Rochester Man Pleads Guilty to Wire Fraud and Money Laundering

MINNEAPOLIS—Today in federal court, a 35-year-old Rochester man pleaded guilty to wire fraud and money laundering. Jason Michael Meyer, who was charged via an information on August 21, 2012, made his initial appearance in federal court today and pleaded guilty to one count of wire fraud and one count of money laundering. He entered his plea before United States District Court Judge Ann D. Montgomery.

In his plea agreement, Meyer admitted that he started an investment company, 3 Hooligans Investment Properties, LLC (3 Hooligans), in 2007. Meyer then represented that he was an experienced investor and began soliciting people to invest their money with 3 Hooligans. He promised his clients both significant and rapid returns for their investments, with no risk, and deposited their money into a bank account he opened at Wells Fargo. However, instead of investing their money, Meyer often used the funds to pay for his personal expenses, including payments on his house in Rochester, family vacations, and car payments on his wife’s BMW. To continue the scheme, Meyer found new clients and used their money to pay previous clients.

Until the fraudulent scheme was discovered in 2010, Meyer participated in approximately 30 transactions each of money laundering and wire fraud that the government believes resulted in losses exceeding $7 million.

For his crimes, Meyer faces a potential maximum penalty of 20 years in prison for wire fraud and 10 years in prison for money laundering. Judge Montgomery will determine his sentence at a future hearing, not yet scheduled.

This case was the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. The case is being prosecuted by Assistant U.S. Attorney Laura M. Provinzino.

Homestead Man Indicted in BP Claims Fund Fraud Scheme

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service, Miami Division; Paula Reid, Special Agent in Charge, United States Secret Service; and Richard Walker, Special Agent in Charge, U.S. Department of Labor, Office of Inspector General-Office of Labor Racketeering and Fraud Investigation, announced the indictment of Jean Mari Lindor, 31, of Homestead, Florida, for his participation in filing false claims in connection with the Deepwater Horizon explosion and pollution incident in the Gulf of Mexico. More specifically, the indictment alleges mail fraud, wire fraud, and access device fraud, all in connection with fraudulent claims filed by the defendant for lost income against the Gulf Coast Claims Facility, in violation of Title 18, United States Code, Sections 1341, 1343, 1029(a)(2) and (b)(1), and 2.

Lindor previously appeared in court after his arrest on a criminal complaint related to this conduct, and was ordered detained pending trial as a risk of flight. The case has been assigned to the U.S. District Judge K. Michael Moore. If convicted of the charges in the indictment, Lindor faces possible terms of imprisonment of up to 20 years on each of the five counts of mail fraud and wire fraud and up to 10 years’ imprisonment on the three counts of access device fraud.

According to the allegations in the indictment and statements in court, in June 2010, BP established the Gulf Coast Claims Facility (GCCF) for the purpose of administering, mediating, and settling certain claims of individuals and businesses for costs, damages, and other losses incurred as a result of oil discharges due to the April 20, 2010 explosion and fire on the Deepwater Horizon, an oil rig in the Gulf of Mexico. In August 2010, the GCCF began receiving and processing claims from individuals and businesses for costs, damages, and other losses they had incurred as a result of the Deepwater Horizon incident, paying the claims from a $20 billion Trust Fund established for that purpose.

The indictment alleges that Jean Mari Lindor filed fraudulent claims against the fund, in his own name and in the name of a not-for-profit business he established, called Noula, Incorporated, located in Homestead. According to the indictment, Lindor sought Emergency Assistance Payments of $12,000 and $25,000, respectively, on his personal and business claims.

To execute his scheme to defraud the GCCF, Lindor used the mail and the Internet to open the claims, and to submit required forms and documentation, including employment verification letters and tax return documents. The indictment alleges that the documents Lindor provided in November and December 2010 were materially false in that they represented that Lindor was an employee of an organization in the Florida Keys at the time of the spill and that his hours and income had been curtailed as a result of the Deepwater Horizon incident. Those statements were false.

The indictment further alleges that Lindor used unauthorized access devices during the criminal conduct, consisting of the unique GCCF claim numbers assigned to his fictitious claims, and without which he would have been unable to communicate with the GCCF, or cause payments to be issued to them.

Mr. Ferrer commended the investigative efforts of the FBI, U.S. Postal Inspection Service, the U.S. Secret Service, the Department of Labor Office of Inspector General, and the U.S. Citizenship & Immigration Service, Fraud Detection and National Security Directorate. The case is being prosecuted by Assistant U.S. Attorney Thomas Watts-FitzGerald.

An indictment is only an accusation and a defendant is presumed innocent until and unless proven guilty.

