Brooklyn Woman Pleads Guilty in Manhattan Federal Cout to Participating in $57.3 Million Fraud on Organization That Makes Reparations to Victims of Nazi Persecution

Preet Bharara, the United States Attorney for the Southern District of New York, announced that Zlata Blavatnik, a former clerk employed at the Conference on Jewish Material Claims Against Germany Inc. (the “Claims Conference”), pled guilty today in Manhattan federal court to conspiring to defraud programs administered by the Claims Conference and established to aid the survivors of Nazi persecution out of more than $57 million. Blavatnik was arrested and charged in October 2011 as part of an ongoing investigation that has resulted in charges against a total of 31 participants, 10 of whom were former Claims Conference employees, including a former director. She pled guilty today before U.S. Magistrate Judge Henry B. Pitman.

According to the complaints and the indictment to which Blavatnik pled:

The Claims Conference, a not-for-profit organization that provides assistance to victims of Nazi persecution, supervises and administers several funds that make reparation payments to victims of the Nazis, including the “Hardship Fund” and the “Article 2 Fund,” both of which are funded by the German government. Applications for disbursements through these funds are processed by employees of the Claims Conference’s office in Manhattan, and the employees are supposed to confirm that the applicants meet the specific criteria for payments under the funds.

As part of the charged scheme, a web of individuals systematically defrauded the Article 2 Fund and Hardship Fund programs for over a decade. The Claims Conference first suspected the fraud in December 2009 and immediately reported their suspicions to law enforcement, which conducted a wide-reaching investigation.

The Hardship Fund pays a one-time payment of approximately $3,500 to victims of Nazi persecution who evacuated the cities in which they lived and were forced to become refugees. Members of the conspiracy submitted fraudulent applications for people who were not eligible. Many of the recipients of fraudulent funds were born after World War II. Some conspirators recruited other individuals to provide identification documents, such as passports and birth certificates, which were then fraudulently altered and submitted to corrupt insiders at the Claims Conference, who then processed those applications. When the applicants received their compensation checks, they kept a portion of the money and passed the rest back up the chain.

From the investigation to date, the Claims Conference has determined that at least 3,839 Hardship Fund applications appear to be fraudulent. These applications resulted in a loss to the Claims Conference of approximately $12.3 million.

The Article 2 Fund makes monthly payments of approximately $400 to survivors of Nazi persecution who make less than $16,000 per year and either (1) lived in hiding or under a false identity for at least 18 months; (2) lived in a Jewish ghetto for 18 months; or (3) were incarcerated for six months in a concentration camp or a forced labor camp. The fraud involved doctored identification documents in which the applicant’s date and place of birth had been changed. The fraud also involved more sophisticated deception, including altering documents that the Claims Conference obtains from outside sources to verify a person’s persecution by the Nazis. Some of the detailed descriptions of persecution in the fraudulent Article 2 Fund applications were completely fabricated.

From the investigation to date, the Claims Conference has determined that at least 1,112 Article 2 Fund cases it processed are fraudulent. Those cases have resulted in a loss to the Claims Conference of approximately $45 million.

Blavatnik, a Claims Conference clerk, was charged with knowingly collecting documents from ineligible applicants to be used in connection with submitting fraudulent applications in their names to the Hardship Fund program in return for payments from the applicants. Blavatnik is the 12th of the 31 defendants charged in the scheme to plead guilty. Charges remain pending against the remaining 19 defendants in the case, who are presumed innocent unless and until proven guilty.

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Blavatnik, 64, of Brooklyn, New York, faces a maximum sentence of 40 years in prison. She is scheduled to be sentenced by U.S. District Judge Thomas P. Griesa on October 25, 2012 at 4:30 p.m.

Mr. Bharara praised the investigative work of the Federal Bureau of Investigation (FBI). He also thanked the Claims Conference for bringing this matter to the FBI’s attention and for its extraordinary continued cooperation in this investigation, which he noted is ongoing.

This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Christopher D. Frey is in charge of the prosecution.

