PHILADELPHIA—Eric Sijohn Brown, 46, of Philadelphia, pleaded guilty today to 20 counts in connection with a mortgage fraud scheme involving KREW Settlement Services. Brown pleaded guilty to conspiracy, two counts of FHA loan fraud, 12 counts of loan fraud, and three counts of tax evasion. Between May 2004 and February 2009, Brown and his co-conspirators inflated purchase prices on loan documents for more than 100 Philadelphia properties, resulting in more than $20 million in fraudulent loan proceeds. A sentencing hearing is scheduled for July 8, 2014. Brown faces a maximum possible sentence of 486 years in prison, including a mandatory two year term, five years of supervised release, a fine of up to $15 million, and $2,000 special assessment. A forfeiture notice was also filed seeking more than $13.7 million from all defendants.
KREW As alleged in the indictment, KREW is an acronym of the first names of Kevin Joseph Franklin, Roderick L. Foxworth, Sr., Eric Sijohn Brown, and Walter Alston Brown, Jr. Settlement Services was a Philadelphia real estate settlement company, and Brown was a general contractor who worked with his co-defendants to identify distressed properties to purchase, typically in the West Philadelphia area. The scheme involved recruiting straw buyers whose credit history and personal information was used to purchase the properties, obtain mortgage loans, and take title to the properties, when, in reality, the properties were owned and controlled by the defendants. Mortgage loan applications were then prepared in the names of the straw buyers containing a host of false information, including false purchase prices, false employment and income information, and false statements about the straw buyers living in the properties. Mortgage brokers—including Roderick Foxworth, Walter Brown, and John William Polosky (charged separately in the Western District of Pennsylvania)—allegedly submitted the fraudulent loan applications to lenders to secure the loans for the buyers, knowing that the information was false.
Charged with Brown were Roderick L. Foxworth, Sr., Cynthia Evette Brown, Walter Alston Brown, Jr., and Kevin Joseph Franklin. Cynthia Brown is alleged to have falsely verified that many of the straw buyers worked for her employer, Unicco Service Company, when they did not. Kevin Joseph Franklin, a title agent, is alleged to have falsely prepared two deeds and settlement statements (referred to as Form HUD-1)—one for the seller that showed the actual agreed-upon purchase price and a false one for the lender that showed the grossly inflated purchase price. Franklin is also alleged to have created false title insurance policies for the lenders.
After the loans funded, the seller was paid the agreed-upon purchase price, and the difference between the actual purchase price and the false purchase price quoted to the lender was shared with and distributed by Franklin to Eric Brown, Foxworth, Walter Brown, and Cynthia Brown, and many of these payments were not reflected on the HUD-1 forms.
In addition to the five defendants charged with Brown and the three defendants charged by the Western District of Pennsylvania, seven defendants were charged by information.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigations, and the Department of Housing and Urban Development’s Office of Inspector General. It is being prosecuted by Assistant United States Attorney Michael S. Lowe.
Showing posts with label tax evasion. Show all posts
Showing posts with label tax evasion. Show all posts
Wednesday, April 9, 2014
Monday, April 7, 2014
New Jersey Woman Charged with Bilking Non-Profit
Rochelle Biesenthal, 64, of Brigantine, New Jersey, was charged today by information with one count of wire fraud and three counts of tax evasion in connection with an alleged scheme to defraud the Jewish Heritage Programs (JHP), a non-profit corporation based in Philadelphia, announced United States Attorney Zane David Memeger.
According to the information, Biesenthal carried out the scheme between 2002 and April 2009 while employed as a bookkeeper at JHP. She allegedly prepared and issued checks, made payable to her, drawn on JHP’s bank accounts. It is further alleged that Biesenthal fraudulently authorized electronic debits from JHP’s bank accounts to pay for her personal credit cards and her family’s personal credit cards. As part of the scheme, it is alleged that she defrauded JHP of a total of over $400,000. In addition, according to the information, she never reported her unauthorized income in her tax returns in tax years 2007 through 2009 and concealed the true sources of her income.
If convicted, the defendant faces a maximum possible sentence of 35 years in prison, a three-year period of supervised release, a fine of up to $1 million, and a $400 special assessment.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations. It is being prosecuted by Assistant United States Attorney Sozi Pedro Tulante.
An information is an accusation. A defendant is presumed innocent unless and until proven guilty.
According to the information, Biesenthal carried out the scheme between 2002 and April 2009 while employed as a bookkeeper at JHP. She allegedly prepared and issued checks, made payable to her, drawn on JHP’s bank accounts. It is further alleged that Biesenthal fraudulently authorized electronic debits from JHP’s bank accounts to pay for her personal credit cards and her family’s personal credit cards. As part of the scheme, it is alleged that she defrauded JHP of a total of over $400,000. In addition, according to the information, she never reported her unauthorized income in her tax returns in tax years 2007 through 2009 and concealed the true sources of her income.
If convicted, the defendant faces a maximum possible sentence of 35 years in prison, a three-year period of supervised release, a fine of up to $1 million, and a $400 special assessment.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations. It is being prosecuted by Assistant United States Attorney Sozi Pedro Tulante.
An information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Friday, March 28, 2014
Solon Man Charged with Defrauding Parker Hannifin of $1.5 Million
A 15-count criminal indictment was filed charging a Solon man with defrauding his former employer of nearly $1.5 million, law enforcement officials said.
John A. Miller, 53, was charged with one count of conspiracy to commit mail fraud, nine counts of mail fraud, three counts of tax evasion, and two counts of money laundering in connection with a scheme to defraud Parker Hannifin Corp.
“This defendant is accused of running a scheme in which he stole nearly $1.5 million from his employer,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “This type of self-dealing is not fair to workers or shareholders and will not be tolerated.”
Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Office, said: “Mr. Miller put a lot of effort into orchestrating and maintaining this seven year fraudulent scheme. Law enforcement will continue efforts to follow the money trial to ensure financial fraudsters are brought to justice.”
“Fraud and embezzlement schemes harm everyone,” said Kathy Enstrom, Special Agent in Charge, IRS-Cincinnati Field Office. “As we often see, the victims are not only the taxpayers, but also the individuals and entities who suffer financial harm.”
Miller worked at Parker Hannifin Corp. (PHC) for 25 years, where he directed work to outside contractors. In 2002, he approached his neighbor, Nancy Seaman, to do IT work for PHC, according to the indictment.
To do this, Seaman established Digital Design Services Inc., which she operated out of her residence in Solon. In 2004, Miller approached R.K. (not charged herein), who owned and operated a billing company in Pennsylvania that had previously been a subcontractor for PHC. Miller requested that R.K. and his billing company prepare invoices and billings for PHC, and R.K. agreed to do so, according to the indictment.
Beginning around 2004, Miller engaged in a fraudulent scheme to increase the payment he was receiving from PHC by using subcontractors Seaman and R.K. to funnel payments to himself. He did his despite having a salaried position at PHC and without the knowledge or consent of PHC, according to the indictment.
Miller did this by falsely inflating the invoices submitted by Digital Design and Seaman and by asking R.K. to process payments and to pay subcontractors as designated by Miller. Under this arrangement, Miller submitted invoices in the names of Miller’s wife and son, even though neither had done any of the work submitted in these invoices nor were they even aware that Miller was using their names to submit such billings to PHC, according to the indictment. Miller caused a loss to PHC of approximately $1,489,494 between 2004 through 2011, according to the indictment.
Seaman was aware that additional amounts, over and above her Digital Design billings, were being sent to her. Miller instructed Seaman to pay these additional funds to him in cash, less a 30 percent commission to Seaman, according to the indictment.
Seaman previously pleaded guilty in U.S. District Court to conspiring with Miller to conceal Miller’s tax liability from the Internal Revenue Service and to conspiring with Miller to commit wire fraud in a scheme to defraud Parker Hannifin. She is awaiting sentencing.
Miller is also charged with money laundering for using the funds he stole from Parker Hannifin Corporation to pay his tax liabilities to the IRS and to pay for his son’s tuition at Cornell University, according to the indictment.
Miller is also charged with tax evasion for calendar years 2009 to 2011. During the calendar year 2009, Miller received approximately $192,042 in taxable income, and owed approximately $30,568 in income tax; during the calendar year 2010, Miller received approximately $378,571 in taxable income, and owed approximately $93,745 in income tax; and during the calendar year 2011, Miller had received approximately $217,060 in taxable income and owed approximately $43,488.00 in income tax, according to the indictment.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations in Cleveland and is being handled by Assistant U.S. Attorney Christian H. Stickan.
If convicted, the defendants’ sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
John A. Miller, 53, was charged with one count of conspiracy to commit mail fraud, nine counts of mail fraud, three counts of tax evasion, and two counts of money laundering in connection with a scheme to defraud Parker Hannifin Corp.
“This defendant is accused of running a scheme in which he stole nearly $1.5 million from his employer,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “This type of self-dealing is not fair to workers or shareholders and will not be tolerated.”
Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Office, said: “Mr. Miller put a lot of effort into orchestrating and maintaining this seven year fraudulent scheme. Law enforcement will continue efforts to follow the money trial to ensure financial fraudsters are brought to justice.”
“Fraud and embezzlement schemes harm everyone,” said Kathy Enstrom, Special Agent in Charge, IRS-Cincinnati Field Office. “As we often see, the victims are not only the taxpayers, but also the individuals and entities who suffer financial harm.”
Miller worked at Parker Hannifin Corp. (PHC) for 25 years, where he directed work to outside contractors. In 2002, he approached his neighbor, Nancy Seaman, to do IT work for PHC, according to the indictment.
To do this, Seaman established Digital Design Services Inc., which she operated out of her residence in Solon. In 2004, Miller approached R.K. (not charged herein), who owned and operated a billing company in Pennsylvania that had previously been a subcontractor for PHC. Miller requested that R.K. and his billing company prepare invoices and billings for PHC, and R.K. agreed to do so, according to the indictment.
Beginning around 2004, Miller engaged in a fraudulent scheme to increase the payment he was receiving from PHC by using subcontractors Seaman and R.K. to funnel payments to himself. He did his despite having a salaried position at PHC and without the knowledge or consent of PHC, according to the indictment.
Miller did this by falsely inflating the invoices submitted by Digital Design and Seaman and by asking R.K. to process payments and to pay subcontractors as designated by Miller. Under this arrangement, Miller submitted invoices in the names of Miller’s wife and son, even though neither had done any of the work submitted in these invoices nor were they even aware that Miller was using their names to submit such billings to PHC, according to the indictment. Miller caused a loss to PHC of approximately $1,489,494 between 2004 through 2011, according to the indictment.
Seaman was aware that additional amounts, over and above her Digital Design billings, were being sent to her. Miller instructed Seaman to pay these additional funds to him in cash, less a 30 percent commission to Seaman, according to the indictment.
Seaman previously pleaded guilty in U.S. District Court to conspiring with Miller to conceal Miller’s tax liability from the Internal Revenue Service and to conspiring with Miller to commit wire fraud in a scheme to defraud Parker Hannifin. She is awaiting sentencing.
Miller is also charged with money laundering for using the funds he stole from Parker Hannifin Corporation to pay his tax liabilities to the IRS and to pay for his son’s tuition at Cornell University, according to the indictment.
