white collar crime

May 6, 2016

Americans Show Up in Panama Papers

In another scandal that has disgusted the entire nation, it is reported that the passports of at least 200 Americans show up in this week’s 11 million data leak. The “Panama Papers” is the world’s largest document leak and went public on April 3rd. The documents detail the offshore bank accounts of the world’s richest people who have hidden their money in Panama to avoid taxes and other reasons. Vladimir Putin for example, is linked moving over $2 billion through shell companies.

The Panama-based law firm Mossack Fonseca is accused of aiding the registration of offshore companies for Americans and many other Europeans who are now either accused or convicted by federal prosecutors of serious financial crimes, including securities fraud and running a Ponzi scheme. In some cases, the shell companies, which are inactive companies that only serve to move assets around, were part of the fraudulent activities.

Currently, the documents are being analyzed by the Internal Revenue Service and approximately 350 investigative journalists under the umbrella of the International Consortium of Investigative Journalists. Amongst the Americans involved were Robert Miracle of Bellevue, Washington. He had already been indicted for running a Seattle-area Ponzi scheme under his shell company, Mcube Petroleum.

What are Ponzi Schemes?

According to the U.S. Securities and Exchange Commission (SEC), a “Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.” Fraudsters attract new money to make promised payments to earlier stage investors to give the appearance that they are investing in a legitimate business. They require a constant flow of new money because they have little to no legitimate business earnings.

Securities Fraud

In California, our state’s Supreme Court has said that the definition of a security needs to be decided on a case by case basis. Securities fraud is occurs when one induces investors to make purchase or sale decisions on the basis of false information. It is either a misdemeanor or felony, punishable by up to three years imprisonment/$1 million fine or five years imprisonment/$10 million fine. However, the California Corporate Securities Law of 1968 does not allow criminal penalties to be assessed unless the defendant broke the law ‘willfully.’ If you merely made a mistake and gave the wrong advice to an investor, you cannot be convicted. Continue reading

February 3, 2016

Local Company Owners Indicted in $7M Hotel-Worker Fraud Case

by David M. Boertje

The owners of Good Neighbor Services, an Orange County based janitorial company that provides cleaning services to luxury hotels across Southern California, have been indicted in a $7 million insurance fraud and tax evasion scheme that has allegedly lasted over 10 years.

Hyok “Steven” Kwon and Woo “Stephanie” Kwon, from Irvine California, are accused of working with six accomplices to vastly underreport the number of employees they employ to avoid taxes. It is reported the Kwons underreported their number of employees by 800 people, resulting in the avoidance of $3.6 million in workers’ compensation insurance rates and more than $3.3 million in payroll taxes. San Diego District Attorney Bonnie Dumanis called it the largest ever insurance premium fraud case in San Diego history.

During the course of the investigation, employees said they were paid with checks that carried the names of other businesses, even though they wore uniforms with the Good Neighbor Services logo. The DA’s investigation discovered the Kwons were using 12 different shell companies to defraud insurance providers and the state of California. They also claim they did not receive overtime pay or workers compensation benefits. Additionally, workers who were injured on the job were allegedly threatened with being fired.

October 30, 2015

Fraud Case Alleges Hundreds of Surgeries By Non-Doctor

by David M. Boertje

An orthopedic surgeon, his lawyer, another doctor, and 12 other defendants (15 in total) have been charged in a California health-care fraud conspiracy in Los Angeles. This past Thursday, Los Angeles county prosecutors handed down indictments for Dr. Munir Uwaydah and the associates who helped cover his illicit activity. The conspiracy ring is alleged to have prescribed unnecessary expensive medications, billed two-minute doctor’s appointments as hour-long examinations, and doctored MRI results and medical records to justify unnecessary operations. It is also alleged that Dr. Uwaydah allowed his physician’s assistant, Peter Nelson, to perform surgeries at an Orange County hospital in 2005. Dr. Uwaydah’s medical license was revoked two years ago after several earlier allegations.

The conspiracy ring is estimated to have cheated insurance companies out of $150 million. It is described as one of the largest health-care schemes in state history. Uwaydah and Nelson are charged with 21 counts of aggravated mayhem — each for a different patient. The District Attorney stated that this is a vast underestimation of the hundreds of procedures that Nelson performed. Nelson is being held on a $21 million bail. The office manager, Kelly Soo Park, 49, is also being held on $18.5 million bail in the fraud case for her involvement in hiding Uwaydah’s money from investigators.

Health Care Fraud in California

September 23, 2015

Five in Orange County Arrested in Fraud and Identity Theft Ring

by David M. Boertje

Earlier this month, five suspects from Santa Ana, Orange County were arrested for their suspected connection with a fraud and identity theft ring. Orange County Sheriff’s Deputies arrested Nhan Hoang Pham, 29, of Fountain Valley, Lam Thanh Bui, 30, of Garden Grove, Chieu Bach Nguyen, 29, of Santa Ana, and Keeta Thilauan, 25, for multiple alleged thefts and burglaries in the past several months. A fifth suspect, according to inmate records, is listed under two names.

The SWAT team and Sheriff’s investigators issued search warrants and did a parole and probation check on the suspects. The team raided the home of the five and found weapons, a half pound of methamphetamine, several thousand dollars, and gift cards. They also found fraudulently obtained credit cards, identity theft profiles, computers, cell phones, and data storage devices. Authorities believe the ring is operating throughout California in conjunction with a larger crime ring. They further believe there are hundreds of potential identity theft victims that they are trying to identify through financial information from the searches.

California Identity Theft Laws (CA Penal Code 530.5)

September 15, 2015

Fraud in California

by David M. Boertje

As shown by this month’s headlines, California seems to be plagued with fraud issues on the government level. Most of the fraud is allegedly being committed by government workers. The California Department of Insurance awarded $34.95 million in grants to district attorney offices across the state to help fight workers’ compensation insurance fraud. The grants were funded by employer fees and will be used to pay enforcement officials to investigate and prosecute fraud workers’ compensation system during fiscal year 2015-2016.

While the Department of Insurance was dealing with its own problems, it was discovered that California DMV workers traded cash for illegal licenses. At least 100 commercial truck drivers bribed DMV workers at $5,000/piece for trucking licenses. From 2011 to 2015, employees allegedly changed computer records to show that truck drivers passed their behind-the-wheel tests when they did not. Officials said up to 23 traffic accidents could be related to the fraud.

Fraud in California

Under the common law, fraud is generally defined as an intentional misrepresentation of existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage.

Generally, you violate California’s criminal fraud statutes whenever you commit an act that results in an unfair or undeserved benefit for yourself, and/or cause harm or loss to another person. The California Penal Code addresses many types of fraud:

Car insurance fraud
Health insurance fraud
Unemployment insurance fraud
Welfare fraud
Worker’s compensation fraud
Check, credit card, and securities fraud (the 3 types of financial fraud)
Forgery and identity theft
Mail fraud
Check fraud (writing bad checks)
Foreclosure and real estate fraud

Penalties

The penalties for each individual type of fraud differ. For example, workers compensation fraud can be punished by two to five years imprisonment and a $150,000 fine. Fraud can be charged as either a misdemeanor or felony. Prosecutors typically decide this based on the amount of money involved and any prior convictions on one’s record. Continue reading