Tag Archives: Fraud

Houston Personal Injury lawyer indicted in $2.4m fraud

Houston attorney, Clyde Moore, known in his advertisements as ‘Car Wreck Clyde’, has been indicted for defrauding injured clients of settlement funds. His office manager, Mark Broussard, was also indicted. The estimated amount of the fraud was $2.4 million.



Moore is a personal injury lawyer. He and Broussard obtained cases by making cash payments to tow truck drivers, repair shop employees and others who would refer car-wreck cases to the firm. According to 2020 civil lawsuit filed by a client, the going rate was $1,000 for a ‘normal’ car accident and $1,500 for a commercial accident.

The scheme ran from 2012 to 2021 and was simple in nature. Moore’s injured clients would obtain medical treatment under a Letter or Protection from Moore’s firm through which Moore agreed to pay the bills of the medical providers. Moore would send these bills to insurers with demands for settlement. However, Moore had agreed lower reduced fees with certain medical providers. His firm would pocket the difference, rather than pass it onto the clients.

Moore, Broussard and three unnamed employees kept detailed ledgers of the amounts being skimmed. Moore would pay the three employees bonuses, based on their share of the skimmed proceeds. The civil lawsuit alleged the bonus paid to the employees was 3% of the amount skimmed.

Dispute between the parties

Interestingly, the case appears to have arisen from a dispute between Moore and Broussard. They were old friends, and Moore hired Broussard in 2012. They formed a partnership where Broussard was to be paid 50% of the net revenues on cases where he did the majority of the pre-litigation work, and 3% of revenues on all other cases.

The partnership broke down in 2017 over a dispute over what Broussard was allegedly owed. Broussard filed a lawsuit that resulted in a mediated settlement agreement that would pay Broussard $660,404. He alleges that Moore made only two payments and then defaulted on the promissory note. Broussard filed a new suit in 2022 to enforce the agreement.

Possible penalties

For conspiracy to commit mail fraud, Moore and Broussard face up to five years in federal prison and a possible $250,000 maximum fine. Moore is also charged with an additional count of mail fraud which carries a maximum prison sentence of up to 20 years and a possible $250,000 fine.

https://www.justice.gov/usao-sdtx/pr/houston-personal-injury-attorney-and-employee-indicted-defrauding-injured-clients-0

 

 

SEC charges 17 individuals in $300m Crypto Ponzi scheme

The SEC has charged 17 individuals with running a $300 million Crypto Ponzi Scheme that targeted the Latino community. The company involved, CryptoFX LLC, and many of the individuals are based in Houston.



The individuals behind CryptoFX are Maurico Chavez and Giorgio Benevenuto. Chavez founded the company in 2020, while Benevenuto assisted Chavez in operating it. The SEC filed an emergency action to halt the scheme in September 2022. They appointed a Receiver over the company and the assets of Chavez and Beneventuo.

The Receiver reported that the company had raised at least $300,000 from over 40,000 predominantly Latino investors across the US. CryptoFX’s market trading generated only $2.6 million in trading profits.

The Founders

Chavez and Benevenuto are not charged in this indictment as they already settled with the SEC in 2023. They agreed to pay back their ill-gotten gains with interest, and a civil penalty. The SEC will determine the amounts later.

In the complaint against Chavez and Benevenuto, the SEC alleged that they diverted $8 million of investor funds to a real estate development company that they owned. The SEC also allege that they diverted a further $6.4 million to homebuilders and related professional companies for the purchase and development of multiple properties. In addition, Chavez is alleged to have spent $1.4 million on personal spending, including $181,996 for his stay at the luxury Post Oak Hotel.

The current Defendants

The current SEC complaint alleges that, from May 2020 to October 2022, the 17 individuals from Texas, California, Louisiana, Illinois and Florida, acted as leaders of the CryptoFX network. They solicited investors by promising returns ranging from 15% to 100%. Instead of placing investor funds into a trading program, CryptoFX and the defendants mostly used the funds to pay returns to existing investors.

CryptoFX operated a commission structure where the defendants got a 7% commission on all investments they brought in, plus 3% of all funds solicited by their first-tier investors.

Combined, the 17 defendants earned nearly $5.2 million from commissions from the scheme. Ismael Zarco Sanchez, of Conroe, earned $2.1 million, while four others earned over $400,000 each.

Sanchez is alleged to have told an investor to wire his investment of $260,000 directly to Chicago Title of Texas. Sanchez was in the process of buying a house in Conroe for $1 million.

