UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA, v. KENNETH G. TITUS, SR., |
: |
CRIMINAL NO. 05-CR-VIOLATIONS: 18 U.S.C. § 1341 (Mail Fraud); |
| Defendant. |
INDICTMENT
The Grand Jury charges that:
COUNTS ONE THROUGH TWELVE – MAIL FRAUD
I. Introduction
At all times material to this Indictment:
1. On or about July 20, 2000, KENNETH G. TITUS, SR. formed Redwood Trust (“Redwood”) by executing a “Revocable Living Trust.”
2. Redwood’s office was located at 901 Draper Avenue, Suite 221 in Schenectady, New York.
3. KENNETH G. TITUS, SR. served as the Trustee of Redwood. KENNETH G. TITUS, SR. also claimed to be the pastor of his own church, Gods Saints Christian Church.
II. The Scheme
4. From in or about September 2003, through in or about at least January 2005, KENNETH G. TITUS, SR. devised a scheme to defraud by:
a. Collecting fees for participation in a program offering to pay off mortgages, promising that Redwood was about to obtain millions of dollars of funding from outside sources to pay off mortgages when there was no reasonable prospect of such funding, and transferring, without the knowledge of Redwood clients, fees received from Redwood clients for use as collateral for a loan and for an investment; and
b. Collecting investments in $25,000 increments for participation in a program promising a weekly rate of return of $5,000 for between 40 and 50 weeks when there was no reasonable prospect of such a return, promising that the investments would be safe, and failing to maintain the investments as promised.
A. The Mortgage Program
5. It was part of the scheme to defraud that in September 2003, KENNETH G. TITUS, SR., acting through Redwood, began to offer debt relief purportedly using “humanitarian aid.” One of the programs offered was the Mortgage Program.
6. It was further part of the scheme to defraud that Redwood offered to pay off mortgages for people who participated in the Mortgage Program by obtaining “humanitarian aid.”
7. It was further part of the scheme to defraud that, to participate in the Mortgage Program, people had to 1) pay a fee of $3,000 for a first mortgage and $2,000 for each additional mortgage and 2) send detailed personal financial information including notarized powers of attorney, deeds, and mortgage information. People whose mortgages were in foreclosure could postpone payment of fees until their mortgages were paid off by Redwood, but others had to pay the necessary fees “up front” or sign a promissory note unless they were transferring from another mortgage elimination program.
8. It was further part of the scheme to defraud that KENNETH G. TITUS, SR. recruited a total of approximately 7,000 “independent representatives” to promote the Mortgage Program and promised to pay them commissions when the mortgages were paid off.
9. It was further part of the scheme to defraud that KENNETH G. TITUS, SR. regularly led conference calls regarding the Mortgage Program for both independent representatives and Mortgage Program participants. During these conference calls, KENNETH G. TITUS, SR. often talked about when funds would be available. He also projected that funds would be forthcoming which would allow Redwood to begin paying off mortgages.
10. It was further part of the scheme to defraud that, at least as early as July 2004, KENNETH G. TITUS, SR., acting through Redwood, directed the creation of a web site describing the Mortgage Program.
11. It was further part of the scheme to defraud that KENNETH G. TITUS, SR. directed Redwood staff not to accept anything sent by United States Mail. In addition, the website stated that any documents sent by United States Mail would be refused.
12. It was further part of the scheme to defraud that between on or about September 5, 2003, and on or about January 20, 2005, at least 869 people sent a total of at least $3.8 million to participate in the Mortgage Program. These funds were deposited in a Pioneer Savings Bank account (last four digits 2965) in the name of Redwood Trust and Kenneth Titus, Trustee.
13. It was further part of the scheme to defraud that between on or about September 5, 2003, and on or about January 20, 2005, approximately 4,440 applications were sent to Redwood to participate in the Mortgage Program from people who did not send fees.
14. It was further part of the scheme to defraud that KENNETH G. TITUS, SR. promised Mortgage Program participants that Redwood would refund fees when requested and that between on or about September 5, 2003, and on or about January 20, 2005, Redwood refunded a total of at least $494,000 to at least 139 people.
