Protect yourself, your family and your business from fraudulent activity by staying up-to-date on fraud cases occurring in communities across the nation. Keep reading to learn about some recent fraud cases from the United States Department of Justice.
Financial Fraud, Email Scams
Read Article: Nigerian Man Sentenced To 5 Years In Prison For Participating In Business Email Compromise Scams
Southern District of New York— Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ONYEKACHI EMMANUEL OPARA was sentenced in Manhattan federal court to 60 months in prison based upon OPARA’s participation in fraudulent business email compromise scams that targeted thousands of victims in the United States and around the world. Through these scams, OPARA and his co-conspirators attempted to defraud victims of over $25 million. On April 11, 2018, OPARA pled guilty to conspiracy to commit wire fraud before U.S. District Judge Paul A. Crotty, who imposed today’s sentence.
U.S. Attorney Geoffrey S. Berman said: “From halfway around the world, Onyekachi Emmanuel Opara ran a global email scam business that victimized thousands of people out of millions of dollars. The global reach of our Office and the FBI ensured that Opara will serve time in the United States for his crimes.”
According to the allegations in the Indictment to which OPARA pled guilty and statements made at the plea and sentencing proceedings:
Between 2014 and 2016, OPARA and his co-defendant, David Chukwuneke Adindu (“Adindu”), participated in multiple business email compromise (“BEC”) scams that targeted thousands of victims around the world, including in the United States, the United Kingdom, Australia, Switzerland, Sweden, New Zealand, and Singapore. OPARA sent bogus emails to employees of the victim companies directing that funds be transferred to specified bank accounts. The emails purported to be from supervisors at those companies or from third party vendors with whom the companies did business. In reality, the emails were either sent from email accounts with domain names very similar to those of the companies and vendors, or the metadata for the emails was modified to make it appear as if the emails had been sent from legitimate email addresses. After victims transferred the funds as directed in the bogus emails, the funds were quickly withdrawn or transferred to other bank accounts controlled by scheme participants. In total, the BEC scam participants attempted to steal more than $25 million from victims around the world. Read More
Financial Fraud, Money Laundering
Read Article: Financial Advisor Pleads Guilty to Money Laundering Charge in Connection with Bribery Scheme Involving Ecuadorian Officials
Southern District of Florida – A U.S.-based financial advisor pleaded guilty for his role in an international money laundering conspiracy involving the proceeds of a scheme to pay bribes to officials of Ecuador’s state-owned and state-controlled energy company, Empresa Pública de Hidrocarburos del Ecuador (PetroEcuador).
U.S. Attorney Benjamin G. Greenberg of the Southern District of Florida, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Acting Special Agent in Charge Kelly Jackson of IRS Criminal Investigation’s (IRS-CI) Washington, D.C. office made the announcement.
Jose Larrea, 40, a U.S. citizen who lives in Miami, Florida, pleaded guilty in Miami before U.S. District Judge Marcia G. Cooke of the Southern District of Florida to one count of conspiracy to commit money laundering.
According to his admissions at the plea hearing, Larrea conspired with his co-defendant, Frank Roberto Chatburn Ripalda (Chatburn), 40, a dual U.S. and Ecuadorian citizen who also lives in Miami, and others to conceal the proceeds of an unlawful scheme, namely to pay bribes to PetroEcuador officials. Larrea admitted to participating in the money laundering scheme by wiring more than $1 million from his own U.S.-based bank account to several U.S.-based bank accounts. Those wire transfers were made to conceal a bribery scheme involving an oil services contractor who made payments to PetroEcuador officials in an effort to retain existing contracts and win new business with PetroEcuador. Larrea further admitted that he created false and back-dated documents on behalf of the oil services contractor. Read More
Elder Justice, Financial Fraud, Identity Theft
Read Article: Former Forest City Investment Adviser Sentenced to Nearly Fifteen Years in Federal Prison for Fraud and Identity Theft
Northern District of Iowa— A North Iowa former investment adviser who stole over $2.4 million from his clients was sentenced on October 5, 2018, to 175 months in federal prison.
