Category Archives: Conspiracy

McDowell County Pharmacist Admits Crimes Tied To Gambling

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From the Charleston Gazette today:

Yesterday Saad Kamil Deeb, a Welch Pharmacist, pled guilty to a 3 count information, charging him with enlisting others to help him conduct transactions at a McDowell County bank so that he could move large amounts of money without triggering a Currency Transaction Report. A financial institution is required to file such a report with the Internal Revenue Service for any transaction over $10,000.

Assistant U.S. Attorney Hunter Smith said that between 2001 and 2005, Deeb became heavily involved in gambling on sports, betting large sums of money and even placing bets on behalf of his friends.
Whether he won or lost, his gambling proceeds or debts were paid in cash, Smith said. Usually, the amounts would approach $100,000 before Deeb or his bookies paid up, he said. “Mr. Deeb did not want the IRS to know that he was engaged in large cash transactions,” Smith said. So he and the others would keep their transactions under the $10,000 ceiling, Smith said, sometimes transferring just under that amount to various accounts several days in a row. According to the information, Deeb and his associates moved more than $871,000 that way over a four-year period. Deeb also admitted skimming cash from the pharmacy and filing false tax returns in 2003 and 2004, failing to report roughly $300,000 in income for each year, resulting in a tax loss of $175,000. Deeb has since filed amended reports and caught up on the taxes he owes, Smith said.

Who knew that a small town pharmacy could make that much so as to skim $300,000 per year for a gambling habit (addiction)? It makes you wonder who is at fault for the high prices of prescription drugs… My grandfather was a small town pharmacist, and for part of my life I grew up in his pharmacy. Things must have changed a lot since then… or maybe that is just par for the course in McDowell County….

– John H. Bryan, West Virginia Attorney.

Another Lawsuit Filed in Cattle/Bank Scam Case

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From the Register-Herald:

Another lawsuit filed against bank, officials in alleged cattle fraud case

By Christian Giggenbach
Register-Herald Reporter

LEWISBURG — Another lawsuit has been filed against First National Bank of Ronceverte and two former bank officials, this time by an Illinois man who alleges disgraced cattle broker Kevin Scott O’Brien defrauded him out of $104,000.

The lawsuit, filed by Robert Dwyer, named First National Bank, former bank president Charles A. Henthorn and former board director **** as defendants.

Henthorn and **** recently pleaded guilty in federal court, Henthorn for taking $10,000 in bribes from O’Brien, and **** for setting up bribes.

O’Brien pleaded guilty to a mail fraud charge involving the sale of cattle in fraudulent Ponzi schemes. A sentencing date has not been set for any of the defendants.

Dwyer claims he gave O’Brien $104,000 in February 2006 for “80 pairs of heifers and their calves,” which should have been shipped to Dwyer’s farm in Carthage, Ill.

“Instead of arranging for the cattle to be trucked to Dwyer … O’Brien sold the cattle to ****,” the lawsuit said. “O’Brien’s sale of the Dwyer cattle to **** was simply one of the last acts of fraud and deceit in O’Brien’s continuing scheme.”

Dwyer claims the bank knew about the **** deal, but looked the other way because O’Brien owed the bank money.

“The bank, through its senior management, including Henthorn and ****, devised a scheme with O’Brien pursuant to which O’Brien would sell **** cattle,” the lawsuit said. “The money that **** paid for the cattle was to be deposited into O’Brien’s checking account in satisfaction of debts that O’Brien owed the bank.”

Dwyer is seeking punitive damages on the basis of fraud, civil conspiracy, and aiding and abetting a wrongful act, among other charges.

Dwyer is being represented by Charleston lawyer James W. Lane.

Neither **** nor Henthorn could be reached for comment.

In February, another Illinois man, Frederic W. Nessler, filed a $340,000 lawsuit against the same three defendants alleging fraud.

O’Brien, who is currently mired in a multimillion-dollar bankruptcy, wasn’t named as a defendant in either suit.

— E-mail: cgiggenbach@register-herald.com

Update: O’Brien, Henthorn and **** Plead Guilty in Greenbrier County Cattle/Bank Scandal

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From the Beckley Register-Herald:

Note: See my earlier post regarding this case here. Each defendant faces a maximum of 30 years in federal prison. Obviously each will receive less than that. Their sentencing, which will take place in June will follow the federal sentencing guidelines, which I will not attempt to decipher in this post. Almost positively however, they all will do time. You can also read today’s Charleston Gazette article about this case here, and the Charleston Daily Mail article here. – John H. Bryan, West Virginia Criminal Defense Attorney.

