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Richard Chichakli Arrested and Facing IEEPA Charges for Alleged Association with ‘Merchant of Death’
Last Thursday, the Southern District of New York announced the arrest of Richard Ammar Chichakli in Australia. Chichakli has been charged with violations under the International Emergency Economic Powers Act (IEEPA), money laundering, wire fraud, and conspiracy.
It is alleged that Chichakli is an associate of Viktor Bout, dubbed the “Merchant of Death” by law enforcement authorities and the press for his dealings in international arms trafficking. Bout allegedly established an international network to facilitate arms trafficking, and furnished arms to the former regime of Charles Taylor in Liberia. Bout was convicted in November 2011 in the Southern District of New York for allegedly selling weapons to the Fuerzas Armadas Revolucionarias de Colombia, FARC, and is currently serving his 25-year sentence.
Chichakli’s indictment focuses mainly on his alleged connections to Bout’s network of arms trafficking. The U.S. Government believes that Chichakli assisted in the management and operations of several of Bout’s airline companies that facilitated the transportation of illegal weaponry. The U.S. followed the lead of the United Nations, in that once the U.N. Security Council designated Chichakli in 2004, the U.S. followed thereafter. On April 26, 2005, Chichakli was placed on the Specially Designated Nationals List (SDN List) by the Office of Foreign Assets Control (OFAC) under the Liberia sanctions program.
The indictment alleges that in order to evade U.S. sanctions, Chichakli pursued airline operations under the guise of the names of others, and used the airline, named Samar Airlines, to engage in the transportation of illegal arms. It is further alleged that Chichakli attempted to purchase two airplanes from a U.S. aviation company. The indictment also cites money laundering, wire fraud, and conspiracy for the transfer funds in the amount of $1.7 million related to arms trafficking that passed through the U.S. financial system.
The U.S. has pursued Chichakli for years, and finally arrested him with the help of Australian authorities. Chichakli could have benefited from attempting to contact the U.S. Government first and contesting his designation through a formal administrative process. Pursuing a request for reconsideration through OFAC allows a designated person or entity to contest the designation and also provide reasons and evidence in support of the wrongful designation.
At this point, Chichakli is facing multiple federal charges that are rooted in IEEPA violations. The national security implications alone are difficult to overcome. If Chichakli argues that he did not engage in the overt acts willfully, and attacks the circumstantial evidence against him, it might work in his favor. The other course of action, which may be his best option, is to begin plea negotiations. If he can provide substantial assistance to the U.S. Government, his ultimate sentence may be reduced.
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.
Former Deputy Director of USAID Contractor and His Wife Accused of Embezzlement
Mark Adams, 43, a former deputy director at a private USAID contractor, and his wife, Latasha Bell, 36, have been indicted by a federal grand jury on charges that they acquired more than $1 million from a program meant to address global health problems such as HIV/AIDS. Among other things, Adams and Bell are accused in the indictment of using the money to renovate their home and purchase two luxury cars worth over $110,000.
The U.S. Agency for International Development, or USAID, is an independent government agency that lends support mostly to developing countries in order to assist with economic growth, global health and other development relief. According to the forty-page indictment, USAID contracted with an unidentified outside company to perform analysis and information management services. Adams served with the company as the deputy director and project manager on the contract.
The 23-count indictment was filed April 10, 2012 in the U.S. District Court for the District of Columbia. It includes one count of conspiracy, ten counts of wire fraud, two counts of mail fraud, seven counts of theft from a program receiving federal funds, one count of conspiracy to launder money, and two counts of aggravated identity theft. Both individuals pleaded not guilty to the charges at their arraignments on April 11, 2012.
Adams has been accused of using his position as deputy director to submit and approve false and fraudulent invoices worth more than $1 million between 2005 and 2010. The alleged invoices claimed to bill for services purportedly provided by Bell and companies controlled by Adams’s two friends, an unidentified co-conspirator and co-conspirator Everett Lipscomb Jr. The alleged scheme caused the USAID contractor to pay the invoices for services not rendered.
The indictment indicates that the unidentified co-conspirator provided testimony to the grand jury. Further, the press release issued by the U.S. Attorney’s Office for D.C. reveals that Lipscomb pleaded guilty to one count of conspiracy to commit wire fraud on March 2, 2012. The tedious detail provided in the indictment, and the fact that the indictment against Adams and Bell came several weeks after Lipscomb’s plea, indicates that the entire case against them is based on the statements and information provided by the co-conspirators.
