Financial Fraud Enforcement Task Force Announces Regional Results of Operation Broken Trust, Targeting Investment Fraud
|U.S. Attorney’s Office December 06, 2010|
Following an announcement today by Attorney General Eric Holder in Washington, D.C., United States Attorney for the District of Montana Michael W. Cotter, announced the statewide results of Operation Broken Trust, a nationwide operation which targeted investment fraud in Montana and throughout the country. Operation Broken Trust is the first nationwide operation of its kind to target a broad array of investment fraud schemes that directly prey upon the investing public.
The interagency Financial Fraud Enforcement Task Force was established by the President to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. Starting on Aug. 16, 2010, to date Operation Broken Trust has involved enforcement actions against 343 criminal defendants and 189 civil defendants for fraud schemes involving more than 120,000 victims throughout the country. The operation's criminal cases involved more than $8.3 billion in estimated losses and the civil cases involved estimated losses of more than $2.1 billion. In the District of Montana, the two cases that have been sentenced have resulted in restitution orders for $605,282.45.
With this operation, the Financial Fraud Enforcement Task Force is sending a strong message," said Attorney General Holder. "To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan—we will use every tool at our disposal to find you, to stop you, and to bring you to justice."
In response to the work of the Task Force in Montana, U.S. Attorney for the District of Montana Michael W. Cotter said, "In these difficult economic times, the cases in Montana send a message that those criminals that seek to take advantage of these trying times will be investigated and prosecuted. Investment schemes are difficult to unravel and Montana's recent successes are due in large part to the excellent investigators from the U.S. Secret Service, the Federal Bureau of Investigation, and the Criminal Investigation Division of the Internal Revenue Service."
Operation Broken Trust cases in the District of Montana included:
United States vs. Michael James Burns, Jr.—Burns, a 51-year-old resident of San Francisco, California, was sentenced on October 8, 2010, to serve 87 months in prison, three years of supervised release upon release from incarceration, and restitution of $445,532.45, following his guilty plea to wire fraud and money laundering. Burns created a company, BMJ Capital in California, to allegedly finance various business projects. Burns entered into an agreement with Strategic Land Company, LLC, to fund a real estate development project in Lakeside, Montana. Burns promised to invest more than $30 million in the development if the company could first provide a 1percent up-front commitment fee of $250,000. The company, encouraged in part by false financial documents, wired the money to Burns. Burns never provided any financing to the company and never returned the advanced fee. A financial analysis of BMJ Capital's records revealed that BMJ collected hundreds of thousands of dollars from individuals and businesses between 2007 and 2008. At the time, Burns was on parole for a similar offense in Hawaii. The case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Ryan M. Archer.
United States v. Kenneth A. Schneider—Schneider, a 57-year-old resident of Weston, Connecticut, pled guilty on November 30, 2010, to wire fraud. Schneider is scheduled to be sentenced on March 10, 2011. Schneider pled guilty to engaging in a fraudulent business in which he claimed to specialize in problematic and opportunistic commercial direct bridge loan funding. Schneider claimed to be capable of funding large dollar, hard money loans to individuals or entities wishing to borrow against a parcel or parcels of real property. In reality, Schneider entered into agreements with clients and took their commitment fees and application fees with no intention of ever providing funding to any of the victims that he encountered. The United States estimates that Schneider swindled in excess of $1.5 million from approximately 130 victims nationally. Included among those victims are two residents of Missoula County and one resident of Ravalli County, who combined to pay Schneider $37,750 in application and commitment fees for a loan that never closed. The case was investigated by the U.S. Secret Service and prosecuted by Assistant U.S. Attorney Timothy J. Racicot.
United States vs. Carl Lawrence Estep—Estep, a 66-year-old resident of Belgrade, Montana, pled guilty to wire and mail fraud on October 22, 2010. Estep's sentencing is scheduled for January 27, 2011. Estep pled guilty to being engaged in a far-reaching, multi-state investment fraud scheme. The scheme defrauded numerous investors out of significant amounts of money by promising them large returns from overseas investments that were allegedly realized by leveraging "gold ore" as collateral for overseas trading. The United States expects the restitution award in the Estep case to exceed $1 million. The case was investigated by the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service and prosecuted by Assistant U.S. Attorney Ryan M. Archer.
United States vs. Michael Sullivan—Sullivan, a 61-year-old resident of San Diego, California, was sentenced on December 6, 2010, to serve five months in prison and five months of community confinement, three years of supervised release upon release from incarceration, and restitution of $159,750, following his guilty plea to conspiracy to commit fraud. Sullivan was one of three individuals charged in the Missoula Division with participating in a scheme and conspiracy to defraud by operating a telemarketing boiler room scam under the business name "Children's Family Films" (CFF). CFF consisted of several individuals who would cold call investors and try to sell them investment shares in CFF. The callers adopted aliases and posed as former investors in order to convince new investors to pay money into the scam. William Marlin and Tyrone Dyse also pled guilty and were sentenced for their participation in the CFF scheme. The case was investigated by the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service and prosecuted by Assistant U.S. Attorney Ryan M. Archer.
As a part of Operation Broken Trust, the task force is making the public aware of resources available to protect against these types of fraud and how to report fraud when it occurs. To learn more about investment scams, how to take steps to protect yourself from scams, or how to report investment fraud if you believe you have been victimized, the task force recommends that you visit its website, www.StopFraud.gov, which includes links to a wide array of task force member resources.