Three plead guilty in cattle, bank scandal

Christian Giggenbach
Register-Herald Reporter

A businessman and two former bank officials pleaded guilty Monday in Beckley’s federal court to charges stemming from a Greenbrier County $4.2 million cattle and banking scandal.

A federal postal inspector testified that an investigation by State Police involving dirty dealings by cattle broker Kevin Scott O’Brien, of Ronceverte, also led to separate criminal charges being filed against former First National Bank of Ronceverte president and CEO Charles A. Henthorn and former First National Bank board director ****.

Last month, O’Brien, 28, was charged in an information with one count of mail fraud, but the complaint also listed several instances of fraudulent business practices including “phantom herding” — selling the same cattle to multiple buyers — check kiting, bribing a bank official, and running pyramid or “Ponzi” schemes.

Prosecutor’s say O’Brien used sophisticated schemes to defrauded investors and businesses out of $4.2 million beginning in early 2005 while brokering cattle deals in West Virginia, Illinois, Texas, Virginia and Nebraska.

Monday’s testimony revealed O’Brien signed a plea agreement with prosecutors in May 2006 and then helped police gather evidence against Henthorn, 48, by wearing an undercover wire which secretly taped the bank president incriminating himself about taking bribes.

Prosecutors then used that evidence and more in persuading Henthorn to wear an undercover wire which recorded incriminating statements made by ****.

There was no evidence that **** wore an undercover wire during the federal investigation which also included FBI and FDIC officials. State Troopers Sgt. V.S. Deeds and W.A. Pendleton, who brought their investigation to federal prosecutors, were present for Monday’s hearing.

Last month, Henthorn was charged with accepting nearly $10,000 in bribes from O’Brien, and **** was charged with aiding and abetting those bribes. Henthorn originally brokered his deal with prosecutors nine months ago and **** signed a plea agreement last August, Forbes said.

When asked why nearly two years had elapsed since O’Brien’s first contact with prosecutors, Forbes said O’Brien’s and Henthorn’s cooperation “took many months to develop.”

“There is no evidence that any criminal activity goes beyond these three defendants,” U.S. Attorney L. Anna Forbes said after the hearing.

O’Brien softly said “yes, your honor” when U.S. District Judge Thomas E. Johnston asked him point blankly: “Did you do it?”

Although O’Brien’s felony charge was specifically based on a $362,000 check he received in the mail after defrauding a Virginia cattle owner, much of Monday’s testimony concentrated on the four bribes O’Brien gave to Henthorn.

Postal Inspector Burl Fluharty testified **** introduced O’Brien to the bank president and told the cattle broker that Henthorn had “the keys to the bank.”

“**** advised O’Brien that payments to Charles Henthorn would help him procure loans,” Fluharty said. “**** facilitated these bribes to the bank president.”

Forbes said O’Brien gave Henthorn four separate bribes in late December 2005, with two cash payments totaling $2,200 and two checks written from his Shamrock Farms business account of $2,500 and $5,000. Forbes entered both checks into the court record as evidence against O’Brien and Henthorn. Henthorn was represented by Charleston lawyer James Cagle.

“It was expected that Charlie Henthorn would extend favorable treatment to Kevin O’Brien and be generally influenced in banking matters,” Fluharty told the court. No specific loan was tied to the bribes.

All three defendants posted a $10,000 unsecured bond and were immediately released after Monday’s hearing. None were available for comment. Each faces a maximum prison sentence of up to 30 years; however, it is unlikely that any of the sentences will be that stiff. Johnston set all three sentencing hearings for 10 a.m. June 30. The trio also face a bevy of fines.

O’Brien, a 1999 graduate of Greenbrier East High School, told the court he previously had worked for his father’s asphalt and excavating business and a NAPA store prior to brokering cattle deals. His federal bankruptcy case is still pending and one court official said O’Brien’s liabilities now total almost $8 million.

Forbes said “close to a dozen victims” were cheated out of money by O’Brien.

O’Brien’s defense attorney, Rodney Smith of Charleston, suggested that the $4.2 million number that prosecutors say his client defrauded investors will be challenged. Karin Nelson, who claims O’Brien cheated her out of $200,000, attended the hearing but declined comment.

