Chuck Gallagher - Motivational Speaker - Choices: Negative Consequences - Positive Results

William J. Trier, II Faces Retirement in Prison for $5.2 Embezzlement - Comments by Chuck Gallagher White Collar Crime Speaker

chuck@chuckgallagher.com — Wed, 07 May 2008 12:52:00 GMT

The first step to a new life is to accept responsibility for your actions. Every choice has a consequence and after ten years of admitted fraud, William J. Trier, II has made a life changing choice - he plead guilty to an embezzlement scheme that lasted for ten years.

Now, as a white collar crime speaker, I must admit that it is generally unheard of for a white collar crime to last for that period of time. More times than not they fall apart before a decade passes.

William J. Trier, II, 57, of Williston, South Carolina, pled guilty today to embezzling approximately $5,200,000.00 from his former employer and to money laundering.

Trier worked at Crane Co., a vending machine manufacturing company in Barnwell County, as the director of logistics in the shipping department. From 1997 through October 2007, Trier embezzled funds from Crane by creating phony invoices from two fictitious freight transport companies and submitting them to Crane for
payment. He used his position to approve the payment of the fraudulent invoices, and received company payments mailed to a Post Office box he had opened as the mailing address for the phantom companies. Over a ten year period, Trier collected approximately $5,200,000.00 using the false invoice scam.

The maximum penalty Trier faces is twenty years imprisonment and a fine of $250,000. Trier must also make full restitution and has agreed to forfeit millions of dollars in assets towards restitution.

Wow...$5.2 million over ten years. This case is a classic example of lack of effective internal control. The ability to create an invoice and approve said invoice enabled Trier to effect this fraud. White collar crime consists of three parts: (1) need; (2) opportunity and (3) rationalization. While I can't speak to Trier's need, the opportunity was created thru simple lack of controls. Crane could have at any time thwarted the fraud with effective auditing and control mechanisms in place. As to "rationalization" - who knows, other than the longer a white collar criminal gets by with the crime, the greater the chance the white collar criminal thinks that the action is actually O.K. If I don't get caught, I won't get caught is the idea.

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. While Trier may have enjoyed his good for a time and avoided the consequences - he did not avoid the consequences all together. Prison is no fun and Trier is facing many years plus substantial restitution for his conviction. Likely he will serve time and that will prove to be a dramatic change from his prior activities. You do reap what you sow.

If anyone reading has any background on Trier - feel free to comment as I study the behaviors and backgrounds of those convicted of white collar crime.

White Collar Crime Speaker - Chuck Gallagher - signing off...

A Ferrari, A Bentley and a Federal Indictment - Andrew Maxwell Parker Finds Himself on the Wrong Side of the Law!

chuck@chuckgallagher.com — Wed, 07 May 2008 12:51:00 GMT

Every choice has a consequence! May 2008 will be remembered by 40-year-old Andrew Maxwell Parker, owner of San Antonio Trade Group, Inc., since he was indicted on conspiracy, wire fraud, money laundering, false statements and tax charges. It appears that Parker's choices may be having unexpected consequences.

Parker's indictment alleges that from February 2003 to November 2006, Parker schemed to defraud the Export-Import Bank of the United States (Ex-Im Bank) by stealing millions of dollars in loan proceeds from private U.S. lenders to Mexican business owners and causing multi-million dollar losses to Ex-Im Bank who guaranteed or insured those loans based on false applications and support documentation submitted by Parker. The indictment also charges Parker with defrauding lenders in transactions not insured or guaranteed by the Ex-Im Bank.

The indictment further alleges that Parker attempted to evade paying taxes owed in calendar years 2003 and 2004 by disguising account transfers of $588,000 and $816,720.55, respectively. Parker allegedly claimed the money was used to purchase equipment being exported to Mexico when in fact, he used the $588,000 to purchase a house in Dallas, Texas, and the $816,720.55 to purchase two Ferrari automobiles and one Bentley automobile for himself. He also funneled money to relatives, all from nominee accounts. Furthermore, the indictment alleges that he under-reported his actual income on his 2003 and 2004 tax returns.

In all, Parker is charged with conspiracy, nine counts of wire fraud, two counts of use of a false document, 12 counts of money laundering, two counts of tax evasion, and two counts of filing a false income tax return. The indictment also seeks the criminal forfeiture of his San Antonio residence at 407 E. Wildwood Dr. and his 2004 GMC Hummer H2, plus a monetary judgement in the amount of $10 million representing proceeds obtained directly or indirectly as a result of Parker’s alleged scheme.

