The Second Amended Complaint has now been filed in the United Bank / Walnut Springs case, on behalf of 33 plaintiffs. The Complaint is 70 pages long and details as sophisticated scheme of bank and appraisal fraud, which now has been exposed in very specific detail.
One of the primary reasons I have posted so sparsely lately is due to my responsibilities on what is possibly the largest lawsuit against a West Virginia bank ever. We have filed suit against the State’s largest bank – United Bank. There are now several dozen plaintiffs who have joined the suit. I agreed to hold off posting any details on the matter due to one major newspaper’s efforts at publishing an expose’ on the case.
After following the case for over a month, the reporter submitted a large article, which was to be published on the front page. In true West Virginia fashion, United Bank was apparently able to pull the plug on the story, an order which apparently came from the corporate owner of the newspaper. I have since learned that United Bank is the financial institution for that corporation. Did they threaten to call in a loan? Who knows. It’s a great wake-up call when you learn these type of things – that the news you read in a newspaper is not necessarily all the news that is fit to print, but rather all the news fit to print which also fits the political agenda of the corporate owners.
Anyways, here is the latest Amended Complaint, which shows that sometimes truth is stranger than fiction. A new Amended Complaint is set to be filed within the next two weeks containing the numerous additional plaintiffs, which I will post after it is filed.
It’s been a while since I last posted. There is a good reason for that. The reason is that unfortunately, my primary profession is the practice of law rather than writing. I have been busier than ever before in the last month or so. For one I had a healthy baby daughter two weeks ago, and she surprisingly loves to sleep through the night, so she is so far no trouble at all (I know, knock on wood). Additionally, I have been working on a number of high profile cases, some of which you may be reading about in the media in upcoming days.
One of my cases is already in the news, and unfortunately for my ego I suppose, the only way you would know that I was involved in it would be to read the Complaint, or to read this, since the media has thusfar deprived me of any credit whatsoever. Anyways, myself and attorney Michael Clifford of Charleston (see Leavitt case), filed a lawsuit against the Parkersburg Police Department, as well as the individual officers involved, last week in federal court. This is a 1983 action for wrongful arrest, excessive force, etc.
There will be a better and more detailed article coming out on this case, after which I will post a link to it here. The facts are egregious, and involve the new classification of homophobic crimes as hate crimes. For now, here is the original story from the Parkersburg News and Sentinel, which interestingly multiplied automatically when it was picked up by the AP.
If anyone else knows someone, or has themselves been arrested,harassed or discriminated against by the Parkersburg Police Department due to their sexual orientation, please let me know, preferably as soon as possible.
As I said, this is not the only high profile case I have been working on. There is going to be another police liability case filed here in the next week or so, this time in Southern West Virginia, and there is an additional case involving white collar fraud I have been spending most of my available time on which is extremely interesting and which I will detail when the time is right. So don’t hold it against me if I cannot find time to post as often as I used to.
- John H. Bryan, West Virginia Attorney.
[Note: at the polite request of innocent family members, I replaced the name of the least culpable defendant with ****.]
Surprisingly, it appears that I am the first to break this story – that the “Cattlegate Cons” were sentenced this morning by U.S. District Court Judge Thomas E. Johnston as follows:
O’Brien was sentenced to 97 months of active incarceration and 3.4 million dollars in restitution.
Henthorn was sentenced to 9 months of incarceration and a $75,000 fine.
***** was sentence to 5 months of incarceration and a $50,000 fine.
ANOTHER UPDATE: The Register-Herald has now published a lengthy article on the sentencing yesterday. Reporter Christian Giggenbach noted in the article that Judge Johnston made some interesting observations about the case during the sentencing hearing.
Johnston also railed on Henthorn, 46, of Lewisburg, for abusing his position of trust in the banking community. He also insinuated this was probably not the only illegal act Henthorn had committed.
“You were living a privileged life and you threw that away,” Johnston said. “This is an example of what can happen when you allow greed to overcome you.”
Henthorn also apparently attempted to get his probation officer to remove negative letters that were going to the judge.
Former FNB board member James C. Justice II of Beckley was among family and church members who wrote letters in support of Henthorn. One document filed by a court official indicated the defendant called his probation officer on June 4 and asked her if “she would remove the negative” letters from his support file.
“The probation officer responded she would not do so … Mr. Henthorn was obviously upset by this answer and ended the conversation soon thereafter,” wrote U.S probation officer Peggy Adams.
Can you believe the arrogance of this guy? Judge Johnston also questioned why First National Bank of Ronceverte was suspiciously absent from this entire ordeal – despite the fact that their President and Board members caused this whole mess. According to the article:
Johnston also asked a rhetorical question about Henthorn’s former employers.
“I’m puzzled by the fact that First National Bank has not participated at all in this hearing,” the judge said. “I expect the whole story has yet to be told.”
