Business Crimes Hotline

CALIFORNIA

CEO Indicted for Unlawful Accessing of Competitor's Voice Mail System

Dmitri Shubov, the CEO and founder of LegalMatch.com, was indicted for allegedly listening to and deleting the voicemails of one of his competitors at Casepost.com. The indictment charged Shubov with three counts of unlawful access to stored communications and one count of making false statements, for allegedly telling federal agents that he had not hacked into Casepost's voice mail system. If convicted on all four counts, Shubov could face up to 20 years in prison.

Securities Firm Consultant Pleads Guilty to Concealing Material Facts from the SEC Irving Kott, a Canadian citizen and former consultant to the Beverly Hills brokerage firm of JB Oxford & Co., agreed to plead guilty to two charges of concealing material facts from the SEC. In 1993, JB Oxford & Co., then known as Reynolds Kendrick Stratton, Inc. (RKS), asked Kott to assist it in raising capital. Kott helped to form an investor group to lend money to RKS. One of the investors in that group purchased 332,000 shares of RKS, using funds borrowed from Kott and others, and pledging the shares as collateral. According to the criminal information, Kott caused JB Oxford Holdings to conceal from the SEC and investing public in a 1994 SEC filing the fact that he was the beneficial owner of the 332,000 shares. In a second count of the criminal information, the government charged that Kott failed to disclose he had an interest in other loans that had been made to JB Oxford, and that in April 1995 he caused JB Oxford to file a false Form 10-K with the SEC because the filing did not disclose his interest.

In a plea agreement filed with the court, Kott has agreed to pay $1 million in fines and donations to charities, and be sentenced to five years of probation. Kott is 73-years-old, and has significant health problems and a legally blind wife who requires his daily assistance. Also, Kott agreed to waive extradition from Canada. JB Oxford agreed in February 2000 to pay $2 million to resolve a criminal securities fraud investigation, and as part of the settlement agreed to sever all ties with Kott.

CONNECTICUT

CEO Sentenced for Failing to Report CFO's Check-Kiting Scheme

Robert Palmer, the former CEO of Eastern Color Printing, was sentenced after pleading guilty to one count of misprision of a felony. Palmer allegedly failed to report to law enforcement officials his awareness of a check-kiting scheme being perpetrated by David T. Lackenby, the CFO of Eastern Color Printing. Palmer acknowledged awareness that thousands of Eastern Color Printing checks were being circulated between Eastern Color Printing's accounts with Fleet Bank, and that the balance of the accounts was insufficient to cover the face value of all the checks. Palmer also admitted that he delayed financial auditors' access to the company's books and records in an effort to conceal the offense, and that he did not alert law enforcement as soon as he became aware of the check-kiting scheme. Fleet Bank allegedly sustained losses of approximately $2.2 million as a result of the scheme.

The Court sentenced Palmer to 5 years of probation, the first 3 months of which are to be served as home-confinement, 208 hours of community service over the next year, and restitution to Fleet Bank in the amount of $684,462. David Lackenby has also pleaded guilty in connection with the scheme.

LOUISIANA

Landfill Owner Sentenced to 21 Months in Prison for Illegal Discharge of Pollutants

Terry Pierre LeBlanc, the owner of a landfill, was sentenced to 21 months in prison for the illegal discharge of pollutants into wetlands. According to a factual stipulation filed in connection with his guilty plea, EPA and FBI agents witnessed an employee of a construction company dumping construction debris at LeBlanc's landfill. LeBlanc admitted that the owner of the construction company had compensated LeBlanc for each load of debris dumped, and that LeBlanc had then used his bulldozer to push the debris into surrounding wetlands. The debris allegedly covered more than a half acre of wetlands, which affected and impacted approximately 125 acres of the surrounding wetlands. In addition to the term of imprisonment, LeBlanc's sentence included 1 year of supervised release and a $3000 fine. The case was investigated by the EPA, FBI, and the Louisiana Department of Environmental Quality.