While an indictment is only a formal accusation of criminal conduct and not evidence of guilt, rarely does the US Attorney's office lose a case like this. More than likely this will be an open and shut case. The government may not get a conviction on all charges, but they will get a conviction. Considering the recency of the indictment, my guess is that Parker will use his resources to secure legal help in reaching a plea agreement that will minimize his prison time. Although Parker's lawyer, John Pinckney, said Parker denies the allegations and wants a jury trial. If convicted he will likely spend substantial time in federal prison.

Parker has been the target of the FBI and criminal investigators of the Internal Revenue Service over more than $163 million in loans backed by the Export-Import Bank of the United States. The bank is a little-known federal agency that is supposed to help American companies export their products by backing high-risk loans to foreign businesses that are supposed to buy the products. It works with some private commercial lenders to get the loans and has to pay with taxpayer funds if the borrower defaults. Court records allege millions of dollars of loans handled through Parker defaulted and the bank had to cover them.

“I have been calling for a (Congressional) investigation because there is ample evidence that hundreds of millions of dollars of taxpayer money is simply disappearing from the Export-Import Bank as they appear to be guaranteeing loans to businesses that don’t exist,” said Congressman Jeb Hensarling of Dallas. “A lot of money was provided to companies and they never, ever repaid the loans. The bottom line is this a mess, it deserves a full investigation. I don’t know of the particulars of the case in San Antonio, but it is further evidence of federal program that has run amok and needs accountability and an investigation.”

“It started out as a well-intentioned program... but there is no oversight, like a board of directors in private (banking), to ensure that things aren’t hinky,” said David Williams, vice president of policy for Washington-D.C.-based watchdog Citizens Against Government Waste. “The federal government has been notorious about its lack of oversight. The last thing we need is a corporate welfare program that has no oversight on it.”

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. While Parker may have looked good for a time and avoided the consequences - he did not avoid the consequences all together. If convicted Parker will find that prison is no fun and likely will be facing many years plus substantial restitution for his conviction. Serving time will prove to be a dramatic change from his prior activities. You do reap what you sow.

If anyone reading has any background on PARKER - feel free to comment as I study the behaviors and backgrounds of those indicted for white collar crime.

White Collar Crime Speaker - Chuck Gallagher - signing off...

THIS JUST IN...another reader provided these links related to Export-Import Bank frauds and sentences. See here and here.

Thanks!!!

Just Pay Me "Cash" - Local Dentist Dr. Brian G. Martinez Pleads Guilty to Tax Evasion!

chuck@chuckgallagher.com — Wed, 07 May 2008 12:49:00 GMT

As a former CPA, I can't tell how many times I've heard clients say that since they received money in cash "it wasn't taxable." WRONG! Not only did I correct that impression for my clients, I would not keep them as clients if they insisted on being a part of what is obviously tax fraud.

Now, I went to prison for tax evasion, so I am not lily white. In fact, while I am not proud of my past, I have a unique perspective from which to write and comment. Perhaps my comments will be the foundation that might help others.

According to the US Attorney's office, a practicing Houston area dentist has pleaded guilty to filing a false income tax return and evading more than $145,000 in federal income taxes between 1999 and 2003. Dr. Brian G. Martinez, 51, a practicing dentist in Houston, pleaded guilty to the federal felony tax charge Thursday, May 1, 2008. At the hearing, Martinez admitted that between Jan. 1, 1999, and April 15, 2004, while engaged in the commercial practice of dentistry, he received payment for services rendered to patients in the form of cash and/or by credit card, check or money order. Although books and records for the practice recording the payments made by patients for services rendered were maintained, not all payments were recorded in the books and records that were disclosed to those who prepared Dr. Martinez’s tax returns for calendar years 1999 through 2003. In some instances, Martinez was handed both cash receipts and checks which he personally cashed, which would not be disclosed, documented or disclosed to the tax return preparers.

COMMENT: The practice of not keeping accurate records is common. In fact, the fact that Dr. Martinez went to the trouble to keep inaccurate records show deliberate intent and, likely will pay against him at his sentencing hearing.

