_________::::___#517 - December 4, 2007________________
FRAUDBARON.com
The Anti-Fraud Professionals'
Source for Fraud News
#517 Updated: 12/03/07 8:16 p.m.

Man Convicted Of Real Estate Fraud Dies At 68
tylerpaper.com | 12/1/07 | Casey Knaupp
Jules Bernard Fleder, who was sentenced to 10 years in federal prison a year ago and
ordered to pay more than $27 million to victims who invested in his fraudulent real estate
scheme, has died.  Fleder, 68, was convicted along with Jack Arnold Brown, 68, and Roger
Sherman, 73, for their roles in the scam, which involved Lindale property.  On Nov. 13,
2006, Fleder was sentenced to 10 years in prison but he had served less than a year when
he succumbed to cancer.  On Friday, Federal Bureau of Prisons spokeswoman Felicia Ponce
confirmed that Fleder died Oct. 22 in a prison in Butner, N.C., but she said she did not know
the cause of death.  Becky Smith, victim services director for the U.S. Attorney’s Office, said
Fleder had an unknown form of cancer and had been housed at a federal hospital facility
that specializes in cancer treatment.  Several of Fleder’s victims, many elderly, have died
since losing their life savings and retirement funds to Fleder’s scheme.  Assistant U.S.
Attorney Arnold Spencer said the restitution Fleder was ordered to pay to the victims would
still be collected against his estate “at the extent it can be.” He said that because Fleder’s
conviction was final and there was no pending appeal, the restitution order was still valid.
Fleder, a businessman who operated 130 entities nationwide, pleaded guilty to conspiracy
to commit securities and mail fraud and committing securities fraud for bilking the investors
from January 2001 to November 2004.  Based in Los Angeles, Fleder concocted real estate
joint venture agreements and mailed misrepresentations. He claimed he intended to
establish a modular home manufacturing plant and a residential subdivision in Lindale. But
after obtaining nearly $2 million from investors, he used the funds to buy luxury
automobiles, expensive boats and a house in Beverly Hills. He also participated in other real
estate schemes in East Texas and throughout the country.  Fleder fled to Bali, Indonesia,
during the investigation but he was found by authorities and brought back to Tyler to face
the charges. (Excerpt)

From Polka to prison
thetimes-tribune.com | 12/3/07 | Josh Mcauliffe
There was much to admire about Jan Lewan besides his prodigious musical talent.  “He was
personally a very charming guy,” John Mikulak said. “He was a workaholic. He had an
incredible amount of energy. And people just liked him.  “In general, people really trusted
him.”  It was exactly those qualities that led to a lot of lives being ruined. Just the kind of
cautionary tale that would make one heck of a documentary, Mr. Mikulak thought.  “I
thought, ‘Wow, there’s a classic rise and fall story,’” said the Waverly resident. “There’s a
guy who attained the American dream, and lost it all.”  Mr. Lewan’s saga begins in the early
1970s, when the former Jan Lewandowski emigrated to America from communist
Poland. Over time, he became one of the most popular acts on the polka circuit, developing
a glitzy stage persona that eventually landed him a regular gig at Donald Trump’s Taj Mahal
casino in Atlantic City, high profile friends like Pope John Paul II and former Polish president
Lech Walesa and a Grammy nomination in 1994.  As his fame grew, so did his interests.
During the late 1980s, Mr. Lewan began selling promissory notes to fans as a way to
fund his myriad business ventures. In 1992, he was caught operating without a license, but
continued selling the notes anyway. Eventually, state and federal investigators discovered
he was operating an illegal Ponzi scam and had swindled his investors out of millions. In
2003, he pleaded guilty to selling unregistered securities in 22 states. Since January 2004,
he’s been serving a five-year sentence in Delaware, where he survived a brutal throat
slashing by his former cell mate.  (Excerpt)

Ethics Risk Landscape Just as Treacherous as Before Enron
smartpros.com | 12/3/07 | Staff Writer
Interviews with almost 2,000 employees at U.S. public and private companies of all sizes for
the biennial NBES show disturbing shares of workers witnessing ethical misconduct at work
-- and tending not to report what they see. Conflicts of interest, abusive behavior and lying
pose the most severe ethics risks to companies today. The measurable lack of progress in
business ethics should signal a need for company management, boards of directors, policy-
makers, investors and consumers to reassess their approach to that challenge, said ERC
President Patricia Harned, Ph.D.  "Despite new regulation and significant efforts to reduce
misconduct and increase reporting when it does occur, the ethics risk landscape in American
business is as treacherous as it was before implementation of the Sarbanes-Oxley Act of
2002," Dr. Harned said. Over the past year, more than half of employees surveyed had
personally observed violations of company ethics standards, policy, or the law. Many
saw multiple violations. More than two of five employees who witnessed misconduct did not
report it through any company channels.  According to Dr. Harned, "There is a strong sense
of futility and fear among employees when it comes to reporting ethical misconduct, and that

increases the danger to business. More than half of employees who witnessed but did not
report misconduct believed that reporting would not lead to corrective action. More than a
third of non-reporters feared retaliation from at least one source; but our research shows
that having a strong ethical culture virtually eliminates retaliation." "Employees at all levels
have not increased their 'ethical courage' in recent years," Dr. Harned said. "The rate of
observed misconduct has crept back above where it was in 2000. And employees'
willingness to report misconduct has not improved, either." "The good news is that the rate
of misconduct is cut by three-fourths at companies with strong ethical cultures, and
reporting is doubled at companies with comprehensive ethics programs," said Dr. Harned.
The study found less than 40 percent of employees are aware of comprehensive ethics and
compliance programs at their companies. The programs are largely driven by legal and
regulatory compliance, and designed in reaction to past mistakes, Dr. Harned observed.
"The fact is, only about 25 percent of companies actually have a well-implemented ethics
and compliance program in place, despite their transformative impact," she said.  The NBES
also found most employees prefer to report misconduct to a person, especially someone
with whom they already have a relationship, rather than to a company "hotline." Only 3
percent of misconduct reports were made to company hotlines.  As part of the latest NBES,
ERC developed The ERC Ethics Risk Index. It categorizes 18 different types of misconduct by
their incidence and whether they would be likely to be reported, and assigns a value to
that type of misconduct. While the Index presents data in a continuum, the projected
risk of various types of misconduct falls generally into three categories: severe risk
(happens frequently and usually goes unreported), high risk (happens often and often goes
unreported), and guarded risk (happens less frequently and may go unreported).