Two of the individuals, who earned a combined $62,000 have already agreed to settle with the SEC.

https://www.sec.gov/news/press-release/2024-35

 

 

 

Husband illegally profits $1.8 million from wife’s M&A deal

Tyler Loudon, a Houston resident, has pleaded guilty to insider trading. He made $1.8 million in illegal profits from the purchase and sale of stock market shares.



Loudon’s wife was an associate manager in M&A working for BP. While working from home in December 2022, Loudon learned that BP was negotiating a deal to buy TravelCenters of America, a US publicly-traded company. Loudon purchased a series of options for TravelCenters in December, January and February, without telling his wife.

BP announced the $1.3 billion deal in mid-February 2023. Loudon promptly exercised the options, netting a profit of $1,763,522.

Loudon finally confessed to his wife in April 2023. She immediately notified BP what had happened.

As part of the plea agreement, Loudon has agreed to forfeit the profits. At his sentencing hearing, scheduled for May 17, he faces up to five years in prison and a possible maximum $250,000 fine.

Loudon’s wife no longer works for BP. She joined another Houston-area company in 2023.

https://www.justice.gov/usao-sdtx/pr/insider-trading-husband-illegally-profits-17m-after-using-wifes-private-company

Twin sisters charged in $170 million healthcare fraud scheme

Shalondria Simpson, a Houston-based Pharmacist and her twin sister, physician Lashondria Simpson-Camp have been charged for their roles in a multi-million healthcare fraud, kickback and money laundering scheme. The 13-count indictment also charges Shayla Bryant, the business manager for Ms. Simpson.



The scheme allegedly ran between 2016 and 2022 and involved prescriptions for injured federal United States Postal Services (‘USPS’) workers. Simpson owned two pharmacies in Houston, Advance Pharmacy and TruCare Phamacy. She allegedly submitted test claims to determine reimbursements for a given drug. After learning the rates, Simpson reversed the test claims and submitted fraudulent claims instead.

Simpson sent pre-printed prescription pads to her sister, based in Allen, TX and to a medical clinic based in Saint Rose, Louisiana. Simpson and Bryant paid kickbacks to her sister and the owner of the Saint Rose clinic in exchange for referral of prescriptions. In fact, the indictment alleges Simpson paid her sister $1.65 million in kickbacks to allow Simpson-Camp to buy a medical clinic in Richardson, TX and refer more claims in furtherance of the scheme.

Between in or around January 2016, and May 2022, Advance and TruCare billed FECA approximately $170 million for prescription drugs. FECA paid Advance and TruCare approximately $53 million on those claims.

The court has notified the defendants that the following property is subject to forfeiture;

  • $53.8 million in criminal proceeds
  • 7 properties, 6 in the Houston-area, one in New Orleans
  • 6 vehicles
  • 9 accounts with financial institutions.

If convicted, Simpson, Simpson-Camp and Bryant each face a maximum penalty of five years in prison for conspiracy to defraud the United States and pay and receive health care kickbacks as well as 10 years in prison for conspiracy to commit healthcare fraud. Simpson and Bryant each face a maximum penalty of 10 years in prison for each count of paying health care kickbacks. Simpson faces a maximum penalty of 20 years in prison for conspiracy to launder money instruments and 10 years for each count of money laundering.

https://www.justice.gov/usao-sdtx/pr/physician-and-two-pharmacists-charged-170m-fraud-scheme

Baytown woman admits to embezzling $3m from employer

Judy M. Green, of Baytown, admitted embezzling over $3 million from her employer over a 10 year period. She pleaded guilty to wire fraud and will be sentenced in August. Ms. Green faces up to 20 years in prison as well as a $250,000 fine.



Her employer, Liqua Tech services commercial properties and focused on roofing, siding and building maintenance for those properties. Ms. Green was hired in 1994 and served as the primary and often only manager of accounts payable for the company.

As part of her duties, Ms. Green received and entered invoices and presented them to the owner for her signature or approval for payment. She would then produce the physical checks for the owner to sign as Ms. Green did not have signature authority.

Beginning in December 2011 and continuing until July 2022, Ms. Green devised a scheme to divert funds for her own personal use. She began to create fake invoices in the name of legitimate vendors. Once she got those invoices approved by the owner, she would change the payee name in the accounting system to one of her or her children’s credit card companies.  She would then physically print the check, forge the owner’s signature and mail the check to the credit card company to cover her personal debts. Ms. Green would then go back in the system and change the payee back to the original listed vendor.

The scheme was uncovered In the summer of 2022 when the owner noticed a large payment to an unknown credit card company.

https://www.justice.gov/usao-sdtx/pr/baytown-woman-admits-embezzling-millions-her-employer

Sugar Land business owner pleads guilty to bribery and bid rigging

Sudhakar Kalaga, a Sugar Land business owner, has pleaded guilty to a nine-year fraud in which he engaged in a bribery and bid rigging fraud to secure construction and maintenance work contracts.



