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Former Construction Company Dispatcher Charged with Accepting Kickbacks June 14, 2010

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HULON EUGENE PARSONS, a/k/a GENE PARSONS, JR., a resident of Hammond, Louisiana, was charged today in a one count bill of information with illegally accepting kickbacks from a subcontractor in connection with a federal contract.

According to court documents, the defendant was employed by a construction company headquartered in New Orleans which had agreed to perform asphalt work on the Naval Air Station Joint Reserve Base Belle Chasse, located in Belle Chasse, Louisiana. That company held a subcontract under a prime contract awarded by Naval Facilities Engineering Command Southeast, an agency of the Department of the Navy. As a trucking dispatcher for his employer, PARSONS’ job duties included deciding which trucking companies would be awarded trucking business in connection with various public works projects, specifically asphalt road projects, of his employer. A cooperating individual reported to law enforcement that he owned a trucking business and he had made cash payments to PARSONS over at least 10 years to ensure that he would continue to be awarded trucking business. When the individual ceased making such payments, the frequency and amount of trucking work awarded to that individual greatly decreased.

Court documents reflect that the individual, using money furnished to him by law enforcement for that purpose, then offered cash payments to PARSONS to obtain and reward favorable treatment in connection with trucking work awarded to him on the Naval Air Station Joint Reserve Base Belle Chasse subcontract. The bill of information charges that PARSONS accepted a total of $900 in cash payments on three occasions from September through November, 2009.

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Will Brian Stack get caught up in Operation Bid Rig III? August 2, 2009

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Yesterday, the Record reportedthat a donation of $4,000 from BH Property Management shows up on a 2007 campaign finance report for Union City First, a political action committee linked to Union City Mayor Brian Stack.  The company has been identified in a federal complaint as “an FBI undercover company” that was used to facilitate money laundering.  Of course, this doesn’t mean that every dollar the company gave was used or intended to be used to facilitate criminal activity. 

However, this story comes a day after the Star Ledger reportedthat Solomon Dwek, the cooperating witness who was at the heart of the 44 arrests of Operation Bid Rig III which ensnared three mayors, two state assemblymen and five rabbis.    Dwek reportedly gave $2,600 to Stack as well as $3,500 to U.S. Sen. Robert Menendez.  Menendez claimed to not know who Dwek was.

It seems like Stack has either been contacted by law enforcement or had some indication that he would be looked at as he has hired attorney Dennis McAlevy.  McAlevy has also represented former Hoboken Mayor Anthony J. Russo who pled guilty  to extorting $317,220 from accounting firm in exchange for contracts.  Russo was sentenced to 30 months in prison.

I’m sure that as OBR3 moves on, some of the 44 people will provide evidence against others who have not been arrested yet.  Whether or not Stack is one of them remains to be seen.

Contractor arrested for theft by deception August 1, 2009

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Robert D. Hamway of Toms River, who is not a licensed contractor, was arrested and charged with theft by deception after allegedly taking money to fix a roof but never performing the work. 

These cases are common but in my opinion, most of them are not criminal cases.  Instead, they are civil cases where the customer does not want to go to civil court for a number of reasons.  While I have little to no facts here, my experience tells me that the customer got fed up at some point and asked for his money back.  However, Hamway may have dodged phone calls or told the customer that the money was on the way, when it never really was.  It is that conduct that occurs after the transaction that tends to push this into criminal court.

Story is here.

Utah law firm indicted for H-2B visa program fraud August 1, 2009

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James Hector Alcala, his law firm the Alcala law firm, seven current or former employees and a property management company have all been indicted for an alleged immigration fraud scheme.  Authorities allege that the firm lied on applications to help 10 companies in Salt Lake, Utah and Davis counties get work visas for ineligible foreign workers. 

The H-2B visa program allows employers to petition for permits that allow foreign nationals to work temporarily in the United States. More than 700 petitions filed by the Salt Lake City firm led to the issuance of more than 5,000 work visas. The majority of those were fraudulent.

This is the type of case where the number of people arrested can increase exponentially if authorities find evidence that the companies working with the firm knew that the applications were fraudulent.  I’m sure at least some of the companies know, but proving it is another matter.  These other companies need attorneys right away to field inquiries from authorities. 

While it looks bad for Acala, I’m questioning the case against the other employees.  Authorities in these cases tend to believe that everyone is in on it.  However, most employees are “worker bees” that do what they are told without being told what is really going on.  With the benefit of the whole picture in front of them, authorities find it impossible to believe that everyone else wasn’t in on it.  I’ve seen this many times. 

