| #527 - December 27, 2007 |
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| #527 Updated: 12/27/07 10:43 a.m. Chetek man pleads guilty to embezzlement zwire.com | 12/26/07 | Staff Writer According to the criminal complaint, beginning in 1999, Otto, owner of the fire equipment firm Eddy Brothers Co., conspired with then-City of Superior Fire Chief Stephen Gotelaere, to submit invoices containing charges for equipment and supplies that in fact were never ordered or delivered. The complaint alleges that Otto prepared invoices that included both legitimate and false charges and that Gotelaere would tell Otto what to put in the invoices and how much Gotelaere would get back. As fire chief, Gotelaere was responsible for reviewing and approving invoices to the fire department for payment. After the city issued checks in payment for these false charges, the complaint alleges, Gotelaere and Otto would meet to divide the proceeds, with Gotelaere receiving most of the funds. The embezzlements continued until May 2005, when Gotelaere retired following the discovery he had submitted a false travel voucher. The complaint also alleges that the embezzlement scheme came to light when Gotelaere's successor discovered what appeared to be instances of double billing by Eddy Brothers Co. DOJ's subsequent investigation revealed the full scope of the scheme. Otto agreed to plead guilty as part of a plea agreement that allows the state to ask the court to withhold sentence and place Otto on probation for five years. As conditions of probation, the state will seek one year in the county jail and full restitution, which the state has calculated is as much as $239,676. The Department of Justice also filed charges the same day against Gotelaere. Gotelaere appeared in Douglas County Circuit Court Wednesday, Dec. 19, and entered pleas of guilty to three felonies, including misconduct in public office, for his participation in the scheme. "My office negotiated this plea agreement in exchange for Otto's full cooperation in our prosecution of the former Superior fire chief, Roger Gotelaere," said Van Hollen. "Together, these two plea agreements are in the interests of justice. They send a strong message to those who embezzle taxpayer public-safety dollars: the state is committed to investigating and prosecuting these cases, to punish wrongdoing and to restore the public faith." Back Home Alleged School Embezzlement Makes List Of Top 10 Stories swtimes.com | 12/26/07 | Amy Sherrill As students in Marble City were wrapping up the 2006-07 school year, their superintendent was dodging questions from a school board member about a suspicious land purchase. By the time students were preparing to return to classes in August, Marble City School District Superintendent/Principal Larry Duane Couch, 55, of Vian had been arrested and charged with embezzlement of public money in Sequoyah County District Court. Sequoyah County law enforcement officials first became aware of accusations against Couch after Marble City School Board member Ramon Bolin requested copies of the school’s warrant register at the county treasurer’s office prior to the end of the 2006-07 school year. Shortly after Bolin left the office that day, Couch entered and handed Treasurer Tricia Yates a large envelope, saying “This is what Mr. Bolin needs.” He cautioned her not to tell Bolin she did not gather the information herself and to put it in a different envelope, in case Bolin saw Couch with the first one. Yates told Sequoyah County district attorney’s investigators that she told Couch that Bolin was looking for a warrant register for the Building Fund 2005-06 for a request for $100,000, and that she and her deputy were unable to locate it, according to a probable cause arrest affidavit. According to the affidavit, Couch replied, “Cool. That’s the one I don’t want him to have. ... Stall him as long as you can.” Yates told investigators that she eventually located a warrant request from the building fund for $100,000 made out to a bank. An employee of the bank told her that a cashier’s check made payable to Jane and Kelly Nelson was issued from the warrant request on Feb. 23, 2006. Yates then searched at the Sequoyah County Clerk’s office and discovered a deed for land issued from the Nelsons to Couch and his wife dated March 23, 2006, according to the affidavit. On May 8, the district attorney’s office made a formal request to the Oklahoma State Auditor’s Office to investigate the matter, and on June 5 a search warrant was executed at Marble City Schools, according to the affidavit. According to investigators, Couch said that day that he took the $100,000 out of school funds to make a land purchase so he wouldn’t have to empty out his farm account. Couch said he intended to replace the money but needed about a year to do so. He said that once he had taken it, he realized it would be a lot harder trying to put it back, according to the affidavit. The investigation into Marble City schools involves at