10/29/2009 Department of Justice Press Release via the FBI website:

SAN JOSE, CA—Khalid Shaikh, a former CEO of YouSendIt Inc., was indicted by a federal grand jury yesterday with four counts of mail fraud, United States Attorney Joseph P. Russoniello announced.

The indictment states that between December 2008 and June 2009 Shaikh used the ApacheBench software program to launch four denial of service (DOS) attacks against YouSendIt’s servers. Each DOS attack temporarily rendered the servers incapable of handling legitimate network traffic and deprived YouSendIt’s customers use of the company’s services.

YouSendIt is a company based in Campbell, Calif., that is engaged in the business of digital content delivery through the Internet. YouSendIt enables users to send, receive and track large files of digital data. YouSendIt’s Web servers are located in San Jose. These servers are also used to facilitate interstate and foreign commerce and communication.

According to the indictment, when the company was established in 2004, Shaikh was one of YouSendIt’s founders. He served as the company’s chief executive officer until August 2005. Thereafter, Shaikh served as the company’s chief technology officer until he departed from YouSendIt in November 2006.

The maximum statutory penalty for each count of mail fraud in violation 18 U.S.C. §§ 1030(a)(5)(A) & (c)(4)(A) is five years imprisonment, three years of supervised release and a fine of $250,000, plus restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Hanley Chew is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Legal Assistant Lauri Gomez, and Law Clerks Traci Lee and Lily Robinton. The charges are the result of a referral to and an investigation by the Federal Bureau of Investigation.

Please note: An indictment contains only allegations against an individual and, as with all defendants, Shaikh must be presumed innocent unless and until proven guilty.

Another fake news site? Zzzzzzzzzzzzzzz

Are fake news sites the next big thing? If the alarming number of fake news sites with fake stories about fake blogs are any indication – the answer is a resounding yes! Most of the fake news sites talk about a fictitious woman named "Mary Steadman" who claims "I get paid about $25 for every link I post on Google and I get paid every week… I make around $5500 a month right now".

One thing that the fake news sites DO get right is that "Mary's story is a very familiar one in these tough times". That's true since there are over 1000 fake blogs perpetuating the myth that you can make big money "just by posting a link on google".

If you want to see a list of over 1000 of the fake blogs, Click here to read Michael Brown's article called "Make Money Posting Links on Google Scam".

Some of the fake news sites do post disclaimers like "This publication is an article advertisement for Google Profit Kits", "This publication is an article advertisement for Easy Google Profit", or "This publication is an article advertisement for Google Biz Kit" (I noticed that many of those are now redirecting to a product called CashSecretClub).

But one of the stranger things about these fake news sites is that they have an "ADVERTISMENTS" section ON the advertisement itself and to my eye the word "ADVERTISEMENTS" on the right is quite a bit bigger than the advertising disclaimer on the top (note, not all sites have the disclaimer).

I haven't determine how many of the fake news sites are similar to the actual newspapers in that area. If anyone lives in one of the area that the following fake news sites claim to be from it would be interesting to know if they sound like a newspaper in your area. You can post that information in the comments section if you like. Here's a list of the fake news sites I've seen:

