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Showing posts with label Ponzi Scheme. Show all posts
Showing posts with label Ponzi Scheme. Show all posts

Thursday, January 24, 2019

The Big Con: Great Hoaxes, Frauds, Grifts, and Swindles in American History is Another Winner from @NateHendley

The Big Con: Great Hoaxes, Frauds, Grifts, and Swindles in American History, examines a broad range of infamous scams, cons, swindles, and hoaxes throughout American history―and considers why human gullibility continues in an age of easy access to information.


  • Explores figures such as "Yellow Kid" Weil, Charles Ponzi (from whom we get the term “Ponzi scheme”), Orson Welles, and Frank Abagnale, among others
  • Provides insight into human nature―gullibility being one aspect of it―throughout the ages, addresses the power of rumor and legend, and identifies the social conditions that have allowed some scams and hoaxes to flourish
  • Presents information that can serve academic research projects as well as fascinate and entertain general readers
  • Features the original stories behind the Hollywood movies The Sting, Catch Me If You Can, Argo, and American Hustle


In addition, The Big Con: Great Hoaxes, Frauds, Grifts, and Swindles in American History, looks at scams and scammers such as Bernie Madoff, online romance fraud, the Nigerian Prince email, disaster fraud, pyramid schemes, medical fakery and other forms of deceit.

Learn about the tricks of the conman trade and how old scams continue to flourish under new guises. Also learn how to avoid being duped by fraudsters.

Very readable. The Big Con is one of those books that you can pick up and start reading anywhere. There is an extensive bibliography at the back for further reading suggestions. Mr Hendley has done sceptics a genuine courtesy by assembling the history of frauds, cons, scams and hoaxes into one beautiful volume.” –The Miramichi Reader

Tuesday, August 19, 2014

Frank Preve Pleads Guilty to Conspiracy to Commit Wire Fraud in Massive Rothstein Ponzi Scheme

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Donnell Young, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announce that Frank Preve, 70, of Coral Springs, pled guilty in Ft. Lauderdale before U.S. District Judge James I. Cohn to conspiracy to commit wire fraud, in violation of 18 U.S.C. § 371. At his sentencing, scheduled for December 12, 2014, Preve faces a maximum statutory sentence of up to five years in prison.

In 2009, it was discovered that the law firm of Rothstein, Rosenfeldt and Adler, P.A. (RRA) was being utilized by its Chairman and Chief Executive Officer, Scott W. Rothstein, to commit a massive Ponzi scheme stemming from the sale of fictitious confidential settlements. In a written factual stipulation filed in connection with his guilty plea, Preve admitted that he worked for a number of companies, referred to as “the Banyon Group,” which solicited lenders and investors into the confidential settlement business being offered by Rothstein. The defendant further admitted that, from on or about July 9, 2009 through October 31, 2009, he defrauded investors by not disclosing that Rothstein had failed to make payments that were due to the Banyon Group, that Rothstein had frozen certain bank accounts that were holding investor funds, that certain paperwork was not being prepared, and that verification of the investments was not taking place, all in violation of a private placement memorandum which had been circulated to potential investors by the Banyon Group. The defendant further admitted that, through these material misrepresentations and omissions, Preve caused more than $20 million to be paid by investors to the Banyon Group.

Monday, June 09, 2014

Investment Adviser, Patricia S. Miller, Charged with Stealing Client Funds in Massive Ponzi Scheme

A Pennsylvania woman affiliated with a Massachusetts-based broker dealer was arrested on charges that she orchestrated a massive Ponzi scheme.

Patricia S. Miller, 67, was charged in a complaint with wire fraud and arrested in Pennsylvania today.

The complaint alleges that Miller used her position as a trusted financial adviser, as well as her association with a Massachusetts-based broker dealer, to obtain money from clients for purported investments that Miller never made on their behalf. Specifically, Miller promised high returns if clients put their money into “investment clubs” called, among other things, “KS Investments” and “Buckharbor.” Miller represented, among other things, that funds put into her investment clubs would be placed in fixed-income notes and other investments. Instead of investing money as promised, Miller misappropriated client funds for her own personal use.

If convicted, Miller faces a maximum sentence under the statute of 20 years in prison, three years of supervised release, and a $250,000 fine.

Thursday, May 29, 2014

Neal Goyal of Blue Horizon Asset Management Charged with Allegedly Defrauding 41 Investors of $11.3 Million

A Chicago investment fund manager fraudulently obtained more than $11.3 million from 41 investors and misused the funds for his own benefit, as well as to repay certain investors in a Ponzi-type scheme, according to a criminal fraud case announced by federal law enforcement officials. The defendant, Neal Goyal, was the founder and sole managing member of Blue Horizon Asset Management LLC and Caldera Advisors LLC, both of which were unregistered investment advisers.

Goyal, 33, of Chicago, was charged with one count of wire fraud in a criminal information filed in U.S. District Court, where he will be ordered to appear for arraignment on a date yet to be determined.

The U.S. Securities and Exchange Commission filed a parallel civil fraud lawsuit yesterday and obtained a court order freezing the assets of Goyal and his funds. The SEC suit alleges that Goyal stole his investors’ money to fund his own lavish lifestyle, to pay business expenses, and to support a variety of personal business ventures, including a bar and two children’s clothing boutiques that his wife operates in Chicago.

According to the criminal case, between June 2006 and May 2014, Goyal obtained more than $11.3 million from investors through offering and selling limited partnerships in three Blue Horizon funds and a Caldera Equity Fund by making false representations about the intended use of the funds, the investment returns generated, and the source of the investment returns and principal paid to investors. In fact, Goyal allegedly misappropriated the investors’ funds for his own benefit and concealed the fraud scheme by creating and distributing false account statements.

