A former New York-based tax liens company executive pleaded guilty for his role in a conspiracy to rig bids at auctions conducted by New Jersey municipalities for the sale of tax liens, the Department of Justice announced.
Vinaya K. Jessani, of New York City, entered a guilty plea in the U.S. District Court for the District of New Jersey in Newark to felony charges. Under the plea agreement, Jessani has agreed to cooperate with the department’s ongoing investigation.
According to the charge, from at least as early as 1994 until as late as February 2009, Jessani, a former senior vice president who supervised the purchasing of municipal tax liens at auctions in New Jersey for the company he worked for, participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to, and instructing others to, allocate among certain bidders which liens each would bid on. The department said that Jessani and those under his supervision submitted bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.
“Today’s guilty plea demonstrates the Antitrust Division’s continuing effort to prosecute those who manipulate the competitive process in order to harm home and property owners,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The division will continue to be vigilant in rooting out conspiracies that harm already distressed property owners.”
The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. New Jersey state law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.
According to court documents, the conspiracy permitted the conspirators to purchase tax liens with limited competition and each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the $1 million statutory maximum.
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Monday, May 12, 2014
Sandip Shah and Shailesh Shah Charged as Part of Securities Kickback Scheme
Two California men were charged for their involvement in a microcap stock kickback scheme.
Sandip Shah, 40, was charged in an indictment with nine counts of wire fraud and Shailesh Shah, 47, was charged in an Information with two counts of mail fraud and two counts of wire fraud. Both are from Chino, California, and were previously arrested on February 27, 2014.
According to the charging documents, Sandip Shah was in the business of promoting penny stocks and assisting public companies in finding sources of funding. Shailesh Shah was the president and chief executive officer of two publicly traded companies, SOHM Inc. and Costas Inc. Shailesh Shah agreed to pay secret kickbacks to an investment fund representative in exchange for having the investment fund buy stock in his two publicly-traded companies. The kickbacks were concealed through the use of sham consulting agreements and other fraudulent documents.
According to the charging documents, Sandip Shah agreed to introduce the investment fund representative to executives of publicly traded companies so that those executives could enter into the kickback arrangement. In exchange for the introductions and for facilitating the kickback arrangements as they continued, Sandip Shah accepted a portion of the kickbacks paid by the executives. What the defendants did not know was that the purported investment fund representative was actually an undercover agent.
The charges follow a lengthy investigation focusing on preventing fraud in the microcap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies per share.
If convicted, each defendant faces a statutory maximum penalty of 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gain or loss on each count.
Sandip Shah, 40, was charged in an indictment with nine counts of wire fraud and Shailesh Shah, 47, was charged in an Information with two counts of mail fraud and two counts of wire fraud. Both are from Chino, California, and were previously arrested on February 27, 2014.
According to the charging documents, Sandip Shah was in the business of promoting penny stocks and assisting public companies in finding sources of funding. Shailesh Shah was the president and chief executive officer of two publicly traded companies, SOHM Inc. and Costas Inc. Shailesh Shah agreed to pay secret kickbacks to an investment fund representative in exchange for having the investment fund buy stock in his two publicly-traded companies. The kickbacks were concealed through the use of sham consulting agreements and other fraudulent documents.
According to the charging documents, Sandip Shah agreed to introduce the investment fund representative to executives of publicly traded companies so that those executives could enter into the kickback arrangement. In exchange for the introductions and for facilitating the kickback arrangements as they continued, Sandip Shah accepted a portion of the kickbacks paid by the executives. What the defendants did not know was that the purported investment fund representative was actually an undercover agent.
The charges follow a lengthy investigation focusing on preventing fraud in the microcap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies per share.
If convicted, each defendant faces a statutory maximum penalty of 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gain or loss on each count.
TelexFree Owners, James M. Merrill and Carlos N. Wanzeler, Charged in $1 Billion Pyramid Scheme
James M. Merrill and Carlos N. Wanzeler, principals of TelexFree Incorporated and related entities, were charged in a federal criminal complaint, charging them with conspiracy to commit wire fraud.
Merrill, 53, of Ashland, Massachusetts, and Wanzeler, 45, of Northborough, Massachusetts, were charged in a one count criminal complaint filed in U.S. District Court in Worcester, Massachusetts. If convicted, each face up to 20 years in prison. Merrill was arrested by federal authorities and made an initial appearance in U.S. District Court in Worcester. A federal arrest warrant was issued for Wanzeler who is a fugitive.
