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Two Extradited from Singapore in Connection with Plot to Illegally Export Military Antennas
Two foreign nationals, Hia Soo Gan Benson (Benson Hia) and Lim Kow Seng (Eric Lim), have been extradited from Singapore to stand trial in the District of Columbia in connection with an alleged fraud conspiracy involving the unlawful export of military antennas from the United States to Singapore and Hong Kong. The indictment, originally filed on June 23, 2010, also alleges that the ultimate object of a second conspiracy was to conceal from the U.S. Government that the true destination of another set of antennas was Iran.
According to the indictment both Benson and Seng are charged with 6 criminal counts. Two of the counts are distinct conspiracy charges. The first conspiracy relates to the defendants’ roles in procuring antennas from the United States that were eventually shipped to Iran through Singapore, Malaysia, and Thailand. The second conspiracy relates to the defendants’ roles in procuring a different kind of antenna from the United States without first applying for a license from the State Department’s Directorate of Defense Trade Control (DDTC).
In relation to the above-mentioned conspiracies, the defendants have also been charged with one count of false statements (18 U.S.C. 1001) in connection with license applications filed with the Bureau of Industry and Security (BIS), one count of false statements (18 U.S.C. 1001) in connection with statements made to Customs and Border Protection (CBP) in the second conspiracy, one count of smuggling (18 U.S.C. 554) in connection with the second conspiracy, and one count of illegally exporting controlled products with DDTC licenses (22 U.S.C. 2778) in violation of the Arms Export Control Act (AECA).
With regards to the defendants’ specific cases, it may be important for defense counsel to explore whether the two distinct counts of conspiracy are superfluous, especially given the similar conduct and goals involved with both conspiracies. If a review of discovery actually unveils the two conspiracies to in fact be one large conspiracy, defense counsel may decide to move the court to dismiss one of the conspiracy counts.
More telling however, is the U.S. Government’s continued focus on prosecuting export related crimes. This is also consistent with what many people in this field have been dicussing. For example, in 2008 the Department of Justice formed the Export and Anti-proliferation Global Law Enforcement (EAGLE) Task Force. The goal of this task force was to bring together the different federal agencies focused on counter-proliferation work and allow them to share resources and knowledge in this complex area, as well as increase the number of prosecutions in this area.
This level of coordination of resources and increased focus by the federal government requires defense counsel to be even more vigilant. Protecting a defendant’s Constitutional rights becomes even more important because many of the federal agencies working together in this task force may not be familiar with rights afforded criminal defendants because they are civil administrative bodies, and not law enforcement agencies. Moreover, many foreign nationals may not be familiar with the rights afforded to defendants in the U.S. criminal justice system. As such, advising foreign clients to assert their Fifth Amendment rights at various stages of an investigation (including extradition) becomes even more critical in this new era of federal coordination in export control cases.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.
Texas Man Accused of Falsely Billing Medicare and Medicaid is Arrested
Lawrence T. Taylor, the Defendant, has been indicted on charges of health care fraud and conspiracy to commit health care fraud. The indictment, returned on Wednesday December 12, 2012 in the Southern District of Texas, formally charged the Defendant with the following nine counts:
Count (1) – 18 U.S.C. 371 – Conspiracy to commit health care fraud in violation of 18 U.S.C. 1347; and Conspiracy to violate the Anti-Kickback statute in violation of 42 U.S.C. 1320a-7b(b)(2)(A); and
Counts (2)-(9) – 18 U.S.C. 1347 – Health care fraud.
Like in most federal indictments, the Defendant is charged with a combination of substantive offenses (8 counts of actual health care fraud) and the inchoate offense of conspiracy (for entering into an agreement to commit health care fraud and violate the Anti-Kickback statute).
By charging the Defendant with conspiracy the Government is able to thoroughly describe the background story leading up to the substantive fraud offenses. This is because the “overt acts” of a conspiracy can be as benign as incorporating a business or leasing office space, if those acts were indeed undertaken to further the criminal goal of the conspiracy. In this case the Government lists the Defendant’s formation of 1866ICPAYDAY.COM LLC, his leasing of office space, and his registration of a d/b/a all as overt acts in furtherance of the conspiracy, effectively casting the Defendant’s otherwise normal business activities as criminal acts.
