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EMPLOYMENT ISSUES UNIQUE TO JEHOVAH'S WITNESS EMPLOYEES
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For decades, the WatchTower Society has repeatedly portrayed Jehovah's Witnesses as "the most honest people on earth". Why? Because, JWs are the only members of "the only true religion on earth". The following state and federal employment related criminal and civil court cases are not intended as evidence that Jehovah's Witness Employees are more dishonest than other employees, but rather are intended to demonstrate that Jehovah's Witnesses are just as dishonest or honest as are other members of the human population -- whether religious or non-religious.
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For decades, the WatchTower Society has also repeatedly portrayed itself as one of the most cost effective and cost efficient organizations on the face of the earth. Why? Because, the WatchTower Society is the group chosen by God and directed by God to do his earthly work in the "last days" of "this system of things".
While reading the following court case summary, ask yourself not only how cost effective and cost efficient was the WatchTower Society for the last quarter of the 20th century with regard to what is assumed to be one of its largest expenditures, but also ask yourself whether such was simply due to incompetence at all levels, or whether such was possibly due to other reasons which seem to ooze out of the Court's opinion.
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"Although Watchtower never entered into a contract with Paper Corp. or Fraser, the following arrangement developed over time: Watchtower placed orders through Henwood and Paper Corp.; Fraser manufactured paper at its mills and sold it to Paper Corp. at a price negotiated by Fraser and Paper Corp.; Paper Corp. then added a gross margin determined by Henwood and Dan Romanaux (“Romanaux”), the president of Paper Corp. during the relevant period; Paper Corp. then sold the paper to Watchtower." (Note that "Fraser" is the manufacturer from whom Paper Corp purchased the paper which was sold to the WatchTower Society.)
"Henwood, as the Paper Corp. sales representative, was intimately involved with, and controlled the Watchtower account on a day-to-day basis. He communicated with Watchtower and Fraser regarding, among other things, the quality and volume of the paper purchased by Watchtower. He also attended quarterly (and other) meetings where paper quality, inventory and other issues were discussed. From 1991 through 1999, Watchtower was Henwood’s only account. He neither serviced nor attempted to develop other accounts during this period."
"Despite having only a one-client book of business, Henwood was the highest paid sales representative at Paper Corp. for each year between 1985 and 1999. Henwood’s financial success was due, in part, to the unusually high gross margin that he, in consultation with Romanaux, set on paper sales to Watchtower. The average gross margins on the type of paper purchased by a client of Watchtower’s size were typically in the range of 3% to 4%; the gross margins charged to Watchtower were 11% to 13% and higher. This resulted in relatively high commissions for Henwood, who in 1998 earned commissions in the amount of $1,329,692.68 and in 1999 earned commissions in the amount of $1,007,038.74."
"In 1995, Wayne Rittenbach assumed responsibility for the entire United States purchasing operation at Watchtower. As the supervisor of all of Watchtower’s purchases, Rittenbach reported to Watchtower’s Operations Committee, which was responsible for Watchtower’s operations in the United States. In servicing the Watchtower account, Henwood worked directly with both Rittenbach and Ralph Lindem (“Lindem”), a paper buyer for Watchtower who began reporting to Rittenbach in 1995. Beginning in approximately 1997, Watchtower, through Rittenbach, began to ask Henwood specific questions about the cost components of the paper Watchtower purchased through Henwood (i.e., those factors that affected the total price)."..."In March 1998, Watchtower’s Operations Committee met for its quarterly meeting. The agenda for the meeting included a discussion of the pricing of paper purchased by Watchtower from Paper Corp. Henwood attended the meeting and was aware that Rittenbach intended to present various graphs and pricing indices that compared the price Watchtower was paying to industry trends. However, after consulting with Lindem, Rittenbach decided not to raise the issue openly at the quarterly meeting."... ..."By a letter to Romanaux dated March 16, 1999, Rittenbach renewed Watchtower’s requests for price information by asking Paper Corp. to provide specific information."... ...."Subsequently, on April 24, 1998, Rittenbach met with Henwood and Romanaux for the specific purpose of discussing the pricing of the paper Watchtower had been purchasing through Henwood. According to Rittenbach, he received “nothing of any value” on the issue of price justification at this meeting."... ...In an internal memorandum to the Operations Committee dated July 15, 1998, Rittenbach expressed concern about Paper Corp.’s failure to respond to Watchtower’s inquiries about pricing.
... ...By a letter to Romanaux dated March 16, 1999, Rittenbach renewed Watchtower’s requests for price information by asking Paper Corp. to provide specific information.
"I was very clear with him in front of anybody who wished to - - - any Watchtower people who were around, that I felt my responsibility to my company and to [Watchtower] was to make sure that we were fully and completely competitive, because I recognized that they had the option at any given time, sans a contract, to go out and purchase a similar quality and grade from anyone in the world. And, if they were successful in doing that, with a product equal to what we were supplying, that I either had to meet that price or give them a better price or lose the business. ... When [Rittenbach] asked about the costs, I deflected it by the statement I just gave you. That was my response to his request for costs."... ..."Rittenbach also testified that his disclosure to Henwood that Watchtower was interested in looking at the marketplace for competitive costs led to some negative reaction from Henwood. Rittenbach testified:'I mean a significant negative reaction. I remember some instances where after discussions - - I remember one in particular, a discussion on the way home from the Madawaska Mill in the airplane. There was a very animated discussion on the part of Mr. Henwood trying to convince us of why it would not be appropriate to go looking to the marketplace and why it would be inappropriate for us to contract our paper - - competitively bid our paper.'"
