FORMER REPAIR CONTRACTOR RECEIVES PRISON TERM FOR ROLE IN WIRE FRAUD

FROM:  U.S. JUSTICE DEPARTMENT  

FORMER CONTRACTOR OF A FLORIDA PROPERTY MANAGEMENT COMPANY SENTENCED TO SERVE TIME IN PRISON FOR WIRE FRAUD

Scheme Affected U.S. Department of Veterans Affairs Mortgage Guarantee Program

WASHINGTON —A former repair contractor of a Florida property management company was sentenced to serve time in prison for his participation in a wire fraud scheme related to housing repairs made under a contract between Ocwen Loan Servicing LLC, and the U.S. Department of Veterans Affairs (VA), the Department of Justice announced today.

Ronald B. Hurst was sentenced by Judge Philip G. Reinhard of the U.S. District Court for the Northern District of Illinois in Rockford to serve 24 months in prison for his role in the conspiracy.

In addition, a second former repair contractor, Bryant A. Carbonell, was sentenced by Judge Reinhard to serve six months of home confinement for his role in the conspiracy.  Hurst and Carbonell were sentenced to pay $147,825 jointly and severally in restitution to the VA.  Hurst pleaded guilty on Feb. 15, 2013, to two wire fraud counts of a 10-count indictment and Carbonell pleaded guilty on Sept. 21, 2012, to the same charges.

An indictment, originally filed in January 2012, charged Hurst, Carbonell and Ryan J. Piana with conspiring to commit bribery and wire fraud from at least January 2006 until as late as September 2007.  Hurst, Carbonell and Piana were also charged with bribery and wire fraud.  As part of the plea agreements, the United States agreed to dismiss the remaining counts against Hurst and Carbonell at the time of their sentencing.

“By paying kickbacks in exchange for contracts to companies they secretly owned or with which they were affiliated, the conspirators created the illusion of competition while illegally steering contracts to themselves,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Today’s sentencing reaffirms the Antitrust Division’s commitment to prosecuting schemes that undermine competition in the VA Mortgage Guarantee Program.”

Hurst and Carbonell were former contractors for West Palm Beach, Fla.-based Ocwen Loan Servicing LLC. Piana was a former residential sales manager at Ocwen.  According to court documents, Ocwen managed foreclosed properties under contract with the VA, which guaranteed qualifying residential mortgages for veterans.  Under the contract between the VA and Ocwen, if a veteran defaulted, Ocwen completed necessary repairs and re-sold the property.  Proceeds from the re-sale of VA-acquired properties directly benefit the VA by reducing the cost of guaranteeing residential mortgages to veterans.

According to the charges, Hurst and Carbonell paid Piana to steer housing repair work to companies affiliated with Hurst and Carbonell.  Piana recruited other Ocwen employees into the scheme and paid them on behalf of himself and the other conspirators.  The department said in order to execute the scheme, the conspirators sent, or caused to be sent, various transmissions via wire communication.

This is the third case involving properties managed by Ocwen under contract with the VA. On Dec. 3, 2010, Benjamin K. Graves, also a former Ocwen employee, pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with the VA contract.  On Jan. 25, 2012, Joshua R. Nusbaum, another former Ocwen employee, and Andrew J. Nusbaum, a former Ocwen contractor, pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with the same VA contract.  Piana pleaded guilty to the same counts as Carbonell and Hurst on July 16, 2013, in U.S. District Court in Orlando, Fla.  Piana was sentenced on Sept. 30, 2013, to serve 24 months in prison and to pay $147,285 in restitution to the VA.

The sentence announced today resulted from a federal investigation of housing repair contracts performed under contract with the VA.  The investigation is being conducted by the Antitrust Division’s Chicago Office and the Central Field Office of the U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division, located in Hines, Ill.

