Former Bordentown, NJ car dealership owner arrested on bank fraud charges August 10, 2009
Posted by whitecollarcrimenews in News.Tags: bank fraud, money laundering, wire fraud
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I actually had a case like this, just on a smaller scale; but still involving a ton of money. My client ran a small dealership and became in debt to a several customers. My client called me at the first sign of trouble and as a result, law enforcement never called. We just worked everything out. In this case, it sounds like everything just went out of control.
This is one of those cases where you have to look into her personal finances and determine if he is just a bad businessman who got in over his head or a greedy scammer who thought he could just get away with it. With a nice house on the water, he certainly wasn’t living a frugal lifestyle on the surface.
TRENTON – The former operator of a Bordentown car dealership was arrested today on a federal Indictment in connection with his check-kiting scheme that resulted in losses of more than $7 million to banks, Acting U.S. Attorney Ralph J. Marra, Jr., announced.
Denis Kelliher, 39, who resides in both Toms River and Monroe Township, was arrested at his home in Toms River by Special Agents with the FBI and IRS Criminal Investigation early this morning. Kelliher is scheduled to make his first appearance in federal court and be arraigned on the 11-count Indictment today at 1:00 p.m., before U.S. District Court Chief Judge Garrett E. Brown, Jr., in the federal courthouse in Trenton.
On August 6, 2009, a federal grand jury returned the Indictment which charges Kelliher with two counts of bank fraud, one count of wire fraud, and eight counts of money laundering. ccording to the Indictment, Kelliher was the principal operator of Cartec Motors, LLC, (“Cartec”) located on Route 206 in Bordentown, which was in the business of buying and selling both new and used motor vehicles, including recreational vehicles.
The Indictment describes a scheme in which Kelliher attempted to create artificial balances in checking accounts that he controlled, including Cartec accounts at KeyBank, Commerce Bank (now known as TD Bank), 1 his personal account at 1st Constitution, by transferring monies between these accounts.
Kelliher allegedly wrote checks on accounts that he controlled, and deposited these checks into other accounts that he controlled, while knowing there were insufficient funds in the accounts against which the checks were drawn – a scheme commonly known as “check kiting.” The Indictment charges that as a result of the defendant’s check kiting activity, Cartec’s account at KeyBank was overdrawn by more than $6.9 million, and that its account at Commerce was overdrawn by more than $200,000.
In addition, the wire fraud count charges Kelliher in connection with a separate scheme in which he approached a prior Cartec customer for a $410,000 loan purportedly to be used to purchase recreational vehicles for re-sale. The Indictment alleges that Kelliher provided the former customer, identified only as “Victim-1” in the Indictment, with a personal financial statement which claimed that as of Dec. 31, 2008, Kelliher’s net worth exceeded $6.2 million. The Indictment alleges this financial statement was false and that it failed to disclose that, in September 2008, KeyBank obtained a judgment for approximately $27 million against Cartec and Kelliher individually.
Counts One and Two of the Indictment, charging Kelliher with bank fraud, each carry a maximum penalty of 30 years in prison and a fine of $1 million. Count Three, which
st Constitution Bank and Roma Bank, and charges wire fraud, carries a maximum penalty of 20 years in prison and a fine of $250,000 or twice the aggregate loss to the victims or gain to the defendant. Counts Four through Eleven, charging money laundering, each carry a maximum penalty of 10 years in prison and a fine of $250,000 or twice the aggregate loss to the victims or gain to the defendants.
Georgia attorney faces 77 count indictment August 10, 2009
Posted by whitecollarcrimenews in News.Tags: embezzlement, Fraud, mail fraud, wire fraud
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This is pretty sad. As an attorney, Eichholz should have known that he should have another attorney talk for him. Instead, he allegedly tried to cover everything up which, as always, only makes everything worse. Lesson for today, if the Department of Labor comes knocking, call an attorney right away; even if you are an attorney yourself!
SAVANNAH, GA—Edmund A. Booth, Jr., United States Attorney for the Southern District of Georgia, announced today the return of a seventy-seven count indictment by the federal grand jury against Savannah attorney Benjamin Sheftall Eichholz, age 58, charging an alleged scheme to embezzle more than $950,000 from employee pension benefit plans established to provide retirement benefits to present and former employees of the Eichholz Law Firm. The charges against Eichholz include Embezzlement from Employee Pension Benefit Plans in violation of Title 18, United States Code, Section 664; Money Laundering in violation of Title 18, United States Code, Section 1957; Mail Fraud in violation of Title 18, United States Code, Section 1341; False Statements in Documents Required to be Filed by ERISA in violation of Title 18, United States Code, Section 1027; Obstruction of Justice in violation of Title 18, United States Code, Section 1505; and False Statements in violation of Title 18, United States Code, Section 1001.
The indictment alleges that beginning in or before 2001 and continuing to in or about October 2008, through a variety of different means, Eichholz embezzled more than $950,000 from two employee pension benefit plans at the Eichholz Law Firm, and then repeatedly executed, mailed and filed false documents with the United States Department of Labor in order to both execute and conceal his embezzlement. The indictment further alleges that during an investigation by the United States Department of Labor of Eichholz and the two employee pension benefit plans at the Eichholz Law Firm, Eichholz made numerous false statements to an investigator with the Department of Labor, and committed other acts to obstruct justice, in a further effort to cover up his embezzlement from the employee pension benefit plans.
