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January 12, 2013

San Bernardino County Man Pleads Guilty to Securities Fraud Charges Related to $40 Million Ponzi Scheme

Filed under: California Defense Attorney — Tags: , , , — fayarfa @ 5:04 am

FORT WORTH, Texas — Jeffrey J. Sykes, 54, of San Bernardino County, California, pleaded guilty this morning before U.S. District Judge John McBryde to two counts of securities fraud stemming from a Ponzi scheme he ran in connection with his ownership of Gemstar Capital Group, Inc. (Gemstar), a California-based private equity company.  For each count of securities fraud, Sykes faces a maximum statutory penalty of five years in prison, a $250,000 fine and restitution.  Sentencing is set for April 26, 2013.  Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

According to documents filed in the case, Sykes owned and operated Gemstar out of Redlands, California.  In 2006, Sykes and “M.K.,” an individual who lived in Westlake, Texas, met at a golf tournament.  Sykes told M.K. that Gemstar was a venture capital company interested in investing in emerging growth companies and that Gemstar was looking to supplement its planned venture capital operations by engaging a brokerage firm to assist it in buying and selling U.S. Treasury Bills (T-Bills).

M.K. asked Sykes whether he could participate, and in April 2007, Sykes and M.K. entered into an agreement in which M.K. would solicit investors to participate in the T-Bill trading program described by Sykes.  The next month, M.K. formed a limited liability company, known as KCG, and began to solicit investors.  Using information Sykes provided, M.K. secured approximately 37 investors who invested approximately $24,617,441.  M.K. sent the money, minus fees he withheld for himself, to Gemstar to be invested by Sykes.  However, unbeknownst to the investors, neither KCG or Gemstar was engaged in any T-Bill trading program at the time of M.K.’s solicitations.

In addition to the funds that M.K. raised, Sykes personally raised approximately $22,488,539 from investors by making representations about a T-Bill trading program that were materially false or omitted material facts.  In fact, none of the money was invested in a T-Bill trading program.  Instead, Sykes and M.K. used some of the money for personal expenses.  Some of the money was invested in ventures that the investors were unaware of and had not given their consent to participate in.  Some of the money was returned to investors, although in some cases, Sykes falsely claimed that the funds represented the return of capital and/or profits from the T-Bill trading program.

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November 1, 2012

Diamond Bar Man Arrested on Federal Charges of Running Ponzi that Raised $49 Million from Investors in Day Trading Scheme

Filed under: Los Angeles Criminal attorney — Tags: , , , — fayarfa @ 5:01 pm

LOS ANGELES – Federal agents this morning arrested a Diamond Bar man on federal wire fraud charges that allege he ran an investment scheme that raised $49 million from investors who suffered losses of approximately $32 million after he lost millions on bad trades and spent millions on Ponzi payments and personal expenses such as gambling.

Syed Qaisar Madad, 65, the CEO and co-owner of Technology for Telecommunication and Multimedia, Inc. (TTM), was arrested at his home without incident by Special Agents with the FBI and IRS - Criminal Investigation. Madad is expected to be arraigned on a 16-count indictment this afternoon in United States District Court in Los Angeles.

Madad, a native of Pakistan who is now a Canadian citizen residing in the United States as a lawful permanent alien, allegedly bilked investors with false promises that his day-trading method would make consistent, substantial profits. The indictment also alleges that Madad falsely told victims that their money was safe and would be returned to them upon request.

However, as the indictment alleges, Madad was actually running a Ponzi scheme in which he used funds from some investors to repay others. While Madad promised that he would not take any fees or compensation for managing the invested funds, Madad allegedly withdrew investors’ money in cash and used millions of investor funds to pay his own personal expenses and expenses of his wife’s business.

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September 24, 2012

Three Indicted, Arrested on Federal Charges Involving Scheme to Defraud Insurance Lenders

Filed under: California Defense Attorney — Tags: , — fayarfa @ 5:54 pm

Three people were arrested today on federal charges alleging they operated a scheme to defraud insurance finance companies, announced André Birotte, Jr., the United States Attorney in Los Angeles; Timothy Delaney, the Special Agent in Charge of the FBI’s Los Angeles Field Office; and Insurance Commissioner Dave Jones, on behalf of the CDI Investigations Division-Criminal Operations Point of Sale (COPS) Team-Los Angeles Regional Office.

