Month: May 2023

Source: United States Department of Justice News

COLUMBUS, Ohio – A former Belmont County attorney was sentenced in U.S. District Court today to 60 months in prison for committing mail fraud related to stealing more than $882,000 from an elderly woman with dementia while purporting to act in her best interests under a Power of Attorney.

From 2012 through August 2019, Mark Alan Thomas, 63, of St. Clairsville, Ohio, defrauded a client and took the victim’s money without her knowledge or permission to use it for his own benefit.

As part of his sentence, Thomas is required to pay $882,502 in restitution.

“Thomas’s grave abuse of power over this vulnerable victim demands today’s serious punishment,” U.S. Attorney Kenneth L. Parker said. “The victim in this case was 86 years old, exhibiting symptoms of dementia, and living in a senior-care facility. She trusted Thomas, and Thomas abused that trust to steal her money for more than seven years. His actions to take advantage of her were utterly shameful.”

According to court documents, Thomas improperly used the victim’s Power of Attorney and his status as a lawyer – even after his law license was revoked in 2015 – to convince various entities, including banks and life insurance companies, to transfer the victim’s money for his use.

In May 2012, a family member of the victim obtained a separate Power of Attorney for the victim, and Thomas drafted a revocation of the family member’s Power of Attorney for the victim to sign. Thomas acted as the notary to verify the victim’s signature on the revocation.

Furthermore, Thomas falsely told a banker he needed $200,000 from the victim’s investment account to set up an educational fund that the victim wanted to establish. Once he received the money from the bank, Thomas transferred the money to himself instead.

In January 2014, Thomas cashed more than $290,000 of the victim’s U.S. Treasury Bonds, then subsequently transferred $200,000 into his law firm’s bank account, and eventually into his own personal bank account.

According to court documents, in 2016, Thomas wrote letters to three life insurance companies purporting to be the victim asking to cash out the victim’s policies and direct all correspondence to Thomas.

Thomas was indicted by a federal grand jury in September 2021 and pleaded guilty in August 2022.

Kenneth L. Parker, U.S. Attorney, Southern District of Ohio; J. William Rivers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division; and Ohio Attorney General Dave Yost announced the sentence imposed today by Chief U.S. District Judge Algenon L. Marbley. The Ohio Attorney General’s Health Care Fraud Unit and the FBI investigated the case. Assistant United States Attorneys David J. Twombly and S. Courter Shimeall are representing the United States in this case.

To report elder fraud, please visit the FBI’s IC3 Elder Fraud Complaint Center or contact the dedicated National Elder Fraud Hotline at 833–FRAUD–11 or 833–372–8311 Monday – Friday, 10:00 am – 6:00 pm EST.

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Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, announced that STEVEN SHORT, the former head of Florida-based E.M. Systems & Services LLC and affiliated companies (collectively, “E.M. Systems”), was sentenced today to 78 months in prison for conspiracy to commit wire fraud and bank fraud in connection with his participation in a fraudulent scheme to obtain credit card processing services for his deceptive Florida-based telemarketing operation through a California-based company called CardReady LLC (“CardReady”).  SHORT previously pled guilty to the conspiracy charge and was sentenced today before United States District Judge Loretta A. Preska. 

U.S. Attorney Damian Williams said: “Over a two-year period, Steven Short and his co-conspirators used shell companies to deceive credit card payment processors into processing more than $19 million obtained from more than 19,000 victims nationwide.  Short preyed on vulnerable people in credit card debt, charging fees up to $1,495 in exchange for guaranteeing to reduce their debt and lower their interest rates, but instead generally sent them cookie-cutter booklets with ordinary budgeting advice.”

According to the Superseding Indictment, court filings, and statements made in Court:

SHORT controlled E.M. Systems.  From approximately 2012 through 2015, SHORT and E.M. Systems carried out a telemarketing fraud scheme in which they used telemarketers to cold-call consumers, targeting consumers with outstanding credit card debt.  In exchange for fees up to $1,495, the cold-callers offered the customers services, including debt consolidation and interest-rate reduction on their debts, which were prohibited by the applicable guidelines from a bank used by SHORT (“Bank-1”) and associated processing entities (the “Guidelines”), and which — as SHORT knew — would produce chargebacks from dissatisfied customers far in excess of the number and rate of chargebacks permitted under the Guidelines.  SHORT and E.M. Systems generated over $19 million in fraud proceeds from more than 19,000 customers through this scheme, resulting in thousands of complaints by customers of fraud and deceptive tactics and requests for millions of dollars in refunds and chargebacks.

In order to charge for E.M. Systems’ purported services via credit cards, SHORT sought access to the credit card processing market through CardReady, a Los Angeles-based company acting as a sales agent in the credit card processing industry.  As part of its business as a sales agent, CardReady found merchants who wanted credit card processing services, such as SHORT, and submitted merchant applications on behalf of those merchants to a Manhattan-based Independent Sales Organization (the “New York ISO”).  The New York ISO then evaluated the merchant applications and referred acceptable merchant accounts up the chain to a payment processor (“Payment Processor-1”) and Bank-1.  Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases by customers who had used credit cards.  Under E.M. Systems’ deal with CardReady, CardReady kept approximately one-third of the credit card sale transactions of SHORT and E.M. Systems in exchange for providing them access to the credit card processing network.  

In securing credit card processing for E.M. Systems to process the fees paid by its customers, SHORT and CardReady concealed that E.M. Systems was the true underlying merchant.  Instead, SHORT and his co-conspirators, over a period of more than 20 months, created approximately 26 sham merchant companies, each headed by a “signer” (the “Sham Merchants” and the “Sham Merchant Accounts”).  The 26 signers for the 26 Sham Merchants typically had no business of their own and knew little or nothing about E.M. Systems’ business.  In return for signing paperwork, the signers were paid a nominal fee by CardReady.  These false merchant applications also concealed the Sham Merchant’s true association with E.M. Systems.

By steering E.M. System’s payment processing through these Sham Merchant Accounts, SHORT and CardReady accomplished a number of fraudulent purposes.  First, the use of these Sham Merchant Accounts made it possible for E.M. Systems to conceal its identity from Payment Processor-1 and Bank-1 and to maintain payment card processing.  This was particularly relevant as Payment Processor-1 repeatedly required CardReady to close individual Sham Merchant Accounts because of excessive chargebacks and reports of sales of prohibited services.  SHORT and CardReady then quickly replaced the closed Sham Merchant Accounts with new Sham Merchant Accounts, precluding Payment Processor-1 from shutting down its processing of high-risk merchants.  Second, the fraudulent processing scheme enabled E.M. Systems to spread out its charges, refunds, and chargebacks across multiple Sham Merchant Accounts.  SHORT and CardReady thus enabled E.M. Systems to evade chargeback monitoring programs operated by Bank-1, Payment Processor-1, and the New York ISO.

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SHORT, 46, of Tampa, Florida, pled guilty on August 16, 2022, to one count of conspiracy to commit wire fraud and bank fraud.  In addition to the prison sentence, SHORT was sentenced to three years of supervised release and ordered to pay restitution of $1,912,090.05 and forfeiture of $8,833,889.69.

Also charged in this case is Brandon Becker, 51, of Los Angeles, California, whose trial is scheduled to begin on December 4, 2023, before Judge Preska.  Becker is presumed innocent unless and until proven guilty.

Mr. Williams praised the work of the Federal Bureau of Investigation and thanked the Federal Trade Commission for its assistance.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys David Raymond Lewis, Vladislav Vainberg, and Sarah Y. Lai are in charge of the prosecution.