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Quatloos! > Investment Fraud > HYIP & Bank Debentures > HYIP > U.S. v Namer U.S. v. Namer Indictment in US v. Namer, which gives you an indication of how law enforment prosecutes alleged HYIP/prime bank scam promoters. IN THE UNITED STATES DISTRICT COURT UNITED STATES OF AMERICA, Plaintiff, v. DAVID I. NAMER and Defendants. Cr. No. 00-20176-M1 15 U.S.C. § 77q(a) INDICTMENT THE GRAND JURY CHARGES that at all times relevant to this indictment: COUNT 1 (Conspiracy to Commit Securities Fraud, Wire Fraud, and Mail Fraud) A. INTRODUCTION 1. Defendant DAVID I. NAMER, a resident of Memphis, Tennessee, was primarily in the business of issuing and selling corporate notes to the investing public, purportedly for the purpose of raising operating capital for various companies. 2. From 1994 through 1996, DAVID I. NAMER issued and offered for sale a total of approximately $ 35 million principal amount of unregistered, purportedly insured corporate notes on behalf of Montalbano Builders , Inc. ("Montalbano"), AVN Corp. ("AVN"), Transportation Leasing Corporation ("TLC"), Lending and Investment Advisory, Inc. ("LIA"), Voyageur Lines, Inc. ("Voyageur"), Mitchell County, Georgia, Revenue Authority Series 1994 ("Mitchell County 1994"), Mitchell County Georgia, Revenue Authority Series 1995 ("Mitchell County 1995"), Tri Star Financial Corporation ("TSFC"), Aircraft Leasing and Funding Company, LLC ("Aircraft Leasing"), Ray & Ross Transport, Inc. ("Ray & Ross"), and Northstar Leasing Company, LLC ("Northstar Leasing") (collectively, the "Issuers"). 3. DAVID I. NAMER issued and sold these note issues principally through two Tennessee corporations, Network Mortgage Services, Inc ("NMS"), and Offshore Insurance Services, Inc. ("OIS"). Their offices were located at 1080 West Rex Road, Memphis, Tennessee. 4. DAVID I. NAMER made all business decisions for both NMS and OIS and controlled the companies' bank accounts and finances. Although he listed various family members as the shareholders and directors of the companies, they played no role in the companies' business or financial affairs. 5. Although DAVID I. NAMER described himself and NMS as merely the financial advisor to the Issuers, he dominated and controlled the Issuers and effectively made all significant business decisions on their behalf concerning the note offerings. 6. FREDERICK J. SMITH, an insurance broker, was the owner and operator of the Cara Group Ltd. d/b/a Associated Insurance Agency, located at 50 Redfield Street, Boston, Massachusetts. B. THE CONSPIRACY 1. Beginning in or about January 1994, and continuing through the present, in the Western District of Tennessee and elsewhere, the defendants, ------------DAVID I. NAMER ----------------- and ---------FREDERICK J. SMITH ----------------- did unlawfully, willfully, and knowingly combine, conspire, and agree with each other and with other persons known and unknown to the grand jury to commit the following offenses against the United States: a. in the offer or sale of any securities by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly, (1) to employ any device, scheme, or artifice to defraud, or (2) to obtain money or property by means of anyuntrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser, in violation of Title 15, United States Code, Sections 77q(a) and 77x; b. to transmit and cause to be transmitted by means of wire communication in interstate and foreign commerce writings, signs, signals, pictures, and sounds, for the purpose of executing and attempting to execute a scheme and artifice to defraud and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, in violation of Title 18, United States Code, Section 1343; and c. to cause to be delivered by mail by the United States Postal Service or interstate carrier matters and things, according to the directions thereon, for the purpose of executing a scheme and artifice to defraud and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, in violation of Title 18, United States Code, Section 1341. C. FORM AND SUBSTANCE OF THE CONSPIRACY 1. The object of the conspiracy was for DAVID I. NAMER and FREDERICK J. SMITH and their co-conspirators, known and unknown to the grand jury, to profit financially by fraudulent and other illegal means from the offer and sale of purportedly high-yield notes to broker-dealers and the investing public. 2. The following acts were a further part of the conspiracy: Bribes to Richard Quackenbush 3. In or about 1994 and 1995, DAVID I. NAMER caused the issuance of a total of $20,775,000 of corporate notes on behalf of Montalbano Builders Inc., AVN, Mitchell County 1994, Mitchell County 1995, TLC, LIA, Voyageur Lines Inc., and TSFC pursuant to "private placements" purportedly exempt from the registration requirements of the federal securities laws. 4. To market these notes to potential investors, DAVID I. NAMER obtained performance bonds that purportedly guaranteed the payment of principal and interest to noteholders in the event of a default. 5. DAVID I. NAMER obtained the performance bonds by bribing an insurance agent, Richard L. Quackenbush, the Vice-President of Underwriting for Universal Bonding Insurance Company ("Universal Bonding"), which was authorized to issue performance bonds on behalf of Crum and Foster InsuranceCompany and its subsidiaries, Westchester Fire Insurance Company and United States Fire Insurance Company. 6. To protect themselves from financial loss, these insurance companies required applicants, among other things, to pledge liquid collateral in the form of cash, letters of credit, or government securities equal in value to the full amount of the performance bonds. Quackenbush was responsible for ensuring that the collateral requirements were met before issuing any performance bonds on the insurance companies' behalf. 7. To induce Quackenbush to issue performance bonds without requiring the Issuers to post the required collateral, DAVID I. NAMER secretly caused the following payments to be made for Quackenbush's benefit from in or about February 1994 through in or about October 1996: a. a $50,000 cashier's check for the purchase of stock in Neurocrine Biosciences, Inc.; b. seven checks totaling approximately $34,959.46, payable to RJJJ Investment Corp., a Florida corporation that DAVID I. NAMER helped Quackenbush create for the purpose of concealing Namer's payments to Quackenbush; and c. twenty checks totaling approximately $36,154.91 towards Quackenbush's monthly home mortgage payments. 8. DAVID I. NAMER and Quackenbush failed to disclose these payments to the insurance companies or Universal Bonding, in order to prevent the insurance companies from learning that Quackenbush was issuing performance bonds on their behalf without requiring the necessary collateral. Bribes to Craig Colwell 9. Craig Colwell was a licensed stockbroker and a Managing Director of Sutter Securities, Inc., a registered broker-dealer based in San Francisco, California. 10. From in or about January 1994 through in or about November 1996, DAVID I. NAMER, Craig Colwell, and others known and unknown offered and sold, and caused to be offered and sold, TLC, LIA, Voyageur, and TSFC corporate notes, and the notes of other companies controlled by DAVID I. NAMER. 11. As an incentive to sell these notes, from in or about January 1994 through in or about June 1996, DAVID I. NAMER secretly made nine payments to Craig Colwell totaling $90,000. 12. DAVID I. NAMER and Colwell failed to disclose these payments to investors, potential investors, Sutter Securities, and other broker-dealers, in order to prevent them from knowing that the objectivity of Colwell's statements and advice may have been affected by his receipt of additional, extraordinary compensation from a person closely affiliatedwith the issuers of the notes. Misappropriation and Laundering of LIA Funds 13. On or about February 23, 1994, DAVID I. NAMER, LIA's attorney, LIA's Vice-President, and others known and unknown opened a checking account and an interest-bearing account in the name of the Advisory and Investment Group ("AIG") at a bank in the Cayman Islands. 14. From on or about February 23, 1994, through on or about April 25, 1994, DAVID I. NAMER and his co-conspirators caused $475,000 of funds of Lending and Investment Advisory, Inc. ("LIA"), a corporation under his control, to be wire transferred to the AIG accounts in the Cayman Islands. 15. From on or about March 22, 1994, through April 29, 1994, DAVID I. NAMER and his co-conspirators used approximately $438,000 of the funds in the AIG accounts to purchase stock for their personal benefit. 16. To conceal this misappropriation of LIA funds, on or about March 8, 1994, DAVID I. NAMER caused AIG to execute a promissory note in which it purportedly promised to repay LIA the principal amount of $700,000, plus $140,000 in interest, fees, and costs, on or before June 1, 1994. The purported promissory note falsely recited that it was secured by a security agreement covering common stock and other personal properties located in the United States. In fact, no suchsecurity agreement existed. 17. From on or about June 13, 1994, through on or about November 4, 1996, DAVID I. NAMER and his co-conspirators offered and sold, and caused to be offered and sold, $2.5 million of LIA 10.5 percent corporate notes. 