Tuesday, July 26, 2011

Two Arrested in $17 Million Mortgage Fraud Scheme

PHOENIX—A federal grand jury in Phoenix returned an indictment earlier this week against mortgage broker Michele Marie Mitchell, 43, of Glendale, and her alleged associate, Jeremy West Pratt, 32, of Phoenix. The indictment, returned on June 28, charged Mitchell and Pratt each with one count of conspiracy and one count of wire fraud. Special agents of the Internal Revenue Service and the FBI arrested Mitchell and Pratt on Thursday.

“With these arrests, we are confronted once again with the damage and pain that mortgage fraud caused in our community and to our economy,” said U.S. Attorney Dennis K. Burke. “Criminals out to make a fraudulent profit deepened this mortgage crisis and made recovery more difficult. We all appreciate the efforts of the IRS and the FBI in bringing this particular scheme to a stop, and we will continue to investigate and prosecute others like it.”

Special Agent in Charge Dawn Mertz of the IRS Criminal Investigation stated, “This case is yet another example of a ‘get rich quick’ scam gone bad. Unfortunately, mortgage fraud schemes such as this one impact all of us with deflated property values, empty homes, and significant financial consequences to banks, taxpayers, and neighborhoods.”

“Mortgage fraud continues to persist as a serious crime problem in Arizona,” said Steven R. Hooper, FBI Acting Special Agent in Charge, Phoenix Division. “This indictment signifies that the FBI’s Mortgage Fraud Task Force is continuing its efforts to protect our community and financial institutions from the effects of mortgage fraud.”

The indictment alleges that Mitchell portrayed herself as a mortgage broker, loan officer, and real estate investor. She allegedly did business at an office on East Vista Bonita Drive in Scottsdale. Pratt is alleged to be the president of Arizona Cooling Control Plus, Inc. and involved in construction and remodeling work. The indictment charges that as part of their alleged conspiracy, Mitchell and Pratt recruited people with good credit scores to act as straw buyers to ostensibly purchase one or more properties as investments. Mitchell and Pratt allegedly enticed the straw buyers by offering to pay a kickback of up to $15,000 per property or to make the mortgage payments until the property could be resold for a profit, or both. In addition, the indictment charges that the defendants submitted false loan applications and supporting documents to induce lenders to fund loans. Then, at the close of escrow, they enriched themselves by directing a portion of loan proceeds, or “cash back,” to a company which one of them controlled.

The indictment goes on to allege that between October 2005 and February 2007, Mitchell and Pratt obtained mortgage financing for 17 properties and induced lenders to fund approximately $17 million in loans, resulting in over $2.4 million dollars in cash back. The properties are located in Glendale, Scottsdale, Surprise, Peoria, Goodyear, and Phoenix. The indictment charges that the defendants failed to make the mortgage payments as promised and that each of the 17 properties went into foreclosure.

Conviction for the crimes of conspiracy and wire fraud each carries a maximum penalty of 30 years in prison, a $1 million fine, or both. This case has been assigned to United States District Judge James A. Teilborg. In determining an actual sentence, Judge Teilborg will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.

Fugitive Extradited from Romania Facing Federal Charges

OXFORD, MS—John Marshall Alexander, United States Attorney for the Northern District of Mississippi; Daniel McMullen, Special Agent in Charge of the FBI in Mississippi; and Jeff Woodfin, Acting United States Marshal for the Northern District of Mississippi, announce that:

Thomas Lowell Ketchum, 53, of Saltillo, Mississippi, a fugitive who has been hiding out in Romania since he was investigated by the FBI in 2005, has been arrested and extradited to the United States to face charges stemming from an indictment that was returned against him by a grand jury in March of 2006.

Ketchum, who appeared before United States Magistrate Judge David A. Sanders in Oxford yesterday, faces charges of possession of firearms by a convicted felon, possession with the intent to defraud of more than 15 unauthorized credit cards, and possession of a United States passport and Social Security number without lawful authority. He was remanded to the temporary custody of the U.S. Marshals pending an arraignment and detention hearing on March 31, 2011.

Following a diligent search by U.S. authorities, and in coordination with the Romanian authorities and the U.S. State Department, Ketchum was arrested in Romania in September 2010. He has been in Romanian custody since that time, fighting extradition. Following the exhaustion of all appeals, Romanian officials agreed to extradition, and Deputy U.S. Marshals traveled to Romania last week to return Ketchum to the United States.

Daniel McMullen, Special Agent in Charge of the FBI in Mississippi, stated: “Those accused of criminal conduct should not fool themselves into thinking they can flee the United States to avoid prosecution. Nor should they believe that the passage of time will protect them from apprehension. The FBI’s role is not to determine guilt or innocence. Our role in fugitive matters is to bring the accused before the appropriate court and allow the judicial process to take its course. For over five years, special agents and task force agents of the FBI and deputy U.S. Marshals persevered in their efforts to locate and apprehend this subject. Ketchum’s arrest and return to the United States is the result of cooperation and coordination between the Romanian authorities, the United States Department of State, and federal law enforcement in the state of Mississippi.”

