Chief Executive Officer And Orchestrator Of $10 Million Advance Fee And Alaskan Gold Mine Investment Schemes Sentenced To More Than 20 Years’ Imprisonment
Advance Fee Scheme Targeted Developers Seeking Financing For Construction Projects In Areas Devastated By Hurricane Katrina
Earlier today, William C. Lange, the founder of Harbor Funding Group, Inc. (“HFGI”) and Black Sand Mine, Inc. (“BSMI”), was sentenced in federal court in Brooklyn to 262 months’ imprisonment. The defendant was remanded after sentencing. In September 2014, Lange pleaded guilty to two counts charging conspiracy to commit wire fraud and conspiracy to commit securities fraud and wire fraud for his leadership role in defrauding: (i) developers and their clients in areas devastated by Hurricane Katrina of more than $9 million through an advance fee scheme; and (ii) investors of almost $1 million through an Alaskan gold mine investment scheme. As part of the sentence, Lange was also sentenced to 3 years’ supervised release. The court will set restitution at a later date.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Philip R. Bartlett, Inspector in Charge, New York Division, U.S. Postal Inspection Service (USPIS), and Frank Montoya, Jr., Special Agent in Charge, Federal Bureau of Investigation, Seattle Field Office (FBI).
“William Lange was a con man who stole more than $9 million from people looking to rebuild areas of the country that had been ravaged by the destructive force of Hurricane Katrina. He enticed his victims by promising financing through the use of loan documents and escrow agreements that were not worth the price of the paper used to print them. Today’s sentence sends a strong message to con men like Lange that they will be brought to justice and held accountable for their crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the USPIS and the FBI for their hard work and dedication through the course of this six-year investigation and prosecution. Ms. Lynch also extended her appreciation to the United States Attorney’s Office for the Western District of Washington for their assistance in the case.
Lange, the Chief Executive Officer of HFGI and orchestrator of the advance fee scheme, told land developers and their clients seeking to rebuild areas devastated by Hurricane Katrina that HFGI had lenders and millions of dollars in funds available to provide financing for their real estate projects. As a condition for financing, HFGI required investors to place ten percent of the loan amount in an attorney escrow account. Contrary to Lange’s representations, HFGI did not have lenders or funds available to finance the loans. As soon as the money was placed in escrow, Lange and his co-conspirators stole it, at times through the use of a sham escrow agreement. Through this scheme, Lange and his co-conspirators stole more than $9 million from approximately 300 individuals. The $9 million was spent on, among other things, salaries, fishing and hunting trips for Lange and his son, remodeling and landscaping for Lange’s new house, three Harley-Davidson motorcycles, and other business ventures started by Lange.
After the $9 million was spent, Lange and his co-conspirators moved on to BSMI and the gold mine investment scheme. BSMI claimed that it would mine gold and other precious metals on Sitkinak Island in Alaska. Through the use of in-person presentations, cold calls, and “webinars,” Lange and his co-conspirators convinced investors to purchase BSMI stock by lying to them about the credentials of BSMI’s officers and directors, BSMI’s assets and liabilities, the intended use of investor funds, and by concealing their prior involvement in HFGI. Lange also concealed his own tarnished name and his leadership role in BSMI. Almost $1 million collected from investors in BSMI was spent on salaries and other personal expenses for Lange and his co-conspirators.
Today’s sentence was imposed by the Honorable Dora L. Irizarry, United States District Judge.
The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes, Alixandra E. Smith, and Melanie Hendry.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
WILLIAM C. LANGE
Gig Harbor, Washington
E.D.N.Y. Docket No. 10-CR-968 (DLI)