Kansas City Couple Await Jury Verdict on Mortgage Fraud Case

Executive Katheryn Shields and her husband, Philip Cardarella, are on trial along with Monty Kinman and Rick Peterson in connection with the proposed $1.2 million sale of Sheilds’ house last year.[1] The house had been on the market for about $700,000. Federal prosecutors alleged that the defendants were part of a conspiracy to sell the Kansas City home at an inflated price.[2] It is asserted that this occurred when Shields and Cardarella allegedly signed closing documents that falsely misstated a $1.2 million sales contract price for the home.[3]

The jury deliberated about four hours Friday in Kansas City before heading home for the weekend, and resumed deliberations about 8:20 AM on Nov. 5.[4]

Shields and Cardarella are charged with mortgage fraud which is covered under 18 U.S.C. § 225 which is also called continuing financial crimes enterprise and it states that whoever organizes, manages, or supervises a continuing financial crimes enterprise; and receives $5,000,000 or more in gross receipts from such enterprise during any 24-month period, shall be fined not more than $10,000,000 if an individual, or $20,000,000 if an organization, and imprisoned for a term of not less than 10 years and which may be up to life.[5] For purposes of subsection (a), the term “continuing financial crimes enterprise” means a series of violations under section 215, 656, 657, 1005, 1006, 1007, 1014, 1032, or 1344 of this title, or section 1341 or 1343 affecting a financial institution, committed by at least 4 persons acting in concert.[6]

Conspiracy is covered by 18 U.S.C. § 371, which makes it a crime for a person to conspire with at least one other person to commit an offense against the United States and then do an overt act in furtherance of the conspiracy.[7] The punishment for a violation of section 371 is a fine, imprisonment for up to 5 years, or both.[8]

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[1] Tony Rizzo, Jury deliberations continue in Shields’ mortgage fraud case, The Kansas City Star, Nov. 05, 2007, available at http://www.kansascity.com/news/breaking_news/story/347274.html (last visited November 5, 2007).
[2] Id.
[3] Id.
[4] Id.
[5] 18 U.S.C. § 225(a)(2007).
[6] Id., at §225(b).
[7] 18 U.S.C. § 371(2007).
[8] Id.

Men Plead Guilty to $80 Million Conspiracy

The Justice Department announced, on Oct 11, that eight individuals have been charged in connection with an $80 million conspiracy to commit fraud against the Export-Import Bank of the United States (Ex-Im Bank). ^[1]

The scheme involved the fraudulent sale and shipment of U.S. exports to the Philippines, and was initially uncovered by Ex-Im Bank staff; after the Bank's investigation the matter was referred to the Department of Justice (DOJ).^[2]

The men charged in the case are Daniel Curran; Edward Chua; Jaime Galvez; Robert Delgado and David Villongco have all pleaded guilty in the case.^[3] Four of the men are exporters, and one is a freight-forwarder. The defendants have all agreed to serve time in prison, with maximum sentences of up to 40 years.^[4] Curran and Chua pleaded guilty to conspiracy to defraud the United States and mail fraud; Villongco pleaded guilty to conspiracy to defraud the government with respect to claims and mail fraud.^[5]

Galvez, pleaded guilty on Oct. 5, 2007, in U.S. District Court for the District of Columbia to destruction or concealment of records in a criminal investigation and perjury.^[6] Robert Delgado pleaded guilty to conspiracy to defraud the government with respect to claims and mail fraud.^[7]

Additional defendants have been charged, including Christina Song, who was charged with conspiracy to defraud the United States and mail fraud.^[8] Marilyn G. Ong and her nephew Ildefonso Ong Jr. both from the Philippines were charged with one count of conspiracy to defraud the United States and to commit offenses against the United States; four counts of submitting false statements to Ex-Im Bank; four counts of mail fraud; and nine counts of money laundering.^[9] The indictment also charged Marilyn Ong with obstructing Ex-Im Bank's investigation of the fraudulent scheme.^[10]

One of the most commonly charged Import-Export crime is covered under 18 U.S.C § 541, which is the entry of goods falsely classified. It is defined as occurring when a person knowingly effects any entry of goods, wares, or merchandise, at less than the true weight or measure thereof, or upon a false classification as to quality or value, or by the payment of less than the amount of duty legally due, shall be fined under this title or imprisoned not more than two years, or both.