15. It was further part of the scheme to defraud that Redwood bank accounts never received any significant deposits of funds other than those received from Mortgage Program participants and Blessings Program investors.
16. It was further part of the scheme to defraud that Redwood paid off just one mortgage of $19,984.01 on or about December 2, 2004 using funds received from Redwood clients and that mortgage was for a trailer owned by the son of Redwood’s webmaster. Other than that single mortgage, Redwood never paid off any mortgages.
17. It was further part of the scheme to defraud that Mortgage Program participants did not know that the fees that they had paid would be used for other investments and as collateral for a loan
B. The Blessings Program
18. It was further part of the scheme to defraud that KENNETH G. TITUS, SR., acting through Redwood, offered an investment program called the Blessings Program.
19. It was further part of the scheme to defraud that the Blessings Program was described in written materials that Redwood sent to interested people. According to those documents, investors who sent money in $25,000 increments would receive a 20% return on their investment each week, that is $5,000, for a total of between 40 and 50 weeks for each $25,000 investment. According to those documents, investors would generally begin to receive their returns within three to four weeks after the necessary paperwork was presented to Redwood for approval.
20. It was further part of the scheme to defraud that KENNETH G. TITUS, SR. and Redwood employees told potential investors both orally and in written materials that invested funds would be safe because they would stay in Redwood’s account.
21. It was further part of the scheme to defraud that KENNETH G. TITUS, SR. created a false sense of urgency by telling some participants that if they did not invest quickly, then they would lose the current opportunity to invest.
22. It was further part of the scheme to defraud that on or about the following dates, ten people invested a total of $350,000 in the Blessings Program as follows:
| Date | Name of Investor | Amount of Investment |
How Payment Sent to Redwood Trust |
|---|---|---|---|
| 12/13/04 | Andrew Adler | $ 25,000 |
Federal Express |
| 11/30/04 | Richard Bray | $25,000 |
Wire |
| 11/30/04 | Kenneth Eller | $25,000 |
Wire |
| 11/30/04 | Valre Love | $100,000 |
Federal Express |
| 12/23/04 | Daniel Lucas | $ 25,000 |
Federal Express |
| 11/30/04 | Daniel Newberry | $ 25,000 |
Wire |
| 12/6/04 | Quinnion Pate | $ 25,000 |
Express mail |
| 12/15/04 | Aldo Ramos | $25,000 |
Unknown |
| 12/15/04 | Darlene Rumple | $ 25,000 |
UPS |
| 12/9/04 | Anthony Palaia | $25,000 |
Wire |
| 12/14/04 | Anthony Palaia | $25,000 |
Wire |
23. It was further part of the scheme to defraud that the money received from the ten Blessings Program investors was deposited in accounts in the name of Redwood Trust and Kenneth Titus, Trustee at Pioneer Savings Bank (last four digits 2965) and Evergreen Bank (last four digits 0835).
24. It was further part of the scheme to defraud that the Blessings Program investors never received any returns on their investments.
Use of Funds Received Through Mortgage and Blessings Programs
25. It was further part of the scheme to defraud that funds received from the Mortgage and Blessings Programs were deposited in a Pioneer Savings Bank account (last four digits 2965) (“The Operating Account”) in the name of “Redwood Trust and Kenneth Titus, Trustee.” This account was used to:
a. Pay operating expenses such as utilities, office supplies, rent, equipment, travel, and meals;
b. Fund a separate payroll account at The Hudson River Bank (last four digits 6024) (“The Payroll Account”); and
c. Fund an account at Evergreen Bank (last four digits 0835) (“The Investment Account”) as follows:
(1) On November 23, 2004, KENNETH G. TITUS, SR. opened an account at Evergreen Bank in the name of “Redwood Trust and Kenneth Titus, Trustee.”
(2) On or about the following dates, KENNETH G. TITUS, SR. deposited a total of $2.3 million in the Investment Account by obtaining cashier’s checks from Pioneer Savings Bank using funds from the Operating Account:
| Date | Amount |
|---|---|
| 11/24/04 | $500,000 |
| 11/30/04 | $490,000 |
| 12/15/04 | $10,000 |
| 12/29/04 | $400,000 |
| 1/11/05 | $900,000 |
(3) On or about December 29, 2005, KENNETH G. TITUS, SR. deposited four checks totaling $100,000 that he had received from Blessings Program investors into the Investment Account.
