Articles

Ex-Owner of Medical Taxi Service Jailed for Medicaid Fraud

The former operator of a medical taxi service in Orange County was sentenced Thursday to one to three years in prison for defrauding Medicaid of more than $200,000. Photo by Bill Oxford on Unsplash

The former owner of a medical cab company in the Town of Wallkill in Orange County, NY, was sentenced Thursday to one to three years in prison for defrauding Medicaid of more than $200,000 by submitting falsified claims for medical transportation services, the Times Herald-Record reported.

Quitoni was arrested in September 2018. The New York State Attorney General’s Office, which prosecuted the case, argued that from 2013 to 2017, Quitoni submitted false claims seeking inflated payments from Medicaid. He was accused of submitting individual mileage claims for each Medicaid recipient traveling together in the same vehicle, instead of submitting group claims for mileage. Medicaid reimburses group trips at a lower rate per client than individual trips because the cost to providers is lower.

Quitoni was also accused of claiming Medicaid’s maximum allowance of $50 in toll reimbursement per trip, even though his vehicles did not incur that amount of toll expense. The Attorney General’s Office noted that there are no $50 tolls in New York and no combination of tolls on trips that Quatroni’s vehicles made which, when aggregated, could have totaled $50.

Continue reading here:

https://www.recordonline.com/news/20190905/ex-owner-of-medical-taxi-service-gets-1-3-years-for-fraud

Father-Son Car Dealers Charged with Tax, Bank Fraud

The father-and-son owners of an Orange County car dealership have been charged with tax fraud and bank fraud. Photo by Bill Oxford on Unsplash

The father-and-son operators of an Orange County used-car dealership have been charged with understating their business’s income on tax returns and overstating it on loan applications, according to the U.S. Attorney’s Office for the Southern District of New York.

Mehdi Moslem and Saaed Moslem, owners of the Exclusive Motor Sports car dealership in Central Valley, are accused of conspiring with a tax preparer and others from 2009 to 2016 to conceal millions of dollars in profits from the IRS.

Prosecutors say that in 2009, Saaed Moslem hired a tax preparer in Rockland County who agreed to lower the yearend inventory value for Exclusive, which increased Exclusive’s cost of goods sold and decreased the net income reported on Saaed Moslem’s personal tax return. From 2010 to 2013 and again in 2015, the defendants directed the tax preparer to use false information in preparing partnership tax returns for Exclusive, according to the indictment. The returns significantly understated gross receipts and underreported inventory, thereby inflating the cost of goods sold. This reduced the business income attributable to the men, resulting in the underpayment of personal income taxes.

The tax preparer is not identified in the indictment, and is referred to as CC-1, short for co-conspirator 1.

Prosecutors say Saaed Moslem used his fraudulent tax returns to conceal his assets from creditors when he filed for bankruptcy in 2015. Both men are from Central Valley.

Bank fraud

Prosecutors say that, from 2011 to 2017, the father and son also conspired to defraud several financial institutions by submitting inflated net worth statements and fabricated tax returns in support of loan applications. They inflated the market value of their real estate holdings and omitted the tax liabilities resulting from the understatement of their income on their personal tax returns, according to the indictment. The loans included a $1.2 million mortgage on the car dealership property on which the men later defaulted.

Mehdi Moslem, 70, and Saaed Moslem, 35, are each charged with one count of conspiracy to defraud the United States and one count of bank fraud conspiracy. Saaed Moslem is also charged with two counts of making false statements to a lender, and one count of concealing assets and making false declarations in a bankruptcy case.  

Read the indictment here: https://www.justice.gov/usao-sdny/press-release/file/1190301/download

Westchester Restaurateur Charged with Cooking the Books

The owner of a French restaurant in Westchester County faces multiple fraud charges. Photo by Jez Timms on Unsplash

The owner of an upscale French restaurant in Westchester County has been charged with multiple counts of fraud, accused of falsifying bank records and running up an $80,000 tab on a customer’s credit card.

