Showing posts with label bank fraud. Show all posts
Showing posts with label bank fraud. Show all posts

Monday, November 27, 2023

Virginia Man Convicted in Delaware County Guardianship Fraud; Accomplice Pleads Guilty

By Mary Roberts


Hampton, VА. — A federal jury has convicted Hampton, Virginia resident Carlton Rembert, 69, for his involvement in a scheme to embezzle funds from court-appointed guardianships. The elaborate fraud involved funneling money through a network of shell companies. Rembert faces charges of conspiracy, bank fraud, and wire fraud following a four-day trial in the Eastern District of Pennsylvania.

Gloria Byars, a 62-year-old Aldan woman, chose to plead guilty to charges of conspiracy, wire fraud, money laundering, and filing a false income tax return. Alesha Mitchell, 42, of Suffolk, Virginia, had previously pleaded guilty in 2022 to conspiracy to commit bank fraud for her role in the $1.2 million scheme.

The trio illicitly obtained over $1.2 million from incapacitated wards through unauthorized checks, manipulating the funds through various shell corporations. Byars, entrusted with managing assets for elderly individuals, abused her role as a guardian, diverting funds for personal use.

The complex financial fraud involved fraudulent checks, shell companies such as Global Guardian Services LLC, ICU Records & Billing, CWR Medical Services, and ACC Medical Billing LLC. Funds were stolen by Rembert and Mitchell, who deposited cashier’s checks into Byars’ accounts.

Byars spent the embezzled funds on personal luxuries, including vacations, clothing, vehicles, gifts, and parties. The investigation revealed that the fraud extended to the Church of the Overcomer, where the Collins, who serve as pastors, faced state charges in connection with the same scheme.

Byars and her co-conspirators collectively stole over $1 million from at least 120 incapacitated individuals. Sentencing for Mitchell is scheduled for December 5, Byars on February 20, and Rembert on February 29. Each faces up to 30 years in prison and substantial fines for their roles in the
conspiracy. The case was prosecuted by Assistant U.S. Attorneys Tiwana Wright and Samuel Dalke.

Sunday, November 13, 2022

Disbarred lawyer can't blame bank fraud on old football injury - appeals court

By Barbara Grzincic 

Sept 2, 2022; Uvalde, TX, USA; Football players watch the game from the sideline. Mandatory Credit: Sara Diggins-USA TODAY NETWORK

Summary

  • Defendant argued that brain disorders nixed specific criminal intent
  • 6th Circuit found the lawyer's conviction and 30-month sentence proper

(Reuters) - A disbarred Tennessee lawyer cannot claim that head injuries he suffered playing football in high school and college made it impossible for him to form a criminal intent to commit federal bank fraud, a federal appeals court held Wednesday.

The 6th U.S. Circuit Court of Appeals affirmed the conviction and 30-month sentence of George Skouteris Jr, who had settled several cases between 2007 and 2013 without his clients’ knowledge and signed their names to deposit the checks to his own account. Those same actions had resulted in Skouteris’ disbarment in 2014.

At his criminal trial April 2021 in U.S. District Court in Memphis, the defense argued the federal bank fraud statute required the prosecution to show that Skouteris specifically intended to defraud the bank, and that his “days on the gridiron had left him with mental impairments — including possible chronic traumatic encephalopathy (CTE) — that cast doubt on whether he had the requisite state of mind,” Circuit Judge Chad Readler wrote Wednesday for the three-judge appellate panel.

Both sides introduced evidence and expert testimony about Skouteris’ mental disorders, but the trial judge declined to instruct the jury that evidence of “diminished mental capacity” could provide “reasonable doubt” that Skouteris lacked a specific intent to defraud the bank.

That was the right call, the 6th Circuit said. Despite some older appellate decisions to the contrary, the U.S. Supreme Court made clear in 2016 that the bank-fraud statute only requires prosecutors to show that defendants knew their actions were likely to cost the bank money – not that they purposely set out to do so.

Applying that “clarified standard,” the 6th Circuit said, “a mountain of circumstantial evidence demonstrated Skouteris’s knowledge that depositing unauthorized settlement checks into his own account was likely to wrongfully deprive the bank of its property.”