Beginning in early 2006, Goyal represented that funds invested in the Blue Horizon funds would be used for long and short trading in equities, options, and other securities. By June 2006, Goyal began sending false account statements to investors that inflated the financial results from trading purportedly being done by those funds, the charging document alleges. By the first half of 2008, Goyal allegedly knew that he intended to misuse the funds for himself and to make Ponzi-type payments to certain investors. By January 2009, Goyal had stopped trading for two Blue Horizon funds and had not traded at all for the third Blue Horizon fund. In February 2009, Goyal allegedly began engaging in a similar fraud scheme with investments in the Caldera Equity Fund.

Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine or an alternate fine totaling twice the loss or twice the gain, whichever is greater, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

Sunday, April 27, 2014

Sheriff’s Office Deputies, David Benjamin and Jeff Alan Poole, Charged with Conspiracy

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; José A. Gonzalez, Special Agent in Charge, Internal Revenue Service-Criminal Investigations (IRS-CI); and Scott Israel, Sheriff, Broward Sheriff’s Office (BSO), announce the filing of charges against David Benjamin, 48, of Boca Raton, and Jeff Alan Poole, 47, of Weston, for conspiring to commit crimes in connection with the operation of the former Fort Lauderdale law firm of Rothstein, Rosenfeldt and Adler P.A. (RRA).

In a criminal information filed earlier, Benjamin was charged with conspiracy to commit extortion and to violate civil rights, in violation of Title 18, United States Code, Section 371. In a separate criminal information, Poole was charged with conspiracy to violate civil rights, in violation of Title 18, United States Code, Section 241. The charges allege that, during the relevant time period, both defendants were employed by the Broward Sheriff’s Office. Benjamin was a lieutenant and served as executive officer to then Sheriff Al Lamberti. Poole was a detective assigned to the Strategic Investigations Division.

The charging documents allege that both defendants agreed to utilize their respective positions within BSO unlawfully to further the interests of RRA, its chairman and CEO Scott W. Rothstein, and other persons associated with Rothstein. Specifically, the charging documents allege that Benjamin received approximately $185,000 in money and other things of value from Rothstein and RRA in return for providing his assistance when needed, including arranging with Poole to arrest the ex-wife of an attorney who was engaged in a child custody dispute with her, arranging to use force and threats of force against the boyfriend of an escort who was threatening to expose the illicit relationship that existed between the escort and one of the partners at RRA, and assisting Rothstein in loading cash and jewelry onto a private airplane that was used by Rothstein to flee to Morocco on October 27, 2009, as the Ponzi scheme being conducted through RRA was beginning to unravel.

U.S. Attorney Wifredo A. Ferrer stated, “David Benjamin and Jeff Poole used their official positions as law enforcement officers to commit civil rights abuses to further the interests of Scott Rothstein and others associated with Rothstein. When law enforcement officers betray the trust of the people, it strikes at the very core of our democracy. The informations filed today charging Benjamin and Poole should serve as a reminder that no one is above the law. When law enforcement officers violate the public’s trust, they will be held accountable. Benjamin and Poole are the 19th and 20th accomplices, respectively, to be held accountable in Rothstein’s $1.2 billion Ponzi scheme.”

“When David Benjamin and Jeff Alan Poole began to use their official positions to further the illegal schemes of Rothstein and his cronies, they crossed a very bright line,” said William J. Maddalena, Assistant Special Agent in Charge, FBI Miami. “Their criminal misconduct undermined the public’s trust in law enforcement. As such, the FBI will continue to work with our partners to remove those law enforcement officers who violate the law. The FBI, in particular, would like to thank BSO for their close partnership investigating this matter.”

IRS-CI SAC José A. Gonzalez stated, “Law enforcement officers and individuals in positions of our citizens’ trust are held to an even higher standard than the general public. It’s a sad day when a lieutenant and a detective of the Broward County Sheriff’s Office who are sworn to uphold the law, allegedly misuse their positions by engaging in criminal acts. IRS-CI, together with its law enforcement partners, will continue to ensure that no one operates above the law and are held accountable for their actions.”

BSO Sheriff Scott Israel stated, “Every time a law enforcement officer is implicated in a crime, it’s a blow to our profession. This indictment tarnishes the image of honest, hard-working law enforcement officers everywhere. My immediate action after taking office was to suspend Deputy Poole and Lieutenant Benjamin based on an ongoing federal investigation. I applaud the diligence and professionalism displayed by our federal partners, and we will continue working closely with them to ensure justice is served.”

Friday, February 14, 2014

Attorney Christina M. Kitterman Convicted in Connection with Rothstein Ponzi Scheme

A federal jury in West Palm Beach convicted Christina M. Kitterman, 38, of Deerfield Beach, on three counts of wire fraud after a week-long trial before U.S. District Judge Daniel T. K. Hurley. A sentencing date has not been set.

Kitterman was charged with three counts of wire fraud, in violation of Title 18, United States Code, Section 1343. The acts set forth in the charging document were all in furtherance of a Ponzi scheme involving the sale of purported confidential settlement agreements in sexual harassment and/or whistle blower cases that were purportedly handled by attorneys at the former Ft. Lauderdale law firm of Rothstein, Rosenfeldt, and Adler P.A. (RRA).

Evidence introduced at trial established that, during the course of the Ponzi scheme and while she was employed as an attorney at RRA, Kitterman falsely posed as the head of the Ft. Lauderdale office of the Florida Bar Association during a meeting with certain investors in order to explain to the investors the reason why certain payments due to them had not been made.

At sentencing, Kitterman faces up to 20 years in prison and a fine of $250,000.

U.S. Attorney Wifredo A. Ferrer stated, “The verdict rendered by the jury today is another step toward bringing Rothstein’s criminal associates to justice. As I have previously stated, the success of Rothstein’s complex scheme to deceive and defraud depended on the complicity of individuals like Christina Kitterman. Kitterman, an attorney, was the 15th individual to face criminal charges in connection with this complex financial fraud.”