Lee Anthony Corlette, 64, of Redondo Beach, was arrested at his residence this morning. Sherman Franklin Hulsey, 60, of Santa Barbara; and Jane Graves, 61, of Astoria, Oregon, were also arrested this morning. The defendants will have an initial appearance in U.S. District Court this afternoon.

A federal grand jury returned an indictment in United States District Court in Los Angeles on September 5, charging Corlette with seven counts of mail fraud, nine counts of wire fraud, and 16 counts of aiding and abetting in connection with a scheme to submit numerous fraudulent insurance premiums to insurance finance companies. Hulsey and Graves were charged with one count of mail fraud, three counts of wire fraud, and four counts of aiding and abetting. The indictment alleges that Corlette, while CEO of Insurance Works Inc., and doing business as Star Alliance Insurance Services in Long Beach, California, obtained over $4 million in fraudulent loans from victim finance companies who believed the money would be provided to the insurance carriers identified in the agreements submitted by Corlette.

Defendants Hulsey and Graves allegedly assisted Corlette in the fraud by providing information about their businesses in order for Corlette to submit the agreements to the victim finance companies and fraudulently obtain the loans. Hulsey is the owner of Liberty Paradise LLC, located in Santa Barbara, and Global Consulting Services Inc, doing business as Vanguard Benefits. Graves was the secretary/treasurer of Global Consulting Services and the owner of Steward Holdings LLC, a company located in Astoria, Oregon.

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July 11, 2012

Anaheim Hills Man Sentenced to 144 Months Imprisonment for Wire Fraud Conspiracy and Tax Evasion in Mortgage Fraud Conspiracy

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 5:42 pm

Over $1.1 Million in Restitution Ordered to Victims and IRS

RIVERSIDE, CALIFORNIA - Today, Gregory Flores, former manager at All Fund Mortgage in Anaheim Hills, was sentenced to 144 months imprisonment and three years of supervised release.  U.S. District Judge J. Virginia Phillips also ordered Gregory Flores to pay over $1 Million in restitution to homeowner victims and over $98,000 in restitution to the IRS for his role in a mortgage fraud conspiracy and evading taxes.
On February 24, 2012, Gregory Flores pleaded guilty to one count of wire fraud conspiracy and one count of tax evasion.  According to the plea agreement, Flores, along with other co-conspirators including Sheri Gale, a realtor in La Mesa, and Amy Hall (also known as: Amy Truijillo) also of Anaheim Hills, a loan processor, executed an illegal scheme by wire communication to defraud distressed homeowners facing foreclosure and lenders who made mortgage and home equity loans.

According to court documents, beginning around May 2003 through around June 2006, Flores managed satellite “All Fund Mortgage” offices, a mortgage company based in Tacoma Washington, in Anaheim Hills and Murrieta.  Flores or his co-conspirators, using various names including “All Fund,” “Advantage 2000,” “Crown and Associates,” “Ichthommol Trust,” “B Owned,” or “Right Way, Inc.” contacted numerous homeowners, mostly in San Bernardino and Riverside counties, to sell or refinance their homes to others controlled by co-conspirators.  Flores and others falsely claimed they could save the homeowners from foreclosure.    Homeowners were also solicited through advertisements in mailings such as the “Penny Saver” or by conducting “knock and talk” and typically had poor credit.

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Former Atascadero Real Estate Developer Charged with Defrauding Investors in Central Coast Real Estate

Filed under: California Defense Attorney — Tags: , , , — fayarfa @ 5:36 pm

LOS ANGELES—A real estate developer who formerly resided in Atascadero was indicted today on federal fraud and money laundering charges that accuse him of bilking investors who put money into Central Coast real estate projects—money that was siphoned off for other purposes, including maintaining a lavish lifestyle.

Kelly Gearhart, 50, who currently resides in Wadsworth, Ohio, was named in a 16-count indictment returned today by a federal grand jury. The indictment charges Gearhart with 10 counts of mail fraud, four counts of wire fraud, and two counts of money laundering.

The indictment alleges that Gearhart fraudulently solicited investments in specific real estate development projects by falsely promising that he would use the funds to develop those projects. Gearhart also told investors that their investments—which he called loans and promised would be paid back with interest—were secured by specific lots.