However here the government has decided to charge the defendants with conspiracy, this allows the government to charge all of the defendants involved with similar crimes. Many times, a defendant will be charged with conspiracy along with the actual crime the defendant is accused of committing.

18 U.S.C. § 371 covers conspiracy and that law states that if two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both. If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor.

Federal criminal defense attorney Douglas McNabb has previously written about the crime of conspiracy, here.

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^[1] U.S. Ex-Im Bank, Press Release, Eight Charged in $80 Million Conspiracy to Commit Fraud Against the Export Import Bank of the United States, U.S. Export Import Bank, October 11, 2007, available at http://www.exim.gov/pressrelease.cfm/94742A17-A0DB-D003-258FD334F7AA201C/ (last visited October 13, 2007).
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] Id.
^[9] Id.
^[10] Id.

Judges Wait on Their own Jury Verdict

U.S. District Court Judge Henry T. Wingate placed a judicial bribery case into the hands of 12 jurors late Thursday, after a day of closing arguments from defense attorneys and a prosecutor whose voice cracked with emotion as she wrapped up the government's case.^[1]

Attorney Paul Minor and former state court judges John Whitfield and Wes Teel are counting on the justice system they tried to circumvent as they wait to their own verdict.^[2] Minor allegedly bribed Whitfield with $140,000 in loans and payments and other cash gifts; Teel allegedly received a $25,000 loan that Minor later repaid through a third party, plus assistance and $10,000 to defend him against unrelated state charges that didn't stick.^[3]

December 2001 Minor's client, The Peoples Bank, got a settlement of $1.5 million in a case Teel handled in Chancery Court.^[4] Minor's firm won a $3.6 million verdict Circuit Court Judge Whitfield awarded in July 2000 to an injured offshore worker.^[5] According to prosecutors, Minor’s bribed the judges by securing and making loan payments for the judges.^[6] Bribery is the root of 14 felony charges leveled against the defendants, including conspiracy and fraud and, in Minor's case, racketeering.^[7]

Bribery
Under 18 U.S.C. § 201, it is a crime for a person to corruptly give anything of value to any public official with the intent to influence any official act.^[8]The punishment for violating section 201 is a fine of up to $250,000 or not more than three times the monetary equivalent of the thing of value, whichever is greater, imprisonment for up to fifteen years, or both.^[9]

RICO Violations
Under 18 U.S.C. § 1962, it is a crime for a person associated with an enterprise engaged in interstate or foreign commerce to conduct or participate, directly or indirectly, in the conduct of that enterprise’s affairs through a pattern of racketeering activity.^[10]The term “racketeering activity” includes bribery and mail and wire fraud.^[11] The punishment for violating section 1962 is a fine, imprisonment for up to 20 years, or both.^[12]

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^[1] Anita Lee, Closing arguments given in bribery case, Bradenton Herald, March 30, 2007.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] 18 U.S.C. § 201(b)(1)(A) (2007).
^[9] Id. § 201(b).
^[10] 18 U.S.C. § 1962(c) (2007).
^[11] Id. § 1961(1)(b).
^[12] Id. § 1963(a).

Former Reagan Aid Charged in Massive Fraud: Stockman

David Stockman began his assent to prominence whilst he was the budget director from 1981 to 1985 under former President Reagan.^[1] He made headlines early in his tenure when he told an interviewer that he thought Reaganomics was a "Trojan horse" for the rich and (correctly) predicted huge budget deficits.^[2]

His reputation has slipped once again in his slow decent from prominence, as he was charged Monday, March 26, with overseeing a comprehensive fraud at a troubled auto parts supplier that he led before the company collapsed into bankruptcy. Stockman was one of four former top Collins & Aikman Corp(C&A) executives named in a federal indictment unsealed Monday; the other four have already pleaded guilty.^[3] C&A, a firm that makes auto interiors, carpets, acoustics, fabrics and convertible tops, cooperated in the investigation and was rewarded with a deal that calls for the company not to be prosecuted if it continues to help the government.^[4]