Miller is also charged with tax evasion for calendar years 2009 to 2011. During the calendar year 2009, Miller received approximately $192,042 in taxable income, and owed approximately $30,568 in income tax; during the calendar year 2010, Miller received approximately $378,571 in taxable income, and owed approximately $93,745 in income tax; and during the calendar year 2011, Miller had received approximately $217,060 in taxable income and owed approximately $43,488.00 in income tax, according to the indictment.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations in Cleveland and is being handled by Assistant U.S. Attorney Christian H. Stickan.
If convicted, the defendants’ sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Thursday, November 7, 2013
Three Sentenced on Conspiracy, Insider Trading, and Tax Evasion Charges
ATLANTA—Douglas Ballard, Guy Mitchell, and Joseph Todd Foster have been sentenced for their roles in a conspiracy to commit bribery and bank fraud, insider trading, and tax evasion that occurred at the now-failed Integrity Bank.
“Our nation’s financial crisis was fueled in part by bank insiders and major borrowers whose greed led them to break the law,” said United States Attorney Sally Quillian Yates. “The conduct of these defendants, two of whom once held prominent positions in banking, helped pave a path to the shocking number of bank failures Georgia has experienced in the last 10 years.”
Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated, “The magnitude and impact of this financial institution based fraud case clearly illustrates why these types of criminal investigations are a priority matter at the FBI. We will continue to work with our various investigative partners to identify, investigate, and present for prosecution those individuals who betray their positions of trust within these institutions for the sake of personal greed.”
“The sentence today does not replace the losses that were incurred due to this scheme,” stated Veronica F. Hyman-Pillot, Special Agent in Charge with IRS-Criminal Investigation. “However, today’s sentence is a message to others that regardless of who you are, there are consequences for committing these types of crimes.”
“The FDIC OIG is pleased to join the U.S. Attorney’s Office and our law enforcement colleagues in announcing the sentencing of individuals whose criminal actions caused serious harm to Integrity Bank,” said Fred W. Gibson, Jr., Acting Inspector General, Federal Deposit Insurance Corporation. “It is particularly troubling to the FDIC OIG when a bank insider like Mr. Ballard, who is entrusted with operating the bank in a safe and sound manner, violates that trust and engages in activities that contribute to losses to the Deposit Insurance Fund. Mr. Mitchell’s sentencing should deter others who face similar opportunities to conspire with bank insiders in such criminal behavior. Today’s sentencing confirms that those who undermine the integrity of the financial system will be brought to justice and held accountable for their crimes.”
According to United States Attorney Yates, the charges, and other information presented in court: Ballard, a former executive vice president at the now-failed Integrity Bank, formerly headquartered in Alpharetta, Georgia, received more than $200,000 in cash bribes from Mitchell, the bank’s largest borrower. At the same time in 2006, when Ballard was being bribed, he allowed Mitchell to draw more than $7 million from a loan that was supposed to be used for renovation and construction at the Casa Madrona Hotel in Sausalito, California, despite the fact that no renovation or construction work was done. Instead, Mitchell used the money to buy an island in the Bahamas, travel by private jet, purchase Miami Heat basketball tickets, buy fancy jewelry and expensive cars, and purchase a mansion in Coconut Grove, Florida.
Mitchell received $20 million in additional business loans from Integrity Bank after the Casa Madrona loan proceeds were exhausted, and he continued to use some of that money for impermissible, personal expenses. Mitchell defaulted on the loans, and Integrity Bank eventually failed.
Foster was Integrity Bank’s vice president in charge of Risk Management. He sold nearly all his Integrity stock in August 2006 based on materially adverse information about the company that was not available to the public. Specifically, Foster knew that the bank was in an increasingly precarious position because of Mitchell’s financial difficulties and pending default.
Ballard, Mitchell, and Foster were sentenced by United States District Judge Julie Carnes.
Douglas Ballard, 44, was sentenced to serve two years and six months in federal prison, to be followed by three years of supervised release. He was ordered to pay restitution in the amount of $1,000,000 and a special assessment of $200. Ballard pled guilty to conspiracy to commit bank fraud and bribery and to income tax evasion on July 6, 2010.
Guy Mitchell, 54, of Miami, Florida, was sentenced to five years in prison, to be followed by three years of supervised release. He was ordered to pay restitution in the amount of $5,661,650, a fine of $250,000, and a special assessment of $100. Mitchell pled guilty to conspiring to commit bank fraud and bribery on July 1, 2013.
Joseph Todd Foster, 46, of Blakely, Georgia, was sentenced to three years of probation, and 120 hours of community service. He was also ordered to pay a $100 special assessment. Foster pled guilty to securities fraud on July 6, 2010.
This case was investigated by special agents of the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation Office of Inspector General, and the Internal Revenue Service.
Assistant United States Attorneys Douglas W. Gilfillan and Christopher C. Bly prosecuted the case.
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 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
“Our nation’s financial crisis was fueled in part by bank insiders and major borrowers whose greed led them to break the law,” said United States Attorney Sally Quillian Yates. “The conduct of these defendants, two of whom once held prominent positions in banking, helped pave a path to the shocking number of bank failures Georgia has experienced in the last 10 years.”
Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated, “The magnitude and impact of this financial institution based fraud case clearly illustrates why these types of criminal investigations are a priority matter at the FBI. We will continue to work with our various investigative partners to identify, investigate, and present for prosecution those individuals who betray their positions of trust within these institutions for the sake of personal greed.”
“The sentence today does not replace the losses that were incurred due to this scheme,” stated Veronica F. Hyman-Pillot, Special Agent in Charge with IRS-Criminal Investigation. “However, today’s sentence is a message to others that regardless of who you are, there are consequences for committing these types of crimes.”
