RW Professional case postponed to after June, 2005
It appears it will be three years before the Drayers face a court of law.
June 1, 2005 to respond to suppression of a motion, so postponed again, and the Drayer's remain under “house arrest” with limited movement to be approved by the court.
June 22,2002, New York Times:
Forty federal agents raided the small headquarters of a company that leases medical equipment and arrested its top officers today for what prosecutors described as nationwide bank frauds that could total $200 million.
Just 10 days of investigation into a small part of the company's dealings found $6.5 million of fraud, prosecutors said in United States District Court in Central Islip, where three suspects were arraigned. A fourth was arraigned in Boston.
Prosecutors said that the company, the RW Professional Leasing Corporation, concocted elaborate schemes using up to 100 rented mailboxes as far away as California to send phony checks, sham invoices, bogus leases and other false documents to banks in various states. Based on those documents, the banks lent RW millions of dollars to buy equipment and lease it out, prosecutors said.
The schemes included multiple loans from different banks for the same medical equipment and loans for equipment that was never bought or leased, prosecutors said.
Those arrested were RW's president and co-owner, Rochelle Besser, also known as Rochelle Drayer, 66, of Long Beach; her brother, RW's senior vice president, Barry Drayer, 62, who operated a branch in Wellesley, Mass.; another brother, Roger Drayer, 59, of Long Beach, who holds various titles; and Roger Drayer's daughter, Jennifer Tarantino, also known as Jennifer Drayer, 31, of Oceanside
This is a press release from the United States Attorney's Office, one year ago, March 12,2004:
Eight Defendants, Including Five Employees and Principals of a Long Island-based Financing Company and a Former Bank of New York Branch Manager, Arraigned on Federal Bank Fraud and Wire Fraud Charges
ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, PASQUALE J. D'AMURO, Assistant Director-in-Charge, Federal Bureau of Investigation, New York, and MICHAEL J. THOMAS, Special Agent-in-Charge, New York Field Office, Internal Revenue Service-Criminal Investigation, announced today that eight defendants, including five employees and principals of defendant RW PROFESSIONAL LEASING SERVICES, INC. ("PLS"), and a former branch manager for The Bank of New York at a retail branch in Island Park, New York, were charged late last week in a superseding indictment (1) with federal crimes in connection with a scheme to fraudulently induce financial institutions around the country to extend $28 million in loans to PLS, a former Bank of New York customer. Seven of the defendants are scheduled to be arraigned this morning at 9:30 a.m. at the U. S. Courthouse in Central Islip, New York, before United States District Judge Arthur D. Spatt.
The individual defendants charged in the superseding indictment are PLS principals BARRY DRAYER and ROCHELLE BESSER; PLS employees ADAM DRAYER, ROGER DRAYER and SUSAN COTTRELL; MYRNA KATZ, a former Bank of New York branch manager; and STEPHEN BARKER, who, as the owner of a California financing company known as Carefree Financial Services, allegedly recruited medical providers to obtain financing through PLS. BARKER was arrested yesterday in California.
The Scheme to Defraud
The superseding indictment charges that PLS, which maintained business locations in Island Park, New York, and Wellesley, Massachusetts, obtained loans from financial institutions, including FDIC-insured banks (collectively, the "funding institutions") for the purported purpose of financing purchases of medical equipment and then leasing that equipment to medical providers. The leases and medical equipment were supposed to serve as collateral for the loans made by the funding institutions.
According to the indictment, PLS, BESSER, BARRY DRAYER, ROGER DRAYER, ADAM DRAYER and COTTRELL (the "PLS defendants"), KATZ and BARKER obtained the loan proceeds under false pretenses. Specifically, the PLS defendants and BARKER misrepresented the actual purpose of the financing which, in many cases, was not used to purchase medical equipment at all, but was instead used by medical providers as working capital. Since working capital loans, which were not collateralized by medical equipment or medical equipment leases, were not favored by the funding institutions, the defendants provided the funding institutions with phony documentation creating the false appearance that the medical providers were leasing medical equipment purchased by PLS, that the financing was needed for that purpose, and that the funding institutions would have an undivided security interest in the lease and the medical equipment. The PLS defendants and KATZ also falsely represented that The Bank of New York (hereinafter "BONY") would act as escrow agent for certain of the funding institutions.