Martinez concealed from his tax preparers a total of $533,048 in revenue or gross receipts received from patients during calendar years 1999 through 2003 – all taxable income – causing materially false income tax returns to be filed with the IRS and evading the payment of a total of $149,253 in income taxes for those tax years.

COMMENT: When cash receipts are concealed the question often arises, what to do with the cash. More times than not, the IRS can recreate accurate income records by looking at lifestyle. Rarely does a person hide the cash. Most of the time they spend it and that's the one activity that creates the trail for a conviction.

To help with sentencing, Martinez paid restitution - delivering a check in the amount of $149,253 payable to the IRS. Sentencing is set for July 25, 2008. Martinez faces a maximum of five years in prison and a $250,000 fine. Additionally, the court may impose up to three years of court supervision to follow any term of imprisonment imposed. I suspect that Martinez will face 12 months in prison!

Comments are welcome!

White Collar Crime Speaker - Chuck Gallagher - signing off...

Identity Theft - How Did They Get My Credit Card Number? Bobby Noy Soulinthong Sentenced to Prison for "Skimming"

chuck@chuckgallagher.com — Wed, 07 May 2008 12:48:00 GMT

Almost a year ago I was at the annual convention for members of the National Speakers Association. As a professional speaker, I attempt to make that each year. This year held something special for me - something unexpected. Upon return home to Dallas, Texas I found that I had become a victim of identity theft.

How? How could it be that my debit card was being used in San Francisco to make purchases at a wig shop. I'll admit that while my hair is receding, I don't need a wig. Fortunately, I was able to stop the process before it got out of hand. But the question still remained - HOW?

I later found out I was a victim of "skimming". So what's that you might ask?

Well, a Texas, man, Bobby Noy Soulinthong, 26, who pled guilty to his role in a credit card “skimming” scheme, was sentenced to 18 months in prison. Other defendants, charged in separate indictments but involved in the same scheme, have also pled guilty and have been sentenced. Dung Ba Nguyen, 28, of North Richland Hills, Texas, and Bryan Nanthathongthip, 24, of Dallas, were each sentenced earlier this year to 12 months in prison. All three defendants were ordered to pay restitution.

Nguyen admitted purchasing stolen credit card account information that had been “skimmed” from restaurant customers, and admitted having more than 100 credit card account numbers stored on his personal “thumb drive.” Soulinthong and Nanthathongthip admitted purchasing goods from GameStop and Target with counterfeit debit cards, which they knew had been electronically encoded with a stolen account number.

The account numbers were stolen by a method known as “skimming.” Individuals working at North Texas restaurants surreptitiously recorded account numbers and other account information from the magnetic strips on restaurant customers’ credit and debit cards with a small hand-held device known as a “skimmer.” After purchasing the stolen account information, Nguyen encoded it onto other credit cards. Soulinthong and Nanthathongthip used the re-encoded cards to purchase consumer goods that they could then re-sell. The restaurant customers whose credit card information had been stolen would receive the bills for those purchases.

According to credit.com - Skimming – Thieves use tiny hand-held credit card readers to collect the information on your credit card’s magnetic strip. Skimming is common in restaurants and stores where you turn over your credit card to pay. When a skimming device is full of hundreds of credit card numbers, these numbers can be sold or used to create fake credit cards. Skimming devices can also be placed over the normal card reader on an ATM to steal your data when you try to withdraw money.

As a white collar crime speaker, often I am asked questions about how to protect yourself against identity theft. Many of the methods used can be avoided, but "skimming" is tough to avoid. When you go to the restaurant, you give your card to pay your bill and, hence, are relying on the honesty of the restaurants employees. Should one of them have been Soulinthong you may have been a victim of identity theft.

If you've been a victim of identity theft and have any comments or helpful hints to avoid this dreaded form of white collar crime - FEEL FREE TO COMMENT.

White Collar Crime Speaker - Chuck Gallagher - signing off...

Texas D.O. - Daniel Andrew Maynard - Pays $253,000 to Resolve Allegations of False Health Care Claims!

chuck@chuckgallagher.com — Wed, 07 May 2008 12:46:00 GMT

As an ethics speaker, I am not sure why. Perhaps the US Attorney's office didn't have enough to convict. Whatever the reason, there was resolution in a case in the Northern District of Texas from a Texas D.O. - Daniel Andrew Maynard and the US Attorney's office.

