#520 - December 11, 2007
FRAUDBARON.com
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Source for Fraud News
#520 Updated: 12/10/07 11:31 a.m.

Conrad Black's sentencing 'sad,' says paper he founded
news.yahoo.com | 12/11/07 | AFP
The Canadian newspaper founded by disgraced media tycoon Conrad Black lamented Tuesday
his 6.5-year sentence for raiding his once mighty empire's coffers and trying to cover it up.
"Lord Black is not just any corporate wrongdoer. He is the Post's founder," the National Post
said in an editorial. "And so we regard the man's sentencing this week as a sad event."  The
Toronto-based daily's main competitors had mixed reactions to the punishment handed to
Black, a once powerful owner of newspapers in Chicago, London and Jerusalem who
renounced his Canadian citizenship to become a British lord.  The Globe and Mail said Judge
Amy St. Eve "delivered a sentence too severe for the crime."  But the Toronto Star said: "In
comparison to Enron's Jeffrey Skilling, WorldCom Inc's Bernard Ebbers,Tyco International Inc.'s
Dennis Kozlowski and Adelphia Communications Corp.'s John Rigas, Black got off easy."
"In the context of big-time US white-collar crime, St. Eve judged Black to be merely a petty
crook," the Star said in an editorial.  In an interview with the paper before sentencing, Black
had maintained he had done nothing wrong and said Canadians would rally behind him.
But, the Star now disagreed, saying, "It is hard to believe anyone will be supporting him now,
especially Canadians who feel too many executives run their businesses with a sense of
entitlement." "Given the severity of his crime, his greed, and his refusal to show remorse, this
is a just sentence for Black."

Charges filed in Fresno Flats embezzlement
Sierra Star | 12/10/07 | Denise Aday
Madera County District Attorney Ernie LiCalsi filed charges against a former office employee at
the Fresno Flats Historic  Museum for allegedly embezzling more than $70,000.  LiCalsi said
charges of grand theft by embezzlement were filed Tuesday against Danielle Hale, 41, of
Coarsegold.  "We filed the papers with the court Tuesday, asking for a warrant," LiCalsi said.
"The judge will decide whether to issue a warrant or cite her in court for her arraignment."
A statement from the Fresno Flats Board of Directors confirmed the missing funds and said
Hale had been employed from May 2005 to Oct. 16, 2007.  Bruce McNichols, president of the
Sierra Historic Sites Association (SHSA), said an examination of the nonprofit organization's
records uncovered signs of wrong doing. "The thefts are a significant and a potentially
crippling blow to Fresno Flats," McNichols said. "At this time, we are unsure if we have
sufficient funds available to pay our current obligations and basic operating expenses."
"We notified the sheriff's department of the thefts Oct. 18, and the authorities immediately
began compiling evidence of the crimes," he said. Fresno Flats volunteer Ray Edmondson said
details of the incident are still being uncovered and confirmed a criminal investigation is under
way.

Ex-printing plant worker pleads guilty in trading case
news.yahoo.com | 12/7/07 | Reuters
A former worker at a plant in Wisconsin that printed BusinessWeek magazines pleaded guilty
on Friday for his role in a farflung insider trading scheme that netted more than $6.7 million.
Juan Renteria, 22, who worked at a Wisconsin printing plant, pleaded guilty to conspiracy and
insider trading charges during a hearing before Magistrate Judge Frank Maas in U.S. District
Court in Manhattan.  Renteria, along with another printing plant worker, Nickolaus Shuster,
was accused of stealing advance copies of the magazine and passing on names of stocks
mentioned in its "Inside Wall Street" column to two former Goldman Sachs Group Inc (GS.N)
employees, Eugene Plotkin and David Pajcin.  Renteria is the last of six defendants in the case
to plead guilty for his involvement in the insider-trading ring, which authorities said was led by
Plotkin and Pajcin.  "In the beginning, I did not appreciate that my conduct was against the
law," Renteria, who was wearing a black T-shirt and jeans, told the judge.  Renteria, who
authorities said along with Shuster was paid $500 or more for each copy of the magazine,
said he eventually understood that it was illegal but continued to do it.  Renteria faces a
maximum of 25 years in prison, but his lawyer, Gary Becker, said after the hearing that the
sentencing range recommended under the plea agreement would be "relatively low."
The ring made millions from illegal trading on news of upcoming mergers, including Procter &
Gamble Co's (PG.N) acquisition of Gillette Co and Adidas' (ADSG.DE) acquisition of Reebok,
prosecutors have said.  The case began in August 2005, when regulators grew suspicious of
the options-trading profits of a 63-year-old retired seamstress in Croatia. The account
belonging to the retiree was frozen and her nephew, Pajcin, was charged with insider
trading.  The Harvard-educated Plotkin and several other defendants were arrested in April
2006 by agents of the Federal Bureau of Investigation, which investigated the case along
with the U.S. attorney's office in Manhattan. Plotkin and Pajcin were also accused of trading
off tips leaked by Stanislav Shpigelman, an ex-Merrill Lynch and Co Inc (MER.N) investment
banking analyst.  They also got information from a New Jersey grand juror, Jason Smith, about
an investigation of drug maker Bristol-Myers Squibb Co (BMY.N), prosecutors have said.

