DOJ: Former Bank Executive Found Guilty in $15 Million Construction Loan Fraud Scheme - No, This Is Not Detroit, Yet

A former Kansas bank executive was found guilty by a federal jury yesterday for his participation in a bank fraud scheme to obtain a $15 million construction loan for certain bank customers based upon false and fraudulent representations.  The loan was shared among 26 Kansas banks.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Justin R. Bundy of the Federal Deposit Insurance Corporation Office of Inspector General’s (FDIC-OIG) Kansas City Regional Office, Special Agent in Charge Timothy R. Langan of the FBI’s Kansas City Field Office and Special Agent in Charge Catherine Huber of the Federal Housing Finance Agency Office of Inspector General’s (FHFA-OIG) Central Region Office made the announcement.                                                                                                                           

Troy A. Gregory, 52, of Lawrence, Kansas, was found guilty of four counts of bank fraud and two counts of false statements, as charged in a November 2017 indictment.  The jury failed to reach a verdict as to one count of conspiracy.  Sentencing is scheduled for Jan. 28, 2020, before U.S. District Judge Carlos Murguia of the District of Kansas, who presided over the trial.

According to the evidence submitted at trial, Gregory was a bank executive and loan officer who had made millions of dollars in loans to a group of borrowers who were struggling to make payments on the loans.  Beginning in approximately late 2007, Gregory began the process of making a $15.2 million construction loan to build an apartment complex to that same group of borrowers.  Gregory’s bank shared this loan with 25 other Kansas banks.  Gregory made and caused others to make false statements to the banks about the strength of the borrowers, the debt status of the apartment property and the existence of approximately $1.7 million in certificates of deposit for collateral on the loan, all to get the loan approved.  Instead of using the loan funds promised for building the apartments, Gregory immediately diverted over $1 million of the loan to pay for part of the certificates of deposit pledged as collateral, pay off debt on the apartment property, and make payments on unrelated loans, the evidence showed.  Other Kansas banks that shared in this loan would not have participated in the loan without the false representations and promises. The banks ultimately wrote off millions of dollars on the $15.2 million construction loan, the evidence showed.

The FDIC-OIG, IRS-CI, FBI and FHFA-OIG are investigating this matter.  Trial Attorney Andrew R. Tyler and Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section are prosecuting the case.

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DOJ: South Florida Resident Sentenced to 30 Years for $100 Million International Fraud Scheme that Led to the Collapse of One of Puerto Rico’s Largest Banks

I wonder how many trafficking tiny humans trust funds were found.

https://westernbank.com/

A Key Biscayne, Florida, resident and the former CEO and Chairman of a now-bankrupt multinational pharmaceutical company was sentenced to 30 years in prison followed by five years of supervised release yesterday for his role his role in a $100 million scheme to defraud Westernbank of Puerto Rico (Westernbank). The losses triggered a series of events leading to Westernbank’s insolvency and ultimate collapse.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida, Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), Special Agent in Charge Michael J. DePalma of IRS Criminal Investigation (IRS-CI) for Miami and Puerto Rico, Special Agent in Charge Iván J. Arvelo of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in San Juan and Special Agent in Charge Douglas A. Leff of the FBI’s San Juan, Puerto Rico Field Office made the announcement.

Jack Kachkar, 56, was sentenced by U.S. District Judge Donald L. Graham of the Southern District of Florida, who also presided over the trial in this case.  Judge Graham also ordered the defendant to pay $103,490,005 in restitution to the FDIC, as receiver for Westernbank.  Kachkar was convicted on Feb. 4, 2019, after a three-week trial, of eight counts of wire fraud affecting a financial institution. 

According to evidence presented at trial, from 2005 to 2007, Kachkar served as chairman and CEO of Inyx Inc., a publicly traded multinational pharmaceutical manufacturing company.  Beginning in early 2005, Kachkar caused Westernbank to enter into a series of loan agreements in exchange for a security interest in the assets of Inyx and its subsidiaries.  Under the loan agreements, Westernbank agreed to advance money based on Inyx’s customer invoices from “actual and bona fide” sales to Inyx customers, the evidence showed.

