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December 13, 2012

Former U.S. Congressman Sentenced to Year in Prison in Tax Case Related to Scam that Sold Unregistered Securities in Internet Firms

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 3:38 am

LOS ANGELES – A former United States Congressman has been sentenced to one year and one day in federal prison in a tax fraud case related to his failure to disclose to the IRS nearly $500,000 of investor funds he received from a $10 million investment fraud scheme.

Wester Shadric Cooley, 80, a native of Los Angeles who now resides in Bend, Oregon, was sentenced yesterday afternoon by United States District Judge Dean D. Pregerson. In addition to the prison term, which Cooley was ordered to begin serving by March 11, 2013, Judge Pregerson directed Cooley to pay $3.5 million in restitution to the victim-investors and another $138,470 in back taxes to the Internal Revenue Service.

Cooley, who represented Oregon’s 2nd congressional district during a two-year term that began in January 1995, was sentenced after pleading guilty in November 2011 to subscribing to a false tax return, admitting that he received approximately $1.1 million during the scheme and that he failed to report approximately $494,000 on his 2002 tax return. The tax fraud case relates to a mail fraud and wire fraud scheme that defrauded more than 400 victim-investors out of over $10 million.

In the investment fraud scheme, former IRS Revenue Agent George Tannous and convicted felon De Elroy Beeler Jr. solicited hundreds of victims across the country to purchase unregistered stock in the Tujunga-based Bidbay.com, Inc. (a company that was later known as Auctiondiner.com, Inc.) and related companies AskGT.com and Rose Laboratories. Cooley was the vice president of Bidbay and an executive of AskGT.com and Rose Laboratories. Victim-investors were enticed to put money into the companies by several false statements, including that the companies would conduct initial public offerings, and that Bidbay.com and/or the shell companies would soon be acquired by Ebay, Inc. for $20 per share. Ebay never had any intention of acquiring Bidbay.com and had even sued Bidbay.com for trademark infringement over the use of “bay” in its name.

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November 30, 2012

Entertainment Executive Sentenced to 5½ Years in Federal Prison in Multi-Million Dollar Stock Fraud and Scheme to Bilk Investor

Filed under: Los Angeles Criminal attorney — Tags: , , — fayarfa @ 9:04 pm

LOS ANGELES – A Hollywood producer who founded and ran various television production and distribution companies was sentenced today to 66 months in federal prison for crimes committed in two cases – one involving stock fraud and another stemming from a scam that bilked an investor in one of the companies.

Drew Savitch Levin, 59, of Pacific Palisades, was sentenced by United States District Judge Dean D. Pregerson, who also ordered Levin to pay $2,272,588 in restitution to 13 victims in the United States, France, Austria, England and Switzerland.

At the sentencing hearing, Judge Pregerson described statements submitted by victims: “It is a picture of Mr. Levin being essentially completely out of control and using his charm and sizable intellect to lie to people and take their money, and continue to feed that engine of whatever it was that he thought he was going to be able to accomplish. And maybe in his mind he felt that it would all come out fine in the end, but it was a scorched earth strategy, and that’s clear. And when you read the letters about the promises that were made once notes were due…those are lies, clearly. And you see that time and time again.”

Levin pleaded guilty in September 2011 in one case to conspiring to inflate the revenue and stock price of Team Communications Group, Inc., a West Los Angeles-based company that Levin founded and for which he served as CEO until early 2001.

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November 9, 2012

MAN SENTENCED TO SIX YEARS IN PRISON FOR DEFRAUDING $350,000 FROM INVESTORS HE MET THROUGH YOUTH SPORTS PROGRAMS

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 6:22 am

SANTA ANA - A man was convicted and sentenced today to six years in state prison for defrauding over $350,000 from investors, whom he met through youth sports programs. Christopher Alan Tate, 47, Mission Viejo, pleaded guilty to seven felony counts of securities fraud, eight felony counts of passing non-sufficient funds checks, and one felony count of forgery. He admitted to sentencing enhancements for committing aggravated white collar crime over $100,000 and property loss over $200,000. Tate must also pay restitution and a fine of $887,944.

