Copyright held by The John Cooke Fraud Report. Reprint rights are granted with attribution to The John Cooke Fraud Report with a link to this website.
ARKANSAS
An attorney is going Whitewater rafting – straight down the river to prison. Eugene Fitzhugh pleaded guilty to charges of trying to bribe a Little Rock investment banker to make an illegal loan. Fitzhugh participated in the scheme with two other men, both of whom have already been sentenced. The total of fraudulent transactions involved is more than $300,000. And, yup, this is the same Whitewater affair that Bill and Hill have been questioned about.
CALIFORNIA
Hey, man, like good drugs! At least that’s what authorities suspect was behind the misdeeds of Raymond Saydah of Sunland. Police had been searching for a northeast Valley graffiti tagger known as “Fat Rat” or “Skex” whose paintings have caused tens of thousands of dollars worth of damage over the past three years. But when they entered Saydeh’s apartment on a search warrant, they got quite a bonus: stolen mail and evidence of an extensive fraudulent credit card operation. Saydeh used information contained in the stolen mail (ie. social security numbers and drivers license numbers) to obtain credit cards in victims’ names, and he used the address of a vacant apartment next door to his own to receive mail. When the cards arrived, he’d use them to order catalog merchandise from Neiman-Marcus, Macy’s, Saks Fifth Avenue and other stores, then re-sell the merchandise as soon as it was delivered. Saydeh’s girlfriend, Christina Kay of Sherman Oaks, was arrested on suspicion of receiving stolen property.
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Ponzi, Ponzi, who’s got the Ponzi? Upon the collapse of a scheme that is alleged to have cost investors over $26 million, Charles Herpick was caught holding the hot potato. After Herpick was ordered to pay restitution of $26,036,127.84 to the victims of the scheme, prosecutors also recommended that he receive a 46-month prison term at his sentencing on January 27. Herpick, the former president of San Jose-based Century Loan Corp., is accused of soliciting friends, pension fund managers and others to invest in the second mortgage market and securing the deals with false loan documents he created by cutting and pasting portions of actual deeds of trust taken from public records. When the scheme was uncovered, Herpick and his son James fled to the Philippines but were returned to the US after being tracked down. The younger Herpick pleaded guilty to participating in the scheme. Century Loan official Richard Bauer is also being tried on related charges.
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The biggest loser is Chemical Bank, holding $24 million in defaulted bank loans from investment manager Christopher K. Bagdasarian of Montecito. Bagdasarian pleaded guilty to securities fraud, bank fraud and perjury and faces a theoretical maximum prison sentence of 165 years plus millions of dollars in restitution and fines. Loans were granted based on the overstated values of Bagdasarian’s securities portfolio. Unfortunately for Chemical, however, the numbers had been stretched by Samuel L. White, Bagdasarian’s accountant, and the portfolio’s net worth was a mere fraction of the stated amount.
FLORIDA
Criminals are using acid for far more than washing their swimming pools. A popular scam, recently on the increase in the Sunshine State and elsewhere, involves stealing a check (usually from a mailbox) and then using chemicals to remove all of the ink except the signature line so that the check can be used again. Police recently arrested Jose Santana of Orlando as he left a SunTrust Bank after trying to cash one of the altered checks.
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It was easier from the inside. American Express employee Joan Ojomo of Plantation is accused of taking part in what’s described by authorities as an international Nigerian fraud ring. She is charged with using her position as a credit analyst to obtain personal account information – and then using that information to help create counterfeit cards and obtain new credit cards. Ojomo is one of many people arrested or sought after a 43-count indictment was issued. The bogus cards were used to withdraw cash from ATMs throughout the US, in Canada and in England. At least $1.25 million was taken from London ATMs. Four people were arrested in London under Section Seven of the Forgery and Counterfeiting Act, and 28 others were rounded up in cities throughout the US. Other American banks hit in the scam include First Union Bank, 1st American Bank and Corestates Bank.
GEORGIA
A dozen bank employees were among the 18 members of a credit fraud ring who recently pleaded guilty to obtaining almost $250,000 in cash advances from stolen credit cards. The cards, which were stolen from the mail by airline employees at Hartsfield International Airport, were used to obtain cash advances in New Orleans and Atlanta. All 18 ring members pleaded guilty to possessing stolen mail, bank fraud and trafficking in stolen credit cards. Sentences ranged from restitution to 18 months in jail. The alleged ringleader, Corey Dion Carter of Marietta, pleaded guilty but failed to show for sentencing.