• www.4KAWeekIn3Steps.com | Mary Steadman story
• www.9NewsDirect.com | Sarah Wilmington story
• www.13Whez.com | John Blanksy story
• www.Action7Journal.com | Mary Steadman story
• www.Action16News.com | Jerry Reynolds story
• www.ActionLocalNews.com | Melissa Steadman story
• www.ActionNews9At5.com | Lisa Johnson story
• www.ActionNews9At6.com | Jennifer Pallin story
• www.ActionNews9NewYork.com | Lisa Johnson story
• www.ActionNewsChannel9.com | Lisa Johnson story
• www.AJobWithGoogle.com
• www.America-Job-Herald.com | Sarah Wilmington story
• www.AmericaFinanceNews.com | Mary Steadman story
• www.AmericaJobDaily.com | RachelAppleton
• www.AmericaJobJournal.com | Mary Steadman story
• www.AmericaJobsDaily.com | Mike Richardson
• www.AmericaNewsDaily.com | Mary Steadman story
• www.AmericaNewsDaily.com | Mary Steadman story
• www.Atlanta-Gazette.com | Lisa Raymond Married to Dan,2kids
• www.Atlanta-Tribune-News.com | Melissa Steadman story
• www.Atlanta-Tribune.com
• www.ATLMoney.com | Sarah Wilmington story
• www.AucklandConsumer.com
• www.B12-Media.com | Mary Steadman story
• www.BargainBoomer.com | Mary Steadman story
• www.Best-Job-In.com | Mary Steadman story
• www.Best10WorkAtHomeJobs.org | Jerry Reynolds
• www.BestGoogleProfits.info | Paul Steadman story
• www.BestGoogleRevenue.info | Paul Steadman story
• www.BestGoogleRevenue.info | Paul Steadman story
• www.BirmingHamTribune.co.uk | Mary Steadman story
• www.BizNews4.com | Maria Gonzales
• www.BizNews9.info
• www.BobbyMakesCash.com | Ana Steadman story
• www.BonusMoneyTips.com | Stephanie Lopez story
• www.Boston-BusinessNews.com | Mary Steadman story
• www.Boston-Tribune.com | Mary Steadman story
• www.BostonCityPost.com | Isabel Goldman
• www.BostonFinanceNews.com | Mary Steadman
• www.BostonGazetteNews.com | Mary Steadman story
• www.BostonInquirer.com | Erin Breheny story
• www.BostonTimesNews.com
• www.BuckinghamTribune.com | Mike Steadman story
• www.BusinessGazette.net | Lisa Burns stor
• www.BusinessOpportunityTimes.com | Mary Steadman story
• www.BusinessShop.com | Jerry Reynolds
• www.BusinessWatchDaily.com | Sarah Jones story
• www.CAGazette.com
• www.CaliforniaGazetteNews.com
• www.CanadaJobJournal.com | Mary Steadman story
• www.CanadaJobNews.com
• www.CanadaJobNews.com | asdf
• www.CanberraGuardianNews.com
• www.Career-Workshop.com | Sarah Wilmington story
• www.CareerBash.com | Jerry Reynolds story
• www.Careers-Tips.com | Andrea Wilmington story
• www.CarterIsCut.com | Mary Steadman story
• www.Cash-With-Google.info
• www.CashMine.net | Mary Steadman story
• www.Chan8News.com | Maria Summers story
• www.Chan33News.net | Mary Steadman story
• www.CharlotteTimesHerald.com
• www.Chicago-BusinessNews.com | Mary Steadman story
• www.Chicago-Extra.com
• www.Chicago-Finance-News.com | Mary Steadman story
• www.Chicago-Tribune-news.com | Melissa Bennett
• www.ChicagoConsumerNewsletter | Mary Hayes story
• www.ChicagoGazetteNews.com | Mary Steadman story
• www.ChronicleNewsFirst.com | Josh Steidler story
• www.CitiPressNews.com | Mary Steadman story
• www.City-Chronicle.com – redirects to Washington-Reporter.com
• www.CityChronicle.com | Mike Steadman story
• www.CityOfDallas.com | Emily Jordan story
• www.Cleveland-Tribune.com | Melissa Steadman story
• www.ColumbusHeraldTribune.com | Ellie Patrick story
• www.ColumbusTribuneNews.com | Mary Hayes story
• www.Consumer-Monthly.com | Brett Johnson
• www.Consumer-Weekly.com | Mary Thompson story
• www.Consumer-Weekly.net | Mary Thompson story
• www.ConsumerReportNow.com | Kenand Ariana Steadman
• www.ConsumerReportsWeekly.com | Marie Thompson story
• www.ConsumerReviewWeekly.com | Mary Hayes story
• www.CurrentNewsReport.com | William Reynolds story
• www.Daily-Breaking-News.com | Linda Trubner
• www.Daily-eNews.com | Debbie Firestone story
• www.Daily-Job-News.com | Mary Steadman story
• www.Daily-Jobs-Herald.com | Mary Steadman story
• www.Daily-News-Now.com
• www.Daily-News-Tribune.com
• www.Daily-Sun-Times.com | Maria Steadman story
• www.Daily-Tabloid.com | Mary Steadman story
• www.DailyJobGazette.com | Mary Steadman story
• www.DailyJobNews.com | Karen Steadman story
• www.DailyJobNews.net | Karen Steadman story
• www.DailyJobsTribune.com | Mike Richardson story
• www.DailyNewsFocus.com | Mary Steadman story
• www.DailyNewsGazette.com | Jerry Reynolds story
• www.DailyOnlineTimes.com
• www.DailyTribunes.com | Mary Steadman story
• www.DailyTVNews4.com | Lisa Johnson story
• www.DailyTVNews7.com | Mary Steadman story
• www.DallasDispatchDaily.com | Mary Bannister story
• www.DallasDispatchNews.com | Mary Bannister story
• www.DearbornDailyNews.com | Mary Steadman story
• www.DearbornNewsDaily.com | Jane Steadman story
• www.DenverGlobeNews.com | Mary Steadman story
• www.DenverInquirer.com | Mary Steadman story
• www.Detroit-Tribune-News.com | Mary Steadman story
• www.Detroit-Tribune.com | Marisa Stamos story
• www.DetroitJournal.com | Mary Steadman story
• www.DetroitTribuneNews.com
• www.Ditopedia.com | Mary Steadman story
• www.DollarHog.com | Mary Steadman
• www.DowntownHerald.com | Mary Steadman story
• www.E-FinancialTimes.com | Cindy Peterson story
• www.e-FusjonEnergy.com | Mary Steadman story
• www.Earn100USPerDay.com | Nicole Steadman story
• www.EarnExtraIncomeEasy.com | Mike Steadman story
• www.EasyJobs2009.com | Mary Steadman story
• www.Eazy-Tips.com | Mary Steadman story
• www.EbaySuccess-Story.com | Joe Simpson story
• www.eBusinessWatchDog.org | Betsy Johnson story
• www.EDaily-News.com | Mary Steadman story
• www.EFinancialTimes.com | Betty Johnson story
• www.EmploymentIQ.com | Jerry Reynolds story
• www.EntrepreneurGazette.com | Sara Johnson story
• www.EricsCashBlog.com
• www.eWorkAtHomeJobs.com | Jerry Reynolds story
• www.Finance-Journal.org | Stephanie Lopez story
• www.Finance-News.com-Review4u.com | Mary Steadman story
• www.FinanceLedger.com
• www.FinancialMoneyNews.com | Sandy Torres
• www.FinancialNewsNY.com | Mary Steadman
• www.Find-Answers.info | Mike Steadman story
• www.FindYourMissingMoney.com | Mary Steadman story
• www.FlipAGrant.com | Lisa Johnson
• www.FloridaJobHerald.com | JoshShelbystory
• www.Forbes-World-News.com | Mike Richardson story
• www.FreeDailyNewsCorp.com | Mary Steadman story
• www.Freefad.com | Mary Steadman story
• www.FreeGoogleKits.info | Mary Steadman story
• www.FreeOnlineKit.com | Mary Steadman story
• www.FremontGazette.com | Mary Steadman story
• www.Fresh-Off-The-Press.com
• www.FutureTimes.com | Jerry Reynolds story
• www.GabrielasBlog.com | Gabriela Steadman
• www.GazetteDailyNews.com | Mary Steadman story
• www.GazetteNews.net | Mark Swiffer story
