_________::::___#502 - November 7, 2007________________
FRAUDBARON.com
The Anti-Fraud Professionals'
Source for Fraud News
#502 Updated: 11/7/07 9:42 a.m.

Haas Automation owner gets 2 years in prison for tax fraud
Ventura County Star | 11/6/07 | Stephanie Hoops
LOS ANGELES — Surrounded by lawyers and his family, Gene Haas was sentenced Monday
to 24 months in federal prison for conspiring to cheat the government out of millions of
dollars in taxes owed by his company.  The owner of Oxnard-based Haas Automation Inc.
pleaded guilty in August, taking responsibility for one of 11 federal charges brought against
him.  Along with agreeing to a two-year prison sentence, Haas paid about $75 million in
restitution and fines before arriving in court Monday, the judge noted, adding that Haas
had to write one more check for $100 for a "special assessment" fee.  Through his lawyers
Monday, Haas, 54, of Camarillo requested treatment for alcohol dependency, and the court
recommended he be considered for the Federal Bureau of Prison's 500-hour drug and
alcohol program. His attorneys also requested — and the judge recommended — that Haas
be placed at the Federal Correctional Institution in Lompoc, a low-security prison for male
inmates near Vandenberg Air Force Base.  Assistant U.S. Attorney Sandra R. Brown pointed
out that while the judge may make recommendations pertaining to Haas' sentencing, the
Bureau of Prisons will decide whether to allow Haas to undergo substance abuse treatment
or be placed at the Lompoc facility.  Haas left the hearing at the U.S. District Court in Los
Angeles with his family and attorneys. He was ordered to return to the court and surrender
himself Jan. 14. Haas remains free on $10 million bail. Known as generous philanthropist
The conviction is a stunning blow for Haas, who has long been regarded as an
extraordinary success. He founded and built his company into the country's largest machine
tool builder. Haas Automation remains one of Ventura County's larger employers, with
about 1,550 workers at a manufacturing complex at 2800 Sturgis Road. Haas also is known
as one of Ventura County's most generous philanthropists. Haas' plea followed a six-year
investigation that also caught four of his business associates who all have Kenneth Greene
are to be sentenced next year.  Haas was charged in October 2005. According to his
indictment, Haas enlisted the help of Dupuis, former general manager of Haas Automation,
and John R. Phillips, the company's former chief financial officer, to create various tax fraud
schemes to help him recoup more than $8.9 million he was ordered to pay to settle a
patent infringement lawsuit filed by a rival firm. Prosecutors maintained that Haas blamed
the financial loss on the federal judge who presided in the case.  After leaving the company
in 2001, Phillips became a whistleblower, providing inside company information to federal
authorities. Investigation records show that Phillips' successor, Greene, continued
the tax fraud scheme.  Cable, owner of Enmark and Associates Inc. in Valencia, and Todd,
owner of Supermill Inc. in Reno, Nev., used their companies to assist Haas and Dupuis by
making bogus purchases of equipment.  98 percent kicked back to Haas Cable and Todd
kept 2 percent of the proceeds from fake equipment purchases and kicked back 98
percent to Haas through one of several subsidiaries, according to court records.  
Prosecutors say the plan was to put $50 million in phony expenses on the company's books
to avoid paying more than $20 million in federal income taxes — payback to the government
for Haas losing the patent lawsuit.  According to company statements from Haas
Automation, Haas has not been involved in the daily operations of the business for nearly a
decade and operations have not been affected by the federal charges.  Haas Automation
reported that 2006 was the most productive year in its history, with more than 12,500
machines produced and more than $740 million generated, nearly 30 percent more revenue
than the previous year.

Conrad Black denied bid to overturn fraud conviction
afp.google.com | 11/6/07 | Staff Writer
CHICAGO (AFP) — Fallen press tycoon Conrad Black lost his bid to overturn his conviction
on fraud and obstruction charges after a judge ruled that the US government proved its
case.  Black and his co-defendants had asked Judge Amy St. Eve of Chicago's federal court
to quash the conviction or grant a new trial, arguing that "no rational jury" could have found
them guilty beyond reasonable doubt.  In a 39-page ruling issued late Monday, St. Eve said
"the evidence supports the verdict" and also "supports an intent to defraud" Hollinger
International.  St. Eve did, however, overturn the conviction on one of three counts against
co-defendant Mark Kipnis, corporate counsel for Hollinger.  Black and his co-defendants,
who have also already begun working on their appeals, are scheduled to be sentenced on
November 30. The Canadian-born British lord, who once ran one of the world's largest
newspaper empires, was convicted in July on four charges -- one of obstruction of justice
and three of fraud -- which could carry 24 to 30 years in prison. The Chicago jury convicted
Black of skimming millions of dollars from the sales of newspapers by his former company
Hollinger International. He was cleared of eight other fraud charges and one of
racketeering.  The flamboyant Black, who renounced his Canadian citizenship to become a
British peer, is currently confined by court order to the Chicago area and his Palm Beach,
Florida mansion where he is reported to be working on another book.  Hollinger's global
newspaper empire once included the Daily Telegraph in Britain, National Post of Canada
and the Jerusalem Post.  Also convicted in the scheme were Peter Atkinson, a senior
executive in Hollinger's Toronto office, and Jack Boutlbee who served as chief financial
officer of Hollinger International.