INDIANA
June 12 – Steven W. Asbery enters the Huntington National Bank branch in Plainfield. He opens a savings account using a $350 personal check written to him by Deana R. Miller of Greencastle on her account at First National Bank of Cloverdale. He withdraws $50 in cash. June 13 – Asbery deposits another $350 check signed by Miller and withdraws $200 in cash. Later he deposits a $600 check, withdrawing $300 in cash. June 17th – Same game; deposited $350 and took $200 in cash and deposited $450 and took $300 in cash. The game went on until June 26, when the Cloverdale bank returned the checks “account closed.” HNB lost over $2,000 in the scam. Multiple felony charges have been filed against the pair, who said they did it because they “needed the money to buy a car and to pay bills.”
LOUISIANA
Along with the usual educational offerings, LaSalle University recently gave its students a lesson in the real world. The university’s leader, Thomas Kirk, pleaded guilty to defrauding students of millions of dollars by misleading them about the school’s accreditation. Additionally, he pleaded guilty to using the school’s parent corporation, the World Christian Church, to avoid paying personal income taxes.
LaSalle, founded in 1989, offers degrees by mail. Under the plea agreement, Kirk will forfeit $10.75 million in cash and his $1.5 million house. Two other university officers will also plead guilty to concealing a felony and tax evasion. In addition, the school must cease claiming it is accredited by the Council on Post-Secondary Christian Education, although it is otherwise allowed to continue operations unchanged.
MARYLAND
A former executive director of the American Hellenic Educational Progressive Association, Constantine Gekas of Adamstown, has been sentenced to 30 months in prison for participating in a $1 million fraud scheme. Charged along with Wanagan Hairabedian, the chief in-house accountant for the association, Gekas was accused of embezzlement and misapplication of association funds. The men were found to have obtained lines of credit, a loan and credit cards by using association assets for security. Funds were then diverted to their personal accounts. Hairabedian has pled guilty and will be sentenced early next year.
MASSACHUSETTS
Catch a crooked banker, put him in your pocket, save him for a rainy day… It looks like that’s just what Robert Mathieu, a Westboro real estate developer, did when he conspired with former Wainright Bank and Trust official Thomos Zocco of Shrewsbury. Mathieu has pled guilty to charges of bank fraud and making false statements to officials in connection with obtaining a $100,000 property loan and a $300,000 construction loan. Zocco has pled guilty to charges of bank fraud, misapplication of bank funds, conspiracy to commit bank bribery and making false entry into company records. Mathieu finds out the prison price tag when he’s sentenced in January; Zocco gets his prison price quote in April.
MICHIGAN
Hudsonville is a small town located midway between Grand Rapids and the Lake Michigan shoreline town of Holland. Bittu Singh Multani split his time between working at a local gas station and … writing bogus checks as part of a Chicago-based group with operators in six states. The scheme involved opening checking accounts at many area banks and then kiting checks back and forth between banks in the different states. Soon, a significant withdrawal would be made before the bank discovered the plot. Old Kent Bank & Trust lost $65,000 and First Michigan Bank of Holland lost $25,000. Another $200,000 was lost by banks in Illinois and Indiana. Banks in Washington and California were also hit. Multani used a variety of identities in the bank plot – but only one of him is heading to prison to serve the three-year sentence imposed by a US District judge.
MONTANA
Former Norwest Bank underwriter Connie H. Dunn has been indicted on bank fraud. The charges stem from an alleged scam involving $2 million in car loans granted through a Longmont Honda dealership. The indictment contains allegations of false statements and false computer entries on more than 100 auto loan applications, many of which later went into default. In order to make sure the loans were approved, the applicant’s income was often inflated.
NEBRASKA
Louis Polak-Rudich has learned that the old adage about not blaming a man for trying does not hold true when it comes to attempting to defraud Home Federal Savings and Loan or First Federal Lincoln. Polak-Rudich is off to prison for fraudulent use of a Social Security number after he used fake numbers to open a series of accounts at the banks late in 1995. Apprehended before he got away with any cash, Polak-Rudich was indeed blamed for trying.
