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ITMG Insider Threat Cases – January 26, 2022

Former Acting DHS Inspector General Pleads Guilty to Fraud

Charles Edwards, 61, of Sandy Spring, Md., who worked as acting inspector general under the Obama administration, was accused of stealing government software from his former office, so his company, Delta Business Solutions, could sell a case management system to government agencies, according to court documents, cited by the Justice Department on Friday.

Edwards pleaded guilty Friday in the U.S. District Court for the District of Columbia to federal charges stemming from the scheme, including conspiracy to commit theft of government property and theft of government property, and he will be sentenced at a later date, the DOJ said in the statement.

Texas Oil & Gas Manufacturing Company’s DTSA/TUTSA Lawsuit Unraveled by Public Disclosure of Alleged Trade Secret in its Own Expired Patent

After a four-day bench trial on August 10, 2021, a Houston federal judge ruled that the conceptual designs of an oil and gas manufacturing company disclosed to its erstwhile collaborator under an NDA were not eligible for trade secret protection because they were neither secret nor misappropriated due predominantly to disclosure in a prior public patent. The ruling underscores the necessity that trade secrets are—in fact—kept actually secret. Moreover, any prior patent of the party seeking to protect its trade secrets should be scrutinized for similarity with the technology or information allegedly comprising a trade secret.

Former Chick-fil-A Employees Sentenced for Scheme to Steal Funds

According to the plea agreement, between April 2018 and January 2020, Black and Powell devised and implemented a scheme to divert $492,000 in customer payments away from Chick-fil-A Five Points and direct them instead to bank accounts under their control.  Black and Powell used these accounts to receive customer credit card payments intended for Chick-fil-A Five Points. Many of these payments were for catering orders from large customers. To effectuate the scheme, Black and Powell used fraudulent email and digital payment accounts that imitated the look of official Chick-fil-A accounts. In addition to these fraudulent “Chick-fil-A” accounts, Black and Powell also utilized a personal email account belonging to Powell to intercept virtual credit card payments that were made on behalf of an additional customer.

CFO of KC Company Pleads Guilty to $3 Million Embezzlement

A former Overland Park, Kansas, man pleaded guilty in federal court today to embezzling $3.1 million from his employer and failing to pay nearly $1 million in taxes owed to the federal government and the state of Kansas.

By pleading guilty today, Simkins admitted that he embezzled at least $3.1 million from Genesys from 2013 to September 2020 by writing checks on the Genesys account to pay his personal expenses. In order to hide his thefts, Simkins recorded the checks to improper accounts. He also aided and abetted another Genesys employee’s embezzlement of approximately $325,000 from the company.

Baltimore Non-Profit Owner Pleads Guilty to Federal Charges Related to the Gambling of Federal Funds Intended for His Youth Focused Non-Profit and for Filing False Tax Returns

According to his plea agreement, Sherrod owned and operated a non-profit that provided after-school and summer education and sports programs at a Baltimore elementary school from 2015 through 2019.  In 2015, Sherrod applied for a grant funded by the U.S. Department of Education through the Maryland State Department of Education to help support those programs and was awarded approximately $1.1 million sub-program federal funding initiative to be paid over three years.  The amounts to be paid each year were based on a detailed budget that accompanied the grant application.  For each period, Sherrod’s non-profit received a 15% advance payment.  The remaining funds were reimbursed every month after Sherrod submitted payroll registers, receipts, and a detailed budget summary referred to as a Project Invoice Summary.

Between 2016 and 2018 Sherrod electronically submitted 19 Project Invoice Summaries that falsely reported a total payroll of $746,005.02.  Sherrod’s actual non-profit payroll during this period was $212,622.55.  The falsities in the Project Invoice Summaries included the overstatement of wages earned, hours worked, and time periods of employment.

Hollywood Executive Pleads Guilty To Defrauding New York Investment Fund Over $30 Million

In one of the schemes (the “Advertising Scheme”), SADLEIR misappropriated millions of dollars in funds from Aviron that had been invested in Aviron by the Fund.  SADLEIR represented to the Fund that this money had been invested by Aviron in pre-paid media credits with the advertising placement company MediaCom Worldwide (“MediaCom”), which is a subsidiary of the advertising and media agency GroupM Worldwide.  Instead, using the bank account for a sham entity he had created, SADLEIR illicitly transferred out of Aviron over $25 million of those funds.  Specifically, SADLEIR created a sham New York-based company called GroupM Media Services, LLC (the “Sham GroupM LLC”) designed to appear to be the legitimate entity, GroupM Worldwide, and a corresponding bank account in the name of that sham entity.  SADLEIR then used a significant portion of those illicitly transferred funds for his personal benefit, including to purchase a private residence in Beverly Hills for approximately $14 million.  SADLEIR then falsely represented to the Fund that Aviron had purchased an approximately $27 million balance in pre-paid media credits with MediaCom with pre-paid media credits available to promote future Aviron films. SADLEIR pledged a portion of those credits to the Fund as collateral for additional loans, when in fact the claimed credits did not exist.  As part of these false representations, SADLEIR also created a fake identity of a purported New York-based female employee of the Sham GroupM LLC named “Amanda Stevens” who corresponded with a representative of the Fund, assuring the Fund that Aviron had an approximately $27 million balance in pre-paid media credits with the Sham GroupM LLC.  But SADLEIR himself posed as Amanda Stevens when engaging in email exchanges with a representative from the Fund.

This entry was posted on Wednesday, January 26th, 2022 at 9:20 pm. Both comments and pings are currently closed.