (APS) has been indicted by a grand jury for allegedly misappropriating funds that belonged to over 5,000 customers.

According to the indictment, DeYoung used several misrepresentations, promises and omission of material facts to defraud APS customers and diverting their money into making “personal high-risk, unsecured investments.” He sustained this scheme for more than a decade, starting from 1998 to 2014, and was mainly using funds that were held in two of three APS “master trust” accounts that contained money pooled together from APS customers.

DeYoung did all this “knowing that the money did not belong to him and that he was using it for purposes not authorized by APS customers,” the indictment stated.

In trying to conceal his misappropriations, DeYoung made false accounting entries of $24,789,313.65 and continued to bring in new customers and acting as a third-party funds administrator, without telling them that funds available in the master trust accounts were not the same as figures stated on the financial records. He has been sending false account statement to APS customers since 1998 in order to conceal the alleged misappropriations.

If convicted, DeYoung will forfeit the proportionate amount of misappropriated funds amounting to $24,789,313.65 and he faces a maximum of 20 years in prison for each of the 15 counts of mail fraud with a fine of $250,000.

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Insurance Exec Pleads Guilty in $30 Million Fraud Scheme

By Ogozi John

The former executive director of a New York investment firm has pleaded guilty to taking part in a massive fraud scheme to defraud his employer and insurance regulators of more than $30 million.

Allen Reichman, 54, of Irvington, N.Y., made the guilty plea before U.S. Magistrate Judge Ins 2 Color for gold foilHenry B. Pitman at the Manhattan federal court for conspiring with others to defraud the unnamed investment firm that he worked with and Oklahoma insurance regulators regarding the purchase of Providence Property and Casualty Insurance Company in Oklahoma.

Court papers identify the conspirators as Charles J. Antonucci Sr., and Matthew L. Morris, former president and vice president of Park Avenue Bank, and Wilbur Anthony Huff, a Kentucky businessman. Reichman connived with his co-conspirators to fraudulently obtain a $30 million loan from his employers at the investment firm. The money was to be used for the purchase of Providence Insurance, and the loan was secured with the assets of Providence Insurance.

Oklahoma laws forbid the use of Providence Insurance assets as collateral for such a loan. So Reichman and the others proceeded to make several misrepresentations to the insurance firm and Oklahoma insurance regulators. Reichman with full knowledge of the illegal loan collateral did everything possible to see that his employees issued the $30 million loan and he also received $200,000 as commission from the firm when the loan was finally issued.

In November 2009, Providence P & C became insolvent and was placed in receivership with its inability to pay policy holders claims, because the $30 million loan had huge effects on its surplus and the trio of Huff, Morris and Antonucci pilfered its remaining assets.

Reichman is now facing a maximum sentence of 5 years in prison and as part of his plea, he has agreed to forfeit $200,000 to the United States and provide restitution of $10 million to the investment firm.

Antonucci, Huff and Morris all pleaded guilty in connection to the case.


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L.A. Company Executive Arrested for $9M Bank Fraud

By Ogozi John

A former executive of Eastern Tools and Equipment based in Ontario, California has been arrested for his role in a scheme to defraud two TARP banks of more than $9 million.

Chung Yu “Louis” Yeung, 37, of San Dimas, CA who was the Vice President of eastern-tools-logoEastern Tools and Equipment has been indicted on a one count charge of conspiracy to commit bank fraud and five counts of bank fraud, alongside Guo Xiang “David” Fan, 52, who was president of the company and is now indicted for conspiracy to commit bank fraud, bank fraud and money laundering.

According to the indictment, Eastern Tools and Equipment, a company specializing in the sales of portable generators and other equipment and was operated by Yeung and Fan. The two conspired with others to carry out a scheme to inflate the company’s accounts receivable in order to increase the company’s line of credit, which they then used to defraud United Commercial Bank (UCB) and East West Bank of more than $9 million.

Yeung, Fan and others allegedly opened 20 shell companies with fictitious business names, bank accounts, statements, telephone numbers and post office boxes. Money was then transferred into these non-existent shell companies from Eastern Tool’s bank account to make it look like the company engaged in a substantial level of commercial activity and they then succeeded in extending their credit line from $5 million to $11 million.

Funds obtained from the scheme were used for their personal expenses and Eastern Tools later defaulted on its line of credit which led to huge losses for the banks.

In November 2008, UCBH Holdings Inc., parent company of UCB received $298.7 million in taxpayer funds through the Troubled Asset Relief Program (TARP), the bank failed in November 2009 and was taken over by state and federal regulators, none of the TARP fund was repaid and the $298.7 million investment was written off.