The co-conspirators, who are childhood friends of Adams’, have managed to push a majority of the blame on Adams and Bell while receiving only minimal charges against themselves. It is unclear what, if any, charges have been brought against the unidentified co-conspirator, but Lipscomb’s plea reflects the favorable treatment he received for turning against Adams and Bell.
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.
TWO SOUTHERN CALIFORNIA LOAN OFFICERS CHARGED IN MORTGAGE FRAUD SCHEME
On February 2, 2012, the U.S. Attorney’s Office for the Southern District of California indicted Simon Saed Alizadeh and Kian Ashkanizadeh for allegedly engaging in a mortgage fraud scheme involving four homes in Carlsbad, California. The indictment charges Alizadeh and Ashkanizadeh with conspiracy, wire fraud, mail fraud, and money laundering.
In a press release issued on February 14, 2012, U.S. Attorney Laura E. Duffy alleges that Alizadeh and Ashkanizadeh, working for the mortgage company Southern California Finance, asked family members to provide their name and signatures on mortgage applications, leading to the qualification of approximately $1 million in mortgage funding for each of the four properties.
According to the indictment, Alizadeh and Ashkanizadeh arranged for $200,000 in “consulting fees” and $45,000 in “construction fees,” but no consulting or construction was ever performed. It is alleged that the funds would first be channeled into the bank accounts of relatives and friends and then cause the funds to be transferred or withdrawn to their own accounts.
Alizadeh and Ashkanizadeh will appear before United States District Judge Irma E. Gonzalez for a motion hearing on April 3, 2012. Count 1 of the indictment charges Alizadeh and Ashkanizadeh with Conspiracy. The maximum penalty is up to five years imprisonment, and the greater of a $250,000 fine or twice the gross pecuniary gain or twice the gross pecuniary loss. Count two is for Mail Fraud, which carries a maximum sentence of twenty years imprisonment, and the greater of a $250,000 fine or twice the gross pecuniary gain or twice the gross pecuniary loss. Count three and four are for Money Laundering, which carries a maximum twenty years imprisonment, and the greater of a $250,000 fine or twice the gross pecuniary gain or twice the gross pecuniary loss. Counts five through eight are for Money Laundering, which carries a maximum penalty of twenty years imprisonment, and a fine for the greater of $500,000 or twice the value of the property involved in the transaction.
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 Charged in Southern California for Alleged Multi-Million Dollar Mortgage Fraud Scheme
An indictment was unsealed Tuesday in the Southern District of California, charging a local real estate agent and eight others with multiple counts of conspiracy, wire fraud, money laundering and criminal forfeiture, for an alleged mortgage fraud scheme.
Eric Elegado, and eight other mortgage industry professionals, Charmagne Elegado, Theodore Cohen, Minh Nguyen, Regidor Pacal, Alexander V. Garcia, Roman Macabulos, Ramin Lotfi and Roderick Huerto, were allegedly involved in a scheme to defraud low-income immigrants in San Diego, California.
According to the indictment, Eric Elegado owned and operated real estate and mortgage brokerage businesses in San Deigo, and the other individuals were all employees. Allegedly, the individuals conspired together to obtain mortgage loans for unqualified buyers by falsifying and assisting others in falsifying the employment and salary information on the loan documents.
In this case, it is unclear whether the mortgage borrowers were aware of the allegedly falsified employment and income documents used to obtain these loans. As always, any person who willfully participates in a scheme to defraud has opened themselves up to a potential investigation and prosecution.
The documents would then be submitted to mortgage lenders. The mortgage lenders allegedly loaned more than $50 million dollars during the course of the scheme. According to the FBI press release, the mortgage companies, lending institutions, and financial institutions lost more than $15 million dollars.
Although the government’s focus has mostly been on large corporations involved in subprime mortgage lending, this does not mean that investigations of smaller companies and individuals has fallen to the wayside. Whether the case involves a financial institution or an individual, the U.S government has stepped up their investigative efforts to seek out those whom they believe are defrauding the system. One significant difference must be mentioned – corporations are punished by fines, such as the recent $26 billion dollar settlement between the big banks and the U.S. government for foreclosure abuses, whereas individuals must face potential prison time.