Former clients and colleagues had described Skouteris as a “detail-oriented lawyer who did not exhibit signs of a diminished mental capacity,” while others testified that Skouteris repeatedly lied to clients about the status of their settlements, “suggesting that he knew he was engaged in deception when cashing the settlement checks.”

In addition, the fact that Skouteris had engaged in similar behavior in seven cases over the “better course of a decade,” even after being confronted and sued for doing so, suggested that his actions “were no accident,” Readler wrote.

“That evidence is reliable proof that Skouteris knew the likely consequences of his behavior,” the court concluded.

Attorneys for the prosecution and defense declined to comment on Wednesday.

The case is USA v. Skouteris, 6th U.S. Circuit Court of Appeals No. 21-6221.

For Skouteris: Josie Holland of Holland Law

For the USA: Carroll André III, U.S. Attorney’s Office for the Western District of Tennessee

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Disbarred lawyer can't blame bank fraud on old football injury - appeals court

Tuesday, October 25, 2022

Art dealer faked lung transplant to rob seniors in $1.6 million fraud scheme, FBI says

by Tresa Baldas

KEY POINTS

  • A Michigan art dealer is being charged in U.S. District Court with running a $1.6 million scam that preyed on the elderly and involved more than 100 rare, fine art photographs.
  • Instead of honoring her clients’ contracts to sell the artwork on consignment, the FBI says, Wendy Beard sold the photos without their knowledge and kept the money.
  • The FBI also alleges that Beard created fake employees and email addresses, used to send clients messages that claimed Beard couldn't be reached because she was in the hospital or in a coma.

For years, Wendy Beard ran a lucrative art gallery she inherited from her millionaire father in Birmingham, Michigan.

But along the way, the FBI says, she got greedy – so greedy that she scammed seniors by taking their rare art on consignment, selling it and then keeping all the profits, including a mural-sized Ansel Adams photograph she sold for $440,000 without ever telling the owner.

When the 82-year-old owner of the photo tried to get the picture back, the FBI says, Beard came up with a story: She was in the hospital getting a double lung transplant and was too sick to deal with the request.

None of it was true, the FBI says.

Fake employees, fake emails, fake transplant

The 82-year-old woman – identified as Victim No. 1 in court documents – was not alone.

On Thursday, the FBI issued a plea to the public, asking for its help in identifying "additional potential victims" who may have provided art to Beard and never got paid, or who bought art from her and never received it.

In an alleged fraud scheme unraveling in U.S. District Court, Beard is charged with running a $1.6 million scam involving more than 100 rare, fine-art photographs that collectors entrusted her with to sell on consignment.

Instead of honoring her clients’ contracts, the FBI says, she sold the photos without their knowledge and kept the money. Moreover, the FBI says, Beard sold artwork to other victims but never delivered the goods – even after they had paid her – and created fake email addresses of fake employees she pretended worked for her.

It was these fake employees who came up with the lung transplant story, the FBI says, alleging it was really Beard who made up the tale in emails to her unwitting clients.

The FBI detailed these allegations in a criminal complaint in U.S. District Court, where Beard is charged with wire fraud and bank fraud for allegedly running a yearslong scheme that preyed largely on the elderly, out of a gallery that her father founded more than 50 years ago.

Beard is free on bond. Neither she nor her court-appointed attorney could be reached for comment.

How the scam allegedly worked

According to the complaint, Beard’s scheme started in 2017 – one year before her father died – and ran out of two locations.

The gallery, which was renamed the Wendy Halsted Gallery a decade earlier, operated for a few years out of a Birmingham storefront. But in 2020, the business closed and relocated to Beard’s home in Franklin, Michigan.

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Art dealer faked lung transplant to rob seniors in $1.6 million fraud scheme, FBI says

Friday, May 6, 2022

Former Altoona financial adviser agrees to plead guilty to federal fraud charges

By Andrew Dowd

ALTOONA — A disbarred financial adviser who ran a wealth management firm in Altoona has agreed to plead guilty to two criminal fraud charges brought against him by the federal government.

Michael F. Shillin, 32, signed an agreement in late April to plead guilty to one count each of wire fraud and bank fraud, and the U.S. Attorney’s Office will dismiss nine other wire fraud charges contained in the same indictment.

Shillin’s next scheduled appearance is to formally enter his plea in U.S. District Court for the Western District of Wisconsin on May 23 at a courtroom in Madison.