18. >From on or about June 13, 1994, through to on or about November 4, 1996, DAVID I. NAMER, together with others known and unknown, made and caused to be made oral and written misrepresentations of material facts and omitted to state material facts about the LIA corporate notes to investors, potential investors, and broker-dealers, including but not limited to: a. falsely stating that AIG had "guaranteed and insured" its repayment of LIA's purported loan, when in fact AIG had provided no security and obtained no guarantees or insurance for repayment of the "loan"; b. failing to disclose that DAVID I. NAMER controlled and had a beneficial ownership interest in both AIG, the purported borrower, and LIA, the purported lender; c. failing to disclose that, as of June 1, 1994, LIA's "loan" to AIG was in default; and d. failing to disclose that DAVID I. NAMER and others,through the guise of the AIG "loan," had misappropriated $475,000 of LIA funds to buy stock for their own personal benefit and for other purposes. 19. From in or about September 1996 through in or about December 1996, DAVID I. NAMER caused a total of $26,500 of the remaining misappropriated funds to be wire transferred from the AIG accounts in the Cayman Islands to a bank account in Memphis, Tennessee beneficially owned by LIA's counsel. Fraudulent Offer and Sale of Voyageur Notes 20. From on or about October 31, 1994, through on or about November 1,1996, DAVID I. NAMER and others known and unknown offered and sold and caused to be offered and sold a total of $3.0 million principal amount of 9.5 percent corporate notes issued by Voyageur pursuant to a private placement purportedly exempt from registration requirements of the federal securities laws. 21. From on or about October 31,1994 through November 1, 1996, DAVID I. NAMER, and others known and unknown, made and caused to be made oral and written misrepresentations of material facts and omitted to state material facts about the Voyageur notes to investors, potential investors, and broker-dealers, including but not limited to: a. omitting the material fact that performance bondshad been fraudulently obtained from Universal Bonding by bribing Richard Quackenbush to issue performance bonds; b. omitting the material fact that the buses which were to be collateral for the noteholders had severely deteriorated in condition; c. making misleading and false statements as to the estimated value of the buses to be used as collateral for the noteholders; and d. making misleading and false statements that the note holders would have a first lien on the buses being used as collateral for the noteholders. Fraudulent Offer and Sale of TSFC Notes 22. >From on or about March 15, 1995, through on or about February 1, 1997, DAVID I. NAMER, FREDERICK J. SMITH, and others known and unknown offered and sold, and caused to be offered and sold, $5 million principal amount of 11.5 percent corporate notes of Tri Star Financial Corporation ("TSFC notes") pursuant to a private placement purportedly exempt from the registration requirements of the federal securities laws. 23. From on or about September 11, 1995,through February 1, 1997, DAVID I. NAMER, FREDERICK J. SMITH, and others known and unknown made and caused to be made oral and writtenmisrepresentations of material facts and omitted to state material facts about the TSFC notes to investors, potential investors, and broker-dealers, including but not limited to falsely stating or misleadingly suggesting that the TSFC notes were fully insured by performance bonds, when in fact the notes were not insured or failing to reveal the material fact that the notes were not insured. Fraudulent Offer and Sale of Mitchell County 1995 Bonds 24. From on or about July 28, 1995, through in or about January 1, 1997, DAVID I. NAMER and others known and unknown offered and sold and caused to be offered and sold $4 million principal amount of Mitchell County, Georgia, Development Authority Revenue Bonds, Series 1995 ("Mitchell County 1995 bonds") pursuant to a private placement purportedly exempt from the registration requirements of the federal securities laws. 25. From on or about July 28, 1995, through on or about January 1, 1997, DAVID I. NAMER and others known and unknown made and caused to be made oral and written misrepresentations of material facts and omitted to state material facts about the Mitchell County 1995 bonds to investors, potential investors, and broker-dealers, including but not limited to falsely stating that Star Insurance Company had issued performance bonds covering the first four interest periods ofthe bonds. In fact, no legitimate performance bonds had been issued by any insurance company to cover any payments of interest or principal under the bonds. Fraudulent Offer and Sale of Aircraft Leasing Notes 26. From on or about February 6, 1996, through on or about February 1, 1997, DAVID I. NAMER and others known and unknown offered and sold and caused to be offered and sold a total of $1.7 million principal amount of 10 percent corporate notes issued by Aircraft Leasing and Funding Company, LLC ("Aircraft Leasing"), pursuant to a private placement purportedly exempt from the registration requirements of the federal securities laws. 27. From on or about February 6, 1996, through on or about February 1, 1997, DAVID I. NAMER, with others known and unknown, made and caused to be made oral and written misrepresentations of material facts and omitted to state material facts about the Aircraft Leasing corporate notes to investors, potential investors, and broker-dealers, including but not limited to: a. falsely and misleadingly stating that the notes were fully insured and backed by performance bonds, when in fact there were no performance bonds in place on the notes; and b. attaching a counterfeit performance bond as an exhibit to the Aircraft Leasing private placement memorandum. Diversion of Ray & Ross Note Proceeds 28. On or about December 8, 1995, DAVID I. NAMER (on behalf of NMS and other entities under his control), Stephen Slade, and others entered into an agreement to purchase all of the outstanding stock of Ray & Ross, a bus company in Las Vegas, Nevada. The sale was contingent on, among other things, approval of the transaction by the Public Service Commission of Nevada. 29. On or about February 27, 1996, before the sale was completed, DAVID I. NAMER and his co-conspirators caused the issuance of $6 million principal amount of 10 percent Ray & Ross corporate notes without the knowledge or authorization of Ray & Ross's directors, officers, or management. 30. From on or about February 27, 1996, through in or about November 1996, DAVID I. NAMER, FREDERICK J. SMITH, and others known and unknown offered and sold and caused to be offered and sold $6 million principal amount of Ray & Ross notes pursuant to a private placement purportedly exempt from the registration requirements of the federal securities laws. 31. From in or about March 1996, through in or about November 1996, DAVID I. NAMER, FREDERICK J. SMITH, and others known and unknown made and caused to be made oral and writtenmisrepresentations of material facts and omitted to state material facts about the Ray & Ross corporate notes to investors, potential investors, and broker-dealers, including but not limited to: a. falsely representing or misleadingly suggesting that the Ray & Ross notes were fully insured by performance bonds, when if fact there were no performance bonds on the notes; b. falsely representing that the note issue had been validly authorized by Ray & Ross; c. falsely representing that Stephen Slade was authorized to sign a private placement memorandum on Ray & Ross's behalf in or about February 1996, when in fact at that time he was not an officer, director, shareholder, or employee of Ray & Ross and had no authority to sign documents or otherwise act on the company's behalf; d. falsely representing that the proceeds of the note offering would be used to finance the acquisition of additional buses and for other corporate purposes, when in fact Ray & Ross would receive only a small portion of the note proceeds; e. failing to disclose that DAVID I. NAMER diverted $1,125,000 of the Ray & Ross note proceeds topurchase, for his own personal benefit, a 50 percent interest in Meyers Pollock Robbins Inc. ("Meyers Pollock"), a registered broker-dealer headquartered in New York, New York; and f. materially overstating the value of the buses to be used as collateral to the noteholders. 32. To allay investors' concerns about the legitimacy of the Ray & Ross note issue and to prevent or delay any investigation of his fraudulent acts, on or about July 30, 1996, DAVID I. NAMER caused the forgery of a signature on board meeting minutes purporting to ratify the note offering retroactively. DAVID I. NAMER thereafter faxed the minutes to, among others, brokers who sold the notes and the trustee for the Ray & Ross noteholders. Fraudulent Offer and Sale of Northstar Leasing Notes 33. >From on or about May 21, 1996, through on or about November 1, 1996, DAVID I. NAMER, FREDERICK J. SMITH, and others known and unknown offered and sold and caused to be offered and sold $6.2 million principal amount of 11.5 percent corporate notes of Northstar Leasing Company LLC ("Northstar Leasing") pursuant to a private placement purportedly exempt from the registration requirements of the federal securities laws. The offering was supposed to finance the acquisition of three jet aircraft by Northstar Airlines, Inc., anothercorporation controlled by DAVID I. NAMER. 