Between April 2008 and May 2010, Tate convinced at least nine victims, who are parents and grandparents that he met through the youth sports programs that his children participated in, to invest money in a business with the promise of high and quick returns.

Tate received approximately $350,000 from his victims and never paid them back or returned their investment money. Tate made elaborate excuses to the victims when asked about their investment and gave them non-sufficient funded checks or forged checks.

On one occasion, Tate falsely told a victim that the money was tied up in bankruptcy court as a result of the 2008 real estate crash and scheduled a meeting with the victim outside of the courthouse. Tate walked out of the courthouse to meet with the victim, making it appear as if he had attended a bankruptcy hearing.

The victims reported the case to the Garden Grove Police Department, who investigated this case.

On Nov. 2, 2012, six victims delivered impact statements to the court describing their financial situations after being defrauded by the defendant. One victim said, “What Chris Tate has done is left my family financially ruined. I had to take out mortgages, and it will take me another 30 years to pay off these loans to get back to where I was. Additionally, $150,000 was given to Tate, which was supposed to be for my mother-in-law with Alzheimer’s. Now I am having to cover all those costs of taking care of her.”

Another victim said, in part, “Chris Tate has ruined our family. He is a pathological liar. He lied about everything. My wife is suffering from an illness that is directly linked to stress. This stress was given by the lies and financial loss that Chris Tate has caused us.”

November 1, 2012

MAN SENTENCED TO 10 YEARS IN PRISON FOR STEALING OVER $280,000 FROM WOMAN IN FAKE GOLD INVESTMENT SCHEME

Filed under: California Defense Attorney — Tags: , , , — fayarfa @ 4:59 pm

SANTA ANA - A man was convicted and sentenced to 10 years in state prison today for stealing over $280,000 from a woman in a fake gold investment scheme. William Scott Spalding, 47, Irvine, pleaded guilty to 13 felony counts of money laundering, three felony counts of grand theft and one felony count of first degree residential burglary. He admitted to sentencing enhancement allegations for committing a theft over $100,000, committing an aggravated white collar crime over $100,000, property loss over $200,000, and laundering money exceeding $150,000. Spalding was also ordered to pay restitution and a fine of $576,000.

On March 6, 2011, Spalding visited 51-year-old Jane Doe, whom he met through an acquaintance, at her home. He claimed to be an investor and promised large returns on her investment if she bought gold from him.

On March 13, 2011, Spalding received $58,000 in cash from Jane Doe. The next day, Spalding received another $180,000 from Jane Doe through a wire transfer. On March 23, 2011, Spalding received an additional $50,000 from Jane Doe. Spalding distributed the money across multiple personal bank accounts and spent the money on expensive personal purchases including a high-end Mercedes-Benz and payments on a house. Spalding used the money for personal use and never purchased the gold he promised or returned any of the money to Jane Doe.

October 16, 2012

San Fernando Valley Woman Agrees To Plead Guilty in Multi-Million Dollar Real Estate Ponzi Scheme

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 5:01 pm

LOS ANGELES – A San Fernando Valley real estate agent and self-described real estate investor has agreed to plead guilty to running a multi-million dollar Ponzi scheme out of companies based in the Santa Clarita Valley.

In a plea agreement filed last Friday in United States District Court in Los Angeles, Celia Gallardo, 42, of North Hills, agreed to plead guilty to wire fraud for perpetrating the Ponzi scheme.

In the plea agreement, Gallardo admitted that she defrauded investors from September 2007 through September 2008 by falsely promising them high rates of return for investing in her purported real estate program. Gallardo admitted that instead of investing victims’ money in real estate transactions, she spent the vast majority of the money on house payments, foreign luxury travel, cash withdrawals, and Ponzi payments to earlier investors.

The plea agreement details how one investor lost $500,000 after Gallardo pressured him to invest quickly with claims that her investment program consisted of buying unfinished condominiums for pennies on the dollar in Florida and Tennessee. This victim borrowed money against his home in order to invest with Gallardo. Instead of using the money to purchase real estate, Gallardo used this victim’s money to make Ponzi payments to earlier investors, pay her employees, withdraw cash, pay personal expenses, pay her mortgage, and go on a luxury Mediterranean cruise with close friends and family.

