Atlanta Man Pleads Guilty to Obtaining $315,000 Through “Advance Fee” Wire Fraud Scheme

A 59-year-old Atlanta man, Kenneth Lane Milstead, has pled guilty to one count of wire fraud for obtaining $315,080.25 through an “advance fee” scheme in which he promised—but never made—loans to potential borrowers across the United States from 2005 to 2008, U.S. Attorney Ronald C. Machen Jr. and Shawn Henry, Assistant Director of the FBI’s Washington Field Office, announced today.

Milstead entered his guilty plea July 22 before the Honorable Rosemary M. Collyer, in the U.S. District Court for the District of Columbia. When he is sentenced on September 24, 2010, he faces up to 20 years of imprisonment under the statute, and a likely sentencing range of 37 to 46 months in prison under the sentencing guidelines. As part of his plea agreement, Milstead agreed to make restitution, and to forfeit a money judgment, in the amount of $315,080.25. According to the government’s evidence, as part of the scheme to defraud, Milstead portrayed himself, at different times, as three different non-existent top corporate executives:

* as “Franklin Lane,” CEO of Franklin Investments, in Atlanta.
* as “Lance Edwards,” CEO of Edwards Capital Group, in Washington D.C.
* as “Kenneth Martin,” Chairman of the Board of KLMEEI, in Boston.

The evidence showed that these companies were “shell companies,” which had actual websites and bank accounts, but only “virtual” offices, and corporate staff who did not exist. The evidence showed that Milstead would approach potential borrowers on line (on venture capital websites), and offer to make substantial loans (usually $1 million) to them, but first requiring that they send him “earnest money” (usually $10,000, and sometimes a second payment). In all, 28 victims—small businessmen/women—made 40 payments, but Milstead never sent any individual borrower any investment capital loan, and instead provided a series of excuses as to why the loan was delayed, and refused to return the “earnest money.”

As a further part of the scheme, Milstead convinced one person to work as the purported Secretary-Treasurer of Edwards Capital Group, and to then take various actions that (unknown to the person) furthered the scheme, including opening a bank account and four credit cards using the person’s personal information (date of birth, social security number), resulting in credit card expenditures more than $100,000 in furtherance of the scheme and charged against the person individually and the credit card companies.

In a search warrant at the time of arrest, of a storage facility connected with Milstead’s residence in Atlanta, the FBI recovered a file, meticulously organized, containing materials relevant to all of the fraudulent loan transactions by “Franklin Lane,” “Lance Edwards,” and “Kenneth Martin.”

In announcing the guilty plea, U.S. Attorney Machen praised the work of the FBI agents on the case. He also acknowledged the efforts of several U.S. Attorney’s Office support staff personnel—Paralegal Specialist Diane Hayes, Legal Assistant Jamasee Lucas, SEEP Student Sierra Tate, and former auditor Robert Jodoin—as well as Assistant U.S. Attorneys Diane Lucas, who assisted with the forfeiture aspect of the case, and Daniel Friedman, who is handling this prosecution.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

Augusta Financial Advisor Pleads Guilty to Stealing More Than $400,000 from Client

ALVIN CHARLES RAMSEY, 44, a financial advisor from Martinez, Georgia pleaded guilty before United States District Court Judge J. Randal Hall to defrauding a client out of more than $400,000.

United States Attorney Edward J. Tarver said, “The United States Attorney's Office will continue to aggressively prosecute those within the financial services industry who abuse the trust placed in them by stealing their clients’ money.”

Evidence presented during the guilty plea hearing revealed that Ramsey obtained a power of attorney over his client’s investments and then, without that client’s knowledge or permission, stole more than $400,000 out of her investments for his personal use.

Ramsey faces a maximum penalty of 20 years' imprisonment, a $250,000 fine, and three years of supervised release. He remains on bond pending his sentencing hearing, which has not yet been scheduled.

U.S. Attorney Tarver applauded the efforts of the FBI, and particularly FBI Special Agent Paul Kubala, in investigating this case.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

Emanuel County Couple Plead Guilty to Mortgage Fraud Scheme

BRIAN STEPTOE, 41, and NATASHA STEPTOE, 38, both from Emanuel County, Georgia, pleaded guilty today in federal district court to bank fraud and conspiracy to commit bank fraud, respectively.

“The U.S. Attorney’s Office will continue to work with law enforcement partners to investigate and prosecute those who engage in financial crimes,” stated United States Attorney Ed Tarver.

