Two Plead Guilty in Scheme to Defraud Factoring Companies of over $1 Million
Greenbelt, Maryland - Rafael Simmons, age 30, of Laurel, Maryland and Texas, pleaded guilty today to wire fraud and money laundering in connection with a scheme to defraud accounts receivables finance companies, known as factoring companies, of more than $1 million. Co-defendant Rodney A. Mathis, age 34, of Stafford, Virginia, pleaded guilty on February 22, 2010, to wire fraud in connection with his role in the scheme.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Special Agent in Charge C. Andre' Martin of the Internal Revenue Service - Criminal Investigation; Special Agent in Charge Kathryn Jones, U.S. Department of Transportation, Office of Inspector General, Washington Regional Office; and Special Agent in Charge Robert Craig of the Mid-Atlantic Field Office, Defense Criminal Investigative Service.
According to their plea agreements, from November 2007 through July 2009, Simmons and others, including Rodney Mathis, engaged in a scheme to defraud factoring companies, which purchase account receivables from federal government contractors and others. For example, Simmons contacted Federal National Payables (FNP), a factoring company, and held himself out as the Director of Omega Rho International (ORI), a management consultant company located in Odenton, Maryland, and falsely represented that ORI had a lucrative contract to supply telecommunications services to the U.S. government. Simmons represented to FNP that ORI was willing to assign its rights to payments under the contract to FNP, in exchange for advances on those payments. Rodney Mathis falsely held himself out as a Contracting Officer for the United States Army in order to convince FNP that ORI had a genuine government contract and that government payments would be made to FNP.
As part of the scheme, Simmons submitted a fictitious financial statement to FNP reflecting that Simmons’ net worth was $12 million and that he had more than $1.9 million in cash available in banks in the Phillipines and in the United Arab Emirates, in order to entice FNP to send the factoring payments. Mathis and Simmons also created a fraudulent classified version of a government contract which they faxed to FNP to further convince FNP that the contract was genuine. As a result, Simmons and Mathis caused FNP to make several wire transfers, including a wire transfer of approximately $315,124 to a bank account controlled by Simmons. Simmons subsequently laundered the payment through other accounts he controlled. The total loss resulting from the scheme was between $1 million and $2.5 million.
Simmons and Mathis face a maximum sentence of 20 years in prison for wire fraud and Simmons also faces a maximum of 10 years in prison for money laundering. U.S. District Judge Roger W. Titus has scheduled sentencing for May 17, 2010 at 9:00 a.m. and 2:00 p.m., respectively.
United States Attorney Rod J. Rosenstein commended Assistant United States Attorney David I. Salem, who is prosecuting the case.