DOL Secures Prison Time for Two Florida ERISA Fraudsters

An investigation by the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) and the FBI has led to prison sentences for two former officials of Orlando, Florida-based First Farmers Financial LLC (FFF).

Both officials have entered guilty pleas for their involvement in the sale of $179 million in fraudulent loans to a Milwaukee company that provided investment services to 42 retirement plans covered by the Employee Retirement Income Security Act (ERISA). Following the guilty pleas, the U.S. District Court for the Northern District of Illinois sentenced former FFF President Timothy Fisher to 120 months in prison, two years supervised release, and ordered restitution of $27,651,838. Fisher pled guilty to money laundering.

According to the DOL and FBI, Fisher’s plea agreement follows the March 6, 2018, sentencing of former CEO Nikesh Patel, who pleaded guilty to five counts of wire fraud in connection with the sale of the loans. The court sentenced Patel to 25 years in prison and three years of supervised release, and ordered him to make $174,791,812 in restitution to the sham loan scheme’s victims, including 42 retirement plans.

As laid out in the course of the prosecution, between November 2012 and September 2014, Patel and Fisher produced false documents and sent them to the Milwaukee investment firm to support 26 sham loans, causing the firm’s clients—which included community banks, retirement plans, and municipalities and subdivisions in Illinois and elsewhere—to suffer $179 million in losses.

“The documents, which Patel submitted to the investment company, falsely created the appearance that FFF had lent money to borrowers in Florida and Georgia in amounts ranging from $2.5 million to $10 million,” DOL and FBI explain. “The documents also falsely indicated that the federal government guaranteed a portion of the loans through a program administered by the U.S. Department of Agriculture (USDA). In fact, the 26 loans had no actual borrower, no pre-existing loan, no government guarantee, and were completely fabricated.”

The investigation found Patel created fictitious business names and false USDA loan identification numbers, and forged the signatures of USDA employees and purported borrowers. He also assisted in creating false financial documents, including what purported to be a certified audit by a fictitious accountant that he submitted to the investment company to obtain the funds.

“By transferring money between inter-state accounts, he committed wire fraud,” DOL and FBI continue. “Fisher admitted in his plea agreement to creating and submitting documents to the USDA that falsely reported FFF’s financial stability, creating false financial statements for FFF, and transferring money knowing the funds were criminally derived.”