An indictment was unsealed charging six men with carrying out a $30 million bank fraud conspiracy by fraudulently inflating the prices of homes for sale and then obtaining mortgages that far exceeded the true collateral value of properties in Nassau and Suffolk Counties. Through his mortgage banking company, defendant Aaron Wider and his co-conspirators allegedly then re-sold these “toxic” mortgages to banks and other investors in the secondary mortgage market, causing millions in losses when the loans went into foreclosure. Four of the defendants were arrested and will be presented for arraignment at the United States Courthouse in Central Islip, New York, before United State Magistrate Judge Gary R. Brown. Of the remaining two defendants, one was taken into custody in Florida, while another is scheduled to surrender to federal agents in Central Islip.
The indictment and arrests were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office.
“The conduct charged in the indictment is a prime example of the type of corrupt mortgage-lending practices that preceded the bursting of the real estate bubble, the loss of faith in securitized mortgage obligations, and the financial collapse of 2007 and 2008,” stated United States Attorney Lynch. “Instead of using their skills in banking, the law, and investing to assist individuals pursuing the American Dream, the defendants cooked up a sophisticated scheme that defrauded lenders and then fed toxic debt to the investigating public at large in the secondary mortgage market. I would like to thank the investigators at the Nassau County District Attorney’s Office and New York State Department of Financial Services for their invaluable assistance in this investigation.”
FBI Assistant Director in Charge Venizelos said, “As alleged in the indictment, during the height of the real estate boom, these defendants devised a scheme to turn a profit at the expense of unsuspecting lenders, investors, and members of the public. Mortgage fraud poses a threat to our financial systems and to our economy. This case should send a clear message to all individuals who try to game our financial market: you will be identified and held accountable for your criminal acts. The FBI, along with our law enforcement partners, will continue to investigate those who orchestrate and participate in various mortgage fraud schemes in order to protect the public against those who seek to damage our economy.”
According to the indictment and other court filings, between 2003 and 2008, defendant Aaron Wider operated a New York State licensed mortgage bank in Garden City, New York, called HTFC Corp., which issued residential mortgages to borrowers. HTFC did not possess assets to fund these loans but relied on funding from other banks and financial institutions, commonly known as “warehouse lenders.” The warehouse lenders relied on Wider and HTFC to ensure that home buyers were able to pay the mortgages and that the market value of the homes fully collateralized the loans.
Instead, Wider and the co-defendants allegedly engineered a complex series of same-day sham transactions, or “flips,” to artificially inflate the prices of homes. Then, they lied to the warehouse lenders to obtain mortgage funding that was 80 percent more than the actual value of the homes. Wider and co-defendants Manjeet Bawa, John Petiton, and Joseph Ferrara contracted to buy homes in Nassau and Suffolk Counties from innocent sellers at market prices. The defendants then submitted fraudulent loan applications to the warehouse lenders that nearly doubled the true sales prices of the homes. The defendants also inflated their personal assets and concealed significant liabilities to get loan approval.
At each closing, Petiton, an attorney admitted to practice in New York State, oversaw the actual sales to innocent sellers and simultaneously created sham trusts into which title to the properties was transferred for no money. He and the co-conspirators then immediately transferred title back to the co-defendants at nearly double the price to create a false paper trail documenting the artificially inflated prices. Meanwhile, real estate appraiser Joseph Mirando prepared false appraisal reports to justify the inflated prices, while HTFC closing attorney Eric Finger concealed the far lower, true sales price for properties by lying on federal-mandated settlement forms. Finger received wire transfers of funds from the warehouse lenders and, after paying the innocent third-party sellers, disbursed the surplus money fraudulently obtained in the mortgages to his fellow co-conspirators.
HTFC sold each of its mortgages in the secondary market. On paper, the loans appeared to be attractive investments because HTFC’s mortgages carried high rates of return that were supposedly fully collateralized by the market value of homes and the assets and incomes of the borrowers or mortgagors. Upon buying mortgages from HTFC, the secondary market bank paid off the warehouse lenders and then either collected the principal and interest or bundled them into mortgage-backed securities that were sold to pension funds, hedge funds, and other investors seeking relatively secure, high-yield investments. When HTFCs mortgages went into foreclosure beginning in 2007 and 2008, the secondary market investors discovered that the actual value of the collateral was 80 percent less than the amount borrowed for each home.
