Outpateint Facilty Investment Costs Millions: Woodcock, Goldfarb

A federal grand jury in Phoenix on Friday returned a 33-count indictment against nine men, on charges of operating a wide-ranging mail fraud and money-laundering scheme that took in $40 million and defrauded more than 300 people.^[1]

It was described as a “very sophisticated and convincing” investment scheme that defrauded well-educated operators of medical outpatient rehabilitation facilities; the prospective facility licensees paid between $100,000 and $165,000 to enter into contracts with the defendants’ company, CORF Licensing Services.^[2] The outpatient companies startup times, profits, and customer numbers were grossly misrepresented, in fact many of the facilities never opened, allegedly costing the licensees millions of dollars.^[3]

David Goldfarb and Paul Woodcock, among others, are listed as defendants in the indictment, and were arrested Friday, March 9, at their homes in Scottsdale on suspicion of mail fraud, conspiracy, money laundering and aiding and abetting, according to Patricia Armstrong, spokeswoman for the U.S. Postal Inspector’s Office in Phoenix.^[4]

Mail Fraud
Mail fraud is a crime under 18 U.S.C. § 1341. Under this section, it is illegal to devise a scheme to defraud and then use the mail to carry out the scheme.The punishment for committing mail fraud is a fine, imprisonment for up to 20 years, or both.

Conspiracy to Commit Mail or Wire Fraud
Under 18 U.S.C. § 1349, any person who conspires to commit mail or wire fraud will be punished in the same way as if he had committed the offense. There is no overt act requirement in the statute.

We have previously discussed the crime of money laundering, here.

If convicted, money laundering carries a maximum 20-year prison sentence and a $500,000 fine, and mail fraud carries a maximum 20-year sentence and a $250,000 fine, according to information from the U.S. Attorney’s Office.^[5]

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^[1] Mike Sakal, Five East Valley men accused of fraud, East Valley Tribune, March 10, 2007.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.