Articles Posted in Fraud, Embezzlement & White Collar Crimes

Original Case Details

A figure who has been at the center of an alleged extortion scheme alleging public corruption has pled guilty. Dino Bucci, long known as a “bag man” for the now-indicted Macomb County Public Works commissioner Anthony Marrocco made his guilty plea in United States District Court, via videoconference in front of Judge Robert H. Cleland (the courthouse is closed due to the pandemic). Bucci pled guilty to both extortion and theft conspiracy charges. He admitted to extorting money from engineering firms and construction developers by pressuring them to buy Anthony Marrocco political fundraiser tickets. Bucci was allegedly directed by Marrocco to let these people know that if they did not purchase the tickets, they would face “economic consequences.” He also admitted to being part of another scheme, this one being a kickback scheme to steal $96,000 from Macomb Township. Bucci faces up to ten years in prison and up to a $250,000 fine. Federal prosecutors have indicated that they will be seeking a lesser sentence for Bucci from Judge Cleland due to Bucci’s health issues. Before he is sentenced, Bucci is required to report to the probation department for a pre-sentence interview. Here, a presentence report will be generated and submitted to Judge Cleland for Bucci’s sentencing. iStock_000009283153_Large-2-300x201

Macomb County Corruption Fallout

Judicial Vote

The Macomb County Circuit Court Judicial bench has now officially named Jean Cloud as interim Prosecutor of Macomb County. Cloud was voted in by a 14-1 vote in her favor by the Macomb County Circuit Court Judges which was conducted remotely on Zoom. She has been in the Prosecutor’s office for twenty years and had already assumed the duties within the office as now-former Macomb County Prosecutor Eric Smith is facing public corruption charges related to misuse of public funds. Cloud will serve out the final six months of Smith’s term before the position opens back up in the general election. Cloud has stated her intentions to not seek election as Macomb County Prosecutor once this term ends. There are seven candidates running for the position that will be available this November. iStock_000025943007_XXXLarge-2-300x200

Attempt to Move Past Office Corruption

Original Case Details

The FBI has long targeted the United Auto Workers (UAW) with an investigation that has spanned years and resulted in over a dozen federal criminal indictments and convictions. While the UAW has been on the defensive with a litany of these charges targeting them, General Motors has been thought to be a target of the FBI’s investigation as well. GM has now been given the official word from the FBI that they are not a target of their ongoing investigation. This type of notification is rarely made, as the FBI is not under any requirement to tell anyone about the status or even existence of an ongoing investigation. Fiat-Chrysler on the other hand, has been on the receiving end of multiple criminal charges as the FBI has targeted them as co-conspirators with the UAW for bribery and kickback schemes. The UAW has separately been dealing with the FBI in an effort to show that those who were involved in any corruption were acting on their own and not in concert with the UAW as an organization. iStock_000006818663_Full-1-300x200

Criminal Charges Involved

Original Case Details

In the fallout from the Eric Smith scandal, another member of the Macomb County Prosecutor’s Office is facing criminal charges. This time it is Derek Miller, who is the suspended chief of operations for the Macomb County Prosecutor’s Office. Miller’s ex-boss was former Macomb County Head Prosecutor Eric Smith. Smith is accused of using money from a civil forfeiture fund for personal benefit to the tune of approximately $600,000 over the course of six years from 2012-2018. Smith is currently charged with a litany of embezzlement and public corruption charges. More information about his case can be found here. Derek Miller has served as a state representative and Macomb County Treasurer along with his time in the Prosecutors office. He is fourth person to be criminally charged in connection with the misuse of forfeiture funds. iStock_000009283153_Large-2-300x201