The charges in the indictment are merely allegations, and the defendants presumed innocent unless and until proven guilty. If convicted, the defendants face up to 30 years’ imprisonment. The indictment unsealed today also seeks to forfeit 19 residential properties traced to the bank fraud or up to $30 million in a money judgment.
The case is being prosecuted by Assistant U.S. Attorney James Miskiewicz.
Defendants:
MANJEET BAWA, age 46, Dix Hills, New York
JOSEPH FERRARA, age 70, Long Beach, New York
ERIC FINGER, age 48, Miami, Florida
JOSEPH MIRANDO, age 54, Centereach, NY
JOHN PETITON age 68, Garden City, New York
AARON WIDER age 50, Copiague, New York
Wednesday, May 07, 2014
Yufeng Wei Sentenced for Illegally Exporting Electronics Components Used in Military Radar, Electronic Warfare, and Missile Systems to China
The former manager of a Massachusetts electronics company was re-sentenced yesterday for illegally exporting electronics components to China.
Yufeng Wei, a Chinese national residing in Belmont, Massachusetts, was sentenced to 23 months in prison for conspiring, over a 10-year period, to illegally export military and sophisticated electronics used in military phased array radar, electronic warfare, and missile systems to the People’s Republic of China (PRC) and illegally exporting sensitive electronic components to the PRC in violation of the Export Administration Regulations. Several Chinese military entities were among those to whom the defendant and her co-conspirators exported the equipment.
On March 19, 2013, the U.S. Court of Appeals for the First Circuit affirmed Wei’s conviction on export violations charges, for which a jury convicted her in May 2010. The First Circuit vacated two counts of the conviction that charged Wei, and her now ex-husband, Zhen Zhou Wu, with illegally exporting parts designated on the United States Munitions List because it held that the jury instructions given were constitutionally inadequate. However, the First Circuit observed that, from 1996 until 2008, Wu and Wei shipped tens of millions of dollars worth of sophisticated electronic components from the United States to China with little regard for whether the parts that they sold were export-controlled. Further, the First Circuit determined that Wu and Wei repeatedly attempted to disguise the fact that they were exporting to China and that they lacked the necessary licenses to do so. Because two counts of conviction were vacated, the case was remanded for a re-sentencing hearing. Wu was sentenced to 84 months in prison at his re-sentencing hearing held on September 9, 2013.
Wei, 50, was also sentenced to two years of supervised release. After serving her sentence Wei, who has been residing in the United States as a Lawful Permanent Resident, will be subject to deportation.
On May 17, 2010, Wei, Wu, and Chitron Electronics Inc. (Chitron-US) were convicted of conspiring from 1997 to 2007 to unlawfully export to the PRC military electronics and export restricted electronics components and illegally exporting such parts to the PRC on numerous occasions between 2004 and 2007. The defendants’ illegal enterprise involved the use of Chitron-US, a company Wu established in Waltham, Massachusetts as a front company for its parent company, Chitron Electronics Company Limited, based in Shenzhen, PRC. Wei was a “hands-on” manager at Chitron-US who oversaw the procurement of export restricted equipment from U.S. suppliers and shipment of those goods from Waltham to China, through Hong Kong without the suppliers’ knowledge. The exported equipment is used in electronic warfare, military radar, fire control, military guidance and control equipment, missile systems, and satellite communications. Many of Chitron’s customers were Chinese military research institutes and military entities responsible for procuring, developing, and manufacturing electronic components for China’s Army, Navy, and Air Force.
The Department of Defense’s Defense Technology Security Administration concluded in a report filed with the court that the defendants’ activities in this case seriously threatened “U.S. national and regional security interests.” According to the Department of Defense, the parts the defendants were convicted of illegally exporting are “vital for Chinese military electronic warfare, military radar, fire control, military guidance and control equipment, and satellite communications.” The report further concluded that the illegally exported parts are “precisely the [types of] items...that the People’s Liberation Army actively seeks to acquire.”
Yufeng Wei, a Chinese national residing in Belmont, Massachusetts, was sentenced to 23 months in prison for conspiring, over a 10-year period, to illegally export military and sophisticated electronics used in military phased array radar, electronic warfare, and missile systems to the People’s Republic of China (PRC) and illegally exporting sensitive electronic components to the PRC in violation of the Export Administration Regulations. Several Chinese military entities were among those to whom the defendant and her co-conspirators exported the equipment.
