RICHMOND, VA—Justin Glynn French, 40, of Richmond, Va., was sentenced today to 196 months, followed by three years of supervised release, for stealing millions from federal and state tax credit programs intended to rehabilitate historic buildings.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Ken Cuccinelli, Attorney General of Virginia; Michael F.A. Morehart, Special Agent in Charge of the FBI’s Richmond Field Office; Rebecca Sparkman, Special Agent in Charge of the Internal Revenue Service Criminal Investigation’s Washington, D.C., Field Office; and Colonel W. Steven Flaherty, Superintendent of Virginia State Police, made the announcement after sentencing by United States District Judge John A. Gibney, Jr.
“Justin French lined his pockets with millions in stolen tax dollars and defrauded more than 100 investors,” said U.S. Attorney MacBride. “Mr. French exploited the rich history of the commonwealth to cheat taxpayers and investors out more than $11 million intended to preserve historic homes in Virginia. While Mr. French spent lavishly on a beach house, a personal jet, and trips to Las Vegas, more than 100 investors lost their retirement funds, their medical care accounts, and their kids’ college funds.”
“Justin French violated the trust of investors and defrauded the state and federal governments out of millions of dollars,” said Attorney General Cuccinelli. “Today’s sentence sends a message not only to French that his tax-credit scheme was reprehensible, but also to anyone else attempting to cheat taxpayers out of their hard-earned money. Unfortunately, the repercussions of French’s crimes will be felt for years to come by those who unwittingly invested in his tax-credits and by honest people who are currently rehabilitating properties in the commonwealth.”
On Jan. 24, 2011, French pled guilty to wire fraud and engaging in unlawful monetary transactions through a criminal information for his role in orchestrating a multi-million-dollar rehabilitation tax credit scheme and defrauding more than 110 investors who purchased tax credits from French for their own use.
According to the statement of facts filed with the plea agreement, Justin French was the owner and operator of French Consulting Company, a Richmond-based real estate development company. He actively sought state and federal historic tax credits as his company worked to rehabilitate a number of historic properties throughout the Richmond area.
At the state level, the Virginia Department of Historic Resources (VDHR) administered the Virginia Historic Rehabilitation Tax Credit program. That program allowed the property owner to receive a state income tax credit equal to 25 percent of the amount spent on eligible rehabilitation expenses. At the the federal level, the U.S. Department of the Interior National Park Service (DOI-NPS) administered the Federal Historic Preservation Tax Incentives program. This program encouraged private sector rehabilitation of historic buildings through tax credit equal to 20 percent of the amount spent on eligible rehabilitation expenses.
Through court documents, French admitted that since 2005, he has initiated the historic rehabilitation tax credit application process on at least 36 properties in Richmond; 14 were approved by state authorities and 20 were approved by federal authorities. Upon receiving the approved credits, and sometimes before receiving final approval, French would sell the credits to private investors who would use those credits on their own tax returns.
As an example of this fraud, French purchased a property on March 7, 2008, located at 1509 Belleville Street in Richmond. In correspondence with the bank that funded a loan for the project, French stated that he had purchased the property for $700,000 and expected the rehabilitation costs to be approximately $200,000.
In November 2008, French began the application process seeking federal and state rehabilitation tax credits for this property. On March 20, 2009, he submitted the final tax credit applications and required CPA cost certification for 1509 Belleville Street to the VDHR. In those applications, he represented the rehabilitation costs as $1,571,503. On March 26, 2009, the VDHR approved French’s state application and awarded him $392,875.75 in state tax credits. On April 17, 2009, the DOI-NPS approved French’s federal application authorizing him $314,300.60 in federal tax credits for this project.
In connection with his plea hearing, French agreed that the requested tax credits for the 1509 Belleville Street, LLC project were grossly inflated. According to the United States, the actual authorized expenses for the purpose of obtaining state and federal historic rehabilitation tax credits should have been approximately $403,200 (including the 20 percent developer fee and an additional 20 percent allowance for allowable expenses), as opposed to the $1,571,503 represented to state and federal authorities. If the actual amounts consistent with the bank loan file had been submitted to the state and federal authorities, French would have received approximately $100,800 in Virginia tax credits (as opposed to $392,875.75 in Virginia tax credits) and $80,640 in federal tax credits (as opposed to $314,300.60 in federal tax credits). The combined total of federal and state tax credits French illegally obtained by inflating the rehabilitation expenses for 1509 Belleville Street was approximately $525,737.
