“If you defraud investors or otherwise engage in fraudulent schemes, then you will eventually get caught—and when you get caught, you should expect to be prosecuted by the federal government and face a long sentence with no parole,” said U.S. Attorney Jerry Martin. “As demonstrated by these cases, the U.S. Attorneys Office and our law enforcement partners are aggressively pursuing those who seek personal gain from fraudulent activity, with no regard for the victims left in their wake. Fraudulent schemes always catch up to the fraudsters and the consequences of running one are severe.”
Recent cases indicted or otherwise charged with federal crimes where significant financial losses resulted from fraudulent schemes include:
Aaron Vallett, 34, of Nashville, Tenn., was charged in a criminal information on February 13, 2012,with mail fraud, wire fraud, and theft from an Employee Retirement Income Security Act (ERISA) plan.
Vallett was a financial advisor who owned his own firm in Brentwood, Tennessee and offered various financial services, including investment advice and 401(k) management. It was through those services that Vallett defrauded numerous clients of approximately $5 million dollars. Much of the loss came from investor-clients who placed money in one of Vallett’s investment “Funds.” Instead of investing that money as promised, Vallett kept it in his company’s operating account and spent it on various personal and business expenses. Vallett’s 401(k) advisory clients suffered a similar fate. Because Vallett was the plan administrator for several clients’ 401(k) plans, he had access to their retirement accounts and transferred funds from those retirement accounts to his operating account and again, spent the money on personal and business expenses. He later attempted to conceal his fraud by lying to securities regulators and falsifying certain documents.
David Mark Lineberry, 41, of Kissimmee, Fla., formerly of Mt. Juliet, Tenn.; and Delaina Thompson, 40, of Mt. Juliet, Tenn., were indicted by a federal grand jury in Nashville on February 8, 2012, on charges of conspiracy to commit bank fraud and wire fraud, six counts of bank fraud, one count of mail fraud, two counts of wire fraud, and three counts of money laundering.
The indictment alleges that between in or about January of 2008 and September 29, 2011, Lineberry and Thompson conspired to commit bank fraud and wire fraud in connection with a loan obtained from Branch Banking and Trust Company for the purpose of constructing Hotel Indigo in downtown Nashville. According to the indictment, Branch Banking and Trust Company suffered a loss totaling approximately $5,046,659.31 and Fidelity National Title Insurance Company suffered a loss totaling approximately $4,158,777.69 as a result of the alleged scheme to defraud.
James Shaub II, 54, of Nashville, was indicted by a federal grand jury on February 8, 2012 and charged with bank fraud and money laundering.
Shaub was the president and chief executive officer of Southeast Waffles, Inc., a franchise of Waffle House Restaurants. Over a period of approximately eight months, Shaub, with the assistance of his chief financial officer, executed a check kiting scheme between First Bank and SunTrust Bank with a resulting loss to SunTrust Bank of approximately $3.7 million.
William Weaver, III, 35, of Brentwood, Tennessee, was charged in a criminal information on February 3, 2012, with wire fraud and money laundering.
Weaver is a former Nashville attorney who committed three related frauds that caused a total loss of over $2.5 million. The frauds fall into two schemes. The first scheme occurred while Weaver worked as a manager in R.R. Donnelly’s tax group. In that position, he stole over $1 million by directing payments to a fake “consulting” company which he had created. The second scheme occurred while Weaver worked as a lawyer in his own title company, W.G. Weaver Title Co. That scheme had two components: (1) Weaver misdirected to his own account approximately $400,000 of a client’s funds intended to pay off a mortgage; and (2) Weaver converted to his own use over $1 million of a corporate client’s funds that were to be held in escrow pending a property transaction. In both cases, Weaver used and lost, all of the fraudulent proceeds by day-trading.
Roy Daniel Webb, 42, of Nashville, was charged in a criminal information on January 4, 2012 and charged with wire fraud.
From 2007 to 2010, Webb, a licensed insurance producer, doing business as Security Risk Managers, located in Brentwood, Tennessee, negotiated multi-tiered policies underwritten by multiple insurers for numerous large businesses. As part of the scheme, Webb misrepresented and over billed the amount of premiums to his customers, receiving approximately $319,000 in proceeds from his scheme to defraud.
In addition, Webb kept his customer’s premium payments and told them that they had coverage, when in fact they did not. The case was referred to the FBI from the Tennessee Department of Commerce and Insurance (TDCI) after TDCI received multiple complaints from unrelated insurers that Webb had counterfeited renewal and billing notices and provided the notices to policyholders in order to misappropriate premiums from them. The victims included, among others, Litchfield Land Holding, LLC; Hirschfeld Holdings, L.P.; and Stanlou Tobacco Company, Inc.
Bernard Stanton, 22, Troice Leslie Stanton, 30, Connie Rena Stanton, 50, Shawanna Nichole Bolden, 29, and Canisha Denise Alred, 28, all of Nashville, were indicted by a federal grand jury on January 25, 2012, and charged with conspiracy, bank fraud and wire fraud, after devising and participating in a scheme to defraud Wal-Mart Stores of approximately $700,000.00.
The scheme consisted of utilizing the personal checks and identification of various individuals to fraudulently purchase Green Dot gift cards which the defendants would then use to obtain cash through ATM debit transactions or electronic transfers. The scheme was conducted at multiple Wal-Mart Stores in more than a dozen states.
Ricky R. Ingram, Sr., 53, of Rembert, South Carolina, Tommy L. Walton, Sr., 74, of Greenville, South Carolina, and Tommy L. Walton, Jr., 32, of Huntersville, North Carolina, were indicted by a federal grand jury on January 19, 2012 , on mail and wire fraud charges, based upon kickbacks paid by the Waltons to Ingram, while he served as the president of the Clarksville, Tennessee Department of Electricity, in exchange for consulting work that he awarded to them.