On March 19, 2013, the U.S. Court of Appeals for the First Circuit affirmed Wei’s conviction on export violations charges, for which a jury convicted her in May 2010. The First Circuit vacated two counts of the conviction that charged Wei, and her now ex-husband, Zhen Zhou Wu, with illegally exporting parts designated on the United States Munitions List because it held that the jury instructions given were constitutionally inadequate. However, the First Circuit observed that, from 1996 until 2008, Wu and Wei shipped tens of millions of dollars worth of sophisticated electronic components from the United States to China with little regard for whether the parts that they sold were export-controlled. Further, the First Circuit determined that Wu and Wei repeatedly attempted to disguise the fact that they were exporting to China and that they lacked the necessary licenses to do so. Because two counts of conviction were vacated, the case was remanded for a re-sentencing hearing. Wu was sentenced to 84 months in prison at his re-sentencing hearing held on September 9, 2013.
Wei, 50, was also sentenced to two years of supervised release. After serving her sentence Wei, who has been residing in the United States as a Lawful Permanent Resident, will be subject to deportation.
On May 17, 2010, Wei, Wu, and Chitron Electronics Inc. (Chitron-US) were convicted of conspiring from 1997 to 2007 to unlawfully export to the PRC military electronics and export restricted electronics components and illegally exporting such parts to the PRC on numerous occasions between 2004 and 2007. The defendants’ illegal enterprise involved the use of Chitron-US, a company Wu established in Waltham, Massachusetts as a front company for its parent company, Chitron Electronics Company Limited, based in Shenzhen, PRC. Wei was a “hands-on” manager at Chitron-US who oversaw the procurement of export restricted equipment from U.S. suppliers and shipment of those goods from Waltham to China, through Hong Kong without the suppliers’ knowledge. The exported equipment is used in electronic warfare, military radar, fire control, military guidance and control equipment, missile systems, and satellite communications. Many of Chitron’s customers were Chinese military research institutes and military entities responsible for procuring, developing, and manufacturing electronic components for China’s Army, Navy, and Air Force.
The Department of Defense’s Defense Technology Security Administration concluded in a report filed with the court that the defendants’ activities in this case seriously threatened “U.S. national and regional security interests.” According to the Department of Defense, the parts the defendants were convicted of illegally exporting are “vital for Chinese military electronic warfare, military radar, fire control, military guidance and control equipment, and satellite communications.” The report further concluded that the illegally exported parts are “precisely the [types of] items...that the People’s Liberation Army actively seeks to acquire.”
Tuesday, May 06, 2014
Review of “Eliot Ness: The Rise and Fall of an American Hero”
Douglas Perry’s “Eliot Ness: The Rise and Fall of an American Hero” is a riveting biography of the man who cleaned up Chicago bootlegging, took on the mob in Cleveland and battled venereal disease among soldiers during World War II.
Eliot Ness
was the real thing. Working as a federal Prohibition agent, he led a bold campaign against bootleggers in Chicago and helped send Al Capone to prison. His “Untouchables” really did crash into illegal breweries with a battering ram mounted on a truck.
Ness had a “soft, indistinct face,” writes Douglas Perry in his new biography of the lawman, and “a sadness in his eyes, even when he was smiling.” He stood about 6 feet tall, with a lithe, athletic build and conveyed a sensitivity that many women found irresistible.
Ness understood public relations and took care to nourish his legend. When he captured contraband liquor, he invited newspapers to send over cameramen with no cameras. He sent them back with their camera cases filled with booze. Predictably, he got good press — too good for FBI Director J. Edgar Hoover, a zealous media hog who declined Ness’ overture to join the bureau.
The end of Prohibition put the Untouchables out of business. Ness went to Cleveland, arguably even more corrupt than Chicago, where as director of public safety he cleaned up the police force and took on the mob.
As in Chicago, he was involved in car chases and shootouts with bad guys. But Ness was interested in more than just dramatic heroics. In Cleveland, he instituted an innovative traffic-safety program that reduced the death rate, and he worked with youth gangs to steer them away from criminal activity.
In World War II, Ness went to work for the government on reducing the incidence of venereal disease among soldiers by suppressing prostitution. He sent hundreds of prostitutes to training camps to learn vocational skills. He himself had no aversion to sex and alcohol. He was an all-night party animal who liked the ladies and drank more and more as the years passed.
