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Tag: TARP

  • Former Mormon Bishop Who Presided Over ‘Friend’s Investment Group’ Charged In Alleged Connecticut Fraud Scheme Targeting Church Members; Former Broker Charged In Alleged Tennessee Ponzi Scheme

    Julius C. Blackwelder, the 59-year-old former bishop of the Bridgeport Ward of the Church of Jesus Christ of Latter-day Saints in Trumbull, Conn., has been charged with money-laundering, mail fraud and wire fraud.

    “This defendant is alleged to have abused his position of trust as a leader in his church to defraud fellow church members and others out of hundreds of thousands of dollars,” said U.S. Attorney David B. Fein of the District of Connecticut.

    Meanwhile, in Tennessee, federal prosecutors charged Brian Keith Miller of Maryville in a separate alleged fraud scheme.

    Miller, prosecutors said, was a former securities broker who hatched a Ponzi scheme and sucked in the trusting locals. He was arrested Monday on charges of wire fraud, money laundering and filing false tax returns.

    “Rather than investing the victims’ funds as promised, the indictment charges that Miller misappropriated investment funds to his own use and used a portion of the victims’ funds to pay other victims to lull them into believing that they were receiving payments on their investments,” the office of U.S. Attorney William C. Killian of the Eastern District of Tennessee said.

    “The indictment also charges that Miller knowingly engaged in monetary transactions greater than $10,000 with the proceeds of the fraud scheme and filed false federal income tax returns for 2007 and 2008,” Killian’s office said.

    In the alleged Connecticut fraud scheme, Blackwelder solicited members of his church congregation, claiming “that he would invest their money in safe, long-term commodities futures contracts, and that he was an experienced and successful commodities investor,” Fein’s office said.

    But Blackwelder “used investors’ money to pay his own expenses, which included repaying earlier investors in the scheme, building a waterfront home in Stratford, and repaying personal bank loans,” prosecutors said.

    One loan was a credit line from a bank that had received funds from the Troubled Asset Relief Program (TARP) program. An investigation by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the IRS, the Connecticut Department of Banking and the U.S. Postal Inspection Service followed.

    Blackwelder’s fraud scheme had a comforting name, officials said: “Friend’s Investment Group.”

    Even so, it was a scam that plucked $400,000 from victims, prosecutors said, noting that Blackwelder now resides in Utah.

    The Miller Ponzi case in Tennessee was brought by the FBI and the IRS, prosecutors said.

  • BULLETIN: Former Radio Host John Farahi Indicted In Alleged Ponzi Scheme; His Attorney Also Indicted Amid Allegations He Obstructed SEC Probe

    BULLETIN: John Farahi, a former Los Angeles radio host who once was a member of the city council of Reno, Nev., has been indicted on dozens of counts of defrauding investors and banks out of at least $20 million, federal prosecutors in the Central District of California said.

    David Tamman, an attorney, was indicted amid allegations he conspired with Farahi to obstruct an SEC probe. Farahi and Beverly Bills-based New Point Financial Services Inc. were charged civilly by the SEC in January 2010.

    Farahi, 54, resides in  Bel Air Estates. Tamman, 44, resides in Santa Monica.

    Prosecutors said Farahi falsely promised investors that “their money would be used to purchase corporate bonds backed by the Troubled Asset Relief Program,” alleging Tamman helped cover up the fraud.

    Most of Farahi’s investors were members of the Iranian-Jewish community, prosecutors said.

    “Farahi attracted many of the investors through his daily radio show in which he touted a conservative investment philosophy,” prosecutors said. “When Farahi met with investors he falsely told them New Point Financial Services invested in low-risk investments like certificates of deposit, TARP-backed corporate bonds, and deeds of trust backed by substantial amounts of borrower equity.”

    In reality, prosecutors said, Farahi used investors’ money to support his “lavish lifestyle,” to make Ponzi payments and engage in “high-risk and speculative future options trading.”

    Farahi lost “at least $15 million through his undisclosed” trading and continued to solicit new investors as losses piled up, prosecutors said.

    To keep the scheme afloat, Farahi drew down lines of credit and lied to banks, prosecutors said.

    After the SEC began its probe in 2009, Farahi and Tamman “engaged in a conspiracy” to backdate documents and remove “incriminating” documents, prosecutors said.

