Texas man and woman behind My Buddy Loans charged with filing hundreds of fraudulent applications for COVID relief (DOJ Release)
Texas man and woman behind My Buddy Loans charged with filing hundreds of fraudulent applications for COVID relief (DOJ Release)The scheme operated from 2010 to February 2018, when postal inspectors executed multiple search warrants and the Department of Justice obtained a court order shutting down the fraudulent mail operation. The indictment and other court filings alleged that Mario Castro, Jose Salud Castro, Salvador Castro, Miguel Castro, Jose Luis Mendez, and Edgar Del Rio worked at the printing and mailing businesses that sent the fraudulent mail, and each shared the profits from the fraudulent prize notices with Patti Kern, who helped manage the scheme. Sean O' Connor provided laser printing and data processing services to the scheme. Burrow opened victim return mail, sorted cash and other payments, and entered data from the victims' responses into a database that the scheme used to target past victims with more fraudulent mail, according to the indictment.
[P]ape and Jung operated under the name My Buddy Loans. In exchange for $1082.50, My Buddy Loans took personal identifying information from third parties and promised to file a federal application for a $10,000 agricultural grant. Instead, Pape and Jung actually filed EIDL applications with the SBA that contained false information. For example, in June and July 2020, Pape and Jung filed 222 EIDL applications, all of which purported to be for businesses with exactly ten employees-the minimum number of employees required to obtain the maximum EIDL advance of $10,000. From those 222 applications, the SBA issued 130 EIDL advances in the amount of $10,000-$1.3 million total.Pape and Jung used Square's credit and debit card processing service to charge third parties the fee of $1082.50. Pape and Jung completed 716 successful charges, obtaining at least $775,000 in fees from third parties. Pape and Jung then transferred the proceeds of the fraud scheme into a bank account they controlled. On one occasion, Pape used the fraud proceeds to pay a traffic ticket. On another occasion, Pape and Jung used more than $3600 from the fraud scheme to pay for a stay at La Cantera Resort in San Antonio, Texas. A picture from that stay shows Pape and Jung celebrating over sparkling wine and other beverages. Pursuant to a seizure warrant, agents seized the $505,535.04 in fraud proceeds remaining in the account.
Customer A and his wife were Holwerda's clients at State Farm's affiliated life insurance company. Customer A was the policy owner and the first named insured on a term life insurance policy that provided coverage for Customer A and his wife. In 2018, Customer A and his wife divorced. In November 2018, Customer A requested that the life insurance policy be cancelled. However, Holwerda understood that Customer A only wanted to be removed from the policy. Holwerda thereafter forged Customer A's signature on a change of ownership form that she submitted to the life insurance company. Customer A eventually discovered the forgery and complained to the life insurance company.
Respondent Steven Robert Luftschein, while associated with Aegis Capital Corp. (Aegis or the Firm), a FINRA-regulated broker-dealer, churned and excessively traded the accounts of three of his Firm customers, Customers A, B and C (collectively, the Customers), from July 2014 through June 2016 (the Relevant Period). During this period, Luftschein executed approximately 430 trades in the Customers' accounts - resulting in annualized turnover rates ranging from 12.5 to 96.3 and annualized cost-to-equity ratios (or break even points) ranging from 35.6% to 123.8%. Luftschein's churning and excessive trading was unsuitable and caused combined losses of more than $261,000 in the Customers' accounts. At the same time, Luftschein's trading in the Customers' accounts generated gross sales credits and commissions of approximately $136,200, with Luftschein receiving a substantial percentage of this amount. By churning and excessively trading the Customers' accounts, Luftschein willfully violated Section 10(b) of the Securities Exchange Act of 1934 (the Exchange Act) and Rule 10b-5 thereunder, and also violated FINRA Rules 2111, 2020 and 2010.Also during the Relevant Period, Luftschein executed 88 trades with a total principal value of approximately $3 1 million in the three Customers' accounts without the Customers' prior authorization. By engaging in unauthorized trading in the Customers' accounts, Luftschein violated FINRA Rule 2010.