During the 10 months that he served as president of the Clarksville Department of Electricity, Ingram approved no-bid consulting work for various projects purportedly performed by Tommy L. Walton, Sr. and his son, Tommy L. Walton, Jr. The younger Walton submitted 14 invoices to the Clarksville Department of Electricity totaling $156,139.39 during a period of six months. During that same time, Walton, Jr. wired funds totaling $51,500 to Ingram’s bank account and to a debt recovery firm collecting debts owed by Ingram. Walton, Sr. submitted eight invoices to the Clarksville Department of Electricity totaling $32,150 during a period of seven months. During that time, Walton, Sr. issued checks to Ingram totaling $16,015 and deposited those checks into Ingram’s bank account.
Edward Shannon Polen, 41, of Greenbrier, Tennessee, was charged in a criminal information on January 9, 2012, with mail fraud, wire fraud, bank fraud and money laundering, after operating an investment Ponzi scheme that defrauded approximately 68 investors of more than $15.3 million.
Polen’s overall scheme to defraud involved three separate, but connected, investment programs in which victims were promised a return of their invested principal along with a substantial profit. All three investment programs were bogus, and Polen never invested any of the money he solicited from victims. Instead, he used investor funds to place bets with local bookies, pay gambling debts, and repay other investor-victims.
The bogus investment opportunities created by Polen were identified as the “John Deere Investment,” a fictional opportunity to purchase repossessed tractor and farm equipment, which were then resold within 30 days for a profit; the “Greenway Investment,” fictional construction of “greenways” by various governmental agencies, with Polen supposedly participating as a supplier of materials; and the “Tennessee Valley Authority (TVA) Coal Ash Cleanup Investment,” related to the coal ash spill at TVA’s Kingston Fossil Plant, with Polen offering investors the opportunity to participate in the clean-up process and be reimbursed by the government at a profit. Polen’s use of the three investment opportunities was all part of the same Ponzi scheme because he routinely “rolled-over” funds from one investment to the next, and used incoming funds designated for one investment to pay-off investors in another.
Polen was successful in soliciting investors for the schemes, in large part, because of his reputation in Robertson County, Tennessee for being a savvy and trustworthy businessman with “insider” political connections. Polen had been active in local and state politics, having served in a variety of elected or appointed public positions, including County Commissioner for Robertson County, Chairman of the Democratic Party of Robertson County and had been appointed during the administration of former Tennessee Governor Phil Bredesen to serve as a member of the Tennessee Collection Services Board, an appointment that Polen still held at the time he was arrested in March, 2011. Polen’s victims were unaware that he had a serious gambling problem, and needed a continuous flow of cash to support his gambling activities.
Francisco Arias, 43, of Nashville, was indicted by a federal grand jury on October 5, 2011, and charged with wire fraud, securities fraud and money laundering.
Arias was a former resident of Florida who claimed to be a successful day trader and a disgruntled member of an elite, special-operations military unit. He used that unusual combination of claims to defraud several investors, including his father-in-law, who was his principal business partner.
Arias’s scheme centered around alleged currency trading on the foreign exchange (Forex) market and two related investment-consulting businesses, Adeius Corporation (Adeius) and Adeius Capital Management (ACM), which were formed by Arias and his father in law. Arias deceived his father in law into forming the companies and doing nearly all the front work for the businesses, while Arias allegedly performed the investing. In reality, Arias took money from clients but invested very little of it, stealing most instead. Ultimately, Arias parted ways with his father-in-law, was sued civilly by several victims and declared bankruptcy. He is now in federal prison in Miami on unrelated charges.
Roger Farley, 53, of Centerville, Tennessee was sentenced on January 31, 2012, to 46 months in prison and ordered to pay more than $1.2 million in restitution for his part in a conspiracy involving fraudulent loans and bribery of a local bank’s loan officer.
Farley was indicted by a federal grand jury in August, 2010 and subsequently pleaded guilty to one count of criminal conspiracy and one count of bank bribery. The fraud subjected the First Federal Bank in Centerville, Tenn. to more than $1.8 million of loss when the loans defaulted. Two co-defendants, Jarrod Jordan,32, of Paragould, Ark., formerly of Hohenwald, Tenn. and Charles Mikan Harris, 34, of Clarksville, Tenn., still await sentencing.
Each defendant in these cases, if convicted, faces a maximum of at least 20 years in prison and a $250,000 fine.
Charges brought in the cases outlined above are representative of the high priority given to fraud cases by the U.S. Attorney’s Office and are the result of the coordinated efforts of the U.S. Attorney’s Office-White Collar Crime Unit and the following agencies:
The FBI; the U.S. Secret Service; the IRS-Criminal Investigation; the U.S. Postal Inspection Service; the U.S. Department of Labor-Employee Benefit Security Administration; the U.S. Securities and Exchange Commission; The Financial Industry Regulatory Authority; the FDIC-OIG; the TVA-OIG; the Special Inspector General-Troubled Asset Relief Program (SIGTARP); the Tennessee Department of Commerce and Insurance-Securities Division; the Tennessee Attorney General’s Office; The Tennessee Bureau of Investigation; and the Hendersonville, Tennessee Police Department.
These cases are being prosecuted by Assistant United States Attorneys assigned to the White Collar Crime Unit, including; John K. Webb; Sandra G. Moses; Ty Howard and Byron Jones.
Charges brought by an indictment or criminal information are merely accusations and are not evidence of guilt. Each defendant has the right to a trial, at which, the government must bear the burden of proof beyond a reasonable doubt.
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