    Farahi was charged with 16 counts of mail fraud, five counts of selling unregistered securities, five counts of altering documents, four counts of loan fraud, four counts of obstruction of justice and single counts of conspiracy, wire fraud, aggravated identity theft, suborning perjury, concealing a material fact and witness-tampering.

    He faces a maximum prison term of 717 years, if convicted on all counts.

    Tamman is charged with five counts of alteration of records, three counts of obstruction of justice and single counts of conspiracy and of being an accessory after the fact to mail fraud and securities violations.

    If convicted on all counts, Tamman faces a maximum prison sentence of 190 years.

    The FBI and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) led the criminal probe.

  • BULLETIN: FLORIDA — AGAIN: Destroying Hope Through Wordplay: 4 Men Arrested In Alleged Loan-Modification Scam That Used ‘HOPE’ As Acronym; Fraudsters Sucked More Than $3 Million From Distressed Homeowners In Part By Claiming To Be Nonprofit, Feds Say

    HOPE is a scam operating as a purported nonprofit, federal prosecutors said.

    BULLETIN: Federal agents from the Special Inspector General’s Office for the Troubled Asset Relief Program (SIGTARP) have arrested four Florida men on charges they collected millions of dollars from financially distressed homeowners in a loan-modification scam that claimed to be a legitimate nonprofit business.

    Arrested this morning in Florida on federal criminal charges filed in Boston were Christopher S. Godfrey, 42, of Delray Beach; Dennis Fischer, 40, of Highland Beach; Vernell Burris Jr., 51, of Boynton Beach; and Brian M. Kelly, 34, of Boca Raton.

    South Florida has been plagued by various fraud schemes. Federal prosecutors in Washington said the Florida men were charged with conspiracy, wire fraud, mail fraud and misuse of a government seal in the operation of an entity known as Home Owners Protection Economics Inc., which used the acronym of HOPE.

    In reality, prosecutors said, HOPE was a scam linked to a telemarketing operation designed to pick the pockets of the very customers HOPE claimed it was helping.

    Separately, the Better Business Bureau lists 177 complaints against HOPE and a previous action filed against the firm, Godfrey and Fischer by the office of the Florida attorney general.

    Godfrey was the president of HOPE, and Fischer was vice president and treasurer.  Burris trained and managed HOPE telemarketers,  and Kelly was a key phone pitchman who also trained telemarketers, federal prosecutors said.

    Among the allegations is that HOPE collected at least $3 million in illegal up-front payments from distressed homeowners by arranging for telemarketers to lie to prospects.

    A website apparently linked to HOPE appears to have used hyphens to spell out its name in this fashion: H-OP-E.com, according to research by the PP Blog. The domain registration is hidden behind a proxy, but a “Contact” page on the site lists a building address in Delray Beach associated with at least two of the defendants arrested today.

    HOPE appears to have formed its website name with hyphens and letters from the word "hope" while claiming nonprofit status. Federal prosecutors said today that HOPE was a scam linked to a telemarketing operation.

    Home Owners Protection Economics Inc. appears to operate in Florida as a purported nonprofit under a nonplural variation of its name — i.e., Home Owner Protection Economics Inc. in which no “s” is used in the word “Owner.” Godfrey and Fischer are listed in Florida records as “directors” of the firm at 1801 S. Federal Highway, Suite 247, Delray Beach.

    The same address appears on the H-OP-E website registered behind a proxy. The firm also appears to have used the word “HOPE” as part of a phone number.

    “The indictment alleges that from January 2009 through May 2011, the defendants made, and instructed their employees to make, a series of misrepresentations to induce financially distressed homeowners looking for a federally-funded home loan modification to pay HOPE a $400-$900 up-front fee in exchange for HOPE’s home loan modifications, modification services and ‘software licenses,’” prosecutors said today.

    “According to the indictment, these misrepresentations included claims that homeowners were virtually guaranteed, with HOPE’s assistance, to receive a loan modification under the Home Affordable Modification Program (HAMP), which is part of TARP and is a federally-funded mortgage assistance program.  Additional misrepresentations to homeowners included that HOPE was affiliated with the homeowner’s mortgage lender, that the homeowner had been approved for a home loan modification, that homeowners could stop making mortgage payments while they waited for HOPE to arrange their loan modification and that HOPE would refund the customer’s fee if the modification was not successful.  HOPE also claimed that it operated as a non-profit organization.”

