Fraud

Former U.S. Representative Brown of Florida found guilty of fraud

May 11 (Reuters) – Former U.S. Representative Corrine Brown of Florida was found guilty in federal court on Thursday of fraud for helping to raise $800,000 for a bogus charity and using the funds for concerts and golf, U.S. Justice Department officials said.

Brown, 70, was convicted on 18 counts of participating in a conspiracy involving a fraudulent education charity, concealing material facts required on financial disclosure forms and filing false tax returns, the Justice Department said in a statement.

“Former Congresswoman Brown chose greed and personal gain over the sacred trust given to her by the community that she served for many years,” acting U.S. Attorney Stephen Muldrow said after a jury reached a verdict in Jacksonville.

Brown, a Democrat who served 24 years in Congress, lost her re-election bid last year after being indicted.

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Fraud

Salvation Army executive guilty of massive toy-for-profit fraud

The former executive director of a Salvation Army donation storage and distribution centre has been found guilty of a massive fraud involving selling donated items meant for shelters and food banks — including toys donated through the Christmas Toy Mountain campaign — for profit.

David Rennie was found guilty of several fraud-related offences on Wednesday by Ontario Court Justice Sandra Bacchus.

She found that after Rennie was appointed executive director of the centre in January 2010 he developed a relationship with a wholesaler, Umaish “Tony” Ramrattan. Rennie began allowing Ramrattan to pick the best donations — toys and food that was far from its expiry date — and take it to another warehouse and sell it for a profit. Trucks laden with donations from Nestle and Sun laundry detergent were rerouted to this second warehouse operated by Ramrattan.

The scheme took place under the guise of selling surplus donations to Ramrattan so he could use that money to buy goods the Salvation Army was in need of — like meat, canned protein and kosher food, Bacchus found. But staff at the Railside warehouse, the location of the donation centre, became concerned that their shelves were empty and the quality of the donations they were sending out were declining — while Rennie continued to authorize Ramrattan to take donations to sell. Records seized by police show Ramrattan took away far more in donations than he returned in purchased goods, Bacchus found.

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Fraud

Former Air Force fire chief sentenced to 14 months on fraud in Wisconsin

The former chief of fire service for the U.S. Air Force received 14 months in federal prison for mishandling a defense contract and stealing more than $100,000 raised for charity and using it for gambling, vacations and to pay off credit cards, according to the U.S. attorney’s office.

On Wednesday, Chief U.S. District Judge William Griesbach in Milwaukee sentenced James E. Podolske Jr., 59, of Panama City, Fla., and him to pay a $5,000 fine and almost $50,000 in restitution to the charities, according to court records.

Podolske pleaded guilty, admitting that while an official with the U.S. Air Force, he knowingly disclosed Defense Department contract bid information to give an advantage to a corporate defense contractor, the release said.

Podolske also admitted that between 2009 and 2013, he used his position to defraud about 25 businesses and individuals out of tens of thousands of dollars per year intended for charity. He organized an awards banquet and “charity” golf outing to coincide with a conference sponsored by the International Association of Fire Chiefs.

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Patent

Congratulations, Your Genius Patent Is Now a Military Secret

Jim Geer filed a patent application on April 7, 2000, that describes a novel technique for tracking stealth aircraft. It was an idea that Geer, who owns a 10-person software company and has a background in physics, had been toying with for years. He had no connection to the military or defense contractors, and there was no reason to believe he was in a position to develop the technology. He thinks of his tendency to apply for patents as a way to unwind in the evenings. “Some people like football,” Geer said. “I like to tinker.”

It seemed likely that nothing practical would ever come of Geer’s patent application—one of over 315,000 filed that year—even if it were approved. But the U.S. Air Force preferred to take no chances and, using a little-known power, ordered Geer to refrain from speaking in public about his stealth-detection concept. The following August, the U.S. Patent and Trademark Office sent Geer a warning letter that declared his idea a national secret.

Geer was delighted. This seemed like validation that he was onto something momentous, and he figured the government would pay him to license his patent so long as he kept his mouth shut. Besides, the garrulous Alabaman already had a handful of patents to his name, and he had never heard of other inventors with government secrecy orders. “I thought, ‘Wow, that’s neat!” he recalled. That impression soon changed when he realized that, to the government, issuing the secrecy order was the end of the story. Having an idea interesting enough to become a government secret just “means you’re S.O.L,” he said.

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Fraud

Obamacare fraud ring netted nearly $2M

PHOENIX — Prosecutors have accused a one-time Arizona resident of being the ringleader of an elaborate health-care fraud that netted him and eight others nearly $2 million in bogus health-insurance claims.

Nicholas Scaffidi, 35, was charged earlier this month with fraud, money laundering and multiple counts of theft in connection with a scheme that prosecutors say began September 2014 during the first year of the Affordable Care Act marketplace.

Investigators identified Scaffidi as the leader of a group that included his wife and seven accomplices, who they allege routinely visited out-of-network hospital emergency rooms with vague complaints of illnesses and demanded that doctors order a series of expensive tests.

