A new foe for cons, frauds and swindles
This is an archived article that was published on sltrib.com in 2006, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Have you swindled investors out of their life savings with an offshore account scam? The feds are going to get you.

Lied on your bankruptcy filing? Cheated on your taxes? They're coming after you, too.

Ditto if you're a public official suspected of embezzling government money. Just ask the former Davis School District employees who were indicted last week on charges related to the theft of $4.3 million in federal grants.

A new team of prosecutors at the U.S. Attorney's Office is targeting white-collar crimes, from multimillion-dollar schemes involving dozens of victims to smaller, less-sophisticated scams.

Call them fraud busters.

"It doesn't matter who you are," said U.S. Attorney for Utah Brett Tolman. "If you're breaking the law, we're going to aggressively prosecute you." On Wednesday, authorities announced two of the first indictments involving public trust since the office's white-collar crime section was established several months ago.

Three former Davis School District employees are accused of stealing federal grant money meant to help disadvantaged students. Two of them, Susan G. Ross and John D. Ross, allegedly began siphoning off millions of dollars in 1985. The couple deny the allegations against them. The third, Stella V. Smith, is accused of taking $338,000 in payment on fake invoices from 1999 to 2005. Her attorney said last week that he was reviewing the indictment before commenting.

The case is typical of many matters being handled by the white-collar section, with money allegedly routed through other companies and with alleged perpetrators taking advantage of the victims' trust.

It's also the type of case that was more actively prosecuted in Utah in the past, according to Tolman. He said the focus shifted away for a while because of the complexity of the cases, the difficulty to prove fraud allegations, and the time and money that went into investigating them.

But then the growth in businesses in Utah led to a corresponding increase in white-collar crimes.

In a recent big case, conspirators allegedly set up bogus offshore accounts in the Isle of Man off the coast of England to help investors hide income, then stole the money for themselves, according to prosecutors.

A half-dozen promoters of the scheme, run through Anglo-American Investment Ltd. and Anglo-American International, were convicted in 2004 of various offenses. The head of the companies, Kirk Koskella, was prosecuted separately and pleaded guilty to tax conspiracy and wire fraud. He is serving a 10-year sentence and has been ordered to pay almost $15 million in restitution.

And in April, three men were indicted on wire fraud charges for allegedly bilking investors of $6.6 million in what a federal grand jury says was a fraudulent stem cell research firm in Salt Lake City. The defendants are accused of selling stock in the company, targeting overseas investors, but doing no research. The case is pending.

Barbara Bearnson, criminal division chief at the U.S. Attorney's Office, says prosecutions of frauds are important because of their tremendous effect on victims, some of whom end up in financial ruin. The office tries to get warrants allowing the seizure of money and goods even before indictments are issued so ill-gotten gains can't be hidden, she said.

Mark Hirata, chief of the white-collar crime section, said it was difficult sometimes in the past to recover money from con artists. His team of prosecutors hopes to be smarter and quicker than the offenders so they can find the money immediately, rather than waiting until a conviction to ask for forfeiture, he said.

"We want to get in on the front end and, when we can, get our arms around the assets," Hirata said.

Agencies working with the U.S. Attorney's Office fraud unit include local police departments, the FBI, the Internal Revenue Service, the Secret Service, the U.S. Department of Health and Human Services, the Office of the U.S. Trustee, the Securities and Exchange Commission and the Utah Department of Commerce's securities division.

The focused approach Utah is taking could make a difference in prosecutions of white-collar crime in the nation, Tolman said.

"We intend to be a standout," he said. "This little flyover state is going to make a name for itself."

pmanson@sltrib.com

U.S. Attorney's Office: Team of prosecutors targets white-collar crimes in Utah
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