Countering the Growing Intellectual Property Theft Threat

In 2008, a new federal law creating stricter penalties for criminals who engaged in intellectual property theft was enacted to keep pace with globalization, e-commerce, and technology advances.

Fast forward to 2016: Technological advances continue at an even faster pace, dramatically increasing the threat posed by criminals who steal trade secrets, produce and/or traffic in counterfeit products, and infringe on copyrights. One important factor in this increase is the global expansion of online marketplaces, which aids international and domestic criminal organizations in trafficking in counterfeit goods.

The Department of Justice (DOJ) recently announced a new strategy that involves partnering more closely with businesses in an effort to combat these types of crimes more effectively. Said Attorney General Loretta Lynch, “Through this new approach, we intend to provide information and resources to individuals and companies that will help them identify and disrupt attempts on their intellectual property, extend greater protection to American commerce as a whole, and safeguard the health and safety of individual Americans.”

And the FBI—working with its investigative partners at the National Intellectual Property Rights Coordination Center (NIPRCC)—will play an integral part in this strategy.

The Bureau has already been collaborating for years with brand owners, copyright holders, and trademark holders because we know the harm that intellectual property theft causes: legitimate businesses lose billions of dollars in revenue and suffer damaged reputations, consumer prices go up, the U.S. and global economies are robbed of jobs and tax revenue, product safety is reduced, and sometimes lives are even put at risk. FBI efforts with these businesses to date have involved shared information, aggressive criminal initiatives based on current or emerging trends, and investigations.

Under the FBI’s new strategy, we’re expanding our efforts to work with third-party entities—such as online marketplaces, payment service providers, and advertisers—that may inadvertently enable the activities of criminals.

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Financial Fraud The Disney Resort That Never Was

Thomas W. Lucas, Jr. was such an effective liar that he was able to convince hundreds of investors—even members of his own family—that he had inside information about a Disney resort to be built in Texas that would make the nearby scrubland worth a fortune for those who bought it ahead of time.

Of course, there was no “Frontier Disney,” as Lucas claimed, but using false documents, forged signatures, and phony presentations, he was able to pocket nearly $450,000 in real estate fees over a four-year period and cause investors to lose approximately $20 million.

“Thomas Lucas Jr. fooled savvy investors and very intelligent people,” said Special Agent Rick Velasquez, who investigated the case from the FBI’s Dallas Division. “He was a very believable guy.”

From 2006 to 2010, Lucas defrauded more than 250 investors. He claimed to have insider information regarding a Disney resort and theme park planned for a rural area about 50 miles north of Dallas. He was giving investors a chance to buy surrounding land outright, or to purchase options to buy the land near the supposed resort. The 65 investors who purchased options lost every cent they invested—more than $8 million. Some investors, including Lucas’ father and uncle in the family real estate business, purchased land outright, believing the Disney story.

“There was not one grain of truth in Lucas’ presentations,” Velasquez said, “but his pitch was very elaborate, and it fooled a lot of people. He duped his own family.”

Lucas claimed to have letters between Disney and a management firm saying that the company had acquired enough land to make the deal happen. He included the letters—complete with forged Disney officials’ signatures—in his presentations to investors, along with detailed maps, concept plans, and images that were later discovered to be lifted from the Internet, some from Disney websites.

According to Lucas, Disney planned to make the big announcement about the resort at a Dallas Cowboys football game on Thanksgiving in 2006. When that didn’t happen, he told investors there were delays. “Then the announcement was going to be Super Bowl 2007, 2008. Then it was Fourth of July at the Beijing Olympic games,” Velasquez said. “He was just trying to keep investors and potential investors on the hook.”

With each delay, Lucas would sweeten the pot with some new bogus e-mail from a Disney executive or other bit of tantalizing information meant to persuade people the project was still on track. Eventually, investors became suspicious, and one made a complaint to the FBI.

Velasquez, who specializes in financial fraud cases, says the scheme went on for so long because Lucas was believable—and also because investors could not resist the temptation of making large returns on their money.

When confronted by investigators about his claims, Lucas falsely blamed the supposed Disney information he received on a man he met at a methadone rehab clinic, who had since died. In 2014, Lucas was indicted by a federal grand jury on seven counts of wire fraud and one count of lying to the FBI.

