The Securities and Exchange Commission (“SEC”) defines illegal insider trading as “buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.  The targets of insider trading investigations and prosecutions are often employees, officers, or directors of a corporation who have access to significant confidential information about the corporation’s dealings; however, other people with non-public information about a corporation can also be targeted.  For example, often the targets or “tippees” of corporate officers or employees, usually friends, family members, and business associates.  Other targets include professionals who are hired to provide services to a corporation, such as attorneys, accountants, bankers, printers, or brokers.

The most common charge brought against individuals accused of insider trading under federal law is under 15 U.S.C. § 78j(b), which makes it unlawful for anyone to use “any manipulative or deceptive device” in contravention of securities law in the purchase or sale of any security.  Similarly, under 17 C.F.R. § 240.10b-5, it is unlawful for anyone to employ any device, scheme, or artifice to defraud, or to make any untrue statement of material fact, in connection with the purchase or sale of a security.

In addition to the criminal penalties associated with insider trading, which can include periods of imprisonment of up to 20 years, insider trading prosecutions usually involve civil actions by the government in order to recover funds that have been lost by investors.  For example, in a recent case, attorney Matthew Kluger, a corporate associate at several prominent law firms, along with his co-conspirators, agreed to pay over $32 million in order to settle a civil insider trading lawsuit brought against them by the SEC.

This article was written by New Jersey white collar criminal defense lawyer Nace Naumoski.

Black’s Law Dictionary defines “bribery” as the “offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in charge of a public or legal duty.”  Although we typically think of bribery as involving the payment of cash bribes, bribery throughout the world takes many different forms and involves many different types of payments.  For example, gifts, food, vacations, event tickets, or even the referral of business are all common forms of bribes that are used to avoid the payment of cash.

Under United States law, there are many federal and state statutes that address the payment of bribes.  The federal bribery statute, 18 U.S.C. Section 201, provides that anyone who directly or indirectly corruptly gives anything of value to a public official with the intent to influence an official to take some action or omit to do any act in violation of their lawful duty commits a federal crime and is subject to up to 15 years in federal prison.  Under the statute, it is also a crime for public officials to accept or ask for a bribe in order to perform an action or omit to do any act in violation of their lawful duty.    Other federal statutes deal with bribes paid to persons in specific positions.  For example, 18 U.S.C. Section 1503 makes it a federal crime to corruptly influence a juror in the discharge of their duty.   Under 18 U.S.C. Section 666, it is also a federal crime to pay a bribe to a state official if the agency for which the state official works receives federal funding.

Individual states also have bribery statutes that are usually similar to the federal statutes.  For example, in New Jersey, under N.J.S. 2C:27-2, “a person is guilty of bribery if he directly or indirectly offers, confers or agrees to confer upon another, or solicits, accepts or agrees to accept from another: a. Any benefit as consideration for a decision, opinion, recommendation, vote or exercise of discretion of a public servant, party official or voter on any public issue or in any public election; or b. Any benefit as consideration for a decision, vote, recommendation or exercise of official discretion in a judicial or administrative proceeding; or c. Any benefit as consideration for a violation of an official duty of a public servant or party official; or d. Any benefit as consideration for the performance of official duties.”  Under New Jersey law, if the benefit received or demanded is over $200.00, bribery is a second degree crime which carries a prison sentence up to 10 years.

Another interesting federal statute that deals with the issue of bribery is the Foreign Corrupt Practices Act (“FCPA”).  This statute was enacted in response to actions taken by American companies in their operations in foreign countries where the payment of bribes is a common practice.  Under  the FCPA, 15 U.S.C. Section 78dd-1, 78dd-2, and 78dd-3, it is a federal crime for any US issuer of securities, US domestic concern, or US person  to corruptly pay money or give anything of value to a foreign official for purposes of influencing the foreign official in taking any official action in violation of that official’s lawful duty.  An individual who violates this act could face up to five years in federal prison.

A recent well-known target of investigations under the FCPA has been Rupert Murdoch’s News Corp.   The main issue in the investigations has been whether reporters working for News Corp. abroad have been paying bribes to local officials in exchange for scoops and inside information on various news stories.   It has been alleged that employees of News of the World, a News Corp. subsidiary in the United Kingdom, have paid local police officers a total of at least £100,000 in exchange for inside information on news stories.  This has prompted politicians in the United States, including various US Senators, to ask the Department of Justice to investigate whether News Corp. has violated the FCPA.  Given that the FCPA imposes criminal liability on US companies for the actions of their subsidiaries, News Corp. and its officers may face criminal charges.

