With Covid-19 still surging throughout the United States, telemedicine has expanded as a viable option for patients seeking to limit their exposure to doctors’ offices. To meet this need, Federal and State regulators have both implemented and increased a number of measures allowing telemedicine to reach more people, as well as cover more areas of practice.

With any expansion of services, combined with a global health pandemic, the government expects that there will be individuals who abuse the system for their own financial gain. The Department of Justice (DOJ) and the U.S. Department of Health and Human Services, Office Inspector General (HHS-OIG), have targeted many such abuses. Federal law enforcement have netted scores of arrests involving telemedicine operations around the country.

Recent announcements by U.S. Attorney’s Offices and DOJ in New Jersey, Florida, Pennsylvania, Georgia, South Carolina, and New York reveal some

common patterns of fraud. Many schemes involve telemedicine companies pushing Durable Medical Goods (DME), such as braces for wrists, elbows, knees and backs, in addition to genetic tests for cancer and other diseases, to Medicare recipients. These companies employ or contract with marketing companies to locate potential beneficiaries and push as many products as possible on an often vulnerable population of patients. The telemed companies employ physicians that have little to no contact with the patient, prescribe medically unnecessary tests or DME, and are paid on a “per patient,” or prescription basis. A number of telemed-company executives have been charged with soliciting illegal kickbacks and bribes in exchange for unnecessary orders of DME and genetic cancer tests. Charges to date allege more than $4.5 billion in fraud to Medicare and other providers. Healthcare fraud continues to be a major federal and state prosecution initiative around the country.

Stahl Gasiorowski Criminal Defense Lawyers have successfully represented dozens of telemedicine companies, physicians, sales and marketing employees, as well as laboratory owners charged with healthcare fraud. To contact the firm’s NJ office, call 908.301.9001 and to contact the firm’s NYC office, call 212.755.3300, or email Mr. Stahl at rgs@sgdefenselaw.com.

The Defense Production Act and 2020 Executive Orders provide the framework for these cases. It can be a criminal fraud to hoard or charge excessive prices for various PPE (personal protective equipment), such as N-95 face masks, surgical gowns, gloves, and disinfectant products. There are currently hundreds of investigations around the country.

Criminal fraud charges in this context require willful violations of the DPA and the orders and regulations issued thereunder. Hoarding must have occurred after March 25, 2020, when an Executive Order delegated powers to DHS to designate 15 categories of health and medical resources as scarce. Price gouging requires prices “in excess of prevailing market prices,” rather than a specific percentage markup. To date, no court has issued an opinion interpreting the meaning of “excessive” in this context.

Notable cases are ongoing in the District of New Jersey and the Eastern District of New York. They involve the importation of supposed FDA-approved N-95 masks from China. As alleged in the Complaints, it was later discovered that the masks were in fact not tested, nor were they approved. The government has charged the Chinese manufacturers and is currently investigating the individuals and companies involved in purchase and sale both here and abroad.

A number of high-profile price gouging cases have been brought in the Southern and Eastern Districts of New York against companies and individuals charging between 50 – 1300% mark-ups on masks. Several prosecutions allege outright fraud, where orders were placed and fees paid to individuals who had no ability to acquire or deliver the PPE. Some of these cases involved orders worth hundreds of millions of dollars.

Federal, state, and local governments, too, have been defrauded in their rush to acquire desperately needed PPE. Many public entities cannot compete with private companies – and even other countries – when purchasing PPE from Chinese manufacturers because of the oft-required 50-100% payment upfront. Government contracts rarely permit payment of more than 10% of the purchase price upfront. In order to secure the contracts, middlemen and layers of companies have been used. These situations lend themselves to fraud and price gouging by adding costly layers of people between the purchaser/end user and the manufacturer.

United States citizens and companies must be particularly vigilant in purchasing and importing PPE from overseas manufacturers. Registration and approvals must be legitimate and precede the importation. The items must meet FDA standards and the prices charged must not be excessive. A failure to comply with these requirements risks scrutiny and potential charges by federal law enforcement.

