Business Crimes Hotline

ALABAMA

False Assets Reported to Auditors: Guilty Plea by Cooperating VP

More charges have been announced in the continuing investigation of Just-For-Feet's (JFF) finances. Steven G. Dodge, a former vice president for U.S. Sales for Converse, Inc., was charged with conspiracy to submit false statements to the auditors of JFF and to falsify the books and records of JFF. Dodge allegedly sent JFF's auditor, Deloitte & Touche, an audit-confirmation letter stating that Converse owed JFF approximately $412,000 for advertising or merchandise sold, knowing that JFF in fact was not owed the money. Dodge agreed to plead guilty to a one-count criminal information, and to cooperate with the federal government's ongoing investigation.

GEORGIA

Two Indicted in Advance Fee Scheme That Targeted Churches

A grand jury in the Northern District of Georgia returned a 91-count indictment against Abraham Kennard and Scott Cunningham on charges relating to a multi-million dollar advance fee scheme. The indictment charges that Kennard and Cunningham engaged in a scheme to defraud churches and other non-profit organizations by selling memberships in the Network International Investment Corporation (NIIC) “Church Funding Project,” which allegedly told organizations that they would receive a forgivable loan or non-refundable grant of $500,000 for every $3000 in membership dues they paid to NIIC. Kennard allegedly represented, among other things, that NIIC was a $25 million Nevada corporation, with $346 million available as loan and grant money. Kennard allegedly arranged with Cunningham, an attorney, to deposit the proceeds from the scheme into a trust account.

Allegedly, Kennard deposited app- roximately $8,756,000 in proceeds into the trust account, $3,400,000 of which Cunningham then disbursed from the trust to himself, Kennard, and friends and family members. The indictment also charges that Kennard and Cunningham used a series of financial transactions to conceal the source and ownership of the scheme proceeds, and contains a criminal forfeiture provision. Approximately 1600 churches and individuals paid $3000 or more to join the Church Funding Project.

MASSACHUSETTS

Refinery Sentenced for Illegal Gold Imports

Metalor USA Refining Corporation, North Attleboro, MA, pleaded guilty to an information charging the company with engaging in financial transactions in excess of $10,000 involving the proceeds of unlawful activity. Metalor allegedly purchased and sold gold that had been imported to and exported from the United States in violation of U.S. customs laws.

In 1998, Metalor began doing business with South American companies that sent gold to Metalor for refining, and that also purchased gold from Metalor. Soon after these transactions began, some Metalor employees became suspicious about the South American companies' conduct, including the use of indirect wire transfers as payment for gold purchases, and the transport of gold in unusual shipping containers, such as shampoo bottles. In January 1999, Metalor sent a representative to South America to investigate the South American companies, and the representative allegedly collected information that the gold was being imported to and exported from the United States in violation of U.S. law. Metalor, allegedly aware of the illegality of the transactions, continued to sell gold to the South American companies and to refine gold for them during the following 4 months. The financial transactions during those 4 months totaled approximately $4.5 million, and Metalor received refining fees of approximately $423,000 from the South American companies during that same period.

The court sentenced Metalor to 5 years of probation and a $2,250,000 fine, and ordered Metalor to forfeit the $423,000 in refining fee profits it had made as a result of its illegal conduct.

NEVADA

CEO Sentenced in Penny Stock 'Pump and Dump' Fraud Scheme

Thomas Becker, and Homer Langrill, were sentenced for operating a “pump and dump” stock fraud scheme, from which they made at least $70,000.

Becker was the CEO and member of the Board of Directors of Greater Northwest Research & Development (GNRD), a publicly traded micro-cap company licensed in Florida, but conducting business in Nevada. Allegedly, Becker worked at the direction of Langrill, who controlled the company, although his name was not disclosed in corporate documents. Langrill had prior convictions in several jurisdictions for wire fraud, passing fictitious checks, and grand theft, and Becker allegedly knew that Langrill was a convicted felon. The state of Florida dissolved GNRD as a corporation in 1996 because it failed to file mandatory reports.

Between Jan. 30 and the end of February, 2002, Langrill and Becker allegedly disseminated false information about GNRD through press releases, infomercials, and a website, including about its legal status, the identity of the company's directors, and its future financial performance in order to sell the stock at artificially high prices. Becker and Langrill also allegedly failed to disclose that GNRD was controlled by Langrill and that Langrill was a convicted felon. During the period in which false information was disseminated, Langrill and Becker both acquired millions of shares, and then allegedly sold some of those shares at a profit of $24,537 and $46,000, respectively. The stock price eventually dropped significantly.

Langrill was sentenced to 13 months of home confinement, and Becker was sentenced to 3 years of probation, and 6 months of home detention with electronic monitoring. Both defendants were also ordered to pay monetary penalties in a proceeding brought by the SEC.

