Computer Programmer Arrested for Stealing Proprietary Code from the Federal Reserve Bank of New York

Preet Bharara, the United States Attorney for the Southern District of New York, and Janice K. Fedarcyk, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”) announced today the unsealing of a complaint charging BO ZHANG, a computer programmer, with stealing proprietary software code from the Federal Reserve Bank of New York, where ZHANG worked as a contract employee. ZHANG was arrested this morning by agents of the FBI and the Department of the Treasury Office of Inspector General (“OIG”) and is expected to be presented in Manhattan federal court later today.

Manhattan U.S. Attorney Preet Bharara said: “As today’s case demonstrates, our cyber infrastructure is vulnerable not only to cybercriminals and hackers, but also alleged thieves like Bo Zhang who used his position as a contract employee to steal government intellectual property. Fighting cyber crime is one of the top priorities of this office and we will aggressively pursue anyone who puts our computer security at risk.”

FBI Assistant Director in Charge Janice K. Fedarcyk stated: “Zhang took advantage of the access that came with his trusted position to steal highly sensitive proprietary software. His intentions with regard to that software are immaterial. Stealing it and copying it threatened the security of vitally important source code.”

According to the complaint unsealed today in Manhattan federal court:

The Government-Wide Accounting and Reporting Program (“GWA”) is a software system that is owned by the United States Department of the Treasury (“DOT”). It is used principally to help keep track of the United States government’s finances. Among other things, the GWA handles ledger accounting for each appropriation, fund, and receipt within the DOT, and provides federal agencies with an account statement—similar to bank statements provided to bank customers—of the agencies’ account balances with the United States Treasury. The proprietary computer source code associated with the GWA is maintained by the Federal Reserve Board of New York (“FRBNY”) in an access-controlled electronic repository. The FRBNY is further developing the source code for the GWA.

As alleged in the complaint, between May 2011 and August 11, 2011, BO ZHANG was a contract employee assigned to the FRBNY to work on further developing a specific portion of the GWA’s source code (the “GWA Code”), which the United States has spent approximately $9.5 million to develop. In the summer of 2011, ZHANG allegedly stole the GWA Code. According to the complaint, ZHANG admitted that in July 2011, while working at the FRBNY, he checked out and copied the GWA Code onto his hard drive at the FRBNY; he subsequently copied the GWA Code onto an FRBNY-owned external hard drive; and he connected that external hard-drive to his private office computer, his home computer, and his laptop. ZHANG stated that he used the GWA Code in connection with a private business he ran training individuals in computer programming.

***

ZHANG, 32, of Queens, New York, faces a maximum term of 10 years in prison, a maximum term of three years of supervised release, and a fine of the greatest of $250,000, or twice the gross pecuniary gain derived from the offense or twice the gross pecuniary loss to the victims.

Mr. Bharara praised the outstanding investigative work of the FBI. He also thanked the Department of the Treasury OIG and the FRBNY for their assistance in the investigation.

This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Niketh Velamoor and Nicholas Lewin are in charge of the prosecution.

The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

International Bank of Commerce Robbery Lands Former Bank Teller in Federal Prison

HOUSTON—Estefany Danelia Martinez, a former bank teller convicted for bank robbery and embezzlement of bank funds arising from a robbery of the International Bank of Commerce (IBOC) has been sentenced to federal prison, United States Kenneth Magidson announced today. U.S. District Judge Keith Ellison handed down the sentences for Martinez, 18, as well as Arturo Solano, 22, in federal court this morning.

 

The two were indicted along with Ricky Gonzalez, 19, the boyfriend of Martinez, and Anna Margarita Rivera, 19, another former IBOC bank teller, on May 11, 2011. All four pleaded guilty to the charges earlier this year.

 

On March 23, 2011, two men wearing masks and hooded sweatshirts and who appeared to be armed with semi-automatic pistols entered the Eldridge Parkway branch of the IBOC. They robbed the bank by threatening the two bank tellers on duty, Martinez and Rivera. The tellers were allegedly forced to empty their teller drawers of cash as well as to fill bags provided by the robbers with cash from the vault. After the two men left the bank, the two tellers—who had remained in the vault, called 911. The tellers described the events and provided a false description of the two robbers to police.

 

Shortly after the robbery, an anonymous tip to Crimestoppers claimed that bank employees, Martinez and Rivera, had actually staged the bank robbery along with Gonzalez and another male and directed investigators to the Facebook pages of Martinez and Gonzalez. Through further investigation, investigating agents ultimately identified Gonzales and Solano as the two males who had robbed the IBOC bank with the assistance of former bank tellers Martinez and Rivera and recovered a portion of the money stolen from the bank.

 

Today, Judge Ellison sentenced Martinez to 15 months on each count to run concurrently, while Solano will serve 10 months in federal prison. Gonzalez and Rivera are pending sentencing on Jan. 5, 2012, and Dec. 8, 2011, respectively.

 

The investigation leading to the filing of federal charges against these four defendants was conducted by the FBI and the Houston Police Department and substantially assisted by a tip called into Houston Crimestoppers.

 

Assistant United States Attorney Suzanne Elmilady is prosecuting the case.

Malware Targets Bank Accounts

‘Gameover’ Delivered Via Phishing E-Mails

 

Cyber criminals have found yet another way to steal your hard-earned money: a recent phishing scheme involves spam e-mails—purportedly from the National Automated Clearing House Association (NACHA), the Federal Reserve Bank, or the Federal Deposit Insurance Corporation (FDIC)—that can infect recipients’ computers with malware and allow access to their bank accounts.