The indictment alleges that Gearhart failed to disclose a number of things to investors, specifically, that he was using victims’ funds to pay for his and his wife’s lavish living expenses, that he was using their money to develop different real estate projects than those intended by the victims, and that he was using victims’ money to make interest payments to other investors.

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March 11, 2012

NINTH DEFENDANT PLEADS GUILTY TO TELEMARKETING FRAUD THAT SOLICITED OVER $9 MILLION FOR INDIE FILMS

NINTH DEFENDANT PLEADS GUILTY TO TELEMARKETING FRAUD THAT SOLICITED OVER $9 MILLION FOR INDIE FILMS

LOS ANGELES – The last of nine defendants facing trial next week on federal fraud charges stemming from boiler room operations that solicited investments in independent movies pleaded guilty in federal district court yesterday afternoon, admitting that he participated in a conspiracy to defraud investors that included false promises of up to 1,000 percent returns and misrepresentations as to how investor funds would be used.

Defendant Robert Ramirez, 45, of Lake View Terrace, pleaded guilty before the Honorable John F. Walter, United States District Judge, to one count charging him with conspiracy to commit mail fraud, wire fraud, and the sale of unregistered securities.  The conspiracy charge carries a maximum sentence of 5 years.

Defendant Ramirez was the last of the defendants in this case to plead guilty before the scheduled March 13 trial.  The other defendants in this case all pleaded guilty earlier in the weeks and months leading up to trial.

The thirty-three count indictment, filed June 15, 2011, focuses on Q Media Assets LLC, an independent movie company operated by Michael D. Sellers, the former CIA operative who had already pleaded guilty and is identified in the indictment as “co-conspirator #1.” The indictment alleges that telemarketers for Q Media fraudulently raised funds for films called “Eye of the Dolphin” and its sequel, “Way of the Dolphin” (which was later called “Beneath the Blue”). Telemarketers associated with Q Media used “lead lists” purchased by Sellers from the San Clemente company, American Investment Strategies, owned by defendant Joel Lee Craft, Jr. According to the indictment, telemarketing “closers” told investors that they were producers of the Dolphin movies, and they “often touted [Sellers’] background as a former clandestine officer with the CIA in order to assure victim investors that representations in the solicitation materials and statements by the closers were true and investments in the Dolphin Movies were safe.”  The telemarketers seeking investments in the Dolphin movies allegedly “made material misrepresentations, told material half-truths, and concealed material facts, when speaking to investors,” specifically concealing information about commissions and promising returns of up to 1,000 percent.

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March 8, 2012

Promoter of Christian Rock Concerts Sentenced to Nearly Five Years in Federal Prison in Ponzi Scheme That Took $1 Million from Victims

Filed under: California Defense Attorney — Tags: , — fayarfa @ 4:50 am

SANTA ANA, CA—The owner and operator of a Downey company has been sentenced to 57 months in custody in a wire fraud scheme that collected nearly $1 million from victims who were falsely promised that their money would be used to host Christian rock concerts.

Lauren Baumann, 43, of Downey, the owner of Stewardship Estates, LLC, was sentenced late yesterday by United States District Judge Josephine S. Tucker.

Baumann pleaded guilty in October, admitting in court that she solicited loans from investors with claims that the money would be used to finance “battle of the bands” events featuring Christian rock bands and other music groups that would generate profits from ticket sales and company sponsorships. In some cases, Baumann told investors that the funds would also be used to purchase, refurbish, and resell homes.

In fact, a substantial portion of the investors’ funds was used to pay earlier investors, who thought they were receiving profits from Baumann’s venture. Baumann also used investor funds to pay approximately $10,000 a month to rent a historic mansion in Downey and to pay private school tuition for her children, among other personal expenses.

As a result of Baumann’s scheme, more than two dozen victims in Orange and Los Angeles counties suffered losses totaling nearly $560,000.

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February 29, 2012

Prominent Surrogacy Attorney Sentenced to Prison for Her Role in Baby-Selling Case

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 2:56 am

United States Attorney Laura E. Duffy announced today that attorney Theresa Erickson was sentenced by United States District Judge Anthony J. Battaglia to serve five months in prison and nine months of home confinement for her involvement in a baby-selling ring that deceived prospective parents and the Superior Court of California.