Last September, after a jury trial in which Lucas maintained his innocence but was found guilty on all charges, a judge sentenced the 35-year-old to 17.5 years in prison. “That was a stiff sentence for a white-collar crime,” Velasquez noted, “but he defrauded a lot of people and showed no remorse.”

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Street gangs migrate from drugs to white-collar crimes

The Van Dyke Money Gang in New York made off with more than $1.5 million this year — but it wasn’t in gunpoint robberies or drug running, it was a Western Union money order scheme. In New Jersey, 111 Neighborhood Crips used a machine to make dozens of fake gift cards for supermarkets, pharmacies and hardware stores.

In South Florida, gangs steal identities to file false tax returns.

These aren’t members of an organized Mafia or band of hackers. They’re street crews and gangs netting millions in white-collar schemes like identity theft and credit card fraud — in some instances, giving up the old ways of making an illicit income in exchange for easier crimes with shorter sentences.

“Why would you spend time on the street slinging crack when you can get 10 years under federal minimums when in reality you can just bone up on how to make six figures and when you get caught you’re doing six months?” said Al Pasqual, director of fraud security at the consulting firm Javelin Strategy and Research.

Law enforcement officials say they see increasingly more gangs relying on such crimes. This year, more than three dozen suspected crew members have been indicted in separate cases around the country. Grand larcenies in New York City account for 40 percent of all crime last year — compared with 28 percent in 2001. About 5 percent of Americans nationwide have experienced some kind of identity theft, with Florida leading the country in complaints.

New York Police Commissioner William Bratton wrote in an editorial in the city’s Daily News last week that white-collar crime was being committed by gang members “to an astonishing degree.”

Crews recruit bank account owners to help cash phony checks, they pay off crooked employees who skim credit card information using hand-held readers, and they buy identities online.

Pasqual said for some, it was a replacement for other crime. “For some it’s a supplement. They’re earning the money to grow the other side of their business, using white-collar crime to fund gun running. For a lot of them this becomes their day to day. They travel the country when they get really good at it.”

A task force created by federal officials in Florida has charged more than 400 people with causing more than $140 million in losses — including more than 60 charged three weeks ago — and officials say increasingly those arrested are gang members.

It’s an organized crime — but not “Organized Crime,” said Bill Maddalena, assistant special agent in charge of the white-collar branch of the Miami FBI office. “They’re very well organized. They have to recruit people to help steal devices, cash the checks.”

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Robber camouflaged as a security guard steals $500,000 from armored car

A robber camouflaged as a security guard hit the jackpot Friday outside Greektown Casino when he stole several bags of loot from an armored truck parked along the curb, making off with more than $500,000, according to Detroit police.

No one was hurt. No weapons were brandished, and no threats were made, police said.

“The FBI has taken the lead on the investigation because it seems to be of a suspicious nature,” Assistant Police Chief Steve Dolunt said without elaborating. “Detroit police are working with the FBI on this heist. We’re still looking at video to see how this person escaped.”

The FBI, through spokeswoman Jill Washburn, confirmed it is investigating the case, but Washburn declined further comment.

The heist happened at around 8 a.m. ET at the intersection of Beaubien Street and Monroe Avenue downtown, police said. A black male wearing a Loomis Armored security guard shirt approached the armored vehicle, took the bags of money out of the back and took off.

The driver of the armored vehicle thought that the thief was a co-worker because he was wearing a uniform shirt, said a source familiar with the case.

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Protect Your Wallet and Your Information This Holiday Season

As the holiday shopping season officially gets underway, the FBI would like to take this opportunity to warn shoppers to be aware of the increasingly aggressive techniques of cyber criminals who want to steal your money and your personal information.

For example, watch out for online shopping scams—criminals often scheme to defraud victims by offering too-good-to-be-true deals, like brand name merchandise at extremely low discounts or gift cards as an incentive to buy a product. Beware of social media scams, including posts on social media sites that offer vouchers or gift cards or that pose as holiday promotions or contests. Always be careful when downloading mobile applications on your smartphone—some apps, disguised as games and offered for free, maybe be designed to steal personal information. And if you’re in need of extra cash this time of year, watch out for websites and online postings offering work you can do from home—you may actually become the victim of an advance fee, counterfeit, or pyramid scheme, or become an unknowing participant in criminal activity.