    In reality, prosecutors said, “HOPE instructed customers to fill out the application and submit it to their mortgage lender.  According to the indictment, the HOPE customers who did use the provided forms to apply on their own for loan modifications had no advantage in the application process, and, in fact, most of their applications were denied.  Through these misrepresentations, HOPE was able to persuade thousands of homeowners collectively to pay more than $3 million in fees to HOPE. ”

    See BBB report.

  • Astonishing Case Of Bank Fraud Alleged In New York; Charles J. Antonucci Sr. Charged With Bilking Pastors, TARP Program — And The Bank He Led

    Acting Assistant Director in Charge of the FBI’s New York Office George Venizelos announces the arrest.

    EDITOR’S NOTE: At the moment, I don’t have the time to do this story justice. The allegations, however, are astonishing. And law-enforcement officials at both the state and federal level  are calling it another case that has been solved by the Interagency Financial Fraud Enforcement Task Force.

    A New York man has been arrested on charges he tried to prop up a failing bank while fleecing two Florida church pastors and attempting to defraud the Troubled Asset Relief Program (TARP) operated by the government — all while stealing from the bank itself.

    The charges against Charles J. Antonucci Sr. read like a work of fiction, painting him as a man who engaged in one deception after another, received first-class transportation on a private plane by approving millions of dollars in overdrafts by a co-conspirator, pocketed money that did not belong to him  and hatched a complex scheme to fleece taxpayers.

    Investigators said all of these things occurred:

    • The Park Avenue Bank in New York was failing.
    • It was seized by the FDIC and New York banking regulators Friday.
    • Prior to the seizure, Antonucci, who served as the bank’s president and chief executive officer from June 2004 to October 2009 and also was a member of the board of directors, engaged in “self-dealing, bank bribery and embezzlement.”
    • Antonucci and a co-conspirator participated in an investment scheme that fleeced the pastors of  Calvary Springs Chapel in Coral Springs, Fla. out of $103,940 by making them believe they could earn back the principal and a profit of about $500,000 in weeks by investing in a bond. The pastors, who were investing the funds to build a new church, deposited the money into an account in the name of “Park Avenue Insurance.” The account proved to be owned by Antonucci, who split the proceeds with his co-conspirator and did not pay the interest promised the church.
    • Antonucci was at the center of a fraud in which he caused the bank to lend a company he owned $400,000 by installing a puppet president to hide his ownership of the firm, which was called “Easy Wealth Group Ltd.” The puppet president applied to the bank for a $300,000 line of credit, and Antonucci personally approved it, later increasing it to $400,000. The puppet president drew down the entire line, causing the bank a loss of the entire sum.
    • Antonucci approved overdrafts totaling more than $8 million tied to an entity of a co-conspirator. (The FBI cryptically referred to this co-conspirator as “CC-1,” an associate of Antonucci’s and part of the “Oxygen-related entities.”) In 2008 and 2009, Antonucci flew on the co-conspirator’s private plane more than 10 times, including trips to Florida, Panama, Arizona (to attend the Super Bowl), and Augusta, Ga. (to attend the Masters golf tournament). When a check from one of the “Oxygen” entities bounced in 2009 — apparently because Antonucci did not intervene — Antonucci was told he no longer could fly on the private plane.
    • Antonucci caused Park Avenue Bank to lease and pay expenses and upkeep on three properties he personally owned. Each of the properties was in Fishkill, N.Y. The bank had no legitimate need for two of the properties.
    • Antonucci tried to calm depositors’ concerns about the bank by saying he personally had pumped in $6.5 million. The money he invested, however, came from a series of loans the bank had made to businesses that had relationships with Antonucci. Those businesses then routed the money to Antonucci, who re-deposited the money back into the bank.
    • Antonucci lied to the FDIC about the source of the $6.5 million.
    • Antonucci tried to get $11 million in TARP funds, based on his purported, personal capital infusion of $6.5 million. He issued a false press release about the purported infusion, saying the bank was “well-positioned.”
    • The FDIC declined the bank’s TARP application. Antonucci then lied, saying he had withdrawn the application because of “issues” with TARP and because he did not want to create the “market impression” the bank was weak because it had accepted TARP funds.
    • To conceal the $6.5 million fraud, Antonucci created a bogus certificate of deposit in the amount of $2.3 million and engaged in an elaborate deception involving at least two companies to conceal the fraud.

    Read the FBI news release.