A former executive of a kosher slaughterhouse that was the site of one of the nation's largest immigration raids was arrested Friday on a bank fraud charge and ordered jailed until at least next week.
]]> Shalom Rubashkin, former chief executive officer at Agriprocessors and the son of company owner Abraham Aaron Rubashkin, shuffled into court Friday morning shackled at the ankles, waist and wrists.This is the second time in less than a month that Sholom Rubashkin has been arrested on federal charges related to his operation of the plant, site of a May 12 immigration raid in which 389 people were arrested.
In the months following the raid, the company has faced state and federal allegations that it violated child labor laws, wage regulations and safety rules. The arrest Friday was related to the depositing of checks from customers and the alleged diversion of money.
Court records said that under a loan agreement with St. Louis-based First Bank, Rubashkin was supposed to deposit customer payments into an account at Decorah Bank & Trust as collateral on a loan.
Records show that Rubashkin instead diverted millions of dollars in customer payments into an Agriprocessors account at a different bank. The payments would then not be posted on the customers' Agriprocessors accounts until later.
That resulted in the inflation of the value of accounts receivable in Agriprocessors' books, allowing the company to borrow additional funds from the bank without proper collateral.
Rubashkin also is accused of telling an Agriprocessors employee to erase evidence of the scheme from company computers. The instructions allegedly began the day after Rubashkin was released after an Oct. 30 hearing in federal court, where he is facing charges of harboring illegal immigrants, document fraud and identity theft.
After the Oct. 30 hearing, Rubashkin was released on his own recognizance on the condition that he put up a $500,000 bond and wear a tracking device on his ankle.
Last week, Agriprocessors filed for bankruptcy protection as it faced allegations of making inaccurate and misleading statements to First Bank. The slaughterhouse owes First Bank at least $33 million.
]]>David McQuillin, former chief executive of Aspen Technology Inc., of Burlington, was sentenced to three years' probation and a $12,000 fine in a federal court in New York after he pleaded guilty to conspiracy and securities fraud.
]]> He was charged with falsifying the 2001 and 2002 revenue of Aspen, which makes software for managing chemical processes. McQuillin and Aspen's founder and chairman, Lawrence Evans, also settled civil fraud charges filed by the Securities and Exchange Commission. McQuillin has been ordered to pay an $85,000 civil penalty plus $28,381.61 in disgorgement and interest and is barred from serving as an officer or director of any public company. Evans must pay a $75,000 civil penalty and $21,478.01 in disgorgement and interest.The young prosecutor tapped to monitor the $700 billion financial rescue plan has brought down Colombian drug traffickers, gone after swindling corporate executives and now heads the mortgage fraud unit for the U.S. attorney's office in Manhattan.
]]> On Friday, President George W. Bush nominated Assistant U.S. Attorney Neil M. Barofsky to become the Treasury Department's special inspector general in charge of auditing and investigating how the federal government spends bailout money. The pick requires Senate confirmation.In turning to Barofsky, the president tapped a rising star in a Justice Department office known for its high-profile prosecution of crime on Wall Street.
Barofsky, 38, led the recent prosecution of top executives at Refco Inc., one of the world's largest commodities brokerages, which collapsed in an accounting scandal in 2005. Before that, he was lead prosecutor in a major narcotics trafficking case against dozens of leaders in the Revolutionary Armed Forces of Colombia, a leftist guerrilla group.
He was appointed in July to head a newly created mortgage fraud unit in the U.S. attorney's office for the Southern District of New York. The unit won one of its first victories this week, convicting the owners of a company that had run a fraudulent "foreclosure rescue" scheme that preyed on struggling homeowners.
Former U.S. Attorney David N. Kelley, one of Barofsky's old bosses, called him an "excellent prosecutor" who has the respect of law enforcement.
Attorney Gary Naftalis, who represented former Refco chief executive Phillip Bennett, called his former legal adversary a "first-class lawyer" capable of deciphering the inner workings of huge, troubled corporations.