34. From on or about May 26, 1996, through on or about November 1, 1996, DAVID I. NAMER, FREDERICK J. SMITH, and others known and unknown made and caused to be made oral and written misrepresentations of material facts and omitted to state material facts about the Northstar Leasing notes to investors, potential investors, and broker-dealers, including but not limited to: a. falsely representing or misleadingly suggesting that the Northstar notes were insured by performance bonds, when in fact no performance bonds were issued on the notes; and b. falsely representing that Northstar Airlines had entered into or was negotiating a contract to provide regional air service for Northwest Airlines, when in fact no such contract had been entered into and Northwest had terminated all discussions with Northstar and DAVID I. NAMER after they discovered that DAVID I. NAMER had prior convictions for conspiracy to commit fraud, wire fraud, and aiding and abetting interstate transportation of stolen goods. Bribes to Bruce Barbers 35. Bruce H. Barbers was a licensed stockbroker with Meyers Pollock Robbins Inc. ("Meyers Pollock"), a registered broker-dealer headquartered in New York, New York. 36. DAVID I. NAMER, Bruce Barbers, and others known and unknown offered and sold and caused to be offered and sold the following note issues on the following dates: Aircraft Leasing, from in or about February 1996 through in or about March 1996; Ray & Ross, from in or about March 1996 through in or about November 1996; and Northstar Leasing, from in or about May 1996 through August 1996. These notes were sold pursuant to private placements purportedly exempt from the registration requirements of the federal securities laws. 37. As an incentive to sell these notes, from in or about December 1995 through August 1996, DAVID I. NAMER secretly made 20 payments totaling $141,155 for Bruce Barbers's benefit. 38. DAVID I. NAMER, Bruce Barbers, and their co-conspirators known and unknown failed to disclose these payments to investors, potential investors, and broker-dealers, in order to prevent them from knowing that the objectivity of Barbers's statements and advice may have been affected by his receipt of additional, extraordinary compensation from a person closely affiliated with the issuersof the notes. D. OVERT ACTS In furtherance of and to effect the objects of the conspiracy, one or more of the co-conspirators committed and caused to be committed one or more of the following overt acts in the Western District of Tennessee and elsewhere: Bribes to Quackenbush DAVID I. NAMER caused the following checks to be issued and delivered for the benefit of Richard L. Quackenbush:
Bribes to Craig Colwell DAVID I. NAMER caused the following payments to be made to Craig H. Colwell:
Misappropriation and Laundering of LIA Funds OA-39. On or about February 23, 1994, DAVID I. NAMER opened a checking account and an interest-bearing account in the name of Advisory and Investment Group ("AIG") at Euro Bank Corporation in Georgetown, Cayman Islands. DAVID I. NAMER caused the following wire transfers to be made from the LIA account at First Tennessee Bank in Memphis, Tennessee, to the AIG checking account in the Cayman Islands: OVERT ACT DATE AMOUNT
OA-45. On or about April 22, 1994, DAVID I. NAMER sent a memo instructing Ivan Burges to purchase 50,000 shares of Cyclone Capital Corp. stock. DAVID I. NAMER caused the following wire transfers to be made from AIG accounts in the Cayman Islands to the account of Municipal Bond Counsel, L.L.C., at the National Bank of Commerce in Memphis, Tennessee: OVERT ACT DATE AMOUNT
OA-54. Between on or about January 28, 1994 and February 23, 1994 DAVID I. NAMER caused National Bank of Commerce and Commerce Capital Management Inc., Memphis, Tennessee (a subsidiary of NBC) to place orders for customers to purchase $1,705,000 in TLC Notes. Fraudulent Offer and Sale of Voyageur Notes OA-55. Between on or about October 27, 1994 and March 29, 1995, DAVID I. NAMER caused National Bank of Commerce and Commerce Capital Management Inc., Memphis, Tennessee (a subsidiary of NBC) to place orders for customers to purchase $2,150,000 in Voyageur Notes. Fraudulent Offer and Sale of LIA Notes OA-56. On or about November 11, 1994, DAVID I. NAMER caused Charles Torti to purchase $25,000 in LIA Notes. OA-57. On or about November 11, 1994, DAVID I. NAMER caused Robert and Terry Parry to purchase $50,000 in LIA Notes. OA-58. On or about November 11, 1994, DAVID I. NAMER caused J. Vance and Terry Parry to purchase $5,000 in LIA Notes. OA-59. On or about December 5, 1994, DAVID I. NAMER caused Louis Chalk to purchase $5,000 in LIA Notes. OA-60. On or about December 8, 1994, DAVID I. NAMER caused Peter Torti to purchase $5,000 in LIA Notes. Fraudulent Offer and Sale of Mitchell County 1995 Bonds OA-61. On or about July 20, 1995, DAVID I. NAMER caused the dissemination to Sentinel Trust Company of an official statement for Mitchell County 95 that falsely stated that Star Insurance Company had issued performance bonds insuring payments to investors. OA-62. On or about September 22, 1995, DAVID I. NAMER caused Harold and Krystyna Brody to purchase $25,000 in Mitchell County 1995 notes. OA-63. Between on or about September 22, 1995 and June 10, 1996, DAVID I. NAMER caused Irving and Ruth Brazen to purchase $275,000 in Mitchell County 1995 notes. OA-64. On or about October 6, 1995, DAVID I. NAMER caused Albert Wendroff to purchase $10,000 in Mitchell County 1995 notes. OA-65. On or about October 2, 1995, DAVID I. NAMER caused George and Elinor Cummings to purchase $15,000 in Mitchell County 1995 notes. OA-66. Between October 12, 1995 and October 18, 1995, DAVID I. NAMER caused James and Barbara Lynch to purchase $60,000 in Mitchell County 1995 notes. OA-67. On or about April 22, 1996, DAVID I. NAMER caused Dr. Charles Drooker to purchase $65,000 in Mitchell County 1995 notes. OA-68. On or about June 4, 1996, DAVID I. NAMER caused a fax to be transmitted by wire from Memphis, Tennessee, to bond counsel, Chix Miller, Esq., in Atlanta, Georgia, containing (a) a consent of surety purportedly issued by Star Insurance Company, consent no SA1408466, dated July 25, 1995, which was altered to delete the collateral requirement and (b) a fraudulent performance bond also purportedly issued by Star Insurance Company, bond no. SA1408466, dated July 18, 1995. Fraudulent Offer and Sale of TSFC Notes OA-69. On or about July 12, 1995, DAVID I. NAMER caused to be transmitted by fax from Memphis, Tennessee, to Nashville, Tennessee an altered consent of surety, consent no. SA1408454, dated July 12, 1995, purportedly issued by Star Insurance Company for the benefit of TSFC, from which Star Insurance Company's collateral requirement had been deleted. OA-70. On or about August 22,1995, DAVID I. NAMER prepared or caused to be prepared a letter to FREDERICK J. SMITH in Boston, Massachusetts, requesting contract performance bonds and consents of surety for TSFC. OA-71. On or about October 10, 1995, FREDERICK J. SMITH caused a fax to be transmitted from Boston, Massachusetts, toDAVID I. NAMER in Memphis, Tennessee, stating: that Acstar had lost interest in executing a consent of surety for TSFC "mainly because [Acstar] felt that this was somewhat of a `sham' and [Namer] had no intention of ever ordering any final bonds"; that Acstar felt that Namer "only wanted a piece of paper that would satisfy the lender"; and that "Acstar of course was right." OA-72. On or about December 14, 1995, DAVID I. NAMER caused counterfeit performance bonds purportedly issued for the benefit of TSFC by Gulf Insurance Company and Star Insurance Company to be sent by facsimile transmission from his office in Memphis, Tennessee, to Sutter Securities in San Francisco, California. OA-73. On or about October 25, 1995, DAVID I. NAMER caused to be transmitted by fax from Memphis, Tennessee to Nashville, Tennessee a counterfeit consent of surety dated October 12, 1995, purportedly issued by Gulf Insurance Company for the benefit of TSFC. OA-74. On or about November 2, 1995, DAVID I. NAMER caused Sentinel Trust Company to return three United States Fire Insurance Company performance bonds issued for the benefit of TSFC, nos. US 83875, US 83876, and US 83878, for cancellation by the insurance company. OA-75. In or about November 1995, DAVID I. NAMER, bytelephone, told Gabriel Elias, an investor in Elkins Park, Pennsylvania, that the TSFC notes were insured by Gulf Insurance Company. OA-76. On or about November 5, 1995, DAVID I. NAMER caused to be faxed to Bruce Barbers a fraudulent performance bond purportedly issued by Gulf Insurance Company for the benefit of TFSC, numbered GA-TBA01 and dated September 7, 1995. OA-77. On or about November 3, 1995, DAVID I. NAMER caused Gabriel and Alma Elias to purchase $2,300,000 in TSFC notes. OA-78. Between on or about November 7, 1995 and December 26, 1996, DAVID I. NAMER caused Edward and Jean Bush to purchase $350,000 in TSFC notes. OA-79. Between on or about November 16, 1995 and January 25, 1996, DAVID I. NAMER caused Donald Adams to purchase $275,000 in