On Q Professional Investigations

An elderly man in a wheelchair lost more than $100,000. A woman lost her high-end home and moved into a small shed on her son’s property. Another victim lost her life savings and could not afford eyeglasses. Some victims declared bankruptcy.

These stories are just a few from the more than 100 victims who lost $63 million as a result of a fraud scheme carried out by the owners of Smith Advertising from around 2008 to 2012.

“This is not just a crime about money. These were people with real lives who were lied to and deceived, and they paid a real price,” said Special Agent Jay Stone, who investigated the case out of the FBI’s Tampa Field Office, along with the U.S. Secret Service.

Gary Todd Smith, and his father, Gary Truman Smith, ran Smith Advertising, a North Carolina-based company with offices in Florida. At first, the company did legitimate advertising work, but it hit a financial snag in the mid-2000s, particularly after the 2008 financial crisis.

“The economic downturn was probably a crippling blow,” Stone said. “The right and legal thing to do if your business is struggling is to restructure and possibly claim bankruptcy. But they wanted money, so they devised this fraudulent scheme.”

The scheme was complex and successful—for a time.

When the business began to struggle, the company solicited investors—including friends and associates from their community, church, and civic organizations—for “bridge loans.” The company told investors that they would loan Smith Advertising money so the company could pre-purchase advertising at a discount. The company promised to pay back the investors what they loaned plus a cut of the discount.

In fact, the company wasn’t buying advertising. The loans were simply to keep Smith Advertising afloat and repay previous debts—the equivalent of opening a new credit card to pay off a maxed-out one. Some of the early victims were paid back with the promised return, but that was simply other people’s money that the company had borrowed. Other victims, however, lost all of the money they invested.

Read More

A Kentucky couple nearly escaped prosecution for setting a fire that burned their rented home to the ground and led to the death of a firefighter until a new FBI agent’s search for fresh evidence helped bring them to justice.

Steve Allen Pritchard, 44, was found guilty by a federal jury of arson and insurance fraud and was sentenced on November 1, 2018, to 30 years in prison. His wife, Brandi Pritchard, who was his girlfriend at the time of the fire, was sentenced to 121 months after pleading guilty to the same crimes.

“This case has stayed with me because it was just so senseless,” said FBI Special Agent William Kurtz of the arson investigation he supported through the FBI’s Bowling Green Resident Agency out of the Louisville Field Office.

According to case records, on June 24, 2011, Brandi Pritchard purchased a $50,000 renter’s insurance policy for the furniture and possessions within the rented Columbia, Kentucky, home she shared with Steve Pritchard. In the early morning hours of June 30, 2011, prosecutors charge that one or both of the Pritchards set fire to the home and then fled the scene.

As firefighters arrived just past 3 a.m., the structure was engulfed in flames. First responders had just succeeded in bringing the fire under control when Columbia/Adair County Fire Department Assistant Chief Charles Sparks, 49, suffered a heart attack.

When firefighters turned their focus to aiding their ill colleague, Kurtz reported, “the fire rekindled and burned the house to the ground.” Sparks died eight days later at a Louisville hospital. Firefighter fatality investigators determined the physical exertion involved in responding to the fire may have triggered his heart attack.

The firefighter’s death prompted an investigation of the fire, but “because the house burned to the ground, any forensic evidence that could have pointed to an arson was destroyed,” said Kurtz.

Immediately after the fire, Brandi Pritchard made a claim against the renter’s insurance policy. She admitted later that Steve Pritchard directed her to invent or inflate the value of items lost during the fire in order to receive the full $50,000 in the policy.

The Kentucky State Police opened an arson investigation after members of the community reported hearing Steve and Brandi Pritchard brag about setting the fire, but investigators had little to go on beyond hearsay.

Read More

The GI Bill provides the country’s service members and veterans a free or reduced-cost college education to those who qualify, offering them a head start on their return to civilian life. But one group of fraudsters used the Post-9/11 GI Bill and other U.S. Department of Defense educational programs for veterans as a piggy bank to line their own pockets while cheating more than 2,500 service members out of an education they were entitled to under the law.

“This was straight up stealing. Stealing money for veterans that was supposed to help them advance their careers and make themselves more marketable to employers after coming out of the military,” said FBI Special Agent James Eagleeye, who investigated the case out of the FBI’s Newark Division along with investigators from the Department of Veterans Affairs (VA), the Department of Defense, and Department of Education.