IRS-CI Special Agent in Charge Jose A. Gonzalez stated, “The jury has validated the government’s case sending a strong message that those who knowingly assist in perpetrating investment scams will be held accountable for their actions. Together with our law enforcement partners, we will continue to aggressively investigate and bring to justice those who aided Rothstein in perpetrating this massive fraud.”

“Although Scott Rothstein was the ringleader in a massive Ponzi scheme, he needed help. A jury of her peers has determined Christina Kitterman gave him that help and needs to be held accountable,” said Michael B. Steinbach, Special Agent in Charge, FBI Miami. “Regardless of one’s role, the FBI and its partners are committed to investigate those who swindle investors.”

Tuesday, March 05, 2013

Dimitry Vishnevetsky Sentenced to Six Years in Prison for Causing Clients to Lose $1.6 Million in Fraud Scheme

A former Chicago investment advisor was sentenced yesterday to six years in federal prison for an investment fraud scheme that swindled clients, causing them to lose more than $1.6 million. The defendant, Dimitry Vishnevetsky, pleaded guilty last August to wire fraud and bank fraud, admitting that he misappropriated funds raised from investors for his own purposes, including to pay for such expenses as mortgage and car payments, travel and vacations, restaurant bills, athletic club dues, and to make trades for himself, while using additional investor funds to make Ponzi-type payments to clients.

Vishnevetsky, 34, of Chicago, was ordered to pay $1,684,763 in restitution, nearly all of it to a half-dozen investment clients, by U.S. District Judge Ruben Castillo, who likened Vishnevetsky’s conduct to a financial storm that devastated the lives of his victims. Vishnevetsky was ordered to begin serving his sentence on May 28.

“This offense was entirely unnecessary,” the government argued at sentencing. “There was no good reason for this fraud, and the defendant, who was skilled in the world of finances, could have gotten a legitimate job. In fact, [he] obtained a bachelor’s degree in business administration and attended the University of Oxford.”

According to the court records, Vishnevetsky offered and purported to sell investments, including investments in funds which promised to trade S&P Futures, and a fund that could trade in things such as equities, futures contracts, and commodities, as well as brokerage and management services for some investors, and promissory notes, through Hodges Trading LLC and Oxford Capital LLC, which he controlled. Three purported Oxford funds existed in name only, as did the promissory notes, which Vishnevetsky described as London Interbank Offered Rate (LIBOR) adjusted notes.

Between September 2006 and March 2012, Vishnevetsky made false representations about the profitability of his prior and current trading, the use of the invested funds, the risks involved, the expected and actual returns on investments and trading, as well as false representations about the funds he purportedly traded. For example, Vishnevetsky created and provided some investors fraudulent trading results showing profits as high as 36 percent per year. In fact, any trades that Vishnevetsky actually made consistently resulted in losses, not profits.

The bank fraud conviction resulted from false statements Vishnevetsky made between 2007 and 2010 to Merrill Lynch Bank & Trust concerning his income and assets to cause the bank to issue, and later modify, two loans totaling approximately $519,500 to purchase a condominium in Chicago.

The government is being represented by Assistant U.S. Attorney Jacqueline Stern.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The Commodity Futures Trading Commission, which filed a companion civil enforcement lawsuit, assisted in the investigation.

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit stopfraud.gov.

Friday, July 13, 2012

If It’s Too Good To Be True, It Might be a Ponzi Scheme

If a respected member of your community offered you an investment opportunity, you might consider it. Especially if it’s a man of the cloth.

For nearly a decade, Martin Sigillito—a bishop in the American Anglican Convocation and a St. Louis attorney—convinced 200-plus people to do more than just consider it: they actually entrusted him with their money to invest in a financial venture. But this venture turned out to be an old-fashioned Ponzi scheme, and in April of this year, Sigillito was convicted of leading a conspiracy that swindled $52 million from victim investors.

How the scam began. In late 2000, Sigillito opened a law office but didn’t actually practice law—instead, he advertised his “international business consulting services.” One of the “services” he offered was participation in the British Lending Program (BLP), transformed by Sigillito into a Ponzi scheme. Through the BLP, investors could “loan” money to a real estate developer in the United Kingdom for short periods of time, mostly one year, at high rates of return—between 10 and 48 percent.

This real estate developer, according to Sigillito, had a knack for spotting undervalued properties he could flip for a profit, had options on land that would become valuable when re-zoned, and had inside connections with British authorities. It sounded like a win-win for investors.

Unfortunately, this British developer was not the wunderkind Sigillito made him out to be—he was just another link in the criminal conspiracy.

How did Sigillito convince his investors to part with their money? He exploited his personal ties to people and particular groups he was affiliated with—like his church, social clubs, professional acquaintances, family, and neighbors—in a technique known as affinity fraud. He also held himself up as an expert in international law and finance and claimed he was a lecturer at Oxford University in England (when in reality he had simply taken part in a summer legal program at Oxford).

Sigillito, who also conspired with another American attorney, insisted that his investors’ funds initially be placed into his trust account, from which he would take exorbitant fees for himself and his co-conspirators. Even though he told investors he would then transmit the money to the U.K., Sigillito actually kept most of the funds in one or more American bank accounts he controlled.

For a while, the scam was self-sustaining: Many investors let their interest payments accrue and rolled their loans over every year, plus Sigillito brought in enough new investors to make interest and principal payments to any previous investor who asked for payment. And all the while, he made enough in “fees” to support his affluent lifestyle: exclusive club memberships, expensive vacations, a country home, a chauffeur, private school for his kids, and collections of rare and antique books, maps, prints, coins, jewelry, and liquor.

How the scam ended. Eventually, an increasing number of investors meant increasing payout requirements, which resulted in the BLP making late interest payments or missing interest payments all together. Then investors began clamoring to withdraw their funds. And finally, Sigillito’s own assistant became suspicious of his activities and contacted the FBI.

The takeaway from this case? Fully investigate any investment opportunity before handing over your hard-earned money.