The trial evidence showed that Kachkar orchestrated a scheme to defraud Westernbank by causing numerous Inyx employees to make tens of millions of dollars worth of fake customer invoices purportedly payable by customers in the United Kingdom, Sweden and elsewhere.  Kachkar caused these invoices to be presented to Westernbank as valid invoices.  Kachkar made false and fraudulent representations to Westernbank executives about purported and imminent repayments from lenders in the United Kingdom, Norway, Libya and elsewhere in order to lull Westernbank into continuing to lend money to Inyx, the evidence showed.  In fact, these lenders had not agreed to repay Westernbank’s loan.  Kachkar made false and fraudulent representations to Westernbank executives that he had additional collateral, including purported mines in Mexico and Canada worth hundreds of millions of dollars, to induce Westernbank to lend additional funds, the evidence showed.  In fact, this additional collateral was worth barely a fraction of that represented by Kachkar.

During the course of the scheme, Kachkar caused Westernbank to lend approximately $142 million, primarily based on false and fraudulent customer invoices.  The evidence showed that the defendant diverted tens of millions of dollars for his own personal benefit, including for the purchase of, among other things, a private jet, luxury homes in Key Biscayne and Brickell, Miami, luxury cars, luxury hotel stays, and extravagant jewelry and clothing expenditures.

In or around June 2007, Westernbank declared the loan in default and ultimately suffered losses exceeding $100 million on the Inyx loans.  According to trial evidence, these losses later triggered a series of events leading to Westernbank’s insolvency and ultimate collapse.  At the time of its collapse, Westernbank had approximately 1,500 employees and was one of the largest banks in Puerto Rico.

This case was investigated by the FDIC-OIG, IRS-CI, HSI and FBI.  The Department of Justice’s Office of International Affairs provided significant support in the investigation.  The case is being prosecuted by Assistant U.S. Attorney Michael N. Berger of the Southern District of Florida and Trial Attorney Michael O’Neill of the Criminal Division’s Fraud Section.  The Department acknowledges and appreciates the substantial assistance of the Royal Canadian Mounted Police and the U.K. Metropolitan Police.

Inyx, Inc. Chairman & CEO Approved as Debtor-In-Possession Lender for Inyx Subsidiaries
Published: Jul 12, 2007

NEW YORK, July 12 /PRNewswire-FirstCall/ -- Inyx, Inc. , reported that the company's Chairman & CEO, Jack Kachkar, M.D., yesterday was approved as the debtor-in-possession lender for Inyx USA, Ltd. and Exaeris, Inc., its two wholly-owned North American operating subsidiaries, by the U.S. Bankruptcy Court in the District of Delaware, over the objections of Westernbank Puerto Rico, a wholly owned subsidiary of W Holding Company, Inc. .

On July 2, 2007, as a measure to protect Inyx against further potential damaging actions by Westernbank, the company placed its two U.S. operating subsidiaries in Chapter 11 protection.

As a result of yesterday's court approval of Dr. Kachkar providing the financing for the U.S. operating subsidiaries, Inyx's North American businesses will continue to operate on a normal basis.

Dr. Kachkar also continues to provide the financing for the operations of Inyx, Inc., which is not itself a party to the Chapter 11 filings.

In addition to the Chapter 11 protection, on June 29, 2007, Inyx, Inc. and Inyx USA, together with Dr. Kachkar and his wife, filed suit against Westernbank in New York State Supreme Court, asserting various causes of action seeking no less that $500 million in compensatory damages as well as punitive damages. The complaint charges, among other things, that Westernbank acted in bad faith and in a commercially unreasonable manner by blocking the flow of funds from Inyx's customers to the company, and preventing the Inyx companies from paying their debts. The complaint asserts causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing, promissory estoppel, wrongful dishonor of checks, wrongful impairment of collateral, tortious interference or impairment with prospective business relations, and third-party beneficiary of contract and tortious interference with contracts and prospective business relations.

About Inyx

Inyx, Inc. is a specialty pharmaceutical company with niche drug-delivery technologies and products for the treatment of respiratory, allergy, dermatological, topical and cardiovascular conditions. Inyx USA, Ltd., located in Manati, Puerto Rico, is the company's North American-based production center. Exaeris, Inc., based in Exton, Pennsylvania, is Inyx's North American marketing arm. For more information, please visit: www.inyxgroup.com.

Safe Harbor

Statements about the Inyx's future expectations, including future revenues and earnings, and all other statements in this press release other than historical facts, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Securities Litigation Reform Act of 1995. Inyx intends that such forward-looking statements be subject to the safe harbors created thereby. Since these

statements involve risks and uncertainties and are subject to change at any time, Inyx's actual results could differ materially from expected results.