Additionally, by charging the defendant with conspiracy, the Government can also significantly increase the loss amount of the alleged fraud. Unlike specific instances of fraud, a conspiracy can last for many years and encompass all of the acts of a defendant, criminal or otherwise. In essence, it gives the Government broad discretion to use as many of the Defendant’s own actions against him. As such, the Government is able to increase the loss amount to $1,238,823.85 when the 8 specific counts of fraud in the indictment only add up to $24,065.60.
If the Defendant is eventually convicted of an offense, defense counsel should argue for a lesser loss amount at sentencing, especially if some of the Defendant’s claims to Medicare and Medicaid were in fact legitimate. Pushing back against the Government’s asserted loss amount is critically important at sentencing because an increased loss amount correlates directly with an increased sentence according to the U.S. Sentencing Commission’s Guidelines Manual.
Depending on how much of the Defendant’s business activities are eventually proven to be fraudulent, defense counsel may also have the opportunity to argue against the “willfulness” element of the fraud counts. Isolated instances of medically unnecessary claims to Medicare or Medicaid can be cast as legitimate mistakes, instead of criminal acts. To determine whether the Government’s allegations are broader than what is reflected in reality requires defense counsel to thoroughly review the Defendant’s business and patient records. Upon this review, defense counsel will be able to effectively compare the Defendant’s version of the facts against the Government’s allegations.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.
The Arms Export Control Act Withstands Constitutionality Challenge in Ninth Circuit Part II
This blog posting is part II of our analysis of U.S. v. Chi Mak. Part I can be read here.
The Ninth Circuit also disposed of Mak’s claims about jury instructions and deliberation on willfulness, the requisite intent that must be proven beyond a reasonable doubt in criminal prosecutions of the Arms Export Control Act (AECA). The relevant case law in the matter presumably favors the defense.
Accordingly, every criminal defendant has a constitutional right to a “meaningful opportunity to present a complete defense.” California v. Trombetta, 467 U.S. 479, 485 (1984); see also United States v. Stever, 603 F.3d 747, 755 (9th Cir.2010) (grounding right to a meaningful defense in the Fifth and Sixth Amendments). An accused can defend against a charge that requires the Government to prove willfulness by presenting evidence that he did not voluntarily or intentionally violate a known legal duty. Cheek v. United States, 498 U.S. 192, 202–03 (1991).
Also favoring the defense is the fact that circumstantial evidence can be probative of the lack of criminal intent. See United States v. Salameh, 152, F.3d 88, 143 (2d Cir. 1998). Moreover, many of the Circuit Courts of Appeals have held that a criminal defendant has the right to introduce evidence that is not directly relevant to an element of the offense where that evidence might tend to negate the existence of an element of the offense, such as intent or willfulness. United States v. Hurn 368 F.3d 1359, 1364-65 (11th Cir. 2004).
Thus, Mak’s contention that he was unaware of the fact that the “technical data” he was sharing with others was not in the “public domain” would seem to be a constitutionally protected defense. Such a defense would clearly demonstrate that he did not intentionally violate a known legal duty. In fact, Mak introduced legally acceptable circumstantial evidence in the form of expert witnesses demonstrating that he did not know the information was “technical data” and not in the “public domain.” Unfortunately, the court’s jury instructions completely stripped this defense of its persuasiveness. So instead of having the jury deliberate the matter, the court determined the issue for them.
In its jury instructions the court stated the following in number 16:
“You are instructed that the information in the Solid State document and the Q.E.D. document is required for the design, development, production, manufacture, assembly, operation, testing, or modification of defense articles. You must accept this fact as true, regardless of whether you heard any witness testify to the contrary.”
