ANNOUNCES OPERATION CONTINUED ACTION
TARGETING FINANCIAL INSTITUTION FRAUD
Washington, D.C. - The Federal Bureau of Investigation
(FBI) today announced action against 205 individuals
in the takedown of the largest nationwide enforcement
operation in FBI history directed at organized groups
and individuals engaged in financial institution
ongoing initiative, known as Operation Continued
Action, "reflects the FBI's mission and effort
to identify, target, disrupt and dismantle criminal
organizations and individual operations engaged
in fraud schemes that target our nation's financial
institutions," said Assistant Director Chris
Swecker, FBI Criminal Investigative Division.
Continued Action is targeting a variety of fraud
schemes to include mortgage and loan fraud, insider
fraud, financial institution failure investigations,
identity theft, check fraud and check kiting. Operation
Continued Action is representative criminal investigations
ongoing in 37 states nationwide of the more than
5,000 cases by the FBI targeting organized criminal
groups and individuals engaged in significant financial
initiative involved the coordination of 47 FBI Field
Offices, the Criminal Division of the Department
of Justice, participating United States Attorney's
Offices, federal, state and local law enforcement
agencies and financial institution regulatory agencies
that work with the FBI on a daily basis in combating
financial institution fraud.
its inception in August 2004, until today, Operation
Continued Action investigators have identified more
than 245 subjects in 158 investigations. More than
151 indictments, informations and complaints have
been filed to date. These charges have thus far
led to more than 144 arrests, convictions, sentences
and millions of dollars in forfeiture and restitution.
The cases included in today's announcement represent
potential losses due to fraudulent activities against
financial institutions in excess of $3 billions.
2000 to the present, the FBI's investigations in
the financial institution fraud arena have resulted
in more than 11,466 indictments, 11,362 convictions
and approximately $8.1 billion in restitution orders.
FBI continues to be the primary law enforcement
agency in protecting our nation's financial institutions
and the investigation of major fraud is a high priority,"
said AD Swecker.
of the actions filed in districts throughout the
CLEAN DEED: On 09/16/2004, informations were filed
in U.S. District Court, Western District of North
Carolina, charging six individuals with bank fraud
for their roles in a multi-million dollar mortgage
fraud. In November 2002, an FBI Undercover Operation
was initiated utilizing a cooperating witness to
introduce undercover FBI agents into seven organizations
involved in a multi-million mortgage fraud ring.
Investigation led to the identification of fraudulent
loans which exposed financial institutions and mortgage
companies to potential losses of $130 million.
FLIPWAGON: In December 2003, the FBI initiated an
undercover operation to address the massive amount
of mortgage fraud in the Jacksonville area. On 09/16/2004,
as a result of this investigation, seven search
warrants were executed and two arrests were made.
Mortgage broker J.R. Parker, and closing attorney
Dale Beardsley, were arrested, via complaint, charging
them with bank fraud for their role in this alleged
GROSSMAN; DONALD GRAUER; dba THE CHURCHILL GROUP:
On 9/9/2004, Jeffrey Grossman entered a guilty plea
in U.S. District Court. On 08/30/2004, Donald Grauer
entered a guilty plea in U.S. District Court to
bank fraud charges. Grauer and his business partner
Grossman, conducted business as the Churchill Group,
operating numerous real estate developments in the
Chicago area. It is alleged that in the course of
constructing two condominium complexes, they submitted
numerous fraudulent vouchers as part of their monthly
draw requests to Oak Brook Bank and Fifth Third
Bank. Losses due to their alleged activities exceed
$15 million. Both subjects have been charged with
bank fraud and false statements.
SMALL, ET AL, dba AMERIFUNDING: On 08/25/2004, Gerald
Small, Kelli Burkhalter-Small, Charles Winnett,
Chad Heinrich, and Robert Sigg, were arraigned in
U.S. District Court, District of Colorado. These
subjects were charged with bank fraud stemming from
their alleged roles in a scheme to obtain loans
employing stolen identities, and then utilizing
these loan proceeds to purchase substandard houses
which were used to perpetuate this scheme. Losses
attributable to this alleged scheme exceed $19 million.
BRENT BARBER, dba MIDTOWNE RESTORATION, L.L.C.:
On 08/16/2004, Chauncey Joseph Calvert, Aronda Lynn
Nicodemus, and Roderick Neil Criss were arraigned
in U.S. District Court, Western District of Missouri,
for their alleged role in a mortgage fraud ring
which utilized straw purchasers to purchase property
which was then foreclosed upon. This scenario was
repeated approximately 300 times, resulting in losses
in excess of $15 million. The alleged leader of
this organization, Brent Barber, was arrested by
agents of the FBI, Internal Revenue Service, and
the Department of Housing and Urban Development
Office of Inspector General.
