Some financial crime suspects get to avoid jail cells

Sunday , July 27, 2014 - 6:21 AM

Attorneys General Investigation

This combination of Tuesday, July 15, 2014 photos provided by the Salt Lake County Sheriff shows...

The Top of Utah is no stranger to accusations of high-profile crime.

In March, South Weber Councilman Michael Poff was charged with communications fraud for reportedly dishonest behavior In his work as an administrator at Bountiful’s Welcome Home Assisted Living. Kaysville man Dee Allen Randall was charged with 23 felonies in June for allegedly running a Ponzi scheme that brought in $72 million from hundreds of investors, including northern Utah’s Boy Scouts of America Trapper Trails Council and the federal Small Business Administration. Private security companies reportedly got in on the action too: North Salt Lake man Michael Anthony Vigil, co-owner of Salt Lake Valley Protective Services, pleaded guilty in May to avoiding paying both taxes and his employees.

And statewide, residents witnessed the arrest of two recent prosecutors-in-chief, Mark Shurtleff and John Swallow, on a bevy of corruption charges, earlier this month. That legal fight has been on high display for well over a year.

Accusations of backdoor financial deals and illicit promises to investors and employees define many of these cases. But high-stakes financial crime arrests often look very little like the process undergone by street criminals accused of theft, burglary and robbery:

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- Swallow and Shurtleff didn’t have to go into a holding cell. The two were “booked” and signed in at the Salt Lake County Jail, but were never put behind bars.

- Poff was given a choice of several locations up and down the Wasatch Front for the precise location of getting his booking mugshot. Poff ultimately chose to have his photo taken at the Salt Lake County Jail.

- Court documents indicate Randall was never jailed for his alleged Ponzi scheme, having posted $100,000 bail in late June to avoid arrest. The warrant that had been issued for his arrest had been recalled, according to court records.

Do such allowances indicate a double standard in how different kinds of criminal suspects are viewed in the justice system? Two Weber County Sheriff’s detectives sat down with the Standard-Examiner to discuss why they believe arrests are made differently for those accused of white-collar crime.

That term is first and foremost a misnomer, says Detective Don Kelly, who works as an analyst in Ogden’s Real Time Crime Center but also deals largely with financial cases. “White collar crime,” Kelly says, indicates theft on a large scale and that it is fundamentally different than snatching someone’s purse or taking their car. It isn’t, he says.

“Law enforcement works rely hard to view the public and view the people we’re dealing with. We try to treat everybody the same. Just like any human being -- I’m a human being – we’re not always completely successful at that, but we try to do that,” Kelly said. “So the problem of (calling large scale financial fraud) ‘white collar crime’ versus some other kind of crime is you might be saying, well, we’re going to treat a white collar crime maybe better somehow than a person who commits theft. But the truth of the matter is they’re the same thing. The white collar criminal is committing theft.”

It’s clear that many high-profile financial cases don’t involve a holding cell for the alleged perpetrator, Kelly said, but that’s very frequently because of the nature of financial crime investigations.

“We’re not right on top of the crime. I’m not standing out there in front of the bank when the guy comes out with the bag of money and you know we point the guns at him we arrest him and take him to jail,” Kelly said. “No, what we’re dealing with as detectives is a case that might have happened six months or a year prior. Quite often the level of evidence, it’s not necessarily ... the smoking gun, where you’ve got five witnesses who have signed in blood, ‘this is exactly what happened.’”

It’s not uncommon for a high-profile financial crime suspect to be interviewed by police for several months before enough evidence is collected to obtain an arrest warrant, Kelly said.

Because the element of surprise is already taken away, Kelly said, the benefits of a physical arrest are reduced.

“Whether we have an attorney appear with them (at the jail) or whether we go and get them and take them (there), they’re going to have to be booked,” he added. “They appear at the jail. If there’s a bond they have to post a bond and they have to meet the requirements for the booking process.”

Detective Scottie Sorensen specializes in financial crime and has been working in the county’s Investigation Bureau since 2002. He told the Standard-Examiner that booking procedures vary by case because the initial booking is generally a temporary process anyway.

“Even if you arrest them they still have the option of bailing,” Sorensen said, noting affluent fraud criminals typically do bail out quickly regardless. “I can’t even think of any times in my career with finance crimes a judge has ever ordered someone to stay in jail without bail. So there’s always bail, there’s always that option.”

In “cases where there’s a lot of knowledge, where the public … wants answers,” he said, the flight risk is negligible.

Sorensen said people typically think of major schemes when it comes to financial crime. But most theft and fraud is petty crime and easily tracked down.

“The misconception is that they get away with it. Other crimes are way easier to get away with than financial crimes,” he said. ”With financial crimes you always leave a trail that we can follow not always do we get our suspect. But it’s easier to investigate a finance crime than it is a vehicle burglary or something to that effect.”