The wire fraud charge carries a maximum penalty of 20 years in prison, three years of extended release and a $250,000 fine. The maximum penalty for bank fraud is 30 years in prison, five years of supervised release and a $1 million fine.

Shillin also will be required to pay restitution to his victims. That means he must pay back $462,000 in loans to Northwestern Bank of Chippewa Falls, but the amount he’ll have to return to his clients has not yet been determined.

Shillin was indicted in late October on the federal charges, but then allowed to be on release while his case was pending. Judge Stephen L. Crocker revoked Shillin’s release on April 14 after the defendant had been caught taking an unauthorized tropical vacation with his girlfriend to the U.S. Virgin Islands in early April.

The plea agreement explains how the government’s case relied on former clients and their documentation to establish that Shillin had lied to them about their investments.

“Shillin kept his clients artificially happy so they would refer other clients, keep money invested for longer, and invest more money,” stated the agreement written by Assistant U.S. Attorney Zachary Corey. Shillin’s firm charged its clients a yearly fee equal to a percentage of the money it managed for them.

One instance cited in the government’s case is a married couple that Shillin managed money for. He told them he’d bought shares of SpaceX for them and they were making a large profit. However, Shillin never did buy those shares, and SpaceX continues to be a private company that does not sell stocks to the general public. The plea agreement cited text messages and emails from fall 2019 and spring 2020 between the couple and Shillin to corroborate the allegations.

Shillin also is accused of defrauding clients by misrepresenting the costs and benefits of insurance policies he convinced them to buy. For example, Shillin advised a couple to switch their State Farm life insurance policies to ones at John Hancock with better long-term care benefits. However, when one of those clients called John Hancock in October 2020 about the policy, the company said the policy number provided by Shillin was invalid. The client then discovered the money provided to Shillin to buy the life insurance policy was still sitting in an investment account at Shillin Wealth Management.

Shillin also made fraudulent tax documents that led clients to believe they were eligible for tax breaks they were not entitled to, the plea agreement stated. Based on 1099 forms from Shillin, a couple expected to only pay $1,628 in federal taxes. But when learning they didn’t qualify for tax breaks Shillin promised, the couple re-filed and found they owed $27,512 in federal taxes.

Between August 2020 and September 2020, Shillin took out a total of $462,000 in loans from Northwestern Bank with the explanation it was to cover his firm’s payroll. To show he had collateral for the loans, Shillin provided a statement showing $1.25 million in an account owned by Shillin Wealth Management. However, that statement was actually for an account belonging to a couple advised by Shillin, not the financial firm itself, according to the plea agreement.

In addition to the federal criminal charges against him, Shillin also filed for Chapter 7 bankruptcy in November. The bank and multiple former clients are among the creditors listed in Shillin’s bankruptcy petition. That case is still pending in the U.S. Bankruptcy Court for the Eastern District of Wisconsin.

According to a Financial Industry Regulatory Agency database, Shillin began his career as a broker in July 2011 at Edward Jones in Chippewa Falls before changing firms to Raymond James Financial Services in August 2014. That second firm fired Shillin in mid-2018 for failing to follow the company’s procedures involving client fees, so then he opened his own firm. Shillin Wealth Management was in business in Altoona’s River Prairie development from mid-2018 until it closed at the end of 2020 while he was under investigation.

Shillin Wealth Management managed 2,992 accounts with nearly $135.5 million in assets in them before the firm went defunct in December 2020, according to a financial report provided to the court.

In January, the U.S. Securities and Exchange Commission barred Shillin from being a financial adviser, following similar bans imposed by Wisconsin regulators and FINRA.

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Sunday, August 1, 2021

Caretaker Of Two Seniors Charged With Stealing Money From Their Bank Accounts


MIAMI, Fla. (CW44 News At 10)– There has been a federal indictment unsealed that charges the caretaker of two seniors with accessing to their bank accounts to steal nearly $300,000.

The indictment alleges that from 2016 to 2019, Sherri Lynn Smith worked as a caretaker for an elderly couple in Broward County.  As part of her duties, Smith had access to the victims’ bank accounts to assist them with paying their monthly bills.  Smith used her access to the victims’ bank accounts to embezzle approximately $300,000 out of the victims’ accounts without their knowledge or consent, according to the indictment.