The indictment charged Stockman and three others with conspiracy to commit securities fraud,^[5] making false statements in annual and quarterly reports, making false entries in books and records,^[6] and lying to auditors as well as committing bank fraud,^[7] wire fraud^[8] and obstruction of an agency proceeding.^[9]

If convicted, the defendants could face up to 30 years in prison on the most serious charge.^[10]

Bank fraud is committed when a person knowingly executes, or attempts to execute, a scheme or artifice, 1) to defraud a financial institution;^[11] or 2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises; this shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.^[12]

Wire Fraud is a crime that takes place when a person, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.^[13]

Obstruction of justice is defined in pertinent part in18 U.S.C. § 1505 as a crime that occurs when the defendant, “with intent to avoid, evade, prevent, or obstruct compliance, in whole or in part, with any civil investigative demand duly and properly made under the Antitrust Civil Process Act, willfully withholds, misrepresents, removes from any place, conceals, covers up, destroys, mutilates, alters, or by other means falsifies any documentary material, answers to written interrogatories, or oral testimony, which is the subject of such demand; or attempts to do so or solicits another to do so…….Shall be fined under this title, imprisoned not more than 5 years.”

The crime of using Manipulative and deceptive devices, is defined in pertinenet part by 15 U.S.C. § 78j(b) where it state that it shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange; to use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

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^[1] Larry Neumeister, Ex-Reagan Official Charged in Fraud Case, AP (via PhillyBurbs.com), March 27, 2007.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] 18 U.S.C. § 371(2007).
^[6] 15 U.S.C. § 78j(b); 78ff (2007);17 CFR 240.10b-5; 18 U.S.C § 2 (2007)
^[7] 18 U.S.C. § 1344 (2007).
^[8] 18 U.S.C. § 1343 (2007).
^[9] 18 U.S.C. § 1505 (2007).
^[10] Neumeister, supra note 1.
^[11] Id. § 1344(1).
^[12] Id. § 1344(2).
^[13] Id. at § 1343.

Money Laundering-Oregon

Thu Hang Thi "Anna" Nguyen of Portland, Oregon pleaded guilty to money laundering charges in a U.S. district court in January. ^[1] She knowingly used drug money to buy a convertible, according to investigators. ^[2] She entered into a plea agreement that would likely reduce her prison time from the 20-year maximum to just one year and a day although the plea agreement is only a recommendation, and the judge could refuse to honor it and impose a stiffer sentence. ^[3]

Her former live-in boyfriend, Mark Phommachanh, is serving more than three years in a federal prison on a conviction of marijuana trafficking as part of a conspiracy to distribute more than l00 kilograms of marijuana.^[4]

Ngyuyen was charged under 18 U.S.C. § 1956, which makes it a crime for a person to knowingly engage in a monetary transaction in criminally derived property which is derived from specified unlawful activity.^[5] The specified unlawful activity in this case is the marijuana trafficking of her boyfriend. The punishment for a violation of section 1956 is a fine, imprisonment for up to 20 years, or both.^[6] Alternatively, the court may impose an alternate fine of not more than twice the amount of the criminally derived property involved in the transaction.^[7]

According to investigators, Phommachanh would deposit cash earned from drug sales into bank accounts belonging to himself and Nguyen; about $52,000 between September of 2002 and January of 2003.^[8] Nguyen then used the money to buy a car, investigators said. ^[9]

As part of her plea deal, Nguyen also had to forfeit assets including a house in Northeast Portland, a diamond ring, and cash. ^[10]

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[1] Craig Edwards, NE Portland Woman Pleads Guilty to Money Laundering, February 14, 2007.
[2] Id.
[3] Id.
[4] Id.
[5] 18 U.S.C. § 1956(a).
[6] Id. § 1956(a)(1).
[7] Id.
[8] Edwards, supra, note 1.
[9] Id.
[10] Id.