Brad Russell was convicted today by a federal jury in Brooklyn on all three counts of the indictment for defrauding developers and their clients of more than $9 million through an advance fee scheme and for defrauding investors through an Alaskan gold mine investment scheme. Kristofor Lange, the vice president of Black Sand Mine Inc. (BSMI), was also convicted on both counts charging him for his role in the gold mine investment scheme. The jury’s verdict followed a six-week trial in United States District Court held before the Honorable Dora L. Irizarry. The trials of co-defendants William Lange and Frank Perkins are scheduled to take place on September 22, 2014.
The guilty verdicts were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Philip R. Bartlett, Inspector in Charge, New York Division, U.S. Postal Inspection Service (USPIS); and Laura M. Laughlin, Special Agent in Charge, Federal Bureau of Investigation, Seattle Field Office (FBI).
“Through lies and deceit, the defendants took advantage of a national tragedy and unsuspecting investors and stole millions of dollars so they could line their own pockets. Their representations and assurances were not worth the price of the paper used to print the loan documents and stock certificates. We will vigorously pursue and bring to justice those who would defraud the investing public,” stated United States Attorney Lynch. Ms. Lynch thanked the USPIS and the FBI for their hard work and dedication through the course of the investigation and prosecution. Ms. Lynch also extended her grateful appreciation to the United States Attorney’s Office for the Western District of Washington for their assistance in the case.
The evidence at trial established that Russell, together with others at Harbor Funding Group Inc. (HFGI), executed an advance fee scheme by targeting regions affected by Hurricane Katrina. Russell and his co-conspirators told land developers and their clients that HFGI had lenders and funds available to provide financing for their real estate projects. As a condition for financing, HFGI required its clients to place 10 percent of the loan amount in an attorney escrow account. Contrary to their representations, HFGI did not have lenders or funds available to finance the loans and stole the deposit money placed in escrow. Russell was the loan processor at HFGI and prepared and maintained the loan documents and escrow agreements. Through this fraudulent scheme, Russell and his co-conspirators stole more than $9 million from approximately 300 individuals.
At trial, the government also proved that Russell and Kristofor Lange, together with others, also executed an investment scheme and induced investors to invest in BSMI through lies and deceit. BSMI claimed that it was going to mine gold and other precious metals on Sitkinak Island in Alaska. Through the use of in-person presentations, cold calls and “webinars,” Russell, Lange, and their co-conspirators convinced investors to invest in BSMI by lying to them about the credentials of BSMI’s officers and directors, BSMI’s assets and liabilities, the intended use of investor funds, and by concealing their prior involvement in HFGI.
When sentenced by Judge Irizarry, Russell faces a sentence of up to 20 years’ imprisonment for wire fraud conspiracy for the HFGI scheme. Russell and Lange also face a sentence of up to 20 years’ imprisonment for securities fraud and a sentence of up to five years’ imprisonment for conspiracy for the BSMI scheme.
The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes, David C. Woll, Jr. and Alixandra E. Smith.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Defendants:
Brad A. Russell
Age: 42
Residence: Gig Harbor, Washington
Kristofor J. Lange
Age: 30
Residence: Gig Harbor, Washington
Note: Kristofor Lange was not charged in the advance fee scheme.
The charges against the co-defendants William Lange and Frank Perkins are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Showing posts with label advanced fee. Show all posts
Showing posts with label advanced fee. Show all posts
Friday, March 7, 2014
Friday, February 21, 2014
Final Defendant Convicted in Advance Pay Scheme That Bilked Entrepreneurs of Millions
PHILADELPHIA—Matthew McManus, 45, of Glenside, Pennsylvania, was convicted today for his role in an advance fee fraud scheme that defrauded hundreds of victims searching for commercial financing. McManus was charged with five other defendants, all of whom have pleaded guilty. Their scheme defrauded more than 1,900 victims out of more than $26 million. A sentencing hearing is scheduled for May 21, 2014. McManus faces a potential advisory guideline sentence of 15 years in prison with a statutory maximum possible sentence of 105 years in prison.
Defendant Andrew Bogdanoff, of Scottsdale, Arizona, was the founder and chairman of Remington Financial Group (later renamed Remington Capital) and ran the company with defendant McManus until 2008 in Arizona and Pennsylvania. After McManus left the company in 2008, defendant Shayne Fowler, also of Scottsdale, replaced McManus as Bogdanoff’s right-hand man. Defendant Joel Nathanson, of San Diego, California, was one of Remington’s most proficient employees and helped Remington defraud many victims. Defendant Frank Vogel, of Rochester Hills, Michigan, was a Michigan‑based broker who referred numerous victims to Remington in exchange for large kickbacks. Aaron Bogdanoff, also of Scottsdale, was also charged in the conspiracy.