Our attorneys and staff are actively and aggressively defending clients being investigated for PPE fraud. We are also available to meet with new clients. Being mindful of the importance of self-distancing, we at times work remotely but are available to meet new clients either in person or through video conferencing, and have the capability to offer initial consultations by phone. Challenging times demand innovation and accommodation to our clients’ needs. Stahl Gasiorowski Criminal Defense is here for all of your criminal legal needs during this time. To contact the firm, call 908.301.9001 for the NJ office and 212.755.3300 for the NYC office, or email Mr. Stahl at rgs@sgdefenselaw.com.

If you are a small business that was lucky enough to find a bank willing to accept and fund your small business Paycheck Protection Program (PPP) application, then a small portion of the $670 billion program went to an intended beneficiary. Unfortunately, many small businesses quickly learned larger banks were unwillingly to process their applications. News reports revealed banks received $10 billion in fees for the first traunch of funds dispersed, for which they received a set processing fee of 1-5% based on the size of the loan. A lawsuit filed in the U.S. District Court for the Central District of California against several major banks alleges they moved larger borrowers to the front of the line, ahead of many deserving smaller businesses in order to maximize on origination fees. Some corporations received tens of millions of dollars from the federal small business lending program, which initially ran out of money on April 16. Although the program has been funded once more, applicants are under much greater scrutiny.

The Department of Justice recently announced that it has launched a probe into potential fraud committed by large, publicly-traded companies that applied for and received funds meant for small businesses. In response to widespread outrage, the Small Business Administration (SBA) updated its PPP guidelines, stating: “It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.”

In order to receive a PPP loan, businesses must certify that they are in need of funding that they cannot get from another source. Per the SBA, public companies have both cash value in the form of shares and access to capital markets (where they can buy and sell debt, among other things), which is why they deem it “unlikely” that public companies will be able to make the aforementioned certification in good faith. An analysis by Forbes revealed 71 publicly-traded companies received PPP loans before the initial $350 billion in funding ran out.

The SBA has stated that any company that gives the money back before May 7 will be determined to have acted in good faith. A number of well-known companies have publicly announced that they will return the funds, including Shake Shack, Ruth Chris Steakhouse, and the Los Angeles Lakers. Many others, however, have so far refused to return the funds, claiming that it would be a breach of fiduciary duty to do so. Those companies argue they met the SBA’s criteria and need the funds to avoid financial ruin.

Because the applications require applicants to agree to use the funds for specified activities and under penalty of perjury, the DOJ may investigate and prosecute any individual or company that violates those terms and conditions. Historically, such investigations and prosecutions disparately impact smaller companies owned by an individual or a small group. These smaller companies are also much more likely to be subject to criminal charges, while larger companies often face fines and penalties.

Our attorneys and staff are actively and aggressively defending our existing clients’ cases. We are also available to meet with new clients. Being mindful of the importance of self-distancing, we at times work remotely but are available to meet new clients either in person or through video conferencing, and have the capability to offer initial consultations by phone. Challenging times demand innovation and accommodation to our clients’ needs. Stahl Gasiorowski Criminal Defense is here for all of your criminal legal needs during this time. To contact the firm, call 908.301.9001 for the NJ office and 212.755.3300 for the NYC office, or email Mr. Stahl at rgs@sgdefenselaw.com.

One of the largest issues hampering the re-opening of the American economy is that there are many asymptomatic yet contagious carriers of COVID-19. Rational leaders, medical experts, and scientists agree that widespread testing is essential to prevent further hotspots and determine which areas of the country may start to open again. Tests to determine whether a person is currently infected, as well as antibody tests to determine whether a person has been exposed and may have some immunity to the virus, will soon be widely available from many new sources. Companies cannot make informed decisions about when and how to re-open without knowing if their employees are healthy. State and local governments cannot determine how to move forward without this critical information. The federal government has assisted testing companies and labs by removing some of the FDA safeguards and time periods normally in place to ensure quality standards and safety.

With desperate need for widespread testing comes the opportunity for various fraudulent schemes and violations of a number of healthcare laws. One of the more recently enacted laws – the Eliminating Kickbacks in Recovery Act (EKRA) – makes it a federal crime “to solicit or receive payment in exchange for referring a patient to a . . . laboratory”, to “pay or offer any payment to induce someone to make” such a referral or to pay “in exchange for an individual using” a lab. The statute extended criminalization of such schemes beyond Medicare/Medicaid reimbursements to private insurance. .