“The FDIC OIG is pleased to join the U.S. Attorney’s Office and our law enforcement colleagues in announcing the sentencing of individuals whose criminal actions caused serious harm to Integrity Bank,” said Fred W. Gibson, Jr., Acting Inspector General, Federal Deposit Insurance Corporation. “It is particularly troubling to the FDIC OIG when a bank insider like Mr. Ballard, who is entrusted with operating the bank in a safe and sound manner, violates that trust and engages in activities that contribute to losses to the Deposit Insurance Fund. Mr. Mitchell’s sentencing should deter others who face similar opportunities to conspire with bank insiders in such criminal behavior. Today’s sentencing confirms that those who undermine the integrity of the financial system will be brought to justice and held accountable for their crimes.”
According to United States Attorney Yates, the charges, and other information presented in court: Ballard, a former executive vice president at the now-failed Integrity Bank, formerly headquartered in Alpharetta, Georgia, received more than $200,000 in cash bribes from Mitchell, the bank’s largest borrower. At the same time in 2006, when Ballard was being bribed, he allowed Mitchell to draw more than $7 million from a loan that was supposed to be used for renovation and construction at the Casa Madrona Hotel in Sausalito, California, despite the fact that no renovation or construction work was done. Instead, Mitchell used the money to buy an island in the Bahamas, travel by private jet, purchase Miami Heat basketball tickets, buy fancy jewelry and expensive cars, and purchase a mansion in Coconut Grove, Florida.
Mitchell received $20 million in additional business loans from Integrity Bank after the Casa Madrona loan proceeds were exhausted, and he continued to use some of that money for impermissible, personal expenses. Mitchell defaulted on the loans, and Integrity Bank eventually failed.
Foster was Integrity Bank’s vice president in charge of Risk Management. He sold nearly all his Integrity stock in August 2006 based on materially adverse information about the company that was not available to the public. Specifically, Foster knew that the bank was in an increasingly precarious position because of Mitchell’s financial difficulties and pending default.
Ballard, Mitchell, and Foster were sentenced by United States District Judge Julie Carnes.
Douglas Ballard, 44, was sentenced to serve two years and six months in federal prison, to be followed by three years of supervised release. He was ordered to pay restitution in the amount of $1,000,000 and a special assessment of $200. Ballard pled guilty to conspiracy to commit bank fraud and bribery and to income tax evasion on July 6, 2010.
Guy Mitchell, 54, of Miami, Florida, was sentenced to five years in prison, to be followed by three years of supervised release. He was ordered to pay restitution in the amount of $5,661,650, a fine of $250,000, and a special assessment of $100. Mitchell pled guilty to conspiring to commit bank fraud and bribery on July 1, 2013.
Joseph Todd Foster, 46, of Blakely, Georgia, was sentenced to three years of probation, and 120 hours of community service. He was also ordered to pay a $100 special assessment. Foster pled guilty to securities fraud on July 6, 2010.
This case was investigated by special agents of the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation Office of Inspector General, and the Internal Revenue Service.
Assistant United States Attorneys Douglas W. Gilfillan and Christopher C. Bly prosecuted the case.
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 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.
Tuesday, November 5, 2013
Bergen County Man Sentenced to 33 Months in Prison for His Role in $3.5 Million Foreign Currency Investment Ponzi Scheme
CAMDEN, NJ—A Bergen County, New Jersey man claiming to run New Jersey-based hedge funds using a secret computer program to invest in foreign currency was sentenced today to 33 months in prison for his role in defrauding victims of more than $3.5 million, U.S. Attorney Paul J. Fishman announced.
Carmelo Provenzano, 31, of Garfield, New Jersey, and co-conspirator Daniel Dragan, 43, of Lebanon, New Jersey, previously pleaded guilty to separate informations charging them with wire fraud conspiracy before U.S. District Judge Jerome B. Simandle in Camden federal court. A third co-conspirator, George Sepero, 40, of Glen Rock, New Jersey, previously pleaded guilty to a superseding information charging him with wire fraud conspiracy, wire fraud, and tax evasion before Judge Simandle.
Dragan will be sentenced in December 2013. Sepero was sentenced to 100 months in prison on October 18, 2013.
According to documents filed in this and other cases and statements made in court:
Beginning in 2009, Dragan, Provenzano, and Sepero claimed to run a series of hedge funds in New Jersey, luring investors with the prospect of extraordinary profits in foreign currency trading. The defendants made numerous misrepresentations and omissions to induce their victims to invest in Caxton Capital Management and CCP Pro Consulting Inc. Dragan, Provenzano, and Sepero claimed they controlled a proprietary computer algorithm for trading foreign currencies; that they had used the algorithm to achieve returns of more than 170 percent in the prior two years; and that any investment funds would be highly liquid and could be withdrawn on a few days’ notice.
Relying on these and other misrepresentations, investors sent the defendants more than $3.5 million. Dragan, Provenzano, and Sepero invested little or no money in foreign currency or any other investment vehicle, instead diverting the vast majority of victims’ investments to pay prior victims in Ponzi-scheme style and to finance extravagant personal expenditures.
Dragan, Provenzano, and Sepero spent investor money on credit card bills averaging $25,000 per month; bar tabs of $18,241—including a $4,000 tip—and $14,034 on separate nights at Drai’s Hollywood nightclub in Los Angeles; and flights to Paris and elsewhere. Provenzano bought a luxury Range Rover Sport SUV costing more than $71,000 with a down payment of more than $65,000.
The defendants furthered the scheme by emailing victims fake statements showing their principal had been invested in the foreign currency markets and was achieving substantial results. Many of these e-mails were purportedly sent by an individual named “Mel Tannenbaum,” a fictional character of Provenzano’s invention.
