Police: Two Louisiana fraud investigators killed; suspect dead

Two insurance fraud investigators slain at Louisiana businessThey were killed in Ville Platte, north of LafayetteThe suspect in their deaths died of self-inflicted wound, police said

(CNN) -- Two Louisiana insurance fraud investigators were killed Tuesday while attempting to collect information from an insurance agent who was later found dead, officials said.

Insurance Commissioner Jim Donelon identified the investigators as Rhett Jeansonne and Kim Sledge.

The insurance agent had previously faced criminal charges and civil sanctions, according to police and the insurance office.

"My deepest sympathies go out to the loved ones of our two departed colleagues, in particular, the surviving spouses and children of these brave individuals," Donelon said in a statement.

Police in Ville Platte, about 50 miles north of Lafayette, got a call of shots fired at Lavergne Insurance about 1 p.m., said Trooper Stephen Hammons, spokesman for Louisiana State Police.

The two investigators were transported to the hospital, where they were pronounced dead, he said. It was not immediately clear why specifically they had gone to the business.

State and local SWAT officers tried to make contact with the person barricaded inside the business. They later made entry and found suspect Melvin Lavergne, 67, dead of a self-inflicted wound, Hammons said.

They found a long rifle, but Hammons did not know if it was believed to be the weapon used to shoot the investigators.

Troopers in January arrested the suspect, also referred to as John Melvin Lavergne, on a complaint alleging he conducted unfair trade practices.

The insurance department said Lavergne was served by Department of Insurance Fraud Section investigators with a summary suspension of his license, a cease-and-desist order, a $4,500 fine notice and notice of proposed license revocation for alleged misappropriation of insurance premiums. An update on that case was not immediately available Tuesday night.

The insurance department said that Lavergne failed to remit more than $1,160 in premiums to insurance companies, which resulted in four of his clients having their insurance policies canceled due to non-payment of premiums, it said in a January 2011 press release.

In November 2009, the department announced Lavergne's licenses would be suspended six months because he allegedly provided fraudulent proof of insurance to a motor vehicles department on four occasions. It also fined him $16,500.

CNN's Phil Gast contributed to this report.

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Facebook, Zuckerberg say ownership suit a "fraud" (Reuters)

CHICAGO (Reuters) – Calling the case a "brazen and outrageous fraud," Facebook founder Mark Zuckerberg urged a federal court on Thursday to dismiss a lawsuit by a New York man claiming he owns a huge stake in the social networking website.

In a filing with the U.S. District Court in Buffalo, New York, Facebook and Zuckerberg said the lawsuit by Paul Ceglia is based on a "doctored contract and fabricated evidence." They also called the plaintiff "an inveterate scam artist whose misconduct extends across decades and borders."

Ceglia, a wood pellet salesman from Wellsville, New York, has contended that he contracted in 2003 for 50 percent of Zuckerberg's interest in what became Facebook.

Facebook is privately held, but analysts have said it could be worth $70 billion should it go public. Forbes magazine in March estimated Zuckerberg's net worth at $13.5 billion.

Ceglia originally sued last July, saying he had contracted with Zuckerberg for an 84 percent Facebook stake. In an amended complaint Ceglia outlined what he called emails between himself and Zuckerberg to support his case.

In their response, Facebook and Zuckerberg said they "specifically deny any liability" to Ceglia, and called the lawsuit "a brazen and outrageous fraud on the court."

They also questioned why Ceglia waited seven years to sue, saying he had long been "utterly silent" as Facebook "grew into one of the world's best-known companies."

A lawyer representing Ceglia declined immediate comment.

According to published reports, Ceglia pleaded guilty in 1997 to possession of hallucinogenic mushrooms in Texas. In 2009, he was accused of fraud and had his business shut down.

In a separate case, Cameron and Tyler Winklevoss are appealing to the U.S. Supreme Court a court ruling that upheld their $65 million cash-and-stock settlement with Facebook.

The twin brothers have accused Facebook and Zuckerberg of stealing their idea for the website.

The battle between the Winklevoss twins and Zuckerberg was dramatized in the 2010 Oscar-nominated movie "The Social Network".

(Reporting by Jonathan Stempel in Chicago; Editing by Tim Dobbyn, Phil Berlowitz)

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Facebook, Zuckerberg say ownership suit a "fraud" (Reuters)

CHICAGO (Reuters) – Calling the case a "brazen and outrageous fraud," Facebook founder Mark Zuckerberg urged a federal court to dismiss a lawsuit by a New York man claiming he owns a huge stake in the social networking website.