The BONY Escrow Agreements
The government alleges that the FDIC-insured funding institutions
(the "bank funding institutions") required that PLS execute escrow agreements in connection with each loan. Each escrow agreement required the establishment of an escrow account in which lease payments would be deposited and held in escrow by BONY as escrow agent for the bank funding institutions. The escrow agreements required BONY, among other things, to disburse the funds on deposit in the escrow account in accordance with a particular payment schedule and only to the bank funding institutions that were financing the leases identified in the escrow agreements.
The indictment charges that KATZ, for the purpose of inducing the bank funding institutions to make loans to PLS, executed and supervised the execution of numerous escrow agreements for BONY between 1991 and 1998, fully aware that she was not authorized to do so and that BONY policy prohibited BONY retail branches from establishing escrow accounts. The indictment also charges that KATZ and the PLS defendants knew that the escrow accounts would not be maintained pursuant to the terms of the escrow agreements, that the lease payments would not be forwarded by BONY to the bank funding institutions, and that BONY would not actually perform any of the other obligations assigned to it as escrow agent in the escrow agreements.
According to the superseding indictment, the PLS defendants fraudulently obtained and converted at least $28 million of loan proceeds and lease prepayments through the fraud scheme.
"We will not hesitate to prosecute wrongdoers to protect the public from abuse of our financial institutions," stated United States Attorney ROSLYNN R. MAUSKOPF. "In this case a bank employee violated a position of trust, and thereby enabled PLS, the PLS defendants and BARKER to plunder the banking system for their own personal gain. Now they must face the consequences." Ms. MAUSKOPF emphasized that the investigation is continuing.
FBI Assistant Director-in-Charge PASQUALE J. D'AMURO stated, "This scheme induced banks to advance millions of dollars in what they believed to be secured loans for equipment financing, when in fact the loans were entirely un-collateralized. The defendants misled the lending institutions through blatant fabrication and deception, putting the banks and their depositors at risk."
The Charges and Maximum Sentences Each defendant is charged with conspiracy to commit bank fraud and wire fraud. (2) In addition, PLS, BARRY DRAYER, BESSER and BARKER are charged with conspiracy to commit money laundering; PLS, BARRY DRAYER and BESSER are charged with multiple counts of bank fraud; BESSER and KATZ are charged with making false statements to an FDIC-insured bank; and KATZ is charged with issuing bank obligations without authority. The charges carry the following maximum terms of imprisonment -- conspiracy (five years), unauthorized issuance of a bank obligation (30 years), false statements to an insured bank (30 years), conspiracy to commit money laundering (20 years) and bank fraud (30 years). On each count of conviction, each defendant faces a maximum fine of $250,000 or twice the gross gain or loss resulting from the offense, whichever is greater; the payment of restitution; and a maximum of three years supervised release (conspiracy charge) and five years supervised release (bank fraud, false statements and issuing obligations without authority charges).
PLS faces a maximum sentence of five years probation and a fine of $500,000 or twice the gross gain or loss resulting from its offenses, whichever is greater, and the payment of restitution. The indictment also seeks forfeiture of any and all property of each of the defendants constituting or derived from proceeds traceable to their offenses, which is valued at a total of at least $28 million.
The government's case is being prosecuted by Assistant United States Attorneys Geoffrey Kaiser and Kevin Mulry A recent repercussion of the pending trial resulted in Bank of New York Chief Executive Thomas Renyi received $6.2 million in compensation last year, 41 percent less than a year earlier, as the No. 10 U.S. bank addressed regulatory issues and its shares lagged those of its peers.
Bank of New York has set aside money for an expected settlement of a federal criminal probe into the alleged fraud of RW Professional Leasing Services Corp., which arranges financing for health care providers leasing medical equipment.
The Wall Street Journal has said the bank was negotiating to avoid a possible indictment in the matter, over a failure to report suspicious activity at a branch.
Separately, the SEC is investigating the bank and its BNY Hamilton mutual fund family over marketing and distribution costs.
Bank of New York said Renyi and Hassell recommended to the compensation and organization committee that their bonuses and performance share grants be reduced ``in view of the RW Leasing matter and other regulatory issues.''
A $20 million dollar suit originally brought by American Express against RW Professional for the portfolio inherited from Sierra Cities was put on hold, pending the outcome of this criminal trial. There are several other civil suits claiming money is owed to approximately 15 community banks in alleged “double dipping” of the same lease sold to several different banks with RW Professional making the monthly payments until the alleged Ponzi scheme fell apart.