Tag Archives: Fraud

Mother and stepson sent to prison for $7 million bank fraud

Leyla Wydler and her stepson, Carlos Wydler, have been sent to prison following their conviction by a jury in March 2017. The mother was sentenced to 11 years in June, the step-son got 7 years today.

Leyla Wydler was the owner of several Houston-area businesses including Globan Mortgage Company, Casa Milagro and First Milagro. In 2007, Farmers and Merchants Bank of Long Beach, a California Bank, hired Carlos Wydler. He was in charge of the bank’s credit card department.



Leyla would sent credit card applications to the bank, Carlos would approve the requests for high credit lines, but would ‘advance’ the entire credit line to the borrower via wire or check. Leyla would take a fee from the borrowers’ loan proceeds. The scheme ran for about a year.

The mother and stepson were developing a real estate project in Houston and used the proceeds to finance investors in their project.

Leyla Wydler skimmed more than $1.4 million from loan proceeds. Carlos Wydler approved approximately $600,000 more in unauthorized loans to family members. More than half of the Texas borrowers run through the Wydler-family business in Houston defaulted on their loans. The bank sustained a loss of nearly $7 million.

The defendants were convicted of conspiracy, bank fraud, false statements on credit applications, wire fraud and mail fraud. Carlos Wydler was also found guilty on six counts of misapplication of bank funds.

Carlos Wydler was ordered to pay $6.8 million in restitution. Leyla Wydler was ordered to pay $6 million.

https://www.justice.gov/usao-sdtx/pr/former-banker-and-mortgage-broker-sent-prison-defrauding-california-bank

Houston man charged with spending COVID relief funds on Lamborghini

Lee Price III, who lives in NW Houston, has been charged with fraudulently obtaining more than $1.6 million in Paycheck Protection Program (PPP) loans. He allegedly spent the money on having a good time, including $233,337.60 on a 2019 Lamborghini Urus.

In case you are thinking that you read about this case last week, no, that was a Florida man who used his PPP funds to buy a $318,000 Lamborghini Huracan.



According to the criminal complaint, Price has a felony conviction for forgery (2010) and for robbery (2010). He is also currently a defendant in Harris County, where he is charged with the felony offense of tampering with a government record.

Price purported to be an executive of Price Enterprise Holdings, Price Logistics Services and 713 Construction LLC. Although these entities exist, they have never filed with the Texas Workforce Commission. That means they have not hired employees or paid unemployment taxes.

PPP applications

Price made six applications for PPP funds. However only two were funded, namely;

  • $937,500 by Radius Bank, Boston
  • $752,452 by Harvest Small Business Finance in California.

For the loan financed by Harvest, Price filled out the forms using the name of an elderly man who had died a month before. On this application, Price had an unnamed co-conspirator, who received $250,000 of the funds received.

Wine, women and song (…and an office lease)

According to the complaint, the day he received the funds from Radius, Price bought a $14,000 Rolex watch. The day after, he bought the Lamborghini. The following days saw him spent $700 at a liquor store, $2,000 at a strip club and $2,500 at two Houston night clubs. Later Price paid $100,000 as a deposit on a property in north Houston. He also spent $108,000 on a lease of new business office space (!) in Memorial City.

For the funds received from Harvest, the complaint alleges Price bought a 2020 Ford F-350 for $85,000 and leased a luxury apartment in midtown Houston. $85,000 was also withdrawn in cash.

Price is charged with making false statements to a financial institution, wire fraud, bank fraud and engaging in unlawful monetary transactions.

Price becomes the third Houston-area man to be charged with fraud in connection with PPP loans. A Funeral Director was charged in June. A 29-year old man (same age as Price) was charged in July.

https://www.justice.gov/usao-sdtx/pr/houston-entrepreneur-charged-spending-covid-relief-funds-improper-expenses-including

Houston tax preparers indicted for false filing of tax returns

Two Houston-area woman have been indicted on 32 counts related to the false filing of tax returns.

Rita Rogers and Joi Lin Hunt owned Caliente Xpress Tax Service in Sharpstown, Houston. The business started in 2014. At its peak, the business had 12 employees.



According to the indictment, they allegedly prepared returns for customers for the 2013-2016 tax years that included false schedules on 1040 forms. These claimed company losses for customers who did not own any businesses and had no such expenses.

The indictment further alleges Hunt and Rogers did not inform customers that the 1040 forms were being prepared on their behalf. Although the taxpayers would collect the refunds, Caliente Xpress charged fees ranging from $300 to $600 to prepare the return.

During the 2013-2016 tax years, Hunt and Rogers prepared 2,613 tax returns, according to the indictment. 98% received refunds, totaling $13.5 million. For 66% of these, Caliente allegedly claimed fictitious expenses on a Schedule 1040.

