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Articles Posted in Fraud

There are 47 defendants in a federal lawsuit filed against the perpetrators of a $250 million scheme to defraud a pandemic-related relief program that earmarked funds for starving children. The Department of Justice announced that it was the largest pandemic relief fraud to date. The defendants have been charged with wire fraud, conspiracy to commit wire fraud, money laundering, and bribery. Federal prosecutors will push hard for maximum sentences as the federal government tends to take it personally when you deprive needy children of necessary food. 

The fraud targeted the Federal Child Nutrition Program. The program sends federal funds to state governments to ensure that children in need are provided with daily meals. Each state has its own agency that oversees these federal funds. Reimbursements are conducted on a per-meal basis, and providers are allowed to keep 15% of the disbursed funds for administrative costs. Individual sponsors apply for applications through their state government and then coordinate meal plans with children in need. During the COVID pandemic, the federal government waived some of the requirements allowing for-profit businesses to partake in the program. It also allowed off-site food distribution for children. 

The scheme called for the opening of fake food distribution sites to secure federal money from state governments. The fraudsters are accused of opening fake food distribution sites and then lying about how many meals they serve. The defendants created shell companies to take the funds, and then more shell companies to launder the proceeds. They submitted falsified reports to the federal government and fake attendance rosters of children who were served meals. They then used the proceeds to buy luxury items. The defendants used a website that randomly generates fake names and an Excel formula to randomly generate ages between 7 and 17. 

She was the “first African-American woman” to hold the title of Director of Special Investigations for the State of Illinois. She was the only woman to ever hold the position. She was the only African-American to ever hold the position. She was the only person ever to have held the position, largely because the position did not exist. It was invented by the only person ever to have held it. But the spectacle of her having received awards and commendation for the position was videotaped for all to see. The defendant had hired the participants to act in these ceremonies including individuals who posed as judges. According to the participants, they were never paid. Therein lies the fraud. The fraudster told the actors that judges were not available for her swearing-in ceremony which is why she required paid actors. The theft of services adds up to over $21,000.

In addition, the defendant coaxed others into advancing her money under false pretenses; money she had no intention of ever paying back. She was also charged with writing fake checks to landlords, letting the checks bounce, and then forcing the landlords to evict her when she refused to pay. She was able to sustain housing like this for an extended period of time.

She has since pleaded guilty to five counts of theft by deception and one count of impersonating a state employee. The prosecution has agreed to recommend a five-year sentence, but the defendant’s actual sentence will be up to the court.

Closing arguments are currently underway in a trial against a USC water polo coach. The coach is accused of faking test scores and inventing athletic achievements including using his role as a water polo coach to help rich applicants secure spots at the exclusive college. 

According to prosecutors, wealthy parents paid over $200,000 so that the coach could establish their children as water polo recruits to gain acceptance. Attorneys for the defendant claim that their client never took a bribe. His attorneys claim that some of the money was deposited into the water polo team’s coffers with the rest of it being scholarship money awarded by a non-profit for the coach’s children. However, the non-profit organizer is a close crony of the coach and is considered the mastermind behind the bribery scheme which targeted several schools.

60 people have been charged in the scheme to help rich people get their low-performing children into exclusive schools. The water polo coach is the only one to fight the charges at trial. The investigation took down Lori Laughlin of Full House fame and other notable celebrities. 

Larry Ray is going to prison, perhaps for life, after a New York jury convicted him on 15 counts all related to the exploitation and extortion of his daughter’s friends. Ray managed to convince his daughter to allow him to move into the dorms shortly after he was released from prison on a securities fraud conviction. 

Ray managed to convince one victim that she had poisoned him and owed him reparations. The woman paid between $10,000 and $50,000 per week to make amends, at one point even performing sex work to make payments. Another woman revealed that her life was turned upside down when she met Ray. She was on track to become a medical doctor when she became romantically involved with him. He would often ask her to have sex with other men while he videotaped it. 

The entire scheme appears to have hinged on Ray using a Svengali-like ability to manipulate those around him. Ray was able to convince several students that they had poisoned him after he agreed to let them stay at his apartment. To make amends, they did as Ray asked, including giving him a lot of money, performing yard work, and more.

