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White Collar Crimes Blog

Former CEO Of Non-Profit Health Clinics Convicted Of Fraud And Money-Laundering

We expect the CEO of a non-profit to be in business to provide for the weakest and most vulnerable among us. That is certainly what was expected of Jonathan Wade Dunning, who was in charge of 2 non-profit health care clinics that provided urgent care for the indigent in the Birmingham, Alabama region. He ran the financial show for Birmingham Health Care and Central Alabama Comprehensive Health since 2008, and he received federal funds to help do it.

Then, in 2011, the FBI received a tip that Dunning was defrauding the government, and was already under investigation by the state health services and the Inspector General. The Internal Revenue Service-Criminal Investigation Division joined the state investigators and the FBI to investigate.

It appeared that Dunning had created for-profit companies and then steered contracts with the clinics to his companies. After he left the company, he formed a group called the "Synergy Entities" and picked his successor as CEO. This allowed him to continue skimming federal funds through illegal contracts with the clinics. One of the companies he owned was a credit union that he made give him a $85,000 loan without filling out the normal forms so he could buy a Jaguar for his personal use. He funneled the money from his business's illicit dealings in to his own accounts, and his clinics suffered for it.

This lasted for 7 years, and he squeezed $16 million from the federal government. The group of state and federal investigators brought him to court and got him convicted on 98 counts of bank fraud, wire fraud, conspiracy and money-laundering. He was sentenced to 18 years in prison and to pay $13.5 million in restitution. He has to give up any interest in real property he has gotten through his crime.  

White collar crime can crop up anywhere, and whenever it involves federal funds, the FBI is not far away. If you think you are involved in a case on the federal level, you want a lawyer with experience. Fortunately, Ashley D. Adams, PLC has done plenty with the federal courts, so feel free to contact us if you want any help.

Qui Tam/False Claims Act Litigation Expected to Rise After News Coverage

In early January 2017, both The Arizona Republic and Cronkite News reported on a problem our law office knows all too well, prescription fraud. It’s something that has plagued Arizona and other states across the nation for years. Unfortunately, it appears to be getting worse, which could subsequently trigger a rise in Qui tam/False Claims Act Litigation.

It’s an area of federal law meant to protect people who help bust prescription fraud operations and similar criminal organizations. Extensive details about the act and its various modifications are found in law books within the Offices of the United States Attorneys.  As the laws are currently written, they require certain standards to be met.

For example, let’s imagine that a receptionist in a doctor’s office feels the need to send a fraud alert in to the Arizona State Board of Pharmacy but worries that she’ll be fired or worse for whistle blowing. She may need to provide copies of the documents that triggered the need for an alert to a Qui Tam/False Claim Act Attorney. Why show the documents to a Qui Tam/False Claim Act Attorney?

Simply put, upon review, the attorney may request that the initial investigation be conducted without the doctor or board’s knowledge. Consequently, the receptionist would not have to fear job loss or other retaliation. We should also mention that in addition to offering protection, the laws enable some litigants to be rewarded for their efforts. Accordingly, the rewards may also alleviate any concerns whistleblowers may have about potential losses of income.

With that in mind, we encourage anyone thinking about sending a fraud alert to the Arizona State Board of Pharmacy to contact Ashley D. Adams in Scottsdale first. Ashley D. Adams is a Qui Tam Attorney with experience handling prescription fraud cases as well as others that involve healthcare.

Mortgage Fraud Victims Left Owing Second or Reverse Mortgages, plus Their Original Mortgage

Last December, five people were indicted and charged in a conspiracy to commit bank fraud, wire fraud and mail fraud. The charges were linked to a mortgage debt-elimination scheme that, ultimately, defrauded homeowners and banks.

According to a report in the Miami Herald, Bruce Lewis, 65, Anthony Vigna, 59, Jacqueline Graham, 47, Paula Guadagno, 58 and Rocco Cermele, 54, conspired through their Pillow Foundation and Terra Foundation (Terra) between 2011 and 2012 to carry out their fraudulent activities:  Their fee-based operation solicited homeowners who were struggling to make mortgage payments.

Clients were told that their monthly fees to the Terra Foundation covered items such conducting a client’s property audits, which “they often failed to perform.

Terra clients were often coaxed into taking out a second or reverse mortgage on their properties with the assumption they had already been “discharged of their first mortgages.” A number of these mortgage fraud transactions were taken out through the HUD Home Equity Conversion Mortgage Program; the defendants were able to claim “substantial portions of the proceeds.”

