Money Laundering and Off Shore Banking News

UBS, the European banking giant has a problem with federal authorities in the U.S. Two individuals have been indicted and charged with avoiding taxes on funds deposited in an off shore UBS account. The bank is drawn in by allegations by federal prosecutors that the bank knew of the tax fraud and assisted by opening accounts and handling funds. Money laundering is always an uphill fight for federal prosecutors because of the political power banks wield in the Congress. Years ago Bankers Trust was targeted for assisting in the transfer of illegal funds from Russian sources and the matter was dropped. Noriega’s removal by force is another example of bankers and US armed forces uniting to thwart a takeover of money laundering for drug cartels.

Girls Gone Wild Founder Gets Probation on Tax Evasion

Joe Francis, age 36 and founder of the lewd soft-porn series "Girls Gone Wild", is on 1 year of probation after filing false tax returns and bribing jail workers. He already served 301 days of jail time in acceptance of his plea deal. "No additional incarceration is neccessary," said US District Judge S. James Otero last Friday. Francis will be paying back about $250,000 in restitution to the IRS and a $10,000 fine. A former tax account is to blame, accord to Francis, for the trouble he was in. Francis says that the account attempted to defraud him and turn him into authorities so he could collect some IRS reward money. Original charges against Francis accuse him of $20 million in fraudulent tax deductions.

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Florida Yacht Broker Sentenced for Tax Evasion

Robert Moran, a yacht broker from Fort Lauderdale, was sentenced to 2 months in prison for his role in filing false federal tax returns and using off-shore bank accounts to conceal millions of dollars. Swiss bank UBS was the banking institution utilized by Moran in his criminal activities. The Honorable Judge James Cohn of Federal District Court in Fort Lauderdale did give credit to Moran due to him confessing his crime and for helping federal investigators in the probe of UBS and other off-shore banks. Moran is the third UBS client to be sentenced in the last 2 weeks in the South Florida region. Moran will be facing a felony record for tax evasion and loss of his yacht broker license.

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Florida UBS Client Charged With Tax Evasion

Steven Rubinstein is being sentenced by the U.S. District Court for the Southern District of Florida for tax evasion. Rubinstein admitted to failing to report an account he had with UBS. Government officials claim over $3 million in taxes was evaded by the use of an off-shore corporation in affiliation with a UBS account from the period of 2001 to 2008. This probe led to the investigation of others involved in Rubinstein's scheme. Government investigators have said to in prosecution that they are seeking the minimum spectrum of the sentencing guidelines due to Rubinstein's testimony being "timely, significant, useful, truthful, complete and reliable."

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White Collar Florida Crime Goes to Federal Courts

Huey Granderson of Millersport, Ohio was charged with three counts related to an insurance fraud ring which involved real estate. Granderson was the ringleader of this group that committed theft in upwards of $5 million from companies in the area. He pled guilty to partaking in corrupt activities, theft and failure to file an income tax return; all have been deemed felonies. According to his plea agreement, the other 14 dropped were lifted from his case. Granderson is set for sentencing at a later date although he can face up to 19 years in prison and a hefty fine.

White collar crime can be committed by a number of individuals, generally those with images like accountants, lawyers, doctors, business executives, stock brokers, and bankers. Real estate fraud comes under the grouping of white collar crimes. Penalties for a white collar crime conviction, as displayed in Granderson's instance, can include criminal forfeiture, payment of fines, supervised release, restitution, and imprisonment.

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Florida Prosecution of Mortgage Frauds by Criminal Lawyer Ralph Behr: Part 6

Here is the next installment of Attorney Behr's mortgage fraud prosecutions series:


18 U.S.C. §225 Continuing financial crimes enterprise

Continuing financial crimes enterprise statue criminalizes any person that “…organizes, manages or supervise a continuing financial crimes enterprise; and receives $5,000,000.00 or more in gross receipts from such enterprise during any 24-month period…”48 The meaning of “…a continuing financial crimes enterprise…” is any combination of eleven other criminal violations found within the same United States Code title “…affecting a financial institution, committed by at least 4 persons acting in concert.”49

This statute was made use of in United States v. Lefkowitz, 125 F.3d 608 (8th Cir. 1997). “From 1984 to 1994, Lefkowitz was President of Cit-Equity Group, Inc. (CEG), a California corporation that formed real estate limited partnerships to build low and moderate-income housing.”50 Starting in 1987, “…CEG began concentrating on projects that would qualify limited partners for low-income housing tax credits…” from the federal government.51 Obtainment of these credits were had when investors built, rehabilitated or acquired “…buildings in which a prescribed percentage of the apartment units are occupied by low-income tenants.”52 Subsequently, the “…government allocates tax credits to the States, with at least ten percent reserved for ventures in which nonprofit organizations participate.”53 Following the federal allocation, individual states and local housing agencies would dispense “…the credits to specific projects.”54

Funds raised from limited partners were used for differing projects as equity, “…generally between one-quarter and one-third of the total project cost.”55 Specifically, after a building is completed, “…CEG’s management company lease out the apartment, the state housing agency release the allocated tax credits, remaining debts to the builder were paid, and…” lastly “…limited partners began receiving their annual tax credits.”56

