FBI ANNOUNCES OPERATION CONTINUED ACTION
TARGETING FINANCIAL INSTITUTION FRAUD
Washington, D.C. - The Federal Bureau of Investigation (FBI) today
announced action against 205 individuals in the takedown of the largest
nationwide enforcement operation in FBI history directed at organized
groups and individuals engaged in financial institution fraud.
The ongoing initiative,
known as Operation Continued Action, "reflects
the FBI's mission and effort to identify, target, disrupt and dismantle
criminal organizations and individual operations engaged in fraud schemes
that target our nation's financial institutions," said Assistant
Director Chris Swecker, FBI Criminal Investigative Division.
Operation Continued Action is targeting a variety of fraud schemes
to include mortgage and loan fraud, insider fraud, financial institution
failure investigations, identity theft, check fraud and check kiting.
Operation Continued Action is representative criminal investigations
ongoing in 37 states nationwide of the more than 5,000 cases by the
FBI targeting organized criminal groups and individuals engaged in
significant financial institution fraud.
This initiative involved the coordination of 47 FBI Field Offices,
the Criminal Division of the Department of Justice, participating United
States Attorney's Offices, federal, state and local law enforcement
agencies and financial institution regulatory agencies that work with
the FBI on a daily basis in combating financial institution fraud.
From its inception in August 2004, until today, Operation Continued
Action investigators have identified more than 245 subjects in 158
investigations. More than 151 indictments, informations and complaints
have been filed to date. These charges have thus far led to more than
144 arrests, convictions, sentences and millions of dollars in forfeiture
and restitution. The cases included in today's announcement represent
potential losses due to fraudulent activities against financial institutions
in excess of $3 billions.
From 2000 to the present, the FBI's investigations in the financial
institution fraud arena have resulted in more than 11,466 indictments,
11,362 convictions and approximately $8.1 billion in restitution orders.
"The FBI continues to be the primary law enforcement agency in
protecting our nation's financial institutions and the investigation
of major fraud is a high priority," said AD Swecker.
Some of the actions filed in districts throughout the country include:
MORTGAGE FRAUD
CHARLOTTE DIVISION
OPERATION CLEAN DEED: On 09/16/2004, informations were filed in U.S.
District Court, Western District of North Carolina, charging six individuals
with bank fraud for their roles in a multi-million dollar mortgage
fraud. In November 2002, an FBI Undercover Operation was initiated
utilizing a cooperating witness to introduce undercover FBI agents
into seven organizations involved in a multi-million mortgage fraud
ring. Investigation led to the identification of fraudulent loans which
exposed financial institutions and mortgage companies to potential
losses of $130 million.
JACKSONVILLE DIVISION
REO FLIPWAGON: In December 2003, the FBI initiated an undercover operation
to address the massive amount of mortgage fraud in the Jacksonville
area. On 09/16/2004, as a result of this investigation, seven search
warrants were executed and two arrests were made. Mortgage broker J.R.
Parker, and closing attorney Dale Beardsley, were arrested, via complaint,
charging them with bank fraud for their role in this alleged scheme.
CHICAGO DIVISION
JEFFREY GROSSMAN; DONALD GRAUER; dba THE CHURCHILL GROUP: On 9/9/2004,
Jeffrey Grossman entered a guilty plea in U.S. District Court. On 08/30/2004,
Donald Grauer entered a guilty plea in U.S. District Court to bank
fraud charges. Grauer and his business partner Grossman, conducted
business as the Churchill Group, operating numerous real estate developments
in the Chicago area. It is alleged that in the course of constructing
two condominium complexes, they submitted numerous fraudulent vouchers
as part of their monthly draw requests to Oak Brook Bank and Fifth
Third Bank. Losses due to their alleged activities exceed $15 million.
Both subjects have been charged with bank fraud and false statements.
DENVER DIVISION
GERALD SMALL, ET AL, dba AMERIFUNDING: On 08/25/2004, Gerald Small,
Kelli Burkhalter-Small, Charles Winnett, Chad Heinrich, and Robert
Sigg, were arraigned in U.S. District Court, District of Colorado.
These subjects were charged with bank fraud stemming from their alleged
roles in a scheme to obtain loans employing stolen identities, and
then utilizing these loan proceeds to purchase substandard houses which
were used to perpetuate this scheme. Losses attributable to this alleged
scheme exceed $19 million.
KANSAS CITY DIVISION
BRENT BARBER, dba MIDTOWNE RESTORATION, L.L.C.: On 08/16/2004, Chauncey
Joseph Calvert, Aronda Lynn Nicodemus, and Roderick Neil Criss were
arraigned in U.S. District Court, Western District of Missouri, for
their alleged role in a mortgage fraud ring which utilized straw
purchasers to purchase property which was then foreclosed upon. This
scenario was repeated approximately 300 times, resulting in losses
in excess of $15 million. The alleged leader of this organization,
Brent Barber, was arrested by agents of the FBI, Internal Revenue
Service, and the Department of Housing and Urban Development Office
of Inspector General.
LOAN FRAUD
NEW YORK DIVISION
ALLIED DEALS, INC.: On 09/09/2004, based upon a provisional arrest
warrant obtained following his indictment in the Southern District
of New York, Gaya Gayarinth, an attorney for Allied Deals, Inc., was
arrested in Bangalore, India. On 8/25/2004, Josielynn Salumbides, was
sentenced to 63 months in jail and ordered to make restitution in the
amount of $683,632,800; Manoj Nijhawan, was sentenced to 41 months
in jail and ordered to make restitution in the amount of $683,632,800;
and Kaushik Amin was sentenced to 18 months in jail and ordered to
make restitution in the amount of $2,211,858. This case was initiated
based upon information from a syndicate of U.S. financial institutions
alleging Allied Deals, Inc., had executed a world-wide fraud scheme
through the pledging of fraudulent bills of lading to obtain credit.
