Category Archives: Government

Houston woman charged for her role in issuing 580,000 fake Texas paper tags

Leidy Areli Hernandez Lopez has been charged in relation to a scheme that issued over 580,000 fake vehicle paper tags.

Also charged are Octavian Ocasio of New York and Emmanuel Padilla Reyes aka Christian Hernandez Bonilla, city unknown. Both men are fugitives and warrants remain outstanding for their arrests.



A quick google search shows that, in February 2016, Ocasio was accused of offering fake New York inspection stickers. It’s not clear whether he was found guilty in that case.

A federal grand jury returned a 15-count indictment on May 20. The fraud mostly operated in 2020 though one count relates to July 2019. The fake tags were generally sold for between $150 and $175 each.

Most residents of Texas are aware that there has been a large problem with fake temporary dealer tags. There have been plenty of stories in recent years on local news and in newspapers. Police in Harris County have estimated that half of the paper tags on Texas roads are fake.

Fake tags are often used by drivers who don’t have insurance or are driving a car that wouldn’t pass inspection.

GDN license – no controls!

In the case of the defendants, it appears that Lopez was acting as a used car dealer. Dealers in Texas must obtain a GDN (general distinguishing number) license to buy or sell vehicles. Once a dealer obtains a GDN license, they can access the online eTag portal of the TX Department of Motor Vehicles to create temporary tags.

However, there are a couple of gaping holes in the system. Firstly, a GDN holder can set up other users on their account who can create and issue temporary tags. Secondly, there are no checks on the vehicle, buyer or vehicle identification number (VIN) entered into the portal.

The defendants advertised the sale of Texas paper tags on Facebook and Instagram to buyers from all over the US.

If convicted each defendant faces up to 20 years in prison and a potential $250,000 maximum fine.

TX Dept of Motor Vehicles

The body that oversees title registration is the Texas Department of Motor Vehicles. It was only created in 2009. In 2017 it issued 8.6 million vehicle titles.

According to a report by the Texas Legislature issued in 2019,  the department only began investigating title fraud in 2014 with the hire of ONE fraud inspector. For 2018-2019, the department was authorized to hire 13 additional investigators.

The department is also hampered by weak IT systems. For example, the same report stated that the department has no fraud reporting tools. Part of the problem is that most of the day-to-day title transactions are carried out by the 254 county tax assessor-collector offices. In turn these offices often sub-contract out such services to private companies.

https://www.justice.gov/usao-sdtx/pr/three-charged-nationwide-scheme-sell-hundreds-thousands-fraudulent-texas-paper-tags

 

 

Houston woman guilty of disaster fraud

Latoya Romar, from SE Houston, has pleaded guilty to defrauding FEMA (Federal Emergency Management Agency) by falsely claiming a storm damaged her residence.



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The 2015 Memorial Day storms dumped up to 10 inches of rain over 12 hours. Seven people died as a result of the storms and a federal disaster was declared for Harris County.

Romar submitted forged documents to FEMA, who paid out $7,124 in response to her claim.

A quick google search on Romar turned up a 2009 conviction in Harris County for forgery. In 2007, Romar was employed by Texas State Bank in the Galleria area. On her application form, Romar had stated that she had never been arrested. In fact, the background check revealed that she had three convictions for forgery, with her last sentence being two years in state jail. She was terminated by the bank in January 2008, the same day the background check results were received.

The following month, in February 2008, she deposited a forged check for $1,000 into her Texas State bank account and then withdrew the money at an ATM. As a result, she was sentenced to six months in jail in 2009.

Sentencing in the latest case is set for August 16. At that time, Romar faces up to 30 years in federal prison and a $250,000 maximum possible fine.

https://www.justice.gov/usao-sdtx/pr/local-woman-guilty-disaster-fraud

Two Houston men charged with $317 million mask fraud

Two Houston men have been charged with trying to fraudulently sell 50 million masks for $317 million to a foreign government. Paschal Eleanya, 46 and Arael Doolittle, 55 are now in custody.

Last month, in a separate case, Doolittle was charged with defrauding investors out of $1.2 million by pretending to have deals with Chevron.



Pascal Eleanya is a supply chain and operations executive who has worked for DuPont, Baker Hughes and Huntsman Corporation.

