Articles Posted in White Collar Crimes

Oral Molden, a 47-year-old Lima Township man, was arrested on December 22 on numerous charges including false pretenses between $999 and $20,000, and false pretenses over $20,000. Molden had faced embezzlement charges prior, but had that charge dismissed earlier in the year. The new charges are connected to the same case, according to news reports.

Molden also faces charges of malicious use of a telecommunications service and making or permitting a false tax return; he is due back in court on January 3 according to police, and was released on a personal recognizance bond. The previous charge of embezzling $20,000 or more had been dismissed in April due to lack of evidence.

Molden’s wife also faces charges in the case, and was a bookkeeper for A2 Auto Glass, the company police believe the couple illegally took money from over a 3 1/2 year time period. Police believe the Molden’s obtained approximately $250,000 from the company, located in Scio Township. Janice Molden faces multiple charges, including embezzling $100,000 or more and three counts of using a computer to commit a crime.

News reports indicate that Oral Molden performed computer work for A2 Auto Glass. Janice Molden’s trial date is scheduled for January 28, although her public defender, Laura Dudley, indicated in a September court appearance that a plea deal may be in the works.

Michigan embezzlement attorneys know that these types of charges do not have to end with the accused facing prison time or substantial fines. Cases involving employee theft, tax fraud, computer crimes or other embezzlement charges are complex and involved, requiring the expertise and skill of a lawyer.

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Paul Douglas Kelly, a 53-year-old Cadillac chiropractor accused of tax evasion, was sentenced to two years in prison on Monday December 3rd. Additionally, Kelly will pay $279,145 in restitution and be placed on supervised release for two years upon the end of his prison term. The chiropractor was sentenced in Kalamazoo by U.S. District Judge Paul Maloney.

According to news reports, the government alleged that Kelly’s chiropractic business earned him $2.2 million from 1999 to 2006, but that Kelly understated his tax liability by $250,000. Kelly allegedly paid only $23,601 in taxes on the income for the years in question.

Kelly has been in the chiropractic field in the Cadillac area for two decades; he first owned the Kelly Chiropractic Center, then the Advanced Chiropractic Center later.

The government alleges that Kelly kept two sets of books, and that he inflated business related expenses while underreporting income. Kelly reportedly gave inaccurate records from the two sets of books to tax preparers, and regularly claimed expenses which were personal on federal income tax returns. Some of these personal items included hunting and snowmobile gear and collectible toys.

IRS criminal investigation special agent in charge Erick Martinez said in a statement that “Kelly went to extraordinary means to hide his income.” Apparently, Kelly learned that he could save significantly on taxes when he attended a seminar in 1996; it was at this seminar that Kelly is said to have met a “notorious tax protester and fraudster.” Kelly’s attorney, Brian Lennon, wrote in a sentencing memorandum that Kelly’s accountant advised him not to follow the advice of the fraudster, but that he didn’t listen.

Kelly pleaded guilty to tax evasion in August of this year, and was freed on a $25,000 bond pending his December sentencing.

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Diane Hathaway, a Michigan Supreme Court judge, has been accused of real estate fraud by the FBI, who believe that she and her husband, Michael Kingsley, fraudulently transferred property in order to wipe $600,000 in mortgage debt off of their Michigan home. The federal government filed a lawsuit recently which seeks to seize Hathaway’s Florida home.

News reports state that Hathaway and Kingsley submitted a hardship letter to ING Bank in 2010, requesting to do a short sale on their Grosse Pointe Park home; however, they did not disclose at the time that their Windermere, FL home had been put under Kingsley’s daughter’s name, according to the federal government.

Essentially, the FBI accused the couple of persuading a bank to allow a short sale on one property, while concealing control of the Florida real estate. Following the short sale of their Michigan home, the Florida home was transferred from Kingsley’s daughter’s name back to the couple, according to the lawsuit which was filed on November 19.

In her first formal response to the government’s lawsuit, Hathaway denied any wrongdoing, saying that while she and Kingsley did not disclose the transfer of their Florida home to their daughter, the bank did not ask about other properties. A court filing submitted on Friday, November 30 does not reveal the reason the couple transferred the Florida home and then got it back.

A written statement from Michigan Chief Justice Robert Young Jr. urges Hathaway to “clear the air and explain these transactions.” Young also said that allegations of fraud against any judge are a “dreadful development.”

