Computer Engineer to stand trial for hacking San Francisco December 27, 2008
Posted by whitecollarcrimenews in News.Tags: computer crime, Crime, Gavin Newsom, News, San Francisco, Terry Childs
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I have been studying computer crime for about 18 years in one way or the other. This is the type of case that I talked about many years ago that other people couldn’t even imagine. I don’t even think it was anything that special. Others who really studied computer crime and/or technology made the same type of predictions. However, most people in the early to mid 90′s didn’t even have a computer in their house, so it was hard for them to understand these types of scenarios.
Terry Childs created and ran FiberWAN which networks the computers of San Francisco and handles 60 percent of the city’s information. He is accused of locking out his bosses from the system and setting up the network to fail during a scheduled shutdown. The City alleges that they had to spend over a million dollars to fix and assess the vulnerability of the network. He remains in jail with a $5 million dollar bail.
This is an amazing case for so many reasons. First, he gave the correct passwords after being in jail for 8 days….to Mayor Gavin Newsom! I guess the Mayor is a witness now. Also, the trial would have to be moved. How could he possibly get a fair trial in that city?
More importantly, how does either side take this case to trial? Issue one is motive. How are you going to ask the jury to convict this guy? What did he really do here? Was anyone actually harmed or put at risk or is this a civil issue? He has no criminal record and no motive. The amount of witnesses and the complex and technical testimony will be tough for the Prosecutor to handle.
I hope the defense realizes that Childs has to be one of their best consultants/experts. I refer to this type of client as an “expert client”. He can and should testify (assuming there is no really damaging motive evidence I don’t know about). He can help the lawyers explain everything about this network, what he did, why, etc.
The problem they have is that the Prosecutor will be out for blood because this case will be extremely political. So the chances of getting a good deal will be slim at best. On the other hand. Childs can help the lawyers know what to ask for in terms of discovery. I am sure there is some sensitive information that the city will not want to part with. The defense will need to find a reason for this information to be necessary (i.e. relevant) to their case. This includes everything about the network, the information on it, internal policies, dirt on everyone involved, etc.
In other words, the defense needs to make the Prosecutor wish they worked out a quiet, easy resolution to the case in the beginning. It is the best strategy at this point for numerous reasons. First, if you can scare the Prosecutor out of going to trial and work out a great deal for your client, you’ve won.
Second, if that doesn’t work, you need to make the trial so drawn out and complex that the jury’s head will spin. This will take the Prosecutor off message because they will be so busy defending everything else, that there will less time spent on the actual allegations against Childs.
His lawyers seem like they have a good idea as to where they are going. I just hope they keep going in that direction . The story indicates that they are making Childs out to be the only one that could save the city from his supervisors and fellow employees who would abuse the network. That is a great theme but you better have the evidence to back it up!
The reason I started studying computer crime all those years ago was because I not only knew there would be cases like this, but I knew that I could win them. While I handle (and win) white collar crime and computer crime cases, there are only so many clients in Terry Child’s position. While I’ve been waiting for many years, it seems like I won’t have to be waiting too much longer huh?
Here is the story.
Stop & Shop allows fake veteran to solicit donations December 26, 2008
Posted by whitecollarcrimenews in News.Tags: Crime, Fraud, Holidays, News, Scams, theft
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I knew that I would find someone arrested around Christmas for allegedly using the holidays for illegal personal gain. Sure enough, I found one that was very interesting both in the way it was set up and the way it was discovered.
Police in Woburn, MA allege that Paul Guilmain pretended to be a military veteran and representative for the very real organization, National Veterans Foundation. He spent about a month in front of the local Stop & Shop soliticing donations from shoppers.
The odd thing is that Stop & Shop claims that they have a thorough vetting process for charities seeking to solicit and that Guilmain was vetted. What exactly Guilmain said and/or provided to Stop & Shop to convince them that he was legit is unknown. My guess is that the store manager just dropped the ball here.
He was caught by a 23 year old former Army soldier Nick Ford, who thought that his uniform was outdated. Attention to detail huh? Ford said that this isn’t the first time that he turned someone in for this type of scam.
I don’t see this case going very far. There is no proof that anyone gave him money, even though there was $150 in his cup. There is also no proof that he was going to keep this money as he could have donated it to the charity. Even assuming the State had a case, $150 of theft in just about any state rarely carries any serious time.
The story is here.
Fry’s Electronic’s Executive charged with fraud December 24, 2008
Posted by whitecollarcrimenews in News.Tags: Crime, Fraud, Gambling, News
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What is it with electronics stores? I guess Ausaf Umar Siddiqui didn’t get the hint from Crazy Eddie. The Feds allege that defrauded Fry’s Electronics and its vendors of over $65 million over the past few years. He allegedly demanded large commissions from a handful of companies in exchange for prominent placement at the stores.
The private company is run by a small family group. As a 20 year veteran of the company, he was apparently trusted. For some reason, the company permitted him to run his own independent company, PC International. The headquarters for his company? His Palo Alto condo. You think that would have tipped someone off that something isn’t right?