Two Augusta Businessmen Sentenced to Federal Prison for Mortgage Fraud Scheme

Robert J. DeMello Jr., 49, formerly of Augusta, Georgia, and Raymond W. Turner, 70, of Hephizibah, Georgia, were sentenced yesterday by United States District Court Judge J. Randal Hall to 58 and 62 months’ imprisonment, respectively, based on their earlier guilty pleas to count two of an indictment that charged them with defrauding Southern Bank, in Waynesboro, Georgia, and other financial institutions of thousands of dollars by submitting false information and fraudulent appraisals relating to mortgage loan applications. Evidence presented at hearings in this case showed that multiple properties in this fraudulent scheme, some of which are located in downtown Augusta, went into foreclosure, resulting in significant losses to Southern Bank.

United States Attorney Edward J. Tarver said, “Georgia has consistently been ranked as one of the top 10 states in the country for mortgage fraud. Yesterday’s sentences should clearly show that the United States Attorney’s Office for the Southern District of Georgia will pursue stiff prison sentences for those whose greed or arrogance leads them to threaten our country’s financial system through mortgage fraud.”

In addition to their prison sentences, DeMello and Turner were ordered to pay restitution, as well as serve five years of supervised release after they are released from prison. Regarding the length of the prison sentences, Tarver noted that there is no parole in the federal system.
This case was investigated by the Federal Bureau of Investigation. Assistant United States Attorneys Stephen T. Inman (now working at the United States Attorney’s Office for the Middle District of North Carolina), and David M. Stewart prosecuted the case. For additional information, please contact First Assistant United States Attorney James D. Durham at (912) 201-2547.

Owner of Grain Exchange Sentenced for Fraud

The United States attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today that John Kniepmann, 48, of Breese Illinois, d/b/a the Grain Exchange and Consolidated Exchange, was sentenced in federal district court to a total of 15 months in prison, followed by three years’ supervised release, on two counts of mail fraud. He was further ordered to pay restitution totaling $108,482.40.

Facts revealed in the case showed that Kniepmann owned Consolidated Exchange Inc. and The Grain Exchange LLC. These entities, Consolidated Exchange Inc. and The Grain Exchange LLC, purchased grain from farmers and then sold the grain on the open market. In the course of Consolidated Exchange Inc. and The Grain Exchange LLC’s regular business practices, the companies stored grain, transported grain using rented trucks, and maintained sales records in their offices. Count one pertained to a fraudulently inflated insurance claim for a Consolidated Exchange Inc. storage shed located in Carlyle, Illinois that was damaged in a fire. Kniepmann used the extra proceeds from the insurance claim for construction costs of a personal residence in Breese, Illinois. Count two pertained to the nominee sale of grain that was collateralized. In 2006, and continuing, while John Kniepmann was doing business as Consolidated Exchange Inc. and The Grain Exchange LLC, he knowingly executed a scheme to defraud First State Bank through a nominee sale of grain. The proceeds from the nominee sale were concealed from the bank and were used to pay personal debts owed by John Kniepmann for vacations and housing costs.

The investigation was handled by the Federal Bureau of Investigation and the Illinois Department of Agriculture, with assistance from the National Insurance Crime Bureau. The prosecution was being handled by Assistant United States Attorney Ranley Killian.

Los Angeles Physician Assistant Found Guilty in $18.9 Million Medicare Fraud Scheme

A physician assistant who worked at fraudulent medical clinics where he used the stolen identities of doctors to write prescriptions for medically unnecessary durable medical equipment (DME) and diagnostic tests has been convicted of conspiracy, health care fraud, and aggravated identity theft charges in connection with a $18.9 million Medicare fraud scheme.

After a two-week trial in federal court in Los Angeles, a jury on Friday afternoon found David James Garrison, 50, of Leimert Park, guilty of one count of conspiracy to commit health care fraud, six counts of health care fraud, and one count of aggravated identity theft.

The evidence at trial showed that Garrison worked at fraudulent medical clinics that operated as prescriptions mills and trafficked in fraudulent prescriptions and orders for medically unnecessary DME, such as power wheelchairs, and diagnostic tests. The fraudulent prescriptions and orders were used by fraudulent DME supply companies and medical testing facilities to defraud Medicare. Garrison wrote the prescriptions and ordered the tests on behalf of some doctors he never met and who did not authorize him to write prescriptions and order tests on their behalf.

