Complaint Alleges Political Consultant Received Fraud Proceeds as Benefit from State Senator

Preet Bharara, United States Attorney for the Southern District of New York, and Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the unsealing of a nine-count Complaint charging New York political consultant MELVIN LOWE with fraud and tax violations. The Complaint alleges that LOWE defrauded the New York Democratic Senate Campaign Committee ("DSCC") and its contributors of $100,000 by causing a vendor to submit a false invoice for printing services to the DSCC. According to the Complaint, LOWE instructed the vendor to send $75,000 of the proceeds to LOWE and $20,000 to a political consultant and to keep $5,000 for himself. The Complaint further alleges that the $20,000 payment came days after a State Senator promised to pay a benefit to the consultant for assistance the consultant had previously provided to the Senator. In addition to this fraud charge, the Complaint charges LOWE with income tax violations for his failure to report more than $2 million in consulting income. He is also charged with causing his bank to make a false statement to his mortgage lender, and also for defrauding a Yonkers resident of $66,000. LOWE was arrested this morning and will be presented later today before United States Magistrate Judge Paul E. Davison in White Plains federal court.

Manhattan U.S. Attorney Preet Bharara stated: “Today’s Complaint alleges that New York's culture of political corruption extends beyond elected officials to the relatively unknown professional political insiders who work behind the scenes to carry out corrupt schemes. Our investigation will continue and we will continue bringing to justice every corrupt official we find, as well as those who allegedly execute their unlawful plots."

IRS-CI Special Agent-in-Charge Toni Weirauch stated: “Elected politicians and others involved in the political process, such as political consultants and insiders, must comply with the same laws as the rest of the American public. IRS-Criminal Investigation investigates tax crimes and other financial crimes to ensure that those who are involved in making the rules, directly or indirectly, are held accountable when they do not follow them.”

According to the allegations in the Complaint unsealed today in White Plains federal court:

Fraud on the Democratic Senate Campaign Committee

In June 2010, MELVIN LOWE, a political consultant who had been retained by the DSCC, caused a New Jersey based political consulting firm (the "Vendor") to submit to the DSCC a false invoice for printing services in the total amount of $100,000. LOWE told a representative of the Vendor to send a total of $75,000 to a bank account held by one of LOWE's companies, $20,000 to another New York political consultant (the "Consultant") and to keep $5,000 for himself. The Complaint alleges further that LOWE used the $75,000 he received to pay for the installation of a pool and other renovations at his second home in Georgia and to give $5,000 to a Manhattan community board member.

The Complaint charges that the Consultant received the $20,000 wire transfer from the Vendor several days after a State Senator, identified as "Senator #1," promised the Consultant a benefit for assistance that the Consultant previously had provided to the Senator. The Consultant, who is further described as a former staff member to elected officials in New York City, did not know the Vendor, had done no work for the Vendor and was not owed any money by the DSCC. The Complaint alleges that days after the Senator promised the Consultant a benefit, the Consultant learned of the $20,000 deposit into his bank account in a telephone call from LOWE.

Tax Violations

The Complaint also charges LOWE with three counts of subscribing to false tax returns for each of the years 2007 through 2009 and three counts of failing to file tax returns for each of the years 2010 through 2012. In total, LOWE is charged with failing to report more than $2 million in income from consulting services over a period of six years.

False Statement in Connection with Mortgage Loan Application

The Complaint charges further that LOWE caused an employee of Commerce Bank to make a false statement to LOWE's mortgage lender regarding the balance of LOWE's checking account at Commerce Bank. In 2007, LOWE obtained a mortgage loan from Premium Capital in the principal amount of approximately $225,000 that was secured by his second home in Georgia. As part of the loan application process, LOWE signed a form in which he represented that he had more than $80,000 in his checking account at Commerce Bank and authorized Commerce Bank to confirm that balance, as well as the average balance in the account over the previous two months, to Premium Capital. LOWE then asked an Assistant Manager at his local Commerce Bank branch to confirm that he had more than $80,000 in his checking account. The Assistant Manager did so, despite the fact that LOWE had less than $2,200 in that account at that time. The Complaint alleges that LOWE's fraudulently inflated checking account balance was a material misstatement in that it allowed LOWE to appear to have a positive net worth when, in fact, LOWE had a negative net worth at the time he closed on his mortgage loan. LOWE's mortgage loan balance remains above $225,000 today and the loan is now in foreclosure.

Fraud on Yonkers Resident

The Complaint alleges that LOWE also defrauded a Yonkers resident who is identified as "John Doe," of $66,000. LOWE told John Doe that he needed $66,000 in connection with his purchase of his second home in Georgia and that he would repay the loan within a few days. When John Doe asked LOWE to repay the loan, LOWE gave John Doe a check that was returned due to insufficient funds. Thereafter, LOWE promised to repay the loan at various times but failed to do so. He told John Doe on multiple occasions that he did not have the money to repay the loan when he, in fact, did have the money, the Complaint alleges.

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LOWE, 52, of New York City, faces upon conviction a maximum sentence of 20 years' imprisonment on the count charging wire fraud in connection with the scheme to defraud the DSCC; a maximum sentence of 30 years' imprisonment on the count charging him with causing an employee of a federally insured bank to make a false report; a maximum of three years' imprisonment on each of the three counts charging him with subscribing to false tax returns; a maximum of one year's imprisonment on each of the three counts charging him with failure to file tax returns; and a maximum of 20 years' imprisonment on the count charging wire fraud in connection with the scheme to defraud the Yonkers resident.

Mr. Bharara praised the investigative work of IRS-CI and the investigators from the United States Attorney's Office for the Southern District of New York.

This prosecution is being handled by the Office's White Plains Division. Assistant U.S. Attorneys Perry A. Carbone and James McMahon are in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

13-323

 

 

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