According to the indictment, Ketchum used the name and Social Security number of his deceased brother to obtain multiple credit cards and a United States passport, all without lawful authority, in violation of 18 U.S.C. Sections 1028(a)(6) and 1029(a)(3). It is also alleged in the indictment that Ketchum was a previously-convicted felon in possession of four firearms, in violation of 18 U.S.C. Section 922(g)(1).

United States Attorney John Marshall Alexander stated: “The successful apprehension and return of Mr. Ketchum to the United States is a prime example of how diligence and cooperation among law enforcement entities can bring about desired results. The U.S. Attorney’s Office is grateful to the FBI and the U.S. Marshals for their persistence in discovering the whereabouts of this individual, and thus ensuring that this important case, involving multiple instances of fraud, is brought to completion.”

If convicted on all counts, Ketchum faces up to 35 years in prison, up to $750,000 in fines, and up to nine years’ supervised release.

An indictment is merely a charge and the defendant is presumed innocent until proven guilty.

This case is being investigated by special agents and task force agents of the Federal Bureau of Investigation and the United States Marshal Service and is being prosecuted by Assistant United States Attorney Paul Roberts.

Saturday, July 16, 2011

Organized Romanian Criminal Groups Targeted by DOJ and Romanian Law Enforcement

FBI: An ongoing Internet fraud scheme conducted by several networks of organized cyber criminals in Romania and the United States has been disrupted as a result of a series of law enforcement actions coordinated since 2010 between Romanian and U.S. law enforcement, including numerous arrests and searches that took place yesterday in Romania.

More than 100 individuals have been arrested and charged in Romania and judicial districts in the United States as a result of close cooperation between the Romanian General Inspectorate of Police, Directorate for Combating Organized Crime, the Romanian Directorate for Investigating Infractions of Organized Crime and Terrorism (DIICOT), the Romanian Intelligence Service (SRI), the General Directorate of Jandarmeria in Romania (GIJR) and the FBI, the U.S. Secret Service, the Computer Crime and Intellectual Property Section (CCIPS) in the Justice Department’s Criminal Division, and the U.S. Attorneys’ Offices for the Southern District of Florida, the Western District of Pennsylvania and the Eastern District of Missouri.

Yesterday, Romania law enforcement executed 117 searches targeting more than 100 individuals allegedly involved in the fraudulent scheme involving fake sales of merchandise through the Internet. Romanian law enforcement targeted individuals organizing and perpetrating this fraud from Romania.

According to U.S. court documents, in many of the cases, conspirators located in Romania would post items for sale such as cars, motorcycles and boats on Internet auction and online websites. They would instruct victims located in the United States and elsewhere who wanted to buy those items to wire transfer the purchase money to a fictitious name they claimed to be an employee of an escrow company. Once the victim wired the funds, the co-conspirators in Romania would text information about the wire transfer to co-conspirators in the United States known as “arrows” to enable them to retrieve the wired funds. They would also provide the arrows with instructions as to where to send the funds after retrieval. The arrows in the United States would go to money transmitter service counters such as Western Union or MoneyGram International, provide false documents including passports and drivers’ licenses in the name of the recipient of the wire transfer, and obtain the funds. They would subsequently wire the funds overseas, typically to individuals in Romania, minus a percentage kept for their commissions. In some cases, co-conspirators in Romania also directed arrows to provide bank accounts in the United States where larger amounts of funds could be wired by victims of the fraud. The victims would not receive the items they believed they were purchasing.

The Romania investigation is being conducted in conjunction with ongoing criminal investigations in the United States that also have been targeting this criminal activity. Since May 2010, the FBI and the U.S. Attorney’s Office for the Southern District of Florida have arrested and prosecuted numerous individuals from Romania, Moldova and the United States allegedly involved in this fraud scheme. Vadim Gherghelejiu, 29, of Moldova; Anatolie Bisericanu, 25, of Moldova; Jairo Osorno, 22, of Surfside, Fla.; Jason Eibinder, 22, of Sunny Isles Beach, Fla.; and Ciprian Jdera, 25, of Romania, have been convicted in the Southern District of Florida of conspiracy to commit wire fraud.

A 21-count indictment returned in Miami on Feb. 22, 2011 charged Pedro Pulido, 41, of Pembroke Pines, Fla.; Ivan Boris Barkovic, 19, of Sunny Isles Beach; Beand Dorsainville, 20, of North Miami Beach, Fla.; Sergiu Petrov, aka “Serogia,” 27, of Moldova; Oleg Virlan, 32, of Moldova; Marian Cristea, 22, of Romania; and Andrian Olarita, 26, of Moldova, with conspiracy to commit wire fraud and substantive counts of wire fraud. Pulido, Barkovic, Dorsainville and Olarita have pleaded guilty to conspiracy to commit wire fraud. Petrov, Virlan and Cristea remain at large and are considered fugitives.