And the following from instructions 20 and 23:
That the government was not required to prove that “the defendant had read, was aware of, or had consulted the specific regulations governing his activities,” and that in “making a determination of whether the defendant had the requisite intent, [the jury] should consider the totality of all relevant circumstances.”
The contention on appeal is that the trial court wrongfully rejected Mak’s recommended jury instruction on willfulness, an instruction that would have given the jury a realistic opportunity to deliberate willfulness with respect to the “public domain” determination it was asked to consider:
“Information which is in the public domain does not constitute technical data and therefore is not subject to the export controls of the United States Munitions List. Even if you determine that any of the items at issue in Counts two, three or four were not in the Public Domain, you the jury must consider whether Mr. Chi Mak believed the items were in the Public Domain in order to determine whether he willfully and knowingly exported defense articles.”
With instruction 16 the trial court shifted the entire debate away from the content of the “technical data” because the court judicially recognized that fact in favor of the Government. The instruction caused even more harm to the defense because it told the jury to totally disregard Mak’s expert witnesses on the issue of technical data and only focus on the whether the information was in the public domain. The cumulative impact of the court’s instructions effectively counseled the jury to disbelieve Mak’s lack of intent, at least on the premise that he did not know the information was “technical data.”
Due to the court’s instructions, the only factual issue left for the jury to deliberate upon was whether the information was in the “public domain.” Although the court’s instructions specifically counsel the jury to disregard a significant part of Mak’s constitutionally recognized willfulness defense, there is no accompanying instruction highlighting for the jury that it could still apply the willfulness defense to the issue of whether the information was in the “public domain.” This harm could have easily been remedied by including Mak’s recommended instructions.
Alas, the only instruction the Ninth Circuit relied upon to dispose of Mak’s claim was the broad catch-all instruction that the jury “should consider the totality of all relevant circumstances.” This, in the Ninth Circuit’s opinion, was enough to undo the severely limiting instructions that harmed the defense in the first place. Sadly, the court seems comfortable with the fact that the jury may have never even fathomed to deliberate upon Mak’s willfulness defense in the context of the “public domain” issue, a limitation of Mak’s constitutionally recognized defense created by the court itself.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
The Arms Export Control Act Withstands Constitutionality Challenge in Ninth Circuit Part 1
On June 21, 2012 a three judge panel of the Ninth Circuit upheld the constitutionality of the Arms Export Control Act (AECA) in United States v. Chi Mak. Mak was ultimately convicted of one count of conspiracy to violate the AECA, two counts of attempting to violate the AECA, and one count of lying to a federal agent.
Mak appealed his conviction, claiming violations of his rights under the First, Fifth, and Sixth Amendments, and the Ex Post Facto Clause. Mak lost on each claim he made, demonstrating the difficulties of calling into question the constitutionality of a statute that pertains to the national security and foreign interests of the United States.
The AECA regulates the export and import of “defense articles” and “defense services” out of and into the United States. 22 U.S.C. § 2778. Section 2778(a) of the AECA authorizes the President: (1) to designate those defense articles and services to be included on the U.S. Munitions List (USML); (2) to require licenses for the export of items on the USML; and (3) to promulgate regulations for the import and export of such items on the USML. Id.
The Directorate of Defense Trade Controls (DDTC), within the United States Department of State, promulgates regulations under the AECA, known as ITAR. 22 C.F.R. § 120–30. ITAR defines the USML, which consists of twenty-one categories of designated defense articles and services that are subject to licensing controls under the AECA. Id. at § 121.1. Unless an exception applies, ITAR requires a license for the export of USML articles and related technical data. 22 C.F.R. §§ 123–125.
Technical data is defined as information which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. 22 C.F.R. § 120.10(a)(1). This definition excludes any information in the “public domain.”
Mak asserted a First Amendment “vagueness” claim. The basis of Mak’s claim was that the technical information he attempted to export to China was protected speech. Although the AECA is not intended to control the content of “speech,” it does so incidentally. The court disposed of Mak’s First Amendment “vagueness” claim by stating that the restrictions on “technical data” are “content neutral.” Content neutral regulation of speech is permitted under the First Amendment so long as it advances important governmental interests.