Henthorn told the court he had been in the banking industry for 25 years. A former bank examiner, Henthorn resigned from First National last summer after working there for over 10 years.

****, who was represented by Charleston lawyer Michael Cary, said he began working in the real estate business with his father in 1974. He now owns two Virginia car dealerships and is a Realtor and auctioneer. **** had been on the bank’s board for eight years until his resignation last July.

— E-mail:

cgiggenbach@register-herald.com

Greenbrier County Residents Headed to Federal Prison After Bank/Cattle Scandal

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From the Beckley Register-Herald:

3 charged in multimillion-dollar cattle scandal involving bank

Christian Giggenbach
Register-Herald Reporter

Ending months of speculation and rumors, the U.S. Attorney’s Office in Charleston filed criminal charges Wednesday against a businessman, a former bank president and a former bank board member for alleged crimes stemming from a multimillion-dollar cattle scandal in Greenbrier County involving First National Bank of Ronceverte.

Named in the information were Kevin Scott O’Brien of Ronceverte, Charles A. Henthorn of Lewisburg and **** of Covington, Va. An information allows prosecutors to bypass a grand jury and usually indicates a defendant is cooperating with authorities.

O’Brien, 27, was charged with one felony count of frauds and swindles, according to court documents. O’Brien first made headlines in April 2006 when State Police began investigating the cattle broker after he filed a multimillion-dollar bankruptcy case.

Federal prosecutors say O’Brien brokered the sale of cattle in Greenbrier and Monroe counties and several other locations, including Virginia, Illinois, Nebraska and Texas, under the business names of Shamrock Farms and K&M Properties Investments.

Prosecutors allege O’Brien devised “schemes” to “defraud and obtain money by means of false and fraudulent pretenses” while selling cattle “at the expense of numerous farmers, banks and other business entities.”

The five-page criminal charge against O’Brien alleges in the spring of 2006 he under-reported his liabilities and distributed false financial statements to lenders and investors and “solicited and procured substantial sums of money” with the “false promise that he would invest the monies in specific cattle sale transactions.”

“It is further part of the scheme that (O’Brien) defrauded these various investors and lenders out of a total of approximately $4.2 million,” federal prosecutor L. Anna Forbes wrote.

O’Brien also allegedly engaged in “phantom herding” — selling the same group of cattle to multiple buyers — and pyramid schemes, where money from one investor is used to fund business dealings with another investor. Other allegations lodged against O’Brien include:

– Giving Henthorn, former First National Bank of Ronceverte president, bribes totaling approximately $10,000.

– Tendering worthless checks for large amounts of money.

– Directing banks to stop payment on checks for the purpose of quelling the investors’ mounting suspicions of fraud and to dissuade investors from reporting him to police.

– Engaging in check-kiting activities involving hundreds of thousands of dollars with various financial institutions to stave off financial disaster.

O’Brien could not be reached for comment Wednesday. If convicted, he faces a maximum sentence of 30 years in prison, with five years of supervised released and a possible $1 million fine.

Henthorn, who abruptly resigned as president and CEO of First National Bank of Ronceverte last June, was charged with one felony count of accepting bribes from O’Brien totaling about $9,700. Henthorn, a former bank examiner, had worked at the bank more than 10 years, starting out as a senior loan officer and vice president.

“(Henthorn in his capacity as bank president) did accept said payments by a customer … intending to be influenced in connection with business and transactions between (O’Brien) and the First National Bank,” Forbes wrote.

When reached by phone Wednesday, Henthorn refused to comment. Court documents indicated the bribe payments were paid in the fall of 2005 through December 2005.

****, who had served on the bank’s board of directors since 1999, resigned last July. **** was charged with one felony count of aiding and abetting the bribes that O’Brien gave to Henthorn. The criminal charge did not state that **** received any bribe money from O’Brien.

****, a Realtor, broker and auctioneer, owns Greenway’s Real Estate & Auction Co. and two car dealerships in Covington. When reached by phone Wednesday, he respectfully declined to talk about his pending charges.

“Everything will work its way out in the end,” he said.

Both **** and Henthorn face maximum prison sentences of 30 years each, five years of supervised release and possible $250,000 fines.

First National Bank chair Ron Snyder, who was out of town Wednesday, told The Register-Herald by phone he had not yet seen the charges leveled against his two former bank associates, but was “relieved to see this finally out in the open.”