The scheme was a basic bait-and-switch. A company called Ed4Mil worked with two schools: one, the private liberal arts Caldwell University in New Jersey; the other, an online correspondence school hired by Ed4Mil to develop and administer courses. Ed4Mil aggressively recruited service members and veterans, offering them free computers and gift cards to sign up for what they thought were classes taught by Caldwell University. Yet when Ed4Mil enrolled the students, they would put them in and pay for unaccredited correspondence school classes—but then charge the government the university tuition rates and pocket the difference.

At the center of the scheme was Ed4Mil founder and president David Alvey. The Harrisburg, Pennsylvania resident saw a business opportunity in educating veterans with government funds but learned that when the government provides tuition and other educational benefits directly to a school, certain requirements must be met that his startup could not satisfy.

To get around the law, Alvey conspired with a Caldwell University official to use the university’s name on coursework that the VA would not have approved. The official—then an associate dean at the school—falsely certified that students were taking the same courses from the same instructors who taught on campus at Caldwell.

But the veterans were instead enrolled in online courses like archery and heavy diesel mechanics that were actually taught by the correspondence school. Students sometimes received a housing allowance for the online school, in violation of the rules governing educational benefits.

Read More

The sentencing of three people who committed over $1 million in return fraud at Amazon points to a cottage industry of bogus returns.

Earlier this month, United States Attorney Josh Minkler announced that three individuals were sentenced up to 71 months for defrauding Amazon out of $1.2 million in consumer electronics items.

Erin Finan, 38, and Leah Finan, 38, a husband and wife from Indiana, pleaded guilty to federal mail fraud and money laundering charges, the Department of Justice, U.S. Attorney’s Office Southern District of Indiana, said earlier this month.

The two were sentenced to 71 months and 68 months respectively. Danijel Glumac, 29, of Indianapolis, pleaded guilty to money laundering and to fencing the items the Finans stole and was sentenced to 24 months in prison.

The three went on a return binge between 2014 and 2016, stealing and selling over 2,700 items, including GoPro digital cameras, Microsoft Xboxes, Microsoft Surface tablets, and MacBooks.

The scheme works by exploiting Amazon’s customer service policy. Basically, they claim that the items they ordered were damaged or not working and then request and receive replacements from Amazon at no charge, the U.S. Attorney’s office said in a statement.

The Finans would place thousands of Amazon orders, create multiple false identities, and get the stolen goods from retail shipping stores all over Indiana, the U.S. Attorney’s office said. Then sell them to their fence, Glumac. In two years, they made roughly $750,000.

“Fraud had become a way of life. Their Amazon scheme was their ‘job,’” the U.S. attorney said in a statement.

This is reflected in the numbers reported by the National Retail Federation (NRF) in a targeted survey for 2017. Of total annual returns and exchanges, the average fraudulent return was expected to be 10.8 percent, up from 8.8 percent in 2015, according to the NRF.

“Return fraud continues to pose a serious threat to the retail industry,” the NRF said in its 2017 Organized Retail Crime Survey.  The most common (about two-thirds) is “the return of stolen merchandise and employee return fraud,” the NRF said.

Read More

Jacksonville FL May 30 2018

The Jacksonville Sheriff’s Office has successfully arrested eight people in connection with an organized retail theft ring that they believe stole more than $500,000 worth of merchandise.

Following a two-year investigation which involved undercover officers, police arrested Natasha Soukseunchay, Latoya Shurman, Jennifer Upton, Chiquita Moorehead, Brian Harris, Deedra Berry, Dantavia Berry and the man they credit with being the leader of the ring, Antoun “Tony” Arbaji.

Sheriff Mike Williams told the media in a press conference that Arbaji sold upwards of $300,000 dollars of stolen merchandise on websites he maintained.

He would pay people for the stolen items either $10 per item or 20% of the total worth. Sherriff Williams said the suspects would enter stores with a large box and conceal stolen items within it and would walk out only having paid for the item printed on the box or having not paid at all.

“There’s a method that these suspects know what stores do or won’t do and they take advantage of that at the end of the day,” said Williams.