East West Bank also reported losses of $9,157,172 as a result of the scheme perpetrated by Yeung, Fan and the others. While Yeung has been arrested to face his charges in the Central District of California, Fan is still at large.

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SBA Fraud: Man pleads guilty to $1.6 million Scheme

By Ogozi John

The United States attorney for the district of Maryland, Rod J. Rosenstein,  announced that a man who is on trial for charges of bank fraud, money laundering, and aggravated identity theft has filed a guilty plea for his alleged crimes.

In the plea filed before the U.S. District Court, Stewart Mark Twayne Harris, 38, of Silver
Money BagSpring, Maryland, states how he applied for a $1,666,700 loan from a commercial lender for the purported purpose of acquiring a commercial glass company. In his loan application, Harris used falsified documents that included tax returns containing the social security number of another individual, bank statement that also contained the stolen identity of another person, and an equity statement that showed false payment receipts and other cash transactions in the company that he wants to purchase.

Harris also obtained a loan guarantee from the Small Business Administration (SBA) covering 89.99% of the loan amount. To conceal the loan proceeds, Harris deposited and withdrew the funds with different bank accounts that he controlled. And he used part of the proceeds to purchase a house in Brandywine, Maryland.

Harris defaulted on the loan and later filed for bankruptcy, and the SBA paid $1,515,918.90 to the lender in fulfillment of its loan guarantee.

In his petition for bankruptcy, Harris still concealed a lot of information, as he failed to state that the commercial lender was a creditor and he did not disclose his position as an officer or director of the glass company with ownership of five per cent or more of the glass company.

Harris has agreed to the payment of at least $1,666,700 in restitution and forfeiture of the property at Brandywine, Maryland.

Sentencing is scheduled to be held on 12 June 2015, where Harris faces a maximum sentence of 30 years in prison for bank fraud, 20 years for money laundering, and a mandatory minimum of two years in prison, all of which will be added to whatever sentence he gets for aggravated identity theft.

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Former Bank of America VP Pleads Guilty to Fraud Charges

By Ogozi John

Justin Brough, the former Bank of America senior vice president, has pleaded guilty to charges of misapplying bank funds.

Brough, 39, who was a senior vice president of BOA in Las Vegas, where he also served as Special Inspector Genral - TARP Sealthe business banking marketing executive, admitted to misapplying bank funds in the issuance of two business loans. The borrowers applied for a $6.3 million short-term construction loan, and a $600,000 line of credit to fund the acquisition of a business, but did not meet the bank’s underwriting requirements and so were unqualified for the loans.

To ensure that they obtain the loans, Brough admitted to falsifying loan documents and forging signatures. When the borrowers had problems in making loan payments, Brough went on to misuse the bank’s general ledger fund by making payments totalling $436,676 on the loans. He disguised these payments as “goodwill,” “miscellaneous adjustments,” fee refunds, and other false information.

Brough also admitted to making sure each borrower’s loan payments remained under $10,000 so that he would not require any additional approvals within the bank.  The borrowers later defaulted on both loans, with the BOA losing a total $5,291,000 and $1,177,167, respectively.

A statement from Christy Romero, Special Inspector General for the Troubled Asset Relief Program, read thus; “Brough, a former senior vice president at Bank of America, pleaded guilty to misapplying bank funds in a scheme designed to bypass the bank’s controls on requiring personal guarantees for a construction loan and line of credit to acquire a business, loans that later defaulted and cost the TARP bank more than $6.4 million.

“Risk management at banks, particularly at TARP banks, is incredibly important to protect not only the bank, but taxpayers who were called upon to bailout these banks. We commend the Justice Department Criminal Division’s Fraud Section, U.S. Attorney Daniel Bogden, and the FBI for standing united with SIGTARP against bailout-related crime,” Romero said.

Sentencing has been scheduled for May 28, 2015.

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Former US Bank Manager to Plead Guilty in Embezzlement Case

By Ogozi John

A former Miamisburg U.S. Bank manager has filed a guilty plea for the alleged embezzlement of over $5.2 million that was used to sustain a gambling habit.

Amy Scarpelli, 48, who was arrested last year after federal complaints accused her of Amy Scarpellispending millions of dollars, which she had embezzled from the bank, will on the scheduled date of April 2 plead guilty to one count charge of embezzlement before U.S. District Judge Walter Rice.

According to the complaint filed at the U.S. District Court in Dayton, Scarpelli together with her friends went on a spending spree from 2009 to 2014, where she spent about $12,287,112.37 in slot machines at Hollywood Casino, and her domestic partner also had about $7,702,695.22 in “coins in” at the slot machines as they were both awarded with “icon” status at the casino in Lawrenceburg, IN.