The author may have spent too much time in creative-writing class. He describes Capone’s chief brewmaster as “stocky, cow-faced, with a wide pessimistic mouth like a dried-up old nun.” Nonetheless, Perry has spun a riveting tale.
Thanks to Hank H. Cox.
Eliot Ness
was the real thing. Working as a federal Prohibition agent, he led a bold campaign against bootleggers in Chicago and helped send Al Capone to prison. His “Untouchables” really did crash into illegal breweries with a battering ram mounted on a truck.Ness had a “soft, indistinct face,” writes Douglas Perry in his new biography of the lawman, and “a sadness in his eyes, even when he was smiling.” He stood about 6 feet tall, with a lithe, athletic build and conveyed a sensitivity that many women found irresistible.
Ness understood public relations and took care to nourish his legend. When he captured contraband liquor, he invited newspapers to send over cameramen with no cameras. He sent them back with their camera cases filled with booze. Predictably, he got good press — too good for FBI Director J. Edgar Hoover, a zealous media hog who declined Ness’ overture to join the bureau.
The end of Prohibition put the Untouchables out of business. Ness went to Cleveland, arguably even more corrupt than Chicago, where as director of public safety he cleaned up the police force and took on the mob.
As in Chicago, he was involved in car chases and shootouts with bad guys. But Ness was interested in more than just dramatic heroics. In Cleveland, he instituted an innovative traffic-safety program that reduced the death rate, and he worked with youth gangs to steer them away from criminal activity.
In World War II, Ness went to work for the government on reducing the incidence of venereal disease among soldiers by suppressing prostitution. He sent hundreds of prostitutes to training camps to learn vocational skills. He himself had no aversion to sex and alcohol. He was an all-night party animal who liked the ladies and drank more and more as the years passed.
The author may have spent too much time in creative-writing class. He describes Capone’s chief brewmaster as “stocky, cow-faced, with a wide pessimistic mouth like a dried-up old nun.” Nonetheless, Perry has spun a riveting tale.
Thanks to Hank H. Cox.
Monday, May 05, 2014
Review of "A History of Violence: An Encyclopedia of 1,400 Chicago Mob Murders"
From his boyhood memories of the raid on a bookie joint under the Chicago apartment where he grew up to the murder cases he worked on as an officer with the Chicago Police Department's organized crime division, Harper College professor Wayne A. Johnson has been steeped in the violence of mobsters.
Isolated murders, such as the infamous Valentine's Day Massacre or the beating deaths of brothers Anthony "Tony the Ant" and Michael Spilotro, have become scenes in mob movies. "But nobody ever put it in one place before," says Johnson, who has done that with his new book, "A History of Violence:: An Encyclopedia of 1400 Chicago Mob Murders.1st Edition."
From the stabbing death of Harry Bush during the newspaper "circulation war" on July 6, 1900, to the Aug. 31, 2006, disappearance of 71-year-old Anthony "Little Tony" Zizzo of Westmont, Johnson has used court documents, police records, newspaper accounts and 14 years of personal research to compile more than a century of suspected mob murders.
"You know what makes it so insidious? Their ability to get into places that affect every aspect of our lives," says Johnson, who notes cases where politicians, judges and police officers cooperated with mobsters. "Once you are into these guys, they own you."
Appearing in countless articles and TV shows as an expert on the mob, Johnson spent 25 years as a Chicago police officer and served as chief investigator for the Chicago Crime Commission before getting his doctoral degree in education. He's now an associate professor and program coordinator of law enforcement programs at Harper College.
The stereotype of the Chicago mob as the Italian Mafia known as Cosa Nostra is a myth, says Johnson, who says organized crime boasts a diverse collection of people, including many immigrants, who learned how to make money through illegal methods. The criminal groups formed partnerships and cut deals with each other, he says.
Of the 1,401 murders Johnson details, he lists only 278 as "solved," and the number of people convicted of those murders is even lower. "Just because they weren't charged doesn't mean it's not solved," says Johnson.
In teaching his "Organized Crime" class, Johnson tells the Harper students that reputed mob boss Tony "Big Tuna" Accardo, who died in 1992 at the age of 86, lived the last years of his life just a short drive away, on Algonquin Road in Barrington Hills.
Student Jackie Cooney, 30, of McHenry wrote a research paper that ended up adding early 20th-century murders to Johnson's book.
"I logged 108 murders, and, of those murders, a portion of them were mob murders," says Cooney, who says she's been interested in the mob since she got her bachelor's degree in history from Roosevelt University in 2008. "I find it fascinating how people make alternative choices to provide for themselves and their families."
