TWENTY-THREE CHARGED IN LEASING FRAUD SCHEME THAT CAUSED MORE THAN $20 MILLION IN LOSSES TO LENDERS

SANTA ANA, Calif. - Federal prosecutors today charged nearly two dozen defendants for their roles in a fraud scheme that allegedly caused more than $20 million in losses to several lending institutions that believed they were financing equipment leases.

The charges are a result of an FBI investigation dubbed Operation Lease Fleece, which targeted individuals in the equipment-leasing industry, including loan brokers, equipment vendors and an employee of CitiCapital.

Some of the defendants - through companies called Capitalwerks in Santa Ana, Brickbanc Capital in Costa Mesa and others - marketed cash loans to small businesses experiencing credit problems. Once small businesses agreed to apply for loans, some of the defendants instead submitted equipment-lease applications to lenders. The equipment-lease applications, which were inflated so that the defendants could obtain lucrative "commissions" for themselves, were submitted along with false invoices that purported to document the sale of computer equipment to the small businesses. The defendants submitted the fraudulent equipment-lease applications because the qualifying criteria were less stringent than for a cash loan. After the lending institutions approved financing for the equipment leases, the proceeds were not used to purchase equipment as promised to the lenders. Instead, the money was used to make improper cash loans to the small businesses and to pay lucrative commissions to employees at Capitalwerks, Brickbanc and the other companies. Hundreds of bogus equipment-lease packages with fake invoices were presented to financial institutions.
The FBI was assisted in their investigation by Citicapital, the leasing division of Citibank, which suffered an estimated $9.5 million in losses and discovered that one of their employees had perpetuated the fraud. Other victim-institutions include Wells Fargo Bank, GE Capital, American Enterprise Leasing, Key Bank, Bank of America and U.S. Bank. Investigators estimate that the victims suffered at least $20 million in losses.

The charges filed today include mail fraud, wire fraud and obstruction of justice.

The 23 defendants charged today will be summoned to make court appearances over the next several months.

The defendants charged today are:

• Adam Zuckerman, 37, of Laguna Beach, who worked at Brickbanc;
• Kirk McMahan, 31, of Newport Beach, who worked at Brickbanc;
• Paul Arnold, 56, of Laguna Hills, who worked at Brickbanc;
• Geoff Silver, 35, of Calabasas, who worked at Silver Industries;
• Brian Sime, 29, of Irvine, who worked at Brickbanc;
• John J. Callaghan, 38, of Warminster, Pennsylvania, who worked at Citicapital;
• James T. Raeder II, 42, of Mission Viejo, who worked at Capitalwerks/Preferred Lease;
• Mark McQuitty, 46, of Trabuco Canyon, who worked at Capitalwerks/Preferred Lease;
• Richard Norris, 60, of Los Angeles, who worked at Capitalwerks/Preferred Lease;
• Leo Najera, 28, of Mission Viejo, who worked at ECCI;
• John Budge, 38, of Sartell, Minnesota, who worked at Bach Business Credit;
• Anthony E. Watson, 61, of San Clemente, who worked at Capitalwerks/Preferred Lease;
• Leigh Dorand, 42, of Phoenix, who worked at Tech Capital;
• Douglas Cox, 37, of Rancho Santa Margarita, who worked at Capitalwerks/Preferred Lease;
• James Breedlove, 51, of Newport Beach, who worked at Santa Fe Equipment;
• Mark Castleman, 47, of Chino Hills, who worked at Industrial Information Systems;
• Les Spitzer, 60, of Grenada Hills, who worked at Pyramid Infinite;
• George Simon, 38, of Redondo Beach, who worked at Advantage IT Solutions;
• Jeff Greenough, 48, of Laguna Beach, who worked at Peniche;
• Troy Worrell, 47, of Newport Beach, who worked at Peniche;
• Lourey McComber, 53, of Prescott Valley, Arizona, who worked at Peniche;
• Harold Gold, 75, of Falmouth, Massachusetts, who worked at Leasing Services; and
• Nohad Mousa, 40, of Anaheim, who worked at Saut Wa Soora, Inc.
• the charges filed today are part of an ongoing investigation by the Federal Bureau of Investigation.