26. It was further part of the scheme to defraud that KENNETH G. TITUS, SR. purportedly planned to use $2 million to invest in a Bank of the Pacific/ ABN AMRO investment program promising a 100% return every 14 banking days or less. At the time, the only Redwood account with $2 million was the Investment Account.
27. It was further part of the scheme to defraud that on or about September 13, 2004, KENNETH G. TITUS, SR. opened an account at the Bank of Richmondville (last four digits 0320) and:
a. Deposited a $450,000 cashier’s check using money from the Operating Account; and
b. Purchased a $450,000 certificate of deposit from the Bank of Richmondville;
28. It was further part of the scheme to defraud that on or about September 16, 2004, person known to the grand jury applied for a $440,000 loan from the Bank of Richmondville. KENNETH G. TITUS, SR. allowed the Bank of Richmondville CD he had obtained to be used as collateral for the loan.
The Mailings
29. On or about the following dates within the Northern District of New York, defendant KENNETH G. TITUS, SR., having devised a scheme and artifice to defraud and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises and for the purpose of executing such scheme and artifice to defraud caused to be deposited matter sent and delivered by private and commercial interstate carriers and took and received therefrom, any such matter, to wit checks, delivered by the private and commercial interstate carriers to Redwood’s Schenectady, New York address as follows:
| Count | Date | Name of Investor | Amount of |
Interstate Carrier Program |
| One | 12/13/04 |
Andrew Adler | $25,000 |
Federal Express Blessings |
| Two | 11/29/04 |
Valre Love | $100,000 |
Federal Express Blessings |
| Three | 12/23/04 |
Daniel Lucas | $25,000 |
Federal Express Blessings |
| Four | 12/9/04 |
Darlene Rumple | $25,000 |
UPS Blessings |
| Five | 6/21/04 |
David Akerberg | $3,000 |
UPS Mortgage |
| Six | 8/12/04 |
David Akerberg | $3,000 |
UPS Mortgage |
| Seven | 9/8/04 | Yaasmyn Fula | $7,000 | Federal Express Mortgage |
| Eight | 8/31/04 | Ronald Passaro | $5,000 | Federal Express Mortgage |
| Nine | 8/9/04 | Jennifer Salzmann | $3,000 | Federal Express Mortgage |
| Ten | 8/9/04 | Jennifer Salzmann | $3,000 | Federal Express Mortgage |
| Eleven | 8/9/04 | Patrick Swint | $3,000 | Federal Express Mortgage |
| Twelve | 8/9/04 | Patrick Swint | $3,000 | Federal Express Mortgage |
(In violation of Title 18, United States Code, Sections 1341 and 2).
COUNTS THIRTEEN THROUGH SIXTEEN – WIRE FRAUD
30. Paragraphs One through Twenty-Nine are hereby realleged and incorporated by reference as if fully set forth herein.
31. On or about the following dates within the Northern District of New York, KENNETH G. TITUS, SR., having devised and intending to devise a scheme and artifice to defraud caused to be transmitted by means of wire communication in interstate commerce writings, signs, signals, and sounds for the purpose of executing such scheme and artifice, to wit, money in the amounts set forth below wired from the following places to Redwood Trust’s Pioneer Savings Bank account (last four digits 2965) in Schenectady, New York:
| Count | Date | Investor | Amount | Origination of Wire | Program |
|---|---|---|---|---|---|
| Thirteen | 11/30/04 |
Daniel Newberry | $25,000 |
Tulsa, OK | Blessings |
| Fourteen | 11/30/04 |
Kenneth Eller | $25,000 |
Peach Bottom, PA | Blessings |
| Fifteen | 12/9/04 |
Anthony Palaia | $25,000 |
Vineland, NJ | Blessings |
| Sixteen | 12/14/04 |
Anthony Palaia | $25,000 |
Vineland, NJ | Blessings |
(In violation of Title 18, United States Code, Sections 1343 and 2).