However, there was a former board member and one former president of First National Bank there supporting Henthorn and *****, respectively (see Justice above). According to the article:
****** had about 15 friends and family members present for the hearing, including former state Commerce Secretary and ex-FNB president Tom Bulla, who Johnston vocally noted had come to support ******. Johnston said individuals filed more than 100 letters of support for ******, “the most I’ve ever seen in a case.”
So, “FNB” was not completely absent, they were represented by former officials – who were there to ask the judge to be lenient. I would note that one of those former officials himself resigned from the board only shortly before ***** and Henthorn themselves resigned from “FNB,” which was reported publicly, but not explained. Don’t you just love banks? Their only motivation is money, and even when their hands are publicly caught in the cookie-jar, they can just switch presidents and board members, and continue on foreclosing on people’s homes who do not have connections to the Board, and making sweetheart loans to crooks like O’Brien, who do have connections to the Board. For too long citizens have been abused by bank boards using their positions to help their buddies and harm innocent folks. A bank would slit your throat if they thought they could make a buck. And lawyers get a bad name….
To *****, Judge Johnston had this to say:
“You participated in a sorry effort to cover this up … which almost resulted in an obstruction charge,” Johnston said.
“Is this the way business is done in Greenbrier County? By being present when a bribe is slid across the table to a bank president?
Johnston then asked why ***** would have risked so much by setting up the bribes, but then not receive any money in return. Johnston also suggested this was not ***** first brush with illegal activity. Forbes told the court ***** turned down bribe money when approached by O’Brien.
“Why would a man of your experience get involved with this?” Johnston asked.
Lastly, the Register-Herald article noted that the case is still being investigated, and that the defendants will most likely enter prison within the next 30 to 45 days. It will be interesting to see whether Judge Johnston is right that “the whole story has yet to be told….”
Note: There also is a new Charleston Gazette article this morning.
- John H. Bryan, West Virginia Attorney.
Regarding the Greenbrier County “Cattlegate” case, the Register-Herald published an article this morning detailing defendant Kevin O’Brien’s presentencing memorandum filed by his defense attorney, in which his attorney states that this was not a typical fraud case because “many of his victims’ losses were unintended.”
Since when are ponzi schemes and check kiting not typical? It sounds like every other “white-collar” federal fraud prosecution that hits the headlines. I guess the word to pay attention to is “many.” There were a lot of victims, some of which were obviously intended. When you “sell” some poor sap a herd of cows that either don’t exist, or that you have already sold to someone else, you darn well intend to cheat that person out of their investment. Of course there were others that he didn’t know about. When you cheat someone, you also cheat others who were depending on the person you cheated. Although you may not intend to directly cheat those people, it is absolutely foreseeable that others will be affected and harmed.
O’Brien’s attorney argues that he will never be able to operate the same type of scams again because of the media coverage surrounding the case.
“Because (his) criminal prosecution has received a tremendous amount of media coverage in his community, it is highly improbable that individuals will place the trust in him necessary to engage in the same criminal conduct upon his return to the community.”
Yeah, but what if he moves to Florida? I guarantee that nobody there has ever heard of him. He could change his name, or use a pseudonym – and Florida is the third largest cattle-producing state. He could go right back into business. He obviously has no qualms about running a scam. He probably only regrets getting caught. If ever in the future he things he can do something like this again and get away with it, do you think he will hesitate? People would have no idea about his prior prosecution. But maybe if he serves a long stretch in federal prison, his desire to be a free man will overwhelm his greedy criminal tendencies.
– John H. Bryan, West Virginia Attorney
The Register-Herald published a rather lengthy and informative article about Greenbrier County’s “Cattlegate” scandal this morning. I have posted on this matter several times thus far, here, here, here, here and here, and I have noticed a lot of interest in this case from the sheer amount of search engine traffic directed to my site from searches about these individuals. I suppose that some people were relying on me to post an update to this matter since the sentencing was supposed to already have happened. But I really didn’t have any idea what was going on. But, I knew that Register-Herald reporter Christain Giggenbach was on top of it, so I need only wait until he published an article, which I knew he surely would – and this morning he did.
Apparently the sentencing was supposed to have taken place this morning, but it was continued, though there were no motions filed by either the prosecution or the defense. Well why was it continued? Apparently these angelic creatures have turned stool pigeons and are collaborating with authorities in investigating other individuals. But since all these canaries are proven liars, I’m not sure what their help is worth, and investigators better not give their words more than a micro-ounce of a grain of salt. The history books are full of tragedies which have occurred through the utilization of this type of snake-in-the-grass testimony. For example, see this post from Glen Graham at the Oklahoma Criminal Defense Blog.
The sentencings were continued to October 17 at 10:30 a.m. before U.S. District Court Judge Thomas E. Johnston in Beckley’s Federal Courthouse.
