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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.
New York Man Arrested for Alleged Identity Theft and Tax Fraud
Gary Rogers, of East Meadow, N.Y., was arrested on Monday after being charged with identity theft and tax fraud after allegedly filing more than 200 false tax returns with the Internal Revenue Service (IRS).
Rogers was named in a federal criminal complaint that alleged he used stolen identification information to make false claims against the U.S. government by filing false tax returns to obtain fraudulent refunds. According to the affidavit in support of the criminal complaint filed in U.S. District Court in Brooklyn, Rogers filed approximately 200 federal income tax returns from 2004 through 2010 using the identification information of others. The complaint alleges that Rogers sought approximately $4,393,356 in fraudulent refunds over the six year period. There is no indication how much Rogers may have actually received, or whose identities he allegedly used to obtain the funds.
In addition to the traditional IRS functions, the IRS also has a Criminal Investigations (CI) Unit. The CI Unit employees approximately 2,700 special agents whose sole purpose is to investigate tax fraud, money laundering, and Bank Secrecy Act violations. The investigations of money laundering and BSA violations tend to overlap with the Department of Justice (DOJ) and the Financial Crimes Enforcement Network (FinCEN); however, the CI Unit is the only federal department that investigates criminal violations of the tax code.
The CI Unit focuses on several areas of financial crimes, including bankruptcy fraud, corporate tax fraud, employment tax evasion, and other crimes as related to filing false tax returns. The U.S. government clearly has a heightened interest in the financial sector, particularly in this economic climate. It is important to remember that mistakes contained on a tax return are not necessarily criminal violations. The CI Unit is more concerned with willful, or intentional, violations of tax fraud and evasion.
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.
FinCEN Imposes Civil Fine on Money Services Business in Georgia
The Financial Crimes Enforcement Network, or FinCEN, is an enforcement branch of the U.S. Treasury Department. FinCEN was established in 1990 to investigate financial crimes, such as money laundering and fraud. In 1994, the branch increased in power when it was delegated with authority to enforce regulations under the Bank Secrecy Act (BSA).
Today FinCEN issued a financial penalty assessment against Altima, Inc., located in Norcross, Georgia. Altima is a money services business and therefore subject to specific reporting regulations under the BSA. Typically, a money services business is any entity that engages in transactions relating to money orders, traveler’s checks, check cashing and currency exchange. Such businesses are required to register with FinCEN once every two years, in addition to other reporting requirements.
According to the assessment, Altima failed to comply with the registration requirements and implement an anti-money laundering program. The assessment alleges that Altima engaged in numerous monetary transactions with entities in Iran. The assessment goes on to state the potential civil penalties it has the ability to impose, specifically, up to $5,000 for each registration violation and up to $25,000 for failure to implement an anti-money laundering program. However, FinCEN only imposed a $5,000 fine against Altima.
The imposition of only $5,000 is great news for Altima. The fact that Altima failed to register repeatedly and implement the required program could have resulted in much larger fines. Altima was owned and managed by one individual, and dissolved in September 2010, which is perhaps why the assessment is minimal. The last money services business that received an assessment, in March of this year, was required to pay $25,000 in civil fines.
Any institution that engages in monetary transactions within the U.S. must be aware of FinCEN and it’s regulatory power. Further, for institutions engaging in transactions with sanctioned countries, such as Iran, investigations by the Office of Foreign Assets Control (OFAC) is also a possibility. It is extremely important to follow proper compliance procedures regarding the U.S. financial system in order to avoid legal action.
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.
Individuals Could Face Decades in Prison for Stock Manipulation Scheme – Attorney also Charged
Three stock promoters have been indicted for their roles in a stock manipulation scheme that defrauded investors. Timothy Barham Jr., 43, of Henderson, Tenn.; Nathan Montgomery, 30, of Henderson, Nev.; and Ryan Reynolds, 39, of Dallas, were each charged in a superseding indictment filed on April 28, 2011, in U.S. District Court for the Southern District of Florida. The superseding indictment charges Barham, Montgomery and Reynolds each with one count of conspiracy to commit securities fraud, wire fraud and mail fraud. The superseding indictment also charges six individuals who were originally indicted in February 2010 for their roles in the fraud scheme: Jonathan Randall Curshen, 46, of Sarasota, Fla.; Michael Simon Krome, 49, Long Island, N.Y.; Ronald Salazar Morales, aka “Ronny Salazar,” 39, of Costa Rica; Robert Lloyd Weidenbaum, 44, of Miami; and Eric Ariav Weinbaum, 37, and Izhack Zigdon, 47, both of Israel.
The defendants are all charged with one count of conspiracy to commit securities, mail and wire fraud. Additionally, as in the original indictment, the superseding indictment charges Krome, the attorney, with one count of securities registration violation, one count of obstruction of justice and one count of wire fraud. Weinbaum and Zigdon also continue to be charged with three counts of wire fraud. In addition, Curshen and Salazar each are charged with two counts of mail fraud, and Weidenbaum and Weinbaum each are charged with one count of mail fraud. The superseding indictment also charges Curshen and Salazar with one count of conspiracy to commit money laundering. The superseding indictment seeks forfeiture in the amount of $7 million.
Weinbaum and Zigdon took control of a company called CO2 Tech, which traded in the OTC market. Weinbaum and Zigdon obtained the shares by retaining Krome, a securities attorney. Krome allegedly evaded federal securities regulation requirements in order to provide co-conspirators with millions of unregistered shares of CO2 Tech that could not have otherwise been legally obtained.
In the indictment, the defendants fraudulently pumped up the market price and demand for CO2 Tech’s stock by making coordinated trades between themselves and making it appear that there were genuine investors in the market that were buying the shares. The defendants are also alleged to have made false and misleading press releases about CO2 Tech’s business relationships. After all the coordinated trades and false press releases artifically pumped the price of CO2 Tech, the defendants “dumped” their shares by selling them for huge profits at the expense of the general investing public.
Each count of wire fraud and mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. The fraud conspiracy charges carry identical penalties as the substantive fraud offenses, up to 20 years imprisonment. The securities registration violation carries a maximum penalty of five years in prison and a $10,000 fine and the obstruction count carries a maximum penalty of 20 years in prison and a $250,000 fine. The money laundering conspiracy charge carries a maximum penalty of 20 years in prison. Each participant is facing decades of prison time for their participation in this scheme.
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.