It appears that, during 2016, taxpayers started getting letters from the IRS that their 2013 or 2014 tax return was under audit. An undercover IRS Special Agent later visited the business in February 2017, posing as a taxpayer needing a return prepared. Rogers initially prepared a correct tax return that reported a tax due to the IRS. She then, allegedly prepared another return, claiming false expenses and a refund due. Hunt transmitted the return to the IRS.

If convicted, both face up to five years imprisonment and a possible $250,000 maximum fine.

Caliente Xpress indictment

https://www.justice.gov/usao-sdtx/pr/two-houston-area-tax-preparers-indicted

Another Houston man charged with PPP fraud

Joshua Argires, 29, of Houston, has been charged with COVID relief fraud. He allegedly made two fraudulent applications for more than $1.1 million in forgivable loans through the Paycheck Protection Program (PPP).



The complaint alleges that Mr Argires made applications on behalf of two businesses, Texas Barbecue and Houston Landscaping. He allegedly claimed that the two companies had numerous employees and hundreds of thousands of dollars in payroll expenses.

The $956,000 Texas Barbecue loan was funded through PrimeWay Federal Credit Union, while the Houston Landscaping loan was funded by Bank of America.

The funds received on behalf of Texas Barbecue were allegedly invested in a cryptocurrency account. The funds obtained for Houston Landscaping were held in a bank account and slowly depleted via ATM withdrawals.

Mr Argires is charged with making false statements to a financial institution, wire fraud, bank fraud and engaging in unlawful monetary transactions.

Last month, another Houston man, Jase Gautreaux, was charged with fraudulently seeking over $13 million through PPP loans.

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

Houston man and disgraced lobbyist charged with $5.6m fraud

Marcus Andrade of Missouri City has been charged with conspiracy to commit wire fraud and violating the Lobbying Disclosure Act. Also charged was Jack Abramoff of Maryland.



Mr Abramoff was the center of a large corruption scandal in 2005 that led to 21 people pleading or being found guilty. Abramoff and other lobbyists grossly overbilled Native American tribes who were seeking to develop casino gambling on their reservations. Abramoff illegally gave gifts and made campaign donations to legislators in return for votes. As a result he served three and a half years in prison.

Abramoff has filed notice that he intends to plead guilty to the charges. It appears he has agreed to a settlement that will require him to repay the $50,000 in commissions he received. He will also pay $5,500 in interest. He may be subject to civil penalties arising out of a separate suit brought by the SEC against Andrade and Abramoff.

Mr Andrade developed a new cryptocurrency called AML BitCoin that purportedly would prevent money laundering and anonymous use through ‘biometric technologies’. Andrade claimed this would allow AML to comply with anti-money laundering and know-your-customer laws and regulations.

Investors misled

Between July 2017 and December 2018, Andrade raised more than $5.6 million from more than 2,400 investors by selling tokens that could later be converted to AML BitCoin. Allegedly, Andrade and Abramoff misled investors by;

  • engaging in a false ‘rejection campaign’ regarding a television commercial that they falsely stated was going to be aired during the 2018 Super Bowl. They claimed the networks and the NFL deemed the commercial too politically controversial as it involved a Kim Jong-un lookalike.
  • making false statements regarding the state of development of the technology
  • making false statements that they were about to finalize agreements with various government agencies for the use of AML Bitcoin.

Money used for personal expenses

The charging document alleges that Andrade diverted more than $1 million to buy

  • a 5-bedroom house in Sienna Plantation ($747,000)
  • a house for his father ($226,000)
  • a Cadillac Escalade ($69,000)
  • a Ford F250 truck ($60,000)

Andrade claims he is innocent and that Abramoff was working with the government to try and get him to sell the technology.

If convicted, Andrade faces a maximum fine of 20 years and a fine of $500,000 plus restitution. The government has already started legal proceedings to get the house.

https://www.justice.gov/usao-ndca/pr/lobbyist-jack-abramoff-and-ceo-rowland-marcus-andrade-charged-fraud-connection-5

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

FTC proposes $225m fine for company that made 1 billion illegal robocalls

The Federal Communications Commission has proposed a record $225 million fine against two related Houston companies. According to the FTC, the companies made 1 billion robocalls in the first five months of 2019, primarily on behalf of clients that sell short-term, limited-duration health insurance plans. Some of the calls were for extended vehicle warranties.

In a related action, the states of Arkansas, Indiana, Michigan, Missouri, North Carolina, Ohio and Texas have also filed a complaint in the Southern District of Texas against the companies and their owners.

Houston companies, Austin owners

The two Houston companies are Rising Eagle Capital and JSquared Telecom. They are registered to a residential address in NW Houston. The owners of the businesses are John C Spiller, II and Jakob Mears. They live in Austin.