The trial evidence showed that between March 2007 and September 2008, Garrison’s co-conspirator, Edward Aslanyan, and others owned and operated several Los Angeles medical clinics established for the sole purpose of defrauding Medicare. Aslanyan and others hired street-level recruiters to find Medicare beneficiaries willing to provide the recruiters with their Medicare billing information in exchange for high-end power wheelchairs and other DME, which the patient recruiters told the beneficiaries they would receive for free. Often, the Medicare beneficiaries did not have a legitimate medical need for the power wheelchairs and equipment. The patient recruiters provided the beneficiaries’ Medicare billing information to Aslanyan and others, or they brought the beneficiaries to the fraudulent medical clinics. In exchange for recruiting the Medicare beneficiaries, Aslanyan and others paid the recruiters cash kickbacks.

Many of the beneficiaries whose Medicare billing information was used at the medical clinics lived hundreds of miles from the clinics, including some beneficiaries who lived more than 300 miles from the clinics. One witness testified that the clinics used beneficiaries who lived such long distances from the clinics because the billing numbers of Medicare beneficiaries who lived in and around Los Angeles had been used in other Medicare fraud schemes and, therefore, could no longer be used to bill Medicare.

The evidence presented at trial showed that Garrison wrote prescriptions for power wheelchairs that the beneficiaries did not need and did not use. In some cases, Garrison wrote power wheelchair prescriptions for beneficiaries he never examined and who never visited the clinics. In one instance, according to the evidence presented at trial, Garrison prescribed a power wheelchair to a beneficiary who did not have the mental capacity to operate the wheelchair.

Once Garrison wrote the power wheelchair prescriptions, Aslanyan and others sold the prescriptions for as much as $1,500 to the owners and operators of approximately 50 fraudulent DME supply companies. The fraudulent prescriptions were used to submit fraudulent power wheelchair claims to Medicare. The DME supply companies purchased the power wheelchairs wholesale for approximately $900 per wheelchair but submitted bills to Medicare at a rate of approximately $5,000 per wheelchair.

The trial evidence also showed that Garrison ordered medically unnecessary diagnostic tests for many Medicare beneficiaries, including tests for sleep studies, ultrasounds, and nerve conduction. These tests were then billed to Medicare by fraudulent diagnostic testing companies that paid Aslanyan kickbacks to operate from the medical clinics.

Throughout the trial, evidence was introduced that showed that Garrison had admitted to writing prescriptions for power wheelchairs and ordered diagnostic tests on behalf of approximately six different doctors and that he did not have a Delegation of Services Agreement with at least two of these doctors, as required by law.

As a result of this fraud scheme, Garrison, Aslanyan, and their co-conspirators submitted and caused the submission of more than $18 million in false and fraudulent claims to Medicare, which paid approximately $10.7 million on those claims.

Garrison is scheduled to be sentenced by United States District Judge Consuelo B. Marshall on September 17. At that time, Garrison faces a maximum statutory penalty of 72 years in federal prison and a $2 million fine. The aggravated identity theft conviction carries a mandatory two year prison sentence.

Currently, Garrison is facing federal drug charges as a result of his alleged involvement with another medical clinic where medically unnecessary prescriptions for Oxycontin were distributed (see: http://www.justice.gov/usao/cac/Pressroom/2011/147.html). Garrison is scheduled to go on trial in the drug case on November 6. He is presumed innocent of the charges against him in this case.

The conviction of Garrison was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; United States Attorney André Birotte, Jr.; Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the HHS Office of Inspector General (HHS-OIG); and Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office.

The case is being prosecuted by Assistant United States Attorney David Kirman and DOJ Trial Attorney Jonathan T. Baum.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the United States Attorney’s Office for the Central District of California. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Since their inception in March 2007, strike force operations in nine districts have charged 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers. To learn more about HEAT, go to www.stopmedicarefraud.gov.

Former Arizona State Representative Sentenced to 27 Months in Prison for Wire Fraud and Tax Evasion Related to the Misuse of More Than $140,000 in Charity Funds

Former Arizona State Representative Richard David Miranda was sentenced to 27 months in prison for defrauding a charity of more than $140,000 and evading income tax related to those unlawfully obtained funds, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Special Agent in Charge James L. Turgal of the FBI’s Phoenix Field Office; and Special Agent in Charge Dawn Mertz of the Internal Revenue Service-Criminal Investigation (IRS-CI), Phoenix Office.