In this case, such important interests include the national security and foreign interests of the United States. A munitions list that does not prohibit the export of technical data would be useless because the defense articles could merely be produced overseas.
Of particular concern for defense counsel in Mak’s appeal is his second claim about the jury instructions on “technical data” on the ground that they relieved the Government of its burden of proving that the documents did not fall within the “public domain.” The instructions seem to favor the Government because they are misleading to the jury. The instructions say:
“All technical data is subject to export control. Technical data is information required for the design, development, production, manufacture, assembly, operation, testing, or modification of defense articles. Technical data does not include information in the public domain.” This instruction continues with:
“You are instructed that the information in the Solid State document and the Q.E.D. document is required for the design, development, production, manufacture, assembly, operation, testing, or modification of defense articles. You must accept this fact as true, regardless of whether you heard any witness testify to the contrary.”
Upon reading this instruction it becomes clear that the issue of whether the information was “technical data” was already decided by the court. What’s even more disturbing is the statement that “you must accept this fact as true, regardless of whether you heard any witness testify to the contrary.”
The court disposes of Mak’s claim by relying on another instruction which explains to the jury that if the information was available in the “public domain” that they must acquit Mak on the AECA offenses. Why the court did not require the jury to determine if the information amounted to regulated “technical data” puzzles me. Apparently the Government can simply assert that something is “technical data” and only need to prove that the information was not in the public domain in order to sustain a conviction under the AECA.
Is it so totally inconceivable that something not available in the “public domain” is also not “technical data” that the government need not be required to prove beyond a reasonable doubt that the infomormation actually amounts to “technical data?” It seems unlikely that any corrected instructions would have remedied the situation to such a degree that Mak’s conviction should have been overturned, but the Government should nonetheless be put to the burden of whether the information is in fact “technical data” and not just that it wasn’t in the “public domain.” We will address the additional claims in part II of this post.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Two Virginia Brothers Charged with Conspiracy and 16 Counts of Interference with Commerce by Robbery
On June 20, 2012, the U.S. Attorney’s Office for the Eastern District of Virginia indicted Laquan Draper and Angelo Draper for their alleged participation in an eight-week robbery spree in July of 2011, spanning Norfolk to Roanoke, VA.
As alleged in the indictment, the brothers, concealing their identities with shirts tied around their faces, entered 7-11 convenience stores with either firearms or replica firearms, jumped over the counter and took money from store employees. The men are also alleged to have robbed employees of two McDonald’s, a Wendy’s, an ABC Store, and a Fast Auto Loans location. In addition, at Got It Video in Norfolk, the Drapers entered with a third person, shattering the locked front glass door by shooting out the bottom half. They then held customers and employees at gun-point and took money from the store registers.
The brothers were arrested in Chesapeake on August 25, 2011 after they crashed the stolen Saturn Vue they were driving into a police vehicle. A .22 caliber hand-gun was found in the passenger floor board of the stolen vehicle when the men were removed. Additional evidence recovered from the car was linked forensically to several of the crime scenes.
The Draper brothers were charged with conspiracy to commit robbery, 16 counts of interference with commerce by robbery, and three firearm charges. Laquan Draper has also been charged with possession of a firearm by a felon. If convicted, they face a maximum of 20 years in prison for each of the robbery and conspiracy charges, and a total of 60 mandatory years on the firearm charges.
The government’s decision to charge the brothers with conspiracy places the defendants at a serious disadvantage. Most importantly, that the government can prosecute the brothers together in a single trial. This is especially important if one of the brothers was only a minor participant because now the jury will see all of the evidence at trial, not just the evidence pertaining to the minor participant’s role in the conspiracy.
Conspiracy also allows the government to introduce hearsay evidence against the brothers under the co-conspirator hearsay exception. This means that statements made by one brother in furtherance of the conspiracy can be used against the other brother.