On July 8, 2011, Adrian Culda, 37, of Romania, was arrested and subsequently charged in a complaint filed in Miami with conspiracy to commit wire fraud as part of this alleged cyber crime activity. Tiberiu Zachiteanu, 19, of Romania, was also charged in the same complaint with conspiracy to commit wire fraud and was arrested on July 12, 2011.

An investigation conducted by the U.S. Attorney’s Office for the Western District of Pennsylvania led to the arrests of seven defendants, including one individual in Pittsburgh, three individuals in the Eastern District of Missouri, two individuals in Fort Bend County, Texas, and one individual in Kentucky. Marion Potcovaru, 30, of Romania, pleaded guilty on Feb. 2, 2011, to wire fraud related charges in the Western District of Pennsylvania. In St. Louis, the U.S. Attorney’s Office charged Augustin Prundurelu, 32, and Georgiana Andrei, 25, both of Romania, with forgery and passport fraud. Both defendants pleaded guilty and each were sentenced to six months in prison and ordered to pay restitution of $18,365. In addition, Sorin Mihai Madaian, 22, of Romania, pleaded guilty on May 23, 2011, in the Eastern District of Missouri to passport fraud charges. Victor Angelescu, 28, of Romania, was charged by the Commonwealth Attorney’s Office for the 27th Judicial Circuit of Kentucky with related wire fraud charges. In Fort Bend County, Texas, Klara Mirabela Rusu, 24, and Eduard Sorin Neacsu, 36, were arrested on June 3, 2011, by officers from the Houston Police Department and charged by Fort Bend and Harris County authorities with money laundering and making false statements to obtain property. Rusu was indicted by a Fort Bend County grand jury on July 11, 2011, and charged with the felony offenses of money laundering and making a false statement. Neacsu’s grand jury date is pending due to possible additional charges. Both individuals are currently detained.

According to court documents, detectives observed Rusu and Neacsu enter a WalMart store, where Rusu and Neacsu presented a MoneyGram voucher and false identifications to a store clerk. Rusu and Neascu received $2,890 through Western Union and Money Gram from a victim in another state who had wired the money in response to an Internet advertisement for merchandise, which the victim never received. Rusu and Neacsu were later arrested and a search of their room produced a large amount of U.S. currency, computers, printers, plastic for manufacturing false identifications, an exacto knife, multiple mobile phones and false identifications with Neacsu’s picture.

An indictment is merely an allegation, and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The Internet fraud scheme has resulted in an estimated loss of more than $10 million from victims, including those in the United States. The full loss amount and identification of additional victims is ongoing.

Over the last 10 years, U.S. law enforcement authorities have strengthened ties with Romanian law enforcement authorities to address the rising threats posed by Romanian-based organized cyber criminal networks. To date, hundreds of defendants have been arrested and charged in the United States, Romania, and other countries as a result of this cooperation.

The Department of Justice International Organized Crime Intelligence and Operations Center (IOC-2) has provided support and assistance to these ongoing investigations. IOC-2 partners with various law enforcement agencies to combine data and produce actionable leads for investigators and prosecutors working nationwide to combat international organized crime. IOC-2 also coordinates the resulting multi-jurisdictional investigations and prosecutions with its member agencies, U.S. Attorneys’ Offices and foreign law enforcement authorities.

The ongoing investigations are being led by the FBI and the U.S. Secret Service. U.S. Immigrations and Custom Enforcement is participating in the investigation related to the Pittsburgh cases. The federal cases are being prosecuted by Assistant U.S. Attorneys from the U.S. Attorneys’ Offices for the Southern District of Florida, the Western District of Pennsylvania and the Eastern District of Missouri, with support from CCIPS.

Local law enforcement assisting in these prosecutions include the Medina County, Ohio, Sheriff’s Office; the London, Ky., Police Department; Memphis, Tenn., Airport Police; the Kirkwood, Mo., Police Department; the Fort Bend and Harris County, Texas, District Attorneys’ Offices; the Houston Police Department; the Hallandale Beach, Fla., Police Department; the Pembroke Pines Police Department; the Miami Gardens Police Department; the Sunny Isles Beach Police Department; the North Miami Beach Police Department and the Davie, Fla., Police Department.

Also assisting law enforcement were the FBI’s Internet Crime Complaint Center (IC3), Wal-Mart Stores, Western Union, MoneyGram International, the National Cyber-Forensics and Training Alliance (NCFTA) and Publix Grocery Stores.

Victims of Internet crime are encouraged to report evidence of fraudulent activity to the IC3 via www.ic3.gov.