"... we also realized that our business was large enough to justify inquiry to the paper mill directly. ... - - it seemed like the time was right. Our volume was enough so it was time to make that inquiry."
UNITED STATES v. ABRACZINSKAS was a 2001-2 Florida federal criminal court decision. In February 2002, William Abraczinskas was convicted on one count of money laundering and on one count of conspiracy to commit money laundering, and was sentenced to 121 months in federal prison.
William Joseph Abraczinskas, 38, of Warren, Oregon, was a prominent Jehovah's Witness Millionaire International Banker-Investor-Entrepeneur, who over the years has done business, both domestic and international, in a number of different states and foreign countries; often with a number of different business associates who are variously characterized as "investors", "partners", "principals", "employees", "owners", "corporate officers", etc. Some of these associates have been identified as being Jehovah's Witnesses, while some others also were probably JWs or family members of JWs. Some of Bill Abraczinskas' business associates were members of his own family, and some were members of Kerrylee Harrington's (Abraczinskas' wife) South Carolina family.
Sometime during the 1990s, William J. Abraczinskas had formed a business in Oregon called Globallink LLC, which conducted various domestic and international banking and other business operations under various subsidiaries using forms of the Globallink name. Abraczinskas' also conducted a wide variety of other business dealings through multiple other corporations, some of which are discussed below. At some point prior to 2001, the business operations of Globallink LLC and William J. Abraczinskas had caught the attention of the Federal Bureau of Investigation, and the F.B.I. set up a "sting" in Miami, Florida, to see what Abraczinskas would do when presented with the opportunity to "launder" drug proceeds for a Mexican Drug Cartel. Abraczinskas agreed to use offshore bank accounts belonging to Globallink LLC to launder the cartel's drug money for a mere 10% fee.
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UNITED STATES v. ABRACZINSKAS. Limited details. Apparently, Bill Abraczinskas was sent to a minimum security federal "resort" for white-collar criminals, because sometime thereafter, he and another prisoner escaped. Both were eventually caught and prosecuted. Abraczinskas was sentenced to have an additional 15 months to be tacked onto his original sentence. However, Abraczinskas won this appeal to have the sentenced reviewed, which seems to make little sense given that the sentencing range was 12 to 18 months.
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HAMBLETON BROTHERS LUMBER COMPANY v. BALKIN ENTERPRISES, INC. ET AL is a 2005 USCA decision, in which William Abraczinskas, his wife Kerrylee Harrington-Abraczinskas, and a corporation owned by Abraczinskas, called Financial Investments, Inc., are Defendants-Appellees. Here are some excerpts which refer to Abraczinskas and Financial Investments' role in the events that gave rise to this lawsuit:
"... [Jim] Ballinger was formerly the president of Balkin Enterprises, an Oregon corporation that had entered into a contract with Hambleton Brothers in 1994 giving Hambleton Brothers the right to all merchantable timber on a particular parcel of land for a period of just over three years. Before Hambleton Brothers could log the property, it was sold by one William Abraczinskas, an unauthorized individual purporting to be Balkin's agent, and then logged by another company. Hambleton Brothers, gaining nothing for the funds it had paid for the logging rights, brought suit ...
... ...
"On July 5, 1995, William Abraczinskas signed an unrecorded warranty deed transferring the Fruitland real estate from Balkin to Financial Investments, Inc. for ten dollars. Although Abraczinskas signed the deed purporting to be Balkin's vice president, he was not an employee, officer, or shareholder of Balkin. Ballinger and Kinsey knew Abraczinskas and had conducted business with him on a prior occasion, but neither authorized him to engage in any transaction on behalf of Balkin Enterprises. Financial Investments was Abraczinskas's own company. After several other rapid property transactions, Cascade Pacific Land & Timber bought a timber deed to the Fruitland real estate and logged the property.
... ...
"On July 7, 1995, Financial Investments deeded the Fruitland property to Sherry Miles for $129,000, for which Miles signed a promissory note. Financial Investments sold the note to Great Northwest Investments on July 12, 1995. Miles deeded the property to MGM Development, Inc. on February 16, 1996. On August 1, 1996, MGM Development granted a timber deed for all timber on the Fruitland property to Cascade Pacific Land & Timber for $32,000.
... ...
"... Ballinger was named as a defendant, along with Balkin Enterprises, Kinsey, Mr. and Mrs. Abraczinskas, Financial Investments, and Trevor Coxen, the president of Financial Investments. On October 24, 2001, the district court granted Hambleton Brothers's motion for entry of default against Balkin and Financial Investments. ...
... ...
"... Instead, the loss to Balkin caused by Abraczinskas, with his complex and covert scheme of fraudulent land transfers, cannot be viewed as reasonably foreseeable by the incorporators of Balkin.