Thus, under EKRA, a lab may not pay commissions to sales or marketing groups or employees based upon the number of tests received or reimbursed. Even if the person is a W-2 employee of the lab, payments to the employee on a commission basis may violate EKRA.

Individuals and companies in the healthcare industry must be aware of these very stringent regulations. In a desire to help the community, and to make a profit during these difficult times, it is incumbent on those involved to fully understand the financial arrangements and seek experienced counsel as to the legality of the contract/payment. Likewise, individuals seeking such tests must do their due diligence to help ensure that the company and tests offered are legitimate, accurate, and effective.

Our attorneys and staff are actively and aggressively defending our existing clients’ cases. We are also available to meet with new clients. Being mindful of the importance of self-distancing, we at times work remotely but are available to meet new clients either in person or through video conferencing, and have the capability to offer initial consultations by phone. Challenging times demand innovation and accommodation to our clients’ needs. Stahl Gasiorowski Criminal Defense is here for all of your criminal legal needs during this time. To contact the firm, call 908.301.9001 for the NJ office and 212.755.3300 for the NYC office, or email Mr. Stahl at rstahl@stahlesq.com.

The Department of Justice (DOJ) and various state agencies have announced that they will aggressively pursue fraudulent schemes related to COVID-19. On March 16, Attorney General William Barr directed all U.S. Attorney’s Offices to prioritize the detection, investigation, and prosecution of all criminal conduct related to the Coronavirus pandemic. Each office was directed to appoint a COVID-19 fraud coordinator to serve as the liaison between the local Department of Justice and their state and local counterparts.

Based upon that directive, the U.S. Attorney for New Jersey and the New Jersey Attorney General just announced the formation of a joint federal-state task force to investigate and prosecute a wide range of misconduct arising from the COVID-19 pandemic, including the unlawful hoarding of medical supplies, price gouging, charity scams, procurement fraud, insurance fraud, phishing schemes, and false and misleading investment opportunities.

On March 21, the first enforcement action was filed in the Western District of Texas against the operators of a website purporting to sell World Health Organization vaccine kits. Those kits are alleged to be fake. In this instance, the Department of Justice filed a civil injunction to immediately block public access to the website and restrained the operators from selling the allegedly false kits. A criminal investigation will likely follow the civil injunction.

On March 30, the U.S. Attorney in the District of New Jersey filed criminal charges against a Georgia man for his alleged role in a Coronavirus-related healthcare scheme. Specifically, it is alleged he and others defrauded health care benefit programs by submitting fraudulent testing claims for COVID-19 and genetic cancer screenings. The complaint alleges that the defendant offered kickbacks in exchange for medically unnecessary tests, including hard-to-obtain COVID-19 tests, coupled with a much more expensive respiratory pathogen panel test (RPP) that does not identify or treat COVID-19.

These are just the beginning of what will likely be a wave of federal and state prosecutions for fraudulent schemes that prey on people’s fears of this pandemic. The Department of Justice announced that it will be investigating price gouging for masks, hand sanitizer, and other personal protective items; phone scams by those pretending to be doctors or hospitals claiming to have treated family members and seeking payment; robocalls offering fake treatments; fake charities seeking donations; cyber crimes like malicious websites and apps that claim to share COVID-19 information, but in reality seek and steal user information; and health care fraud, such as the schemes detailed above.

Heath care fraud is a Department of Justice priority even during “normal” times. Now, with the pandemic, new investigations and prosecutions will rapidly expand as people look to take advantage of the public health crisis.

Stahl Gasiorowski Criminal Defense Lawyers

Our attorneys and staff are actively and aggressively defending our existing clients’ cases. We are also available to meet with new clients. Being mindful of the importance of self-distancing, we at times work remotely but are available to meet new clients either in person or through video conferencing, and have the capability to offer initial consultations by phone. Challenging times demand innovation and accommodation to our clients’ needs. Stahl Gasiorowski Criminal Defense is here for all of your criminal legal needs during this time.

In the real world, of course, hearing from the IRS is seldom an occasion for amusement; especially when the subject of its communication with you is to accuse you of tax fraud.