The defendants also e-mailed to several investors screen shots of a computer-based trading program, which they claimed represented the investors’ funds being traded in the currency markets. In reality, the shots reflected trading in fictional accounts set up by the conspirators to dupe investors.
In addition to the prison term, Judge Simandle sentenced Provenzano to serve three years of supervised release and ordered him to pay restitution of $4,508,949.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s sentence. He also thanked the Commodity Futures Trading Commission’s New York Regional Office, under the direction of David Meister.
The government is represented by Assistant U.S. Attorneys Christopher Kelly and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit and Evan Weitz of the Office’s Asset Forfeiture Unit in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established 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 nearly 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, please visit www.stopfraud.gov.
Carmelo Provenzano, 31, of Garfield, New Jersey, and co-conspirator Daniel Dragan, 43, of Lebanon, New Jersey, previously pleaded guilty to separate informations charging them with wire fraud conspiracy before U.S. District Judge Jerome B. Simandle in Camden federal court. A third co-conspirator, George Sepero, 40, of Glen Rock, New Jersey, previously pleaded guilty to a superseding information charging him with wire fraud conspiracy, wire fraud, and tax evasion before Judge Simandle.
Dragan will be sentenced in December 2013. Sepero was sentenced to 100 months in prison on October 18, 2013.
According to documents filed in this and other cases and statements made in court:
Beginning in 2009, Dragan, Provenzano, and Sepero claimed to run a series of hedge funds in New Jersey, luring investors with the prospect of extraordinary profits in foreign currency trading. The defendants made numerous misrepresentations and omissions to induce their victims to invest in Caxton Capital Management and CCP Pro Consulting Inc. Dragan, Provenzano, and Sepero claimed they controlled a proprietary computer algorithm for trading foreign currencies; that they had used the algorithm to achieve returns of more than 170 percent in the prior two years; and that any investment funds would be highly liquid and could be withdrawn on a few days’ notice.
Relying on these and other misrepresentations, investors sent the defendants more than $3.5 million. Dragan, Provenzano, and Sepero invested little or no money in foreign currency or any other investment vehicle, instead diverting the vast majority of victims’ investments to pay prior victims in Ponzi-scheme style and to finance extravagant personal expenditures.
Dragan, Provenzano, and Sepero spent investor money on credit card bills averaging $25,000 per month; bar tabs of $18,241—including a $4,000 tip—and $14,034 on separate nights at Drai’s Hollywood nightclub in Los Angeles; and flights to Paris and elsewhere. Provenzano bought a luxury Range Rover Sport SUV costing more than $71,000 with a down payment of more than $65,000.
The defendants furthered the scheme by emailing victims fake statements showing their principal had been invested in the foreign currency markets and was achieving substantial results. Many of these e-mails were purportedly sent by an individual named “Mel Tannenbaum,” a fictional character of Provenzano’s invention.
The defendants also e-mailed to several investors screen shots of a computer-based trading program, which they claimed represented the investors’ funds being traded in the currency markets. In reality, the shots reflected trading in fictional accounts set up by the conspirators to dupe investors.
In addition to the prison term, Judge Simandle sentenced Provenzano to serve three years of supervised release and ordered him to pay restitution of $4,508,949.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s sentence. He also thanked the Commodity Futures Trading Commission’s New York Regional Office, under the direction of David Meister.
The government is represented by Assistant U.S. Attorneys Christopher Kelly and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit and Evan Weitz of the Office’s Asset Forfeiture Unit in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established 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 nearly 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, please visit www.stopfraud.gov.
Thursday, September 19, 2013
Two Men Sentenced to Prison for Roles in Large-Scale Identity Theft Ring and Tax Evasion
NEWARK, NJ—Two men were sentenced to prison terms today for their respective roles in a large-scale and sophisticated identity theft scheme, U.S. Attorney Paul J. Fishman announced.
Sang-Kyu Seo, 63, of Palisades Park, New Jersey, was sentenced to three years in prison, and Young-Woo Ji, 39, Bayside, New York, was sentenced to 65 months in prison by U.S. District Judge Katharine S. Hayden in Newark federal court.
Seo previously pleaded guilty before Judge Hayden to a five-count information that charged him with conspiracy to unlawfully produce identification documents and false identification documents, aggravated identity theft, conspiracy to commit wire fraud, conspiracy to commit bank fraud, and tax evasion.
Ji previously pleaded guilty before Judge Hayden to an information charging him with conspiracy to commit wire fraud affecting financial institutions and bank fraud, aggravated identity theft, and false claims.
According to documents filed in this case and statements made in court:
The Seo Conspiracy
Seo was the owner and operator of Hang Jin Yi Inc., d/b/a Hwangini, a salon located in North Bergen, New Jersey, and Pier 7 Corporation, a purported small business located in Palisades Park. Seo conspired with Sang-Hyun Park, a/k/a “Jimmy,” and others to obtain a Social Security card beginning with the prefix “586” for another individual. These 586 Social Security cards were issued by the United States to individuals, usually from China, who were employed in American territories, such as Guam. Park is alleged to have been the leader of a criminal organization headquartered in Bergen County, New Jersey. that obtained, brokered, and sold identity documents to customers for the purpose of committing credit card fraud, bank fraud, tax fraud, and other crimes. Park pleaded guilty on January 9, 2012, to his role in the enterprise and is awaiting sentencing.
The Park Criminal Enterprise engaged in the fraudulent “build up” of credit scores associated with the Chinese identities. They did so by adding the Chinese identity as an authorized user to the credit card accounts of various coconspirators who received a fee for this service—members of the enterprise’s credit build-up teams. By attaching the Chinese identities to these existing credit card accounts, the teams increased the credit scores associated with the Chinese identities to between 700 and 800. The members of the build-up teams knew neither the real person to whom the identity belonged nor virtually any of the customers who had purchased the identities.