Most folks do not understand how our economic system really works. What is a bank? What is a security? What is a corporation? Folks who have general ideas about what the concepts mean tend to be misinformed. As an example, most folks believe that banks use deposits to issue loans. They do not. Banks can fabricate loans ex-nihilo so long as they pay interest on the loans they create. Once the loan has been issued, the bank issues a deposit to the borrower and creates a liability in its own ledger. If all goes well, the bank makes money because the interest paid by the borrower is greater than that charged by the Federal Reserve. 

So, what if I created a bank just to issue worthless loans to my pals? Well, then you end up in prison. The system is actually quite easy to abuse, but the thing you have to understand is that they will catch up with you eventually. In this case, the bank was closed after accruing $66 million in non-performing loans issued to bank insiders. The government, of course, believes that they used the bank apparatus to fabricate money they had no intention of ever repaying. 

The charges

Elizabeth Holmes is accused of lying to investors and committing fraud. The state believes that she told investors that her company’s medical device would be able to replace complex labs that perform bloodwork. However, the device did not work as advertised, cost investors millions, and tanked the company for which she was CEO. The state accuses her of knowingly providing investors with false or overstated information and omitting information concerning the results of her company’s product. 

Analyzing her defense strategy

The biggest problem Holmes faces right now is that the prosecution has produced a cavalcade of witnesses who will testify that Holmes made specific statements concerning the quality of the device for the purpose of getting more money for her company. The witnesses will testify that Holmes overstated the efficacy of the device to get more capital for her company. However, the device never worked. 

Buried behind the headlines of high-profile criminal cases involving pedophile islands, modern lynchings, and public shootings, is another high-profile trial with incredibly high stakes coming out of California. However, because Elizabeth Holmes did not shoot three people, lynch a Black man, or organize the largest sex crime racket in human history, her trial is not nearly as famous as the other three. Luckily for Holmes, her trial just is not as interesting. Yet the stakes are incredibly high for the founder of Theranos who is accused of defrauding investors by overstating the functionality of a blood-testing device.

The device was believed to be a revolutionary step forward in the medical industry, but Holmes is accused of failing to disclose major shortcomings in the device to investors. For the prosecution to successfully convict Holmes, they must prove that Holmes knew the device was defective and still overstated what it could do. If true, they could convict Holmes on charges of wire fraud which carries a potential sentence of 20 years. Holmes would also be required to make restitution to investors. There is a lot of money in play, and stakeholders will be closely watching the criminal case to see how strong their civil cases are.

Understanding the Charges

Necromancy is the act of wielding the dead against the living. Necromancers have the power to manipulate souls or bodies and use them at their will. While necromancy is not real and is more the stuff of fantasy novels, there are some who actually perform necromancy for personal gain. For example, using the social security numbers of dead Americans to file fraudulent tax returns and gain access to stimulus payments that you’re not entitled to is using the dead to for personal gain and profit. 

Now, a 50-year-old Chicago woman is facing 10 counts of wire fraud, six counts of aggravated identity theft, three counts of making false statements to the SBA, and one other count of possessing forged documents with the intent to defraud. However, she is facing zero counts of tax necromancy.

Tax Necromancy

Melvin Ely and Will Bynum, both of whom are former NBA players from the Chicago area, are facing fraud charges related to a scheme involving the NBA players’ health care program. The pair will face charges in a federal Manhattan court where the indictment was unsealed. 

The indictment names 19 defendants, 18 of whom are former NBA players. The former players are accused of defrauding the Health and Welfare program of nearly $4 million. The fraud was masterminded by former New Jersey Nets star Terrence Williams. Williams was paid kickbacks of about $250,000 to actuate the fraud, while players stole a reported $2.5 in personal proceeds.

While the story by now has made it to major airwaves, details of the prosecution are as of yet unknown. The defendants are facing charges of aggravated identity theft, health care fraud, and wire fraud. 

Federal authorities have announced the arrest of two individuals who have been accused of embezzling vaccine cards from their place of employment for sale elsewhere. The first defendant is a registered nurse who stole vaccine cards from her employer at the VA Hospital. Another defendant is facing charges that he purchased counterfeit vaccine cards and attempted to sell them on Facebook. 

The nurse is facing charges of theft of government property and embezzlement related to a health care benefit program. The Facebook guy is facing charges for trafficking in counterfeit goods and fraud related to official government documents. The charges have been filed and prosecuted by the U.S. State Attorney’s office meaning that both defendants will face federal charges for their role in distributing fraudulent vaccine cards. 

The government does not take kindly to those defrauding the system. They contend such efforts place everyone at risk and undermine the efforts of health officials.

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