TSFC notes. OA-80. On or about December 5, 1995, DAVID I. NAMER caused Ruth Brazen and the Brazen Family Trust to purchase $150,000 in TSFC notes. OA-81. On or about December 7, 1995, FREDERICK J. SMITH caused to be transmitted by fax from Boston, Massachusetts, to DAVID I. NAMER in Memphis, Tennessee, an invoice for a bond premium of $20,000, for a consent of surety for bond numberGA-TSA02 from Gulf Insurance Company for the benefit of TSFC. OA-82. On or about December 12, 1995, DAVID I. NAMER caused Union Benefits Network Inc. to wire transfer $10,000 from NBC Bank in Memphis, Tennessee, to the account of CARA Group Limited at Bay Bank, in Boston, Massachusetts, as partial payment for the consent of surety issued by Gulf Insurance Company for TSFC. OA-83. On or about December 13, 1995, FREDERICK J. SMITH sent by facsimile transmission from his office in Boston, Massachusetts to DAVID I. NAMER in Memphis, Tennessee, directions on how to set up a conference call with Gabe Elias. OA-84. On or about December 14, 1995, DAVID I. NAMER caused a wire transfer of $10,000 from the NMS account at Bear Stearns Securities Corporation in Pittsburgh, Pennsylvania, to the account of the CARA Group Limited at Bay Bank in Boston, Massachusetts, to pay the remaining balance due for the consent issued by Gulf Insurance Company for TSFC. OA-85. On or about December 14, 1995, DAVID I. NAMER caused to be faxed from his office in Memphis, Tennessee, to Gabe Elias in Elkins Park, Pennsylvania, a counterfeit performance bond purportedly issued by Gulf Insurance Company. OA-86. On or about December 21, 1995, DAVID I. NAMER caused a fax to be sent to Sentinel Trust Company, which included a fraudulent performance bond, numbered GA-TBA01 anddated September 7, 1995, purportedly issued by Gulf Insurance Company for the benefit of TSFC, and a fraudulent performance bond, numbered SA1408454 and dated July 17, 1995, purportedly issued by Star Insurance for the benefit of TSFC. OA-87. On or about December 22, 1995, DAVID I. NAMER caused to be faxed to Gabe Elias in Elkins Park, Pennsylvania, a counterfeit letter dated December 22, 1995, purportedly issued by Gulf Insurance Company, bearing the forged or transposed signature of Tobin B. Jacobson, a Gulf Insurance officer. OA-88. On or about December 25, 1995, DAVID I. NAMER caused to be faxed to Sentinel Trust Company a counterfeit letter dated December 22, 1995, purportedly from Gulf Insurance Company, bearing the forged or transposed signature of Tobin B. Jacobson. OA-89. On or about December 26, 1995, DAVID I. NAMER caused George and Elinor Cummings to purchase $10,000 in TSFC notes. OA-90. On or about January 2, 1996, DAVID I. NAMER sent or caused to be sent to Sentinel Trust Company a counterfeit letter dated January 2, 1996, purportedly from Gulf Insurance Company, bearing the forged or transposed signature of Tobin B. Jacobson, which falsely stated that consents of surety and performance bonds were pledged to the trustee on behalf ofnoteholders; that should TSFC fail to make required payments to the trustee Gulf is obligated to make the payments; and that the commitments and agreements were irrevocable and unconditional. OA-91. On or about January 10, 1996, DAVID I. NAMER caused Gabriel Elias to send by U.S. mail a check dated January 5, 1996, in the amount of $650,000, which represented partial payment towards his purchase of $2.3 million principal amount of TSFC notes. OA-92. On or about June 20, 1996, DAVID I. NAMER spoke by telephone to Irving Brazen, an investor in Bridgeport, Connecticut, and told him that the TSFC notes were insured. Fraudulent Offer and Sale of Aircraft Leasing Notes OA-93. On or about January 12, 1996, DAVID I. NAMER caused to be faxed from Memphis, Tennessee, to Sutter Securities in San Francisco, California, an Aircraft Leasing private placement memorandum. OA-94. On or about January 24, 1996, DAVID I. NAMER caused to be faxed to Bruce Barbers a false and misleading "summary" of the Aircraft Leasing note issue and the Aircraft Leasing private placement memorandum, both of which falsely stated that the notes were insured by performance bonds. OA-95. In or about January 1996, FREDERICK J. SMITH, by telephone, told Craig Colwell that consents of surety were inplace on the Aircraft Leasing notes. OA-96. On or about February 7, 1996, DAVID I. NAMER caused to be faxed from Memphis, Tennessee, to Sutter Securities in San Francisco, California, (a) an altered consent of surety numbered SA-1418940 and dated January 26, 1996, purportedly issued by Star Insurance Company for the benefit of Aircraft Leasing, which deleted the collateral requirement, and (b) a counterfeit performances bond, numbered SA-1418940, purportedly issued by Star Insurance Company. OA-97. On or about February 7, 1996, DAVID I. NAMER caused to be faxed from Memphis, Tennessee, to Bruce Barbers in New Jersey, (a) an altered consent of surety numbered SA-1418940 and dated January 26, 1996, purportedly issued by Star Insurance Company, that deleted the collateral requirement, and (b) a counterfeit performance bond, numbered SA-1418940, purportedly issued by Star Insurance Company. OA-98. On or about February 8, 1996, DAVID I. NAMER caused to be faxed to Sentinel Trust Company (a) an altered consent of surety numbered SA-1418940 and dated January 26, 1996, purportedly issued by Star Insurance Company for the benefit of Aircraft Leasing, that deleted the collateral requirement, and (b) a fraudulent performance bond numbered SA-1418940 and dated January 26, 1996, purportedly issued by Star Insurance Company for the benefit of Aircraft Leasing. OA-99. Between on or about February 9, 1996 and March 20, 1996, DAVID I. NAMER caused Donald Adams to purchase $95,000 in Aircraft Leasing notes. OA-100. Between on or about February 9, 1996 and March 27, 1996, DAVID I. NAMER caused Edward and Jean Bush to purchase $370,000 in Aircraft Leasing notes. OA-101. On or about February 21, 1996, DAVID I. NAMER caused Dr. Charles Drooker to purchase $250,000 in Aircraft Leasing notes. OA-102. On or about April 23, 1996, DAVID I. NAMER caused Eugene and Constance Tacetta to purchase $10,000 in Aircraft Leasing notes. Diversion of Note Proceeds to Buy Fifty Percent of Meyers Pollock In connection with the purchase of a 50 percent interest in Meyers Pollock by NMS and other entities under DAVID I. NAMER's control, DAVID I. NAMER made or caused to be made the following transfers of funds, derived from the proceeds of Aircraft Leasing, Ray & Ross, and Northstar Leasing note sales, from the account of NMS at Meyers Pollock to the account of Shelli Ploshnick at Meyers Pollock:
Fraudulent Offer and Sale of Ray & Ross Notes OA-111. In or about March 1996, FREDERICK J. SMITH caused forgery of the signature of two officials of Ranger Insurance Company on a ranger power of attorney dated March 12, 1996, purportedly authorizing FREDERICK J. SMITH to issue consents of surety and performance bonds up to $2.5 million on Ranger's behalf. OA-112. In or about March 1996, FREDERICK J. SMITH created and caused the creation of a second altered and forged power of attorney, dated March 13, 1996, purportedly authorizing him to issue consents of surety and performance bonds up to an additional $2.5 million on Ranger's behalf. OA-113. Between on or about March 1, 1996 and November 13, 1996, DAVID I. NAMER caused National Bank of Commerce and Commerce Capital Management Inc., Memphis, Tennessee (a subsidiary of NBC) to place orders for customers to purchase $2,340,000 in Ray & Ross notes. OA-114. Between on or about March 12, 1996, and on or about March 13, 1996, FREDERICK J. SMITH caused to be prepared and signed (a) a counterfeit consent of surety purporting to commit Ranger Insurance Company to issue $2.4 million in performance bonds to Ray & Ross, and (b) a counterfeit consent of surety purporting to commit Ranger Insurance Company to issue $2 million in performance bonds to Ray & Ross. OA-115. On or about March 15, 1996, DAVID I. NAMER caused to be transmitted by fax to Sentinel Trust Company two counterfeit consents of surety and one counterfeit performance bond purportedly issued by Ranger Insurance Company for the benefit of Ray & Ross. On or about the dates listed below, FREDERICK J. SMITH caused to be transmitted from Boston, Massachusetts, to DAVID I. NAMER in Memphis, Tennessee, invoices charging premiums for counterfeit consents of surety purportedly issued by Ranger Insurance Company or Gulf Insurance Company for the benefit of Ray & Ross: OVERT ACTS APPROX. DATE INVOICE NO. OA-116 3/13/96 2002573 $24,000