Wednesday, June 06, 2012

Christopher Varlesi Indicted for Allegedly Causing 15 Investors to Lose Approximately $600,000 in Ponzi-Type Fraud Scheme

A Chicago man who operated an investment trading pool allegedly fraudulently obtained approximately $1.4 million and caused some 15 individual investors to lose about $600,000, federal law enforcement officials announced today. The defendant, Christopher Varlesi, was charged with six counts of mail and wire fraud in an indictment returned yesterday by a federal grand jury. Varlesi allegedly misappropriated a substantial portion of investor funds for his own benefit, including misusing $99,750 in May 2010 to pay for a year’s rent for an apartment in the Trump International Hotel and Tower in Chicago and to make Ponzi-type payments to other investors.

Varlesi, 53, of Chicago, will be arraigned at a later date in U.S. District Court. He was the sole proprietor of Gold Coast Futures & Forex, which purported to buy and sell securities and commodities and operate a pool of investor money for trading purposes but was not actually registered or licensed to do so. The indictment seeks forfeiture of approximately $600,000.

The charges were announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The Illinois Securities Department assisted in the investigation, as did the Commodity Futures Trading Commission, which filed a civil enforcement lawsuit against Varlesi in March of this year.

According to the indictment, between July 2008 and January 2012, Varlesi made false representations to clients about using their money to trade gold, commodity futures, and foreign currency, the expected return on their investments, and the security of their money. He fraudulently retained investors’ funds and concealed the scheme by creating and distributing false account statements and making Ponzi-type payments to investors, the charges allege. Varlesi also allegedly told clients that their investments were guaranteed to be profitable, with no risk of losing principal. As part of the scheme, the charges allege that he provided promissory notes to certain investors, falsely promising to return the entire principal amount of their investment, as well as guaranteed interest ranging between five to 7.5 percent per month.

The government is being represented by Assistant U.S. Attorney Sarah E. Streicker.

Each count of wire and mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.stopfraud.gov.

An indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Monday, October 31, 2011

Gangsters Expand to White-Collar Crime and Cyber Attacks

When is credit-card theft a good thing? When the culprits might otherwise be killing you.

The Federal Bureau of Investigation says national gangs like the Bloods and Crips are becoming more sophisticated, turning to white-collar financial crime and cyber attacks that threaten Corporate America and, well, everyone.

The evolving criminal schemes, which include mortgage fraud, counterfeiting, bank and credit card fraud and identity theft, are attractive because they are much less risky than traditional gang-related crimes such as murder, drug trafficking and robbery, and have the potential to yield much greater profits, according to a new national gang threat assessment from the FBI.

“In sort of a macro-sense, if they are hacking into people’s computers rather than killing them in cold blood, that’s a good thing, in some respects,” said Jonathan Armstrong, a partner at Duane Morris who practices Internet law. However, these gangs, which also include the Latin Kings, Aryan Brotherhood and Texas Syndicate, are growing in size, with membership up 30% to 1.4 million compared with 2009, and the FBI says they are becoming more dangerous.

“Gangs are more adaptable, organized, sophisticated, and opportunistic, exploiting new and advanced technology as a means to recruit, communicate discretely, target their rivals, and perpetuate their criminal activity,” the FBI said.

This heightened threat among U.S. gangs brings to light the increased volume of financial crimes and hacking seen across all industries over the last few years, which have already cost corporations, retailers and innocent people billions of dollars. “It’s an issue and I think it’s one that’s definitely accelerating,” Armstrong said. “I think we ought to be worried.”

Financial crime has picked up significantly over the last few years amid financial turmoil and technological advances. Ponzi and other high-yield investment fraud schemes surged when the Dow Jones Industrial Average plunged from a high of 14,164 in October 2007 to 6,547 in March 2009, the FBI said in its 2009 Financial Crimes Report.

While authorities have cracked down, the development of new schemes, such as securities market manipulation via cyber intrusion, has put fraud on the rise, the FBI said. From 2004 through 2009, fraud investigations increased by 33%, bringing losses associated with those schemes into the billions of dollars.

Of course, U.S. street gangs aren’t at the crux of financial crime in the U.S. just yet, which is typically led by professionals and swindlers within the banking system or high-tech cyber hackers. However, the gangs’ sophistication offers yet another impediment to authorities trying to suffocate white-collar crime and a sign these groups may continue to evolve into high-yielding complex schemes, forming much more lucrative enterprises.

Gangs such as the Bloods, Crips and La Nuestra Familia that are undertaking white-collar crime are recruiting members that possess the necessary high-tech skill sets, according to the FBI.

Some that run these criminal gangs could run corporations,” Armstrong said. “They push out less profitable businesses and build up the more profitable (ones), just as a corporation would.”

The FBI says gang members are exploiting vulnerabilities in the banking and mortgage industries for profit. They are turning to counterfeit and identity theft, using methods such as skimming to steal account numbers from ATMs or retail card readers.

Mortgage fraud is also on the rise, and gangs, such as the Gangster Disciples, are purchasing properties with the intent to receive seller assistance loans, only to retain proceeds from the loans or co mingle illicit funds through mortgage payments.

In April 2009, members of the Bloods in San Diego were charged with mortgage fraud, and in August 2010, members of the Black Guerilla Family in Maryland used pre-paid retail debit cards as virtual currency inside Maryland to buy drugs and further the gangs’ interests, according to the FBI.

“Wall Street has a brilliant system for pushing money around the world. So does organized crime,” Armstrong said, liking the underground profit-driving activities to an “underworld banking system.”

Earlier this month, authorities in New York arrested more than 100 service-sector employees in the city and dismantled five separate criminal enterprises operating out of Queens in a multi-million dollar counterfeiting scheme. New York Police Commissioner Raymond Kelly had said that while those crimes weren't holdups at gunpoint, the impact on victims was just as bad.

Robert Rebhan, a former Los Angeles Police Department officer who later directed a credit card fraud prevention program for American Express (AXP: 52.10, +0.29, +0.56%), notes that those are the kind of stunts, which are less risky and more profitable than traditional street crimes, that gangs are likely pursuing.

