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FRAUDBARON.com
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#499 Updated: 11/1/07 2:00 p.m.

Former Rochelle bank official sentenced for embezzlement
Rockford Register Star | 10/31/07 | Staff Reporters
former Rochelle bank executive will spend 15 months in federal prison after he embezzled
more than $150,000 from his former employer, Lincoln State Bank.  Edward J. Hickey, 67,
was sentenced Tuesday in federal court.  He pleaded guilty in September to the crime,
admitting that he used a corporate credit card intended for bank-related expenses to
spend more than $92,860 in personal purchases. He also admitted that he did not
reimburse the bank.  Hickey’s other crimes include:

Between March 2001 and March 2004, Hickey granted more than $100,000 in loans to
family members and used part of the loan proceeds for his personal benefit without
disclosing his involvement in the transactions.

Between January 2001 and September 2005, he took more than $9,534 in bank money by
debiting general ledger expense accounts and crediting his joint checking account at Lincoln
State Bank. He intercepted 22 checks payable to the bank and used them to buy more than
$25,800 worth of cashier’s checks, which he also used for his personal benefit.

Hickey admitted that he deposited more than $3,000 in bank money into four general
ledger accounts to hide his using $5,000 of the bank’s money to make a down payment on
a house bought by one of his relatives.  The FBI and the FDIC investigated the case.

Former CEO faces new counts of money laundering
Dayton Daily News | 10/31/07 | Lou Grieco
DAYTON — Michael E. Peppel, the former CEO of MCSi who was indicted last year on 26
criminal counts, now faces an additional 6 counts of money laundering.  Those counts were
added in a superseding indictment dated Oct. 9, which had been sealed until yesterday,
when Senior U.S. District Judge Walter H. Rice ordered it unsealed.  Peppel will be arraigned
on the new indictment on Nov. 20.  The original indictment charged Peppel with securities
fraud, conspiracy to commit securities fraud, filing false SEC reports, mail fraud, wire fraud
and money laundering. Those 26 counts are part of the new indictment.  Publicly traded
since 1996, MCSi, a computer sales firm, went bankrupt in 2003. Between 1996 and 2000,
MCSi acquired 26 companies. At the peak of its business, MCSi had offices at 160 locations,
more than 50,000 clients, 2,000 vendors and 1,300 employees, according to the
indictment.  The government claims Peppel and others caused MCSi to report net income
from continuing operations of nearly $18.7 million for the year 2001, instead of an actual
loss of about $24.7 million. The company overstated its reported gross revenue by about
$28 million for the quarter ended March 31, 2002, the government said.  In July, former
Chief Financial Officer Ira Stanley pleaded guilty to three felony counts: conspiracy to
commit mail fraud, wire fraud and securities fraud, one count of mail fraud, and one count of
false certification of a financial report by a corporate officer. Stanley's October 15
sentencing was postponed until next year.

Ex-Agent Pleads Guilty to Fraud
AP.Google.com | 10/31/07 | Eduardo Montes
PHOENIX (AP) — A former federal agent who had investigated health care fraud pleaded
guilty to seizing more than $1 million to buy property and pay off his mortgage, officials said
Wednesday.  Scott Allen Gompert pleaded guilty Tuesday in federal court to a charge of
forging the signature of a judge or court officer and to a charge of bank fraud. He also
agreed to forfeit about $550,000 in cash and some property.  He faces as many as 35 years
in prison and fines totaling more than $1.2 million at sentencing in January.  "Mr. Gompert
has taken responsibility for his conduct, and we're going to wait for the sentencing to see
what happens," said his attorney, Patricia Gitre. "He's been very forthcoming about what
happened."  Gompert investigated health care fraud for the U.S. Department of Health and
Human Services. According to a statement from federal officials, Gompert used his expertise
and connections to identify bank accounts holding proceeds from fraudulent activity.  He
then created fake seizure warrants and forged federal judges' signatures to steal more
than $1.1 million during three investigations in 2005 and 2006. He deposited the money
into an account he opened at a Phoenix bank, according to the plea agreement he signed.
Gompert used part of the first seizure, which totaled more than $253,000, to pay off his
mortgage and some credit card debt and to buy a 2005 Toyota Avalon, according to the
court documents. He put some of the money he seized later into a CD.  According to court
documents, he used part of the stolen money to buy land in Peoria, a Phoenix suburb.
Court documents say he intended to go into the business of building high-end homes.

