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A former bishop and lay leader of an historically African American church have been charged with defrauding California congregations by mortgaging their properties in order to obtain $14 million in loans they used for personal expenses, authorities said yesterday, the Associated Press reported. A federal indictment unsealed yesterday accuses Staccato Powell of Wake Forest, N.C., and Sheila Quintana of Vallejo, Calif., of conspiracy and wire fraud, with Powell also charged with mail fraud, the U.S. attorney's office for the Northern District of California said in a statement. The indictment said Powell and Quintana set up Western Episcopal District, Inc., and used the entity to illegally obtain grant deeds to properties owned by congregations in Oakland, San Jose, Palo Alto and Los Angeles. The congregations had little or no mortgage debt until the pair, without permission, used their real estate as collateral to obtain more than $14 million in high-interest loans, prosecutors said. Western Episcopal District, Inc. filed for chapter 11 bankruptcy in 2020 and listed among its assets 11 churches in California, Arizona and Colorado, authorities said.

After more than a dozen years of motions, objections, petitions and appeals, the multibillion-dollar civil fraud case against five banks that provided financial services to Ponzi scheme perpetrator R. Allen Stanford and his investment firm will finally go to trial later this year and the trial will take place in Houston, the Houston Chronicle reported. A federal judge, who has overseen the massive litigation brought by thousands of investors who claim they were defrauded more than $5 billion in hard money by Stanford and the Stanford Financial Group between 1999 and 2008, said the biggest and final of all the lawsuits is ready to be sent back to Houston to be decided by a judge and jury in the town were the scheme took place. U.S. District Judge David Godbey of Dallas, who was appointed in 2009 to handle all civil litigation stemming from the Stanford fraud, ruled on Thursday that “the proper time to remand the case to the Southern District of Texas has arrived.” Lawyers involved in the litigation said the case could go to trial as early as this summer or fall and would be the largest in terms of civil damages to go to trial since a Houston jury awarded more than $10 billion to Pennzoil in its tortious interference case against Texaco 37 years ago. Judge Godbey, at the request of the U.S. Securities and Exchange Commission, which brought fraud charges against Stanford and his Stanford Financial Group in 2009, appointed Dallas lawyer Ralph Janvey to recover as much money as possible to return to the victims. To date, the receiver has collected $1.1 billion.

A federal jury convicted Elizabeth Holmes, the startup founder who claimed to revolutionize blood testing, on four of 11 charges that she conducted a yearslong fraud scheme against investors while running Theranos Inc., which ended up as one of Silicon Valley’s most notorious implosions, the Wall Street Journal reported. The verdict caps a steep fall for the former Silicon Valley star who once graced magazine covers with headlines such as “This CEO is Out for Blood” and emulated Apple Inc. co-founder Steve Jobs by wearing black turtlenecks. At the 15-week trial, Ms. Holmes testified in her own defense, showing regret for missteps and saying she never intended to mislead anyone. She accused her former boyfriend and deputy at Theranos of abusing her, allegations he has denied. Ms. Holmes was charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud under an indictment brought 3 ½ years ago. She was found guilty on three of the nine fraud counts and one of two conspiracy counts. She was acquitted on four counts related to defrauding patients — one charge of conspiracy to commit wire fraud and three charges of wire fraud. The jury failed to reach a verdict on three counts related to investors, after saying earlier Monday it was having difficulty reaching consensus on three of the charges.

Michigan likely paid about $8.5 billion in fraudulent jobless benefits over a 19-month period during the coronavirus pandemic, far more than previously estimated, according to a report released yesterday by the state’s unemployment agency, the Associated Press reported. The figure, provided by Deloitte, came more than a year after the firm said the agency expected fraud losses in the “hundreds of millions” of dollars. State auditors have since reported that the agency improperly paid $3.9 billion to claimants who were later deemed ineligible. There is “some overlap” between those payments — made to self-employed and gig workers who began qualifying for federal aid because of the pandemic — and the overall $8.5 billion estimate, said Julia Dale, director of the Unemployment Insurance Agency. “My initial reaction to seeing these numbers is one of outrage and certainly frustration,” she told The Associated Press. “These are not the type of numbers that we had hoped to see or want to see.” She added, however, that Michigan is doing a much better job blocking fraud, noting it avoided an estimated $43.7 billion in fraud from March 2020 through September 2021. The state paid $34.5 billion in benefits over that time. The percentage of payments involving likely imposter fraud was 0.46% last fiscal year, down from 9.7% between March 2020 and October 2020. The portion paid for likely intentional misrepresentation fraud — when real claimants may fabricate income-verification documents or knowingly not report information that would make them ineligible — was 0.11%, a drop from 20.1%.

The U.S. Secret Service said that nearly $100 billion has potentially been stolen from COVID-19 relief programs designed to help individuals and businesses harmed by the pandemic, the Wall Street Journal reported. The funds have “attracted the attention of individuals and organized criminal networks” world-wide, the agency said in a news release, though its estimate of stolen benefits represents just a fraction of the trillions of dollars in government relief provided since last year. The Secret Service said that it would work closely with a variety of federal agencies — including the Labor Department and Small Business Administration, which have key roles tracking and administering relief funds — to investigate and recover fraudulently disbursed funds. The Secret Service said that its estimate is based on public reports issued by internal government watchdogs, with the bulk of the potentially misused funds stemming from fraud tied to unemployment insurance. Those analyses are based on 2020 activity and could overstate the amount of actual fraud or stolen money, in part because they also include mistaken payments to ineligible recipients and not necessarily bad actors. The Secret Service issued a revised statement on Wednesday afternoon warning of “potential fraudulent activity nearing $100 billion,” amending an earlier release that said “stolen benefits” and pointed to estimates totaling more than $100 billion. In a separate estimate released last week, the Labor Department said about $87 billion in unemployment benefits might have been paid improperly, “with a significant portion attributable to fraud.” The department administers federal components of aid programs in addition to compiling data on state-run benefits.