Booth noted that, if convicted of the charges, Eichholz faces the following maximum statutory penalties:
Counts One Through Thirty – Embezzlement from Employee Pension Benefit Plans
Imprisonment for not more than five (5) years;
Fine of up to $250,000 (18 U.S.C. § 3571), or both;
Not more than three (3) years supervised release (18 U.S.C. § 3583);
Counts Thirty-One Through Thirty-Four – Money Laundering
Imprisonment for not more than ten (10) years;
Fine of up to $250,000 (18 U.S.C. § 3571), or both;
Not more than 3 years supervised release (18 U.S.C. § 3583);
Counts Thirty-Five Through Forty-Four -Mail Fraud
Imprisonment for not more than twenty (20) years;
Fine of up to $250,000 (18 U.S.C. §3571);
Not more than three (3) years Supervised Release (18 U.S.C. 3583);
Counts Forty-Five Through Fifty-Four False Statements in Documents Required to be Filed by ERISA
Imprisonment for not more than five (5) years;
Fine of up to $250,000 (18 U.S.C. §3571);
Not more than three (3) years Supervised Release (18 U.S.C. 3583);
Count Fifty-Five – Obstruction of Proceedings Before Departments, Agencies, and Committees
Imprisonment for not more than five (5) years;
Fine of up to $250,000 (18 U.S.C. §3571);
Not more than three (3) years Supervised Release (18 U.S.C. 3583);
Counts Fifty-Six Through Seventy-Seven – False Statements
Imprisonment for not more than five (5) years;
Fine of up to $250,000 (18 U.S.C. §3571);
Not more than three (3) years Supervised Release (18 U.S.C. 3583);
National Prearranged Services executive indicted for fraud August 10, 2009
Posted by whitecollarcrimenews in News.Tags: Fraud, mail fraud, wire fraud
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I’d really like to know if Randall Sutton had an attorney in 2007 when regulators came calling. A good attorney should have been able to sniff out these lies and counsel him accordingly. One of the primary reasons to get an attorney at the first sign of danger is to have a mouthpiece that is detached from your personal situation. Looks like Sutton tried to do the talking for himself which really made things go from bad to worse.
ST. LOUIS, MO—Randall Sutton was indicted on mail fraud, wire fraud and money laundering charges involving a ten-year multi- million dollar fraud scheme involving the sale of pre-paid funeral services, Acting United States Attorney Michael W. Reap announced today.
Randall Sutton was the Chief Financial Officer, Director, and President of National Prearranged Services, Inc., headquartered in Clayton, MO, an entity that sold prearranged funeral services in 19 states. Customers either purchased prearranged funeral services directly from National Prearranged Services, or from funeral homes who in turn purchased these services from National Prearranged Services. National Prearranged Services purchased life insurance policies from Memorial Service Life Insurance Company and Lincoln Memorial Life Insurance Company of Austin, Texas in order to fund the funerals when customers died. Sutton was Director of both of those companies.
According to the indictment, beginning in 1998 and continuing until 2008, Sutton and others, defrauded National Prearranged Services’ customers, states’ guaranty funds, and funeral homes doing business with National Prearranged Services.
The purchase of prearranged funeral services involves a pre-payment of a substantial sum by the customer, in exchange for the promise that funeral services will be provided at no further expense upon the customer’s death. In the ordinary course of business, the seller of prearranged funeral services uses the customer’s pre-paid funds to purchase a life insurance policy, holds the funds in trust, or otherwise makes reasonable use of the funds, to ensure that funds are available to provide the funeral services upon the customer’s death. The customer reasonably expects that the business will operate in such a way so that the pre-purchased services will be available upon death.
The indictment alleges that rather than making reasonable use of the assets of their business, Randall Sutton and others used a series of deceptions to extract funds from National Prearranged Services and related entities such as Lincoln Memorial Life. As a result of this fraudulent scheme, National Prearranged Services and Lincoln Memorial Life were unable to meet their mounting obligations and collapsed in 2008. Sutton and others at National Prearranged Services led funeral homes and customers to believe funds paid for prearranged funeral services would be held in trust or used to purchase life insurance policies in order to ensure that money would be available to pay for customers’ funeral services when needed. Funeral homes and customers who paid the entire cost of pre-need funerals up-front were given “Paid in Full” certificates. Customers were not informed that their purchase of prepaid funerals involved risk. They also failed to disclose to funeral homes and custom
For example, at the time they purchased prearranged funeral services, many customers completed applications for life insurance policies indicating they were making payment in full for insurance policies that would fund their funerals. Employees at National Prearranged Services, with the knowledge and under the direction of Sutton, simply whited-out the indications that payments had been made in full and altered the documents to make it appear as though the customers had made partial payments. The altered documents were forwarded to life insurance companies such as Lincoln Memorial Life, who adopted the policies and assumed the obligation to pay a lump sum at the time of the customer’s death. National Prearranged Services, meanwhile, diverted the difference between the true full payments and the falsified partial payments from the customer’s insurance policy, thus retaining the vast majority of the customer’s lump-sum payment while transferring the obligation of future pay.