“If I have dirty money from a drug steal I need the underwater market to clean it up, so I might only get 20% return,” Armstrong said. “But if I can make it credit card fraud, then I can probably get better than a 20% return rate, particularly if I can use the compromised credit card to buy real goods and turn over those goods on an auction site.”

Cyber criminals typically steal a smaller amount of money from a large number of victims. Since, credit card companies and banks aren’t reporting minor counterfeiting cases to the Federal Trade Commission, it becomes the responsibility of victims.

Rebhan, who is a financial crimes expert, says 95% of those are never reported – making web-based fraud tougher to identity. “It’s not a critical step in recovering your identity - it’s a pain,” he said. “So when you hear crime is down – don’t believe that’s true of financial crimes.”

U.S street gangs are likely a ways off from operating botnets and siphoning massive funds from corporations, Rebhan said, noting the FBI is probably using “cyber crime” in a broader sense. However, criminal groups are becoming increasingly savvy and embracing advanced technology to enhance operations, according to the FBI.

Gangs are using social networking like Facebook, YouTube and Twitter to recruit new members and communicate globally and more discreetly without the proximity once needed for communication. “The proliferation of social networking websites has made gang activity more prevalent and lethal—moving gangs from the streets into cyber space,” the FBI said.

Many also use the Internet to carry out crimes such as computer hacking, cyber attacks and phishing schemes, which are used to illegally acquire personal information such as usernames, passwords and credit card information. But besides the attractive profits, gangs are also finding the web more enticing because of the less-stringent punishment faced by cyber criminals, at least compared with robbery and murder. Where a robbery can lead to a seven-year sentence, counterfeiting or identity fraud using the web could lead to just a few months of jail time, Rebhan said.

Of course, there are some exceptions, including Tien Truong Nguyen, who was sentenced last year to more than 12 years in prison for his role in a phishing scam that impacted more than 38,000 victims, and Albert Gonzalez, who was sentenced to 20 years for the Heartland Payment Systems (HPY: 21.62, +0.37, +1.74%) data breach. But for the most part, catching and punishing cyber criminals takes a certain skill set that many in law enforcement and judiciaries just don’t have yet, the experts say. Because of that, white-collar crime is slated to grow among street gangs.

“There’s no formal education given to the judiciary on cyber crimes – the jury is perplexed by these crimes and the judge is also – (they) don’t have a clue of bytes, bits or how malware is written,” Rebhan said.

Thanks to Jennifer Booton

Wednesday, April 20, 2011

Crime Beat Radio Show Releases Upcoming Program Schedule

Crime Beat: Issues, Controversies and Personalities from the Darkside has been programming since January of this year and is currently averaging 50,000l listeners plus each week and the figure is growing.

Crime Beat is now pleased to announce its forthcoming schedule:

  • April 21: Diedre Capone, ancestor of Al Capone and author of Uncle Al Capone, shares family secrets about the godfather
  • April 28: Tom Ajamie and Bruce Kelley, the authors of Financial Serial Killers, give us an inside look at the world of Wall Street hustlers, swindlers and con men and provide advice on how to protect yourself against Ponzi investment schemes
  • May 5: Lynda Milito, the author of Mafia Wife talks about love, murder and madness.
  • May 12: Howard Campbell, the author of Drug War Zone, talks about the Mexican drug war and life on the streets today in Juarez and El Paso
  • May 19: Robert Wittman, former FBI agent and the author of Priceless, reveals how he went underground to rescue the world’s art treasures.

Crime Beat is a weekly hour-long radio program and airs every Thursday from 9 and 10 EST. Beginning with the May 5 program the show moves to the 8pm-9pm EST time slot on the Artist First World radio Network. Crime Beat presents fascinating topics that bring listeners closer to the dynamic underbelly of the world of crime. Guests have included ex-mobsters, undercover law enforcement agents, sports officials, informants, prisoners, drug dealers and investigative journalists, who have provided insights and fresh information about the world’s most fascinating subject: crime.

Crime Beat is hosted by award-winning crime writer Ron Chepesiuk (www.ronchepesiuk.com) and broadcast journalist and freelance writer Willie Hryb. Ronald Herd 11, the popular Internet radio host and regular listener of Crime Beat, said "Crime Beatsounds like an organized crime greatest hits collection...I am loving it!"

Tuesday, August 24, 2010

Organized Crime and Facebook

A vast amount of modern organized crime in the U.S. and Canada revolves around high-tech scams, identity theft, and other cyber crimes.

Gone are the days, to a large degree, of the mob and its penchant for more "traditional" avenues of revenue like gambling rings, loan sharking, and basic theft.

Now, as the CBC reports, new data is revealing the face of organized crime in the 21st century, and its a face that hides behind some unlikely fronts.

Specifically, social networking sites and free classifieds forums are being used for a wide array of schemes, whether it is human trafficking via Craigslist, identity scams on Facebook, or Ponzi schemes advertised as legitimate business ventures on business forums.

The CBC cites Edmonton Police Service Chief Mike Boyd as noting the grim realities of these crimes, non-violent though they tend to be..

In Boyd's words:

Thousands of people in Canada are victims of [financial fraud] … and will recover little if any of their money...

A new annual report on organized crime compiled and published by Criminal Intelligence Service Canada was the source of much of this new data, collected in hopes of aiding in the fight against modern organized crime and its many branches.

Thanks to Chris Stewart

Sunday, March 21, 2010

Mobsters in South Florida Use New Ways to Face New Rivals

Ever since the ruthless Chicago mobster Al Capone bought a mansion on Miami's Palm Island in 1928, South Florida has been a destination for organized crime figures who want to relax and do a little business.

The rackets have evolved over the years — loan-sharking, extortion and gambling have largely given way to stock scams, money laundering and white-collar fraud — and the Italians and Jews of yore have been joined by rival contingents from Russia, Israel and South America. But the culture of greed and violence has remained a constant.