least $500,000 — the largest ever in Oklahoma history — according to Terri Watkins, public relations officer of the state Auditor and Inspector’s Office. Three auditors from the state Auditor’s Office and two investigators from the Sequoyah County District Attorney’s Office have been reviewing records since the summer and likely will work through the end of this month, looking at school records of purchases since 1999. Marble City School District has about 160 students from kindergarten through eighth grade; 85 percent of the students are Cherokee, officials have said. (Excerpt) Back Home Former town official to serve 15 months for $46K embezzlement boston.com | 12/22/07 | Staff Writer A 65-year-old former town official in Willimantic who embezzled more than $46,000 from the town over 10 years will be spending 15 months behind bars. Jacqueline Gorey pleaded guilty Friday in Piscataquis County Superior Court to a felony theft charge. The longtime tax collector and town clerk choked up as she spoke of her shame at what she had done. Gorey said she started taking a few dollars from town coffers that she intended to pay back, but the stealing got out of control. Her sentence of two years, with all but 15 months suspended, also includes three years of probation and 300 hours of community service. Gorey also must pay restitution. Back Home Bail set for ex-Archbishop Ryan High president philly.com | 12/25/07 | Marcia Gelbart The Rev. Charles Newman, former president of Archbishop Ryan High School, was arraigned last night on theft and forgery charges. His bail was set at $50,000. Newman, a Franciscan friar who led Philadelphia's largest Roman Catholic high school, was accused of stealing $900,000 from the school and providing drugs and money to a former student he allegedly molested. The preliminary hearing is scheduled for Monday. The multiple charges include felony counts with maximum penalties of 10 years in prison and $25,000 in fines. Newman, 57, led Archbishop Ryan from July 2002 to November 2003. It is Philadelphia's largest Roman Catholic High School. Recently, Newman had been living in a Wisconsin friary. Back Home Three indicted for unemployment fraud centralvalleybusinesstimes.com | 12/24/07 | Staff Writer Three Central Valley residents have been indicted by a federal grand jury on charges related to what the government says is unemployment benefits fraud. Mario Jurado Pena, 37, and his wife, Jacqueline Chavez Jurado, 32, of Sanger, are charged with conspiracy, mail fraud, identity theft and conspiracy to commit money laundering. Cruz Mendoza, who also goes by the name of Carlos Espindola, 40, of Dinuba, was indicted for mail fraud, identify theft and criminal forfeiture. According to Assistant U.S. Attorneys Stanley Boone and Sheila Oberto, who are prosecuting the cases, the first indictment charges Mr. Pena and Ms. Jurado with defrauding the Employment Development Department (EDD) by filing thousands of false unemployment insurance claims with the EDD from the period of January 2001 to April 2003 in claims totaling close to $3 million. According to the indictment, the pair acquired thousands of employees’ identities, which included names and Social Security numbers. Using that fraudulently acquired information, the defendants then filed false claims with the EDD and had the fraudulent unemployment checks sent to numerous post office boxes and other addresses that they controlled, says the grand jury. Mr. Mendoza is charged with similar conduct but from the period of January 2000 to August 2007 for claims totaling over $500,000. In a search warrant executed at his home earlier this month, federal and state agents seized $219,690 in cash. Officials Falling Behind on Mortgage Fraud Cases nytimes.com | 12/25/07 | John Leland The number of mortgage fraud cases has grown so fast that government agencies that investigate and prosecute them cannot keep up, lenders and law enforcement officials have said. Reports of suspected mortgage fraud have doubled since 2005 and increased eightfold since 2002. Banks filed 47,717 reports this year, up from 21,994 two years ago, according to statistics from the Federal Bureau of Investigation and the Financial Crimes Enforcement Network of the Treasury Department. In 2002, banks filed 5,623 reports. “I don’t think any law enforcement agency can keep up with mortgage fraud, because it’s such a growth industry,” said Chuck Cross, vice president of mortgage regulatory policy for the conference of state bank supervisors, an organization of regulators and bankers. “There’s too many cases, not enough agents.” Mortgage fraud covers crimes like false statements on mortgage applications and elaborate “flipping” schemes that involve multiple properties and corrupt appraisers, title companies and straw buyers. In one common flipping plot, someone buys a house, has it appraised for more than its true value and sells it to a straw buyer for the inflated price, pocketing the difference. The straw buyer lets the