Tax fraud is a criminal matter. If you are convicted of an activity like failing to report income or earnings, or violations of sales or payroll tax withholdings, or even money laundering, you could face heavy financial penalties and even jail time.

Unless you are already a tax expert — and probably even then — the one thing that you should not do if the IRS is threatening you with tax fraud is to take it on by yourself. The Internal Revenue Code is lengthy and extraordinarily complex.

When the IRS accuses you of violating that code, it is not only playing on its home field, but can also call upon the considerable resources of the federal government in pressing its case against you.

It’s a classic mismatch, Goliath versus David without his sling. In such a situation, you will almost certainly need an attorney as your advocate.

But not just any attorney will do. You need a law firm that has intimate awareness not only of the Internal Revenue Code and tax court decisions interpreting it, but also of how the IRS operates. What its strengths are — and its possible weak points. A good way to benefit from this kind of knowledge is to find an attorney who has worked as a federal prosecutor.

That is where we come in. Our firm includes attorneys with experience in federal prosecutions and we have defended against IRS tax fraud charges in the past. We can help you to defend against the same thing. If you want to know more about our firm, start with our tax fraud webpage.

But what can make matters worse in our legal minefield of state and federal criminal laws is that not only are there seemingly more mines being planted all the time, but the mines themselves are becoming bigger. What we are referring to is the trend toward increasing the jail or prison time, fines and other sanctions that you may face if you are convicted of crimes that are already serious in nature, such as white collar crimes.

The convergence of a steadily increasing body of criminal laws that you can find yourself in violation of, even inadvertently, coupled with the steadily increasing severity of the sanctions for such violations, means that if you find yourself accused of a serious offense such as fraud, or tax evasion, or embezzlement, you need legal representation that can keep up with the growing seriousness of the crimes that you can be charged with. You don’t go to a general practitioner when you are diagnosed with cancer; likewise, you should not trust your legal rights and even your freedom to a general practice attorney when agents and agencies of the New Jersey state government or the federal government set their sights on you.

At the Law Offices or Robert G. Stahl, our attorneys are highly experienced in defense against many kinds of serious, white collar crimes. We know that it is essential to get started on your legal defense as quickly, thoroughly and aggressively as possible to present the best case possible for our clients, whether in pretrial negotiations or in trial defense. If you find yourself under government scrutiny based on accusations of serious crimes, contact us as soon as possible. Time is not your ally when you are being targeted by the government.

Fraud is probably the most common white-collar crime. Unlike a theft crime in which money or personal property is physically removed from the possession of a victim, a fraud victim loses the money or property a result of a lie, trick or deception. For example, someone running a Ponzi scheme tricks investors into parting with their money by promising them extremely high returns on an investment that does not exist.

Another form of white collar crime is money laundering in which money obtained from an unlawful enterprise, such as from the sale of illegal drugs, is “laundered” to make it lose its connection to the illegal origins. A money laundering operation might have legitimate businesses through which the unlawfully obtained money is passed.

People sometimes confuse tax evasion, which is a criminal offense, with making legitimate use of tax deductions and credits to minimize your tax liability. Trying to reduce the taxes you must pay to New Jersey or to the federal government is not illegal, but not reporting income or making up phony deductions could be tax fraud.

Many white collar crimes, such as securities fraud and insider trading, wire and mail fraud, and mortgage fraud and falsifying documents, may lead to a federal investigation that could end with criminal charges being filed. White collar crime charges, such as RICO/racketeering cases and Medicare and Medicaid fraud, can be complicated.

As informative as this posting might be, it is not offered as or intended to be relied upon as legal advice. Your best source for legal advice should be an experienced federal criminal defenseattorney.

Most crimes involving fraudulent conduct fall under the category of white collar crime charges because they usually do not include violence or threats to carry them out. The laws that define state and federal fraud crimes will vary depending upon the particular activities being prohibited, but there are certain elements common to all crimes involving fraudulent conduct.

Criminal charges in which plays a key role include:

• A Ponzi scheme
• Health care fraud
• Tax fraud
• Bank fraud
• Computer fraud
• Some Internet crimes
• Mortgage fraud

Each of these crimes includes a misrepresentation by the individual committing them. This is one element of a fraud crime. A second element of fraud is that the person making the misrepresentation knows, or has reason to believe, that the statement or misrepresentation is false.