As another example, National Prearranged Services’ employees used white-out or cross-outs to change the names of beneficiaries on insurance applications in order to extract money. Customers completed applications for life insurance policies naming themselves or their funeral homes as a beneficiary. With Sutton’s knowledge, employees at National Prearranged Services simply whited-out or crossed-out other beneficiaries named in the applications and made National Prearranged Services the sole beneficiary. Once National Prearranged Services was listed as the sole beneficiary on policies, it was able to extract money from customers’ policies in at least two separate ways:
First, customers’ insurance policies were pledged as collateral for loans to National Prearranged Services without the customers’ knowledge. Typically, the loans were made by insurance companies within the same family of corporate entities, such as Lincoln Memorial Life, allowing Sutton and others to extract funds from these insurance entities under false premises. In total, as alleged in the indictment, National Prearranged Services received in excess of $65 million from such policy loans. Often, the proceeds of these policy loans were immediately turned around and used to pay outstanding premiums due from other customers.
Second, once it had altered applications to name itself as sole beneficiary, National Prearranged Services then converted customers’ whole life insurance policies to monthly renewable term polices, extracting from the insurance company the difference between the cash surrender value of the whole life policy and the first monthly premium of the renewable term policy. By doing so, National Prearranged Services extracted more than $40 million from the customers’ policies at Lincoln Memorial Life without their knowledge.
As another example, National Prearranged Services failed to invest the funds it received from roll-over accounts as promised. Instead, they often purchased large blocks of prearranged funeral contracts from funeral homes that had sold prearranged funeral services in the past. These block purchases were referred to as “roll-overs” because the prearranged funeral contracts were rolled-over from the originating funeral homes to National Prearranged Services. National Prearranged Services promised to invest 80 percent of the underlying customers’ funds in safe investments for 30 days, and then to use the money to purchase life insurance. Instead, National Prearranged Services failed to invest the money for 30 days as promised, and after 30 days failed to invest the money in life insurance policies as promised. Instead, the roll-over funds were used for other purposes, only to be replaced with “debentures” or promises to repay the funds. Sutton and others then caused false mo
The indictment states that Randall Sutton and others at National Prearranged Services agreed to manage a $1.7 million custody account for the Muehlebach Funeral Home located in Kansas City, MO. The Muehlebach Funeral Home needed this account to pay for its customers’ funerals when they died. National Prearranged Services invested this money in speculative futures contracts, lost most of the money, and then sent monthly statements to the Muehlebach Funeral Home showing false balances in its “Custody Account.”
As another example, Randall Sutton and others at National Prearranged Services caused over $50 million to be taken from the Company in exchange for promissory notes from related individuals or companies. Unlike legitimate promissory notes, these notes were often backdated, sometimes interest was paid back to National Prearranged Services with money that originated from National Prearranged Services itself in “round trip” transactions, and promissory notes were often replaced with new promissory notes when they came due. Over $10 million of these funds were funneled through various entities and used to purchase a company known as Professional Liability Insurance Company of America which is owned by RBT Trust II.
During 2007, regulators and funeral homes from various states began to increase scrutiny of National Prearranged Services’ practices. In response, Randall Sutton and others gave false information to state regulators and funeral homes. For example, regulators and concerned funeral homes were told falsely that “policy loans” were not taken by National Prearranged Services, or that policy loans had been repaid, or that senior management was not aware of the policy loans. As another example, regulators and concerned funeral homes were told falsely that senior management was not aware of the practice of whiting out and altering customers’ life insurance applications, or they were told falsely that National Prearranged Services was permitted to do so based on language in the applications.
Finally, the indictment alleges that Randall Sutton held himself out to be licensed by the Missouri Department of Insurance. Sutton did in fact hold a Producer License issued by the Missouri Department of Insurance and this license was renewable every two years upon the successful completion of a qualifying exam. In truth, Sutton had his secretary study for and take the qualifying exam on-line rather than taking it himself.
“Money laundering is not a victimless crime as innocent people are often “duped” by various schemes” said C. Steve Howard, Acting Special Agent in Charge of IRS Criminal Investigation. “We will continue to work with our law enforcement partners to financially disrupt criminal organizations that commit crimes against our society and our economy.”
“Fraud schemes have a pronounced economic impact that eventually increase costs for all of us,” said John V. Gillies, Special Agent in Charge of the FBI in St. Louis. “Investigators work hard to unravel this complex type of corporate fraud. The FBI and our partners are committed to protecting the public by eliminating dishonest and unscrupulous greed.”
Sutton, 63, Chesterfield, MO, was indicted by a federal grand jury on six felony counts of mail fraud, one felony count of money laundering, and two felony counts of wire fraud. He is expected to appear in federal court this morning, in St. Louis.