After building up the credit associated with these identities, Park and his conspirators directed, coached, and assisted the customers in opening bank accounts and obtaining credit cards. Park and his conspirators then used these accounts and credit cards to commit fraud. In particular, Park relied on several collusive merchants who possessed credit card processing, or swipe, machines. For a fee, known as a “kkang fee,” these collusive merchants charged the fraudulently obtained credit cards, although no transaction took place. After receiving the money into their merchant accounts from the credit cards related to these fraudulent transactions, the collusive merchants gave the money to Park and his coconspirators, minus their kkang fee.
Seo admitted that he obtained a 586 Social Security card and counterfeit driver’s licenses through Park for a family member, who then used this identity to “bust out” credit cards.
Seo also admitted that he gave his corporate and personal credit cards to Park for the purpose of busting out these maxed out credit cards. In furtherance of this conspiracy, Park and his conspirators issued worthless checks, drawn on bank accounts that had been established using the 586 identities, as payment toward the balances on Seo’s credit cards. Before the banks and credit card companies realized that these checks were bogus, Park and his conspirators charged Seo’s credit cards through collusive merchants or used them to purchase merchandise.
Seo also admitted that in mid-2007, with the assistance of a loan broker, he fraudulently obtained a $100,000 commercial loan on behalf of Pier 7. Seo admitted that he and the loan broker made false statements to obtain the loan, including falsely representing that his business’ annual revenue was approximately $620,000.
Seo admitted that he committed tax evasion by issuing checks to himself and others, representing income derived through the operation of Hwangini and then failing to report this income on his personal tax returns. Seo admitted that on or about April 15, 2008, he filed an individual income tax return for tax year 2007. This return declared that his taxable income for calendar year 2007 was approximately $197, and the amount of tax due and owing was approximately $19. Seo admitted that this return failed to include $304,848 in additional taxable income that he had received in 2007, having an additional tax of $81,643. He was arrested on September 16, 2010, and released on $250,000 bail.
The Ji Conspiracy
Ji conspired with Park and others to defraud banks, credit card companies, and other lenders. Ji admitted that in February 2008, he traveled to Illinois and used a 586 Social Security card belonging to a person with the initials F.C. to fraudulently obtain driver’s licenses.
Ji admitted that he used the F.C. identity to fraudulently obtain credit cards. He then used these credit cards, in the name of F.C., to fraudulently build up credit scores and credit histories for Park’s customers who had obtained 586 identities from the Park Criminal Enterprise.
Ji also admitted that he used the F.C. identity to establish a merchant account for ZZ Entertainment Inc., a completely fictitious business. By establishing this account, Ji obtained a credit card processing machine and thereafter served as a “collusive merchant” for the Park Criminal Enterprise. Ji acknowledged that between October 5, 2008 and October 20, 2008, he charged $50,000 in fraudulent credit card charges through his ZZ Entertainment Corp. account and then shared portions of this fraud with Park. In total, Ji caused more than $400,000 in financial losses to banks, credit card companies and others.
Ji admitted that he used the 586 identities that he had obtained from Park to file fraudulent tax returns with the IRS. Ji admitted that he used these identities, together with fraudulent W-2 Forms, to claim hundreds of thousands of dollars in tax refunds. He was arrested on September 16, 2010, and released on a $250,000 bail.
In addition to the prison term, Judge Hayden sentenced Seo to three years of supervised release and ordered him to pay $1.2 million in restitution. She sentenced Ji to three years of supervised release and ordered him to pay $187,874 in restitution.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; U.S. Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees; the Bergen County Prosecutor’s Office, under the direction of Prosecutor John L. Molinelli; and the Office’s Chief of Detectives Steven Cucciniello, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.
As for other members of the Park Criminal Enterprise, the charges and allegations contained in the complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Sang-Kyu Seo, 63, of Palisades Park, New Jersey, was sentenced to three years in prison, and Young-Woo Ji, 39, Bayside, New York, was sentenced to 65 months in prison by U.S. District Judge Katharine S. Hayden in Newark federal court.
Seo previously pleaded guilty before Judge Hayden to a five-count information that charged him with conspiracy to unlawfully produce identification documents and false identification documents, aggravated identity theft, conspiracy to commit wire fraud, conspiracy to commit bank fraud, and tax evasion.
Ji previously pleaded guilty before Judge Hayden to an information charging him with conspiracy to commit wire fraud affecting financial institutions and bank fraud, aggravated identity theft, and false claims.
According to documents filed in this case and statements made in court:
The Seo Conspiracy
Seo was the owner and operator of Hang Jin Yi Inc., d/b/a Hwangini, a salon located in North Bergen, New Jersey, and Pier 7 Corporation, a purported small business located in Palisades Park. Seo conspired with Sang-Hyun Park, a/k/a “Jimmy,” and others to obtain a Social Security card beginning with the prefix “586” for another individual. These 586 Social Security cards were issued by the United States to individuals, usually from China, who were employed in American territories, such as Guam. Park is alleged to have been the leader of a criminal organization headquartered in Bergen County, New Jersey. that obtained, brokered, and sold identity documents to customers for the purpose of committing credit card fraud, bank fraud, tax fraud, and other crimes. Park pleaded guilty on January 9, 2012, to his role in the enterprise and is awaiting sentencing.
The Park Criminal Enterprise engaged in the fraudulent “build up” of credit scores associated with the Chinese identities. They did so by adding the Chinese identity as an authorized user to the credit card accounts of various coconspirators who received a fee for this service—members of the enterprise’s credit build-up teams. By attaching the Chinese identities to these existing credit card accounts, the teams increased the credit scores associated with the Chinese identities to between 700 and 800. The members of the build-up teams knew neither the real person to whom the identity belonged nor virtually any of the customers who had purchased the identities.