Barbara “Bobbie” Meyzen, owner of La Cremaillere Restaurant in Banksville, faces a litany of fraud charges, the culmination of a five-year spree of brazen acts of theft and fraud detailed by the U.S. Attorney’s Office for the Southern District of New York.

Meyzen has owned the restaurant since 1993. From August 2015 to July 2016, Meyzen submitted applications for credit on behalf of the restaurant to at least nine lenders and factors. According to the U.S. Attorney’s Office, Meyzen provided the potential lenders with business bank statements that she had altered, changing negative balances to positive balances, removing references to bounced checks and reducing service fees. When one lender discovered that the bank statements had been altered, authorities say Meyzen created an email account in the name of a bank officer and sent an email to the lender stating that the bank statements were genuine.

Authorities say Meyzen falsely represented to the same lender that the second mortgage on the restaurant had been paid off. She is accused of forging a satisfaction of mortgage document, filing it with the Westchester County Clerk’s Office and sending a copy to the lender. Meyzen later denied filing the false document, telling FBI agents that she believed a loan broker with whom she had previously worked had done it.

Meyzen is also accused of charging more than $80,000 in food and restaurant supplies to the American Express card of one of the restaurant’s customers. When the customer discovered the charges, authorities say Meyzen claimed the charges were a mistake and promised to resolve them. She later gave the customer two checks totaling $32,000. The checks bounced.  She told the FBI that she knew nothing about the unauthorized charges and denied giving the customer any checks, according to the U.S. Attorney’s Office.

In September 2018, Meyzen Family Realty Associates, LLC, the company that owns the property where La Crémaillère operates, filed for bankruptcy in U.S. Bankruptcy Court in White Plains. In April 2019, La Crémaillère Restaurant Corp., which operates the restaurant, followed suit. Meyzen is a part owner in both businesses. Two days after the second filing, Meyzen opened a bank account in her name and diverted more than $40,000 of the restaurant’s credit card receipts to that account, authorities said. The funds were used to make payments to a food distributor and to an in-home nursing service.

That bank account was closed on May 1. Six days later, Meyzen opened an account at another bank under Honey Bee Farm, LLC, and diverted La Crémaillère’s credit card receipts, as well as $20,000 in advances on the eatery’s future credit card revenue, to that account, according to the U.S. Attorney’s Office. Authorities say Meyzen used some of that money to make a payment on Meyzen Family Realty’s mortgage and to pay food distributors, wine wholesalers, a commercial trash service, a tableware and china company, and a restaurant employee.

Meyzen, 57, of Redding, Connecticut, has been charged with aggravated identity theft, wire fraud, mail fraud, credit card fraud, two counts of making false statements and one count of concealing a debtor’s property.

Read the complaint here: https://www.justice.gov/usao-sdny/press-release/file/1186206/download

CEO from Westchester County convicted in hedge-fund scheme

The co-founder of a Manhattan investment firm and a former trader at the firm were convicted this week of inflating the value of the firm’s investments. Photo by Bill Oxford on Unsplash

The co-founder and CEO of a Manhattan investment firm and a former trader at the firm were convicted Thursday of securities fraud.

Anilesh Ahuja, 51, the co-founder, CEO and chief investment officer of Premium Point Investments LP, which managed a portfolio of hedge funds, and Jeremy Shor, 44, a former trader at PPI, were convicted of scheming to artificially inflate the value of the firm’s holdings by more than $100 million in order to attract new investors and retain existing ones.

Ahuja, of New Rochelle, NY, and Shor, of New York City, were found guilty of all four counts against them: conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison, and securities fraud, conspiracy to commit wire fraud, and wire fraud, each carrying a maximum potential sentence of 20 years. The men will be sentenced by U.S. District Judge Katherine Polk Failla at a future date.

Before founding PPI a decade ago, Ahuja was the head of the residential mortgage-backed securities group at a global investment bank. At its peak, PPI managed more than $5 billion in assets.

According to prosecutors, from approximately 2014 to 2016, Ahuja and Shor participated in a conspiracy to defraud PPI’s investors and potential investors by mismarking the value of certain securities held by its funds each month, thereby inflating the net asset value of those funds as reported to existing and potential investors.