OA-121. On or about April 3, 1996, DAVID I. NAMER caused the wire transfer of $80,000 from the NMS account at Bear Stearns Securities Corp. in Pittsburgh, Pennsylvania to the account of CARA Group Limited at Bay Bank in Boston, Massachusetts, in payment of premiums for consents of surety purportedly issued by Ranger Insurance Company for the benefit of Ray & Ross. OA-122. On or about April 9, 1996, DAVID I. NAMER caused Edward and Jean Bush to purchase $50,000 in Ray & Ross notes. OA-123. On or about April 17, 1996, DAVID I. NAMER caused Eugene and Constance Tacetta to purchase $10,000 in Ray & Ross notes. OA-124. On or about April 22, 1996, DAVID I. NAMER caused Irving Brazen to purchase $35,000 in Ray & Ross notes. OA-125. On or about April 29, 1996, DAVID I. NAMER caused the transmission by fax from Memphis, Tennessee, to Chris Culp in New York, New York, of (a) two fraudulent consents of surety purportedly issued by Ranger Insurance Company dated March 12, 1996, and March 13, 1996, from which the collateral requirement was deleted; (b) a copy of a counterfeit performance bond purportedly issued by Ranger Insurance Company, dated March 12,1996; and (c) two counterfeit consents of surety purportedly issued by Gulf Insurance Company, dated March 15, 1996, both of which bear the forged or transposed signature of a Gulf Insurance Company representative. OA-126. On or about April 30, 1996, DAVID I. NAMER caused the false and misleading Ray & Ross private placement memorandum to be transmitted by fax from Memphis, Tennessee, to Chris Culp in New York, New York. OA-127. On or about May 1, 1996, DAVID I. NAMER caused to be transmitted by fax from New Jersey to the GMS Group, a securities brokerage firm in Atlanta, Georgia, copies of a Ray & Ross private placement memorandum that falsely stated that the Ray & Ross notes were insured by performance bonds, a counterfeit Gulf Insurance Company consent of surety, and a counterfeit Ranger Insurance consent of surety. OA-128. Between on or about May 3, 1996 and May 20, 1996, DAVID I. NAMER caused GMS to purchase $2,575,000 in Ray & Ross notes. OA-129. On or about June 28, 1996, DAVID I. NAMER caused to be transmitted by fax from Memphis, Tennessee, to GMS Securities in Atlanta, Georgia, a letter falsely stating that one hundred percent of the principal and interest payments for the life of the Ray and Ross Transport note issue were fully guaranteed; that should the company fail to make a payment, the surety would make the payment pursuant to consents; and that there were no events that could invalidate the consents, which are irrevocable for the life of the issue. OA-130. On or about July 30, 1996, DAVID I. NAMER caused to be transmitted by fax from Nevada to Bruce Barbers in New Jersey fraudulent Ray & Ross board meeting minutes, bearing the forged signature of a purported Ray & Ross corporate officer, which purported to ratify the company's $6 million note offering retroactively. Fraudulent Offer and Sale of Northstar Leasing Notes OA-131. On or about April 26, 1996, DAVID I. NAMER, caused to be transmitted by fax from Memphis, Tennessee, to Chris Culp in New York, New York, a fax that included a false and misleading summary of the Northstar Leasing note issue. OA-132. On or about May 22, 1996, DAVID I. NAMER caused Dr. Charles Drooker to purchase $250,000 in Northstar notes. OA-133. On or about May 29, 1996, DAVID I. NAMER caused Donald and Joan Adams to purchase $50,000 in Northstar notes. OA-134. Between on or about May 31, 1996 and August 6, 1996, DAVID I. NAMER caused General Conference of Seventh Day Adventists to purchase $2,500,000 in Northstar notes. OA-135. On or about June 18, 1996, FREDERICK J. SMITH, by telephone, made false and misleading statements and omitted to state material facts to a Northstar Leasing note holder, including but not limited to failing to tell the caller that the Northstar Leasing notes were not insured, that no performance bonds had ever been issued for Northstar Leasing's benefit, and that DAVID I. NAMER had not pledged sufficient collateral to obtain a performance bond. OA-136. On or about June 20, 1996, FREDERICK J. SMITH faxed a letter to DAVID I. NAMER agreeing to talk to investors to verify insurance coverage and allay their fears that their investment was insured. OA-137. On or about June 20, 1996, DAVID I. NAMER caused to be transmitted by fax from Memphis, Tennessee, to Irving Brazen in Connecticut, a copy of a Northstar Leasing private placement memorandum, and three counterfeit consent ofsurety letters purportedly issued by Gulf Insurance Company for the benefit of Northstar Leasing. OA-138. On or about June 21, 1996, DAVID I. NAMER caused Irving Brazen to purchase $55,000 in Northstar notes. OA-139. On or about June 26, 1996, DAVID I. NAMER caused Eugene and Constance Tacetta to purchase $25,000 in Northstar notes. OA-140. On or about June 28, 1996, DAVID I. NAMER caused to be transmitted by fax from Memphis, Tennessee, to Howe, Solomon & Hall, Inc., a registered broker-dealer in Miami, Florida, a false and misleading summary of the Northstar Leasing private placement memorandum. OA-141. On or about July 2, 1996, DAVID I. NAMER caused Edward and Jean Bush to purchase $195,000 in Northstar notes. OA-142. On or about July 3, 1996, DAVID I. NAMER caused Howe Solomon & Hall to purchase $1,100,000 in Northstar notes. OA-143. On or about July 8, 1996, DAVID I. NAMER caused James and Barbara Lynch to purchase $50,000 in Northstar notes. OA-144. On or about July 24, 1996, DAVID I. NAMER caused to be transmitted by fax from Memphis, Tennessee, to GMS Securities in Atlanta, Georgia, three counterfeit consentsof surety and one counterfeit performance bond purportedly issued by Gulf Insurance Company for the benefit of Northstar Leasing. OA-145. On or about August 6, 1996, DAVID I. NAMER caused to be transmitted by fax from Memphis, Tennessee, to a Meyers Pollock broker in Houston, Texas, and to Meyers Pollock's president in Boca Raton, Florida, a false and misleading Northstar Leasing private placement memorandum and a fax cover sheet directing them to "make sure this is the one being used." OA-146. On or about August 14, 1996, DAVID I. NAMER caused to be transmitted by fax from Memphis, Tennessee, to Howe, Solomon & Hall in Miami, Florida, five pages of a draft term sheet between Northwest Airlines and TriStar Airlines, that omitted the material fact that Northwest Airlines had terminated the Northstar Airlines transaction because they discovered DAVID I. NAMER had been convicted and served a prison term for fraud. OA-147. On or about October 31, 1996, FREDERICK J. SMITH made false and misleading statements and omitted to state material facts in a letter to Chris Hall, of Howe Solomon & Hall, in order to lead him to believe that performance bonds were in place on the Northstar Leasing notesand to lull him into not taking any further action that might have exposed the fraud and led to Smith's apprehension and prosecution. OA-148. On or about November 20, 1996, FREDERICK J. SMITH made false and misleading statements and omitted to state material facts in a letter to Donald Ecker, of Meyers Pollock Robbins, in order to lead him to believe that performance bonds were in place on the NorthStar and Ray & Ross notes and to lull him into not taking any further action that might have exposed the fraud and led to his apprehension and prosecution. Bribes to Bruce Barbers As an incentive to sell Aircraft Leasing, Ray & Ross, Northstar, and other Namer-related notes, DAVID I. NAMER caused the following undisclosed payments to be made for the benefit of Bruce H. Barbers: OVERT ACT APPROX. DATE AMOUNT PAYOR/ACCT. PAYEE PAYMENT METHOD
[nmt 5 yrs.; $250,000; or both, plus nmt 3 yrs. supervised release, together
with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Securities Fraud-TSFC Notes) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A1-6; B; C3-12; C22-23; OA-1-29; OA 30-38; OA 69-92 of this Indictment. From on or about March 15, 1995 through in or about February 1, 1997, in the Western District of Tennessee and elsewhere, the defendants, -----------DAVID I. NAMER ----------------- and ---------FREDERICK J. SMITH ------------------ aided and abetted by each other and others known and unknown to the grand jury unlawfully, willfully, and knowingly, in the offer and sale of securities by the use of any means or instruments of transportation or communication in interstatecommerce or by the use of the mails, directly or indirectly, did (1) employ any device, scheme, or artifice to defraud, and (2) obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, and (3) engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon one or more purchasers of Tri Star Financial Corporation notes. All in violation of Title 15, United States Code, Sections 77q(a) and 77x, and Title 18, United States Code, Section 2. [nmt 5 yrs.; $10,000; or both, plus nmt 3 yrs. supervised release, together
with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Securities Fraud-Mitchell County 1995 Bonds) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 3-12; C 24-25; OA 1-38; OA 61-68 of this Indictment. From on or about July 28, 1995 through in or about January 1, 1997, in the Western District of Tennessee and elsewhere, the defendant, -----------DAVID I. NAMER------------------- being aided and abetted by others known and unknown to the grand jury unlawfully, willfully, and knowingly, in the offer and sale of securities by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly, did (1) employ any device, scheme, or artifice to defraud, and (2) obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, and (3) engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon one or more purchasers of Mitchell County, Georgia, Development Authority Revenue Bonds, Series 1995. All in violation of Title 15, United States Code, Sections 77q(a) and 77x, and Title 18, United States Code, Section 2. [nmt 5 yrs.; $10,000; or both, plus nmt 3 yrs. supervised release, together
