Business/Finance

DOJ - Defendant Sentenced for Intentional Destruction of Data, Credit Card Fraud and Aggravated Identity Theft

A former Davie, Florida resident was sentenced to seven years in prison for intentionally damaging a protected computer belonging to his former employer and making unauthorized purchases with credit card numbers belonging to others.

Acting Assistant Attorney General Kenneth A. Blanco of the Department of Justice’s Criminal Division, Acting U.S. Attorney Benjamin G. Greenberg of the Southern District of Florida, and Special Agent in Charge George L. Piro of the FBI’s Miami Field Office made the announcement.
In April 2017, a jury convicted Jonathan Lee Eubanks, 29, of one count of intentionally causing damage to a protected computer without authorization, one count of access device fraud, and three counts of aggravated identity theft. According to testimony presented at trial. After resigning from a private security company, Eubanks repeatedly accessed his former employer’s computer system, without authorization, using remote access software that he had surreptitiously installed on a co-worker’s computer. The evidence showed that through this remote access software, on Jan. 27, 2013, Eubanks deleted all of the files on one of the company’s computer servers, including databases of client and employee information and files necessary for scheduling and tracking employee shifts. He also re-directed the company’s website, so that visitors to that site were instead directed to the website of a competing security firm. The trial evidence also revealed that the following day, Eubanks used the email account of a former co-worker to send multiple emails in that former co-worker’s name to the company’s employees and clients disparaging the company and accusing it of illegal practices. Several weeks later, Eubanks placed a series of online orders for rifle scopes, survivalist gear and electronics using credit cards and names belonging to three other individuals, which the evidence presented at trial showed he had obtained by accessing the computers of another company, which made software for use by private security firms.

The Honorable James I. Cohn, Senior U.S. District Judge, sentenced Eubanks to a total of 84 months in prison. The sentence consisted of 60 months for intentionally damaging a protected computer and access device fraud, followed by a consecutive term of 24 months in prison for aggravated identity theft.

The FBI investigated the case. Trial Attorney Louisa K. Marion, of the Justice Department’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Jared M. Strauss of the Southern District of Florida are prosecuting the case.

North Carolina Man Indicted for Obstructing the IRS, Preparing Fraudulent Tax Returns and Bankruptcy Fraud

A grand jury sitting in the Middle District of North Carolina returned an indictment charging a Greensboro, North Carolina resident with corruptly endeavoring to obstruct and impede the Internal Revenue Service (IRS), preparing and filing fraudulent tax returns, bankruptcy fraud and making false bankruptcy declarations, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Sandra J. Hairston for the Middle District of North Carolina.

The indictment alleges that, between July 2008 and July 2009, Hassie Demond Nowlin aka Demond Nowlin and Brilliant Knowlin, filed personal tax returns with the IRS reporting fake income and income taxes withheld and seeking more than $700,000 in fraudulent refunds. According to the indictment, between 2008 and 2010, the IRS assessed taxes, penalties and interest against Nowlin related to his 2005 through 2008 income tax returns. After being notified of the assessments, Nowlin allegedly began concealing his assets and placing them in the names of nominee entities. The indictment also alleges that Nowlin made false statements to IRS agents, including that he did not prepare tax returns for clients.

The indictment further charges that between January 2011 and January 2017, Nowlin operated a tax preparation business, and filed tax returns for clients that claimed phony business and education expenses and sought refunds to which the clients were not entitled. According to the indictment, Nowlin did not identify himself as the paid preparer on these fraudulent returns. The indictment alleges that Nowlin caused more than $250,000 in clients’ tax refunds to be deposited into nominee bank accounts that he controlled.

In addition to the tax-related charges, the indictment alleges that Nowlin attempted to cheat his creditors by filing six fraudulent personal bankruptcy petitions between April 2013 and January 2017. Along with five of those petitions, Nowlin also allegedly submitted false financial statements on which he did not fully disclose his income and assets.

An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proved guilty beyond a reasonable doubt.

If convicted, Nowlin faces a statutory maximum sentence of three years in prison for obstructing the IRS and each count of preparing false tax returns and five years in prison for each count of bankruptcy fraud and making false bankruptcy declarations. He also faces a period of supervised release, restitution and monetary penalties.

Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Hairston commended special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorney Robert J. Boudreau of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

Atlanta Tax Consultant Guilty Of Defrauding The Kentucky Department Of Revenue And Signature Healthcare

LOUISVILLE, Ky. – An Atlanta, Georgia tax consultant pleaded guilty in United States District Court this week, before United States Magistrate Judge Colin H. Lindsay, to mail fraud and money laundering for devising a scheme to defraud the Kentucky Department of Revenue and his client Signature Healthcare, announced United States Attorney John E. Kuhn, Jr.

Todd Griffin, 46, was a tax credit consultant for a company located in Atlanta, Georgia. Between April of 2013, and June of 2014, Griffin fraudulently obtained $499,320 in state tax credits for his client Signature Healthcare (SHC) from the Kentucky Department of Revenue (KDOR). In return for securing the fraudulent tax credits, SHC compensated Griffin with commissions totaling $46,155. Griffin admits that he attempted to conceal his fraud from SHC, to continue to receive their commission and business, by making payments totaling $242,939.92 to KDOR, from his employer’s bank account, using funds derived from the scheme.