Evidence presented during their guilty pleas revealed that the Steptoes, with the assistance of others, knowingly submitted a false loan application and other documentation to Bank of America with regard to a $400,000 home loan. The investigation revealed that the Steptoes’ scheme was to defraud Bank of America in order to pocket sizeable sums of money for themselves and others. The property went into foreclosure soon after it was sold and remains on the market to this day.

BRIAN STEPTOE faces a maximum penalty of thirty (30) years' imprisonment, a $1,000,000 fine, and five (5) years' of supervised release. He is currently incarcerated and awaits sentencing. NATASHA STEPTOE faces a maximum penalty of five (5) years' imprisonment, a $250,000 fine, and three (3) years' of supervised release. She remains on bond pending her sentencing hearing, which has not yet been scheduled.

This case was brought in coordination with President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

U.S. Attorney Tarver recognized the extensive efforts of the FBI in bringing this criminal activity to light, and particularly praised the efforts of Statesboro FBI Special Agent Cornelius Harris, who investigated this case.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

Former Mortgage Broker Sentenced to 25 Years in Prison in Multiple Mortgage Fraud Schemes Worth $23 Million

EDWARD WILLIAM FARLEY, 47, of Hoschton, Georgia, was sentenced today by United States District Judge Timothy C. Batten, Sr. to serve 25 years in federal prison on charges of bank fraud and conspiracy involving mortgage fraud, a real estate investment “Ponzi” scheme with over 100 victims, a check-kiting scheme, and bankruptcy fraud. WALTER JULIUS HERMANN, 41, of Dunwoody, Georgia, was also sentenced by Judge Batten to serve over two years in federal prison on charge of bank fraud involving real estate appraisals he submitted in the FARLEY mortgage fraud scheme.

United States Attorney Sally Quillian Yates said, “Not only did these different mortgage fraud schemes cause the lenders to suffer cash losses of $23 million, they contributed to the losses that many homeowners and communities have experienced because of the blight of empty houses. Homeowners think someone new is moving in, their houses will keep their value, and their community is growing. But just the opposite happens. Flipped houses turn into eyesores and the neighborhood quickly suffers. This creative mortgage fraudster is now going to federal prison.”

Brian Lamkin, Special Agent in Charge, FBI Atlanta, said, “While justice is served in the sentencing of Mr. Farley and his associates to federal prison, over a hundred victims suffering large monetary losses remain. Mr. Farley’s greed was far reaching in that he crossed over into several schemes to defraud. The mortgage fraud scheme run by Mr. Farley relied on others to pull off the scam, but he relied on the complete and ill-placed trust of the victims in an aggressive real estate Ponzi scheme offering investors high rates of returns. The FBI is pleased in the role that it played in removing from society these few individuals that preyed on so many.”

FARLEY was sentenced to 25 years in prison to be followed by five years of supervised release, and ordered to pay restitution of $24,131,857. FARLEY pleaded guilty to these charges on November 5, 2009.

HERMANN was sentenced to two years and nine months in prison to be followed by five years of supervised release, and ordered to pay restitution of $2,023,077. HERMANN was also prohibited from requesting reinstatement of his appraiser’s license during his prison sentence or during his supervised release. HERMANN pleaded guilty to this charge on December 16, 2009. There is no parole in the federal system.

According to United States Attorney Yates, the charges and other information presented in court: FARLEY, a former mortgage broker, operated through “Creative Home Search,” “Southern Land Partners,” “Georgia Land Group,” and “Global Mortgage” in Dunwoody and Norcross, Georgia, to defraud mortgage lenders through same-day “flips” of properties located in Buford, College Park, Conyers, Cumming, Dacula, Grayson, Lawrenceville, Lithonia, Norcross, Marietta, Roswell, Snellville, and Suwanee.

FARLEY paid appraiser HERMANN to fraudulently inflate the value of each property by $50,000 to $100,000, and recruited often unqualified investor/borrowers to purchase them from one of his companies. The loan applications of these investor/borrowers were often supported by false income, employment, bank deposits, bank statements, W2’s and/or leases. However, as is common with “flips,” FARLEY did not purchase the properties he was selling to the investors/borrowers until after the fraudulently obtained loan proceeds on the “second” “subsequent” purchase had been disbursed. During the “first” purchase, he purchased the properties for up to $100,000 less than the amount of the inflated mortgage loans he had arranged for the investor/borrowers in the “second” purchase. As a result of the defendant’s lies and manipulations, the lenders lost millions of dollars in this flip scheme.

