Maryland Man Indicted for Attempting to Defraud Twenty-Eight Federal Bankruptcy Courts Out of More Than $1.8 Million in Unclaimed Funds

SAN JUAN, Puerto Rico – On April 3, 2024, a federal grand jury in the District of Puerto Rico returned a ten-count indictment charging Osakwe Ismael Osagbue with mail fraud in violation of 18 U.S.C. § 1341, wire fraud in violation of 18 U.S.C. § 1343, falsification of bankruptcy records in violation of 18 U.S.C. § 1519, and aggravated identity theft in violation of 18 U.S.C. § 1028A in connection with his scheme to defraud twenty-eight federal bankruptcy courts, announced W. Stephen Muldrow, United States Attorney for the District of Puerto Rico.

According to court documents, from 2022 through April 2024 Osagbue devised a scheme to obtain money under the custody of various United States Bankruptcy Courts by submitting false documents impersonating unsuspecting individuals and requesting the withdrawal of unclaimed funds. Osagbue used the Federal Judiciary’s Public Access to Court Electronic Records system (PACER) to search for and identify bankruptcy cases with unclaimed funds. Osagbue would then mail the corresponding bankruptcy court a fraudulent application for payment of unclaimed funds. These fraudulent applications contained the means of identification of real people, including names and social security numbers, and signatures.  The fraudulent applications sought payment to bank accounts controlled by Osagbue in the names of the individual victims. On occasion, Osagbue followed-up by sending e-mail communications to court personnel using fraudulent e-mail accounts in the names of the unsuspecting individual victims. Upon receipt of payment, Osagbue would withdraw funds from automatic teller machines (ATMs) and deposit cash into his own personal bank account in his true name.

As part of his scheme, Osagbue submitted applications for more than $1.8 million in unclaimed funds. The twenty-eight United States Bankruptcy Courts involved are as follows:

1.         The District of Puerto Rico;

2.         The Northern District of Alabama;

3.         The District of Arizona;

4.         The District of Colorado;

5.         The District of Connecticut;

6.         The District of Delaware;

7.         The Middle District of Florida;

8.         The District of Hawaii;

9.         The Northern District of Illinois;

10.       The Southern District of Indiana;

11.       The Eastern District of Kentucky;

12.       The Western District of Louisiana;

13.       The Eastern District of Michigan;

14.       The Southern District of Mississippi;

15.       The Eastern District of Missouri;

16.       The District of Montana;

17.       The District of Nevada;

18.       The District of New Jersey;

19.       The Eastern District of New York;

20.       The Eastern District of North Carolina;

21.       The Northern District of Ohio;

22.       The Southern District of Ohio.

23.       The Western District of Pennsylvania;

24.       The District of Rhode Island;

25.       The District of Utah;

26.       The Eastern District of Washington;

27.       The District of Washington D.C., and

28.        The Eastern District of Wisconsin

The United States Secret Service is investigating this case in furtherance of its mission to combat cutting edge and complex financial crimes that pose a threat to the federal government and the nation’s economic security. Special thanks are provided to the United States Bankruptcy Court for the District of Puerto Rico (BCPR) which reported the fraudulent scheme to federal authorities.

Special Assistant U.S. Attorney José Capó-Iriarte and Special Assistant U.S. Attorney José Carlos Díaz-Vega from the United States Department of Justice, Office of the United States Trustee, San Juan field office, are prosecuting the case.  The United States Trustee Program, through its Office of Criminal Enforcement is providing assistance as part of their responsibilities of coordinating criminal enforcement activities in the investigation and prosecution of bankruptcy related crimes throughout the United States and Puerto Rico, with the mission to protect the nation’s bankruptcy system and to promote the integrity and efficiency of the bankruptcy system for the benefit of debtors, creditors, and the public.

“The United States judicial system stands a core component of the United States government. Those that would steal from the judiciary pose a direct threat to that institution which will not be tolerated,” said W. Stephen Muldrow, United States Attorney for the District of Puerto Rico. “The U.S. Attorney’s Office will continue to actively investigate and prosecute those criminals whose actions impact the integrity of the United States courts and the integrity of the United States bankruptcy system.”

“Fraudulent unclaimed funds requests undermine the integrity of the United States bankruptcy system and frustrate the important administrative work by United States Bankruptcy Courts.  Such actions take money out of the pockets of creditors and debtors—and harm American taxpayers when fraudulent requests are paid,” said Tara Twomey, Director of the United States Trustee Program in Washington D.C. “Together with U.S. Attorney Muldrow in Puerto Rico, our law enforcement partners, such as the United States Secret Service, and our Special Assistant U.S. Attorneys, we will continue to pursue fraud and abuse in bankruptcy cases across the country.  We also appreciate the vital cooperation from the federal judiciary which helped bring this conduct to light.”

The defendant is scheduled for an initial court appearance in the U.S. District Court for the District of Maryland prior to his transfer to the District of Puerto Rico for subsequent proceedings. If convicted, he faces a maximum penalty of twenty years in prison for any mail fraud, wire fraud, or falsification of bankruptcy records violation, and a mandatory term of two years in prison for any aggravated identity theft violation which must run consecutively. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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