 

The malware is appropriately called “Gameover” because once it’s on your computer, it can steal usernames and passwords and defeat common methods of user authentication employed by financial institutions. And once the crooks get into your bank account, it’s definitely “game over.”

 

Gameover is a newer variant of the Zeus malware, which was created several years ago and specifically targeted banking information.

 

How the scheme works: Typically, you receive an unsolicited e-mail from NACHA, the Federal Reserve, or the FDIC telling you that there’s a problem with your bank account or a recent ACH transaction. (ACH stands for Automated Clearing House, a network for a wide variety of financial transactions in the U.S.) The sender has included a link in the e-mail for you that will supposedly help you resolve whatever the issue is. Unfortunately, the link goes to a phony website, and once you’re there, you inadvertently download the Gameover malware, which promptly infects your computer and steals your banking information.

 

After the perpetrators access your account, they conduct what’s called a distributed denial of service, or DDoS, attack using a botnet, which involves multiple computers flooding the financial institution’s server with traffic in an effort to deny legitimate users access to the site—probably in an attempt to deflect attention from what the bad guys are doing.

 

But that’s not the end of the scheme: Recent investigations have shown that some of the funds stolen from bank accounts go towards the purchase of precious stones and expensive watches from high-end jewelry stores. The criminals contact these jewelry stores, tell them what they’d like to buy, and promise they will wire the money the next day. So the next day, a person involved in the money laundering aspect of the crime—called a “money mule”—comes into the store to pick up the merchandise. After verifying that the money is in the store’s account, the jewelry is turned over to the mule, who then gives the items to the organizers of the scheme or converts them for cash and uses money transfer services to launder the funds.

 

In many cases, these money mules are willing participants in the criminal scheme. But increasingly, as part of this scheme, we see an increasing number of unsuspecting mules hired via “work at home” advertisements who end up laundering some of the funds stolen from bank accounts. The criminals e-mail prospective candidates claiming to have seen their resumes on job websites and offer them a job. The hired employees are provided long and seemingly legitimate work contracts and actual websites to log into. They’re instructed to either open a bank account or use their own bank account in order to receive funds via wire and ACH transactions from numerous banks…and then use money remitting services to send the money overseas.

 

If you think you’ve been victimized by this type of scheme, contact your financial institution to report it, and file a complaint with the FBI’s Internet Crime Complaint Center.

 

How Can You Protect Yourself?

- Obviously, make sure your computer’s anti-virus software is up to date.

 

- Don’t click on e-mail attachments from unsolicited senders. NACHA, FDIC, and the Federal Reserve all say they don’t send out unsolicited e-mails to bank account holders. If you want to confirm there’s a problem with your account or one of your recent transactions, contact your financial institution directly.

 

-Don’t accept unsolicited jobs online that require you to receive funds from numerous bank accounts and then wire the money to overseas accounts—you could get caught up in a criminal investigation.

Two Former Leaders of the United Auto Workers Sentenced to Prison for Extorting General Motors

Donny Douglas, 70, of Holly, Michigan, a former United Auto Workers (“UAW”) International Servicing Representative, and Jay Campbell, 70, of Davisburg, Michigan, a former UAW Local 594 Chairman, were both sentenced today to terms of imprisonment United States Attorney Barbara L. McQuade announced. Douglas was sentenced to 18 months in prison, and Campbell was sentenced to 12 months and one day in prison based on their June 2006 convictions following a jury trial.

 

McQuade was joined in the announcement by James Vandenberg, the Special Agent in Charge of the Department of Labor, Office of Investigations–Office of Labor Racketeering and Fraud Investigations and FBI Special Agent in Charge Andrew Arena.

 

Douglas and Campbell stand convicted of conspiring to commit extortion and conspiring to violate the Labor-Management Relations Act. The jury found that Douglas and Campbell had conspired to commit extortion by threatening to extend the 1997 strike at the Pontiac Truck Plant by UAW Local 594 unless General Motors hired two unqualified, non-UAW members who were family members or friends of the defendants as skilled tradesmen. Based on the demands of the defendants and in order to avoid continued significant losses from the strike, General Motors hired Campbell’s son and a former UAW Local 594 President’s son-in-law as journeymen even though neither man was a member of the UAW, worked for General Motors, or was qualified for the position.

 

Previously, in May 2007, the district court had sentenced Douglas and Campbell to terms of probation. These sentences were overturned on appeal before the Court of Appeals for the Sixth Circuit. Today, the district court conducted another sentencing hearing based on the decision of the Sixth Circuit.

 

The case was investigated by agents of the Department of Labor, Office of Inspector General–Office of Labor Racketeering and Fraud Investigations and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys David A. Gardey and Kathleen Moro Nesi.

Overland Park Man Charged with Scheme to Sell Phony Investments in Facebook

WICHITA, KS—A Kansas man has been charged with devising a scheme to sell phony investments in Facebook, U.S. Attorney Barry Grissom said today.

 

Ronald D. Catrell, 45, Overland Park, Kan., is charged with three counts of bank fraud, one count of money laundering, one count of wire fraud and one count of aggravated identity theft. Federal criminal charges were filed Friday in U.S. District Court in Kansas City, Kan.

 

The charges allege Catrell fraudulently obtained business loans from three banks including Valley View Bank, Bank of the West and M&I Bank. In order to obtain the loan from Valley View Bank, for instance, he gave the bank a personal account statement claiming his account balance was more than $297,000 when the actual balance was less than $179.