This investigation was difficult and took two years due to the merchandise being sold not only online but also across state lines. The investigation led police as far away as Tallahassee and St. Marys, Georgia and everywhere in between, according to the Sheriff.

When police arrest Arbaji they seized $53,000 in stolen merchandise and $11,000 in cash.

Read More

While students spent this school year rushing to and from classes, Pacific’s Department of Public Safety spent the past eight months hard at work protecting students and their belongings.

The officers at Public Safety are a proactive group who have gotten creative when it comes to curbing crime at Pacific. Perhaps the best display of that creativity is the Department’s response to one of the most common issues plaguing campus over the years: bike theft.

A 26-year veteran of the force, Lieutenant Wayne Germann of Public Safety told The Pacifican that officers could do very little about bike theft for a long time.

“It’s been very hard to have a progressive and proactive approach to bike theft because we have so many bike racks on campus that we can’t put enough people or enough cameras around to actually protect the bikes,” Germann said. “So either students have to be taught how to lock them up properly, so people can’t steal them, or we have to take other measures.”

One of the other measures Germann is referring to is something called the “bait bike” program. Spearheaded by Sergeant Nick DeMuth, this program addresses the bike theft problem by leading officers directly to the thieves themselves. Officers place decoy bikes around campus that contain GPS tracking devices, then simply wait for the bikes to be stolen.

“[We] take the bike out to an area where it’s known bikes are being stolen, or parts of bikes are being stolen, and purposely lock it up with a cable lock, which is one of the easiest locking mechanisms to cut and steal the bike,” Germann said. “The moment that somebody comes over and touches the cable lock… it will set off the GPS. Then it flashes up onto the screen for dispatch, which tells them where the bike is at, where it’s going, and so forth.”

Dispatch will then begin sending officers to the location of the bike to place the suspect under arrest.

The program has been in place for approximately two years, since Sergeant DeMuth learned about it from a department in the Las Vegas area. DeMuth knew it would be perfect for Pacific, and put in a request to take one of the bikes in the evidence room and turn it into a “bait bike.”

“Then he ordered the GPS unit and stuck it in the seat, and the rest was history. We were just knockin’ the heck out of them,” Germann said.

Read More

The general concept of criminal restitution—perpetrators having to repay their victims any losses caused by their illegal actions—has been around for ages.

In the U.S., there are various restitution laws at both the state and federal level. One of the more significant federal laws on restitution was the Mandatory Restitution Act of 1996, which established procedures for determining the amount of restitution to which a victim may be entitled and made restitution mandatory for many types of federal crimes.

Restitution is an attempt to make crime victims whole again—basically to “restore” them to the same condition they were in before being victimized. Which makes the recent case of a Liberty, Missouri lawyer charged with obstruction of justice by stealing victim restitution funds seem all the more abhorrent.

Attorney Robert J. Young was legally representing a Missouri man who had been indicted and convicted in federal court of a fraudulent scheme to steal money from his employer. The defendant—who worked as the director of information technology at a Midwest construction company—stole hundreds of thousands of dollars by using his company credit card to purchase unnecessary equipment and then reselling it for personal profit. The defendant used the illegal proceeds to buy such luxury items as customized motorcycles, a boat, jet skis, and a large motor home.

Young’s client, who was ultimately sentenced to a federal prison term, had also been ordered to pay a total of $442,000 in restitution to his company. His initial sentencing hearing had been set for January 2016, and Young had made it known to court personnel in advance that his client would be making a partial restitution payment at that hearing.

Before the January hearing, the defendant’s wife had given Young more than $62,000 for her husband’s partial restitution payment through several deposits to the lawyer’s client trust account and business account as well a personal check. But at the January 2016 sentencing hearing, Young did not make the partial restitution payment on behalf of his client. Instead, he told the court that the funds were still in his client trust account, so the hearing was postponed until March 2016.

Read More

WAUKESHA – A patient walked into Waukesha Memorial Hospital with a wallet containing $2,585 in cash, which is placed in a bag for storage in a security room.

When the patient is discharged six days later and the security bag is opened in his presence, the only items found inside are a white board eraser and a box of tissues, neither of which belonged to him. No cash.

According to a criminal complaint filed March 28, an investigation by hospital security officials pointed to Jay Reiners, a 33-year-old nurse from Hartland, who was reportedly seen on surveillance video entering an area where the security bag was temporarily placed before it was moved to more secure area.

