Financial Fraud: Jason J. Parmeley , formerly of O’Fallon, MO, Sentenced For Running Large Stolen Property Fraud Ring

O’Fallon Missouri Man Sentenced to Fourteen Years in Prison for Running Large Stolen Property Fraud Ring and Bank Fraud

Donald S. Boyce, United States Attorney for the Southern District of Illinois, announced that yesterday, in federal court in Benton, Illinois, Jason J. Parmeley, 43, formerly of O’Fallon, MO, was sentenced to fourteen years in federal prison for crimes arising from a large stolen property fraud ring and a separate bank fraud. The stolen property ring operated in the Metro East and numerous other locations.

At his plea hearing on December 6, 2016, Parmeley admitted that he was the leader and organizer of a stolen property ring that victimized numerous retailers and equipment rental stores throughout the United States. Specifically, Parmeley admitted that he used the internet to obtain credit account numbers that individuals and businesses had with retail stores, such as Home Depot, Lowes, Menards, and rental stores, such as SunBelt Rentals. Using this information, Parmeley placed orders with the stores in the names, and under the credit accounts, of the individuals and businesses. The items Parmeley ordered frequently consisted of appliances, computers, expensive tools, and construction equipment. Parmeley further admitted that, after he placed the orders, he dispatched drivers to go to the stores and pick up the items. The items were then sold at prices

substantially below retail. The profits were wire transferred to Parmeley in Mexico. The losses caused by this stolen property ring exceeded $4,000,000.

Parmeley lived in Mexico and controlled the fraud ring from that country. In late August of 2015, Mexican Immigration Authorities deported Parmeley from Mexico. Parmeley has been held in federal custody since that time.

Parmeley also pled guilty to a second federal criminal indictment on December 6, 2016. The charges in that case were brought by the United States Attorney’s Office for the Northern District of Alabama. In that case, Parmeley was charged with defrauding Regions Bank by electronically re-depositing checks that he had previously deposited, and then withdrawing funds from those re-deposited checks. Parmeley engaged in this fraudulent scheme from November 20, 2009, through September 20, 2010. As a result of this fraud, Regions Bank sustained a loss of $174,451.80. Although the charges in the second indictment originated in Alabama, Parmeley’s guilty plea was made to the Court here in the Southern District of Illinois.

At the sentencing hearing yesterday, United States District Judge Staci M. Yandle sentenced Parmeley to serve 140 months in prison on the convictions arising from the stolen property ring. Judge Yandle then ordered that Parmeley will serve a consecutive sentence of 28 months on his bank fraud conviction. The judge also ordered Parmeley to pay restitution of $456,882.37 to the victims of the stolen property ring for the specific losses that could be identified. She further directed Parmeley to pay $174,451.80 in restitution to Regions Bank.

To date, six defendants have been sentenced to prison for their roles in the stolen property conspiracy. On June 7, 2016, James D. Litchfield, 59, owner of Big Jim’s Autorama in Madison, IL, was sentenced to 3 years in prison, and his brother, Ryan P. Litchfield, 37, of O’Fallon, MO, was sentenced to 1 year in prison. Both of the brothers admitted to receiving large quantities of

the stolen property. On October 4, 2016, Shannan M. Flora, 42, of O’Fallon, MO, and Rigoberto Gutierrez, 28, of Compton, CA, were both sentenced to 15 months in prison. Flora performed a wide variety of tasks for the conspiracy, including arranging sales of stolen goods. Gutierrez coordinated shipments of stolen goods in California. On October 12, 2016, Russell J. Witt, 34, of Mount Clemens, MI, was sentenced to 12 months in prison. Witt worked as a driver for the conspiracy for over a year. On December 13, 2016, Sean A. Shields, 48, of Ozark, MO, was also sentenced to 12 months in prison. Shields owned a store in Ozark, MO, and purchased large quantities of the stolen merchandise.

Six other defendants in the stolen property case were sentenced to terms of probation. They are: Nicholas A. Brockman, 20, of Wentzville, MO; Benedict G. Pellerito, 56, of Troy, MO; Bryce E. Atkinson, 22, of Lake Saint Louis, MO; Alice J. Hembree, 44, of Moscow Mills, MO; Tony G. Robertson, 45, of O’Fallon, MO; and Jessie S. Urias, 38, of Compton, CA. Brockman, Pellerito, Atkinson, Robertson, and Urias all worked as drivers for the conspiracy. Hembree performed administrative and bookkeeping functions for the fraud ring.