United States Attorney Carmen Ortiz said, “The scope of this alleged fraud is breathtaking. As alleged, these defendants devised a scheme, which reaped hundreds of millions of dollars from hard working people around the globe.”
“I am very proud of the tireless efforts of my special agents. Investigating the flow of illicit money across U.S. borders and the criminal enterprises behind that money is one of our top priorities,” said Bruce Foucart, Special Agent in Charge of Homeland Security Investigations. “While pyramid schemes are nothing new, the potential scope of this case will hopefully serve as an educational lesson for all. The main point is clear—if it sounds too good to be true, it probably is.”
According to the complaint affidavit, TelexFree Inc. and TelexFree LLC (collectively, TelexFree) provided voice-over Internet protocol (“VoIP”) telephone services, for which customers can sign up via a website maintained by TelexFree. It is alleged that TelexFree was actually a pyramid scheme and that between January 2012 and March 2014, TelexFree purported to aggressively market its VoIP service by recruiting thousands of “promoters” to post ads for the product on the Internet. Each promoter was required to “buy in” to TelexFree at a certain price, after which they were compensated by TelexFree, under a complex compensation structure, on a weekly basis so long as they posted ads for TelexFree’s VoIP service on the Internet.
It is alleged that the ad-posting requirements were a meaningless exercise in which promoters cut and pasted ads into various classified ad sites provided by TelexFree that were already saturated with ads posted by earlier participants. According to the affidavit, TelexFree derived only a fraction of its revenue from sales of VoIP service—less than one percent of TelexFree’s hundreds of millions of dollars in revenue over the last two years. The overwhelming majority of its revenue—the other roughly 99 percent—came from new people buying into the scheme. TelexFree was allegedly only able to pay the returns it had promised to its existing promoters by bringing in money from newly recruited promoters.
On or about March 8, 2014, TelexFree announced changes to its compensation system. On April 14, 2014, Telexfree filed for bankruptcy. In its filings with the bankruptcy court, Telexfree stated, among other things, that it changed its compensation plan “because questions were raised” about the prior plan and that, after changing the plan, the “discretionary payments...quickly became a substantial drain on the company’s liquidity.”
On April 16, 2014, the Securities and Exchange Commission obtained a restraining order to freeze assets of Telexfree and eight related individuals. Since then, the U.S. Attorney’s Office has executed 37 seizure warrants for assets in the tens of millions of dollars.
It is further alleged that in 2013, TelexFree reported sales of $1.016 billion, while known sales of the TelexFree VoIP product represented less than 0.1 percent of TelexFree’s total revenues.
United States Attorney Ortiz, SAC Foucart and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Cory Flashner and Andrew Lelling of Ortiz’s Worcester Branch Office and Economic Crimes Unit, respectively.
If you believe that you are a victim of the alleged TelexFree Inc. scheme, please send your contact information to the following address: USAMA.VictimAssistance@usdoj.gov.
Merrill, 53, of Ashland, Massachusetts, and Wanzeler, 45, of Northborough, Massachusetts, were charged in a one count criminal complaint filed in U.S. District Court in Worcester, Massachusetts. If convicted, each face up to 20 years in prison. Merrill was arrested by federal authorities and made an initial appearance in U.S. District Court in Worcester. A federal arrest warrant was issued for Wanzeler who is a fugitive.
United States Attorney Carmen Ortiz said, “The scope of this alleged fraud is breathtaking. As alleged, these defendants devised a scheme, which reaped hundreds of millions of dollars from hard working people around the globe.”
“I am very proud of the tireless efforts of my special agents. Investigating the flow of illicit money across U.S. borders and the criminal enterprises behind that money is one of our top priorities,” said Bruce Foucart, Special Agent in Charge of Homeland Security Investigations. “While pyramid schemes are nothing new, the potential scope of this case will hopefully serve as an educational lesson for all. The main point is clear—if it sounds too good to be true, it probably is.”
According to the complaint affidavit, TelexFree Inc. and TelexFree LLC (collectively, TelexFree) provided voice-over Internet protocol (“VoIP”) telephone services, for which customers can sign up via a website maintained by TelexFree. It is alleged that TelexFree was actually a pyramid scheme and that between January 2012 and March 2014, TelexFree purported to aggressively market its VoIP service by recruiting thousands of “promoters” to post ads for the product on the Internet. Each promoter was required to “buy in” to TelexFree at a certain price, after which they were compensated by TelexFree, under a complex compensation structure, on a weekly basis so long as they posted ads for TelexFree’s VoIP service on the Internet.