After building up the credit associated with these identities, Park and his conspirators directed, coached, and assisted the customers in opening bank accounts and obtaining credit cards. Park and his conspirators then used these accounts and credit cards to commit fraud. In particular, Park relied on several collusive merchants who possessed credit card processing, or swipe, machines. For a fee, known as a “kkang fee,” these collusive merchants charged the fraudulently obtained credit cards, although no transaction took place. After receiving the money into their merchant accounts from the credit cards related to these fraudulent transactions, the collusive merchants gave the money to Park and his coconspirators, minus their kkang fee.
Seo admitted that he obtained a 586 Social Security card and counterfeit driver’s licenses through Park for a family member, who then used this identity to “bust out” credit cards.
Seo also admitted that he gave his corporate and personal credit cards to Park for the purpose of busting out these maxed out credit cards. In furtherance of this conspiracy, Park and his conspirators issued worthless checks, drawn on bank accounts that had been established using the 586 identities, as payment toward the balances on Seo’s credit cards. Before the banks and credit card companies realized that these checks were bogus, Park and his conspirators charged Seo’s credit cards through collusive merchants or used them to purchase merchandise.
Seo also admitted that in mid-2007, with the assistance of a loan broker, he fraudulently obtained a $100,000 commercial loan on behalf of Pier 7. Seo admitted that he and the loan broker made false statements to obtain the loan, including falsely representing that his business’ annual revenue was approximately $620,000.
Seo admitted that he committed tax evasion by issuing checks to himself and others, representing income derived through the operation of Hwangini and then failing to report this income on his personal tax returns. Seo admitted that on or about April 15, 2008, he filed an individual income tax return for tax year 2007. This return declared that his taxable income for calendar year 2007 was approximately $197, and the amount of tax due and owing was approximately $19. Seo admitted that this return failed to include $304,848 in additional taxable income that he had received in 2007, having an additional tax of $81,643. He was arrested on September 16, 2010, and released on $250,000 bail.
The Ji Conspiracy
Ji conspired with Park and others to defraud banks, credit card companies, and other lenders. Ji admitted that in February 2008, he traveled to Illinois and used a 586 Social Security card belonging to a person with the initials F.C. to fraudulently obtain driver’s licenses.
Ji admitted that he used the F.C. identity to fraudulently obtain credit cards. He then used these credit cards, in the name of F.C., to fraudulently build up credit scores and credit histories for Park’s customers who had obtained 586 identities from the Park Criminal Enterprise.
Ji also admitted that he used the F.C. identity to establish a merchant account for ZZ Entertainment Inc., a completely fictitious business. By establishing this account, Ji obtained a credit card processing machine and thereafter served as a “collusive merchant” for the Park Criminal Enterprise. Ji acknowledged that between October 5, 2008 and October 20, 2008, he charged $50,000 in fraudulent credit card charges through his ZZ Entertainment Corp. account and then shared portions of this fraud with Park. In total, Ji caused more than $400,000 in financial losses to banks, credit card companies and others.
Ji admitted that he used the 586 identities that he had obtained from Park to file fraudulent tax returns with the IRS. Ji admitted that he used these identities, together with fraudulent W-2 Forms, to claim hundreds of thousands of dollars in tax refunds. He was arrested on September 16, 2010, and released on a $250,000 bail.
In addition to the prison term, Judge Hayden sentenced Seo to three years of supervised release and ordered him to pay $1.2 million in restitution. She sentenced Ji to three years of supervised release and ordered him to pay $187,874 in restitution.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; U.S. Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees; the Bergen County Prosecutor’s Office, under the direction of Prosecutor John L. Molinelli; and the Office’s Chief of Detectives Steven Cucciniello, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.
As for other members of the Park Criminal Enterprise, the charges and allegations contained in the complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Friday, September 13, 2013
Bergen County Resident Pleads Guilty to His Role in a Large-Scale Identity Theft Ring and Tax Evasion
NEWARK, NJ—A Bergen County, New Jersey man today admitted his role in a large-scale and sophisticated identity theft scheme, U.S. Attorney Paul J. Fishman announced.
Matthew J. Kang, 44, Englewood Cliffs, New Jersey, pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with conspiracy to unlawfully produce identification documents and false identification documents (count one), conspiracy to commit wire fraud affecting financial institutions and bank fraud (count two), aggravated identity theft (count three), conspiracy to commit bank fraud (count four), and tax evasion (count five).
According to documents filed in this case and statements made in court:
Kang, an independent loan broker, conspired with Sang-Hyun Park, a/k/a “Jimmy,” and others to obtain a Social Security card beginning with the prefix “586.” These 586 Social Security cards were issued by the United States to individuals, usually from China, who were employed in American territories, such as Guam. Park was the leader of a criminal organization, identified in court papers as “the Park criminal enterprise,” headquartered in Bergen County, that obtained, brokered, and sold identity documents to customers for the purpose of committing credit card fraud, bank fraud, tax fraud, and other crimes. Park pleaded guilty on January 9, 2012, related to his role in the enterprise and is pending sentencing.
The Park criminal enterprise engaged in the fraudulent “build up” of credit scores associated with the Chinese identities. They did so by adding the Chinese identity as an authorized user to the credit card accounts of various conspirators who received a fee for this service—members of the enterprise’s credit build-up teams. By attaching the Chinese identities to these existing credit card accounts, the teams increased the credit scores associated with the Chinese identities. The members of the build-up teams knew neither the real person to whom the identity belonged nor virtually any of the customers who had purchased the identities.