Studying
to become a physical anthropologist while excelling in her art classes at Harper, Daniella Boyd, 21, of Wheeling responded to Johnson's request to draw a grisly scene for the cover of his book. "I did some research," says Boyd, who spent about 12 hours making a graphite drawing of the toe tag on the left foot of mobster Sam Giancana, who was gunned down in his Oak Park home in 1975.
The suburbs are home to some of the most infamous mob murders. On Feb. 12, 1985, the body of 48-year-old Hal Smith of Prospect Heights was found in the trunk of his Cadillac in the parking lot of an Arlington Heights hotel. Suspected of being a sports bookie who had run afoul of the mob, Smith was lured to the Long Grove home of his friend William B.J. Jahoda and was tortured, had his throat cut and was strangled. Jahoda, who became a friend of Johnson's before his death of natural causes in 2004, testified against the mob and helped send reputed mob leaders including Ernest Rocco Infelice and Salvatore DeLaurentis of Lake County to prison.
Another gambling operator who angered the mob, Robert Plummer, 51, was found dead in a car trunk in Mundelein in 1982. He was murdered in a Libertyville house already notorious before it was purchased by a mobster and turned into an illicit casino. In 1980, in a crime that went unsolved for more than 15 years, William Rouse, 15, used a shotgun to murder his millionaire parents, Bruce and Darlene Rouse, in a bedroom of the family home.
"Some people romanticize the mob," says Johnson, who adds that he hopes his book not only makes people recognize the heinous brutality of mobster killings, but might also help solve some of the remaining mysteries. "I hope they read my book and say, 'Yeah, it was 20 years ago, but I know who killed so-and-so.' Maybe we can still do something."
Isolated murders, such as the infamous Valentine's Day Massacre or the beating deaths of brothers Anthony "Tony the Ant" and Michael Spilotro, have become scenes in mob movies. "But nobody ever put it in one place before," says Johnson, who has done that with his new book, "A History of Violence:: An Encyclopedia of 1400 Chicago Mob Murders.1st Edition."
From the stabbing death of Harry Bush during the newspaper "circulation war" on July 6, 1900, to the Aug. 31, 2006, disappearance of 71-year-old Anthony "Little Tony" Zizzo of Westmont, Johnson has used court documents, police records, newspaper accounts and 14 years of personal research to compile more than a century of suspected mob murders.
"You know what makes it so insidious? Their ability to get into places that affect every aspect of our lives," says Johnson, who notes cases where politicians, judges and police officers cooperated with mobsters. "Once you are into these guys, they own you."
Appearing in countless articles and TV shows as an expert on the mob, Johnson spent 25 years as a Chicago police officer and served as chief investigator for the Chicago Crime Commission before getting his doctoral degree in education. He's now an associate professor and program coordinator of law enforcement programs at Harper College.
The stereotype of the Chicago mob as the Italian Mafia known as Cosa Nostra is a myth, says Johnson, who says organized crime boasts a diverse collection of people, including many immigrants, who learned how to make money through illegal methods. The criminal groups formed partnerships and cut deals with each other, he says.
Of the 1,401 murders Johnson details, he lists only 278 as "solved," and the number of people convicted of those murders is even lower. "Just because they weren't charged doesn't mean it's not solved," says Johnson.
In teaching his "Organized Crime" class, Johnson tells the Harper students that reputed mob boss Tony "Big Tuna" Accardo, who died in 1992 at the age of 86, lived the last years of his life just a short drive away, on Algonquin Road in Barrington Hills.
Student Jackie Cooney, 30, of McHenry wrote a research paper that ended up adding early 20th-century murders to Johnson's book.
"I logged 108 murders, and, of those murders, a portion of them were mob murders," says Cooney, who says she's been interested in the mob since she got her bachelor's degree in history from Roosevelt University in 2008. "I find it fascinating how people make alternative choices to provide for themselves and their families."