Here are some additional steps you can take to avoid becoming a victim of cyber fraud this season:

Check your credit card statement routinely, and ensure websites are secure and reputable before providing your credit card number;
Do your research to ensure the legitimacy of the individual or company you are purchasing from;
Beware of providing credit card information when requested through unsolicited e-mails;
Avoid filling out forms contained in e-mail messages that ask for personal information;
Never click on links contained within unsolicited e-mails;
Verify any requests for personal information from any business or financial institution by contacting them directly;
Be cautious of e-mails claiming to contain pictures in attached files, especially unsolicited e-mails—the files may contain viruses; and
Be leery if you are requested to act quickly or told there is an emergency (fraudsters often create a sense of urgency).
If you suspect you have been victimized, contact your financial institution immediately, contact law enforcement, and file a complaint with the FBI’s Internet Crime Complaint Center (IC3).


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Man Who Escaped Ohio Prison in 1978 Caught in Minnesota, Feds Say

A convicted murderer who escaped from an Ohio prison in 1978 by cutting through cell bars and a fence was captured in Minnesota’s capital, where he had a job delivering newspapers, the U.S. Marshals Service said Friday.

Oscar Juarez, 66, was among Ohio’s most wanted fugitives and evaded being caught while on the run despite being arrested but let go at least seven times in the 1980s.

He was taken into custody Thursday night in St. Paul, Minnesota, at an apartment building on a tree-lined street, said Pete Elliott, the U.S. marshal for northern Ohio. It wasn’t clear how long he had been in Minnesota.

He was living alone in St. Paul under a different name, said Chris Clifford, the supervisory deputy U.S. marshal in Minneapolis. Juarez told authorities he’d been living in Minnesota for 20 years, but “we are finding that hard to believe,” Clifford said.

Juarez made an initial appearance before a U.S. magistrate in St. Paul on Friday. He will be held until a hearing next week to determine his identity and argue detention.

He gave the magistrate a different name when he was asked if he understood his rights. But Elliott said there was no doubt it was Juarez, noting his fingerprints were a match and the name he gave was that of a deceased person.

Juarez was arrested at least six times on minor charges in California and once in 1988 in Texas, but he went undetected because he was using fake identities, Elliott said.

“We know if he was in several different states over the years,” Elliott said. “It wasn’t one thing that led us to his doorstep. It was a number of things and good old-fashioned police work.”

He apparently worked as a welder and machine operator, the FBI said in a most wanted advisory.

It appears that Juarez had family in Texas and Ohio and may have picked Minnesota at random, Clifford said.

Juarez was serving a life sentence for fatally shooting a Toledo man after a bar fight in 1975.

He escaped from a state prison in Marion three years later by sawing through prison bars and cutting through a fence, according to the marshals. They say he also put a dummy in his bed and covered it with blankets.

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Couple Arrested for Credit Card Fraud in Lemon Grove

Authorities arrested two people for credit card fraud in Lemon Grove last week.

Lasaro Quijano, 30, and Bunthi Im, 29, were arrested after officers found numerous fraudulent credit and ID cards, meth and other drugs and a stolen handgun. A search of the couple’s vehicle revealed credit card making materials and items purchased with the fraudulent cards.

Lemon Grove Home Depot employees called the Sheriff’s Department after one of the suspects made a purchase with a fake card. The employees then saw him enter a hotel room across the street.
The couple is suspected of conducting numerous similar credit card frauds at Home Depot stores throughout the state.

Quijano and Im were booked into jail on a number of charges including burglary, possession of a forged driver’s license, possession of a stolen handgun, having card making machinery, possession of a counterfeit access card and possession of a controlled substance among other charges.

Their bail is set at $250,000.

The Sheriff’s Financial Crimes Unit is conducting further investigation.

