The White Collar Defense Report® provides updates on cases, policy developments and trends in the white collar area, including federal criminal matters as well as civil cases such as qui tam cases and SEC enforcement actions.
If you would like to receive future reports via email, please subscribe here.
COVID-19 Fraud and Conspiracy
Christopher Charles Perez, 40, of San Antonio was sentenced to 15 months in prison in connection with a COVID-19 hoax. Previously, a federal jury found Christopher Perez guilty of two counts of 18 U.S.C. § 1038, which criminalizes false information and hoaxes related to biological weapons. According to court records, Perez posted two threatening messages on Facebook in which he falsely claimed to have paid someone who was infected with COVID-19 to lick items at grocery stores in the San Antonio area to scare people away from visiting the stores. In addition to the sentence, Perez was ordered to pay a $1,000 fine.
A federal grand jury has indicted 11 defendants for defrauding elderly victims in romance schemes. According to court documents, the majority of the defendants charged in the investigation have ties to a transnational organized crime syndicate originating in Nigeria. The defendants assumed fake names and trolled dating sites like Match.com, ChristianMingle, JSwipe, and PlentyofFish, searching for targets. Once they had ingratiated themselves with their victims, they allegedly concocted sob-stories about why they needed money – i.e., taxes to release an inheritance, essential overseas travel, crippling debt, etc. – and then siphoned money from victims’ accounts, tens of thousands of dollars at a time. If convicted, the defendants face up to 20 years in federal prison on the wire fraud conspiracy counts and up to 10 years in federal prison on the money laundering conspiracy counts.
Could your business already be in DOJ’s crosshairs?
If you are under investigation or have been indicted for conspiracy, Medicare fraud, money laundering, wire fraud, or a COVID-19 fraud, defending yourself or your business against federal charges requires the assistance of experienced counsel. Dan Guthrie understands the tremendous damage an indictment can cause to a person or company’s reputation, even if there is an acquittal later. He thinks outside the box and is proactive and thorough, doing everything everything possible to prevent an indictment or aggressively defend his client if already indicted. If you are in need of experienced white collar criminal defense lawyer to represent you or your business, contact us for a no-charge initial consultation.
The chief executive of a Grapevine lender that operates various real estate investment trusts and three other executives have been charged by federal prosecutors with engaging in a scheme to defraud banks and investors about the source of funds used to pay them, The Dallas Morning News reported. The indictment, filed in federal court in Fort Worth, names Hollis Greenlaw, CEO of United Development Funding, along with Benjamin Wissink, Cara Obert and Jeffrey Jester. They’re charged with conspiracy to commit wire fraud affecting a financial institution and conspiracy to commit securities fraud.
Sumit Kumar Singh, 27, an Indian citizen illegally in the United States, entered a guilty plea to conspiracy to commit mail fraud. According to court records, Singh admitted to participating in a fraud ring that operated out of various cities, including Houston. The scheme targeted elderly victims throughout the United States and elsewhere. The fraud ring deceived victims into believing a technical support company helped them with their computers and told the victims they had erroneously refunded or overpaid them and that the victim needed to return the overpayment. Through the “refund” process, the ring gained access to the victim’s bank account(s) and credit cards and manipulated the accounts to make it appear the victim was paid too large a refund due to a typographical error (e.g., a victim received a refund of $10,000 instead of the intended refund amount of $100). Victims were then instructed to reimburse the ring by various means. Victims were sometimes re-victimized multiple times and threatened with bodily harm if they did not pay. Singh faces up to 20 years in federal prison and a possible $250,000 fine.
Denny C. Mackey, 68, of Richardson, Texas, has been charged with bank fraud in connection with a scheme to take out fraudulent loans using his position as treasurer of the Crandall Volunteer Fire Department. According to court records, Mackey allegedly obtained tens of thousands of dollars from financial institutions by applying for unauthorized loans purportedly to be used for fire department purposes, unbeknownst to the fire department’s leadership. In one case, he applied for a $75,000 loan to fund the salary of a full-time fire department employee, knowing full well that the volunteer force didn’t employ any full-time staff. Shortly after the bank issued the loan, Mackey allegedly withdrew more than $50,000, some in cash and the rest by writing fire department checks to a company he controlled. According to media reports, the Crandall fire chief later reported that the fire department had been forced to sell some of its trucks and equipment in order to pay off the fraudulent loan. If convicted, Mackey faces up to 30 years in federal prison.