As a result of an investigation conducted separately by hospital security and the Waukesha Police Department, Reiners was charged in Waukesha County Circuit Court with one count of theft of movable property worth between $2,500 and $5,000.

Reiners was one of four hospital staff members aware of the large sum of money the patient had brought to the hospital prior to an undisclosed medical treatment on Jan. 6, according to the complaint. Three of them — a nursing assistant and two nurses, including Reiners — were identified in surveillance video as the money was first being counted and placed in the security bag.

According to the complaint, that bag was moved to a “cubby area,” loosely described as a place where patients’ belongings are kept before they are turned over to security personnel. The area is in view, though apparently not fully, of a surveillance camera.

In video reportedly viewed by hospital security and Waukesha police, Reiners was seen entering the cubby area, where he appeared to grab some items off the counter there, though it isn’t clear what they were, the complaint said. About five minutes later, he returned to the area, but this time, as he was leaving, he appeared to be holding his left arm tightly against his body, then entered a bathroom down the hallway.

Read More

More than two dozen Sewerage & Water Board employees have been using fake or unauthorized handicap tags to bilk parking meters near the utility’s main office on St. Joseph Street, according to a report drafted following an investigation by the New Orleans Office of Inspector General.

The report, sent to the city’s Department of Public Works last November, summarizes a two-day investigation probing an “allegation” that “able-bodied” utility employees had been using handicap tags to park their personal vehicles on metered spaces near the utility’s main office at 625 St. Joseph St. The handicap tags allow drivers to park up to three hours for free in downtown metered spaces, which otherwise would cost $3 per hour.

Office of Inspector General investigators ran the registrations of 40 vehicles displaying handicap tags near the St. Joseph Street main office and found 37 of those vehicles were registered to Sewerage & Water Board employees. Of those 37 employees, investigators found just 11 – less than a third – were authorized to have handicap tags, which are distributed by Louisiana State Police, according to the report.

In all, 26 Sewerage & Water Board employees parked with handicap tags that either belonged to a relative, belonged to someone else or were “invalid or unreadable.”

Additionally, investigators spotted 31 vehicles with handicap tags that also displayed parking receipts, ostensibly to cover meter fees beyond the maximum three hours of free time, but that those vehicles had receipts showing “usually a nickel” had been paid into the meter. While five cents would cover “only one minute of parking,” investigators found some of those vehicles were parked that way for entire work shifts. None were ticketed.

All together, the inspector general’s report estimated the invalid handicap tags and expired meter receipts that weren’t ticketed could cost the city around $197,000 a year in lost parking meter revenue.

Read More

Six Howard University employees were fired last year after an internal investigation found the financial aid office had misappropriated university-based grants to some university employees, the school’s president said Wednesday.

According to a statement from Wayne Frederick, Howard University president, an outside auditor found that several university employees received grants in addition to discounts on tuition that exceeded the total cost of tuition and kept the difference.

Some students said they felt betrayed. Employees took financial aid funds as students prepare to spend years paying off their loans.

“I’m actually on the verge of transferring schools because I can’t afford to stay here because a grant was taken away from me,” one student said.

“It’s disappointing to actually come to terms with the reality of what’s going on,” senior Quencey Hickerson said.

Parent Cecily Johnson said she was disgusted.

“Someone could totally change their trajectory if they can’t pay tuition,” she said.

Frederick said he was told in December 2016 that there may have been “some misappropriation of university-provided financial aid funds,” and launched an internal investigation.

The auditor found that between 2007 and 2016, university grants were awarded to some university employees who also were receiving tuition remission. The grants and tuition remission equaled more than the total cost of attendance, which allowed the employees to receive “inappropriate refunds.”

The grants came from institutional funds that help low-income students pay tuition. Frederick said the grants came from the university and were not federal or donor funds.

Tuition remission allows eligible employees or their dependents to receive discounted tuition at the university. Full-time employees eligible to receive tuition remission can take two classes per semester for free, according to the university’s website. Tuition at Howard for the 2017-2018 school year was $12,061 per semester, not including room and board.

Frederick’s statement came after an anonymous post on Medium.com claimed financial aid employees at the university stole nearly $1 million in funds.

Read More