For more information, please contact: Jay M. Green, Executive VP jgreen@inyxgroup.com

Inyx, Inc.
CONTACT: Jay M. Green, Executive VP of Inyx, Inc., jgreen@inyxgroup.com

Web site: http://www.inyxgroup.com/ Voting is beautiful, be beautiful ~ vote.©

DOJ First Historic Conviction Of Medicaid Fraud In Child Welfare Funding Political Campaigns

The case was investigated by IRS Criminal Investigation, the FBI, and the Offices of the Inspectors General from the Departments of Justice, Labor, Veterans Affairs, and the Federal Deposit Insurance Corporation (FDIC).  This is a combined investigation with the Western District of Arkansas, the Eastern District of Arkansas and the Public Integrity Section of the Department of Justice.  This case is being prosecuted by Trial Attorney Marco A. Palmieri of the Public Integrity Section and Assistant U.S. Attorney Steven M. Mohlhenrichof the Western District of Missouri.

I humbly bow, to each and everyone of you.

Much love.

Alrighty, back to work.

Vite, vite.

On a mission...

Former Charity CEO Pleads Guilty To Multi-Million-Dollar Political Corruption Scheme

The former CEO of a charity headquartered in Springfield, Missouri has pleaded guilty to her role in a multi-million-dollar political corruption scheme that involved bribes and campaign contributions for elected public officials in Missouri and Arkansas, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Tim Garrison of the Western District of Missouri.

Marilyn Luann Nolan, 68, of Springfield, pleaded guilty before U.S. Magistrate Judge David P. Rush on Friday, Nov. 9, to one count of conspiracy to embezzle and misapply the funds of a charitable organization that received federal funds.

By pleading guilty, Nolan admitted that she conspired with others from 2008 to June 30, 2017, to misapply millions of dollars of the charity’s funds for substantial, undisclosed payments to lobbying firms and political advocates, monetary and in-kind contributions to the campaigns of candidates for public office, and to bribe public officials.  Nolan also admitted that she knew her co-conspirators defrauded the charity in order to enrich themselves, and her.

Nolan began working at Alternative Opportunities Inc., in 1992.  In 2015, that company merged with Preferred Family Healthcare Inc., after which it continued to be known as Preferred Family Healthcare.  Nolan was the chief executive officer and oversaw the charity’s lobbying and governmental affairs activities.

Preferred Family Healthcare and its subsidiaries provided a variety of services to individuals in Missouri, Arkansas, Kansas, Oklahoma and Illinois, including mental and behavioral health treatment and counseling, substance abuse treatment and counseling, employment assistance, aid to individuals with developmental disabilities and medical services.

Political Advocacy, Campaign Contributions, Fund-Raising Events

According to the plea agreement, Nolan and her conspirators caused the charity to misapply its funds to pay for political advocacy, including lobbying, that violated both IRS rules governing tax-exempt organizations, and federal laws and regulations governing recipients of federal grants and contracts.  Nolan admitted that she directed and assisted her co-conspirators to direct millions of dollars to lobbyists, including Donald Andrew Jones and Milton Russell Cranford, who previously entered pleas of guilty to federal crimes in related cases.  Nolan also directly lobbied legislators.

Under her plea agreement, Nolan also admitted that she and her conspirators:

• Caused the charity to contribute financially to the campaigns of candidates for public office through “straw donors,” including the charity’s lobbyists, who were also reimbursed by way of invoices that were falsely described as “training” and “consulting” expenses;
• Encouraged charity employees to contribute to candidates for public office and caused the charity to reimburse them for those contributions by providing funds falsely described as reimbursement for travel or other expenses the employees had not actually incurred; and
• Caused the charity to provide in-kind contributions to the campaigns of candidates for public office, including in Missouri where they organized fundraisers for several candidates running for seats in the Missouri State Senate, Missouri House of Representatives, and the Greene County Commission and in Arkansas, where Nolan and her conspirators organized fundraisers (often at hotels or restaurants) for many candidates running for seats in the Arkansas State Senate and Arkansas House of Representatives.

Nolan also admitted as part of her plea to directing an employee to use the charity’s resources to arrange for catering, liquor, decorations, and other food connected to political fundraisers.  This employee used a charity-issued corporate credit card for the purchases, with Nolan’s knowledge.