It is alleged that the ad-posting requirements were a meaningless exercise in which promoters cut and pasted ads into various classified ad sites provided by TelexFree that were already saturated with ads posted by earlier participants. According to the affidavit, TelexFree derived only a fraction of its revenue from sales of VoIP service—less than one percent of TelexFree’s hundreds of millions of dollars in revenue over the last two years. The overwhelming majority of its revenue—the other roughly 99 percent—came from new people buying into the scheme. TelexFree was allegedly only able to pay the returns it had promised to its existing promoters by bringing in money from newly recruited promoters.
On or about March 8, 2014, TelexFree announced changes to its compensation system. On April 14, 2014, Telexfree filed for bankruptcy. In its filings with the bankruptcy court, Telexfree stated, among other things, that it changed its compensation plan “because questions were raised” about the prior plan and that, after changing the plan, the “discretionary payments...quickly became a substantial drain on the company’s liquidity.”
On April 16, 2014, the Securities and Exchange Commission obtained a restraining order to freeze assets of Telexfree and eight related individuals. Since then, the U.S. Attorney’s Office has executed 37 seizure warrants for assets in the tens of millions of dollars.
It is further alleged that in 2013, TelexFree reported sales of $1.016 billion, while known sales of the TelexFree VoIP product represented less than 0.1 percent of TelexFree’s total revenues.
United States Attorney Ortiz, SAC Foucart and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Cory Flashner and Andrew Lelling of Ortiz’s Worcester Branch Office and Economic Crimes Unit, respectively.
If you believe that you are a victim of the alleged TelexFree Inc. scheme, please send your contact information to the following address: USAMA.VictimAssistance@usdoj.gov.
Ann Elizabeth Ursiny, a/k/a Ann Stone, and Robert E. O’Connor Indicted for Operating Advance Fee Loan Scheme
A Florida woman and a man who previously resided in Beverly were charged in an indictment unsealed today in connection with an advance fee scheme involving approximately 100 victims throughout the United States, including many in Massachusetts.
Ann Elizabeth Ursiny, a/k/a Ann Stone, 50, and Robert E. O’Connor, 63, were indicted on 19 counts of mail fraud and 17 counts of wire fraud.
The indictment alleges that between early 2010 and 2011, Ursiny recruited agents, including O’Connor, in several states to solicit individuals to apply for loans through her entity Trace Financial Group Inc. (Trace) and to pay the advance fees. The agents, including O’Connor, were paid a portion of those advance fees. O’Connor and Ursiny told prospective applicants that Trace had successfully processed and disbursed many loans, when in fact none were ever disbursed. Ursiny and O’Connor focused their scheme on prospective applicants who had poor credit or whose homes were underwater and represented that Trace could replace their mortgage with a new, smaller mortgage with lower mortgage interest payments. The indictment alleges that Trace never funded any of the loans and failed to pay refunds as promised. Victims’ funds were used primarily for Ursiny’s personal and family expenses, as well as to pay “commissions” to agents.
If convicted, Ursiny and O’Connor each face a statutory maximum sentence of 20 years in prison, three years of supervised release, and a $250,000 fine on each count.
Ann Elizabeth Ursiny, a/k/a Ann Stone, 50, and Robert E. O’Connor, 63, were indicted on 19 counts of mail fraud and 17 counts of wire fraud.
The indictment alleges that between early 2010 and 2011, Ursiny recruited agents, including O’Connor, in several states to solicit individuals to apply for loans through her entity Trace Financial Group Inc. (Trace) and to pay the advance fees. The agents, including O’Connor, were paid a portion of those advance fees. O’Connor and Ursiny told prospective applicants that Trace had successfully processed and disbursed many loans, when in fact none were ever disbursed. Ursiny and O’Connor focused their scheme on prospective applicants who had poor credit or whose homes were underwater and represented that Trace could replace their mortgage with a new, smaller mortgage with lower mortgage interest payments. The indictment alleges that Trace never funded any of the loans and failed to pay refunds as promised. Victims’ funds were used primarily for Ursiny’s personal and family expenses, as well as to pay “commissions” to agents.
