MAN PLEADS GUILTY FOR ROLE IN $53 MILLION TAX SCHEME THAT INVOLVED BRIBING BANK OFFICIALS

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, December 23, 2014

Kentucky Businessman Pleads Guilty in Manhattan Federal Court to $53 Million Tax Scheme and Massive Fraud That Involved the Bribery of Bank Officials
U.S. Attorney Preet Bharara for the Southern District of New York and Deputy Assistant Attorney General David A. Hubbert for the Tax Division of the Department of Justice announced that Wilbur Anthony Huff, a Kentucky businessman, pleaded guilty today in Manhattan federal court to various tax crimes that caused more than $50 million in losses to the Internal Revenue Service (IRS), and a massive fraud that involved the bribery of bank officials, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators.  Huff pleaded guilty this afternoon before U.S. District Judge Naomi Reice Buchwald.

“Today’s guilty plea ensures that Wilbur Huff will be punished for perpetuating a vortex of fraud – complete with bribery, tax crimes that caused $53 million in losses to the IRS, the fraudulent purchase of a company, and the defrauding of insurance regulators,” said U.S. Attorney Bharara.  “Those who might be tempted to follow in Huff’s criminal footsteps should understand that this office and our law enforcement partners will aggressively pursue and root out fraud wherever we find it.”

Huff, 53, of Caneyville and Louisville, Kentucky, pleaded guilty to one count of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, which carries a maximum penalty of three years in prison, one count of aiding and assisting with the preparation and presentation of false and fraudulent tax returns, which carries a maximum penalty of three years in prison, one count of failing and causing the failure to pay taxes to the IRS, which carries a maximum penalty of one year in prison, and one count of conspiracy to (a) commit bank bribery, (b) commit fraud on bank regulators and the board and shareholders of a publicly-traded company, and (c) fraudulently purchase an Oklahoma insurance company, which carries a maximum penalty of five years in prison.  He is scheduled to be sentenced by Judge Buchwald on April 8, 2015, at 2:30 p.m. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  As part of his plea, Huff also agreed to forfeit $10.8 million to the United States and to provide restitution in the following amounts to victims of his crimes: $70,100,000 to the Receiver for Park Avenue Property and Casualty Insurance Company; $4,857,266.62 to the Federal Deposit Insurance Corporation (FDIC); $597,420.29 to Valley National Bank (the successor of Park Avenue Bank); and $53,094,219 to the IRS.

According to the information, plea agreement, and statements made during court proceedings:

Background

Huff was a businessman who controlled numerous entities located throughout the United States (Huff-controlled entities).  Huff controlled the companies and their finances, using them to orchestrate a $53 million fraud on the IRS as well as other illegal schemes.  However, rather than exercise control of these companies openly, Huff concealed his control by installing other individuals to oversee the companies’ day-to-day functions and to serve as the companies’ titular owners, directors or officers.  Huff also maintained a corrupt relationship with Park Avenue Bank and its executives, Charles J. Antonucci Sr., the president and chief executive officer, and Matthew L. Morris, the senior vice president.

Tax Crimes

From 2008 to 2010, Huff controlled O2HR, a professional employer organization (PEO) located in Tampa, Florida.  Like other PEOs, O2HR was paid to manage the payroll, tax, and workers’ compensation insurance obligations of its client companies.  However, instead of paying $53 million in taxes that O2HR’s clients owed the IRS, and instead of paying $5 million to Providence Property and Casualty Insurance Company (Providence P&C) – an Oklahoma-based insurance company – for workers’ compensation coverage expenses for O2HR clients, HUFF stole the money that his client companies had paid O2HR for those purposes.  Among other things, Huff diverted millions of dollars from O2HR to fund his investments in unrelated business ventures, and to pay his family members’ personal expenses.  The expenses included mortgages on Huff’s homes, rent payments for his children’s apartments, staff and equipment for Huff’s farm, designer clothing, jewelry, and luxury cars.

Conspiracy to Commit Bank Bribery, Defraud Bank Regulators, and Fraudulently Purchase an Oklahoma Insurance Company

From 2007 up to and including 2010, HUFF engaged in a massive multi-faceted conspiracy, in which he schemed to (i) bribe executives of Park Avenue Bank, (ii) defraud bank regulators and the board and shareholders of a publicly-traded company and (iii) fraudulently purchase an Oklahoma insurance company.  As described in more detail below, Huff paid bribes totaling hundreds of thousands of dollars in cash and other items to Morris and Antonucci, in exchange for their favorable treatment at Park Avenue Bank.

As part of the corrupt relationship between Huff and the bank executives, Huff, Morris, Antonucci, and others conspired to defraud various entities and regulators during the relevant time period.  Specifically, Huff conspired with Morris and Antonucci to falsely bolster Park Avenue Bank’s capital, by orchestrating a series of fraudulent transactions to make it appear that Park Avenue Bank had received an outside infusion of $6.5 million, and engaged in a series of further fraudulent actions to conceal from bank regulators the true source of the funds.