NEW JERSEY
Suburban National Bank, founded in the late 80s, is now defunct. Part of the failure may be due to the acts of the man who was the bank’s president. Joseph Sullivan, the former mayor of Hillsborough, pleaded guilty to two charges of bank fraud and to participation in a plot that cost the bank $1.3 million. Sullivan admitted to making loans to partnerships in which he had an undisclosed interest and to making loans to people who intended to direct the money to partnerships in which he had a disclosed interest. He faces a prison sentence of up to 20 years, a multi-million dollar fine and restitution when he is sentenced on February 3.
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No pity for 56-year-old William Johnson of Hackensack. Johnson attempted to use a stolen bank card to withdraw cash at the Hashbrouck Heights branch of the Bergen Commercial Bank. The amount he wanted exceeded the card’s limit, prompting a check of the records. The police were called and arrested Johnson, charging him with attempted theft by deception and possession of stolen credit cards.
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Wow, what school did this guy go to? Patrick Gawrysiak of Hackensack got a special 26th birthday present that few guys his age have ever managed to get. It was an indictment on charges of mail, wire, insurance and bank fraud. Posing as an extremely successful entrepreneur, Gawrysiak (AKA Patrick Gray) swindled at least nine investors out of $750,000. The house of cards fell down when the scamster tried to buy a Texas insurance company with bogus bonds supposedly issued by The Penske Group. An alert Texas state official discovered that no such group existed and notified the federal authorities. Gawrysiak faces up to 30 years in federal prison if he’s convicted.
NEW YORK
Authorities in Western New York say a group of college students was among 20 people convicted of ripping off area banks for more than $120,000. Maybe it was just a novel way to pay off their student loans.
The scam, which ran for several years, called for bank customers to hand over their bank cards to the crooks – along with the corresponding personal identification numbers – in exchange for a cash payment of $200 to $500. After waiting a few days, the customer would file a false report claiming the card had been stolen. In the interim, the crooks would deposit thousands of dollars in bad checks to the account and withdraw the money before the bank was aware of any problem. The take was usually around $2,000 per bank card.
The real victims in the scheme were the banks that were hit:
Fleet, Key, Marine Midland and M&T.
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Anthony David, AKA Michael Albert David, couldn’t catch a break. First, tellers at Union National Bank, Sumeytown Pike, refused to let him have a $2,800 advance on a stolen credit card. Then, after he was arrested when he tried to leave town, several bank employees identified him as the crook. He was jailed on $75,000 bail.
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What a scam! A ten-million-dollar scam! It began with stolen credit cards, often obtained by filing fake change-of-address requests with the post office. Then the thieves would obtain social security numbers by pulling credit reports on the victims. Once they had the SSNs, they bribed employees at the Social Security Administration to look up the victim’s dates of birth and their mother’s maiden names, information they’d use to activate the cards. Then it was charge, charge, charge. The investigation was launched by the SSA when Citibank alerted the agency to a dramatic increase in credit card fraud and the plot slowly unraveled. In all, 20 people have been charged: ten Social Security employees, nine people accused of stealing the credit cards and one security guard. (…and a partridge in a pear tree.)
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The feds got their men. Two former officials of Jefferson National Bank were found guilty by a federal jury of conspiracy, bank fraud and bank bribery. Harry S. Park, former president and chairman of the bank and Thomas Swartz, formerly a director of and attorney for the bank will be sentenced in January. A 1996 indictment accused Pack of accepting $332,900 in kickbacks for placing the bank’s legal business and for smiling sweetly when it came to granting loans to Swartz and businesses he was involved in. Defaults on some of the loans were blamed as part of the reason the bank collapsed. Prison sentences for the men are mandatory and the fines could reach up into the millions.
OHIO
Attorney David Bart was the last of seven Ohio defendants sentenced in a $28 million loan/tax fraud scheme that stretched all the way to Texas. He was given 90 days of home confinement and ordered to pay $10,000 in fines. The scam consisted of loans taken out to finance shaky investments that paid high interest to initial investors but eventually lost $100 million. The IRS developed an interest in the case when some defendants failed to report all of their income from the scheme. Others already sentenced included Arthur F. Millonig and William H. Seall both of Dayton, Richard D. Tipton and L. Keith Brunner, both of Centerville, John C. Brauer of Cincinnati, and David A. Shafer of Springboro. Texas participants were sentenced there.
OKLAHOMA
Police arrested a 19-year-old woman, Yaisa J. Jones, with more than five fake identification documents, for credit card fraud and for attempting to obtain a driver’s license in a name other than her own. Two women arrested at the same time told authorities that they had been recruited by Jones, known as “Creamy,” to participate in a “million-dollar business” of credit card fraud. If convicted, Jones faces up to 15 years in prison.