This article was written by New Jersey white collar criminal defense lawyer Nace Naumoski.

Once the domain of only skilled confidence artists and scammers, counterfeiting is now one of the fastest growing crimes in the world.  The reason for the expansion of counterfeiting?  Where expensive equipment and rare skills were once required in order to make good counterfeits, modern technology, including inkjet printers and desktop computers, has made counterfeiting accessible to amateurs.   Essentially, counterfeiting involves the illegal manufacture of an imitation of something with the intent to deceive others into believing that it is the real thing.  While many items are often counterfeited, including art, luxury clothing and accessories, jewelry, software, pharmaceuticals, and electronics, this article will focus on the counterfeiting of money.

In the United States, the main agency charged with investigating the counterfeiting of American currency is the Secret Service.  Prior to the creation of the Secret Service in 1865, nearly one third of the currency in circulation in the United States was counterfeit.  According to the Secret Service, “many of today’s counterfeiters have moved from the traditional method of offset printing, which has its own set of required skills, to computer-generated counterfeiting.”  Even the best counterfeit notes today are produced using supplies and technology that can be purchased at a local office supply store.

Under federal law, it is a crime for anyone to manufacture, pass, or possess a counterfeit bill.  18 U.S.C. Section 471 provides for a 20 year prison sentence for anyone who, “with intent to defraud, falsely makes, forges, counterfeits, or alters any obligation or other security of the United States.”     18 U.S.C. Section 472 also provides for a 20 year prison sentence for anyone who, “with intent to defraud, passes, utters, publishes, or sells…or keeps in possession or conceals any falsely made, forged, counterfeited, or altered obligation or other security of the United States.”  It is also a Class B felony for anyone to have in his possession any equipment that was used to manufacture counterfeit bills.  The punishment for a Class B felony is up to 25 years imprisonment.

Recently, Albany-area individuals were indicted in the Northern District of New York with possessing and attempting to pass counterfeit bills.  The seven count indictment alleges that Jeremy Zamyslowski and Terrie Carney of Tannersville, New York, possessed 173 counterfeited and altered bills.  According to information contained in the indictment, it is alleged that the two individuals removed the ink from five-dollar bills and printed fifty dollar bills on the same paper.  This process is commonly referred to as “bleaching” or “washing” the bills.  It is alleged that the purported conspirators attempted to pass the bills at a Walmart and Grand Union.  The total amount of the counterfeit bills recovered by law enforcement is approximately $6,550.

In counterfeiting cases, the general strategy of the Secret Service and other law enforcement agencies involved is to work backwards from the recovery of counterfeit bills.  The process is usually initiated when a merchant or bank notifies law enforcement that someone has passed or has attempted to pass a counterfeit bill.  Law enforcement then attempts to identify the person that passed the bill.  Once that person is identified, it becomes easier for law enforcement to identify the person or people who manufactured the bill.  Finally, law enforcement tries to determine if other counterfeit bills that have been recovered by law enforcement match the bills they believe to have been manufactured or possessed by their suspect, and then uses other evidence to connect the individual with that bill.  The result is that a person can be charged in a separate count for every transaction in which a counterfeit bill was purportedly passed.

This article was written by New Jersey white collar criminal defense lawyer Nace Naumoski.

With the surge in popularity of online auctions there has also been a rise in auction fraud scams.  The anonymity offered by the internet provides a perfect environment for online auction scams.  There are several varieties of auction fraud scams, which can range from very simple and primitive to very complex and sophisticated.  The common denominator: somebody does not get what they paid for.

The most primitive auction scams involve sellers who sell fake or stolen goods, or sellers who simply take money and never send any goods.  One sign of this type of scam is when a seller asks a buyer to wire money through a company like Western Union rather than accept PayPal or a credit card.  Western Union is typically used because once money is transferred via Western Union, there is little that can be done to get the money back.  PayPal and credit cards, on the other hand, have mechanisms that allow transactions to be reversed if the item is not sent.

Another type of online auction scam is known as “shill bidding” or “second-chance schemes.”   These scams involve the seller using a “shill” to bid up an item, and then offering the item to the legitimate buyer that comes in second place in the auction at that bidder’s highest place.  This scam permits the seller to artificially inflate the bidding on an item.