with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Securities Fraud-Aircraft Leasing Notes) The grand jury realleges and incorporates by referencethe allegations in Count 1 paragraphs A; B; C 35-38; C 26-27; OA 93-102; OA 149-168 of this Indictment. From on or about February 6, 1996 through on or about February 1, 1997, in the Western District of Tennessee and elsewhere, the defendant, -------------DAVID I. NAMER ------------------ aided and abetted by others known and unknown to the grand jury unlawfully, willfully, and knowingly, in the offer and sale of securities by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly, did (1) employ any device, scheme, or artifice to defraud, and (2) obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, and (3) engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon one or more purchasers of Aircraft Leasing notes. All in violation of Title 15, United States Code, Sections 77q(a) and 77x, and Title 18, United States Code, Section 2. [nmt 5 yrs.; $10,000; or both, plus nmt 3 yrs. supervised release, together
with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Securities Fraud-Ray & Ross Notes) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 28-32; C35-38; OA 103-130; OA 149-168 of this Indictment. From on or about February 27, 1996 through in or about November 1996, in the Western District of Tennessee and elsewhere, the defendants, -------------DAVID I. NAMER ------------- and ------------FREDERICK J. SMITH----------------- aided and abetted by each other and others known and unknown to the grand jury unlawfully, willfully, and knowingly, in the offer and sale of securities by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly, did (1) employ any device, scheme, or artifice to defraud, and (2) obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, and (3) engage in any transaction, practice, or course of business which operates or would operate as afraud or deceit upon one or more purchasers of Ray & Ross notes. All in violation of Title 15, United States Code, Sections 77q(a) and 77x, and Title 18, United States Code, Section 2. [nmt 5 yrs.; $10,000; or both, plus nmt 3 yrs. supervised release, together
with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Securities Fraud-Northstar Leasing Notes) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 33-38; OA 131-168 of this Indictment. From on or about May 21, 1996 through on or about November 1, 1996, in the Western District of Tennessee and elsewhere, the defendants, ------------DAVID I. NAMER ----------------- and -----------FREDERICK J. SMITH------------ aided and abetted by each other and others known and unknown to the grand jury unlawfully, willfully, and knowingly, in the offer and sale of securities by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly, did (1) employ any device, scheme, or artifice to defraud,and (2) obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, and (3) engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon one or more purchasers of Northstar Leasing notes. All in violation of Title 15, United States Code, Sections 77q(a) and 77x, and Title 18, United States Code, Section 2. [nmt 5 yrs.; $10,000; or both, plus nmt 3 yrs. supervised release, together
with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Mail Fraud-Bribes to Richard Quackenbush) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 3-8; OA 1-29 of this Indictment. On or about the dates set forth below, in the Western District of Tennessee and elsewhere, the defendant, ------------DAVID I. NAMER ----------------- aided and abetted by others known and unknown to the grand jury, knowingly having devised and intending to devise ascheme and artifice to defraud Universal Bonding Insurance Company, Crum and Foster Insurance Company, Westchester Fire Insurance Company, and United States Fire Insurance Company, of the right to honest services of Richard Quackenbush and to obtain money and property by means of false and fraudulent pretenses, representations, and promises, for the purpose of executing such scheme or artifice and attempting so to do, did place and caused to be placed in a post office or an authorized depository for mail matter, matters and things to be sent and delivered by the Postal Service, and did deposit and cause to be deposited matters and things to be sent and delivered by private or commercial interstate carrier, and did knowingly cause to be delivered by mail or such carrier according to the direction thereon checks for the benefit of Richard Quackenbush in the amounts indicated below from 1080 W. Rex Road, Memphis, TN, to PNC Mortgage at PNC Mortgage Corporation of America, P.O. Box 747014, Pittsburgh, PA 15274-7014:
All in violation of Title 18, United States Code, Sections 1341, and 2. [nmt 5 yrs.; $250,000; or both; if the violation affected a financial institution
nmt 30 yrs. and a fine of nmt $1 million or both; plus nmt 3 yrs. supervised
release, together with a mandatory special assessment of $100, see 18 U.S.C.
§ 3013(a)] (Wire Fraud-TSFC Notes) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 3-12; C 22-23; OA 1-38; OA 69-92 of this Indictment. On or about the dates listed below, in the Western District of Tennessee and elsewhere, the defendants, -----------------DAVID I. NAMER ----------------- and ---------------FREDERICK J. SMITH ---------------- aided and abetted by each other and others known and unknown to the grand jury, and knowingly having devised and intending to devise a scheme and artifice to defraud purchasers of TSFC notes and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, transmitted and caused to be transmitted by means of wire communications in interstate commerce writings, signs,signals, pictures, or sounds for the purpose of executing such scheme and artifice, as specified below: COUNT DATE TRANSMISSION FROM TO
[nmt 5 yrs.; $10,000; if the violation affected a financial institution 30
yrs. or $1 million or both; plus nmt 3 yrs. supervised release, togetherwith
a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Mail Fraud-TSFC Notes) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 3-12; C 22-23; OA 1-38; OA 69-92 of this Indictment. On or about January 10, 1996, in the Western District of Tennessee and elsewhere, the defendant, -------------DAVID I. NAMER ------------------ together with others known and unknown to the grand jury, and knowingly having devised and intending to devise a scheme and artifice to defraud purchasers of TSFC notes, and to obtain money and property by means of false and fraudulent pretenses, representations, and promises, for the purpose of executing such scheme or artifice and attempting so to do, did place or caused to be placed in a post office or authorized depository for mail matter, matters and things to be delivered by the Postal Service, and did deposit or cause to be deposited matters and things to be sent or delivered by private or commercial interstate carrier, and did knowingly cause to be delivered by mail or such carrier according to the direction thereon a check dated January 5, 1996, in the amount of $650,000 sent by U.S. mail by from Gabriel Elias, to NetworkMortgage Services, 1080 W. Rex Road, Memphis, Tennessee 38119. All in violation of Title 18, United States Code, Sections 1341, 1346, and 2. [nmt 5 yrs.; $10,000; or if the violation affected a financial institution
nmt 30yrs. and a $1 million fine or both; plus nmt 3 yrs. supervised release,
together with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)]
(Wire Fraud-Aircraft Leasing Notes) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 26-27; C 35-38; OA 93-102; OA 149-168 of this Indictment. On or about the dates listed below, in the Western District of Tennessee and elsewhere, the defendant, -------------DAVID I. NAMER ------------------ together with others known and unknown to the grand jury, and knowingly having devised and intending to devise a scheme and artifice to defraud purchasers of Aircraft Leasing notes and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, transmitted and caused to be transmitted by means of wire communications in interstate commerce writings, signs, signals, pictures, or sounds for the purpose of executing suchscheme and artifice, as specified below: COUNT DATE TRANSMISSION FROM TO
[nmt 5 yrs.; $250,000; or both; of if the violation affected a financial institution
nmt 30 yrs. and a fine of $1 million or both; plus nmt 3 yrs. supervised release,
together with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Mail Fraud-Ray & Ross Notes) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 28-32; C 35-38; OA 103-130; OA 149-168 of this Indictment. On or about the dates listed below, in the Western District of Tennessee and elsewhere, the defendants, --------------DAVID I. NAMER --------------- and --------------FREDERICK J. SMITH --------------- aided and abetted by each other and others known and unknown to the grand jury, knowingly, having devised and intending to devise a scheme and artifice to defraud purchasers of Ray & Ross notes, and to obtain money and property by means of false and fraudulent pretenses, representations, and promises, for the purpose of executing such scheme or artifice and attempting so to do, did place or caused to be placed in a post office or authorized depository for mail matter, matters and things to be sent and delivered by the Postal Service, and did deposit or cause to be deposited matters and things to be sent and delivered by private or commercial interstate carrier, any such matter or thing, and did knowingly cause to be delivered by mail or such carrier according to thedirection thereon as specified below: COUNT DATE MAILING FROM TO