Michigan fraud defense attorneys know that these allegations are serious, and that Hathaway and Kingsley could be facing serious punishment if found guilty of bank/real estate fraud. Many criminal offenses subject those convicted to substantial fines, prison time, and even forfeiture of professional licenses; federal sentencing guidelines are usually even more harsh than those at the state level.

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In August of this year, George and Teresa Kastanes were accused of initiating a Ponzi scheme which allegedly stripped more than $10 million from the Detroit Police and Fire Retirement fund.

The Florida couple received a loan in 2008 in the amount of $9.9 million from the pension system according to news reports. This money was purportedly to be used for investing in distressed properties for resale by the couple, who operated Paramount Land Holdings, a South Carolina based company. However, a federal complaint against the couple stated that no payments were ever made in the agreement.

On Tuesday, November 13, Teresa Kastanes surrendered to authorities in Fort Lauderdale, FL after arriving back in the U.S. following a trip to Nicaragua. Kastanes, who is 54 years old, was escorted off of the plane by Homeland Security agents.

News reports state that the pension fund money was to be used to purchase and restore more than 1,400 homes in the Detroit area which had been foreclosed upon. Instead, about half of the money was allegedly used for the purchase of jewelry and exotic art. Court documents state that only $2 million in interest was repaid to the retirement system.

Abner McWhorter was a partner in the Ponzi scheme with the Kastanes, who had approached him about the land-purchase business proposal. McWhorter presented the proposal to the pension board at Paramount Limited where he was president; the board granted the $10 million loan although it did not invest in the business. After reporting to the pension board in July of 2009 that the business was thriving, he requested an additional $8 million. It was while investigating the second loan that “numerous substantial breaches” relating to the initial loan were identified by the board.

Sadly, after being accused in the Ponzi scheme McWhorter took his own life in 2011. Teresa Kastanes’ husband was arrested earlier this year after federal agents were ordered by Judge Raymond Ray to find and arrest the couple who had failed to show up for court appearances. Teresa Kastanes was released from custody after surrendering her passport.

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A Livonia gynecologist, 63-year-old Jonathan Agbebiyi of Sterling Heights, has been ordered to pay nearly $3 million in restitution to the government after being convicted of Medicare fraud. According to the U.S. Attorney’s office, Agbebiyi was convicted on charges of conspiracy to committing health care fraud and six counts of health care fraud in May of this year. News reports also state that the doctor was sentenced on November 8 to 5 years in prison and 2 years of supervised release. Between 2007 and 2010, Agbebiyi worked at three clinics in Livonia.

Agbebiyi, who reportedly bilked Medicare for $5.4 million, was sentenced by U.S. District Judge Arthur Tarnow. During the week-long trial, evidence was allegedly presented which revealed that Agbebiyi performed neurological tests which were medically unnecessary in the conspiracy to bill Medicare. Court documents claim that diagnostic tests were administered by clinic employees according to news sources, and that these employees lacked “meaningful training.”

According to prosecutors, patients were lured to the clinics by the promise of cash, prescriptions and fast food, and were not referred by other physicians. The FBI and U.S. Health and Human Services Department’s Office of Inspector General investigated the case, stating that some patients underwent testing that involved sending an electric current through the legs and arms. Patients who received these tests were not followed up on for further neurological treatment according to reports which state that Medicare was billed about $515 for each one of these tests.

This case was part of the Medicare Fraud Strike Force operations, a federal government program that has charged over 1,300 defendants across the nation since 2007 with more than $4 billion in Medicare fraud.

Michigan fraud defense attorneys know that those convicted on charges of Medicare fraud will face severe penalties. In most cases, those involved will be subject to significant fines, prison time, and restitution, or repayment of the money illegally gained from Medicare.

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Pamela McMichael, a 55-year-old woman who was working as a budget analyst in Eastern Michigan University’s Extended Programs and Educational Outreach department, has been accused of embezzling approximately $10,000 according to police and news reports. The embezzlement occurred over the summer months, according to EMU Police Chief Bob Heighes.

Heighes stated that investigators are not certain just how long it has been going on, and that the investigation is not yet complete. So far, efforts have been focused on the past summer. McMichael was arraigned on November 3rd on one count of embezzlement by an agent or trustee of more than $1,000 but less than $20,000 according to records.