Thus, attorneys for these other employees need to really look at the case from a number of angles to see if there is any real criminal exposure for their clients.  Law enforcement tends to exert a lot of pressure on attorneys in an effort to weaken their opinion of the case which in turn, will change the advice they give to their clients.  In these situations, attorneys need to counter this pressure and work to convince law enforcement that they have no case.  I’ve done this several times with great results.

Story is here.

11 week bribery trial ends in 5 hours July 30, 2009

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My heart goes out to Robin Lord.  She’s a great attorney.  After 11 long weeks of trial, her client, John Fiore was convicted  after just 5 hours of deliberations.  In my opinion, that tells me that it wasn’t even close which just has to kill you as an attorney.  There is no way that a jury can give serious consideration to 11 weeks of testimony in just 5 hours.  While I did not follow the trial, those two numbers alone tell me that most of the jury probably convicted him a few weeks ago.  Thus, this may have been a situation where, for whatever reason, there is little an attorney can do and no one could have done better. 

Press release:

TRENTON – Attorney General Anne Milgram and Criminal Justice Director Deborah L. Gramiccioni announced that John Fiore, former executive vice president of the East Windsor Police Athletic League, was convicted at trial today of official misconduct and bribery for steering a PAL construction contract to a contractor who built a deck at his home free of charge.

According to Director Gramiccioni, Fiore, 63, of Allentown, was convicted by a Mercer County jury of conspiracy, bribery and official misconduct, all second-degree offenses. The verdict followed an 11-week trial before Superior Court Judge Mitchell Ostrer. The jury deliberated for five hours over a two-day period. Second-degree crimes carry a maximum sentence of 10 years in state prison and a $150,000 fine. Judge Ostrer scheduled Fiore’s sentencing for Oct. 13.

Assistant Attorney General Lewis Korngut conducted the trial for the Division of Criminal Justice Corruption Bureau. The charges stem from an investigation by the Office of Insurance Fraud Prosecutor within the Division of Criminal Justice.

“This defendant selfishly and corruptly used his public position within the PAL for his personal gain,” Attorney General Milgram said. “Today’s verdict sends a loud message that this type of conduct will not be tolerated.”

The jury found that Fiore, a retired East Windsor police officer, used his position as an officer on the Board of Directors of the East Windsor PAL to steer a contract to Jeffrey Nemes to build the PAL a combined concession stand and administration building on Airport Road in East Windsor. The jury found that, in return for Fiore influencing the Board of Directors to hire Nemes’ company, Nemes built a $12,000 deck, free of charge, at Fiore’s former home in Washington Township, Mercer County.

The state’s investigation revealed a conspiracy among Fiore, Nemes and a third man, Marc Rossi, to arrange for Nemes Construction Company to get the contract and overcharge the East Windsor PAL for the project. The PAL paid Nemes a total of $274,046, which was at least $90,000 more than what the building should have cost. Rossi received $5,000 for his role in arranging the deal between Fiore, the East Windsor PAL, and Nemes Construction Company.

The investigation was conducted and coordinated by Lt. Robert Stemmer, Civil Investigator Joseph Salvatore, Analyst Paula Carter, Deputy Attorney General Asha Vaghela and Assistant Attorney General Lewis Korngut. Stemmer and Salvatore were formerly assigned to the Office of Insurance Fraud Prosecutor but now are assigned to the Division of Criminal Justice Corruption Bureau.

“This verdict is a tribute to the superb hard work and dedication of the Division of Criminal Justice’s investigative and trial teams,” Director Gramiccioni said. “Today’s conviction marks the conclusion of a 10-year investigation in which 12 people were convicted, resulting in seven people being sent to New Jersey State Prison.”

In March, Nemes, 43, of Hamilton, pleaded guilty to bribery, admitting he built the $8,000 deck for Fiore in return for the PAL contract. The judge ordered Nemes to pay $8,000 in restitution to the East Windsor PAL and imposed a five-year state prison sentence, concurrent to an eight-year sentence he was already serving on a 2007 bribery conviction obtained by the Division of Criminal Justice.

Rossi pleaded guilty to theft in 2003 in connection with the $5,000 payment involving the PAL. He was sentenced to three years in prison.

Nemes, a former Hamilton Township police officer, was convicted at trial in 2007 of offering two Hamilton Township fire chiefs up to $500 and other rewards if they would delay fire suppression and increase damage at fire scenes so as to increase potential profits for Nemes’ company and an insurance adjustment firm owned by Rossi. That conviction led to his prior eight-year state prison sentence. Assistant Attorney General Korngut also represented the state in that trial.

