Attorney General for Northern District of Texas Prosecutes Lots of Federal Money Crimes: Fraud, Tax Evasion, Money Laundering, and More

The Office of the United States Attorney for the Northern District of Texas has four branch offices in Dallas, Fort Worth, Lubbock, and Amarillo.  Since September 2011, U.S. Attorney Sandra Saldana has held the job of top federal prosecutor for this region and she is one of 93 U.S. Attorneys appointed by the President to serve as the “chief law enforcement officer of the United States” within their jurisdiction.  Her big boss?  Attorney General Eric Holder.

According to federal law, these federal prosecutors are responsible for three things:

1. prosecuting criminal cases filed by the federal government;
2. representing the United States in lawsuits where it is a party (either civil court or criminal court); and
3. collecting debts owed to the United States that administrative agencies have been unable to collect.

Dallas’ U.S. Attorney Prosecuting Lots of Crimes Involving Money These Days

It’s no secret what the Northern District of Texas’ federal prosecutors are doing in court: it’s a matter of public record, after all.  However, many of the crimes are getting prosecuted recently appear to be tied to financial pursuits that may or may not be in violation of federal law.

Consider these reports of prosecutions by the Office of the Attorney General for the Northern District of Texas in the month of May 2013:

1.  Dallas Woman Indicted In Bankruptcy Fraud

(May 23, 2013) DALLAS — Estela Martinez, 53, of Dallas, made her first appearance in federal court this afternoon for the felony offense of bankruptcy fraud, as charged in an indictment returned by a federal grand jury in Dallas earlier this week. She pleaded not guilty and U.S. Magistrate Judge David L. Horan released her on bond….

The indictment alleges that from January 2011 through November 2012, Estela Martinez filed several fraudulent bankruptcy petitions concerning, or in relation to, bankruptcy proceedings. She also allegedly made several false, fraudulent and material statements regarding her social security number in four Chapter 13 voluntary bankruptcy petitions. The indictment further alleges that Martinez repeatedly sought to defraud her creditors, by her efforts to delay, and frustrated the ability of the mortgage holder to foreclose on her residence.

A federal indictment is an accusation by a grand jury and a defendant is entitled to the presumption of innocence unless proven guilty. If convicted, however, the offense of bankruptcy fraud carries a maximum statutory penalty of five years in federal prison and a $250,000 fine.

2.  Dallas Woman Charged With Financial Aid Fraud

(May 22, 2013) DALLAS — Sussette Sheree Timmons, 30, of Dallas, was indicted by a federal grand jury yesterday on multiple counts of financial aid fraud, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.  The indictment alleges that Timmons applied for and received financial aid from six schools that offered distance learning programs via the Internet. Timmons allegedly never intended to use the disbursed financial aid funds for education and instead intended to embezzle, misapply, steal and obtain the funds for her own personal use.

Timmons applied for, and received financial aid from: New Mexico State University, Western New Mexico University, Ashford University, Northern New Mexico College, Coconino Community College and Pima Community College. She enrolled in classes at the schools and the awarded financial aid was applied to her tuition and fees.

As part of the financial aid, Timmons also received disbursement checks which she cashed, even though she had no intention of using those funds for authorized educational expenses and purposes. The indictment further alleges that Timmons not only did not intend to complete, but she did not complete any of the classes for which she enrolled, and she did not intend to pursue an education at the schools. When asked by the institutions to return or refund the financial aid, she refused. In 2011, when one of the schools suspended her financial aid, Timmons appealed. That school rejected her appeal, stating that she had withdrawn from 13 colleges or universities since 2009.

A federal indictment is an accusation by a grand jury and a defendant is entitled to the presumption of innocence unless proven guilty. The indictment charges Timmons with six counts of financial institution fraud. If convicted, each count carries a maximum statutory sentence of five years in federal prison and a $250,000 fine. In addition, restitution could be ordered.

3.  Licensed Pharmacist Sentenced To 18 Months In Federal Prison And Fined $30,000 On Income Tax Evasion Conviction

(May 20, 2013) FORT WORTH, Texas — Norvell Moss was sentenced on Friday by U.S. District Judge John McBryde to 18 months in federal prison and ordered to pay a $30,000 fine and additional restitution of $8,277, to go along with the more than $94,000 he paid prior to sentencing, following his guilty plea in January 2013 to one count of income tax evasion. Judge McBryde ordered Moss to surrender to the Bureau of Prisons on June 7, 2013. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

According to the felony Information filed in the case, Moss is a resident of Colleyville, Texas. The factual resume states that Moss is a licensed pharmacist and works as the head pharmacist for Grapevine Drug Mart, a family-owned and operated pharmacy in Grapevine, Texas.  The stipulated facts included in the factual resume note that Moss received quarterly and weekly payment of income drawn on Grapevine Drug Mart’s business accounts. The quarterly payments, generally received three to five times per year, varied in amounts ranging from $20,000 to $100,000. These payments were made payable to Mossman Management, dba Moss established in Tarrant County, and deposited into Mossman Management’s business bank account. The weekly payments (checks) were much smaller and were made payable to Moss or Mossman Management. From October 2006 through December 2008, Moss cashed the weekly checks.

The factual resume further stipulates that Moss willfully attempted to evade the amount of income tax he owed for tax year 2008 by failing to report approximately $194,150 that he received from Grapevine Drug Mart for that year. As a result of not reporting all of his income received, Moss had an additional tax due and owing of $58,233 for that year.