[nmt 5 yrs.; $250,000; or if the violation affected a financial institution
30 yrs. and a $1 million fine or both; plus nmt 3 yrs. supervised release, together
with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Wire Fraud-Ray & Ross Notes) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 28-32; C 35-38; OA 103-130; OA 149-168 of this Indictment. On or about the dates listed below, in the Western District of Tennessee and elsewhere, the defendants, --------------DAVID I. NAMER --------------- and ----------FREDERICK J. SMITH --------------- aided and abetted by each other and others known and unknown to the grand jury, having devised and intending to devise a scheme and artifice to defraud purchasers of Ray & Ross notes and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, transmitted and caused to be transmitted by means of wire communications in interstate commerce writings, signs, signals, pictures, or sounds for the purpose of executing such scheme and artifice, as specified below: COUNT DATE TRANSMISSION FROM TO
[nmt 5 yrs.; $250,000; or if the violation affected a financial institution
30 yrs. and a $1 million fine or both; plus nmt 3 yrs. supervised release, together
with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Wire Fraud-Northstar Leasing Notes) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 33-38; OA 131-168 of this Indictment. On or about the dates listed below, in the Western District of Tennessee and elsewhere, the defendant, -----------DAVID I. NAMER ---------------- aided and abetted by others known and unknown to the grand jury, and knowingly having devised and intending to devise a scheme and artifice to defraud purchasers of Northstar Leasing notes and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, transmitted and caused to be transmitted by means of wire communications in interstate commerce writings, signs, signals, pictures, or sounds for the purpose of executing such scheme and artifice, as specified below: COUNT DATE TRANSMISSION FROM TO
[nmt 5 yrs.; $250,000; or if the violation affected a financial institution
30 yrs. and a $1 million fine or both; plus nmt 3 yrs. supervised release, together
with a mandatory special assessment of $100, see 18 U.S.C. § 3013(a)] (Wire Fraud-Mitchell County 1995 Bonds) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 3-12; C 24-25; OA 1-38; OA 61-68 of this Indictment. On or about June 4, 1996, in the Western District of Tennessee and elsewhere, the defendant, -------------DAVID I. NAMER -------------- aided and abetted by others known and unknown to the grand jury, having devised and intending to devise a scheme and artifice to defraud purchasers of Mitchell County 1995 Bonds and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, transmitted and caused to be transmitted by means of wire communications in interstate commerce, writings, signs, signals, pictures, or sounds for the purpose of executing such scheme and artifice, namely, a fraudulent consent of surety and a fraudulent performance bond sent by fax to Chix Miller, Esq., in Macon, Georgia, from DAVID I. NAMER in Memphis, Tennessee. All in violation of Title 18, United States Code, Sections 1343, 1346, and 2. (nmt 5 yrs or nmt $250,000, or both; or if the violation affected a financial
institution 30 yrs. and a $1 million fine or both; together with a mandatory
special assessment of $100, see 18 U.S.C. § 3013(a), and nmt 3 yrs. supervised
release) (Wire Fraud-Bribes to Craig Colwell) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 9-12; OA 30-38 of this Indictment. On or about June 7, 1996, in the Western District of Tennessee and elsewhere, the defendant, -----------DAVID I. NAMER ---------------- aided and abetted by others known and unknown to the grand jury, and having devised and intending to devise a scheme and artifice to defraud Sutter Securities, Inc., of the honest services of Craig Colwell and purchasers of TLC, LIA, Voyageur, and TSFC corporate notes, and the notes of other companies controlled by DAVID I. NAMER, and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, transmitted and caused to be transmitted by means of wire communications in interstate commerce writings, signs, signals, pictures, or sounds for the purpose of executing such scheme and artifice, namely, a wiretransfer of $2,500 from the NMS account at United American Bank in Memphis, Tennessee, to the account of Craig Colwell at Bank of America Bank in San Francisco, California. All in violation of Title 18, United States Code, Sections 1343, 1346, and 2. (nmt 5 yrs or nmt $250,000.00, if financial institution 30yrs. or $1 million
or both, together with a mandatory special assessment of $100, see 18 U.S.C.
§ 3013(a), and nmt 3 yrs. supervised release) (Money Laundering Conspiracy) A. THE CONSPIRACY 1. Beginning in or about February 1994, and continuing through the present, in the Western District of Tennessee and elsewhere, the defendants, -------------DAVID I. NAMER ----------------- and --------------------FREDERICK J. SMITH -------------------- did unlawfully, willfully, and knowingly combine, conspire, and agree with each other and with other persons known and unknown to the grand jury to commit the following offenses against the United States: a. knowing that the property involved in a financial transaction represented the proceeds of some form of unlawfulactivity, to conduct and attempt to conduct such a financial transaction (1) with the intent to promote the carrying on of specified unlawful activity, and (2) knowing that the transaction was designed in whole or in part to conceal and disguise the nature, location, source, ownership, and/or control of the proceeds of specified unlawful activity, in violation of 18 U.S.C. § 1956(a)(1); and b. knowingly to engage, attempt to engage, and cause and aid and abet others in engaging in monetary transactions in criminally derived property that was of a value greater than $10,000, in violation of 18 U.S.C. § 1957. B. FORM AND SUBSTANCE OF THE CONSPIRACY 1. The objects of the conspiracy were for DAVID I. NAMER and FREDERICK J. SMITH and other co-conspirators known and unknown to profit financially by selling various corporate notes using false, fraudulent, deceptive, and, unlawful means. 2. It was further the object of the conspiracy to conduct financial transactions after the corporate notes were sold in order to distribute the proceeds to promote and carry on the fraudulent activity and to distribute the proceeds between the co-conspirators. 3. The grand jury realleges and incorporates by reference the allegations in counts one through forty-nine ofthis Indictment. All in violation of Title 18, United States Code, Section 1956(h). (nmt 20 yrs, nmt $500,000 or twice the value of the property involved in the
transaction, whichever is greater, or both, together with a mandatory special
assessment of $100, see 18 U.S.C. § 3013(a), and nmt 3 yrs. supervised
release) (Money Laundering-Section 1956(a)(1)(A)(i)-by Defendant Namer) The grand jury realleges and incorporates by reference the allegations in Count 1-49 of this Indictment. On or about the dates set forth below, in the Western District of Tennessee and elsewhere, the defendant, ------------DAVID I. NAMER ----------------- aided and abetted by others known and unknown did knowingly conduct and attempt to conduct financial transactions affecting interstate commerce, namely, the issuance and delivery of checks and wiring of funds as described below, which involved the proceeds of specified unlawful activity, namely, securities fraud, Title 15, United States Code, Sections 77q(a) and 77x; wire fraud, Title 18, United States Code, Section 1343; and mail fraud, Title 18, United State Code, Section 1341; with the intent to promote the carrying on of the specified unlawful activity, and that while conductingand attempting to conduct such financial transactions knew that the funds involved in the financial transaction represented the proceeds of some form of unlawful activity. COUNT DATE PAYMENT METHOD PAYOR PAYEE AMOUNT
(on each count, nmt 20 yrs, nmt $500,000 or twice the value of the property
involved in the transaction, whichever is greater, or both, together with a
mandatory special assessment of $100, see 18 U.S.C. § 3013(a), and nmt
3 yrs. supervised release) (Money Laundering-Section 1956(a)(1)(A)(i)-by Defendants Namer and Smith) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 22-23; C 28-38; OA 69-92, OA 103-148 of this Indictment. On or about the dates set forth below, in the Western District of Tennessee and elsewhere, the defendants, ------------DAVID I. NAMER ------------------ and ---------------FREDERICK J. SMITH ----------------- aided and abetted by each other did knowingly conduct and attempt to conduct financial transactions affecting interstate commerce, as described below, which involved the proceeds of specified unlawful activity, namely, securities fraud, Title 15 United States Code, Section 77q(a) and 77x; wire fraud, Title 18, United States Code, Section 1343; and mail fraud, Title 18, United State Code, Section 1341; with the intent to promote the carrying on of the specified unlawful activity, and that while conducting and attempting to conduct such financial transactions knew that the funds involved in the financial transaction represented the proceeds of some form of unlawful activity. COUNT DATE PAYOR PAYEE AMOUNT