Darrell Smith, age 62, from Forest City, Iowa, received the prison term after a July 2017 guilty plea to one count of wire fraud and one count of aggravated identity theft. Smith’s nearly fifteen-year prison term follows a thirteen-month prison sentence that he received in 2016 for payroll tax fraud.
Smith’s admissions at the plea hearing, as well as evidence presented in other court proceedings, established that Smith was a broker and adviser for several investment firms. From 2010 to 2013, Smith caused withdrawals of over $2.4 million in funds from ten of his investment clients’ accounts without those clients’ knowledge or authorization. The funds were transferred to Energae, LP, a partnership Smith previously had formed with another individual to invest in different bio-energy companies. Smith then used those stolen funds to pay expenses related to the operation of Permeate Refining, LLC, which operated a now-defunct ethanol plant in Hopkinton, Iowa. In order to transfer funds from client accounts, Smith used authorizations purportedly signed by the client authorizing the withdrawal of funds from the investment account. He either forged his clients’ signatures on the authorizations or used pre-signed, blank authorization forms without the clients’ approval.
Smith was sentenced in Cedar Rapids by United States District Court Judge Linda R. Reade. Smith was sentenced to 175 months’ imprisonment. He was ordered to make $1,056,909.68 in restitution to ten victims and ordered to pay costs of prosecution in the amount of $2,947.35. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system. Smith is being held in the United States Marshal’s custody until he can be transported to a federal prison. Read More
Financial Fraud
Read Article: Northrop Grumman Subsidiary Agrees to Pay $31.65 Million for Overbilling U.S. Air Force in Civil and Criminal Settlements
San Diego, CA— Northrop Grumman Systems Corporation (“NGSC”), a subsidiary of the Northrop Grumman Corporation, with offices in San Diego, California, agreed to pay a total of $31.65 million to settle civil and criminal investigations into fraud arising out of its Battlefield Airborne Communications Node (“BACN”) and Dynamic Re-tasking Capability (“DRC”) contracts with the United States Air Force. NGSC agreed to pay $27.45 million to settle civil allegations that it violated the False Claims Act by overstating the number of hours its employees worked on the BACN and DRC contracts with the United States Air Force. Additionally, NGSC agreed to forfeit $4.2 million in a separate agreement to resolve a criminal investigation into fraudulent billing on the BACN contract. In exchange for admitting its employees’ misconduct, making full restitution, and agreeing to cooperate in the ongoing criminal investigation, no criminal charges will be filed against NGSC.
In the agreement resolving the criminal investigation of NGSC, the company admitted that its employees deployed to an air base in the Middle East defrauded the Air Force by overbilling time charged to the BACN contract. Specifically, from January 2011 to October 2013, NGSC employees charged exactly 12 or 13.5 hours per day, seven days a week, despite the fact that the employees were not working those hours. NGSC admitted that its employees billed time to the BACN contract when its employees were not working and engaged in leisure activities, such as golfing, skiing, visiting local amusement parks, going out to eat or drink, shopping, and enjoying various amenities at the five-star hotels where the employees were housed.
By inflating their time, the employees working on the BACN contract personally profited and were paid thousands of dollars that they did not earn. In an email, one NGSC employee summed up the billing practices by saying that they “work[ed] about 6-8 hours and charge[d] 13.” NGSC admitted that its employees working on the BACN contract overbilled the United States by more than $5 million at one site alone.
“Federal contracts are not a license to steal from the U.S. Treasury,” said U.S. Attorney Adam Braverman. “DOJ is firmly committed to vigilantly weeding out abuse and will swiftly pursue all available remedies when egregious fraud occurs.” Read More
Financial Fraud
Read Article: Union County, New Jersey, Woman Admits Role In $2 Million Debt Payoff Scheme
Newark, NJ – A Union County, New Jersey, woman admitted making and using phony money orders, cashier’s checks, receipts and other fabricated documents to fraudulently discharge $2 million in mortgages, student loans, and other financial obligations, U.S. Attorney Craig Carpenito announced.
Melissa Reynolds, 43, of Elizabeth, New Jersey, pleaded guilty before U.S. District Judge William H. Walls to information charging her with conspiracy to commit mail fraud, mail fraud affecting financial institutions, and bank fraud.
