Michigan Man Sentenced to 30 Years for Ponzi Scheme

By | Tax Crimes, Uncategorized

On Dec. 3, 2014, in Grand Rapids, Michigan, David W. McQueen, of Byron Center, Michigan, was sentenced to 360 months in prison and ordered to pay $32,036,997 in restitution to his victims and $926,787 to the IRS. McQueen was convicted on May 9, 2014 of mail fraud, money laundering and tax evasion stemming from a massive Ponzi scheme that spanned three years. The scheme affected more than 800 families, and preyed upon unsophisticated, often elderly investors. According to evidence presented at trial, in 2006, McQueen borrowed funds to invest in a company called Multiple Return Transactions (MRT) which promised 10 percent return on investments. McQueen later created a company called Accelerated Income Group (AIG), through which he promised returns as high as 5-6 percent to investors. McQueen used MRT’s promised returns of 10 percent, to make AIG’s promised returns of 5 percent. McQueen could meet his 5 percent obligations to his investors and then keep 5 percent for himself. However, MRT was merely a Ponzi scheme. Instead of notifying AIG investors that MRT had failed, McQueen continued to tell investors that their money was safe and growing. Without MRT making its monthly payments, McQueen and AIG could not meet their 5 percent monthly obligations to investors based on investment earnings. Instead, McQueen used money from new investors to make promised interest payments. In addition to AIG, McQueen created three other funds that were nothing more than sham corporations designed to raise millions of dollars from investors. McQueen commingled the investor money between his various and purportedly distinct funds and used it to make bogus interest payments and redemption requests to investors, pay commissions to agents or simply spend the money. Despite knowing that he had absolutely no revenue coming in, McQueen took $100,000 of investor money per month tax free for his own personal use and enjoyment.

Illinois Home Builder Gets 30 Months in Jail for Failing to Pay $1.27 Million in Federal Income Taxes

By | Tax Evasion

On Nov. 24, 2014, in Chicago, Illinois, Dennis Weiss, of South Elgin and formerly of St. Charles, was sentenced to 30 months in prison and ordered to pay $296,643 in restitution to the IRS. Weiss previously pleaded guilty to filing a false federal income tax return and making false statements in a bankruptcy petition. According to court documents, Weiss owned Custom Homes by D. R. Weiss, Inc., and Reliable Home Solutions, Inc. Weiss filed false individual federal income tax returns for 2005 through 2009, and he failed to file corporate tax returns for both of his companies. Between 2005 and 2009, Weiss paid personal expenses from Custom’s business bank account, accepted cash payments from Custom and Reliable customers, and failed to record the receipt of these funds on the books and records of the corporations, resulting in a total federal tax loss of $1,271,280. In Weiss’ personal bankruptcy petition, he intentionally concealed the existence of a company he owned and interests in three family held entities. In addition to criminal penalties, Weiss remains responsible for all taxes and interest due, as well as civil penalties of up to 75 percent of the tax owed.

California Attorney Sentenced to Five Years for Defrauding Investors

By | Tax Crimes, Tax Fraud

On Nov. 14, 2014, in Baltimore, Maryland, Gregory E. Grantham, of Oceanside, California, was sentenced to 60 months in prison, three years of supervised release, and ordered to forfeit/pay restitution of $17.4 million. Grantham pleaded guilty to wire fraud conspiracy, wire fraud and obstruction of justice. According to court documents, between September 2009 and September 2011, Grantham, a licensed attorney, was employed as General Counsel for IAGU Underwriters, LLC which was operated by Mervyn Phelan. Between mid-2010 and August 2011, Grantham and Phelan became involved in a fraudulent scheme carried out by Patrick Belzner and Brian McCloskey. McCloskey owned a real estate development business known as the McCloskey Group, LLC. Belzner, a home builder, worked with McCloskey. Phelan and IAGU began working with the McCloskey Group trying to locate sources of financing for its projects. Beginning in 2009 and continuing through June 2011, Belzner and McCloskey persuaded a series of private lenders to fund loans to establish that the McCloskey Group had reserves of cash that would supposedly help it obtain loans it was seeking in connection with real estate development projects through IAGU. In return for this temporary use of the lender’s funds, Belzner and McCloskey promised to pay substantial fees or interest. However, once the lenders transferred their funds into the escrow accounts, Belzner directed McCloskey to remove those funds from the escrow accounts without the knowledge or permission of the lenders. Belzner and McCloskey then used the majority of the stolen funds to pay for their personal and business expenses. The total losses resulting from the scheme were approximately $20 million. Grantham and Phelan obstructed grand jury investigation of the fraud scheme. Patrick J. Belzner, aka Patrick McCloskey, was previously sentenced to 15 years in prison for wire fraud conspiracy, wire fraud and tax evasion, and ordered to pay $19.805 million in restitution. Brian McCloskey, Kevin Sniffen, and Mervyn A. Phelan, Sr., are scheduled to be sentenced at a later date.