A former Middlesex County man involved in a $16 million insurance fraud scheme was sentenced to two years in federal prison yesterday.

http://liarcatchers.com/fraud_investigation.html

Edward Dombrowski, 47, now an Acworth, Ga., resident, previously pleaded guilty in federal court to one count of conspiracy to commit wire fraud. He was ordered yesterday to pay nearly $1 million in restitution and serve three years of post-release supervision, U.S. Attorney Paul J. Fishman said.
Dombrowski and his co-conspirator, 53-year-old Stephen Locrotondo of Bridgewater, orchestrated a multi-layered scheme that involved ripping off several companies by falsely claiming they had created a group life insurance policy for hundreds of Linden employees, according to prosecutors and court documents.
The conspiracy had several components, authorities said:
First, the employees were told they would receive free life insurance paid for by a financing company in exchange for a share of the benefits. Then, despite never finalizing a policy, the men told the finance company a $15 million premium was due, and had that money paid out to a trust they created.
Dombrowski took nearly $2 million, buying real estate, stocks and two luxury cars, Fishman said.
The men also convinced a factoring company — a firm that buys another company’s accounts receivable — to become involved, authorities said. That firm, New Jersey-based Pine Brook Funding, paid Locrotondo $1 million for commissions that he was never really owed, prosecutors said.
Locrotondo previously pleaded guilty and is awaiting sentencing.

The woman who built a 7,600-square-foot mansion and bought a Jaguar convertible while collecting roughly $3 million in taxpayer subsidies from her Milwaukee child care centers has agreed to plead guilty to fraud, theft and conspiracy.

http://liarcatchers.com/fraud_investigation.html

Latasha Jackson, 34, faces a maximum of 35 years in prison, but she is likely to get far less time under federal sentencing guidelines, according to a plea agreement filed this week in federal court in Milwaukee.

Prosecutors will ask that Jackson be ordered to pay $333,000 in restitution. No sentencing date has been set. Jackson most recently was living in Texas.

Jackson, who also is listed as Latasha Wilder in court documents, was charged with using two centers to defraud state and federal programs designed to help poor mothers go to work. Regulators ignored red flags for 10 years that she could be cheating the system, the Journal Sentinel’s “Cashing in on Kids” investigation found.

The case against Jackson is one in a series of federal and state criminal cases brought in the wake of the newspaper’s series, which uncovered millions in taxpayer dollars squandered by parents and providers scamming the $350 million Wisconsin Shares program.

The series also discovered hundreds of criminals working in the business, with some of Milwaukee’s biggest crime bosses having ties to centers. It sparked taxpayer outrage and led to the closure of more than 170 centers. State officials said the crackdown saved $45 million in 2010 alone.

Jackson was indicted with participating in a fraud with a different center and later with committing fraud through her centers. The defendants in the first case are still set for trial later this year.

Jackson has agreed to plead guilty to three counts from the two cases – conspiracy to defraud the government, theft and fraud.

Her attorney, Rodney Cubbie, noted the plea agreement settles all counts in both cases against Jackson.

“These are always client decisions,” Cubbie said of her decision to plead guilty. “I make my recommendation and the client makes the decision.”

According the plea agreement, Jackson collected funds for children who did not attend her centers, Latasha’s Learning Enterprise and Kiddie Springs Child Development Center, from December 2006 to August 2009.

Failure to act
The Journal Sentinel first wrote about Jackson in August 2009, compiling a paper trail on Jackson tallying more than 1,800 pages, including public records as well as documents, obtained from sources, that state and county regulators refused to release.

The documents detailed how regulators repeatedly failed to take action or cut off payments despite Jackson’s extensive violations, her history of lying and even regulators’ own outright proof of fraud. The Journal Sentinel series won the Pulitzer Prize for local reporting in 2010.

Jackson’s center, Latasha’s Learning Enterprise, was shut down in 2007. She sent authorization information for 45 children to another center, run by Duane and Shontina Gladney, according to the federal case filed in 2011.

The children didn’t attend the Gladneys’ center, Executive Kids, but the Gladneys billed the state anyway and paid Jackson for the information, according to the first indictment.

Jackson’s license was revoked because she beat her nephew with a belt, according to documents obtained by the Journal Sentinel. Jackson applied for public assistance to enroll her three children and a niece in the Gladneys’ center while she reportedly worked for them in their real estate office, the indictment stated. But Jackson’s children never attended.

Jackson later went before a rehabilitation panel and won her license back. She reopened in December 2008 as Kiddie Springs on W. Lancaster Ave. near N. 38th St. State regulators revoked her license in 2009 after learning the Journal Sentinel was preparing to publish a story.

While Jackson was under investigation, fire destroyed her home in Menomonee Falls in December 2009. Investigators call the fire suspicious. No one was charged.

The Cape Coral Police Department will announce the findings of a year-long investigation into personal injury protection insurance fraud Thursday.

http://liarcatchers.com/fraud_investigation.html

The joint-investigation involves the Cape Coral Police Department and United States Secret Service, according to the Cape Coral police.