At all times relevant to Nolan’s plea, the charity was absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of, or in opposition to, any candidate for elective public office.  Contributions to political campaign funds violated this prohibition, and could have resulted in denial or revocation of tax-exempt status and the imposition of certain excise taxes.

Bribery of Elected Public Officials

According to the plea agreement, Nolan and her conspirators misapplied some of the charity’s funds to bribe elected public officials in the following manners:

• They gave things of value to numerous public officials, in exchange for their official actions benefitting the charity and themselves personally, including cash, travel and entertainment, premium tickets to sporting events, hotel accommodations, and use of the charity’s luxury/recreational real estate;
• They hired public officials and the family members of public officials as charity employees; and
• Nolan and the conspirators disguised bribes as contract payments for things such as consulting, training, and legal services.

The government believes the schemes Nolan pleaded guilty to totaled approximately $6 million.  The parties reserved the right in the plea agreement to litigate the exact amount of that loss, for the purpose of computing the federal sentencing guidelines.

Charity Embezzlement

As part of her plea agreement, Nolan also admitted that over an approximately 12-year period from 2005 to 2017, certain charity executives embezzled millions of dollars from the charity, from which Nolan profited.  Nolan admitted that although she did not know the full details of the many embezzlement and misapplication of funds schemes, she knew at the time that the charity bore additional costs from many of those transactions, and willfully blinded herself regarding the details of her conspirators’ schemes and artifices to defraud the charity.

One example referenced in Nolan’s plea agreement consisted of the formation of an LLC that was used as the management company for Alternative Opportunities, identified in court documents as Entity A.  In 2006, Entity A was sold to a publicly-traded corporation identified in court documents as Company A, which was also partly owned by Nolan.  Nolan admitted that this sale was perpetrated for the primary purpose of enriching charity executives, including herself.  Nolan’s share of the proceeds from the sale of Entity A to Company A was $3,769,536.

Nolan further admitted as part of her plea that she also received $361,574 from two LLCs identified as Entity B and Entity C where, immediately prior to the 2006 sale of Entity A to Company A, Entity B acquired title to all real estate formerly held by Entity A and Entity C held the title to the corporation’s headquarters building in Springfield, and duplex homes located in Springfield.

Under the terms of Friday’s plea agreement, Nolan must pay $4,131,111 in restitution to the government, less a credit for taxes she paid on the funds received.

A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

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Does DOJ Know About The Multi-Million Dollar Bank Fraud Schemes In Child Welfare?

The Multi-Million dollar question in bank fraud schemes is whether the DOJ knows that using Social Security Numbers of children in foster care and adoption is a common, legal practice?

Yes, it goes like this:

Co-Conspirator Sentenced in Multi-Million Bank Fraud Scheme

HOUSTON – A Houston-area man has been ordered to federal prison for perpetrating a scheme that caused a loss of more than $4 million to several local banks, announced U.S. Attorney Ryan K. Patrick. Gregory Roberson, 65, of Missouri City, pleaded guilty June 14, 2016.

Today, U.S. District Judge Gray Miller, who accepted the guilty plea, handed Roberson a 24-month sentence and ordered him to pay $3,081,942.14. The ringleader of the scheme, Andre Chenier, 44, of Houston, had previously been sentenced to 48 months in federal prison and ordered to pay more than $4.5 million in restitution. Both will also serve three years of supervised release following completion of their sentences. 

From 2004 to 2012, Chenier obtained multi-million dollar commercial loans from several Houston-area banks by submitting false and fraudulent documents, including Bank of Texas and Third Coast Bank. The loan applications included falsified financial statements and fake income tax returns and were obtained using the Social Security numbers of identity theft victims. Chenier ultimately defaulted on both of these loans and others, resulting in a loss of $4,581,942. Chenier represented to banks that he owned various technology companies, when in fact the companies were fictitious and Chenier was merely living off loan proceeds.     

Roberson assisted Chenier in the scheme by preparing falsified income tax forms and other documents to help Chenier obtain millions in commercial loans.

He was permitted to remain on bond pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.

The FBI, Federal Deposit Insurance Corporation – Office of Inspector General and IRS – Criminal Investigation conducted the investigation. Assistant U.S. Attorney Belinda Beek is prosecuting the case.V

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DOJ Busts $22 Million Dollar Real Estate Fraud Scheme

Now, start making your way back east.

