Former GlobeTel CEO Sentenced for Securities and Tax Fraud Conspiracy
|U.S. Attorney’s Office July 26, 2010|
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; John A. DiCicco, Acting Assistant Attorney General for the Tax Division; Daniel W. Auer, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division; and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, announced that defendant Timothy Huff was sentenced today before the Honorable Judge Donald Middlebrooks.
Defendant Huff was sentenced to 50 months of imprisonment, to be followed by three years of supervised release. Huff previously pled guilty to a one count criminal Information that charged him with a dual object conspiracy to commit securities fraud and to defraud the United States, the United States Treasury Department and the Internal Revenue Service (“IRS”), in violation of 18 U.S.C. § 371.
According to the Information, Huff was the CEO of GlobeTel Communications, Corp. (“GlobeTel”), which purported to be in the wholesale telecommunications business. During 2002, 2003, and 2004, Huff conspired with Thomas Y. Jimenez, the CFO of GlobeTel, and others, to create fictitious revenue, purportedly from Trans Global Ventures, Inc. (“TGVI”), and GTCC Qualnet Mexico, LLC (“Qualnet Mexico”). Huff and his co-conspirators then caused GlobeTel to report that fictitious revenue on its books and in periodic filings with the SEC.
To execute the scheme, Huff and Jimenez created fraudulent invoices and fraudulent technical documents, known as “call detail records” (“CDR’s”), that appeared to corroborate the fictitious revenue GlobeTel was reporting. Huff and Jimenez provided the fraudulent CDR’s and invoices to GlobeTel’s independent auditor to mislead the auditors into believing that GlobeTel had, in fact, received the purported revenue. In this way, according to the Information, Huff and Jimenez reported more than $22,600,000 in fraudulent revenue.
Also part of the conspiracy, Huff and Jimenez deposited $300,000 into a SunTrust account in the name of a GlobeTel subsidiary and fraudulently recorded the transfer on GlobeTel’s books as a payment by TGVI. Additionally, Huff and Jimenez made six wire transfers between May, 2004 and February, 2005, totaling approximately $980,500. These funds were purported to be the proceeds of a stock-loan transaction between Huff and other GlobeTel executives. In fact, however, the transfers were the proceeds of a fraudulent stock sale.
Additionally, Huff, Jimenez and others caused stock to be issued as compensation to themselves and other GlobeTel officers and directors. Rather than reporting the stock as compensation, Huff, Jimenez, and others, disguised the transaction as a loan, by transferring the stock to C&M Management Consulting, Inc. (“C&M”), knowing that C&M would not hold the stock as collateral but would sell the stock. Huff and Jimenez fraudulently applied some of the proceeds from the stock transaction to falsely reduce GlobeTel’s accounts receivable. Thereafter, Huff and Jimenez failed to have Forms 1099 issued for the stock transaction, and failed to report the proceeds of the stock transaction on their personal tax returns for 2001 through 2004.
Special Agent in Charge John V. Gillies stated, “As demonstrated in this case, the securities industry relies on regulatory and law enforcement agencies to ensure that individuals are following the rules. When those laws are broken, the FBI will dedicate the necessary resources to investigate those that commit securities fraud.”
Mr. Ferrer commended the investigative efforts of the Internal Revenue Service, Criminal Investigation Division, and the Federal Bureau of Investigation. This case is being prosecuted by Assistant U.S. Attorney Thomas P. Lanigan and Trial Attorneys Gregory R. Bockin and Kathryn Ward of the Department of Justice's Tax Division.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.