St. Louis, MO: Edward Levinson was indicted on bank fraud charges in connection with his construction business, resulting in more than $10 million in losses to banks and prospective home owners and subcontractors, United States Attorney Catherine L. Hanaway announced today.

According to the indictment, Edward A. Levinson was in the residential and commercial real estate construction and sale business, doing business under the name of Levinson Companies, a/k/a Wynncrest, Inc., Terra Vista, Inc., Belle Maison, Inc., and Levinson Building and Realty Corporation, among others. Levinson had construction lending relationships with Royal Banks of Missouri; First Bank; and Enterprise Bank and Trust. The purpose of the loans was initially to purchase and develop land and later construct residences for sale to the public.

Royal Banks of Missouri financed the Wynncrest/Terra Vista Projects’ land acquisition, development, and construction of residences at a Levinson project known as Wynncrest Phase I, St. Louis County, MO, in 2003,and two more Levinson projects known as Wynncrest Phase II, and Terra Vista, both in St. Louis County, in 2006.

Beginning in September 2007, Royal Banks of Missouri became uncomfortable with their loan exposure with Levinson and demanded that Levinson obtain a third party disburser of money to pay subcontractors on the construction of homes at Wynncrest Phase II and Terra Vista. At this time, Levinson had cash flow problems on his construction projects and attempted to obtain more financing initially from Royal Banks of Missouri and subsequently numerous financial institutions.

In November 2007, Royal Banks of Missouri hired an independent appraiser to re-appraise Wynncrest Phase II, and as a result of this appraisal Royal Banks of Missouri refused Levinson’s request for additional financing. Levinson then went to Enterprise Bank and obtained the additional financing for Wynncrest Phase II without the requirement of utilizing a third party disburser of loan money.

The indictment alleges that in early February 2008 Levinson refinanced two Wynncrest Phase II display homes through Enterprise Bank and Trust, reducing the loan debt to Royal Banks of Missouri. Enterprise also agreed to provide construction financing of pre-sold homes at Wynncrest Phase II up to a total of approximately $3,500,000.

However, in April 2008, Levinson obtained an additional $500,000 loan from Royal Banks of Missouri for the Wynncrest Phase II and Terra Vista Projects. During this time, at Royal Banks of Missouri’s request, Levinson sold two lots at Wynncrest Phase II to another builder for more than $200,000 each, reducing his debt to Royal Banks of Missouri and generating limited funds for working capital.

During this time, Levinson contracted numerous purchasers/buyers of Wynncrest Phase II and Terra Vista lots and homes built to specifications of the purchaser/buyers. In return, they paid Levinson a lot deposit and down payment earnest money for the construction of their homes. A number of these purchasers requested their money be placed in a escrow account, and in each instance Levinson refused. Levinson used these contracts to build homes to obtain financing to build the specific homes and pay subcontractors for the construction of these homes.

However, the indictment alleges that down payments/earnest money and construction loan money was used for other projects, other unrelated business interests, and other overhead expenses unrelated to the specific purposes of these monies. During the Wynncrest and Terra Vista developments financed by Royal Banks of Missouri and later Enterprise Bank and Trust, home buyers closed on homes where subcontractors later filed mechanics liens totaling in excess of $500,000. Some home buyers on the Wynncrest and Terra Vista developments failed to close on their contracted homes which were never completed and lost all their down payments for the expected construction of a Levinson home.

The Wynncrest/ Terra Vista Projects were foreclosed upon beginning October 2008 by Royal Banks of Missouri and Enterprise Bank and Trust resulting in losses of approximately $1,500,000 to Royal Banks of Missouri; approximately $1,000,000 to Enterprise Bank and Trust; approximately $300,000 to home buyers; and approximately $500,000 in subcontractor liens against banks and homeowners and home owners associations.

The indictment further alleges that in February 2007, Levinson closed on an $18,000,000 deal with First Bank to finance the land acquisition, development, and construction of homes at the Belle Maison Project. Similar to the Wynncrest Phase II / Terra Vista Projects home buyers would contract with Levinson to build/purchase homes giving him deposit money and down payments.