Two former PPI employees, Amin Majidi of Armonk and Ashish Dole of White Plains, had already pleaded guilty to their roles in the scheme, as had Frank Dinucci Jr., a former salesman at a broker-dealer.

“Investors in our markets must be able to count on the truth and accuracy of the information they receive from those they entrust with their money,” said Deputy U.S. Attorney Audrey Strauss.

To read the U.S. Attorney’s Office’s press release on the conviction: https://www.justice.gov/usao-sdny/pr/hedge-fund-founder-ceo-and-cio-anilesh-ahuja-and-former-trader-jeremy-shor-convicted

To read the U.S. Attorney’s Office’s press release on the indictment of Ahuja, Majidi and Shor: https://www.justice.gov/usao-sdny/pr/hedge-fund-founder-portfolio-manager-and-trader-charged-manhattan-federal-court

To read the indictment: https://www.justice.gov/usao-sdny/press-release/file/1061281/download

New Standards Released for Forensic Engagements

New standards released Wednesday by the American Institute of Certified Public Accountants provide guidance for member engagements involving investigation or litigation.

The American Institute of Certified Public Accountants on Wednesday issued its first authoritative standards for members who provide forensic accounting services.

Forensic accounting services are described in the document as those involving “the application of specialized knowledge and investigative skills by a member to collect, analyze, and evaluate certain evidential matter and to interpret and communicate findings.” The Statement on Standards for Forensic Services No. 1 focuses on certain types of engagements – litigation and investigation – rather than the specific skill sets used or activities involved in those engagements.

Litigation is described in the statement as “an actual or potential legal or regulatory proceeding before a trier of fact or a regulatory body as an expert witness, consultant, neutral, mediator, or arbitrator in connection with the resolution of disputes between parties.” The category includes disputes and alternative dispute resolution.

Investigation is described as “a matter conducted in response to specific concerns of wrongdoing in which the member is engaged to perform procedures to collect, analyze, evaluate, or interpret certain evidential matter to assist the stakeholders in reaching a conclusion on the merits of the concerns.”

The standards generally do not apply to forensic services performed as part of an attest engagement such as an audit, review or compilation, or to internal assignments made by an employer to an employee not in public practice.

Under the standards, an AICPA member who serves as an expert witness in a litigation engagement is generally barred from providing opinions subject to contingent fee arrangements. A member performing forensic services is also prohibited from issuing an opinion regarding whether a fraud has been committed. A member may provide an expert opinion regarding “whether evidence is consistent with certain elements of fraud or other laws.”

The standards were developed and issued by the AICPA’s Forensic and Valuation Services Executive Committee. They are effective for engagements accepted on or after January 1, 2020, but may be voluntarily implemented earlier. Member forensic services are also subject to the AICPA’s broader “General Standards Rule,” which establishes guidelines such as professional competence, professional care and planning and supervision.

If you have any questions regarding this article or other matters related to forensic accounting, please contact Advent Valuation Advisors at info@adventvalue.com.

NY developer charged with running Ponzi-type scheme

A developer and landlord in western New York is charged with running a fraud scheme that prosecutors say cost investors millions.

One of the largest landlords in the country has been charged with operating a Ponzi-like scheme that used millions in investor funds to make interest and principal payments to prior investors, and to cover up other fraudulent conduct.

Robert Morgan, Frank Giacobbe, Todd Morgan and Michael Tremiti were indicted May 21 on 114 counts, charged with conspiracy to commit wire fraud and bank fraud for their roles in what prosecutors describe as a half-billion dollar mortgage fraud scheme. The defendants each face various additional charges such as wire and bank fraud and money laundering. Robert Morgan and Todd Morgan are also charged with wire fraud conspiracy to defraud insurance companies.

The charges carry a maximum penalty of 30 years in prison and a fine of twice the loss caused by the crimes, which is currently estimated to exceed $25 million.

In a related civil case, the Securities and Exchange Commission alleges that Robert Morgan, Morgan Mezzanine Fund Manager LLC and Morgan Acquisition LLC, all of Pittsford, NY, made a series of fraudulent private securities offerings that operated in a “Ponzi scheme-like manner” by using new investor funds to repay prior investors.