The two remaining defendants will be sentenced on the following dates: (1) June 6, 2017 – Steven J. Belcher, 45, of St. Charles, MO; and (2) June 22, 2017 – Angel Speed, 26.

The investigation of the stolen property ring is being conducted by agents from the St. Louis Division of the Federal Bureau of Investigation (“FBI”). The FBI has received substantial assistance from many state and local police departments in numerous jurisdictions, including the Metro East Auto Theft Task Force and the California Highway Patrol. The investigation of the bank fraud scheme involving Regions Bank was conducted by the FBI in Alabama. The case is being prosecuted by Assistant United States Attorney Scott A. Verseman.

Original PressReleases…
O’Fallon Missouri Man Sentenced to Fourteen Years in Prison for Running Large Stolen Property Fraud Ring and Bank Fraud
Donald S. Boyce, United States Attorney for the Southern District of Illinois, announced that yesterday, in federal court in Benton, Illinois, Jason J. Parmeley, 43, formerly of
https://goo.gl/NnSl96

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Financial Fraud: AQE Inc. Asbestos Abatement Company Sentenced for Defrauding Union Benefit Funds

New Hampshire Asbestos Abatement Company Sentenced for Defrauding Union Benefit Funds

BOSTON – An asbestos removal company was sentenced today in federal court in Boston in connection with a scheme to pay union members at non-union rates and without benefits by setting-up and paying union members through a separate corporate entity.

AQE Inc. of Windham, NH, was sentenced by U.S. District Court Judge Patti B. Saris to one year of probation and was ordered to pay restitution of $500,000 to the Massachusetts Laborers Benefit Fund (MLBF). In February 2017, AQE Inc. pleaded guilty to 18 counts of mail fraud, one count of benefit fund embezzlement and 18 counts of filing false documents with an ERISA fund.

AQE Inc. employed members of the Tewksbury Local 1421 of the Laborers International Union of North America. It paid members of Local 1421 for jobs that required union participation from the payroll of AQE Inc., which was a union signatory corporation. When the jobs did not require a union signatory company, union members were paid from the payroll of Air Quality Experts Inc.— an entity of AQE Inc.’s business, serving as a second corporate identity. In these instances, union members did not receive union rates, and benefits were not paid by AQE Inc. to the MLBF, which provides medical and pension benefits to 8,000 laborers and their families in Massachusetts. AQE Inc. sent “remittance reports” to the MLBF that failed to report thousands of hours worked by members of Local 1421. By significantly under reporting the hours worked by union members, AQE Inc. failed to pay hundreds of thousands of dollars to the MLBF.

Acting United States Attorney William D. Weinreb; Cheryl Garcia, Special Agent in Charge of the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigation, New York Region; and Susan Hensley, Regional Director of the Department of Labor, Employee Benefits and Security Administration, made the announcement today. Assistant U.S. Attorneys Fred M. Wyshak Jr. and Ryan M. DiSantis of Weinreb’s Public Corruption Unit prosecuted the case.

Original PressReleases…
New Hampshire Asbestos Abatement Company Sentenced for Defrauding Union Benefit Funds
BOSTON – An asbestos removal company was sentenced today in federal court in Boston in connection with a scheme to pay union members at non-union rates and without benefits by setting-up and paying union members
https://goo.gl/p1VAOG

Financial Fraud: THOMAS E. HAIDER Sentenced To Implement And Maintain An Effective Anti-Money Laundering Program And File Timely SARS In Moneygram

Acting Manhattan U.S. Attorney Announces Settlement Of Bank Secrecy Act Suit Against Former Chief Compliance Officer At Moneygram For Failure To Implement And Maintain An Effective Anti-Money Laundering Program And File Timely SARS

Thomas E. Haider Agrees to a Three-Year Bar from Performing a Compliance Function at a Money Transmitter and to Pay a Civil Penalty of $250,000