 

As part of the investment fraud scheme, Catrell created a business called Blue Valley Capital Management, LP, which he claimed had an office at 244 Fifth Avenue, Suite 1882, New York, N.Y. In fact, the building at that address did not have an 18th floor and the business located there, Aerobeep & Voicemail, offered postal mail boxes to persons or businesses desiring a mailing address on Fifth Avenue in New York.

 

Catrell offered investors the opportunity to purchase Facebook stock through him. He falsely told investors he could purchase stock in Facebook through Goldman Sachs. In fact, Facebook was a privately held company that was not publicly traded. One victim, identified as William L., gave Catrell $35,000 to invest in BCVM and $50,000 to invest in Facebook stock.

 

Upon conviction, the crimes carry the following penalties:

 

■Bank fraud: A maximum penalty of 20 years and a fine up to $1 million.

■Aggravated identity theft: A mandatory two years and a fine up to $250,000.

■Money laundering: A maximum penalty of 10 years and a fine up to $250,000.

■Wire fraud: A maximum penalty of 20 years and a fine up to $250,000.

The FBI investigated. Assistant U.S. Attorney Chris Oakley is prosecuting.

 

In all cases, defendants are presumed innocent until and unless proven guilty. The charges merely contain allegations of criminal conduct.

Ten Years Later: The Enron Case

Boxes of evidence and data

It was 10 years ago this month that the collapse of Enron precipitated what would become the most complex white-collar crime investigation in the FBI’s history.

 

Top officials at the Houston-based company cheated investors and enriched themselves through complex accounting gimmicks like overvaluing assets to boost cash flow and earnings statements, which made the company even more appealing to investors. When the company declared bankruptcy in December 2001, investors lost millions, prompting the FBI and other federal agencies to investigate.

 

The sheer magnitude of the case prompted creation of the multi-agency Enron Task Force, a unique blend of investigators and analysts from the FBI, the Internal Revenue Service-Criminal Investigation Division, the Securities and Exchange Commission, and prosecutors from the Department of Justice.

 

Agents conducted more than 1,800 interviews and collected more than 3,000 boxes of evidence and more than four terabytes of digitized data. More than $164 million was seized; to date about $90 million has been forfeited to help compensate victims. Twenty-two people have been convicted for their actions related to the fraud, including Enron’s chief executive officer, the president/chief operating officer, the chief financial officer, the chief accounting officer, and others.

 

“The Enron Task Force’s efforts resulted in the convictions of nearly all of Enron’s executive management team,” said Michael E. Anderson, assistant special agent in charge of the FBI’s Houston Division, who led the FBI’s Enron Task Force in Houston. “The task force represented a model task force—the participating agencies selflessly and effectively worked together in accomplishing significant results. The case demonstrated to Wall Street and the business community that they will be held accountable.”

Former Senior Trader at Bernard L. Madoff Investment Securities LLC Pleads Guilty to Creating Fake Trades

NEW YORK, NY—David L. Kugel, a former senior trader in the Market Making and Proprietary Trading operations of Bernard L. Madoff Investment Securities LLC (BLMIS), pleaded guilty today in Manhattan federal court to a six-count superseding information related to his conduct while employed at BLMIS, announced Preet Bharara, the U.S. Attorney for the Southern District of New York. Kugel admitted that, beginning in the early 1970s, he helped create fake, backdated trades for the purpose of defrauding BLMIS’s investment advisory (IA) clients. Kugel pleaded guilty today before U.S. District Judge Laura Taylor Swain to two counts of conspiracy, as well as substantive counts of securities fraud, falsifying books and records of a broker-dealer, falsifying books and records of an investment adviser, and bank fraud. In addition to pleading guilty, Kugel agreed to cooperate with the government in its ongoing investigation of the fraud that occurred at BLMIS.

 

According to the superseding Information, plea agreement and other documents filed in connection with the case:

 

Kugel was employed at BLMIS from 1970 through Dec. 11, 2008. Beginning in 1970, Kugel was a trader in BLMIS’s Proprietary Trading and Market Making operations. In the late 1990s, he assumed a managerial position on the trading floor and later took on the role of “trading floor compliance analyst.”

 

From the 1970s through the collapse of BLMIS, Kugel provided historical trade information to other BLMIS employees, including Annette Bongiorno and Joann Crupi, which allegedly enabled them to create fake trades. Beginning in the early 1970s, Kugel provided certain historical information to Bongiorno so that she could select particular stocks and purchase prices to be used for each IA client, in order to meet the rate of return pre-determined by Bernard Madoff for that client. The information that Kugel provided included stock names; the buy and sell dates of potential trades; as well as the historical price ranges of those stocks for the respective dates that Bongiorno could allegedly use to make a profit. Kugel’s information often mimicked trades previously executed in connection with BLMIS’s proprietary trading operation. Beginning in the early 1990s, Kugel similarly provided Crupi with historical price information to enable her to allegedly create false, backdated trades for IA clients. These false, backdated trades were used to defraud IA clients because, when included on their account statements and trade confirmations, they gave the appearance of profitable trading when none, in fact, had occurred.

In addition, Kugel, and allegedly Crupi and others, defrauded numerous banks by using false financial information to obtain loans. On multiple occasions, Kugel and allegedly Crupi, submitted false and misleading information to banks concerning Kugel’s assets and the assets of others, in order to obtain loans for the purchase and construction of homes. With the assistance of Crupi and others, Kugel obtained multiple million-dollar loans based on the submission of this fraudulent information.