Gallardo admitted that her scheme caused losses of at least $2.245 million to dozens of victims, who primarily resided in California and Arizona.

Gallardo will be directed by United States District Judge Dean D. Pregerson to appear in his court later this month to formally enter the guilty plea.

Once she pleads guilty, Gallardo will face a maximum statutory sentence of 20 years in federal prison and will likely be ordered to make full restitution to her victims.

August 31, 2012

TWO INVESTMENT ADVISORS CONVICTED IN CALIFORNIA OF HIGH YIELD INVESTMENT FRAUD

WASHINGTON – William J. Ferry, a former stock broker and investment advisor, and Dennis J. Clinton, a former real estate investment manager, were found guilty by a federal jury in Santa Ana, Calif., today for their roles in a conspiracy to defraud a wealthy investor of $1 billion in a high-yield investment fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.  The investor was, in reality, part of an undercover FBI team that posed as wealthy investors and investment managers in an effort to stop fraudsters before they actually harmed victims.

“Mr. Ferry and Mr. Clinton tried to dupe undercover agents into believing their high-yield investment program would earn them extremely high rates of return,” said Assistant Attorney General Breuer.  “In fact, Ferry and Clinton were conspiring to steal their money, along with the money of trusting investors.  Undercover operations are an integral part of our efforts to stop financial fraudsters before they wipe out the life savings of innocent victims.  Based on today’s verdict, the defendants will now pay a heavy price for their conduct.”

Ferry, 70, of Newport Beach , Calif., and Clinton, 64, of San Diego, were each found guilty in U.S. District Court for the Central District of California of one count of conspiracy, two counts of mail fraud and six counts of wire fraud.  They face a maximum penalty of 20 years in prison on each fraud count.  They will be sentenced on Feb. 1, 2013.

Paul R. Martin, a former senior vice president and managing director of Bankers Trust, was found guilty in U.S. District Court for the Central District of California for his role in the scheme in a separate trial on Aug. 3, 2012.  Martin, 63, of New Jersey, was convicted of one count of conspiracy, two counts of mail fraud and six counts of wire fraud.  At sentencing, scheduled for Feb. 1, 2013, Martin faces a maximum penalty of 20 years in prison on each fraud count.

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August 13, 2012

Former Long Beach Man Pleads Guilty to Promoting ‘Pump-and-Dump’ Stock Scheme Involving Sports Drink Company

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 3:22 pm

SANTA ANA, California – A man who resided in Long Beach before he fled the country during an investigation faces up to five years in prison after admitting this morning that he orchestrated a “pump-and-dump” stock scheme to generate demand for a penny stock issued by a sports drink company founded by Notre Dame football legend Daniel “Rudy” Ruettiger.

Chad Peter Smanjak, 38, pleaded guilty this morning in United States District Court to one count of conspiring to commit securities fraud. As part of the plea deal, Smanjak will be required to pay full restitution to the more than 250 victims of the scheme, although the amount of restitution has yet to be determined.

United States District Judge James V. Selna is scheduled to sentence Smanjak on December 12, at which time he will issue an order on restitution.

Smanjak was arrested in January in Johannesburg, South Africa by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Attaché office in Pretoria and members of South Africa’s Police Services. Smanjak waived extradition and voluntarily returned to the United States last Friday to face the charges.

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June 10, 2012

Former Fund Manager Pleads Guilty in Investment Fraud and Obstruction Case in Which Losses May Exceed $20 Million

Filed under: California Defense Attorney — Tags: , — fayarfa @ 8:24 pm

LOS ANGELES – A former investment fund manager pleaded guilty this morning to federal fraud charges, admitting among other things that he bilked investors out of millions of dollars by falsely promising to purchase corporate bonds backed by the Troubled Asset Relief Program (TARP).

John Farahi, 54, of Bel Air Estates, pleaded guilty to four felony counts – mail fraud, loan fraud, selling unregistered securities and conspiracy to obstruct justice while collaborating with his corporate counsel to cover-up the fraud. Farahi formerly ran the Beverly Hills-based New Point Financial Services, Inc.

In a plea agreement filed in United States District Court, Farahi acknowledged that the scheme caused losses of more than $7 million, while prosecutors reserved the right to argue that losses to victims are in excess of  $20 million.