Huff further conspired with Morris, Antonucci, and others to defraud Oklahoma insurance regulators and others by making material misrepresentations and omissions regarding the source of $37.5 million used to purchase Providence Property and Casualty Insurance Company, an Oklahoma insurance company that provided workers’ compensation insurance for O2HR’s clients, and to whom O2HR owed a significant debt.

Bribery of Park Avenue Bank Executives

From 2007 to 2009, Huff paid Morris and Antonucci at least $400,000 in exchange for which they: (1) provided Huff with fraudulent letters of credit obligating Park Avenue Bank to pay an investor in one of Huff’s businesses $1.75 million if Huff failed to pay the investor back himself; (2) allowed the Huff-controlled entities to accrue $9 million in overdrafts; (3) facilitated intra-bank transfers in furtherance of Huff’s frauds; and (4) fraudulently caused Park Avenue Bank to issue at least $4.5 million in loans to the Huff-controlled entities.

Fraud on Bank Regulators and a Publicly-Traded Company

From 2008 to 2009, Huff, Morris, and Antonucci engaged in a scheme to prevent Park Avenue Bank from being designated as “undercapitalized” by regulators – a designation that would prohibit the bank from engaging in certain types of banking transactions, and that would subject the bank to a range of potential enforcement actions by regulators.  Specifically, they engaged in a series of deceptive, “round-trip” financial transactions to make it appear that Antonucci had infused the bank with $6.5 million in new capital when, in actuality, the $6.5 million was part of the bank’s pre-existing capital.  Huff, Morris, and Antonucci funneled the $6.5 million from the bank through accounts controlled by Huff to Antonucci.  This was done to make it appear as though Antonucci was helping to stabilize the bank’s capitalization problem, so the bank could continue engaging in certain banking transactions that it would otherwise have been prohibited from doing, and to put the bank in a better posture to receive $11 million from the Troubled Asset Relief Program.  To conceal their unlawful financial maneuvering, Huff created, or directed the creation of, documents falsely suggesting that Antonucci had earned the $6.5 million through a bogus transaction involving another company Antonucci owned.  Huff, Morris, and Antonucci further concealed their scheme by stealing $2.3 million from General Employment Enterprises Inc., a publicly-traded temporary staffing company, in order to pay Park Avenue Bank back for monies used in connection with the $6.5 million transaction.

Fraud on Insurance Regulators and the Investment Firm

From July 2008 to November 2009, Huff, Morris, Antonucci, and Allen Reichman, an executive at an investment bank and financial services company headquartered in New York, New York (the “investment firm”), conspired to (i) defraud Oklahoma insurance regulators into allowing Antonucci to purchase the assets of Providence P&C – the Oklahoma insurance company that was owed $5 million by O2HR and (ii) defraud the investment firm into providing a $30 million loan to finance the purchase.  Specifically, HUFF and Antonucci devised a scheme in which Antonucci would purchase Providence P&C’s assets by obtaining a $30 million loan from the Investment Firm, which used Providence P&C’s own assets as collateral for the loan.  However, because Oklahoma insurance regulators had to approve any sale of Providence P&C, and because Oklahoma law forbade the use of Providence P&C’s assets as collateral for such a loan, Huff, Morris, Antonucci, and Reichman made, and conspired to make, a number of material misstatements and material omissions to the investment firm and Oklahoma insurance regulators concerning the true nature of the financing for Antonucci’s purchase of Providence P&C.  Among other things, Reichman directed Antonucci to sign a letter that provided false information regarding the collateral that would be used for the loan, and Huff, Morris, and Antonucci conspired to falsely represent to Oklahoma insurance regulators that Park Avenue Bank – not the investment firm – was funding the purchase of Providence P&C.

After deceiving Oklahoma regulators into approving the sale of Providence P&C, Huff took $4 million of the company’s assets, which he used to continue the scheme to defraud O2HR’s clients.  Ultimately, in November 2009, the insurance company became insolvent and was placed in receivership after Huff, Morris, and Antonucci had pilfered its remaining assets.

*                *                *

Charles Antonucci, who was charged separately by complaint on March 15, 2010, pleaded guilty to his role in the crimes described above on Oct. 8, 2010.  Matthew L. Morris and Allen Reichman were charged by Indictment with Huff on Oct. 1, 2012.  Morris pleaded guilty in connection with the case on Oct.17.

Reichman is currently scheduled to go to trial March 2, 2015 before Judge Buchwald.  The charges against Reichman are allegations and he is presumed innocent unless and until proven guilty beyond a reasonable doubt.

U.S. Attorney Bharara praised the investigative work of the Special Inspector General for the Troubled Asset Relief Program, the FBI, the IRS, the New York State Department of Financial Services, Immigration and Customs Enforcement (ICE)’s Homeland Security Investigations (HSI), and the Office of Inspector General of the FDIC.  Mr. Bharara also thanked the Department of Justice’s Tax Division and the U.S. Attorney’s Office for the Southern District of Florida for their assistance.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Janis Echenberg and Daniel Tehrani and Special Assistant U.S. Attorney Tino Lisella are in charge of the criminal case.

