Massachusetts Man Sentenced to 36 Months for Investment Fraud Scheme

ALEXANDRIA, VA—Antonio Zappa, 50, of Lynn, Massachusetts, was sentenced to 36 months in prison, followed by three years of supervised release, for engaging in a fraudulent foreign investment scheme that defrauded at least 20 victims of more than $6.9 million.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Gary Barksdale, Inspector in Charge of the Washington Division of the United States Postal Inspection Service, made the announcement after sentencing by United States District Judge Gerald Bruce Lee.

Zappa pled guilty on July 11, 2012, to one count of conspiracy to commit wire fraud. According to a statement of facts filed with his plea agreement, from September 2005 through April 2008, Zappa conspired with James W. Massaro, 70, of Boxford, Massachusetts, and others to engage in a fraudulent scheme that required investors to pay a fee that would be used to secure large letters of credit through European financial institutions. Investors were told the initial payment was a commitment fee necessary to secure a multi-million-dollar letter of credit and that they would receive a percentage monthly return on the total amount of the letter of credit. Each investor entered into an escrow agreement with Massaro’s business, Tracten Corporation, which stated that the fee would be wired to an escrow attorney, who would, in turn, disburse the fee to Tracten after the escrow attorney received a commitment letter from the foreign bank on behalf of the investor.

Zappa admitted that in 2005, he and Massaro made multiple trips to Rome, Italy, to meet with bank officials to pitch the letter of credit program. Despite the bank’s refusal to participate, Zappa secured an Internet domain name to set up an e-mail account that would appear to come from a bank representative and created fraudulent bank letterhead that also appeared to come from the bank. Zappa, Massaro, and others used the e-mail account and letterhead to forge commitment letters purporting to be from bank officials that would be provided to escrow attorneys. Pursuant to the escrow agreement, the escrow attorneys relied on these fraudulent commitment letters to disburse the fees to Massaro.

According to the plea agreement, Zappa defrauded at least 20 investors who had together paid $6,936,985 in fees as part of the letter of commitment investment program

Massaro pled guilty to the same charge on July 3, 2012, and was sentenced to 87 months in prison on September 21, 2012.

The investigation was conducted by FBI’s Washington Field Office and the U.S. Postal Inspection Service’s Washington Division. Assistant U.S. Attorney Timothy D. Belevetz from the U.S. Attorney’s Office for the Eastern District of Virginia’s Financial Crimes and Public Corruption Unit is prosecuting the case on behalf of the United States.

Smithsonian Parking Lot Attendant Pleads Guilty to Stealing at Least $400,000 in Parking Fees from Aircraft Museum

ALEXANDRIA, VA—Meseret Terefe, 36, of Silver Spring, Maryland, pled guilty today to stealing at least $400,000 of visitor parking fees belonging to the Smithsonian Institution’s Steven F. Udvar-Hazy Center in Chantilly, Virginia.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Scott S. Dahl, Inspector General for the Smithsonian Institution; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after the plea was accepted by United States District Judge T. S. Ellis, III.

“Mr. Terefe admitted today to stealing hundreds of thousands of dollars from one of America’s most revered institutions,” said U.S. Attorney Neil H. MacBride. “Especially during a time of challenging budgets, this fraud is extremely troubling.”

Terefe was arrested on August 4, 2012, and pled guilty today to theft of public money. He faces a maximum penalty of 10 years in prison when he is sentenced on December 14, 2012.

In a statement of facts filed with his plea agreement, Terefe admitted that from March 2009 and continuing through July 2012, he was an employee of Parking Management Inc. (PMI) and worked as a booth attendant at the National Air and Space Museum’s Steven F. Udvar-Hazy Center parking lot. The Udvar-Hazy Center is the annex location of the Air & Space Museum and is home to the Space Shuttle Discovery and other historic aircraft. These two Smithsonian sites display the largest collection of aircraft and spacecraft in the world. PMI began managing the center’s parking lot, which holds approximately 2,000 vehicles, in March 2009.

Terefe admitted that he began stealing parking fees in late 2009 by either repeatedly unplugging the electronic vehicle counters installed in the parking booths or by not handing customers a serialized parking ticket to display in the car windshield after they paid their entrance fee. These tactics allowed Terefe to underreport the true number of vehicles entering the facility. He and other booth attendants discussed tactics for stealing parking revenues, and Terefe stated that one of his managers approached him and demanded that Terefe pay him half of the stolen proceeds in order to continue his criminal activity.

The statement of facts states that Terefe stole between $1,800 and nearly $4,500 during a daily shift working at the Smithsonian, and the three-year loss to the Smithsonian attributable to Terefe is at least $400,000. Terefe stored a portion of the cash proceeds at his residence in Silver Spring and used some of the proceeds to purchase an interest in commercial property in Ethiopia.

The investigation was initiated by the Smithsonian Office of the Inspector General and jointly investigated by the FBI’s Washington Field Office. Assistant United States Attorney Jasmine Yoon and Special Assistant United States Attorney James McDonald are prosecuting the case on behalf of the United States.

Houston Man Convicted of Health Care Fraud

Over $600,000 Stolen from Medicare Based on False Claims

SHREVEPORT, LA—Godspower Joseph Essang, 35, of Houston, Texas, pled guilty today to one count of health care fraud arising out of his scheme to defraud the Medicare Program, United States Attorney Stephanie A. Finley announced. Judge S. Maurice Hicks scheduled Essang’s sentencing for January 24, 2013. Essang faces a maximum term of imprisonment of not more than 10 years, a fine of not more than $250,000, or both, and a term of supervised release of at least one year but not more than three years.