Also, Scarpelli and her domestic partner allegedly spent money on buying  lots at Lake Waynoka,  a lake house, campers, boats, cars and motorcycles, investigations by the Secret Service also reveal payments made for “Caribbean cruises.”

Court documents explain how Scarpelli amassed millions of dollars fraudulently by making carefully calculated withdrawals between $25,000 to $45,000 and then covering it up with false repayments using the credit line of a roofing business, which was supposedly closed.

“The parties have reached a plea agreement, which will be filed on the day that there’s a change of plea hearing,” assistant U.S. Attorney, Brent Tabacchi said. “The ultimate format of the plea agreement, whether it’s a binding plea agreement or some other iteration, is still to be determined.”

In his remarks, Gump said, “I think gambling is a disease no different than alcohol or drugs, and I think that we present to the court our sentencing memorandum as they will be presenting theirs and then it will be up to Judge Rice to decide that sentence in that range,” He added.

Embezzlement carries a maximum sentence of 30 years in prison, but Gump said Scarpelli’s sentence will most likely be in the range of four to seven years.

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Affordable Housing Developer Sentenced for Loan Fraud

By Ogozi John

A Trenton-based affordable housing developer has been sentenced to two years and three months in prison for diverting construction loans for his personal use.

Robert Kahan, 68, a well-known housing developer in Trenton, NJ and owner of Tara Robert KahanDevelopers, pleaded guilty to two counts of making false statements on a loan application that he took for his company.

From 2006 to 2009, Kahan diverted funds from a construction loan that he received from Roma Bank. In the loan application, he had stated that the funds will be used as payment for labor, materials and other costs needed to be made on the construction work of the Southwest Village II Project, a 52-unit affordable housing project in Trenton.

Instead, Kahan used $340,000 from the loan to make a down payment for a condominium in Florida, and also diverted the loan proceeds into other development projects and for personal use.

Apart from the $6.4 million loan he obtained from Roma Bank, Kahan, who is a city-designated developer, also received tens of thousands of dollars in federal and state funding for his affordable housing projects.

He was originally indicted on 25 counts that included bank fraud, mail fraud, and fraud against a local government receiving federal funds, among others.  But in his plea agreement, he admitted to three counts relating to the Southwest Village II project.

Also, Kahan has agreed to forfeit about $990,000 of proceeds from the scheme and another $89,000 that has been seized by the federal government and will be released to any affected institution that lays claim to it.

When asked to address the court before his sentencing, Kahan apologized to his family for the “ordeal” he has put them through, “I fear that all our hard work and my reputation has been forever tarnished by my action, it may now seem hard for you to accept, but I truly believe in helping people to live in better neighborhoods. I hope to be able to continue supporting my family and helping the community. I ask your Honor to please give me that chance,” he said.

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Former BankAsiana Exec Indicted for Fraud and Embezzlement

By Ogozi John

A federal grand jury has indicted the former assistant vice president at the Fort Lee branch of the defunct BankAsiana, where she allegedly embezzled more than $1 million.

Miye Chon, aka “Karen Chon,” 34, of Englewood Cliffs, NJ, is now facing a 27-count BankAsianacharge of theft, embezzlement or misapplication of funds by a bank officer or employee, and a single count charge of bank fraud.

According to court documents and statements, Chon, was initially employed by BankAsiana as an operations officer before being given the position of assistant vice president and operations officer at the bank’s Fort Lee Branch. Chon had access to customers’ accounts, the bank’s internal records, computer system and vault, and she used this access to steal from the bank by regularly making unauthorized transfers from customer certificate of deposit (CD) accounts into BankAsia’s vault cash account and then proceeded to physically remove the cash from the bank’s vault. She continued this scheme for several years, embezzling over $1 million.

In October 2013, BankAsiana, a federally insured financial institution, was acquired by Wilshire Bank. A customers’ complaint of irregularities with tax and account records led to an internal audit, and this was when Chon’s unauthorized transfers were discovered. Chon covered up her fraudulent cash withdrawals by altering bank records and then continued with transferring funds from newer CDs into the maturing CDs that were short of funds due to her withdrawals.

The audit also showed that Chon was regularly making transfers totaling tens of thousands of dollars at a time. In a period of one week, before her last day at work in the bank, she made transfers of about $1.2 million between customers’ accounts in order to cover up her previous loots from the accounts.

Investigations by Wilshire bank showed that Chon’s scheme resulted in a $1.4 million loss to the bank.

Chon now faces a maximum sentence of up to 30 years in prison on each count charge and a fine of $1 million, or twice the gross gain or loss resulting from the scheme. Also, it is mandatory that she pay full restitution to the affected bank.

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