Precious House, Brian Huges, Michael Turner, and Keith Foster Indicted in Alleged $1.4 Million Automobile Loan Fraud Scheme

Four Chicago and area defendants were indicted on federal bank fraud charges for allegedly engaging in a scheme to fraudulently obtain 46 automobile loans totaling approximately $1.4 million without ever intending that the borrowers would purchase the high-end luxury cars that they claimed to be buying. As a result, various credit union lenders, Including Great Lakes Credit Union, Pentagon Federal Credit Union, and Sherwin-Williams Credit Union, incurred losses totaling at least $914,000, the charges allege.

One defendant, Precious W. House, 47, of Chicago, the president of Rolling Auto Inc., a Plymouth, Indiana wholesale auto dealership that purported to be selling many of the autos, was arrested yesterday. He pleaded not guilty to five counts of bank fraud and one count making false statements on a loan application and is scheduled to have a detention hearing at 9:15 a.m. next Tuesday before Magistrate Judge Sidney I. Schenkier in U.S. District Court.

Another defendant, Brian K. Huges, 41, of Homewood, was arrested January 9 and was ordered detained in federal custody. He was charged with four counts of bank fraud and one count of making false statements on a loan application.

Co-defendants Michael O. Turner, 44, of Richton Park, who was charged with one count of bank fraud, and Keith B. Foster, 46, of Harvey, who was charged with one count each of bank fraud and making false statements on a loan application, were not arrested and will be arraigned next Tuesday in U.S. District Court.

The six-count indictment was returned by a federal grand jury. The indictment also seeks forfeiture of approximately $914,511 from all four defendants.

According to the indictment, between February and November 2013, the defendants fraudulently obtained at least 28 automobile loans of the 46 they fraudulently applied for and obtained approximately $914,000 of $1.4 million they sought in loan proceeds. They made and caused others to make false representations in documents submitted to lenders, including loan applications, vehicle purchase orders, and verifications of employment, concerning the individuals’ income, employment, credit history, intent to use the loan proceeds to purchase automobiles, and the existence of contracts obligating the borrowers to purchase vehicles from House and Rolling Auto.

House, Hughes, and Turner allegedly recruited individuals seeking auto and personal loans and agreed to find loans for them in exchange for a fee of 20 to 30 percent of the loan. Then, they submitted false information in the borrowers’ loan applications, their income, employment, and credit history, as well as their intent to use the loan proceeds to purchase autos from Rolling Auto and other dealerships, and the existence of contracts obligating them to purchase luxury automobiles made by BMW, Chevrolet, Jaguar, Lexus, Mercedes-Benz, Nissan, and Porsche, the indictment alleges.

If the individual borrowers refused to cash checks obtained as part of the scheme, Hughes allegedly threatened them with civil lawsuits and criminal prosecutions. House allegedly deposited the loan proceeds into bank accounts he controlled in Illinois, California, and Georgia.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

The government is being represented by Assistant U.S. Attorney Christopher R. McFadden.

Each count of bank fraud and making false statements on loan applications carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. The court may impose an alternate 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 public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

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Details on Conrad Ulz's Indictment in Alleged $3.2 Million Mortgage Fraud Scheme Involving Properties in Chicago’s Englewood Community

A Lake County man who operated two real estate–related firms was indicted on federal mortgage fraud charges. The defendant, Conrad Ulz, allegedly engaged in a scheme to fraudulently obtain 13 residential mortgage loans, totaling approximately $3.2 million, from lenders to purchase properties in Chicago’s Englewood neighborhood. The indictment alleges that Ulz paid buyers to purchase the properties and promised them no out-of-pockets costs and then made false statements to lenders on their behalf. As a result, the lenders incurred losses totaling more than $3.1 million because the amount of the mortgage loans was not fully recovered through subsequent sale or foreclosure.

Ulz, 73, of Libertyville, who operated Citywide Financial Group and Metro Realty Services, was charged with five counts of wire fraud and three counts of making false statements to financial institutions in an indictment that was returned by a federal grand jury. The indictment also seeks forfeiture of at least $3.1 million. Ulz will be arraigned on a date to be determined in U.S. District Court.

According to the indictment, between August 2007 and May 2009, Ulz caused buyers to fraudulently obtain 13 mortgage loans from various lenders for properties on South Sangamon, South Carpenter, South Morgan, South May, and South Ada streets, among others, in Englewood on the city’s south side. The alleged fraud involved false representations in documents, including loan applications and HUD-1 settlement statements concerning sales prices and the buyers’ employment, assets, income, and intention to occupy the property.