Studying
to become a physical anthropologist while excelling in her art classes at Harper, Daniella Boyd, 21, of Wheeling responded to Johnson's request to draw a grisly scene for the cover of his book. "I did some research," says Boyd, who spent about 12 hours making a graphite drawing of the toe tag on the left foot of mobster Sam Giancana, who was gunned down in his Oak Park home in 1975.The suburbs are home to some of the most infamous mob murders. On Feb. 12, 1985, the body of 48-year-old Hal Smith of Prospect Heights was found in the trunk of his Cadillac in the parking lot of an Arlington Heights hotel. Suspected of being a sports bookie who had run afoul of the mob, Smith was lured to the Long Grove home of his friend William B.J. Jahoda and was tortured, had his throat cut and was strangled. Jahoda, who became a friend of Johnson's before his death of natural causes in 2004, testified against the mob and helped send reputed mob leaders including Ernest Rocco Infelice and Salvatore DeLaurentis of Lake County to prison.
Another gambling operator who angered the mob, Robert Plummer, 51, was found dead in a car trunk in Mundelein in 1982. He was murdered in a Libertyville house already notorious before it was purchased by a mobster and turned into an illicit casino. In 1980, in a crime that went unsolved for more than 15 years, William Rouse, 15, used a shotgun to murder his millionaire parents, Bruce and Darlene Rouse, in a bedroom of the family home.
"Some people romanticize the mob," says Johnson, who adds that he hopes his book not only makes people recognize the heinous brutality of mobster killings, but might also help solve some of the remaining mysteries. "I hope they read my book and say, 'Yeah, it was 20 years ago, but I know who killed so-and-so.' Maybe we can still do something."
Matthew Stoen of Stone Rose, Indicted for Allegedly Cheating at Least 50 Mostly Chicago-Area Investors of $10 Million
A former Chicago-area real estate investment partner was indicted on federal charges alleging that he fraudulently obtained more than $10 million from more than 50 investors, many of whom lived in the Chicago area, and misused the funds he obtained from them as well as lenders. The defendant, MATTHEW STOEN, was a founder of Stone Rose, LP, and effectively was its managing general partner.
Stoen, 35, of Wayzata, Minnesota and formerly of St. Charles and Chicago, was charged with four counts of mail fraud and two counts of wire fraud in an indictment returned by a federal grand jury. He will be arraigned on a date to be determined in U.S. District Court in Chicago.
The indictment also seeks forfeiture of more than $10 million in alleged fraud proceeds.
According to the indictment, Stoen falsely represented to investors and lenders his personal background and financial condition, including claiming that he was the beneficiary of a trust fund, which he knew was false. He allegedly carried out a financing fraud scheme to benefit himself by fraudulently raising millions of dollars through the offer and sale of limited partnership interests and through loans. Stoen fraudulently obtained and retained these funds by making false representations regarding the intended use of the funds raised for Stone Rose, the terms of Stone Rose’s real estate transactions, Stone Rose’s financial condition, his personal financial condition, and his interest in Stone Rose real estate transactions. Stoen misappropriated Stone Rose funds for his own benefit, and concealed his scheme by creating and distributing to investors a false and misleading financial review of Stone Rose, the indictment states.
Stoen allegedly represented to investors and lenders that funds invested in Stone Rose would be used for real estate investment projects in the Kansas City area as well as certain Stone Rose fees and expenses, knowing that he intended to misappropriate a portion of the funds for other purposes, including for his own use and benefit.
Each count of mail and wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
Stoen, 35, of Wayzata, Minnesota and formerly of St. Charles and Chicago, was charged with four counts of mail fraud and two counts of wire fraud in an indictment returned by a federal grand jury. He will be arraigned on a date to be determined in U.S. District Court in Chicago.
The indictment also seeks forfeiture of more than $10 million in alleged fraud proceeds.
According to the indictment, Stoen falsely represented to investors and lenders his personal background and financial condition, including claiming that he was the beneficiary of a trust fund, which he knew was false. He allegedly carried out a financing fraud scheme to benefit himself by fraudulently raising millions of dollars through the offer and sale of limited partnership interests and through loans. Stoen fraudulently obtained and retained these funds by making false representations regarding the intended use of the funds raised for Stone Rose, the terms of Stone Rose’s real estate transactions, Stone Rose’s financial condition, his personal financial condition, and his interest in Stone Rose real estate transactions. Stoen misappropriated Stone Rose funds for his own benefit, and concealed his scheme by creating and distributing to investors a false and misleading financial review of Stone Rose, the indictment states.
Stoen allegedly represented to investors and lenders that funds invested in Stone Rose would be used for real estate investment projects in the Kansas City area as well as certain Stone Rose fees and expenses, knowing that he intended to misappropriate a portion of the funds for other purposes, including for his own use and benefit.
Each count of mail and wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
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