Couple Arrested for Money Laundering Scheme in Cape Corral

ABC reports in this latest article that a Cape Corral couple has been charged with two counts of money laundering and one count of conspiracy to commit grand theft for billing Lee Memorial Health System out of more than $600,000 in a fraudulent billing scheme.

This investigation began when LMHS became suspicious of charges it received from a company in Florida for nurse recruitment. The LMHS reported to Florida Department of Law Enforcement that these services represented in the invoice might have never been performed and that they might have been submitted by a former LMHS employee. The investigation proved that Melody McClintock and Ralph McClintock defrauded LMHS for approximately $660,000.

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E*Trade Fined

In reports at Reuters and MarketWatch, it was announced that E*Trade will pay a $1 million fine for failing to comply with SEC regulations. The anti-money laundering rule requires that brokers must verify the identities of their customers, something that E*Trade has been failing to do. According to the report, they failed to do this for at least 65,000 customers, and as a result are paying the fine.

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Ex-Newark Mayor is Sentenced to Jail for Corruption

The Associated Press reports that the former Newark Mayor Sharpe James has been sentenced to serve more than two years in prison for selling “city land” at discounted prices to his former mistress.

Prosecutors argued that James sold city-owned property for $46,000 to Tamika Riley who later sold them for $655,000 without starting required rehabilitation work on the properties. Both James and Riley were convicted on several counts of conspiracy as well as fraud. As a result of the conviction, Sharpe might also be stripped of his six-figure annual income pension.

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Three Men Indicted in $82M Money Laundering Scheme

The Herald Tribune reports that Neil Mohamed Husani along with Michael Tringali, John A. Yanchek, 48, and Larry P. Nardelli have been indicted by the US grand jury on 47 counts of conspiracy, making false statements in connections with bank loans, and a scheme to defraud seven banks in the Tampa-Sarasota area.

An investigation was launched after articles were published describing Husani’s multimillion-dollar real estate deals. From October 2003 to March 2006, Husani and others completed 27 real estate deals in Sarasota counties, buying land for a total of $69 million and reselling it for $147 million. Husani helped partners raise more than $84 million in bank loans and he netted more than $5.8 million in profits.

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Credit Card Fraud detected at Airport

According to this article at Computer World, West Jet airlines of Canada will no longer allow customers to check in with their credit cards as a means of identification due to detected fraud. The incident started occurring at Toronto’s Pearson Airport. This stems from Visa noticing the potential possibility of fraud related when checking into the airline. The website sites that the fraud could be coming from the retailers and the parking system within the airport. The airline is now waiting on Visa to clear up what had happened before they allow credit cards to be used at the check in again.

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Canoeist Wife Anne Darwin Convicted of Money Laundering

The Crown Prosecution Service reported yesterday that in what is perhaps one of the most unusual of cases, Anne Darwin, wife of canoeist John Darwin was convicted today of fraud and money laundering. You may remember this story from late last year when it was announced that John Darwin, who was reported missing in March 2002, and then reappeared with much surprise of everyone except his wife who was in on the deception. Initially Anne Darwin, plead not guilty and used the plea of ‘marital coercion’, despite her plea, she was found to be guilty. Chief Crown Prosecutor, Gerry Wareham had this to say about the case:

This is a case which seized the public imagination, which is understandable since the facts as they have emerged have been unusual and at times intriguing. However, this was a serious offence of fraud involving considerable sums of money. The plot was carefully calculated to deceive the authorities, family and friends, including their own sons, who were led to believe for several years that their father was dead.

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Online Payment Services Firm Plead Guilty to Money Laundering

PC World reports in this latest article that the three owners of E-Gold, an internet-based payment service like PayPal, have pleaded guilty to charges related to money laundering. The violations include operating a money transmitting business without a license. E-gold, which provided digital currency services, allowed accounts to be opened without verification of user identity. According to the Department of Justice, many E-gold users were using its services for criminal activity, investment scams, identity theft, and credit card fraud. All three owners face potential prison time and fines ranging from $25,000 to $500,000.

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FinCEN Announces Retirement of BSA Magnetic Media Filing Program

Yesterday, according to this press release from FinCEN, they announced they would be retiring the BSA Magnetic Media Filing Program. All companies must transfer to the BSA e-filing no later than December 31 of this year.

They cited many reasons for the transition to these new programs, including the fact that e-filing is more secure, cost efficient and user friendly. It also decreases the time it takes to file forms and can provide a more rapid receipt of acknowledgment.

The transition to the web based program will support single and multiple based BSA reports, and users are no longer required to store media, instead it can be accessed on the web with a user ID and a password.