COUNT SEVENTEEN – ENGAGING IN MONETARY TRANSACTION IN PROPERTY
DERIVED FROM SPECIFIED UNLAWFUL ACTIVITY
32. Paragraphs One through Thirty-One are hereby realleged and incorporated by reference as if fully set forth herein.
33. On or about September 13, 2004, within the Northern District of New York, KENNETH G. TITUS, SR., did knowingly engage and attempt to engage in a monetary transaction by, through, and to a financial institution, affecting interstate or foreign commerce, in criminally derived property of a value greater than $10,000, that is deposit of funds in the Bank of Richmondville (last four digits 0320) account in the name of Redwood Trust, said deposit being in the form of a $450,000 cashier’s check prepared using funds from the Operating Account which contained fees received from Mortgage Program participants and investments from Blessings Program investors, said fees and investments having been derived from a specified unlawful activity, that is, mail fraud and wire fraud.
(In violation of Title 18, United States Codes, Sections 1957 and 2).
COUNTS EIGHTEEN THROUGH TWENTY-ONE – ENGAGING IN MONETARY
TRANSACTION IN PROPERTY DERIVED FROM SPECIFIED UNLAWFUL ACTIVITY
34. Paragraphs One through Thirty-Three are hereby realleged and incorporated by reference as if fully set forth herein.
35. On or about the following dates, within the Northern District of New York, KENNETH G. TITUS, SR., did knowingly engage and attempt to engage in monetary transactions by, through, and to a financial institution, affecting interstate or foreign commerce, in criminally derived property of a value greater than $10,000, that is deposit of funds in the following amounts in the Investment Account, said deposit of funds being in the form of cashier’s checks prepared using funds from the Operating Account which contained fees received from Mortgage Program participants and investments from Blessings Program investors, said fees and investments having been derived from a specified unlawful activity, that is, mail fraud and wire fraud:
| Count | Date | Amount |
|---|---|---|
| Eighteen | 11/24/04 |
$500,000 |
| Nineteen | 11/30/04 |
$490,000 |
| Twenty | 12/29/04 |
$500,000 |
| Twenty-one | 1/11/05 |
$900,000 |
(In violation of Title 18, United States Codes, Sections 1957 and 2).
FORFEITURE ALLEGATION RELATING TO COUNTS ONE THROUGH TWELVE
Counts One through Twelve of this Indictment are realleged and incorporated by reference as though fully set forth herein.
As a result of committing one or more of the alleged offenses in Counts One through Twelve of this Indictment, if convicted, the defendant, KENNETH G. TITUS, SR. shall forfeit to the United States, pursuant to:
Title18, United States Code, Section 981(a)(1)(C), Title 18, United States Code, Section 1956(c)(7), Title 18, United States Code, Section 1961(1) and Title 28, United States Code, Section 2461(c) his interest, if any, in any and all property, real or personal, which constitutes or is derived from proceeds traceable to a violation of Title 18, United States Code, Section 1341 (relating to mail fraud).
The intent of the United States of America to forfeit such property includes, but is not limited to, the following property:
FORFEITABLE PROPERTY
A. MONEY JUDGMENT
A money judgment representing the total dollar amount derived from a violation of one or more of the violations alleged in Counts One through Twelve of this Indictment.
B. MONETARY INSTRUMENTS
- $2,300,577.10 in United States Currency from Evergreen Bank
Account No.: XXXX0835; - $124,283.08 in United States Currency from Pioneer Savings Bank Account No.: XXXX2965;
- $1,002.70 in United States Currency from Bank of America Account No.: XXXX2705;
- $3,000.00 in United States Currency from Official Check No.: XX0907, from the Bank of Illinois Service Federal Savings and Loan Association of Chicago, currently held in the bank’s internal Daily Investment Deposit Account;
- $20,000.00 in United States Currency from Teller’s Check No.: XX7213 from Pioneer Savings Bank, located in their Official Checks Account;
- 49 Miscellaneous uncashed, Personal, Official, Cashier’s and Treasurer’s checks made payable to Redwood Trust;
- 3 Uncashed Money Orders made payable to Redwood Trust; and
- 1 Uncashed Bank Money Order made payable to Redwood Trust in the amount of $2,000.00 U.S.