In addition, Nemes pleaded guilty in March to theft for stealing insurance money from four fire victims who hired him for repairs that he never completed. For that charge, Nemes received a concurrent jail sentence and was ordered to pay $74,472 in restitution.

Rossi pleaded guilty in 2003 to bribery and operating an “arson-for-profit” insurance fraud scheme. Rossi admitted to intentionally setting at least six fires in the Trenton area in 1999 so his public insurance adjustment business would be hired to adjust the insurance claims. Rossi was sentenced to eight years in prison and was ordered to pay $542,853 in restitution and a $50,000 insurance fraud fine.

Ponzi schemes continue to roll up July 30, 2009

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Some of the ponzi schemes that surfaced over the past year are starting to plea out.  The latest includes Marcia Sladich, the former operator of a Clifton-based real estate investment program.  She admitted that she fraudulently stole more than $15 million from hundreds of investors.  She pleaded guilty on Thursday in federal court to a one-count information charging her with mail fraud.  Under federal sentencing guidelines, she faces up to 78 months in prison but of course, the guidelines are no longer mandatory.

After the circus that was the Madoff case, I would want a few more of these cases to shake out first before tempting fate.  Conventional wisdom has traditionally been that a good attorney can shave years off the sentencing guidelines in a white collar crime case.  My firm has made that a reality.  Of course, post-Madoff, some judges might want to send an example especially when the victims are in the hundreds.  A six and a half year sentence in a  $15 million case is pretty good deal so we’ll have to see what the judge hands down.

Story is here.

Private investigator probably lost opportunity to settle case before indictment July 30, 2009

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Jerry Panico of Staten Island, is accused of stealing $79,000 from Allstate Investigations by diverting funds from clients to his own bank account.  He was charged with second-degree theft by deception for allegedly conducting investigations for clients without his employer’s knowledge then had checks written made payable to himself and mailed to his home. 

That alleged theft totaled $30,000 and I would have no problem taking that case to trial.  However, he is also charged with stealing an additional $49,000 worth of checks made payable to Allstate by endorsing them and cashing them before being deposited into a fraudulent account he created in the company’s name.

He was fired in October of 2008, arrested in June and indicted this week.  This case is illustrative of advice that I often give but is rarely followed:  hire an attorney at the first sign of trouble.  Here, Panico was fired almost a year ago and he knew what was going on.  He should have hired a good attorney right away to resolve this before it even got to the police. 

For whatever reason, many people think that nothing bad will ever happen to them so they do nothing.  How do I know?  I have people come to me before law enforcement is involved but some of them seem to want  to find someone that will just agree with them.  As soon as I tell them that they need to take proactive action now, they assure me that nothing bad will ever happen.  Of course, that begs the question, why the hell are you in my office in the first place?  I have seen these people try to convince me that they know better only to read (and blog) about them later when they are arrested/indicted and sentenced to prison. 

You know you will never read about?  All the clients that came to me early on where I could work out a case and prevent them from ever getting arrested/convicted.  Those clients pay a smaller legal bill and have a lot less stress in their life. 

Story is here.

20 reasons to call a white collar criminal defense attorney July 28, 2009

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I see way too many people come into my office when it is already too late. The difference between prison and freedom, a criminal record and no record, unemployment and a great career may not only be what attorney you call, but when you call that attorney. To make it clear, I came up with a list of twenty scenarios where you should call a white collar criminal defense attorney right away. You may not need to hire the attorney, but you at least need to get advice on how to proceed and whether or not you have any exposure.  Even better, if you call early enough, you can often prevent any charges from being filed which will keep your legal fees low.

 1. Arrest

If you are arrested, you should call an attorney ASAP. The sooner you get a good attorney involved in your case, the greater the chance for a successful result.

2. Arrest of someone closely associated with you (family member, friend, co-worker)

If someone close to you has been arrested and there is a chance that their criminal activity is associated with you in any way, see an attorney right away.

3. Conviction

Many people choose the wrong attorney the first time around. It can’t hurt to call a good attorney to check your options now that you are convicted.

4. Call from police asking to make statement

You have the right to remain silent and anything you say will be used against you. Don’t think that you can explain it away. Call an attorney or risk a conviction as a result.

5. Knock on door from law enforcement

If law enforcement knocks on your door and makes a request, you should call an attorney right away before doing anything. Unless they have a warrant, they can always come back later.

6. Subpoena from law enforcement requesting records and/or testimony

Many white collar crime cases start with a subpoena. You may not have to turn over anything or you could limit what you turn over. Call an attorney for guidance.

7. Allegation from DYFS of any type of child abuse or neglect

While DYFS investigations and criminal prosecutions do not always go hand-in-hand, they quite often do. Thus, anything you say to DYFS could be used to convict you.

