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

Pak: Disbarred attorney arraigned on federal fraud, theft charges in $337K College Park escrow case

Carla Burton Gaines faces federal fraud & misuse of client funds charges.

by Robin Kemp

ATLANTA—An attorney who allegedly stole hundreds of thousands of dollars in county escrow funds that were to go to a College Park business has been indicted by a federal grand jury on charges of fraud and misuse of client funds.

Carla Burton Gaines, 60, of Mableton, was disbarred by the Georgia Supreme Court on Nov. 18. According to a press release from U.S. Attorney for the Northern District of Georgia Byung J. "BJay" Pak, Gaines "allegedly stole $337,400 that she had received from the Clayton County government to hold in escrow for payment" to Kelete, Inc. of College Park.

"After the theft," which according to the indictment took place from August 2014 through March 2016, "Gaines allegedly lied to Clayton County and Kelete to convince them that she still had the money and payment was on the way."

The money came from a right-of-way sale agreement between Kelete, Inc., a convenience store, and Clayton County. The county paid Kelete $712,400, which Gaines was to have held in escrow. The deal closed in November 2015 and Gaines paid Kelete, Inc. $375,000. The rest was to remain in escrow until the company "removed certain trade fixtures and improvements on the property."

Kelete, Inc. finished the work in March 2016 but, despite asking repeatedly for the rest of its money, never got it.

"For example, Gaines falsely claimed that the wire was 'pending,' that the wire was 'stuck,' that she was 'awaiting a call from the bank,' that she had 'straightened out the issue,' and that the 'wire should be processed Monday,'" Pak's office said. "Those representations were false." What's more, the government alleges, "Gaines had far less...in her bank accounts at the time she made those representations."

Kelete, Inc. then sued Gaines, who allegedly lied under oath in two depositions on March 2017 and June 2018, claiming that she had accidentally paid the money to another client, a pastor, who she said repeatedly promised to pay her back.

"Attorneys who allegedly lie and steal abuse the trust owed to their clients and violate the law," Pak said. "The indictment alleges that Gaines stole client money that should have been held in escrow, and then lied about the theft in an attempt to lull her victims into a false sense of security."

FBI Special Agent in Charge of Atlanta Chris Hacker added, "It is very disheartening when a lawyer, sworn to uphold the Constitution of the United States and the Constitution of the jurisdiction they are licensed in, violates that oath."

According to her bio on the Gaines and Associates website, "Gaines is an attorney with over 23 years of experience in her field of law. She was a founding partner of Miller & Gaines, P.C., an Atlanta real estate closing firm, for over 15 years. She received her Bachelor’s Degree in Criminal Justice from the University of Tennessee at Chattanooga and her Juris Doctorate Degree from the University of Tennessee School Of Law. Since 2010, Mrs. Gaines and her team has successfully negotiated over 100 loan modifications, principal reductions, settlements, and short sales for clients in need, maintaining a 95% success rate. Mrs. Gaines sees this firm as a ministry allowing her to use her legal skills to help God’s people suffering in today’s tough economy."

Gaines is presumed to be innocent unless the government proves its case beyond a reasonable doubt. The News attempted to reach Gaines but did not hear back before press time.

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Pak: Disbarred attorney arraigned on federal fraud, theft charges in $337K College Park escrow case

Cook County Judge Faces Trial On Federal Fraud Charges

Judge Jessica Arong O'Brien is accused of lying on loan documents to secure $1.4 million for investment properties.

CHICAGO — The federal trial of a Cook County judge indicted last year on two counts of fraud is set to begin this week in Chicago. Judge Jessica Arong O'Brien has been accused of a scheme to defraud banks by lying on mortgage paperwork. The Chicago Sun-Times reports jury selection started Monday and opening statements could begin as early as Tuesday at the Dirksen Federal Courthouse.

At the time the alleged fraud was taking place, O'Brien was working full-time for the Illinois Department of Revenue, working part time as a loan officer for Amronbanc Mortgage Corp. in Lincolnwood and the owner of a O'Brien Realty LLC, according to the feds.