SUBSTITUTE ASSETS
If the property described above as being subject to forfeiture, as a result of any act or omission of the defendants:
- cannot be located upon the exercise of due diligence;
- has been transferred or sold to, or deposited with, a third party,
- has been placed beyond the jurisdiction of the court;
- has been substantially diminished in value; or
- has been commingled with other property which cannot be divided without difficulty;
it is the intention of the United States, pursuant to Title 21, United States Code, Section 853(p), to seek forfeiture of any other property of the defendant up to the value of the forfeiture judgment.
FORFEITURE ALLEGATION RELATING
TO COUNTS THIRTEEN THROUGH SIXTEEN
Counts Thirteen through Sixteen of this Indictment are realleged and incorporated by reference as though fully set forth herein.
As a result of committing one or more of the alleged offenses in Counts Thirteen through Sixteen of this Indictment, if convicted, the defendant, KENNETH G. TITUS, SR. shall forfeit to the United States, pursuant to:
Title18, United States Code, Section 981(a)(1)(C), Title 18, United States Code,
Section 1956(c)(7), Title 18, United States Code, Section 1961(1) and Title 28, United States Code, Section 2461(c) his interest, if any, in any and all property, real or personal, which constitutes or is derived from proceeds traceable to a violation of Title 18, United States Code, Section 1343 (relating to wire fraud).
The intent of the United States of America to forfeit such property includes, but is not limited to, the following property:
FORFEITABLE PROPERTY
A. MONEY JUDGMENT
A money judgment representing the total dollar amount derived from a violation of one or more of the violations alleged in Counts Thirteen through Sixteen of this Indictment.
B. MONETARY INSTRUMENTS
- $2,300,577.10 in United States Currency from Evergreen Bank
Account No.: XXXX0835; - $124,283.08 in United States Currency from Pioneer Savings Bank
Account No.: XXXX2965; - $1,002.70 in United States Currency from Bank of America
Account No.: XXXX2705; - $3,000.00 in United States Currency from Official Check No.: XX0907, from the Bank of Illinois Service Federal Savings and Loan Association of Chicago, currently held in the bank’s internal Daily Investment Deposit Account;
- $20,000.00 in United States Currency from Teller’s Check No.: XX7213 from Pioneer Savings Bank, located in their Official Checks Account;
- 49 Miscellaneous uncashed, Personal, Official, Cashier’s and Treasurer’s checks made payable to Redwood Trust;
- 3 Uncashed Money Orders made payable to Redwood Trust and
- 1 Uncashed Bank Money Order made payable to Redwood Trust in the amount of $2,000.00 U. S.
SUBSTITUTE ASSETS
If the property described above as being subject to forfeiture, as a result of any act or omission of the defendant:
- cannot be located upon the exercise of due diligence;
- has been transferred or sold to, or deposited with, a third party,
- has been placed beyond the jurisdiction of the court;
- has been substantially diminished in value; or
- has been commingled with other property which cannot be divided without difficulty;
it is the intention of the United States, pursuant to Title 21, United States Code, Section 853(p), to seek forfeiture of any other property of the defendant’s up to the value of the forfeiture judgment.
FORFEITURE ALLEGATION RELATING TO COUNT SEVENTEEN
Counts One through Seventeen of this Indictment are realleged and incorporated by reference as though fully set forth herein.
As a result of committing one or more of the alleged offenses in Count Seventeen of this Indictment, if convicted, the defendant, KENNETH G. TITUS, SR. shall forfeit to the United States, pursuant to:
Title18, United States Code, Section 982(a)(1), his interest, if any, in any and all property, real or personal, involved in or traceable to a violation of Title 18, United States Code, Section 1957 of this title.
The intent of the United States of America to forfeit such property includes, but is not limited to, the following property:
FORFEITABLE PROPERTY
A. MONEY JUDGMENT
A money judgment representing the total dollar amount involved in a violation of one or more of the violations alleged in Count Seventeen of this Indictment.
