Business Crimes Hotline

Contract Manager Guilty Of Soliciting Kickbacks

A California man pleaded guilty to federal mail fraud and tax evasion charges, admitting that he took kickbacks from a company which he hired to install equipment for his employer, according to the Depart-ment of Justice. The defendant, a contract manager, admitted soliciting and accepting over $650,000 in payments in exchange for awarding contracts to install fiber optic cable in construction projects throughout California. (United States v. Bryan, No. 06-00011, C.D. Ca.)

Project Manager Admits Stealing Trade Secrets

A former project manager for a construction company plead guilty to the theft of trade secrets from his former employer, according the U.S. Attorney's office. The manager ad-mitted that, after leaving his em-ployer for a competitor, he accessed the company's computer network from his home computer, using a password belonging to another em-ployee. He then downloaded draft bid proposals and used that confidential information to draft bid proposals for his new employer. Upon learning of the theft, his new employer withdrew the bid and participated in the investigation. (United States v. Munoz, No. 06-00831, S.D. Ca.)

DISTRICT OF COLUMBIA

Restaurateur Sentenced to 18 Months for Sales Tax-Related Fraud

A Washington restaurateur was sentenced to 18 months in prison following his guilty plea on charges of mail, tax, and bankruptcy fraud stemming from his failure to pay over $2 million in sales taxes collected at his restaurants. According to prosecutors, this is the first felony prosecution under a new District of Columbia statute that provides for up to 10 years' imprisonment for sales tax abuses. The defendant reportedly diverted over 80% of the taxes he collected to his own use, filing false sales figures with the city to conceal his fraud. United States v. Kowkabi, No. 05-0135, D.D.C.)

Loan Officer Guilty of Fraudulently 'Flipping' Properties

A former District of Columbia loan officer was found guilty by a federal jury of conspiracy, bank fraud, wire fraud, and money laundering, ac-cording to the U.S. Attorney's Office. The charges stemmed from a scheme to buy and quickly resell, or 'flip sell,' DC homes at fraudulently inflated prices. The defendant is alleged to have recruited others to act as straw buyers and arranged for the straw buyers to receive fraudulent mortgages to fund the inflated purchases. The mortgages were later defaulted and foreclosed, resulting in millions of dollars of damages to lenders. (United States v. Hall, No. CR 04-0543, D.D.C.)

CALIFORNIA

Two Executives Charged With Securities Fraud for Backdating Stock Options

The former President and CEO of a California information technology company and its former Vice President of Human Resources have been charged with criminal securities fraud related to backdating stock options, according to federal prosecutors. The charges stem from allegations that the two regularly caused the company to grant 'in the money' stock options to its employees but backdated the options to make it appear they were issued before the stock's market price exceed the option price. By concealing the true value of the options at the time they were issued, the company avoided recording the compensation expenses associated with issuing 'in the money' options. Prosecutors and SEC investigators allege that backdating the options misled the investing public. (United States v. Reyes, No. 06-00556, N.D. Ca.)

Contract Manager Guilty Of Soliciting Kickbacks

A California man pleaded guilty to federal mail fraud and tax evasion charges, admitting that he took kickbacks from a company which he hired to install equipment for his employer, according to the Depart-ment of Justice. The defendant, a contract manager, admitted soliciting and accepting over $650,000 in payments in exchange for awarding contracts to install fiber optic cable in construction projects throughout California. (United States v. Bryan, No. 06-00011, C.D. Ca.)

Project Manager Admits Stealing Trade Secrets

A former project manager for a construction company plead guilty to the theft of trade secrets from his former employer, according the U.S. Attorney's office. The manager ad-mitted that, after leaving his em-ployer for a competitor, he accessed the company's computer network from his home computer, using a password belonging to another em-ployee. He then downloaded draft bid proposals and used that confidential information to draft bid proposals for his new employer. Upon learning of the theft, his new employer withdrew the bid and participated in the investigation. (United States v. Munoz, No. 06-00831, S.D. Ca.)

DISTRICT OF COLUMBIA

Restaurateur Sentenced to 18 Months for Sales Tax-Related Fraud

A Washington restaurateur was sentenced to 18 months in prison following his guilty plea on charges of mail, tax, and bankruptcy fraud stemming from his failure to pay over $2 million in sales taxes collected at his restaurants. According to prosecutors, this is the first felony prosecution under a new District of Columbia statute that provides for up to 10 years' imprisonment for sales tax abuses. The defendant reportedly diverted over 80% of the taxes he collected to his own use, filing false sales figures with the city to conceal his fraud. United States v. Kowkabi, No. 05-0135, D.D.C.)

Loan Officer Guilty of Fraudulently 'Flipping' Properties

A former District of Columbia loan officer was found guilty by a federal jury of conspiracy, bank fraud, wire fraud, and money laundering, ac-cording to the U.S. Attorney's Office. The charges stemmed from a scheme to buy and quickly resell, or 'flip sell,' DC homes at fraudulently inflated prices. The defendant is alleged to have recruited others to act as straw buyers and arranged for the straw buyers to receive fraudulent mortgages to fund the inflated purchases. The mortgages were later defaulted and foreclosed, resulting in millions of dollars of damages to lenders. (United States v. Hall, No. CR 04-0543, D.D.C.)