Federal Crimes

Federal Law Enforcement Officials Focus on Mortgage Fraud

Published on: July 8, 2008 | by Lasnetski Gihon Law

The federal crime of mortgage fraud has become a priority for federal law enforcement officials, according to a recent FBI press release. Over the last few months, the FBI and Department of Justice have undertaken coordinated efforts to arrest and prosecute those allegedly responsible for committing mortgage fraud. No doubt, the recent and continuing problems with the housing markets and foreclosures throughout Jacksonville, Florida and many other parts of the country have played a significant role in the decision to make mortgage fraud an increasing priority. In approximately three and a half months, over 400 people were charged with mortgage fraud across the country. According to federal officials, these cases involved approximately $1 billion in losses.

The crime of mortgage fraud can occur in a few different ways. A borrower may make misrepresentations on a mortgage application about his/her income, liabilities or intention for the property in order to obtain a mortgage or a better rate on a mortgage. An appraiser may inflate the value of property to entice a lender to approve a higher loan than the property used as collateral would warrant or the fraudulent and excessively high appraisal amount may be obtained to allow the buyer to quickly re-sell, or flip, the house to an unsuspecting buyer (although this is more difficult in today’s difficult housing market). There are many other forms of mortgage fraud. For more information about the various mortgage fraud schemes, go to the FBI’s website which discusses the subject.

Police Officer and Magistrate Judge Charged with Human Trafficking in Federal Court

Published on: July 3, 2008 | by Lasnetski Gihon Law

A police officer and former magistrate judge were charged with human trafficking and several other federal crimes for allegedly bringing a woman into the United States from India under false pretenses and subjecting her to a form of “modern day slavery” in Georgia, according to an article at www.ajc.com.

According to federal prosecutors, the defendants lied to the Indian victim and told her she would be employed as a nanny, but after she arrived in the United States, they refused to pay her, made her live in an unheated basement, limited her access to the outside and told her she was a criminal and threatened to have her arrested. When the victim was able to escape the house, one of the defendants reportedly contacted the Department of Homeland Security and reported that the victim may be a terrorist.

Federal human trafficking allegations are considered a top priority and prosecuted to the fullest extent of the law, according to representatives of the Department of Justice. Earlier this year, three defendants in New Jersey were given maximum sentences after pleading guilty to human trafficking for their role in bringing Hondurans into the United States, lodging them in cramped apartments and forcing them to work extensive hours dancing in bars for low wages that were taken away to pay for the cost of smuggling them into the country.

Florida Man Charged with Fraud for Allegedly Lying During Job Application Process

Published on: June 19, 2008 | by Lasnetski Gihon Law

Federal criminal charges were brought against a Florida man who allegedly attempted to obtain a high paying job with forged documents and false information, according to an article at www.Reuters.com. The Florida suspect has been charged with three counts of wire fraud by federal prosecutors after allegedly sending fraudulent documents to a company performing a background check on behalf of the company to which he applied for a job. The fraudulent documents were related to an SEC investigation that the suspect claimed was no longer ongoing. According to federal prosecutors, the suspect created a fake email from the SEC indicating that he cooperated with their investigation and provided valuable information. Federal prosecutors also allege that the suspect claimed that he was the vice president of finance for a Fortune 500 company, although he had been previously fired from that job.

The federal crime of wire fraud refers to any use of interstate wire communications to commit a fraudulent scheme to obtain money or other property. The use of wires encompasses telephone, radio, television and computer networks. Without knowing more about the facts of this case, the allegations of wire fraud likely involve an attempt to obtain money via a well paying job by using email and/or the telephone to transmit fraudulent information. If he is convicted of the wire fraud counts, he faces a maximum of 20 years in prison and a $250,000 fine.

Federal Crimes Sentencing Guidelines Changed Regarding Crack Cases

Published on: June 14, 2008 | by Lasnetski Gihon Law

In March, federal sentencing guidelines, which help a judge determine what kind a sentence a person will get after he/she is arrested and convicted of a federal crime, were changed as they apply to crack cocaine related crimes. Prior to the change, a person arrested and convicted for possessing a small amount of crack would receive the same sentence as a person arrested and convicted for possessing a much larger amount of powder cocaine. The old sentencing guidelines were criticized since most people arrested for crack related crimes were African-American while most people arrested for cocaine related crimes were white. One of the original justifications for the disparity in sentencing between crack and cocaine related crimes is that government officials found that people arrested for crack related crimes were more likely to also commit a violent crime.