ALABAMA

False Assets Reported to Auditors: Guilty Plea by Cooperating VP

More charges have been announced in the continuing investigation of Just-For-Feet's (JFF) finances. Steven G. Dodge, a former vice president for U.S. Sales for Converse, Inc., was charged with conspiracy to submit false statements to the auditors of JFF and to falsify the books and records of JFF. Dodge allegedly sent JFF's auditor, Deloitte & Touche, an audit-confirmation letter stating that Converse owed JFF approximately $412,000 for advertising or merchandise sold, knowing that JFF in fact was not owed the money. Dodge agreed to plead guilty to a one-count criminal information, and to cooperate with the federal government's ongoing investigation.

GEORGIA

Two Indicted in Advance Fee Scheme That Targeted Churches

A grand jury in the Northern District of Georgia returned a 91-count indictment against Abraham Kennard and Scott Cunningham on charges relating to a multi-million dollar advance fee scheme. The indictment charges that Kennard and Cunningham engaged in a scheme to defraud churches and other non-profit organizations by selling memberships in the Network International Investment Corporation (NIIC) “Church Funding Project,” which allegedly told organizations that they would receive a forgivable loan or non-refundable grant of $500,000 for every $3000 in membership dues they paid to NIIC. Kennard allegedly represented, among other things, that NIIC was a $25 million Nevada corporation, with $346 million available as loan and grant money. Kennard allegedly arranged with Cunningham, an attorney, to deposit the proceeds from the scheme into a trust account.

Allegedly, Kennard deposited app- roximately $8,756,000 in proceeds into the trust account, $3,400,000 of which Cunningham then disbursed from the trust to himself, Kennard, and friends and family members. The indictment also charges that Kennard and Cunningham used a series of financial transactions to conceal the source and ownership of the scheme proceeds, and contains a criminal forfeiture provision. Approximately 1600 churches and individuals paid $3000 or more to join the Church Funding Project.

MASSACHUSETTS

Refinery Sentenced for Illegal Gold Imports

Metalor USA Refining Corporation, North Attleboro, MA, pleaded guilty to an information charging the company with engaging in financial transactions in excess of $10,000 involving the proceeds of unlawful activity. Metalor allegedly purchased and sold gold that had been imported to and exported from the United States in violation of U.S. customs laws.

In 1998, Metalor began doing business with South American companies that sent gold to Metalor for refining, and that also purchased gold from Metalor. Soon after these transactions began, some Metalor employees became suspicious about the South American companies' conduct, including the use of indirect wire transfers as payment for gold purchases, and the transport of gold in unusual shipping containers, such as shampoo bottles. In January 1999, Metalor sent a representative to South America to investigate the South American companies, and the representative allegedly collected information that the gold was being imported to and exported from the United States in violation of U.S. law. Metalor, allegedly aware of the illegality of the transactions, continued to sell gold to the South American companies and to refine gold for them during the following 4 months. The financial transactions during those 4 months totaled approximately $4.5 million, and Metalor received refining fees of approximately $423,000 from the South American companies during that same period.

The court sentenced Metalor to 5 years of probation and a $2,250,000 fine, and ordered Metalor to forfeit the $423,000 in refining fee profits it had made as a result of its illegal conduct.

NEVADA

CEO Sentenced in Penny Stock 'Pump and Dump' Fraud Scheme

Thomas Becker, and Homer Langrill, were sentenced for operating a “pump and dump” stock fraud scheme, from which they made at least $70,000.

Becker was the CEO and member of the Board of Directors of Greater Northwest Research & Development (GNRD), a publicly traded micro-cap company licensed in Florida, but conducting business in Nevada. Allegedly, Becker worked at the direction of Langrill, who controlled the company, although his name was not disclosed in corporate documents. Langrill had prior convictions in several jurisdictions for wire fraud, passing fictitious checks, and grand theft, and Becker allegedly knew that Langrill was a convicted felon. The state of Florida dissolved GNRD as a corporation in 1996 because it failed to file mandatory reports.

Between Jan. 30 and the end of February, 2002, Langrill and Becker allegedly disseminated false information about GNRD through press releases, infomercials, and a website, including about its legal status, the identity of the company's directors, and its future financial performance in order to sell the stock at artificially high prices. Becker and Langrill also allegedly failed to disclose that GNRD was controlled by Langrill and that Langrill was a convicted felon. During the period in which false information was disseminated, Langrill and Becker both acquired millions of shares, and then allegedly sold some of those shares at a profit of $24,537 and $46,000, respectively. The stock price eventually dropped significantly.

Langrill was sentenced to 13 months of home confinement, and Becker was sentenced to 3 years of probation, and 6 months of home detention with electronic monitoring. Both defendants were also ordered to pay monetary penalties in a proceeding brought by the SEC.