The criminal conduct continues when the person making the statement does so knowing that it will be relied upon to the detriment of the person to whom it was made. This detriment is usually a financial loss of some type.

A federal investigation into someone’s business activities could lead to allegations of criminal wrongdoing. Criminal defense attorneys know that proving health care fraud, tax fraud or other forms of fraudulent conduct requires evidence to support each of the elements of the crime. For instance, a doctor who bills Medicare twice for the same services to a patient might not be guilty of a crime if the doctor did so believing the services were, in fact, performed.

The laws under which people are prosecuted for fraud are usually complex. A person in need of legal advice relating to criminal charges should speak to a criminal law attorney. This post is not intended, nor should it be relied upon, as legal advice.

The law in this state that makes forgery a crime makes it clear that the act must be intentional, and that it must be undertaken with the intent to defraud or injure someone else. How one can go about accomplishing these objectives can involve more than simply faking someone else’s signature on a blank line.

To begin with, altering an otherwise valid writing by someone else is a form of forgery. This can be something other than altering a signature; it can be something like making changes to an existing record or creating a false communication, and then passing it off as being from another person, such as the will example above, or to make a defamatory comment in another person’s name in the hope that the reaction will harm that person.

Another thing to keep in mind is that the law considers a “writing” to be more than just a document. Writings can include non-documentary items, including:

• Credit or debit cards
• Identity cards
• Coins
• Stamps
• Sales receipts
• UPC labels
• Trademark or other symbols

The information in the false writing can be personal identifying information, which goes beyond names and addresses or phone numbers to include taxpayer or employee identification, account numbers, or even biometric data, it is possible to “forge” someone else’s fingerprint, for example, or a retinal scan or voiceprint.

The most important consideration to remember is not the mechanisms of possible forgery, but the intent element. Not every altered or newly-created writing will qualify as a forgery if the prosecution cannot prove that it was made with the intent to defraud or injure another. This is where having experienced defense counsel can be crucial, because if the intent element of the crime can be cast into reasonable doubt, it may be possible to avoid a conviction for forgery even if the other elements exist.

This post will address two of the most common investment frauds that you may see in New Jersey: the Ponzi scheme, and the pyramid scheme.

These two fraudulent schemes have some similarities: both rely on a fresh influx of new “investors” to provide the cash needed to pay earlier participants the fantastic returns they were promised. And both eventually run dry if they are not discovered and prosecuted first, leaving many hopeful investors with nothing in return for their contributions.

There are some distinctions to be aware of between these two crimes, so they should not be used interchangeably with one another.

The key element of the Ponzi scheme is that it often relies on investor trust in the scheme’s creator to do all the work in return for a one-time payment, although additional payments may also be asked for. But the contributor usually has a passive role aside from sending in money.

A pyramid scheme’s distinctive feature is that it usually requires not only an upfront payment or repeat payments, but also that the participant then recruit others to participate as well. Indeed, new participants may never interact with the pyramid scheme’s original creator, but rather with someone one level above them in the multi-layered pyramid organization.

Pyramid schemes tend to break down more quickly than Ponzi schemes, because the latter is often smaller and has stronger misplaced trust bonds between the creator and the contributor while the former requires ever larger additional layers to the pyramid to keep going and will run out of fresh contributors more rapidly.

Not all multi-layered investment or business strategies are illegal. If you are charged with running a Ponzi or a pyramid scheme when in fact your business is legitimate, such as a multi-level marketing system, a criminal defense attorney’s assistance will be essential in defending yourself legally.

The seeming pervasiveness of fraudulent activity on the part of both providers and recipients of federally-funded healthcare programs has led to more determined efforts by the federal government to identify such activity and to prosecute it. A search for examples of Medicare and Medicaid abuse also quickly reveals a federal government initiatives to combat healthcare fraud. the Health Care Fraud Prevention and Enforcement Action Team Task Force and the Medicare Fraud Strike Force being two examples.

