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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Thursday, May 17, 2018

Arizona Men Charged In Manhattan Federal Court With $23 Million Fraud And Money Laundering Scheme In Connection With Purported Fundraising For Numerous Scam Political Action Committees

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that WILLIAM TIERNEY, a/k/a “Bill Johnson,” and ROBERT TIERNEY were arrested this morning and charged with wire fraud conspiracy, mail fraud conspiracy, and money laundering conspiracy for their role in a nationwide, multi-year scheme to defraud donors to at least nine political action committees in the amount of more than $23 million.  The defendants are expected to be presented this afternoon in the District Court of Arizona.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants secretly operated numerous political action committees, raising small-dollar donations from people who believed their hard-earned money would support the causes described in solicitation calls and mailings.  In reality, as alleged, these PACs were political action committees in name only – they engaged in no advocacy campaigns, education efforts, or political operations, and donated less than one percent of the money they raised to candidates for office, all while personally enriching the defendants.  Now, these so-called PACs are no longer defrauding donors, and the defendants have been charged with federal crimes.”      

FBI Assistant Director William F. Sweeney Jr. said:  “The defendants, as alleged, capitalized on the sympathy and activism of those who sought to support awareness of various causes near and dear to their hearts.  Instead, virtually none of the money raised was used for its intended purpose, and the so-called political action committees served as nothing more than a front for an extensive personal fundraising campaign.  Today's charges detail a scheme lacking in ethical oversight and laden with greed, but it all ends today.”

According to the Complaint[1] unsealed today in Manhattan federal court:

From 2014 up to the present, WILLIAM TIERNEY and ROBERT TIERNEY defrauded tens of thousands of donors to at least nine political action committees that they controlled, operated, and influenced.  The defendants founded and directly operated six PACs,[2] and managed, operated, or influenced three additional PACs[3] (“Scam PACs).  These nine Scam PACs – which collectively raised more than $23 million between 2014 and 2017, and more than $50 million in the past 10 years – were fraudulent entities, operated solely to enrich the defendants and their co-conspirators.

As alleged, the Scam PACs targeted victims across the country, raising funds on the basis of fraudulent representations that the donations would support voter education regarding, and the political campaigns of those who supported, various causes, including autism awareness, law enforcement, and pro-life causes—including through purported “coast to coast” education and advocacy campaigns, working with local groups and organizations, and “investing every penny . . . in the big races to come.”  In truth, virtually all of the money raised was either paid to the scheme participants or used to perpetuate the fraud through additional telemarketing, fundraising, and overhead expenditures.  During the relevant time period, less than one percent of all donor money to the Scam PACs was spent on political contributions. 

The defendants perpetrated the fraud through various deceptive means and methods.  For example, as alleged, the defendants created and utilized a web of shell pass-through entities to conceal and disguise their fraud.  Donated funds were transferred to these shell entities, which were given names that suggested activities related to marketing, consulting, and communications efforts, including for issue-specific causes – so that payments to the shell entities would appear to be for legitimate expenditures.  In at least one instance, a website was created for one of the shell entities, falsely stating that the entity provided direct marketing and political consulting services to trade associations, candidate campaigns, political action committees, and nonprofit organizations.  In fact, these and the other shell entities were created by the defendants and their co-conspirators, had no active operations or employees, were retained by no outside “clients,” and served only to funnel and disguise financial transactions involving money donated to certain Scam PACs.

WILLIAM TIERNEY also allegedly instructed two companies that made telemarketing solicitation calls for certain Scam PACs to create their own shell companies – which he referred to as “Stealth LLCs” – with names that concealed any discernible connection with their parent telemarketing vendors.  This prevented the Federal Election Commission (“FEC”), donors, and other members of the public from being able to learn from required FEC disclosure forms that multiple Scam PACs were in fact paying the same telemarketing vendors. 

As alleged, the scheme participants also used multiple fraudulent identities.  WILLIAM TIERNEY used the fake identity of “Bill Johnson” when meeting and corresponding with officials at certain fundraising call centers, including during meetings at which ROBERT TIERNEY was present.  Another fake identity, “Emma Smith,” was used in fundraising solicitations, and was described as a “Volunteer Coordinator” for one of the PACs; in fact, neither Emma Smith nor the position of “Volunteer Coordinator” actually existed.  The defendants also undertook efforts to avoid press coverage of the Scam PACs more generally, despite the Scam PACs’ claims in solicitation materials of national advocacy and awareness campaigns.

Donations to the Scam PACs during the relevant period totaled more than $23 million.  Approximately $109,000 of those donations were directed to political candidates and more than $3.5 million was paid to the defendants personally.

*                      *                      *

WILLIAM TIERNEY, 46, and ROBERT TIERNEY, 40, are each charged with one count of wire fraud conspiracy, which carries a maximum sentence of 20 years in prison; mail fraud conspiracy, which carries a maximum sentence of 20 years in prison; conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison; and conspiracy to engage in monetary transactions in property derived from specified unlawful activity, which carries a maximum sentence of 10 years in prison.

The statutory maximum and mandatory penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge.

Mr. Berman praised the investigative work of the Special Agents of the United States Attorney’s Office for the Southern District of New York, and thanked the Federal Bureau of Investigation for its assistance in the investigation.

If you think you are a victim of, or have information about, the scheme alleged in this press release, or if you are a victim of, or have information about, a similar scheme, you are encouraged to contact the FBI at 212-384-2135.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Alex Rossmiller and Alison Moe are in charge of the prosecution.

The charges contained in the Complaint are merely accusations.  The defendants are presumed innocent unless and until proven guilty.

 

[1] As the introductory phase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

[2] Grassroots Awareness PAC, Americans for Law Enforcement PAC, National Campaign PAC, Voter Education PAC, Action Coalition PAC, and Protect Our Future PAC.

[3] Life and Liberty PAC, Republican Majority PAC, and RightMarch.com PAC.  These three PACs originally were founded by others.

Topic(s): 
Consumer Protection
Financial Fraud
Press Release Number: 
18-167
Updated May 17, 2018