By entering into a settlement, Maynard admits no wrong-doing and denies all liability. However, the very fact that Maynard is paying over a quarter of a million dollars says something.

According to the US Attorney's office, in February 2005, the Office of Inspector General for the Department of Health and Human Services (OIG), the Texas Health and Human Services Commission, Office of Inspector General (HHSC), and the Federal Bureau of Investigation referred allegations to the government that Maynard had inflated billings for thousands of physician evaluation and management services submitted to the Medicare and Texas Medicaid programs. The U.S. and Texas allege that on at least 32 separate days, Maynard billed both programs for patient encounters - that if provided as claimed - meant he spent more than 24 hours each day seeing and treating patients. Maynard claimed to have seen more than 100 patients on six of those occasions. The U.S. and Texas contend that contrary to Maynard’s claims, he could not have possibly furnished anything more than the most basic of physician services during those 32 days.

Hum...guess Maynard was a work-a-holic? While, again, according to the settlement there was no admission of wrongdoing, the fact remains that a substantial sum has been paid to correct what appears to be incorrect behavior.

Further, as part of the civil settlement, Maynard agreed to be permanently excluded from participation in Medicare, Texas Medicaid, and all other federal health care programs. Maynard previously pleaded, in October 2007, no contest to several Dallas County criminal counts charging him with delivery of a prescription or prescription form without a valid medical purpose.

According to a 2003 news release, Maynard has had issues with his medical practice. The news release stated: "Dr. Maynard's office was raided by local, state and federal law enforcement officials based on information regarding non-therapeutic prescribing, medically unnecessary prescribing and possible patient harm, including deaths, as a result of his prescribing activity. The panel determined that Dr. Maynard had violated several provisions of the Medical Practice Act by failing to keep adequate medical records related to treatment of Intractable Pain Patients; failure to practice medicine in an acceptable professional manner consistent with public health and welfare; committing unprofessional or dishonorable conduct that is likely to deceive or defraud the public; and by prescribing dangerous drugs and controlled substances to persons who are known or should have been known to be a drug abuser."

Every choice has a consequence. So far, Maynard should be pleased that the consequence was civil - not criminal. He may, by agreeing to a civil settlement, be able to keep his medical license. However, since he cannot participate in either federal or Texas state health care programs, his client base will likely be limited.

Feel free to share your comments!

Business Ethics Speaker - Chuck Gallagher - signing off...

White Collar Crime's Surge - Mortgage Fraud - FBI Director's Comments

chuck@chuckgallagher.com — Wed, 07 May 2008 12:45:00 GMT

As a white collar crime speaker, most of my presentations on the subject centered around corporate fraud and how to prevent it. Lately, however, more and more organizations from real estate firms, to associations, to mortgage companies are interested in the new hot topic - MORTGAGE FRAUD. They want to know how it happens, what to look for and how to prevent it.

Below are comments reprinted from the FBI web-site. The entire document can be found here.

A day after warning the Senate about a “tremendous surge” in the FBI’s mortgage fraud investigations, Director Robert Mueller talked in more detailed terms about the growth in both corporate fraud and public corruption cases at the annual conference of the American Bar Association's Section of Litigation in Washington, D.C.

Despite limited resources, Mueller said that the FBI’s corporate fraud cases have grown more than 80 percent since 2003. Last year, we had more than 490 corporate and securities fraud convictions.

He predicted that the problem will only worsen because of the "ripple effect of the sub-prime crisis and its impact on the credit market.” The FBI, he said, has already “identified 19 corporate fraud matters related to the sub-prime lending crisis … targeting accounting fraud, insider trading, and deceptive sales practices.” And, we’re currently investigating more than 1,300 mortgage fraud matters.

Years past, the FBI was involved in other forms of white collar crime. Today, that is shifting. That is not to say that corporate and public corruption do not exist - they do, but this new wave of crime seems to have caught on right under the public's nose as mortgage money came easy.

Mueller goes on to say, In my days as defense counsel with a firm representing corporate targets, I met a number of executives who could rationalize every bad decision. They would say it was “business as usual”—that they were acting in the best interests of the company, given financial constraints and the pressures of running a business.

And I would think to myself, “You broke about 14 laws before breakfast. How could you fail to see you were doing anything wrong?”

I saw executives who did not start out intending to break the law. They would argue they were playing by the same rules as everyone else. They began to believe their own explanations. But it is a slippery slope from behavior that skirts ethical or legal boundaries to behavior that crosses the line completely.