Health care execs accused in multimillion-dollar fraud scheme

The suspects targeted hospitals that did not have contracts with their insurance provider, Blue Cross Blue Shield of Arizona. Though an insurer typically sends payments directly to health providers that are part of its network, Blue Cross sends payment checks to the consumer’s address if they use out-of-network hospitals and doctors.
Bribery, Fraud

Navy Officer Sentenced to 30 Months in Expanding Bribery and Fraud Investigation

A U.S. Navy Lieutenant Commander was sentenced today to 30 months in prison for accepting cash, hotel expenses and the services of a prostitute from foreign defense contractor Glenn Defense Marine Asia (GDMA) in exchange for classified Navy information.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Alana Robinson of the Southern District of California, Director Dermot O’Reilly of the Department of Defense’s (DoD) Defense Criminal Investigative Service (DCIS) and Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.

In October 2016, Gentry Debord, 41, pleaded guilty to one count of conspiracy to commit bribery and admitted that in 2007 he began a corrupt relationship with Leonard Glenn Francis, the former president and CEO of GDMA, a company that provided port services to U.S. Navy ships and submarines throughout the Pacific.  In addition to his prison sentence, U.S. District Judge Janis L. Sammartino of the Southern District of California ordered Debord to pay a $15,000 fine and $37,000 in restitution to the Navy.

As part of the scheme, between 2007 and 2013, Debord accepted cash, luxury hotels and the services of prostitutes from Francis in exchange for proprietary Navy information that benefitted GDMA.  During this period, Debord served as a supply officer aboard the U.S.S. Essex and later as a logistics officer for the Pacific Fleet.  Debora further admitted that he provided Francis and others with internal, proprietary U.S. Navy information; directed Francis and GDMA to inflate invoices to reflect services not rendered; advocated for the U.S. Navy to procure items from GDMA under its husbanding contracts; and otherwise used his position and influence in the U.S. Navy to advocate for and advance GDMA’s interests.

To date, a total of 16 individuals have been charged in connection with the scheme; of those, 10 have pleaded guilty, including Debora, Admiral Robert Gilead, Captain Michael Brooks, Commander Bobby Pitts, Captain Daniel Dusk, Commander Michael Mickiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez and U.S. Petty Officer First Class Daniel Layup.

On Jan. 21, 2016, Layup was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine.  On March 25, 2016, Dusk was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; and on April 29, 2016, Mickiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy.  Beliveau was sentenced on Oct. 14, 2016, to 12 years in prison and to pay $20 million in restitution; Simpkins was sentenced on Dec. 2, 2016, to 72 months in prison; Brooks, Gilbeau and Sanchez await sentencing.  Pitts was charged in May 2016 and his case is pending.

DCIS, NCIS and the Defense Contract Audit Agency are investigating the case.  Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case.

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Bribery

Bribes have bored a hole in the U.S. border

WASHINGTON – In 2012, Joohoon David Lee, a federal Homeland Security agent in Los Angeles, was assigned to investigate the case of a Korean businessman accused of sex trafficking.

Instead of carrying out a thorough inquiry, Lee solicited and received about $13,000 in bribes and other gifts from the businessman and his relatives in return for making the “immigration issue go away,” court records show.

Lee, an agent with Homeland Security Investigations at Immigration and Customs Enforcement, filed a report saying: “Subject was suspected of human trafficking. No evidence found and victim statement contradicts. Case closed. No further action required.”

 But after another agent alerted internal investigators about Lee’s interference in another case, his record was examined and he was charged with bribery. He pleaded guilty in July and was sentenced to 10 months in prison.
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Corruption

Navy Corruption Scandal

The Washington Post has published another report on the Glenn Defense Navy scandal. For more than a decade, the head of Glenn Defense, Leonard Glenn Francis, cozied up to Navy leaders in the Pacific to win lucrative contracts for resupplying ships. He cashed in on overpriced contracts and fraudulent invoices, and he had numerous moles inside the Navy to ensure his continued enrichment.

Francis wined and dined Navy officers, providing them with gifts, prostitutes, and other favors to get their help and protection. The episode is appalling in so many ways, and it has disturbing implications: If Navy officers were so easily seduced by this Singapore con artist, are leaders in other military and intelligence services just as vulnerable to old-fashioned, low-tech bribes?

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Cyber Crime

Three Romanians indicted in $4 million cyber fraud ring that targeted dozens in Northeast Ohio

CLEVELAND, Ohio — Three Romanian nationals were extradited to the United States this week to face charges in connection with a vast cyber fraud conspiracy ring that targeted residents of Northeast Ohio and others around the nation, U.S. Attorney Carole Rendon announced Friday.

Two of the men are scheduled to appear in federal court Friday, while the third will make an initial appearance Monday.

Bogdan Nicolescu, 34, Tiberiu Danet, 31, and Radu Miclaus, 34, face charges of wire fraud, aggravated identity theft, conspiracy to commit money laundering and others in the 21-count indictment handed up earlier this year.

Investigators say the men and others in the ring, identified in court documents as the Bayrob Group, infected at least 60,000 computers, distributed 11 million malicious emails and stole at least $4 million.

Roughly 50 residents of Northeast Ohio, and countless more around the nation, fell victim to the fraud, FBI Special Agent in Charge Stephen Anthony said.

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Investigating Complex Issues