Former County Chief Deputy Auditor Convicted of Embezzling Government Funds, Tax Fraud and Wire Fraud

A former chief deputy auditor for LaPorte County, Indiana, was convicted today by a federal jury in the Northern District of Indiana of embezzling over $150,000 from the LaPorte County government, tax fraud and defrauding her elderly father-in-law out of at least $400,000.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David A. Capp of the Northern District of Indiana made the announcement.

Mary Ray, 67, of La Porte, Indiana, was convicted of two counts each of theft of government monies and making false statements on a tax return, and with seven counts of wire fraud.  Ray will be sentenced by Judge Jon E. Deguilio of the Northern District of Indiana on Dec. 22, 2015.

According to evidence presented at trial, from September 2011 through December 2012, while she served as deputy chief auditor for LaPorte County, Ray embezzled over $150,000 from county coffers, and underreported her income on her U.S. Individual Tax Returns for those years by failing to report the embezzled funds.  Evidence at trial also showed that Ray defrauded her 86-year-old father-in-law, a disabled veteran, out of at least $400,000 that he entrusted her to oversee.  The trial evidence also demonstrated that Ray used the funds that she embezzled from LaPorte County and stole from her father-in-law to gamble at casinos.

This case was investigated by the FBI and IRS-Criminal Investigation, with assistance from the Indiana State Police, the LaPorte County Sheriff’s Department and the Indiana State Board of Accounts.  The case is being prosecuted by Trial Attorney Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana.

Former Virginia Short Sale Specialist Sentenced to Prison for Mortgage and Tax Fraud

An Ashburn, Virginia, resident was sentenced to prison today for mortgage and tax fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Dana J. Boente of the Eastern District of Virginia.

Charise Stone, 46, was convicted by a federal jury on May 27 of 13 counts of mortgage fraud, passing fictitious financial instruments and tax fraud.  U.S. Senior District Judge Claude M. Hilton of the Eastern District of Virginia sentenced Stone to serve five years in prison to be followed by three years of supervised release, and ordered her to forfeit $721,552.55 and pay $2,330,722 in restitution to the victim financial institutions and $143,218 in restitution to the Internal Revenue Service (IRS). 

According to court records and evidence introduced at trial, from 2007 to 2010, Stone targeted distressed homeowners who owed more on their mortgage loan than the market value of the home with false promises of financial recovery.  Stone acquired the distressed homeowners’ properties in her own name or under entities she controlled, made false representations to mortgage lenders in order to induce approval of the short sales and then resold the properties – often the same day or the next – to new buyers at a price above the short sale amount in violation of agreements made with mortgage lenders.

Co-defendant Jose Marinay owned a settlement company that closed every short sale transaction for Stone.  Marinay pleaded guilty to wire-fraud conspiracy on May 27, 2014.  At his and Stone’s direction, fraudulent HUD-1 settlement statements were prepared to facilitate the transactions.  Stone destroyed some of the incriminating documents after closings.  Financial institutions suffered at least $2.2 million in losses from the scheme.  Stone profited more than $700,000 from these transactions and failed to file individual income tax returns.  She also sent fictitious bonds to the IRS in an attempt to pay off her tax liability, and sent fake international promissory notes to creditors purporting to satisfy her credit card debt as well as her mortgage loan.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Boente commended special agents of the FBI Washington Field Office and IRS-Criminal Investigation, who investigated the case, and Assistant U.S. Attorney Uzo Asonye of the Eastern District of Virginia and Assistant Chief Todd A. Ellinwood of the Tax Division, who prosecuted the case.

Week in Review—Hammond

HAMMOND, IN—The United States Attorney’s Office announced the following:

Pleas:

■Hector Tovalin, Jr., 36, of Hammond, Indiana, pled guilty before Senior Judge James T. Moody to the felony offense of possession of child pornography. These charges were filed as the result of an investigation by members of the Indiana Internet Crimes Against Children Task Force, including the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorney Jill Koster.

■Linda Lyrla, 57, of DeMotte, Indiana, pled guilty before Senior Judge James T. Moody to the felony offenses of mail fraud and tax evasion. These charges were filed as the result of an investigation by the Internal Revenue Service and the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorney Gary Bell.

■Terrance Young, 49, of Valparaiso, Indiana, pled guilty before Judge Rudy Lozano to the felony offense of receipt of child pornography. These charges were filed as the result of an investigation by members of the Indiana Internet Crimes Against Children Task Force, including ICE-Homeland Security Investigations. This case is being prosecuted by Assistant United States Attorney Jil Koster.

■Armando Ortega, 33, of Hammond, Indiana, pled guilty before Judge Rudy Lozano to the felony offense of possession with the intent to distribute cocaine. Sentencing has been set for October 2, 2012. These charges were filed as the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms, and Explosives HIDTA Task Force. This case is being prosecuted by Assistant United States Attorney David Nozick.

If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.

Dispositions:

■Gary James, 54, of Marisa, Illinois, was sentenced by Judge Rudy Lozano to five months’ imprisonment and one year of supervised release, to include five months of home supervision, and $42,127.08 in restitution after pleading guilty to the felony offense of wire fraud. James participated in a scheme to defraud Bechtel SAIC Company LLC and to obtain money and property by false pretenses. This case was the result of an investigation by the Federal Bureau of Investigation. This case was prosecuted by Assistant United States Attorneys Jacqueline Jacobs and Susan Collins.

■Troy Lively, 43, of Westville, Indiana, was sentenced by Judge Rudy Lozano to 110 months’ imprisonment, restitution of $5014, and two years of supervised release after pleading guilty to the felony offense of the bank robbery of DeMotte State Bank. This case was the result of an investigation by the Federal Bureau of Investigation. This case was prosecuted by Assistant United States Attorney Nicholas Padilla.

■Desanka Henrichs, 60, of Lake Station, Indiana, was sentenced by Senior Judge James T. Moody to 15 months’ imprisonment and one year of supervised release after pleading guilty to the felony offense of mailing threatening communications in a scheme to extort money from individuals by threat to injure their reputations by telling the general public that they had, or were having, extramarital affairs. This case was the result of an investigation by the Federal Bureau of Investigation. This case was prosecuted by Assistant United States Attorney David Nozick.

Former Las Vegas Nightclub VIP Host Pleads Guilty to Filing False Tax Return

Kelly Doll, formerly a VIP host at the Pure Nightclub located within the Caesars Palace Hotel and Casino in Las Vegas, pleaded guilty in federal court Thursday to one count of filing a false federal income tax return for the 2006 tax year, the Justice Department and Internal Revenue Service (IRS) announced today.   U.S.   District Court Judge Miranda Du presided over the plea hearing.

 According to information disclosed at the plea hearing, during the years 2005, 2006 and 2007, some of Pure’s patrons made cash payments to Pure door personnel and “VIP hosts” to bypass the general admissions line and to obtain more desirable seating.   This money was collected, pooled and generally distributed on a weekly basis to the door personnel and VIP hosts, as well as to managers of Pure.  Distributions from this “tip pool” comprised the bulk of Doll’s compensation during the time he worked at the nightclub. Doll concealed large amounts of this income from the IRS.

 Pure’s former managing owner, Steve Davidovici, has also pleaded guilty to tax fraud for failing to report income earned at Pure, as have Doll’s former co-workers, Mikel Hasen, Ali (Sean) Olyaie and Richard Chu.  Each of these individuals likewise admitted filing false federal income tax returns for 2006.  Doll’s sentencing is set for Nov. 24, 2012.

 Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Christopher J. Maietta and Joseph A. Rillotta, who prosecuted the case.

 More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.