The White Collar Defense Report® provides updates on cases, policy developments and trends in the white collar area, including federal criminal matters as well as civil cases such as qui tam cases and SEC enforcement actions.
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PPP Loan Fraud Prosecutions
As noted in previous issues, DOJ is prosecuting Paycheck Protection Program (PPP) fraud cases within months of the alleged offense, much faster than any other white collar cases have ever been prosecuted in recent memory. There are too many cases to share here, so we’ve whittled it down to a single notable case this month:
Florida Recording Artist and Pennsylvania Man Charged for Role in $24 Million COVID-Relief Fraud Scheme
A Florida recording artist and a Pennsylvania towing company owner have been charged for their alleged participation in a scheme to file fraudulent loan applications seeking more than $24 million in forgivable PPP loans. Diamond Blue Smith, 36, of Miramar, Florida, and Tonye C. Johnson, 28, of Flourtown, Pennsylvania, were charged in federal criminal complaints filed in the Southern District of Florida with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud. Smith, a recording artist, Smith allegedly purchased a Ferrari for $96,000 and made other luxury purchases using PPP loan proceeds.
Could your business already be in DOJ’s crosshairs?
There is an unprecedented coordination between government agencies regarding the investigation of PPP fraud crimes. In many cases, businesses with no intent to defraud U.S. taxpayers get caught in a net of overzealous prosecutions. Business owners and executives must seek experienced counsel if they receive any indication they are being investigated.
Financial Fraud & Investment Fraud
Just because they’re cute doesn’t mean you should commit fraud to buy them. Designer puppies are just one of the outlandish luxury items featured in these fraud schemes.
Financial Fraud Chicago-Area Rappers Indicted in Nationwide Fraud Conspiracy
Six Chicago-area men have been indicted by a federal grand jury in Springfield with participating in a nationwide wire fraud and identity theft scheme that victimized businesses across the United States. Antonio Strong, 28; Herbert Wright, 25; Demario Sorrells, 34; Steven Hayes, 28; Joseph Williams, 28; and Terrance Bender were charged with using stolen credit cards to pay for private jet and yacht charters, private chefs, security guards, luxury hotels and designer puppies. Strong is also charged with nine counts of aggravated identity theft; Williams is also charged with three counts of aggravated identity theft; Wright, Hayes, and Bender are also each charged with two counts of aggravated identity theft; and Sorrells is also charged with one count of aggravated identity theft.
Pennsylvania Attorney Sentenced for Role in $2.7 Million Ponzi Scheme
An Allentown, Pennsylvania, attorney was sentenced today to 78 months in prison followed by three years of supervised release for his role in a $2.7 million investment fraud scheme that victimized his law clients. Todd H. Lahr, 60, licensed to practice law in Pennsylvania and the District of Columbia, and with offices in Allentown, pleaded guilty in April 2020 to one count of conspiracy to commit securities fraud and wire fraud, two counts of securities fraud, and four counts of wire fraud.
Conspiracy & Foreign Corruption
Despite warnings against flying during a pandemic, five men from California to Poland were charged with frequent flier fraud. We also have a money laundering case out of Venezuela. It’s a truly international roundup.
Six Charged in Frequent Flier Fraud
Six men have been charged with stealing millions of airline frequent flier miles, announced U.S. Attorney for the Northern District of Texas Erin Nealy Cox. A federal grand jury indicted Wojciech Borkowski (43, of Zgierz, Poland), Terran Oliver (51, of Allen, TX), Semaj Lee (55, of Oklahoma City, OK), Derrick Booker (49, of Spencer, OK), Yusuf Siddique (30, of Folsom, CA), and Stanley Benton (42, of Los Angeles, CA) on conspiracy to commit wire fraud in August 2019. The lead defendant, Mr. Borkowski, was arrested in Poland in May 2020. Following a successful extradition request, he was handed over to FBI custody and flown to Dallas.
Former Venezuelan National Treasurer and Her Spouse Charged in Connection with International Bribery and Money Laundering Scheme
A former Venezuelan National Treasurer and her spouse were charged in a superseding indictment filed Tuesday for their alleged participation in a previously indicted billion-dollar currency exchange and money laundering scheme. Claudia Patricia Diaz Guillen, 47, and her spouse, Adrian Jose Velasquez Figueroa, 41, Venezuelan citizens who reside in Madrid, Spain, were charged in a superseding indictment filed in the Southern District of Florida with one count of conspiracy to commit money laundering and two counts of money laundering.
Healthcare & Tax Evasion
Cryptocurrency might be virtual, but it still counts as taxable income. Read on to learn about one cryptocurrency investor’s road to extradition.
Owner of Texas Chain of Hospice Companies Sentenced for $150 Million Health Care Fraud and Money Laundering Scheme
A corporate executive has been ordered to serve 20 years in prison after his conviction related to falsely telling thousands of patients with long-term incurable diseases, such as Alzheimers and dementia, they had less than six months to live and subsequently enrolling them in hospice programs. A federal jury in McAllen, Texas, convicted Rodney Mesquias, 48, of San Antonio, Texas. The one-month trial in November 2019 was one of the first criminal hospice fraud prosecutions the Department of Justice has presented to a federal jury. U.S. District Court Judge Rolanda Olvera ordered Mesquias to serve a total of 240 months in federal prison and to pay $120 million in restitution.
John McAfee Indicted for Tax Evasion
An indictment was unsealed charging John David McAfee with tax evasion and willful failure to file tax returns. The June 15 indictment was unsealed following McAfee’s arrest in Spain where he is pending extradition. He allegedly hid cryptocurrency, a yacht, real estate and other properties in nominee names to evade taxes. If convicted, McAfee faces a maximum sentence of five years in prison on each count of tax evasion and a maximum sentence of one year in prison on each count of willful failure to file a tax return. McAfee also faces a period of supervised release, restitution, and monetary penalties.