Former fire company treasurer faces prison for embezzlement
PennLinve.com | 11/6/07 | Associated Press
DOYLESTOWN, Pa. (AP) — The former treasurer of an Upper Bucks County fire company is
facing a 1- to 3-year state prison term for writing fire company checks to his own business
for $134,800.  Former treasurer Harold Lauble has been making restitution to the Delaware
Valley Fire Co. but still owes about $54,000. He was also sentenced Monday to seven years
probation. Lauble says he's ashamed he violated his position of trust. His attorney, Daniel
Sweeney, says Lauble's business was losing money and he then bought into a gold-dust
selling business he read about on the Internet and lost more money.  Lauble pleaded guilty
in May to theft charges, and he and his wife have refinanced their home and taken
out loans to repay most of the money.

Charlestown woman sentenced in embezzlement case
courier-journal.com | 11/5/07 | Staff Writer
A former Charlestown bank employee has been sentenced to 21 months in prison after
pleading guilty to embezzlement.  Stella L. Henry, 65, of Charlestown, was sentenced
Friday by U.S. District Judge John Daniel Tinder.  Henry embezzled more than $156,000 from
JP Morgan Chase Bank between Feb. 4, 2002 and Oct. 15, 2005, according to a statement
by acting U.S. Attorney Timothy M. Morrison. In addition to the prison time, Henry was
ordered to make full restitution.

Woman pleads in Polar Gas embezzlement
The Daily Telegram | 11/6/07 | Staff Writer
A Solon Springs woman who embezzled more than $30,000 from Polar Gas over two years
may spend 20 days in jail. Theresa Lynn Sather, 44, pleaded guilty to an amended charge of
misdemeanor theft and an additional charge of misdemeanor theft Wednesday in Douglas
County Court. She was originally charged with felony theft.  If she complies with a
psychological evaluation, pays $35,000 restitution and writes an apology letter within 60
days, attorneys on both sides will request the 20-day sentence and two $100 fines,
according to court records. Sather worked for Polar Gas in the Solon Springs office for five
years. Up until 2005, there was another person working with her in the office. When her co-
worker retired, Sather began taking payments.  A customer check bounced in late April,
alerting the general manager of Polar Gas, Jane Kriskovich, to a possible problem. She
learned Sather had been playing a financial shell game with other people’s payments,
keeping some of the cash customers brought in to pay on their bills and covering them with
other customers’ checks. Kriskovich noted that Sather never tried to hide the paper trail.
Sather told Det. Paul Lindberg of the Douglas County Sheriff’s Department that she was
experiencing hard times financially and needed the money.

Finance Dept. may be out $1 million
delawareonline.com | 11/6/07 | Patrick Jackson, The News Journal (Excerpt)
DOVER -- Finance Department employees may have stolen as much as $1 million in the last
two years using an intricate fraud scheme targeting refunds for unclaimed stock certificates,
bank accounts and other abandoned assets that revert to state ownership.  Abandoned
financial property -- known as escheat -- is one of the state's largest revenue sources,
bringing in about $364.9 million last year alone. Money comes from abandoned assets that
have been dormant for five or more years or unredeemed retail store gift cards.  Because
so many corporations are set up in Delaware, a large volume of abandoned financial
property held by banks and corporations legally reverts to Delaware.  No one at the state
has been fired or placed on administrative leave, but the case has been handed over to the
Delaware State Police after a three-month internal probe at the Finance Department, which
began with a call from an anonymous tipster to the state Auditor's Office.  "It was very
clever. The people involved knew how to do this in a way that was very hard to detect,
without specific information," said state Auditor R. Thomas Wagner Jr. "This could be the
largest case of government fraud we've ever had, and we just got done handling an
$800,000 fraud case in Harrington."  Wagner's office recently investigated financial fraud in
Harrington that led to indictments against the former town finance director and two
relatives. They pleaded guilty and await sentencing.  State police spokesman Cpl. John
Barnett said the investigation at the Finance Department "is in its infancy" and that
the agency couldn't comment on the allegations.  State officials say the scheme involved
bogus refund claims for unclaimed property.  Patrick Carter, who heads the state's revenue
department, said Delaware refunds $7 million to $10 million of its escheat revenues each
year, typically to people who find long-forgotten stock certificates or bank accounts and
learn the money has been turned over to Delaware.  State officials say they suspect
someone in the Finance Department was running a scheme in which bogus refund claims
would be submitted and checks sent out to a phony person or bank account.  "This hurts,"
Finance Secretary Richard Cordrey said Monday. "We thought the system we were using
had good safeguards in place, but we were wrong. We want to bring in outsiders to look at
this and tell us what we can do differently and better so this doesn't happen again."  
Cordrey has ordered a temporary suspension of all refund payments until investigators and
auditors sort things out. He plans to hire a national auditing firm to review the case and
recommend ways to improve security. Carter said people legitimately seeking refunds will
get their money.