Criminal Charges Involved

A 24-year-old Muskegon, MI man is now facing federal charges for offering to sell N95 masks that either were not authentic or never sent at all. An N95 respirator mask is a mask that covers the users nose and mouth and filters at least 95% of airborne particles. It is the medical standard when it comes to face masks. He is accused of scamming people online who were looking to buy the protective face masks during the current COVID-19 pandemic. He has been charged with federal mail fraud by the United States government in the Northern District Court of California. The Michigan State Attorney General has also recently announced an investigation into the man and his company EM General for price-gouging, and misleading customers into purchases that were never going to be filled nor refunded. index2-300x129

Original Case Details

The federal complaint which is the basis for the federal mail fraud charge alleges that customers of EM General paid as much as $40 per mask, but many never received them. Others who bought masks were sent cheaply made knockoffs that did not comply with the standards of real N95 masks. The man is also accused of attempting to make EM General appear more legitimate by using stock photos of people from the internet to make a page of the “employees” of EM General. He is also accused of naming a fake CEO for his “company.” Customers of EM General included paramedics and other hospital workers who were trying to do their best to protect themselves during this pandemic, but ultimately most never received their masks. In response to complaints from customers, EM General claimed that the delay in shipping was due to the masks being shipped from Turkey. It is not clear how many alleged victims there are in this case as the complaint simply states that EM General scammed “several” people into buying N95 face masks that they never received. This case is still being investigated jointly by FBI and federal postal inspection services in both San Francisco and Detroit.

Original Case Details

The married owners of a farm in southwest Michigan were charged with a litany of charges related to a 2012 bankruptcy filing. The husband was indicted by a grand jury with conspiracy to commit bank fraud, bank fraud, two counts of false statements on loan and credit applications, conspiracy to defraud the United States, and three different counts of bankruptcy fraud. It is alleged that the husband fraudulently received a $68 million loan from Wells Fargo Bank by falsely claiming the amount of his land, his assets, and inventory among other things. It is alleged he also filed false insurance claims to obtain payments which were actually used to pay for his farming operations and overhead. 68916_law_education_series_2-300x225

The husband made a deal with the U.S Attorney’s Office back in April 2019. His deal included a maximum of five years in federal prison. He pled guilty to conspiracy to commit bank fraud and conspiracy to commit crop insurance fraud. The judge ruled that the agreement was not consistent with how the sentencing guidelines should be applied in regard to the case. The judge ruled that the correct sentencing guidelines range was between 12.5 to 15 years in prison. This ruling obviously did not line up with the original five year maximum in the agreement. The judge allowed for time to either come up with a new plea agreement or withdraw the plea altogether. The wife had been charged with separate related offenses back in 2015 and sentenced to 20 months in prison on her own plea agreement. That plea was also withdrawn because her plea agreement was ruled to be contingent on the husband going through with his plea agreement.

Michigan State Rep. Larry Inman was tried on 3 different counts in federal court this past December. He was accused of lying to the FBI, extortion, and bribery. The jury acquitted Inman of lying to the FBI, but they were deadlocked on the other two charges and did not come to a decision which led to a mistrial on those charges. Hung juries are incredibly rare, but that is exactly what happened on the extortion and bribery counts for this case. The judge in this case said that in 12 years on the federal bench, he had only presided over one other hung jury.

Inman testified on his own behalf and U.S. Attorneys now claim that two other state representatives now contradict Inman’s testimony, which they believe entitles them to a new trial. Typically, a hung jury results in a mistrial and the case will then be retried in the future. But since the jury acquitted him on one count, there are some concerns whether a new trial would violate double jeopardy. Prosecutors believe they can retry Inman on the remaining charges with any new evidence they obtain. The judge in this case has also expressed a concern that punishing Inman would basically criminalize political fundraising and collecting campaign contributions. 68916_law_education_series_2-300x225

Original Case Details

Current Macomb County Prosecutor Eric Smith has been charged with 10 separate criminal corruption offenses relating to the alleged misuse of money forfeited to Macomb County. This money comes from the forfeiture of funds and property of criminal defendants, most typically people accused of drug trafficking. He is charged with conducting a criminal enterprise, five separate counts of embezzlement by a public official, tampering with evidence, conspiracy to commit forgery, accessory to a crime after the fact, and public office misconduct. There are three other defendants in this case for their alleged acts that contributed to these crimes. iStock_000009283153_Large-2-300x201

