Articles Posted in Fraud

Two men in New England were charged with fraudulently applying for a Payment Protection Program (PPP) loan worth over $500,000. These loans, stemming from the recent CARES Act, were designed to assist small businesses during the COVID-19 pandemic. David Butziger of Rhode Island and David Staveley of Massachusetts were charged with conspiracy to make false statements on their SBA forms and conspiracy of fraud. Staveley was separately charged with identity theft and Butziger was separately charged with bank fraud. They claimed on their applications to have multiple wage-earning employees at four different businesses. The Justice Department stated the employees who claimed to work at the businesses were not actually employed. The FBI uncovered emails between the two men, discussing ways to create an application for a federal PPP loan and the supporting documents under false information without getting caught.

Butziger claimed his company, Dock Wireless, had seven workers on the payroll. The Department of Revenue determined, under further investigation, that those workers were not employed at Dock Wireless. Records further showed no evidence of any alleged workers except Butziger. Staveley claimed on his application there were dozens of employees unemployed across three restaurants he owned. However, under further investigation, it was determined two of the restaurants were closed before the pandemic hit early March, and the other restaurant had no indication Staveley was involved in the business.

For the men to be charged in a criminal court, they must be proven, beyond a reasonable doubt, to be guilty of the charges. Fraudulent applications to the PPP must have evidence containing immense wrongdoing in one or more of the four categories needed on the original application: 1) necessity for the loans, 2) size eligibility for the loan- less than 500 employees, 3) amount requested for the loan- under $10 million, or 4) the use of the loan- payroll, mortgage, rent, and/or utilities.

I was in need of money and told people I was raising money for a charity, but I plan to keep the money for myself instead of actually making the donation. Can I be charged with a crime?

The crime of wire fraud generally involves obtaining money, property, services, or something of value under false pretenses using electronic means of communication, including the internet, emails, text messages, social media websites, or wire transfers. Mail fraud is a similar offense, only the communications occur through the United States Postal Service or other carriers.

Wire fraud is illegal under both federal and Florida law. The Florida Communications Fraud Act criminalizes schemes to defraud, as described above. Under Florida law, a scheme to defraud is defined as “a systematic, ongoing course of conduct with intent to defraud one or more persons, or with intent to obtain property from one or more persons by false or fraudulent pretenses, representations, or promises or willful misrepresentations of a future act.” In the situation described above, asking people for money for a charity while knowing that the money would not actually be turned over to that charity and instead used for other purposes would be an intentional scheme to defraud.

I recently wrote a check and knew at the time that I did not have enough money in my bank account to cover the full amount. I was hoping that I could add enough funds to my account before the check was cashed to cover it, but I wasn’t able to and now the check has bounced. I know that my bank will charge me overdraft fees, but can I also be charged with a crime?

The short answer is it is possible. Under Florida law, there are many ways you could potentially face criminal charges for check fraud. For example, it is illegal to write a check or use a debit card while knowing at the time that there are insufficient funds in your account. It is also a crime to cash or deposit a check into your account with the intent to defraud, forge checks, forge signatures, or sign someone else’s name on a check, or otherwise alter a check and then deposit it into your account or cash it. Writing a check and then improperly issuing a “stop payment” order on it to prevent it from being cashed is also a crime.  Issuing a worthless check or debit card order is a misdemeanor of the first degree punishable by up to one year imprisonment and a fine if the amount is less than $150. If the amount is $150 or more, it becomes a felony of the third degree, punishable by up to five years imprisonment and a more severe fine. Cashing or depositing a check with the intent to defraud is also a felony of the third degree. All are theft and fraud crimes.

There are several defenses available to these charges that an experienced attorney may be able to raise on your behalf. The person using the debit card or writing the check cannot be charged if the person or business they gave the check to or used the debit card with knows, has reason to know, or has been expressly informed that there were not sufficient funds in the account to cover the transaction. Postdating a check to be cashed in the future or verbally asking that the check not be cashed until a date in the future can also be a defense. Surprisingly, making a payment for the overdrawn amount at a later date in an attempt to remedy the situation is not a defense.

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Over 50 people, including celebrities, CEOs, and administrators, have been charged following the long-running college admissions scandal. Those charged paid over $25 million to ensure their children were admitted to elite universities, including Yale, Stanford, Georgetown, and the University of Southern California, despite the students not having the qualifying credentials. Among those charged, the most notable are Lori Loughlin, from “Full House,” her husband and fashion designer, Mossimo Giannulli, and Felicity Huffman, from “Desperate Housewives.” Loughlin and Giannulli were indicted for allegedly paying $500,000 to have their two daughters designated as crew recruits to guarantee admission to USC, despite neither girl ever having done crew. Huffman, meanwhile, was indicted for allegedly paying an organization $15,000 to help her daughter cheat on the SAT.

The charges for the parents include racketeering, conspiracy to commit mail fraud, money laundering conspiracy, and obstruction of justice. At the heart of this recent story and scandal are several fraud charges. Mail fraud and wire fraud are broad terms that cover any scheme sent via mail or wire intended to deprive someone else of money or assets using fraudulent means. Examples include investment scams, “foreign inheritance” emails, and Ponzi schemes. These charges are punishable through federal law. Mail fraud uses U.S. mail or a private mail carrier to defraud someone for money, property, or what is referred to as “honest services.” If you are convicted of mail fraud, you could spend up to 20 years in federal prison and be ordered to pay a substantial fine. Wire fraud is very similar to mail fraud, but instead uses the phone, fax, email, and other electronic communications to carry out a fraudulent scheme. The potential penalties are the same as a mail fraud conviction.

While mail and wire fraud are dealt with at the federal level, Florida law addresses some of the serious offenses the parents have been charged with, including racketeering. In fact, Florida’s RICO (Racketeer Influenced and Corrupt Organization) Act closely mirrors that of the Federal RICO Act. A violation of Florida’s RICO Act alleges participating in an enterprise through a pattern of racketeering. The crime is charged as a first-degree felony punishable by up to 30 years. Florida law defines “racketeering activity” as soliciting, coercing, or intimidating another person to commit criminal charges.

There has been a recent increase in arrests and prosecutions for health care fraud in Florida as a result of increased law enforcement efforts in investigating these crimes. Healthcare fraud largely involves medical providers committing fraudulent billing practices to increase their profits, including submitting charges for reimbursement to insurance companies, Medicare, and Medicaid for services that weren’t provided. Additional investigations include accepting illegal kickbacks for patient referrals and billing insurance companies under incorrect billing codes to increase the payments received.

On July 31, 2017, seventy-seven people were arrested in Florida for their involvement in various health care fraud schemes that totaled over $141 million dollars in fraudulent billing. These arrests were part of a larger investigation by the Medicare Fraud Strike Taskforce that resulted in 412 individuals facing charges for over $1.3 billion in false billings. These investigations involved a multi-agency effort, involving local law enforcement, the FBI, the Department of Health and Human Services, the Medicaid Fraud Control Unit, and the Florida Attorney General’s Office. Continue reading

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