Contact reporter Ben Lockhart at 801-625-4221 or blockhart@standard.net. Follow him on Twitter at @SE_Lockhart. Like his Facebook page at www.facebook.com/blockhartSE.

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Sentencing panel to weigh economic crime penalties

Thursday , August 14, 2014 - 7:17 AM

By ERIC TUCKER Associated Press

WASHINGTON (AP) — The federal panel that sets sentencing policy announced Thursday that it plans in the coming year to consider changes to sentencing guidelines for some white-collar crimes.

The U.S. Sentencing Commission, which earlier this year reduced guideline ranges for drug crimes, unanimously approved its latest set of priorities. The top priority will be continuing to work with Congress on reducing the scope and severity of mandatory minimum penalties, but another goal will be evaluating the fairness of sentences for economic crimes like fraud, the commission said.

The panel had been reviewing data for several years, but plans to hear more from judges, victims and others to decide “whether there are ways the economic crime guidelines could work better,” the commission’s chairwoman, Patti Saris, a federal judge in Massachusetts, said in a statement.

Defense lawyers who long have sought the changes say a window to act opened once the sentencing commission cut sentencing guidelines for drug crimes, clearing a major priority from its agenda.

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It’s unclear what action the commission ultimately will take, especially given the public outrage at fraudsters who stole their clients’ life savings and lingering anger over the damage inflicted by the 2008 financial crisis. But the discussion about tweaking sentences for economic crimes comes as some federal judges have chosen to ignore the existing guidelines in some cases and as the Justice Department, which has said it welcomes a review, looks for ways to cut costs in an overpopulated federal prison system.

Sentencing guidelines are advisory rather than mandatory, but judges still rely heavily on them for consistency’s sake. Advocates arguing that white-collar sentencing guidelines are “mixed up and crazy” could weaken support for keeping them in place, said Ohio State University law professor Douglas Berman, a sentencing law expert.

The commission’s action to soften drug-crime guidelines is a signal that the time is ripe, defense lawyers say. The commission this year agreed to reduce guideline ranges across drug types and then apply that change retroactively to the current inmate population, a move that could permit tens of thousands of drug-dealing felons to seek an early release. The commission says no inmate would be freed early under the change unless a judge determined that the release would not jeopardize public safety.

Just as drug sentences historically have been determined by the amount of drugs involved, white-collar punishments typically are defined by the total financial loss caused by the crime. Advocates hope the commission’s decision to lower sentencing guideline ranges for drug crimes, effectively de-emphasizing the significance of drug quantity, paves the way for a new sentencing scheme that removes some of the weight attached to economic loss.

A 2013 proposal from an American Bar Association task force would do exactly that, encouraging judges to place less emphasis on how much money was lost and more on a defendant’s culpability. Under the proposal, judges would more scrupulously weigh less-quantifiable factors, including motive, the scheme’s duration and sophistication, and whether the defendant actually financially benefited or merely intended to.

The current structure, lawyers say, means bit players in a large fraud risk getting socked with harsh sentences despite playing a minimal role.

“It’s real easy to talk about 10, 15, 20 years, but when you realize just how much time you’re talking about ... it’s too much,” said Washington defense lawyer Barry Boss, an ABA task force member.

No one is talking about leniency for imprisoned financier Bernie Madoff, who’s serving a 150-year sentence for bilking thousands of people of nearly $20 billion, or fallen corporate titans whose greed drove their companies into the ground. But defense lawyers are calling for a sentencing structure that takes into account the broad continuum of economic crime and that better differentiates between, for example, a thief who steals a dollar each from a million people versus $1 million from one person.

Any ambitious proposal will encounter obstacles.

It’s virtually impossible to muster the same public sympathy for white-collar criminals as for crack-cocaine defendants sentenced under old guidelines now seen as excessively harsh, which took a disproportionate toll on racial minorities. The drug-sentencing overhaul also was promoted as fiscally prudent, because drug offenders account for roughly half the federal prison population. Tea party conservatives and liberal groups united behind the change.

In comparison, the clamor for changing white-collar guidelines has been muted. The Justice Department, already criticized for its paucity of criminal prosecutions arising from the financial crisis, has said it’s open to a review but has not championed dramatic change.

“I don’t think there’s a political will for really cutting back or retooling the guidelines,” Columbia University law professor Daniel Richman said.

Follow Eric Tucker on Twitter at http://www.twitter.com/etuckerAP

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S. Weber councilman pleads not guilty to felonies

Thursday , July 17, 2014 - 5:54 PM

Standard-Examiner staff

FARMINGTON — A South Weber councilman accused of embezzling hundreds of thousands of dollars from an assisted living center pleaded not guilty to the felony charges on Thursday, four months after the original charges came down.