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Jamal El-Hindi, the Acting Director of the Financial Crimes Enforcement Network (“FinCEN”), announced today that the United States Department of the Treasury (the “Treasury Department”) has settled its claims under the Currency and Foreign Transactions Reporting Act of 1970 (“Bank Secrecy Act” or “BSA”) against THOMAS E. HAIDER (“HAIDER”), the former chief compliance officer of MoneyGram International, Inc. (“MoneyGram”). During the relevant time period, MoneyGram operated a money transfer service that enabled its customers to transfer money from one MoneyGram outlet to another. In the settlement – which resolves claims that HAIDER is liable under the BSA for failing to ensure that MoneyGram implemented and maintained an effective anti-money laundering (“AML”) program and filed timely suspicious activity reports (“SARs”) with FinCEN – HAIDER has agreed to a three-year injunction barring him from performing a compliance function for any money transmitter. HAIDER has also agreed to pay $250,000, and has admitted, acknowledged, and accepted responsibility for, among other things, (1) failing to terminate specific MoneyGram outlets after being presented with information that strongly indicated the outlets were complicit in consumer fraud schemes, (2) failing to implement a policy for terminating outlets that presented a high risk of fraud, and (3) structuring MoneyGram’s AML program such that information that MoneyGram’s Fraud Department had aggregated about outlets, including the number of reports of consumer fraud that particular outlets had accumulated over specific time periods, was not generally provided to the MoneyGram analysts who were responsible for filing SARs.

The settlement was approved yesterday by U.S. District Judge David S. Doty of the U.S. District Court for the District of Minnesota.

Acting U.S. Attorney Joon H. Kim said: “Compliance officers perform an essential function, serving as the first line of defense in the fight against fraud and money laundering. Unfortunately, as today’s settlement shows, Thomas Haider violated his obligations as MoneyGram’s chief compliance officer. By failing to terminate MoneyGram outlets that presented a high risk for fraud and to take other actions clearly required of him, Haider allowed criminals to use MoneyGram to defraud innocent consumers. We are committed to working with FinCEN to enforce the requirements of the Bank Secrecy Act and to hold individuals like Haider accountable.”

Acting FinCEN Director Jamal El-Hindi said: “FinCEN relies on compliance professionals from every corner of the financial industry. FinCEN and our law enforcement partners need their judgment and their skills to effectively fight money laundering, fraud, and terrorist financing. Compliance professionals occupy unique positions of trust in our financial system. When that trust is broken, it is important that we take action so that the reputations of thousands of talented compliance officers are not diminished by any one individual’s outlying egregious actions. We have repeatedly said that when we take an action against an individual, the record will clearly reflect the basis for that action. Here, despite being presented with various ways to address clearly illicit use of the financial institution, the individual failed to take required actions designed to guard the very system he was charged with protecting, undermining the purposes of the BSA. Holding him personally accountable strengthens the compliance profession by demonstrating that behavior like this is not tolerated within the ranks of compliance professionals.”

As part of the settlement, filed in federal court in Minneapolis, HAIDER has admitted, acknowledged, and accepted responsibility for the below-described conduct that occurred during the period 2003 through May 23, 2008 (the “Covered Period”).

MoneyGram operated a money transfer service that enabled its customers to transfer money to and from various locations in the United States and abroad through MoneyGram’s global network of agents and outlets.

HAIDER was MoneyGram’s chief compliance officer, and was the most senior MoneyGram employee with direct oversight over MoneyGram’s Fraud Department and AML Compliance Department. As such, HAIDER had the authority to implement a policy for terminating or otherwise disciplining MoneyGram agents and outlets. In 2006 and 2007, members of MoneyGram’s Fraud Department proposed that MoneyGram implement a policy for terminating or otherwise disciplining agents and outlets that presented a high risk of fraud. A draft policy was provided to HAIDER no later than March 2007. However, MoneyGram’s Sales Department objected to a discipline/termination policy for high-fraud agents and outlets, and therefore, during HAIDER’s employment at MoneyGram, no such policy was implemented.