Two New Bedford Waste Services employees charged with embezzlement
Southcoast Today | 12/6/07 | Brian Fraga
NEW BEDFORD — Two former employees of a city recycling plant were arraigned this week,
accused of stealing thousands of dollars in cash and double-charging customers' credit cards
to cover up their larceny.  Kristina M. Perry, 24, and Jennifer Snell, 23, both worked for New
Bedford Waste Services, 1245 Shawmut Ave., which recycles construction and demolition
debris, court records said.  Ms. Perry is accused of stealing more than $5,000 in cash that
customers gave her while having their trucks weighed at the facility. Between April and May,
she allegedly double-charged some individuals' credit card numbers and forged the account
holders' names on the corresponding weight tickets to hide the missing cash.  Ms. Perry is
charged with 13 counts of forgery of documents, larceny of trade secrets, and larceny of
more than $250. Ms. Snell, of 26 Abbey St. in Fairhaven, is charged with larceny for allegedly
stealing more than $17,000 in cash between December 2006 and April, police said. She was
arraigned Tuesday in New Bedford District Court and released on personal recognizance,
according to the Bristol County District Attorney's Office.  Ms. Perry of 1066 Marlborough St.
was arrested last year, and charged with stealing someone's check book and writing checks
made payable to herself, police said.  Assistant District Attorney Frank Ribeiro said during Ms.
Perry's arraignment Wednesday that she had a long police record that includes prior arrests
for identity fraud.  "This is a very determined individual," he said.  Ms. Perry was ordered held
in lieu of $30,000 cash bail. A supervisor at New Bedford Waste Services declined comment
Thursday, referring all questions to the company's lawyer.  New Bedford police spokesman Lt.
Jeffrey Silva said Ms. Snell was arrested on a warrant based on allegations that she stole just
over $17,200 during the five-month period.  She allegedly stole the money by charging
customers and then voiding the transactions and pocketing the cash. She also allegedly
charged customers the regular scale rate, and then later underpriced the transaction in the
computer system, pocketing the difference.  Police reports said New Bedford Waste Services
became suspicious of Ms. Perry in May after an employee reported that his credit card had
been double-charged.  The company's billing manager pulled the credit card receipts and the
corresponding weight tickets from when Ms. Perry worked in the scale house. The manager
found that the credit card slips had been hand-entered hours after the customers' trucks had
been weighed.  Company officials said the weight amounts on the tickets did not match the
usual weight that customers brought in to the plant. Also, the signatures on the credit card
receipts did not match the actual customers' signatures. Some receipts were missing, court
records said. Security tapes also showed there was nobody at the payment window when Ms.
Perry entered the credit card transactions. Police said she was also seen on the tapes putting
money from the cash register into her pockets. New Bedford Waste Services officials told
police that Ms. Perry was hired April 6 as a scale house operator. Her duties included weighing
trucks on the scale and receiving the payments.  From April 21 to May 14, she allegedly forged
13 credit card receipts, ranging from $91 to $305 per charge. She fraudulently charged a total
of $5,090.85, court records said.  (Excerpt)

FBI: Mortgage fraud cases up "exponentially"
reuters.com | 12/6/07 | Paritosh Bansal
NEW YORK (Reuters) - Mortgage fraud cases have increased "exponentially" and federal
investigators expect it to be a high priority area in the coming year, a Federal Bureau of
Investigation official said on Thursday. The FBI has roughly tripled the number of agents in
New York over the past year working on cases involving conduct such as fraudulent
foreclosure rescue schemes and inflated home appraisals.  Supervisory Special Agent Ben
Berry told Reuters in an interview at the FBI's New York office that the agency expects more
cases to be brought. "We are now starting to reap some of the benefits of having ramped up
a bit  here," Berry said. "It takes a while sometimes to bring a case to prosecution." With
home prices falling and the cost of repaying loans rising, hundreds of thousands of people are
finding it harder to refinance into cheaper mortgages and hang onto their homes. "With real
losses out there ... the FBI is making this a major focus," Berry said.  Earlier this week, six
people were charged with fraudulently obtaining titles to scores of homes and taking out bad
bank loans against them worth more than $20 million as part of a home foreclosure "rescue"
scheme.  Homeowners were allegedly told that third party buyers, called "straw buyers,"
would hold the titles to the homes for a year, pay off the original mortgages and make
payments on the new mortgages while the homeowners cleaned up their credit. Instead, the
indictment said, the defendants kept excess cash after paying off the original loans.  The
defendants were also accused of submitting loan applications on behalf of the straw buyers,
often using documents containing false or misleading information to improve the straw buyer's
credit worthiness. Berry, whose unit investigated the case along with federal prosecutors, said
nationally the FBI has launched 1,200 mortgage fraud investigations this year.  In New York,
he said federal prosecutors in Manhattan and Brooklyn had been taking an increased interest
in such cases.  Several mortgage fraud cases involved homes in Brooklyn, Queens and Long
Island areas, Berry said. "Manhattan prices were already so inflated it is hard to inflate them
any more," he said.  Berry said his team did not handle investigations on the corporate side,
such as probes into companies initiated at the behest of the U.S. Securities and Exchange
Commission.