 

Kugel, 66, faces a total statutory maximum sentence of 85 years in prison. A chart identifying the maximum penalties for each of the charged offenses is attached to this release. Kugel is also subject to mandatory restitution and criminal forfeiture and faces criminal fines up to twice the gross gain or loss derived from the offense. According to the agreements entered into with the government, Kugel has agreed to forfeiture of more than $170 billion, including his interests in homes, a luxury car, various accounts at financial institutions and other specific assets. The net proceeds from the sale of the forfeited property will be used to compensate victims of the fraud, consistent with applicable Department of Justice regulations.

 

Following the guilty plea, Judge Swain released Kugel on a $3 million bond on the condition that the bond be co-signed by six financially responsible individuals and secured by $900,000 in cash and property. In addition, Kugel’s travel is restricted to the Southern and Eastern Districts of New York and the District of New Jersey. He will be subject to strict pretrial supervision. Kugel has surrendered his passport.

 

Judge Swain set a sentencing date for Kugel of May 4, 2012, at 11:00 a.m.

Charges against Bongiorno and Crupi remain pending and are merely accusations. They are presumed innocent unless and until proven guilty.

 

Mr. Bharara praised the investigative work of the FBI. He also thanked the U.S. Securities and Exchange Commission for its assistance.

 

These cases were brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. 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.

The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Lisa A. Baroni, Julian J. Moore, Arlo Devlin-Brown, Barbara A. Ward and Matthew L. Schwartz are in charge of the prosecution.

Triton President and CEO Kurt Barton Sentenced to Federal Prison

The United States Attorney’s Office announced that in Austin today, 44-year-old Kurt Branham Barton, founder, president, and CEO of Triton Financial, L.L.C., was sentenced to 17 years in federal prison followed by five years of supervised release for carrying out a Ponzi scheme which victimized more than 300 individuals and resulted in a total estimated loss to investors of over $50 million.

In addition to the prison term, United States District Judge Sam Sparks ordered that Barton pay restitution in the amount of $63,707.496.

On August 17, 2011, a federal jury convicted Barton of conspiracy to commit wire fraud, making false statements to secure loans from financial institutions, and money laundering, as well as multiple substantive counts including one count of securities fraud, 15 counts of wire fraud, five counts of making a false statement related to the acquisition of loans, and 17 counts of money laundering.

Evidence presented during the eight-day trial revealed that from December 2005 and December 2009, Barton devised a scheme to obtain money from investors under false pretenses. Barton represented to investors, including members of the defendant’s family, members of the Church of Jesus Christ of Latter Day Saints, business leaders, as well as professional football players, that Triton was purchasing properties, businesses and other assets with their funds when, in fact, he was using their money to satisfy the needs of other ventures and the need to pay quarterly dividends or redemptions to prior investors. Testimony also revealed that Barton used prominent former National Football League players and Heisman Trophy winners to solicit and encourage additional investors. To conceal his scheme, Barton presented fabricated and fictitious versions of his E*Trade monthly account statement to financial institutions, commercial lenders and potential investors.

“Mr. Barton’s scheme adversely affected the lives of many investors who trusted him with not only with their money but with their faith also. His reckless actions were driven by greed and selfishness as he continued to seek out more victims to perpetuate the misery to others and supplement his extravagant lifestyle. The other victims in this tragedy are the reputations of the retired National Football League players, who Mr. Barton used to market his company and then recruit more victims for his Ponzi scheme. The FBI warns all investors to highly scrutinize investment opportunities where the return seems extremely high and too good to be true,” stated FBI Special Agent in Charge Cory B. Nelson.

IRS Criminal Investigations Special Agent in Charge Steve McCollough reminds investors that “they should diligently check out claims of unusually high rates of return like those posed by Barton and DiMeglio before investing. Investors should not blindly follow the advice of any one person, always get a second opinion.”

“Today’s sentence concludes a very trying and devastating time for a great number of investors. The story of this case should be a great reminder to potential investors that the old adage ‘if it sounds too good to be true, it probably is,’ still holds true. We hope today’s sentence will serve as a deterrent and a warning—those who engage fraud will be prosecuted to greatest extent that the law allows,” stated Texas Securities Commissioner Benette L. Zivley.

This investigation was conducted by the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation together with the Texas State Securities Board. Assistant United States Attorneys Mark Lane and Jennifer Freel prosecuted this case on behalf of the government.

SIX JAPANESE FREIGHT FORWARDING COMPANIES AGREE TO PLEAD GUILTY TO CRIMINAL PRICE-FIXING CHARGES

Companies Agree to Pay a Total of $46.8 Million in Criminal Fines

WASHINGTON — Six Japanese freight forwarders have agreed to plead guilty and to pay criminal fines totaling $46.8 million for their roles in a conspiracy to fix certain fees in connection with the provision of freight forwarding services for air cargo shipments from Japan to the United States, the Department of Justice announced today. These are the second round of charges filed as a result of the department's antitrust investigation of the freight forwarding industry.

According to charges filed separately today in U.S. District Court for the District of Columbia, six companies - Kintetsu World Express Inc.; Hankyu Hanshin Express Co. Ltd.; Nippon Express Co. Ltd.; Nissin Corporation; Nishi-Nippon Railroad Co. Ltd.; and Vantec Corporation - engaged in a conspiracy to fix and impose certain freight forwarding service fees, including fuel surcharges and various security fees, charged to customers for services provided in connection with air freight forwarding shipments of cargo shipped by air from Japan to the United States from about September 2002 until at least November 2007.

Under the plea agreements, which are subject to court approval, the six companies have agreed to pay the following criminal fines: Kintetsu World Express, $10,465,677; Hankyu Hanshin Express, $4,522,065; Nippon Express, $21,115,396; Nissin Corporation, $2,644,779; Nishi-Nippon Railroad, $4,673,114; and Vantec Corporation, $3,339,648. Each company has also agreed to cooperate with the department's ongoing antitrust investigation.