Members of the public can report fraud, waste, abuse, or allegations of mismanagement involving disaster relief operations, including the 2010 Deepwater Horizon oil spill, through the National Center for Disaster Fraud (NCDF) Disaster Fraud Hotline at 877-NCDF-GCF (623-3423), the Disaster Fraud Fax at 225-334-4707, or the Disaster Fraud e-mail at disaster@leo.gov.

Fen-Phen Fraud Doctor Convicted

PHILADELPHIA—Dr. Abdur Razzak Tai, 79, of Kissimmee, Florida, was convicted today of a fraud scheme involving a trust fund set up to compensate victims of the Fen-Phen diet drug. Tai, who practiced cardiology under the name A. Razzak Tai, M.D., and through Tri-County Doctors, Inc. and Medical Legal Consultants, Inc., was indicted on six counts of mail fraud and seven counts of wire fraud.

American Home Products Corporation, later known as Wyeth, entered into a class action settlement, which established a Trust to pay benefits to persons injured by Fen-Phen with money contributed by Wyeth. Between 1997 and 2009, Tai devised a scheme to defraud the Seventh Amendment, the Trust and Wyeth, and to obtain money and property from them by means of false and fraudulent representations. He reviewed the echocardiograms of more than 1,100 patients who filed claims with the American Home Product Settlement Trust in Philadelphia and falsely certified that the patients’ tests showed that they had sustained heart damage. In reality, many of those claimants had not been harmed.

For at least one lawyer, Dr. Tai was paid a set fee of $100 for each echocardiogram that he read. In addition, Tai was to be compensated $1,500 for each claimant who qualified for benefits when that patient’s claim was paid. Dr. Tai wrote reports and signed certifications attesting that claimants had suffered heart damage on some occasions when he knew that the tests showed that they had not and, on other occasions, when he knew that he had not personally reviewed the test results to determine whether they had suffered heart damage. By misreporting measurements from the echocardiogram, the severity of a claimant’s medical condition could be exaggerated, thereby improperly qualifying the claimant for hundreds of thousands of dollars more in benefits. Dr. Tai certified that some patients qualified for the increased settlement benefits when he knew they did not.

At trial, Dr. Tai testified that his medical reports had been forged by the mass-tort lawyer who had hired him and who had paid him on a contingency fee basis. The jury returned a verdict of guilty on all 13 counts after deliberating for less than two hours.

U.S. District Court Judge Juan R. Sanchez scheduled a sentencing hearing for December. Each count of mail and wire fraud carries a statutory maximum sentence of 20 years in prison.

The case was investigated by the FBI and U.S. Postal Inspection Service and is being prosecuted by Assistant United States Attorney Paul Shapiro.

Principals of Mortgage Brokerage Arrested in Equity-Skimming and Foreclosure Avoidance Scheme Targeting Distressed Homeowners

LOS ANGELES—The top two managers at a Westwood-based mortgage brokerage company have been arrested on federal charges relating to a foreclosure avoidance and equity-skimming scheme that targeted distressed homeowners. According to an indictment in this case, the scheme led several mortgage lenders to disburse more than $15 million in loan proceeds—with nearly half of that being lost to the fraud conspiracy.

Federal authorities on Tuesday arrested David Singui, 49, of Inglewood, and Aziz Meghji, 35, of Los Angeles, who were, respectively, the principal owner and the second-in-charge at Direct Money Source (DMS), a mortgage brokerage which allegedly operated as an equity-skimming operation that took possession of distressed homeowner’s equity under fraudulent pretenses and also defrauded mortgage lenders.

A third defendant in the case—Kiet Truong, 27, of Hawthorne, who worked at DMS, surrendered to authorities yesterday morning.

The fourth defendant named in the 42-count indictment—Starr Smith, 31, whose last known address was in Long Beach, is a fugitive currently being sought by authorities.

The federal grand jury indictment, which was returned on September 6, charges all four defendants with conspiracy, wire fraud, loan fraud and aggravated identity theft. Singui and Meghji are additionally charged with money laundering.

DMS held itself out as a company with a “Fresh Start Program” that was devoted to assisting distressed homeowners avoid foreclosure by arranging to have their homes purchased by so-called “credit investors,” who would hold the properties for 12 months and then sell them back to the original homeowners after they restored their credit ratings. In fact, as alleged in the indictment, DMS was an equity-skimming operation that took possession of distressed homeowner’s equity under fraudulent pretenses. the scheme allegedly defrauded mortgage lenders in connection with loans on approximately 50 different properties.