Former Roseville Developer Pleads Guilty to $22 Million Fraud

SACRAMENTO, Calif. — Abolghasseni “Abe” Alizadeh, 59, of Granite Bay, pleaded guilty today to wire fraud, bank fraud and making false statements to a federally insured financial institution, U.S. Attorney McGregor W. Scott announced.

According to court documents, Alizadeh, a Sacramento-area commercial real estate developer, restauranteur and owner of Kobra Properties, came up with a scheme to fraudulently purchase land that he planned to develop. Banks usually loan up to 60–65 percent of the loan-to-value ratio (LTV) on undeveloped commercial property. (LTV ratio is the comparison between the amount of the loan and the value of the property.) To circumvent the banks and fraudulently get a higher level of financing, Alizadeh submitted altered purchase contracts to the banks that greatly inflated the purported purchase price. The banks, which competed for Alizadeh’s business, were unaware that the purchase prices were inflated and sometimes loaned well in excess of the loan-to-value ratio. By concealing the true purchase price from the banks, Alizadeh received substantial amounts of cash, sometimes millions of dollars, at the close of escrow and avoided making the full down payment or, in some instances, any down payment.

Alizadeh was assisted in this scheme by co-defendant Mary Sue Weaver, 64, currently of Scottsdale, Arizona and formerly of Lincoln, California, who was employed at a local title company. According to the plea agreement, Alizadeh would write checks for the down payment, but because he lacked funds to cover the checks, he would call Weaver and ask her to delay depositing the checks until after escrow closed. Once escrow closed, Weaver disbursed funds from the title company’s escrow trust account to Kobra Properties. Kobra Properties then used those funds to cover its down payment and other costs. In this way, it appeared as though Alizadeh was making a substantial down payment when in fact he was not.

On April 29, 2005, Alizadeh submitted a fraudulent purchase contract to Central Pacific Bank, which induced the bank to lend him nearly $4 million for the purchase of 10.3 acres of property. This loan represented over 96 percent loan-to-value ratio. Similarly, on October 21, 2005, Alizadeh received over $22 million in funding and loans to purchase the Turtle Island property, when in actuality, the original purchase price was $10 million. In March 2006, Alizadeh also falsely claimed to Bank of Sacramento that he was paying $36 per square foot for a piece of property where he intended to build a TGI Friday’s restaurant. In reality, Alizadeh was paying only $21 per square foot. This resulted in a $650,000 inflation of the true purchase price. Alizadeh’s entire scheme, involving no fewer than six properties in the Sacramento area, resulted in a loss to various financial institutions of over $22 million.

This case is the product of an investigation by the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation, and the Federal Deposit Insurance Corporation, Office of Inspector General. Assistant U.S. Attorney Michael D. Anderson and Heiko P. Coppola are prosecuting the case.

Alizadeh is scheduled to be sentenced by U.S. District Judge Garland E. Burrell Jr. on March 30, 2018. Co-defendant Weaver pleaded guilty to one count of wire fraud and one count of bank fraud on December 15, 2017, and is scheduled for sentencing on March 23, 2018. Alizadeh and Weaver face a maximum statutory penalty of thirty years in prison on each count and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

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DOJ Busts More Mortgage Fraud Schemes

I really wish my #Superfans would hurry up and come to Detroit.

Vallejo Business Owner Pleads Guilty to Multimillion Dollar Mortgage and Foreclosure Rescue Fraud Scheme

SACRAMENTO, Calif. — Sergio Roman Barrientos, 64, of Poway, pleaded guilty today to conspiracy to commit wire fraud affecting a financial institution and bank fraud, U.S. Attorney McGregor W. Scott announced.

According to court documents, from about September 2004 through February 2008, Barrientos and co-conspirators Zalathiel Aguila and Omar Anabo operated an entity named Capital Access LLC, in Vallejo. They preyed on homeowners nearing foreclosure, convinced them to sign away title in their homes, spent any equity those homeowners had saved, and used straw buyers to defraud federally insured financial institutions out of millions of dollars in home loans obtained under false pretenses. The equity stripped from the distressed homeowners’ properties was then used for operational expenses of the scheme and personal expenses of Barrientos and his coconspirators. Vulnerable homeowners across California lost their homes and savings as a result of the scheme, and lenders lost an estimated $10.47 million from the fraud.

This case is the product of an investigation by the Federal Bureau of Investigation and the U.S. Postal Inspection Service. Assistant U.S. Attorneys Matthew M. Yelovich and Todd A. Pickles are prosecuting the case.