One of the most complex and sophisticated online auction scams is the “overpayment scam.”   What makes an “overpayment scam” unique is that it is usually the seller of an item that is the target.  A buyer bids on a high-end item and wins the auction.  The buyer then sends the seller a counterfeit check for an amount greater than the value of the item.  When the seller contacts the buyer to tell him that the check was for a greater amount, the buyer asks the seller to deposit the check and to refund the overpayment to the seller.  Using this method, a buyer is able to get cash for a counterfeit check without having to take the risk of passing the check himself.

In February of 2011, Adrian Ghighina of Romania, pled guilty in the United States District Court for the Northern District of Illinois for his involvement in an online auction scam that purportedly netted $2.7 million.  In court documents, prosecutors alleged that individuals located in Romania offered items for sale on internet sites such as eBay, craigslist and AutoTrader.  When bidders won items, bidders were urged to wire transfer funds via Western Union.  However, in order to avoid the suspicion that would be raised if the funds were being wired to Romania, the alleged conspirators purportedly used individuals in the United States, including Ghighina, to receive the money in the United States.  The US-based conspirators allegedly used a variety of aliases and locations to hide their identities when receiving the funds.  The sellers purportedly never actually sent any items to the winning bidders.

Ghighina pled guilty to acting as “a money mule” who would pick up the money at various Western Union locations and forward the money to alleged co-conspirators in Romania.  In his plea agreement, Ghighina admitted to obtaining several fraudulent identifications for various aliases.  Ghighina would receive payment information from co-conspirators in Romania by text message that would allow him to go to a Western Union location in the United States and obtain funds.  Ghighina would then give the funds (minus a percentage that he collected as his fee) to individuals who would transfer them to Romania.  Ghighina pled guilty to one count of wire fraud under an indictment issued in Chicago and one count of conspiracy to commit wire fraud under an indictment out of Washington, D.C.  Ghighina was sentenced to 27 months in federal prison.

This article was written by New Jersey criminal defense lawyer Nace Naumoski.

The “advance-fee fraud,” commonly known by most internet users as the “Nigerian scam,” is a scam in which the mark is sent correspondence asking him to advance a smaller sum of money in order to get access to a much larger sum.  Although there are many variations of the scam, all of them involve sending a smaller amount of money in the hopes of receiving a larger amount.

In the classic version of the scam, an individual receives a letter or e-mail from someone in Nigeria claiming to be some type of Nigerian royalty, military, executive, etc.  They say they have a lot of money stashed away somewhere, but the government is after them and they need to secretly move the money out of the country.  If the mark provides them with assistance in moving the money, he will be given a percentage of the money.  Once the mark signs on to help, the scammer asks for money to be sent to him in Nigeria to be used to cover the costs of moving the money.  Of course, the mark never gets that money back and certainly never gets the percentage of the money that was to be moved.  The mark is asked to advance more and more money, until the mark realizes the scam and stops sending additional funds.

One of the consequences of the “advance-fee fraud” scam is that, on many occasions, the marks of these scams get victimized again when another scammer shows up to help him recoup his losses from the first scam, or the mark himself turns to criminal activities in order to recover their losses or continue the scam.  Such was the case of a Wyoming man named Eugene Sunday, who was convicted in 2010 of bank fraud after trying to pass bad checks and money orders in order to continue an advance-fee fraud.

Starting in 2006, Sunday apparently became ensnared in a Nigerian scam and began sending significant funds to Nigeria as an advance to help the Nigerian scammer move money out of the country.  As Sunday’s contacts in Nigeria required more and more money to further the Nigerian scam, Sunday began to commit bank fraud in the United States in order to get the money to send to Nigeria.  According to testimony at Sunday’s trial, Sunday applied checks with insufficient funds to a line of credit and subsequently withdrew the funds as cash from the line of credit in order to send the funds to Nigeria.  To make matters worse, as Sunday’s funds dried up and he could not send more money to Nigeria, Sunday received counterfeit checks from Nigeria, which he deposited at his banks in the United States in an effort to convert them to cash to send back to Nigeria.

After a trial held in 2010, Sunday was convicted of one count of bank fraud in  violation of 18 U.S.C. Section 1344 and three counts of uttering counterfeit securities in violation of 18 U.S.C. Section 513(a).  Sunday was sentenced to 18 months in federal prison – all because of his participation as a victim in an advance-fee fraud scam.  Bank fraud carries a maximum potential sentence of 30 years imprisonment, and uttering a counterfeit security carries a potential sentence of 10 years imprisonment.