(on each count, nmt 20 yrs, nmt $500,000 or twice the value of the property
involved in the transaction, whichever is greater, or both, together with a
mandatory special assessment of $100, see 18 U.S.C. § 3013(a), and nmt
3 yrs. supervised release) (Money Laundering-Section 1957) The grand jury realleges and incorporates by reference the allegations in Count 1-49 of this Indictment. On or about the dates set forth below, in the Western District of Tennessee and elsewhere, the defendant, -------------DAVID I. NAMER --------------- aided and abetted by others known and unknown did knowingly engage and attempt to engage in monetary transactions by,through, or to a financial institution, affecting interstate commerce, in criminally derived property each of a value greater than $10,000, namely, the withdrawal of funds and issuance of checks in the amounts set forth below, such property having been derived from a specified unlawful activity, namely, securities fraud, Title 15, United States Code, Sections 77q(a) and 77x; wire fraud, Title 18, United States Code, Section 1343; and mail fraud, Title 18, United State Code, Section 1341. COUNT DATE PAYOR PAYEE AMOUNT
(on each count, nmt 10 yrs, nmt $250,000.00 or twice the value of the criminally
derived property involved in the transaction, or both, together with a mandatory
special assessment of $100, see 18 U.S.C. § 3013(a), and nmt 3 yrs. supervised
release) (Money Laundering-Section 1957) The grand jury realleges and incorporates by reference the allegations in Count 1 paragraphs A; B; C 22-23; C 28-38; OA 69-92; OA 103-148 of this Indictment. On or about the dates set forth below, in the Western District of Tennessee and elsewhere, the defendant, -------------FREDERICK J. SMITH --------------- aided and abetted by others known and unknown did knowingly engage and attempt to engage in monetary transactions by, through, or to a financial institution, affecting interstate commerce, in criminally derived property each of a value greater than $10,000, namely, the withdrawal of funds and issuance of checks in the amounts set forth below, such property having been derived from a specified unlawful activity, namely, securities fraud, Title 15, United States Code, Sections 77q(a) and 77x; wire fraud, Title 18, United States Code, Section 1343; and mail fraud, Title 18, United State Code, Section 1341. COUNT DATE PAYOR PAYEE AMOUNT
(on each count, nmt 10 yrs, nmt $250,000.00 or twice the value of the criminally
derived property involved in the transaction, or both, together with a mandatory
special assessment of $100, see 18 U.S.C. § 3013(a), and nmt 3 yrs. supervised
release) (Tax Evasion - 1994) On or about May 24, 1995, in the Western District of Tennessee, the defendant, ------------DAVID I. NAMER --------------- a resident of Memphis, Tennessee, did willfully attempt to evade and defeat a large part of the income tax due and owing by him to the United States of America for the calendar year 1994, by filing and causing to be filed with the District Director of the Internal Revenue Service, a false and fraudulent U.S. Individual Income Tax Return, Form 1040, on behalf of himself, wherein it was stated that his taxable income for said calendar year was the sum of $87,569 and thatthe amount of tax due and owing thereon was the sum of $20,822, whereas, as he then and there well knew and believed, his taxable income for the said calendar year was substantially in excess of the amount declared and upon said additional taxable income a substantial additional tax was due and owing to the United States of America, all in violation of Title 26, United States Code, Section 7201. (nmt 5 yrs, nmt $100,000, or both, together with the costs of prosecution and
a mandatory special assessment of $100, see 18 U.S.C. § 3013(a), and nmt
3 yrs. supervised release) (Tax Evasion - 1995) On or about July 19, 1996, in the Western District of Tennessee, the defendant, ----------------DAVID I. NAMER --------------- did willfully attempt to evade and defeat a large part of the income tax due and owing by him to the United States of America for the calendar year 1995, by filing and causing to be filed with the District Director of the Internal Revenue Service, a false and fraudulent U.S. Individual Income Tax Return, Form 1040, on behalf of himself, wherein it was stated that his taxable income for said calendar year was the sum of $64,105 and that the amount of tax due and owing thereon wasthe sum of $13,893, whereas, as he then and there well knew and believed, his taxable income for the said calendar year was substantially in excess of the amount declared and upon said additional taxable income a substantial additional tax was due and owing to the United States of America, all in violation of Title 26, United States Code, Section 7201. (nmt 5 yrs, nmt $100,000, or both, together with the costs of prosecution and
a mandatory special assessment of $100,see 18 U.S.C. § 3013(a), and nmt
3 yrs. supervised release) (Tax Evasion - 1996) On or about September 2, 1997, in the Western District of Tennessee, the defendant, ----------------DAVID I. NAMER ------------------ did willfully attempt to evade and defeat a large part of the income tax due and owing by him to the United States of America for the calendar year 1996, by filing and causing to be filed with the District Director of the Internal Revenue Service, a false and fraudulent U.S. Individual Income Tax Return, Form 1040, on behalf of himself, wherein it was stated that his taxable income for said calendar year was the sum of $51,185 and that the amount of tax due and owing thereon was the sum of $10,150, whereas, as he then and there well knewand believed, his taxable income for the said calendar year was substantially in excess of the amount declared and upon said additional taxable income a substantial additional tax was due and owing to the United States of America, all in violation of Title 26, United States Code, Section 7201. (nmt 5 yrs, nmt $100,000, or both, together with the costs of prosecution and
a mandatory special assessment of $100, see 18 U.S.C. § 3013(a), and nmt
3 yrs. supervised release) (Forfeiture) The grand jury realleges and incorporates by reference Counts 50 through 91 of this Indictment as if fully set forth herein for the purposes of alleging forfeiture pursuant to Title 18, United States Code, Sections 982(a)(1). As a result of committing the money laundering offenses charged in Counts 50 through 93 in violation of Title 18 United States Code, Section 1956 and 1957 the defendants, --------------DAVID I. NAMER -------------- and --------------FREDERICK J. SMITH ------------- shall forfeit to the United States pursuant to Title 18 United States Code, Section 982 all property, real and personal, involved in money laundering offenses, including butnot limited to the following: For Defendant DAVID I. NAMER: a. Thirty Four Million Six Hundred Fifty Thousand Dollars ($34,650,000.00) b. One parcel of real property located at 5600 St. Joseph Fairway, Memphis, Tennessee 38120, together with its buildings, improvements, fixtures, attachments, and easements, being more particularly described as: Part of Lot 6, Shady Grove Place, Subdivision, as shown on plat of record in Plat Book 128, Page 24, in the Register's Office of Shelby County, Tennessee, to which plat reference is hereby made for a more particular description of said property; and c. All shares and any other financial interest held either directly or indirectly by DAVID I. NAMER in Meyers Pollock Robbins Inc. For Defendant FREDERICK J. SMITH a. Seventeen Million Two Hundred Thousand Dollars ($17,200,000.00) b. All shares and any other financial interest held either directly or indirectly by FREDERICK J. SMITH in CARA GROUP, INC., ASSOCIATED INSURANCE AGENCY, and INFINITY MARINECORPORATION. SUBSTITUTE ASSETS In the event that any property, real or personal, involved in the allegations contained in this count of the Indictment, or any property traceable to such property as a result of any act or omission of the defendants: a. cannot be located upon the exercise of due diligence; b. has been transferred to, sold to, or deposited with a third person; c. has been placed beyond the jurisdiction of the Court; d. has been substantially diminished in value; or e. has been commingled with other property that cannot be subdivided without difficulty, it is the intent of the United States, pursuant to Title 18, United States Cods, Section 982(b)(2), to seek forfeiture of any other property of the defendants up to the value of the property described as being subject to forfeiture. All pursuant to Title 18, United States Code, Section 982. A TRUE BILL: DATE: ______________________________ _________________________ ___________________________ 1 "UP" is an abbreviation for account
number 00216798 of Offshore Insurance Services, Inc., at Union Planters Bank.
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