In addition, in April 2007, MoneyGram’s Fraud Department recommended terminating a number of specific MoneyGram outlets that were located in Canada. To support this recommendation, the Director of Fraud provided HAIDER and other senior managers with specific information on 49 Canadian outlets, which included spreadsheets analyzing the 49 outlets’ money transfer activity during the six-month period from September 2006 through February 2007. The spreadsheets revealed that the 49 outlets accounted for approximately 58% of all reported fraud involving money sent through MoneyGram’s money transfer system to Canada during this six-month period. The spreadsheets also reflected, among other things, that each of the 49 outlets had characteristics that HAIDER and the other members of the Fraud and AML Compliance Departments who reported to him viewed as strong indicators that an outlet was complicit in consumer fraud schemes. Among the 49 outlets were four outlets that were owned and/or operated by the same individual, James Ugoh. The April 2007 spreadsheets revealed that, during the six-month period, the four Ugoh outlets alone had collectively accumulated 150 consumer fraud reports, totaling more than $300,000 in consumer losses. Ugoh has since pled guilty to various crimes relating to consumer fraud, and he has admitted that almost all of the money his outlets received constituted fraud proceeds.

HAIDER had ultimate authority to terminate agents and outlets because of fraud or AML compliance concerns, but in the face of pushback from the Sales Department did not exercise that authority with respect to the vast majority of the 49 outlets identified in the April 2007 spreadsheets.

By April 2007, HAIDER was aware that MoneyGram’s Fraud Department had the ability to aggregate – and had been aggregating – information relating to MoneyGram’s agents and outlets, including the number of consumer fraud reports particular outlets had accumulated over specific time periods. However, HAIDER structured MoneyGram’s AML program such that this information was not generally provided to the MoneyGram analysts who were responsible for filing SARs. During the Covered Period, there were numerous outlets that the Fraud Department identified as having accumulated a disproportionate number of consumer fraud reports, but for which MoneyGram did not file SARs. In addition, MoneyGram’s AML Compliance Department failed to conduct adequate audits of many of those agents/outlets, and certain of the agents were permitted to open additional outlets.


The Treasury Department filed its complaint in this lawsuit in the United States District Court for the Southern District of New York in December 2014. In March 2015, the parties agreed to transfer the case to the United States District Court for the District of Minnesota, where MoneyGram was headquartered for the period of time relevant to the Government’s complaint.

Mr. Kim thanked FinCEN’s Enforcement Division, Office of Chief Counsel, and Office of Special Investigations for their extraordinary assistance with this case.

This case has been handled at all times by the Civil Frauds Unit of the United States Attorney’s Office for the Southern District of New York. Assistant United States Attorneys Christopher B. Harwood, Jessica Jean Hu, Caleb Hayes-Deats, and Elizabeth M. Tulis are in charge of the case, having been designated as Special Assistant United States Attorneys for the District of Minnesota for that purpose.

Original PressReleases…
Acting Manhattan U.S. Attorney Announces Settlement Of Bank Secrecy Act Suit Against Former Chief Compliance Officer At Moneygram For Failure To Implement And Maintain An Effective Anti-Money Laundering Program And File Timely SARS
Thomas E. Haider Agrees to a Three-Year Bar from Performing a
https://goo.gl/4RqYAL

Financial Fraud: MAHMOUD THIAM Convicted Of Money Laundering Charges Stemming From His Scheme

Former Minister Of Mines For The Republic Of Guinea Convicted Of Receiving And Laundering $8.5 Million In Bribes From Chinese Companies

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Kenneth A. Blanco, the Acting Assistant Attorney General of the Department of Justice’s Criminal Division, announced that MAHMOUD THIAM was convicted in Manhattan federal court yesterday of money laundering charges stemming from his scheme to launder $8.5 million in bribes that THIAM received from senior representatives of a Chinese conglomerate. THIAM was charged with using his official position as Minister of Mines for the Republic of Guinea to facilitate the award to the Chinese conglomerate of exclusive and highly valuable investment rights in various sectors of the Guinean economy. THIAM was convicted after a seven-day trial before U.S. District Judge Denise L. Cote.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As a New York federal jury has now found, Thiam abused his official government position to enrich himself at the expense of one of Africa’s poorest countries. Thiam laundered the proceeds of his bribery scheme into the United States to fund his lavish lifestyle, buying a multi-million dollar estate in Dutchess County, and paying for private schools for his children. Thanks to the work of the FBI, Thiam’s scheme was exposed and he was swiftly convicted.”

