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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.
Nine Family Members in Alabama Indicted for Tax Fraud and Identity Theft Conspiracy
Barbara Murry, Douglas Murry, Douglas Murry III, Yolanda Moses, Lee Moses, Veronica Temple, Jeffrey Temple, Almetta Johnson and Courtney Johnson were charged in an indictment by a federal grand jury in the Middle District of Alabama on a variety of counts stemming from an alleged identity theft and tax fraud scheme, according to the Justice Department and the Internal Revenue Service (IRS). The 33-count indictment charges all nine with conspiring to defraud the United States and to commit theft of public funds and with theft of public funds. Barbara Murry, Yolanda Moses and Veronica Temple are also charged with aggravated identity theft. The indictment was unsealed last Friday, May 4.
According to the indictment, all of the individuals are related to each other. Barbara Murry owned and operated B&B Weaving Shop, located in Montgomery, Alabama. B&B Weaving Shop was located in the same building as B&B Tax Service. Barbara Murry’s daughter, Yolanda Moses, owned and operated B&B Tax Service. Between 2006 and 2012, Barbara Murry, Yolanda Moses and Veronica Temple allegedly filed false federal income tax returns with stolen identities and had refunds directly deposited into the bank accounts of their family members and others. According to the government, the bank accounts received at least $1.3 million in false tax refunds.
The specific instances of conduct included in the indictment are limited to deposits made in late 2011, and a majority of the deposits are in the amount of $1,400. This seems to be an odd time of the year to receive tax refunds. Further, the indictment alleges that the conspiracy was ongoing since approximately 2006, yet the deposits all take place in 2011. An indictment does not have to provide specific details of the circumstances giving rise to the case, but an individual has the right to be put on fair notice of the charges against them. The government is either being overly inclusive in the indictment regarding the dates of the alleged conspiracy, or the indictment fails to include everything.
Unfortunately, the indictment does not discuss in detail the government’s theory of the case and fails to connect the dots between the allegations and counts contained therein. The indictment only gives a cursory overview of the alleged scheme but manages to accuse nine family members of conspiring to defraud the IRS by means of identity theft. As this case continues, it will be interesting to hear the government’s foundation for the alleged conspiracy of fraud and identity theft.
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.
Six Charged with Scheme to Defraud IRS by Using Deceased Taxpayer Information
A 10-count indictment was unsealed Wednesday charging six people with various offenses related to a scheme to defraud the Internal Revenue Service (IRS) of at least $1.7 million in fraudulently obtained tax returns, often filed in the names of recently deceased taxpayers, according to Justice Department press release released Wednesday.
According to the indictment, between April 15, 2009, to at least August 2011, Muaad Salem, Fahim Sulieman, Hanan Widdi, Najeh Widdi, Hazem Woodi and Daxesj Patel and other unknown co-conspirators allegedly defrauded the United States by filing false and fraudulent tax returns, many in the names of recently deceased taxpayers, and directing refunds to controlled locations in the state of Florida.
The indictment further alleges that the U.S. Treasury checks generated by the false and fraudulent returns would then be sent by the U.S. mail to co-conspirators in Ohio who would sell and distribute the checks for negotiation at various businesses and banking institutions.
The six are also charged with three counts of mail fraud and two counts of aggravated identity theft. In addition to the other charges, Patel is separately charged with two counts of making a false claim against the United States and with making a false statement to law enforcement officials investigating the crimes.
This case contemplates a hybrid of alleged crimes centered around a financial scheme to defraud the IRS. Unknown to most taxpayers, the IRS has its own Criminal Investigation Unit responsible for investigating fraudulent tax crimes. The CI Unit is actually quite substantial, with twenty-six field offices and 2,800 special agents. Investigations are usually targeted at legal source tax crimes, illegal source financial crimes, and counter narcotics and terrorism crimes. The CI Unit works in conjunction with the Justice Department to bring criminal charges against a person or entity once the fraud is substantiated by documentary evidence, usually just by following the paper trail connected to the money.
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.
Fifty Individuals Indicted in Puerto Rico with Alleged Identity Fraud
Fifty individuals were charged in an indictment unsealed yesterday in Puerto Rico, a U.S. territory, with conspiracy to commit identification fraud in connection with their alleged roles in a scheme to traffic the identities of Puerto Rican U.S. citizens and corresponding identity documents.