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Dat Xuong Vong walked into the Boatman’s First National Bank of Oklahoma and opened an account, allegedly with false information. If the FBI is correct, the account he opened may have been scheduled to receive some pretty hefty deposits and withdrawals. Vong was accused in a federal complaint along with Cuong Huy Nguyen and An Truong. Nguyen and Truong were charged with possessing counterfeit checks – those found in the car the three men were riding in totaled $53,480. Truong was arrested after trying to cash a bogus check at a branch of the Bank of Oklahoma, and Nguyen is believed to have cashed at least nine of the checks. There were at least 50 counterfeit checks discovered, all carrying real business names and account numbers.
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Somebody wasn’t paying close enough attention to the ticket counter. Ronald David Geurin, an Oklahoma City travel agent, managed to squeeze over $100,000 from a ticket account and convert it for personal purposes. Geurin was named in a 13-count indictment filed in US District Court that included charges for swindling, money laundering and credit card fraud. He’s accused of submitting false airline ticket sales figures to the Airline Reporting Corp, the clearing house for inter-airline fund exchanges.
OREGON
It was wrong when she did it the first time, but it hardly stopped her. It happened a total of 73 times before she was arrested and stopped. Ronda R. Nichols of Gorham was a home health care worker sent to care for an elderly Portland resident, 84-year-old Clara Maynard. Unfortunately, it appears that Nichols cared for the old lady’s checkbook more than she cared for the old lady. Over a 13-month period, Nichols withdrew $59,264 by writing checks on the octogenarian’s account at Peoples Heritage Bank. Nichols has been sentenced to a 21-month federal prison sentence and full restitution.
SOUTH CAROLINA
“Hi, sweetie, would you believe that I’m sitting here absolutely naked and…” Federal prosecutors are trying to wrap up a credit card fraud investigation that involves former congressional candidate, Van Hipp. Their two star witnesses are Steven Rosen of Pennsylvania and Ann Denise Huffman of Mount Pleasant, both recently convicted on charges associated with a telephone sex business they operated. Hipp is accused of illegally recruiting outside companies to help process almost $9 million in credit card charges over several years and of laundering money while he worked as a lawyer for the phone sex company.
TEXAS
Larry A. Thomas Sr. siphoned the heiress’s inheritance like a teenage hoodlum might siphon a gas tank. Thomas and his wife, Darlene, took only nine months to empty out the heiress’s tank of money. He did it by convincing her that the IRS was investigating her family as possible organized crime participants and that a hit man had been hired to kill her. He made her home into a fortress and began moving her money around, from account to account, to protect it for her. Soon, however, there was nothing left to protect. Search warrants have been executed and arrests are expected soon.
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There’s been more going on at the Dallas/Fort Worth airport than one might reasonably expect. Not only do planes fly in and out, mail tends to disappear and envelopes containing credit cards vanish into the air just like the planes. Tyrone Edwards has recently been arrested in conjunction with a rash of mail thefts in 1992 and is being questioned in connection with another series of missing mail this summer. A task force of US Secret Service agents, postal inspectors and D/FW Airport Department of Public Safety officers began working the case in July. Edwards, who’s pled not guilty, goes to trial in December.
VIRGINIA
In 1992, Cleo J. Thornhill and his wife, Barbara Thornhill, were convicted of running a mortgage fraud scheme through their company, Eastern Mortgage Bankers Inc. Each was sentenced to 51 months in prison and ordered to pay $4 million in restitution. But even jail couldn’t keep Thornhill from running his scam.
With his associate Valerie Y. Holloman on the outside, Thornhill ran his new company, Southeastern Financial Services Inc, from his jail cell. Although the company was allegedly servicing mortgages for Prudential Home Mortgage Co., Thornhill and Holloman were siphoning off over $404,000 for their own use. Thornhill had Southeastern send fake monthly reports to Prudential to cover his actions. Prudential eventually got wind of the problem and had Southeastern’s assets frozen; but the ever-creative Thornhill, with the aid of Holloman, still managed to divert some of the funds. These actions earned criminal contempt charges for Thornhill and Holloman.
Thornhill has recently agreed to plead guilty to one count each of mail fraud and criminal contempt. His associate, Valerie Y. Holloman of Richmond, has been charged with two counts of criminal contempt.