Mobsters generally prefer to keep a low profile hereGangsters of Miami: True Tales of Mobsters, Gamblers, Hit Men, Con Men and Gang Bangers from the Magic City, but La Costa Nostra — "this thing of ours" — is once more in the headlines, this time connected with Ponzi schemer Scott Rothstein.

Upon his return from Morocco last November, Rothstein reportedly went to work for the FBI, even as agents were dismantling his $1.2 billion investment fraud.

Roberto Settineri, the alleged Sicilian mobster whom Rothstein is credited with bringing down this month, appears to have the same short fuse and propensity for violence, according to a Miami Beach police report, that has marked mob behavior for a century.

As Settineri lunched at Soprano Cafe on Lincoln Road in January, he got into a heated argument with a security guard, stood up, and pulled back his leather jacket to reveal a black semi-automatic pistol.

"I will put this gun in your f------ mouth now. I know where you live. I'll go to your f------ house and kill you and your family," Settineri told the guard, according to his arrest report.

The pending aggravated assault charge against Settineri, 41, is the least of his concerns. Federal prosecutors allege he was a key intermediary between a crime family in Sicily and the Gambino crime family in New York City.

Settineri and two of his reported associates — security firm operators Daniel Dromerhauser, of Miami, and Enrique Ros, of Pembroke Pines — were indicted March 10 on federal charges of money laundering and obstruction of justice for reportedly shredding two boxes of documents at Rothstein's request and laundering $79,000 for him.

The Mafia's traditions in South Florida date to the 1930s gambling heydays in Broward, when Meyer Lansky and his associates came south to claim a piece of the action in dozens of "carpet joints" — classy casinos that operated around Hallandale under the beneficial eye of a crooked sheriff.

"It goes back to the 1920s and Al Capone. Capone had a house on Palm Island … and that was his alibi for the 1929 St. Valentine's Day Massacre," said Richard Mangan, a 24-year Drug Enforcement Administration agent.

"Back in the 1940s and 1950s, Hallandale was Las Vegas Southeast," said Mangan, who now teaches a class called "Organized Crime and the Business of Drugs" at Florida Atlantic University's School of Criminology. "Clubs like La Boheme were operating. A made [formally inducted] mob member named Anthony "Tony" Plates would set up shop in the Diplomat Hotel during the winters, plying politicians with booze and hookers."

The gambling generated so much cash that the gangsters suppressed their violent natures.

"The Mafia had an understanding that there would be no killings in Broward County because it was such a lucrative business," said Robert Jarvis, a professor at Nova Southeastern University Law School and a gambling-law expert.

By the early 1950s, government scrutiny forced the mobsters out of their illegal casinos but not the county. They still had their hands in local dog and horse tracks and jai lai frontons, as well as in shakedown schemes. They expanded their gambling ventures to Cuba under the tutelage of Lansky, who lived for years in a canal home in Sunny Isles, a popular mob neighborhood.

"Many of the mob people — Chicago, New Orleans, New York — would come down here because they owned casinos in Havana, and [Cuban leader Fulgencio] Batista was more than happy to take bribes," Mangan said.

Hundreds of them made Broward their second or retirement home.

New York's five organized crime consortiums — the Gambino, Genovese, Bonanno, Colombo and Lucchese families — have always considered Florida to be "open," with no one family claiming exclusive rights to operate in the Sunshine State. "This is open territory for anyone with the mob for whatever they want to do," said Nick Navarro, a 30-year law enforcement official who was Broward's sheriff from 1984 to 1993. "It's a beautiful part of the country and this is where they like to come down."

With the dramatic expansion of air conditioning in the 1950s and cheap jet flights, Florida had a commercial building boom over the next decades, drawing more mobsters.

"The Mafia has long been involved in the rigging of construction contracts," Jarvis said.

By 1968, a state crime commission concluded, "South Florida, especially Dade and Broward counties, has become a haven for many known Mafia figures and associates, though their activities know no local boundaries within the state."

In more recent years, "The Teflon Don," Gambino boss John Gotti, maintained a residence in Fort Lauderdale. So did Nicodemo "Little Nicky" Scarfo, the brutal head of a Mafia family operating in Philadelphia and Atlantic City.

Underbosses, consiglieres and soldiers from all the families are well represented, from Palm Beach Gardens to the Keys.

They still get involved in gambling, loan sharking, strip clubs, prostitution, drug dealing and extortion, but have gravitated toward more sophisticated crimes — such as stock and Medicare fraud — that don't carry the same risks.

They have faced increased competition from Israeli organized crime and Russian mobsters.

"The biggest change has been the Russian mafia," Mangan said. "The Russians started moving in after the fall of communism. They primarily set up in South Beach. They started opening banks in Antigua and Aruba."

Federal prosecutors roll out indictments against the Italian Mafia every year, charging everything from murder to money laundering, but younger Mafiosi come up the ranks to fill the voids left by the prison sentences and old-age deaths of top family members.

"It's a funny thing — it's always said that the Mafia has been destroyed and all the old chieftains are dead or in jail; but every time you turn around, there is a story about the Mafia," Jarvis said.

"To the extent that the Mafia exists anywhere, it would have its hand in South Florida because it still has all the attributes that made it so attractive in the 1930s — warm weather, a lot of wealth, a lot of opportunity. Why wouldn't the Mafia be here? Everyone else wants to be in South Florida."

Thanks to Jon Burnstein and Peter Franceschina

Sunday, February 08, 2009

Crime Does Pay. How? Italian Mafia Earned $167 Billions

How many times have we heard these words? "Crime doesn't pay"....or a Judge will say, "it doesn't pay to commit crimes".

It is true crime didn't pay for some lawbreakers who were caught and lost their freedom and every dime they earned. Swindler Ken Madoff earned billions running a ponzi scheme that bilked investors and now he's been caught. With the exception of having already spent 'hundreds of millons' and facing life in prison Madoff will probably lose all the money he may have left. Did crime pay for this billionaire crook?