Miranda, 55, of Tolleson, Arizona, served as a member of the Arizona House of Representatives for the 13th District from 2011 until his resignation, effective February 20, 2012. Miranda previously served as a member of the Arizona State Senate from 2002 until 2011 and the Arizona House of Representatives from 1999 until 2002. Since July 2002, Miranda also served as executive director of Centro Adelante Campesino Inc., a non-profit charitable organization that provided food, clothing, and educational assistance to persons in need, including migrant farm workers, in and around Maricopa County, Arizona.

On March 14, 2012, Miranda pleaded guilty to a two-count information charging him with defrauding Centro of more than $140,000 and evading income tax related to those unlawfully obtained funds. As part of his plea agreement, Miranda agreed to resign from office. Miranda was also ordered to pay a total of $230,342 in restitution ($212,220 for funds he unlawfully obtained from Centro, along with an additional $18,122 he unlawfully obtained from the Arizona Latino Caucus Foundation).

During his plea, Miranda admitted that, in May 2005, he initiated a scheme to wind down Centro, sell Centro’s sole remaining asset (a building), and use the proceeds of the sale for personal expenses. To do so, Miranda removed the charity’s longstanding volunteer accountant as an authorized signer on the charity’s bank and credit union accounts, and assumed sole control of the charity’s accounts and financial records. He also told the volunteer accountant that the proceeds of the sale would be used to fund scholarships. In March 2007, the building was sold for $250,000, and on March 7, 2007, a significant portion of the profits of that sale, $144,576, were wired across state lines into Centro’s credit union account.

Miranda also admitted that within one week of the wire transfer, he began to withdraw the proceeds from Centro’s credit union account without the authorization or knowledge of Centro’s board of directors. For example, Miranda obtained two checks payable to himself, totaling $37,000, and paid off personal credit card debts totaling more than $60,000. By December 31, 2007, Miranda had withdrawn the remaining proceeds (approximately $46,836) using checks, withdrawals, and electronic funds transfers, and used the funds to pay off additional personal debts and make numerous purchases for personal travel, services, clothing, food, and household items. Miranda also failed to report the proceeds of the sale as income on his IRS Form 1040 for calendar year 2007.

This case is being prosecuted by Trial Attorneys Monique T. Abrishami and Brian A. Lichter of the Public Integrity Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Frederick A. Battista of the District of Arizona. The case is being investigated by agents from the FBI Phoenix Field Office and IRS-CI Phoenix Office.

CEO and Head Trader of Bankrupt Sentinel Management Indicted in Alleged $500 Million Fraud Scheme Prior to Firm’s 2007 Collapse

The chief executive officer and the head trader of the bankrupt Sentinel Management Group Inc. were indicted on federal fraud charges for allegedly defrauding more than 70 customers of more than $500 million before the firm collapsed in August 2007, federal law enforcement officials announced today. Sentinel, which was located in suburban Northbrook, managed short-term cash investments of futures commission merchants, commodity pools, hedge funds, at least one pension fund, and other customers. The defendants, Eric A. Bloom and Charles K. Mosley, allegedly misappropriated securities belonging to customers by using them as collateral for a loan that Sentinel obtained from Bank of New York Mellon Corp. (BoNY) that was in part used to purchase millions of dollars worth of high-risk, illiquid securities not for customers, but for a trading portfolio maintained for the benefit of Sentinel’s officers, including Mosley, Bloom, certain Bloom family members, and corporations controlled by the Bloom family.

Bloom, the president and CEO of Sentinel who was responsible for its day-to-day operations, allegedly misled customers four days before Sentinel declared bankruptcy by blaming Sentinel’s financial problems on the “liquidity crisis” and “investor fear and panic” when he knew that the actual reasons for Sentinel’s financial problems were its purchase of high-risk, illiquid securities; excessive use of leverage; and the resulting indebtedness on the BoNY credit line, which had a balance exceeding $415 million on August 13, 2007. Sentinel declared bankruptcy on August 17, 2007.