WASHINGTON DC
Maryland National Bank can take pleasure in the fact that Steven M. Gouterman and Timothy C. Starinieri have been sentenced to prison after their bank fraud convictions. Gouterman and Starinieri were executives with Gouterman & Sheffey, a chain of jewelry stores that declared bankruptcy in 1991. Along with Jack Spitzer, a New York diamond dealer, the men falsely inflated the company’s inventory in order to obtain increases in a line of credit. Maryland National Bank lost an estimated $1.5 million in the deal.
CANADA
Samuelu was her name, phantom loans were her game. Cheryl K. Samuelu, a former loan officer for Columbia Credit Union in Vancouver, was charged by the Seattle US Attorney’s office with processing $120,000 worth of loans for phantom customers over a five-year period ending in 1992. The plot was discovered during an audit of delinquent loans. When copies of the files that Samuelu worked on were requested, they mysteriously came up missing. When they were recreated, each had similar characteristics: ie. invalid social security numbers, non-existent phone numbers, bad addresses, etc. Samuelu is heading for jail where she’ll try to figure out how to pay $104,198 in restitution to the credit union.
CZECH REPUBLIC
A group of 25 people, including former soldiers, former policemen, former prison guards and entrepreneurs, were detained by Czech police on charges that they defrauded ten banks between 1992 and 1994. They were accused of fraud causing major damages.
GREAT BRITAIN
British business consultant Peter Garnett insisted that an Armenian businessman had given him a 10 million-pound (that’s $17 million US) check drawn on the Bank of England as part of a property deal in Spain. The Armenian, described as having a number of gold teeth, had handed the check over to Garnett at King’s Cross station in London. When Garnett and his accountant wife Linda tried to deposit the check into their own Grantham – central England bank account, an astute banker decided to call the central bank to confirm that the 9.7 million pound check was good. Eyebrows had been raised at the exceedingly lavish lifestyle of the Garnetts – homes, cars, vacations – and it wasn’t until the phone call to the central bank that bank officers realized the check was unaccounted for. It was missing from a checkbook used to purchase certificates of deposit, and the two required signatures were expertly forged. The judge sent the couple packing on another vacation – this time to prison.
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In May, the City of London Police’s Financial Investigation Unit (FIU) was established to fight money laundering. Six months later they nabbed four Brits accused of trying to wash almost $1 million obtained from a US bank fraud. Leslie Goodwin of Lostwithiel, Cornwall, John Butler-Rees of Knightsbridge, central London, Anthony Adjei of north London and Jason Radak of Richmond upon Thames, Surrey, were accused of moving money first into the Midland Bank under the name of JRB Asset Management and on into the Bank of Austria in Vienna in the name of Refina Kredit Gas. The men were also charged with conspiracy to defraud NatWest Bank. Cooperating in the ongoing investigation are the Austrian police, the FBI and the FIU.
IRELAND
It’s difficult to decide if Michael S. Bentham was the crook or the victim. The story goes that Bentham owed money to a notorious Dublin criminal. A collector forced Bentham into depositing a forged bank draft for Stg88,000 into his personal account at AIB Bank and withdrawing an immediate 30,000, which was then turned over to the collector. The plan called for another 14,000 to be forwarded to a solicitor, supposedly as a deposit on a property sale – although it was truly intended as a cut for Bentham so he would not be left penniless. The bank caught the fraud before the 14,000 was released, however, and Bentham disappeared after leaving a suicide note in his car. Three years later he was arrested and jailed for three months in a South African “hell” prison before he was extradited on the charges. The judge, saying that Bentham was naive and had already lost everything, backdated the one-year sentence to reflect the time served in South Africa.
JAPAN
Hideki Nishiyama, the former acting manager of the Bank of Tokyo, which is now known as the Bank of Tokyo-Mitsubishi, has been sentenced to five years in prison for defrauding the bank of over one billion yen. Nishiyama opened an account under the name of a fictitious customer and then transferred money into the account over a period of five years. The judge in the case sentenced Nishiyama to five years instead of the seven-year sentence demanded by the prosecution – citing defects in the bank’s internal security that allowed the crime to remain undetected for so long.
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And then there’s the case of Toshiaki Washida, a former employee of Biwako Bank, who’s under investigation for allegedly using bogus remittance documents to defraud the bank of more than 3 billion yen over several years. The fraud was discovered after Washida resigned and the bank began checking documents. It was Washida’s job to oversee the clearing of interbank checks and bank remittances.
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