After building the credit scores associated with these identities, Park and his conspirators directed, coached, and assisted his customers to open bank accounts and obtain credit cards. Park and his conspirators then used these accounts and credit cards to commit fraud. Park relied on several collusive merchants who possessed credit card processing, or swipe, machines. For a fee, known as a “kkang fee,” these collusive merchants charged the fraudulently obtained credit cards, although no transaction took place. After receiving the money into their merchant accounts from the credit card related to these fraudulent transactions, the collusive merchants gave the money to Park and his conspirators, minus their kkang fee.
Kang admitted that he obtained and brokered 586 Social Security cards and counterfeit driver’s licenses through Park for others. Kang further admitted that as a member of a “build-up” team, he fraudulently established credit histories and scores for customers using these 586 identities. Kang and his conspirators used these fraudulently obtained identities to obtain credit cards and to obtain bank loans. Kang also admitted that he brokered numerous commercial loans through false statements and documents. Kang and his conspirators caused more than $4 million in financial losses.
Kang admitted that he committed tax evasion by receiving income, including commission and fees from loans he had brokered, funneling this income through his corporate accounts and then using these funds for personal expenses. Kang admitted that around April 15, 2008, he filed an individual income tax return for tax year 2007 that declared that his taxable income for calendar year 2007 was $73,741. Kang admitted that this return failed to include $74,647 in additional taxable income that he had received in 2007, thus having an additional tax of $28,705 due to the United States.
Kang faces the following statutory maximums: five years in prison (count one); 30 years in prison (count two and four); two years in prison, mandatory minimum (count three), and five years’ imprisonment (count five). Sentencing is scheduled for January 6, 2014. He was arrested on September 16, 2010, and released on $250,000 bail.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; the Department of Homeland Security’s Immigration and Customs Enforcement Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees; and the Bergen County Prosecutor’s Office, under the direction of Prosecutor John L. Molinelli, and the Office’s Chief of Detectives Steven Cucciniello for the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorneys Anthony Moscato of the U.S. Attorney’s Office Organized Crime/Gangs Unit and Jane Yoon of the Healthcare and Government Fraud Unit in Newark.
As for other members of the Park Criminal Enterprise, the charges and allegations contained in the complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Matthew J. Kang, 44, Englewood Cliffs, New Jersey, pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with conspiracy to unlawfully produce identification documents and false identification documents (count one), conspiracy to commit wire fraud affecting financial institutions and bank fraud (count two), aggravated identity theft (count three), conspiracy to commit bank fraud (count four), and tax evasion (count five).
According to documents filed in this case and statements made in court:
Kang, an independent loan broker, conspired with Sang-Hyun Park, a/k/a “Jimmy,” and others to obtain a Social Security card beginning with the prefix “586.” These 586 Social Security cards were issued by the United States to individuals, usually from China, who were employed in American territories, such as Guam. Park was the leader of a criminal organization, identified in court papers as “the Park criminal enterprise,” headquartered in Bergen County, that obtained, brokered, and sold identity documents to customers for the purpose of committing credit card fraud, bank fraud, tax fraud, and other crimes. Park pleaded guilty on January 9, 2012, related to his role in the enterprise and is pending sentencing.
The Park criminal enterprise engaged in the fraudulent “build up” of credit scores associated with the Chinese identities. They did so by adding the Chinese identity as an authorized user to the credit card accounts of various conspirators who received a fee for this service—members of the enterprise’s credit build-up teams. By attaching the Chinese identities to these existing credit card accounts, the teams increased the credit scores associated with the Chinese identities. The members of the build-up teams knew neither the real person to whom the identity belonged nor virtually any of the customers who had purchased the identities.
After building the credit scores associated with these identities, Park and his conspirators directed, coached, and assisted his customers to open bank accounts and obtain credit cards. Park and his conspirators then used these accounts and credit cards to commit fraud. Park relied on several collusive merchants who possessed credit card processing, or swipe, machines. For a fee, known as a “kkang fee,” these collusive merchants charged the fraudulently obtained credit cards, although no transaction took place. After receiving the money into their merchant accounts from the credit card related to these fraudulent transactions, the collusive merchants gave the money to Park and his conspirators, minus their kkang fee.
Kang admitted that he obtained and brokered 586 Social Security cards and counterfeit driver’s licenses through Park for others. Kang further admitted that as a member of a “build-up” team, he fraudulently established credit histories and scores for customers using these 586 identities. Kang and his conspirators used these fraudulently obtained identities to obtain credit cards and to obtain bank loans. Kang also admitted that he brokered numerous commercial loans through false statements and documents. Kang and his conspirators caused more than $4 million in financial losses.
Kang admitted that he committed tax evasion by receiving income, including commission and fees from loans he had brokered, funneling this income through his corporate accounts and then using these funds for personal expenses. Kang admitted that around April 15, 2008, he filed an individual income tax return for tax year 2007 that declared that his taxable income for calendar year 2007 was $73,741. Kang admitted that this return failed to include $74,647 in additional taxable income that he had received in 2007, thus having an additional tax of $28,705 due to the United States.
Kang faces the following statutory maximums: five years in prison (count one); 30 years in prison (count two and four); two years in prison, mandatory minimum (count three), and five years’ imprisonment (count five). Sentencing is scheduled for January 6, 2014. He was arrested on September 16, 2010, and released on $250,000 bail.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; the Department of Homeland Security’s Immigration and Customs Enforcement Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees; and the Bergen County Prosecutor’s Office, under the direction of Prosecutor John L. Molinelli, and the Office’s Chief of Detectives Steven Cucciniello for the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorneys Anthony Moscato of the U.S. Attorney’s Office Organized Crime/Gangs Unit and Jane Yoon of the Healthcare and Government Fraud Unit in Newark.
As for other members of the Park Criminal Enterprise, the charges and allegations contained in the complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
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