Criminal Injustice?
cfo.com | 12/3/07 | Don Durfee
Critics of criminal justice in countries ranging from the United States to Korea have long
complained of a glaring imbalance: white-collar criminals typically receive far greater
leniency than other crooks. Could a similar inconsistency exist within companies? A new
study of economic crime suggests that it does. PricewaterhouseCoopers surveyed 5,400
companies globally and found that when corporations discover employee fraud, they deal
more harshly with middle managers and lower-level employees than with their top
managers. For example, they are more likely to file criminal charges when low-level
employees are involved. There's an irony here: The same study finds that the more senior
the employee, the greater the damage to the business.  John Donker a PwC partner in
Hong Kong, argues that such inconsistency sends the wrong message to employees. "The
ethical tone in an organization is very important for dealing effectively with economic crime,"
he says. "If senior executives are being punished less, that's clearly a problem."

Ky. Fraud Trial Features Famous Firearms
ap.google.com | 12/3/07 | Dylan T. Lovan
LOUISVILLE, Ky. (AP) — The evidence will look like a prop list from a John Wayne movie
when three antique gun enthusiasts go on trial Monday on charges of bilking a millionaire
collector.  Buffalo Bill's Winchester rifle. A pair of Colt six-shooters owned by Gen. George
Custer. Geronimo's bow and arrows.  The collector, Owsley Brown Frazier, a well-known
Louisville philanthropist, spent millions acquiring the antique arms and displaying in a
downtown museum that he opened in 2004.  But federal authorities say Frazier grossly
overpaid for the weapons, thanks to an alleged scam hatched by the man he entrusted to
find the famous firearms and run the museum.  Prosecutors estimate that Michael K.
Salisbury and his wife, Karen Salisbury, turned a profit of at least $1.75 million from 1997 to
2002 by giving Frazier false appraisals.  The Alabama collector and his wife were indicted by
a federal grand jury in March 2006 on several counts of fraud, money laundering and tax
evasion.  The grand jury also named R.L. Wilson, one of the world's leading authorities on
antique firearms, who appraised the weapons at inflated prices, federal officials said.
Wilson, who describes himself on his Web site as "the most published author in the history
of arms collecting," faces several counts of fraud. It was not clear how Wilson would have
profited from the transactions. Eric Long, the chief prosecutor in the case, declined to
comment.  Attorneys for the Salisburys say Frazier had struck an agreement with them to
pay higher prices as commission for Salisbury's work in finding the weapons.  "It boils down
to one thing: Did Mr. Frazier agree that Mike would get commission for these guns?" said
Gregg Hovious, Michael Salisbury's attorney. "That's what it's about."  Calls to Wilson's San
Francisco apartment were not answered, and his attorney declined to comment. In court
records, Wilson denied the allegations and said he looked "forward to vigorously defending
myself in a court of law." Prosecutors say Salisbury's mark-ups sometimes doubled the price
he had paid. In one 2000 purchase cited in court records, Frazier bought a Henry repeating
rifle from Salisbury for $135,000, though Salisbury had acquired it for just $31,000.
Salisbury bought the Custer pistols for $235,000 and sold them to Frazier for $300,000,
according to the indictment.  Frazier met the Salisburys through a mutual friend in 1997
when he was a novice collector and eventually "grew to view them as close personal
friends," according to court records. Frazier named Michael Salisbury president of the
Frazier Historical Museum in 2001, paying him a $100,000 annual salary.  Frazier also had a
close relationship with Wilson, who declared bankruptcy in 2001 and recently served a year
in a California prison for a conviction in an unrelated fraud case. The Louisville museum
houses several ancient and historical weapons, including Teddy Roosevelt's "Big Stick" — a
19th century Holland and Holland rifle. It also has the only permanent U.S. collection from
the Royal Armouries, Britain's national repository for arms and armor, which Wilson
reportedly helped Frazier acquire.  Frazier, great-grandson of the founder of Louisville liquor
giant Brown-Forman, sued the couple and Wilson in April 2004, making similar allegations of
fraud. That suit has been put on hold until the criminal proceedings are completed.  Just
before Salisbury was named museum president, Hovious said, he and Frazier drew up a
document that said Salisbury would receive commissions for finding antique weapons.
Frazier has testified that he wanted to keep his dealings with Salisbury secret from the
museum's board because the purchases were funded out of his own pocket. Frazier also
said the agreement with Salisbury was not a binding contract.  It was not until 2002 that
Frazier and the museum's foundation "began to comprehend the wrongdoing by Salisbury,"
Frazier's civil suit said. In a countersuit filed by the Salisburys and Wilson last year,
attorneys argued that Salisbury would not have devoted four years of his life to tracking
down hard-to-find antique firearms without being compensated.  Both Salisburys face up to
20 years in prison if convicted; Wilson could be sentenced to up to 5 years.

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