Between 2005 and 2011, the defendants fraudulently induced hundreds of people to pay Remington fees in excess of $10,000 a piece based on false representations that Remington had lenders and/or investors ready to provide financing for the victims’ projects. To facilitate this fraud, the defendants issued each victim a “letter of interest,” commonly referred to as an LOI. Almost every LOI Remington issued stated that Remington had a lender or investor interested in financing the victim’s project. Remington issued an LOI to every victim even though no Remington employee had spoken to any funding source and Remington knew that it was unlikely to find funding for the project.
The LOI was written to fraudulently lead victims to believe that Remington either was an actual lender or had spoken to lenders that had already expressed interest in the customer’s project. Neither was true. Additionally, the financing terms Remington included in the LOI were unrealistic and were used solely to induce customers to pay Remington’s advance fees. In addition to the false representations in the LOI, the defendants and other Remington employees also told victims the following lies to further induce victims to pay Remington’s fees: a) Remington had five investors or lenders interested in their project; b) Remington was the actual lender for the project; c) Remington funded or “closed” 80 percent of its deals; d) the victim would get funding for the project once the advance fee was paid and/or; e) Remington would provide funding through its funding source Northbridge. After a customer paid Remington’s fee, McManus and Andrew Bogdanoff instructed Remington employees to find problems with the projects so that Remington could blame its failure to provide financing on the victim. The defendants did this to help protect Remington from civil and criminal complaints.
After the FBI and IRS conducted search warrants in Arizona and Colorado in March 2011, defendant Matthew McManus attempted to distance himself from the fraudulent scheme by obstructing justice and lying to federal agents. He was convicted of these charges as well.
Some of the defendants used sophisticated means to perpetuate the fraud. For instance, in 2010, defendants Fowler and Andrew Bogdanoff used Remington’s website to advertise an anti‑fraud policy and stated falsely that Remington had recently provided information to the Federal Bureau of Investigation and local law enforcement authorities about a suspected e-mail scam. Remington posted this information to ensure that if potential customers used an Internet search engine to search for allegations about Remington’s fraud, they would be directed to Remington’s website rather than third‑party Internet sources that contained negative information about Remington.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigations with assistance from the Pennsylvania Securities Commission. It is being prosecuted by Assistant United States Attorney David Axelrod.
Defendant Andrew Bogdanoff, of Scottsdale, Arizona, was the founder and chairman of Remington Financial Group (later renamed Remington Capital) and ran the company with defendant McManus until 2008 in Arizona and Pennsylvania. After McManus left the company in 2008, defendant Shayne Fowler, also of Scottsdale, replaced McManus as Bogdanoff’s right-hand man. Defendant Joel Nathanson, of San Diego, California, was one of Remington’s most proficient employees and helped Remington defraud many victims. Defendant Frank Vogel, of Rochester Hills, Michigan, was a Michigan‑based broker who referred numerous victims to Remington in exchange for large kickbacks. Aaron Bogdanoff, also of Scottsdale, was also charged in the conspiracy.
Between 2005 and 2011, the defendants fraudulently induced hundreds of people to pay Remington fees in excess of $10,000 a piece based on false representations that Remington had lenders and/or investors ready to provide financing for the victims’ projects. To facilitate this fraud, the defendants issued each victim a “letter of interest,” commonly referred to as an LOI. Almost every LOI Remington issued stated that Remington had a lender or investor interested in financing the victim’s project. Remington issued an LOI to every victim even though no Remington employee had spoken to any funding source and Remington knew that it was unlikely to find funding for the project.
The LOI was written to fraudulently lead victims to believe that Remington either was an actual lender or had spoken to lenders that had already expressed interest in the customer’s project. Neither was true. Additionally, the financing terms Remington included in the LOI were unrealistic and were used solely to induce customers to pay Remington’s advance fees. In addition to the false representations in the LOI, the defendants and other Remington employees also told victims the following lies to further induce victims to pay Remington’s fees: a) Remington had five investors or lenders interested in their project; b) Remington was the actual lender for the project; c) Remington funded or “closed” 80 percent of its deals; d) the victim would get funding for the project once the advance fee was paid and/or; e) Remington would provide funding through its funding source Northbridge. After a customer paid Remington’s fee, McManus and Andrew Bogdanoff instructed Remington employees to find problems with the projects so that Remington could blame its failure to provide financing on the victim. The defendants did this to help protect Remington from civil and criminal complaints.
After the FBI and IRS conducted search warrants in Arizona and Colorado in March 2011, defendant Matthew McManus attempted to distance himself from the fraudulent scheme by obstructing justice and lying to federal agents. He was convicted of these charges as well.
Some of the defendants used sophisticated means to perpetuate the fraud. For instance, in 2010, defendants Fowler and Andrew Bogdanoff used Remington’s website to advertise an anti‑fraud policy and stated falsely that Remington had recently provided information to the Federal Bureau of Investigation and local law enforcement authorities about a suspected e-mail scam. Remington posted this information to ensure that if potential customers used an Internet search engine to search for allegations about Remington’s fraud, they would be directed to Remington’s website rather than third‑party Internet sources that contained negative information about Remington.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigations with assistance from the Pennsylvania Securities Commission. It is being prosecuted by Assistant United States Attorney David Axelrod.
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