Every day, individuals and businesses fall victim to various types of fraud, leading to hundreds of billions in losses each year. By frequently checking the Department of Justice and the FBI websites, you can stay current on crimes being committed in the United States and gain valuable tips to protect yourself.
Take a look at the featured articles below to learn about recent crime investigations and fraud cases from the United States Department of Justice.
Financial Fraud
District of Columbia— The owner of a physical security school has been indicted by a federal grand jury for defrauding a U.S. Department of Veterans Affairs (VA) program dedicated to rehabilitating military veterans with service-connecting disabilities and for making false statements to the VA.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Jessie K. Liu for the District of Columbia, Special Agent in Charge Matthew J. DeSarno of the FBI’s Washington Field Office’s Criminal Division and Special Agent in Charge Kim Lampkins of the VA Office of Inspector General (OIG), Mid-Atlantic Field Office made the announcement.
Francis Engles, 63, of Bowie, Maryland, was charged in a 20-count indictment by a federal grand jury in Washington, D.C. The indictment was recently unsealed.
The indictment alleges that Engles was the co-owner and operator of Engles Security Training School (Engles Security). Engles Security was located in Maryland and specialized in security guard and related courses. In August 2015, Engles Security became an approved vendor of the VA’s Vocational Rehabilitation & Employment (VR&E) program, which provides disabled U.S. military veterans with education and employment-related services. Thereafter, Engles submitted documents to the VA representing that he was providing 15 veterans with months-long courses for 40 hours per week and over 600 total hours. In fact, Engles Security allegedly offered veterans far less than what Engles represented to the VA. Engles allegedly ended some classes after less than a month, even though he represented to the VA that the veterans’ classes would last for several months. In some instances, he allegedly offered only a few hours of class per day, while representing that the students would be in school for 40 hours per week. According to the indictment, Engles frequently cancelled classes without notice or makeup classes and instructors showed up late and ended class early. Read More
Cyber Crime
Read Article: Marcus Hutchins Pleads Guilty to Creating and Distributing the Kronos Banking Trojan and UPAS Kit Malware
Eastern District of Wisconsin – Matthew D. Krueger, the United States Attorney for the Eastern District of Wisconsin, announced that Marcus Hutchins, aka “MalwareTech,” pleaded guilty to two counts relating to his creation and distribution of the Kronos banking Trojan and UPAS Kit malware. This includes one count of conspiracy to commit computer fraud in violation of Title 18, United States Code, Section 371, and one count of advertising a device used to intercept electronic communications, in violation of Title 18, United States Code, 2512(1)(c)(i).
According to admissions made in connection with his plea, Hutchins, age 24, developed UPAS Kit and Kronos and then worked with an accomplice to sell the malware programs for profit. Both UPAS Kit and Kronos were designed to be deployed secretly on victim computers, and then to intercept communications and transmit personal information, including usernames, passwords, email addresses, and financial data to the person controlling the malware program. The malware was specially tailored to target victims’ banking information. Since 2014, Kronos has been used to infect numerous computers around the world and steal banking information.
Hutchins and his accomplice, “Vinny,” advertised Kronos and UPAS on various websites, including the AlphaBay market and Darkode forum. The advertisements highlighted the ability of the malware to steal information and avoid antivirus programs. Hutchins updated the malware code as needed, and Vinny and Hutchins shared profits from the sales. Read More
Financial Fraud
Read Article: Smiths Grove Businessman Pleads Guilty To Bank Fraud
Louisville, KY — Michael Todd Barrick, aka Kentuckyana Jones, age 56, of Smiths Grove, Kentucky, pleaded guilty to five counts of bank fraud on Monday in United States District Court in Louisville, announced United States Attorney Russell M. Coleman. Barrick also stipulated to a loss of over $1.4 million. Barrick’s codefendants, Roger Hagan, Lorri Hughes, and Garry Hammer, all pleaded guilty in April.