Moreover, the clients were often paying not only both their second or reverse mortgage, but also on their property’s original mortgage. The charges claim that around 60 fraudulent deals totalling over $33 million were made in Westchester and Putnam Counties in New York and Connecticut.

Preet Bharara, the Manhattan U.S. Attorney noted…

“...(they) preyed on vulnerable homeowners struggling with their mortgage payments and, with their greed, victimized them further...these homeowners were left much worse off, in even greater debt.”

If convicted, the five defendants face a “maximum penalty of 30 years in prison,” plus a fine of $1 million.

Contact us if you feel you are in need of counsel. Our experience includes processing complicated, federal cases.

Lesser Known Types Of Real Estate Fraud

Real estate fraud is a type of white collar crime, and it's a pretty wide category at that. It describes any type of fraud that affects a person's right to title of use of property. It encompasses equity skimming, foreclosure scams, and inflated appraisals. That isn't all, however. There are a host of lesser known scams involving real estate that a person should be on the look out for. Here are a few examples of what you could see.

Mortgage Elimination Schemes

   This is where a company convinces people that they can eliminate their mortgage in a very short period of time, frequently a year. The company will claim that there are loopholes, and that you can go through some administrative process that will wipe out a person's mortgage debt without risking foreclosure or hurting their credit score. The company asks for a lump sum up front to reveal the special process, possibly in a class. Of course, there are no loopholes or administrative process. The company gives a lot of misinformation and then scampers off with the money.

Double Sale 

  A double sale is when a mortgage is sold to more than one investor. The scammer will accept a legitimate application from a buyer and then make a copy of the loan package. He or she sends the copies to two separate lenders to get more than one loan. One of the loans goes to the borrower, and the second one goes to the perpetrator. Guess who is stuck actually paying the loan?

Short Sale Fraud

   This is where someone buys a property and then refuses to pay the mortgage, which then goes in to foreclosure. The perpetrator then gets a straw buyer to come in and offer to buy the property for way less than the borrower's loan balance. Naturally, they take off with the remaining money and the house.

    It should be noted, any mortgage fraud is a federal crime, and they rules involved can be a bit arcane. If you think you are witnessing real estate fraud, contact us. We have the experience to untangle the cons.

Federal Crime: Computer Fraud

The intent when someone commits fraud is to achieve financial or personal gain. Many types of fraud exist and are commonly committed all across the country. One such type is computer fraud.

Computer fraud is a federal crime that's prosecuted under federal (not state) law, which means that the law applies to everyone, regardless of where you live in the United States. If you're found guilty of computer fraud, you could incur a substantial fine or imprisonment of up to twenty years, or both, depending on the circumstances.

So what is computer fraud? Using a computer to steal someone's assets or information that leads to the theft of someone's assets is computer fraud. This fraud can include getting access to credit card numbers, bank account numbers, social security numbers, or other personal information. Even simply breaking into a computer can sometimes be considered computer fraud, if the information exposed has value. Additionally, after gaining access, damaging a computer or a computer system is also considered computer fraud.

These crimes result in millions of dollars stolen every year from victims. As such, the federal government takes computer fraud seriously and actively pursues cases all across the country.

Two Such Cases Involving Arizona Residents:

- According to the Washington Times, a Phoenix AZ man was recently charged with computer fraud. He breached over 1,000 student email accounts at more than 75 colleges, from October 2015 to September 2016, in an attempt to hack into third-party linked accounts.

- According to the Department of Justice, a woman living in Tuscon AZ pleaded guilty to computer fraud after committing multiple offenses in two states. In 2015, she gained access to student accounts in an attempt to steal loan refund payments.

Computer fraud cases can become very involved and are too complex to handle on your own. Often times, additional charges are also filed -- such as charges of identity theft, bank fraud, credit card fraud, or some other criminal offense. If you've been charged with computer fraud or any other crime, contact us immediately for representation. We're experienced in handling complex criminal defenses and can provide you with the legal protection you'll need.

Signs of Real Estate Fraud

 If the last decade has taught us anything at all, it's that honesty in real estate is very important. Your financial health is tied intimately to your ability to make your mortgage payments, and honesty makes it more likely that you can. So, you want to know what to look for when you want to know if real estate dealer is dishonest. Real Estate fraud can break down in to many types, and each type has its own peculiarities, however they all have a few things in common. There are a couple signs to look for.