In a separate real estate investment/Ponzi scheme, FARLEY operated under the name “Alliance Resource Management” (“ARM”) in Lawrenceville, Georgia, to conceal his new source of income from prior victims. He falsely represented that ARM was in the business of purchasing primarily residential properties which were being renovated and sold at a profit, when in reality ARM had insufficient equity and income to do so. Real estate investors and lenders, including private investors, corporate lenders, and banks were induced to participate through FARLEY’s false promises that their investments and loans were fully secured by a first security position in property, plus a personal guarantee, and sometimes title insurance. FARLEY also provided promissory notes falsely promising those ARM lenders an interest rate between 14 percent to 60 percent. The same property was used to “fully secure” multiple investors and lenders, causing losses in excess of $20 million. As is common in such Ponzi schemes, FARLEY made repayments to early victims from scheme proceeds generated from newer investors and lenders.

FARLEY also fraudulently obtained $1.2 million from Washington Mutual Bank in a check kiting scheme by transferring funds he did not have among several ARM bank accounts, and withdrawing scheme proceeds before the “insufficient funds” checks were returned. He then used $400,000 in investor funds solicited for property refinance loans to address his check-kiting problem. The evidence also showed that FARLEY diverted assets of ARM to himself after a bankruptcy petition was filed, and concealed that diversion from the United States Bankruptcy Court and ARM creditors.

A co-defendant related to FARLEY’s Ponzi scheme, TRENT EDWARD WRIGHT, 38, of Cumming, Georgia, was a real estate closing attorney used by FARLEY in his scheme to issue title policies without paying off prior security holders. WRIGHT pleaded guilty to mail fraud on December 17, 2009, and was sentenced on March 12, 2010, by Judge Batten to serve one year and nine months in prison, to followed by three years supervised release, and ordered to pay restitution of $2,409,760.

These cases were investigated by special agents of the Federal Bureau of Investigation with the assistance of the Office of the United States Trustee.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

Four Sentenced to Lengthy Prison Terms for Their Roles in Drug Trafficking Ring

Brian Christopher HARRIS, 28, of Augusta; Marsignor Cornelius WHITE, 26, of Augusta; Derrick D. KING, 32, of Millegeville, Georgia; and Jaimere PROSSER, 27, of Newark, New Jersey, were sentenced this week by United States District Judge J. Randal Hall to serve prison terms of 14 years or more in federal prison on charges of drug trafficking.

United States Attorney Edward J. Tarver said, “These defendants directly participated in the distribution of significant quantities of cocaine throughout the Augusta area. These sentences demonstrate that those who distribute cocaine and other dangerous drugs in our communities will serve long prison sentences.”

HARRIS was sentenced to more than 14 years (175 months) in prison to be followed by five years of supervised release. WHITE was sentenced to more than 15 years (188 months) in prison to be followed by five years of supervised release. KING was sentenced to more than 18 years (220 months) in prison to be followed by five years of supervised release. PROSSER was sentenced to 25 years (300 months) in prison to be followed by eight years of supervised release.

United States Attorney Tarver noted that these sentences relate to a 14-month federal investigation of a cocaine trafficking ring in the East Augusta area including Augusta’s Dogwood Terrace Public Housing Community. During the investigation, government agents seized significant quantities of crack and powder cocaine, nine firearms and over $55,000 cash. The investigation was conducted by the FBI’s Safe Streets Task Force which consists of officers and agents from the FBI, the Richmond County Sheriff’s Office, the Columbia County Sheriff’s Office, the GBI, and the Georgia State Board of Pardons and Paroles. ATF, DEA and the United States Marshal’s Service also participated in the investigation.

Other defendants who pleaded guilty and are awaiting sentencing include: Reginald Darrell BEALE, 28, of Hephzibah, Georgia; Latria Grenise SMITH, 26, of Hephzibah; Mark JONES, 52, of Augusta; Sylvester Ruben LEWIS, 33, of Augusta; and Sequoyah ELAM, 28, of Lincolnton, Georgia.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

Defendants Sentenced for Telemarketing Stock Fraud Scheme

JOHN A. REECE, 57, of St. Augustine, Florida, and PATRICK J. SOLTIS, 47, of Hoschton, Georgia were sentenced today by United States District Judge Clarence Cooper to federal prison for operating a telemarketing scheme in Marietta, Georgia, that defrauded dozens of foreign individuals into investing hundreds of thousands of dollars in fraudulent companies.