In the plea agreement, Farahi specifically admitted that he engaged in a scheme that started as early as November 2005 to defraud numerous victims by using their funds for a range of unauthorized purposes, including paying off prior investors and subsidizing options futures trading. Farahi also admitted that he extended his fraud scheme in 2008 by drawing down on personal lines of credit based upon false statements to federally insured banks, including Bank of America, Sunwest Bank and U.S. Bank. Farahi also acknowledged that he violated federal securities laws by selling unregistered securities and failing to comply with the SEC’s rules and regulations for selling unregistered securities. Farahi further admitted that he conspired with his attorney to obstruct an SEC investigation by, among other things, altering documents that were turned over to the SEC and providing false and misleading testimony under oath to the SEC on three separate occasions.

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April 13, 2012

Orange County Man Pleads Guilty to Ponzi-style Investment Fraud Scheme

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 2:36 am

LOS ANGELES – An Orange County man pleaded guilty today in federal court to conducting a Ponzi-style investment fraud scheme that caused approximately 28 victims to suffer a total loss of approximately $2.7 million.

Timothy Melvin Murphy, 70, of Orange, pled guilty to a single count of mail fraud, in violation of Title 18, United States Code, Section 1341.  Murphy is a retired Colonel in the California Army National Guard who previously served as the Commanding Officer of the Guard’s base in Los Alamitos, California.

At his change of plea hearing, Murphy admitted that he devised and executed a scheme to obtain money from certain of his clients by means of material false promises.   Murphy admitted that he executed the scheme through his business, Capital Investors, Inc., which he operated out of Orange, California.

Murphy admitted that, in furtherance of his scheme, he offered fraudulent investment opportunities to certain of his clients, and that he created and used a variety of false documents to execute the scheme.  The investigation revealed that, in presenting the bogus investment opportunities, Murphy falsely represented that certain clients’ funds would be invested as promised and would generate substantial rates of return, which, in some cases, he falsely portrayed as “guaranteed” rates of return.  Murphy created false account statements to mislead his clients into thinking that their money was properly invested and generating the promised income.  In fact, as he admitted today, Murphy did not use the clients’ investment funds as he promised he would, and the government estimates that Murphy’s victims suffered losses in the amount of approximately $2.7 million.

The charge of mail fraud carries a statutory maximum sentence of 20 years in federal prison; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and 3 years supervised release.  In addition, Murphy will be required to pay restitution to the victims of his fraud scheme.

Murphy is expected to be sentenced in this case on June 25, 2012 before United States District Court Judge David O. Carter.

April 8, 2012

MAN CHARGED FOR STEALING OVER $280,000 FROM WOMAN IN FAKE GOLD INVESTMENT SCHEME

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 7:01 pm

SANTA ANA - A man was charged and arraigned today for stealing over $280,000 from a woman in a fake gold investment scheme. William Scott Spalding, 47, Irvine, is charged with 13 felony counts of money laundering, three felony counts of grand theft and one felony count of first degree residential burglary. He faces sentencing enhancement allegations for having a non-accomplice present during a residential burglary, committing a theft over $100,000, committing an aggravated white collar crime over $100,000, property loss over $200,000, and laundering money exceeding $150,000. Spalding faces a maximum sentence of 20 years in state prison if convicted. He is currently being held on $285,000 bail and is scheduled for a pre-trial hearing April 6, 2012, at 8:30 a.m. in Department C-55, Central Justice Center, Santa Ana.

On March 6, 2011, Spalding is accused of visiting a 51-year-old Jane Doe, whom he met through an acquaintance, at her home. He is accused of claiming to be an investor and promising large returns on her investment if she bought gold from him.

On March 13, 2011, Spalding is accused of receiving $58,000 in cash from Jane Doe. The next day, Spalding is accused of receiving another $180,000 from Jane Doe through a wire transfer. On March 23, 2011, Spalding is accused of receiving another $50,000 from Jane Doe. Spalding is accused of distributing the money across multiple personal bank accounts and spending the money on expensive personal purchases including a high-end Mercedes Benz and payments on a house. Spalding is accused of using the money for personal use and never purchasing the gold he promised or providing the victim with her money back.

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