• www.GetYourFreedomBack.info | Paul Steadman story
• www.GlobeNewsDaily.com
• www.GoogleCashProfit.info | PaulStory
• www.GoogleCashWorks.com | Mary Steadman story
• www.GoogleCashWorks.com | Matt story
• www.GoogleGrant.com | Rosina Marshall
• www.GoogleJob.com
• www.GoogleJobSearch.com
• www.GoogleProfitNow.info | Paul Steadman story
• www.GoogleProfitsNew.info | Paul Steadman
• www.GoogleWallets.com | Karent Steadman
• www.GreatWorkAtHomeJob.com | Brittany Murphy story
• www.GuardianOnline.us
• www.Help4WeightLoss.com | Alyssa Montez story
• www.HeraldOnlineNews.com
• www.Home-Job-News.com | TedSantiagostory
• www.HomeFinanceJournal.com | Elizabeth Steadman story
• www.HomeJobDailyNews.com | Mary Steadman story
• www.HomeJobsNews.com | Marie Thompson
• www.HomeJobsPoint.com | Mary Steadman story
• www.HomeWinning.com | Scott
• www.HottiesBuzz.com | Mary Steadman story
• www.HoustonGazetteNews.com | DianaMartinez
• www.ImmigrantsFinancialTimes.com | YuhongHu
• www.InertiaInMotion.com | KarenSteele
• www.Internet-News-Daily.com
• www.InternetJobNews.com | Karen Steadman story
• www.InternetJobNews.com | Mike Richardson story
• www.IOAssets.com | Mary Steadman story
• www.JakesCashBlog.com | Eva Smolevsky story
• www.JCCNews.com | Mary Steadman story
• www.JobFinderDaily.com | Mary Steadman story
• www.JobNewsToday.com | Mary Steadman
• www.JobNewsToday.info | Paul & Fiance story
• www.JobPost2009.com | RobertSmithstory
• www.JobReportingNews.com | DavidAndersonstory
• www.Jobs-AtHome.info | Mary Steadman story
• www.Jobs-Tribune.com | Mary Steadman story
• www.JobsAndNews.com | Mike RichardsonMarried
• www.JobsGazetteNews.com | Jeff-editor
• www.JobsWithGoogle.com
• www.JobThatYouWorkFromHome.com | ScottHunter
• www.JoshuaGetsGreen.com
• www.JustinsGoogleBlog.com | Mary Steadman story
• www.Kit-Digital.com | Mary Steadman story
• www.KLMT3.com | Mary Steadman story
• www.La-Tribune-Online.com | Mary Steadman
• www.LaBusinessNews.org | Sabrina Mercer story
• www.LaCityOnlineGazetteNews.com | Mary Steadman story
• www.LaFinanceNews.com | Kelly Steadman story
• www.LAFinancialTimes.com | Brandice Johnson
• www.LANews9.com | Lisa Johnson story
• www.LANews9.com | Lisa Johnson story
• www.LATribuneNews.com | Mary Steadman story
• www.LiveOn7.com | Jessica Meyer story
• www.Local-Tribune.com | Nicole Steadman story
• www.LocalGazetteNews.com | MarkSwiffer
• www.LocalHearld.com | Mary Steadman story
• www.LocalJobsNews.com | Ann Steadman story
• www.LocalNews17.com | Mary
• www.LocalTelegraph.com
• www.LocalTribuneNews.info | Mary Steadman
• www.LondonJournalNews.com | Mary Steadman story
• www.LondonMetroNews.com
• www.LondonTribuneNews.com
• www.Los-Angeles-Daily.com | Mary Steadman story
• www.Los-Angeles-Gazette.com | Maria Rodriguez story
• www.Los-Angeles-Tribune.info | Sarah Wilmington story
• www.Los-Angeles-Weekly.com | Mary Steadman story
• www.LosAngeles-Tribune-News.com | Mary Steadman story
• www.LosAngeles-Tribune.com | Mary Steadman story
• www.LosAngeles-Weekly.com | Mary Steadman
• www.LosAngelesDailyGazette.com | Mary Steadman story
• www.LosAngelesDailyTribune.com | Karen Brown story
• www.LosAngelesDispatch.com | Mary Steadman story
• www.LosAngelesFinanceNews.com | Mary Steadman story
• www.LosAngelesNews7.com | Mary Steadman story
• www.LosAngelesSun.net | Mike Richardson story
• www.LosAngelesTribuneNewsMary Steadman story
• www.LosVegasFinanceNews.com | Mary Steadman
• www.LVNewsToday.com | Jeremy and Sheila Jordan story
• www.MakeFastCashFromHome.com | Mary Steadman story
• www.ManchesterGazettenews.com
• www.ManchesterGazetteNews.com
• www.MariasMoneyBlog.com | Mary Steadman story
• www.MarisMoneyBlog.com | Mary
• www.Marks-Blog.com | Marie Thompson story
• www.MarylandFinanceNews.com | Omar Wilkinson story
• www.MaryMakesTheNews.com | Mary Steadman story
• www.MemphisGazetteNews.com
• www.MemphisTribuneNews.com | Debra Clark story
• www.Miami-Gazette.com | Mary Steadman story
• www.Miami5News.com | references LocalHearld.com
• www.MiamiCityPost.com | Mary Steadman story
• www.MiamiCityPostToday.com | Mary Walters story
• www.MiamiFinancePost.com | Mary Steadman story
• www.MiamiGazetteNews.com
• www.MiamiJobJournal.com | Mary Steadman story
• www.MiamiSunSentinelNews.com
• www.MiamiTribuneNews.net
• www.MidTownFinancialNews.com | Mary Steadman story
• www.MikeMakesMoreMoney.com | Maria Summers story
• www.MissoulaDailyNews.com | Mike Richardson story
• www.MktFinanceNews.com | Amber Westman story
• www.MomsWorkNews.com | Mary Steadman story
• www.MoneyOnlineRoi.com | Jerry Reynolds story
• www.MoneySecretBlog.com | Louise Biggs story
• www.MoneyShell.com | Jerry Reynolds
• www.Monthly-Times.org | Sarah Johnson story
• www.My-Daily-Herald.com | Mary Steadman story
• www.MyGlitsy.com | Mary Steadman story
• www.MyGoogleCash.info | Mike Stanley
• www.MyLocalJobNews.com | Richard Tucker story
• www.MyLocalTribune.com | Mary Steadman story
• www.MyLocalTribune.net | Mary Steadman
• www.MyOnlineWealthReviews.com | Mary Steadman story
• www.NaperVilleTimes.com
• www.NashvilleChronicle.com
• www.NastyOrNice.com | Mary Steadman story
• www.Nation-Wide-Jobs.com
• www.National-News-Gazette.com | Mary Steadman story
• www.National-News-Gazette.com | Mary Steadman story
• www.NationalEmploymentNews.com | Mary Steadman story
• www.NationalEmploymentNews.info | Mary Steadman story
• www.NationalJobDigest.com | Kathleen Steadman
• www.NationalJobDigest.info | Kathleen Steadman story
• www.NationalNews5.com | Charlie Thompson story
• www.Net-News-Daily.com | States Advertisement
• www.Net-NewsDaily.com
• www.NetCashDaily.net | Mary Steadman story
• www.NetCityReviews.com
• www.NetGazetteNews.com
• www.NetNews-Daily.com | Josh Parker
• www.New-York-Gazette.com | Mary Rodriguez
• www.New-York-Tribune.com
• www.NewJerseyDaily.com
• www.NewJobWithGoogle.com | Mary
• www.NewOnTheNews.com | Sarah Wilmington story
• www.News-Net-Daily.com | Richard Tucker story
• www.News3Daily.com
• www.News3Insider.com | Mary's story
• www.News4Online.net | Mary's story
• www.News4Show.com | Mary
• www.News5Local.com
• www.News5Local.com | Mary Steadman
• www.News5Online.net
• www.News6Online.info | Mary Steadman story
• www.News6Today.com | Charlie Steadman story
• www.News9At6.com | Jennifer Pallin story
• www.News9At7.com | Jennifer Pallin story
• www.News9At9.com | Lisa Johnson story
• www.News9At11.com | Jennifer Pallin story
• www.News9Austin.com
• www.News9Sentinel.com | Lisa and Gary Johnson Story
• www.News9Tonight.com | Frank Goldman story
• www.News15Today.com | Mary Steadman story
• www.News16Today.com | Mary Steadman story
• www.News17Today.com | Mary Steadman story