SECURITIES FRAUDSTER SENTENCED TO 20 YEAR PRISON TERM

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Minneapolis-Based Fraudster Patrick Joseph Kiley Sentenced to 20 Years in Priso
The Securities and Exchange Commission announced that on July 15, 2013, the Honorable Chief Judge Michael J. Davis of the United States District Court for the District of Minnesota sentenced Patrick J. Kiley to 20 years in prison and ordered him to pay $155 million in restitution.  The sentence was based on Kiley’s conviction on 15 criminal counts including mail and wire fraud, conspiracy to commit mail and wire fraud, and money laundering for his role in a $194 million foreign currency trading scheme that defrauded approximately 1,000 investors.  Kiley was charged on July 19, 2011, and a jury found him guilty on June 12, 2012.

Kiley is one of the defendants in a pending civil injunctive action filed by the Commission on November 23, 2009 in the United States District Court for the District of Minnesota.  The Commission’s action against Kiley arose out of the same facts that are the subject of the criminal case against him.

The Commission’s complaint alleges that from at least July 2006 through at least July 2009, Kiley and co-defendant Trevor G. Cook of Minneapolis, Minnesota, raised at least $190 million (later determined to be $194 million) from 1,000 investors through the unregistered offer and sale of investments in a purported foreign currency trading venture.  According to the Commission’s complaint, Cook and Kiley pooled investors’ funds in bank and trading accounts in the names of entities they controlled.  The Commission’s complaint alleges that the foreign currency trading they conducted resulted in millions of dollars in losses, and they misused approximately one half of the investor funds to make Ponzi-like payments to earlier investors and pay for, among other things, Cook's gambling losses and the purchase of the historic Van Dusen Mansion in Minneapolis.

The Commission’s complaint charges Cook and Kiley with violating Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  On November 23, 2009, the Court entered a preliminary injunction order against Cook and Kiley and froze all of their assets.  On March 7, 2011, the Commission also filed a civil complaint in the U.S. District Court in Minneapolis against Jason Bo-Alan Beckman and his registered investment advisory firm Oxford Private Client Group, LLC, for their roles in this scheme.  On August 27, 2010, the Court entered an order of permanent injunction against Cook.  The Court also appointed a receiver to marshal and preserve all of the Defendants’ assets.

FORMER CONGRESSMAN RENZI CONVICTED IN ILLEGAL FEDERAL LAND SWAP SCHEME

FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, June 11, 2013

Former Congressman Richard G. Renzi Convicted of Extortion and Bribery in Illegal Federal Land Swap

A former U.S. Congressman and a real-estate investor were convicted today by a federal jury in Tucson, Ariz., of conspiring together to extort and bribe individuals seeking a federal land exchange, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney John Leonardo of the District of Arizona and Special Agent in Charge Douglas F. Price of the FBI’s Phoenix Division.


Richard G. Renzi, 55, of Burke, Va., was found guilty of 17 felony offenses including conspiracy, honest services wire fraud, extortion under color of official right, racketeering, money laundering and making false statements to insurance regulators.

James W. Sandlin, 62, of Sherman, Texas, was found guilty of 13 felony offenses including conspiracy, honest services wire fraud, extortion under color of official right and money laundering.

Sentencing is set before U. S. District Judge David C. Bury on Aug. 19, 2013.

"Former Congressman Renzi’s streak of criminal activity was a betrayal of the public trust and abuse of the political process," said Acting Assistant Attorney General Raman. "After years of misconduct as a businessman, political candidate and member of Congress, Mr. Renzi now faces the consequences for breaking the laws that he took an oath to support and defend."

"Our democracy is undermined whenever our elected officials misuse the power entrusted to them by the voters to serve their own private interests rather than in the service of the public interest," said U.S. Attorney Leonardo. "The jury’s verdict reinforces the fundamental principle that our society is governed by the rule of law, and that no citizen, including the most influential and powerful among us, is above the law."

"Today's conviction is a culmination of the investigative efforts of the FBI and IRS-Criminal Investigation over a period of several years," said FBI Special Agent in Charge Price. "Public corruption is one of the top criminal priorities of the FBI, and it is imperative that elected public officials be held accountable to uphold the public's trust. The FBI remains committed to this criminal priority in combating public corruption at all levels."