8. Investigation from Administrative agency regarding possible criminal conduct

You do not have the same rights in an administrative action as you do in a criminal court. Thus, you could open yourself to criminal prosecution if you make the wrong step. This could be in the form of a demand for inspection, a subpoena or a set of interrogatories.

9. Investigation from employer for possible criminal activity

You have no Miranda rights with your employer and private companies will prosecute you.

10. Discipline from employer for criminal activity

Now that you have been disciplined or terminated for possible criminal wrong-doing, you need someone to field any possible calls from law enforcement.

11. Civil suit complaint alleging possible criminal activity

Setting up a team of attorneys for the civil case that can make strategic use of discovery proceedings to set up the eventual criminal case can make all the difference.

12. Subpoena for deposition in civil case

A fishing expedition in a civil case could lock you into a statement that can be used down the road in a criminal case where you could be seriously regretting your own words.

13. Subpoena for testimony at grand jury

You are only one piece of the puzzle and thus, you may not know the goal of the grand jury. Your testimony could lead to an indictment of a friend, family member or even yourself.

14. Letter from insurance company regarding investigation

Insurance company investigations discover a majority of the insurance fraud that is criminally prosecuted in New Jersey. Again, you have no Miranda rights here.

15. Request from insurance company requesting an Examination Under Oath (EUO)

Same as above, however, this is a sure sign that you are suspected of insurance fraud. Having an attorney guide you through the process can be priceless.

16. Allegations of criminal activity in divorce case

A soon to be ex-spouse can be out for blood. Consulting with an attorney about possible criminal activity such as invasion of privacy can give you piece of mind.

17. Tevis claim as part of divorce complaint

Not just a mere allegation but a civil claim seeking damages. Criminal complaints can be used for leverage. Having a good criminal defense attorney to shut this down is key.

18. Identity theft or unknown items on credit report

Innocent people are arrested everyday because someone else stole their identity. You need an attorney that can clear up both your good name and credit.

19. Property seized by law enforcement

If your property is seized, there is a good chance you are not getting it back regardless of what the police say. Call an attorney right away to look into your options and criminal exposure.

20. IRS notice that there was a problem with your taxes

The IRS can be easy to deal with if they approached early and in the right way. After a while, they lose their patience and you find yourself indicted for any number of tax crimes.

Mortgage fraud crackdown continues July 28, 2009

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Six people, including an attorney were charged by the FBI this week with wire fraud.  With many of these investigations, the allegations stem from incidents that occurred in 2005.  As 2010 nears, the Feds have to focus on cases from 2005 or risk running into the statute of limitations.

Of course, the mortgage industry didn’t fall apart until 2008, so we will see these cases crop up for years to come.

Press release:

Six Mortgage Industry Insiders Charged by FBI and IRS

NEWARK, NJ—FBI Special Agent In Charge Weysan Dun announced today the arrest of Daniel Verdia, Don Apolito, Jaye Miller, and Chrystal Paling (all on Tuesday, July 21), as well as the surrender of Robert Gorman and Philip Blanch (on Friday, July 24)—all in connection with a mortgage fraud scam operated out of an office in Hasbrouck Heights, New Jersey. All of the arrests occurred without incident. The six defendants are each charged with one count of wire fraud, in a joint investigation between the FBI and IRS titled “Operation Follow The Money.”

The investigation centered around activities occurring between February and September of 2005. According to the criminal complaint, the defendants obtained five mortgage loans by fraud between February and September of 2005 and deceptively converted the proceeds of those loans to their own use. This was done by first misrepresenting to the buyers and sellers the terms of the mortgage financing the purchase, the disbursements of the mortgage proceeds, and the source of the proceeds to pay off the mortgages, among other details. The second phase of the fraud involved falsifying information on the mortgage loan applications—namely the income and assets of the purchasers on the loans, the source of the down payments on new purchases, and the disbursements of cash related to the mortgage proceeds. The defendants allegedly accomplished their misdeeds through numerous interstate wire transfers. In the end, the only people who made a profit were Verdia, Miller, Apolito, Gorman, Blanch, and Palings.

Background

According to the complaint, Verdia, age 51, has owned and operated mortgage brokerage companies since 2001, beginning with Challenge Mortgage Services, LLC which was located at 377 Route 17, Hasbrouck Heights, New Jersey. Challenge later became Monarch Mortgage Services, LLC, which eventually moved to 1 International Boulevard, Mahwah, New Jersey in 2007. In February of that year, Verdia and his associates closed Monarch and opened The Mortgage Exchange at the same address.  While he operated Monarch at the Hasbrouck Heights location, Verdia also owned Capital Investment Strategies (CIS), LLC which operated out of the same office and purportedly was the source of funds for Verdia’s real estate ventures. According to the complaint, CIS is a shell company used by Verdia and his associates to fraudulently conceal money.