Sign 1:

   As with all types of fraud, perpetrators will demand money upfront. They want the check signed as soon as possible and will say that the deal will disappear if the victim doesn't pay up right away. They want their money before they perform whatever they promised, too.

   Scammers might also offer equity in lieu of cash to make payments, but that is just because it is easier to confuse someone about how much they paid for something that way. 

Sign 2:

    Con artists make promises that seem too good to be true. Scammers will promise to save your house from foreclosure regardless of the situation. When you are buying a property, the promised price might be lower than the contract price. They might offer assistance with loans, or third parties may be offering cash to sellers.

Sign 3:

    They are not transparent about the property. Scammers may lie about the size of a property and improvements they made. They might hide that they built a structure without obtaining the right permits. Of course, they would love it if you bought a property without ever laying eyes on it, but they would also prefer you not check out the property's history. They would rather you not find out things such as how long it has been on the market or whether it is sitting on a Superfund site.

Sign 4:

    Fraudsters tend to shun paperwork. Are there signatures missing? Are addenda and paragraphs AWOL? An honest broker will have all the appropriate documents for you to read and understand. Scammers will sometimes encourage their victims to send money by promising that the deeds or titles are on their way, but don't fall for that.

  When scammers apply for loans, their income won't match their tax returns, and they will count capital infusions as though it was regular income. 

   Regardless of the type of real estate fraud that someone wants to perpetrate, these are some signs that you should dig deeper. If you think you are seeing real estate fraud, contact us, and we will help you. 

Air Loans: Making Loans Out Of Nothing

You may remember that mortgage fraud is broken into 2 groups: fraud committed by loan applicants who lie for housing and fraud committed by industry insiders who lie for money. Air loans go firmly in the second category. Their elaborate subterfuge and paperwork requires brokers with inside knowledge.

How They Work

Air loans are created by brokers who invent borrowers and properties, then set up accounts for payments and custodial accounts for escrows. They can go so far as to set up offices with phones where people pose as the various institutions necessary to verify information on loan applications. They might set up mailboxes to keep up the deception. They apply for loans with invented appraisal values and title histories. Ultimately, these loans go into default and the creditors lose everything. Meanwhile, the brokers profit off the completed loan transactions.

Red Flags For Air Loans

If you are making a loan, you might want to watch out for a few signs that would indicate that someone is trying to pull a fast one.

First, is someone other than the borrower is completing the application. It is not a sure sign, but it is easier to hide deception through a third-party.

Second, you see differences between the credit report and applications. Credit reports can accumulate bad information over time, so it is another pink flag, if you see what I mean. It could be that the credit report is off. Still, the report should have the address right, at least. There shouldn't be many major differences.

Third, the people on the application all have generic names. The employer, the borrower and the lender have names such as Jane Smith and Joe Brown. Again, some people have generic, common names. All of them, though? There should be at least some unusual names.

Fourth, the borrowers show no interest in such petty details as the interest rate, type of loan, and the closing fees. You know, the little things that a person that intends to actually pay back the loan would need to know. That is a serious give away.

If you suspect you may be seeing an air loan in action, contact us. We have all the experience you need to deal with it.

Arizona Takes Medicaid Fraud Seriously

Arizona has long been known as a place that does not tolerate crime, especially crime that victimizes the sick. The Arizona Attorney General's Office has a specialized Medicaid Fraud Control Unit to weed out fraud and abuse committed by Medicaid employees, providers, and facilities.

This group consists of a nurse investigator, a paralegal, attorneys, investigators and support staff. They spend their days checking out claims of billing for services not rendered, double billing, kickbacks, embezzlement, denial of care, and abuse. So, what have they been up to lately?

Well, there is the case of the Arizona physician who had to pay $700,000 in restitution and give up his license after he was caught massively overbilling Medicaid through his pain management clinic. A doctor named Yeh ran a clinic one day a week where he shortened patient visits and then inflated bills by having a computer enter false information in patient's charts. He had prescriptions for narcotics that were written out before even conducting a medical exam. He was sentenced to 2 and a half years in prison.

Then there is Dr. Takyar, who was indicted on 42 felony counts for prescribing controlled substances without medical reason. He also compensated people for referring patients, in other words, he used a system of kickbacks. A pharmacist was charged on similar grounds in a separate case. The Fraud Control unit has been busy rooting out beneficiaries who have passed on and otherwise recouping money from con artists.

Anyone who has suffered from Medicare fraud can file a report with them on their website. If you have been accused of fraud, or are a victim of fraud and need help bring the culprits to justice, you will want lawyers deeply versed in the intricacies of health care cases and familiar with all the players. If you find yourself involved in a health care fraud case, contact us.