It calls to mind the saying: If you jump out of a window on the 100th floor, and you seem to be doing fine as you pass the 40th floor, that doesn’t mean you don’t have a big problem. Rationalization will not provide much padding when you hit the pavement.

Mueller points out a valuable truth that often comes out in my business ethics presentations, just because some one else does some thing does not mean that it is ethical, right or that you should make the same choice. Every choice has a consequence.

If your organization deals with the sale of real estate it is worthwhile to explore MORTGAGE FRAUD - how it happens, what to look for and how to avoid the outcome - PRISON. For more information contact me through my web site: www.chuckgallagher.com

Mortgage Fraud Speak - Chuck Gallagher - signing off...

Wachovia Pays $125 Million to End Federal Investigation for Telemarketer Fraud!

chuck@chuckgallagher.com — Wed, 07 May 2008 12:44:00 GMT

The Wachovia Corporation, the banking giant, has agreed to pay an estimated $144 million to settle federal accusations that it failed to block telemarketers who took advantage of thousands of elderly bank customers.

The federal Office of the Comptroller of the Currency said Friday that Wachovia, which is based in Charlotte, N.C., had improper relationships with four telemarketers and payment processors who maintained their accounts at the bank. The marketers obtained customers’ bank account information while selling vouchers for discount travel and groceries and other products.

The bank has not admitted any wrongdoing, but will pay up to $125 million in claims, $8.9 million toward consumer education programs and a $10 million fine.

According to the Charlotte Bizjournal: "According to documents obtained by the newspaper, other banks alerted Charlotte-based Wachovia about the activities. However, the Times says, internal memos show Wachovia continued to provide services to companies that helped take as much as $400 million from unauthorized accounts."

“This situation was unacceptable and we regret it happened, ” a Wachovia spokeswoman, Christy Phillips-Brown, said. “We will work diligently to provide restitution to consumers affected by the situation and to educate consumers.”

She said the settlement was not expected to impact the company’s financial condition.

The Wachovia case, the subject of an 18-month investigation by bank regulators, involved the use of “remotely created checks,” which do not require a customer’s signature.

Regulators said telemarketers would call Wachovia customers, offer them medical discount plans or other services, obtain customers’ bank account information, create a check and withdraw cash from customers’ accounts.

Since the telemarketers and payment processors were Wachovia customers, they could deposit those checks into their own Wachovia bank accounts, allowing money to be withdrawn quickly from consumers’ accounts.

The government said a large percentage” of customers complained, saying they never authorized the payments, or did not receive the products or services offered.

Though the bank became aware of the situation. it “failed to take quick action to terminate these account relationships or otherwise correct the problem,” the O.C.C. said in a statement.

In fact an article posted on domainb.com states: Wachovia executives, when quizzed about the lawsuits, pleaded ignorance about the thefts. However, newly released documents from the lawsuit have now established that Wachovia was quite aware about allegations of fraud, but had in effect, chosen to solicit business from companies it knew had been accused of telemarketing crimes.

Wachovia, however, continued processing fraudulent transactions for that account, along with others, as the bank charged fraud artists a fee each time a victim spotted a bogus transaction, and demanded their money back via chargebacks. Investigators indicate that one company alone paid Wachovia about $1.5 million over an 11 month period.

Linda Pera, an executive who left Wachovia in 2006, wrote, "We are making a ton of money from them," while referring to a company that was later accused by federal prosecutors of abetting in stealing up to $142 million.

Ms. Phillips-Brown said the bank was not directly involved in the telemarketing activity or soliciting of account information from consumers.

The government said many affected consumers have already received reimbursement payments. It said the companies involved were: Payment Processing Center; FTN Promotions; the Netchex Corporation; and Your Money Access.

As of Dec. 31, Wachovia had assets of $782.9 billion and market capitalization of $75.3 billion. The company (NYSE:WB) has 3,400 retail financial centers in 21 states.

COMMENTS: Now, as a business ethics speaker, here's an ethics question. Do I report on this issue about Wachovia's settlement related to (their non admission of guilt) telemarketing fraud - and by doing so risk not being hired by Wachovia in the future?