house fall into foreclosure, leaving the bank with the loss. The cases coming into view reflect the recent boom in mortgages with limited borrower documentation and lax scrutiny. Law enforcement agencies say they are overwhelmed, especially because investigating and prosecuting fraud can be complex and time consuming. The officials say career criminals and organized-crime rings have increasingly turned from other crimes to mortgage fraud because it offers lower risks and high profits. “I could hire a dozen investigators and a dozen prosecutors and only scratch the surface,” said David McLaughlin, a senior assistant attorney general in Georgia who coordinates prosecutions of mortgage fraud. Losses involving federally insured banks totaled $813 million in the 2007 fiscal year, more than double the $293 million lost in the 2002 fiscal year. These figures most likely represent “the tip of the iceberg,” said the Mortgage Bankers Association, an industry group, because they do not cover mortgage brokers, who arrange more than half of new mortgages. The industry estimates the total loss this year at $4 billion. Mortgage fraud can damage whole neighborhoods. Derrick Duckworth, a real estate broker in southwestern Atlanta, has watched “about 40 percent” of the houses in his neighborhood, Adair, become vacant as a result of mortgage fraud. The remaining residents cannot sell their houses because of the abandoned buildings and the neighborhood’s reputation for fraud, he said. Fraud is especially common with subprime mortgages, the high- price loans for borrowers with poor credit. Lenders and investigators trace part of the foreclosure crisis to mortgage fraud. For local law enforcement agencies, fraud is increasing as regulatory budgets are tight and other crimes seem more pressing, said Tom Levanti, a fraud investigator in New York. (Excerpt) Back home School lunch system found open to fraud dailynews.com | 12/25/07 | Naush Boghossian and Lisa Friedman While the $8.2 billion national school lunch program is designed to provide meals to needy students, the system is fraught with loopholes that leave it open to rampant fraud. A recent government report said verification remains a problem in the program that provides about 6.6 billion meals to kids each year at a cost of about $10.2 billion. To participate in the program, parents complete applications listing their income. Random verification checks are performed, but from 2005 to 2006, the study found slightly more than one student in five students who applied and got served was actually ineligible - at a cost of $935 million. "Several data sources suggest that a significant number of ineligible children are receiving free or reduced- price meals," the auditors wrote. Los Angeles Unified School District officials, who sought verification for 8,000 applications last year, said they are in full compliance with the law. "Is there a potential to falsify income in any system in which you gather individual data and don't review 100 percent of the applications? Yes, that risk exists," said Michael Eugene, LAUSD's business manager. "(But) since we're in full compliance, our major focal point is to get meals to those students who need it." The federal government requires school districts to audit 3 percent of applicants from families whose income falls within $100 of the cutoff - those believed to be the most prone to reporting errors. A child from a family of four making $26,845 or less qualifies for the free-lunch program, while $38,203 is the limit for reduced- price lunches. Last year, LAUSD sent verification letters to about 8,000 households. Of those, 1,700 didn't respond, 176 went from the free to the reduced-price category, and only 36 were changed to full-pay status, said Dennis Barrett, director of food services at LAUSD. Those who didn't respond - nearly 25 percent of those sent verification letters - were removed from the program. But Jon Coupal, president of the Howard Jarvis Taxpayers Association, said the program should have more safeguards to limit potential fraud. "We all know that there's going to be some level of fraud," Coupal said. "There should be more significant consequences for defrauding a program like that, and we rarely see that kind of consequences flow from fraud. "The ultimate goal is to make sure that taxpayers aren't being ripped off while at the same time trying the achieve the objective of the program." A number of federal audits found vast discrepancies between the census counts of low income households and the number of students receiving free and reduced-price lunches. A study five years ago in New York City's school district, only one larger than the LAUSD, found about $100 million in potential losses. While the Bush administration proposed strict new verification measures, advocates for the poor questioned the veracity of the studies and accused the administration of swiping tater tots out of the fingers of poor children. (Excerpt) Back Home ________________________ |