According to evidence at trial, Renzi, then a member of Congress from Arizona’s 1st Congressional District, promised in 2005 to use his legislative influence to profit from a federal land exchange that involved property owned by Sandlin, a real-estate investor.

At the time, Sandlin owed Renzi $700,000 in future payments from their business dealings, and Renzi threatened a proponent of the land exchange that he would not support it unless they purchased Sandlin’s property in Cochise County, Ariz. When that individual refused, Renzi promised a second proponent of a land exchange that he would support the exchange if they purchased Sandlin’s property. According to an agreement reached in May 2005, Sandlin was paid $1 million in earnest money, out of which he paid $200,000 to Renzi. Just before Sandlin received the $1.6 million balance owed on the exchange, he paid an additional $533,000 to Renzi.

Evidence at trial further showed that from 2001 to 2003, Renzi engaged in insurance fraud by diverting his clients’ insurance premiums to fund his first campaign for Congress, and he provided false statements to various state regulators who were investigating his activities.

Renzi was indicted in February 2008, and in October 2008, Renzi moved to dismiss the indictment under his rights as a member of Congress under the Speech or Debate Clause. The court denied his motion in February 2010, and Renzi pursued an interlocutory appeal. After Renzi’s appeal was unsuccessful, trial was set for May 2013.

Honest services wire fraud, extortion under color of official right, concealment money laundering and racketeering each carry maximum penalties of 20 years in prison. Conspiracy carries a maximum penalty of five years in prison, and making false statements to insurance regulators and transactional money laundering each carry maximum penalties of 10 years in prison.

This case was investigated by the FBI and the Internal Revenue Service – Criminal Investigation. The prosecution was handled by Trial Attorneys David Harbach and Sean Mulryne of the Department of Justice’s Public Integrity Section and Assistant U.S. Attorneys Gary Restaino and James Knapp of the District of Arizona.

GRAND JURY INDICTES THREE INDIVIDUALS IN VETERANS ADMINISTRATION MORTGAGE REPAIR AND RESALE FRAUD CASE

The following excerpt is from the Department of Justice website:

January 17, 2012
“WASHINGTON — A Rockford, Ill., grand jury indicted a former residential sales manager and two former contractors of a Florida property management company in connection with housing repair contracts for the U.S. Department of Veterans Affairs (VA), the Department of Justice announced.

The 10-count indictment filed today in U.S. District Court in Rockford charged Ryan J. Piana, Ronald B. Hurst and Bryant A. Carbonell with conspiring to commit bribery and wire fraud from beginning at least as early as January 2006 continuing until as late as September 2007. Piana, Hurst and Carbonell are also charged with bribery and wire fraud.

Piana is a former residential sales manager at West Palm Beach, Fla.-based Ocwen Loan Servicing LLC, and Hurst and Carbonell are former contractors for Ocwen. According to court documents, Ocwen managed foreclosed properties under contract with the VA, which guaranteed qualifying residential mortgages for veterans. Under the contract between the VA and Ocwen, if a veteran defaulted, Ocwen completed necessary repairs and re-sold the property.

Proceeds from the re-sale of VA-acquired properties directly benefit the VA by reducing the cost of guaranteeing residential mortgages to veterans.

According to the charges, Hurst and Carbonell paid Piana to steer housing repair work to companies affiliated with Hurst and Carbonell. Piana recruited other Ocwen employees into the scheme and paid them on behalf of himself and the other conspirators. The department said in order to execute the scheme, the conspirators sent, or caused to be sent, various transmissions via wire communication.

This is the second case involving properties managed by Ocwen under contract with the VA. On Dec. 3, 2010, Benjamin K. Graves, also a former Ocwen employee, pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with the VA contract.

The wire fraud charges carry a maximum penalty of 20 years in prison; the bribery charges carry a maximum penalty of 15 years in prison; and the conspiracy charge carries a maximum penalty of five years in prison. The maximum fine for each charge is $250,000. For wire fraud and conspiracy, the maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. For bribery, the maximum fine may be increased to three times the value of the bribes, if that amount is greater than the statutory maximum fine.”