Former Bakersfield Credit Union Employee Sentenced to 12 Months’ Imprisonment for Stealing a Quarter of a Million Dollars

FRESNO, CA—United States Attorney Benjamin B. Wagner announced that today United States District Judge Anthony W. Ishii sentenced Carolyn Jean Jones, 45, of Bakersfield, to 12 months in prison for stealing approximately a quarter of a million dollars from her employer, Kern Schools Federal Credit Union. Judge Ishii, in sentencing the defendant, also imposed restitution in the amount of $245,000 and 36 months of supervised release.

In denying the defendant’s request for probation, Judge Ishii noted, “This is a serious offense and the message must be sent that those who steal these amounts from their employers will go to prison.”

This case is the product of an extensive investigation by the Federal Bureau of Investigation. This case was prosecuted by Assistant U.S. Attorney Stanley A. Boone.

According to court documents, Jones worked for Kern Schools Federal Credit Union as a Servicing Representative in the Home Loan Processing Center. From March 2003 and to November 2003, she embezzled over $250,000 by opening up fraudulent lines of credit using pre-existing customers’ information and diverting the monies from those lines of credit into accounts she controlled.

Guilty Plea in Embezzlement by Bank Agent

Defendant Stole Items while Providing Foreclosure Services

ALBANY, NY—United States Attorney Richard S. Hartunian and Special Agent in Charge Clifford C. Holly of the Federal Bureau of Investigation, Albany Division, announced today that Sean DeCelle pled guilty before United States Magistrate Judge David R. Homer to embezzlement by an agent of a federally insured bank.

Defendant DeCelle, age 44, of Troy, New York, admitted that, in or about 2009, while acting as an agent of and connected in a capacity with Quantum Bank (hereinafter “the bank”), the deposits of which were then insured by the Federal Deposit Insurance Corporation, he knowingly and with intent to injure and defraud the bank, took assets of and intrusted to the custody and care of the bank and to him. Specifically, the defendant admitted that he stole certain items belonging to a Ms. Jeanne Wells, d/b/a Marie’s Dreamhouse, Inc., 2804 Route 42, Westkill, New York, while he was providing foreclosure services at that location on behalf of the bank. On June 6, 2010, the defendant was interviewed at his residence by Special Agents of the Federal Bureau of Investigation, at which time he admitted the theft and wrote out a list of items he had taken, which included steamer trays, fans, a meat slicer, wooden chairs, bowls, a tea pot, a silverware separator, and a blender, and the FBI took pictures of a number of these items located within his residence.

Defendant DeCelle faces a maximum statutory penalty of up to one (1) year imprisonment, a $100,000 fine, or both, and a period of up to one year supervised release to follow any term of imprisonment, as well as mandatory restitution. Sentencing was set for Monday, September 26, 2011, at 1:30 p.m., before Magistrate Judge Homer in Albany.

The investigation in this matter was conducted by the Albany Division of the Federal Bureau of Investigation, and the case was prosecuted by the United States Attorney’s Office for the Northern District of New York.

Image courtesy of Wikimedia Commons

Former Massachusetts Scientist Convicted of Fraud Scheme Involving a Multi-Million Dollar Federal Research Grant

BOSTON, MA—A federal jury in Boston has convicted Christopher D. Willson, a former Massachusetts scientist and businessman, in connection with a fraud scheme involving a multi-million dollar federal research grant.

On June 21, Willson was found guilty of one count of conspiracy to defraud the United States and to commit wire fraud, six counts of wire fraud and four counts of false claims.

Willson was the chief scientist and senior vice president of EV Worldwide, LLC (EVW), a Pittsfield, Mass. company. From 2000 through 2005, United States Congressman John Olver arranged for an earmark directing the Federal Transit Administration (FTA) to transfer approximately $4.3 million to EVW through a regional transit agency called the Pioneer Valley Transit Authority (PVTA).

According to Congressman Olver’s testimony, he intended the earmarked funds to be spent by EVW to develop an electric battery that would be used to propel public transit buses. The federal grant required EVW to match the federal funds, dollar-for-dollar, with its own resources. For every dollar EVW spent on the project, the company could seek up to 50 percent reimbursement from the FTA.

Evidence presented at trial showed that, from 2004 through 2005, Willson submitted 10 fraudulent invoices in which he falsely claimed that EVW was matching the FTA funds, when in fact, EVW was millions of dollars in debt and had nearly no other non-public source of funds. Willson repeatedly contacted and met with Congressman Olver and grant officials at the FTA and PVTA to discuss the company’s claimed progress and federal grant funding, but he never informed them of the company’s financial problems. As a result of this deception, Willson fraudulently obtained more than $700,000 in federal funds for EVW.

