Wire Fraud, Mail Fraud, Tax Fraud and other Federal Fraud Cases

Published on: March 23, 2022

Fisherman’s theft of trade secret conviction overturned for lack of venue but netted on extortion for Grouper sites.

Timothy Smith was a software engineer living in Mobile Alabama. An avid fisherman, he learned about a website called “Strikelines” that sells the coordinates of artificial reefs placed in various locations in the Gulf of Mexico by commercial fisherman. These reefs are attractive fishing locations but the coordinates are not shared to prevent overfishing. Strikeline obtains the coordinates by launching boats equipped with sonar equipment from its base in Pensacola, Florida that trowel through the Gulf of Mexico and discover reef locations. After processing the raw data collected by sonar, Strikeline offers for sale the private reef coordinates for $ 199.

Published on: March 1, 2022

Georgia real estate lawyer’s conviction and sentence for stealing millions from his law firm is upheld

by The Swartz Law Firm

Nathan Hardwick was a real estate attorney in Georgia who managed the “closing side” of the real estate law firm practice. The law firm sold part of its foreclosure operation to a private equity group for 14 to 15 million dollars but within a few years Hardwick’s portion of the money was gone from misfortune that included the 2008 financial crises, gambling, and a bad divorce. He owed millions in loans he could not repay. To satisfy his creditors Hardwick turned to conduct that led to federal criminal charges.

To repay a bank and casino debt, Hardwick lied to a bank in a line-of-credit application claiming that there were no lawsuits pending against him. Even worse, he siphoned off about $26 million from the law firm including $19 million from the law firms’ trust account, while hiding the withdrawal from other shareholders. To accomplish this theft, he relied heavily on Asha Maurya, who Hardwick promoted by to the position of CFO giving her authority over the trust accounts. At Hardwick’s request she repeatedly sent money from the law firm to Hardwick or his creditors and significantly underreported the law firm distributions to Hardwick. Eventually the scheme unraveled when an internal audit revealed an altered bank account. Both were indicted by a grand jury of wire fraud, conspiracy to commit wire fraud and making false statements to a federally insured financial institution. Maurya pled guilty. Hardwick went to trial and was convicted. Hardwick received a 180-month sentence and Maurya received an 84-month sentence.

Published on: November 17, 2021

Shrimp company owner’s false claims for federal CDSOA subsidy leads to a criminal conviction

by The Swartz Law Firm

Michael Anderson owned and operated a shrimping business called Shrimpy’s in Savannah Georgia. From 2005 through 2007, Anderson submitted CBP (Customs & Border Protection) Forms 7401 in which he falsely claimed large business expenses as part of a scheme to acquire federal government subsidies under the Continued Dumping and Subsidy Act of 2000 (CDSOA). This federal program is designed to compensate U.S. domestic producers for losses that foreign producers caused by dumping underpriced goods into the American market. Enacted by Congress and administered by Customs, the program allowed the federal government to levy duties on specific foreign goods and distribute the funds to affected domestic producers of products, such shrimpers, who could claim subsidies by identifying their business expenses on the Form 7401 and mailing it to the Customs office in Indiana. Customs would then use the claimed expenses to calculate each qualifying domestic producer’s pro rata share of the funds and distribute the funds accordingly.

Mr. Anderson’s claims for 2005 through 2007 stated he had expenses exceeding $24 million in raw material expenses. He submitted 47 invoices from a company called R&R Seafood, which happened to be identical invoices except they bore different dates ranging from February 2005 to September 2006 and listed different rates for shrimp. The invoices showed he purchased 4.7 million pounds of shrimp for more than $29 million in two years. Based on his CDSOA claims, Anderson received a total of $864,292.40 in federal subsidies.