If convicted, each count of mail and wire fraud carries a maximum penalty of 20 years in prison and/or fines up to $250,000; money laundering carries a maximum penalty of 10 years in prison and/or fines up to $250,000. Restitution is mandatory.
Operation Silent Shield defendant gets three years August 9, 2009
Posted by whitecollarcrimenews in News.Tags: child pornography
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Most defendants charged with distribution of child pornography get three years in prison if they have no prior record. Defense attorneys should take notice as it shouldn’t take much work to get such a plea. Complicating these cases is that almost all defendants confess before they call an attorney which makes a defense very difficult.
For those few that do no confess, a three flat may not be all that it is cracked up to be. A good attorney should be able to secure a five flat if the defendant is convicted at trial. However, even a seven flat is not that big of a difference from a three flat. A few extra months in prison may not be worth throwing away all of your rights and your life. Without a confession, these cases are ripe for a good defense attorney to have fun with. However, the chances of a defendant who has not confessed finding a good defense attorney and having the money to pay him or her is a rather rare occurrence. As a result, these pleas will just keep coming without the State’s case being tested.
As a side note, the DAG’s that handle these cases are some of the nicest and most professional prosecutors you could ever hope to meet.
TRENTON – Attorney General Anne Milgram announced that a Passaic County man was sentenced to state prison today after pleading guilty to distributing child pornography on the Internet. The defendant was among more than three dozen people arrested in October 2007 as part of “Operation Silent Shield,” an investigation that targeted offenders who distributed known images and videos of child pornography via the Internet.
According to Criminal Justice Director Deborah L. Gramiccioni, Kevin Scully, 21, of North Haledon, was ordered by Superior Court Judge Joseph A. Portelli in Passaic County to serve three years in state prison. Scully was also ordered to register under Megan’s Law. The sentence was based on Scully’s March 16 guilty plea to endangering the welfare of a minor (distribution of child pornography).
In pleading guilty before Superior Court Judge Philip H. Mizzone, Jr. in Passaic County, Scully admitted that between July 24 and Sept. 24, 2007, he knowingly used Internet file sharing software to make multiple videos and photographs containing child pornography readily available for any other user to see and/or download from a designated “shared folder” on his computer. On July 24, 2007, one of those videos was actually downloaded by an undercover detective from the Internet Crimes Against Children Task Force of the New Jersey State Police.
On Sept. 24, 2007, members of the New Jersey State Police executed a search warrant at Scully’s home. The search revealed at least 26 movie clips containing child pornography.
The Digital Technology Investigation Unit of the New Jersey State Police coordinated the investigation. Deputy Attorney General Lee D. Schaer prosecuted the case and represented the Division of Criminal Justice at the guilty plea hearing.
Jersey City Sewer Permit Supervisor Guilty of Attempted Extortion August 9, 2009
Posted by whitecollarcrimenews in News.Tags: Corruption
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Angela Bellizzi, the supervisor of permits and connection fees for the Jersey City Municipal Utilities Authority pleaded guilty this week to attempted extortion. On the surface, this seems like a pretty good deal considering the public’s attitude towards these crimes as well as the US Attorney’s Office win streak. However, I do hope that an entrapment defense was seriously considered here.
When a case like this comes in the door, one of the first things I want to know is how many people does this involve? Is my client accused of taking payments from many people or just one person? Is that one person a cooperating witness (CW)? If it is just the CW, then an entrapment defense really needs to be examined. There is a lot to explain here so that’ll require a separate blog post.
NEWARK—The supervisor of permits and connection fees for the Jersey City Municipal Utilities Authority pleaded guilty today to extorting corrupt cash payments from contractors, Acting U.S. Attorney Ralph J. Marra, Jr. announced.
Angela Bellizzi, 53, of South River, pleaded guilty before U.S. District Judge Susan D. Wigenton to a one-count criminal Information charging attempted extortion. Bellizzi is free on $75,000 bond pending her sentencing, which is scheduled for Nov. 12.
At her plea hearing, Bellizzi admitted accepting cash payments in exchange for her agreement to falsify and/or approve fraudulent sewer permit applications submitted by a government cooperating witness. The fraudulent permit applications for various properties made it appear that sewer connections would be for two-bedroom residences, as opposed to three-bedroom residences, which resulted in lower permit application fees.
Bellizzi admitted that she extorted corrupt payments in two ways: She agreed to falsify permit applications in return for payments, or instructed the contractor on how to falsify permit applications that would be approved by her in return for payments.
Bellizzi admitted that she told a cooperating witness who owned and/or renovated residential properties that, by fraudulently indicating on sewer connection application that it was for a two-bedroom versus three-bedroom residence, the cooperating witness was saving between $1,300 and $1,500.
Bellizzi admitted that on several occasions she took corrupt cash payments of between $200 and $500 from the cooperating witness for fraudulent applications. She also admitted that she told the cooperating witness that she normally charged other contractors $300 for similar fraudulently prepared applications.
According to a stipulation in Bellizzi’s plea agreement, the value of the benefit received by the cooperating witness and others who acted similarly with Belizzi exceeded $70,000 but was less than $120,000. She agreed that the corrupt contact occurred between at least January 2005 and June 2008. The investigation is continuing.
