Tag: fraud

bookmark_borderChester County Based Fraud

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PHILADELPHIA, PA — The FBI issued a statement saying Christopher Stehm, 51, of Mason, Ohio, was charged with defrauding his employer, Berwyn-based Ametek Inc., of at least $659,731, announced United States Attorney Zane David Memeger. According to the information, Stehm was the chief accounting officer at two different offices of the company when he submitted phony claims for expense reimbursements, many of which he supported with doctored receipts. Stehm is charged with two counts of wire fraud and two counts of filing false tax returns.

Stehm was the controller for Ametek’s Chandler division in Broken Arrow, Oklahoma, from about January 2006 through March 2010. In April 2010, Ametek promoted Stehm to be the vice president of finance at its HCC division in Cincinnati, Ohio, and Stehm held that position until November 2012. In both positions, Stehm was his office’s chief accounting officer. According to the information, throughout his employment at Ametek, Stehm used a variety of methods to obtain “reimbursements” for expenses that he either never incurred or that were wholly personal in nature. These methods allegedly included cutting off the tops of receipts or “whiting out” portions of receipts that Stehm submitted with his expense reimbursement claims to make them appear to be business-related. Stehm also allegedly used copies of the same receipts to support multiple expense reimbursement claims.

Ametek is a publicly traded company (symbol AME on the New York Stock Exchange) that manufactures electronic instruments and electromechanical devices for sale in numerous countries. The company is headquartered in Berwyn, Pennsylvania, but it has offices in numerous locations in the U.S. and overseas.

The information alleges that among the numerous personal expenses Stehm submitted for reimbursement from Ametek were repairs to his personal cars, private meals, and the purchase of a family dog. Stehm also allegedly hid his illegal income from the Internal Revenue Service and claimed baseless deductions when he filed his tax forms for 2010 and 2011, thereby under-reporting his annual income by more than $100,000 in each of those tax years.

If convicted of all charges, the defendant faces a maximum possible sentence of 46 years in prison, three years of supervised release, a $1 million fine, and a $400 special assessment.

The case was investigated by the FBI and the Internal Revenue Service Criminal Investigations. It is being prosecuted by Assistant United States Attorney Mark B. Dubnoff.

An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.

bookmark_borderScheme to Steal Public Assistance Benefits

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HARRISBURG, PENNSYLVANIA — Agents from the Attorney General’s Public Corruption Unit have arrested a former employee from a Pennsylvania Department of Public Welfare (DPW) office in Philadelphia who is accused of orchestrating a scheme to steal more than $330,000 in public assistance payments.

Attorney General Linda Kelly identified the defendant as Kyshima D. Montgomery, 23, of 2934 North Judson St., Philadelphia.

Kelly said that evidence and testimony concerning the theft of state welfare benefits was presented to a statewide investigating grand jury, which recommended the charges that were filed today. Kelly also noted this is an active and ongoing investigation and additional arrests are anticipated.

“This is a disturbing scheme to corrupt the public assistance system for personal gain by diverting massive amounts of taxpayer funds from their intended purpose, aiding Pennsylvania residents who are struggling to feed and support their families,” Kelly said.

According to the grand jury, Montgomery used her position as a clerk at the DPW’s Philadelphia County West District Office to place tens-of-thousands of dollars in additional cash benefits into the accounts of numerous friends, associates and other individuals, without proper authorization.

Kelly said that most of the extra payments were in the form of “One Time Issuances,” which are intended to assist recipients with additional expenses, such as job training, books or fees. Montgomery allegedly transferred these additional funds into the Electronic Benefit Transfer (EBT) accounts of the targeted individuals, allowing the money to be withdrawn with an EBT card, which functions much like a bank debit card.

The grand jury found that Montgomery withdrew the majority of the extra funds for her own use before turning the EBT cards over to the other participants in this scheme. Many of the co-conspirators understood they were receiving additional benefits, often improperly – typically several hundred dollars in extra funds – but most were not aware that Montgomery was allegedly using their accounts to funnel thousands of dollars to herself.

Kelly said that between December 2010 and May 2011, Montgomery allegedly made $235,648 in unauthorized payments to various EBT accounts, much of which was withdrawn as cash using various ATM’s and bank branches in Philadelphia.

Additionally, Montgomery is accused of transferring an additional $104,310 to other EBT accounts, but those funds were frozen by the Department of Public Welfare before the money could be withdrawn.

Montgomery is charged with 17 counts of theft by deception, one count of criminal attempted theft by deception, 18 counts of criminal use of a communications facility, 18 counts of unlawful use of a computer and 14 counts of criminal conspiracy, all third-degree felonies which are each punishable by up to seven years in prison and $15,000 fines.

Montgomery is also charged with one count of theft by deception and one count of criminal conspiracy, both first-degree misdemeanors which are each punishable by up to five years in prison and $10,000 fines.

Montgomery will be prosecuted in Philadelphia County Court of Common Pleas by Senior Deputy Attorney General E. Marc Costanzo of the Attorney General’s Criminal Prosecutions Section.

Kelly noted this arrest involving the theft of DPW benefits in Philadelphia comes only weeks after agents from the Attorney General’s Office arrested two former caseworkers from Delaware County who were charged with stealing nearly $300,000 in a similar public assistance fraud scheme.

Kelly thanked the Pennsylvania Department of Public Welfare and Pennsylvania Office of the Inspector General for their cooperation and assistance with these continuing investigations.