According to Barrick’s plea agreement and other documents filed in the case, in 2007 Barrick and his co-defendant, Roger Hagan, agreed that Hagan would purchase property at 302 Laurel Street in Smiths Grove from Barrick for $575,000, but Barrick would make all loan payments and keep all rental income. Hagan did not have sufficient assets and income to qualify for the loan, but at Barrick’s direction Hagan submitted a fraudulent financial statement to American Bank & Trust (AB&T) that substantially overstated Hagan’s assets and income. Based on these fraudulent representations, AB&T approved Hagan for the loan. Barrick paid Hagan’s $118,977.50 loan down payment, and gave Hagan $21,422.50 as payment for participating in the transaction. The loan went into default in November 2010.
In 2008, Hagan entered a similar agreement with Barrick to purchase 708 Kelly Road in Bowling Green for $300,000. At Barrick’s direction, Hagan again submitted a fraudulent financial statement to PBI Bank. Based on these fraudulent representations, PBI approved Hagan for the loan. After the loan closed Barrick paid Hagan $6,534 for participating in the transaction, and the loan went into default in March 2010.
In 2011, Barrick recruited co-defendant Lorri Hughes to purchase a Wholesale Mattress Warehouse (WMW) from Barrick for $179,000. The WMW was purportedly located at 1700 N. Dixie Highway in Louisville, but in reality a McDonalds restaurant operated at that address, and had been there for many years. At Barrick’s direction, Hughes submitted a fraudulent financial statement to Monticello Bank that substantially overstated her income and assets. Based on these fraudulent representations, Monticello Bank approved the loan, and after the loan closed Barrick paid Hughes $20,000 for participating in the transaction. The loan went into default in February 2012.
In 2010, Barrick recruited T.P. to purchase Som’ Beach Tanning (SBT), a business located at 140 River Place Avenue in Bowling Green, from Barrick. At Barrick’s direction, T.P. submitted a fraudulent financial statement to Monticello Bank that substantially overstated his assets. The loan was supposed to be collateralized by SBT’s equipment, but Barrick had already used that equipment as collateral in a separate December 2009 loan from BB&T Bank, and that BB&T loan was not satisfied. Based on these fraudulent representations, co-defendant Garry Hammer, a Monticello Bank loan officer, approved the loan, and after the loan closed Barrick paid T.P. $5,000 for participating in the transaction, but Barrick never surrendered control of the business.
In late 2010, Barrick recruited R.R. to purchase a Mattress City Wholesale (MCW) from Barrick for $179,880. Under the terms of their agreement, R.R. would own the business on paper and would receive a small percentage of profits, but Barrick would pay the taxes, insurance, and all loan payments, and would receive the majority of profits. The paperwork Barrick submitted reflected that the MCW was located at 2201 Gallatin Road in Madison, Tennessee. In reality, a PetSmart was located at that address, and had been there for many years. Read More
Tax and Mail Fraud
Read Article: Company Controller Pleads Guilty to Fraud Charges for Failing to Report $2.8 Million He Embezzled from Employer
Los Angeles, CA — A controller for a commercial printing company has pleaded guilty to tax and mail fraud charges for embezzling $2.8 million from his employer and failing to report the stolen funds as income to the Internal Revenue Service.
Sean Edin Talaee, 62, of Glendale, pleaded guilty to one count of mail fraud and one count of subscribing to a false income tax return. United States District Judge Otis D. Wright II has scheduled an August 19 sentencing hearing, where Talaee will face a statutory maximum sentence of 23 years in federal prison.
According to his plea agreement, between October 2015 and June 2018, Talaee worked as the controller overseeing the accounting and tax payments of Printograph, Inc., a Burbank-based commercial printing company that does business as GotPrint.com. During this time period, Printograph made a series of periodic estimated tax payments, which were based on the company’s expected gross income, deductions, and credits for each year. To enable these estimated tax payments, Talaee brought company checks to Printograph’s president and sole owner – who had signing authority for the company’s bank account – for her signature prior to their submission to the IRS.
On at least eight separate occasions, Talaee obtained company checks from Printograph’s president but instead inserted his own taxpayer information when filling out the IRS voucher forms that accompanied the estimated tax payments. By using his own information – and not the company’s – Talaee was able to claim the estimated tax payments for himself and caused the IRS to credit the payments to his own personal account, thereby embezzling the funds from Printograph and effectively laundering the embezzled proceeds through the IRS. Read More
Health Care Fraud
Read Article: New York Diagnostic Testing Facility Owners Plead Guilty in More than $18.5 Million Health Care Fraud Scheme
Eastern District of New York – Two New York diagnostic testing facility owners pleaded guilty for their roles in a more than $18.5 million health care fraud scheme.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Richard P. Donoghue of the Eastern District of New York, Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office, Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) New York Region and Acting Special Agent in Charge Jonathan Larsen of IRS Criminal Investigation (IRS-CI) New York made the announcement.