The one-count indictment was returned by a federal grand jury on December 29, 2011. Defendants were arrested yesterday in multiple districts throughout the United States and Puerto Rico and will make initial appearances in federal court in the districts in which they were arrested. At this time, it is not clear if the individuals will be transported to Puerto Rico to face charges, or will remain in the district in which they were arrested.
According to the indictment, from at least April 2009 to December 2011, alleged conspirators in 15 states and Puerto Rico trafficked the identities of Puerto Rican U.S. citizens, corresponding Social Security cards, Puerto Rico birth certificates and other identification documents to undocumented aliens and others residing in the United States.
Although Puerto Rico is an unincorporated territory of the United States, those born in Puerto Rico are U.S. citizens. U.S. federal law is applied to Puerto Rico, such as federal taxes and federal criminal laws, yet Puerto Ricans are not permitted to vote in U.S. federal elections. Current actions are being taken by the Government of Puerto Rico to establish itself apart from the United States, but as it stands today Puerto Ricans are U.S. citizens, thereby opening themselves up to this kind of identity theft.
The indictment alleges that conspirators located in the Savarona area of Caguas, Puerto Rico, (Savarona suppliers) obtained the Puerto Rican identities and corresponding identity documents. Conspirators in various locations throughout the United States (identity brokers) solicited customers. The identity brokers allegedly sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The indictment alleges that identity brokers ordered the identity documents from Savarona suppliers, on behalf of the customers, by making coded telephone calls, including using terms such as “shirts,” “uniforms” or “clothes,” to refer to identity documents. Specifically, the brokers asked for “skirts” for female customers and “pants” for male customers in various “sizes,” which referred to the ages of the identities sought by the customers.
According to the indictment, payment was made through a money transfer service. Savarona suppliers allegedly retrieved the payments from the money transfer service and then sent the identity documents to the brokers using express, priority or regular U.S. mail. The indictment alleges that various conspirators sent or received money and mail parcels.
As alleged in the indictment, the customers generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses.
If convicted, each individual faces a maximum sentence of 15 years in prison and a $250,000 fine, as well as forfeiture. To view the Department of Justice press release on this case, please click here.
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 Investment Fund Manager from Los Angeles Charged with Defrauding Investors
John Farahi, of Bel Air Estates, California, was named in a 41-count indictment returned on December 7, 2011 by a federal grand jury. The former investment fund manager defrauded investors out of millions of dollars by falsely promising investors their money would be invested conservatively to purchase corporate bonds backed by the Troubled Asset Relief Program (TARP) and then collaborating with his corporate counsel to cover-up the fraud.
Farahi, a former Reno, Nevada City Council Member and Farsi-language radio investment advisor, instead used the investment funds for a variety of personal purposes, including to support his family’s lavish lifestyle, to make Ponzi payments to early clients of his investment fund, and to trade in high-risk and speculative future options trading. Farahi was able to attract many of his clients through his daily radio show in which he touted a conservative investment philosophy. Most of his clients were members of the Southern California Iranian-Jewish community.
In the face of huge trading losses at the end of 2008, Farahi allegedly tried to extend the scheme by drawing down extensively on lines of credits at banks while making false statements to those banks about his financial condition. The victim banks included TARP recipients Bank of America and U.S. Bank as well as Sun West Bank.
The indictment charges Farahi with 16 counts of mail fraud, one count of wire fraud, five counts of offering for sale unregistered securities, four counts of loan fraud, one count of aggravated identity theft, five counts of alteration of documents, one count of suborning perjury, one count of concealing a material fact, one count of witness tampering. If he is convicted of the 40 counts in which he is charged, Farahi would face a statutory maximum sentence of 717 years in federal prison.
It is alleged that Farahi’s scheme lasted from 2005 until 2010. The Securities Exchange Commission (SEC) had filed a federal complaint alleging violations of federal securities laws against Farahi and other in January 2010. Many of the charges Farahi now faces are derived from his attempts to mislead, conceal, and redirect the SEC’s investigation. Otherwise known as cover-up crimes, targets of federal investigations often get themselves into more trouble early on in an investigation by lying to investigators or acting unethically. Now that the SEC has referred the case to the DOJ for criminal prosecution, Farahi now faces a significant number of charges in addition to his initial fraud 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.