The owners of a cryptocurrency company have pleaded guilty to tax evasion. According to court records, Bitqyck founders Bruce Bise, 60, and Samuel Mendez, 65, admitted that Bitqyck raised approximately $24 million from more than 13,000 investors. Instead of fulfilling their promises to these investors, the defendants used Bitqyck funds on personal expenses, including casino trips, cars, luxury home furnishings, art, and rent. In marketing materials, the pair promoted the company’s cryptocurrency, Bitqy, as a way for “those individuals who missed out on Bitcoin” to get rich. In an attempt to legitimize Bitqy tokens – and to avoid scrutiny over selling unregistered securities – the company characterized the cryptocurrency as an “earned gift” that rewarded consumers for certain internet purchases. From 2016 to 2018, Mr. Bise and Mr. Mendez raked in roughly $4.68 million and $4.48 million, respectively. Both men now face up to five years in federal prison.
Bart Reagor, 55, owner of Reagor Dykes Auto Group, was convicted of lying to a bank about his company’s prospects and now faces up to 30 years in federal prison. According to evidence presented at trial, in 2017, Reagor told International Bank of Commerce (IBC) that the auto group was experiencing tremendous growth and expected to go public. He claimed the company needed a cash infusion to sustain its upward trajectory and maintain a cash cushion for each of the dealerships to operate. Relying on that information, IBC granted Reagor Dykes a $10 million working capital loan, which was distributed in two tranches: $5 million in July 2017 and another $5 million in February 2018, to be disbursed to the various RDAG entities. Instead of investing all of the money into the business as he said he would, Reagor diverted more than $1.7 million to his personal account at Prosperity Bank. While the jury convicted Reagor of lying to an FDIC-insured bank, they acquitted him of bank fraud. His sentencing date has not yet been set.
Aviation Industry Crime
Mark A. Forkner, 49, formerly of Washington State and currently of Keller, Texas, has been charged with deceiving the Federal Aviation Administration’s Aircraft Evaluation Group in connection with their evaluation of Boeing’s 737 MAX airplane, and scheming to defraud Boeing’s U.S. based airline customers to obtain tens of millions of dollars for Boeing. According to court records, Forkner, formerly a Chief Technical Pilot for Boeing, provided the agency with false information about a new part of the flight controls for the Boeing 737 MAX called the Maneuvering Characteristics Augmentation System (MCAS). Because of his alleged deception, a key document published by the FAA AEG lacked any reference to MCAS. In turn, airplane manuals and pilot-training materials for U.S.-based airlines lacked any reference to MCAS — and Boeing’s U.S.-based airline customers were deprived of important information when making and finalizing their decisions to pay Boeing tens of millions of dollars for 737 MAX airplanes. Rather than sharing information about this change with the FAA AEG, Forkner allegedly intentionally withheld this information and deceived the FAA AEG about MCAS. Because of his alleged deceit, the FAA AEG deleted all reference to MCAS from the final version of the 737 MAX FSB Report published in July 2017. As a result, pilots flying the 737 MAX for Boeing’s U.S.‑based airline customers were not provided any information about MCAS in their manuals and training materials. Forkner sent copies of the 737 MAX FSB Report to Boeing’s U.S.-based 737 MAX airline customers, but withheld from these customers important information about MCAS and the 737 MAX FSB Report evaluation process. In 2018, Lion Air Flight 610 — a 737 MAX — crashed near Jakarta, Indonesia, shortly after takeoff. According to court records, MCAS was operating in the moments before the crash. In 2019, Ethiopian Airlines Flight 302 — also a 737 MAX — crashed near Ejere, Ethiopia, shortly after takeoff. Again, MCAS was operating in the moments before the crash. Shortly after the Ethiopian Airlines crash, all 737 MAX airplanes were grounded in the United States. If convicted, Forkner faces a maximum penalty of 20 years in prison on each count of wire fraud and 10 years in prison on each count of fraud involving aircraft parts in interstate commerce.
Victor Farias, 48, of Boerne, was sentenced to 135 months in prison and ordered to pay $7.4 million in restitution for running a Ponzi scheme. According to court documents, Farias owned and operated Integrity Aviation & Leasing (IAL) and persuaded victims to invest in IAL by misrepresenting that investors’ funds would be used to purchase aircraft engines and that the aircraft engines would be leased to airlines for profit. In addition, Farias also told investors he would not pay himself a salary or commission. Instead, Farias bought one aircraft engine and sold it shortly thereafter, making no profit for investors. He used investors’ money to pay himself a salary, commissions, and personal expenses. He also paid out false investment returns to prior investors and financed the construction of the Fair Oaks Country Store, a convenience store unrelated to the IAL investment.