She accomplished this by writing and forging the victim’s signature on a number of checks made payable to herself, her family members, and her creditors; initiating Zelle electronic money transfers from the victims’ accounts to her own bank account; and making electronic payments from the victims’ accounts to her and her husband’s numerous credit card accounts, it is alleged.

The indictment returned by a federal grand jury on June 8, 2021, charges Smith with 16 counts of bank fraud and 5 counts of aggravated identity theft.

Smith made her initial federal court appearance today before U.S. Magistrate Judge Bruce E. Reinhart, who sits in West Palm Beach.  If convicted, the maximum prison sentences on each bank fraud count is 30 years.

The maximum sentence on each aggravated identity fraud charge is two years.  The case is assigned to U.S. District Judge Aileen Cannon, who sits in Ft. Pierce.

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Wednesday, December 2, 2020

Disbarred Sturgis lawyer accused of stealing from second client

The Federal Courthouse in Rapid City.

by Arielle Zionts

A disbarred lawyer who previously worked in Sturgis is accused of stealing money from a second client and covering her fraud by giving false documents to a tax preparer and lying to a legal assistant, lawyer and judge.

Rena Hymans, a 48-year-old from Vale, is now facing 57 charges in federal court related to allegedly stealing $217,699 from two clients between 2014 and 2019, according to a 21-page indictment.

Hymans pleaded not guilty in September at the federal courthouse in Rapid City to 38 counts of wire fraud, 17 counts of money laundering, one count of mail fraud and one count of bank fraud. She was released pre-trial.

If convicted, Hymans faces up to 30 years in prison on the bank fraud charge and up to 20 years on each mail fraud, wire fraud and money laundering count.

The charges come after Hymans resigned from the South Dakota State Bar on Jan. 22, which means she’s no longer eligible to practice law, according to documents provided by the state court administrator.


Hymans resigned after learning the state bar was investigating a complaint that accused her of breaking a law that says it’s illegal for attorneys to use clients' money in unauthorized ways. She was also accused of violating professional rules about misconduct and safekeeping property.

“I do not desire to contest or defend against the above-described complaint, allegations or instances of alleged misconduct,” Hymans wrote in her resignation letter.

Hymans was indicted in August on charges related to allegedly stealing $167,699 between May 2017 and July 2019 from a client who inherited the money from a relative. She was indicted on additional charges the next month related to allegedly stealing $50,000 from a second client between February 2014 and November 2015.

According to the new indictment:

In February 2014 Hymans put $50,000 in her client trust account for the Gilbert Keester Estate and was supposed to hold the money until litigation surrounding the estate was settled. Hymans instead embezzled the money into other accounts and used it for work and personal expenses.

In order to conceal the fraud, Hymans told her legal assistant that the transferred funds were earnings for her legal services. She also provided falsified documents to her income tax preparer that made the embezzled money look like income.

The mail fraud charge relates to Hymans sending a 2016 letter to a lawyer involved in the estate litigation that said the $50,000 remained in her client trust account when she had already spent it.

Hymans appeared in the Oglala Sioux court in 2018 on behalf of the Gilbert Keester Estate and falsely told the judge that she still had all of the money in her client trust account.

Later that year she wrote a check from her client trust account to the estate by using money that belonged to the other client she defrauded. ​

 
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Tuesday, August 25, 2020

Disbarred Sturgis lawyer accused of stealing $168,000 inheritance from client

The Federal Courthouse in Rapid City.
by

A disbarred Sturgis-based lawyer is accused of stealing $167,699 from a client who inherited the money from a relative and trying to cover the fraud by lying to a tax preparer, judge and bank employee.

Rena Hymans, a 48-year-old from Vale, was indicted last week in federal court on 30 counts of wire fraud, 10 counts of money laundering and one count of bank fraud. She's accused of embezzling the money and using it to pay for business and personal expenses between May 2017 and July 2019.

The indictment says Hymans went to great lengths to hide the fraud by providing false documents to a tax preparer, making false statements in state court and lying to a bank employee.

Hymans pleaded not guilty to the 41 counts Monday at the federal court in Rapid City, records show. She was released pre-trial.