Ulz allegedly recruited buyers with good credit, promising to pay them for purchasing the properties and promising that they would not have to pay any of their own money toward the purchases, including down payments and mortgage payments.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

The government is being represented by Assistant U.S. Attorney Renai Rodney.

Each count of wire fraud affecting a financial institution and making false statements on loan applications carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. The court may impose an alternate 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 public is reminded that 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.

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Kamalu Gonzales Sentenced to More Than Six Years in Prison for Investment Fraud Scheme

A former loan officer from Henderson, Nevada, who convinced at least 16 victims to give him money for a high-yield investment scheme involving the foreign currency exchange market was sentenced today to six-and-a-half years in prison, five years of supervised release, and ordered to pay over $830,000 in restitution for his guilty pleas to federal fraud and money laundering charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

Kamalu Gonzales, 47, was sentenced by U.S. District Judge Gloria M. Navarro and was permitted to self-report to federal prison by April 17, 2014. Gonzales pleaded guilty in August 2013 to two counts of mail fraud, six counts of wire fraud, and two counts of money laundering.

“Prosecuting persons who commit financial fraud crimes is a top priority of the U.S. Attorney’s Office in Nevada,” said U.S. Attorney Bogden. “Many of these persons target elderly and other vulnerable victims. If someone promises you an investment opportunity with unusually high rates of return, it is likely that the opportunity is fraudulent and that you will lose your money.”

During 2007, Gonzales worked as a loan officer for Meridias Capital in Henderson. Gonzales helped persons refinance their homes and placed false information in the loan applications so the individuals could obtain refinancing and cash to which they would not have otherwise been entitled. Gonzales also told individuals that he was a successful investor and trader in the foreign currency exchange market. Gonzales recruited individuals to invest with him in the market, telling them that they could earn high rates of return on their investments in a short period of time. Some of the victims wired money to Gonzales, and others borrowed money from their retirement funds or lines of credit. Gonzales also convinced some of the persons who refinanced their houses to give him some of the cash they received from refinancing for his investment fraud scheme. None of the victims agreed to pay Gonzales any commissions or fees or agreed that he could use their investments for personal or business expenses or to pay other investors.

In order to continue the scheme and to keep victims from discovering the crime, Gonzales lied to the victims repeatedly and told them their investments were doing well. As a result of the lies, some victims gave Gonzales more money to invest. Gonzales also made payments to some of the victims using money he received from other victims.

Gonzales received approximately $1 million total from at least 16 victims in 2007 and 2008. Gonzales did not invest the victims’ funds as promised and diverted approximately $410,000 for his own personal purposes.

The case was investigated by the FBI, IRS-Criminal Investigation, and the Henderson Police Department and prosecuted by Assistant U.S. Attorneys Kathryn C. Newman and Kimberly M. Frayn.

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U.S. Department of the Treasury's Office of Foreign Assets Control Continues to Target #SinaloaCartel with Support from DEA

Drug Enforcement Administration (DEA) Special Agent in Charge Doug Coleman announced that the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) reported the designation of Jose Guadalupe Tapia Quintero, a Culiacan, Sinaloa, Mexico based senior lieutenant of the Sinaloa Cartel.  Jose Guadalupe Tapia Quintero was designated for his role in the drug trafficking activities of Ismael "Mayo" Zambada Garcia and for playing a significant role in international drug trafficking.

"DEA and its OFAC partners will not allow these dangerous cartels and their associates to exploit the U.S. financial system," said DEA Special Agent in Charge Doug Coleman.  "We're relentlessly following the financial trail to deprive these traffickers of their assets, draining the lifeblood from their criminal enterprises."

Tapia Quintero oversees the transportation of cocaine and marijuana for the Zambada Garcia drug trafficking organization and is responsible for coordinating the purchase and transportation of cocaine and methamphetamine from Sinaloa into the U.S., specifically Arizona and California, on a monthly basis.  Tapia Quintero also transports methamphetamine on behalf of a drug trafficking cell affiliated with Joaquin "Chapo" Guzman Loera from Sinaloa to Tijuana, Baja California via tractor trailers.  The President identified Joaquin Guzman Loera, Ismael Zambada Garcia, and the Sinaloa Cartel as significant foreign narcotics traffickers pursuant to the Kingpin Act in 2001, 2002 and 2009, respectively.

Pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act), this designation generally prohibits U.S. persons from conducting financial or commercial transactions with Tapia Quintero, and also freezes any assets he may have under U.S. jurisdiction.

"We will continue to target all aspects of the narcotics trade," said Treasury's Director of the Office of Foreign Assets Control (OFAC) Adam J. Szubin.  "Our actions will focus on their financial nerve points as well as the underlying logistics which are essential to their day to day operations such as the transportation network that we are taking action against today."