“During the late 1980's, CEG's builders obtained construction loans to build the projects, while CEG obtained permanent financing to replace the construction loan once a building was completed.”57 Starting in 1990 construction loans became hard to obtain and CEG began marketing First Secured Mortgages (FSMs) to other investors.58 These FSM investors made loans to limited partnerships that owned by one or more of the projects “…with the expectation that CEG's permanent lenders would take out the FSM loans with long-term mortgages.59

“When Lefkowitz left CEG in May of 1994, properties in which limited partners and FSM investors had invested more than $80,000,000 were unbuilt, unfinished, or lost in foreclosure.”60 “Funds from limited partners and FSM investors were first deposited in an operating account for each particular investment.”61 However, “…Lefkowitz and CEG as general partners immediately transferred all investor funds to a central CEG account.”62 Once in this account these monies were misused by the company.63 The extent of the alleged scheme and the participation of the defendant’s general partners provided the evidence needed to convict the defendant of the crime of continuing financial crime enterprise statute, because “…banks invested a total of $1,120,000 in…” FSM loans.64

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Any use of the previous article requires written permission from Ralph Behr and from this website and its subsidiaries under State and Federal Law. DO NOT copy and use the text provided above and/or publish as your own. The document may only be used for private study or distributing among peers in paper, not on internet transmission, with no intent to make profit or sell without credit being due to the original author.

Florida Prosecution of Mortgage Frauds by Criminal Lawyer Ralph Behr: Part 5

Further exposition of Attorney Behr's mortgage fraud prosecutions series:


18 U.S.C. § 1341 Frauds and swindles

&

18 U.S.C. § 1343 Fraud by wire, radio, or television

Also know as the mail and wire fraud statutes. These statutes explain any person “…having devised or intending to devise any scheme or…” ploy while making material misrepresentations in conjunction with the use of the United States Postal Service or the use of any electronic media format may be exposed to prosecution under these statutes.36

An example of both these statutes in action is outlined in the Seventh Federal Circuit case of United States v. Owens, 301 F.3d 521 (7th Cir. 2002). “A jury convicted real estate appraiser Reginald Owens of mail fraud and wire fraud for his part in a multi-million dollar real estate and mortgage fraud scheme.”37 The alleged “…scheme was a land “flip” scheme, which basically involved having people purchase distressed properties for cash and then immediately resell that same property at artificially-inflated prices.”38 One of the co-defendants, Brian Parr’s “…role in the scheme was to first identify the property he wanted to buy through realtors and by searching the Multiple Listing Services (“MLS”), a real estate computer database that showed properties for sale and the seller's listing price.”39 While arranging for the proper contracts for purchase of these properties, “…Parr would prepare to sell the property at an artificially-inflated price to a second buyer.”40 These sales mostly happened at the same time; however there were instances when the subsequent sale was performed prior to the property being contracted with the first purchaser.41

Second possible buyers were lured in with offers of “…no money down and cash back at closing.”42 “The second buyers, however, typically did not have jobs or bank accounts and thus could not have normally qualified for a mortgage.”43 In avoidance of this potential problem, “…several other co-schemers, including loan officer Tamira Smyth, created false documents to submit to the lender institutions.”44

Besides false documents, the mortgage brokers additionally worked with individual appraisers to make certain the appraisals synched up with the contract price of the subsequent sale to exploit Parr’s profits.45 The appraisers utilized inflated the value of the properties by leaving out critical pieces of information from their appraisal reports and the MLS and “…by comparing the sale house involved in the flip transaction to houses that were far superior.”46 “Parr then used the profits from each transaction to pay his co-schemers.”47


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Any use of the previous article requires written permission from Ralph Behr and from this website and its subsidiaries under State and Federal Law. DO NOT copy and use the text provided above and/or publish as your own. The document may only be used for private study or distributing among peers in paper, not on internet transmission, with no intent to make profit or sell without credit being due to the original author.

Federal Tax Evasion Hits an Attorney and Doctor

According to AP reports, a lawyer-turned-tax preparer was jailed after a jury convicted him of helping a radiologist and others hide $24 million in income. A defense lawyer for 59-year-old Bernard J. Bagdis of Norristown says his client was obsessed with the tax code and did not believe he had to file or pay taxes, in part because of business losses. The jury found otherwise, convicting Bagdis, 57-year-old radiologist Bertram Russell of Gladwyne and 63-year-old engineer Richard Frase of Schoharie, N.Y., of dozens of counts. Nine defendants pleased guilty before trial. Prosecutors say Russell filed no taxes despite earning nearly $3 million in income from 1998 to 2006.

They say the 12 defendants together avoided nearly $5 million in taxes.

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Detroit Businessman Caught on Federal Tax Evasion Charges

Marc Bruce, president and owner of the former MDB1 Inc. in Lincoln Park, is heading to court with four counts of tax evasion and one of corrupt or forcible interference with internal revenue laws. The IRS and the U.S. Attorney’s Office in Detroit say Marc Bruce failed to pay $244,000 on a cumulative income of $890,000 from 2001 to 2004. Federal officials contend Bruce willfully avoided tax payments and tried to conceal his income, and that he impeded the IRS by not paying taxes that were due when he transferred business operations to another company. Included with all these charges, he is being accused of using a business-cash concealment scheme by transferring assets to other parties.

Tax evasion is a serious matter and one that will catch with you in the long run. Do not fall behind on your tax payments or try to get some change through the cracks of your business or corporation.

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