MARYLAND FEDERAL JUDGE SENTENCES MAN TO 27 MONTHS IN PRISON FOR EMBEZZLEMENT & WIRE FRAUD RELATE
Prosecutors Bring 11-Count Indictment For Real Life, “House of Lies”
For anyone not familiar with the Showtime original series, “House of Lies” starring Don Cheadle and Kristina Bell, I recommend you check it out if you have some free time on Sundays at 10 pm. The television show is reportedly loosely inspired by the book House of Lies: How Management Consultants Steal Your Watch and Then Tell You the Time, by Martin Kihn. According to Forbes magazine, Kihn is a former management consultant for Booz Allen Hamilton. The show is about a group of ruthless and relentless management consultants who would stop at nothing to earn a buck. Season 3 ends with the main character, Marty Kaan, being arrested by the FBI at his company, Kaan & Associates, for essentially what amounts to insider trading and fraud related offenses. So much for a fast buck!
On February 2, 2015, Brian Hooper was sentenced by U.S. District Court Judge George J. Hazel (Maryland) to 27 months incarceration and ordered to pay $1,031,571.96 in restitution for what could be referred to as a real-life, “House of Lies.” Hooper, 42, pleaded guilty to one count of conspiracy to commit wire fraud in connection with a scheme to steal over $1 million dollars from the Maryland office of the global consulting company, FTI Consulting, Inc. Hooper faced a maximum statutory penalty of 20 years in prison and a $250,000 fine for conspiracy to commit wire fraud in violation of 18 U.S.C. Sections 1343 & 1349.
The scheme played out like a Hollywood original series. According to the Department of Justice Press Release, co-defendant Janice McCumbie worked for FTI Consulting, Inc. in Maryland. FTI provided consulting services for various companies around the world. These companies typically paid a large retainer and FTI used the retainer as compensation for their consulting services. If the retainer had money left over at the end of the engagement or if the customer company accidentally made duplicate payments, FTI would issue a refund check to the company. McCumbie worked in the department at FTI which issued refund checks and her duties included coordinating and issuing refund checks. In 2008, Hooper introduced McCumbie to an unnamed co-conspirator referred to in Hooper’s plea agreement as “co-conspirator A.” Thereafter, McCumbie issued six false refund checks to co-conspirator A, who was not a client of FTI. Co-conspirator A shared the proceeds from the false refund checks totaling $121,081.22 with McCumbie and Hooper. Thereafter, Hooper introduced McCumbie to Leonard Smedley, who also was not a customer of FTI. McCumbie then proceeded to issue 42 false refund checks to Smedley, who similarly shared the proceeds from those refund checks totaling $910,490.74 with Hooper and McCumbie. All 4 defendants were charged in an 11-count indictment and ultimately pleaded guilty to conspiracy to commit wire fraud and received the following sentences:
Leonard Smedley, II, 35, of Capital Heights, Maryland was sentenced to 18 months in prison and ordered to pay $910,490 in restitution;
Amber Gayleard, 29, of Pennsylvania was sentenced to 21 months in prison and ordered to pay $217,695.57 in restitution; and
McCumbie, 45, of Marydel, Maryland will be sentenced on March 12, 2105.
To prove conspiracy to commit wire fraud, in violation of 18 U.S.C. Sections 1343 & 1349 the government must show:
Two or more persons knowingly and voluntarily entered into a criminal agreement;
One or more defendants took an overt act in furtherance of the conspiracy;
The conspiracy involved a willful intent to defraud another, using interstate or international wire transmissions such as internet, telephones, cellular phones, interstate banking transfers, etc.
(There is currently a split in the federal circuits as to whether the government must prove an overt act or not under Section 1349). This scheme involving the above defendants qualifies as “wire fraud” because one or more of the defendants deposited the checks into an interstate bank account and the money was transferred from Maryland and New Jersey to Texas.
While the television show “House of Lies” is certainly entertaining and hilarious, being investigated by the federal authorities in real life is no laughing matter. Anyone who is under investigation for or has been charged with embezzlement or wire fraud should contact an experienced federal criminal defense attorney, knowledgeable about these and other white collar offenses, to discuss the best strategy to handle your case. Additionally, companies who suspect one or more of their employees are involved in embezzlement or fraud should immediately contact a white collar criminal defense attorney who can: (1) conduct a thorough internal investigation, (2) report any findings of wrongdoing to management, (3) determine whether the company should self-report the conduct to law enforcement, and (4) review internal controls and/or recommend remedial policies which will prevent future wrong doing.