This is a very interesting story to follow for several reasons. Apparently, an IRS agent was doing some dumpster diving at the homes or business of some of the vendors for Fry’s. The agent was able to recover incriminating emails, although it is unknown as to why these emails were printed out and then thrown out without being shredded. Another reason to watch the case is to see if anyone else will be charged. If the executive from these other companies agree to testify, they will probably not be charged. A lot depends on how their attorneys handle the case.
Finally, the alleged motivation for all of this was gambling debt. While everyone knows that there are plenty of people that have gambling problems, the extent to which people will go to satisfy their urges and debts are rarely discussed. I have represented several clients who have blown $100,000′s on gambling. Of course, these clients didn’t have this money just lying around; they had to “obtain” the money from one illegal means or the other. Eventually, it comes crashing down on them and it could be really tough to help dig them out of the hole they created for themselves. Luckily, I’ve help many people do just that without them ever being arrested.
For more info, check out the detailed story here.
FBI investigating fraud at NJ schools December 23, 2008
Posted by whitecollarcrimenews in News.Tags: Bribery, Corruption, Fraud, New Jersey, News, Schools
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The FBI has opened an investigation of an unknown number of New Jersey schools after David Drill, the former president of Circle Systems Groups, a sports gear company in Pennsylvania, admitted engaging in fraud. He would submit phony quotes and give gifts to purchasing agents with the knowledge of athletic directors, equipment managers, trainers and coaches. He is cooperating in the investigation.
Although there is no indication of what schools are involved, the company appears (based on my contracts) to have had contract with many New Jersey schools including Asbury Park, Edison, Perth Amboy, Hudson Catholic, Hawthorne, East Brunswick, Rutherford, Hammonton among others.
This may become a huge story that can ensnare many people. Hopefully, anyone that gets a call or letter from the FBI calls a good attorney before doing anything. My guess it, most won’t and they will wind up giving a statement that will ensure that the will lose their job, have a criminal record and possibly go to prison.
Click here for the story.
2 more Ponzi schemes, one old, one new December 21, 2008
Posted by whitecollarcrimenews in News.Tags: Fraud, Investing, Law, News, Ponzi scheme
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First the new. This week, Milton Retana, the owner of Best Diamond Funding in the Los Angeles area was indicted for fraud and making false statements. It is alleged he stole $62 million from investors, most of whom are from the Hispanic community. Notice a patern here with all of these Ponzi schemes? In addition to using local papers and magazines, he used the Internet and weekly seminars. You can read more about him here.
Now the old. Ronald Keith Owens, 72, of Mineral Wells, Texas, who previously pleaded guilty an Information charging offenses related to an investment scheme he ran got 63 months. Owens hundres of victims lost over $2 million dollars. You can read more about his scam here.
I think I’m done making my point about the media pretending like Madoff invented the Ponzi scheme.
Blagojevich says he’ll stay put (and keep his leverage) December 20, 2008
Posted by whitecollarcrimenews in News.Tags: Blagojevich, Crime, Law, News, Politics
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In case you missed it, Blagojevich made a very short statement today. Basically he says he did nothing wrong. Normally I can’t stand when lawyers put clients in front of the media (see Drew Peterson) as it does nothing but keep the story going; but in this case, I think it makes sense.
He needs all the leverage he can get and since this involves Obama’s seat, the story is going to be hot regardless of whether he talks to the press. If this case is going to plea out, resigning could be part of the deal. If he left now, that would be off the table.
Normally, I wouldn’t mention these big national stories, but this one could get interesting. His defense seems like it will be walking the fine line of the law on conspiracy because there was no “overt act”. Watch for an indictment. if he gets indicted, the US Attorney will be sure they have a really good case. He is undefeated in these types of cases as most US Attorneys are.
NJ woman gets 10 years for mortgage fraud December 20, 2008
Posted by whitecollarcrimenews in News.Tags: Crime, Fraud, money laundering, Mortgage, Mortgage Fraud, News
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I’m sure the average citizen thinks this sentence is great. However, as a criminal defense attorney, I have a real problem with the outcome of this case.
In June, Crystal Velitschkow pleaded guilty to second degree State money laundering charges. Although the plea called for 10 years, the range is 5 to 10 years. Thus, in order for the judge to give her 10 years, he would have to find that the aggravating factors strongly outweigh the mitigating factors. Even though she had no record (I assume) and she flipped on her boyfriend, she still got the 10 years! Her attorney only asked for 7.
As always, I know next to nothing about this case, but I just can’t imagine a situation where I would have told my client to take this plea. I also don’t understand why her attorney did not ask for 3 years. While the range is 5 to 10, the just could go as low as 3 years if there were a lot of mitigating factors present. The whole situation makes no sense to me.