“This is just more of the same of what we’ve seen too often in Jersey City and elsewhere in New Jersey – public officials and employees in a position of authority abusing that authority to line their pockets,” Marra said. “It’s a disgrace and subverts even routine functions of government.”
“Today’s guilty plea was not connected to or influenced by the recent corruption takedown of July 23rd,” noted Weysan Dun, FBI Special Agent in Charge in Newark.
“This was a separate investigation conducted and prosecuted on its own merits. However, we take this opportunity to drive home the message that bribery and corruption should not be tolerated and we call on the citizens of New Jersey to take a stand as they have done recently. We thank the Special Investigative Unit of the Jersey City Police Department for their assistance in this investigation.”
The charge to which Bellizzi pleaded guilty carries a maximum statutory penalty of 20 years in prison and a $250,000 fine. However, in determining an actual sentence, Judge Wigenton will consult the advisory U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant’s criminal history, if any, and other factors, including acceptance of responsibility.
Under the advisory U.S. Sentencing Guidelines, Bellizzi faces a probable sentencing range of between 37 and 46 months in federal prison. The judge, however, has discretion and is not bound by those guidelines in determining a sentence, which could fall within or outside of that range.
Foreclosure fraud: the natural next step in mortgage fraud August 9, 2009
Posted by whitecollarcrimenews in News.Tags: Mortgage Fraud
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Mortgage scams from 2005 to 2008 are just being uncovered today. With all of the foreclosures going on last year and this year, I am sure we will see a wave of foreclosure fraud arrests in the next several years. However, it seems like Garth Celestine of 535 Dean Street, Apartment 515, Brooklyn, New York and Phil Simon of Brooklyn – both better known collectively as “Home Savers Consulting Corporation” were ahead of the game.
NEWARK, NJ—It’s the type of story that is becoming increasingly more common: FBI Special Agent In Charge Weysan Dun announced today the arrests of GARTH CELESTINE, age 44, of 535 Dean Street, Apartment 515, Brooklyn, New York; and PHIL A. SIMON, age, 34, of Brooklyn – both better known collectively as “Home Savers Consulting Corporation”. Both were arrested this morning at their residences without incident and charged with attempt and conspiracy to commit wire fraud in connection with a home foreclosure scheme.
Celestine and Simon owned and operated Home Savers, which held itself out as a foreclosure rescue company, at 946 Fulton Street, Brooklyn, New York and 350 North Main Street, Freeport, New York. The company conducted business in both New York and New Jersey. According to the complaint, Celestine and Simon allegedly conspired with each other to defraud both homeowners facing foreclosure and mortgage lenders by making materially false representations and promises and causing wire transfers to perpetuate the scheme. A key aspect of the scheme was the targeted victims: homeowners with substantial equity in their homes who were facing foreclosure because of an inability to make the monthly payments. The criminal complaint specifically alleges five incidents of fraudulent mortgage loan applications generated by the defendants in August and September of 2005 for properties located in Bergenfield, Paterson and Elizabeth, New Jersey. The defendants are suspected of additional incidents in New York, but have not been charged in those matters.
Based on the complaint, there were three separate groups of victims. First, there were the defrauded homeowners. Celestine and Simon would promise to help the homeowners keep their homes by avoiding foreclosure and repairing their damaged credit. The homeowners would be required to allow the title of the homes to be put in the names of “straw buyers” (third party purchasers) for one year –all with the promise of obtaining more favorable mortgages on those homes and having the title returned to them at the end of the one year period. Furthermore, Celestine and Simon allegedly told the homeowners that any equity withdrawn from their homes would be kept in escrow and used to pay the mortgages and expenses on those homes, as well as to repair the original owners’ credit.
The second victim-group consisted of the straw-buyers. Celestine and Simon allegedly recruited individuals with good credit scores to act as “buyers” of the homes facing foreclosure. This was accomplished by misrepresenting to the straw-buyers that they were helping the true owners to “save” their homes. The straw-buyers were also paid a fee up to $10,000 per property in exchange for their participation in the transactions.
The third group of victims were the mortgage lenders. Based on the criminal complaint, Celestine and Simon submitted and caused to be submitted fraudulent loan applications to lenders in the straw-buyers’ names. The applications contained false personal and financial information about the straw-buyers, most importantly their income, assets, and debt. The combination of the high equity properties, the good credit ratings of the straw-buyers, the false information in the loan applications, and the promise that the straw-buyers intended to live in the homes in question all unfairly influenced the mortgage lenders into granting the mortgages. Celestine and Simon also allegedly applied to different lenders for multiple mortgages on the same properties at the same time to extract the maximum available equity from each property.
According to the complaint, Celestine and Simon attended each loan closing and controlled the payout of the loan proceeds. Once all the homeowner’s debts and other fees were paid off, the remainder of the loan proceeds was deposited in one or more of three different company accounts owned and controlled by Celestine and Simon. However, Celestine and Simon kept every penny for themselves. Furthermore, the complaint charges that Celestine and Simon eventually failed to make the mortgage payments in nearly every case and caused the loans to default. In the end, Celestine and Simon caused lenders to fund more than $10 million worth of fraudulent loans and stole $1.5 million worth of equity from the properties.