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India Joins FATF

It was recently announced in this article that India is going to join the Financial Action Task Force later this year, in part due to pressure from the United States. Specifically the US had been denying the ICICI Bank, Bank of Baroda, and State Bank of India branch licenses on the premise that the country was not a member of FATF. Since the Reserve Bank of India withheld branch licenses from Citibank, other Indian Banks were given temporary relief, however, the country still felt is was necessary in order for local banks to have better access to developed country markets. So far all of the requirements have been fulfilled for India to join the organization with the exception that they have not amended the Prevention of Money Launder Act (PMLA) to incorporate offensive strategies. It is expected that the amendments will be passed through Parliament in the next month allowing India to have membership.

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European Countries at Stake for not Adopting EU Anti-Money Laundering Rules

Breaknews.ie reports that the European Commission is threatening legal action against Ireland for not cooperating with the EU Anti-Money Laundering Directive, which was put into place to combat terrorism. Ireland though is not the only country which has been threatened by Internal Market Commissioner Charlie McCreevy. Here are the rest of the countries at stake: Austria, Belgium, the Czech Republic, Germany, France, Greece, Latvia, Luxembourg, Malta, Netherlands, Poland, Slovakia, Sweden and Spain. These fifteen countries all failed to adopt these new practices by the scheduled deadline of December 15^th, 2007.

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IndyMac Target for FBI Investigation

As reported by this article, on July 11^th mortgage lender IndyMac was seized by the U.S. banking regulators making it the third largest banking failure in U.S. History. Reuters announced that in addition to the failure of the bank, it is now under investigation by the FBI for possible mortgage lending fraud.

Spokesman for IndyMac, Evan Wagner, released the following statement

"The first we heard of the investigation was in the press accounts today. We're not in a position to confirm or deny (the investigation) because it's an uncorroborated press account."

Also, he mentioned that

"It shouldn't be surprising that there is an investigation because of the size of the bank failure."

The FBI, have refused to comment but had announced on Wednesday that they had increased the number of corporations under investigation from 19 to 21 leading to the speculation that IndyMac was a target. Their probes are for fraud regarding securitizing loans, insider trading, and improper disclosure of the value of corporate assets.

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North Carolina Reached Settlement with Bristol-Myers Squib

North Carolina’s Medicaid program was awarded $14.8 million in a settlement with Bristol-Myers Squib, as reported by CNNmoney.com. The amount going to the state of North Carolina is part of a $515 million agreement that was previously announced including other states as well as the District of Columbia, and the federal government. The allegation that was initially filed claimed that the drug company made the state too much for the drugs. State Attorney General Roy Cooper announced that

$2.9 million of the settlement will go to the state Medicaid program, $2.7 million to public schools and the rest to reimburse state costs.

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Sharjah Islamic Bank Adapts New Money Laundering Prevention Process

CPI Financial reports that Sharjah Islamic Bank has implemented a new risk compliance solution from Complinet for fraud related screening.

The Complinet Global Sreening Workstation will screen clients against a global database of enforcements, backlists, sanctions, politically exposed persons. This new solution will be used on all existing customers, as well as brand new clients. All these names will be crosschecked against the system, and when the names of clients are on global watchlists, compliance managers will be notified. This system will also be used to verify potential customers.

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Ex Loan Officer charged with wire fraud and conspiracy charges

Christopher Brooks, an ex loan officer, and his assistant, Amani Moss, who worked at a mortgage company, are charged with conspiracy and wire fraud, according to this article at the Seattle Times. The two obtained $27 million in fraudulent loans and acquire 54 different homes starting in 2005. They used straw buyers who would be paid between $7,000 and $10,000 for each transaction. They obtained the homes at inflated prices and then siphoned the extra money out for their own use.

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Mark Turkan Indicted

Mark Turkan, a former president of First Bank Mortgage in St. Louis, was indicted on eight felony counts for: wire fraud, misapplication of bank money, making of false bank entries, and causing a filing of a false annual report. He is allegedly responsible for a loss of up to $35 million because of “shady securities transactions” as reported by CNNmoney.com here. As stated in the indictment, his alleged dealings resulted in First Bank having to pay fines of $35 million to Bear Stearns. The penalties that Turkan is facing include up to 30 years in prison for each count of wire fraud which does not include the extra years for the other counts, as well as millions of dollars for fines.

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Man arrested with charges of mail fraud

The Press Republican reports that a Canadian man with federal mail charges was arrested on Wednesday at a US/Canadian border stop. A warrant that was issued for his arrest on charges dealing with an embezzlement scheme worth $33 million. His arrest was a direct result of Customs and Border police running his name. He was sent back to Pennsylvania where his charges are pending.