• www.News18.TV | Maria Thompson story
• www.News19.org | Mary Steadman story
• www.News88.org | Maria Gonzales story
• www.NewsAtChannel9.info | Lisa Johnson story
• www.NewsChannelOnline.net
• www.NewsJournal18.com | Mary Steadman story
• www.NewsLine11.com | Debbie Jenkins story
• www.NewsLine17.com | Eva Steadman story
• www.NewsLine46.com
• www.NewsLine47.com | Eva Steadman story
• www.NewsPostDaily.com | Mary Steadman story
• www.NewsPostDaily.com | Mary Steadman story
• www.NewsSpecialPromotions.com | MarkMartin
• www.NewsThatMatters.net | Mary Steadman story
• www.NewsTV5.com | Eva Steadman story
• www.NewYork-DailyNews.com | Mary Steadman story
• www.NewYork-FinancialNews.com | Cindy Peterson story
• www.NewYork-Tribune.com
• www.NewYork-Tribune.net | Mary Steadman story
• www.NewYorkDailyHerald.com | Craig Wilsons tory
• www.NewYorkDailyWeb.com | Mary Steadman story
• www.NewYorkFinanceNews.com | Mary Steadman story
• www.NewYorkGazetteNews.com | Mary Steadman story
• www.NewYorkGlobalNews.com | Mary Steadman story
• www.NewYorkHerald.com
• www.NewYorkMinuteNews.com
• www.NewYorkNewsAt9.com | Lisa Johnson story
• www.NewYorkNewsAt9.com | Lisa Johnson story
• www.NewYorkNewToday.com
• www.NewYorkPostHearld.com | Mary Steadman story
• www.NewYorksNews9At6.com | Lisa Johnson story
• www.NewYorksNews9At6.com | Lisa Johnson story
• www.NJGazette.com
• www.NorthMiamiGazette.com
• www.NorthStarTribune.com | Mary Kate-Livingston
• www.NorthWest-News.com | Mary Steadman story
• www.Nu-New.com | Mary Steadman story
• www.NY-Times-News.com
• www.NY-Tribune.net
• www.NYC-Tribune.com
• www.NYFinanceNews.com | Mary Steadman story
• www.NYGazetteNews.com | Mary Steadman story
• www.NyGuardian.com
• www.NYGuardianOnline.com
• www.NYNewsandReports.com | Laura Steadman story
• www.OaklandGazette.com | Mary Steadman story
• www.OfficialOnlineBusinessreviews.com | Mary Steadman story
• www.OfficialOnlineBusinessReviews.com | Melissa Bennett story
• www.OfficialTwitterJob.com | Mary Steadman story
• www.OhioBusinessNews.com | Zac Bradley
• www.Online-Chronicles | Mary Steadman story
• www.Online-Gazette.com
• www.Online-Herald.com | Shareese Jackson story
• www.Online-Job-News.com | Mary Steadman story
• www.Online-Jobs-Journal.com | John Thibeault story
• www.Online-Money-Journal.com | Mary Steadman story
• www.Online-Newspaper.co.cc | Maria Summers story
• www.Online-Weekly-News.com | Mary Summers story
• www.OnlineCashReviews.info | Sarah Stanley story
• www.OnlineDailyGazette.com | Mary Steadman story
• www.OnlineGazette.com | Sarah Myers story
• www.OnlineGazetteNews.com | Mary Steadman story
• www.OnlineInquirer.us
• www.OnlineInquisitor.us | Debbie Firestone story
• www.OnlineJobNews.com | Mary Steadman story
• www.OnlineJobsJournal.com | Mary Steadman story
• www.OnlineJobsNews.com | Mary Steadman story
• www.OnlinePressDaily.com | Debbie Jackson story
• www.OnlineTribune.us | Debbie Firestone story
• www.OrangeCountyReporterNews.com | Mary Ann Bulger,Married to Gary
• www.Orlando-Tribune.com | Mary Steadman story
• www.OrlandoGazetteNews.com | Mike Steadman story
• www.OrlandoInquirer.com
• www.OrlandoWebTimes | Mary Steadman story
• www.OrlandoWebTimes | Mary Steadman story
• www.Ottawa-Times.com | Mary Steadman story
• www.Ovuw.com | Mary Steadman story
• www.PACourierNews.com | AnneMariestory
• www.ParttimeOnlineCash.com | Jennifer Pallin story
• www.Philadelphia-Herald.com
• www.PhiladelphiaCityPost.com | Mary Williams
• www.PhiladelphiaGazette.com | Dan & Lisa Raymond,2Kids
• www.PhiladelphiaMorningNews.net | Mike Richardson story
• www.PhillyGazette.com | MaryHayesstory
• www.PittsburghTimesNews.com | Mary Steadman story
• www.Poll-Discovery.com | Mary Steadman story
• www.PollsNPrizes.com | Mary Steadman story
• www.PostAdsOnGoogle.com | EricHoeffner
• www.PostJuly.com | Maria Summers story
• www.PrimeNews9.com | Lisa Johnson story
• www.ProAuctionUpdate.com
• www.ProfitsBiz.info | Ana Steadman story
• www.PubPaper.com | Carol Fergusonstory
• www.Quality-Forever-Marketing.com | Maria Summers story
• www.ReadSomeNews.com | Mary Steadman story
• www.Real-Success-Stories.com | Jack Waterman
• www.Recession-Proof-Jobs.info
• www.RecessionMoneySystem.com | Mary Steadman story
• www.ReligionNews5.org | redirects to The Monday News.org
• www.ReviewsTimes.com
• www.RingToneMyCell.com | Mike Stanley story
• www.RunMyBusinessOnline.com | Mary Steadman story
• www.San-Francisco-Tribune.com | Sabrina Mercer story
• www.Sandiego-Tribune-News.com | Mary Steadman story
• www.SanDiego-Tribune.com | Mary Steadman
• www.SanDiegoBusinessObserver.com | Jenny Anderson story
• www.SanFrancisco-Tribune.com | Mary Steadman story
• www.SanFranCiscoCityHearld.com | Mary Steadman story
• www.SanFranciscoGazette.com | Mike Jacobson
• www.SanJose-Herald.com | Mary Steadman story
• www.SanJose-Times.com | Mary Steadman story
• www.Seattle-Tribune.com | Neal Anderson Married
• www.SeattleChronicleNews.com | Mary Steadman story
• www.SeattleGazetteNews.com | Mary Steadman
• www.SeattlePostDaily.com
• www.SelfWorkhome.com | Mary Steadman story
• www.SentinelMonthly.com | Shelly Sanders story
• www.Serene-News.com | Mary Steadman story
• www.ServFuss.com | Mary Steadman story
• www.SF-Tribune.com | Mary Steadman story
• www.sfbaynewsgazette.com | Mary Steadman story
• www.Simple-Money.org | Maria Gonzales story
• www.SportsFanWeekly.com | Kevin Wilson story
• www.StanfordDailyNews.com | Teresa
• www.StephenHerald.com | Paul
• www.StLouisGazetteNews.com | Mary Steadman
• www.StStephenTimes.com | Paul
• www.SunChronicleTimes.com
• www.SunCountyTimes.com | Sharon Freeman
• www.SunshineTribune.com | Laura Steadman story
• www.SydneyNewsGazette.com
• www.Tech-News-Daily.com
• www.TechWrap.org | Mary Steadman story
• www.TexanTribune.com | Robby Andrews story
• www.The-Chicago-Tribune.com | Lauren Sanders
• www.The-Courier-Chronicle
• www.The-Daily-Dispatch.com | Paul Steadman story
• www.The-Daily-Herald.com | Mary Steadman story
• www.The-Daily-Reporter.com | Mary Steadman story
• www.The-Daily-Tribune.com | Mary Steadman story
• www.The-Miami-Herald.com | Mike Steadman
• www.The-NewYork-Tribune.com | Mary Steadman story
• www.The-Seattle-Tribune.com | Mary Steadman story
• www.The-Times-Colonist.com | MaryWhitmorestory
• www.The-Tribune-Weekly.com | Maria Summers story
• www.The-Weekly-Times.com | Maria Summers story
• www.The-WeeklyTimes.com | Mary Steadman story
• www.TheBostonChronicle.com | Mary Steadman
• www.TheBostonChronicles.com | Mary S.Story
• www.TheBostonTribuneToday.com
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Ask the Editor: "What city is our fake newspaper from again?"