In some sense, Sunday was lucky that the worst thing that happened to him was a federal prison sentence.  There are many cases of  marks of advance-fee fraud scams traveling to Nigeria (or other countries where the fraud originates) in order to track down their money and ending up kidnapped for ransom or murdered.  There are also numerous accounts of marks committing suicide because of their inability to cope with the loss.

This article was written by New Jersey criminal defense lawyer Nace Naumoski.

The “franchise scam,” is one of the oldest and most common types of fraud throughout the world.  The scam, which is a type of “pyramid scheme,” involves the sale of a franchise or distributorship to an individual to sell a particular product.  However, the real money does not come from selling the product itself; rather, the money comes from continually selling new franchises or distributorships.  The scheme usually collapses when the supply of potential investors is exhausted.

On January 23, 2012, federal prosecutors charged Eric Stein, a/k/a “Robert Philips,” with operating a franchise scam in New York City.  Stein purportedly began the scam after completing an eight year prison sentence after pleading guilty to various fraud charges in 2001.  Federal law enforcement agents allege that Stein used internet and print ads to sell “distributorships” for a company known as “Return-A-Pet, LLC.”  Each distributorship, which purportedly cost between $5,000 and $50,000, gave the investor the right to sell pet tags that contained an 800 number and a registration number for pets.  The investor would then sell the pet tags to pet owners, who would register their pet with “Return-A-Pet.”   If the pet was ever lost, anyone who finds it would simply call the 800 number on the tag, and “Return-A-Pet would facilitate the return of the pet.

Federal law enforcement are alleging that, after a potential distributor signed a distribution agreement and paid the required distribution fee, they would either receive no tags, services, and other materials promised by Stein, or less than the promised number of tags, services, and other materials.  The complaint filed in the matter also states that various purported victims demanded refunds; however, Stein did not refund any money.

Under federal law, individuals charged in a franchise fraud scheme are usually prosecuted under the federal wire fraud statute and/or the federal mail fraud statute.  These statutes make it a federal crime to use the wires or the mail, respectively, in furtherance of a scheme to defraud.  Convictions for both wire fraud and mail fraud carry a penalty of up to 20 years in federal prison.  Many states also have specific state laws prohibiting franchise fraud.

In the present case, if Stein is convicted, he would face up to 40 years in federal prison.  It will be interesting to see what defenses are raised by Stein in this case.  In some cases, legitimate businesses simply grow too quickly and cannot provide the services they promise without an actual intent to defraud.  In other cases, business owners simply get in over their heads and cannot meet their obligations.  However, in the present case, it does not help that Stein has previously served prison time for engaging in various frauds and swindles.

The only way in which the alleged scheme in the Stein case differs from the traditional pyramid scheme is that, in a pyramid scheme, investors are encouraged to sell more distributorships as their primary source of income, rather than selling the product itself.  As new distributorships or franchises are sold, money is kicked up the chain to the person who originated the scheme.  Therefore, the profits generated by that person grow exponentially as new members are recruited in the scheme.

This article was written by New Jersey criminal defense lawyer Nace Naumoski.

Online piracy involves the use of the internet to distribute and copy copyrighted materials.   Materials that are typically “pirated” include movies, television shows, music, electronic books, video games, computer software, and photographs.   As described by one source, the term online piracy is used by both opponents of online piracy, and the people who engage in or benefit from piracy.  “Opponents, such as the Recording Industry Association of America, use the term to attempt to equate copyright violators with the pirates of the high seas who plundered ships.  Proponents use the term to recollect the romanticism of the pirate lifestyle, with its stressing of individual freedom and liberation among all else.”

On January 5, 2012, federal prosecutors charged two companies and seven individuals in a massive online piracy sting in the federal district court for the District of Virginia.  The charges relate to the online operations of Megaupload.com, a website that purportedly distributed copyrighted content, including videos, music, electronic books, software, and images.   According to law enforcement, the website generated more than $150 million in revenues by allegedly distributing copyrighted material on the internet, and diverted the money to various individuals and corporate entities around the world.  The website also allegedly generated another $25 million in revenue through the sale of advertising space on its websites.

