Article

Criminal Fraud

Note: The United States Court of Appeals for the First Circuit affirmed the conviction of Jeffrey Alan Fischer in the U.S. District Court for the Middle District of Florida, Hull, J., on 13 counts, including conspiracy, fraud, bribery, mail fraud, wire fraud, and money laundering, for which he was given a 65 month sentence. As partial security for a US$ 1.2 million loan by West Volusia Hospital Authority (WVHA), Fischer pledged a $1 million letter of credit obtained through a foreign bank, First Asia Development Bank (FADB), by QMC-a company of which Fischer was president and part-owner.

The court noted:

"After reviewing the $1 million letter of credit, the account representative at WVHA's bank expressed concerns ... about the legitimacy of the letter of credit and about WVHA's ability to collect on the letter of credit, if necessary. The account representative's concerns were based on the facts that she had never heard of FADB and that the letter of credit had not been signed, would expire even before the WVHA-QMC loan matured, and required QMC's approval before WVHA could even collect on it."

Despite this concern, WVHA proceeded to make the loan of $1.2 million which Fischer disbursed or speculated and lost in options trading. The court stated that:

"To show that Fischer had a pattern of fraudulently obtaining money and then using that money to speculate in the securities market, the Government introduced evidence that Fischer, while a broker for E.F. Hutton, had embezzled two million dollars of his clients' money. Fischer thereafter lost the two million dollars in failed investments. As a result of these actions, Fischer was convicted on three counts of mail fraud on April 12, 1985."

Other evidence showed that QMC paid a $10,000 kickback to WVHA's Chief Financial Officer, Robert Caddick.

The court also found "Fischer had QMC lend at least $100,000 to a company owned by the FADB representative who had assisted QMC with the $1 million letter of credit."

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