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Interestingly, sometime prior to 2001, William Abraczinskas also had started a business in Montana called The Bank Exchange. Sometime around 2000-1, Bill Abraczinskas sold The Bank Exchange to fellow Jehovah's Witnesses, Darryl K. Willis and Dale A. Erickson (see next summary). The State of Montana apparently closed down The Bank Exchange sometime in early 2002 (prior to Willis' and Erickson's arrests for the Anderson Swindle), because it allegedly was being used in a scam involving the formation and operation of offshore credit unions . However, Willis and Erickson (nor Abraczinskas) were ever prosecuted for any TBE dealings, possibly because the State of Montana did not want to expend the additional resources given the pending Anderson Swindle prosecutions, and possibly because any investigation of TBE would possibly embarrass or even implicate various Montana politicians and elected officials.
What is extremely interesting is the fact that in April 2000, Globalink LLC signed an exclusive contract with the Montana Department of Commerce to develop its Foreign Capital Depository Program. Under that deal, Globalink LLC was to conduct due diligence investigations of all persons or entities applying for a depository charter in Montana and make recommendations to the Commissioner of Banking and Financial institutions whether they should be approved. According to multiple webpages, the President of Globalink LLC was a man experienced in international banking operations, named Doug Hamilton, who lived in Whitefish, Montana. According to the October 2001 edition of the Northwest Financial Review, Doug Hamilton and Darryl K. Willis filed Montana's very first application for a depository charter -- First Depository of Montana Inc. -- using a San Diego, California attorney, according to another source. However, the Montana Banking Board kept asking Darryl Willis for additional information, which he never provided. The application for First Depository of Montana Inc. eventually went unprocessed, despite the unusually strong public support for Willis and Hamilton from a certain Montana State Senator.
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Click HERE, and HERE for additional readings on some of William Abraczinskas' other domestic and international business dealings. (Use FIND to search "Abraczinskas" on each webpage.)
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UNITED STATES v. WARD was a 2007-8 California federal criminal court case. In August 2007, a former Jehovah's Witness Elder, named Joel Nathan Ward, 50, pleaded guilty to 5 counts of wire fraud, 2 counts of mail fraud, and 2 counts of engaging in a monetary transactions in property derived from specified unlawful activity, a form of money laundering. In April 2008, Joel N. Ward was sentenced to 9 years in prison, and to serve 3 years of supervised release after the completion of his prison sentence. Ward must serve 85% of his sentence, or more than 7 1/2 years, before he is eligible for release. Joel Ward, who claimed that he had no money left, was also ordered to pay $11,275,501.53 in restitution.
Joel Ward, a well known commentator and seminar speaker on Forex trading, ran an elaborate Forex trading scam through two of his companies, the Joel Nathan Forex Investment Group, of Turlock, California, and Learn:Forex, Inc., a Forex trading educational center based in Sacramento, California. Ward also allegedly defrauded investors in a Hurricane Katrina scheme, which involved a real estate investment project in Mississippi, in which Ward allegedly diverted investors' funds to his own use. Joel Ward admitted that he stole the investors’ funds, using the money for his own compensation and expenses, and to purchase the Learn:Forex School in Sacramento. He also admitted that, in order to conceal the theft, he made “Ponzi” payments using other investors’ funds, and that he provided his investors with altered account statements. In a handwritten personal journal, which was recovered during the execution of a search warrant, Ward described himself as a "financial serial killer" and "just another scumbag con artist bilking old people out of their retirement money."
Many of Joel Ward's victims were family members and close friends -- many of whom were also fellow Jehovah's Witnesses. After various federal agencies started investigating Ward in mid 2006, Joel Ward confessed the ongoing fraud to his JW Wife around November 2006, and Ward thereafter sent a series of emails to his victims admitting the theft, asking for their forgiveness, and purposing that if they would allow him to continue doing business legitimately that he could soon recoup the lost funds, and repay them all their money.
Many of Ward's victims were in no mood for forgiveness. Ward's JW wife even eventually divorced him. She first showed Ward's aforementioned personal journal to her father, Oren Collett, who was Ward's partner, and Collett reportedly informed the federal authorities of Ward's confessions. Ward was eventually arrested by the F.B.I. in April 2007.
Even after his arrest and guilty plea, Joel Ward continued to plead with victims, prosecutors, and the federal judge to allow him to continue doing business legitimately, so that he could soon recoup the lost funds, and repay his victims all their money. Joel Ward's former mother-in-law, Barbara Collett, who, along with her husband, Oren Collett, lost nearly $100,000.00, told the Wall Street Journal that over half of Ward's victims wanted to forgive him and supported Ward's restitution plan (actually 44 of 79 victims who expressed their opinion). Joel Ward even told the Modesto Bee of his plan:
"Several friends who know my trading ability are willing to put up seed money so I can trade, and my commissions would go into a recovery fund. My former father-in-law and business partner, Oren Collett, would manage the fund and several victims have volunteered to sit on a board of trustees and act as auditors. I would have no direct access to the money."
Gene Myatt, purportedly a Jehovah's Witness businessman in Modesto, California, who lost $50,000.00, was quoted in that same 2007 Wall Street Journal article as supporting Ward's restitution plan: "If Joel goes to prison, no investor will be cared for." Russ Sharpe, who owns a marketing company in Oakdale, California, and who lost $480,000.00, stated, "I've watched him trade. He can exceed by vast measures what he has lost. ... I have no doubt that Mr. Ward has the capability of making whole this loss." Rohn Ritzema of Elk Grove, California , who lost $320,000.00, and Michael Mello of Sacramento, California, who lost $754,000.00, both urged the judge to give Joel Ward another chance.