According to the plea agreement, Griffin submitted fraudulent documents to SHC to make it appear that the KDOR had approved certifications for eligibility for a tax credit program. Griffin then obtained state tax credits based on the fraudulent documents. The KDOR disallowed the credits and contacted Griffin, who had power of attorney for SHC and paid the disallowed tax credits in order to conceal the fraud.

According to the terms of the plea agreement, Griffin will pay restitution of $46,155 to SHC. At sentencing, the United States will recommend a sentence of 27-33 months in prison. Sentencing is scheduled before Chief Judge Joseph H. McKinley, Jr., on October 2, 2017 in Louisville.

This case is being prosecuted by Assistant United States Attorney Josh Judd and is being investigated by the Kentucky Department of Revenue, Kentucky Attorney General’s Office, Internal Revenue Service, Postal Inspection Service, and the Federal Bureau of Investigation.

Federal Grand Jury in Chicago Indicts Two Former Tech Executives For Allegedly Conspiring to Obstruct SEC Probe into Sale of Company

CHICAGO — A federal grand jury in Chicago has indicted two former executives of a Florida technology company for allegedly conspiring to obstruct an investigation by the U.S. Securities and Exchange Commission.

CHRISTOPHER YOUNG, the former President of Tampa-based M2 Interactive Group Inc., and JOSHUA CARLUCCI, M2 Interactive’s former Chief Executive Officer, are charged with conspiracy to obstruct, influence, and impede an official proceeding. The pair allegedly conspired with executives from Schaumburg-based Quadrant 4 System Corp. to obstruct an SEC investigation into Quadrant 4’s 2013 purchase of M2 Interactive.
The indictment was returned Thursday in federal court in Chicago. In addition to the conspiracy count, Young, 35, of Norwich, N.Y., and Carlucci, 39, of Tampa, Fla., are also charged with attempting to obstruct, influence, and impede an official proceeding. Carlucci also faces a charge of making false statements to the Federal Bureau of Investigation. The Court will schedule arraignments for Young and Carlucci at a later date.
New and expanded criminal charges were also filed Thursday against the two Quadrant 4 executives, NANDU THONDAVADI and DHRU DESAI. A criminal information filed in federal court in Chicago charged them with wire fraud. Arraignments for Thondavadi, 63, of North Barrington, and Desai, 55, of Barrington, have been scheduled for July 6, 2017, at 10:00 a.m., before U.S. District Judge Charles Norgle.
The charges were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent in Charge of the Chicago office of the FBI. The Chicago office of the SEC provided valuable assistance.

M2 Interactive was a technology company that developed applications for mobile devices and conducted business under the name Momentum Mobile. Quadrant 4 provides software products, platforms and consulting services to customers in the healthcare and education sectors. As a public company, Quadrant 4 is required to provide to the SEC a detailed report of its financial condition.

In 2015, the SEC launched an investigation of Quadrant 4 based on indications that the firm may have violated federal securities laws. The FBI initiated an investigation of Quadrant 4 in 2016. As set forth in the information against Thondavadi and Desai, the investigation revealed that Thondavadi and Desai engaged in a wide-ranging scheme to defraud Quadrant 4’s shareholders by misappropriating more than $3 million from the company, fraudulently inflating Quadrant 4’s revenue, and regularly concealing Quadrant 4’s liabilities. The information charges that Thondavadi and Desai certified false SEC reports, including Quadrant 4’s 2014 Form 10-K, in which the defendants fraudulently inflated Quadrant 4’s revenue by more than $4.2 million – nearly 10% of Quadrant 4’s reported income that year.

The fraud scheme also involved numerous misrepresentations related to Quadrant 4’s acquisitions, including misrepresentations about the terms of Quadrant 4’s purchase of Momentum Mobile in 2013. Quadrant 4 purchased Momentum Mobile for $100,000 in cash and 250,000 shares of Quadrant 4 stock, plus assumption of approximately $165,000 in Momentum Mobile liabilities, according to the indictment against Young and Carlucci. Federal authorities discovered that Thondavadi and Desai later concealed the true terms of the deal from Quadrant 4’s auditor and its shareholders, according to the charges. The pair furnished the auditor with a fictitious agreement that Thondavadi created, the charges state. The bogus document inflated the purchase price and failed to mention the liabilities Quadrant 4 assumed, according to the charges.

As set forth in the charges, the investigation further revealed that Thondavadi and Desai attempted to obstruct the SEC’s investigation of Quadrant 4 as it related to the Momentum Mobile acquisition. In July 2016 SEC attorneys sought to question Young and Carlucci, who were unaware of the fictitious acquisition agreement that Thondavadi created. Carlucci notified Thondavadi and Desai of the SEC’s inquiry, and the Quadrant 4 executives responded by striking a deal with Young and Carlucci to pay them cash in exchange for their agreement to send Thondavadi an e-mail falsely stating that Momentum Mobile had previously authorized the terms of the fictitious agreement, according to the charges. The defendants attempted to disguise the payments – $102,900 to Young and $60,000 to Carlucci – as “consulting” fees, the charges state.

The public is reminded that charges are not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The conspiracy, obstruction and wire fraud charges are each punishable by up to 20 years in prison, while making false statements to the FBI is punishable by up to five years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant U.S. Attorney Matthew Madden.