B. MONETARY INSTRUMENTS
- $2,300,577.10 in United States Currency from Evergreen Bank
Account No.: XXXX0835; - $124,283.08 in United States Currency from Pioneer Savings Bank Account No.: XXXX2965;
- $1,002.70 in United States Currency from Bank of America Account No.: XXXX2705;
- $3,000.00 in United States Currency from Official Check No.: XX0907, from the Bank of Illinois Service Federal Savings and Loan Association of Chicago, currently held in the bank’s internal Daily Investment Deposit Account;
- $20,000.00 in United States Currency from Teller’s Check No.: XX7213 from Pioneer Savings Bank, located in their Official Checks Account;
- 49 Miscellaneous uncashed, Personal, Official, Cashier’s and Treasurer’s checks made payable to Redwood Trust;
- 3 Uncashed Money Orders made payable to Redwood Trust, and
- 1 Uncashed Bank Money Order made payable to Redwood Trust in the amount of $2,000.00 U. S.
SUBSTITUTE ASSETS
If the property described above as being subject to forfeiture, as a result of any act or omission of the defendants:
- cannot be located upon the exercise of due diligence;
- has been transferred or sold to, or deposited with, a third party,
- has been placed beyond the jurisdiction of the court;
- has been substantially diminished in value; or
- has been commingled with other property which cannot be divided without difficulty;
it is the intention of the United States, pursuant to Title 21, United States Code, Section 853(p), to seek forfeiture of any other property of the defendant’s up to the value of the forfeiture judgment.
FORFEITURE ALLEGATION RELATING
TO COUNTS EIGHTEEN THROUGH TWENTY-ONE
Counts One through Twenty-One of this Indictment are realleged and incorporated by reference as though fully set forth herein.
As a result of committing one or more of the alleged offenses in Counts Eighteen through Twenty-One of this Indictment, if convicted, the defendant, KENNETH G. TITUS, SR. shall forfeit to the United States, pursuant to:
Title18, United States Code, Section 982(a)(1), his interest, if any, in any and all property, real or personal, involved in or traceable to a violation of section 1957 of this title.
The intent of the United States of America to forfeit such property includes, but is not limited to, the following property:
FORFEITABLE PROPERTY
A. MONEY JUDGMENT
A money judgment representing the total dollar amount derived from a violation of one or more of the violations alleged in Counts Eighteen through Twenty-One of this Indictment.
B. MONETARY INSTRUMENTS
- $2,300,577.10 in United States Currency from Evergreen Bank
Account No.: XXXX0835; - $124,283.08 in United States Currency from Pioneer Savings Bank Account No.: XXXX2965;
- $1,002.70 in United States Currency from Bank of America Account No.: XXXX2705;
- $3,000.00 in United States Currency from Official Check No.: XX0907, from the Bank of Illinois Service Federal Savings and Loan Association of Chicago, currently held in the bank’s internal Daily Investment Deposit Account;
- $20,000.00 in United States Currency from Teller’s Check No.: XX7213 from Pioneer Savings Bank, located in their Official Checks Account;
- 49 Miscellaneous uncashed, Personal, Official, Cashier’s and Treasurer’s checks made payable to Redwood Trust;
- 3 Uncashed Money Orders made payable to Redwood Trust, and
- 1 Uncashed Bank Money Order made payable to Redwood Trust in the amount of $2,000.00 U. S.
SUBSTITUTE ASSETS
If the property described above as being subject to forfeiture, as a result of any act or omission of the defendants:
- cannot be located upon the exercise of due diligence;
- has been transferred or sold to, or deposited with, a third party,
- has been placed beyond the jurisdiction of the court;
- has been substantially diminished in value; or
- has been commingled with other property which cannot be divided without difficulty;
it is the intention of the United States, pursuant to Title 21, United States Code, Section 853(p), to seek forfeiture of any other property of the defendant’s up to the value of the forfeiture judgment.
A TRUE BILL,
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By: ___________________________ By: ____________________________ |