CALIFORNIA

CEO Indicted for Unlawful Accessing of Competitor's Voice Mail System

Dmitri Shubov, the CEO and founder of LegalMatch.com, was indicted for allegedly listening to and deleting the voicemails of one of his competitors at Casepost.com. The indictment charged Shubov with three counts of unlawful access to stored communications and one count of making false statements, for allegedly telling federal agents that he had not hacked into Casepost's voice mail system. If convicted on all four counts, Shubov could face up to 20 years in prison.

Securities Firm Consultant Pleads Guilty to Concealing Material Facts from the SEC Irving Kott, a Canadian citizen and former consultant to the Beverly Hills brokerage firm of JB Oxford & Co., agreed to plead guilty to two charges of concealing material facts from the SEC. In 1993, JB Oxford & Co., then known as Reynolds Kendrick Stratton, Inc. (RKS), asked Kott to assist it in raising capital. Kott helped to form an investor group to lend money to RKS. One of the investors in that group purchased 332,000 shares of RKS, using funds borrowed from Kott and others, and pledging the shares as collateral. According to the criminal information, Kott caused JB Oxford Holdings to conceal from the SEC and investing public in a 1994 SEC filing the fact that he was the beneficial owner of the 332,000 shares. In a second count of the criminal information, the government charged that Kott failed to disclose he had an interest in other loans that had been made to JB Oxford, and that in April 1995 he caused JB Oxford to file a false Form 10-K with the SEC because the filing did not disclose his interest.

In a plea agreement filed with the court, Kott has agreed to pay $1 million in fines and donations to charities, and be sentenced to five years of probation. Kott is 73-years-old, and has significant health problems and a legally blind wife who requires his daily assistance. Also, Kott agreed to waive extradition from Canada. JB Oxford agreed in February 2000 to pay $2 million to resolve a criminal securities fraud investigation, and as part of the settlement agreed to sever all ties with Kott.

CONNECTICUT

CEO Sentenced for Failing to Report CFO's Check-Kiting Scheme

Robert Palmer, the former CEO of Eastern Color Printing, was sentenced after pleading guilty to one count of misprision of a felony. Palmer allegedly failed to report to law enforcement officials his awareness of a check-kiting scheme being perpetrated by David T. Lackenby, the CFO of Eastern Color Printing. Palmer acknowledged awareness that thousands of Eastern Color Printing checks were being circulated between Eastern Color Printing's accounts with Fleet Bank, and that the balance of the accounts was insufficient to cover the face value of all the checks. Palmer also admitted that he delayed financial auditors' access to the company's books and records in an effort to conceal the offense, and that he did not alert law enforcement as soon as he became aware of the check-kiting scheme. Fleet Bank allegedly sustained losses of approximately $2.2 million as a result of the scheme.

The Court sentenced Palmer to 5 years of probation, the first 3 months of which are to be served as home-confinement, 208 hours of community service over the next year, and restitution to Fleet Bank in the amount of $684,462. David Lackenby has also pleaded guilty in connection with the scheme.

LOUISIANA

Landfill Owner Sentenced to 21 Months in Prison for Illegal Discharge of Pollutants

Terry Pierre LeBlanc, the owner of a landfill, was sentenced to 21 months in prison for the illegal discharge of pollutants into wetlands. According to a factual stipulation filed in connection with his guilty plea, EPA and FBI agents witnessed an employee of a construction company dumping construction debris at LeBlanc's landfill. LeBlanc admitted that the owner of the construction company had compensated LeBlanc for each load of debris dumped, and that LeBlanc had then used his bulldozer to push the debris into surrounding wetlands. The debris allegedly covered more than a half acre of wetlands, which affected and impacted approximately 125 acres of the surrounding wetlands. In addition to the term of imprisonment, LeBlanc's sentence included 1 year of supervised release and a $3000 fine. The case was investigated by the EPA, FBI, and the Louisiana Department of Environmental Quality.