Second District Court Judge Robert J. Dale set a date for 60 days out for scheduling a pretrial hearing, since there was so much discovery to still go through.

Michael Poff, 41, of South Weber, faces three communications fraud charges, all second-degree felonies, for actions that happened between 2008-10 when he worked as an administrator for Welcome Home Assisted Living In Bountiful.

A pretrial conference is scheduled for September since attorneys from both sides say they have “thousands of pages” of bank records and documented evidence to go through.

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Since Poff was officially charged on March 27, he has had the expectation of complying with a court summons. Court records indicate Poff should have been booked and released from the Davis County Jail prior to his April 30 appearance, according to a summons order signed by Judge Michael G Allphin. That didn’t happen, so the judge encouraged Poff to “get that taken care of.” He had not been booked and released as per the court summons by his May 7, or his May 28 hearing. On May 28 Poff’s attorney had the judge approve a special stipulated order for book and release. There were no contempt of court charges or additional fines applied by the judge for previously not complying with the court order, which is an option for the violation.

The special order allowed Poff to get his mugshot taken at any of eight locations along the Wasatch Front from Logan to Provo. Something court clerks insist is not an uncommon practice. It wasn’t until June 11, two days before his next hearing, that he went into the Salt Lake County Jail in the 3rd District Court’s jurisdiction and was booked and released. 

The case has been more than two years in the making and includes a Homeland Security investigation. Bountiful police asked for help from Homeland Security Investigations over a year ago to participate as subject matter experts due to the “substantial experience in investigating transnational financial crimes,” wrote HSI spokesman Andrew S. Muñoz in a statement to the Standard-Examiner.

According to another assisted living center that has served the Davis County area for over 20 years, this isn’t the first time Poff has tried to make off with money while in a management position.

Shane Ericksen, who manages Country Pines Assisted Living in Clinton, said Poff worked his way up the ranks to management there. Poff got the job through his father-in-law, David Preece, who once managed the location. Preece moved on to be a part-owner at Thatcher Brook Rehabilitation & Care Center in Clearfield, but was recently found guilty by a jury of nearly 40 different charges of fraud against the company in a civil lawsuit. About $1.8 million was awarded to Thatcher Brook Rehabilitation Center and its investors after a jury unanimously found Preece had sifted money from the company he was a part-owner of, according to court documents.

In 1996, Poff was hired on at the Country Pines center as a cook with the help of his father-in-law Preece. By the time Poff worked his way up the ranks into management it was uncovered he had stolen tens of thousands of dollars from the company, according to Ericksen, who added that Poff wanted to make things right after being caught.

“Poff offered to repay as much of it as possible,” Ericksen told the Standard-Examiner in an earlier interview.

The owner allowed Poff to cash out his entire 401K plan and pay the company about $25,000, but that didn’t cover all of the losses.

Angela Elmore, Poff’s defense attorney, said her client declined to comment on the allegations of what happened at Country Pines or the current charges against him related to Welcome Home.

Poff has been serving as a city council member since January 2004. He is in his third term. South Weber City has declined to take any action until the adjudication of the case since the criminal charges are not linked to his responsibilities as a public servant. Currently Poff is responsible for South Weber’s city mission statement and oversees Commercial/Economic Development, Eagle Scout and youth service projects, the Youth City Council, and Central Weber Sewer Improvement District Board.

Contact reporter Cimaron Neugebauer 801-625-4231 or cimaron@standard.net Follow him on Twitter at @CimaronNews or on Facebook at facebook.com/SECimaron

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Alleged Kaysville Ponzi mastermind makes first court appearance

Wednesday , July 02, 2014 - 6:17 PM

Standard-Examiner staff

SALT LAKE CITY — Dee Allen Randall, the Kaysville man accused of duping investors in a $72 million Ponzi scheme, attended the first hearing of his criminal case Wednesday in 3rd District Court. 

Randall was charged with 23 felony counts of securities fraud in June and is being prosecuted by the Utah Attorney General’s Office. He allegedly misled investors about the use of their funds from 2006 to 2011, all while selling securities without a license to do so.

Randall’s initial appearance was held primarily to set a date for his next hearing: a scheduling conference July 21 at 9 a.m. before 3rd District Judge Denise Lindberg. The date for Randall’s preliminary hearing and other court appearances will be tentatively set at that conference. Lindberg is only the temporary judge in Randall’s case, according to attorney general spokeswoman Missy Larsen.

Randall has also been fighting several civil lawsuits against him. Eighty-seven creditors have sued Randall for lost investments in an ongoing class action lawsuit, including the South Ogden-based Boy Scouts of America Trapper Trails Council. The federal Small Business Administration and financial giants such as American Express, City National Bank, Bank of New York Mellon, U.S. Bank and Wells Fargo Bank are also suing Randall. 

