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Ex-congressman faces long fight in fraud charges March 3, 2009

Posted by jefhenningeresq in News.
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Wes Cooley, a former Congressman from Oregon has been charged with filing false tax returns and several counts of money laundering.   Authorities allege that Cooley and two other men who were associated with the former auction site, bidbay.com used the Internet to get investors to buy unregistered stock.  Cooley is also alleged to have lied to investors when he claimed that eBay would buy the company for $20 per share.

The unregistered stock issue is usually a red flag here and it will likely be a major issue if this case goes to trial.  An example of whay may have happened here is that Cooley and/or others may have registered the stocks with Form S-8, which is for securities issued by a company to employees or certain types of consultants. This is a short-form document that is not as detailed as registration forms required for a public offering of stock.   As a result, a public sale of the stock can done without informing the public about the company’s true condition or status.

While not the end of the world, I think Cooley’s biggest problem will come from the money laundering charges.  When it comes to white collar crimes like this, the case is usually very circumstantial.  For example, no one witnessed a person stealing money out of a safe.  The Government will take various business transactions and other activities and argue that everything put together shows that the activity is illegal. 

The claim that eBay would buy the company for $20 could have been a misunderstanding or could have come from someone else.  After all, everyone can make a mistake or be a bad businessman.  Getting people to buy stock; that’s what you do as an officer of the company.  However, if all of your activities are legit, why hide the source of the money?  That is the problem here. 

However, like many of the Ponzi scheme defendants I have blogged about, Cooley is old.  At 76 years old, where is he really going here?  His best defense may be to flip and secure a four year sentence to he can get out in his 80’s.  However, this could be tough due to the was the Federal sentencing schemes work.  But, if it doesn’t happen, there is nothing else to do but fight all the way.

Story is here.

Stop & Shop allows fake veteran to solicit donations December 26, 2008

Posted by jefhenningeresq in News.
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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.