However, David Rothell, an insurance broker in Bryan, Texas, who lost $15,000.00, told the WSJ that Ward needed to pay for his crimes. According to the Modesto Bee, Nancy Jones, an auditor from Dallas, Texas, who lost $50,000.00, stated, "If Joel had just come to my house and beat me up, I'd be a whole lot better off today."
Interestingly, the Commodity Futures Trading Association had a finance professor analyse Ward's business records, and he reported that of the $15,000,000.00 that Ward took in from investors, Ward only ever invested $2,000,000.00, and Ward lost $1,840,000.00 of that. In fact, of the two trading accounts in which no employee of Ward also traded, there was a profit of only about $1000.00. Yet, 44 of 79 of Joel Ward's victims still think that Ward is a financial genius. One can't help but wonder how many of those 44 people also believe that they are members of the "only true religion".
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SOUTH CAROLINA v. SHEPPARD was a 2007 South Carolina criminal court decison. Labeled "The Largest Bankruptcy in South Carolina's History", HomeGold, Inc., a subprime mortgage lender, and its subsidiary, Carolina Investors, filed for bankruptcy in April 2003, and defaulted on approximately $277,000.000.00 owed to over 8000 lenders and investors -- many of whom were elderly retirees who lost much or most of their lifetime savings. In February 2007, a Jehovah's Witness, named Ronald J. Sheppard, 49, was convicted and sentenced to 20 years in prison on three counts of securities fraud committed while President and CEO of HomeGold, Inc., from 2000 until November 2002.
Sheppard was originally indicted on 11 charges found in a 39 page indictment -- Securities Fraud (3), Bank Fraud , Insurance Fraud (4), Theft, Perjury, and Breach of Trust -- but Sheppard was only tried on the fraud charges. The court dismissed the perjury charge. It is not known whether the State will pursue the remaining 7 charges, but Sheppard will likely be paroled when he is eligible in Spring 2012.
Ronald Sheppard was a multi-millionaire, and a prominent Jehovah's Witness known throughout much of the United States. Sheppard reportedly credited his huge financial success to his being a Jehovah's Witness. Sheppard reportedly showed his appreciation by donating the land and the money to construct the West Columbia Kingdom Hall of Jehovah's Witnesses. Given Sheppard's status, it is most probable that he was an "Elder" in the organization.
Sheppard's wife, Dana Sheppard, who was supported by several weeping friends and family, spoke at his sentencing and asked the judge to consider her husband's charity and kindness when issuing his sentence. Dana Sheppard said that if her husband was guilty of anything, "he is guilty of being generous to a fault."
With regard to the settlement in the separate bankruptcy case, in which investors recouped only about 18c on the dollar, Dana Sheppard attempted to gain the judge's sympathy by proclaiming, "We paid millions of dollars in a civil suit. ... Nearly everything he got from the company he paid back."
The "millions of dollars" to which Dana Sheppard was referring as having been repaid was most likely the $5,000,000.00 which the Sheppards had borrowed from Carolina Investors in the Fall of 2002 to start EMMCO, another subprime mortgage lender, which they founded after Ronald Sheppard left HomeGold. It is doubtful that the Sheppards were required to repay any of the money they received when they sold their interest in HomeSense to HomeGold in 2000, and it is doubtful that it included any of the millions (possibly approaching $10,000,000.00) that Ronald Sheppard received in compensation while President and CEO of HomeGold.
There are a number of affiliated corporations involved in this case in one way or another. Here are some of the names which popped up in the indictment: HomeGold, HomeSense, Carolina Investors, Emergent Mortagage, EMMCO, R-Doc, FlexCheck, and Prevost Montana. Several of Sheppard's business associates have also been either indicted or convicted. It is unknown how many employees of all these businesses were fellow Jehovah's Witnesses. Google names and keyterms for many more details.
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S.E.C. v. RONALD J. NADEL and JOSPEH M. MALONE. In July 2006, a prominent Jehovah's Witnesses Millionaire, with ties throughout both his home state of California and the entire United States, named Ronald J. Nadel, of San Clemente, California, was charged with various financial crimes by the Securities and Exchange Commission (SEC), which were alleged to have been committed while operating Renaissance Asset Fund, Inc. between 1999 and 2004.
Included in the complaint was a second Jehovah's Witness named Joseph M. Malone, of Newport Coast, California, who was Renaissance Asset Fund's "Investor Relations Representative".
The SEC alleged that Ronald Nadel and Joseph Malone defrauded $16,000.000.00 from nearly 200 investors, many of whom were "elderly", and even Nadel and Malone's fellow Jehovah's Witnesses:
The complaint charged Renaissance, Nadel, and Malone with fraud in violation of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. It also charged Nadel and Malone with violations of the broker-dealer registration provisions of Section 15(a) of the Exchange Act. The complaint sought permanent injunctions prohibiting future violations of the securities laws, an accounting, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.
In January 2008, the SEC issued an Order which found that on Sept. 4, 2007, a final judgment was entered by consent against
Nadel and Malone permanently enjoining the pair from future violations of federal securites laws. The Order barred Nadel from association with any broker or dealer with the right to reapply for association after five years to the appropriate self-regulatory organization, and Malone from association with any broker or dealer with the right to reapply for association after three years to the appropriate self-regulatory organization. Nadel and Malone consented to the issuance of the Order without admitting or denying any of the findings in the Order. [Those SEC attorneys are tough cookies!!!]