If convicted, Hymans faces up to 30 years in prison on the bank fraud charge and up to 20 years on each wire fraud and money laundering count

The criminal charges are the result of an investigation by the FBI, IRS and South Dakota Division of Criminal Investigations, according to a news release from the U.S. Attorney's Office in South Dakota.

The charges come after Hymans resigned from the South Dakota State Bar on Jan. 22, which means she’s no longer eligible to practice law, according to documents provided by the state court administrator. She previously worked out of Sturgis.

Hymans resigned after learning the state bar was investigating a complaint that accused her of breaking a law that says it’s illegal for attorneys to use clients' money in unauthorized ways. She was also accused of violating professional rules about misconduct and safekeeping property.

“I do not desire to contest or defend against the above-described complaint, allegations or instances of alleged misconduct,” Hymans wrote in her resignation letter.

The South Dakota Supreme Court disbarred Hymans on Feb. 24 without holding a hearing or issuing any opinion since she resigned. The court later ordered Hymans to pay $5,040 — the amount spent investigating her complaint — to the state bar.

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Alleged scheme

What follows is alleged in Hymans’ 14-page indictment:

Doris Lauing hired Hymans in November 2016 to represent her relative Leo Drillig in an estate matter related to the death of Lauing’s uncle, Leo Miller. Miller left an inheritance for Drillig — who lives in Germany — so Lauing hired Hymans to serve as Drillig’s personal representative in the U.S.

Hymans deposited $167,699 — the amount of Drillig’s inheritance — in her client trust account in May 2017 and was supposed to immediately transfer the money to Drillig.

But Hymans instead decided to “defraud Drillig and enrich herself,” causing “Drillig’s inheritance to be entirely depleted,” the indictment says.

Hymans transferred the money in her client trust account to her business account and then her personal bank accounts. She concealed the fraud by telling her legal assistant that the transfers were for legal services and providing false documentation to her income tax preparer.

Lauing made multiple attempts to contact and ask Hymans to transfer the inheritance to Drillig, but Hymans never responded. She hired an attorney in September 2018 to help retrieve the funds, but Hymans provided the attorney with false explanations for the delay of the transfer.

The attorney filed a petition at the Meade County Court in January 2020 to force Hymans to turn over the money. Hymans falsely told a judge on Jan. 3 that she was reluctant to give Drillig his money because she was concerned he was trying to hide it in the U.S. The court ordered Hymans to pay Drillig the money minus $2,709, which Hymans said she earned as attorney’s fees.

Hymans made her false statements to the attorney and judge after she had spent all of Drillig’s money.

Hymans deposited a check Jan. 3 to Drillig’s estate from her client trust account knowing that the account had insufficient funds. She called her bank and asked an employee to honor the check, falsely saying she would soon be making a large deposit.

Lauing then attempted to deposit the check but the bank told her Hymans’ client trust account had insufficient funds. She contacted Hymans who sent emails that falsely stated the bank told her she did have enough funds.

Hymans has still not put money into her client trust account so she can pay Drillig.

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Disbarred Sturgis lawyer accused of stealing $168,000 inheritance from client

Monday, October 21, 2019

Don't spend that inheritance money until it's yours

Sharon Cermak
Just because you're set to inherit money soon doesn't mean you get to take it before your loved one dies.

DuPage County Judge John Kinsella made that clear Thursday when he sentenced Sharon Cermak of Villa Park to 120 days in jail and three years of probation for stealing more than $100,000 from her 85-year-old uncle's bank account.

"You took it upon yourself to determine, 'Well, he's not going to live that long,' and spent his money -- that's wrong," Kinsella told Cermak.

Cermak, 63, obtained power of attorney to oversee the care and finances of her uncle in June 2013. DuPage County Adult Protective Services began investigating her three years later.

She was arrested in January 2017, two weeks after her uncle's death, on charges of bank fraud and financial exploitation of a person older than 80. The exploitation charge was dropped when Cermak pleaded guilty to bank fraud in August.

Authorities said she took more than $250,000 from her uncle, with Assistant DuPage County State's Attorney Diane Michalak saying Cermak treated his money like a "newfound piggy bank."

"Her justification is: 'There was still money in his account when he died,'" Michalak said.

In court Thursday, Cermak described using her uncle's money to buy a car but said she bought a modest one instead of a Camaro and had intended to reimburse his accounts. She insisted she planned to pay him back for other spending as well, like money she used for a trip to Florida.

