Final Defendant Convicted in Advance Pay Scheme That Bilked Entrepreneurs of Millions
|U.S. Attorney’s Office February 19, 2014|
PHILADELPHIA—Matthew McManus, 45, of Glenside, Pennsylvania, was convicted today for his role in an advance fee fraud scheme that defrauded hundreds of victims searching for commercial financing. McManus was charged with five other defendants, all of whom have pleaded guilty. Their scheme defrauded more than 1,900 victims out of more than $26 million. A sentencing hearing is scheduled for May 21, 2014. McManus faces a potential advisory guideline sentence of 15 years in prison with a statutory maximum possible sentence of 105 years in prison.
Defendant Andrew Bogdanoff, of Scottsdale, Arizona, 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 Shayne Fowler, also of Scottsdale, replaced McManus as Bogdanoff’s right-hand man. Defendant Joel Nathanson, of San Diego, California, was one of Remington’s most proficient employees and helped Remington defraud many victims. Defendant Frank Vogel, of Rochester Hills, Michigan, was a Michigan‑based broker who referred numerous victims to Remington in exchange for large kickbacks. Aaron Bogdanoff, also of Scottsdale, was also charged in the conspiracy.
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 either was an actual lender or had spoken to lenders that had already expressed interest in the customer’s project. 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 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.
After the FBI and IRS conducted search warrants in Arizona and Colorado in March 2011, defendant Matthew McManus attempted to distance himself from the fraudulent scheme by obstructing justice and lying to federal agents. He was convicted of these charges as well.
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.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigations with assistance from the Pennsylvania Securities Commission. It is being prosecuted by Assistant United States Attorney David Axelrod.