| #524 - December 19, 2007 |
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| #524 Updated: 12/19/07 12:54 p.m. Fraud conviction nets man 6 years in state pen The Pueblo Chieftan | 12/18/07 | John Norton Ronald McLain, convicted of bilking investors out of more than $500,000, was sentenced to six years in a Colorado prison Monday, a term he’ll start serving once he’s paroled from jail in New York for a similar crime. District Court Judge David Crockenberg handed down the sentence along with an order to pay $202,800 in restitution to his victims. Crockenberg gave McLain credit for 594 days served in custody but tacked on five years of mandatory parole after he serves his time. McLain and his wife, Constance, were charged with setting up a stock fraud that drew in 120 investors from Pueblo and seven other states. They were stopped when Colorado Securities Commissioner Fred Joseph launched an investigation and the state attorney general’s office brought charges. Jean Woodford, first assistant attorney general in the financial fraud unit, said that only half of the victims asked for restitution. “The rest were mainly family and friends,” she said. Mrs. McLain is originally from Pueblo, but the couple lived in Oregon before coming here in 2004 and began holding investment seminars for their company, IQ Entertainment. The business, which was to sell pre-paid cards for entertainment and travel, promised returns of 14 to 22 percent. They also made bogus claims to be working with the Pueblo Economic Development Corp. to use an industrial park building to store the cards. While free on bond in the Pueblo case, McLain was indicted last year by a New York City grand jury for selling stock in another phony company that he claimed would sell electronics at deep discounts. He has about two more years to serve there, according to Woodford. Mrs. McLain pleaded guilty last year to the Colorado charges and is currently on probation. Woodford said she is living in Las Vegas, teaching school and paying into the restitution fund. McLain, 57, pleaded guilty to securities fraud and felony theft and seven other charges were dismissed as part of the plea bargain. While describing the agreement to Crockenberg, Woodford said that during presentencing discussions, McLain indicated he planned to go back into the same kind of business once out of prison. “I feel duty-bound to put on the record what a bad idea that is,” she said. AIG executive, 3 others charged in alleged fraud reuters.com | 12/18/07 | Gina Keating LOS ANGELES, Dec 18 (Reuters) - A former human resources executive at American International Group Inc (AIG.N: Quote, Profile, Research) was arrested on Tuesday along with two others and charged in what federal prosecutors in New York described as a scheme to defraud the insurer of over $1 million. John Falcetta, a former vice president of human resources at AIG's life insurance division in Manhattan, was accused of funneling company funds to a number of sham "headhunter" or executive search companies and receiving kickbacks in return. Also charged in the alleged scheme, carried out between 2005 and 2007, were Justin Broadbent, Gary Santone and Thomas Pombonyo, according to documents filed in Manhattan federal court. Santone and Pombonyo also were arrested on Tuesday. Falcetta, Santone and Pombonyo appeared on Tuesday in federal courts in Boston, Philadelphia and Manhattan, respectively, prosecutors said. Broadbent is still at large, prosecutors said. Broadbent, Santone and Pombonyo all had existing relationships with Falcetta before he went to work with AIG in 2005, prosecutors said. Falcetta arranged for them to submit invoices charging AIG for head-hunter services supposedly undertaken to fill vacant positions at the company, the documents said. Falcetta approved payment for the sham services and received kickbacks from the sham companies to "Human Capital Management Partners," a brokerage account he controlled, the document said. AIG representatives could not be reached immediately for comment. Neither the defendants nor their lawyers could be immediately located. Ex-Refco Lawyer Collins Indicted for Role in Fraud bloomberg.com | 12/18/07 | David Scheer and David Glovin Refco Inc.'s former lawyer Joseph Collins was indicted by a federal jury for allegedly helping the futures brokerage hide bad debts from investors, in an unusual prosecution of an outside counsel in a corporate fraud case. Collins, a partner in Mayer Brown LLP's Chicago office, allegedly drafted documents for transactions that hid loans and public filings Refco used in attracting $2.4 