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FBI Operation Lease Fleece---Update

by Christopher Menkin



 

November 7, 2007, the FBI investigation dubbed "Operation Lease Fleece" indicted over 23 in their roles in a fraud scheme that allegedly caused more than $20 million in losses to several lending institutions that believed they were financing equipment leases. Many were disguised "sale/leasebacks" or leases that exceeded the "soft costs" such as software and installation. Many were on ghost equipment. Adam Zuckerman told Leasing News he set up phony bank accounts, trade references, fake vendors, knew how to fool site inspections, and existed before the days of Lease Police. He was taught this, he said, by Jim Raeder and Mark McQuitty, after they leased space in his building, and then when there were disagreements on commissions, he basically went on his own, as he thought this was a common practice, and even got an opinion from an Equipment Leasing and Finance Association recommended attorney (well-known in the industry) that it was "okay." Leasing News in a previous story printed an email from the attorney and had two parts of a series on Zuckerman printed until Leasing News was told authorities did not want further publication involving almost three months of interviews with Zuckerman published and Leasing News complied with the request.

It seems McQuitty and Raeder allegedly brought leases from their main business to this "group," and also started generating leads through fax marketing for working capital loans using equipment that originally existed, and then later, was more than inflated, did not exist at all.

The press release issued by the United States Attorney's Office Central District of California:

“The charges are a result of an FBI investigation dubbed Operation Lease Fleece, which targeted individuals in the equipment-leasing industry, including loan brokers, equipment vendors and an employee of CitiCapital.

“Some of the defendants – through companies called CapitalWerks in Santa Ana, Brickbanc Capital in Costa Mesa and others – marketed cash loans to small businesses experiencing credit problems. Once small businesses agreed to apply for loans, some of the defendants instead submitted equipment-lease applications to lenders. The equipment-lease applications, which were inflated so that the defendants could obtain lucrative “commissions” for themselves, were submitted along with false invoices that purported to document the sale of computer equipment to the small businesses. The defendants submitted the fraudulent equipment-lease applications because the qualifying criteria were less stringent than for a cash loan. After the lending institutions approved financing for the equipment leases, the proceeds were not used to purchase equipment as promised to the lenders. Instead, the money was used to make improper cash loans to the small businesses and to pay lucrative commissions to employees at CapitalWerks, Brickbanc and the other companies. Hundreds of bogus equipment-lease packages with fake invoices were presented to financial institutions.

“The FBI was assisted in their investigation by Citicapital, the leasing division of Citibank, which suffered an estimated $9.5 million in losses and discovered that one of their employees had perpetuated the fraud. Other victim-institutions include Wells Fargo Bank, GE Capital, American Enterprise Leasing, Key Bank, Bank of America and U.S. Bank. Investigators estimate that the victims suffered at least $20 million in losses.”

There have been other indictments since the first 23; almost all have turned evidence with a "guilty plea" except for what appears to be a key case the US Attorney and FBI want to try. No one has directly stated this, but in interviews with many of those named as well as law enforcement officials not directly connected to the case, it appears sealed cases of information are to be sealed until their trial, with some cases actually "closed."
 

Chant Vartanian and Sarkis Vartanian trial continued to October 18th, 2011. It appears to be the main one, although there may be other indictments, but the FBI and US Attorney General's office has no comment, public or private.

Shant (Chant) Vartanian, president of ISystems Technology and Solutions, 3650 East Olympic Boulevard, Los Angeles, California, and his brother, Sarkus Vartanian, Vice-President, Marketing are reportedly still in business, as well as working with several Southern California leasing companies. One company allegedly working with the Vartanian brothers is owned by the top salesman for CapitalWerks for five years, now a CLP and National Association of Leasing Broker’s Best Practice Broker. Previous requests for a comment or statements have not been issued.

Alphabetically these are the alleged top shearers and their sentencing dates (states are primarily California unless otherwise indicated):


 

Mark McQuitty, 50, of CapitalWerks/Preferred Lease of Trabuco Canyon sentencing date continued to August 22, 2011 (allowed to travel to New Zealand, where he was born and raised) from 4/16-5/16/2011.


 


 

Jim Raeder, 46, of CapitalWerks/Preferred Lease, formerly Mission Viejo, now living in Colorado, sentencing set for September 26, 2011. A condition of pretrial release was issued "...(a) do not use alcohol; (b) submit to drug and/or alcohol testing and outpatient treatment as directed by Pretrial Services; and (c) Comply with all conditions of probation for defendant's State of Colorado case."
 

Adam Zuckerman, 41, of BrickBanc, Laguna Beach sentencing set for October 24, 2011. He has been involved in other investment controversies, in which he has reportedly prevailed.
 

These are changes in sentencing, chronologically, of those named:

Brian Sime, 33, BrickBanc, Irvine also known as Joe Turner also known as Tonga sentencing continued until July 25, 2011

Leigh Dorand, 42, Tech Capital, Phoenix, Arizona sentencing continued until August 1, 2011.

Paul Arnold, 60, Brickbanc, Laguna Hills sentencing sent for August 1, 2011.

George Simon, 42, Advantage IT Solutions, Redondo Beach, sentencing sent for August 1, 2011.

Kirk A. McMahan, 35, Brickbanc, Newport Beach sentencing continued until August 29, 2011.