So what kind of sentences are they looking at? A lot of people have commented to me that this bunch is going to get away with probation, but that will not happen. They may however, get some type of home confinement, or mixed sentence. With respect to O’Brien, a presentencing memorandum filed by Assistant U.S. Attorney L. Anna Forbes recommended a prison sentence up to 10 years, but “indicated the defendant has provided more information about possible criminal conduct of others who may have filed claims in his multi-million dollar bankruptcy case.” Lastly, she writes to the Court that “a sentence within the advisory guildine range of 97 to 121 months of imprisonment is appropriate.” So fear not, even with his sleazy finger-pointing, he will be doing time.
With respect to Henthorn and *****, the AUSA recommended 6 to 12 months, while their lawyers are arguing for home confinement or a mixed-type of sentence – and they are apparently strenuously snitching as much as the feds will allow, in order to get what they want. Mind you, that all of these defendants already snitched on each other – one even reportedly wearing a wire in a conversation with the others.
I know that there are a lot of people out there, in Greenbrier County, Monroe County – and across the fruited plain – who want the Judge to stick it to them. The AUSA noted in her memorandum that:
“One of the victims is a single-mom with a couple children in college, another is a Virginia cattle farmer with a small farm who lost so much money and was so ashamed by his financial predicament that he could not, for a long time, bring himself to tell his wife about what the defendant had done,” Forbes wrote. “Many of the victims attempted to pursue claims in bankruptcy, a process that left some with unsatisfactory settlements, large legal fees and a sense, because of the perceived misconduct by other creditors, that they had not been treated fairly by the bankruptcy system.”
So this is a great group of guys. Real quality people, and I wish them luck on the 17th.
- John H. Bryan, West Virginia Attorney.
I apologize for not posting much this week, but it has been one of those end-of-the-month weeks…
As I had previously detailed, the sentencing for O’Brien, Henthorn and **** was scheduled for Friday, June 30, but now has been continued until sometime in the fall. This was likely a joint motion as probation officers had likely not completed their presentencing reports, which the lawyers must rely on and respond to accordingly, depending on what they contain. It’s important to remember that in federal court, the most frequent claim for legal malpractice comes out of mis-advice given by attorneys, to their clients, regarding the federal sentencing guidelines, so it is important to get it right the first time.
For those of you who don’t know, this is just a case that probably repeats itself in all other small towns across the country. You have good country folks who work hard to earn a living. Then you have the fat cats, who get high-on-the-hog by ripping off the working folks. Most times they are greedy, compulsive, narcissistic liars who have an obsession with all things underhanded. They will do anything for money – anything that is, except for actually earn it. They look down at the working peons as a bunch of suckers who were not blessed with the infinite wisdom they were born with, when in reality they were just born as spoiled rich kids with a lack of morals and manners.
It still blows my mind that this bank CEO, and they almost always become extremely rich legally, would throw his life away for $10,000 worth of bribes… In all likelihood, this was not the first time, there probably were many other bribes passed under the table, and that was what made it worth it in his mind, not this particular bribe.
You can read the full article here.
- John H. Bryan, West Virginia Attorney.
From the Charleston Gazette today:
Yesterday Saad Kamil Deeb, a Welch Pharmacist, pled guilty to a 3 count information, charging him with enlisting others to help him conduct transactions at a McDowell County bank so that he could move large amounts of money without triggering a Currency Transaction Report. A financial institution is required to file such a report with the Internal Revenue Service for any transaction over $10,000.
Assistant U.S. Attorney Hunter Smith said that between 2001 and 2005, Deeb became heavily involved in gambling on sports, betting large sums of money and even placing bets on behalf of his friends.
Whether he won or lost, his gambling proceeds or debts were paid in cash, Smith said. Usually, the amounts would approach $100,000 before Deeb or his bookies paid up, he said. “Mr. Deeb did not want the IRS to know that he was engaged in large cash transactions,” Smith said. So he and the others would keep their transactions under the $10,000 ceiling, Smith said, sometimes transferring just under that amount to various accounts several days in a row. According to the information, Deeb and his associates moved more than $871,000 that way over a four-year period. Deeb also admitted skimming cash from the pharmacy and filing false tax returns in 2003 and 2004, failing to report roughly $300,000 in income for each year, resulting in a tax loss of $175,000. Deeb has since filed amended reports and caught up on the taxes he owes, Smith said.
Who knew that a small town pharmacy could make that much so as to skim $300,000 per year for a gambling habit (addiction)? It makes you wonder who is at fault for the high prices of prescription drugs… My grandfather was a small town pharmacist, and for part of my life I grew up in his pharmacy. Things must have changed a lot since then… or maybe that is just par for the course in McDowell County….
– John H. Bryan, West Virginia Attorney.