According to the public court record, two other defendants affiliated with Grapevine Drug Mart were recently convicted in the Northern District for tax-related felony offenses. Larry Lake, also a Colleyville resident and a part-owner of Grapevine Drug Mart, was convicted by a federal jury in Fort Worth in February 2013 on concealment of assets (bankruptcy fraud) and three counts of tax evasion. His son, Travis Lake, who managed Grapevine Drug Mart, pleaded guilty that same month to an indictment charging three counts of fraud and false statements in connection with tax returns he filed for tax years 2006, 2007 and 2008. Both Larry Lake and Travis Lake are awaiting sentencing.

4. Former Bank Executive Sentenced To 37 Months In Federal Prison For Embezzling From Bank Of America

(May 16, 2013) LUBBOCK, Texas — Donnie Wright, 53, of Lubbock, Texas, was sentenced today by U.S. District Judge Sam R. Cummings to 37 months in federal prison and ordered to pay $385,356 in restitution following his guilty plea in February 2013 to one count of bank embezzlement by a bank employee. Judge Cummings ordered that Wright surrender to the Bureau of Prisons on June 20, 2013. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

According to documents filed in the case, Wright was employed by Bank of America in Lubbock, as a Branch Manager at the 5144 82nd Street location. The factual resume states that Wright was a member of the Board of Deacons and Trustee at Community Baptist Church (CBC) in Lubbock. Beginning in May 2006 and continuing to January 24, 2010, Wright used his position as a Bank of America employee to embezzle funds owned by CBC and entrusted to the custody and care of Bank of America. He employed a variety of methods to embezzle the funds, including embezzling from CBC’s Certificates of Deposits held at the bank; making cash withdrawals from CBC’s accounts using debit (withdrawal) tickets; and fraudulently drawing checks on CBC’s checking account.

5.  Owner Of Gemstar Capital Group Private Equity Company Sentenced To 120 Months In Federal Prison For Role In $40 Million Ponzi Scheme, Pay $17 Million Restitution

(May 3, 2013) FORT WORTH, Texas — Jeffrey J. Sykes, 54, of San Bernadino County, California, was sentenced this morning by U.S. District Judge John McBryde to 120 months in federal prison and ordered to pay $16,867,037 in restitution, following his guilty plea in January to two counts of securities fraud stemming from a Ponzi scheme he ran. Sykes, who was the owner of Gemstar Capital Group, Inc. (Gemstar), a California-based private equity company, was ordered to surrender to the Bureau of Prisons by May 24, 2013. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

According to documents filed in the case, Sykes owned and operated Gemstar out of Redlands, California. In 2006, Sykes and “M.K.,” of Westlake, Texas, met at a golf tournament. Sykes told M.K. that Gemstar was a venture capital company interested in investing in emerging growth companies and that Gemstar was looking to supplement its planned venture capital operations by engaging a brokerage firm to assist it in buying and selling U.S. Treasury Bills (T-Bills).

M.K. asked Sykes whether he could participate, and in April 2007, Sykes and M.K. entered into an agreement in which M.K. solicited investors to participate in the T-Bill trading program described by Sykes. The next month, M.K. formed a limited liability company, known as KCG, and began to solicit investors. Using information Sykes provided, M.K. secured approximately 37 investors who invested more than $20 million. M.K. sent the money, minus fees he withheld for himself, to Gemstar to be invested by Sykes. However, unbeknownst to the investors, neither KCG nor Gemstar was engaged in any T-Bill trading program at the time of M.K.’s solicitations.

In addition to the funds that M.K. raised, Sykes personally raised more than $20 million from investors by making representations about a T-Bill trading program that were materially false or omitted material facts. In fact, none of the money was invested in a T-Bill trading program. Instead, Sykes and M.K. used some of the money for personal expenses. Some of the money was invested in ventures that the investors were unaware of and had not given their consent to participate in. Some of the money was returned to investors, although in some cases, Sykes falsely claimed that the funds represented the return of capital and/or profits from the T-Bill trading program.

Although Sykes used some of the investments he received for personal expenses, to pay partners, and for other purposes, he held a large portion of the invested funds in low-risk money market accounts. Because a substantial portion of investor funds were held in these accounts, investors were able to recover some of their investments.

Accounting for payments made to investors during the course of the scheme and money returned to investors after the termination of the scheme, investors collectively lost approximately $16,867,037. This amount includes losses incurred by the investors solicited by M.K., whose funds he subsequently sent to Sykes after taking a fee for himself.

The two counts of securities fraud to which Sykes is pleading specifically stem from false Gemstar account statements that Sykes used to deceive investors about the value of their investments.

Federal Criminal Defense for Financial Felony Crimes: Money Laundering, Tax Evasion, Bankruptcy Fraud, Mortgage Fraud, Etc.

The federal system operates independently of the state system and not every criminal lawyer in Texas practices in both federal and state court.  Texas attorneys must be accepted into the local federal bar and be licensed to appear before the local federal courts in a process that is distinct from getting approved to practice law in Texas courts.

For those who suspect that they are in the sights of a federal investigation into a money-related crime, it can be very important to understand their constitutional and statutory rights under federal law.   An experienced federal criminal defense lawyer in these federal felonies based on finances can be invaluable, even before arrest and indictment.

How?  Consider these examples from Michael Lowe’s Case Results page:

1.  Less than one half guideline sentence on Dallas Federal Mortgage Fraud Case

Client sentenced to less than one half of Federal Sentencing Guideline range applicable to his case.

2.  Structured Money Laundering/Tax Evasion

Sentence Reduced by 42 months–Judge Departs From Federal Sentencing Guidelines

All case results are case-specific and do not imply any particular result will be obtained in your case.