They partnered with the U.S. Attorney’s Office, IRS, State of Florida Department of Financial Services (Insurance Fraud Division), Miami and Hialeah police and the National Insurance Crime Bureau, according to Anthony Sizemore, Cape police spokesman.

They will announce the unsealing of two federal indictments and multiple arrests related to fraudulent insurance schemes in Southwest Florida.

The state Legislature earlier this month approved new laws in hopes of stopping PIP fraud.

WASHINGTON, DC – Delton de Armas, a former chief financial officer (CFO) of Taylor, Bean & Whitaker Mortgage Corp. (TBW), pleaded guilty today to making false statements and conspiring to commit bank and wire fraud for his role in a more than $2.9 billion fraud scheme that contributed to the failures of TBW and Colonial Bank.

http://liarcatchers.com/fraud_investigation.html

The guilty plea was announced today by Christy Romero, Deputy Special Inspector General for the Office of the Special Inspector General for the Troubled Asset Relief Program; Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; David A. Montoya, Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Rick A. Raven, Acting Chief of the Internal Revenue Service Criminal Investigation (IRS-CI).

De Armas, 41, of Carrollton, Texas, pleaded guilty before U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. De Armas faces a maximum penalty of 10 years in prison when he is sentenced on June 15, 2012.
“With our nation in a housing crisis, de Armas, as chief financial officer of TBW, one of the country’s largest mortgage lenders, papered over a gaping hole in the balance sheet of TBW subsidiary Ocala Funding and lied to regulators and investors to cover it up,” said Christy Romero, Deputy Special Inspector General for SIGTARP. “The fraud provided cover to others at TBW to misappropriate more than $1 billion in Ocala funds and sell fraudulent, worthless securities to conspirators at Colonial BancGroup. SIGTARP and its law enforcement partners stopped $553 million in TARP funds from being lost to this fraud and brought accountability and justice that the American taxpayers deserve.”

According to court documents, de Armas joined TBW in 2000 as its CFO and reported directly to its chairman, Lee Bentley Farkas, and later to its CEO, Paul Allen. He admitted in court that from 2005 through August 2009, he and other co-conspirators engaged in a scheme to defraud financial institutions that had invested in a wholly-owned lending facility called Ocala Funding. Ocala Funding obtained funds for mortgage lending for TBW from the sale of asset-backed commercial paper to financial institutions, including Deutsche Bank and BNP Paribas. The facility was managed by TBW and had no employees of its own.

According to court records, shortly after Ocala Funding was established, de Armas learned there were inadequate assets backing its commercial paper, a deficiency referred to internally at TBW as a “hole” in Ocala Funding. De Armas knew that the hole grew over time to more than $700 million. He learned from the CEO that the hole was more than $1.5 billion at the time of TBW’s collapse. De Armas admitted he was aware that, in an effort to cover up the hole and mislead investors, a subordinate who reported to him had falsified Ocala Funding collateral reports and periodically sent the falsified reports to financial institution investors in Ocala Funding and to other third parties. De Armas acknowledged that he and the CEO also deceived investors by providing them with a false explanation for the hole in Ocala Funding.

De Armas also admitted in court that he directed a subordinate to inflate an account receivable balance for loan participations in TBW’s financial statements. De Armas acknowledged that he knew that the falsified financial statements were subsequently provided to Ginnie Mae and Freddie Mac for their determination on the renewal of TBW’s authority to sell and service securities issued by them.

In addition, de Armas admitted in court to aiding and abetting false statements in a letter the CEO sent to the U.S. Department of Housing and Urban Development, through Ginnie Mae, regarding TBW’s audited financial statements for the fiscal year ending on March 31, 2009. De Armas reviewed and edited the letter, knowing it contained material omissions. The letter omitted that the delay in submitting the financial data was caused by concerns its independent auditor had raised about the financing relationship between TBW and Colonial Bank and its request that TBW retain a law firm to conduct an internal investigation. Instead, the letter falsely attributed the delay to a new acquisition and TBW’s switch to a compressed 11-month fiscal year.

In April 2011, a jury in the Eastern District of Virginia found Lee Bentley Farkas, the chairman of TBW, guilty of 14 counts of conspiracy, bank, securities and wire fraud. On June 30, 2011, Judge Brinkema sentenced Farkas to 30 years in prison. In addition, six individuals have pleaded guilty for their roles in the fraud scheme, including: Paul Allen, former chief executive officer of TBW, who was sentenced to 40 months in prison; Raymond Bowman, former president of TBW, who was sentenced to 30 months in prison; Desiree Brown, former treasurer of TBW, who was sentenced to six years in prison; Catherine Kissick, former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division (MWLD), who was sentenced to eight years in prison; Teresa Kelly, former operations supervisor for Colonial Bank’s MWLD, who was sentenced to three months in prison; and Sean Ragland, a former senior financial analyst at TBW, who was sentenced to three months in prison.

The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the U.S. Department of Justice Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, the FBI’s Washington Field Office, FDIC-OIG, HUD-OIG, FHFA-OIG and IRS-CI. The Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury also provided support in the investigation. The U.S. Securities and Exchange Commission also provided substantial assistance in the investigation.

This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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.