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.
Lanny Breuer, assistant attorney general and head of the Criminal Division of the U.S. Department of Justice
BULLETIN: The U.S. government has announced charges against at least 43 defendants in five separate financial-fraud schemes, the largest of which allegedly involved $1.9 billion and contributed to the collapse last year of a bank with 346 branches and a mortage-lending company in Florida.
Smaller schemes in cases outlined by federal prosecutors today involved tens of millions of dollars, including a New Jersey real-estate Ponzi scheme that netted $45 million, a California mortgage-fraud scheme that netted at least $5.5 million, a second California scheme that netted an unknown amount and another real-estate fraud scheme in New Jersey that netted at least $5.5 million.
The youngest defendant charged in the cases was 27; the oldest 77.
Law-enforcement operations were centered in the states of Florida, New Jersey, Virginia and California, and involved multiple agencies working under the umbrella of the Financial Fraud Enforcement Task Force established by President Obama in November.
Lee Bentley Farkas, former chairman of Taylor, Bean & Whitaker (TBW), was arrested last night in Ocala, Fla. Farkas was named in a 16-count indictment filed in Virginia that accused him of presiding over a $1.9 billion fraud scheme that contributed to the failures last year of Colonial Bank, one of the 50 largest banks in the United States, and TBW, one of the nation’s largest privately held mortgage-lending companies.
“The fraud alleged here is truly stunning in its scale and complexity,” said Lanny Breuer, head of the Criminal Division of the U.S. Department of Justice.
“According to the indictment, the fraud began as early as 2002 in an effort to conceal significant TBW operating losses,” Breuer said. “It then evolved over the course of seven years as Mr. Farkas and his co-conspirators sought to misappropriate hundreds of millions of dollars from Colonial Bank and Ocala Funding, a mortgage lending facility that was controlled by TBW and financed by large banks.”
Farkas and unnamed coconspirators compounded the fraud by asking for bailout funds from the federal Troubled Asset Relief Program (TARP), prosecutors said.
“That [TARP] application included materially false information, and no TARP funds were released,” said Breuer.
The case was brought by the office of U.S. Attorney Neil MacBride of the Eastern District of Virginia.
“Taxpayers have paid a hefty price for the crimes related to the current financial crisis, and investors in Colonial and Ocala Funding were among those directly affected by this conspiracy,” said MacBride.
Neil Barofsky, the Special Inspector General of the TARP program (SIGTARP), said the banking scheme was unprecedented.
“Due to the efforts of SIGTARP agents, our law-enforcement partners, and the SEC, this scheme was stopped dead in its tracks, taxpayers were protected, and Lee Farkas has joined the growing list of financial industry executives who have been charged with TARP-related frauds,” Barofsky said.
In one of the separate alleged schemes in New Jersey, 28 people were charged. (See link below to read the names of the defendants in the cases, which involve at least $5.5 million.)
“These cases demonstrate just how pervasive the mortgage fraud problem is in New Jersey,†said U.S. Attorney Paul J. Fishman. “Mortgage fraud is not limited to people who steal millions at a time. It is more insidious. It is more pernicious. And it is more prevalent. Mortgage fraud is often done at a retail level, and involves many different people playing many different roles. No matter what your role, if you participate in this kind of scheme, you will be held accountable.â€
Among the 28 defendants are 12 real estate agents, four investors, four mortgage consultants, three individuals who allegedly created fraudulent documents, two accountants, a real-estate appraiser, a bank employee and a mortgage broker.
A veteran FBI agent described the New Jersey cases as a battle in an ongoing war against fraud.
“Today’s arrests do not signify the culmination of a single investigation, but rather serve as notice that law enforcement is aggressively pursuing mortgage fraud schemes in New Jersey,” said Michael B. Ward, special agent in charge.
In the second New Jersey case, Antoinette Hodgson, 58, of Montclair, was arrested on charges of operating a $45 million Ponzi scheme involving false tales of property-flipping. (See earlier story.)
Meanwhile, 13 people were charged in a California real-estate fraud cases. U.S. Attorney Benjamin B. Wagner announced the indictments of Hoda Samuel, 58, of Elk Grove, Calif.; Connie Devers, 40, of Elk Grove; Dana Faulkner, 43, of Oakland; Charles Robert Maness, 32, of Elk Grove; Tracy Painter, 50, of Lodi, Calif.; Sean Patrick Gjerde, 34, of Elk Grove; Ronald Burris, 36, of Elk Grove; Ygnacia Bradford, 34, of Oakland; Nicole Dawson, 40, of Oakland; and Daniel Harrison, 40, of San Diego.
Gjerde is an attorney;Â Samuel a licensed real estate broker and the head of Liberty Real Estate and Investment Co. and Liberty Mortgage Co. of Elk Grove .
“From April 2006 through February 2007, Liberty was involved in approximately 30 residential real estate transactions in which the mortgage lenders were given false information as to the income of the purchasers and/or the value of the homes being purchased,” prosecutors said.
“At least 28 of the properties have since gone into foreclosure, resulting in a loss to lenders of over $ 5.5 million,” prosecutors said.
Also in California, Eric Ray Hernandez, 34, Monica Marie Hernandez, 29, and Evelyn Brigget Sanchez, 27 were indicted in a mortgage-fraud case. Each of the defendants lists an address in Bakersfield.
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.
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.