After reading the details of this scheme, one might assume Celestine and Simon were experts in the mortgage business. In fact, Simon currently cuts hair at his salon, “House of Hair” located at 615 Washington Avenue in Brooklyn, New York. This is an example as to why the public should research the credentials of anyone with whom they intend to do business in the mortgage and real estate industry.
Celestine and Simon are scheduled for an initial appearance today before the Honorable Esther Salas, United States Magistrate. If convicted, the defendants could face a maximum sentence of up to thirty years in prison, a $1,000,000 fine, or both. A criminal complaint is merely an accusation. Despite this accusation, every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
Atlantic City attorney and business partner indicted for official misconduct August 5, 2009
Posted by whitecollarcrimenews in News.Tags: official misconduct
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This is an interesting case. On one hand, these guys had the inside track and made a profit, but on the other hand, it seems like everything was out in the open and obviously traceable. Thus, I fail to see a real criminal intent here. I would have to see some evidence, but this might be a good case for trial. There is no fraud alleged from what I can see. It seems more like a civil case to me and the mandatory stip with the official misconduct charge for these guys seems way to harsh.
I also have to question the case against the business partner. I think they will have to show that he had some criminal knowledge here which may be very hard for them to do.
TRENTON – Attorney General Anne Milgram today announced that a former attorney for Atlantic City has been indicted on official misconduct charges for assigning city tax sale certificates to his business partner, who used them to acquire four undeveloped properties for their real estate investment firm. The business partner was also indicted.
According to Director Deborah L. Gramiccioni, the Division of Criminal Justice obtained a state grand jury indictment charging Joseph R. Dougherty, 45, of Ventnor, a former deputy solicitor and counsel for Atlantic City, and his business partner, Brian P. Curran, 49, of Ventnor, with three counts of official misconduct and one count of misconduct by a corporate official, all second-degree crimes. The indictment resulted from an investigation by the New Jersey State Police Official Corruption Bureau and the Division of Criminal Justice Corruption Bureau. The indictment was voted on July 29 but handed up in court today.
“This is a classic case of corrupt self-dealing,” said Attorney General Milgram. “Dougherty acted in his official capacity, despite his clear duty to refrain from being involved in the transactions, to ensure that properties that were subject to city tax liens were received by his business partner so they could both profit through their real estate firm. The defendants flagrantly violated state law, which strictly prohibits public servants from taking official action in matters where they have a personal or financial interest.”
Tax sale certificates are sold by municipalities. They enable the purchaser to foreclose and take title to a property on which the city holds liens for unpaid taxes. In some cases, they are sold for the full amount of the tax liens; in others, they are sold to the highest bidder who meets a minimum bid. The municipality thereby loses any claim to past unpaid taxes.
In July 1999, Dougherty and Curran formed Bryce Madison LLC, a real estate investment firm. Beginning in June 1999 and continuing through June 2002, Dougherty was employed as deputy city solicitor in the Atlantic City Solicitor’s Office. From 2002 through 2006, Dougherty served as outside counsel for Atlantic City, providing legal services on real estate and tax matters. In both capacities, Dougherty was responsible for tax sale matters for the city, including handling the legal work involved in approving and assigning tax sale certificates.
The indictment alleges that Dougherty violated his official duties by participating, first as deputy solicitor and later as counsel for Atlantic City, in the sale of city tax sale certificates to his business partner, despite the clear conflict of interest presented. Dougherty approved or prepared resolutions, which were approved by the city council, authorizing the sale of four city tax sale certificates that were purchased by Curran. Dougherty also prepared the legal documents that assigned the four certificates to Curran or, in one instance, to their real estate investment firm, Bryce Madison.
The following four properties, all vacant lots, were acquired by Curran or Bryce Madison:
18 North Connecticut Avenue (2 adjacent properties) – Curran paid $4,000 for the two tax sale certificates for these lots in January 2002. As deputy solicitor, Dougherty approved the form and legality of the resolution of the city council authorizing the auction of the certificates. He also prepared the legal documents assigning them to Curran. Curran obtained title to the properties through foreclosure in 2004. Bryce Madison received more than $45,000 in lease payments on the two properties between 2006 and 2008 from the Atlantic City Special Improvement District, which had a warehouse for its landscaping unit adjacent to the properties. In 2008, Bryce Madison sold both lots to a private developer for $110,000. Curran subsequently issued checks payable to himself and Dougherty from the firm’s bank account totaling $89,700.
258 North Nevada Avenue – Curran paid $2,018 for the tax certificate for this property in December 2005. As counsel for the city, Dougherty prepared the resolution of city council authorizing sale of the certificate. He also prepared the assignment that transferred the certificate to Curran. In 2008, Curran obtained title to the property through foreclosure and sold it for $20,000. The sale proceeds were deposited into a bank account of Bryce Madison, and Curran subsequently issued checks payable to himself and Dougherty totaling $17,600.