Perhaps the most important disadvantage facing the brothers is that each may be responsible for the substantive crimes committed by the other during the course of the conspiracy. This concept is known as vicarious liability and was upheld by the Supreme Court in Pinkerton v. United States, 328 U.S. 640 (1946). Not only can the brothers face jail time for the crimes they personally committed, they can be convicted for the offenses committed by the other brother if they were committed during the term of the conspiracy.
Managing both the scope of the conspiracy and the flow of admissible evidence by the government will be very important for the defense. Also important will be communicating to the prosecutor if one brother was in fact only a minor participant in the conspiracy (e.g., one brother coerced the other, less capable brother, to participate in the conspiracy).
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Check Cashers in Brooklyn, Philadelphia, and Los Angeles Charged for Allegedly Evading Anti-Money Laundering Laws
On June 14, 2012 seven individuals and four check cashing businesses were charged in the Eastern District of New York and the Central District of California for their alleged roles in separate schemes to violate the Bank Secrecy Act (“BSA”). The defendants allegedly failed to follow reporting and anti-money laundering requirements for transactions totalling more than $50 million. A total of four indictments were filed.
Two of the indictments were returned in Los Angeles and named three individuals and two check cashing businesses. The other two indictments were returned in Brooklyn and named four individuals and two check cashing businesses. All seven individual defendants were arrested or surrendered to authorities. Those named in the indictments include Belair Payroll Services, Bargain Island, G&A Check Cashing, and AAA Cash Advance, all check cashing businesses. The individuals names in the indictments include Craig Panzera, Lasha Goletiani, Zhan Petrosyants, George Gonchar, Karen Gasparian, Humberto Sanchez, and Diana Brigitt.
The four indictments charge the defendants with failure to file currency transaction reports (“CTRs”) or falsely filing CTRs, as well as failure to have an effective anti-money laundering program, all violations under the BSA.
The BSA is a set of laws and regulations enacted by Congress to address an increase in criminal money laundering through financial institutions, which include check cashing businesses. Check cashers enable people to cash checks without having to go to a bank account or maintain a bank account. A check casher will typically charge a fee for this service.
Under the BSA, financial institutions, including check cashers, are required to file a CTR with the Department of Treasury for any transaction involving more than $10,000 in currency. As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction, the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction. CTRs are important law enforcement tools for uncovering criminal activity.
The BSA also requires financial institutions, including check cashing businesses, to maintain an effective anti-money laundering (AML) program. The purpose of an AML program is to effectively detect and prevent attempts to facilitate money laundering. Check-cashing businesses are therefore required to have written policies and procedures regarding CTR filings, records maintenance and responses to law enforcement.
According to the indictments, despite these regulations, check-cashing businesses are a common venue for individuals who want to anonymously cash large numbers of checks to facilitate fraud and money laundering schemes. According to the indictments, the use of check cashers to launder money is particularly prevalent in the area of health care fraud, where fraudulent health care businesses commonly convert the proceeds of their fraud into cash by presenting checks to check cashers who they know will not ask for proof of the payee’s identity and will either not file CTRs or file false CTRs.
The BSA is intended to assist both the private sector and the government in its detection and prevention of criminal money laundering. By implementing these regulations, financial institutions provide law enforcement agencies from around the world with valuable insight into the banking and financial activities of people from all walks of life. Although the specific conduct of those named in the indictments may not in any way be connected to the criminal activity they’re designed to detect, the allegations of noncompliance with CTRs and anti-money laundering programs are in and of themselves considered criminal conduct.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Former Virginia Man Sentenced for Bank Fraud and Identity Theft Scheme Targeting Young Navy Sailors
On June 6, 2012 the U.S. Attorney for the Eastern District of Virginia announced that Lionel Jason Haynes was sentenced to seven years and three months in prison for bank fraud (18 U.S.C. 1344) and aggravated identity theft (18 U.S.C. 1028A(c)). He was also ordered to pay $181,960 in restitution.