In a filing Thursday with the U.S. District Court in Buffalo, New York, Facebook Inc and Zuckerberg said the lawsuit by Paul Ceglia is based on a "doctored contract and fabricated evidence." They also called the plaintiff "an inveterate scam artist whose misconduct extends across decades and borders."

Ceglia, a wood pellet salesman from Wellsville, New York, has contended that he contracted in 2003 for 50 percent of Zuckerberg's interest in what became Facebook.

Facebook is privately held, but analysts have said it could be worth $70 billion should it go public, perhaps in 2012. Forbes magazine in March estimated Zuckerberg's net worth at $13.5 billion.

Christopher "Kip" Hall, a lawyer representing Ceglia, declined immediate comment.

Ceglia originally sued last July, saying he had contracted with Zuckerberg for an 84 percent Facebook stake. But after a setback over a jurisdictional issue, Ceglia dropped his lawyer and retained a large global law firm, DLA Piper.

The amended complaint outlined what Ceglia called emails between himself and Zuckerberg to support his case. In one, Zuckerberg appeared to resist a clause that could have given Ceglia a stake greater than 80 percent.

"I'd like to suggest that you drop the penalty completely and that we officially return to 50/50 ownership," Zuckerberg was said to have written on February 2, 2004.

In their response, Facebook and Zuckerberg said they "specifically deny any liability" to Ceglia, and called the lawsuit "a brazen and outrageous fraud on the court."

They also questioned why Ceglia waited seven years to sue, saying he had long been "utterly silent" as Facebook "grew into one of the world's best-known companies."

According to published reports, Ceglia pleaded guilty in 1997 to possession of hallucinogenic mushrooms in Texas. In 2009, he was accused of fraud and had his business shut down by Andrew Cuomo, then New York's attorney general.

In a separate case, Cameron and Tyler Winklevoss are appealing to the U.S. Supreme Court a court ruling that upheld their $65 million cash-and-stock settlement with Facebook.

The twin brothers had accused Facebook and Zuckerberg of stealing their idea for the website. They complained that the 2008 accord was fraudulent because Facebook hid information from them, and that they deserved more Facebook stock.

The case is Ceglia v. Zuckerberg et al, U.S. District Court, Western District of New York, No. 10-00569.

(Reporting by Jonathan Stempel in Chicago; Editing by Tim Dobbyn, Phil Berlowitz)

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Argentina: Hawaii doctor nabbed for billing fraud (AP)

BUENOS AIRES, Argentina – A psychiatrist who has spent a lifetime traveling the world, meeting famous people and giving spiritual awareness lectures has been arrested in Argentina on charges of falsely billing $1 million in health insurance claims in Hawaii, authorities said Tuesday.

Dr. Carlos Livio Warter, 61, was arrested Monday afternoon at his home in a wealthy Buenos Aires neighborhood, where he had been working as a psychiatrist and leading seminars based on his latest book, "Pathways to the Soul."

He was hospitalized at the Fleni Clinic after fainting, said Osvaldo Magnoli, chief of fugitives investigations for Interpol in Argentina. His health was not at risk, and upon his release he would be detained in a federal prison to await extradition proceedings, Magnoli added.

A Chilean-born naturalized U.S. citizen, Warter traveled regularly between Argentina, Chile and Hawaii, FBI special agent Tom Simon said in Honolulu.

Simon said FBI agents working out of the U.S. Embassy in Buenos Aires were coordinating with their Argentine counterparts on the extradition.

Warter says on his website that he has spent 30 years "journeying between the fields of western medicine and the deep exploration of spiritual practices from around the world," doing his residency at Harvard University's Children's Hospital and later lecturing at Esalen Institute.

He has written dozens of books in Spanish and English, and his site shows photos of him meeting with world leaders from Robert F. Kennedy Jr. to the Dalai Lama, Pope John Paul II, Brazilian soccer legend Pele and former U.S. Secretary of State Colin Powell. The site says his non-profit groups include the World Health Foundation for Development and Peace, Heartnet International and Gota de Miel (Drop of Honey), which aids orphanages in Latin America.

A federal grand jury indictment accuses Warter of knowingly sending about $1 million in inflated bills to Medicaid, the Hawaii Medical Service Association and TRICARE, a federally funded program that provides care to military personnel. It alleges he overbilled for sessions that didn't last as long as he claimed, and even billed for sessions when he wasn't physically in the state of Hawaii, pocketing more than $530,000 that he wasn't completely entitled to.