(A person charged with a crime is presumed innocent until proven guilty.)

bookmark_borderCaution: Storm-related Scams

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HARRISBURG, PA — The Attorney General (Linda Kelly) urged Pennsylvania residents to be cautious about storm-related consumer problems and potential scams in the coming days, as residents assess damage and communities work to recover from Hurricane Sandy.

“Natural disasters can be a magnet for scam artists and unscrupulous operators who are more interested in taking money from storm victims than in helping with repairs,” Kelly said.  “Consumers should remain vigilant, understand their rights and carefully evaluate any contractors they hire to repair homes or to address other storm damage.”

Kelly noted that the most common topics for consumer complaints following disasters include home repair scams, government loan or grant schemes, fraudulent disaster-related fundraising efforts and concerns about price gouging.
Home Repairs

“It is understandable to homeowners to look for speedy repairs, attempting to return to ‘normal’ activities as quickly as possible, but consumers should not allow the desire for immediate repairs to cloud their judgment regarding contractors,” Kelly said.

Kelly explained that all home improvement contractors who do more than $5,000 worth of business per year in Pennsylvania are required to register with the Attorney General’s Bureau of Consumer Protection. Additionally, all of those businesses are required to provide consumers with specific information before proceeding with any project, including:

  • The contractor’s registration number, which must be included in all contracts, estimates and advertisements.
  • A written contract for any project costing more than $500.
  • Information about the consumer’s three-day right to cancel a home improvement contract.
  • Details about the materials and labor included in the project.
  • Total cost of the work.
  • A specific start-date and end-date for the project.

Additionally, Kelly explained that the state’s Home Improvement Consumer Protection Act limits the amount of any up-front payments that contractors can collect.  For projects costing more than $5,000, contractors may not accept advance payment of more than one-third of the total price of the contract.

Kelly also encouraged consumers to get multiple estimates for any major project, to check references for recent work before committing to a project and to be wary of individuals who approach you with stories of “just being in the neighborhood” or other unsolicited offers that seem “too good to be true.”

Warning signs for potential home repair scams include:

  • Unsolicited door-to-door sales pitches.
  • Requests for large up-front payments.
  • No written estimates or contracts.
  • Offers to perform work using “left over” or “discount” materials from other jobs.
  • High-pressure sales pitches.

“When consumers understand their rights, they are much better prepared to identify and avoid potential scams,” Kelly said. “If you encounter a contractor who is not providing the information required by Pennsylvania law, we encourage you to file a complaint with our office and consider using another business for your project.”
Government loan or grant scams

Kelly said that government aid for communities and businesses is often a major topic of public discussion and media coverage following a disaster, but many victims may not be familiar with how those programs operate.

“Scam artists attempt to prey on desperate storm victims who are looking for assistance – requesting up-front payments in order to process applications for ‘loans’ or other ‘disaster aid,’ or to search for grants and other funds,” Kelly said. “It is important for everyone to understand that legitimate government assistance programs and relief agencies do not ask for pre-payment from disaster victims.”

Kelly urged storm victims to contact their local governments directly to get a list of available disaster-relief programs – checking with their local city, borough or township office; their county emergency management office; the Pennsylvania Emergency Management Agency (http://www.pema.state.pa.us/portal/server.pt/community/disaster_assistance/4687); the Federal Emergency Management Agency (http://www.fema.gov/); and the U.S. Small Business Administration, along with established private relief organizations such as the American Red Cross.
Fictitious Fundraising Efforts

Kelly said that in times of disaster, scammers may attempt to take advantage of peoples’ desire to help their neighbors by collecting contributions for non-existent charities or other deceptive solicitations.

Kelly urged consumers to consider the following tips:

  • Be wary of high-pressure tactics and door-to-door collections.
  • Ask for details about any charity before you make a donation.
  • Request information about how funds will be spent (legitimate charities will tell you what percentage of your gift will go toward community services, operating expenses or fundraising).
  • Make contributions directly to the charity – do not give cash donations.

Charitable organizations operating in Pennsylvania are required to register with the PA Department of State.  Consumers can check the registration status of charities using the Department of State’s searchable online database at http://web.dos.state.pa.us/cgi-bin/Charities/char_form.cgior by calling the Department of State Charities Bureau at 1-800-732-0999.
Price Gouging

Kelly said that Pennsylvania’s price gouging law is intended to protect consumers and businesses from sudden, unwarranted price increases during emergency situations.

The price gouging restrictions were triggered by Governor Corbett’s declaration of a disaster emergency on October 26th and apply to anyone involved in the distribution or sale of consumer goods or services. The price restrictions apply to businesses involved in direct consumer sales, along with manufacturers, suppliers, wholesalers and distributors.

Gouging is defined as a price increase of more than 20% above the average prices observed during the week before the emergency declaration.

Kelly said the price gouging law gives the Attorney General’s Bureau of Consumer Protection the authority to investigate price gouging complaints and allows for penalties of up to $10,000 per violation.

Kelly encouraged consumers to report potential price-gouging or other consumer related scams by submitting an online consumer complaint using the Attorney General’s website, at www.attorneygeneral.gov(Click on the “Complaints” button on the front page of the website and then select the “Consumer Complaint Form”).

Consumers who do not have access to a computer can call the Attorney General’s Consumer Protection Hotline, at 1-800-441-2555 (Monday through Friday during normal business hours).