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S.E.C. v. KENNETH E. BAUM. In July 2006, the SEC also settled administrative cease-and-desist proceedings against Senior Resources Asset Fund, LLC and Kenneth E. Baum (who according to a JW discussion board is also a Jehovah's Witness) based on their conduct in selling Renaissance Asset Fund investments. With their consent, the Commission ordered both Senior Resources Asset Fund and Kenneth Baum to cease and desist from selling unregistered securities, and ordered Kenneth Baum, of Hemet, California, to cease and desist from acting as an unregistered broker-dealer.
The SEC’s settled Order against Kenneth Baum and Senior Resources Asset Fund makes the following findings, among others.
The Order directed Senior Resources and Baum to cease and desist from committing or causing violations or future violations of Sections 5(a) and 5(c) of the Securities Act, and ordered Baum to cease and desist from committing or causing violations or future violations of Section 15(a) of the Exchange Act. It ordered disgorgement and prejudgment interest against Senior Resources and Baum but waived payment based on sworn financial statements showing inability to pay. It states that the Commission is not imposing a civil penalty against Baum for the same reason. The Order further barred Baum from association with any broker or dealer for a period of three years. Senior Resources and Baum consented to the issuance of the Order without admitting or denying its findings.
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UNITED STATES v. KNOWLES. In October 2002, a prominent millionaire Jehovah's Witnesses, with ties throughout both his home state of Florida and the entire United States, named Robert L. Knowles, was convicted and sentenced to 57 months in federal prison on 24 counts of mail, wire, and securities fraud. The victims of All Diversified Financial Services, Inc. included many elderly and disabled clients, including many of his own fellow Jehovah's Witnesses. In 2003, a federal judge ordered Knowles to repay nearly $5,000,000.00 to nearly 50 victims. It is unknown how much money actually remained by that time.
Robert Knowles was a prominent Jehovah's Witness Elder, who had regularly delivered speeches at WatchTower Conventions over the years. Knowles reportedly had also served as a "missionary" in Africa. It is unclear whether Knowles was a graduate of the WatchTower Society's missionary school, known as "Gilead", which would make him an "official" WatchTower missionary, or whether Knowles was an "unofficial" missionary, or what is known as a "NeedGreater" within the Jehovah's Witness community.
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ALABAMA v. WILSON was a 2003 Alabama court case. In 2003, an Anniston, Alabama Jehovah's Witness, named Celeous Wilson, 31, was sentenced to one year in the Calhoun County jail for "writing bad checks". By March 2004, Wilson was allowed to participate in the county's work release program. However, on March 11, Wilson did not return from a roofing job, and may not have even showed up at the jobsite that day. During the evening of Wilson's third day of freedom, Wilson checked himself into Regional Medical Center for a supposed "psychiatric" condition. Outcome unknown, but sounds as if 'ol Celeous may be saner than most.
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CHAO v. FIDELITY GROUP In February 2001, the federal government's Department of Labor obtained a consent judgment from a New York federal district court, which settled this civil lawsuit which the DOL had been pursuing against two Jehovah's Witness couples: Eugene and Yvonne Duncan, and Dwayne and Carol Samuels. Both Eugene Duncan and Dwayne Samuels were prominent Jehovah's Witness "Elders" in the NYC area, and both had regularly given talks at circuit assemblies and district conventions over the years. Samuels purportedly also served as a substitute "Circuit Overseer" (a/k/a District Sales Manager) in NYC for the WatchTower Society.
Eugene Duncan and Dwayne Samuels were the President and Vice-President, respectively, of Fidelity Group Inc., which essentially marketed health and dental insurance group plans to small employers in New York and 31 other states. Duncan and Samuels created the scheme in 1995. Each owned 50% of Fidelity's stock. In 1998, BLACK ENTERPRISE business magazine honored Fidelity Group Inc by naming FGI to its' "100s Universe"; the magazine's top 100 African-American owned and operated businesses in the United States.
Fidelity Group, Inc. was established to administer the health plan. The "International Workers' Guild" and the "National Association of Business Owners and Professionals" were formed to make it appear that Fidelity Group's health plan was a federally regulated ERISA health plan, and thus not subject to regulation by state insurance laws. However, when later scrutinized by federal and state authorities, it was deemed to actually be a Multiple Employer Welfare Arrangement (MEWA), which are subject to state regulation. In its lawsuit, the Department of Labor referred to IWG as a "sham union", which operated the health plan for employers through "bogus" collective bargaining agreements with the NABOP, which the DOL referred to as a "sham employer association". Yvonne Duncan and Carol Samuels were Corporate Officers of NABOP. Before marketing of the plan was stopped in January 1999, it had over 10,000 participants in 32 states. Unpaid insurance claims were estimated at between $8,000,000.00 and $28,000,000.00.