In addition to the federal indictment, Warter was charged in August 2009 with 37 state felonies accusing him of medicare fraud, each punishable by up to five years in prison. This February he surrendered his medical license for failure to comply with professional conduct laws, said Connie Cabral, director of the Hawaii Medical Board.

Argentine police said Warter, who is married and has four children, has been living for more than a year in Argentina. A woman answering his phone in Buenos Aires refused to comment Tuesday.

Jim Carter, listed by Warter as a U.S. contact for his seminars, said the arrest "has got me flabbergasted."

"Everything I've done with him has been on the up and up, and he's made a big positive impact on my life. I'm sure a lot of other people will say the same thing," said Carter, who lives in the Lansing, Mich., area and began following Warter's advice years ago.

"His day job is psycotherapy and the other stuff he does is life coaching, with a spiritual bent," Carter said. "A lot of his work is showing people how their ego is interfering, and to get that out of the way so their essence can grow."

___

Associated Press writers Almudena Calatrava in Buenos Aires and Jennifer Kelleher and Mark Niesse in Honolulu contributed to this report.

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Feds sue Deutsche Bank for mortgage fraud, to recover millions in insurance payments

NEW YORK (AP) — The federal government sued Deutsche Bank Tuesday, saying the bank committed fraud and padded its pockets with undeserved income as it repeatedly lied to benefit from a government program that insured mortgages.

The lawsuit in U.S. District Court in Manhattan seeks to recover hundreds of millions of dollars in insurance claims the government had to pay when homeowners defaulted on their mortgages.

The lawsuit also asks for punitive damages. The government said the bank made substantial profits between 2007 and 2009 from the resale of the risky mortgages, leaving the government to foot the bill for loans that defaulted. The mortgage insurance is issued by the Federal Housing Administration.

The lawsuit said the bank carried out the fraud through its subsidiary, MortgageIT, which employed more than 2,000 people at branches in all 50 states. Deutsche acquired MortgageIT in 2007.

At a news conference, U.S. Attorney Preet Bharara said the bank "repeatedly and brazenly" engaged in a pattern of reckless lending for mortgages "that were really ticking time bombs," sometimes failing even to verify that a mortgage applicant had a job.

"In fact, they often seemed to treat red flags as if they were green lights," he said.

Still, the prosecutor said the government found no evidence of the criminal intent necessary to take the case beyond a civil lawsuit.

"Every lie is not a crime," he said.

In a statement, Deutsche Bank spokeswoman Renee Calabro said the bank has received the complaint and was reviewing it.

"We believe the claims against MortgageIT and Deutsche Bank are unreasonable and unfair, and we intend to defend against the action vigorously," she said.

Calabro said nearly 90% of the activity described in the lawsuit occurred before Deutsche Bank acquired MortgageIT, which had been an FHA lender operating with government oversight for almost a decade.

Since last fall, federal regulators and attorneys general of all 50 states have been investigating lenders accused of cutting corners and using flawed documents to foreclose on many homeowners. In some cases, employees of financial institutions engaged in so-called robo-signing ? approving documents in foreclosures without actually reading them. Foreclosure-fraud class-action lawsuits are also piling up against major banks nationwide.

Bharara said it "would not be a fantastical stretch to think we are looking at other lending institutions as well."

The lawsuit against Deutsche Bank sought to recover more than $386 million that the Department of Housing and Urban Development has paid out in FHA insurance claims and related costs.

It said HUD had paid more than $97 million in FHA claims and related costs arising out of more than 600 mortgages that defaulted within six months.

HUD sets the rules for the FHA mortgage insurance program, including requirements relating to the adequacy of the borrower's income to meet mortgage payments, the borrower's creditworthiness and the appropriateness of the valuation of the property being purchased.

The lawsuit said Deutsche Bank and MortgageIT failed to comply with HUD rules and regulations regarding required quality control procedures, and then lied about their purported compliance.

The government said the quality control violations were egregious, including the failure to review all early payment defaults and to implement minimal quality control processes.

The lawsuit noted that MortgageIT hired an outside vendor, Tena Companies, to conduct quality control reviews of closed FHA-insured loans in 2004 but then never read letters that Tena wrote identifying serious underwriting violations.

"Instead, MortgageIT employees stuffed the letters, unopened and unread, in a closet in MortgageIT's Manhattan headquarters," the lawsuit said.