Acting Assistant Attorney General Kenneth A. Blanco said: “As a high-level Minister in Guinea, Thiam sold out his country and then used U.S. banks and real estate to hide millions in bribes paid to him by a Chinese conglomerate. Corruption is a global disease that undermines the rule of law everywhere. The Justice Department is committed to investigating and prosecuting those who commit these crimes and use the U.S. financial system and free marketplace to conceal and benefit from their crimes.”

According to the Indictment, other filings in Manhattan federal court, and the evidence admitted at trial:

THIAM, a United States citizen who was Minister of Mines and Geology of the Republic of Guinea in 2009 and 2010, engaged in a scheme to accept bribes from senior representatives of a Chinese conglomerate and to launder that money into the United States and elsewhere. In exchange for these multimillion-dollar bribe payments, THIAM used his position as Minister of Mines to facilitate the award to the Chinese conglomerate of exclusive and highly valuable investment rights in a wide range of sectors of the Guinean economy, including near-total control of Guinea’s significant mining sector.

In order to receive the bribes covertly, THIAM opened a bank account in Hong Kong (the “Hong Kong Account”) and misreported his occupation to the Hong Kong bank to conceal his status as a public official in Guinea. Upon receiving the bribes, THIAM transferred millions of dollars in bribe proceeds from the Hong Kong Account to, among others, THIAM’s bank accounts in the United States; a Malaysian company that facilitated and concealed THIAM’s purchase of a $3,750,000 estate in Dutchess County, New York; private preparatory schools in Manhattan attended by THIAM’s children; and at least one other West African public official.

To further conceal the unlawful source of the bribery proceeds that THIAM transferred from the Hong Kong Account to banks in the United States, THIAM lied to two banks based in Manhattan and on tax returns filed with the Internal Revenue Service regarding the bribe payments, his position as a foreign public official, and the source of the funds in the Hong Kong Account. In total, THIAM received approximately $8.5 million in bribes from the Chinese conglomerate.


THIAM, 50, of Manhattan, was convicted of one count of transacting in criminally derived property, which carries a maximum sentence of 10 years in prison, and one count of money laundering, which carries a maximum sentence of 20 years in prison. THIAM is scheduled to be sentenced before Judge Cote on August 11, 2017, at 10:00 a.m.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation. The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter. The Office is grateful to the government of Guinea for providing substantial assistance in gathering evidence during this investigation.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Elisha J. Kobre and Christopher J. Dimase and Trial Attorney Lorinda I. Laryea of the Fraud Section of the Justice Department’s Criminal Division are in charge of the prosecution.

Original PressReleases…
Former Minister Of Mines For The Republic Of Guinea Convicted Of Receiving And Laundering $8.5 Million In Bribes From Chinese Companies
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Kenneth A. Blanco, the Acting Assistant Attorney General of the
https://goo.gl/fsakW6

Financial Fraud: Owners Of Keystone Biofuels, Inc., Indicted To Have Participated in a Scheme To Fraudulently Claim RIN Credits

Owners Of Biofuel Company Indicted On Conspiracy And False Statement Charges

WASHINGTON – A Pennsylvania biofuel producer and two of its officers were indicted on May 3, 2017, on conspiracy and false statements charges for participating in a scheme that generated over $10 million in U.S. Environmental Protection Agency (EPA) renewable fuels credits (RIN credits) at Keystone Biofuels, Inc., a company that purported to produce and sell biodiesel for use as transportation fuel.

Ben Wootton, age 52, of Enola, PA, Race Miner, age 48, of Buena Vista, Co., and Keystone Biofuels, Inc. were indicted by a grand jury in Harrisburg, announced Bruce D. Brandler, U.S. Attorney for the Middle District of Pennsylvania, Jeffrey H. Wood, Acting Assistant Attorney General for the Department of Justice’s Environment and Natural Resources Division, Jennifer Lynn, Acting Special Agent in Charge for the Philadelphia Office of the Environmental Protection Agency’s Criminal Investigation Division, and Steven L. McQueen, Acting Assistant Special Agent In Charge of the Philadelphia Office of the Federal Bureau of Investigation.