You be the judge.

But there's a group of outlaws who keep winning in the crime game and seemingly they .never lose. They don't own banks, casinos, nor authorized by government to print 'money on demand' but they've mastered the money game of making crime pay 24-7. They're not strangers. Their history etched in the annals of the crime world. They are no other than Italian Organized Crime aka Mafia. And they make billions!

Financial experts said the global recession has undoubtedly struck European countries hard but Italy's organized crime thrives in the midst of it all. Italy's world known organized crime groups are: (1) Sicilian Mafia. (2) Camorra (3) 'Ndrangheta (4) Sacra Corona Unita. Bloomberg.com reported the Italian Mafia's revenue in 2008 had increased 40 percent.

Example: Italy's organized crime syndicates grossed at least $167 billion dollars in 2008, up from $90 billion euros in 2007, according to figures supplied by Eurispes and SOS Impresa. Eurispes is a worldwide research organization and SOS Impresa consist of businessmen who investigate Mafia extortion. Extensive research based on long-term investigations and apprehension of organized crime gangsters, drug trafficking ranked the number#1 top revenue, bringing in approximately $59 billion euros.

Other Mafia players earned $5.8 billion euros from selling arms, the Rome-based research group reported Friday, January 30, 2009. "During a crisis, people lower their guard", says Robert Saviano. Saviano became an overnight success in 2007 after publishing a bestselling book called "Gomorrah". Gomorrah, superbly document the history of the notorious Camorra crime bosses. "Studies show the criminal market never suffer during a crisis", Saviano explained. "I'm convinced this crisis brings huge advantage to criminal syndicates". As the global recession tighten its grip banks are recluctant to risk loans.

This area of finance brings the Mafia on shore. They loan money at high interest rates. Consequences are detrimental even sometimes fatal if the borrower fail to pay up on time. "With people more desperate for money, loan sharking thrives", said Amedeo Vitagliano, an Italian crime expert at Eurispes research organization. "While the country is on its kneess, the Mob rejoice".

So how can the experts know the amount of illegal money earned by organized crime? What guidelines are utilized to caculate the Mafia's big payoffs? Simple math.

Mafia wealth is reflected in police asset seizures of $5.2 billions in 2008. $2.9 billions seized from the Camorra; $1.4 billion from the Sicilian Mob based in Sicily, and $231 millions from the 'Ndrangheta syndicate. The Eurispe report confimed a recent estimation by the Interior Ministry that 'Ndrangheta alone generate $45 billion euros, or 3% of GDP(Gross Domesticated Products) from dominating the European cocaine trade.

Here's another breakdown of revenues earned in 2008 by Italian organized crime based on their network of operations:

(1) loan shark: $12.6 billion euros
(2) protection rackets: $9 billion
(3) Arms trafficking and smuggling crimes: $5.8 billion In 2006, previous research showed that organized crime made $128 billions, a sum equivalent at that time to 7 percent of Italy's GDP.

For 2005, the crime syndicates took in approximately $106 billions. But the economy in Italy can swing back and forth with a double edged sword. Many businesses not particularly connected with the mob engage in shady pratices of doing business off the books.

Gian Maria Fara, an Eurispes chairman said the deeper underground economy don't reflect gross domestic product figures. "During good times, having a big underground sector can be a burden since the underground products isn't taxable and the state must account for it by increasing taxes on those who actually pay taxes".

"In this country," Fara added, "much more money goes around than whats actually represented by official statistics". "Italy's black economy has grown to a staggering 35% of GDP, approximately $540 billion euros".

Despite mass arrests of Italian crime gangsters over the years and the capture of several family bosses and high-ranking soldiers the Italian Mafia is a phenonomal money machine. They are a force the law must deal with in years to come.

Each day from extortion the combined groups earn at least $90 to 100$ billon euros per year, $250 million euros a day and $10 million euros an hour. If that's not making crime pay....then nobody commit crimes.... but we know this isn't true. People commit crimes every day.

Just ask the Mafia. They make billions and nobody can stop them.

Thanks to Clarence Walker

Thursday, November 22, 2007

Old School Mobsters Among "Celebrities" Spending Time in The Big A

The Big A has always been a rough joint.

Before the turn of the last century, the government had no dedicated facilities for men convicted of federal crimes – typically, moonshiners, mail-tamperers and those engaged in "white slavery," better known today as pimpin'.

When criticism escalated about the common practice of renting out federal prisoners as involuntary laborers, Congress passed the Three Prisons Act of 1890, which authorized federal prisons in Leavenworth, Kansas; on McNeil Island in Washington's Puget Sound; and on the southeastern outskirts of Atlanta.

Although 14 more federal penitentiaries – considered the high-security flagships of the Bureau of Prisons – would be built over the next century, Atlanta would remain the largest. And when Alcatraz shut its doors in 1963, it regained its reputation as the meanest.
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Italian immigrant and small-time scam artist Charles Ponzi served a few years in Atlanta for fraud during the teens. When he got out, he dreamed up an elaborate investment scheme that hoodwinked a nation and, at the time it came crashing down in 1920, was earning him $250,000 a day. Ponzi served another few years in prison, was deported back to Italy and finally died penniless in Brazil.

In 1919, the Atlanta Pen would get its first celebrity inmate in Eugene V. Debs, a renowned labor leader, pacifist and three-time Socialist Party candidate for president. The 63-year-old Debs had been convicted under the liberally worded Espionage Act for giving a speech opposing World War I and sentenced to 10 years in prison. In 1920, he again ran for president from his cell, receiving nearly a million votes, about 3.4 percent of the ballots cast. The following year, Debs was pardoned by President Warren G. Harding.

Another political prisoner was Marcus Garvey, a Jamaican-born journalist who had come to the United States in 1916 to preach the then-controversial notion of social equality for blacks. Launching a back-to-Africa movement, he was viewed as a rabble-rousing seditionist by the feds, who eventually convicted him of mail fraud.