Bennett pleaded guilty this year to conspiracy and fraud charges and was sentenced to 16 years in prison.
A 1995 graduate of New York University's law school, Barofsky worked for the law firms Weil, Gotshal & Manges and then Morvillo, Abramowitz, Grand, Iason & Silberverg before becoming an assistant U.S. attorney in 2000, joining an office whose alumni include former Mayor Rudy Giuliani.
Barofsky was part of a group of prosecutors who received an award last year for recovering more than $1.2 billion in assets from corporate fraudsters to be used to compensate swindled investors.
In his early years in the office, he also prosecuted a Hong Kong man who tried to fake his death in the Sept. 11, 2001, attacks to avoid facing charges in a passport fraud case.
The establishment of a special inspector general dedicated to the rescue program was one of the provisions added to the bailout legislation to secure its passage.
Other provisions intended to boost oversight of the massive program included a special oversight board and regular government audits.
If confirmed by the Senate, Barofsky's appointment would carry over into the next administration, though President-elect Barack Obama would also have the power to replace him.
Barofsky would be required to file a report to Congress within 60 days detailing the "purchases, obligations, expenditures and revenues" associated with the bailout plan.
He would not be the only overseer. The law also requires oversight from the Government Accountability Office.
Congress allocated $50 million to run the office.
]]>lashy Las Vegas entrepreneur who became a billionaire at the height of the dot-com bubble was sentenced Friday to nine years in prison for stock fraud, capping a seven-year investigation that led to seven convictions.
]]> The sentence meted out to Charles E. "Junior" Johnson, founder and CEO of now-defunct PurchasePro Inc., was significantly less than that sought by federal prosecutors, who had recommended he spend between 16 and 17 1/2 years behind bars for defrauding investors in his now defunct software company in 2001.U.S. District Judge Liam O'Grady ruled that because Johnson's crimes occurred more than seven years ago, he should be sentenced under older federal sentencing guidelines calling for a lesser sentence. Sentencing guidelines are not binding on judges, but frequently serve as a benchmark for their decisions.
Johnson was convicted last May of stock fraud, witness tampering and obstruction of justice.
Prosecutors said he was the ringleader of a scheme to falsely inflate PurchasePro's revenue in the first three months of 2001, as the high-tech economy was in freefall. Seven people were convicted in a long-running investigation, which also exposed improper accounting practices at America Online, which had been PurchasePro's business partner
Prosecutors said he orchestrated efforts in the first quarter of 2001 to inflate the company's revenue to meet the expectations of Wall Street analysts. The scheme, authorities said, included falsified and backdated contracts, and secret side deals with AOL, which had a marketing partnership with PurchasePro.
PurchasePro relied heavily on its partnership with AOL to sell its core product, a "marketplace license" and software that supposedly facilitated business-to-business commerce. But AOL could only sell the licenses by relying on the side deals in which PurchasePro agreed to buy equal amounts of goods and services from companies willing to buy from PurchasePro.
In all, seven PurchasePro employees, including Johnson, were convicted. Four others, including two midlevel executives at AOL, were acquitted of all charges.
While nobody at AOL was convicted of fraud, the company as a whole paid a $210 million fine in 2004 to settle criminal charges that it had aided and abetted stock fraud at PurchasePro.
Steer said Johnson is now essentially broke and will be unable to pay the $9.7 million in restitution that the judge could impose as a part of the sentence. Restitution is to be addressed at a later date.
Johnson also was convicted of obstruction of justice for trying, unsuccessfully, to sneak fabricated e-mails into evidence at his trial. His previous lawyers caught him and resigned from the case, resulting in a mistrial. Johnson was subsequently convicted at retrial. (Excerpt)
]]>The former senior manager of human resources of Hitachi American Ltd., a New York and California based corporation, has been charged in connection with a scheme to defraud the Hitachi America Ltd. Group Health and Welfare Plan of approximately $8 million.