Both are charged for their role in a scheme to sell 50 million 3M model 1860 N95 respirator masks they did not actually possess to a foreign government. They negotiated a sales price of $317 million. This was five times the public list price that 3M had set.

Based on their representations, the foreign government allegedly wired the funds to complete the purchase. However, authorities disrupted the transaction before it could be completed.

If convicted, both Doolittle and Eleanya face up to five years in prison for conspiracy and up to 20 years in prison for each of the two counts of wire fraud. Each of these charges also carry a possible $250,000 maximum fine.

The Secret Service conducted the investigation.

https://www.justice.gov/usao-sdtx/pr/two-houston-men-charged-attempting-fraudulently-sell-50-million-masks

 

Six Houston-area men charged in $16 million PPP loan fraud

Six Houston-area men have been charged with fraudulently obtaining more than $16 million in Paycheck Protection Program (PPP) Loans. A seventh individual from Illinois was also charged.

The indictment alleges that the defendants filed at least 80 fraudulent PPP applications, seeking nearly $30 million in PPP loan funds. Ultimately about $16 million was funded.



Amir Aqeel, 52 was the ringleader. He would create the loan applications for shelf or inactive companies, working with the other defendants who owned many of them. Other companies were owned by unnamed and not charged individuals.  For some of the loans, Aqeel would keep 33%, with the business owner getting the rest.

Unlike other PPP fraudsters, the defendants went further by writing purported paychecks to fake employees. Many of these were the defendants or their relatives. Aqeel’s 86-year-old mother (not charged) received checks from at least six different companies that received fraudulent PPP loans.

Over 1,100 fake paychecks, totaling over $3 million, were cashed at Almeda Discount Store in SE Houston, owned by one of the defendants.

With some of the proceeds, it is alleged that Aqeel bought a 2013 Lamborghini Gallardo Spyder and a 6,000 sq ft, $1 million house in Champion Forest.

https://www.justice.gov/opa/pr/seven-charged-connection-covid-relief-fraud-scheme-involving-more-80-fraudulent-loan

Houston woman charged with $1.9 million PPP loan fraud

Lola Shalewa Barbara Kasali, 22, of Houston, has been charged with fraudulently obtaining more than $1.9 million in Paycheck Protection Program (PPP) loans.

The complaint alleges that Kasali submitted at least two fraudulent PPP loan applications. One for an entity called Lola’s Level and the other in the name of Charm Hair Extensions. Kasali allegedly received more than $1.9 million in PPP loan funds following the approval of the Lola’s Level application.



The charges allege that after receiving the funds, Kasali transferred the money into four additional bank accounts. Authorities were later able to seize the funds, according to the charges.

The loan applications allegedly asserted both Charm Hair Extensions and Lola’s Level had numerous employees and significant payroll expenses. According to the charges, however, neither entity has employees nor pays wages consistent with the amounts claimed in the loan applications.

According to the PPP loan database of loans over $150,000 that is published by the Small Business Administration, there is one loan approved for Lola’s Level but none for Charm Hair Extensions.

The bank that approved the Lola’s Level loan was Radius Bank of Boston. That bank was also involved in partially funding the PPP loans of a Houston man now charged with buying a Lamborghini with his funds.

https://www.justice.gov/opa/pr/texas-woman-charged-fraudulently-obtaining-nearly-2-million-covid-relief-funds

Houston man sentenced to 54 months for IRS Tax Fraud Scheme

Oluwole Odunowo has been sentenced to 54 months in federal prison for his role in a nationwide conspiracy to commit mail fraud and aggravated identity theft. In May 2020, he pleaded guilty before a court in Oregon.



The IRS began investigating in May 2013, when a woman in Medford, Oregon notified the IRS that false federal and state tax returns were filed electronically. The IRS found that co-conspirators amassed a large supply of stolen U.S. taxpayer identities; obtained IRS filing PINs using victim identities; acquired prepaid debit cards in victims’ names; used fictitious email addresses; filed fraudulent tax returns and wired refund proceeds to Nigeria.

The scheme ran between 2012 and 2015 and netted co-conspirators more than $11.6 million in fraudulent tax returns. Odunowo used 700 stolen identities and filed fraudulent returns seeking over $1.5 million in refund payments. He received refunds totaling $403,000.