According to court documents and proceedings, Haynes, a former Navy sailor, executed a scheme to defraud Navy Federal Credit Union (NFCU) by victimizing young, impressionable sailors. Posing as a Chief Petty Officer, Navy SEAL or as a representative of the Navy’s Fleet and Family Services Center, Haynes would approach a sailor on Navy Base Norfolk and offer assistance to help him purchase a car.
He would ask for their personal identifying information and bank account information under the pretense of needing it to determine pre-approval for an auto loan. Once he received this information, he accessed their NFCU bank account, requested an auto loan, and changed the mailing address to an address to which he had access. He received the check, wrote down the fraudulent vehicle information, forged their name, and had an associate (the purported seller) cash the check. He victimized 14 different sailors in this manner.
In its sentencing memorandum the government requested 60 months’ imprisonment for bank fraud, plus 24 months for identity related fraud. Although the defense moved for a downward departure, it is apparent that no such departure was granted by the sentencing judge. Mr. Haynes was sentenced to exactly what was requested by the government and prescribed in the U.S. Sentencing Guidelines. Unfortunately for Mr. Haynes his request to have his identity theft conviction run concurrently was denied, probably because the statute specifically prescribes the sentence to run consecutively. As such, instead of serving 5 years and 3 months in prison, he will serve 7 years and three months.
Not all was lost however. According to sentencing documents the judge did grant Mr. Hayne’s request to be placed in a prison near his family in New York and ordered him to continue his education while in prison. Court documents made it clear that Mr. Haynes was in college during the sentencing phase of the case.
This case was investigated by the Navy Criminal Investigative Service (NCIS) and prosecuted by the U.S. Attorney’s Office of the Eastern District of Virginia.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Accused Member of Foreign Terrorist Organization Extradited to United States on Hostage Taking Charges
The Department of Justice announced on March 12, 2012 that Alexander Beltran Herrera, a/k/a Jhon Beltrain Herrera, a/k/a Rodrigo Pirinolo, an accused member of the Revolutionary Armed Forces of Colombia (“FARC”), has been extradited from Colombia to face hostage taking and terrorism charges in the United States.
The indictment alleges that the FARC is an armed and violent organization in the Republic of Colombia. The indictment further alleges that the FARC is a “highly structured criminal organization” divided into seven geographic “blocks” — the Caribbean block, the Northwestern block, the Middle Magdalena block, the Central block, the Eastern block, the Western block, and the Southern block — which are each further subdivided into a number of Fronts and named Mobile Columns. The indictment specifically alleges that Mr. Herrera was a member of the 27th Front in the FARC’s Southern block and committed various crimes against the United States as a member of FARC.
For example, according to the indictment, in 2004 the 27th Front allegedly held three Americans for nearly two years. The indictment also alleges that Mr. Herrera was one of the FARC “jailers” who used “choke harnesses, chains, padlocks, and wires to bind the necks and wrists” of American hostages. In addition to these alleged acts, Mr. Herrera was charged with the following specific offenses: 18 U.S.C. 1203(a) (Conspiracy to Commit Hostage Taking); 18 U.S.C. 1203(a),(2) (Hostage Taking; Aiding and Abetting and Causing an Act to be Done); 18 U.S.C. 924(c),(2) (Using and Carrying a Firearm During a Crime of Violence; Aiding and Abetting and Causing an Act to be Done); 18 U.S.C. 2339A (Conspiracy to Provide Material Support to Terrorists); 18 U.S.C. 2339B (Conspiracy to Provide Material Support or Resources to a Designated Foreign Terrorist Organization).
When an individual located in a foreign country has been indicted by a federal grand jury the United States will attempt to compel the government of that country to turn that individual over into the custody of the United States. This request will usually be pursuant to an extradition treaty between the United States and that foreign country. The extradition request is formally made with the foreign government’s embassy in the United States. Additionally, this formal request is made by the U.S. Department of State, not Justice. The U.S. will likely accompany this formal request with a copy of the indictment, arrest warrant, relevant statutes, a photograph of the accused, and the affidavit of an investigating officer on the case.