14 Halloween financial horror stories (Excerpt)
BankRate.com | 10/31/07| Leslie McFadden
In the spirit of Halloween, we found the spookiest reader stories that creeped their way
into our editor's inbox at Bankrate. From Nigerian scams to evil customer service tricks, the
tales that follow happened before and will happen again.

1. Tax refund rip-off
2. Eerie employment offer
3. Web of worthless checks
4. Insane logic
5. Frightfully sweet justice
6. Rotten recording trick
7. Phantom puppy
8. Lifeless interest rate
9. Taken for a magic carpet ride
10. Undead debt collector
11. Wallet weight loss
12. Fake sports memorabilia
13. The company that vanished  
14. Grave mortgage lending  

Shareholder lawyer Lerach pleads guilty
Reuters.com | 10/29/07 | Gina Keating
LOS ANGELES (Reuters) - William Lerach, a top U.S. class action attorney who won billions
for Enron investors, pleaded guilty on Monday to criminal conspiracy and is expected to go
to prison for his role in a kickback scheme at his former law firm, Milberg Weiss LLP.
The plea agreement carries a recommended prison sentence of one to two years, but U.S.
District Judge John Walter has final discretion. Lerach also agreed to forfeit $7.75 million to
the government and pay a $250,000 fine. Sentencing is scheduled for January 14.
Lerach, 61, entered his guilty plea in U.S. District Court in downtown Los Angeles. He was
dressed in a gray suit and his distinctive mane of wiry hair was cut short. He answered
"guilty" in a strong voice, when Walter asked for his plea at the end of the half-hour
hearing. Lerach and his attorneys declined comment outside of the courtroom. New York-
based Milberg Weiss and the firm's co-founder, Melvyn Weiss, have been indicted for
allegedly participating in a scheme in which several individuals were secretly paid to serve
as plaintiffs in more than 150 lawsuits. They have pleaded not guilty and their trial is set for
next year. Lerach once headed West Coast operations for Milberg but left in 2004 to
form a San Diego-based practice. Last summer, he retired from that firm, which dropped his
name and is now called Coughlin Stoia Geller Rudman & Robbins LLP. His plea agreement
was announced last month, capping a seven-year investigation that began after a former
Milberg client, Steven Cooperman, told prosecutors about the kickback arrangements during
plea negotiations in an unrelated insurance fraud case. Prosecutors said the firm reaped
more than $200 million in attorneys' fees from lawsuits filed on behalf of paid plaintiffs over
the past two decades. The individuals were generally promised 10 percent of the attorneys'
fees received by the law firm, prosecutors said. Lerach joins former colleagues Steven
Schulman and David Bershad in pleading guilty in the case. Two former clients also have
pleaded guilty, and prosecutors are in plea negotiations with an attorney accused of acting
as a conduit for the payments. The plea marks a sudden, stunning turnabout for the hard-
charging lawyer who spent decades sparring with big corporations on behalf of
shareholders. Lerach won more than $7 billion in legal settlements for Enron investors,
amassing a large personal fortune along the way. Last year, Coughlin Stoia Geller Rudman
& Robbins LLP was the top U.S.