Co-defendant Zalathiel Aguila remains out of custody awaiting trial. The charges against him are allegations; he is presumed innocent until and unless proven guilty beyond a reasonable doubt. Omar Anabo, charged elsewhere, is set for sentencing on April 27.

Barrientos is scheduled to be sentenced by Judge Garland E. Burrell Jr. on April 6, 2018. Barrientos faces a maximum statutory penalty of 30 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

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Why Banks Are Not Lending: FDIC Tells It Like It Is

It seems the big banks would rather be beholden to their shareholders than the people.

Instead of lending, they are paying out dividends to their shareholders, constraining the economy.

Dear Chairman Crapo and Ranking Member Brown, 

Although bank capital is a critical indicator of the health of the financial industry, it continues to be discussed in sound bites rather than substantive public debate. I write to provide an alternative perspective to recent industry statements claiming that large banks have too much capital and that their improving capital position has resulted in too little lending and a constrained economy. 

TRANSLATION:  Big banks are hustling in a niggardly fashion.

MY ALTERNATIVE TRANSLATION: Mortgage scams make money, particularly when they are well aware that the DOJ is only, if that, going to slap them on the wrist with a civil fine, that they will charge back to the people in other complex mortgage fraud, bank fee schemes.

FDIC Chairman Earnings and Loan Growth Letter to U.S. Senate Banking Committee 7-31-2017 by Beverly Tran on Scribd

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The FEC Is Alive!

Not only is the Federal Election Commission finally bringing its campaign database search engine up to date, but it is actually looking like it is a real organ of law enforcement within the Executive Branch!

via GIPHY                               Proof of Life Announcement for the FEC

FEC Approves Amended Audit Division Recommendation Memorandum, Approves Advisory Opinion, and Agrees to Commence Work on Party Rulemaking

May 25, 2017

WASHINGTON – At its open meeting today, the Federal Election Commission approved an Amended Audit Division Recommendation Memorandum and an advisory opinion, and reached consensus to begin drafting a Notice of Proposed Rulemaking on political party rules.

At the start of the meeting today, Chairman Steven T. Walther noted that, in view of external events, questions have been raised with respect to the role of the Federal Election Commission concerning allegations of foreign influence in the American political process. The Chairman asked the Staff Director and other members of the staff to develop a web portal that will assemble all campaign finance information, advisory opinions, enforcement matters, and existing educational materials in this area in order to facilitate a better understanding by members of the public. He also noted that the Commissioners unanimously agreed last September to direct the Office of General Counsel “to prioritize cases involving allegations of foreign influence.” He also called upon the Office of General Counsel and other Commission staff to apply their resources, including providing adequate staffing, to continue to fulfill that priority and to further the agency’s regulatory, educational, and enforcement work in this area.

Audit Division Recommendation Memorandum on Ted Cruz for Senate. Prior to the meeting, the Commission approved on tally an Audit Division Recommendation Memorandum on Ted Cruz for Senate, covering financial activity between January 18, 2011, and December 31, 2012. The memorandum disclosed a finding and recommendation related to the reporting and disclosure of candidate loans.

Resubmission: Audit Division Recommendation Memorandum on the Colorado Republican Committee. The Commission approved the resubmitted Audit Division Recommendation Memorandum on the Colorado Republican Committee, covering financial activity between January 1, 2011, and December 31, 2012, as amended at the table. The memorandum disclosed findings and recommendations related to the misstatement of financial activity, rephorting of apparent independent expenditures, recordkeeping for communications, and failure to itemize debts and obligations.

For those who do not remember or know about my stunning revelation of War Chest seeking FEC approval to use campaign contributions to invest in the markets, well, here is your friendly reminder because, below, is the ruling.

War Chest Seeks FEC Approval To Engage In Campaign & Tax Fraud

Considering the current IRS structural status of campaign committees and all sorts of Political Action Committees (PAC), the ruling to allow War Chest to utilize 

Advisory Opinion 2017-02 (War Chest, LLC). The Commission issued an advisory opinion  in response to a request from War Chest, LLC. The Commission concluded that the requestor may provide political committees with a web-based deposit program but that the political committees participating in the program may not use the requestor’s trust account or sub-investment money market accounts as campaign depositories. Political committees participating in the program would deposit funds into an account; the funds would subsequently be transferred to money market deposit accounts at banks insured  with the Federal Deposit Insurance Corporation (FDIC).