Damn right I do. Ethics are ethics and companies should work hard to have a positive ethical footprint. In this case, while Wachovia did not admit guilt, the writing is on the wall. A profitable, but likely unethical, part of their business was uncovered and has cost them. Although paying $125 million for something that reported generated more than $400 million from unauthorized accounts might not have been so bad...considering the time value of money.

Now the question is...wonder which other banking organizations use their client list to offer other services to unsuspecting customers? Frankly, I can understand offering services to expand your business...that's just makes good business sense. However, offering the services using in-house support may be more acceptable than farming it out to outside telemarketers. After all, once data is shared outside of the organization issues of privacy may be breached.

ANY COMMENTS ARE WELCOME!

Meanwhile, Business Ethics Speaker - Chuck Gallagher - signing off...

Celebrity Medical Information for Sale - Could Bring Lawanda Jackson 10 Years in Prison

chuck@chuckgallagher.com — Wed, 07 May 2008 12:43:00 GMT

What do Britney Spears, Farrah Fawcett and Maria Shriver have in common? Any or all could have had their medical information leaked to the media.

A Los Angeles woman has been indicted for accessing the private medical records of celebrity patients at the UCLA Medical Center and selling information obtained from those files to a national media outlet.

Lawanda Jackson, 49, was indicted under seal on April 9. That indictment, which alleges one count of illegally obtaining individually identifiable health information for commercial advantage, was unsealed this morning.

Jackson, an administrative specialist at the UCLA Medical Center from 2006 until she was terminated on May 21, 2007, allegedly received at least $4,600 from the media outlet in exchange for providing the private medical information. The media outlet paid Jackson by writing checks to her husband, the indictment alleges.

Jackson, who faces a potential sentence of 10 years in prison if she is convicted of the charge, is expected to be arraigned on the felony count on June 9 in United States District Court in Los Angeles.

According to celebnews: "The hospital has a PIN number system that shows who is looking at medical records, but doesn’t have a system in place to stop people from looking at the records. While it would be great to be able to trust all of the hospital’s employees, someone like Lawanda Jackson might just sell the information if they need the money badly enough. The LA Times reports she was $37,300 in debt in 2001, when she filed for bankruptcy."

"We are deeply troubled that a former employee may have illegally received payments from a news organization in exchange for providing personal medical information," Dr. David T. Feinberg, the UCLA hospital system's chief executive, said in a recent statement.

"Meanwhile, we continue to take steps to improve our staff training and information systems to further strengthen the confidentiality of patient records."

According to cbc.ca: Jackson quit her job as an administrative specialist at UCLA last May 21 after learning she was to be fired.

UCLA also fired several other employees for peeking at psychiatric information about Britney Spears, 10 months after Jackson left the hospital.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt. Now, that said, as a business ethics speaker and writer about white collar crime, I would predict that Jackson will get prison time if convicted.

Every choice has a consequence. Every group I address as a speaker will be presented that simple comment. The facts are, your choices will either bring you negative consequences or positive results. It seems that Jackson's choices were at best unethical and at worst will bring her a conviction and prison.

WHAT COMMENTS DO YOU HAVE ABOUT THIS INTRUSION INTO CELEB'S PRIVACY?

For now...Business Ethics Speaker - Chuck Gallagher - signing off...

Fake IRS Employee - Morgan Mayfaire a/k/a Elizabeth Valdo - Charged with Prepare Fraudulent Tax Returns

chuck@chuckgallagher.com — Wed, 07 May 2008 12:42:00 GMT

So it's tax season, the time when all are required to file tax returns. You look for someone who can provide the service correctly. You want someone with experience, someone who knows the law. Hum... I guess a n IRS employee would do?

As it turns out, Morgan Mayfaire, a/k/a/ Elizabeth Valido, age 49, of Davie, Florida, was charged with thirty-five counts of making false and fraudulent statements and eight counts impersonating an employee of the United States. Great! Wonder how the folks who had her fill out their returns feel?

If convicted, Morgan Mayfaire faces a maximum term of imprisonment of 3 years and a $100,000 fine on each of the charges of fraud and false statements, and a maximum term of imprisonment of 3 years and a $250,000 fine on each of the charges of impersonating an employee of the United States.

According to the Indictment, Morgan Mayfaire prepared fraudulent tax returns at her residence in Davie, Florida for several clients. The clients paid Mayfaire a tax return preparation fee of 10% of the refund claimed on their federal tax returns. Mayfaire prepared tax returns and amended tax returns on Forms 1040 and 1040X in which she reported false medical expenses, taxes, charitable contributions, and employee business expenses. The false expenses and deductions listed on the returns resulted in approximately $472,904 in tax refunds to her clients.