This action would not have been possible without the support of the Drug Enforcement Administration (DEA), specifically the Phoenix Field Division, and the multi-agency OCDETF Strike Force.

Since June 2000, the President has identified 103 drug kingpins, and OFAC has designated more than 1300 entities and individuals, pursuant to the Kingpin Act. Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals could face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

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Considering Realities Before Passing More #GunControl Laws

The new year has brought yet more gun-control regulations. President Obama announced new executive orders on background checks. Connecticut citizens stood in long lines to register their guns, and, next door in New York City, registration lists are used to confiscate them.

While the research by criminologists and economists keeps showing that gun control doesn't work, technological advances and practical problems mean the laws are increasingly likely only to disarm the law-abiding.

In the era of 3D printing, you won't be able to ban guns and it will be even more difficult to stop unapproved people from obtaining them. A part metal/part plastic gun printed from a 3D printer will be completely indistinguishable from a traditionally made gun, even down to whatever serial number you want.
3D printers have consequences for the gun-control laws Obama and other Democrats are pushing. If AR-15s are banned, anyone could borrow a 3D printer and make one. If magazines holding more than 10 rounds are banned, and you don't have access to a very simple set of tools, print one off.

Can the government stop 3D-printed guns? Unfortunately, no. Even if the government registered every printer, criminals could simply steal one. How about requiring prior government permission for every item printed? That seems unenforceable, especially since printers will soon become ubiquitous.

Software is also impossible to control. When Cody Wilson, the 25-year-old founder of Defense Distributed, announced his design of a virtually all-plastic gun in May, the software blueprint from his website was quickly downloaded around the world. In just two days, 100,000 downloads were made, with most coming from Spain, followed by the United States and heavily regulated Brazil and Germany. Within two weeks, the software could be downloaded from more than 4,000 servers around the world.

There is also a practical problem in stopping these attacks. As Interpol Secretary General Ron Noble noted in November, there are two ways to protect people: "One is to say we want an armed citizenry; you can see the reason for that. Another is to say the enclaves are so secure that in order to get into the soft target you're going to have to pass through extraordinary security."

Noble points to the real problem: "How do you protect soft [civilian] targets? That's really the challenge. You can't have armed police forces everywhere. . . . It makes citizens question their views on gun control. You have to ask yourself, 'Is an armed citizenry more necessary now than it was in the past with an evolving threat of terrorism?' "

Noble's comments came shortly after the terrorist attack at the Westgate Mall in Nairobi, Kenya, where 68 people were killed. Kenya bans both open and concealed carrying of firearms by civilians. Yet, obviously, those bans didn't stop the terrorists.

In the United States, the vast majority of mass public shootings have been extensively planned beforehand - often many months or even years in advance. An example is Adam Lanza, the Sandy Hook Elementary School killer, who spent more than two years studying everything about previous mass shootings: the weapons used, the number of people killed, and even how much media coverage each attack received. Some police even likened his careful study to a doctoral dissertation.

Another careful planner was James Holmes, who is charged with the Aurora, Colo., massacre. According to police, he started buying items 21/2 months in advance. He visited neighboring theaters, buying his ticket almost two weeks before his attack. To help himself prepare, he photographed the layout of the theater.

Holmes appears to have carefully selected the theater. There were seven movie theaters within a 20-minute drive of his apartment showing the premiere of The Dark Knight Rises. He didn't choose the one closest to his apartment or the one prominently advertising the largest auditoriums in Colorado. He chose the only one with signs saying permitted concealed guns were banned.

The decision to pick the one theater that posted a gun ban would not surprise Noble. He notes: "Where would you have wanted to be? In a city where there was gun control and no citizens armed if you're in a Westgate Mall, or in a place [with lots of people armed]?"

The importance of armed citizens was demonstrated just days before the Sandy Hook attack, at the Clackamas Town Center Mall in Portland, Ore. In the crowded mall, a likely mass shooting was halted after two people were killed. It ended because one brave person, Nick Meli, a concealed-permit holder, stopped the attack simply by pointing his gun at the shooter. Alas, as is all too typical, the national news media all but ignored how an armed citizen prevented a large-scale killing spree.

Noble's statements and the ruckus over 3D printing show the frustration in stopping criminals and terrorists from getting guns. Before more gun-control measures are enacted, policymakers and the public need to understand that so-called gun-free zones shouldn't be places where only victims are disarmed.

Thanks to John R. Lott Jr., president of the Crime Prevention Research Center and the author of "More Guns, Less Crime".

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