| #534 - January 9, 2008 |
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| #534 Updated: 1/9/08 9:04 a.m. Co-defendant pleads guilty in mortgage fraud scheme bizjournals.com | 1/8/08 | Staff Writer A co-defendant in the $25 million mortgage and loan fraud scheme involving F. Jeffrey Miller pleaded guilty to conspiracy and money-laundering charges Tuesday in federal court in Kansas. Judy Brumble, 58, of Lee's Summit, admitted to prosecutors that she had worked with Miller and real estate agent Todd Earnshaw and other defendants to fleece mortgage lenders with bogus loan documents. Miller, former head of Miller Enterprises and Star Land Development, once ran one of the leading Kansas City-area home builders in 1999 and 2000, according to a 2006 indictment. His business ran afoul of the law when he created a pair of companies -- Associated Capital and Associated Finance -- that allegedly created falsified documents and provided closing costs and down payments to customers with weak credit without the lender knowing it. The scheme enabled customers with risky credit to get loans they otherwise wouldn't get. Prosecutors claim that Miller originally worked with Earnshaw, a real estate agent facilitating the scheme, until Miller agreed with the Kansas State Bank Commissioner to stop working with Earnshaw. That's where Brumble came in, according to the indictment. At that point, Brumble opened a company called Classic Realty Inc. so Earnshaw could continue selling Miller's homes and offering mortgage services. Brumble also marketed Miller's homes through a Web site for Maplewood Real Estate and offered mortgage services. Brumble faces five years in federal prison and as much as $250,000 in fines. No sentencing hearing has been set. Steve Middleton, another co-defendant named in the scheme, also pleaded guilty and is scheduled for sentencing March 24. That leaves Miller, Earnshaw and co-defendants Brian Rouse, James Moser and Lanny Ross waiting for trial. Investment fraud, theft trial begins for ex-pastor gazette.com | 1/7/08 | Dennis Huspeni The defense attorney for a former Colorado Springs pastor accused of luring churchgoers to an investment company, then overcharging them more than $3 million in fees, told jurors Monday his client was not even a company official and should not have been charged. Douglas Alan Scott’s trial on charges of securities fraud and theft began Monday in 4th Judicial District Judge J. Patrick Kelly’s courtroom. He could face up to 12 years in prison on each count if convicted. Scott, 47, is the former pastor of the now-defunct River of Life Church. Scott’s attorney, Terry Rector, told jurors all Scott did was find investors, he was not a broker or a sales representative for the XL Capital Partners Inc. and its hedge fund called the Vision Fund. A Denver grand jury indicted Scott in 2006. The fund collected nearly $24 million from 450 investors, including several churches and religious organizations based in Colorado Springs. Investigators found $7.5 million from the fund was allegedly used to buy a $4.1 million corporate jet, a personal home for a company official and undisclosed referral fees to those who helped recruit investors. First Assistant Attorney General Jean Woodford told jurors Scott misled investors by not revealing how much of a referral fee he would be getting. He also signed a promissory note for more than $3 million to help buy the jet when he knew “the only assets (the company had) was money of investors.” “Theft means he knowingly used the money of others, through deception, for the purchase and use of an airplane,” Woodford said during her opening statements. Rector laid the blame for everything on Hamilton Alan Bird, 44, the head of XL. “Alan Bird in the key,” Rector said. He “formed the division fund in 2002 for the purpose of trading other people’s money.” Bird was in charge of making sure investors had all the information required by law, Rector said. “The records are clear. Mr. Scott was merely a signer for the debt. He never received any assets,” Rector said. “There are eight others who received referral fees, but he’s the only one who’s here.” Hedge funds use sophisticated investment strategies such as selling borrowed stock to make profits on price declines and buying subprime mortgages. The aggressive funds have grown in popularity nationally because of reported high returns. Ex-Analyst Sentenced for Insider Trading ap.google.com | 1/3/08 | Larry Neumeister NEW YORK (AP) — A former Goldman Sachs analyst was sentenced Thursday to nearly five years in prison for his role in an insider trading operation that used illegal tips from a grand juror and leaked copies of a market-moving magazine to make millions of dollars. Eugene Plotkin, 28, apologized before he was sentenced to four years and nine months in prison by U. S. District Judge Richard J. Holwell in Manhattan. He was ordered to pay a $10,000 fine and to forfeit up to $6.7 million, the amount of the scam's illegal profits. "I'm ashamed and deeply sorry for what I did," Plotkin said. The judge ordered Plotkin to report to prison by March 15. He told him he found the crime to be an "egregious breach of trust." Plotkin pleaded guilty to conspiracy to commit securities fraud and eight