Examination of the many examples of federal prosecutions trumpeted by the Office of the Inspector General of the Department of Health and Human Services shows two things: first, many of these alleged and actual crimes involve large sums of money, frequently running into the millions of dollars; and second, the harsh penalties that result upon convictions.

Those finding themselves in the crosshairs of a federal investigation for Medicare or Medicaid fraud need to understand that federal prosecutors will be determined to make an example out of them, if for no other reason than to deter others. Defense counsel who are not prepared to deal with an aggressive prosecution will quickly find themselves hard pressed to adequately protect their clients.

The Law Offices of Robert G. Stahl has attorneys with extensive litigation experience defending clients in federal court, including against charges of Medicare and Medicaid fraud. Our experience gives us the ability to know how federal prosecutors handle such cases. We understand that for our clients their personal and professional lives and reputations are at stake: the loss of liberty, devastating fines, loss of professional licenses that took years to qualify for and loss of businesses are all possible, and we prepare the best possible defense for our clients to avoid or mitigate these consequences.

When everything is on the line, you cannot afford to short-change yourself in choosing your legal defense team. Contact us to arrange for a free initial consultation to discuss your case.

But what constitutes “tax evasion?”

To begin with, we need to distinguish between tax avoidance and tax evasion. Tax avoidance describes a legal means to protect income and assets. It encompasses methods such as charitable contributions or participation in certain retirement savings plans.

Tax evasion, on the other hand, is illegal. The IRS divides tax evasion into two subcategories: evasion of assessment and evasion of payment.

• Evasion of assessment refers to attempts to fool the IRS into thinking that you do not owe as much as you really do. Typically, this behavior manifests itself in efforts to not declare income or to claim deductions and credits to which you are not entitled. Examples include filing false tax returns, concealing sources of income, keeping false bookkeeping records and unlawfully destroying financial records.
• Evasion of payment means an illegal attempt to hide funds and assets from which your tax obligations can be paid. This can result from things like transferring money into accounts held by relatives or friends or transferring taxable assets under the names of others. If its main purpose is to try to avoid paying taxes, even the otherwise legal act of declaring bankruptcy can be a form of tax evasion under this definition.

The IRS has dealt with many individuals’ attempts to use creative means to argue against accusations of tax evasion; it has taken an attitude of “we’ve heard it all before” to the point where it has prepared a guide for tax defense attorneys specifically illustrating arguments that do not work.

This is not to say, however, that there are not plausible and reasonable defenses that you can raise if the IRS accuses you of tax evasion. What you need in such an event is a law firm that not only has experience defending tax cases, but one that is also savvy enough not to fall into the trap of arguments guaranteed to fail in court.

When we hear the term white-collar crime, we may think of a business executive wearing a business suit planning some sort of arcane scheme involving complex and little understood corporate financial matters, like money laundering or insider-trading. But is this understanding entirely accurate? While these examples do indeed represent types of white-collar crime, the term itself includes many different kinds of the illegal activity.

As a general rule, white-collar crimes are nonviolent crimes. The main motivation behind them is the desire to realize financial gain by illegal means. There is no particular description of the type of person who becomes a white-collar criminal; one need not go to college, or hold a high-level company position, or steal a large amount of money to commit a white-collar crime. In fact, many types of white-collar crime are committed by otherwise decidedly ordinary people:

• a clerical worker failing to pay taxes;
• a cashier stealing money from the register;
• a person who fakes an injury to collect insurance benefits;
• a person who provides false information to obtain a home mortgage.

Despite their nonviolent nature, white-collar crimes can still lead to serious federal and New Jersey state penalties including lengthy prison sentences and heavy fines.

Accordingly, if you have been accused of a white-collar crime, you should take your legal defense has seriously as you would had you been accused of a crime of violence, beginning with the selection of a law firm that has experience with defending clients charged with money-related crimes.

Goldman Sachs (NYSE: GE) recently agreed to a $5.6 billion dollar settlement for its role in bundling subprime mortgages for sale to investors without disclosing that the mortgages had an unusually high percentage of credit and compliance issues. In doing so, it joins a number of other high profile banks who have admitted wrongdoing with regard to their roles in the mortgage frenzy that led up to the financial crisis in 2008.