"I was not aware I was not supposed to use his money," Cermak said.

Kinsella didn't buy Cermak's explanation.

"I suspect this kind of thing goes on undetected and unreported all the time," the judge said.

Crime pays?


Despite her conviction, Cermak still might get her uncle's estate, which Michalak said could be worth $455,000.

She appears to be the only specified heir left, and no other relatives were to receive anything under the terms of amendments he made to his will in 2014.

But the DuPage County public guardian is disputing those amendments, arguing in probate court that the uncle was incapable of understanding what he was signing due to dementia and that Cermak took advantage of him.

If Cermak had been convicted of financial exploitation, the state's probate law could have prevented her from inheriting the estate. The next court date for the probate case is Oct. 24.

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Don't spend that inheritance money until it's yours

Tuesday, February 12, 2019

North Carolina News: Durham Woman, Teresa Denise Schneider Who Defrauded Elderly Victim Pleads Guilty

Winston-Salem, N.C. – A woman who embezzled from an older person for whom she was a caretaker pleaded guilty to federal charges on Friday, February 8, announced United States Attorney Matthew G.T. Martin for the Middle District of North Carolina.

Teresa Denise Schneider, 52, of Durham, North Carolina, pleaded guilty to one count of bank fraud and one count of wire fraud, in front of the Honorable Loretta C. Biggs, United States District Judge for the Middle District of North Carolina.

“We should honor our elders, not steal from them. Ms. Schneider abused her position of trust as caretaker. We will aggressively pursue those who commit such acts,” said U.S. Attorney Martin, adding, “I commend the Department of Treasury Task Force, NC SBI, and AUSA Chut who worked diligently to make sure this defendant is held accountable for exploiting a vulnerable victim and abusing the trust of the victim’s family.”

According to court documents, Schneider began caring for the victim in 2010 and continued to do so until the victim’s death of natural causes at the age of ninety in 2013. During this time, family members of the victim, who visited almost daily, became concerned about Schneider’s involvement in the victim’s finances. In September 2011, a family member instructed Schneider to provide monthly copies of all bank and credit card statements. Schneider complied, but after the victim’s death, the family discovered that the account statements Schneider provided had been altered to remove or conceal transfers of funds to Schneider. In total, Schneider embezzled approximately $370,000 from the victim.

Schneider’s main source for converting the victim’s funds to her own use involved the victim’s credit card. Schneider transferred funds from the victim’s deposit and investment accounts to overpay wildly the credit card by tens of thousands of dollars. Schneider then converted this money in two ways. First, she made numerous unauthorized purchases on the card, including paying for spa treatments, travel, college tuition, dining, and expensive shopping sprees at department stores. Second, Schneider used a direct transfer feature of the credit card to transfer over $100,000 to her personal bank account.

Schneider knew that she was not entitled to these funds and not authorized to make these transfers.
The sentencing is set for July 18, 2019, at 9:30 a.m. in Winston-Salem. Schneider faces up to thirty years in prison, a fine of up to $1,000,000, and supervised release of not more than five years following release from prison. At sentencing Schneider will also be ordered to pay restitution.

This case was investigated by the United States Department of Treasury Office of Inspector General Task Force and the North Carolina State Bureau of Investigation. Assistant United States Attorney Frank J. Chut, Jr. prosecuted the case.

Elder abuse includes physical abuse, caregiver neglect, financial exploitation, psychological abuse, sexual abuse, and abandonment. Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors.

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North Carolina News: Durham Woman, Teresa Denise Schneider Who Defrauded Elderly Victim Pleads Guilty

Thursday, May 24, 2018

Solon resident charged with embezzling $157,000 from trust for disabled woman

CLEVELAND, Ohio -- A Solon woman is accused of defrauding a trust set up for a Hudson resident with multiple sclerosis and using the money to pay her personal expenses.

Teresita Sidoti, 52, embezzled $156,949.75 between 2009 and 2015 from a trust established to pay the medical expenses of Noel Zugay, who died in October 2014 at age 58, according to an investigation by the FBI and IRS.

Sidoti worked as Zugay's caregiver and controlled bank accounts for Zugay and the trust. She took the money by writing checks to herself, transferring money online and by making withdrawals in person, the U.S. Attorney's Office says.