One thing I noticed about the fake newspapers is they sometimes forget which city they operate out of, such as…

The Washington Chronicle providing of course the St. Louis Daily News!

Washington or Saint Louis - who are we?

Or…

The "NY Times News" serving of course…Miami!

The New York Times of Miami?

Related:

• Top ten recommended home businesses
• "Make Money Posting Links on Google Scam".
• Directory of Fake Blogs (over 1000 served!)
  

The crisis of the past 20 months has exposed critical gaps and weaknesses in our financial regulatory system. As risks built up, internal risk management systems, rating agencies and regulators simply did not understand or address critical behaviors until they had already resulted in catastrophic losses. Those failures have caused a dramatic loss of confidence in our financial institutions and have contributed to a severe recession.

Last March, Secretary Geithner laid out new regulatory rules of the road to ensure we never face a crisis of this magnitude again. An essential element of reform is the establishment of a comprehensive regulatory framework for over-the-counter derivatives, which under current law are largely excluded or exempted from regulation.

As the AIG situation has made clear, massive risks in derivatives markets have gone undetected by both regulators and market participants. But even if those risks had been better known, regulators lacked the proper authorities to mount an effective policy response.

Today, to address these concerns, the Obama Administration proposes a comprehensive regulatory framework for all Over-The-Counter derivatives.

Moving forward, the Administration will work with Congress to implement this framework and bring greater transparency and needed regulation to these markets. The Administration will also continue working with foreign authorities to promote the implementation of similar measures around the world to ensure our objectives are not undermined by weaker standards abroad.

Objectives of Regulatory Reform of OTC Derivatives Markets

• Preventing Activities Within The OTC Markets From Posing Risk To The Financial System – Regulators must have the following authority to ensure that participants do not engage in practices that put the financial system at risk:
• The Commodity Exchange Act (CEA) and the securities laws should be amended to require clearing of all standardized OTC derivatives through regulated central counterparties (CCP):

• • CCPs must impose robust margin requirements and other necessary risk controls and ensure that customized OTC derivatives are not used solely as a means to avoid using a CCP.

• • For example, if an OTC derivative is accepted for clearing by one or more fully regulated CCPs, it should create a presumption that it is a standardized contract and thus required to be cleared.

• All OTC derivatives dealers and all other firms  who create large exposures to counterparties should be subject to a robust regime of prudential supervision and regulation, which will include:

• • • Conservative capital requirements
    • Business conduct standards
    • Reporting requirements
    • Initial margin requirements with respect to bilateral credit exposures on both standardized and customized contracts
• Promoting Efficiency And Transparency Within The OTC Markets — To ensure regulators would have comprehensive and timely information about the positions of each and every participant in all OTC derivatives markets, this new framework includes:

• Amending the CEA and securities laws to authorize the CFTC and the SEC to impose:

• • • Recordkeeping and reporting requirements (including audit trails).
    • Requirements for all trades not cleared by CCPs to be reported to a regulated trade repository.
      • CCPs and trade repositories must make aggregate data on open positions and trading volumes available to the public.
      • CCPs and trade repositories must make data on individual counterparty's trades and positions available to federal regulators.
    • The movement of standardized trades onto regulated exchanges and regulated transparent electronic trade execution systems.
    • The development of a system for the timely reporting of trades and prompt dissemination of prices and other trade information.
    • The encouragement of regulated institutions to make greater use of regulated exchange-traded derivatives.

• Preventing Market Manipulation, Fraud, And Other Market Abuses The Commodity Exchange Act (CEA) and securities laws should be amended to ensure that the CFTC and the SEC have:

• • Clear and unimpeded authority for market regulators to police fraud, market manipulation, and other market abuses.
  • Authority to set position limits on OTC derivatives that perform or affect a significant price discovery function with respect to futures markets.
  • A complete picture of market information from CCPs, trade repositories, and market participants to provide to market regulators.

• Ensuring That OTC Derivatives Are Not Marketed Inappropriately To Unsophisticated Parties Current law seeks to protect unsophisticated parties from entering into inappropriate derivatives transactions by limiting the types of counterparties that could participate in those markets.  But the limits are not sufficiently stringent.

• The CFTC and SEC are reviewing the participation limits in current law to recommend how the CEA and the securities laws should be amended to tighten the limits or to impose additional disclosure requirements or standards of care with respect to the marketing of derivatives to less sophisticated counterparties such as small municipalities.

###

REPORTS

• Letter

United States Attorney Julia C. Dudley announced today that John Mark Donnelly, age 52, of Crozet, Virginia, pled guilty in the United States District Court for the Western District of Virginia in Charlottesville today to an information charging him with numerous illegal activities related to a Ponzi scheme that bilked victims of more than $5 million.

Donnelly, who was arrested on a criminal complaint March 11, 2009, today waived his right to indictment and instead entered a guilty plea to a four-count information. The defendant pled guilty to one count of wire fraud, one count of securities fraud, one count of fraud in connection with futures contracts, and one count of impeding the administration of the internal revenue laws.

“John Donnelly looked his friends, neighbors, co-workers and strangers in the eye and lied to them. He lied to them and then he took their money, in some instances their life savings. He did this knowing that in all liklihood they would never see that money again. And he did it all in the name of greed, to line his own pockets and live a lavish lifestyle,” United States Attorney Julia C. Dudley said today. “However, like all Ponzi schemes, the house of cards, built on lies, can only stand for so long. When the money ran out and investors started asking questions, Mr. Donnelly was exposed for what he is, a fraud.”

According to information entered into the record today in U.S. District Court by Assistant United States Attorney Ronald Huber, Donnelly, through numerous corporations and partnerships that he had established, devised a scheme to defraud and obtain money from investors through false pretenses.

Specifically, Donnelly devised and marketed a complex securities and futures market trading strategy and told investors he would be investing their money using this strategy. However, the money received by Donnelly was almost never traded and was actually distributed to other investors.

In order to maintain the scheme, Donnelly sent monthly statement to investors showing fictitious returns. The defendant also sent annual 1099-INT, 1099-MISC and K-1 tax forms to investors. These forms caused many investors to pay income taxes on their fictitious investment returns.

More than 30 investors entrusted more than $5 million to Donnelly between 1998 and 2009. At the time of his March 11, 2009 arrest, the defendant was in the process of rasing additional funds from new investors based on fictitious returns previously reported to defrauded investors.
The maximum penalty faced by the defendant is 48 years incarceration and/or a fine of up to $5,755,000.

The investigation of the case was conducted by the Federal Bureau of Investigation, the United States Department of Justice Tax Division, the Internal Revenue Service, the Security Exchange Commission and the Commodities Future Trading Commission. Assistant United States Attorneys Stephen Pfleger and Ronald Huber are prosecuting the case for the United States, they are being assisted by Department of Justice Tax Division Trial Attorney Gregory Bockin.

GREENBELT, MD—Charlotte Melissa Josephine Hardmon, age 39, of Bowie, Maryland, pleaded guilty today to conspiracy to commit wire fraud in connection with her participation in a massive mortgage fraud scheme which promised to pay off homeowners’ mortgages on their “Dream Homes,” but left them to fend for themselves, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

“Our investigation is continuing,” said U.S. Attorney Rod J. Rosenstein. “We aim to hold all perpetrators accountable and recover any remaining proceeds of the scheme.”

According to her plea agreement, beginning in 2005, co-conspirators targeted homeowners and home purchasers to participate in a purported mortgage payment program called the “Dream Homes Program.” In exchange for a minimum of $50,000 initial investment and an “administrative fee” of up to $5,000, the conspirators promised to make the homeowners’ future monthly mortgage payments, and pay off the homeowners’ mortgage within five to seven years. Dream Homes Program representatives explained to investors that the homeowners’ initial investments would be used to fund investments in automated teller machines (ATMs), flat screen televisions that would show paid business advertisements and electronic kiosks that sold goods and services. To give investors the impression that the Dream Homes Program was very successful, Metro Dream Homes spent hundreds of thousands of dollars making presentations at luxury hotels such as the Washington Plaza Hotel in Washington, D.C., the Marriott Marquis Hotel in New York, New York and the Regent Beverly Wilshire Hotel in Beverly Hills, California.

In February 2006, the Dream Homes Program added a second program called “POS Dream Homes” that offered similar promises of paying off investor mortgages in five to seven years in exchange for an upfront investment of $50,000 or more. Collectively, these programs had offices in Maryland, the District of Columbia, Virginia, North Carolina, New York, Delaware, Florida, Georgia, and California. The Dream Homes Program successfully recruited over 1,000 investors who invested over $70 million.