The complaint alleges that Spiller and Mears operated Rising Eagle from January 2018 to January 2020, through which they placed billions of robocalls. On January 2019, they formed a new entity, JSquared Telecom. Spiller and Mears targeted numbers on the national ‘Do not call’ Registry list.

According to the Texas Attorney General, between January and May 2019, they placed 136 million robocalls to Texas residents. Interestingly the complaint filed in court only mentions 328 million robocalls (including the other states) in the first five months of 2019, not the 1 billion mentioned by the FTC. But who’s counting!

The calls would come from a number with the same area code and prefix of the recipient in order to mislead the recipient into believing the call was coming from someone known to the recipient. This practice is called neighborhood spoofing.

FTC collection rate

The FTC appears to have little chance of collecting much of the fine in this case. According to a 2019 Wall Street Journal article, the FTC had levied $208 million in fines against robocallers, but collected only $6,790.

FTC $225 million proposed fine

Spiller – Southern district of Texas complaint 6.9.20

 

SEC bars Houston investment advisor after guilty plea

The Securities and Exchange Commission has barred Bill Hightower from association with any broker or investment advisor. This follows Mr Hightower’s guilty plea in a federal court in October 2019.

Mr Hightower had been indicted in October 2018 on 13 counts for running a $10 million Ponzi scheme between 2013 and 2018. Mr Hightower, who lives in Bellaire, was the President of Hightower Capital Group, which he founded in 2010. He worked as a broker for UBS Financial Services between 2007 and 2013 and Legacy Asset Securities between 2013 and 2015.



Just before his trial was due to start in October 2019, he pleaded guilty to two counts. One for transferring $900,000 from a trust for an elderly investor and using that money to pay back other investors and fund his personal lifestyle. For the second count, he admitted to selling $800,000 worth of ExxonMobil shares without the investor’s permission. Again he used the money to pay back other investors and fund his personal lifestyle.

As part of the plea agreement, Mr Hightower agreed that investors lost $9.5 million. He also agreed to pay back whatever amount the Court decides as restitution. He is scheduled to be sentenced in July. Mr Hightower could face up to 20 years in prison.

In a separate case, in September 2019, the Financial Industry Regulatory Authority (FINRA) ordered UBS to pay $555,000 to an 90-year old woman who claims she was defrauded by Mr Hightower. At that time, he was a broker for UBS.

https://www.sec.gov/litigation/admin/2020/34-88941.pdf

 

Missouri City Physician to pay $450,000 to resolve fraud allegations

Dr Maaz Abbasi has agreed to pay $450,000 to resolve allegations that he falsely signed home help certifications and plans of care in exchange for money. He also agreed to a three-year exclusion from participation in any federal healthcare program.

Dr Abbasi was connected with Egondu ‘Kate’ Koko. In May 2019, she was sentenced to over 15 years in prison for her role in a $20 million medicare fraud. She owned a number of home health agencies. She admitted to paying illegal kickbacks and bribes to physicians and patients for paperwork necessary for the agencies to bill Medicare.

From 2015 to 2018, Abbasi certified patients for home health services without any knowledge of their medical condition or homebound status. One of the companies owned by Ms Koko paid Abbasi approximately $6,200 in exchange for signing these fraudulent Medicare home health certifications and plans of care. Abbasi also fraudulently signed a fellow physician’s name on these certifications and plans of care without that physician’s authorization, permission or knowledge.

The agreement resolves the allegations without a determination of liability.

https://www.justice.gov/usao-sdtx/pr/missouri-city-physician-pays-nearly-half-million-resolve-illegal-kickback-and-fraud

Texas City man admits to $5 million health care fraud

Ravinder Syal, 57, of Texas City, has admitted to a nearly $5 million fraud in a Corpus Christi federal court.



Between February 2018 and March 2020, he acquired several physician practices in Harris County, Galveston County and Corpus Christi. He handled the administrative functions of the practices including staffing and billing. In each case, he switched the practices to electronic billing and hired an outside billing service, located in India, to handle patient billing.

The Defendant conspired with the outside billing firm to fraudulently bill Medicare, Medicaid, and several private health insurers. He billed for tests and services that were not rendered by a physician or performed during a patient visit.

Syal acted without the knowledge or assistance of the physicians. According to the charge sheet, this included his wife, who is a pediatrician!

He fraudulently billed services amounting to almost $4.9 million. Syal was paid $553,069 as a result of these claims.

Sentencing has been set for August 10. At that time, Syal faces up to 10 years in federal prison and a possible $250,000 maximum fine.

https://www.justice.gov/usao-sdtx/pr/texas-man-admits-role-nearly-5-million-health-care-fraud-scheme