This scheme resulted in $500 million in losses to U.S. financial institutions,
as well as an additional $500 million in losses to financial institutions
in the United Kingdom. To date, 14 individuals have been convicted
in this matter.
CHECK KITING
ALBANY DIVISION
ADAM WEITSMAN: On 09/03/2004,
Adam Weitsman was sentenced to 1 year and 1 day in prison, and agreed
to asset forfeiture of $1 million.
Weitsman, the operator of a recycling business in Binghamton, New York,
wrote in excess of $1 billion in worthless checks over a 15-month period
to perpetuate a check kite. These checks were deposited by Weitsman
at Partners Bank & Trust, Binghamton, New York, and Community Bank,
Olean, New York, as a means of obtaining cash to meet the operational
needs of his business.
CLEVELAND DIVISION
STEVE MYERS, dba STEVE MYERS AUTO SALES: On 09/10/2004, Tom Winkle
was sentenced to 78 months in prison and ordered to make restitution
in the amount of $8,054,000. On 8/23/2004, Myers was sentenced to 60
months in prison and ordered to make restitution in the amount of $8,054,000.
Myers, the owner of Steve Myers Auto Sales, teamed with Winkle, the
owner of Tom Winkle Chevrolet, to carry out a check kite which resulted
in the deposit of more than $495 million in bad checks to banks in
the Lima, Ohio area. This check kiting scheme inflicted losses of approximately
$8 million and contributed to the failure of the Oakwood Savings Bank.
NEW YORK DIVISION
DAVID SCHICK: On 08/18/2004, David Schick was sentenced to 97 months
in federal prison for his scheme to defraud several banks through
a check kiting scheme. In this scheme, Schick funneled worthless
checks through a network of shell corporations he set up. Losses
attributable to this scheme were $2.2 million.
IDENTITY THEFT
DETROIT DIVISION
RICHARD BURLEY; TIMOTHY
CLARK; KHARY LAWSON; THEODORE WASHINGTON, also known as "CASH MONEY BOYS":
On 09/01/2004, these subjects were charged in U.S. District Court,
Eastern District of Michigan,
on bank fraud and conspiracy charges for their alleged roles in an
Identity Theft Ring which derived profits of more than $2 million.
This indictment was the result of the investigative efforts of the
Detroit Metro Identity Fraud Task Force (DMIFTF). The DMIFTF, comprises
agents from the FBI, U.S. Postal Inspection Service, United States
Secret Service, the Michigan State Police and several local police
departments. Since its inception in 1999, the DMIFTF has accounted
for more than 100 convictions for identity theft related crimes.
NEW YORK
PHILIP J. CUMMINGS; FORD MOTOR CREDIT - VICTIM: On 09/14/2004, Philip
J. Cummings, former Telecommunications Data, Inc., technical support
representative, pled guilty in U.S. District Court, Southern District
of New York, to one count of Title (T) 18, United States Code (USC),
Section 1343, Wire Fraud, one count of T18, USC, Section 1028, Fraud
Related to Identification Documents and Information and one count of
T18, USC, Section 371, Conspiracy, for his participation in a massive
scheme to steal the identities of individuals which defrauded financial
institutions of more than $11 million. It was alleged that Cummings
stole the passwords and access codes of Ford Motor Credit and other
financial companies, to access Equifax, Trans Union, and Experian credit
report records and downloaded credit report information on 30,000 individuals.
These credit reports were allegedly sold to a group of co-conspirators.
To date, this is the largest identity theft case.
FINANCIAL INSTITUTION FAILURE
SALT LAKE CITY DIVISION
RANDY K. MCARTHUR, DEAN JOHNSON, BANK OF EPHRAIM - VICTIM: On 09/13/2004,
Randy McArthur, Supervisor of Tellers, Bank of Ephraim, Ephraim, Utah,
and his associate, Dean Johnson, entered guilty pleas to bank fraud
charges for their alleged roles in a $5 million embezzlement scheme
which contributed to the failure of the Bank of Ephraim. This embezzlement
took place over a 20-year period.
INTERNAL THEFTS
SAN DIEGO DIVISION
CYNTHIA REYNOLDS, NORTH ISLAND FINANCIAL CREDIT UNION - VICTIM: On
08/20/2004, pursuant to an information, Cynthia Reynolds pled guilty
to one count of Title 18 U.S.C. 657 - Embezzlement, and one count of
Title 18 U.S.C. 982 - Criminal Forfeiture, before United States Magistrate
Judge Jan Adler in the Southern District of California. The plea also
directed her to quit-claim her residence to NIFCU, as funds from the
fraud had been used to pay for the residence. Cynthia Reynolds was
an employee of NIFCU. As part of her responsibilities, she was authorized
to move funds in and out of the NIFCU real estate suspense account.
Reynolds embezzled at least $917,712.94 from that account by transferring
money from the suspense account into a relative's account at NIFCU.
Reynolds also generated official NIFCU checks drawn on the suspense
account and improperly used these checks to purchase vehicles, and
pay various individuals and businesses for her and her relatives benefit.
Reynolds concealed her activity by making false entries into NIFCU's
general ledger system.
SALT LAKE CITY DIVISION
BARBARA JANE COWARD, UTAH COPPER EMPLOYEE'S CREDIT UNION: On 09/15/2004,
Barbara Jane Coward was indicted for embezzling from the Utah Copper
Employee's Credit Union (UCECU). Coward was employed as the manger
of the UCECU, where she had worked for 54 years. Coward allegedly embezzled
approximately $2.4 million from UCECU during a 40-year period, through
the creation of fictitious loans.
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