Posts tagged: fraud
Here’s a news item from the Associated Press: BOISE, Idaho (AP) — Idaho Attorney General Lawrence Wasden has filed a lawsuit against a southwest Idaho fitness company. Wasden contends in the lawsuit filed in Ada County District Court that Body Renew Fitness & Tanning and owner Dakota Routh charged customers for memberships and other fees just before closing the gyms on July 9. Wasden also says Routh tried to collect unsubstantiated debts from consumers by sending bogus collection notices. The lawsuit is based on 54 consumer complaints filed with his office, Wasden said; the company operated three gyms in Boise and one each in Meridian, Star and Garden City. The attorney general said it’s illegal for companies to sell future services and then close, leaving customers without either their money or the services; he’s inviting anyone else who lost money to the firm to file a complaint with his office.
Owners of three businesses that duped Idahoans on everything from satellite TV systems to vendor spaces at events to fake college credits have agreed to cease all operations in Idaho, Attorney General Lawrence Wasden announced today, under agreements with the attorney general's Consumer Protection Division. The three are Geo Marketing, LLC, of Boise; Kasey Thompson, of Boise, and Philip Braun, owner of the bankrupt Caldwell-based Canyon College of Idaho, Inc. Click below for Wasden's full announcement.
Idaho inmate fraud artist Mark Brown pleaded guilty today to two federal counts of mail fraud, avoiding a trial on a 12-count federal indictment and agreeing to forfeit $60,000 in proceeds from his scam. Brown also agreed, as part of a plea agreement with federal prosecutors, to forfeit the cherished electric typewriter he used to pull off the unprecedented financial fraud from his Idaho prison cell, which took in big corporations, courts and attorneys around the nation and got hefty checks sent to him in Idaho over a period of several years.
Senior U.S. District Judge Justin Quackenbush expressed some puzzlement about Brown’s crimes. “How’d you get involved in all this, Mr. Brown?” he asked him. “Just tell me how it got started.” Brown responded with a nervous chuckle, “Um, the idea just popped in my head.”
Quackenbush, who was the chief judge for the Eastern District of Washington until 1995, when he took senior status, responded, “Well, people in custody ordinarily aren’t filing claims. I’ve handled a lot of class actions in my years on this federal bench … and approved a lot of settlements. … How’d you get started in the filing of false claims?”
Brown, 54, said, “Uh, it was my view that if a claim was filed, even if it was false, there was a small percentage chance that it would be paid.” When the judge pressed him as to how he heard about the big class-action legal settlements and bankruptcy and security settlements in which he filed claims, Brown said, “Well, I read the newspapers and watch TV.”
“What newspapers were you reading – the Wall Street Journal?” the judge asked. “Oh, yes,” Brown replied.
The plea agreement could bring Brown a slightly reduced sentence, though that’s not binding on the court; Quackenbush set his sentencing for Nov. 13. You can read my full story here at spokesman.com.
It’s clear that Mark Brown is a smart guy, maybe even borderline brilliant. But what’s astounding is the way he apparently pulled off a major, years-long financial fraud, taking in big corporations, courts and attorneys across the nation, all from behind bars in an Idaho prison cell.
Brown had no access to the Internet and appears to have had no accomplices or outside help. Instead, investigators believe he used a cherished electric typewriter that he was allowed to keep in his small, spare cell, and legal ads found in national newspapers including the Wall Street Journal and USA Today, to make fraudulent claims in big class-action lawsuits and bankruptcies. The story is detailed in my two-part series in The Spokesman-Review’s Sunday and Monday editions; you can read Part 1 here, and Part 2 here.
Brown is alleged to have typed up professional-looking legal documents, false letters from law firms and more, and made skillful use of the “legal mail” exception for inmates that allows for correspondence with attorneys and judges without review from prison staff. Big checks poured in – Brown’s take in multiparty lawsuits including a $70 million GlaxoSmithKline drug-pricing settlement and a $20 million IBM shareholders’ settlement. Authorities say Brown collected close to $64,000 through those settlements and deposited the money in his prison trust account, which inmates can use for things like commissary purchases. He then transferred much of it out to an investment account that authorities have targeted for potential forfeiture.