As part of the scheme, DMS told distressed homeowners that it would provide affiliated “credit investors” with good FICO scores, which the “credit investors” would use to provisionally purchase the properties for one year, thereby avoiding foreclosure on the properties. During this period, the distressed homeowners could remain in their homes and repair their credit and, at the end of the 12-month period, they could repurchase their homes at a lower interest rate, according to promises allegedly made by DMS. The distressed homeowners were told that, because they had equity in their homes, DMS would be able to draw down on the equity and make monthly mortgage payments on behalf of the homeowners during the one-year period in which they were to repair their credit.

In fact, according to the indictment, DMS took title to more than four dozen properties belonging to the distressed homeowners it targeted and simultaneously misappropriated the existing equity in their homes. Using “straw borrowers” as the “credit investors,” DMS orchestrated loan transactions that allowed DMS to obtain access to the distressed homeowners’ equity. As alleged in the indictment, DMS and its principals falsified the employment, bank account and income information of the straw borrowers on the loan applications. DMS also allegedly fabricated fictitious bank statements to support this false information on the loan applications in order to facilitate the approval of these fraudulent loans.

At the conclusion of these transactions, DMS usually ended up with approximately $100,000 equity per transaction, plus around $35,000 in fees and commissions associated with each loan. In the meantime, each of the straw borrowers ended up owing approximately $300,000 or more on loans that went into default because DMS did not make the 12 months of mortgage payments as promised.

As a consequence of this scheme, the mortgage lenders lost more than $7 million on approximately 50 different fraudulent loans.

Singui and Meghji were arraigned on the indictment on Tuesday afternoon. They both entered not guilty pleas, and a federal magistrate judge ordered them held without bond. Meghji asked for a bond hearing that is scheduled for Tuesday afternoon.

Truong was arraigned yesterday afternoon. He pleaded not guilty and was released on a $100,000 bond.

This case has been assigned to United States District Judge Christina A. Snyder. A trial has been scheduled for November 6.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

If convicted on all charges in the indictment, Singui would face a statutory maximum sentence of 855 years in federal prison, while Meghji would face a maximum sentence of 815 years in prison.

Truong and Smith similarly would face potential sentences of hundreds of years in prison if they are convicted.

This case is the result of a joint investigation by the Federal Bureau of Investigation, the United States Postal Service and IRS-Criminal Investigation.

This prosecution is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 United States Attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

[b]Contact: [/b]

Assistant United States Attorney Paul Stern

Major Frauds Section

(213) 894-0715

Assistant United States Attorney Monica Tait

Major Frauds Section

(213) 894-2931

Florida Man Sentenced for Role in European Fraud Scheme

Defendant Funneled Millions in Earnest Money Through Bogus Escrow Account

ATLANTA—Eric Dallas, 41, of Panama City, Florida, was sentenced today by United States District Judge Steve C. Jones to serve five years in federal prison on the charge of conspiracy to commit wire fraud.

“Eric Dallas preyed on small business owners who were trying to secure financing for their businesses. Instead of providing the start-up or investment funds promised, the defendant stole millions of dollars in earnest money. Now he will spend five years in prison,” said United States Attorney Sally Quillian Yates.

Ricky Maxwell, Acting Special Agent in Charge, FBI Atlanta Field Office, stated: “While the FBI often investigates elaborate and varied schemes to defraud, the basic commonality is that of misplaced or abused trust and greed. Mr. Dallas had no regard for his victims as people and saw them as merely an opportunity to enrich his own bank account.”

Dallas was sentenced to five years in prison to be followed by three years of supervised release, and ordered to pay $3,199,050 in restitution. Dallas was convicted of these charges on July 6, 2012, upon his plea of guilty to a criminal information.

According to United States Attorney Yates, the charges, and other information presented in court: In 2010, two Americans based in Germany, Kenneth Swenson and Heather Cote, used the Internet and telephone to promise prospective small business borrowers and others in the United States that they could assist them in securing financing from wealthy Eastern European investors. Swenson and Cote represented to victims that the investors required payment up front of “100 percent refundable consideration fees,” typically 15 percent of the contractual funding amount, as a form of earnest money. After some victims balked at sending the fees, Cote recruited Dallas to assist in the scheme. Dallas subsequently established Southeastern Escrow Express in Panama City, Florida to facilitate the fraud. Dallas entered into written contracts with would-be borrowers, promising them that their “consideration fees” would be held in escrow until needed at the closing table for the project financing. The promised closings never occurred and millions of dollars in advance fees were never refunded.

Kenneth Swenson, 49, formerly of Atlanta, Georgia, and Heather Cote, 40, of Tustin, California, are charged in a separate federal indictment with conspiracy to commit wire fraud and several counts of wire fraud, among other charges. Swenson is a fugitive.

This case was investigated by the Federal Bureau of Investigation.

Assistant United States Attorney Brian Pearce prosecuted the case.

For further information please contact the U.S. Attorney’s Public Information Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.