Prosecutors said she met co-defendant Maria Bartko at the Lincolnwood firm and used her as a straw buyer to fraudulently obtain about $1.4 million worth of home loans for two properties on Chicago's South Side – to buy an investment property on the 600 block of West 46th Street and to refinance another in the 800 block of West 54th Street.

Bartko pleaded guilty last month to one count of mail fraud and is expected to testify in O'Brien's trial, according to the Sun-Times.

The alleged crimes took place before O'Brien, who is married to Cook County Circuit Court Judge Brendan O'Brien, was elected to her position as the first Filipino-American elected to judge.

O'Brien has been on administrative duty since her indictment in April 2017, the Sun-Times reported. She is up for retention in 2018 but has not yet filed paperwork.

Under state law, O'Brien would be automatically removed from office and lose her nearly $200,000 salary if convicted of a felony.

O'Brien's lawyer said the government's case relied on a "known liar" and someone who had a "sham marriage" in order to gain citizenship, according to the Sun-Times.

Ricardo Meza has claimed his client is being unfairly targeted because of her job and promised more details in future remarks to the jury.

According to an online biography, O'Brien has won an award from former President Barack Obama for performing more than 4,000 hours of volunteer service over a decade.

She also has been a contributing editor for the Chicago Daily Law Bulletin and the president of the Women's Bar Association of Illinois.

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Cook County Judge Faces Trial On Federal Fraud Charges

FED: Man Schemed Elderly With Reverse Mortgages

(CHICAGO) — A Chicago businessman has been arraigned on federal fraud charges for his alleged role in a scheme to bilk elderly homeowners out of millions of dollars.

Federal prosecutors say Mark Steven Diamond, a mortgage loan originator with offices in Chicago and Calumet City, engaged in a home repair and loan fraud scheme that targeted elderly homeowners and lenders. According to the indictment, Diamond fraudulently caused lenders to make reverse-mortgage loans to homeowners who either did not sign up for the loans or did so unwittingly after Diamond intentionally misrepresented the terms. They say Diamond fraudulently pocketed the loan checks by causing title company representatives, including a co-schemer, to provide the checks to Diamond rather than the homeowners. The indictment seeks forfeiture of $7 million from Diamond.

Diamond, 60, pleaded not guilty at his arraignment this week to seven counts of wire fraud.

According to the indictment, Diamond targeted his victims, who ranged in age from 62 to 97, based on the equity in their homes and their relative lack of financial sophistication. If a victim’s relative questioned Diamond on the need for a reverse mortgage, prosecutors say Diamond would schedule a time to visit the victim’s home when he knew the relative would not be there.

Also charged in the indictment is Cynthia Wallace, 47, of Chicago. Prosecutors say Wallace solicited homeowners to have home repairs performed by Diamond, knowing that Diamond would not actually perform the work. They say Wallace also posed as a representative of the U.S. Department of Housing and Urban Development to fraudulently obtain money from victims.

Wallace has pleaded not guilty to nine counts of wire fraud and two counts of falsely pretending to be an employee of the United States.

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FED: Man Schemed Elderly With Reverse Mortgages

Cook County Judge Removed From Bench Amid Federal Fraud Charges

Judge Jessica Arong O’Brien

CHICAGO (CBS) — A highly regarded Cook County judge has been removed from hearing cases after being charged by federal authorities with fraud for providing false information to obtain loans for properties on the South Side.

Judge Jessica Arong O’Brien, 49, was charged last week with one count of mail fraud affecting a financial institution, and one count of bank fraud, according to the U.S. Attorney’s office in Chicago.

On Wednesday, Chief Judge Timothy Evans announced that O’Brien has been “reassigned to administrative duties in the office of the Presiding Judge of the First Municipal District, Judge E. Kenneth Wright Jr.” The action followed a meeting of the Executive Committee of the Circuit Court of Cook County on Tuesday.

Administrative duties can include performing marriage ceremonies and reviewing petitions for reduced court-filing fees for indigent parties, a statement from Evans’ office said. The action is effective immediately and until further notice.

“The committee is aware that a federal grand jury indicted Judge O’Brien on April 12, and she is accused of fraudulently obtaining loans related to the purchase, maintenance and sale of properties in Chicago,” the statement said. “That same day, on April 12, Judge Wright reassigned Judge O’Brien to administrative duties until the Executive Committee could consider the matter.”