Small Business Owners Concerned About to Fraud
cnn.com | 11/5/07 | PR Newswire
ATLANTA, Nov. 5 /PRNewswire-FirstCall/-- Eighty-four percent of small business owners are
concerned about fraud in connection to their business finances. This is according to survey
results jointly released today by SunTrust Banks, Inc. and the National Small Business
Association (NSBA). The "Foil Fraud" survey also showed seven out of 10 small business
owners are more concerned about fraud now than they were a year ago.  The online
survey, conducted independently for SunTrust and NSBA, included more than 500 small
business owners in the Southeast U.S. to identify the biggest concerns regarding fraud in
small businesses. The survey included small business owners from the following areas:
Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, Virginia,
West Virginia and Washington, D.C. "The survey reinforced that fraud is a very significant
issue for small business," explained Todd McCracken, president of the National Small
Business Association. "The reality is that a good number of entrepreneurs are being
targeted by criminals trying to defraud them. Responsible for creating two-thirds of all net
new jobs in the U.S., the last thing America's small-business owners need is to be a faced
with the crippling effects of fraud."  According to the survey, nearly six in 10 small business
owners (58 percent) believe they currently are unarmed to fight fraud -- agreeing that
businesses of their size have limited options to safeguard against fraud. This sense of
vulnerability is increasing as the majority of small business owners (eight in 10) believe
their businesses may face more risk from fraud over the next few years.  The survey further
found that respondents were in fact in need of education about protection and proactive
measures provided by their financial institutions to help protect their business against
fraud. In fact, respondents asked that their financial service provider work to "make [them]
more knowledgeable about what to look for regarding fraud." Overall, 82 percent of small
business owners surveyed wish there was more information available about preventing
fraud in their businesses. The SunTrust and NSBA partnership is designed to fill this void by
educating small business owners about the risks of fraud and how to avoid becoming the
victim of fraudulent conduct.  "It was not just the concern surrounding fraud that prompted
us to address this issue but also its prevalence among businesses," said SunTrust
Corporate Executive Vice President Gay Abbott, head of the Company's Commercial line of
business. "We have noticed, and this survey confirmed, that fraud touches two-thirds of
small business owners (either directly or indirectly). It is our hope that through this
education campaign with NSBA and our newest offering -- Online Cash Manager with Fraud
Inspector -- we can continue to help curb the instances of fraud and minimize our clients'
concerns."
Embezzlement lands credit union manager in jail
dailypressandargus.com | 11/2/07 | Lisa Roose-Church
The former manager of the Brighton branch of the Huron River Area Credit Union learned
Thursday that he will spend 240 days in the Livingston County Jail for embezzling.  
Livingston County Circuit Judge Stanley J. Latreille imposed the sentence, which was with a
recommended plea agreement between defendant Jason Stewart Dodge, 31, and the
prosecutor's office, which agreed to recommend no more than one year in the county jail.
The judge also ordered Dodge to serve three years probation and to pay $204,000 in
restitution.  Dodge, who apologized and said he wants to put the situation behind him,
pleaded no contest to one count of embezzlement and two counts of identity theft. A no-
contest plea is not an admission of guilt, but is treated as such for sentencing purposes.
Police say Dodge embezzled more than $200,000 and tried to cover the losses with false
loans taken out in the names of credit union members.  Auditors discovered irregularities
about the time members started seeing inappropriate activity on their accounts, police said.
Brighton police began investigating allegations against Dodge in March, serving a search
warrant on his home in Plymouth, where personal bank records were seized.  In February,
federal regulators took over operation of the credit union and placed it into conservatorship
after the state declared it was in danger of insolvency.