According to the indictment, Wootton and Miner were co-owners of Keystone Biofuels, Inc. located in Shiremanstown, PA and later in Camp Hill, PA. Wootton, serving as President of Keystone Biofuels and Miner, serving as Chief Executive Officer, are alleged to have participated in a scheme with other coconspirators to fraudulently claim RIN credits on non-qualifying renewable fuel. Although the credits required that the fuel pass standards set by the American Society for Testing and Materials (ASTM), the fuel produced by Keystone did not meet this standard, the grand jury alleges, and was placed into commerce despite being “off-spec.” The conspirators also allegedly generated fraudulent documentation and manipulated samples to be sent to laboratories for testing as part of their scheme. Keystone, Wootton and Miner also allegedly made false entries into an EPA tracking system in violation of the Clean Air Act.

The investigation was conducted by the Environmental Protection Agency and Federal Bureau of Investigation. Department of Justice Environmental Crimes Section, Senior Litigation Counsel Howard P. Stewart, Trial Attorney Adam Cullman, and Assistant U.S. Attorney Geoffrey W. MacArthur of the Middle District of Pennsylvania are prosecuting this case.

Indictments are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.

A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statues and the Federal Sentencing Guidelines. The crime of conspiracy is punishable by up to five years in prison. The crime of False Statements is punishable by up to five years in prison. A fine of up to $250,000 for an individual and $500,000 for a corporation may also be imposed.

Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense, among other factors.

Original PressReleases…
Owners Of Biofuel Company Indicted On Conspiracy And False Statement Charges
WASHINGTON – A Pennsylvania biofuel producer and two of its officers were indicted on May 3, 2017, on conspiracy and false statements charges for participating in a scheme that generated over $10 million in U.S.
https://goo.gl/JPc9RO

Financial Fraud: PHILIP HENRY COOPER Plead Guilty In $5 Million Bribery and Wire Fraud Scheme

Former Regions Bank Executive Agrees to Plead Guilty in $5 Million Bribery and Wire Fraud Scheme

BIRMINGHAM – A former senior vice president at Regions Bank has agreed to plead guilty to conspiracy charges in a $5 million bribery and wire fraud scheme, announced Acting U.S. Attorney Robert O. Posey and FBI Special Agent in Charge Roger C. Stanton.

The U.S. Attorney’s Office on Wednesday filed a plea agreement in U.S. District Court with PHILIP HENRY COOPER, 67, of Birmingham. As part of the agreement, Cooper pledges to plead guilty to conspiracy to solicit and accept bribes for steering Regions’ business to a company established by a co-conspirator, and to conspiracy to launder the millions of dollars the conspirators received as part of the scheme.

Along with his two co-conspirators, Cooper agrees to repay Regions $5.1 million, according to the plea agreement. Cooper also agreed to forfeit approximately $1.5 million he received from the scheme.

Cooper was indicted last year along with Richard Alan Henderson, 57, of Hoover, on conspiracy, bank bribery, wire fraud affecting a financial institution and money laundering charges. Henderson, who also was a senior vice president at Regions, is scheduled for trial on those charges in June.

A third conspirator in the case, Jesse Stewart Ellis, 56, of Hoover, pleaded guilty last year to conspiracy to commit bank bribery and wire fraud, and money laundering conspiracy. He is scheduled for sentencing June 26.

Henderson and Cooper served as senior officers of Regions Bank. Through a wholly-owned subsidiary, Regions Equipment Financing Company, Regions Bank offered business customers various financing tools, including equipment financing and lease options. Henderson was first assigned to be finance manager of REFCO and was later promoted by Regions Bank to REFCO’s chief administrative officer. Cooper worked for Regions Bank as REFCO’s asset manager.

According to Cooper’s plea agreement, he and Henderson recruited Ellis to establish a company that would enter an agreement with REFCO to provide residual value insurance, a type of insurance designed to manage asset value risk and provide favorable accounting treatment on leases for Regions Bank. Ellis had no experience providing residual value insurance. The defendants directed REFCO’s residual value insurance business to Ellis’ new company, and Ellis, in return, split the money paid to him with Henderson and Cooper, according to the charges and Cooper’s plea agreement. Cooper and Henderson concealed from Regions that they were receiving money as a result of directing residual value insurance business to the company Ellis established.

Between Sept. 2010 and Nov. 2015, REFCO paid Ellis’ company, Residual Assurance Inc., about $5.1 million. Henderson received about $1.8 million as a result of the scheme and Cooper received about $1.5 million, according to Cooper’s plea agreement.