Original Case Details

The main thing at issue here is what Smith did with forfeiture funds that are seized by the police. Forfeiture funds are supposed to be spent on county police departments and the county’s sheriff department. Michigan State Police raided Smith’s office and home in an effort to uncover his alleged misuse of these funds. Investigators estimate that Smith embezzled approximately $600,000 since 2012 relating to the forfeiture funds. This money was allegedly spent on things such as television service to AT&T and DIRECTV to the tune of almost $30,000, retirement and Christmas parties, and nearly $100,000 in credit card charges that were reimbursed for various activities and expenses. Smith’s secretary appears on over 100 checks, where allegedly she would use her own credit card for purchases and Smith would reimburse her with checks that are paid out from forfeiture money. These forfeiture funds are controversial in nature, because they don’t require a conviction for the police to keep the money and property seized. Opponents of forfeiture funds see these accounts as slush funds for police to use how they please. Forfeiture funds are only supposed to be used in a way that enhances public safety and security, not for personal enrichment.

One form of criminal prosecution that has been on the rise throughout the state of Michigan has to do with the famed “Blue Sky Laws” which has consistently presented issues in the white collar sect of criminal prosecution. While the laws were put into place to protect investors, the application of the laws have led to a tremendous amount of confusion. The leader in criminal defense in the State of Michigan is Scott Grabel of Grabel and Associates. One of the ways that Grabel has earned his reputation is through the defense of “White Collar” crimes. Grabel, along with other leaders in the field provided insight on the matter. Let’s build an understanding of the law and then explore the practical application of the statutes in place. to-sign-a-contract-2-1221951-m

To begin, there are federal requirements to the law. Securities are subject to state registration requirements under state securities laws. In our state we have several registration exemptions for offerings to a limited number of investors which makes the filing of foreign LLC’s in the state of Michigan a dangerous proposition. In some cases, Michigan exemption provisions are preempted by federal law but in many other cases they are not. When asked about the laws, Scott Grabel provided insight on the manner. Grabel was quoted as saying, “There is a danger to the Commerce Clause when we look at the issue of Blue Sky Laws globally. Generically speaking, all securities sold in a particular state must either be registered there or be exempt from registration; and all broker-dealers and their representatives must be registered there or be exempt from registration. The origination of the law causes a great deal of confusion for investors. People seem to think that Justice Joseph McKenna created the term in the famous Hall case but that’s not actually factual (Hall v. Geiger-Jones Co., 214 U.S. 539, [1917]). Without knowing how the term was created makes it almost impossible to see the evolution of the law. When our firm started to defense people charged with a violation of the law, we studied the origins and created case studies from there. The work put in on the front end of the litigation has helped us achieve a great amount of success for our clients.”

Matthew McManus, a partner at Ann Arbor Legal in Ann Arbor, Michigan weighed in on the civil litigation aspect. McManus stated, “Whenever our firm deals with foreign investors, we have a series of questions that have to be addressed, the first being how many investors does the company plan to have. There are a number of limitations that far too often get overlooked. If your client-intake is flawed, your entire representation can lead to harm for your client and a malpractice claim. Diligence is crucial in this regard.”

In 2012, Paul Seewald, who at the time was a congressional aide and district director forpaul seewald ex-U.S. Congressman Thaddeus McCotter, was charged with nine counts of falsely signing nominating petitions after he and other members of the congressman’s campaign were accused of trying to get McCotter’s name on the ballot in his reelection efforts by submitting bogus petition information.

The nine counts were misdemeanors, however Seewald was also charged with a single count of conspiring to commit a legal act in an illegal manner, which is a felony. Seewald was the subject of a criminal investigation after it was alleged that he signed a petition as a circulator, although court documents reveal the petition was not circulated.

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