Trusted workers make ideal embezzlers
news-leader.com | 11/5/07 | Sarah Overstreet
I've known two embezzlers (at least, that I was aware of) in my life.
Both are women, both sweet as pie. One quiet, living in a house you couldn't find dust in if
you had a squadron of white-glove-wearing swipes. The other, always smiling, congenial,
so ready to talk about her children.  Photos of them all over her desk.  The second woman
embezzled twice from the same company. The first time a relative paid off her bill and she
was allowed to keep her job. Then she did it again.  The guilty plea of former Springfield
Municipal Court employee Rhonda Bateman — a trusted employee who admitted to stealing
$25,000 —left me with the stupefied feeling I'd had when I realized the two earlier women
had embezzled: How, when so many business offices keep track of every dime you spend?
Why, when so many of us live with the innate certainty that soon as we touch an illicit dime,
the office sprinklers and tornado alarms will go off?  The how isn't so hard to figure, says
Greene County Prosecutor Darrell Moore. "Part of it is because people will not invest in a
safeguard, because they trust this person." Nice as pie. "They don't separate
responsibilities and don't want to spend the money" for professional accounting and
establishing solid internal controls. "This happens frequently to small doctors' and dentists'
offices."  "Most of the time the people who were involved in this have earned great
positions of trust," says Jeffrey Roberts of accounting firm BKD LLP. Roberts is a certified
public accountant and a certified fraud examiner.  The laundry list of methods embezzlers
use includes a lot that aren't sophisticated, Roberts says. "One person who knows how to
hide things from the business owner, and sometimes they know what kinds of things
auditors look for."  To find what went wrong, fraud examiners go to the bank records that
can't be doctored by a human hand, he says. "Sometimes we can figure it out in a day or
two, especially if you have a manager who hasn't seen the information or has seen false
information."  Springfield dentist Gary Buzbee's office was one of those businesses without
inner controls, with the same woman handling all the money and the paper trails for several
years.  "We didn't have QuickBooks or anything, then we brought somebody in to do online
accounting," Buzbee says. "When he started digging into this, he said, 'Something is not
right here.' He was going through the bills and they had her name on them, rather than the
office name. He checked to see if the money was going to a Buzbee account: No. It was
going into a separate account — hers. And we paid the lady $60,000 a year!" The "why" is
still hazy to me. There seems to be one common thread among psychological and
criminology researchers' theories, however. Embezzlers have some sort of perceived
financial problem they think their theft will solve and are able to justify and rationalize
taking money that isn't theirs. They even tell themselves, "I'll pay it back later," although
later never comes. Some of the profile factors Roberts has picked up in his studies:
- Embezzlers are not saving the money for retirement — they're spending it now on
department store binges, trips and gambling.
- "Once it starts, it very, very rarely stops," Roberts says. "I don't know of any we've dealt
with who have stopped.   They're wired differently than most criminals. "There is very little
difference between an embezzler and a normal citizen, but a vast difference an embezzler
and someone doing another type of criminal activity, say a bankrobber." And just how
prevalent is the crime? The Springfield Police Department has approximately 887 stealing,
fraud and embezzlement cases working, says Maj. Steve Hamilton, head of the Springfield
Police Department Investigations Division. Of those, approximately 222 are classified as
embezzlement cases, he says. And Hamilton says those were just the ones the department
knows about.  "A lot of (businesses) handle it in-house," he said. Ditto, Roberts says.
Probably only 60-70 percent of cases are eventually handed over to police, he says. The
business owners may be embarrassed, want to make private arrangements with the
employee, or simply not want the crime to become public. Buzbee did want his business's
victimization to become public, but it wasn't and he's angry. He won restitution in his case,
but the woman was not prosecuted for the crime.  All of this doesn't even begin to address
the mantra citizens have been screaming since the Municipal Court money disappeared:
"How did this happen in a city the size of Springfield, and in the division of the government
where the rest of us go to pay up for our own sins?" All those trespasses for which we
atoned slid into the pockets of a pilferer, and now we'll have to make up the shortfall
without even getting the fun of trespassing. Before this, if you'd asked me which
department of the city would be the least likely to be ripe for theft, I would have said the
ones where the judges and police officers hang out. I wouldn't have given an embezzler a
Chihuahua's chance in a dogfighting ring.  Moore says we'll find out the how and the who
Nov. 9 when, in response to Sunshine Law requests from local members of the media, he
will release the transcripts of the grand jury hearing that led to Bateman's indictment. The
only thing that could delay the Nov. 9 unveiling is if the defense files a motion to set aside
Bateman's sentencing, he says.  In the grand jury hearing, Moore says former employees
testified that they saw problems and told higher-ups an audit was needed.  "I think clearly
there was negligent oversight," Moore says. "The city finance department saw shortages
that weren't being recognized. Part of the reason (for the large sum embezzled) is that city
officials wouldn't push it, and City Council has responsibility, too," for overseeing the city's
money.  We may have paid a lot for the show we're going to get when the documents are
opened, but it's likely we won't see a better one for a long time.

________________________