According to the U.S. Sentencing Commission Preliminary Crack Cocaine Retroactivity Data Report published in April of this year, 3647 inmates convicted of a crack related crime have applied to have their sentences reduced, and 3,075 of them have been successful. The Middle District of Florida, where Jacksonville is located, had the 5th highest number of prison inmates convicted of a crack related crime apply for, and have granted, a reduction in their prison sentence. Inmates in the Middle District of Florida who had their sentences reduced did so by an average of 19.4%.

Fewer Federal White Collar Crimes Prosecuted Under Bush Administration

Published on: May 30, 2008 | by Lasnetski Gihon Law

There has been a clear trend of fewer white collar crime cases being prosecuted in federal court over the last seven years under the Bush administration, according to an analysis done by the Transactional Records Access Clearinghouse (TRAC) which reviewed the records of thousands of federal criminal cases. TRAC also concludes that this trend will continue at least until 2009, when the new administration takes over.

Some of the statistics showing the decreasing number of white collar crimes pursued by federal prosecutors include: the prosecution of all federal white collar crimes is down 27% since 2000; there are about half the number of federal charges against organized crime suspects than there were in 2000; the prosecution of federal drug cases is down 20% from ten years ago; and the prosecution of federal weapons cases is down 21% since 2004. According to the study, only federal immigration crimes have seen an increase in federal prosecutions since 2000 (a 127% increase). Based on changes in staffing and budgeting of funds, the study concluded that this trend is likely to continue.

The TRAC study is consistent with an article written in August of last year on www.Seattlepi.com which discussed the number of white collar crimes which had not been prosecuted by the federal government. That article noted that approximately 2400 federal agents were transferred from various criminal divisions to handle counter-terrorism matters after 9/11. They have not since been replaced. After a six month investigation, Seattle PI concluded that the number of criminal cases investigated by the FBI declined by 34% from 2000 to 2005 and white collar crime cases referred from the FBI to federal prosecutors went from about 10,000 in 2000 to 3,500 in 2005.

Long Federal Prison Sentence for Manager of Popular Bands, But With Incentives

Published on: May 28, 2008 | by Lasnetski Gihon Law

Lou Pearlman was the creator of two of the most famous young bands (The Backstreet Boys and N’Sync), but he was recently sentenced to 25 years in prison after being convicted of the federal crimes conspiracy, money laundering and making false statements, according to the Orlando Sentinel. Pearlman defrauded more than 1,000 people and banks out of approximately $500 million. The prison sentenced ordered by the U.S. District Court Judge in Orlando, Florida was agreed to by federal prosecutors. Pearlman would normally serve 85% of his prison sentence, however the judge did give Pearlman an opportunity to reduce his sentence by one month for every million dollars he returns to the victims of his crimes.

The federal crimes Pearlman committed were part of what is commonly called a Ponzi scheme. A Ponzi scheme occurs when someone, presumably a good communicator and seemingly savvy businessperson or investor, makes claims that he/she can make excessively high financial returns for potential investors. The Ponzi schemer is typically someone who appears to have a lot of money giving the impression that he/she can do for others what he/she has already done for him/herself. Once a few victims are attracted to the scheme and pay their initial investments, the offender typically pays part of the promised profits to some of the initial investors. This serves the purpose of gaining trust and also generates some third party advertising.

However, the problem, and the crime, is that there are no high yield investments. The initial money that was returned to investors 1, 2 and 3 as profits are really the initial “investment money” that was paid to the Ponzi schemer by investors, or victims, 4, 5 and 6. So, going forward, initial victims are paid periodically from the funds of subsequent victims. Ponzi schemes while effective initially, depending on the skill of the person running it, are generally destined to fail. The obvious flaw is that victims are going to eventually want their money back plus the promised profits. As the Ponzi schemer runs out of new investors, or victims, he/she also runs out of money to pay his investors since there were never any real investments or legitimate source of profits. Ultimately, the victims will figure out the scheme and talk to other victims as well as the police. At that point, the Ponzi scheme collapses and often, unfortunately, the victims find that the money they thought they invested is gone.

DNA to be Collected From Anyone Arrested by Federal Law Enforcement Officials

Published on: May 18, 2008 | by Lasnetski Gihon Law

A proposed federal law would require anyone arrested for a federal crime to provide a DNA sample to federal law enforcement officials to be stored in a nationwide DNA database called CODIS, according to a recent article. The DNA samples would be swabbed from the inside of a person’s cheek. The Department of Justice expects that this new law will increase the number of people whose DNA samples have been collected after an arrest by 1.2 million each year.

In support of the federal law, law enforcement officials say the DNA samples of people arrested will help law enforcement officials catch criminals and also prevent people from committing crimes. Critics of the law worry about whether the DNA will be used for purposes other than law enforcement, although federal officials confirmed that the privacy laws will apply to the DNA that is collected.

