U.S. Attorney’s Office Announces Results of Operation Broken Trust, Targeting Investment Fraud
|U.S. Attorney’s Office December 07, 2010|
BALTIMORE, MD—Following a national announcement yesterday by Attorney General Eric Holder, Maryland U.S. Attorney Rod J. Rosenstein announced the local results of Operation Broken Trust, a coordinated law enforcement operation that targeted investment fraud 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.
An 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. The task force identified investment fraud as a leading priority. 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 Maryland, the operation’s criminal cases involved more than $21 million in losses.
“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.”
“The Financial Fraud Task Force program commits federal law enforcement agencies to devote additional resources to investigate and prosecute cases in areas identified by the task force as national priorities,” said U.S. Attorney Rod J. Rosenstein. “By directing federal agencies to work cooperatively on specific types of cases, the task force can ensure that we prosecute those cases more quickly, educate the public about fraudulent schemes, and deter similar fraud in the future.”
The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
Assistant U.S. Attorney Jonathan C. Su is the financial fraud coordinator for the U.S. Attorney’s Office, District of Maryland.
As a part of Operation Broken Trust, federal agencies are making the public aware of resources available to protect against investment fraud and procedures to report fraud allegations. Anyone who wishes to learn more about investment scams, to find out what steps to take to protect against scams, or to report investment fraud should visit the internet website www.StopFraud.gov, which includes links to a wide array of task force member resources, or telephone the Baltimore Field Office of the Federal Bureau of Investigation at (410) 265-8080.
Operation Broken Trust cases in Maryland include:
United States vs. Irvin Hannis Catlett, Jr., et al
On November 4, 2010 a federal jury convicted Irvin Hannis Catlett, Jr., age 63, of Crownsville, Maryland of tax offenses in connection with a scheme to prepare individual income tax returns for clients which reported bogus tax losses from a purported car leasing company. According to trial testimony, Catlett falsely held out tax shelter entities to his clients as operating businesses involved in automobile leasing and sales. From 1999 to 2009, Catlett worked with others to sell to clients purported “investments” in the tax shelter entities. These investments were payments to Catlett for the purchase of bogus tax losses, purportedly generated by the tax shelter entities’ automobile leasing operations. Trial testimony further showed that Catlett paid Mark Hunt, an IRS revenue officer, for providing Catlett with IRS taxpayer information on Catlett’s clients and for allowing Catlett to introduce Hunt to clients as Catlett’s “connection” at the IRS, in order to assure them that their tax returns would not be subjected to adverse IRS actions. Approximately 275 tax returns were filed with the IRS reporting $22,009,021 in bogus business losses, which resulted in a tax loss to the United States of $3,810,244. Catlett is scheduled to be sentenced on February 17, 2011. Mark E. Hunt, age 45, of Baltimore, previously pleaded guilty to his participation in the tax evasion scheme and is scheduled to be sentenced on January 24, 2011.
United States vs. Byron Keith Brown
On August 18, 2010 a federal jury convicted Byron Keith Brown, age 34, of Vienna, Virginia, formerly of Ellicott City, Maryland, of wire fraud and money laundering charges related to a five year scheme to fraudulently obtain over $17 million from online investors. According to trial testimony, from 2003 to 2009, Brown operated websites in which he advertised that the basic investment required was a minimum of $1 million. To lull investors into believing that their investment was making money, Brown used computer software to create the illusion that the investor was logging into a banking website and viewing account information when in fact, the account balances and numbers were made up. Brown sometimes used funds from new investors to make payments to old investors and to conceal his diversion of investors’ monies. He used the investors’ money to support an extravagant lifestyle: living in a Virginia mansion, traveling to NBA All Star games and purchasing courtside seats, and building an exotic, luxury car collection. To date, the government has seized 16 vehicles, including a 2004 Bentley, a 2005 Rolls Royce Phantom, a 1936 Auburn Speedster, a 2007 BMW, a 1997 Jaguar, a 2006 Aston Martin, a 2007 Lamborghini, a 2008 Maserati, two Mercedes and a 2002 Ferrari, and restrained bank and brokerage accounts. Brown is scheduled to be sentenced on December 21, 2010.
United States vs. George O’Neal
On October 19, 2010, George O’Neal, age 70, of Anne Arundel County, Maryland, who operated from an office space in Annapolis, Maryland, pleaded guilty to wire fraud in connection to three fraud schemes. According to O’Neal’s plea agreement, from 2004 to 2006 O’Neal placed ads in newspapers soliciting investors in Baltimore row houses. From 2005 to 2006, O’Neal also solicited investors to buy real estate properties for condominium conversions in Atlanta, Georgia. In both schemes, O’Neal misrepresented to investors, among other things, that he had 30 years experience in real estate sales when in fact he had previously been convicted of federal offenses regarding his real estate dealings; and falsely stated that their investment money would be used to purchase, renovate and sell or lease the properties, when in fact O’Neal knew money would be used for unrelated purposes. In 2008, O’Neal, while working for an Atlanta roofing company, falsely told customers that his employer was going out of business. O’Neal arranged for the customers to make up front payments to himself and a company he created for the roofing work. In one to two months, O’Neal collected approximately $75,000 from individual homeowners for whom he failed to provide the promised roofing work, except for one homeowner who received a severely deficient roof. Losses from the three schemes total over $1 million in losses to victims. O’Neal is scheduled to be sentenced on March 25, 2011.