Hardmon was hired in December 2006 at an annual salary of $200,000 as a business consultant for digital advertising for Metro POS. Her salary was two and one-half times her prior salary as a marketing executive in Boston, Massachusetts. Hardmon received a Christmas bonus of $16,000 just two weeks after she began work.

Shortly after starting work, Hardmon saw that Metro POS had little organization. Personnel decisions as to hiring and salary were often made without consulting division heads such as Hardmon. Hardmon’s sales staff was being paid on salary, despite the fact that the sales staff had generated no material revenue.  Hardmon imposed a commission structure and laid off most of the staff in her division in an attempt to improve the disorganization.

Hardmon bought a home for $899,000 in June 2007 and enrolled her home in the Dream Homes Program.

At no time throughout her employment did Hardmon see any evidence of material revenue being generated from the digital advertising. She saw no evidence of any revenue being generated by any division of the company.

Hardmon attended a meeting of Metro Dream Homes senior executives in June 2007 in which they were told that the company was accumulating much more debt than revenue, and that the companies which Metro Dream Homes had been in “partnership” with also were generating no revenue.

After a cease and desist order was issued by a Maryland court against Metro Dream Homes, Hardmon participated in meetings in which investors were told that the company’s legal difficulties were the result of either misunderstandings or racial animus against company leaders. Hardmon knew the purpose of the meetings was to calm investor fears. She participated in these meetings, despite her knowledge that the company was generating no revenue. In a meeting on September 8, 2007, Hardmon stated that the digital advertising side of the company was viable. In addition, she stood by and gave audible support while senior Metro Dream Homes employees stated that the company was doing well.

From December 2006 to October 2007 while Hardmon was employed by Metro POS, she received approximately $167,000 in salary and one mortgage payment.

Hardmon faces a maximum sentence of 30 years in prison and a fine of $1 million or twice the value of the transaction, whichever is greater. U.S. District Judge Roger W. Titus scheduled sentencing for September 24, 2009, at 8:30 a.m. As part of her plea agreement, Hardmon has agreed to pay restitution for the full amount of the victims’ losses.

Carole Nelson, age 50, of Washington, D.C., pleaded guilty to money laundering on April 28, 2009 in connection with this scheme. Judge Titus scheduled her sentencing for August 6, 2009, at 8:30 a.m. As part of her plea agreement, Nelson has agreed to forfeit two homes in Virginia and Washington, D.C.

This prosecution is being brought jointly by the Maryland and Washington, D.C. Mortgage Fraud Task Forces, which are comprised of federal, state and local law enforcement agencies in Maryland, Washington, D.C. and Northern Virginia. The Task Forces were formed to promote the early detection, identification, prevention and prosecution of various kinds of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Forces, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and help to ensure the integrity of the mortgage market and other credit markets. Information about mortgage fraud prosecutions is available on the internet at http://www.usdoj.gov/usao/md/Mortgage-Fraud/index.html.

United States Attorney Rod J. Rosenstein praised the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation, the Maryland Attorney General’s Office – Securities Division and the Federal Deposit Insurance Corporation – Office of Inspector General for their investigative work.  Mr. Rosenstein thanked Assistant U.S. Attorneys for the District of Maryland Jonathan C. Su and Bryan E. Foreman, who are prosecuting the case.

Two Missouri Brothers Among Those Indicted in $4 Million Nationwide Spamming Conspiracy Millions of E-Mail Addresses Illegally Harvested from Computers at 2,000 Schools

KANSAS CITY, MO—Two Missouri men and their company are among those indicted by a federal grand jury in a nationwide e-mail spamming case that victimized more than 2,000 colleges and universities in a scheme that sold more than $4 million worth of products to students, announced Matt J. Whitworth, Acting United States Attorney for the Western District of Missouri.

Amir Ahmad Shah, 28, of St. Louis., his brother, Osmaan Ahmad Shah, 25, of Columbia, Mo., their business, I2O, Inc., Liu Guang Ming, a citizen of China, and Paul Zucker, 55, of Wayne, N.J., were charged in a 51-count indictment returned under seal by a federal grand jury in Kansas City, Mo., on April 23, 2009. That indictment was unsealed and made public today upon the arrests and initial court appearances of Amir and Osmaan Shah.

“Nearly every college and university in the United States was impacted by this scheme,” Whitworth said. “Illegal hacking and e-mail spamming wreaks havoc on computer networks. These schools spent significant funds to repair the damage and to implement costly preventive measures to defend themselves against future intrusions. We take computer crimes seriously and will aggressively prosecute those who violate the federal CAN-SPAM Act.”

The federal indictment alleges that the spam e-mail scheme targeted colleges and universities across the United States. The Shahs allegedly developed e-mail extracting programs, which they used to illegally harvest more than eight million student e-mail addresses from more than 2,000 colleges and universities. They allegedly used this database of e-mail addresses to send targeted spam e-mails selling various products and services to those students. They conducted at least 31 of these spam e-mail marketing campaigns directed at students, the indictment says, selling more than $4.1 million worth of products.

According to the indictment, the Shahs often initiated their spam campaigns, sending millions upon millions of spam e-mail messages through the computer network at the University of Missouri, where Osmaan Shah is a student. Osmaan Shah either connected to the Internet via the campus wireless Internet service or connected directly to the network through an ethernet cable connection in a classroom or other campus building. The university’s network sustained damage from the large amount of network resources and bandwidth used during the transmission of millions of spam e-mail through its system. The university also expended a substantial amount of time, money and resources to respond to and repair problems caused by the spam e-mail campaigns and to protect and defend its network from future spam e-mail campaigns.

“The University of Missouri has worked closely alongside our office throughout this investigation,” Whitworth said. “We appreciate their partnership and cooperation, which has been instrumental in bringing this case to indictment.”

As part of the conspiracy, the indictment says, the Shahs used false and misleading information in the spam e-mails, suggesting they had an association with the university or college that the student receiving the spam attended. They allegedly used fictitious name and purported to be “campus representatives” from the college of the student receiving the spam. They also falsely claimed that the businesses who manufactured or sold the products in the spam e-mail were “alumni-owned” companies.

The Shahs allegedly made money from these spam e-mail campaigns in one of two ways: by earning a “referral fee” for sending spam e-mail for products and services sold by others, or by buying products in bulk themselves and then selling those products.

The Shahs hired several employees – who are not named in the indictment, but identified as unindicted co-conspirators – to help develop the e-mail extraction program and create the Web sites to market and sell the products and services advertised by their spam e-mails. The Shahs allegedly used mass mailing software programs to materially falsify e-mail header information and to avoid spam filters by rotating subject lines, reply addresses, message content and URLs, and other information in the e-mail header and e-mail body content.

The Shahs allegedly created dozens of identical Web sites for each campaign (often more than 60 Web sites per campaign) in order to divide, obscure, and conceal the source of the spam e-mails, and to attempt to keep the source of their spam e-mails from being blocked by spam filters. These Web sites sold products such as digital cameras, MP3 players, magazine subscriptions, spring break travel offers, pepper spray and teeth whiteners. More recently, the indictment says, the Shahs began sending spam e-mails soliciting students to subscribe to their social networking Web site, www.noog.com.