McMichael, who was arrested on Friday and released from the Washtenaw County Jail on a $10,000 personal recognizance bond, has been placed on leave by the university. During a normal audit process which took place in August, the alleged embezzlement was revealed when auditors discovered irregularities. Police then took over the investigation.

According to news reports, McMichael will face a fine of three times the amount embezzled and as much as five years in prison if convicted of the charge. A preliminary exam is scheduled on November 13 at 8:30 a.m. according to Washtenaw County Sheriff’s Office Sgt. Geoffrey Fox.

Individuals who are charged with embezzlement and other theft related offenses must have a competent Michigan embezzlement attorney on their side in order to protect their legal rights and freedom. These types of charges are often extremely complex and diverse; because you have been arrested does not automatically mean that you must spend time in jail or face a permanent criminal record. Until proven guilty beyond a reasonable doubt, you are innocent.

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In March of this year, shocking allegations were made against a Pontiac school administrator involving use of federal and state education funds for personal purchases including furniture, clothes and expensive cars. The alleged offenses took place in 2011, according to news reports. Jumanne Sledge, former head associate superintendent for Organizational Development and Human Resources pleaded guilty to defrauding the Pontiac School District of $236,000 last week; he now faces as much as 30 months in jail along with restitution and loss of his Jaguar.

Federal agents obtained a search warrant which was applied for on January 26th. After conducting interviews and pouring over evidence, agents were convinced that Sledge had used funds for various expenditures, including shopping at Macys, Burberry and Saks, and for travel expenses for a trip to Chicago. Sledge also allegedly had an employee of the Pontiac school district write a $236,000 check to a company that he owned, according to investigators. FBI agent Brian C. Max obtained a court order to review Sledge’s investments and bank accounts, a lease agreement for a 2011 Mercedes 450 SUV, and to search his Oakland County condo at the Wabeek Country Club.

In all, Sledge was charged with money laundering and embezzlement, or “program fraud” under federal statutes. News reports allege that Sledge had the employee write the $236,000 check to Leadership Academy. He then purportedly converted the money for his own personal use after issuing a fraudulent invoice, according to U.S. Attorney Barbara L. McQuade. The issue was discovered when Darryl Cosby, Pontiac School District Security Chief, discovered that the district’s deficit had doubled in two years’ time after investigating finances at the request of the school board.

Sledge, a resident of Bloomfield Hills, turned himself in to authorities in March, and originally pleaded not guilty to the charges.

Michigan fraud defense attorneys know the serious consequences individuals convicted of such charges face. However, an aggressive, skilled lawyer also knows that these types of charges to not necessarily have to result in conviction and the penalties that apply.

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On October 2nd, Tammy Lynn Lumbard was sentenced by U.S. District Judge Paul L. Maloney to serve one year and one day in federal prison after being convicted on one count of bank embezzlement. The mother of three worked as a teller and supervisor at a Huntington Bank branch in downtown Kalamazoo.

In June, Lumbard pleaded guilty to stealing more than $108,000 from customers of the bank. According to news reports, Lumbard was making out checks on various customers’ accounts payable to “cash,” then forging their names on the checks. Her attorney asked that she not serve prison time and for the judge’s leniency because of his client’s family situation, however the judge denied that request.

However, Lumbard did receive a lesser sentence than the standard federal sentencing guidelines of 15 to 21 months in prison. Ray Kent, Lumbard’s attorney, requested that his client be placed on probation and sentenced to house arrest or community confinement. He wanted leniency for Lumbard due to alleged hardships in her life, and cited reasons including that she was the sole provider for the family. Kent said in the sentencing memorandum that Lumbard carried “guilt” because of uprooting her children, and that bills were piling up due to Lumbard being the only source of income for the family. He claimed that things got out of hand although his client intended to repay the money, and that the situation snowballed.

After being charged with embezzlement, Lumbard’s second husband forced her and the children to leave the home. Kent said that his client had saved a “sizable” chunk of money to begin repaying the money she had taken, but that her husband took the money. In addition to the one year, one day federal prison sentence, Lumbard was ordered to pay $108,630 in restitution.

The judge recommended that Lumbard be incarcerated at a facility close to her home, and that she receive a mental health evaluation and treatment while in prison.

Charges of embezzlement and/or fraud are extremely complex, and require the expertise of a skilled Michigan embezzlement defense attorney. Depending on the circumstances, those convicted may face up to 20 years in prison and substantial monetary fines/restitution.

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