The DOL's lawsuit filed on Dec. 15, 1998, alleged that nine defendants holding various positions at either FGI, IWG, or NABOP violated ERISA (Employee Retirement Income Security Act) when they:
-- paid excessive administrative fees from health plan assets to Fidelity for its service as the third-party administrator;
-- diverted assets of the health plan to IWG and NABOP in the form of sham union and association fees;
-- failed to monitor and administer the fund's claims processing system and adjudication system, thereby resulting in a $25 million backlog of unprocessed health claims;
-- failed to assure the financial soundness of the plan through the use of adequate underwriting and sound actuarial analysis;
-- failed to establish adequate contribution rates and maintain cash reserves to assure the payment of claims;
-- allowed the plan to become insolvent and used plan money for prohibited purposes; and
-- permitted NABOP and IWG to be created or operated primarily to divert plan assets from the payment of health benefits.
Under the 2001 consent judgment, Eugene Duncan and Dwayne Samuels were each required to restore $250,000.00 under a payment schedule, and restore annually to the plan 50% of their net income over a $50,000.00 threshold for 15 years, up to an $8,000,000.00 cap. The JW Duo also were barred from serving as fiduciaries, receiving compensation, marketing services, and having business dealings with any plan governed by the Employee Retirement Income Security Act. Eugene Duncan later attempted to discharge this obligation by filing bankruptcy, but the DOL successfully intervened in Duncan's 2005 bankruptcy case.
Under the 2001 consent judgment, Yvonne Duncan and Carol Samuels were each required to restore annually to the plan 50% of their net income over a $50,000 threshold for 10 years, up to a $3,800,000.00 cap. They also are permanently barred from acting as fiduciaries or service providers to any ERISA plan.
An earlier settlement with the four plan trustees, Paul Askew (Dwayne Samuels brother-in-law), Charles Bradley (Eugene Duncan's half-brother), Terence Rhue and Noel Shaw, as well as with FGI management-level employees, David Spooner and Lee Jarmolowsky, barred the four trustees for 10 years, and Spooner for life, from activities governed by the Employee Retirement Income Security Act. They may not act as fiduciaries, provide services, receive compensation, market a plan, recruit participants, or sell property to any ERISA plan. Jarmolowsky, who was not involved in the diversion of plan assets, consented to an injunction which permanently prohibited him from acting as a fiduciary to any ERISA plan.
Reportedly, this scheme involved other Jehovah's Witnesses as employees of FGI, IWG, or NABOP. Employees of the sales and marketing entities in the states where the plan was sold, and also business owners and employees covered by the plan, may have also involved some JWs.
Readers should be aware of the existing hole in American law that impacted this scenario. In the United States, the federal government is the primary regulator of the banking and securities industries. However, the insurance industry is primary regulated by the individual states. In this particular case, the DOL took its' best shot under ERISA. However, since this scheme was actually a MEWA, it was subject to state insurance laws, and some individual states, such as South Carolina and North Carolina (see also Long Et Al v. Hammond, Holroyd Et Al v. Requa), have also gone after the above parties, as well as the in-state marketers. A "Marty Geitler" and a "John Branham" (spellings not necessarily correct) were identified in one SC court case as the exclusive "General Agents" who marketed the plan around the U.S.
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GUNNELLS ET AL v. FIDELITY GROUP ET AL. In South Carolina, a class action lawsuit was also filed against the above entities, as well as the insurance agents in SC who marketed this plan. In 2004, ten SC insurance agents agreed to a settlement totaling $1,352,062.00 in order to be released from the lawsuit. Readers interested in knowing whether any of those agents, or whether the multitude of defendants remaining in the ongoing lawsuit (other than those already identified) have any ties to the Jehovah's Witnesses can view the linked webpage.
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UNITED STATES v. SAMUELS and UNITED STATES v. DUNCAN were the 2001 federal criminal trials related to the above. The government outdid itself in these. Limited details, but apparently Samuels and Duncan plea bargained to "littering", since they each received only six months probation. If Samuels would have been jailed in 2001, that would have saved many people from being defrauded in the Vanguarde scheme he already had going.
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UNITED STATES v. SAMUELS is/was a 2005 New York criminal court case filed against the former WatchTower "Circuit Overseer" named Dwayne Samuels (see CHAO v. FIDELITY GROUP), who had been operating a health insurance scheme similar to the Fidelity Group scheme since 1999. The list of new corporations formed by Samuels included: Vanguarde Group, Vanguard Group, Financial Independence & Prosperity Network, Inc., and American Financial Management Association. Outcome unknown.
Samuels was indicted for embezzlement of payments intended to provide health care coverage and for devising a scheme to defraud members of the Wedding & Event Videographers Association (WEVA) and the American Financial Management Association Group (AFMA). AFMA was a corporation set up by Samuels to collect premiums from individuals that were not WEVA members. Samuels allegedly carried out the fraud by falsely representing to WEVA members that Vanguard carried stop-loss insurance coverage to pay claims in excess of the assets that Vanguard had and by embezzling for his personal use payments intended to provide health coverage. Samuels, who was in charge of Vanguard's day-to-day operations including its financial affairs, allegedly failed to pay numerous bills submitted to Vanguard by health care providers for services provided to WEVA and AFMA members. Vanguard marketed the health care benefit program in numerous states including New York, Colorado, Pennsylvania, Florida, New Jersey, Florida, Connecticut and Massachusetts.
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IN THE MATTER OF VANGUARD ASSET GROUP. In 2002, the Florida Department of Insurance filed a Cease & Desist lawsuit against Dwayne Samuels, Vanguarde Group, Vanguard Group, Financial Independence & Prosperity Network, Inc., American Financial Management Association, Anthony Williams, William McCreary, V. DiCarlo, Robert Lenore, and Phil Jackson. This 2002 Florida lawsuit compared Vanguard Group's scheme with that of the Fidelity Group scheme that had been shut down in 1999.