According to the indictment, the Shahs initially set up hosting in China, which provided them anonymity as to the origins of the spam e-mails and shielded them from complaints from the recipients of their spam. Ming allegedly partnered with the Shahs as early as 2002 and rented them access to a network of 40 servers under his control in China for hosting Web sites and sending spam e-mail. Ming also provided hosting and mailing services to other spammers, the indictment says, with the Shahs acting as the middle-man in the transactions. The Shahs solicited customers for what was advertised as “Offshore Bullet Proof Hosting” and collected the money, which they sent to Ming. Ming performed the network administration duties in China, and worked to keep the Web sites operational.

After learning of the criminal investigation into their activities in 2005 when search warrants were executed on their residence and business, the indictment says, the Shahs modified their scheme. Because officials at the University of Missouri had identified them as the source of the spam e-mails, they allegedly removed the e-mail addresses of students of the University of Missouri from their database and continued to send their spam e-mail to all of the other colleges and universities. According to the indictment, they began leasing hosting and mail services from numerous companies for each subsequent spam campaign in order to conceal the source and size of their spam e-mail campaigns.

Zucker, allegedly a spammer sending spam e-mail for his own products, partnered with the Shahs when they were leasing space on Ming’s servers in China. Zucker is alleged to have bought and sold proxies (computer servers that allow clients to make indirect network connections to other computers in order to camouflage the originating source of an e-mail) with the Shahs.

Each of the defendants is charged with participating in the conspiracy to engage in an unlawful spam e-mail operation since Jan. 1, 2004. In addition to the conspiracy charge, the indictment also contains the following charges:

Fraud in Connection with Computers

The Shahs are charged in each of five counts of computer hacking related to the use of e-mail extractor programs to unlawfully harvest student e-mail addresses.

Each of the defendants is charged in one count of aiding and abetting each other to unlawfully use the University of Missouri computer network to send spam e-mail. In 2004, the Shahs conducted at least seven spam e-mail campaigns utilizing the university’s network.

Fraud in Connection with E-mail

All of the defendants are charged in each of nine counts of aiding and abetting each other to access a protected computer without authorization and transmit multiple commercial e-mails.

All of the defendants are charged in each of nine counts of aiding and abetting each other to materially falsify header information in multiple commercial e-mails.

The Shahs and I2O are also charged in each of 26 counts of aiding and abetting each other to access a protected computer without authorization and transmit multiple commercial e-mails with the intent to deceive or mislead the recipients (or any Internet access service) about the origin of those messages.

Forfeiture Allegation

The indictment also contains a forfeiture allegation, which would require the defendants to forfeit to the government $4,191,966, representing the proceeds obtained as a result of the offense, for which the defendants are jointly and severally liable, as well as two residential properties in St. Louis and a 2001 BMW belonging to Amir Shah and a residential property in Columbia and a 2002 Lexus sedan belonging to Osmaan Shah.

CAN-SPAM Act

In 2003, Congress passed the CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing) Act, making fraud in connection with electronic mail a federal crime. Spam refers to unsolicited bulk commercial e-mail. Under federal law, it is illegal to send multiple commercial e-mails if the sender accesses a computer system without authorization, transmits the e-mails in such a way as to hide their origin, or materially falsifies the header information in the messages.

Whitworth cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney Matthew P. Wolesky. It was investigated by the FBI.

LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, announced that ARTHUR G. NADEL, 76, of Sarasota, Florida, was indicted today on securities, mail, and wire fraud charges stemming from a ten-year scheme to defraud investors out of millions of dollars. NADEL previously was arrested in this case on January 27, 2009. As alleged in the fifteen-count Indictment filed in Manhattan federal court:

From 1999 through January 2009, NADEL perpetrated a scheme to defraud investors in six different funds: (a) Victory IRA Fund Ltd.; (b) Scoop Real Estate LP; (c) Victory Fund Ltd.; (d) Valhalla Investment Partners; (e) Viking Fund, LLC; and (f) Viking IRA Fund, LLC (collectively the "Funds").

NADEL solicited prospective clients to invest in the Funds by making various misrepresentations about the performance and value of the Funds, including that the net asset value of each of the Funds was tens of millions of dollars. NADEL also claimed to investors that his purchases and sales of securities in the Funds had generated cumulatively more than $271 million in gains. In truth, NADEL’s trading resulted in an overall net loss in the Funds.

To further the scheme, NADEL created and caused others to create false and fraudulent client account statements, among other documents, that reflected fictitious positive returns consistent with the returns NADEL represented to investors he had achieved.

Based, in part, on NADEL's false statements, from 1999 through January 2009, more than 350 clients invested more than $360 million with the Funds. NADEL received tens of millions of dollars in management fees and performance incentive fees and, moreover, transferred and caused to be transferred millions of dollars in investor money in the Funds to accounts and entities that he owned and/or controlled. The investors in the Funds did not authorize NADEL to make these transfers, and NADEL failed to disclose them.

NADEL is charged with six counts of securities fraud, one count of mail fraud, and eight counts of wire fraud. Each securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The mail fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. Each wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. If found guilty on all counts, NADEL faces a combined statutory maximum sentence of 280 years’ imprisonment. NADEL is also subject to mandatory restitution. The Indictment includes forfeiture allegations which would require NADEL to forfeit the amount of money involved in the charged crimes.

NADEL is currently detained pending his meeting bail conditions set by United States District Judge DENISE L. COTE following NADEL's January arrest. NADEL is expected to be arraigned on the Indictment by United States District Judge JOHN G. KOELTL on April 30, 2009.

Mr. DASSIN praised the work of the Federal Bureau of Investigation, and thanked the United States Securities and Exchange Commission for its assistance. He added that the investigation is continuing.

Assistant United States Attorneys REED M. BRODSKY, MARIA E. DOUVAS, and JEFFREY ALBERTS are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Mariusz Debowksi pleaded guilty in U.S. District Court in Manhattan to conspiracy to aid another in filing false tax returns.  Between approximately 2000 and February 2005, Debowski conspired with others to falsify income tax returns through a fraudulent check cashing scheme for the owner of a corporation that was engaged in the business of providing maintenance and insulation services to New York Presbyterian Hospital (NYPH).  According to the charge, Debowski provided false documentation to co-conspirators indicating that he had performed construction services and received more than $2.3 million in checks from the co-conspirators as payment for the construction services.  Debowski cashed the checks but returned the bulk of the money to the co-conspirators in exchange for a fee.  The co-conspirators then took false deductions for those payments made to Debowski’s businesses.

“Those who illegally profit from their participation in fraudulent schemes will be vigorously prosecuted,” said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division.

The tax fraud conspiracy that Debowski is charged with carries a maximum penalty of five years in prison, three years of supervised release and a $250,000 fine.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

In April 2007, as part of the same investigation, Michael Theodorobeakos and two maintenance and insulation companies he co-owned – Monosis Inc. and STU Associates Inc.–  pleaded guilty to conspiring to rig bids on the supply of maintenance and insulation services to NYPH and Mount Sinai Medical Center (Mount Sinai).  In addition, Michael Vignola and Mister AC Ltd. pleaded guilty in November 2007, to conspiring to rig bids on heating, ventilation and air conditioning (HVAC) services provided to NYPH and paying kickbacks to former NYPH purchasing officials.  In April 2008, Aaron S. Weiner pleaded guilty for participating in a conspiracy wherein Weiner acted as a conduit in another million-dollar kickback scheme also involving one of the same former NYPH purchasing officials involved with the Vignola kickback schemes.