Again, Levinson would use these contracts to obtain loan money from First Bank to build a specific home, and again Levinson used deposit money/down payments and First Bank loan money for other purposes. Home buyers failed to obtain completed homes, did not close on these home contracts and lost their down payment money and other payments to Levinson for home construction.

Subcontractors also performed specific work and were not paid and First Bank lost loan money which was disbursed at Levinson’s direction for the construction of specific homes. In early December 2008, First Bank foreclosed resulting in losses of $8,000,000 on First Bank loans; approximately $241,000 to home buyers; and approximately $1,000,000 on subcontractor liens against First Bank.

Levinson, 49, Chesterfield, MO, was indicted by a federal grand jury late Thursday, on ten felony counts of bank fraud.

If convicted, each count of bank fraud carries a maximum penalty of 30 years in prison and/or fines up to $1,000,000. Restitution is mandatory.

Hanaway commended the work on the case by the Federal Bureau of Investigation, and First Assistant United States Attorney Michael W. Reap, who is handling the case for the U.S. Attorney’s Office.

The charges set forth in an indictment are merely accusations, and each defendant is presumed innocent until and unless proven guilty.

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Nora R. Dannehy, Acting United States Attorney for the District of Connecticut, announced that a federal grand jury in New Haven has returned a 15-count Indictment charging a Connecticut real estate developer, his business associate and two of his companies with conspiracy, financial institution fraud, bank fraud, wire fraud and money laundering.

The Indictment alleges that RICHARD R. GIROUARD, 54, of Norwalk, Connecticut and Stuart, Florida, was a real estate developer and home builder in Connecticut.  GIROUARD operated GIROUARD ASSOCIATES, INC. (“GIROUARD ASSOCIATES”) and RICHARD GIROUARD ASSOCIATES, LLC (“RGA”), formerly located in New Canaan and now of Greenwich, Connecticut.  PAUL A. MAYOTTE was the Chief Financial Officer of GIROUARD ASSOCIATES and a business confidant of GIROUARD’s.

The Indictment alleges that GIROUARD and MAYOTTE, along with GIROUARD ASSOCIATES and RGA, conspired with Kevin J. O’Keefe, formerly a Vice President at Fleet Bank, now Bank of America, in Hartford and with GIROUARD’s lawyer, Paul J. Aparo, to commit financial institution bribery, bank fraud, honest services fraud, and money laundering.  The Indictment alleges that the purpose of the conspiracy was for GIROUARD and MAYOTTE and the other co-conspirators to enrich themselves through the use of O’Keefe’s position at Fleet Bank by, among other things, corrupting the process by which Fleet Bank sold distressed loan assets, including using the confidential information of Fleet Bank to submit winning bids, and to conceal the conspiracy from Fleet Bank and others.  The Indictment alleges that, in return for O’Keefe’s corrupt assistance, GIROUARD and MAYOTTE paid O’Keefe and Aparo a total of  approximately $1.4 million.

The Indictment further alleges that GIROUARD and MAYOTTE and their co-conspirators created companies in order to submit bids on Fleet Bank distressed loans and to receive proceeds from the scheme.  They also acted to exclude bidders who they believed would submit competitive bids for distressed loans on which GIROUARD and MAYOTTE and their co-conspirators sought to submit the winning bid.  They are alleged to have set up a shell company called Lexington Associates for the purpose of receiving and distributing a portion of the profits from the scheme.

The Indictment alleges that GIROUARD and his companies, GIROUARD ASSOCIATES and RGA, made approximately $6 million in profits from the scheme.

The Indictment further alleges that GIROUARD and MAYOTTE engaged in another scheme by themselves to defraud an unwitting investor in one of the corrupt transactions with Fleet Bank (and later Bank of America) out of more than $400,000, and that they conspired further to launder that money.