]]> Hitachi America is a subsidiary of Hitachi Ltd., a Japanese corporation, and it markets and manufactures electronic equipment, computer systems, and consumer electronics, among other products, and provides industrial equipment and services throughout North America. Hitachi America maintained the Plan to provide health benefits to eligible employees of Hitachi America and certain of its corporate affiliates.Dennis M. Dowd, 52, of Yorktown Heights, who was hired by Hitachi America in 1979, was a senior manager of corporate benefits for Hitachi America until March of this year. He was responsible for managing various aspects of Hitachi America’s employee benefits programs, including the “plan”.
In January 1997, Dowd opened a bank account in the name “Hitachi Group Insurance Health and Welfare Trust”, an account whose creation was allegedly not authorized by Hitachi America. Prosecutors say between 2000 and early 2008, Dowd deposited approximately $8 million into that account, approximately $4.9 million of which were payments for insurance claims belonging to the plan.
Checks totaling an additional approximately $2.9 million from, among other entities, insurance companies and health care providers that were made payable to the Plan or to Hitachi America (or to a corporate affiliate thereof), were also deposited into the account.
Dowd diverted the funds in the bank account he created to pay for personal expenses related to himself and his family, including, among other things at least $1 million in payments to credit cards held in Dowd’s name that were used to purchase, among other things, consumer goods; at least $2 million in checks made payable to Dowd using various spellings of Dowd’s name; approximately $42,000 paid for a Lexus automobile registered to Dowd; and approximately $625,000 paid to purchase a house in Ver oBeach, Florida.
Dowd is charged with one count of embezzlement in connection with health care, one count of health care fraud, and one count of money laundering. He faces a total maximum sentence of 30 years’ imprisonment if convicted.
]]>A one-man embezzlement scheme that drained $757,000 from a Henrico County cleaning-supply firm put the firm's former accountant behind bars today.
]]> Fifteen months after he was arrested and released on $75,000 bond, John N. Sacco received a 28-month prison sentence.Sacco pleaded guilty earlier in the year to six embezzlement charges and five counts of check forgery.
Sacco, who lost his home in the 3200 block of Fox Chase Road in Brandermill to settle civil proceedings from the theft, said he is receiving counseling to come to grips with what he did.
"I'm extremely embarrassed, extremely so," he told the judge. "I'll never be in trouble again, so help me God."
Sacco's lawyer, Michael Morchower, argued that rarely has an embezzlement case produced a restitution settlement before sentencing. He added that Sacco carries the burden of being a convicted felon.
"He's a multiple felon for life," Morchower said, noting that Sacco needed money to care for a special-needs child and has devoted time to volunteer organizations.
Sacco and Environmental Supply Co. Inc. settled civil proceedings this month that left about $300,000 of the $757,000 still owed to Environmental Supply's owner.
The agreement included language that the settlement terms resolved all differences between the two parties.
Sacco's former home, assessed at $279,700, cash payments and a car made up the bulk of the restitution.
Oversight of Sacco's bookkeeping methods was so lax that he was able to write checks to himself, one for nearly $30,000, said Assistant Commonwealth's Attorney Richard Collins.
Collins asked for a sentence close to the six-year, three-month upper range given in sentencing guidelines. He said the amount of the theft was more than eight times larger than the $90,000 theft amount triggering the guidelines.
But Morchower, noting the settlement agreement and Sacco's clean prior record, argued that Sacco should serve no more than six to 12 months, far below the guideline's five-year midpoint.
]]>Federal prosecutors closed their fraud case against the philanthropist Alberto Vilar on Wednesday by telling jurors that the opera-loving investment adviser "flat out stole" from some clients when his firm ran into financial trouble in the high-tech stock crash.
]]> Vilar and business partner Gary Tanaka are charged with improperly investing millions of dollars of their clients' money in risky stocks after telling them it was going into ultra-safe investments such as government bonds.Prosecutors said Vilar and Tanaka, desperate to cover their own bills, illegally transferred hundreds of thousands of dollars out of Lily Cates' account without her knowledge after photocopying her signature onto a form to make it appear as if she had authorized the transaction.