The behind-bars operation caught authorities by surprise. “We screen our mail pretty well, but he also was running a pretty good scam here,” said Cpl. Wesley Heckathorn, a guard at the Idaho Correctional Institution in Orofino and former longtime U.S. Navy investigator who helped uncover Brown’s alleged fraud. Brown is now facing a 12-count federal indictment for mail fraud and awaiting a September trial, while authorities at both Idaho’s state prison system and the nation’s largest private prison operator, Corrections Corp. of America, scratch their heads over how he allegedly pulled it off.
Some who know Brown, however, aren’t surprised. “Mark is just so bright,” said Terry Rich, who hired Brown in 1994, when Brown was briefly out on parole, to work at his Boise high-tech firm. “He is so slippery, and he’s so believable, one of the most charming people you’ll meet. … If you let Mark sit around and think too much, this is what happens.” Brown was a promising 23-year-old computer science student at the University of Idaho when he first went to prison with a 20-year sentence for theft; now, he’s 53, still in prison, and never likely to get out.
Here’s a news item from the Associated Press: BOISE, Idaho (AP) — An optometrist from southwest Idaho convicted for defrauding Medicaid and other health care programs has been sentenced to three years in prison. A federal judge on Tuesday also ordered 60-year-old Christopher Card of Caldwell to pay $1 million in restitution and another $100,000 in fines. Card pleaded guilty in a deal with federal prosecutors in August to defrauding health care programs. He is the former owner and care provider at Total Vision, P.A. The plea agreement says that between 1993 and Aug. 31, 2010, Card gave phony diagnoses of glaucoma, colorblindness or other eye diseases so he could bill and be reimbursed by Medicaid, Medicare and other insurance programs for expensive tests and treatments that he never administered. Federal officials say health care fraud nationally costs taxpayers $78 billion annually.
Of all the people to be targeted by identify theft: The head of Idaho's consumer protection division? Deputy Attorney General Brett DeLange tells the Idaho Statesman today that fraudulent charges were made to his credit card, and the first he knew of it came when the credit card company called him to verify that he'd ordered five video cameras - he hadn't. DeLange immediately checked his credit card online and found several other fraudulent charges; he notified the credit card company, which canceled the account and took care of the charges, reports Idaho Statesman reporter Sandra Forester. DeLange is suggesting that all credit card users monitor their statements regularly for unusual activity. You can read Forester's full story here.
A Boise couple who defrauded the Idaho Department of Environmental Quality of hundreds of thousands in federal grant funds – and while they were at it, damaged Idaho school buses and caused a need for thousands in costly repairs – was sentenced in federal court today by U.S. District Judge Edward Lodge. Jorge Garcia, 50, a DEQ employee who submitted a fraudulent bid to do the federally funded work and then awarded the contract to himself and his wife, was sentenced to 30 months in federal prison followed by three years of supervised release. His wife, Karen, was sentenced to five months of probation with 10 months of home detention with electronic monitoring, also followed by three years of supervised release. The two also must pay restitution; you can read the U.S. Attorney's office's full announcement here. “The Garcias violated the public trust,” said U.S. Attorney Wendy J. Olson. “Today’s sentencings make clear that abuse of positions of trust and intentional misuse of taxpayer money will result in sure punishment.”
KTVB-TV reporter Nishi Gupta broke a rather stunning story this week: An Idaho DEQ employee fraudulently secured a big-bucks DEQ contract in 2008 to install emission-reducing devices on school buses around the state through a federally funded program; three years later, school districts around the state are facing hundreds of thousands in repair work for the shoddy and even dangerous work done to their buses, and the former state employee - who was arrested in the Virgin Islands - has pleaded guilty to federal charges. You can read the full story here.