Embezzler makes payment
The Detroit News | 10/3107 | Mike Martindale
PONTIAC -- A woman convicted of embezzling more than $83,000 from St. Mary Magdalen
Catholic Church avoided jail Tuesday by showing up in court with a check for $30,000.
Janice Ann Labroski, 52, former church business manager for six years, was given until
Tuesday by Oakland Circuit Judge Rae Lee Chabot to make a payment toward full
restitution or spend the next year in jail. Embezzlement of more than $20,000 is a felony
punishable by up to 20 years in jail. Labroski entered a guilty plea last month under a
sentencing agreement under which she would receive three years' probation and be
allowed to pay back funds discovered missing during an audit.   "There appears to be a lot
more embezzlements going on in the county," Chabot told a courtroom including
parishioners and teachers from St. Mary Magdalen. "It (embezzlement) appeals to certain
people because it is nonviolent," she added. "But it is a betrayal. And when it involves a
church, even more so." Labroski of St. Clair Shores asked Chabot that she be permitted to
leave Michigan to be with her husband in Nevada. "I would be happy if she moved there --
no offense," said Chabot, who granted the request. Outside the courtroom, several people,
like Kathleen Fisher, said they felt Labroski "got off easy" and were disappointed she didn't
go to jail. Assistant Oakland Prosecutor Jason Pernick told Labroski that he planned to
monitor the matter and if she doesn't make payments, he will have her back in Michigan
and behind bars

Former NYC official admits stealing 9/11 funds
CNN.com | 10/30/07 | Sarah Boxer
NEW YORK (CNN) -- A former New York City official pleaded guilty Tuesday to stealing
millions of government dollars, some of which were intended to help identify victims of the
September 11, 2001, attacks, according to the U.S. Attorney's Office.  Natarajan R.
Venkataram pleaded guilty to embezzlement, money laundering and conspiracy charges
before the U.S. Attorney for the Southern District of New York, Michael J. Garcia.  The
government is hoping to sentence him to more than 20 years in prison, said Venkataram's
lawyer, Alan Seidler.  Venkataram is being held in federal prison in Brooklyn, New York.
Venkataram served as a director of New York's Office of the Chief Medical Examiner for 13
years.  After September 11, 2001, the Federal Emergency Management Agency provided
the medical examiner's office with more than $46 million to help identify victims through
forensic tests on body parts and other evidence collected in downtown Manhattan.  Along
with another employee, Rosa Abreu, Venkataram steered millions of those dollars to
fraudulent companies.  Abreu pleaded guilty to the same charges as Venkataram last week.
Venkataram "pled guilty because he is guilty, and he wanted to do the right thing. He feels
terribly about what he did," Seidler said.  His client is "truly devastated by all of this and
terribly embarrassed," he said.


Fletcher gets 21 months in prison in bank fraud case
Reformer.com | 10/30/07 | Paul Heintz
BRATTLEBORO -- Former Vernon Selectboard Chairman Douglas Fletcher was sentenced to
21 months in prison Monday after pleading guilty to bank fraud. Fletcher was also ordered
to pay full restitution of the $236,566.47 he was accused of embezzling from Merchants
Bank while he served as its Brattleboro branch manager.  In a plea deal, Fletcher also
agreed to repay the Brattleboro Area Affordable Housing Corp. $50,000 he allegedly stole
from the nonprofit in order to cover up the bank embezzlement.  He served as a board
member and treasurer of the BAAHC and had full control over its assets.  Authorities have
previously stated they believe Fletcher embezzled the money over the course of six years.
The bank uncovered irregularities in the amount of money kept in the Brattleboro branch's
vaults last March during an internal audit.  Merchants subsequently fired Fletcher and Lillian
Williams, a bank teller who also had access to the vault, though Williams was cleared of any
wrongdoing. Williams wrote a letter to the Reformer last week saying she was unfairly fired
for "trusting (Fletcher) and following his orders."  In a statement she planned to give during
Fletcher's sentencing in Burlington Monday, Williams encouraged Chief Judge William K.
Sessions III to dole out the maximum sentence to her former boss.  "It's time he learned
that his actions have consequences, just like everybody else's. He had over six years to
think about what he was doing, and how it would impact those around him when he was
caught," Williams said in the statement, which was provided to the Reformer over the
weekend. "I feel very bad for his family, especially the children, but the damage to his family
is done already, and it was done by Fletcher's own hands."  Fletcher's lawyer, Tom Costello,
did not return several calls seeking comment.  Sessions ordered Fletcher to surrender to
the Federal Bureau of Prisons Jan. 8 in order to begin his sentence.  In addition to 21
months in prison, Fletcher faces five years of supervised release.  Merchants' security officer
Garry Dean said, "In our eyes, we think (the sentence) was appropriate. It was a serious
offense."  "I think everybody's kind of happy that it's over with," he said.