Currently, only people convicted of crimes have their DNA collected and stored in the database. According to the article, people who have been arrested for a federal crime and have their DNA taken but are not subsequently convicted of the crime can contact the United States Department of Justice and have their DNA samples destroyed. Whether people arrested for a federal crime will be informed of that fact or how they would otherwise know they can do this is not clear.

Federal Financial Identity Theft Crime Law Considered by Congress

Published on: May 14, 2008 | by Lasnetski Gihon Law

Identity theft (aka financial identity theft) is an increasingly common crime in Florida that can cost a lot of time, money and effort for the victims to resolve. According to a recent study, approximately 8.4 million people were victims of identity theft crimes in the United States in 2006.

To address the increase in identity theft crimes, particularly those committed using computers, Congress is currently considering a federal law called the Identity Theft Enforcement and Restitution Act which, if it passes, would allow victims of identity theft crimes to seek restitution from offenders not just for the amount that was stolen from them, if any, but for the victim’s expenses related to fixing all of the problems that were caused by the identity theft. When the crime of identity theft occurs, a victim can spend a significant amount of time canceling old, and obtaining new, credit card, cell phone and other accounts, dealing with credit agencies to assess and fix the damage to their credit rating and dealing with accounts that were opened and purchases made in their name.

The federal law would also expand the crime of cyber-extortion to include threatening to take or release information found on a computer. Currently, the federal law of cyber-extortion only deals with threats to shut down or damage a business or government computer.

Federal Sentencing Memorandum Filed by Government Asks for Maximum Sentence for Snipes

Published on: April 16, 2008 | by Lasnetski Gihon Law

Federal government prosecutors have filed their sentencing memorandum with the federal court which asks the judge to sentence Wesley Snipes to the maximum prison sentence for his recent criminal convictions for failing to file his tax returns, according to a Reuters news release. In 2006, the federal government indicted Snipes on multiple counts including tax fraud, conspiracy and failing to file tax returns. A copy of the indictment can be found here.

Earlier this year, after hearing the evidence in his federal criminal trial in Ocala, Florida (which is about 100 miles southwest of Jacksonville, Florida), a jury found Wesley Snipes guilty of three counts of failing to file tax returns for the years 1999 – 2001. Each of the three counts on which Snipes was convicted, one for each year, is a conviction for a federal misdemeanor crime. That jury also found Snipes not guilty of the felony counts, which were tax fraud and conspiracy counts.

The federal crimes on which Snipes was convicted each carry a maximum sentence of 12 months in prison and associated fines. As a result of the three convictions, Snipes is facing a maximum sentence of 36 months in prison. That is exactly what the federal government is requesting along with a $5 million fine for failing to pay his taxes for those three years. According to the sentencing memorandum, the tax loss from Snipes’ failure to pay taxes for three years was over $7 million and the maximum fine would be over $14 million. The sentencing memorandum also asks the judge to hold Snipes in jail pending his appeal. Some defendants, after they are convicted, are permitted to remain out of prison on bond until their appeal is heard. Snipes also may likely face a civil action from the IRS to force him to pay millions of dollars in overdue taxes.

Increased Government Oversight of Contractors Suggested

Published on: March 22, 2008 | by Lasnetski Gihon Law

Federal government paid contractors are the target of federal legislation currently being considered by Congress. Specifically, Congress is considering several bills that would restrict contractors from doing business with the U.S. government if they have not paid their taxes. Contractors with the federal government are paid over $400 billion per year.

The U.S. government estimates that there are thousands of companies who are delinquent in paying their taxes. This represents over $7 billion in money owed to the U.S. government. There is currently no system in place for the U.S. government to identify which customers who want to do business with the government are among those companies who have not paid their taxes. In order to identify those potential contractors who have not paid their taxes, Congress is considering a law that would require all companies bidding on a federal contract to submit a declaration that the company is current with their tax obligations. The proposed law would also bar any company that is delinquent in the payment of their taxes from being awarded a government contract. The proposed standard for disqualifying a company from contracting with the federal government is whether the IRS has filed a tax lien against the company. Therefore, companies with fairly insignificant amounts owed to the IRS would still likely be eligible to contract with the federal government if a tax lien is not likely to be filed against them.

Additionally, to prevent companies contracting with the federal government from setting up shell companies in foreign companies that act as the employer for the contractor so they can avoid paying Social Security and Medicare taxes, a proposed bill would treat foreign subsidiaries of U.S. companies contracting with the federal government as U.S. companies for which are required to pay Social Security and Medicare taxes.