Willson used the money to pay EVW’s CEO, Michael Armitage, approximately $250,000, paid himself approximately $100,000, and to provide approximately $110,000 to fund a separate Canadian research company, Hydrogen Storage Media, Inc., which he and Armitage had founded.

U.S. District Judge Rya Zobel scheduled sentencing for October 6, 2011. Willson faces up to 20 years in prison for each of the six counts of wire fraud, up to five years in prison for each of the four counts of false claims and up to five years in prison on the conspiracy count. Willson also faces maximum fines of $250,000 per count.

United States Attorney Carmen M. Ortiz; Assistant Attorney General Lanny A. Breuer of the Criminal Division, United States Department of Justice; Theodore L. Doherty III, Special Agent in Charge of U.S. Department of Transportation, Office of Inspector General, Office of Investigations; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Office made the announcement today.

The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow of Ortiz’s Springfield Branch Office and Trial Attorney Edward J. Loya, Jr. of the Criminal Division’s Public Integrity Section. The case is being investigated by the Department of Transportation, Office of Inspector General, IRS-CI, and the FBI’s Boston Field Office, with assistance from the Defense Contract Audit Agency.

Former Bank Lawyer Indicted in Multi-Million Dollar Fraud and Money Laundering Conspiracies

Attorney Allegedly Assisted Bank President and Senior Loan Officer with Massive Insider Dealing and Fraud that Preceded Bank’s Failure

ATLANTA, GA—ROBERT E. MALONEY, JR., 47, of McDonough, Georgia, was arraigned on federal charges this afternoon before United States Magistrate Judge Janet F. King. A superseding indictment charges MALONEY and two former top officers of “FirstCity Bank” of Stockbridge, Georgia: MARK A. CONNER, 45, formerly of Canton, Georgia, and Tallahassee, Florida, and CLAYTON A. COE, 44, of McDonough, Georgia, with conspiracy to commit bank fraud, bank fraud, conspiracy to commit money laundering, and related crimes in connection with misconduct at FirstCity Bank in the years before the bank’s seizure by state and federal authorities on March 20, 2009.

A federal grand jury in Atlanta returned the superseding indictment against CONNER, COE, and MALONEY on June 22, 2011. The grand jury previously returned an indictment against CONNER and COE on March 16, 2011. Federal agents arrested CONNER and COE on March 20 and March 27, 2011, respectively, upon their return to the United States from the Turks and Caicos Islands in the British West Indies. U.S. District Judge Steve C. Jones has ordered CONNER to remain in the custody of the U.S. Marshals Service pending trial, based on a risk of flight. COE was released to home detention and electronic monitoring. Arraignments for CONNER and COE on the superseding indictment have been scheduled for July 1, 2011 before United States Magistrate Judge Janet F. King.

FDIC Inspector General Jon Rymer said, “The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General (OIG) is pleased to join our law enforcement colleagues in announcing the indictment of Mr. Maloney for his alleged role in this multi-million dollar bank fraud and associated money laundering activities. It is especially important to investigate and prosecute cases where trusted professionals, such as attorneys who owe a fiduciary duty to the bank, violate that duty and abuse their positions to undermine the integrity of the financial services industry. The FDIC OIG is particularly concerned when fraudulent schemes mislead the FDIC’s examiners and contribute to bank failures that cause losses to the Deposit Insurance Fund. We are committed to preventing such threats to the safety and soundness of FDIC-insured banks throughout the country.”

Christy L. Romero, Acting Special Inspector General for the Troubled Asset Relief Program said, “Today’s indictment involves another unfortunate example of allegedly brazen criminal conduct by senior bank officials who tried to conceal their fraud from regulators and improperly access TARP funds. As the bank’s top legal officer, Maloney maintained a position of trust within the bank and had a special duty to prevent and detect misconduct. The indictment alleges that Maloney violated his important gatekeeper responsibilities and conspired with Conner and Coe in a criminal scheme that victimized unwitting federally-insured banks who invested millions of dollars into fraudulent loans. Fortunately, their attempts to victimize Treasury and the American taxpayers by obtaining TARP funds were unsuccessful. SIGTARP will continue to work with our law enforcement partners to bring to justice those who sought to cover their fraud with taxpayer dollars through TARP.”

IRS-Criminal Investigation Special Agent in Charge Reginael McDaniel said, “IRS Criminal Investigation is committed to protecting the integrity of our financial institutions and we will use all the legal tools available to assist in the investigation and prosecution of those who attempt to damage that integrity.”