"Including today's charges, 12 companies have agreed to plead guilty and nearly $100 million in criminal fines have been obtained as a result of the Antitrust Division's ongoing freight forwarding investigation," said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice's Antitrust Division. "Prosecuting these kinds of global price fixing conspiracies, that are harmful to the economy and consumers, has been and will continue to be a top priority of the Antitrust Division."

Freight forwarders manage the domestic and international delivery of cargo for customers by receiving, packaging, preparing and warehousing cargo freight, arranging for cargo shipment through transportation providers such as air carriers, preparing shipment documentation, and providing related ancillary services.

According to the charges, the companies carried out the conspiracy by, among other things, agreeing during meetings and discussions to coordinate and impose certain freight forwarding service fees and charges on customers purchasing freight forwarding services for cargo shipped by air from Japan to the United States. The department said that the companies levied freight forwarding service fees in accordance with the agreements reached and engaged in meetings and discussions for the purpose of monitoring and enforcing adherence to the agreed-upon freight forwarding service fees.

As a result of the department's investigation into the freight forwarding industry, on Sept. 30, 2010, six international freight forwarders - EGL Inc.; Kühne + Nagel International AG; Geologistics International Management (Bermuda) Limited; Panalpina World Transport (Holding) Ltd.; Schenker AG; and BAX Global Inc. - agreed to plead guilty and to pay criminal fines totaling $50.27 million for their roles in several conspiracies to impose certain charges or fees on customers purchasing international freight forwarding services for cargo freight destined for air shipment to the United States during various periods between 2002 and 2007.

Each company is charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today's charges are the result of a joint investigation into the freight forwarding industry being conducted by the Antitrust Division's National Criminal Enforcement Section, the FBI's Washington Field Office and the Department of Commerce's Office of Inspector General. Anyone with information concerning the price fixing or other anticompetitive conduct in the freight forwarding industry is urged to call the Antitrust Division's National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contract/newcase.htm or call the FBI's Washington Field Office at 202-278-2000.

Former Microsoft Manager Sentenced to Prison for Embezzlement Scheme

Used Unwitting Third Party Vendor to Steal More Than $400,000

ROBERT D. CURRY, 41, of Seattle, Washington, was sentenced today in U.S. District Court in Seattle to 33 months in prison, three years of supervised release, and $459,341.63 in restitution for wire fraud. CURRY, a former management employee of Microsoft has agreed to repay the company for its losses as well as for the cost of the internal investigation of his criminal conduct. At sentencing today Chief U.S. District Judge Marsha J. Pechman noted that the public has grown increasingly outraged over those who lie to line their own pockets.

According to records filed in the case, CURRY worked as a manager in the online business development area of Microsoft. A highly regarded and well-paid professional with an MBA from Yale, CURRY claims he began the fraud scheme in 2010 when he was disillusioned with Microsoft because of an abusive manager. CURRY convinced one of the vendors he supervised to bill Microsoft for audio equipment he said had been purchased for X-Box 360 promotional events. In fact CURRY had purchased the equipment for his own use. Later, CURRY used the third party vendor to bill Microsoft for downloads of Microsoft’s search engine software. The third party later discovered that the download information was fraudulent, and that the money was passing into companies controlled by CURRY or his friends. Before the scheme was discovered, CURRY tried to embezzle an additional $1.3 million from Microsoft. In all CURRY defrauded Microsoft out of $459,341.

In their request for prison time, prosecutors noted that this was not a simple crime of opportunity. “Mr. Curry stole nearly half a million dollars from his employer in an intricate and sophisticated scheme that took deliberation and careful execution. This was not a hastily committed crime that would have been easily detected, nor was it something that was designed to be a one-time event. This crime was serious because of the careful efforts that Mr. Curry took to manipulate third parties, forge documents, and set up a shell company in a manner that indicated that he intended to continue to exploit his employer for as long as possible and for as much as possible,” the prosecutor wrote in her sentencing memo. The prosecutor also noted that CURRY was the third defendant this year to have been sentenced in this district for theft from Microsoft and urged the court to send a strong deterrent message to make clear that stealing from this company will not be tolerated.

The case was investigated by the FBI. The case was prosecuted by Assistant United States Attorney Katheryn Kim Frierson.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110 or Emily.Langlie@USDOJ.Gov.

Two Ft. Lauderdale Men Indicted for Money Laundering and Obstruction of Justice in Connection with Mutual Benefits Corporation Fraud

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CID), announced the unsealing of a fifty-four count indictment against defendants Henry Fecker, III, 57, and Steven Steiner, a/k/a “Steven Steinger,”59, for their participation in a scheme to launder and conceal proceeds in connection with the Mutual Benefits Corporation (“MBC”) fraud. More specifically, Fecker and Steiner are charged with receiving more than $10 million into the account of Camden Consulting, a company they controlled, and then hiding and concealing assets from the U.S. Securities and Exchange Commission (“SEC”) and the United States District Court. Both defendants were arrested and appeared in court earlier today. A pre-trial detention hearing is scheduled for Tuesday, August 30, 2011 at 1:30 p.m. before U.S. Magistrate Judge Andrea M. Simonton.