21 North New Jersey Avenue – Curran paid $10,797 for the tax certificate for this property, which was assigned to Bryce Madison in December 2006. As counsel for the city, Dougherty prepared the resolution of city council authorizing sale of the certificate. He also prepared the assignment that transferred the certificate to Bryce Madison. Bryce Madison obtained title to the property through foreclosure in July 2008. The property is currently under an agreement of sale to a private developer.
“The transactions chronicled by our detectives and attorneys in the State Police and Division of Criminal Justice present what we allege in the indictment to be clear cases of official misconduct,” said Director Gramiccioni. “Dougherty was there at the start, signing or initialing each of the tax sale certificates in his official capacity, and he was there at the end as he and Curran sold the properties through their real estate firm and reaped a profit.”
The investigation was conducted for the State Police Official Corruption Bureau South by Detective John Scalabrini, Detective Anthony Carugno and Lt. Robert Shulte. It was conducted and coordinated for the Division of Criminal Justice Corruption Bureau by Deputy Attorney General Peter Lee, Deputy Attorney General Robert Czepiel Jr., Detective John Sheeran, Detective Edward Augustyn, Investigator Wayne Cummings, Special Investigator Maureen Graham, Analyst Alison Callery, and Jenny Hsu. Deputy Attorneys General Lee and Czepiel presented the case to the grand jury.
New arrests in 2007 election fraud case shows need to lawyer up early August 4, 2009
Posted by whitecollarcrimenews in News.Tags: Corruption, Fraud
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As I have said in posts about other news stories, large and complex investigations have a way of morphing as time goes by and other defendants flip on existing and unindicted co-defendants. Those lucky enough to escape the initial arrests should not think that they are out of the woods although I am sure that most will convince themselves that they are.
I have had great success when clients call me at the first sign of danger. Of course, you cannot stop others from flipping on your client and thus, there may be little you can do to prevent an indictment in some cases. However, I am a big proponent of starting trial prep right away as you can never have enough time to prepare for trial, gather information and minimize damage. Hopefully, these three people already had attorneys and are not surprised by this week’s events.
Press release:
TRENTON – Attorney General Anne Milgram announced that three more people were indicted today for election fraud in connection with absentee ballots they collected and submitted as workers for the 2007 campaign of Teresa Ruiz for the New Jersey Senate in the 29th District. Another campaign worker for Ruiz, Antonio Santana, was previously indicted on March 23 on charges he fraudulently changed votes on absentee ballots during the election.
According to Criminal Justice Director Deborah L. Gramiccioni, a state grand jury returned two indictments today charging three individuals in the ongoing investigation by the Division of Criminal Justice Corruption Bureau and the Essex County Prosecutor’s Office.
One indictment charges Gianine Narvaez, 36, of Belleville, a data processing technician for the Essex County Commissioner of Registration and Superintendent of Elections, with official misconduct (2nd degree), election fraud (2nd degree), absentee ballot fraud (3rd degree), tampering with public records or information (3rd degree), and forgery (4th degree).
The second indictment charges Angel Colon, 46, of Newark, an employee of the City of Newark Office of Affirmative Action, and Colon’s fiancée, Sorinette Rosario, 31, of Belleville, an employee of the Newark Welfare Department, with election fraud (2nd degree), conspiracy to commit election fraud (2nd degree), absentee ballot fraud (3rd degree), conspiracy to commit absentee ballot fraud (3rd degree), tampering with public records or information (3rd degree), and forgery (4th degree).
According to Director Gramiccioni, Narvaez, Colon and Rosario are charged with tampering with documentation for messenger ballots, which are absentee ballots intended for use by homebound voters. They are charged with fraudulently submitting such ballots as votes in the Nov. 6, 2007 general election.
“We charge that these campaign workers fraudulently submitted absentee ballots on behalf of residents who never received the ballots or had an opportunity to cast their votes,” said Attorney General Milgram. “Election fraud is a serious crime, particularly when voters are disenfranchised.”
Messenger ballots are for use only by those who are homebound due to illness, infirmity or disability. Such persons can complete an application designating a messenger who is a family member or a registered voter in the county. The messenger is thereby authorized to obtain an absentee ballot from the county board of elections, take it to the voter, and return a completed ballot to the county board.
Narvaez, Colon and Rosario allegedly solicited applications for messenger ballots from individuals not qualified to receive them and fraudulently designated themselves as the authorized messengers. They allegedly obtained messenger ballots from the county board of elections, and submitted them to the board of elections as votes on behalf of voters who, in fact, never received or voted the ballots.
“This alleged voter exploitation was brought to our office’s attention by the Essex County Superintendent of Elections,” said Essex County Prosecutor Paula Dow. “Voting is a fundamental privilege that all American citizens have a right to exercise without any form of meddling. The Essex County Prosecutor’s Office will not tolerate any attempt to manipulate elections of any kind.”
“We are continuing our investigation into allegations of fraud in the November 2007 general election in the 29th District,” said Director Gramiccioni. “The Division of Criminal Justice and Essex County Prosecutor’s Office are pursuing all leads concerning tampering with absentee ballots.”