How The FBI Treats Mortgage Fraud

You may know that mortgage fraud is considered a federal crime and that the government takes the charges very seriously. What you might not know is how the FBI goes about prosecuting these crimes. This is an issue. Not knowing the intricacies of how a charge is classified and dealt with leaves you lost when you contact them. Here, then, is how the FBI views and treats mortgage fraud.

Broader Umbrella

Mortgage fraud is a subcategory of Financial Institution Fraud, which is where crimes are aimed at stealing from federally-insured financial institutions such as banks and credit unions. Credit card scams, account holder impersonation, and embezzlement count as Financial Institution Fraud (FIF). Identity theft is considered  a FIF where the institution and the individual whose identity was stolen are considered victims. FIF is broken down in 2 groups: external fraud committed by outsiders, such as counterfeit checks cashed by random con artists, and internal fraud committed by employees, such as embezzlement.

However, mortgage fraud gets a special place in the FBI’s heart. They expanded the definition when the housing market collapsed to let them go after fraudsters who victimize distressed homeowners. In 2011, they launched a sting for it caused Operation Stolen Dreams, and while the sting ended, their focus remains strong.

Breakdown of Mortgage Fraud

The FBI breaks mortgage fraud into 2 categories. There is fraud for profit. This is where people, mostly industry insiders, use the lending process to steal from lenders or homeowners. Equity skimming, Air loans (where brokers invent borrowers and properties to steal from creditors) and Reverse Mortgage Fraud are examples of this. The FBI focuses on these types of cases as much as possible.

The other type of mortgage fraud is fraud for housing. This is when borrowers commit fraud to get or keep a house. Lying on the application forms about assets and inflated appraisals are some examples.

Who Investigates, What Department

Their criminal branch investigates white collar crime, but they have specially designated groups for FIF and mortgage fraud. The FBI has several Financial Crimes Task Forces composed of state, federal and local agencies. These are stationed at field offices throughout the country, one of which is in Phoenix, Arizona.

As you can see, anyone charged with mortgage fraud is facing a lot of complications. If you need help with a case, contact us. We have plenty of experience dealing with federal cases.

Federal Crime: Mail Fraud

Mail fraud is a federal crime prosecuted under federal criminal law, not under state criminal law. State laws only apply to the people who live or work in a particular state. Federal law applies to everyone in the United States. If an explicit conflict arises, federal law prevails.

If convicted of mail fraud, you can incur up to 20 years in a federal prison or even longer depending on the circumstances. A fine of up to $250,000 can result or higher fines for fraud involving financial institutions. In lieu of prison, a conviction could include probation over several years and/or restitution payments to victims. Whatever the punishment, mail fraud is a serious charge with serious consequences.

What constitutes mail fraud?

The crime of mail fraud occurs when someone has knowingly defrauded or attempted to defraud someone else of money or property using the post office or other mail service. Mail fraud can also be committed over the internet or by using the telephone to illegally gain funds from people. It is a crime of intent, and not something that occurs from a misunderstanding or something done without meaning to defraud anyone.

Mail fraud is a crime categorized as white-collar. Such crimes are usually committed by someone in a business -- an employee, manager, or senior officer -- for financial gain. The label of "white-collar" has become attached to these crimes because the people committing them are generally considered middle or upper class.

Additional fraud, such as credit card fraud or real estate fraud, often occurs along with mail fraud. Multiple charges can quickly add up, resulting in even more penalties if you're convicted.

If you find yourself charged with mail fraud, contact us for the legal protection you need. No white-collar criminal case is too complex or too challenging for us. When it comes to criminal defense, we believe that the best defense is a strong offense!

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ASHLEY D. ADAMS, PLC
4301 N. 75th St., Suite 105
Scottsdale, AZ 85251

Phone: 480.219.1366
Cell: 602.524.3801
Fax: 480.219.1451

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The attorneys at Ashley Adams PLC handle federal criminal cases and state criminal cases throughout Arizona including the cities of Phoenix, Scottsdale, Glendale, Mesa, Tempe, Ahwatukee, Maricopa, Gilbert, Peoria, Surprise, Goodyear, Litchfield Park, Avondale, Chandler, Casa Grande, Florence, Queen Creek, Deer Valley, North Pinal and Sun City as well as those living in and around Maricopa County, Pinal County, Pima County, Yuma County and Yavapai County.