09/28/2006
Two Named in Scheme to Defraud U.S. Bank and Others
Johnny “Mickey” Brown and Lili Brown charged with fraud losses of over $4,200,000
and evading the payment of taxes
PORTLAND, OREGON—A federal grand jury returned an indictment yesterday which alleges that a husband and wife who operated a Kirby vacuum sales and financing business in Tigard defrauded U.S. Bank and a group of credit card customers causing losses exceeding $4,200,000. The Browns are also charged with evading the payment of more than $130,000 in federal taxes. The case was investigated by the Internal Revenue Service/Criminal Investigation Division and the FBI.
Karin J. Immergut, United States Attorney, stated, “Prosecuting those who commit white collar crimes is a top priority for the U.S. Attorney’s Office and the U.S. Dept of Justice. I want to commend the Internal Revenue Service/Criminal Investigation Division and the Federal Bureau of Investigation for their hard work on this case.”
Johnny “Mickey” Brown and Lili Brown are charged in a 30-count indictment with wire fraud, making false statements to a federally insured bank, mail fraud, access device fraud, bank fraud, and tax evasion. For each count, maximum penalties, if convicted, call for a fine and imprisonment for: mail and wire fraud - 20 years; false statements and bank fraud - 30 years; access device fraud - 10 years; and tax evasion - 5 years. Actual sentences would be based on many factors under the federal sentencing guidelines.
The indictment alleges that Johnny “Mickey” Brown owes at least $130,871 in taxes to the Internal Revenue Service, that he has a prior bankruptcy in Oregon, and that Lili Brown has a prior conviction for wire fraud and previously filed a bankruptcy action in Washington as President of Granite Distributions. Furthermore, the indictment alleges that because of these legal and financial problems, the Browns opened financial accounts and placed assets, which they controlled, in the names of employees and others. In addition, the Browns operated a Kirby vacuum sales business and, using the name of one of their employees, entered into a merchant banking arrangement with U.S. Bank which enabled them to accept credit cards from customers for the purchase of vacuum cleaners and related products.
During 2001 through 2003, the Browns are alleged to have recruited over 50 individuals to loan them money by letting them use the individuals’ credit cards to finance their business. The Browns allegedly promised to pay the minimum payment due on the credit card charges, and pay each card holder a dividend of at least 1% of the outstanding balance on that card holder’s credit card used by the Browns each month. The Browns then used the credit cards and their merchant credit card terminal to charge the credit cards, even though the card holders were not actually purchasing vacuum cleaners or related products. This use of the merchant credit card process to, in effect, get cash advances, is an alleged breach of the agreement which the Browns had with U.S. Bank. They allegedly misrepresented and concealed their improper use of the merchant account and other facts from the card holders and from U.S. Bank while accumulating approximately $4,200,000 in fraudulent credit card debt.
The indictment further alleges that when the Browns were no longer willing or able to pay the dividends and amounts due on the card accounts, they acted in collusion with the card holders to try and reverse the previous credit card transactions and charge them back to the credit card issuers who would then seek to collect from the Browns, who in fact had no intention or means with which to pay the claims. The Browns cooperated with the card holders in the submission of credit slips wherein the card holders, with the Browns’ help, requested a credit and falsely claimed that the Browns failed to deliver merchandise purchased.
In addition, the indictment alleges that the Browns evaded the payment of at least $130,871 in taxes owed to the United States by concealing income and placing assets in the names of others.
A criminal indictment is only an allegation and not evidence of guilt. Defendants are presumed to be innocent unless and until proven guilty.
For further information, contact Assistant U.S. Attorney Lance Caldwell at (503) 727-1011.