These charges arose from an ongoing federal antitrust investigation of fraud, bribery, tax-related offenses and bidding irregularities relating to contracts administered by the Facilities Operations Department and the Engineering Department at NYPH and the Engineering Department at Mt. Sinai.   The investigation is being conducted by the Antitrust Division’s New York Field Office, the FBI and the Internal Revenue Service Criminal Investigation’s New York Field Office.

Anyone with information concerning bid rigging, bribery, tax offenses or fraud related to contracts administered by the Facilities Operations Department at NYPH or the Engineering Departments at Mount Sinai or NYPH should contact the New York Field Office of the Antitrust Division at 212-264-9308 or the New York Office of the FBI at 212-384-4467.

A federal grand jury has charged Rocco DeSimone, of Johnston, with conning an inventor and defrauding investors with fraudulent claims about marketing three inventions.  DeSimone, who is about to complete a federal prison term for tax fraud, escaped from a minimum security facility in New Jersey in March 2008 after he learned that federal agents had executed a search warrant at his Johnston home.  He surrendered in Rhode Island three days later.

United States Attorney Robert Clark Corrente, Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation, and Susan Dukes, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, jointly announced a ten-count indictment charging DeSimone with mail fraud and money laundering.  The indictment was returned on March 11 in U.S. District Court, Providence.
Disk Shield, Drink Stik, Song Tube.

According to the indictment, DeSimone’s scheme involved the marketing of three inventions developed by two inventors.  One inventor developed the “Disk Shield” in 2006 as a protective shield for compact discs and DVDs.  In 2005, another inventor, who is also a physician, patented the “Drink Stik,” designed to allow individuals wearing protective gear to drink fluids without first having to remove the protective gear.  In 2006, the physician-inventor developed the “Song Tube,” designed as an improved version of a gastrointestinal medical tube.

According to the indictment, DeSimone falsely represented to the Drink Stik inventor that he personally knew the Chief Executive Officer of Fidelity Investments and claimed that the CEO had agreed to purchase the Drink Stik for millions of dollars.  In fact, according to the indictment, DeSimone had never met or even spoken with the Fidelity CEO.  DeSimone allegedly used this and other ruses to con the inventor into giving him part ownership of the company marketing the Drink Stik.

According to the indictment, DeSimone falsely represented to potential investors that Fidelity, Raytheon and/or Tyco International had offered to purchase the rights to the Drink Stik for millions of dollars.  DeSimone subsequently provided false explanations to investors concerning purported delays in receiving funds from Fidelity, Raytheon and Tyco, claiming, for instance, that the deals were delayed in company bureaucracy.

DeSimone allegedly obtained from investors in the Drink Stik about $1.2 million in funds and $4.9 million in other property and forgiven debts.  Among the property he allegedly obtained were expensive pieces of art and valuable Japanese artifacts.

According to the indictment, DeSimone convinced the physician-inventor that he could successfully market the Song Tube gastrointestinal device in exchange for an ownership interest in the Song Tube.  The inventor subsequently assigned the Song Tube patent to a company in which DeSimone had a 34 percent ownership.

The indictment alleges that DeSimone solicited investments in the Disk Shield by falsely representing that he owned the right to market it.  According to the indictment, DeSimone had no ownership interest in the Disk Shield and no authority to solicit investments.  DeSimone allegedly represented that Nintendo, Inc. and SONY Records, Inc. had offered millions of dollars for the Disk Shield, when neither company had made such an offer, according to the indictment.

According to the indictment, DeSimone made several false representations about the Drink Stik and Song Tube marketing campaigns to a California investor, who subsequently wired about $500,000 to a bank account held in the name of Rocco DeSimone’s wife.

The indictment charges DeSimone with nine counts of mail fraud.  It also charges him with money laundering for allegedly using about $180,000 of the money sent by the California investor to buy a Fort GT automobile.

An indictment is merely an allegation and a defendant is presumed innocent unless and until proven guilty.  In the event of a conviction, the maximum penalty for mail fraud is 20 years in prison and a $250,000 fine.  The maximum penalty for money laundering is ten years in prison and a fine of $250,000 or twice the amount of gain or loss.

The indictment also seeks the forfeiture of money and other assets that DeSimone allegedly derived from the scheme.  Among the assets:  motor vehicles, nine Japanese swords, and a 1915 painting by Pierre-August Renoir entitled “Paysage a’ Cagnes.”

DeSimone, 55, who is scheduled to be released from prison on March 21, is to be brought into U.S. District Court, Providence on Friday, March 20, to be arraigned on the indictment.

The Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation, conducted the investigation.  Assistant U.S. Attorneys Lee H. Vilker and John P. McAdams are prosecuting the case.

SACRAMENTO: Acting United States Attorney Lawrence G. Brown announced today that STEFAN WILSON, aka Steve Wilson, 45, of Folsom, has pleaded guilty to wire fraud and income tax evasion in connection with a fraudulent investment scheme which he conducted under the name CIC Investment Fund.  The guilty plea was entered before Senior United States District Judge Lawrence K. Karlton.

This case was investigated by the FBI and IRS Criminal Investigations.

According to the indictment, which was filed in March, 2008, WILSON raked in approximately $13 million from investors over a two year period.  In the plea agreement, WILSON admitted that he was able to collect this money by making false and fraudulent statements to investors.  Among other things, WILSON told investors that he had a long and successful history of investing in the stock market; that he could promise an 18-24% return whether the market was good or bad; and that he was aware that other promoters of the Fund were claiming that there was a reserve fund such that were the CIC Fund to sustain losses, there would still be sufficient funds to pay the promised return for up to three years.  In fact, WILSON did not have the track record of successful investing that he claimed, nor a reserve fund.

Many of the investors were encouraged to refinance their homes or use their life savings to come up with the $100,000 minimum investment that WILSON required to invest in the Fund.  As a result, many of WILSON’s victims have lost their homes or have been forced to come out of retirement and search for work in an uncertain economy.

According to other documents filed in the case, although WILSON placed approximately $6.5 million of investor funds into a brokerage account, he lost virtually all of it in bad stock trades.  Then, despite these staggering losses, WILSON continued to represent to investors that the fund was doing well and caused monthly statements and checks to be sent to investors showing that they were receiving the promised return, even after the CIC Fund lost 99.42% of its value.

The remainder of the investor money was left in a bank account that WILSON used to make lulling payments to investors and to pay for a lavish lifestyle, including a $400,000 down payment on his personal residence in Folsom and a $118,000 down payment on a Lamborghini.  Because WILSON did not declare any of this income on his 2006 tax return, he also pled guilty to filing a false income tax return for that year.

Acting U.S. Attorney Brown said: “The devastation that Wilson wreaked on hardworking people is heartbreaking and demonstrates why white collar crime has such a huge impact on the community.  Thanks to a thorough and timely investigation by the FBI and IRS, Wilson was stopped before he could do even more damage.”

Based on his plea, Wilson faces a maximum penalty of 23 years in prison.  Under the terms of the plea agreement, the United States is free to recommend any term of imprisonment up to the maximum.  According to Assistant U.S. Attorney R. Steven Lapham and Russell Carlberg, who are prosecuting the case, because of the devastating effect on the victims, they intend to ask the court for a very lengthy sentence.  However, the actual sentence will be determined at the discretion of the court after consideration of the Federal Sentencing Guidelines, which take into account a number of variables, and any applicable statutory sentencing factors.

Judge Karlton scheduled the matter for Judgment and Sentencing on May 27, 2009.