Bloom, 47, of Northbrook, and Mosley, 48, of Vernon Hills, will be arraigned on a date yet to be scheduled in U.S. District Court in Chicago. They were each charged with 18 counts of wire fraud, one count of securities fraud, and one count of making false statements to an employee pension plan in a 20-count indictment that was returned by a federal grand jury yesterday. The indictment seeks forfeiture of more than $500 million.

The case is one of the largest criminal financial fraud cases ever prosecuted in federal court in Chicago. The indictment was announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and James Vanderberg, Special Agent in Charge of the U.S. Department of Labor Office of Inspector General in Chicago. Also assisting in the investigation were the Labor Department’s Employee Benefits Security Administration, the Commodity Futures Trading Commission, and the Securities and Exchange Commission. The CFTC and the SEC filed separate civil enforcement lawsuits following the collapse of Sentinel, which remains in bankruptcy proceedings.

According to the indictment, between January 2003 and August 2007, Bloom and Mosley fraudulently obtained and retained under management more than $500 million of customers’ funds by falsely representing the risks associated with investing with Sentinel, the use of customers’ funds and securities, the value of customers’ investments, and the profitability of investing with Sentinel. Bloom and Mosley allegedly used customers’ securities invested in Sentinel’s “125 Portfolio” and its “Prime Portfolio” as collateral for its credit line with BoNY to purchase millions of dollars worth of high-risk, illiquid securities, some of which were collateralized debt obligations (CDOs). Mosley allegedly purchased the CDOs from two brokerage firms and received substantial personal benefits from those firms in the form of gifts, vacations, expensive tickets to sporting events, and parties.

The indictment alleges that Bloom and Mosley lied about customers’ investments and engaged in an undisclosed trading strategy with Sentinels’ own “House Portfolio,” which they traded for the benefit of themselves and Bloom family members. In addition to his salary, Mosley received an annual bonus based on the profitability of the House Portfolio. The undisclosed trading strategy included extensive leverage and a high concentration of CDOs that was inconsistent with the representations Bloom and Mosley made to customers regarding separate investment portfolios. The undisclosed strategy affected all customers, regardless of the trading portfolio in which they were invested, because the defendants allegedly used customers’ securities as collateral when they borrowed money from the BoNY and so-called “repo” lenders and then used the borrowed money to carry out the undisclosed trading strategy. (Under a repurchase agreement, known as a “repo,” a party such as Sentinel, effectively a borrower, sold securities to a counterparty, effectively a lender, with an agreement to repurchase the securities at a later date.)

“The use of their customers’ securities as collateral allowed the defendants to borrow more money than Sentinel otherwise could, subjected the customer securities to potential legal claims by creditors, and allowed the defendants to employ leverage to the extent that Sentinel itself, and all of the customer portfolios, were at increased risk of adverse market movements and insolvency,” the indictment states.

As part of the fraud scheme, Bloom and Mosley allegedly falsely represented to customers the returns generated by the securities in each Sentinel portfolio. Rather than giving customers the actual returns generated by a particular portfolio, the defendants on a daily basis pooled the trading results for all of Sentinel’s portfolios and then allocated the returns to the various portfolios as they saw fit, the indictment alleges. To conceal the scheme, to encourage customers to invest additional funds, and to otherwise lull customers, Bloom and Mosley on a daily basis allegedly caused false and misleading account statements to be created and distributed to customers, including via e-mail. These account statements reported returns earned by customers without disclosing that the returns actually were allocated by the defendants and were not the result of the market performance of the customers’ particular portfolios. The account statements also listed the purported value of securities being held by each portfolio without disclosing that the securities were being used as collateral for Sentinel’s loan from BoNY. The daily account statements were also misleading in that many of them, particularly those issued in July and August 2007, contained incorrect securities and inflated values of certain securities, the indictment alleges.

In July and August 2007, when Bloom and Mosley knew that Sentinel was approaching insolvency and that defaulting on the over-$400 million bank line of credit was a real possibility, they allegedly caused millions of dollars in investments in Sentinel to be obtained and retained by concealing Sentinel’s true financial condition from customers.

Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or, alternatively, a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater, and restitution is mandatory. Securities fraud and making false statements to a pension plan each carry a maximum penalty of five years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorneys Clifford C. Histed and Patrick M. Otlewski.

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov.

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

Five Sentenced for Their Roles in Stolen Identity Refund Fraud Scheme

Fahim Suleiman and Muuad Salem were sentenced to prison by U.S. District Court Judge James S. Gwin in connection with their roles as co-conspirators in a scheme to defraud the United States by obtaining false and fraudulent U.S. Treasury tax refund checks, the Justice Department and Internal Revenue Service (IRS) announced. According to documents filed with the court, the two participated in a conspiracy with others to file false United States income tax returns using personal identifying information, including names and Social Security numbers, of deceased taxpayers in order to obtain false tax refund checks that were subsequently sold and negotiated. Suleiman was sentenced to 64 months in prison, including a 24-month mandatory minimum sentence for aggravated identity theft. Salem was sentenced to 27 months in prison.

Judge Gwin had previously sentenced three co-conspirators. On May 29, 2012, Najeh Widdi was sentenced to 36 months in prison. Hanan Widdi and Hazem Woodi were sentenced on May 30, 2012, to prison terms of 21 months and 18 months, respectively. Judge Gwin ordered all five defendants to pay, jointly and severally, $177,744 in restitution to the IRS as part of their sentences.

Each of the defendants previously entered guilty pleas on March 13, 2012. Salem, Najeh Widdi, and Woodi pleaded guilty to conspiracy to defraud the United States, conspiracy to commit mail fraud and one count of mail fraud; Hanan Widdi pleaded guilty to conspiracy to defraud the United States and conspiracy to commit mail fraud; and Suleiman pleaded guilty to conspiracy to defraud the United States, conspiracy to commit mail fraud, three counts of mail fraud, and one count of aggravated identity theft.

Daxesj Patel also pleaded guilty on March 13, 2012 to two counts of submitting false claims for refund and one count of false statements. Patel is scheduled to be sentenced on June 8, 2012 by Judge Gwin.

“The Justice Department is working closely with the IRS to investigate and prosecute stolen identity refund fraud crimes,” said Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division. “The sentences handed down in this and other cases show that identity thieves will pay a high price for their crimes.”

“The theft of anyone’s identity is a serious offense, but stealing the identities of the recently departed to defraud all the other taxpayers is particularly egregious,” said Steven M. Dettelbach, the U.S. Attorney for the Northern District of Ohio. “These sentences should cause anyone who would engage in this conduct to reconsider.”

“Individuals who commit refund fraud and identity theft of this magnitude deserve to be punished to the fullest extent of the law,” stated Richard Weber, Chief, IRS Criminal Investigation. “We, along with our law enforcement partners and the U.S. Attorney’s Office, continue to do our part in protecting the sanctity and integrity of the tax system and those individuals whose identities were stolen, as well as a monetary loss against the U.S. Treasury.”

According to the indictment, from April 2009 to at least August 2011, Najeh Widdi, Hanan Widdi, Hazem Woodi, Muaad Salem, Fahim Suleiman, Daxesj Patel, and other unnamed co-conspirators defrauded the United States by filing false and fraudulent tax returns, many in the names of recently deceased taxpayers. The co-conspirators directed the refunds to controlled locations in Florida. The U.S. Treasury checks generated by the false tax returns were sent by U.S. mail to co-conspirators located in Ohio. The Ohio co-conspirators then sold and distributed those U.S. Treasury checks for negotiation at various businesses and banking institutions. The IRS estimated that the scheme involved at least $1.7 million in fraudulently obtained tax returns. As part of their plea agreements, Suleiman, Hanan Widdi, Najeh Widdi, Salem, and Woodi admitted that the fraud loss caused by their conduct was between $1 and $2.5 million and that the offenses involved more than 10 victims.

The case was prosecuted by Assistant U.S. Attorney Gary D. Arbeznik and Trial Attorney Jessica W. Knight of the Tax Division, presently on detail to a U.S. Attorney’s office in Ohio. The investigation was jointly handled by the Cleveland Division of the FBI, IRS-Criminal Investigation, and the U.S. Postal Service.