According to the Medford Mail Tribune, the scheme began when a Vietnamese hacker got into the databases of CICS Employment Services of Lincoln City, Oregon. He sold 91,732 identities to the ringleader, Emmanuel Kazeem of Maryland. Mr Kazeem was sentenced to 12 years in 2018. Kazeem’s younger brother, Michael, who lived in Georgia, got 7 years in November 2017. Three other Nigerians living in Georgia have also been sent to prison, along with a Wisconsin man, Curtis Pethley.

Because of security breaches tied to Kazeem’s ring, the IRS disabled its “Get Transcript” program in 2015. It was relaunched the following year, with additional security features.

https://www.justice.gov/usao-or/pr/sixth-nigerian-co-conspirator-sentenced-federal-prison-nationwide-identity-theft-and-irs

Houston Funeral Director charged with PPP fraud

A Houston Funeral Director, Jase Gautreaux, has been charged with fraudulently seeking over $13 million in Paycheck Protection Program (PPP) loans.



Mr Gautreaux allegedly submitted several fraudulent loan applications to multiple banks. He applied on behalf of a business that did not exist and sought loans for a business with which he had no affiliation. He allegedly falsified the number of employees, payroll expenses, tax documents and bank account information. Mr Gautreaux ultimately received over $1.6 million in PPP funds.

Mr Gautreaux, 38, is currently a Funeral Director at Wingate Funeral Home. According to LinkedIn, until January 2020, he spent 11 years in Procurement at Tema Oil and Gas (which became part of Rosehill Resources in 2017). During that time, he also appeared to operate his own funeral home business.

Bank fraud is a crime punishable by up to 20 years in prison. Making a false statement within the jurisdiction of a federal agency carries a potential maximum sentence of five years in prison.

In the past day, there were a number of other people around the country who were charged with PPP fraud. These included;

  • Virginia couple ($1.4 million paid out), arrested as they attempted to flee to Poland.
  • Dayton, Ohio businesswoman ($1 million paid out but flagged and recalled by the bank).
  • New York opthalmologist ($630,000 paid out) already under indictment for healthcare fraud.
  • ‘Arkansas Mo’, who appeared in Love & Hip Hop: Atlanta ($3.7 million). He used some of the money to lease a Rolls-Royce
  • Fahad Shah, a Dallas-area man, was charged with a fraudulently seeking $3 million in PPP loans. He allegedly used part of the money to buy a Tesla.

https://www.justice.gov/usao-sdtx/pr/houston-man-charged-covid-relief-fraud

State of Texas agrees to pay $15 million to resolve errors in administering food stamp program

The Texas Health and Human Services Commission has agreed to pay the federal government $15.3 million to resolve allegations that it violated the False Claims Act in its administration of the Supplemental Nutrition Assistance Program (SNAP). SNAP was known as the Food Stamp program until 2008.



Under SNAP, the US Department of Agriculture provides eligible low-income individuals and families with financial assistance to buy nutritious food. Although the federal government funds the benefits, it relies on the states to determine whether applicants are eligible and to administer the scheme.

Furthermore states are required to perform quality control to ensure that eligibility decisions are accurate. The federal government also pay performance bonuses to those states that report the lowest error rate and the most improved error rate. The state of Texas contracted with Julie Osnes Consulting LLC (based in South Dakota) to provide advice and recommendations designed to lower its quality control error rate. The federal government alleged that the recommendations injected bias into the quality control process, resulting in the state receiving performance bonuses in 2010, 2013 and 2014 for which it was not entitled.

This is the fourth state that the Federal government has settled with. All hired Osnes Consulting. The other states are Virginia ($7 million), Wisconsin ($7 million) and Alaska ($2.5 million). The government has also settled with Julie Osnes herself ($0.8 million).  The state of Mississippi is also under investigation.

Although the details concerning the Texas program have not been released, from reporting in other states, it is alleged that the consulting firm would pressure state employees to either reclassify errors as correct or omit them from the sample.  The states would select a quality control sample and the federal government would audit a subset of the state’s sample.

https://www.justice.gov/opa/pr/texas-health-and-human-services-commission-agrees-pay-over-15-million-resolve-false-claims