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 Executive at Gourmet Foods Company Sentenced to 30 Months in Prison for Embezzling Over $1 million from Her Employer
In the Central District of California, a woman was sentenced on February 13, 2012 for embezzling more than $1 million from her employer, a Santa Barbara-based gourmet food company. Lisa Sackie, 48, was sentenced by United States District Judge George H. Wu, who also ordered the defendant to pay $1.1 million in restitution to Future Food Brands, the parent company of Santa Barbara Bay Foods.
Sackie pleaded guilty to two counts of mail fraud in August of 2011, admitting that she wrote company checks to herself and to pay for personal expenses. Sackie pleaded to an information, and subsequently waived her right to a grand jury indictment. Sackie’s decision to plead to an information and waive her right to an indictment likely benefited her in sentencing because she admitted guilt early in the process and saved government resources. In fact, according to her sentencing memorandum and the sentencing guidelines, Sackie was facing a sentencing range of 33 to 41 months. Accordingly, Sackie was sentenced to 33 months in prison, the very bottom of her recommended sentencing range. Although her attorneys’ request for a variance of 33 months of probation was denied, Sackie benefited from cooperating, as reflected in the judge’s determination to sentence her at the bottom of the applicable range.
According to the plea agreement the government agreed to bring no additional charges against the defendant based upon her scheme to defraud her employer. Thus, instead of facing a multitude of fraud counts, Sackie only faced the maximum penalty of two fraud counts. Had Sackie not agreed to a plea agreement early on, the government would have likely convened a grand jury and charged her with a multitude of fraud counts dating as far back as 2004, which is when the government alleges Sackie’s scheme to defraud had begun. Depending on the full extent of the circumstances a defendant faces, it may be prudent to plea early, much like Sackie, and not put the government to its constitutional burden of proving a case.
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 United Nations Employee Sentenced for Fraud
Jeffery K. Armstrong, 52, of South Riding, Va., was sentenced today to 18 months in prison for obtaining more than $100,000 in salary payments by fraudulently holding concurrent jobs at the United Nations (U.N.) and the National Labor Relations Board (NLRB). He was ordered to serve a three-year term of supervised release following his sentence and to pay $128,153 in restitution.
Armstrong was convicted by a federal jury on October 21, 2011, on nine counts of wire fraud. He was indicted on June 28, 2011, by a federal grand jury in the Eastern District of Virginia for his scheme to defraud the U.N., an international organization committed to humanitarian and peace-keeping efforts, and the NLRB, an independent agency of the U.S. government.
According to evidence presented in the trial, in March 2008, Armstrong took a leave of absence from his position as a supervisory security specialist with the Department of the Army to accept a full-time position at the U.N. As an assistant chief of the Security and Safety Service at the U.N., Armstrong was responsible for all physical security of U.N. facilities in New York City, among other functions. According to evidence at trial, Armstrong received an annual salary from the U.N. of approximately $160,000. In February 2009, after working at the U.N. for almost a year, Armstrong applied for a position as chief of the security branch within the Division of the Administration at the NLRB in Washington, D.C. In April of 2009, Armstrong became a full-time employee at the NLRB, with an annual salary of approximately $121,000.
From approximately April to September 2009, Armstrong was an employee of both the U.N. and the NLRB. Armstrong concealed his dual employment from both employers by, among other things, dissuading NLRB personnel from contacting his supervisor at the U.N., submitting incomplete or inaccurate employment forms to the NLRB, and causing to be mailed to the NLRB false correspondence suggesting that he no longer worked at the U.N. In addition, Armstrong submitted medical leave documentation to the U.N., indicating that he was unable to work and was undergoing medical treatment, despite his full-time employment at the NLRB. According to the evidence presented at trial, Armstrong failed to notify his superiors at both entities of his concurrent employment and received more than $100,000 in concurrent salary.
One underlying issue that seems to be overlooked is the fact that the employers in this case, the U.N. and the NLRB, may have been somewhat negligent in failing to follow up on the information Armstrong was providing to them. As a chief of the security branch at the NLRB, one would think that past employers, including the U.N., would have been contacted rather than relying on paperwork provided by the potential employee. Further, the U.N. also appears to be negligent in failing to confirm whether Armstrong’s medical leave was valid. If both employers had acted diligently, Armstrong would not have been able to hold concurrent employment. If this was a civil case, these issues would be a larger factor in the case. However, in a criminal trial, negligence by others is hardly relevant as to whether a crime was committed.