She is charged with bank fraud and filing false tax returns. The charges were filed Tuesday via a criminal information, which usually means a plea agreement is forthcoming.

Federal prosecutors did not indicate what disability Zugay suffered from, but court filings in a 2015 lawsuit her family filed against Sidoti say Zugay was diagnosed with multiple sclerosis in 1989 "and by 1998 was completely and totally disabled."

That lawsuit, along with another action taken in Cuyahoga County Probate Court, was dropped to let the federal government investigate, said Robert Higgins, an attorney for the Zugay family. The lawsuits accuse Sidoti of embezzling much more, as court filings say the trust had $590,000 in April 2006. By August 2013, it had a negative balance of $130, the family claimed in the litigation.

Zugay left behind two sons, and they've been "waiting for this day for two years," Higgins said.

The information says Sidoti became Zugay's caregiver and the trustee for the trust in 2006, the year it was established in 2006 by Zugay's parents. The trust's money initially came from Zugay's parents, but it also came from royalty checks from oil exploration rights for a well the Zugay family owned in Pennsylvania.

Sidoti also had Zugay's power of attorney, the information says.

In addition to stealing from the trust's bank account, Sidoti also diverted oil and gas exploration rights royalty checks to herself, the information states. She also did not report the extra money to the IRS, the government says.

In March 2012, Sidioti moved Zugay to Hudson Elms Nursing Home because the money in the trust was running law, prosecutors say.

A call left for Sidoti's federal public defender was not immediately returned.

The case is assigned to Senior U.S. District Judge Donald Nugent.

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Solon resident charged with embezzling $157,000 from trust for disabled woman

Saturday, March 12, 2016

Guilty verdicts handed down on 11 of 17 charges in $52 million federal fraud case


After three days of deliberations, a federal jury on Monday decided that former Alaska prosecutor Mark Avery cheated his way into a wealthy, elderly widow’s trust fund in 2005, then spent wildly on vintage planes and expensive boats. The jury handed down verdicts of guilty on 11 of 17 felony counts in U.S. District Court.

But jurors found him not guilty of one count, and hung on five others.

Jurors began deliberating the $52 million fraud case Thursday morning and announced their decision Monday afternoon in a federal courtroom in Anchorage.

Avery, 56, was tried on five counts of wire fraud, 10 counts of money laundering and single counts of bank fraud and making a false statement to a bank.

Under their decision, jurors found that the fraud of the May Smith Trust added up to $31 million.

They found him not guilty on the fourth of five requests for wire transfers, which amounted to $6 million. They couldn’t decide whether Avery deceived his two fellow trustees from the very start, when he emailed a financial manager for the first $15 million drawn on a loan backed by the trust.

They also hung up on whether the initial spending amounted to money laundering, including Avery’s purchase of two RVs and his payoffs of a second mortgage, loans for three SUVs and other debt. They also couldn’t decide on another money laundering charge related to Avery making a $304,000 interest payment from, as prosecutors said, the trust-backed loan.

U.S. District Judge Ralph Beistline, who presided over a trial spanning 15 days from the start of jury selection, earlier said he was considering entering his own order of not guilty on two counts related to a separate $500,000 Wells Fargo line of credit. While jurors convicted Avery of those two charges, the judge could still rule in the defendant's favor on them.

Avery declined to comment after the verdicts were read and didn’t react in the courtroom. His attorney, Mike Dieni, also declined to comment.

Over 11 days of testimony, jurors were shown some 200 exhibits. They heard from 20 government witnesses and five from the defense, including Avery himself, who testified over one full day and parts of two others, more than any other witness.

“These guilty verdicts are clear indicators that they totally discounted his explanation and his story,” said assistant U.S. Attorney Steve Skrocki, the lead prosecutor on the case.

It’s too soon for the prosecution to say whether it intends to retry Avery on the five counts on which jurors couldn’t reach a decision.

But, Skrocki said: “This is a $30 million conviction, so it’s probably unlikely we will retry him on those charges.”

Avery was one of three trustees for the $100 million May Smith Trust, set up to provide for the care of May Wong Smith, as well as the $350 million charitable trust in the name of May and her late husband, Stanley Smith, who made a fortune in mining after World War II.  (Continue Reading)

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Guilty verdicts handed down on 11 of 17 charges in $52 million federal fraud case