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New Medicare Fraud Revealed

Scammers have been using the Medicare ID numbers of deceased doctors in order to obtain over $76 million dollars by posing as medical suppliers. This article in the Arizona Republic states that the government found out about this fraud in 2001, and failed to take any action to prevent any further occurrences.

When the investigation took place, recorded from 2001 to 2007, revealed that 1500 deceased doctors names and Medicare numbers had been used to order the supplies. Those doctors whose numbers had been used had been dead from 12 months to 15 years.

Although the American Association for Homecare has been encouraging the government to set up a program that accredits suppliers, nothing has been done. However, a new ID system for doctors was put into place in May, and they had to re-enroll with new numbers. This should help cut down on the current fraud occurring.

Also, in an update from Monday’s post, Efiraim Diveroli has pleaded not guilty to the charges of fraud against the US Government and supplying arms to the troops Afghanistan. He is currently out of prison on bail according to this article at the New York Times.

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Ex-HSBC Clerk Sentenced For 9 Years in Prison

Times Online announced in this article that Judge Geoffrey Rivlin, from Southwark Crown Court in England, sentenced Jagmeet Channa to nine years in prison. Channa, a former clerk for HSBC, had pleaded guilty for one count of conspiracy to defraud, and one count of money laundering. He admitted that he used his former colleagues’ passwords to wire approximately ₤72 million to contacts of his in Manchester and Morocco. At first his colleagues were apprehended, however, upon further investigation it came to light that Channa was solely responsible. Channa refused to cooperate with police in identifying his contacts that he wired money to, and as a result faces the maximum penalty.

A detective, Sergeant Martin Peters, was quoted as saying “This crime is believed to be one of the largest frauds of its kind and it is thanks to the prompt response of the police and the banks that the money was recovered.” The only monetary loss reported is to HSBC, in the amount ₤54,000 for interest that it could have accrued.

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Diveroli fails to show for charges

Efraim E. Diveroli, age 22, President of AEY Incorporated was expected to plead guilty today to charges of fraud and making false statements. Diveroli did not show up for his court sentencing, according to this article at the Miami Harold.

AEY Incorporated was a company responsible for selling the US Army arms in Afghanistan, but the material delivered was out of date, and the Chinese inscriptions on the boxes and paperwork were removed. The government paid more than $10 million for the shipments of ammunition.

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Wisconsin Bans Charges For Real Estate Fraud

The current mortgage crisis in the US has been a key talking point in the news as well as in several of our previous discussions on this blog including this post where we reported that 67 people were charged with mortgage fraud in Chicago, and 28 were recently charged in Michigan

In related news concerning the crisis, Forbes.com reported that the Wisconsin Supreme court has decided to bar fraud charges in regards to home sales. The court was divided with a 4-3 majority winning. Homeowners who feel that they have been the victim of fraud will still be able to seek damages in the court of law, however, as Rudolph Kuss a Brookfield attorney stated “Time limits are more restrictive and it's harder to collect penalties under some other options.

Justice Ann Walsh, who sided against the majority opinion, believes that sellers may feel more able to "look the buyer in the eye, lie about the condition of the home, and escape legal consequences."

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Update: Hedge fund Manager turns himself in

On June 11, we reported that Samuel Isreal III failed to report to jail for fraud convictions, and his car was found abandoned on a bridge over the Hudson River.

The New York Times reported that Israel turned himself in to the local jail in Southwick, Massachusetts, according to authorities on Wednesday, July 2. He will be transported back to Ayers, Massachusetts, where he will likely serve out his sentence of twenty years in prison.

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Fraud is Big Business in Florida

FloridaTrend.com recently took a look at the huge business of fraud in south Florida. Illegal activity ($36 billion/year) and occupational fraud ($36 billion/year) ranking 7^th and 8^th in contribution to the Florida GDP of $713.5 billion, fraud is a big business. Experts believe that the majority of fraud committed in this state is from white-collar petty crimes.

Some officials believe that 20% of the nation’s Medicare fraud occurs in the state, which amounts to $12 billion a year coming into the economy. Most of the money in this category is hard to recognize because the money comes from checks written by the government.

Money laundering is a second source of fraud. It is believed that $25 billion a year is laundered in and out of the state of Florida. Sources of the money are believed to come from drugs, fraud schemes, and possibly even terrorism finance. Experts believe $1.5 billion is laundered from Latin America and the Caribbean.

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