MAN WHO ATTEMPTED TO PURCHASE 100 STOLEN IDENTITIES SENTENCED TO 27 MONTHS IN PRISON

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, October 1, 2014

Florida Man Sentenced to 27 Months in Prison for Attempting to Purchase 100 Stolen Identities

A Florida man was sentenced today to serve 27 months in prison for attempting to purchase sensitive, detailed personal identifying information, known as PII – including Social Security numbers and bank account numbers – to open credit card accounts and file fraudulent tax returns.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney John P. Kacavas of the District of New Hampshire made the announcement.  U.S. District Judge Steven J. McAuliffe of the District of New Hampshire imposed the sentence.            

Derric Theoc, 36, was indicted by a federal grand jury in July 2013 and pleaded guilty in June 2014 to one count of attempted access device fraud.  In addition to his prison sentence, he was ordered to serve two years of supervised release.

In his guilty plea, Theoc admitted that, in April 2013, he attempted to purchase packages of personal identifying information for 100 people from an undercover United States Secret Service agent who was posing as a known, prolific vendor of personally identifiable information, Hieu Minh Ngo.  Theoc had previously made multiple similar purchases from Ngo.

Ngo, a Vietnamese national, pleaded guilty on March 3, 2013, to wire fraud, identification fraud and fraud in connection with access devices and on Aug. 21, 2014, to a separate indictment to four counts of computer fraud.  Sentencing is scheduled for Dec. 1, 2014.  According to court documents, Ngo administered websites from 2007 through February 2013 that allowed more than 1,000 individuals from throughout the world to access databases containing personal identifying information and conduct more than 3 million queries to obtain a person’s date of birth, Social Security number and other information.  He also sold or transferred more than 150,000 packages of personally identifiable information that would allow criminals to take over the identity of another person.

The packages of personal identifying information that Theoc attempted to purchase typically included a person’s name, address, date of birth, Social Security number, mother’s maiden name, driver’s license number, bank account number, bank routing number, email account, account password and place of work.  Theoc further admitted that he attempted to purchase the information with the intent to obtain credit cards to make purchases or withdraw money and to file fraudulent tax returns in an effort to receive refunds to which he was not entitled.

The case is being investigated by the United States Secret Service.  The case is being prosecuted by Senior Counsel Mysti Degani of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Arnold H. Huftalen of the District of New Hampshire.

6 PLEAD GUILTY TO STEALING THE IDENTITIES OF DEAD PEOPLE

The following excerpt is from the Department of Justice website:
Tuesday, March 13, 2012
Six Plead Guilty in Ohio to Tax and Mail Fraud Conspiracies Involving I.D. Theft of Deceased
Muaad Salem, Hanan Widdi, Najeh Widdi, Hazem Woodi, Daxesj Patel and Fahim Suleiman each entered guilty pleas before the Honorable James S. Gwin today to charges arising from a scheme to obtain false and fraudulent U.S. Treasury tax refund checks, the Justice Department, the U.S. Attorney’s Office for the Northern District of Ohio and the Internal Revenue Service (IRS) announced.   Specifically, Salem, Najeh Widdi and Woodi entered guilty pleas to conspiracy to defraud the United States, conspiracy to commit mail fraud and mail fraud; Hanan Widdi entered a guilty plea to conspiracy to defraud the United States and conspiracy to commit mail fraud; Patel entered a guilty plea to two counts of submitting false claims and one count of false statements; and Suleiman entered a guilty plea to conspiracy to defraud the United States, conspiracy to commit mail fraud; mail fraud and aggravated identity theft.

According to the indictment, between April 15, 2009 to at least August 2011, Salem, Suleiman, Najeh Widdi, Hanan Widdi, Woodi, Patel and other unknown co-conspirators defrauded the United States by filing false and fraudulent tax returns, many in the names of recently deceased taxpayers, and directing refunds to controlled locations in the state of Florida.   The U.S. Treasury checks generated by the false and fraudulent returns were then sent by the U.S. mail to co-conspirators in Ohio who sold and distributed the checks for negotiation at various businesses and banking institutions.   As part of their plea agreements, the defendants admitted that the fraud loss caused by their conduct was between $1 and 2.5 million and that the offenses involved more than ten victims.

Sentencing is scheduled on May 29, 2012, for Najeh Widdi and Patel; on May 30, 2012, for Hanan Widdi and Woodi; and on June 1, 2012, for Salem and Suleiman.   Mail fraud is punishable by a maximum potential sentence of 20 years in prison; conspiracy to defraud the United States is punishable by a maximum potential sentence of 10 years; conspiracy to commit mail fraud, making a false claim against the United States and making a false statement are each punishable by a maximum potential sentence of five years in prison; aggravated identity theft is punishable by a mandatory minimum prison sentence of two years to follow conviction on any other offense.   All of the above sentences are also punishable by a fine of $250,000 for each count of conviction.

The case was prosecuted by Assistant U.S. Attorney Gary D. Arbeznik of the Northern District of Ohio and Trial Attorney Jessica W. Knight of the Justice Department’s Tax Division following investigation by the Cleveland Division of the Federal Bureau of Investigation, the IRS-Criminal Investigation, and the United States Postal Service.