From the Register-Herald:
Another lawsuit filed against bank, officials in alleged cattle fraud case
By Christian Giggenbach
LEWISBURG — Another lawsuit has been filed against First National Bank of Ronceverte and two former bank officials, this time by an Illinois man who alleges disgraced cattle broker Kevin Scott O’Brien defrauded him out of $104,000.
The lawsuit, filed by Robert Dwyer, named First National Bank, former bank president Charles A. Henthorn and former board director **** as defendants.
Henthorn and **** recently pleaded guilty in federal court, Henthorn for taking $10,000 in bribes from O’Brien, and **** for setting up bribes.
O’Brien pleaded guilty to a mail fraud charge involving the sale of cattle in fraudulent Ponzi schemes. A sentencing date has not been set for any of the defendants.
Dwyer claims he gave O’Brien $104,000 in February 2006 for “80 pairs of heifers and their calves,” which should have been shipped to Dwyer’s farm in Carthage, Ill.
“Instead of arranging for the cattle to be trucked to Dwyer … O’Brien sold the cattle to ****,” the lawsuit said. “O’Brien’s sale of the Dwyer cattle to **** was simply one of the last acts of fraud and deceit in O’Brien’s continuing scheme.”
Dwyer claims the bank knew about the **** deal, but looked the other way because O’Brien owed the bank money.
“The bank, through its senior management, including Henthorn and ****, devised a scheme with O’Brien pursuant to which O’Brien would sell **** cattle,” the lawsuit said. “The money that **** paid for the cattle was to be deposited into O’Brien’s checking account in satisfaction of debts that O’Brien owed the bank.”
Dwyer is seeking punitive damages on the basis of fraud, civil conspiracy, and aiding and abetting a wrongful act, among other charges.
Dwyer is being represented by Charleston lawyer James W. Lane.
Neither **** nor Henthorn could be reached for comment.
In February, another Illinois man, Frederic W. Nessler, filed a $340,000 lawsuit against the same three defendants alleging fraud.
O’Brien, who is currently mired in a multimillion-dollar bankruptcy, wasn’t named as a defendant in either suit.
— E-mail: firstname.lastname@example.org
From the Charleston Gazette:
Dawn Compton, who pleaded guilty to embezzling more than $10,000 from the West Teays Elementary parent-teacher organization, consults with her lawyer, David Moye, in Putnam Circuit Court on Thursday. ..
Ex-PTO mom pleads guilty to embezzling more than $10,000
By Alison Knezevich
WINFIELD – The former president of a Putnam County parent-teacher organization pleaded guilty Thursday to embezzling more than $10,000 from an account meant for playground equipment and a school carnival.
Dawn R. Compton, 42, admitted in Putnam Circuit Court that between August 2006 and July 2007, she had taken $10,338.07 from the West Teays Elementary School PTO to buy items for herself.
At her hearing, she wrote out a $3,000 check to the PTO. Her lawyer, David Moye, said he would mail the check to the PTO today.
Compton told the judge she would be able to pay back the rest of the money by the end of August.
“She and her husband are working together to withdraw it from his 401(k) plan,” Moye said.
Students at the elementary school missed out on new playground equipment, a year-end carnival, and other activities because of Compton’s dishonesty, PTO vice president Jennifer Johnson told the Gazette. One of Compton’s children attends the school, she said.
“Taking money from these children – that’s just sad,” Johnson said. “I can’t tell you how many volunteer hours I put in to raise that much money.”
PTO officers started getting suspicious last spring, she said. Usually, the checking account had a healthy balance of tens of thousands of dollars.
“We started receiving collection notices and bills that had not been paid, and there was no money to be found,” she said. “We didn’t have a penny.”
Compton had complete control of the finances, Johnson said.
“She would not let anyone touch the checkbook,” she said. “Even the treasurer.”
Johnson said she feels sorry for Compton’s family, but “parents need to know that there are consequences.”
In court, Compton said she would usually write PTO checks out to cash, and then use the money for herself.
She also would go to stores such as Sam’s Club and use PTO money to buy items for both the school and herself, Moye said.
“She wanted to make it right with the PTO,” he said.
The missing money caused somewhat of an uproar among West Teays parents last summer. Last July, Putnam County schools treasurer Bill Duncan went over the group’s books after parents alleged money was missing.
On Thursday, Duncan said he had turned over his findings to a police officer months ago. He said he never knew that Compton had been charged with a crime.
“I’m happy that [prosecutors] followed through with it,” Duncan said. “We lose the faith of the public if they feel that their money’s not safe. That’s my greatest concern.”
Compton was charged via an information, which usually means a defendant cooperated with investigators. She waived her right to indictment by a grand jury.
Spaulding released Compton on a $10,000 personal recognizance bond. Assistant Prosecutor Larry Frye said she had cooperated with prosecutors and was not a flight risk.
She could face one to 10 years in prison and a $2,500 fine when she is sentenced April 11.
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