Published on: February 22, 2021

Use of a fraudulent Order of Supervision violated a federal criminal statute

by The Swartz Law Firm

Ardon Chinchilla was charged in a federal indictment with violating 18 U.S.C. §1546 by using a fraudulent Order of Supervision to obtain a driver’s license from the Florida Department of Highway Safety and Motor Vehicles. Section 1546 makes it a crime to knowingly use or attempt to use a forged or unlawfully obtained document prescribed by statute or regulation for entry into or as evidence of authorized stay or employment in the United States. An Order of Supervision is a document issued by the U.S. Immigration & Customs Enforcement (ICE) to aliens unlawfully present in the United States. It authorizes an unlawful alien to be released from custody into the community and to remain living in the United States for an indefinite period of time pending removal. An Order of Supervision may authorize the alien to seek employment in the United States. Florida accepts an Order of Supervision from applicants seeking to obtain a Florida driver’s license as proof of legal presence in the United States.

Chinchilla moved to dismiss the superseding indictment for failure to state an offense under §1546 arguing that the term “authorized stay” means lawful presence in the United States and that no federal statute or regulation expressly identifies an Order of Supervision as evidence of authorized stay in the United States. The district court agreed and dismissed the indictment.

Published on: December 31, 2020

Evidence found sufficient to convict defendant of conspiracy to commit healthcare fraud but wrong sentence imposed

by The Swartz Law Firm

Grow formed a company and teamed up with a compounding pharmacy called Patient Care America to market three of its compounded medications: a pain cream, a scare cream, and a metabolic vitamin. He recruited two sales representatives and paid them using a tiered multilevel pyramid structure which meant that commissions for the sales representatives were based on their own referrals and referrals made by representatives brought in by the representatives they brought in. He also recruited patients instead of doctors and used telemedicine companies to prescribe the creams and vitamins to patients. Some recruited patients were paid commissions for just ordering their own creams and vitamins and set up a phony survey program where Grow’s recruited patients were paid $1,000 per month to try the creams and vitamins and write about their experiences. The only purpose of the survey was to refer more beneficiaries and get paid commissions. Nothing was done with the results of the survey. Grow was charged and convicted of conspiracy to commit healthcare and wire fraud, committing healthcare fraud, conspiracy to receive and pay kickbacks.

Published on: December 24, 2020

No error to let a Defendant in a Federal criminal trial represent himself if he chooses

by The Swartz Law Firm

Gerti Muho’s scheme led to his conviction of bank fraud, wire fraud, aggravated identity, money laundering, and a 264-month sentence in federal prison. In this appeal he claimed that the district court should have reinstated his court appointed counsel despite his having invoked his right to self-representation. He also claims the trial court should have granted his request for court issued subpoenas, and the trial court erred by enhancing his sentence.

Muho worked for an investment firm “FAM” which gave him a position allowing him access to the personal information of the firm’s employees. After he left the firm, he created and used fraudulent documents purporting to reestablish his authority with the firm and then take control of one of FAM’s entities using a shell company he created. He was able to convince a bank, HSBC-Monaco, that he had legal authority to execute financial transactions on behalf of one of the subsidies and incuduced the bank to wire transfer over $2 million from the firm’s subsidy account to an account Muho controlled in another bank.

Published on: December 11, 2020

Fraudulent payment for an I.R.S. debt was a nexus to obstructing I.R.S. administrative proceedings

by The Swartz Law Firm

Graham’s IRS problems started because he only paid a small portion of the money he made running bingo games from 2006 through 2009. When Graham’s payments to the IRS were too small to satisfy his debt, they became more aggressive and after sending lien and levy notices they began to confiscate and selling several pieces of his real estate. Those sales still fell short of is debt which by June of 2014 reached $3.6 million. Graham met a Thomas Walker who claimed to specialize in credit repair. Walker introduced Graham to two individuals Ben and James that he knew who claimed they could help him pay off his taxes with the help of a bill of exchange that would only cost Graham $10,000. After paying the fee, Ben and James sent Graham and Walker a packet of documents which Graham and Walker took to the IRS building in Montgomery, Alabama. Theses documents included a $3.6 million check entitled an “international bill of exchange. The bill of exchanged was not processed because it looked suspicious and determined to be fraudulent. Graham was indicted on one count of passing a fictitious financial instrument in violation of USC 514(a)(2) and one count of corruptly endeavoring to obstruct the administration of the internal revenue laws in violation of 26 USC 7212(a).