As alleged in the indictment, from approximately 1994 to May 2004, MBC purchased life insurance policies and sold them in fractionalized form to investors. MBC and its employees and agents eventually defrauded approximately 30,000 investors by, among other things, misleading them about the accuracy of life expectancies of the insureds and the expenses required to maintain the insurance policies via premium payments. New investor money was thus used to pay premiums on life insurance policies purchased by earlier investors. As the scheme continued, more investor money was required to prevent the Ponzi-scheme from collapsing. After the MBC business collapsed in 2004, investors eventually suffered more than $830 million in losses.

As charged in the indictment, Steiner was a founder and Vice President of MBC and was paid by MBC using the account of Camden Consulting. Fecker was the owner of Camden Consulting. In this way, the MBC funds were used to support a lavish lifestyle for Steiner and Fecker, who lived together and jointly owned waterfront homes in Ft. Lauderdale and Camden, Maine, and a luxury apartment in New York City.

According to the indictment, in May 2004, MBC was sued by the SEC in the civil action, S.E.C. vs. Mutual Benefits Corp., et al., No. 04-60573-CIV-MORENO (S.D. Fla.) (the “SEC Fraud Action”). The SEC obtained a restraining order to halt the alleged fraud at MBC, and thereafter a receiver was appointed by the United States District Court for the Southern District of Florida (the “MBC Receiver”), to identify and trace the assets of MBC. Steiner was a named defendant in the SEC Fraud Action and Fecker was a party due to his control of Camden Consulting.

According to the indictment, after 2004 when MBC was shut down, Fecker and Steiner engaged in a series of transactions to hide assets from the SEC and the MBC Receiver by placing funds attributable to Steiner with third parties or in Fecker’s name alone, and later by causing third parties to make payments of monies due to Steiner, instead to Fecker. In 2006, for example, Fecker obtained a refinance of the Maine property and placed the proceeds of approximately $480,000 into a series of certified checks to conceal their existence from authorities. Fecker began cashing these checks in 2008 and continued this through July 2011, using the funds to support a lavish lifestyle for Fecker and Steiner.

To obtain a favorable settlement of their liability with the SEC, the indictment alleges that in 2006 and early 2007, Fecker and Steiner submitted a series of false and misleading documents to conceal their true financial condition. Based on this documentation, around April 2007, the SEC agreed to settled their liability for $5 million and further agreed to a reduced penalty of $3.95 million, and the court in the SEC Fraud Action thereafter ordered that these sums be paid by order dated April 10, 2007. The indictment alleges that, to date, Steiner and Fecker have paid only $750,000.

The indictment further alleges in late 2009, to further conceal assets from the SEC and the SEC receiver, Steiner sold the luxury New York apartment for $1.3 million, but caused false documents to state that the sales price was $1.1 million and submitted these documents to the SEC and the MBC Receiver. To further thwart the SEC’s efforts to recover assets attributable to MBC, Steiner allegedly provided false and misleading testimony under oath to the MBC Receiver concerning his assets and financial condition.

Previously, in a separate case also in the Southern District of Florida, Steiner was charged in United States v. Joel Steinger, et al. (Case No. 08-CR-21158), with conspiracy to commit mail and wire fraud and money laundering, in relation to the MBC fraud scheme. Trial in that matter is scheduled for February 2013 before U.S. District Judge Adalberto Jordan.

United States Attorney Wifredo A. Ferrer stated, “Ponzi-schemes, like the MBC investment scheme, defraud unwitting investors out of their lives savings. These defendants compounded their legal troubles by then laundering the proceeds of the fraud and attempting to hide assets. Such abuse will not be tolerated.”

“We will vigorously investigate and prosecute individuals who obstruct justice by making false statements and concealing assets from an agency of the United States attempting to carry out its mission, such as the SEC’s efforts to protect investors here,” said FBI Special Agent in Charge John V. Gillies.

“We will hold accountable those who engage in the laundering of funds derived from fraud, particularly through concealment and spending of funds through sophisticated transactions, like the ones employed here,” said IRS Special Agent in Charge José A. Gonzalez.

Mr. Ferrer commended the investigative efforts of the FBI and the IRS-CID, and the Miami Regional Office of the SEC, which previously brought a civil action against MBC and its principals. The matter is being prosecuted by Assistant U.S. Attorney Jerrob Duffy.

An indictment is only a charging document, and a defendant is presumed innocent unless and until proven guilty.

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 pacer.flsd.uscourts.gov.

Iowa Company Pleads Guilty to Participating in Ready-Mix Concrete Price-Fixing and Bid-Rigging Conspiracy

WASHINGTON—An Iowa ready-mix concrete company pleaded guilty today to participating in a price-fixing and bid-rigging conspiracy for the sales of ready-mix concrete, the Department of Justice announced.

According to a one-count felony charge filed on Aug. 15, 2011, in U.S. District Court in Sioux City, Iowa, Great Lakes Concrete Inc., a producer of ready-mix concrete with headquarters in Spencer, Iowa, participated in a conspiracy with another ready-mix concrete company to fix prices and rig bids for ready-mix concrete sold in the northern district of Iowa. The department said the company participated in the conspiracy beginning at least as early as January 2008 and continuing until as late as August 2009.

Ready-mix concrete is a product comprised of cement, aggregate (sand and gravel), water, and other additives. The concrete generally is produced in a concrete plant and is transported by concrete-mixer trucks to work sites, where it is used in various types of construction projects, including buildings and roads.

According to court documents, Kent Robert Stewart, the president of Great Lakes Concrete, participated in the conspiracy by engaging in conversations and reaching agreements regarding the conspirators’ price lists and project bids for ready-mix concrete sold in the Northern District of Iowa. Great Lakes Concrete then accepted payment for those sales at collusive and noncompetitive prices, the department said. On May 24, 2010, Stewart pleaded guilty in U.S. District Court in Sioux City to participating in a conspiracy to fix prices and rig bids of the sale of ready-mix concrete, and, on Feb. 8, 2011, was sentenced to serve a year and a day in prison and to pay a $83,427.09 criminal fine.