United States Attorney Sally Quillian Yates said of the case, “These defendants ran an investment boiler room operation using telemarketers to pressure their unsuspecting victims into investing thousands of dollars in a variety of phony ventures. The defendants have now been sentenced to federal prison and ordered to pay restitution to their innocent victims.”

REECE was sentenced to six years and six months in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $582,639. SOLTIS, who cooperated with the government and received a sentence reduction as a result, was sentenced to three years and five months in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $301,601. REECE was convicted of these charges after pleading guilty on January 11, 2010. SOLTIS was convicted after pleading guilty on October 15, 2008.

According to United States Attorney Yates, the charges and other information presented in court: REECE and SOLTIS lied to investors in 2002 to entice them to invest in a shell company, Wolf & Soltis Holdings, LLC. Through telemarketers they hired to sell the stock in unsolicited transactions, the defendants falsely claimed that Wolf & Soltis had substantial business operations and plans to expand in a number of areas. In fact the company was bogus, had no operations, assets, revenues, or even employees, other than the hired telemarketers.

As part of the scheme, the defendants claimed that they owned a private bottled water company, were involved with the University of Minnesota to develop a tree species that grew more quickly, and owned a cosmetics company for which entertainment personality Raquel Welch was the spokesperson. All of these claims were false. In truth, the defendants pocketed the lion’s share of the money they received from investors and used the rest to pay their telemarketers, telephone bills, and related expenses. After a disagreement with SOLTIS, REECE began to operate a second fraudulent telemarketing scheme through an entity he operated known as “Wellington Group,” purportedly selling shares in “Australian Biofund Investments, Ltd.” (ABIL), based on material misrepresentations and omissions. REECE retained the vast majority of the money invested in Wellington, but failed to disclose that fact and even falsely informed investors that there was no commission associated with their investments.

To execute their fraud, REECE and SOLTIS ran a boiler room with high-pressure telemarketers they hired to call hundreds of potentially vulnerable victims each day from call lists they had purchased. In addition to providing call lists to the telemarketers, REECE developed scripts for them to use in selling the fraudulent investments. The call lists targeted foreign investors in English speaking countries. The defendants intentionally targeted foreign investors in part to avoid, or at least delay, the scrutiny of U.S. law enforcement. As a result, the overwhelming majority of the victims live in foreign countries, primarily Australia and Canada. The defendants’ schemes resulted in a loss of over $600,000 to the victims.

This case was investigated by Special Agents of the Federal Bureau of Investigation.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

Infant Deaths Prompt CPSC Warning About Sling Carriers for Babies

The U.S. Consumer Product Safety Commission (CPSC) is advising parents and caregivers to be cautious when using infant slings for babies younger than four months of age. In researching incident reports from the past 20 years, CPSC identified and is investigating at least 14 deaths associated with sling-style infant carriers, including three in 2009. Twelve of the deaths involved babies younger than four months of age.

Slings can pose two different types of suffocation hazards to babies. In the first few months of life, babies cannot control their heads because of weak neck muscles. The sling's fabric can press against an infant's nose and mouth, blocking the baby's breathing and rapidly suffocating a baby within a minute or two. Additionally, where a sling keeps the infant in a curled position bending the chin toward the chest, the airways can be restricted, limiting the oxygen supply. The baby will not be able to cry for help and can slowly suffocate.

Many of the babies who died in slings were either a low birth weight twin, were born prematurely, or had breathing issues such as a cold. Therefore, CPSC urges parents of preemies, twins, babies in fragile health and those with low weight to use extra care and consult their pediatricians about using slings.

Two months ago, the Commission added slings to the list of durable infant products that require a mandatory standard. Additionally, CPSC staff is actively investigating these products to determine what additional action may be appropriate. Until a mandatory standard is developed, CPSC is working with ASTM International to quickly complete an effective voluntary standard for infant sling carriers.

CPSC recommends that parents and caregivers make sure the infant's face is not covered and is visible at all times to the sling's wearer. If nursing the baby in a sling, change the baby's position after feeding so the baby's head is facing up and is clear of the sling and the mother's body. Parents and caregivers should be vigilant about frequently checking their baby in a sling.