REG 2014-10, Implementing the Consolidated and Further Continuing Appropriations Act, 2015, and REG 2016-03, Political Party Rules. The Commission directed the Office of General Counsel to commence drafting a Notice of Proposed Rulemaking with respect to political parties, in response to two petitions for rulemaking and a resolution introduced by Commissioner Lee E. Goodman.

FEC Response to War Chast Campaign Finance Invesstment Program by Beverly Tran on Scribd

On a side note.  I have a sneaky suspicion that this War Chest, LLC was set up by someone who works in D.C. who has had their hands in the campaign cookie jar for quite some time and is seeking a new route to skim campaign money since their side income has been substantially cut.  

That is all I am saying for now.

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FBI Busts $2.9 Billion Mortgage Fraud Scheme

Former TBW CEO Sentenced to 40 Months in Prison for Fraud Scheme 

WASHINGTON—The former chief executive officer (CEO) of Taylor, Bean & Whitaker (TBW) was sentenced today to 40 months in prison for his role in a more than $2.9 billion fraud scheme that contributed to the failure of TBW. At one time, TBW was one of the largest privately held mortgage lending companies in the United States.

Paul Allen was sentenced today by U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Acting Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Deputy Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Victor S. O. Song, Chief of the Internal Revenue Service-Criminal Investigation (IRS-CI). Allen, 55, of Oakton, Va., pleaded guilty in April 2011 to one count of making false statements and one count of conspiring to commit bank and wire fraud. Co-conspirator Sean Ragland, a former senior financial analyst at TBW who reported to Allen, was also sentenced today by Judge Brinkema to three months in prison. Ragland, 37, of San Antonio, pleaded guilty in March 2011 to one count of conspiracy to commit bank and wire fraud. Allen and Ragland both admitted to conspiring with Lee Bentley Farkas, the former chairman of TBW, and others, to defraud financial institutions that had invested in Ocala Funding LLC, a facility wholly-owned by TBW. Farkas was convicted on April 19, 2011, on 14 counts of fraud for his role in masterminding the scheme, which was one of the largest bank frauds in the country. Farkas is scheduled to be sentenced on June 27, 2011. The Securities and Exchange Commission (SEC) has a civil action pending against Farkas in the Eastern District of Virginia. Co-conspirators Catherine Kissick, a former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division (MWLD); Teresa Kelly, a former operations supervisor in Colonial Bank’s MWLD; Raymond Bowman, the former president of TBW; and Desiree Brown, the former treasurer of TBW, have also pleaded guilty for their participation in the scheme. Earlier this month, Kissick was sentenced to eight years in prison, Brown was sentenced to six years in prison, Bowman was sentenced 30 months in prison and Kelly was sentenced to 3 months in prison.

“As TBW’s chief executive officer, Mr. Allen served as an accomplice to Lee Farkas and his massive fraud scheme,” said Assistant Attorney General Breuer. “He concealed TBW’s staggering deficits through false financial reports, which ultimately caused investors to lose more than $1.5 billion. Today’s sentence sends a strong message that corporate fraud by senior executives will not be tolerated. At the same time, it demonstrates that substantial assistance in the government’s investigation and prosecution of corporate fraud will be taken into account at sentencing.”

“Paul Allen was a well-respected mortgage executive hired by Lee Farkas to be TBW’s chief executive officer. Working from Oakton, Va., Mr. Allen led Ocala Funding, a TBW multi-billion dollar lending facility that was used to defraud investors of more than $1 billion,” said U.S. Attorney MacBride. “Mr. Allen’s sentence reflects his ultimate cooperation with this investigation, but also sends the message that unless executives expose and stop fraud when they first learn of it, they will be punished.”