Great Lakes Concrete is charged with violating the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s guilty plea arose from an ongoing federal antitrust investigation of the ready-mix concrete industry in Iowa and surrounding states. As a result of the investigation, three individuals have been convicted and sentenced to serve prison time, and, including Great Lakes Concrete, four ready-mix concrete companies have pleaded guilty and are awaiting sentencing.

The investigation is being conducted by the Antitrust Division’s Chicago Field Office, the FBI’s Sioux City Resident Agency and the U.S. Department of Transportation’s Office of the Inspector General, with the assistance of the U.S. Attorney’s Office in Sioux City. Anyone with information concerning bid-rigging, price-fixing or territorial allocation related to the ready-mix concrete industry in Iowa and its surrounding states should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit justice.gov/atr/contact/newcase.htm.

Harris Dempsey “Butch” Ballow Sentenced to Statutory Maximum Prison Term for Money Laundering Conviction

HOUSTON—Convicted money launderer Harris Dempsey “Butch” Ballow, 68, formerly of Galveston County, Texas, was sentenced today by U.S. District Judge David Hittner to 10 years in federal prison without parole and ordered to pay more than $10 million in restitution to his victims, United States Attorney José Angel Moreno announced today along with FBI Special Agent in Charge Stephen L. Morris and acting United States Marshal Elizabeth Saenz.

Indicted in 2003 for fraud and money laundering which centered on misrepresentations made in connection with the purchase and sale of stock, Ballow pleaded guilty before Judge Hittner to money laundering in November 2003 and faced a maximum of 10 years’ imprisonment. At the time, Ballow, who had been in custody without bond for approximately a year, agreed to cooperate with a Securities and Exchange Commission (SEC) investigation and was released on a $100,000 bond pending sentencing on Dec. 16, 2004. However, Ballow fled the country. A warrant for Ballow’s arrest was issued the following day, Dec. 17, 2004.

After more than six years on the run, Ballow was arrested by Mexican authorities on July 13, 2010, in Nuevo Vallarta, Mexico, on a provisional warrant requested by the Southern District of Texas. Ballow was extradited by Mexico to the United States on April 8, 2011.

Judge Hittner sentenced Ballow this morning to the maximum statutory prison term for the offense of conviction and further ordered him to pay restitution to the victims of his fraudulent stock scheme in the amount of $10,483,769.81. Ballow has been in custody without bond since his extradition from Mexico and will remain in custody to serve his sentence.

Ballow is also charged with conspiracy to commit wire fraud, wire fraud and failure to appear for his sentencing pending in a separate indictment returned by a Houston grand jury in 2010 (cause number 4:10-494-S). Those charges are pending and Ballow is presumed innocent of these charges unless and until convicted through due process of law.

Ballow’s wife, Robin Harless Ballow, 56, formerly of Galveston County, Texas; and Ruben Garza Perez, 50 Kelly Lyn Boothe, 45, and Jeffrey Janssen Anuth, 52, all formerly of Houston, are also charged with conspiracy, wire fraud, and harboring and concealing Ballow from arrest. Robin Ballow, Garza, Boothe, and Anuth are all fugitives. Anyone having information regarding the whereabouts of these defendants is asked to contact the Houston office of the FBI at (713) 693-5000.

Similar charges (cause number 4:10-cr-258-S) are pending against five other co-defendants in a separate but related indictment set for trial on Jan. 23, 2012, before U.S. District Judge Lee H. Rosenthal.

The investigation leading to the 2003 charges against Ballow was conducted by the FBI Houston Division office. The search for and subsequent charges against others filed in 2010 is the result of an investigation conducted by the Houston and San Antonio Division FBI offices and the United States Marshals Service with assistance of the United States Postal Inspection Service. Assistant U.S. Attorney John R. Lewis is prosecuting the cases.

Brookline Man to Plead Guilty to Foreign Economic Espionage

BOSTON—A Brookline man has agreed to plead guilty to foreign economic espionage for providing trade secrets over an 18-month period to an undercover agent posing as an Israeli intelligence officer. This is the first prosecution in Massachusetts for foreign economic espionage and only the eighth in the nation.

ELLIOT DOXER, 42, a former Akamai Technologies, Inc. employee, was charged in an information and has agreed to plead guilty to foreign economic espionage for providing Akamai trade secrets to an undercover agent posing as an Israeli intelligence officer. The plea hearing is scheduled for August 29 at 3:15 p.m.

United States Attorney Carmen M. Ortiz said, “Economic espionage poses a tremendous risk, not only to corporate America, but to the safety and well being of our nation’s security. I want to thank Akamai Technologies, Inc. for their outstanding cooperation in this matter, which played an important role in assisting law enforcement with bringing Mr. Doxer to justice.”

“The Boston area is a worldwide leader of innovative technology and research. Preventing those intent on stealing trade secrets and American technology from local industry leaders, regardless of their motivation, is a high priority for the FBI,” said Richard DesLauriers, Special Agent in Charge of the FBI in Boston. “Mr. Doxer’s criminal actions are an affront to the dedicated workers in the thriving technology industry. The arrest of Mr. Doxer is a significant achievement by the FBI and the USAO, District of Massachusetts, to thwart Mr. Doxer’s goal of attempting to deprive Akamai Technologies of valuable business technology and confidential business information.”