IN THE MATTER OF VANGUARDE ASSET GROUP. In 2003, the Pennsylvania Department of Insurance shut down Dwayne Samuels' illegal insurance operations in that state. Samuels was barred from doing business in Pennsylvania for 20 years, and Vanguarde was fined $338,000.00. Samuels probaby busted a gut laughing when he got that letter.
IN THE MATTER OF VANGUARDE ASSET GROUP. In 2003, the Colorado Department of Insurance also filed a Cease and Desist Order against Dwayne Samuels' illegal insurance operations in that state.
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The Mildreada Andrews Jehovah's Witness Crime Family. Referred to by federal prosecutors as the "Grand Dame of Identity Theft", a Jehovah's Witness named Mildreada Andrews (amongst other surnames) was finally partially exposed for who she was, and she and her children were finally convicted in United States Federal Court, in 2005-6.
Given that Mildreada Ruiz was a Cuban immigrant, it probably is not even a sure bet that Mildreada's maiden name is "Ruiz". The only surname that is a certainty is "Andrews", and that is a known fact only because it can be established that the then 20 year-old Mildreada "Ruiz" married a fellow Jehovah's Witness named Mark Andrews, in Florida, in January 1980, and they thereafter had a son, named Michael Lee Andrews (1981), and a daughter, named Melanie Marie Andrews (1983).
Reportedly, Mark Andrews met Mildreada "Ruiz" at a "Jehovah's Witness Get-Together" in Hollywood, Florida, sometime in the late 1970s. The day after they returned from their honeymoon in January 1980, the FBI knocked on their front door looking for Mildreada on forgery charges, since their wedding, honeymoon, etc had been paid with checks that she had forged.
Although only 20 years old at the time, Mildreada Andrews' life of crime probably pre-dated those 1979-80 crimes, and it is known to have continued long after Mark Andrews and she divorced in the mid-1980s. Mildreada Andrews apparently was even somehow able to con the Florida family courts into garnting her custody of Michael Andrews and Melanie Andrews, despite having served an unknown amount of prison time during the 1980s, and rearing the two children in "the family business" At some point, Mildreada Andrews also started using the surname "Rapa" with some regularity. It is not known whether Mildreada may have married a second time, or whether "Rapa" was simply a "clean alias".
Mildreada Andrews used "identity theft" as a way to facilitate the family's many other financial crimes. Thus, even after the 2005-6 federal prosecutions and convictions of all three family members, the FBI probably has no idea of the actual number of crimes which were committed during the nearly 30 years long multi-state crime spree, because even when arrested, and/or prosecuted, and/or jailed, it is known that at least some of those arrests, prosecutions, and convictions were under ever-changing aliases.
Mildreada Andrews apparently also used the Jehovah's Witnesses' proclivity for packing up their families and moving every few years in order to perform WatchTower recruiting in a less often worked area as a means of moving from state-to-state and lying-low as honest-beyond-reproach citizens. While JWs holler that Mildreada Andrews also victimized fellow JWs, interestingly, it was not until the 2001-3 crimes against several JWs in Washington State that law enforcement was able to uncover who was the real Mildreada Andrews. If Mildreada Andrews had a pattern of victimizing JWs prior to then, then show me the proof.
Apparently, only because she was either arrested, prosecuted, or convicted under her own name, Mildreada Andrews is known to have operated in Florida, New Jersey, possibly Texas (a "Mildreada Ruiz" was indicted in Jefferson County -- east Gulf coast of Texas -- in December 1992), Arizona, California, and Washington. It is anyone's guess as to where else this "Jehovah's Witness Gang" may have conducted criminal operations.
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UNITED STATES v. RAPA, UNITED STATES v. ANDREWS, and UNITED STATES v. ANDREWS. In 2006, "Mildreada Rapa", her daughter Melanie Andrews, and her son Michael Andrews (using the surname "Hernandez"), were convicted in Washington state federal court of Fraudulent Use of Social Security numbers, real estate fraud, false statements to HUD, and income tax fraud. "Mildreada Rapa" was sentenced to 8 years in prison and 3 years of supervised release, and was ordered to make restitution of $550,000.00. Melanie Andrews was sentenced to 15 months in prison and 3 years of supervised release, and was ordered to pay restitution of $60,000.00. Michael Andrews had already been sentenced in October 2005 to18 months in prison and ordered to pay $243,224.00 in restitution after pleading guilty to related identity theft charges.
Among the many criminal schemes conducted during their stay in Washington State from around 2001 to 2003, the family got overly greedy and even started victimizing several of their fellow Jehovah's Witnesses. Having prepared Federal Income Tax returns for some JWs, they inflated the W-2s of those JWs, and had the refunds paid to their own accounts, and then either kept the entire refund or kept the inflated amount and paid the correct refund amount to the JWs. The family also submitted several returns using false identities. Altogether, they stole only about $60,000.00 from the IRS, which corresponds to the restitution Melanie Andrews was ordered to pay.Some of the family had been arrested in Washington State back in 2003, but they even used forged bonds to gain their release. After fleeing Washington State, the family eventually settled in Arizona.