French’s subsequent transactions with a number of private investors who purchased these tax credits resulted in his pleading to engaging in unlawful monetary transactions. As part of the investment process, French caused the mailing of subscription agreements via United States mail to the individual investors. Those investors, in turn, executed the subscription agreements and returned those documents along with their investment funds to the defendant. In February 2009, those individual investors provided the defendant with approximately $228,800 in exchange for purchasing the state tax credits related to 1509 Belleville Street. These investor funds were deposited into a First Market Bank business checking account for the 1509 Belleville Street project. French subsequently transferred $218,000 of those funds to his personal money market savings account at First Market Bank.
Overall, French agreed in his plea agreement that the intended and actual tax credit losses connected to the 1509 Belleville Street and other rehabilitation projects was between $7 million and $20 million. The defendant also agreed to pay full restitution for the losses he caused in connection with the ongoing rehabilitation tax credit scheme, which will be determined as the victims and loss amounts are identified in the ongoing investigation. The final restitution amount will be determined at a restitution hearing to be scheduled at a later date, following the completion of the investigation.
To date, the total losses for the scheme have been calculated as $11,266,622. French has agreed to an order of forfeiture imposing a monetary judgment of $7 million, representing the proceeds he received from the fraudulent scheme. At this time, he has agreed to forfeit the assets listed in the First Consent Order of Forfeiture entered at his plea hearing. The investigation to identify additional assets remains ongoing.
This case was investigated by the Federal Bureau of Investigation Richmond Office, the Internal Revenue Service Criminal Investigation Division, the U.S. Department of the Interior Office of Inspector General, the U.S. Department of Energy Office of Inspector General, the Virginia State Police, the Raleigh, North Carolina Police Department, and the National White Collar Crime Center. The Virginia Department of Historic Resources also assisted law enforcement in the investigation. Assistant United States Attorneys Michael Gill and Laura Marshall and Special Assistant Attorneys Patrick Dorgan and Shannon Dion are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia athttp://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.

WASHINGTON—Two Miami-area corporations, American Therapeutic Corporation (ATC) and Medlink Professional Management Group Inc., pleaded guilty today in U.S. District Court in Miami for a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, the Departments of Justice and Health and Human Services (HHS) announced.
According to court documents, ATC is a Florida corporation headquartered in Miami that operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando, Fla. A PHP is a form of intensive treatment for severe mental illness. Medlink is a Florida corporation headquartered in Miami that purported to act as a “management company” for health care businesses. In reality, ATC and a related company, the American Sleep Institute (ASI), were Medlink’s only clients. ATC and Medlink are each charged with conspiracy to commit health care fraud in a superseding indictment unsealed on Feb. 15, 2011. ATC is also charged in the superseding indictment with health care fraud and conspiracy to defraud the United States and to pay and receive illegal health care kickbacks.
“ATC and Medlink, and their owners, have now pleaded guilty to perpetrating a massive $200 million Medicare fraud scheme in South Florida,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “The fraud scheme was staggering in scope, and those who concocted the scheme exhibited a complete disregard for the elderly, infirm, and disabled victims who were used to commit it. Today’s guilty pleas mark an important step forward in our effort to hold accountable everyone—and every entity—involved in the scheme, and to recover the maximum amount possible on behalf of American taxpayers.”
“The defendants altered patient files, diagnoses, and medication types and levels to make it appear that patients being treated qualified for PHP treatments,” said U.S. Attorney Wifredo Ferrer for the Southern District of Florida. “This was done so that the defendants could fraudulently bill Medicare for more than $200 million in medically unnecessary services. We are pleased to have put these unscrupulous operators out of business.”

David B. Fein, United States Attorney for the District of Connecticut, announced that JUAN CARLOS GUILLEN ZERPA, 44, a citizen of Venezuela, pleaded guilty today before United States District Judge Stefan R. Underhill in Bridgeport to one count of conspiracy to obstruct an official proceeding of the U.S. Securities and Exchange Commission (SEC).
“The U.S. Attorney’s Office, FBI and our Connecticut Securities, Commodities, and Investor Fraud Task Force partners will pursue aggressively individuals who attempt to obstruct the SEC and its critically important mission of protecting investors and the integrity of American capital markets,” stated U.S. Attorney Fein.