Evans said last week that he was unable to comment further on the matter, citing Supreme Court Rule 63, which states, “A judge should abstain from public comment about a pending or impending proceeding in any court…”

The alleged crimes occurred before O’Brien was elected the first female Filipino-American judge in the Circuit Court of Cook County in 2012.

Federal prosecutors allege O’Brien got lenders to provide loans “by making false representations and concealing material facts in documents submitted to the lenders.” An attorney at the time, she used the loans to buy and refinance about $1.4 million in mortgage and commercial loans, including the purchase of an investment property in the 600 block of West 54th Street in the Back of the Yards, prosecutors said.  (Click to Continue)

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Cook County Judge Removed From Bench Amid Federal Fraud Charges

Disbarred Longwood attorney arrested on federal fraud charges

Julie Kronhaus, a former Longwood attorney, was disbarred

A Longwood attorney accused of draining hundreds of thousands of dollars from the trust accounts and businesses of her clients was arrested Friday on federal charges.

Julie Kronhaus, 51, is accused of 11 counts of wire fraud and seven counts of bank fraud.

An Orlando federal grand jury indicted her on Wednesday.

The indictment, unsealed Friday, accuses her of wrongdoing dating back to 2009. She's charged with making eight illegal wire transfers totaling $526,000 between 2012 and 2014.

In addition, she's charged with defrauding Bank of America out of $425,000 in a separate series of transactions.

Clients, however, have filed lawsuits and complaints with the Florida Bar accusing her of misappropriating more than $2 million.

Kronhaus provided legal advice, did accounting, set up trust funds and managed them for several clients. It's those funds that she's accused of raiding.

Disbarred attorney embezzled money from disabled girl, records allege

One of those was Brittany Jones, who gave birth 10 years ago to a baby girl who suffered severe brain damage while in a Lake County hospital. Kronhaus was in charge of the child's trust account when $180,000 disappeared, Jones alleged in a complaint with the Florida Bar.

"I'm glad it's finally happened," she said Friday when told of Kronhaus' arrest. "I've never seen where she's ever denied any wrongdoing."

Kronhaus had an office on Howell Branch Road near Winter Park and also was a certified public accountant. She was disbarred in 2014 and stripped of her CPA license by state regulators last year.

She did not return phone calls Friday evening.

Her arrest came as no surprise. Former clients have clamored for it for more than two years, when they first discovered checks she wrote to them began to bounce.

The first agency to take action against her was the Florida Bar. About that time, the Seminole County Sheriff's Office began an investigation, then turned it over to the FBI.

As the investigation dragged on, clients grew angry that she had not been charged with a crime.

They include the widow and son of a Casselberry man who was killed in an automobile crash, at least two Orlando-area aviation businesses and a Baltimore lawyer.

Kronhaus ran something similar to a Ponzi scheme, according to the indictment, sometimes transferring client money into the accounts of other clients in an attempt to cover up earlier wrongdoing.

She also made $120,000 in fraudulent wire transfers to American Express to pay for personal travel, clothes and entertainment, according to the indictment.

Former clients accused her of living a lavish lifestyle. She and her cardiologist husband, Ken Kronhaus, live in Alaqua, a gated community outside Longwood, in a 6,500-square foot home that has a heated swimming pool and backs up to a golf course.

Julie Kronhaus wore designer clothes, drove a Lexus, sent her daughter to Lake Highland Preparatory School and took the girl to out-of-state-beauty pageants and shows on Broadway, photos show.

The bank-fraud victim, according to the indictment, was Bank of America. Kronhaus carried out a check kiting scheme in 2014, leaving the bank holding $425,000 worth of bad checks.

She also diverted money from client accounts that were supposed to go to the Internal Revenue Service to pay their tax bills, the indictment alleges.

Kronhaus was booked into the Seminole County Jail about 1:45 p.m. Friday. After being transferred to federal custody, she was released on her own recognizance, according to Amy Filjones, a spokeswoman for the U.S. Attorney's Office.

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Disbarred Longwood attorney arrested on federal fraud charges