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Sept. 25, 2009

TWO LOCAL WOMEN PLEAD GUILTY TO INTERSTATE IDENTITY THEFT SCHEME AFTER FOUR DAYS OF TRIAL TESTIMONY

(HOUSTON) – Brenda East, 48, and Jami McCoy, 31, both of Houston, have pleaded guilty to conspiracy, aggravated identity theft and bank fraud today after four days of trial testimony, United States Attorney Tim Johnson announced today.

Today, East and McCoy admitted they had lied to third party victims from Louisiana, Oklahoma and Florida to obtain their identification information from May 2007 through October 2007. The two women used the information in loan applications submitted to financial institutions where the women paid bank insiders to facilitate the loans. East and McCoy provided the victims' Social Security number and name, but then supplied their own address and contact information on the loan applications which misstated the victims' salary, employment positions and assets. In addition, East, McCoy and others supplied the banks with false tax returns, false partnership agreements, altered utility bills, false pay stubs and false financial statements that reiterated lies supplied to the banks in the loan applications. On one of the accounts that McCoy attempted to open, the Social Security number of a child from Kentucky was supplied to the bank. 

The financial institutions lost more than $300,000 in connection with this scheme. The scheme involved the transfer of funds from these fraudulent loans (or spoke) accounts into hub accounts, which were business or personal checking accounts that had been opened in the name of an entity with a religious name, the victims' name or another fictitious entity. These entity names were used by defendants and others to disguise the scheme. The defendants spent these funds on personal items and on construction of an adult day care facility run by East. They also used the funds to make small payments on some the fraudulent loans to ensure to postpone the bank’s discovery of the fraud scheme.

The two women and others exchanged the fraudulent documents, identification and other information used to execute the scheme via e-mail that the United States Postal Inspection Service (USPIS) obtained by executing a federal search warrant on various e-mail accounts. E-mails also showed East and McCoy exchanged a disposable cell phone number that was supplied and used as contact information for McCoy in connection with some of the accounts. McCoy was shown to have provided false statements to investigators during the course of the investigation including representing to investigators that McCoy had not opened any bank accounts and did not live at the address she supplied to financial institutions during the fraud scheme. However, utility records and bank photos showed she both lived at the address and was inside the bank during the opening of the accounts. In May 2008, when East was arrested, USPIS inspectors found mail and credit cards associated with the fraudulent accounts.

Testimony during the trial proved the victims did not consent for their identification to be used during this fraud scheme. Representatives from the affected financial institutions testified how the scheme caused the banks to extend credit to the defendants based on the fraudulent representations and how the women were able to circumvent the internal controls at the bank.

After hearing the evidence presented in court, East and McCoy elected to plead guilty to the charges in the indictment before United States District Judge Nancy Atlas today.

Sentencing for East and McCoy is scheduled for Dec. 17, 2009. Both face a sentence of up to 30 years for bank fraud, five years for conspiracy and a mandatory consecutive two-year sentence to follow any sentence on the bank fraud and conspiracy counts. Both also face a potential fine of up to $1 million and five years of supervised release. 

A third defendant, Jacqueline Campbell, was also charged in the scheme and pleaded guilty to aggravated identity theft and bank fraud prior to trial. 

The USPIS investigation is ongoing.

This case was tried by Assistant U.S. Attorneys Ryan D. McConnell and David Searle.

 

 

 

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