Defendant Jaye Miller, age 50, has actively worked with Verdia since 2000 and has functioned as a loan officer and loan processor within Verdia’s companies. Miller was also a 50% owner of CIS and endorsed checks made out to that entity—monies that were allegedly proceeds of fraudulent activity. Robert Gorman, age 60, has also worked in many of Verdia’s businesses. Gorman obtained information from the mortgage applicants and processed the applications. This involved knowingly signing and submitting applications with false information, according to the allegations. Don Apolito, age 37, has done business with Verdia since 2002 and operated a number of companies that supplied warehouse lines of credit that funded Verdia’s alleged fraudulent transactions. All three of the companies operated by Apolito—Nina Funding, Matrix Funding, and the Mortgage Exchange—were operated out of Verdia’s Hasbrouck Heights office. Additionally, the complaint alleges that Apolito also served the same function as Gorman: knowingly signing and submitting loan applications with false information. Attorney Philip Blanch, age 69, closed all of loans in question. It was his responsibility to ensure the legality of the transactions and to verify the accuracy of the information in the closing documents and disbursement of funds.  Blanch did this by signing the federal Uniform Settlement Statements (HUD-1) forms involved in the transactions.  However, the complaint alleges Blanch was well aware that information he “verified” on the HUD-1 statements was false. Crystal Paling, age 49, worked for Blanch. The complaint alleges that Palings recruited individuals to purchase and sell the properties that were the subjects of fraud in this case. The complaint also alleges that Palings authored many of the documents associated with these transactions and facilitated the wire transfers to and from Blanch’s trust account.

The Scheme

The following outline is based on allegations made in the criminal complaint.  In the simplest terms, a victim home owner (two of which in this case were suffering financial hardship due to medical expenses) was convinced by one of the defendants named above to either sell or refinance his or her home through Monarch Mortgage Services, LLC as part of a foreclosure bailout scheme. The defendants then recruited a straw buyer who was promised a sum of $5,000 for his or her participation. The defendants explained to the straw buyer that the original owner would repurchase the home after a short period of time when the owner had recovered from financial difficulties. The defendants also told the straw buyers that the mortgage payments for the newly purchased properties would be paid by Monarch. The defendants then falsified the financial information in the paperwork associated with the transaction. In one of the transactions, the falsified application was submitted to one of the companies under Apolito’s control, Matrix Funding, for loan approval and then later sold to an outside mortgage company. But in all other cases, the fraudulent applications were submitted directly to outside mortgage lenders. Once the loans were approved, the mortgage lenders wired funds to Blanch’s attorney trust account. At Blanch’s direction, Palings, would then wire all or most of the proceeds to CIS as a fee or payment. In the end, three of the victim homeowners received no compensation whatsoever for the sale of their homes. Furthermore, one of those three victims suffering financial hardship was lead to believe he was refinancing his home when in reality, he sold it for a 100% loss. The other two victims received a fraction of the money they were legitimately owed. The defendants, however, all received financial compensation for each of the five transactions.  None of the resulting mortgages from these five transactions were ever paid and all of them went into default. The total fraud in these five transactions is estimated at $1 million. 

“Those who are engaged in foreclosure bailout schemes are opportunistic thieves,” said Weysan Dun. “The defendants in this matter are charged with preying on the financially weak and desperate, our lending industry, and ultimately the taxpayers.To swindle people out of the roofs over their heads is just deplorable. But we will continue working with our partners in uncovering these schemes, bringing the fraudsters to justice, and educating the public.”

Acting SAC Julio La Rosa, IRS-Criminal Investigations stated, “We will continue to work closely with our law enforcement counterparts at the FBI to investigate allegations of mortgage fraud. These types of financial crimes add to the underground economy, erode the integrity of our tax system, and threaten the financial health of our communities.”

Senior citizen charged with theft from estate July 27, 2009

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J.B. Schmidt, a 69 year old South Plainfield, New Jersey woman has been indicted for misapplication of entrusted property, theft and theft by failure to make the required disposition of property received in connection with her alleged theft from the estate of her cousin.  She was also indicted for  theft and theft by failure to make the required disposition of property received for allegedly accepting four pension checks from the state of New Jersey — totaling $1,800 — and depositing them in the estate. 

Is this a case of an evil mastermind or a confused old lady that did not understand how to have an estate probated?  If there was ever a great case for PTI, this is it.   

Story is here.