counts of insider trading. Most of the profits have been secured by federal authorities who froze bank accounts when the fraud was discovered. The charges carried a potential maximum prison term of 165 years, but a plea deal enabled a much lower sentence. The prosecution began after regulators noticed unusually high trading volume before a merger announcement and discovered that a retired seamstress in Croatia, the aunt of a defendant, had made more than $2 million. Prosecutors said Plotkin ran the schemes, enlisting David Pajcin, a former Goldman Sachs Group Inc. analyst who has pleaded guilty to charges in the case and is cooperating with the government. They said Plotkin introduced Pajcin to his college buddy Stanislav Shpigelman in 2004 at a Russian day spa and sauna in lower Manhattan. Shpigelman worked as an analyst at Merrill Lynch & Co.'s mergers-and-acquisitions division. In exchange for information on six pending mergers or acquisitions, Shpigelman received cash and promises of future payments based on a percentage of profits. Shpigelman pleaded guilty to conspiracy to commit insider trading and was sentenced last year to more than three years in prison. Accountant Sentenced for Fraud ap.google.com | 1/8/08 | Veronika Oleksyn VIENNA, Austria (AP) — A court convicted an accountant Tuesday of embezzling $1.8 million from the Helsinki Federation for Human Rights to support his mistress — a crime that forced the respected group to fold. The Vienna-based Helsinki said on its Web site that the fraud scheme forced it to seek bankruptcy and a decision on final liquidation is expected by the end of the month. The Vienna court sentenced the 43-year-old accountant to three years in jail, two of which were suspended. His 31-year-old girl friend was sentenced to two years, 16 months of which could be served on parole, the Austria Press Agency reported. The names of the two were not immediately available. The accountant, while working for Helsinki, channeled money to his bank account under the guise of financing human rights projects, APA's court report said. He also used the organization's ATM card for personal purposes. But his misuse of funds went unnoticed for six years. The agency reported that his mistress, 31, gambled away up to $7,000 a week at poker and once told him she needed $44,000 to open her own hair salon. She also used it to finance a breast augmentation and a nose job. The man testified that the woman told him she was expecting a large inheritance, and had promised she would pay him back. He said he found out about the plastic surgery only after it had been performed. He said he would not have agreed to financing the operations had he known about them ahead of time. "I was basically her slave," APA quoted the man, who is married and has children. The couple met in a pizzeria where the woman worked as a waitress. The woman testified she was unaware of the illegal origins of the money. She was convicted of concealment and receipt of stolen goods. Helsinki's top official said the group had no choice but to shut down. "This had to be done due to the Federation's grave financial crisis caused by an economic crime," Ulrich Fischer, IHF president, wrote in the statement posted Dec. 7 on the group's Web site. "The former IHF financial manager has been taken in pretrial detention after he confessed to having embezzled a large amount of money over several years," Fischer wrote then. According to its Web site, the International Helsinki Federation for Human Rights worked as a an umbrella group for rights groups across Europe. One of its main focuses was to monitor compliance with international human rights standards. "Missing" canoeist couple facing extra charges uk.reuters.com | 1/8/08 | Andrew Hough LONDON (Reuters) - A man who "returned from the dead" after apparently being lost at sea in a canoeing accident five years ago will face extra charges, as will his wife, Cleveland Police confirmed Tuesday. John Darwin, 57, and his wife Anne, 55, will face additional charges of obtaining money by deception when they appear before Hartlepool Magistrates' Court on Wednesday, a spokesman said. The pair already face charges of deception by dishonestly claiming his life insurance money. Anne Darwin, who was arrested following her return from Panama where she had recently moved, is charged with dishonestly obtaining 25,000 pounds by money transfer and dishonestly obtaining 137,000 pounds by money transfer. Her husband is further charged with making a false declaration to get a passport. He walked into a London police station in December claiming amnesia after apparently drowning at sea in a canoeing accident five years ago, sparking days of international media coverage. The couple's sons, who are not suspects, have said they want no further contact with their parents after their mother revealed a photo of her and her husband taken together in Panama last year was genuine. Anne Darwin had reported her husband missing in 2002 when he failed to return home after canoeing in the North Sea near their home in Hartlepool, in the North East. A few weeks later the shattered remains of his red kayak were discovered. A coroner declared Darwin dead in 2003 after a police inquiry. ________________________ |