“We are happy that this has finally been filed and now the rumors can either be quashed or reinforced,” Snyder said. “We understand the only wrongdoing were by the actions of these two individuals and this bears that out because they are the only ones that were charged.”

But left in the wake are nearly a dozen individuals, banks and businesses that O’Brien allegedly defrauded for millions of dollars. Lewisburg lawyer Steve Hunter, who represents Karin Nelson — who claims O’Brien cheated her out of more than $200,000 — said there are still many unanswered questions that need to be addressed.

“There are still pending motions left in the bankruptcy case. I still don’t think we have gotten to the bottom of this whole story and we won’t know until O’Brien is questioned under oath by lawyers representing the victims,” Hunter said Wednesday. “We still don’t know whose cattle went where and there are a lot of people who are out of a lot of money.”

Creditors named in O’Brien’s bankruptcy case include The Bank of Monroe, United Bank and Farm Credit of Lewisburg. These alone total $2.5 million. During his initial bankruptcy filing, O’Brien stated he owed First National Bank nearly $400,000. One Virginia cattle dealer filed worthless check charges against O’Brien two years ago totaling 270,000.

In August 2006, O’Brien attended one bankruptcy hearing after skipping out on several others. At that time, he invoked his Fifth Amendment right against self-incrimination more than 100 times.

Hearings to accept pleas from the three men will most likely be set in the next five days.

Note: Since the three men who were charged were charged by information rather than by indictment through a grand jury, it indicates that all three have made plea deals with the government already. Indeed, speculation for months has been that all three of these characters had in fact already made plea agreements. It has been noted through the grapevine that one of the defendants either wore a wire or had a recorded telephone conversation with the other – ensuring his conviction. With all of the rumors flying around, it will be interesting to see which of them are true. The fact of the matter is that when you are charged federally, your chances of not going to prison are extremely, extremely low. So, it is safe to say that all of these guys are going to do time in the federal pen – and deservedly so. – John H. Bryan, West Virginia criminal defense attorney.

South Charleston Gas Prices .010 per Gallon?

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From the Charleston Gazette today:

Police: Clerk cut gas price for family

By Davin White
Staff writer
South Charleston police say gas prices dropped to .001 dollars a gallon for one clerk’s friends and family.

On Sunday morning, South Charleston Police arrested clerk Madeline Jordan, 25, of Nitro and five of her family members and friends after she allegedly sold them gas at a rate of 10 gallons per penny.

The owner of the Spring Hill BP alerted police Thursday that he was losing money at an alarming rate and feared he would have to file for bankruptcy protection, according to South Charleston Patrolman C.A. Crowder.

Police did not wish to release the owner’s name.

The store is on U.S. 60 at the west end of town near Jefferson, Crowder said.

The owner estimated that he’s lost more than $40,000 in about six months, Crowder said. Receipts led investigators to monitor Jordan’s Sunday work shift. She starts at 7 a.m. and could change the rate customers were charged for gas, Crowder said.

Crowder said they found five vehicles Sunday morning hauling between four and seven gasoline containers each, with about 25 in all. Each of the gas containers could hold three or more gallons of gas, he said. Some of the drivers arrived by 6:45 a.m. and started pumping gas before the store even opened at 7 a.m., Crowder said.

Police charged Jordan, Mary Catherine Jordan, 58; Clifford Parker, 47; Vonnie Oldham, 38; Glennis Fields, 39; and John Jordan III, 27, each with fraudulent schemes, a felony.

Crowder said Madeline Jordan is not related to Fields. She may be related to Parker, he said.

The six suspects are from the Nitro, Dunbar and Leon areas.

Madeline Jordan may also face additional charges, Crowder said.

All six were sent to the South Central Regional Jail on Sunday, Crowder said.

Note: all involved here are probably judgment-proof civilly. However, as far as restitution out of a criminal case, the more the merrier. In West Virginia, the monetary threshold between misdemeanors and felonies is $1,000.00. Certainly the clerk is above that threshold. But, it would be difficult to figure out who bought what gas as far as the records are concerned. That being said, it would be difficult to pin the felony against any of the individuals absent some sort of conspiracy-type charge. But then again, they could confess to stealing more than $1,000.00 worth of gas and they wouldn’t have to worry about the records. – John H. Bryan, Attorney at Law.