According to court documents and statements made in court, Francisco Illarramendi, of New Canaan, Connecticut, acted as an investment adviser to certain hedge funds. In approximately 2006, one hedge fund he advised lost millions of dollars of the money he was charged with investing. Rather than disclose to his investors the truth about the losses incurred, Illarramendi intentionally chose to conceal this information by engaging in a long-running scheme to defraud and mislead his investors, creditors, and the SEC to prevent the truth about the losses from being discovered. As part of the scheme, Illarramendi and others created fraudulent documents, including a fictitious asset verification letter falsely representing that one of the hedge funds, the Short Term Liquidity Fund (STLF), had at least $275 million in credits as a result of outstanding loans, when Illarramendi and others knew it did not have any such credits.
GUILLEN is a resident and citizen of Venezuela who was the managing partner of a Venezuelan accounting firm associated with a major international accounting firm. In late 2010, GUILLEN agreed to prepare the asset verification letter that would falsely indicate that the STLF had made outstanding loans to Venezuelan companies. A co-conspirator then worked with other persons to create a fraudulent list of loans and to incorporate this list in the asset verification letter to be signed by GUILLEN.
In approximately January 2011, GUILLEN executed the false asset verification letter and sent it by e-mail to Illarramendi. Thereafter, GUILLEN learned that the false asset verification letter had been supplied to the U.S. Securities and Exchange Commission, and that the SEC had initiated a civil action against Illarramendi and others (SEC v. Illarramendi, et al., 3:11-CV-00078). In an effort to deceive and mislead the SEC and to prevent the SEC from learning during the civil action that the asset verification letter was false, GUILLEN, Illarramendi and others sought to create fraudulent documentation to falsely support the information contained in the letter. GUILLEN also participated in a telephone call with representatives of the SEC in January 2011 in which he intentionally misrepresented that the assertions in the asset verification letter about the existence of the hedge funds’ assets were true, when he knew they were false.
GUILLEN expected to receive approximately $1 million for his willingness to sign the false asset verification letter. As partial payment for GUILLEN’s services in this conspiracy, a co-conspirator caused $250,000 to be transferred to a third party for the benefit of GUILLEN.
Judge Underhill has scheduled sentencing for July 22, 2011, at which time GUILLEN faces a maximum term of imprisonment of 20 years and a fine of up to approximately $2.5 million. GUILLEN also has agreed to forfeit $250,000 to the government.
GUILLEN has been detained since his arrest by FBI special agents on March 3, 2011, in Florida. Following his guilty plea today, GUILLEN was released into home confinement under electronic monitoring after he posted a bond in the amount of $1.35 million, which is secured by $550,000 in cash and real property. GUILLEN will reside in an apartment in Miami, Florida while awaiting sentencing.
On March 7, 2011, Illarramendi waived his right to indictment and pleaded guilty to two counts of wire fraud, one count of securities fraud, one count of investment adviser fraud, and one count of conspiracy to obstruct justice, to obstruct an official proceeding and to defraud the SEC. He awaits sentencing.
This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Senior Litigation Counsel Richard J. Schechter and Assistant U.S. Attorney Paul A. Murphy.
U.S. Attorney Fein also acknowledged the substantial assistance provided by the U.S. Attorney’s Office for the Southern District of Florida.
In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities, and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement. The task force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich Police Department and Stamford Police Department.
Citizens are encouraged to report any financial fraud schemes by calling, toll free, 855-236-9740, or by sending an e-mail to ctsecuritiesfraud@ic.fbi.gov.
This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated 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.

• Adjust the privacy settings on social networking sites you frequent to make it more difficult for people you know and do not know to post content to your page. Even a “friend” can unknowingly pass on multimedia that’s actually malicious software.
• Do not agree to download software to view videos. These applications can infect your computer.
• Read e-mails you receive carefully. Fraudulent messages often feature misspellings, poor grammar, and nonstandard English.
• Report e-mails you receive that purport to be from the FBI. Criminals often use the FBI’s name and seal to add legitimacy to their fraudulent schemes. In fact, the FBI does not send unsolicited e-mails to the public. Should you receive unsolicited messages that feature the FBI’s name, seal, or that reference a division or unit within the FBI or an individual employee, report it to the Internet Crime Complaint Center at www.ic3.gov.

INDIANAPOLIS—Joseph H. Hogsett, U.S. Attorney, today announced the dismantling of a criminal organization similar to those involved in the illegal importation and distribution of controlled substances—the only difference being that the product being imported and sold by this organization was the services of prostitutes.