According to court documents and information presented at trial, Allen and Ragland participated in the scheme from early 2005 through August 2009 by distributing materially false documents to investors in Ocala Funding that misrepresented the financial condition of the facility. The fraud scheme ultimately caused investors in Ocala Funding to lose more than $1.5 billion and Colonial Bank to lose $900 million. According to court documents and information presented at trial, TBW began running overdrafts in its master bank account at Colonial Bank because of TBW’s inability to meet its operating expenses, which included payroll, servicing payments owed to third-party purchasers of loans and/or mortgage-backed securities and other obligations. In or about 2002, Farkas and other co-conspirators engaged in a series of fraudulent actions to cover up the overdrafts, first by sweeping overnight money from one TBW account with excess funds into another, and later through the fictitious “sales” of mortgage loans to Colonial Bank, a fraud scheme the conspirators dubbed “Plan B.” The conspirators accomplished Plan B by selling Colonial Bank mortgage loans that did not exist or that TBW had already committed or sold to other third-party investors. As Plan B evolved, co-conspirators at TBW also caused TBW to engage in sham sales of groups of mortgage loans, known as “pools,” that other entities already owned to Colonial Bank. As a result, false information was entered on Colonial Bank’s books and records, giving the appearance that the bank owned interests in legitimate pools of mortgage loans, when in fact the pools had no value and could not be securitized or sold. Neither Allen nor Ragland participated in the effort to cover up TBW’s overdrafts or Plan B. Additionally, the co-conspirators at TBW caused TBW to misappropriate more than $1.5 billion in collateral from Ocala Funding. According to court documents, both Allen and Ragland played significant roles in the Ocala Funding misappropriation. The misappropriation caused Colonial Bank and the Federal Home Loan Mortgage Corporation (Freddie Mac) to falsely believe that they each had an undivided ownership interest in thousands of the same loans worth hundreds of millions of dollars. According to court documents, the fraud scheme also included an effort by certain conspirators in the fall of 2008 to obtain $570 million in taxpayer funding through the Capital Purchase Program, a sub-program of the U.S. Treasury Department’s TARP. In connection with the application, Colonial BancGroup submitted financial data and filings that included materially false information related to mortgage loan and securities assets held by Colonial Bank as a result of the fraudulent activity at TBW. Colonial BancGroup never received the TARP funding. According to court documents, Allen played a key role in causing materially false information to be submitted to and received by the government in connection with Colonial Bank’s TARP application. Ragland was not aware of this aspect of the fraud scheme. In August 2009, the Alabama State Banking Department, Colonial Bank’s regulator, seized the bank and appointed the FDIC as receiver. Colonial BancGroup also filed for bankruptcy in August 2009.

“Instead of upholding his position of power and trust as CEO of TBW, Paul Allen chose the path of fraud and deception in helping facilitate the long-running fraud carried out by TBW and Colonial Bank. Fortunately, the scheme came to a halt when an attempt was made to steal more than a half billion dollars from the TARP,” said Acting Special Inspector General for the TARP Romero. “Today’s sentence appropriately recognizes the severity of Allen’s participation in the fraud along with his cooperation in the Government’s investigation.”

“As a result of this complex fraud scheme, these defendants cost investors and our financial markets billions of dollars,” said Assistant Director in Charge McJunkin. “Today’s sentence shows that those who take advantage of investors and our banking and mortgage systems will be held accountable. The FBI will continue to work with our law enforcement partners and remain vigilant in investigating these illegal transactions.”

“Today’s sentencing marks the culmination of a large effort on the part of this agency and of the law enforcement and regulatory community,” said Deputy Inspector General Stephens of HUD-OIG. “More importantly, however, it shows our nation that is slowly recovering from a damaged housing market that we are committed to bringing to justice those whose pernicious behavior contributed to this condition.”

“The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General is pleased to join our law enforcement colleagues in announcing this sentencing,” said Inspector General Rymer of FDIC. “We are particularly concerned in cases like this one where fraudulent activities involving employees of Colonial Bank in association with officials of Taylor, Bean and Whitaker contributed to the failure of Colonial Bank, resulting in a $3.8 billion loss to the Deposit Insurance Fund. We are committed to continuing our investigations of such criminal misconduct to help ensure the integrity of the financial services industry and maintain the safety and soundness of the nation’s financial institutions and the viability of the fund.”

“Paul Allen used his extensive experience gained from employment with the government sponsored enterprises (GSEs) to assist Lee Farkas in his massive fraud scheme,” said Inspector General Linick of FHFA-OIG. “This sentence sends a strong message to individuals who would try to defraud Freddie Mac and American taxpayers, who have invested over $163 billion in the GSEs to date.”

The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC-OIG, HUD-OIG, FHFA-OIG and the IRS-CI. The department recognizes the substantial assistance of the SEC. The department also recognizes the assistance of the Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury.

This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. 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. For more information about the task force visit: www.StopFraud.gov.

Financial Fraud Enforcement Task Force Launches StopFraud.gov