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Financial Fraud

Inside the Investigation of a Las Vegas Construction Boss

When a federal judge sentenced former Las Vegas construction boss Leon Benzer to nearly 16 years in prison in August, it marked a final chapter in a $58 million fraud scheme that took investigators nearly a decade to unravel.

Over a period of many years, Benzer brazenly sought to gain control of numerous condominium homeowners associations (HOAs) in the Las Vegas area to secure lucrative construction and other contracts for himself and additional conspirators. To date, 44 individuals, including numerous state officials, have been convicted of crimes in connection with the fraud—which has been described as one of the largest public corruption cases in Nevada history.

“This case represented an incredibly complicated financial fraud with a significant public corruption component,” said Special Agent Michael Elliott, who spent nearly eight years working on the investigation from the FBI’s Las Vegas Division. “It involved so many people over so long a period of time, it was like an intricate spider web of crime that kept expanding.”

The scheme was nothing if not grandiose. In attempting to control dozens of Nevada HOAs between approximately 2002 and 2009, Benzer, an attorney, and other conspirators recruited straw buyers to purchase condominiums and then secure positions on HOA boards of directors. Benzer rigged HOA board elections and paid board members to take actions favorable to his interests—including hiring his co-conspirator’s law firm to handle construction-related litigation and awarding profitable construction contracts to Benzer’s company, Silver Lining Construction.

Benzer manipulated and bribed HOA boards in a variety of ways—he often claimed he had local judges and law enforcement in his pocket; in other cases, he fooled unwitting homeowners into thinking his actions were legitimate and they were simply making wise investment choices.

In September 2008, investigators executed a search warrant—one of nine that would take place during the investigation—and found that Benzer was in the process of targeting well over 20 different HOAs for illegal takeovers. “There were boxes and boxes of folders with information about different HOAs,” Elliott said. “He was deliberately attempting to identify board members along with other information to target what he believed were HOAs vulnerable to takeover through bribery, extortion, or whatever illegal means could be used.”

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Identity Theft, Fake Hospice Nurse Treated More Than 200 Patients

Imagine the emotional difficulty of arranging in-home hospice care for a terminally ill family member. Now imagine learning after the fact that your loved one had been cared for not by a nurse but by a medical imposter.

That is exactly what happened in more than 200 cases in the Dallas/Fort Worth area over nearly a three-year period when a woman who had stolen the identity of a registered nurse used those credentials to gain employment with multiple hospice companies.

“Jada Necole Antoine had absolutely no nursing experience or medical training,” said Special Agent Brian Marlow, who investigated the case out of the FBI’s Dallas Division. “The thought of having someone who is not a nurse taking care of your parent or loved one is not only criminal, it is morally outrageous.”

The Bureau’s investigation began in 2013 as a result of a local traffic stop in Texas. When the patrol officer asked for identification, Antoine produced her own driver’s license, and it turned out there was a warrant for her arrest on another matter. She also had other identification in the car—including documents belonging to the victim nurse—along with a number of medical records.

That information was forwarded to the Medicare Fraud Strike Force team in Texas, which consists of the FBI, the Department of Health and Human Services, the Texas State Attorney General’s office, and local law enforcement.

The strike force is part of a larger, nationwide effort aimed at combating health care fraud and abuse.

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Woman sentenced for stealing grandmother’s SSA benefits

A Birmingham woman was sentenced after pleading guilty to stealing social security benefits awarded to her grandmother—for more than two decades after she died.

Wendi D. Baldwin, 41, was sentenced to six months in prison and also six months of in-home detention, according to a news release from Joyce White Vance, the U.S. Attorney for Alabama’s northern district.

She pled guilty February to one count of theft of government property.

The benefits were deposited into Baldwin and her grandmother’s shared bank account from Jan. 1992 until July 2013, according to the plea agreement.

Her grandmother died in 1991.

The Social Security Administration became aware of the theft when it could not reach Baldwin’s grandmother after several attempts.

She was also ordered to forfeit $30,934 to the government and pay that much to the SSA

According to the release, Baldwin stole more than $155,000 in social security benefits, but the statute of limitations only allowed the government to recover five years’ worth of benefits.

A Birmingham woman was sentenced after pleading guilty to stealing social security benefits awarded to her grandmother—for more than two decades after she died.

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