Associate Press Writer Derek Kravitz in Washington contributed to this report.

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Ex-CEO of mortgage giant convicted of $3B fraud

The former CEO of what used to be one of the largest mortgage companies was convicted today of a $3 billion fraud, the Associated Press reports.

A federal jury in Alexandria, Va., found Lee Farkas, onetime chairman of Florida-based Taylor Bean & Whitaker, guilty on all 14 counts of bank, wire and securities fraud. He was taken into custody pending sentencing July 1.

Prosecutors called it one of the largest bank frauds in U.S. history and one of the most significant convictions stemming from the recent financial crisis. The fraud contributed to the collapse of Alabama-based Colonial Bank, the sixth-largest failure in U.S. history.

Six others pleaded guilty and agreed to testify against Farkas.

The gang of suit-and-tie thieves also tried to scam more than $500 million from the Troubled Assets Relief Program, the taxpayer-funded bank bailout.

Farkas, 58, took the stand during the two-week trial and proclaimed his innocence.

"I didn't believe at the time I committed any crimes and I don't believe now that I committed any crimes," Farkas said.

Prosecutors disagreed, saying the evidence was overwhelming:

They said the fraud began in 2002, when Taylor Bean overdrew its main account with Colonial by several million dollars. Midlevel executives at Colonial agreed to transfer money into Taylor Bean's accounts at the end of each day to avoid generating overdraft notices, a process known as "sweeping."

As the hole grew to well over $100 million, Taylor Bean and a handful of Colonial executives concocted a scheme in which Taylor Bean sold hundreds of millions in worthless mortgages to Colonial - mortgages that had already been sold to other investors. More than $1 billion in such phony mortgages were eventually sold to Colonial, which listed them on its books and on its quarterly reports as legitimate assets, prosecutors alleged.

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Ex-baseball star Lenny Dykstra accused of bankruptcy fraud

Lenny Dykstra, the former star outfielder for the Philadelphia Phillies and New York Mets, has been arrested in California for allegedly selling $400,000 worth of belongings after he declared bankruptcy in 2009, the Los Angeles Times reports.

Separately, he was also charged with grand theft over the purchase of vehicles.

Federal prosecutors charge that about a month after Dykstra filed for protection, he sold a "truck load" of furnishings, without permission from the court-appointed trustee, from his $18.5 million mansion in Ventura County.

The criminal complaint also alleges he sold sports memorabilia, including his World Series ring, and ripped out a $50,000 granite sink to reinstall in an outside office. He could get five years in prison if convicted.

After retiring from baseball, Dykstra opened a luxury car wash near Los Angeles and wrote a stock-picking column for TheStreet.com.

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ACORN Pleads Guilty to Voter Registration Fraud in Nevada

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The defunct political advocacy group ACORN has pleaded guilty to one count of an election law violation in Las Vegas, Nevada.

ACORN attorney Lisa Rasmussen told Fox News that a plea agreement was worked out with the state attorney general. The violation was for unlawfully providing compensation for registering voters based on the total number of people registered. Sentencing for the organization is set for Aug. 10, and the potential fine is a maximum of $5,000.

ACORN itself was named as a criminal defendant in the case for allegedly running an illegal voter registration scheme called "21," or "Blackjack," which paid ACORN workersarned bonuses based on the number of voters they registered in Nevada during the 2008 election. 

This is the only case in the country in which ACORN itself was named as a felony defendant. The organization, a one-time community-based activist group, filed for Chapter 7 bankruptcy after dozens of its workers allegedly committed voter fraud in cases that led to numerous convictions. 

The deputy regional director of ACORN, Amy Busefink, was sentenced to a year of probation in January after she pleaded the equivalent of a no-contest to two misdemeanor counts of conspiracy in relation to the voter registration payment plan.

ACORN field director Christopher Edwards copped a plea with prosecutors and agreed to testify against Busefink and ACORN.

The original complaint filed in May of 2009, included 26 counts of compensation for registration of voters, a felony At the time Nevada Secretary of State Ross Miller, a Democrat, said at the time that "we would be aggressive in our pursuit and prosecution of any fraudulent activity that might threaten the integrity of the election process."

Among the fake names proseuctors said that were filed by ACORN were Dallas Cowboys Tony Romo, along with other members of the team.

ACORN has long faced criticism after dozens of its workers allegedly committed voter registration fraud during the 2008 election. The group dissolved amid falling revenues last year after conservative activists posing as a pimp and prostitute caught some of its workers offering tax advice to them.

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