Published on: May 17, 2019

The ten-or-more victim enhancement for use rejected where information only sold not used

by The Swartz Law Firm

Corbett and Weaver worked at Florida Hospital near Orlando Florida. When Weaver held the position of release of information specialist he would download patients’ face sheets containing their name, health information, date of birth and social security number without authority to do so and sold them to coconspirators who, the government believed, intended to use the information to open credit card accounts and commit identity fraud. Corbett took over Weaver’s position as release of information specialist, he solicited her to obtain face sheets without authority and paid her for each assisting him obtain the information. Both were charged with conspiracy to obtain identifiable health information for commercial advantage and pleaded guilty.

The probation officer that calculated the sentencing guidelines recommended a two level enhancement for an offense that involve 10 or more victims under 2B1.1. the probation officer also calculated the Florida Hospital’s loss on costs associated with identifying and notifying patients whose individually identifiable health information was viewed without authorizations. This resulted in a 10 level enhancement. At sentencing the defendant objected to the loss amount on the grounds that the Florida Hospital’s expenses should have been excluded as cost incurred by victims primarily to aid the government in the prosecution and criminal investigation of the offense. She objected to the 10 or more victim enhancement on the grounds that the government only identified a handful at most who suffered any identifiable financial harm as a result of the conspiracy. The district court denied both objections.

Published on: April 12, 2019

Defendant had no standing to contest a vacatur of the criminal forfeiture order

by The Swartz Law Firm

Frank Amodeo pled guilty to conspiracy to defraud the United States for his failure to collect and remit payroll taxes and obstruction of an agency investigation. His offense arose from his scheme to divert his clients’ payroll taxes to his companies’ bank accounts instead of remitting the money to the I.R.S. As part of his plea agreement he agreed to forfeit many assets including properties, luxury cars a Lear jet, and the ownership of several corporations including two corporations: AQMI Strategy Corporation and Nexia Strategy Corporation. After the plea, the district court entered a preliminary forfeiture order for the assets, including the two corporations AQMI and Nexia. The government then moved for and received a final forfeiture order giving clear title to the United States.

Eventually, victims from Amodeo’s scheme filed lawsuits against his corporations, including the forfeited AQMI and Nexia. After the victims served the lawsuits on these two companies, the government moved to vacate the final forfeiture order because both were shell corporations without any assets. The government did not want to defend either corporation. The district court granted the motion and vacated the final forfeiture order as to these two corporations. Amodeo moved to reconsider the partial vacatur on the ground that the district court lacked jurisdiction to alter the final forfeiture order. the district court denied the Amodeo’s motion stating that it had vacated only the final forfeiture order in part and not the preliminary order. the trial court ruled that Amodeo lacked standing to challenge the vacatur of that order.

Published on: March 11, 2019

Prison officer’s extortion conviction upheld

by The Swartz Law Firm

Inmates at the Autry state Prison had a phone scam in which they would masquerade as law-enforcement or court officials and dupe their victims into paying them for fake infractions. Victims paid money to the inmates in the form of Green Dot numbers. Green Dot corporation sells debit cards that can be reloaded by purchasing a MoneyPak at the store’s checkout counter. Inmates possessed theses Green Dot debit cards but were not allowed to possess them in the prison so they possessed the numbers on pieces of paper and hid the papers in their cell until they could load the money. The succeeded for one inmate who collected over $15,000.

Paul Harris was a corrections officer at Autry state Prison when he discovered the scam. He worked on the shakedown team that conducted surprise search of the cell of an inmate. He began to find the Green Dot numbers and learned how the inmates obtained them and that they were worth money. Instead of turning the numbers over to supervisors, Harris loaded the money onto his Green Dot cards. Meanwhile the inmate’s scam continued. After the complaints about the scam and the FBI began to investigate, the Green Dot accounts showed that the amount Harris loaded on his Green Dote card exceeded his income. When confronted he eventually confessed.