Robert Morgan was the managing member and CEO of Morgan Management and controlled a large portfolio of properties, according to prosecutors. Morgan and his companies developed residential and commercial real estate projects, with most of its properties located in western New York and Pennsylvania. According to the SEC complaint, between 2013 and September 2018, Morgan and the related entities raised more than $110 million by selling securities directly to investors.

The money was supposed to be used to acquire multifamily residential properties and engage in other real estate development projects. Investors were promised 11 percent returns. More than 200 investors in at least 17 states poured money into Morgan’s notes funds.

According to the criminal complaint, Morgan Management provided property management, accounting and financial reporting services for properties owned by limited liability companies controlled by Robert Morgan. The defendants are accused of conspiring to manipulate income and expenses for properties to meet financial ratios required by lenders.

“The manipulation included, among other things, removing expenses from information reported to lenders and keeping two sets of books for at least 70 properties, with one set of books containing true and accurate figures and a second set of books containing manipulated figures to be provided to lenders in connection with servicing and refinancing loans,” according to the U.S. Attorney’s Office for the Western District of New York.

Prosecutors say that, between 2007 and June 2017, the defendants conspired with others to fraudulently obtain money, securities and other property from financial institutions and government-sponsored entities like Freddie Mac and Fannie Mae. The defendants are accused of providing false information overstating the incomes of properties owned by Morgan Management or certain principals of Morgan Management.

Many of the projects did not generate sufficient cash flow to repay both their secured lenders and the notes funds, according to the SEC. As a result, the defendants used the notes funds as “a single, fraudulent slush fund, repeatedly using the funds for purposes inconsistent with the representations and disclosures made to investors,” according to the complaint. “To conceal their fraudulent conduct, and to mislead their auditors, defendants papered these transfers using sham loan documents designed to make the transfers appear legitimate.”

Investors are owed more than $63 million, according to the complaint, and the notes funds have few if any assets aside from the receivables for the loans they have made to affiliated borrowers.

Both the criminal case and the SEC’s civil case are being heard in U.S. District Court for the Western District of New York.

For more information:

https://www.justice.gov/usao-wdny/pr/robert-morgan-three-others-indicted-multi-million-dollar-mortgage-fraud-scheme

https://www.sec.gov/litigation/complaints/2019/comp24477.pdf

Protect Your Business from Employee Fraud

Installing a safe and securing cash and other valuables are among the many steps employers can take to fight workplace fraud. Photo by Nicole De Khors from Burst

The bookkeeper for a small Sullivan County business is charged with making $3,000 in personal purchases on the company credit card.

An employee of an Ulster County restaurant is charged with stealing $12,000.

The longtime office manager of an Orange County propane dealer pleads guilty to embezzling more than $1.3 million – the equivalent of four years of profits – by disguising thefts as payments to vendors.

Experts estimate that organizations lose 5 percent of their annual revenues to fraud. Organizations with fewer than 100 employees are more likely to be victimized by occupational fraud – acts committed against an organization by its own officers, directors or employees – than are larger ones. And the losses for small organizations, which are more likely to lack internal controls, are typically twice as large, according to the Association of Certified Fraud Examiners’ Report to the Nations 2018 Global Study on Occupational Fraud and Abuse.

The path to a more secure workplace

Organizations need strong internal controls to prevent theft and fraud. What can a small organization with limited resources do to protect itself? Consider these steps to help reduce risk:

  • Have a written code of conduct, documentation of policies/processes, and anti-fraud policies in place. Have staff review these documents each year.
  • Segregate duties when possible, bearing in mind the potential for collusion.
  • Conduct background checks on all potential hires. If red flags are detected, do not hire the applicant without a confirmed (hopefully, in writing), sound explanation.
  • Rotate job responsibilities when possible.
  • Require employees to use vacation days, and have their job duties covered by another employee who can discover any questionable activity. Follow up with the covering employee. Ask about job-efficiency suggestions, and if they identified any concerns.
  • Provide separate user names and passwords for all authorized IT users, with information-access rights limited to required users.
  • Use a safe and security cameras. Safeguard cash, checks, credit cards and inventory.
  • Take a physical inventory at least once a year.
  • Require authorizations, receipts and recording of all petty cash transactions.
  • Have copies of bank and credit card statements sent to the home of a key manager or board member who can review them.
  • Require detailed receipts for all credit/debit card charges shortly after they are incurred.
  • Require two signatures or written authorization for expenditures over a material dollar amount.
  • Require detailed invoices from vendors that clearly outline goods and/or services provided, related locations/job names, etc.


Give your organization a checkup

Conducting regular reviews of key checkpoints in your organization can help you detect fraud early. If maintaining a schedule is difficult, try random, unpredictable reviews as frequently as possible.

Here are a few ways to get started:

  • Review monthly bank statements. Ensure checks paid were properly authorized and signed. Test large checks to the related underlying documentation. If checks are out of chronological order, determine why, and locate any missing ones. Confirm total deposits match accounting records and investigate any discrepancies. Compare the bank statement to the bank reconciliation and note if any payee name differences exist. If payroll checks are issued, examine any payroll checks with two endorsements.
  • Investigate unexplained differences in monthly cash flows from prior periods.
  • Review monthly or quarterly payroll reports. Investigate unexplained compensation increases, overtime and/or unusual reimbursements. Verify that new employees exist and former employees are no longer being compensated. Investigate any employees with no withholdings.
  • For point-of-sale transactions, reconcile closeouts to bank deposits. Note if discrepancies regularly occur with a specific employee.
  • Investigate unexplained changes in sales from prior periods. Identify missing invoice numbers, unusual credits and potential over- or under-billings.
  • Review software audit trails and access logs to identify any questionable activity or patterns.
  • Compare financial statements to the former period and clarify any unexplained discrepancies.

Here’s a final piece of advice. To limit workplace fraud, build a fair organization. Avoid situations that promote fraud, such as unrealistic goals, poorly designed incentive compensation plans or unfair workloads. Encourage an atmosphere of open communication where problems can be identified and resolved.

If you think your organization may have been victimized by occupational fraud, contact Advent Valuation Advisors at info@adventvalue.com.

Meet Our New Partner, Lorraine Barton

Lorraine Barton

Advent Valuation Advisors, LLC, takes great pleasure in announcing that Lorraine Barton, CPA/ABV/CFF, CIRA, CVA, MAFF, MBA, has been admitted to the partnership. 

Lorraine joined Advent, an affiliate of accounting and advisory firm RBT CPAs, LLP, in 2015. She has an extensive and varied accounting, valuation and litigation-support background in private industry and public accounting.

Lorraine has provided bankruptcy-support services since 2002 and business valuation services since 2004. She previously served as interim chief financial officer of a $125 million credit card processing company operating in Chapter 11 bankruptcy, helping to facilitate the sale of the business and saving more than 100 jobs.

At Advent, she and her team provide valuation and litigation-support services to closely held businesses and their advisors for purposes including mergers and acquisitions, buy-sell agreements, divorce, estate and gift-tax planning and corporate reorganizations.

Lorraine has completed a 40-hour divorce mediation training program that meets the requirements of the New York Association of Collaborative Professionals. She and the firm have wide-ranging experience in matrimonial finance, including asset tracing, lifestyle analysis and forensic examination.

Lorraine lives in Fishkill and has two sons. She is a graduate of Leadership Orange and serves on the NYSSCPA Business Valuation Committee.

She is also a member of the American Institute of Certified Public Accountants (AICPA), the National Association of Certified Valuators and Analysts (NACVA), the Association of Insolvency and Restructuring Advisors (AIRA) and the Hudson Valley Collaborative Divorce & Dispute Resolution Association (HVCDDRA).

“We are so pleased to welcome Lorraine as the newest partner in Advent Valuation Advisors,” said Michael Turturro, managing partner of RBT CPAs. “Lorraine is a crucial part of our continued growth. I wish her congratulations and many years of continued success!”