According to United States Attorney Yates, the charges and other information presented in court: CONNER served in a variety of top positions at FirstCity Bank between 2004 and 2009, including as Vice Chairman of the Board of Directors, as a member of the banks' loan committee, as President, and later as acting Chairman and Chief Executive Officer. COE served as a Vice President and as FirstCity Bank’s Senior Commercial Loan Officer. MALONEY served as FirstCity Bank’s in-house counsel, or corporate counsel, between 2006 and 2009. While serving in these positions, CONNER, COE, MALONEY, and their co-conspirators allegedly conspired to defraud FirstCity Bank’s loan committee and Board of Directors into approving multiple multi-million dollar commercial loans to borrowers who, unbeknownst to FirstCity Bank, were actually purchasing property owned by CONNER or COE personally.

The indictment charges that CONNER, COE, MALONEY, and their co-conspirators misrepresented the essential nature, terms, and underlying purpose of the loans and falsified documents and information presented to the loan committee and the Board of Directors. CONNER, COE, and their co-conspirators then allegedly caused at least 10 other federally-insured banks to invest in, or “participate in” the fraudulent loans based on these and other fraudulent misrepresentations, shifting all or part of the risk of default to the other banks. COE’s bonus compensation was tied to the origination of FirstCity Bank loans, including the fraudulent loans with which he and CONNER allegedly assisted each other. MALONEY is alleged to have taken extra payments in the form of “legal fees” from the fraudulent transactions, even though as corporate counsel he was actually a salaried employee of FirstCity Bank. He also allegedly helped launder and distribute funds to or for the benefit of CONNER, COE, other co-conspirators, or to himself through an attorney trust account maintained at the bank.

In the process of defrauding FirstCity Bank and the “participating” banks, CONNER, COE, MALONEY, and their co-conspirators allegedly routinely misled federal and state bank regulators and examiners to conceal their unlawful scheme. They also unsuccessfully sought federal government assistance through the U.S. Treasury Department’s Troubled Asset Relief Program (“TARP”) and engaged in other misconduct in an attempt to avoid seizure by regulators and prevent the discovery of their fraud.

The superseding indictment charges CONNER, COE, and MALONEY with conspiracy to commit bank fraud, bank fraud, making false entries in the records of an FDIC-insured financial institution, and conspiracy to commit money laundering. It also charges CONNER alone with conducting a continuing financial crimes enterprise at the bank between February 2006 and February 2008, during which CONNER’s and his co-conspirators' crimes allegedly generated over $5 million in unlawful gross proceeds, and it charges COE alone with making a false federal credit application.

The charges for bank fraud conspiracy, bank fraud, false entries, and making a false credit application carry a maximum sentence of 30 years in prison and a potential fine of up to $1 million on each count. The charge against CONNER for conducting a continuing financial crimes enterprise carries a mandatory minimum sentence of 10 years in federal prison, a maximum sentence of life in prison, and a potential fine of up to $10 million. The money laundering conspiracy charge against CONNER, COE, and MALONEY carries a maximum sentence of 10 years in prison and a potential fine of up to twice the value of criminally-derived funds. In determining the actual sentences for each defendant, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force 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, to 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.

This case is being investigated by Special Agents of the FDIC, Office of Inspector General; the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), the Federal Bureau of Investigation, and Internal Revenue Service-Criminal Investigation.

Assistant United States Attorneys Douglas W. Gilfillan and David M. Chaiken are prosecuting the case.

For further information please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (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.

Jupiter Man Sentenced in $1.6 Million Precious Metals Investment Scheme

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, and Amos Rojas, Jr., Special Agent in Charge, Florida Department of Law Enforcement, FDLE), Miami Field Office, J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, and Edward M. Morley, Chief, Stuart Police Department, announce yesterday’s sentencing of defendant Christopher Arthur Kertatos, 40, of Jupiter, Florida. U.S. District Court Judge K. Michael Moore sentenced Kertatos to 42 months in prison, following his earlier plea of guilty to conspiracy to commit mail fraud and eight counts of mail fraud for his involvement in a $1.6 million fraud involving the precious metals market.

According to statements made in court and documents filed in the case, Kertatos was the operator of Bullion Trading Group, with offices located in Stuart and West Palm Beach, Florida. Bullion Trading employed brokers who solicited private investors nationwide to invest in precious metals, such as gold, silver, and palladium. Though false representations as to material facts in the solicitation of funds, Kertatos and others helped secure nearly $1.6 million in funds from the victim investors. The victims were made to believe that their money was being invested in the precious metal market. In fact, however, Kertatos and his co-defendants actually used the funds for their personal benefit.

Mr. Ferrer commended the FBI, FDLE, State of Florida’s Office of Financial Regulation, and the Stuart Police Department for their work in the case. This case was prosecuted by Assistant U.S. Attorney Carmen Lineberger.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.