Goldman Sachs took advantage of the mortgage boom. When the mortgage industry was in full swing, Wall Street made sure to benefit as well. Originators were making so-called stated income and stated asset loans with little or no underwriting controls, and passing along the risk to successive lenders. Goldman Sachs, and others, bundled thousands of toxic subprime mortgages and sold them to investors.

Surprisingly, many prosecutors don’t see the banks as part of the machinery of fraud, and have targeted only the borrowers, appraisers, and mortgage brokers involved in fraudulent mortgages for criminal charges. Many of the banks engaging in this risk shifting behavior are considered “victims” in the multitude of mortgage fraud cases that arose during this period. The tide may be turning. In a noteworthy case in California, a straw buyer in a mortgage fraud case mounted a successful defense to charges of mortgage fraud, with the very simple question: how can the borrower have committed fraud if the lender didn’t care whether his answers on the mortgage application were truthful? The success of the defense relied, in part, on testimony from a former banking regulator that it was well known in the banking industry that so called “stated income” loans–also known as “liar’s loans”– were 90% fraudulent, and that making such loans meant banks had to gut their own underwriting controls. The jury found that the truth or falsity of the documentation provided by the borrower was immaterial because the lenders would have made the loans anyway.

The contributory conduct of “victim” originators and banks is also relevant in the context of pleas and sentencing for our clients accused of bank fraud, wire fraud, and money laundering. In cases where a trial is not possible, we aggressively challenge the “loss” calculation, which determines the possible Guidelines sentencing range. We have also argued that the knowing participation of the “victim” banks and lenders in the mortgage meltdown should be considered as a basis for a variance from the Sentencing Guidelines range, resulting in a lower sentence for our mortgage fraud clients.

Importantly, the industry’s business practices may also impact how the courts determine restitution for mortgage fraud victims. Typically, the formula for calculating actual loss for restitution purposes calls for subtracting the value of the collateral–or, if the lender has foreclosed on and sold the home, the amount of the sales price–from the amount of the outstanding balance on the loan. That restitution formula is not always appropriate, especially when loan originators were selling loans almost immediately after they were made, and the mortgages were often pooled, as Goldman Sachs did, into derivative products sold to investors. Very often these mortgages were sold at a discount. When the “victims” of mortgage fraud are the purchaser or successive lenders, and the loans may have been acquired for less than the amount of the outstanding principal balance, courts must use a different formula to avoid providing a “windfall” to the victim in restitution.

In these cases, the loss amount is determined by calculating the amount the successive lender paid the original lender for the loans (less any principal repayments by borrowers) and what it received for the property at the foreclosure sale. In simplest of terms, the formula for loss for restitution purposes is how much the successor lender paid, minus how much it made. Using this formula and demanding supporting documentation, mortgage fraud defendants may persuade the judge that the restitution amounts calculated by Probation and the Government are far greater than what can be proved, or is ultimately due the “victims” in these cases.

The lawyers at the Stahl Gasiorowski Criminal Defense Lawyers are dedicated to finding law and facts to defend our clients, whether at trial, across the table from a prosecutor during plea negotiations, or before a sentencing judge. We are constantly updating our knowledge and coming up with novel, creative and effective arguments to provide our clients the best defense.

It is dangerous to allow hysteria to take the reins away from common sense and rational judgment. When that occurs, the risk is that innocent people will be accused and harmed in the process.

This hostile view towards finance executives has led to the increase in accusations, charges and prosecutions for white-collar crimes. The seriousness with which the country looks at those accused of crimes like securities fraud and insider trading is demonstrated by the number of different government agencies and departments that are dedicated to this field.

A person who is accused of these types of white-collar crimes can be investigated and prosecuted by a number of agencies at the local, state and federal level.

Our firm is made up of experienced attorneys who have dealt with fraud cases before. We are aware of the many different levels of authority and various agencies that may claim jurisdiction in a fraud case.

Being charged with a crime and having to prepare a criminal defense is a frightening proposition, but it is only made that much scarier when having to face FBI agents, Secret Service or IRS employees who are investigating your business – or even personal -activities.

It is important to remember that you do not have to face these powerful government agencies alone. If you are facing charges of fraud/ or other types of corporate crime, please visit our website to learn more about how our firm can help you