Second-degree crimes carry a maximum sentence of 10 years in prison and a $150,000 fine, while third-degree crimes carry a maximum sentence of five years in prison and a $15,000 fine. Fourth-degree crimes carry a maximum sentence of 18 months in prison and a $10,000 fine.
The official misconduct charge against Narvaez carries a mandatory minimum sentence of five years in prison without parole. The mandatory minimum was established under a law signed by Governor Jon S. Corzine in March 2007 that significantly enhances the punishment of government officials who are convicted of abusing their office and violating the public trust.
The charges remain pending against, Antonio Santana, 58, of Newark. That indictment alleges that Santana changed the votes on three absentee ballots that he collected from members of one family in October 2007. The family members filled in the circles on the ballots in pencil to vote for the three independent candidates. They gave the sealed ballots to Santana, who allegedly changed the votes on each of the ballots to the three Democratic candidates.
NJ man allegedly steals domain name and sells it to NBA player August 3, 2009
Posted by whitecollarcrimenews in News.Tags: computer crime, New Jersey, News
4 comments
Daniel Goncalves of Union Township, New Jersey is charged with hacking into the online account belonging to owner of the P2P.com domain name. He allegedly then shifted ownership to himself and resold the Web site address on eBay to Los Angeles Clippers power forward Mark Madsen. The price was allegedly $100,000.
He faces felony charges of theft by unlawful taking or deception, identity theft, and computer theft. Even if he doesn’t have a record, prison time is mandatory if convicted. The initial offer will be either a 5 or 3 flat.
Hopefully, he gets a good attorney that actually knows how to turn on a computer. It sounds like a very interesting case with some unique defense issues. Story is here.
How to deal with a demand for inspection August 3, 2009
Posted by whitecollarcrimenews in Articles.add a comment
As a white collar crime defense attorney in New Jersey, you will eventually encounter an administrative demand to inspect if you represent enough clients in the medical field. Since this isn’t exactly a criminal defense issue, most attorneys may be confused by this demand and how to handle it. Hopefully, this article can provide a little guidance.
A demand for inspection, usually issued by the Department of Consumer Affairs is essentially a request to come into a place of business for the purposes of gathering evidence that the person has violated a regulation. While the agents for the Department cannot force their way in, the person must comply or face various sanctions. The key case that fully addresses this issue is Medical Soc’y v. Robins, 321 N.J. Super. 586 (App.Div. 1999).
The first question that any attorney handling this issue may have is “is this even legal and if so, why?”. You have to understand that different rules apply to highly regulated industries. In Robins the Appellate Division found that there can be no doubt that the medical profession is highly regulated. This is because, licensure to practice medicine is required, it follows extensive education, and is subject to the rules and regulations of the Board of Medical Examiners. Thus, an administrative search as part of a comprehensive statutory scheme to assure compliance with specific regulations governing the profession is authorized by New York v. Burger, 482 U.S. 691 (1987). In Burger, the Court held that there is a significantly reduced expectation of privacy in a closely regulated business.
The good news here is that the Department of Consumer Affairs cannot go on a witch hunt. In order for their demand for inspection to be valid there has to be sufficient evidence before the Board of a violation of a regulation or there has to be a factual basis in the public interest to inquire whether any such violation may exist. In addition, its findings have to be sufficiently made of record and the administrative demand must be sufficiently tailored in terms of time, place and scope.
I know your primary concern is keeping your client out of prison, but you have to realize that this demand for inspection will probably lead to criminal charges at some point. Law enforcement should not be involved in a demand for inspection. Instead, the Appellate Division stated that the Division of Consumer Affairs or Attorney General enforcement officers should conduct the inspection. While the Appellate Division views this warrantless search to be conducted to assure compliance of laws and regulations and not to gather evidence of crime they also recognize that the discovery of evidence of crime during an otherwise valid administrative inspection need not necessarily be suppressed. This is incredibly important since the Attorney General will likely be the same entity that may eventually use evidence of criminal activity to prosecute your client.
Maybe I’m cynical but I think you have to assume that criminal charges are coming and that the Attorney General’s office is using the administrative process to get evidence on your client. Even if you eventually have to give in to the demand, you at least have to try to bring out as much information in the process. This will allow you to prepare for trial before any criminal charges are even filed.
In order to challenge the demand, you should first file with the administrative agency, in this case, the Board of Licensing and not with your local superior court. Your challenge will be primarily directed to making sure that they have at least some information of wrong doing on behalf of your client and that this is not a witch hunt. You also want to make sure that the inspection is limited as discussed above. Your challenge should also be made before the date for the demand for inspection. Of course, this is impossible where there is no advance notice. While I see no law on the issue, I cannot see how any sanctions would be lawful if your client was not given any opportunity to challenge it before the scheduled inspection. If you are not satisfied with the result, you have to file an appeal with the Appellate Division.
As I indicated before, you must assume that your client will be facing criminal charges at some point. At the end of this process, you should have gathered enough information to figure out where this case is going. Thus, you must start to conduct your own investigation in order to nail down the statements of potential witnesses and to photocopy documents that may eventually be taken during a search warrant. Early preparation will always pay dividends later on in the case.
