Government Enforcement Actions

March 24, 2016

Two residents of Kenner, Louisiana, pleaded guilty before Federal District Court Judge Lance M. Africk of the Eastern District of Louisiana for crimes related to the operation of their check cashing business, VJ Discount Inc. According to publicly filed documents, defendants Susantha Wijetunge and Manula Wijetunge owned VJ Discount Inc., a Louisiana corporation that operated a convenience store and check cashing business in Kenner. Susantha Wijetunge, VJ Discount Inc. and others cashed fraudulently obtained tax refund checks for multiple co-conspirators, for which they charged a higher fee than normal. Often, these transactions involved multiple checks and tens of thousands of dollars. In order to conceal this illegal activity, Susantha Wijetunge and others filed false reports with the government, or failed to file them as required by law. As part of their guilty pleas, the defendants and certain corporate entities they control agreed to the forfeiture of approximately $4.12 million dollars. DOJ

March 23, 2016

California obtained a $1.1 billion judgment against defunct Corinthian Colleges, Inc. (CCI) for their predatory and unlawful practices. While CCI filed for bankruptcy in May 2015, this judgment can help secure further relief for struggling students. In October 2013, Attorney General Kamala D. Harris led the charge against CCI and its subsidiaries that operate Everest, Heald, and Wyotech colleges, filing suit seeking to put an end to abusive practices that left tens of thousands of students under a mountain of debt and useless degrees. CCI filed for bankruptcy in May 2015. In granting the default judgment, the Court ordered restitution on behalf of students in the amount of $820,000,000 and civil penalties totaling $350,025,000, for a total of $1,170,025,000 in monetary relief. CA

March 23, 2016

New York announced a settlement with Carolina Furniture, Inc., a business that sells furniture and home furnishings. An investigation of a “store closing sale” by the attorney general showed that Carolina Furniture made deceptive representations in its advertisements and failed to obtain a proper license before the sale. Carolina Furniture advertised its store closing extensively and made many representations about the sale that the NYAG found deceptive. For example, Carolina Furniture sent out a letter to 40,000 consumers inviting them to a “PRIVATE SALE HELD 4 DAYS ONLY!” This claim was not true as all three retail locations were open to the public during the “private sale.” NY

March 23, 2016

JPMorgan Ventures Energy Corp. and JPMorgan Chase Bank, N.A.  have agreed to pay a $225,000 penalty to resolve charges of failing to comply with their obligations to submit accurate large trader reports for physical commodity swap positions.  CFTC

March 22, 2016

New York announced a $1.1 million dollar settlement of a whistleblower case alleging that real estate developer Asher Roshanzamir wrongfully deferred payment of New York state and New York City income taxes. Federal law allows a seller of real property to defer paying income taxes on certain capital gains when he exchanges it for ‘like-kind’ real property, under certain conditions. An investigation by the Attorney General’s Office found that Mr. Roshanzamir wrongfully deferred payment of New York State and local income taxes by disguising withdraws of approximately $3.5 million from the like-kind exchange and by disguising approximately $5 million in equity contributions as loans. NY

March 22, 2016

A federal judge for the Southern District of Iowa ordered Alabama resident John David Stroud and his companies to pay over $4.7 million in restitution and penalties for committing commodity pool fraud and misappropriation of funds.  CFTC

March 22, 2016

The CFTC has ordered payment of penalties of $665,000 by Credit Suisse International for violating speculative position limits for wheat futures and by Credit Suisse Securities LLC for submitting false or misleading information to the CFTC.  CFTC

March 21, 2016

A Charlotte, North Carolina, area resident was sentenced to 41 months in prison for his involvement in a fraudulent tax return scheme. According to court documents and statements in court, in early 2011, Daniel Heggins, 44, and Joan Clark operated Guarantor Manufactures Inc. (GMI), a business that purported to help individuals who were in debt. Heggins and his co-conspirators, including Clark, prepared and filed false tax returns on behalf of GMI’s clients claiming fraudulent tax refunds from the Internal Revenue Service (IRS) in the amount of their clients’ debts. The intended loss of the conspiracy exceeded $4 million. Heggins also charged GMI’s clients bogus filing fees of $2,500 to $5,000 in order to prepare and file the fraudulent returns. Heggins and Clark pleaded guilty to conspiracy to defraud the United States in November 2015. DOJ

March 18, 2016

A California district court ordered debt relief company Morgan Drexen, Inc., to pay $132,882,488 in restitution and a $40 million civil penalty for charging illegal upfront fees and deceiving consumers.  The order follows a preliminary injunction prohibiting the company from collecting any more money from customers and a default judgment entered against the company for misleading the court and “act[ing] willfully and in bad faith by falsifying evidence.”  The court’s findings regarding Morgan Drexen’s bad faith were based, in part, on testimony from a whistleblower who exposed the company’s conduct.   CFPB

March 18, 2016

New York announced the guilty pleas of Sergio Raymundo, 28, and his New Paltz-based construction company Lalo Drywall, Inc. Raymundo and Lalo Drywall, Inc. cheated eight workers at a Harlem housing project out of approximately $800,000 in wages during a 17-month period, and attempted to conceal the underpayments by signing false checks drawn on the company’s account indicating that employees on the job were paid properly under the law. However, those checks were never actually given to the workers. NY