Michael Andrew's wife, "Isis Pellon Andrews", as well as other aliases, is named in media reports as being charged in connection with crimes in California and Arizona, but it is unknown whether she was ever charged in connection with the crimes in Washington State. Given that she was supposedly only 19 years-old in 2005, she possibly could have an "unavailable" juvenile record.
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ARIZONA v. RAPA and ARIZONA v. ANDREWS. In 2004, "Mildreada Rapa" and Melanie Andrews were indicted by an Arizona grand jury on 10 counts of fraud, theft, forgery, and identity theft in connection with their impersonation of and employment as Registered Nurses at two renal dialysis clinics. Using stolen identities to gain employment, the JW-Gang then used their employment access to patient records to steal even more identities. They plea bargained down to only one theft count for which the Mother received a sentence of 30 months in jail, and the Daughter received a sentence of 18 months in jail. They also were ordered to pay $32,500.00 in restitution.
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CALIFORNIA v. NIDIA JIMENEZ BERNAL (Mildreada Andrews), CALIFORNIA v. STEPHANIE MENDOZA (Melanie Andrews), CALIFORNIA v. MICHAEL LEE APODACA (Michael Andrews), and CALIFORNIA v. DEIDRE ANN MENDOZA (Isis Pellon Andrews). Possibly again using forged bonds to gain release in Arizona, the family members were arrested in California in February 2005, where they had set up shop in the Palm Springs area. The three female family members were arrested at medical clinics in Indio and Palm Springs, where they had taken jobs so that they allegedly could steal the identities of patients and co-workers. Michael Andrews allegedly was developing a con related to a pool business.
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UNITED STATES v. MILDREADA ANDREWS. Sometime in the early 1980s, Mildreada Andrews was charged with passport fraud.
FLORIDA v. MILDREADA ANDREWS. Around 1987, Mildreada Andrews was charged in south Florida with over 100 counts of various frauds and theft.
FLORIDA v. MILDREADA ANDREWS. In 1999, Mildreada Rapa (?) was convicted in Key West, Florida for filing $59,000.00 in fraudulent insurance claims. The Monroe County Prosecutor had been investigating Rapa since the 1987 spree. Sentence unknown
FLORIDA v. MILDREADA MARTINEZ. Under this Florida alias, Mildreada Andrews is currently wanted for parole violation.
FLORIDA v. MARIA ANNA MARTINEZ. Another outstanding Florida warrant under even another alias of Mildreada Andrews.
Even Canadian authorities have said they intend to seek "Mildreada Rapa's" extradition for a credit card fraud committed in Canada around 2000.
CALIFORNIA v. LUIS PEREZ (2006), CALIFORNIA v. PAUL RODAS (2006), CALIFORNIA v. OSCAR HIDALGO (2006), CALIFORNIA v. ELIZABETH MIDDLETON WALDO (2006), and CALIFORNIA v. JAVIER CHAVOLLA (2006). Employers who use "temps" should be aware that there purportedly is a syndicate of Temporary Employment Agencies operating across the United States, which are purportedly owned and operated by several different Jehovah's Witnesses, and employ many Jehovah's Witnesse workers, and are under investigation by several states' governments.
This linked magazine article contains partial information, as does the public comment section at the bottom of the article (start with oldest comments). "Googling" the named owners and named businesses will provide additional info which suggests that this syndicate operates in 10 or more states other than just California. The named operators also may already be using different business names in California, and even different business names in other states. Excerpt:
"After a nearly four-year investigation conducted by the Department of Insurance's (CDI) Fraud Division, investigators served arrest warrants on Tuesday against Luis Perez, 37, of Dove Canyon; Paul Rodas, 40, of Costa Mesa; Elizabeth Waldo (aka: Elizabeth Middleton), 58, and Oscar Hidalgo, 31, both of Yorba Linda. An arrest warrant is still outstanding for Javier Chavolla, 36, also of Yorba Linda. All of the suspects were either owners or principal employees of temporary employment agencies known as Checkmate Staffing Inc.; Checkmate Staffing West Inc.; Checkmate Staffing West Inc.; Checkmate Transport Inc; Tower Temps, Inc.; Staffaide Inc.; RPM Staff Leasing; and Tower Staffing Inc."
Perez, Rodas, Waldo, and Hidalgo were charged with one count of conspiracy to commit workers’ compensation insurance fraud and one count of conspiracy to commit denial of workers’ compensation insurance benefits. Perez was booked into Orange County jail with bail set at $10 million. Waldo was booked into West Valley Detention Center Jail on $500,000 bail. Hidalgo was booked into Orange County jail on $500,000 bail, and Rodas was booked into Orange County jail on $250,000 bail. Outcome of these criminal cases are unknown.
However, in 2003, the State of California went after the corporate entity, Checkmate Staffing, Inc., for failing to pay accurate Worker's Compensation premiums. After agreeing to settle with the State Compensation Insurance Fund for $7.2 million in unpaid workers' compensation premiums, Checkmate filed bankruptcy. Checkmate's attorney also reportedly stated that Checkmate also owed about $30 million in back taxes. The assets of Checkmate and Luis Perez (eight homes) were sold, but apparently did not satisfy the various debts.
According to multiple unconfirmed media articles and discussion board postings, Luis Perez and some of his associates laid low for a while, but are currently back in business.
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