The organization, which operated out of Indianapolis over the course of several years, was headed by three brothers who procured prostitutes, some of whom were smuggled into the United States from Mexico and Central America. Another group of individuals acted as managers of the locations where the prostitutes conducted business. The organization maintained and operated houses of prostitution in multiple states—including Indiana, Michigan, Illinois, Ohio—and caused the prostitutes to move between these houses on a near-weekly basis.
The organization operated primarily in the Hispanic community and advertised its services by distributing business cards bearing advertisements and telephone numbers for auto repair or western wear outfitters. These business cards were known within the Hispanic community as contact numbers for arranging appointments with prostitutes. Each such appointment, referred to as a “ticket,” cost between $40 and $50.
The complaint charges 16 defendants with having conspired to utilize interstate and/or foreign travel in aid of racketeering enterprises, in violation of Title 18, United States Code, Section 371.
The complaint alleges that the criminal organization was primarily controlled by brothers Jose Louis Hernandez-Castilla, Norberto Hernandez-Castilla, and Gregorio Hernandez-Castilla.
The complaint further alleges that the houses of prostitution were managed by Hector Elizalde-Hernandez, Javier Aguilera-Sanchez, Fredy Arnulfo Valle-Soto, Jorge Armando Rodriguez-Sanchez, Jose Mejia, Santos Nunez, and Elvin Herrara.
The arrests of these individuals are based on an investigation by multiple law enforcement agencies, including the Federal Bureau of Investigation, the Department of Homeland Security (Homeland Security Investigations and Immigration and Customs Enforcement, Enforcement and Removal), the Indianapolis Metropolitan Police Department, the Marion County Sheriff’s Department, the Addison, Illinois Police Department, and others.
According to Assistant U.S. Attorneys Bradley P. Shepard and Gayle Helart, who are prosecuting the case for the government, each of these defendants faces a maximum of five years in prison and a $250,000 fine. An initial hearing will be scheduled for each of the arrested defendants in Indianapolis, Indiana before a U.S. Magistrate Judge.
A complaint is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

Kenneth G. Reidenbach was charged today by superseding indictment with bankruptcy fraud, concealing assets during a bankruptcy proceeding, and embezzling from a bankruptcy estate, announced United States Attorney Zane David Memeger. According to the superseding indictment, Reidenbach, an attorney in Lancaster, represented an individual in a bankruptcy proceeding. Reidenbach counseled the client to place nearly $40,000 in real estate proceeds into a law firm account controlled by Reidenbach and then concealed those proceeds from the bankruptcy court. The indictment also alleges that Reidenbach falsely represented that he had agreed to receive only $1,500 for representing the client in the bankruptcy proceeding. The original indictment, filed December 9, 2010, charged Reidenbach and co-defendant Herbert P. Henderson, another attorney in Lancaster, with conspiracy to commit bankruptcy fraud and concealing assets in bankruptcy by concealing more than $51,000 of clients’ real estate sales proceeds from the bankruptcy court.
Information Regarding the Defendant 
Name: Kenneth G. Reidenbach
Address: Lancaster, Pennsylvania
Age or Year of Birth: 1950
If convicted of the charges in the superseding indictment, Reidenbach faces a maximum possible sentence of 40 years in prison and a fine of $2,000,000.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney David J. Ignall.
An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.

Kenneth G. Reidenbach was charged today by superseding indictment with bankruptcy fraud, concealing assets during a bankruptcy proceeding, and embezzling from a bankruptcy estate, announced United States Attorney Zane David Memeger. According to the superseding indictment, Reidenbach, an attorney in Lancaster, represented an individual in a bankruptcy proceeding. Reidenbach counseled the client to place nearly $40,000 in real estate proceeds into a law firm account controlled by Reidenbach and then concealed those proceeds from the bankruptcy court. The indictment also alleges that Reidenbach falsely represented that he had agreed to receive only $1,500 for representing the client in the bankruptcy proceeding. The original indictment, filed December 9, 2010, charged Reidenbach and co-defendant Herbert P. Henderson, another attorney in Lancaster, with conspiracy to commit bankruptcy fraud and concealing assets in bankruptcy by concealing more than $51,000 of clients’ real estate sales proceeds from the bankruptcy court.
Information Regarding the Defendant 
Name: Kenneth G. Reidenbach
Address: Lancaster, Pennsylvania
Age or Year of Birth: 1950
If convicted of the charges in the superseding indictment, Reidenbach faces a maximum possible sentence of 40 years in prison and a fine of $2,000,000.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney David J. Ignall.
An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.