During the guilty plea, Essang admitted that he operated Shalom Equipment, a durable medical equipment company, located on Woodward Avenue in Shreveport, Louisiana. Shalom engaged in the business of providing what were referred to as “ortho kits,” which were basically braces for various parts of the body. Essang admitted operating his company out of Shreveport because Medicare was focusing on false claims by durable medical equipment providers out of Houston. By operating out of Shreveport, the claims he submitted received less scrutiny.

Essang admitted paying individuals for identifying information of Medicare beneficiaries and physicians. He then used this identifying information to file false claims with Medicare for providing “ortho kits” to Medicare beneficiaries who did not need, were not prescribed, and/or did not receive the items. Essang admitted that between August 12, 2007 and October 21, 2008, he filed approximately 736 claims, billing Medicare for $1,223,255. Medicare actually paid out $613,096 on the claims.

United States Attorney Stephanie A. Finley stated, “Mr. Essang’s scheme was designed to defraud a program whose sole purpose is providing medical services to the elderly and the disabled. His actions defrauded the program and, ultimately, the U.S. taxpayers. This office will continue to vigorously pursue charges against those who steal from such programs.”

“Durable medical equipment fraud is a major problem that costs taxpayers billions in lost and wasted dollars. Today’s guilty plea is the culmination of a concerted and joint effort by our Inspector General’s Office, the U.S. Attorney’s Office, and the Federal Bureau of Investigation to quickly bring to justice those who prey on our elderly for financial gain,” said William W. Root, Assistant Special Agent in Charge, U.S. Department of Health and Human Services.

The case was investigated by the Federal Bureau of Investigation and the United States Department of Health and Human Services, Office of the Inspector General. The case was prosecuted by Assistant United States C. Mignonne Griffing.

National Cyber Security Awareness Month 2012: Are You the Weakest Link?

October is National Cyber Security Awareness Month—for the ninth straight year. So what’s new?

Well, since last October, the threat has continued to grow even more complex and sophisticated. Just 12 days ago, in fact, FBI Director Robert Mueller said that “cyber security may well become our highest priority in the years to come.”

For its part, the FBI is strengthening its cyber operations to sharpen its focus on the greatest cyber threats to national security: computer intrusions and network attacks. We are enhancing the technological capabilities of all investigative personnel and hiring additional computer scientists to provide expert technical support to critical investigations. We are creating two distinct task forces in each field office: Cyber Task Forces, focused on intrusions and network attacks that will draw on our existing cyber squads; and Child Exploitation Task Forces, focused on crimes against children. We are also increasing the size and scope of the National Cyber Investigative Joint Task Force—the FBI-led multi-agency focal point for coordinating and sharing cyber threat information to stop current and future attacks.

The FBI also runs several other cyber-related programs, including the Innocent Images National Initiative—which combats online child predators—and the Internet Crime Complaint Center—a partnership between the Bureau and the National White Collar Crime Center that serves as a clearinghouse for triaging cyber complaints and provides an easy-to-use online tool for reporting these complaints.

Because of the interconnectedness of online systems, every American who uses digital technologies at home or in the office can—and must—play a part in cyber security. For example, if you open a virus-laden e-mail attachment at work, you could infect your entire company’s computer network. Don’t be the weakest link: get educated on cyber safety.

Here are a few basic steps you can take to be more secure:

■Set strong passwords, and don’t share them with anyone.

■Keep a clean machine—your operating system, browser, and other critical software are optimized by installing regular updates.

■Maintain an open dialogue with your family, friends, and community about Internet safety.

■Limit the amount of personal information you post online, and use privacy settings to avoid sharing information widely.

■Be cautious about what you receive or read online—if it sounds too good to be true, it probably is

Minneapolis Man Pleads Guilty to Mortgage Fraud in Connection with Burnsville Condo Project

MINNEAPOLIS—Today in federal court, a 43-year-old Minneapolis man pleaded guilty to defrauding mortgage lenders out of millions of dollars in connection with the sale of condominiums at Chateau Ridge in Burnsville. Jared Mitchell Rothenberger pleaded guilty to one count of conspiracy to commit wire fraud. Rothenberger was charged in an information on September 27, 2012. He entered his plea before United States District Judge Susan R. Nelson.

Rothenberger admitted that in 2006 and 2007, he was part of a conspiracy to defraud mortgage lenders by finding buyers to apply for loans to purchase units at Chateau Ridge. He testified that he provided buyers with funds for down payments and closing costs and was then reimbursed after the sales by the property seller, although these actions were not disclosed to lenders. Furthermore, Rothenberger participated in the distribution of mortgage loan proceeds outside of property closings, again without informing the lenders. Some of the funds were paid to management companies set up for the purpose of channeling kickbacks to people involved in the scheme, Rothenberger admitted.

For his offense, Rothenberger faces a potential maximum penalty of five years in prison, as well as possible fines and forfeitures. Judge Nelson will determine his sentence at a future hearing, not yet scheduled.

This case is the result of an investigation by the Federal Bureau of Investigation and the United States Postal Inspection Service. It is being prosecuted by Assistant United States Attorneys Robert Lewis and Karen Schommer.

This law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. It includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and, with state and local partners, investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.