NOTICE: If you hire a return preparer who charges based on the refund received...watch out. By any ethical standard you can think of - this is wrong and a clear indication that some sort of fraud is likely.

Moreover, according to the charges, Mayfaire falsely represented to her clients that she was an IRS employee, and, as such, knew ways to increase taxpayer deductions on tax returns that others were unfamiliar with. These false representations induced clients to hire her to prepare their tax returns.

While an indictment is not an indication of guilt, I have found as someone who speaks and writes about white collar crime, that most indictments result in a guilty verdict. As evidenced in the Wesley Snipes sentencing hearing, if convicted, this woman will go to jail.

YOUR COMMENTS ARE WELCOME!

Meanwhile, white collar crime speaker, Chuck Gallagher, signing off...

Mortgage Fraud - Loan Kickback Scheme Earns Renato Gonzalez Quiazon 3 Years in Prison!

chuck@chuckgallagher.com — Wed, 07 May 2008 12:40:00 GMT

It might have been mortgage fraud that started the crime, but in the end it was the IRS that nailed Renato Gonzales Quiazon, who was sentenced to three years in prison, followed by three years of supervised release for wire fraud and filing false tax returns. This sentence is the result of an investigation by the Internal Revenue Service - Criminal Investigation.

As evidenced by the recent prison sentence for Wesley Snipes for failure to file a tax return - the message is clear. Pay your taxes and don't mess with the IRS!

Quiazon, age 54, of Hayward, California, acknowledged that he knowingly devised a scheme to fraudulently obtain payments of loan kickbacks, commissions and cash outs/extraneous line items from borrowers’ escrow accounts from which he received more than $500,000. Beginning about January 2000 through October 2004, the defendant was employed as a loan officer with New Century Mortgage, located in Emeryville, CA. During this time, Mr. Quiazon entered into an agreement with an independent mortgage broker to use his name and broker’s license on loans that Mr. Quiazon processed as the loan officer. By using the mortgage broker’s identity on these particular loans, Mr. Quiazon defrauded New Century Mortgage by causing it to issue a 1% commission (1% of the total loan amount) to the mortgage broker who had not earned that commission. As part of the agreement with the mortgage broker, the mortgage broker was to retain 20% of the fraudulent commissions and pay Mr. Quiazon a kickback of 80% of the commissions.

Mr. Quiazon further admitted that from about 2002 through October 2004, he violated his agreement with the mortgage broker by retrieving some of the commission checks directly from title companies, forging the mortgage broker’s signature on the back of these checks, and depositing them into his bank account. He conducted these financial transactions without the mortgage broker’s knowledge or consent.

Not only did he conduct a crime against New Century Mortgage, but he expanded the crime by conducting a crime against his co-conspirator. Note: if someone suggests participation in a crime - run like a scalded dog. If they are willing to deceive others they will deceive you. In fact, more times than not, the reason a crime is uncovered is that a co-conspirator exposes the crime. But back to Quaizon...

During this same time period, Mr. Quiazon added cash outs, ranging from approximately $1,500 to $12,300, and extraneous line items on borrowers’ escrow accounts that were shown as payments to creditors or other third parties on behalf of the borrowers in amounts ranging from approximately $200 to $14,000. Title company checks were disbursed for these amounts from borrowers’ escrow accounts without the borrowers’ knowledge or consent. The defendant forged the borrowers’ signatures and deposited these checks into his bank account.

Mr Quiazon also filed false individual income tax returns for the tax years 2001, 2002, 2003 and 2004. He did not report income relating to the aforementioned scheme to the IRS. The total amount of unreported income was approximately $430,661 for the period under investigation.

STOP: I am not proud of my past, but what gives me license to discuss these crimes in detail is that I have been convicted of them myself. I, too, went to prison for failure to pay taxes on stolen money. As a former CPA and tax partner for a CPA firm, it never occurred to me to pay taxes on stolen money. The thought never crossed my mind. Well, obviously it didn't cross Quiazon's either...and that's what got him in the end. Me too! However, I have learned that every choice has a consequence and you do reap what you sow...

Your comments are welcome...

For now, white collar crime speaker, Chuck Gallagher, signing off...