When this request is made, the terms of the treaty dictate whether the foreign government will agree to turn over the individual into the custody of the United States. Accordingly, most extradition treaties must satisfy a legal concept known as dual criminality. Dual criminality means that the offenses being charged by the requesting country must also be considered punishable offenses in the other country. This very requirement exists in Article 2(1)(a) of the extradition treaty between the United States and Colombia.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Home Builder Indicted in $14.7 Million Construction Investment Scheme
On March 1, 2012 a federal grand jury indicted Patrick J. Belzner, a/k/a “Patrick McCloskey,” of Glen Arm, Maryland fo conspiring to commit wire fraud arising from an investment fraud scheme.
The indictment alleges that in order to gain their victims’ confidence, Belzner and his co-conspirators caused victim investors and borrowers to enter into escrow agreements which stated that no person other than the victims had the ability to remove the escrowed funds without the victims’ permission. Belzner told the victims that a co-conspirator had to be the attorney assigned as the escrow agent.
The indictment alleges that Belzner and his co-conspirator fraudulently withdrew approximately $14,730,780 from the escrow accounts and used these stolen funds to satisfy their business and personal debts. To conceal their scheme, Belzner and his co-conspirators allegedly: emailed fabricated bank statements to victims that misrepresented the escrow account balance and the date by when the investors’ money would be returned. Belzner and his co-conspirators also used funds fraudulently obtained from some victim investors to repay money owed to previous victim investors, or to other individuals to whom the conspirators owed debts.
Belzner faces a maximum sentence of 20 years in prison and fine of $250,000 or twice the value of the gain or loss. The indictment further seeks forfeiture of at least $14,730,780, the amount of money stolen from victim investors.
Belzner’s alleged co-conspirators are not named in the indictment. According to the indictment Bezner’s co-conspirators included a home builder from Baltimore, Maryland, an attorney licensed to practice in Maryland, a senior underwriter from Newport Beach, California, and an attorney licensed to practice in California. The government may still be building its case against the other co-conspirators, offering the defendant the opportunity to cooperate with investigators. However, since the indictment was recently unsealed, there is a good chance that the other co-conspirators were actually involved in the investigation into Belzner.
Co-conspirators make for interesting government witnesses. These “insider” witnesses provide the government with invaluable insight into the inner workings of the alleged crime. However, due to a co-conspirator’s own precarious position as a criminally liable person, defense counsel is afforded the opportunity to seriously call into question the reliability, veracity, and character of such witnesses.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Humboldt County Marijuana Grower Indicted for Murder by Feds
It was announced on March 1, 2012 that a federal grand jury in San Francisco indicted Mikal Xylon Wilde, of Humboldt County, with murder during a narcotics offense, conspiracy to manufacture and distribute 1000 or more marijuana plants, use of a firearm during and in relation to a drug trafficking offense and crime of violence, use of a firearm causing death in the form of a murder, and possession of ammunition by a convicted felon.
These federal offenses are being charged separately and in addition to California’s own charges against Wilde. As such, the defendant is currently in custody in Humbodlt County on state murder charges arising from the incident. An unfortunate, yet common, trend in drug related offenses are concurrent state and federal investigations and prosecutions for the exact same conduct. In essence, the defendant can lawfully be tried twice for the same conduct. The doctrine of double jeopardy does not apply in instances of concurrent federal and state prosecutions because both the federal government and state government are distinct sovereigns. This concept, known as dual sovereignty, permits any number of sovereign entities to separately prosecute a person if the person’s action violates the laws of each sovereign entity.
Wilde pleaded not guilty to state charges back in September 2011 and his case is ongoing. However, in line with the concept of dual sovereignty, Wilde was indicted for federal offenses in March 2012. Murder is generally considered an offense best handled by state governments. But since Wilde’s offense involves large scale narcotics trafficking, the federal government probably thought it would be prudent to pursue the case as well. The defendant will make his initial appearance in federal court in Eureka before U.S. Magistrate Judge Nandor J. Vadas.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