GIROUARD and MAYOTTE are charged with two counts of conspiracy, which carries a maximum term of imprisonment of five years, on each count; two counts of financial institution bribery, which carries a maximum term of imprisonment of 30 years, on each count; one count of bank fraud, which carries a maximum term of imprisonment of 30 years; eight counts of money laundering, which carries a maximum term of imprisonment of 10 years, on each count, and two counts of wire fraud, which carries a maximum term of imprisonment of 20 years, on each count.  Several of these counts also carry a maximum fine of $12 million.

GIROUARD ASSOCIATES and RGA, are charged with one count of conspiracy, one count of bank fraud and two counts of financial institution bribery.  Each count carries a maximum term of probation of five years and a fine of up to $12 million.

The Indictment was returned on January 21.  Today, GIROUARD appeared before United States Magistrate Judge Donna F. Martinez in Hartford and pleaded not guilty to the charges against him and his companies.  MAYOTTE will be arraigned next week.

O’Keefe and Aparo have been charged separately.  Their cases are pending before United States District Judge Alvin W. Thompson in Hartford.

This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Eric J. Glover.

NEWARK – A Palisades Park man was sentenced today to 12 years in prison for orchestrating a bank fraud scheme involving millions of dollars of fraudulent home equity and business lines of credit, Acting U.S. Attorney Ralph J. Marra, Jr. announced.

U.S. District Judge Peter G. Sheridan also ordered Jacob Kim, 53, to make restitution in the amount of $10,485,114, representing the verifiable actual losses to the banks.

Kim pleaded guilty on July 28 to conspiracy to commit bank fraud.

Kim, who was president of American Macro Growth (AMG) in Palisades Park, was indicted in June 2007 along with four AMG employees and eight AMG clients. Kim was a fugitive from justice until he was arrested on May 5 while taking swings at the Alley Pond Golf Center in Queens, N.Y. The arrest capped off an intensive fugitive hunt that involved law enforcement personnel from the FBI, Federal Deposit Insurance Corporation and Bergen County Prosecutor’s Office.

At his plea hearing, Kim admitted that he engaged in a conspiracy with AMG employees and clients to fraudulently obtain millions of dollars in home equity and business lines of credit from at least 16 different lenders in northern New Jersey between February 2004 and November 2005. Kim specifically admitted receiving $59,519 in commission payments from one AMG client for assisting the client in obtaining lines of credit from 10 different banks, which totaled approximately $1.35 million, by using the same property as collateral for each of the loans. Kim also admitted that he obtained falsified income tax returns and submitted those returns to the banks on behalf of his clients. He further admitted instructing his employees in the means and methods of perpetrating the scheme.

Kim admitted that AMG and its clients executed the scheme by closing on multiple home equity lines of credit, or HELOCs, in a short period of time so that the earlier lenders’ security interests would not be publicly recorded at the time that later lenders closed on subsequent loans. The scheme effectively stripped lenders of security for the loans.

In sentencing Kim, Judge Sheridan noted that Kim drew more than 20 people into his scheme. The Judge stated that Kim “also drew his son and former wife into the scheme” which the Judge termed “reprehensible.” He labeled Kim the “ringleader” of an “outrageous scheme” and stated that he “conned financial institutions” and did so in a deliberate and calculated manner. The Judge also found that Kim “turned his crime into a business, rented space, recruited brokers” and did so for more than a year. He also stated that the “nature and circumstances of the offense are very serious.” The Judge also said that Kim instructed other employees of AMG to shred documents after learning of the FBI investigation and this reflected “a clear effort to destroy evidence and obstruct justice.”

Sixteen other individuals are scheduled to be sentenced in connection with the scheme between now and Jan. 7. They include four former AMG employees, 11 former clients, and Jacob Kim’s current wife, who pleaded guilty to helping Kim avoid arrest by law enforcement.

In formulating Kim’s sentence, Judge Sheridan included enhancements for obstruction of justice for the destruction of documents and computer evidence, and for the number of victims and Kim’s status as an organizer and leader of the fraud.

