Advance Pay Scheme Defendant Pleads Guilty in Multi-Million-Dollar Fraud of Entrepreneurs
|U.S. Attorney’s Office August 29, 2013|
PHILADELPHIA—Andrew Bogdanoff, 66, of Scottsdale, Arizona, pleaded guilty today to charges stemming from an advance fee scheme that defrauded hundreds of victims searching for commercial financing. The scheme defrauded more than 800 victims of more than $10 million. Bogdanoff pleaded guilty to conspiracy to commit mail and wire fraud, mail fraud, wire fraud, money laundering, conspiracy to defraud the United States, and filing false tax returns. He faces an advisory sentencing guideline range of at least 121 months to 151 months in prison. A sentencing hearing is scheduled for December 4, 2013.
Charged in the 33-count indictment with Bogdanoff were Matthew McManus, 44, of Glenside, Pennsylvania; Shayne Fowler, 28, of Scottsdale, Arizona; Joel Nathanson, 26, of San Diego, California; Frank Vogel, 48, of Rochester Hills, Michigan; and Aaron Bogdanoff, 25, of Scottsdale, Arizona.
Andrew Bogdanoff was the founder and chairman of Remington Financial Group (later renamed Remington Capital) and ran the company with defendant McManus until 2008 in Arizona and Pennsylvania. After McManus left the company in 2008, defendant Fowler replaced McManus as Bogdanoff’s right-hand man. Defendant Nathanson was one of Remington’s most proficient employees and helped Remington defraud many victims. Defendant Vogel was a Michigan-based broker who referred numerous victims to Remington in exchange for large kickbacks.
Between 2005 and 2011, the defendants fraudulently induced hundreds of people to pay Remington fees in excess of $10,000 a piece, based on false representations that Remington had lenders and/or investors ready to provide financing for the victims’ projects. To facilitate this fraud, the defendants issued each victim a “letter of interest,” commonly referred to as an LOI. Almost every LOI Remington issued stated that Remington had a lender or investor interested in financing the victim’s project. Remington issued an LOI to every victim even though no Remington employee had spoken to any funding source and Remington knew that it was unlikely to find funding for the project.
The LOI was written to fraudulently lead victims to believe that Remington was either a lender or had spoken to lenders that had already expressed interest in the customer’s project when neither was true. Additionally, the financing terms Remington included in the LOI were unrealistic and were used solely to induce customers to pay Remington’s advance fees. In addition to the false representations in the LOI, the defendants and other Remington employees allegedly also told victims the following lies to further induce victims to pay Remington’s fees: a) Remington had five investors or lenders interested in their project; b) Remington was the actual lender for the project; c) Remington funded or “closed” 80 percent of its deals; d) the victim would get funding for the project once the advance fee was paid; and/or e) Remington would provide funding through its funding source Northbridge.
After a customer paid Remington’s fee, McManus and Andrew Bogdanoff instructed Remington employees to find problems with the projects so that Remington could blame its failure to provide financing on the victim. The defendants did this to help protect Remington from civil and criminal complaints.
Some of the defendants used sophisticated means to perpetuate the fraud. For instance, in 2010, defendants Fowler and Andrew Bogdanoff used Remington’s website to advertise an anti-fraud policy and stated falsely that Remington had recently provided information to the Federal Bureau of Investigation and local law enforcement authorities about a suspected e-mail scam. Remington posted this information to ensure that if potential customers used an Internet search engine to search for allegations about Remington’s fraud they would be directed to Remington’s website, rather than third-party Internet sources that contained negative information about Remington.
Co-defendants Joel Nathanson and Shayne Fowler have pled guilty and are awaiting sentencing.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division with assistance from the Pennsylvania Securities Commission. It is being prosecuted by Assistant United States Attorney David Axelrod.