The parties have stipulated in an agreed statement of facts that on June 22, 2006, DOXER sent an e-mail to the Israeli consulate in Boston stating that he worked in Akamai’s finance department and was willing to provide any information that might help Israel. In later communications, DOXER said that his chief desire “was to help our homeland and our war against our enemies.” He also asked for payment in light of the risks he was taking.

In September 2007, an FBI agent posing as an undercover Israeli intelligence officer spoke to DOXER and established a “dead drop” where the agent and DOXER could exchange written communications. From September 2007 through March 2009, DOXER visited the dead drop at least 62 times to leave information, retrieve communications, or check for new communications.

Included in the trade secret information that DOXER provided the undercover agent were an extensive list of Akamai’s customers; contracts between Akamai and various customers revealing contact, services, pricing, and termination date information; and a comprehensive list of Akamai’s employees that revealed their positions and full contact information. DOXER also broadly described Akamai’s physical and computer security systems and stated that he could travel to the foreign country and could support special and sensitive operations in his local area if needed.

We also acknowledge the government of Israel for their cooperation in this investigation, and underscore that the information does not allege that the government of Israel or anyone acting on its behalf committed any offense under U.S. laws in this case.

DOXER was arrested on October 6, 2010, on a complaint charging him with wire fraud.

That charge will be dismissed as part of the plea agreement. The charge of foreign economic espionage carries a maximum penalty of 15 years in prison, a three-year term of supervised release and a $500,000 fine.

The case is being prosecuted by Assistant U.S. Attorneys William D. Weinreb and Scott Garland respectively in Ortiz’s Antiterrorism and National Security Unit and Cybercrimes Unit, and trial attorneys Kathleen Kedian and David Recker of the Department of Justices’ Counterespionage Section. Akamai Technologies cooperated fully in the investigation.

The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Houston Venture Capitalist Charged with Fraud

HOUSTON—Harvard H. Hill, of Houston, has been charged with three counts of wire fraud in connection with an investment in the general partnership of a Houston-based venture capital fund he promoted, United States Attorney José Angel Moreno announced today.

Hill, 74, surrendered to FBI agents this morning as a result of the return of the three-count indictment on July 21, 2011. He made his initial appearance this morning before U.S. Magistrate Judge Mary Milloy. He is scheduled to appear again today at 1:45 p.m., at which time the issue of bond will be decided.

The indictment alleges that Hill defrauded an investor in the general partnership that managed the James Sunbelt Investment LP Fund that Hill promoted. Hill, who has operated venture capital funds in Houston under the name Houston Partners, solicited an investor to become a special limited partner in the general partnership. Under the supposed structure of the fund, the general partnership would receive 20 percent of the fund’s profit distributions and a 2 percent annual management fee. The special limited partner would receive a percentage of the general partnership’s stake, so the ability to repay the special limited partner depended in significant part on the amount invested in the fund given the annual 2 percent management fee.

The indictment alleges that Hill misrepresented that millions of dollars were already in the fund under the management of the general partnership, provided false information listing the names of companies in which the fund was supposedly invested and falsely claimed that professors at Rice and MD Anderson Cancer Center had agreed to serve on the fund’s Scientific Advisory Board. The indictment further alleges that within a week of the investor wiring $500,000 to Hill in July 2006, Hill had transferred over half the funds to a personal account in his name, a bank account controlled by a member of Hill’s family and an account in the name of another fund in which Hill had past due expenses. According to the indictment, within two months of receipt of the investment, more than 80 percent of the money had been spent and was not used for promoting and managing the fund.

Each wire fraud count carries a potential punishment of up to 20 years in prison and a $250,000 fine.

The case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Gregg Costa.

An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.

Barry Minkow Sentenced to Five Years’ Imprisonment for Stock Manipulation Conspiracy

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced that defendant Barry Minkow, 44, of San Diego, California, was sentenced today on one count of conspiracy to commit securities fraud, in violation of Title 18, United States Code, Section 371, for his participation in a scheme to manipulate the stock price of Lennar Corporation (Lennar) through false and misleading statements about Lennar’s business operations and management. At today’s hearing, U.S. District Court Judge Patricia A. Seitz sentenced Minkow to five years in prison, to be followed by three years of supervised release. In addition, the court ordered Minkow to pay $583,573,600 in restitution.

According to documents filed with the court, Minkow operated Fraud Discovery Institute, a for-profit fraud investigation firm based in California. In this way, Minkow developed ties with federal law enforcement agencies as a purported fraud-finder. During his plea hearing, Minkow admitted making false and misleading statements alleging widespread improprieties in Lennar’s financial reporting and business structure, and attacking the personal character of Lennar’s management.

According to court documents, Minkow was hired to put economic pressure on Lennar to pay money demanded by a business partner in a prior land deal. To this end, beginning in January 2009, Minkow used the Internet, press releases, e-mail communications, Youtube.com videos, and the U.S. mail to broadcast false and misleading statements about Lennar, with the intent of artificially depressing Lennar’s stock price. Minkow then used his relationship with federal law enforcement agencies to report false allegations of criminal conduct purportedly committed by Lennar and its management. Once Minkow confirmed that his allegations had successfully induced law enforcement to open a criminal investigation, Minkow used that knowledge and information to trade Lennar securities for his own benefit.

Mr. Ferrer commended the investigative efforts of the FBI and the cooperative efforts of the Miami Regional Office and the Washington, D.C. Office of the Securities and Exchange Commission. This case is being handled by Assistant United States Attorney Cristina Perez Soto.

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 pacer.flsd.uscourts.gov.