DEALS, INC.: On 09/09/2004, based upon a provisional
arrest warrant obtained following his indictment
in the Southern District of New York, Gaya Gayarinth,
an attorney for Allied Deals, Inc., was arrested
in Bangalore, India. On 8/25/2004, Josielynn Salumbides,
was sentenced to 63 months in jail and ordered to
make restitution in the amount of $683,632,800;
Manoj Nijhawan, was sentenced to 41 months in jail
and ordered to make restitution in the amount of
$683,632,800; and Kaushik Amin was sentenced to
18 months in jail and ordered to make restitution
in the amount of $2,211,858. This case was initiated
based upon information from a syndicate of U.S.
financial institutions alleging Allied Deals, Inc.,
had executed a world-wide fraud scheme through the
pledging of fraudulent bills of lading to obtain
credit. This scheme resulted in $500 million in
losses to U.S. financial institutions, as well as
an additional $500 million in losses to financial
institutions in the United Kingdom. To date, 14
individuals have been convicted in this matter.
MYERS, dba STEVE MYERS AUTO SALES: On 09/10/2004,
Tom Winkle was sentenced to 78 months in prison
and ordered to make restitution in the amount of
$8,054,000. On 8/23/2004, Myers was sentenced to
60 months in prison and ordered to make restitution
in the amount of $8,054,000. Myers, the owner of
Steve Myers Auto Sales, teamed with Winkle, the
owner of Tom Winkle Chevrolet, to carry out a check
kite which resulted in the deposit of more than
$495 million in bad checks to banks in the Lima,
Ohio area. This check kiting scheme inflicted losses
of approximately $8 million and contributed to the
failure of the Oakwood Savings Bank.
DAVID SCHICK: On 08/18/2004, David Schick was sentenced
to 97 months in federal prison for his scheme to
defraud several banks through a check kiting scheme.
In this scheme, Schick funneled worthless checks
through a network of shell corporations he set up.
Losses attributable to this scheme were $2.2 million.
BURLEY; TIMOTHY CLARK; KHARY LAWSON; THEODORE WASHINGTON,
also known as "CASH MONEY BOYS": On 09/01/2004,
these subjects were charged in U.S. District Court,
Eastern District of Michigan, on bank fraud and
conspiracy charges for their alleged roles in an
Identity Theft Ring which derived profits of more
than $2 million. This indictment was the result
of the investigative efforts of the Detroit Metro
Identity Fraud Task Force (DMIFTF). The DMIFTF,
comprises agents from the FBI, U.S. Postal Inspection
Service, United States Secret Service, the Michigan
State Police and several local police departments.
Since its inception in 1999, the DMIFTF has accounted
for more than 100 convictions for identity theft
J. CUMMINGS; FORD MOTOR CREDIT - VICTIM: On 09/14/2004,
Philip J. Cummings, former Telecommunications Data,
Inc., technical support representative, pled guilty
in U.S. District Court, Southern District of New
York, to one count of Title (T) 18, United States
Code (USC), Section 1343, Wire Fraud, one count
of T18, USC, Section 1028, Fraud Related to Identification
Documents and Information and one count of T18,
USC, Section 371, Conspiracy, for his participation
in a massive scheme to steal the identities of individuals
which defrauded financial institutions of more than
$11 million. It was alleged that Cummings stole
the passwords and access codes of Ford Motor Credit
and other financial companies, to access Equifax,
Trans Union, and Experian credit report records
and downloaded credit report information on 30,000
individuals. These credit reports were allegedly
sold to a group of co-conspirators. To date, this
is the largest identity theft case.
FINANCIAL INSTITUTION FAILURE
LAKE CITY DIVISION
K. MCARTHUR, DEAN JOHNSON, BANK OF EPHRAIM - VICTIM:
On 09/13/2004, Randy McArthur, Supervisor of Tellers,
Bank of Ephraim, Ephraim, Utah, and his associate,
Dean Johnson, entered guilty pleas to bank fraud
charges for their alleged roles in a $5 million
embezzlement scheme which contributed to the failure
of the Bank of Ephraim. This embezzlement took place
over a 20-year period.
REYNOLDS, NORTH ISLAND FINANCIAL CREDIT UNION -
VICTIM: On 08/20/2004, pursuant to an information,
Cynthia Reynolds pled guilty to one count of Title
18 U.S.C. 657 - Embezzlement, and one count of Title
18 U.S.C. 982 - Criminal Forfeiture, before United
States Magistrate Judge Jan Adler in the Southern
District of California. The plea also directed her
to quit-claim her residence to NIFCU, as funds from
the fraud had been used to pay for the residence.
Cynthia Reynolds was an employee of NIFCU. As part
of her responsibilities, she was authorized to move
funds in and out of the NIFCU real estate suspense
account. Reynolds embezzled at least $917,712.94
from that account by transferring money from the
suspense account into a relative's account at NIFCU.
Reynolds also generated official NIFCU checks drawn
on the suspense account and improperly used these
checks to purchase vehicles, and pay various individuals
and businesses for her and her relatives benefit.
Reynolds concealed her activity by making false
entries into NIFCU's general ledger system.
LAKE CITY DIVISION
JANE COWARD, UTAH COPPER EMPLOYEE'S CREDIT UNION:
On 09/15/2004, Barbara Jane Coward was indicted
for embezzling from the Utah Copper Employee's Credit
Union (UCECU). Coward was employed as the manger
of the UCECU, where she had worked for 54 years.
Coward allegedly embezzled approximately $2.4 million
from UCECU during a 40-year period, through the
creation of fictitious loans.