The defense that the alleged conspirators will likely raise in this case is that they did not charge people for downloading copyrighted content; rather, they merely acted as a “cyberlocker,” providing their users with storage space for electronic content.  According to the company, their premium members are merely given access to more online space and faster and more reliable download and upload connections.   This defense is supported by the fact that an individual cannot search for copyrighted content directly on the website and can only find content stored on the website through third party websites and search engines that are not operated by members of the alleged conspiracy.  Moreover, members of the alleged conspiracy have stated that they comply with federal laws requiring the removal of copyrighted content after notice is given.

The individuals charged in the “Mega Conspiracy,” have been charged with racketeering in violation of 18 U.S.C. Section 1962(d).  The predicate criminal acts for the racketeering charge, with which the alleged conspirators have also been charged, include copyright infringement in violation of 18 U.S.C. Sections 2319(b)(1) and 2319(d)(2), and 17 U.S C. Sections 506(a)(1)(A) and 506(a)(1)(C), and money laundering in violation of 18 U.S.C. Sections 1956(a)(1)(A)(i), 1956(a)(2)(A), 1956(h), 1956(f), and 1957.  If convicted, the alleged conspirators face up to twenty years in prison on the racketeering charges,  five years in prison for each charge of copyright infringement, and up to twenty years in prison on each of the money laundering charges.

This case comes amidst the debate in both congress and the public regarding the proposed Stop Online Piracy Act, (“SOPA”) and the Protect Intellectual Property Act (“PIPA”).  Some members of congress believe that additional legislation is required to further criminalize online privacy, arguing that the laws currently on the books are not effective enough in stopping piracy.  Opponents of SOPA and PIPA argue that the laws currently on the books are adequate to protect intellectual property, and the passage of these new laws would seriously affect websites with legitimate user-provided content, such as Wikipedia, Facebook, and Twitter.  The legislation, if passed, would make these websites targets of law enforcement and content creators if they unknowingly host content that is copyrighted.   Moreover, the government would be able to simply shut down or block websites who are allegedly providing protected content, which would encourage leaders in authoritarian countries, who already engage in the practice of blocking internet content.

The article is written by New Jersey criminal defense lawyer Nace Naumoski.

The act of “embezzlement” involves the taking of property by someone to whom that property was originally lawfully entrusted.  Although embezzlement comes in many forms, the most common form is an employee diverting to his own use money that belongs to his employer.  The crime of embezzlement was created because theft involving funds or property that were originally entrusted to a person legally did not meet the elements of the common law crime of “larceny.”  Under common law, larceny was defined as “the trespassory taking and carrying away of the personal property of another with the intent to permanently deprive.”  However, because personal property involved in an embezzlement was legally taken, the element of a “trespassory taking” could not be met.  As a result, a separate crime was created for property that was legally obtained by the possessor, but fraudulently converted to the possessor’s own use.

On January 18, 2012, David Newmark, of Towaco, N.J., admitted in federal court in Newark to embezzling more than $10.4 million from his employer.  Between February 2008 and March 2011, Newmark was employed as the chief financial officer of an investment management firm in New Jersey.  Newmark was able to embezzle the money by setting up a fake bank account using a name that sounded similar to the name of the company with which he was employed.  Newmark then requested money transfers from several financial institutions that held money for his employer into the fake bank account.  Newmark then took the money from the fake bank account for his own personal use. This is a case of embezzlement because, while as CFO Newmark had the legal right to obtain the funds and to request the money transfers, he did not have the legal right to convert the money to his own personal use.

Many state criminal codes have a statute criminalizing the fraudulent conversion of funds or property that was lawfully obtained by an individual.  Some states, such as New Jersey, have gotten around the need for separate theft and embezzlement statutes by defining a theft as not only “unlawfully taking” property, but also “unlawfully exercising control” over property.  However, since the federal criminal code does not contain a specific embezzlement statute, embezzlement is usually prosecuted under the very broad mail fraud and wire fraud statutes.  These statutes make it a federal crime to use the mail or the wires respectively in furtherance of a scheme to defraud.  In addition, it is a federal crime for a person not to report funds obtained through embezzlement on their income tax returns, so individuals accused of embezzlement are also usually charged with tax evasion.

David Newmark pled guilty to one count of wire fraud and one count of tax evasion.  The basis for the wire fraud charge was that Newmark requested various wire transfers from banks in New York, New Jersey, and Connecticut into the fake bank account that he set up.  As for the tax evasion charge, Newmark simply did not report the proceeds of his embezzlement to the government in his tax returns.  The wire fraud charge carries a maximum penalty of 20 years in federal prison, and the tax evasion charge carries a maximum penalty of 5 years in prison.  In addition, Newmark will be required to make restitution in the entire amount that he admitted to embezzling.