Although the complaint filed in the Southern District of Texas doesn’t name the company, Toshiba International filed a lawsuit in 2019 against Mr. Kalaga and Pablo D’Agostino, a facilities manager employed by Toshiba in Houston. The company alleged that the two men conspired to trick it into awarding over $100 million in construction contracts to KIT Professionals, the company owned by Mr. Kalaga. Mr. D’Agostino died in 2019 before the case came to a conclusion.

From 2010 to 2019, Mr. Kalaga submitted fake bids to Toshiba to Mr D’Agostino, who coordinated the submission of the fake bids to make it appear Mr. Kalaga’s company was the low bidder. In exchange for rigging the bid process, Mr Kalaga paid Mr. D’Agostino millions of dollars in cash, luxury gifts and other items.

KIT Professionals has been awarded a lot of work by the City of Houston, although the guilty charge does not relate to any work done for the public sector.  According to the Houston Chronicle, KIT was awarded $55 million in contracts between 2008 and 2022 ($50 million from the city and $5 million from Harris County).

Mr. Kalaga and his wife also donated $93,550 to 25 city candidates from 2007 to 2019. Houston mayor, Sylvester Turner, received $25,000.

Mr. Kalaga now faces up to five years in prison and a possible maximum fine of $250,000. His sentencing is scheduled for June 20.

https://www.justice.gov/usao-sdtx/pr/sugar-land-business-owner-pleads-guilty-nine-year-fraud-scheme

Social Influencers charged in $114m Pump-and-Dump scheme

Eight men have been indicted in a $114 million ‘Pump and Dump’ securities fraud that ran from January 2020 until April 2022. All have been arrested and will appear in court in Houston. There is both a criminal complaint filed by the Justice Department and a civil complaint, filed by the SEC.



The men allegedly manipulated stock prices by publishing false and misleading information on Twitter, on podcasts and through an online forum called Atlas Trading. Edward Constantin from Montgomery, TX and Perry Matlock from The Woodlands co-founded Atlas. Mr. Constantin, aka “MrZackMorris” had 551,000 Twitter followers while Mr. Matlock had 340,000.

Another defendant, John Rybaracyzk, from Spring had 267,000 followers and founded another stock trading forum on Discord. Other defendants are from Beverly Hills, New Jersey, Miami and Houston.

The scheme was simple. One or more of the group would buy a penny stock and tell the others in the group, allowing them to buy in at lower prices, prior to the manipulation. Then they would promote the stock to their followers. They would announce price targets, tease upcoming news and/or state their intentions to buy or hold their current positions.

After promoting the stock, they would sell their shares. Often they would continue to recommend their followers buy the stock, while not disclosing that they were selling their shareholding.

In the indictment, the first example given is of Camber Energy (CEI), a Houston-based penny stock. On August 3-4, 2021 three defendants bought a combined 2.2 million shares at an average price of 46 cents each. At 3.37pm on August 4, one defendant posts on Twitter and on Atlas “I added CEI for the swing… Last time it was at these prices, we went to $3”. Matlock posts on Atlas one minute later, echoing the sentiment.

Within the next four minutes, all three had sold a combined 465,000 shares after the stock rose by a penny. The cycle of promotional tweets and simultaneous sales happened five more times that day as the stock rose to 50 cents. Between August 3 and August 5, the three defendants made $54,989 through their misleading posts on CEI.

Constantin followed with a similar pattern and between September 1, 2021 and October 5, 2021, he made $4.3 million on buying and selling CEI stock.

It appears that someone known to all the defendants is working with prosecutors and helped build the case against them. The indictment refers to two unindicted co-conspirators. It also refers to private Discord chats between some of the defendants that were surreptitiously recorded.

That includes these two classics from one of the defendants, Daniel Knight (who lives in Houston);

‘Get caught? … We’re robbing f*cking idiots of their money…’

“. . . I mention a stock the less likely I get involved whenever all of Atlas gets a class action lawsuit . . . I’m playing this extremely smart, for the very long term. If you don’t think all
these f*ckers go to jail or at least get sued, you are crazy. . . .PJ is posting McLarens, $10 mill accounts, green 400 f*cking days in a row, come on. Every purchase over $10,000
immediately gets turned to the SEC. And it’s like everything he f*cking buys. . . . Just wait and see. . . . It’s market manipulation.