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Contact reporter Ben Lockhart at 801-625-4221 or blockhart@standard.net. Follow him on Twitter at @SE_Lockhart. Like him on Facebook at www.facebook.com/blockhartSE.

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Former Utah AGs booked and released

Wednesday , July 16, 2014 - 9:58 AM

By MICHELLE PRICE The Associated Press and CIMARON NEUGEBAUER Standard-Examiner staff

SALT LAKE CITY — Two former Attorney Generals for Utah were booked and released from the Salt Lake County jail, according to jail personnel.

They did not have to pay the $250,000 bond originally requested by the courts, according to the jail processing attendant. It was not disclosed how long the two former top cops actually spent in the jail before being released. They were allowed to leave on a pretrial release.

Utah Department of Public Safety Capt.Doug McCleave said neither man received special treatment and anyone facing these sort of charges would be dealt with in the same manner.

“It was consistent with what we would normally do, for someone looking at these kinds of charges,” McCleave told the Standard-Examiner adding that all the key stake holders and prosecutors in the case met to decide the court of action and vet it out.

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This morning authorities arrested and charged two former Utah attorneys general who were targets of a bribery probe that stemmed from their cozy relationships with several businessmen during their time in office.

In May of 2012, the Utah Department of Public Safety (DPS), State Bureau of Investigation (SBI) was asked by representatives in the Utah Attorney General's Office to conduct a criminal investigation into the alleged criminal activity of Timothy Lawson, according to a DPS statement issued on Tuesday. “Lawson's activities appeared to be related to the investigation of Marc Jenson by the Attorney General's office.“ 

The case was turned over to DPS because of a potential conflict of interest between Marc Jenson, Timothy Lawson and Attorney General Mark Shurtleff. 

Salt Lake County District Attorney Sim Gill said John Swallow and Mark Shurtleff were taken into custody Tuesday.

Salt Lake County Jail records show John Swallow was booked Tuesday on four felony charges, including receiving or soliciting a bribe and misusing public money. Shurtleff was booked on four felony charges, three of which were bribery-related. Two of Swallow’s charges and all four of Shurtleff’s charges each come with a maximum penalty of 15 years in prison and a $10,000 fine.

Shurtleff has been charged with 10 counts of second or third-degree felony charges, according to court documents. The charges range from bribery, accepting gifts when prohibited, improper use of employee’s position, tampering with a witness or evidence and obstructing justice.

Prosecutors charged Swallow with more counts, but some were misdemeanors. He was charged with 13 counts, 11 of those were either second or third-degree felonies. The charges range from misuse of public money, falsifying government records, receive or solicit bribery. Tampering with evidence, providing false or inconsistent material statements to investigators and failure to disclose a conflict of interest.

Swallow and Shurtleff’s attorneys did not answer after-hours calls Tuesday morning.

The arrests come more than 14 months after county prosecutors started scrutinizing Shurtleff and Swallow’s relationships with businessmen, including allegations of a chain of favors, campaign donations and gifts such as spa vacations and use of a private jet and luxury houseboat.

Swallow resigned in late 2013 after spending nearly 11 months dogged by allegations of murky dealings with questionable businessmen and employing underhanded campaign tactics in 2012.

At a nearly half-hour news conference announcing his decision, Swallow adamantly denied breaking any laws and said the toll of the scrutiny had become too much for him and his family.

The first bombshell allegations dropped less than a week after Swallow took the oath of office in January 2013, when a businessman in trouble with federal regulators accused Swallow of arranging a bribery plot involving Senate Majority Leader Harry Reid of Nevada.

Reid and Swallow denied the allegations.

In the months following, the accusations and investigations snowballed, and led to probes by the U.S. Department of Justice, Utah elections officials and the state bar.

An investigation from Utah lawmakers concluded Swallow destroyed and fabricated records and hung a veritable “for sale” sign on the door of the attorney general’s office.

Swallow denied the allegations and said any missing records were deleted unintentionally.

Shurtleff, his predecessor, is Utah’s longest-serving attorney general and left the office in early 2013 after a dozen years as the state’s chief law enforcement officer.

When he decided not to seek a fourth term, he accepted a job with a large Washington, D.C., law firm.

He left the job six months later after one businessman claimed that four years earlier, Shurtleff had offered him $2 million if he stopped trying to find a suspected swindler.

That came on the heels of a jailed businessman’s claims that he paid for meals, golf and massages for Shurtleff and Swallow at a Newport Beach resort months after the Utah attorney general’s office charged him with fraud.

Shurtleff and Swallow denied the allegations, and Shurtleff said they played no role in his decision to leave the Washington firm.

 

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