According to documents filed in this case and statements made in court:
Beginning in early 2014, Reynolds and Germaine H. King, 41, of Elizabeth, began making fraudulent money orders, cashier’s checks, and other fictitious documents on their home computer. They began mailing these phony money orders to financial institutions and other lenders in their attempt to fraudulently discharge their lawful debts. Reynolds discharged and attempted to discharge more than $2 million in lawful debts.
For example, in May 2014, Reynolds and King mailed fraudulent money orders for $22,260 and $39,585 to a credit union in an effort to fraudulently pay off their Mercedes-Benz cars. They also made and mailed a fraudulent money order for $432,000 to a financial institution as a complete payoff of the mortgage on Reynolds’ home in Elizabeth. The financial institution erroneously accepted the fraudulent payment and credited it as a payoff for her mortgage. Later, a state court reinstated the mortgage.
Reynolds and others unsuccessfully used the same scheme to seek the discharge of other mortgages, including Reynolds’ second residence in Newark, the residence of a conspirator in Hillside, New Jersey, the residence of an individual in West Orange, New Jersey, and the residence of an individual in Bowie, Maryland. Certain of these mortgages were Federal Housing Administration mortgages backed by the U.S. Department of Housing and Urban Development, including the mortgage on Reynolds’ Newark residence. Reynolds and her conspirators mailed fraudulent money orders to HUD or companies acting on behalf of HUD. These payments were rejected.
Reynolds also sought to fraudulently discharge more than $52,000 in student loans with fraudulent money orders and cashier’s checks. On March 20, 2017, Reynolds sent a fraudulent cashier’s check in the amount $67,000 to the Department of Education’s processing company. These payments were rejected. Read More
Financial Fraud
Read Article: Bank Executive and Husband Sentenced after Embezzling $2.7 Million
Boston, MA – A former Senior Vice President at Bank of America and her husband were sentenced in federal court in Boston for embezzling more than $2.7 million from the bank using fraudulent donations to non-profit organizations.
Palestine Ace, a/k/a Pam Ace, 45, a former Senior Vice President of Bank of America’s Global Wealth & Investment Management Division, was sentenced on Nov. 14, 2018, by U.S. District Court Judge Allison D. Burroughs to one year and one day in prison, two years of supervised release and ordered to pay restitution of $2,778,000. Her husband, Jonathan R. Ace, 46, was sentenced by Judge Burroughs to two years in prison, two years of supervised release and ordered to pay restitution of $1,855,000. In February 2018, Palestine Ace pleaded guilty to one count of conspiracy to commit bank fraud, five counts of wire fraud, and 12 counts of bank fraud; Jonathan Ace pleaded guilty to one count of conspiracy to commit bank fraud, three counts of wire fraud, and one count of engaging in an unlawful monetary transaction.
From approximately October 2010 to April 2015, the couple engaged in an embezzlement and kickback scheme to defraud Bank of America of approximately $2.7 million using fraudulent donations to non-profit organizations. As part of the scheme, Palestine Ace used her position as a Senior Vice President at Bank of America to misappropriate funds from a marketing budget and transfer the money to non-profit organizations. Specifically, Palestine Ace authorized 75 transactions, each under $50,000, to non-profit organizations in Boston and Atlanta. Then, the couple, either directly or indirectly, informed the non-profit organizations that a substantial portion of the donated funds had to be returned in order to ensure that Bank of America would continue to fund the organization. The non-profit organizations either wrote a check to Jonathan Ace or a co-conspirator, or they returned funds to a Bank of America account, to which the couple had access. On various occasions, Jonathan Ace pressured the recipients of the donated funds to return a higher percentage of the funds to him, by using intimidation and threats of public humiliation. Read More
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We provide fraud investigation and dispute services to uncover fraud schemes and minimize the resulting damages. If you think you have been the victim of fraud, or suspect that others are taking part in fraudulent activity, call the fraud experts at Veriti Consulting today at (877) 520-1280 to speak with a professional about certified forensic accounting services.
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