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.
U.S. Attorney’s Office for the Southern District of New York Announces Extradition of Four Israeli Defendants Charged in Multi-Million Dollar Fraud Scheme
The US Attorney for the Southern District of New York recently announced that four defendants have been extradited from Israel on charges relating to their participation in multiple lottery telemarketing fraud schemes. Many of those charged in two indictments in 2008 and 2009 have already been arrested and have either plead guilty to conspiracy and/or fraud charges or been found guilty by bench trial.
The four recently extradited include Avi Ayache, Yaron Bar, and Ian Kaye, all of whom were arrested in Israel back in July of 2009 awaiting extradition to the United States. The fourth man, Shai Kadosh, who was indicted back in September 2008 was a fugitive until he was arrested in Israel in December of 2011.
The four men and their co-conspirators allegedly operated phony “lottery prize” schemes out of numerous boiler rooms in Israel. The schemes targeted hundreds of victims, mostly elderly, throughout the United States. To identify potential victims, the defendants purchased from list brokers the names and contact information of U.S. residents who subscribed to sweepstakes lotteries. They then contacted the victims and solicited information about their finances by falsely telling them they had won a substantial cash prize that they would receive as soon as they paid the necessary fees and taxes. In reality, there was no lottery prize. Collectively, the American victims in these lottery fraud schemes lost approximately $25 million.
Ayache, Bar, Kaye, and Kadosh are each charged with one count of conspiracy to commit wire fraud and mail fraud through telemarketing, which carries a maximum penalty of 30 years in prison. In addition, Ayache, Bar, and Kadosh are each charged with two substantive counts of wire fraud through telemarketing, each of which carry a maximum potential penalty of 30 years in prison. Ayache and Bar are also charged with conspiracy to commit money laundering, which carries a maximum potential penalty of 20 years in prison. The enhanced fraud penalties are a result of the telemarketing scheme employed by the defendants. According to 18 U.S.C. 2326 there is up to a 10 year penalty enhancement when the fraud is carried out by telemarketing and targets at least 10 elderly people over the age of 55.
The government will also seek forfeiture and mandatory restitution of up to $25 million in substitute assets to recover the defendants’ ill-gotten gains.
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.
Blagojevich’s Sentence Sets a Precedent
Judge James Zagel sentenced Rod Blagojevich on Wednesday in the Northern District of Illinois on 18 counts of corruption, including his June convictions on charges that he tried to sell or trade an appointment to President Barack Obama’s U.S. Senate seat for campaign cash or a top job. The impeached governor must report to prison on February 16.
Prosecutors in the case were seeking 15 to 20 years for Blagojevich, while defense counsel was arguing for only 4 to 5 years. Judge Zagel was clearly upset with Blagovich when he pronounced his sentence, stating “When it is the governor who goes bad, the fabric of Illinois is torn, disfigured and not easily repaired.”
In federal court, judges typically follow the Federal Sentencing Guidelines to determine how much time a defendant will serve. The Supreme Court has ruled that the Guidelines are not mandatory, but most federal judges determine their sentence based on how the convicted counts fit into the Guideline range. Unfortunately for Blagojevich, not only was he convicted on 18 counts, but he was also a public official at the time which fares a higher sentence.
Blagojevich’s first trial took place in the summer of 2010 and he was convicted of making false statements to FBI agents when he told them in an interview on March 16, 2005, that he did not track, or want to know, who contributed to him or how much money they contributed to him, but the jury was deadlocked on all remaining counts.
The government went after Blagojevich again in the spring of 2011, and this time he was convicted on 17 additional counts, including 10 counts of wire fraud, two counts of attempted extortion, two counts of conspiracy to commit extortion, one count of soliciting bribes, and two counts of conspiracy to solicit and accept bribes.
Federal prosecutors and the judge have made a spectacle of this case, as Blagojevich’s lengthy sentence is surely meant to heed a warning to others not to engage in public corruption practices. Unfortunately, the ones suffering the most in this case are Blagojevich’s young daughters, who will be adults when he is released in 14 years.
Blagojevich is the fourth Illinois governor to be sentenced to prison. The previous governor, George H. Ryan, is still serving time for his corruption sentence and is set to be released in 2013.
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.