As noted during the hearing, California law forbids the sale of parental rights to babies and children. The law does, however, permit surrogacy arrangements, but only if the Gestational Carrier (“GCs”) and the Intended Parents (“IPs”) enter into an agreement prior to an embryonic transfer. If the GC and IPs do not reach an agreement before the GC receives the embryonic transfer, the GC can only transfer parental rights in the unborn child through a formal adoption procedure. California law permits participants to profit from surrogacies, but not adoptions.

In her August 2011 guilty plea, Erickson (an internationally-renowned California attorney specializing in reproductive law) admitted that she and her conspirators used numerous GCs to create an inventory of unborn babies that they would sell for over $100,000 each. They accomplished this by sending women to become implanted with embryos in overseas clinics. If the women (now GCs) sustained their pregnancies into the second trimester, the conspirators offered the babies to prospective parents by falsely representing that the unborn babies were the result of legitimate surrogacy arrangements in which the original IPs had backed out. The conspirators also drafted fraudulent “assumption agreements” for the prospective parents to sign, which reinforced the lie that original IPs existed but had simply backed out.

According to court records, Erickson admitted to lying to the California Superior Court by fraudulently representing in court documents that these post-pregnancy agreements between the GC and IPs were legitimate surrogacies, which allowed Erickson and her co-conspirators to make over $400,000 in profit from the sale of parental rights. Specifically, Erickson admitted that she prepared and filed with the Superior Court of California, County of San Diego, declarations and pleadings that falsely represented that the unborn babies were the products of legitimate surrogacy arrangements—that is, ones that involved agreements between the IPs and the GCs prior to embryonic transfer. With these fraudulently obtained pre-birth orders, the IPs’ names would be placed on the babies’ birth certificates through a surrogacy and the conspirators would be able to profit from their sale of parental rights.

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February 3, 2012

Orange County Couple Plead Guilty to Federal Fraud Charges for Bilking Banks out of Nearly $5 Million

Filed under: California Defense Attorney — Tags: , , , — fayarfa @ 5:07 am

SANTA ANA, California – A Newport Coast couple pleaded guilty this morning to defrauding a consortium of seven banks, including Bank of America, in connection with a $130 million line of credit.

Thomas Chia Fu, 63, and his wife, Cheri L. Shyu (also known as Cheri Fu), 60, owned Anaheim-based Galleria USA, Inc., which imported home decor items manufactured in China. The Fus obtained a $130 million revolving line of credit for Galleria from a consortium of seven banks. In connection with that revolving line of credit, the couple overstated by tens of millions of dollars the accounts receivables of the company – lies they told the banks in order to continue borrowing funds under the revolving line of credit, according to plea agreements filed in this case. The Fus also admitted to falsifying in Galleria’s computer system the accounts receivable amounts by a factor of 10 or more times the actual amount purchased to support the exaggerated numbers and hide Galleria’s true financial status.

The banks suffered an estimated loss of $4.7 million on the revolving line of credit from October 2008 to July 2009.

The Fus pleaded guilty this morning before United States District Judge Cormac J. Carney. Cheri Fu is scheduled to be sentenced by Judge Carney on July 9, and Thomas Fu is scheduled to be sentenced on July 30.

At sentencing, the Fus each face a statutory maximum sentence of 30 years in federal prison.

January 11, 2012

Glendale Man Pleads Guilty in $5 Million Loan Fraud Case

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 5:55 am

LOS ANGELES—A Glendale man has pleaded guilty to five felony charges, admitting that he defrauded private money lenders out of more than $5 million by fabricating numerous documents and pledging as collateral properties he did not own.

Henrik Sardariani, 44, pleaded guilty last Wednesday to conspiracy, three counts of wire fraud and money laundering.

Henrik Sardariani has been in custody since December 21, 2010, when he and his brother, Hamlet Sardariani, were arrested by special agents with the Federal Bureau of Investigation and IRS-Criminal Investigation.

According to a plea agreement filed in this case, Henrik Sardariani obtained more than $5 million in loans after, among other things, falsifying numerous documents. In order to obtain one of the loans, Henrik Sardariani fraudulently used a house as collateral and falsely claimed to be the president of the company that owned the property. To support the claim that he controlled the company, Henrik Sardariani created false corporate records that were presented to the lender.

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