In 2014, after initially receiving his share of the bribery money in cash, Cooper established a company named Capital Equipment Appraisal Service to receive his payments, according to the plea agreement. After May 2014, Ellis deposited most of Cooper’s share of the bribery payments into a Wells Fargo Bank account Cooper opened for that company. Cooper also had a part of his share of the money deposited into an account at Merrill Lynch, according to the plea agreement.

The maximum penalty for conspiracy is five years in prison and a $250,000 fine. The maximum penalty for money laundering conspiracy is 20 years in prison and a fine of $500,000 or twice the value of the property involved in the transaction, whichever is greater. As part of the plea agreement, the government recommends a five-year prison sentence for Cooper.

The FBI investigated the case, which Assistant U.S. Attorneys George A. Martin Jr., Henry B. Cornelius, and John B. Ward are prosecuting.

Original PressReleases…
Former Regions Bank Executive Agrees to Plead Guilty in $5 Million Bribery and Wire Fraud Scheme
BIRMINGHAM – A former senior vice president at Regions Bank has agreed to plead guilty to conspiracy charges in a $5 million bribery and wire fraud scheme, announced Acting U.S. Attorney Robert O.
https://goo.gl/kAVqTE

Financial Fraud: ENRICO RUBANO And SHIVANAND MAHARAJ Charged to Commit Wire Fraud in Connection With a False Invoicing Scheme

Information Technology Chief And Consultant Charged With Multimillion-Dollar False Invoicing Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced today the filing of a criminal complaint charging ENRICO RUBANO, a/k/a “Rick Rubano,” and SHIVANAND MAHARAJ with two counts of conspiracy to commit wire fraud in connection with a false invoicing scheme that defrauded health and retirement funds (the “Funds”) of millions of dollars. As alleged, over a period of six years, RUBANO, MAHARAJ, and their co-conspirators generated hundreds of invoices for work they had not performed, which RUBANO, in his role as co-head of information technology for the Funds, approved for payment. RUBANO and MAHARAJ were arrested this morning, and will be presented before U.S. Magistrate Judge Andrew J. Peck.

Manhattan U.S. Attorney Preet Bharara said: “As alleged, Enrico Rubano used his position as the co-head of IT for a health and retirement benefit fund to perpetrate a scheme to falsely invoice millions of dollars from the fund for consulting work never actually performed. Rubano allegedly had the fund make payments based on hundreds of fake invoices to Shivanand Maharaj’s company, not for IT work actually done by that company, but really in exchange for alleged kickback payments to Rubano. Money that should have gone to help pay retirement and health care benefits were instead allegedly diverted to Rubano and Maharaj.”

USPIS Inspector-in-Charge Philip R. Bartlett said: “These defendants devised a scheme to falsely bill their client for work that was never performed by allegedly using an ‘inside’ employee to approve bogus invoices. They went one step too far when they decided to use the US Mail to facilitate their criminal misdeeds. Postal Inspectors will resolutely pursue fraudsters who use the U.S. mail to facilitate fraud schemes.”

According to the Complaint:

From 2008 through October 2015, RUBANO was the co-head of information technology for the Funds and had the authority to approve the payment of invoices from third-party vendors. Beginning in 2009, and continuing through 2015, RUBANO, MAHARAJ, and others devised a scheme in which companies they owned or controlled submitted to the Funds invoices for millions of dollars in information technology services that were never performed or that had, in fact, been performed by employees of the Funds or other vendors. RUBANO, in his position as co-head of information technology, approved these fraudulent invoices, and received kickbacks from MAHARAJ and other co-conspirators. Between 2009 and 2015, RUBANO, MAHARAJ, and their co-conspirators falsely billed and fraudulently received from the Funds at least approximately $3.4 million.


RUBANO, 48, of Tappan, New York, and MAHARAJ, 36, of Cresskill, New Jersey, were arrested this morning in Tappan, New York, and Cresskill, New Jersey, respectively. RUBANO and MAHARAJ are each charged with two counts of conspiracy to commit wire fraud, each of which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Bharara praised the efforts of the USPIS in this investigation. He added that the investigation is continuing.

This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Matthew Podolsky and Jacob Warren are in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Original PressReleases…
Information Technology Chief And Consultant Charged With Multimillion-Dollar False Invoicing Scheme
Preet Bharara, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”),
https://goo.gl/cj4c5H