Nine Charged in Multi-million Dollar Leased-funds Accounts Fraud Conspiracy
Defendants Include Owner and Employees of Financial Services Company and Two Bank Employees
Nine defendants, including the owner and seven employees and associates of Apogee Financial, Inc. and two Wells Fargo bankers, were charged in a complaint filed in Brooklyn federal court today with conspiracy to commit wire fraud. The defendants allegedly engaged in a wide-ranging scheme to defraud individuals of the fees they paid to “lease” funds from Apogee by providing them with fraudulent “proof of funds” documentation printed on bank stationery and purportedly signed by collusive bank employees.1 As a result, Apogee customers were defrauded of more than $7 million. Previously, federal agents executed search warrants at three Apogee offices in Georgia and Michigan and seized approximately $4.5 million in proceeds from the fraud scheme.
The charges were announced by Benton J. Campbell, United States Attorney for the Eastern District of New York, and Brian G. Parr, Special Agent-in-Charge, New York Field Office, United States Secret Service.
According to the complaint, some financial services companies “lease” funds to customers by opening bank accounts in the customers’ names and depositing funds into the accounts (“leased-funds accounts”) for a predetermined period of time. The customers obtain a Proof of Funds letter (“POF”) from the bank, which they can use to improve their apparent creditworthiness when applying for loans or seeking credit from lending institutions. POF documents are typically prepared by banks and other financial institutions to verify the balance of funds in a particular bank account.
As alleged in the complaint, Apogee advertised its leased funds services on craigstlist.com and through various brokers, and offered to lease funds to borrowers for a short period of time, often 60 days, in exchange for fees ranging from $40,000 for a leased-funds account of $2 million, to over $300,000 for leased funds accounts of $750,000,000 or more. However, Apogee never actually provided any funds, but instead simply printed fraudulent POF documents on bank stationery — including Bank of America, JP Morgan Chase, Wells Fargo, and Wachovia Bank — which falsely represented that the funds were held in an account at one of those banks in the borrower’s name. Apogee allegedly paid collusive bank employees, including defendants Jinnate Glasper and Dayana Mendoza of Wells Fargo, to falsely verify the existence of the leased-funds accounts when clients called to ensure that the funds were in place.
“These defendants took advantage of the level of good faith and fair dealing in our financial system to line their own pockets,” stated United States Attorney Campbell. “Now they will be held to account for those lies.” Mr. Campbell expressed his grateful appreciation to the Secret Service, the agency responsible for conducting the government’s investigation.
Secret Service Special Agent-in-Charge Parr stated, “The Secret Service actively continues to adapt our investigative techniques to progressively combat contemporary threats posed to our nation’s financial infrastructure.”
If convicted, the defendants face a maximum sentence of 30 years of imprisonment.
The government’s case is being prosecuted by Assistant United States Attorneys Zainab Ahmad and Duncan Levin.
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