The victims of the scheme include Banco Popular, Bank of America, The Bank of New York, Citibank, Commerce Bank, Fleet Bank, JP Morgan Chase Bank, HSBC Bank, Hudson United Bank, North Fork Bank, PNC Bank, Sovereign Bank, Wachovia Bank, Washington Mutual Bank, Wells Fargo Bank and Countrywide Home Loans, Inc.

Marra credited Special Agents of the FBI, under the direction of Special Agent in Charge Weysan Dun, and the Federal Deposit Insurance Corporation, under the direction of Special Agent in Charge Gary Sherrill, with the investigation leading to the guilty pleas.

The government was represented by Assistant U.S. Attorney Bradley A. Harsch of the Criminal Division in Newark.

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Defense Counsel: Kenneth W. Kayser, Esq., Livingston, NJ

Specifically, PERDIGAO pled guilty to Counts 1, 13, 31 through 56, 60 and 61of the Second Superseding Indictment.  PERDIGAO further consents to forfeiture of approximately $30 million to the United States that was charged in the Second Superseding Indictment, and which PERDIGAO admittedly stole as part of his elaborate fraud scheme.

According to court documents, PERDIGAO, a former partner at the law firm of Adams and Reese, provided legal services to companies in Louisiana’s gambling industry.  PERDIGAO admitted today in court to stealing checks belonging to Adams & Reese and depositing those checks into accounts controlled by PERDIGAO.  Further, he admitted stealing a tax refund check payable in the amount of $485,000 to Horseshoe Entertainment, which was being acquired by Harrah’s.  Once these checks were deposited, they became available for withdrawal and thus exposed the banks, such as Bank One (now Chase) to the risk of civil liability and financial loss.

PERDIGAO also admitted to concocting a fraudulent billing scheme whereby he would submit phony invoices to his clients including Pinnacle Entertainment, Inc. and Boomtown, causing them to remit millions of dollars in fraudulent payments.

According to court records, during a one-week period in October, 2004, PERDIGAO wired nearly $20,000,000 to a Swiss bank account that he controlled in Zurich, Switzerland. Additionally, PERDIGAO pled guilty to tax evasion and filing false tax returns, for the tax calendar years 2000 through 2004. The tax due and owing by PERDIGAO exceeds approximately $4,500,000 as indicated in the indictment.   The indictment and prosecution of individuals who intentionally conceal income and evade taxes is a vital element in maintaining the public confidence in our tax system.  Income from all sources, legal and illegal is taxable.

By failing to report substantial taxable income and utilizing fraudulent losses on these tax returns, PERDIGAO qualified himself for the earned income tax credit. The earned income tax credit is a refundable federal income tax credit for low-income, working individuals and families.

PERDIGAO faces a maximum term of imprisonment of over 300 years.  He also faces possible fines of over $8 million, as well as criminal forfeiture of $30 million.   Sentencing has been scheduled for February 11, 2009.

U. S. Attorney Jim Letten, speaking to today’s conviction and forfeiture, stated:

“As the result of the expertise, hard work and dedication of the prosecution team, including FBI and IRS Special Agents, a local attorney who had misused his position of trust to grossly enrich himself in a contorted scheme of theft and obstruction, has been brought to justice through his own admission of guilt.  Defendant JAIME PERDIGAO, by openly admitting his guilt to 30 counts of fraud, theft, tax and bank violations, computer hacking, and obstruction of justice, has further demonstrated that this investigation and prosecution by the United States was and is sound, and our evidence uncontroverted and overwhelming.   Moreover, today’s guilty plea, along with the U. S. District Court’s previous rejection of PERDIGAO’S myriad claims against the United States, is confirmation that PERDIGAO’s legal filings, evolving over many months, were absolutely without any merit whatsoever, and were part of a desperate and vicious attack in an attempt to escape punishment for such crimes.  As we have prevailed in this case through professionalism and determination, we will continue to follow evidence of crime wherever it takes us.”

The case was investigated by the Internal Revenue Service and the Federal Bureau of Investigation.

The case is being prosecuted by Assistant U. S. Attorneys James Mann, Salvador Perricone,  Brian M. Klebba, and Loan “Mimi” Nguyen.