The State alleged that she conspired with her boyfriend Spiro Pollatos, ran numerous scams to steal more than $2.7 million. Pollatos targeted victims in the Greek community by advertising his mortgage company in a Greek newspaper. He offered to secure loans for victims and then charged clients excessive loan commissions and fees. One part of the scam involved mortgaging homes well beyond their value while another part involved him keeping money that was suppose to be used for a down payment.
Another one of his scams that he perpetrated involved the Yellow Rose Diner in Keyport, New Jersey. He found a victim to secure $500,000 in loans to invest in the diner. The sale was never completed and the victim lost all of this money.
Pollatos has also pled guilty and he is on track to get 15 years even though he was the mastermind and has a prior record. I have a client right now that was in the same type of situation Velitschkow was. Although it appears my client has a better case and involved only about one-third of the the money (1 million as opposed to almost 3), my client stands to come out far better than Velitschkow. I hope to tell you about it soon.
The story is here.
Michael Park, another alleged Ponzi scheme you probably won’t hear about December 19, 2008
Posted by whitecollarcrimenews in News.Tags: Madoff, mail fraud, Ponzi scheme, wire fraud
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I’m getting tired of hearing about Bernard “Bernie” Madoff over and over again without hearing about all of the other scams out there. First of all, the financial market is filled with scammers. Just check your spam folder for “hot stock tips”, investment schemes from the ousted king of some African country, etc. However, if you listen to the news, you’d think that Madoff invented the Ponzi scheme.
While the dollar amount and scope is huge, the scheme itself is both old and common. Just this week we had Jeffrey Southard in New Jersey arrested for allegedly running a Ponzi scheme but you probably heard nothing about that. (see below). While the reach of that story is not as broad as the Madoff scandal, we are still talking about millions.
Yesterday, Michael J. Park from Brentwood, Tennessee was accused of allegedly defrauding dozens of investors out of about $9 million. Specifically, he was charged with three counts of mail fraud and one count of wire fraud. Again, you probably won’t here much about this story as the news continues to pretend that Madoff is the only current Ponzi scheme around right now.
Click here for the story.
Jeffrey Southard arrested for being NJ’s version of Bernard Madoff December 18, 2008
Posted by whitecollarcrimenews in News.Tags: Madoff, money laundering, Ponzi scheme, theft
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Talk about timing huh? Jeffrey Southard of Pittsgrove, New Jersey arrested today for allegedly operating a ponzi scheme to that (allegedly again) stole over $1.6 million from 16 elderly investors. He is charged with first-degree money laundering, second-degree misapplication of entrusted property, second-degree theft by deception, and second-degree securities fraud. Those are some very, very heavy charges. (See why I don’t blog about national news like Madoff? We have enough going on here in New Jersey).
Although I am sure he has no prior record, it will be tough for his attorneys to come up with some good mitigating factors. The state money laundering charge does not merge and the first degree charge carries 10 to 20 years in prison. Thus, at a minimum, he is looking at 15 years in prison. However, there are several aggravating factors that will apply at sentencing if he is convicted. Besides the usual ones that apply in every case, the State will allege that he took advantage of a position of trust and that the crime involves elderly victims. That would be at least 4 aggravating factors right from the start. So, a sentence closer to 20 years would be possible if found guilty of all counts.
On the other side, it will be tough to get these victims into court. But since there are so many of them, it is likely they could get some of them to trial. As an attorney, you can’t beat up an 80 year old person on the stand either.
With any of these cases, the big upper hand the defense always has is that victims are out money. If this guy goes to prison for a long time, he would have spent a ton of money on his defense and the victims stand to get little to nothing. A good resolution would allow the victims to be made whole in exchange for a (much) lesser sentence. It seems like he has been under investigation for some time, so hopefully his attorneys have been working hard for him. They have a lot of work ahead of them.
Click here for the story.
Neil Cohen, former Assemblyman indicted for child pornography charges December 17, 2008
Posted by whitecollarcrimenews in News.Tags: computer crime, official misconduct
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As an attorney that represents a former politician on charges that are somewhat related, I’ve been watching this case with interest. Neil Cohen is a former New Jersey Assemblyman who allegedly uses his office computer to view child pornography. He also allegedly printed out at least one image which results in a second degree distribution charge. Since he did this with his work computer, he is also facing a second degree official misconduct charge. Luckily, my client alleged actions took place on his own time so he doesn’t have the OM charge.
I’m sure there were plea negotiations for the past several months which probably had a hand in delaying the indictment. It is too bad that there are the 2nd degree child porn charges because his attorney could have then heavily litigated the OM charge which has been over used in the last several years. Now, his attorney has to deal with the OM charge and the other charges. He will lose just about everything if he is convicted of all charges. The sentence would be prison, Megan’s law and parole supervision for life.
A good plea would be plea to the OM charge, and drop the other child porn charges to 4th degree possession so he can avoid parole supervision for life. The prison term would be a 5 flat but a good sentencing package could get that down to a 3 flat. He would be out within 9 months or earlier if he got ISP.
Click here for the press release and indictment.