Garvey came to Atlanta in 1925 and immediately wrote his most famous speech, "First Message to the Negroes of the World From Atlanta Prison," which urged his followers to "Look for me in the whirlwind." His sentence was commuted two years later by President Calvin Coolidge and he was subsequently deported.

Also in 1925, Atlanta became home to Roy Gardner, a legendary train robber who had managed to escape from McNeil Island. He tried to tunnel under the thick prison wall and, later, led an unsuccessful breakout by holding two Atlanta guards at gunpoint, a move that earned him 20 months in solitary, followed by a transfer to Alcatraz. Paroled in his 50s, Gardner committed suicide after a movie based on his life failed at the box office.

Al Capone's business card reputedly identified him as a used-furniture dealer. But, although he was never convicted of racketeering or rapped for the St. Valentine's Day Massacre, the Chicago mob boss known as "Public Enemy No. 1" was eventually nailed by G-man Eliot Ness on 22 counts of tax evasion.

Landing in Atlanta in 1932, Capone soon became top dog, bribing guards to run errands and manipulating the warden for special privileges. Two years later, federal authorities fed up with the mobster's cushy arrangement shipped off him to Alcatraz. Released in 1939, Capone spent his remaining years suffering from advanced syphilis.

Capone was only one of many gangsters to spend time in the Big A. Irish-American hoodlum James "Whitey" Bulger served three years here in the mid-'50s for armed robbery and hijacking before returning to Boston to take charge of a crime ring that controlled much of the narcotics trade throughout New England. A fugitive since 1994, Bulger is widely thought to have been the inspiration for the mob boss portrayed by Jack Nicholson in The Departed.

Old-school Mafia Don Vito Genovese ended up in Atlanta for heroin dealing not long after he had finished bumping off rivals to secure his place as boss of the country's pre-eminent crime family. Reportedly, he continued to run the family business from behind bars until his death in 1969.

After the fabled French Connection narcotics ring had been broken up in the late '60s, Vincent Papa, a major New York drug runner, organized one of the most brazen series of thefts in that city's history. Over the course of three years, more than 250 pounds of seized heroin was stolen from the NYPD property room and replaced with baking flour. The switch was only discovered when police noticed the powder was being eaten by small beetles.

Although Papa was convicted for the scheme and sent to Atlanta in 1972, authorities never solved the question of how he managed to get the drugs out of the heavily guarded room. Five years later, Papa took his secret to the grave when he was stabbed to death by inmates reputedly hired by Lucchese family mobsters who'd heard the rumor – spread by then-prosecutor Rudolph Giuliani – that he was talking to the feds.

In 1957, Atlanta became home to Rudolph Abel, a Soviet superspy whose real name was Vilyam Fischer. After supervising Moscow's entire U.S. espionage network for decades, Abel was finally caught when the FBI found one of the hollow nickels he used to hide microfilm. He was returned to the Motherland in a secret 1962 swap with downed U2 pilot Francis Gary Powers.

Gifted con man Frank Abagnale had already successfully impersonated an airline pilot, a pediatrician and an attorney when, at the ripe age of 23, he was sent to Atlanta in 1971. He didn't stay long. Abagnale reportedly walked out the front gate by pretending to be an undercover prison inspector. Later recaptured, he served less than five years in prison and now runs a thriving consulting firm specializing in fraud prevention.

During his 1970s heyday, Atlanta's own "Scarface of Porn," Mike Thevis, owned more than 500 adult bookstores, controlled distribution of 40 percent of the country's pornography and was raking in $100 million a year. Thevis was convicted of burning down a competitor's business in 1978, and he escaped from jail to shotgun the former associate (and a bystander) who'd ratted him out. Thevis was recaptured and briefly held in the Atlanta Pen before being sent off to a federal prison in Minnesota to serve a life sentence.

Another notable Atlantan to pass through the Big A was Fred Tokars, a former prosecutor and magistrate judge who had his wife killed in 1992 rather than pay a divorce settlement. Hit man Curtis Rower kidnapped Sara Tokars and her two young sons, then shot her in the back of the head with a sawed-off shotgun as the children watched. Sent away for life, Tokars now suffers from MS in a federal prison infirmary in Florida.

Charles Harrelson, father of Woody Harrelson of "Cheers" fame, was sent to Atlanta for the notorious 1988 murder of a federal judge in Texas. A freelance contract killer, the elder Harrelson is often cited by conspiracy buffs who place him on the Grassy Knoll during JFK's assassination. After a failed escape attempt, he was sent to the Supermax facility in Colorado, where he died in his sleep in March.

The Atlanta Pen's last real celebrity prisoner was ill-starred baseball star Denny McLain.

A two-time winner of the Cy Young Award as a Detroit Tiger and the last major-league pitcher to win 30 games, he finished his career with the Atlanta Braves. Unfortunately, McLain also was a born flimflam man who makes Pete Rose look like the Dalai Lama.

Even as a player, he was suspended for running a bookmaking operation and once cost his team a pennant race when he had his toes broken by a Mob loan shark. Not long after leaving baseball, McLain declared bankruptcy for the second time, fell in with gamblers, and was convicted of racketeering, extortion and cocaine possession.
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On arriving in Atlanta in 1985, the former all-star tipped the scales at 275 pounds and was in such bad shape that when he pitched in a jail-yard baseball game, he had to be relieved after the sixth inning and his team lost 25-5.

McLain was eventually released two-and-a-half years into a 23-year prison sentence when it was proved that several of the jurors who'd convicted him had slept through the trial. But, unable to stay out of trouble, he spent another six years behind bars for looting the pension fund of a company he'd bought, finally getting sprung in 2003.

In his various memoirs, McLain singled out the Big A as the filthiest and most dangerous of the many prisons he'd known, once writing: "After Atlanta, the men's room at a Texaco would look like a hospital operating room."

Thanks to Scott Henry

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