Local Fraud Roundup
Swissvale Man Pleads Guilty to $8.2 million Ponzi Scheme
John Hogan pleaded guilty to five counts of mail fraud relating to an investment scheme that resulted in the loss of over $8.2 million dollars from 80 investors. Mr. Hogan ran an insurance company called Hogan and Associates that sold whole life policies, but also held himself out as a financial planner when in reality he was not. The fraud scheme involved convincing his clients to borrow against the value of their policies and invest in a “promissory note” program in which he guaranteed a 10% return. In reality the funds were used to invest in condos and properties around the US. Following the decline in real estate values in 2008, Mr. Hogan began to struggle to make guaranteed return payments This ultimately lead to the collapse of the scheme. No significant assets have been recovered as all of the real estate holdings owned by Mr. Hogan are significantly indebted.
Former Ibis Tek Executives Plead Guilty to $6 Million Overbilling Scheme
Thomas and John Buckner, who formerly owned the Butler County based defense contractor Ibis Tek, pleaded guilty to major fraud against the U.S. and tax evasion along with their former CFO. The billing scheme involved inflating costs relating to a contract with the Army to build Humvee window escape kits. The Buckners admitted to creating a shell company which they used to by window frames from a Chinese company for $20. The brothers then created fake invoices from the shell company to make it appear that they paid $70 a frame, which is the amount they then billed the Army.
In addition to the billing scheme, the brothers also admitted to income tax evasion for not reporting income from the cash sale of aluminum scrap and for illegal gratuities paid to the Army civilian in charge of the Humvee contract.