Jeffrey Greenough, 52, Peniche, Laguna Beach sentencing continued to September 19, 2011.

Troy Worrell, 51, Peniche, Newport Beach, sentencing continued until September 19, 2011.

Geoffrey Silver, 39, of Silver Industries, Calabasas, sentencing continued until October 17, 2011.

Chance Nell Weaver, Axis Communications, Tarzana sentencing continued to October 31, 2011.

Michael Scott Grayson, Axis Communication, Tarzana sentencing continued to October 31, 2011.

Michard Norris, 60, CapitalWerks/Preferred Lease, Los Angeles, sentencing sent for November 14, 2011.

Les Spitzer, 64, Pyramid Infinite, Grenada Hills, also known as Guy Amsalem continued until November 21, 2011.

Alphabetically, these people have already been sentenced:

James H Breedlove, 55, Santé Fe Equipment, Newport Beach: “12 months and 1 day imprisonment, with credit for time served. Pay $100 special assessment. Pay total restitution of $391,976.25. The defendant shall be held jointly and severally liable with convicted co-participants Mark McQuitty (Docket No. SACR 07-00236-CJC) and James Raeder (Docket No. SACR 07-00237-CJC) for the full amount of restitution ordered in this judgment. Interest on restitution ordered waived. 3 years supervised release under terms and conditions of US Probation Office and General Orders 318 and 01-05.”
 

Mark Castleman, 51, Industrial Information Systems, Chino Hills, indicted for mail fraud and November 19, 2008 pled guilty. “April 23, 2009. Hearing held before Judge Cormac J. Carney as to Defendant Mark P Castleman. Defendant Mark P Castleman (1), Count(s) 1, 1 day imprisonment, with credit for time served. Pay $100 special assessment. All fines are waived. 3 years supervised release under terms and conditions of US Probation Office and General Order 318. Bond Exonerated. Sixty (60) hours of community service with the first six months.
 

Douglas Cox, 42, CapialWerks/Preferred Lease, Rancho Santa Margarita, placed on probation for 1 year under terms and conditions of US Probation Office and General Orders 318 and 01-05. Pay $100 special assessment

Harold Gold, 79, Leasing Services, Falmouth, Massachusetts, placed on probation for two years under terms and conditions of US Probation Office and General Orders 318 and 01-05. Pay $100 special assessment.

Lourey McComber, 57, Prescott Valley, Arizona, Peniche, appears to have had a medical problem, and last entry shows a Government motion to dismiss information without prejudice and signed by Judge Cormac J. Carney. There appears to be another entry made in Yuma, Arizona that was terminated.

Nohad Mousa, 44, Saut Wa Soora, Inc., Anaheim, pled guilty to 18:1341 MAIL FRAUD before Judge Cormac J. Carney. “JUDGMENT AND COMMITMENT by Judge Cormac J. Carney as to Defendant Nohad Mousa (1), Count(s) 1, 6 months imprisonment, time served. Pay $100 special assessment. Pay total restitution of $94,775. Interest on restitution ordered waived. Defendant shall be held jointly and severally liable with co-participant George Simon (Docket No 8:07CR00246) for the amount of restitution ordered in this judgment. All fines are waived. 3 years supervised release under terms and conditions of US Probation Office and General Orders 318 and 01-05. Signed by Judge Cormac J. Carney. “
Plea Agreement:
leasingnews.org/PDF/NohadMousa.pdf

Leo J. Najera, 64, ECCI, Mission Vallejo, July 20th JUDGMENT AND COMMITMENT by Judge Cormac J. Carney as to Defendant Leo J Najera (1), Count(s) 1, Defendant is sentenced to 1 day imprisonment, which the Court determines has been served. Pay $100 special assessment. Pay total restitution of $396,251.22. The defendant shall be held jointly and severally liable with convicted co-participants Mark McQuitty (Docket No SACR 07-236-CJC) and James Raeder (Docket No SACR 07-237-CJC) for the full amount of restitution ordered in this judgment. Interest on restitution ordered waived. Placed on supervised release for 3 years under terms and conditions of US Probation Office and General Orders 318 and 01-05.

Anthony E. Watson, 65, CapitalWerks/Preferred Lease, Los Angeles, pled guilty before Judge Cormac J. Carney. 1 day imprisonment with credit for time served. Pay $100 special assessment. All fines are waived. 3 years supervised release under terms and conditions of US Probation Office and General Orders 05-02 and 01-05. (mt)
 

John J. Callaghan, 38, of Warminster, Pennsylvania, who worked at Citicapital, one of first 23 indicted, no record found.

John Budge, 38, of Sartell, Minnesota, who worked at Bach Business Credit, one of first 23 indicted, no record found.

Note: This list may not be complete as information gathered came from many different sources, including the original US Attorney Press Release. Ages also may not be correct, but are estimated from the original date of filings.

Indictment of Chance Nell Weaver showing how the scheme worked
http://www.leasingnews.org/PDF/ChanceWeaver.pdf
 

Grand July October, 2007 Indictment of Michael Scott Grayson (Citibank connection)
http://www.leasingnews.org/PDF/MichaelScottGrayson.pdf

Previous Operation Lease Fleece Stories:
http://www.leasingnews.org/Conscious-Top%20Stories/Lease_Fleece.htm