Attorneys for the two men say they are innocent and never intentionally misled anyone.
He rattled off a list of Amerindo investors who had made a fortune with the company and said even when Vilar and Tanaka ran into financial problems they worked to get investors their money back, plus interest.
"That's not fraud, and we believe that the government hasn't proven fraud," he said.
Tanaka and Vilar, who pledged tens of millions of dollars to the Metropolitan Opera and other performing arts centers when their fortunes were soaring in the 1990s, each could face more than 10 years in prison if convicted.
The charges include conspiracy to commit securities, mail, wire and investment fraud.
Lawyers on both sides of the case began making their closing statements on Wednesday and were expected to continue on Thursday.
]]>Vijay K. Taneja, 47, admitted that he defrauded banks of at least $33 million through schemes in which he created bogus mortgage loans and obtained funds for the same loans from multiple banks. Prosecutors said the case is the largest in Virginia in at least 20 years.
]]> bTaneja is well known in the local Indian American community, and he invested millions of his proceeds in Indian films and musical acts, officials said.As Taneja, of Fairfax City, pleaded guilty to one count of conspiracy to commit money laundering in U.S. District Court in Alexandria, prosecutors indicated that the fraud might be larger than what they charged. "He has millions of dollars unaccounted for," Assistant U.S. Attorney Stephen Learned told Judge Claude M. Hilton. "There's so much money, and it's difficult to figure out where it all went."
Citing Taneja's ties to India and a possible seven-year prison sentence, Learned urged the judge to order Taneja to be electronically monitored to ensure he doesn't flee before his Jan. 30 sentencing. "We can't be unmindful of the crisis we're facing in mortgage frauds," he said.
But after defense lawyers emphasized that Taneja had cooperated with the government, Hilton ordered him released on a personal recognizance bond.
Experts in mortgage fraud said the amount of loss to the banks makes this case one of the nation's largest mortgage fraud prosecutions. Investigators are continuing to examine an upsurge in fraud triggered by the slumping housing market, and the FBI has ramped up investigations locally through a mortgage fraud task force begun late last year in its Washington field office.
]]>An Indianapolis man was sentenced to 16 months in prison Monday after pleading guilty to embezzling more than $600,000 to buy car parts for his fledgling engine-making company, Chaos Drag Racing.
]]> Robert Rosenberg, 41, was a purchasing manager at Sealed Air Corp. in Indianapolis and charged about $613,000 in personal purchases to his corporate credit card, prosecutors said.A spokesman said Sealed Air, which is based in Elmwood Park, N.J., but employs about 200 workeres at a packaging materials plant in Indianapolis, is satisfied with Rosenberg's sentence.
"He not only defrauded the company, he caused personal pain and hardship to people he worked with," said company spokesman Ken Aurichio. "We feel it was an abuse of trust."
Rosenberg took the purchasing manager job with Sealed Air in 2001 but didn't make any unauthorized purchases until late 2003, authorities said.
He had a discretionary limit of up to $4,000 per transaction and up to $40,000 a month on his corporate card.
According to prosecutors, Rosenberg would buy car parts and have them delivered to the company's loading dock, where he would pick them up. Sealed Air first identified suspicious charges on Rosenberg's account in October 2007.
A subsequent search of a pole barn on his property uncovered hundreds of thousands of dollars in car parts, which corresponded to the purchases he made with the company credit card.
Rosenberg's attorney, John Tompkins, said Chaos Drag Racing will remain idle until Rosenberg gets out of prison. He ran the company by himself, building performance engines for professional drag racing teams.
]]>Jeffrey Scott Koger admitted to embezzling approximately $3 million from 400 homeowner associations using 140 bank wire transfers, according to statement of facts filed Monday, Nov. 10 with his plea agreement in federal court in Alexandria.