Adviser Guilty in Ohio Investment Loss
AP.google.com | 10/31/07 | Joe Milicia
AKRON, Ohio (AP) — An investment adviser to the state agency for injured workers was
convicted Tuesday of fraud charges connected to the loss of $216 million in a high-risk
hedge fund, becoming the 20th person convicted in a wide-reaching scandal. Mark Lay,
chief executive and founder of MDL Capital Management of Pittsburgh, appeared stunned
after the first verdict was read, rubbing his hands together and leaning back in his chair.
He was convicted of investment advisory fraud, two counts of mail fraud, and conspiracy to
commit mail and wire fraud. He will remain free on bond and be sentenced early next year,
Judge David D. Dowd Jr. said. He could face as many as 20 years in prison. Lay's lawyer,
Richard Kerger, said he would seek to have the judge overturn the verdict and would
appeal if that failed.  Prosecutors said Lay hid the extent of the risk he took, which went far
beyond the limit state officials set. The defense contended that the financial loss to the
Ohio Bureau of Workers' Compensation wasn't a crime. The bureau was the sole investor in
a hedge fund that Lay set up in Bermuda, according to the indictment. He was accused of
repeatedly failing to tell bureau officials about the risks he was taking.  The case against
Lay emerged from a probe into the 2005 revelation that Republican donor Tom Noe was
investing state money in rare coins. Noe is now serving 18 years in prison for theft and
other crimes.  More than $300 million in losses were reported at the bureau. Former Gov.
Bob Taft pleaded no contest to charges that he failed to report golf outings and other gifts
on his disclosure forms and was fined $4,000.  In the wake of the scandal, Democrats made
significant inroads in last November's elections.

Restated Dell Profits Down $92 Million
AP.google.com | 10/31/07 | Matt Slagle
DALLAS (AP) — Dell Inc. reduced profits by $92 million in restated earnings filed with federal
regulators on Tuesday.  The restated earnings were first announced two months ago after
a yearlong internal investigation found employees had misled auditors and manipulated
results to meet performance goals for more than four years.  The affected earnings reports
covered fiscal years 2003 through 2006, as well as the first quarter of fiscal 2007.  The
profit cut is equal to 3 cents per share for the total period, when the Round Rock company's
net income was more than $12 billion.  Dell spent $205 million on the investigation,
spokesman David Frink said.  "We feel as though we have completed this chapter in Dell's
business and we're going to be squarely focused on customers and strategy to drive
shareholder value," Frink said.  An SEC probe, however, remains unresolved. Frink said it
was unclear when that might end.  Dell also faces shareholder lawsuits. And federal
prosecutors in New York have subpoenaed documents on the company's financial reporting
since 2002.  Tuesday's filings should bring Dell back into compliance with the Nasdaq's
listing requirements, Frink added.  Dell continues to struggle against competitors like
Hewlett-Packard Co. and others. Last fall, overtook Dell for the No. 1 spot in PC sales.  Dell
has countered by striking retail deals around the world, most recently with Staples Inc.  
Frink said Dell plans to resume its share repurchase program shortly after it announces
third-quarter results Nov. 29.  Dell shares briefly hit a 52-week high of $29.92 in trading
Monday after a Goldman Sachs analyst said the company's stock price is poised to rise on
improved margins and a number of partnerships.