C-Suite Felons SSA Jason Watson FBI - Cleveland. Federal Bureau of Investigation Background – FBI...

C-Suite Felons

SSA Jason WatsonFBI - Cleveland

Federal Bureau of Investigation

• Background – FBI WCC Priorities

• Common Characteristics & Red Flags

• Case Examples

FBI PRESENTATION- NOT FOR DISTRIBUTION2


• Statistics– 13,598 Agents– 35,344 Total Employees– Field Divisions

• 56 - Broken up by Judicial Districts• 381 Resident Agencies

– Legal Attaché• 78 International Offices throughout the world


White Collar Crime

Identification and Prioritization of Threats:

1. Corporate / Securities Fraud2. Healthcare Fraud3. Financial Institution Fraud (to include

bank failures and mortgage fraud)4. Insurance Fraud5. Money Laundering6. Mass Marketing Fraud


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Intellectual Property Rights18 USC 1832 – Theft of Trade SecretsElements - 1. The defendant misappropriated a trade secret from its owner. 2. The defendant knew or believed the item/information was a trade secret.3. The item/information was in fact a trade secret. 4. The defendant intended to convert the trade secret to the economic benefit of anyone other than the owner. 5. The defendant intended or knew the theft would injure the owner. 6. The trade secret was related to or was included in a product that was produced for or placed in interstate or foreign commerce.

Definition - Trade secret. All forms and types of financial, business, scientific, technical, economic, or engineering information, if (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.

FBI PRESENTATION- NOT FOR DISTRIBUTION

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Fraudsters: Who are they?

©2012 Association of Certified Fraud Examiners, Inc.

Behavioral Red Flags of Perpetrators


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Position of Perpetrator — Median Loss

Fraudsters: Who are they?


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Case ResultsCases Referred to Law Enforcement

Alotech – Victim

The Fraud• John black served as the Chief Financial Officer of Alotech from

2009 – 2012.

U.S. vs John Black

FBI PRESENTATION- NOT FOR DISTRIBUTION 10

• From 2011 – 2012, Black embezzled approximately $1.2 milllion from Alotech.

• Was ‘caught’ when a financial institution called the CEO questioning certain transactions.

• In his role as CFO, Black:1. Changed bank statement mailing

address to his residence.2. Obtained a corporate credit card.3. Obtained a corporate debit card

without authorization.

U.S. vs John Black


Embezzlement primarily occurred by way of:

• $280k – Corporate checks payable to Black/others

• $47k – ATM withdrawals

• $164k – Payments made on personal credit cards

• $202k – Unauthorized fed wires

• $174k – Transfer to another Alotech bank account used exclusively by Black for personal expenditures. (CEO was unaware of this account’s existence).

Use of Criminal Proceeds:• $450k used in less than one year for providing cash and

gifts to multiple women.

U.S. vs John Black


• Purchases from:• Louis Vuitton• Saks Fifth Avenue• Victoria’s Secret• Neiman Marcus

• Vacations to Chicago for these shopping sprees

• New Vehicles

U.S. vs John Black


Case Status• December 2014, Black pled guilty to wire fraud.• Sentenced March 2015 to 46 months in prison.

Rationalization for Behavior during Sentencing• Defense Expert testified that Black suffered from

Interferon-Induced Mania which caused him to embezzle from his employer.• Interferon is a drug used to treat Hepatitis C.

• The prescription drug led to a period of ‘mania’ which is marked by euphoria, delusions, excessive enthusiasm or desire. It is an obsession.

U.S. vs John Black


Prosecution’s Response:• (Note: Embezzlement began prior to Black taking Interferon.)

Prosecutor to defense expert:

• Is it a requirement to be on Interferon to embezzle?• Answer: “No”

• So there’s lots of reasons why someone might embezzle money?• Answer: “Absolutely.”

• And there’s also not a requirement that someone spend that money on gifts or for women?

• Answer: “No.”

• And if there was evidence showing that money was being withdrawn prior to taking that medication, it would be a continuation of that pattern potentially?

• Answer: “Absolutely.”

Taupa Lithuanian Federal Credit Union• Alex Spirikaitis, Chief Executive Officer, embezzled $4.2

million from at least 2001 – 2013, aided co-conspirators, concealed losses from regulators / auditors.

• Fled the area upon notice of an arrest warrant.

U.S. vs Alex Spirikaitis, et al


Preparations to Flee



Office



• Arrested October 21, 2013, after being on the run for three months.

• February 2014, Spirikaitis pled guilty to conspiracy to commit bank fraud causing losses in excess of $15M

• Sentenced to over 10 years in prison



Proceeds used:• Construction of $1.6M home• Numerous vehicles• Luxury suite at Cleveland

Browns stadium• Small arsenal of automatic

weapons and 10,000 rounds of ammunition.

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U.S. vs Thomas SteigerVoith Industrial Services – Victim

The Fraud• Thomas Steiger, Facility Manager, ordered $744,000 in equipment paid

for by his employer and resold be Steiger to third parties for the benefit of Steiger from 2011 – 2012.• Purchased fluke meters, particle counters, earth-ground testers,

infrared cameras, and oscilloscopes.• Purchased laptops, chainsaw, and snow thrower.

The Motive• Slippery slope – After profiting from a few small sales, Steiger’s fraud

accelerated with a significant amount of the proceeds being spent on numerous assault rifles and ammunition.

The Outcome• 10/21/2013, Guilty Plea.• 01/31/2014 – Sentenced to 33 months in prison.


Home of a WCC Criminal


Tools of the WCC Trade


Cleveland Clinic – Victim

The Subjects• Randy Breininger served as the

Institute Administrator for the Anesthesiology Institute at the Cleveland Clinic from 2008 - 2013.

• Breininger ‘s responsibilities:• Marketing• Strategic planning• Acquisition of private practices• Recruitment of physicians and

certified registered nurse anesthetists

U.S. vs Randy Breininger, et al



The Subjects• Richard Zukowski owned a

recruiting firm utilized by the Cleveland Clinic called the David Anthony Group (DAG).

• DAG located/recruited nurse anesthetists for the Clinic which in turn paid DAG:• Commissions equal to a

percentage of the first year’s annual salary of the nurse.




The Scheme• From 2010 – 2013, Breininger and Zukowski embezzled approximately

$179,000 from the Cleveland Clinic.

• Breininger provided names of new Clinic hires to Zukowski who in turn submitted false invoices to Breininger.

• Breininger approved the invoices and split the recruitment fees with Zukowski.

Results• Breininger -

– Pleaded Guilty on 04/16/2014– Sentenced on 7/29/2014 – 9 months in prison.

• Zukowski– Pleaded Guilty on 02/19/2014– Sentenced on 05/16/2014 - probation



External Attacks on Vulnerable Insiders• Request for return of overpayment (Check Fraud)

– Real Estate transactions– Collections– New purchase orders

• Email requests to AP clerk for change in supplier’s bank account and routing number

• Impersonation of company executive followed by spoofed email ordering the wiring of funds

Reoccurring Schemes


Questions?

SSA Jason WatsonCleveland FBI216-522-1400

C-Suite Felons SSA Jason Watson FBI - Cleveland. Federal Bureau of Investigation Background – FBI...

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