All defendants are charged with one count of conspiracy to commit securities fraud. Most are also charged with multiple counts of securities fraud. If convicted, each defendant faces a maximum penalty of 25 years in prison for conspiracy to commit securities fraud and each charged count of securities fraud. Constantin also faces a maximum penalty of 10 years in prison if convicted of engaging in unlawful monetary transactions.

Criminal Indictment

Former manager of Prairie View Credit Union indicted for embezzlement

Gloria Hall, who was the Manager of Prairie View Credit Union (“PVCU’) for 20 years, has been indicted on charges of embezzlement. PVCU was founded in 1937 to serve the Prairie View A&M University and surrounding community.

The discovery of the alleged fraud resulted in the National Credit Union Administration liquidating PVCU (assets $3 million) and forcing a merger with Cy-Fair Federal Credit Union (assets $340 million) earlier this year.



Hall joined PVCU as a loan officer in 1988, but left in 1990 to work for the University. She returned in 2000 as manager of the credit union.

During her 20 years as manager, PVCU did not offer online banking and do not have an ATM. Hall single-handedly approved all loans and personally communicated with major account holders. She controlled access to all books and records and controlled the information provided to the PVCU Board of Directors.

From 2010 to August 2020, Hall utilized 34 member accounts, mostly belonging to elderly members, to carry out various fraudulent schemes. She allegedly created 58 false loans in the names of relatives and friends and transferred $791,000 from elderly credit union members to those relatives and friends. When loans were due, she would create more false loans to repay the amounts due. It’s not clear from the indictment how much of the $791,000 was lost.

Between November 2017 and September 2019, Hall also allegedly embezzled  $211,563 from two elderly account holders and transferring the monies to other account holders. Between 2016 and 2020 she also allegedly withdrew $76,772 from account holders and used the money for her personal benefit.

The National Credit Union Administration estimated total losses to be $200,000.

Hall is charged with three counts of embezzlement by a credit union employee and one count of making false entries in the financial records of the credit union.

If convicted, Hall faces up to 30 years in prison and a possible $1 million maximum fine.

https://www.justice.gov/usao-sdtx/pr/former-manager-prairie-view-federal-credit-union-indicted-embezzlement-charges

Houston bank first to settle allegations of false PPP lending

Prosperity Bank, based in Houston, has become the first US bank to settle claims arising out of the Paycheck Protection Program (PPP). It has agreed to pay $18,674 arising from a $213,400 PPP loan made to Woodlands Pain Institute.



The PPP application included a question asking whether the applicant is subject to an indictment or is facing criminal charges. At the time of his application, Dr. Emad Bishai was the sole owner of Woodlands Pain Institute. He checked the box marked ‘No’ even though he was facing criminal charges in Montgomery County.

Prosperity Bank employees knew Bishai was facing charges and was therefore ineligible to apply for the PPP loan. They processed his application anyway. Prosperity Bank received a 5% processing fee of $10,670.

Bishai entered into a $0.5 million settlement in November 2021 to resolve his liability arising from fraudulent medical billing and his submission of the PPP loan application. He also repaid the PPP loan in full in 2022.

https://www.justice.gov/usao-sdtx/pr/first-ever-false-claims-act-settlement-received-paycheck-protection-program-lender

Ex-wife indicted in $600,000 Medicaid fraud

Kay Le Farmer, who lives in Katy, has been indicted for defrauding Medicaid of more than $600,000.

Her ex-husband is a licensed professional counselor, who operated a practice in West Houston from 2009 to 2013. Ms. Farmer and the counselor were married from 2000 to 2014. They separated in 2013 and divorced the following year.



From 2012 until 2013, Ms. Farmer was the office manager for the practice and had access to patient information as well as the practice’s billing records. In June 2013, it is alleged she began billing Medicaid for services not provided by her now ex-husband. She channeled the funds received to a newly-opened bank account that she controlled.

The fraud continued even after Ms. Farmer began employment as an office manager with a Pediatrician in Katy. Between November 2017 and March 2018, she submitted claims for 25 patients associated with the Pediatrician for psychotherapy services purportedly provided by her ex-husband.

In total, from June 2013 until June 2018 Ms. Farmer billed Medicaid $617,000. She was paid about $475,000, which she then transferred to her personal accounts.

In 2018, when one of the insurance companies requested records from Ms. Farmer regarding services billed, she requested a records extension and falsely claimed her ex-husband had suffered a massive stroke and was in hospital.

If convicted, Farmer faces up to 10 years in federal prison and a possible $250,000 maximum fine for each count of health care fraud. She was indicted on 22 counts (each count represents a specific fraudulent claim made in 2017 or 2018).

https://www.justice.gov/usao-sdtx/pr/therapist-s-ex-wife-charged-defrauding-medicaid-and-stealing-patient-information