New Charges Filed in Coupon Fraud Case
Houston Chronicle | 126/07 | Associated Press
MILWAUKEE — Two new federal charges were filed Wednesday in a $250 million fraud case
involving the nation's largest coupon company.  The 11 men _ mostly from International
Outsourcing Services based in Bloomington, Ind. _ were charged in March with 25 counts of
wire fraud.  The original indictment alleged the defendants submitted fraudulent coupons to
manufacturers for payment of up to $250 million between 1997 and 2006. They were accused
of defrauding grocery stores and manufacturers.  Assistant U.S. Attorney Stephen Ingraham
said most of the nine who originally worked at IOS still do but in different capacities.
In the new charges, U.S. Attorney Steven Biskupic alleges the men took part in a wire-fraud
conspiracy from 1996 to 2007.  He also alleges that seven company executives tried to
obstruct a grand jury investigation through several means over the last four years, including
coaching witnesses or threatening them and destroying documents and creating fraudulent
ones in their place.  If the seven charged with all 27 counts are convicted, each could face up
to 525 years in prison, $6.75 million in fines, restitution and supervised release. The four
others could face 520 years in prison, $6.5 million in fines, restitution and supervised release.
In May, the U.S. attorney agreed to drop charges against the corporation after the company
agreed to cooperate with the investigation.  The scam affected manufacturers nationwide,
prosecutors have said, but the case was filed in Milwaukee because that's where the
investigation began.  IOS acts as a clearinghouse for coupons, receiving them from retailers
who seek payment from manufacturers. IOS processes the coupons, gets payments from
manufacturers and gives them back to retailers, subtracting fees for its services.
Officials at IOS didn't immediately return a call for comment Wednesday.  

Former Fairbanks first lady guilty of theft, money laundering
Fairbanks  Daily News | 12/06/07 | Chris Eshleman
The wife of former Fairbanks city mayor Jim Hayes pleaded guilty in federal court Wednesday
to two felony charges of theft and money laundering.  The pleas were part of a deal with
federal prosecutors that puts an end to the government’s legal pursuit of Murilda “Chris”
Hayes for playing a role in misspending more than $450,000 from federal grants the couple
secured for LOVE Social Services, a nonprofit they helped create.  The plea agreement
removes Chris Hayes from an upcoming trial scheduled for the couple, who had previously
pleaded innocent. Jim Hayes continues to face more than 20 federal charges and is scheduled
to stand trial next month. An assistant federal prosecutor said her office is not talking to the
former mayor about the prospect of a similar plea agreement. Jim Hayes attended his wife’s
hearing Wednesday but declined to speak to a reporter about the charges against him.
Chris Hayes said she agreed to plead guilty to two counts to avoid standing trial this winter
on more than 90 counts. The agreement leaves her subject to a maximum sentence of 20
years in jail and $500,000 in fines for money laundering and 10 years in federal prison and
$250,000 for theft and fraud, according to U.S. District Court Judge Ralph Beistline. She will be
sentenced later this winter.  Chris Hayes pleaded guilty through the agreement to illegally
spending $89,516 during 2003 on personal and family purposes and to help build a church
where her husband serves as pastor. She also acknowledged hiding the spending through
different methods, including the conversion of checks to cash and, eventually, to cashier’s
checks or money orders. Under one charge included in the deal, she admitted using more than
$14,000 to pay a plumbing company that had worked on the church.  The government
dropped dozens of other charges against Chris Hayes under the plea deal. The entire
original case, however, can be considered as the government takes legal steps to recover the
misused money.  A public defender representing Chris Hayes said in court her client is
suffering from anxiety and depression and is taking a number of medications. Hayes told
Beistline she had originally been confused by the proposed agreement when it was offered by
government attorneys late last month.  “I believe I did nothing intentionally,” Hayes said in
court.  In the signed plea agreement, however, Chris Hayes explains she knew she was
misspending money and trying to hide it. She agreed in court when federal assistant
prosecutor Andrea Steward pointed out that, through the agreement, Hayes was
acknowledging she had illegally used the grant money and disguised the source of the
spending through various transactions.  “There were intentional acts. She did this knowingly,”
Steward said in court.  The federal government 11 months ago accused the Hayeses of
misusing almost a half-million dollars, part of almost $3 million their nonprofit received from
the Department of Justice and the Department of Housing and Urban Development. The
misspent money went to help build the South Fairbanks Lily of the Valley Church of God in
Christ and for personal benefit and charitable donations. The money was obtained through
earmarks at the urging of U.S. Sen. Ted Stevens.


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