If convicted, Ursiny and O’Connor each face a statutory maximum sentence of 20 years in prison, three years of supervised release, and a $250,000 fine on each count.
Sunday, May 11, 2014
Bilal Ahmed Charged with Attempting to Illegally Export Thermal Imaging Camera to Pakistan
A Bolingbrook man was indicted on federal charges alleging that he violated U.S. export laws by attempting to ship a thermal imaging camera from his company in Schaumburg to a company in Pakistan without obtaining a license from the U.S. Commerce Department.
The case involves a FLIR HRC-U thermal imaging camera, which was on a Commerce Department list of controlled export goods for reasons of national security and regional stability. As a controlled material, a license was required from the Commerce Department’s Bureau of Industry and Security to export the camera to certain countries, including Pakistan.
The defendant, Bilal Ahmed, 33, was charged with one count of violating the International Emergency Economic Powers Act (IEEPA) and one count of attempted smuggling of goods in violation of U.S. export regulations in a two-count indictment returned by a federal grand jury yesterday. Ahmed was initially charged in a criminal complaint and arrested on March 14, and he was subsequently released on a $100,000 secured bond. No date has been set yet for Ahmed to be arraigned in U.S. District Court in Chicago.
According to the complaint affidavit and the indictment, Ahmed was the owner, president, and registered agent of Trexim Corp., which used the address of a virtual office in Schaumburg. Between November 2013 and February of this year, Ahmed corresponded via e-mail with a company in California and negotiated the purchase of a FLIR HRC-U camera for approximately $102,000, which he paid with two checks in February. Ahmed took delivery of the camera on February 27 at a commercial shipping store in Bolingbrook.
On March 7, Ahmed allegedly took the camera, packaged in two boxes, to a different commercial shipper located in Elk Grove Village and left the packages to be shipped to a company in Pakistan. The waybill included a handwritten note containing the letters “NLR,” meaning “no license required.” A search of U.S. State and Commerce Department databases showed there were no licenses applied for or obtained by Ahmed, Trexim, or any other related individual or company names for the export of a FLIR HRC-U camera from the U.S. to Pakistan, the indictment alleges.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and Ronald B. Orzel, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Chicago Field Office. The Justice Department’s National Security Division is providing assistance in the case.
Violating IEEPA carries a maximum penalty of 20 years in prison and a $1 million fine, while attempted smuggling of goods carries a maximum penalty of 10 years in prison and a $250,000 fine.
The case involves a FLIR HRC-U thermal imaging camera, which was on a Commerce Department list of controlled export goods for reasons of national security and regional stability. As a controlled material, a license was required from the Commerce Department’s Bureau of Industry and Security to export the camera to certain countries, including Pakistan.
The defendant, Bilal Ahmed, 33, was charged with one count of violating the International Emergency Economic Powers Act (IEEPA) and one count of attempted smuggling of goods in violation of U.S. export regulations in a two-count indictment returned by a federal grand jury yesterday. Ahmed was initially charged in a criminal complaint and arrested on March 14, and he was subsequently released on a $100,000 secured bond. No date has been set yet for Ahmed to be arraigned in U.S. District Court in Chicago.
According to the complaint affidavit and the indictment, Ahmed was the owner, president, and registered agent of Trexim Corp., which used the address of a virtual office in Schaumburg. Between November 2013 and February of this year, Ahmed corresponded via e-mail with a company in California and negotiated the purchase of a FLIR HRC-U camera for approximately $102,000, which he paid with two checks in February. Ahmed took delivery of the camera on February 27 at a commercial shipping store in Bolingbrook.
On March 7, Ahmed allegedly took the camera, packaged in two boxes, to a different commercial shipper located in Elk Grove Village and left the packages to be shipped to a company in Pakistan. The waybill included a handwritten note containing the letters “NLR,” meaning “no license required.” A search of U.S. State and Commerce Department databases showed there were no licenses applied for or obtained by Ahmed, Trexim, or any other related individual or company names for the export of a FLIR HRC-U camera from the U.S. to Pakistan, the indictment alleges.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and Ronald B. Orzel, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Chicago Field Office. The Justice Department’s National Security Division is providing assistance in the case.
Violating IEEPA carries a maximum penalty of 20 years in prison and a $1 million fine, while attempted smuggling of goods carries a maximum penalty of 10 years in prison and a $250,000 fine.
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