CPSC is interested in receiving incident or injury reports that are directly related to infant slings. You can do this by visiting www.cpsc.gov/cgibin/incident.aspx or call CPSC's Hotline at (800) 638-2772.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

LG, Sharp, Chunghwa Agree to Plead Guilty, Pay Total of $585 Million in Fines for Participating in LCD Price-Fixing Conspiracies

Three leading electronics manufacturers-LG Display Co. Ltd., Sharp Corp. and Chunghwa Picture Tubes Ltd.-have agreed to plead guilty and pay a total of $585 million in criminal fines for their roles in conspiracies to fix prices in the sale of liquid crystal display (LCD) panels, the Department of Justice announced. Of the $585 million in fines, LG will pay $400 million, the second highest criminal fine ever imposed by the Department's Antitrust Division.

Today's charges were filed in U.S. District Court in San Francisco. The companies have agreed to cooperate with the Department's ongoing antitrust investigation.

Thin-Film Transistor-Liquid Crystal Display (TFT-LCD) panels are used in computer monitors and notebooks, televisions, mobile phones, and other electronic devices. In 2006, the worldwide market for TFT-LCD panels was approximately $70 billion. Companies directly affected by the LCD price-fixing conspiracies are some of the largest computer, television and cellular telephone manufacturers in the world, including Apple, Dell and Motorola.

"Today's charges and criminal fines emphasize the commitment of the Department of Justice to crack down on international cartels," said Attorney General Michael B. Mukasey.

LG Display Co. Ltd, a South Korean corporation, and its wholly-owned subsidiary, LG Display America Inc., a California company (LG), agreed to plead guilty to participating in a conspiracy from September 2001 to June 2006 to fix the price of TFT-LCD panels sold worldwide. During the conspiracy, LG Display Co. Ltd. was known as LG.Philips LCD Co. Ltd. (a joint venture between LG Electronics and Philips Electronics) and LG Display America Inc. was known as LG.Philips LCD America Inc.

Sharp Corp., a Japanese consumer electronics manufacturer, has agreed to pay a $120 million fine for its participation in separate conspiracies to fix the price of TFT-LCD panels sold to Dell Inc. from April 2001 to December 2006 for use in computer monitors and laptops; to Motorola Inc. from fall 2005 to the middle of 2006 for use in Razr mobile phones; and to Apple Computer Inc. from September 2005 to December 2006 for use in iPod portable music players.

Chunghwa, a Taiwanese TFT-LCD panel manufacturer, has agreed to pay a $65 million fine for its participation with LG and other unnamed co-conspirators in a conspiracy from September 2001 to December 2006 to fix the price of TFT-LCD panels sold worldwide.

"These price-fixing conspiracies affected millions of American consumers who use computers, cell phones and numerous other household electronics every day," said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division. "These convictions, and the significant fines they carry, should send a clear message that the Antitrust Division will vigorously investigate and prosecute illegal cartels, regardless of where they are located."

LG and Chunghwa are charged with carrying out the conspiracy by:

* Participating in meetings, conversations, and communications in Taiwan, Korea and the United States to discuss the prices of TFT-LCD panels;
* Agreeing during those meetings, conversations and communications to charge prices of TFT-LCD panels at certain pre-determined levels;
* Issuing price quotations in accordance with the agreements reached; and
* Exchanging information on sales of TFT-LCD panels, for the purpose of monitoring and enforcing adherence to the agreed-upon prices.

Sharp is charged with participating in three separate conspiracies, to fix the price of TFT-LCD panels sold to Dell, Motorola and Apple by:

* Participating in bilateral meetings, conversations, and communications in Japan and the United States to discuss the prices of TFT-LCD panels to be sold to Dell, Apple and Motorola;
* Agreeing during those bilateral meetings, conversations and communications to charge prices of TFT-LCD panels at certain pre-determined levels to Dell, Apple and Motorola;
* Issuing price quotations in accordance with the agreements reached; and
* Exchanging information on sales of TFT-LCD panels to be sold to Dell, Apple and Motorola, for the purpose of monitoring and enforcing adherence to the agreed-upon prices.

LG, Sharp and Chunghwa are each charged with price fixing in violation of the Sherman Act. Each violation carries a maximum fine of $100 million for corporations. 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.

LG Display Co. Ltd., based in Seoul, South Korea, reported $15.3 billion in revenue for 2007.

Sharp, based in Osaka, Japan, reported $34.2 billion in revenues for its fiscal year ending March 31, 2008, including $6.8 billion in revenue from LCD sales.

Chunghwa, based in Taoyuan, Taiwan, Republic of China, reported $4.8 billion in revenue for 2007.

These pleas are the result of a joint investigation by the Antitrust Division's San Francisco Field Office and the Federal Bureau of Investigation in San Francisco. The plea agreements are subject to court approval.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page