billion from banks and investors before the company went bankrupt in 2005, according to a federal indictment unsealed in New York today. Prosecutors took the rare step of targeting an outside lawyer because Collins played such a ``vital'' part in the scheme, U.S. Attorney Michael Garcia told journalists today. The indictment is ``startling,'' said Ralph Ferrara, a partner at the Dewey & LeBoeuf LLP law firm in Washington and former general counsel at the U.S. Securities and Exchange Commission. ``For an attorney to cross the line from being an adviser and advocate and move into the realm of being a participant is very rare,'' he said. Few corporate lawyers have faced such allegations, either from the Justice Department or SEC, amid a spate of multi- billion dollar corporate frauds in the past decade. When Enron Corp., once valued at as much as $68 billion, collapsed 2001, lawyers who advised the company were interrogated by congressional investigators and sued by shareholders. None was charged with a crime. ``Joe Collins is an innocent victim of the Refco fraud,'' said his defense attorney, William Schwartz. ``This indictment should send a chill down the spine of every transactional lawyer who believes he or she is representing an honest client. We intend to fight these charges to acquittal.'' Collins helped draft documents Bennett and others used in round-trip transactions that disguised debts owed to Refco by an entity Bennett controlled, the SEC said in a related civil lawsuit filed today. The lawyer also didn't adequately describe the loans while preparing documents used to finance the 2004 sale of a Refco stake to Boston-based buyout firm Thomas H. Lee Partners, the SEC said. While working on the IPO in 2005, Collins revised statements that should have disclosed the debts, the SEC said. ``Collins was in a perfect position to protect investors from being harmed, but chose instead toperpetuate the deception by actively assisting Refco's fraud,'' said Scott Friestad, an associate director of SEC enforcement who oversaw its probe. Collins, who is 57 and lives in Winnetka, Illinois, pleaded not guilty to an 11-count indictment alleging securities fraud, bank fraud, wire fraud and conspiracy. Prosecutors said he may spend the rest of his life in prison if convicted. U.S. District Judge Leonard Sand released him on a $1 million bond. The SEC's suit shows the agency may be taking a more aggressive stance against ``gatekeepers'' who facilitate misconduct, said Michael Missal, a former SEC lawyer who heads the regulatory practice at Kirkpatrick & Lockhart Preston Gates Ellis LLP in Washington. ``It's looking at the role people played, as opposed to just the position they held,'' he said. (Excerpt) Antioch woman arrested for embezzlement The Mercury News | 12/18/07 | Linda Davis Piedmont police on Monday arrested a 35-year-old woman and charged her with embezzling more than $100,000 from a Piedmont dentist. The Antioch resident, 35-year-old Sunny L. Gresham, was arrested at her current employer' s dental office in Brentwood, Piedmont Detective Catherine Carr said. She was booked into Santa Rita Jail in Dublin and is facing 26 felony counts of grand theft. Her bail has been set at $100,000. This January, the Piedmont dentist reported to Piedmont police that he believed a former employee had embezzled funds for approximately three years. Gresham had left his employment after a disagreement over working hours and salary. The dentist also suspected something was amiss with her accounting practices. She had served as an office manager and accounts manager, Carr said. A new accountant hired by the Piedmont dentist started noticing suspicious discrepancies of a few thousand dollars here, a few thousand there. It is believed Gresham funneled money via credits to her credit card and out of petty cash. Police could not prove the thefts from petty cash, Carr said. But, Carr said, "Every time she did a transaction over $400, there was another count of grand theft added." Carr completed a year-long investigation of the allegations which culminated in Gresham's arrest on Monday in Brentwood. Carr said in the course of her investigation she spoke to a dentist where Gresham worked previously. "He said, 'Oh, she's done it again' but that dentist never pressed charges on her," Carr said. Gresham was apparently planning a wedding during her employment with the Piedmont dentist. "The withdrawals seemed to ramp up as the wedding got closer," Carr said. Gresham was arrested around 1 p.m. Monday. She has no previous criminal record, police said. ________________________ |