This article was written by New Jersey criminal defense lawyer Nace Naumoski.

A “computer worm” is a computer program that travels across network connections without any user intervention.  The worm is usually downloaded by the user through an infected e-mail, chat room, social networking site, or internet website, and then sends copies of itself across an entire network.  Computer worms, unlike viruses, do not necessarily cause harm to files on the infected computer; however, in many cases, they can be used to gather private information from the infected computers.

Recently, the New York Times reported on a web gang operating out of St. Petersburg, Russia that is allegedly responsible for spreading a computer worm through Facebook, and purportedly pocketing several million dollars.  The gang, known as the Koobface gang, is interesting because the alleged members operate in the open, and their identities are known to computer security investigators and law enforcement officials.

According to sources, the gang operates by inviting Facebook users to watch a funny or sexy video.  Once the user clicks on the link, the user gets a message that their Flash software must be updated.  If the user agrees to the update, the Koobface worm downloads on to their computer and places the computer on a “botnet.”  A “botnet” is a network of infected computers.  The computer then receives advertisements for bogus anti-virus software.  The malware installed on the computer also monitors users’ web searches.  The group purportedly makes money through the sales of the bogus anti-virus software and from selling search information to advertisers.

Data collected through various sources on the group indicates that the group has earned at least $2.5 million per year in each of the years that it has existed.  What is interesting about the Koobface gang is that they seem to subscribe to a sort of “honor amongst thieves” mentality, and have vowed to never steal credit card or banking information.  Moreover, the group targets individuals who make unwise clicks on Facebook, rather than deploying malware that installs automatically.

Under federal law, pursuant to 18 U.S.C. Section 1030, it is a federal crime to knowingly access a computer or to exceed authorized access to a computer.  Depending on the purpose of the access, the damage caused, and the number of prior offenses, computer hacking is punishable by anywhere between one year and twenty years in prison.  Hacking offenses on the federal level are usually investigated by the Federal Bureau of Investigation or the Secret Service.  However, what makes it difficult to catch and prosecute hackers is the fact that they typically operate in countries that are not very keen on cooperating with the United States in criminal investigations.

This article was written by New Jersey criminal defense lawyer Nace Naumoski.

The goal of this blog will be to provide information on various types of scams, hacks, cons, and schemes using real-life examples from around the world.  So, let’s dive right in with the grand-daddy of them all – the “Ponzi scheme.”

As described by the United States Securities and Exchange Commission, a Ponzi scheme is “an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.”  Generally, Ponzi schemes involve little or no legitimate earnings and usually collapse when a large number of investors begin to cash out.  The scheme is named after Charles Ponzi, an Italian immigrant who pulled one of the first massive schemes of this type in the United States.  Ponzi’s scheme purported to take advantage of a form of arbitrage involving postal reply coupons that could be purchased in Europe for 1 cent and exchanged in the United States for a stamp worth 6 cents.  However, Ponzi never actually purchased the coupons in Europe or exchanged them in the United States.  He merely paid off earlier investors in his idea from money obtained from later investors.

On January 13, 2012, a Seattle-area pastor named Anthony C. Morris pled guilty to operating a Ponzi scheme involving his parishioners.   According to documents in the case, between 2003 and 2011, Morris promised various investors up to 400% returns on their money in a very short period of time if they would allow him to invest their money.  Morris purportedly told the investors the money was being invested in an overseas trading program, or used to invest in property for his church.   However, these representations turned out to be false, and Morris was merely using money from later investors to pay off earlier investors.  In total, Morris took $1.6 million from 24 parishioners.

Morris pleaded guilty in federal court in Seattle to wire fraud and money laundering.  Under the federal wire fraud statute, 18 U.S.C. Section 1343, it is a federal crime for anyone to transmit any communication by means of the wires, as part of a scheme to defraud.  Under the federal money laundering statute, 18 U.S.C. Section 1956, it is a federal crime for anyone to conduct a financial transaction involving the proceeds of unlawful activity with the intent to promote the unlawful activity or to conduct a financial transaction knowing that the transaction is designed to either conceal the funds or to avoid a reporting requirement.  Wire fraud is punishable by up to 20 years in prison and money laundering is punishable by up to 10 years in prison.

This article was written by New Jersey criminal defense lawyer Nace Naumoski.