Tea Kaganovich, 47, and Ramazi Mitaishvili, 58, a married couple, both of Brooklyn, New York, each pleaded guilty to one count of health care fraud and one count of conspiracy to defraud the lawful functions of the IRS before U.S. Magistrate Judge Steven M. Gold of the Eastern District of New York. Sentencing has been scheduled for July 18, 2019, before U.S. District Judge Margo K. Brodie of the Eastern District of New York.
The defendants were the co-owners of several diagnostic testing facilities in Brooklyn, including Sophisticated Imaging Inc., East Coast Diagnostics Inc., East Shore Diagnostics Inc., East West Management Inc. and RM Global Health Inc. As part of their guilty pleas, Kaganovich and Mitaishvili admitted that they executed a scheme in which they submitted fraudulent health care claims for diagnostic testing services. The defendants admitted that they paid approximately $18.5 million in kickbacks for the referral of beneficiaries who submitted themselves to diagnostic testing and other purported medical services. Kaganovich and Mitaishvili falsely reported to the IRS that the illegal kickback payments were legitimate business expenses, which caused relevant tax forms to falsely under-report business income and claim deductions, they further admitted. Read More
Cyber Crime
Southern District of Indiana – A federal grand jury returned an indictment unsealed in Indianapolis, Indiana, charging a Chinese national as part of an extremely sophisticated hacking group operating in China and targeting large businesses in the United States, including a computer intrusion and data breach of Indianapolis-based health insurer Anthem Inc. (Anthem).
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Josh Minkler for the Southern District of Indiana, Assistant Director Matt Gorham of the FBI’s Cyber Division and Special Agent in Charge Grant Mendenhall of the FBI’s Indianapolis Field office made the announcement.
The four-count indictment alleges that Fujie Wang (王 福 杰 in Chinese Hanzi), 32, and other members of the hacking group, including another individual charged as John Doe, conducted a campaign of intrusions into U.S.-based computer systems. The indictment alleges that the defendants gained entry to the computer systems of Anthem and three other U.S. businesses, identified in the indictment as Victim Business 1, Victim Business 2 and Victim Business 3. As part of this international computer hacking scheme, the indictment alleges that beginning in February 2014, the defendants used sophisticated techniques to hack into the computer networks of the victim businesses without authorization, according to the indictment. They then installed malware and tools on the compromised computer systems to further compromise the computer networks of the victim businesses, after which they identified data of interest on the compromised computers, including personally identifiable information (PII) and confidential business information, the indictment alleges.
“The allegations in the unsealed indictment outline the activities of a brazen China-based computer hacking group that committed one of the worst data breaches in history,” said Assistant Attorney General Benczkowski. “These defendants allegedly attacked U.S. businesses operating in four distinct industry sectors, and violated the privacy of over 78 million people by stealing their PII. The Department of Justice and our law enforcement partners are committed to protecting PII, and will aggressively prosecute perpetrators of hacking schemes like this, wherever they occur.”
“The cyber attack of Anthem not only caused harm to Anthem, but also impacted tens of millions of Americans,” said U.S. Attorney Minkler. “This wanton violation of privacy will not stand, and we are committed to bringing those responsible to justice. I would also like to thank Anthem for its timely and substantial cooperation with our investigation.”
The indictment further alleges that the defendants then collected files and other information from the compromised computers and then stole this data. As part of the computer intrusion and data breach of Anthem, the defendants identified and ultimately stole data concerning approximately 78.8 million persons from Anthem’s computer network, including names, health identification numbers, dates of birth, Social Security numbers, addresses, telephone numbers, email addresses, employment information and income data, according to the indictment. Read More
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If you suspect that fraudulent activity is taking place, call the experts at Veriti Consulting at (877) 520-1280 to speak with a professional. With our national presence, we can provide fraud investigation services for U.S. businesses of all sizes and types.
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