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Secrets

When white-collar crime goes dirty



When we talk about the crime of extortion, the fraud or theft isn't necessarily accomplished by hidden means or trickery. The 2016 ACFE Fraud Examiners Manual defines extortion as "the obtaining of property from another with the other party's 'consent' having been induced by wrongful use of actual or threatened force or fear" (2.208). Perpetrators can use a threat to expose a victim's secret that they badly want to keep hidden (and for very understandable reasons).

In two unrelated but sadly similar cases, Harvey and Larry carried on secret, sexually aberrant lives that were decidedly at variance with their known, socially respectable lives. Unfortunately, Harvey and Larry encountered extortionists who exploited their secrets, which cost each man thousands of dollars and one his life.

Harvey

"Victim of extortion over $500,000. This is best for family & friends. Funeral home is paid."

This was the scrawled note found near Harvey's body at the suicide scene. Harvey had been a successful businessman and owner — in partnership with two others — of a thriving local manufacturer. He was married with two adult children, went to church every week and regularly attended Alcoholics Anonymous. Investigators quickly learned from Harvey's traumatized wife and children that there'd been multiple calls and in-person visits to Harvey's house on the day of and day after his suicide. They later identified these callers and visitors as two prostitutes and their pimp, D.W.B.

Further investigation revealed that Harvey had hired prostitutes for many years, and had repeatedly engaged in commercial sex with one woman for months. This included in-person encounters, phone sex and "sexting." She retained Harvey's sexts and videotaped and photographed herself in sexual activity with him.

D.W.B., through both of the prostitutes and sometimes directly, threatened to share all the sexts, photos and videos with Harvey's family, friends and business associates. Over the course of about eight months, up until his suicide, Harvey paid D.W.B. hundreds of thousands of dollars to prevent his secret from being exposed.

Larry

Like Harvey, Larry was a successful businessman, albeit long retired. Widowed for many years, he had a loving extended family and a respected standing in the community. Like Harvey, Larry also had an appetite for commercial sex with prostitutes, which he'd indulged for years.

Larry's nemesis was M.N.G., a 27-year-old prostitute who conducted her commercial sex business independent of a controlling pimp. In the early stages of their "relationship," M.N.G. sold sexual services to Larry, sometimes by herself and at other times with different prostitutes. Many photographs erupted from these sessions.

Within about four months of their first encounter, M.N.G. began demanding money, via emails and text messages, in exchange for promises not to divulge Larry's sexual activities to his family with the photographs and their correspondence. Over a seven-month period, Larry paid at least $69,000 to M.N.G. by wire transfers, gift cards and direct cash payments in response to M.N.G.'s demands.

By the time Larry's infatuation with M.N.G. ended, she'd cost him a combined total of $113,000 in sex fees and extortion payments. He made a police report, and a detective arranged to be present for a scheduled delivery of $5,000 in cash by Larry on an agreed-upon evening in the parking lot of an agreed-upon burger joint. At the time and place of the delivery, M.N.G. was seen entering and then exiting Larry's car; when she exited she was carrying a sack with the money. Police arrested her on the spot.

Investigating extortions as financial crimes

The detectives in charge of the D.W.B. and M.N.G. investigations, both of whom were skilled in financial-crime investigations and violent crime offenses, each faced sizable challenges.

In D.W.B.'s case, the victim of the crime was dead, and his survivors were largely unaware of anything improper in his life prior to his suicide. Thus the investigation centered on the interviews of the other witnesses and the defendants, the gathering of physical evidence and a post-mortem examination of extensive financial records.

The detective analyzed bank account records, credit card statements, home equity line of credit records showing drawdowns totaling $350,000 over several months (of which his widow was unaware) immediately prior to Harvey's suicide and documentation of $200,000 in loans Harvey had begged from one of his business partners late in his life. He falsely told her that he'd assaulted someone, and he needed money to pay the fictitious victim's medical bills. The truth was D.W.B. was increasing his demands for money.

The detective also obtained and analyzed D.W.B.'s casino records, which revealed large infusions of cash into D.W.B.'s house account that tied closely with dates of withdrawals from Harvey's accounts and loans from his business partner. The detective was able to surmise that the extortion scheme began about eight months prior to Harvey's suicide with a $65,000 cash payment, after he was given the damning photo and sext printouts, and the amounts escalated from there.

The detective obtained, with a search warrant, from D.W.B.'s house a hotel invoice dated close to the time of the first payment, in which Harvey was listed as a guest, and printouts of sexually explicit photos and text messages between Harvey and one of the prostitutes.

D.W.B. stated that he held these items "for safekeeping" for Harvey and blamed one of the prostitutes for the entire extortion scheme. D.W.B. admitted that he was going to receive "some" of the money. Both prostitutes alleged D.W.B. got the lion's share of the money and was the mastermind of the scheme.

D.W.B. and the two prostitutes were each charged with felony coercion, by "acting alone or intentionally aiding, advising, hiring, counseling or conspiring with another, orally or in writing threatened to expose (any person) to disgrace or ridicule, and thereby caused Victim against his will to do an act or to forebear doing a lawful act, and the pecuniary gain to Defendant and loss to Victim was more than $2500.00." (Minn. Stat. § 609.27, Subd. 1(4), Subd. 2(3); § 609.05)

All of the defendants pleaded guilty. D.W.B. was sentenced to prison, the prostitutes were sentenced to workhouse time, and all three were imposed with restitution orders payable to Harvey's estate.

In M.N.G.'s case, the detective's job was somewhat simpler because he had a living victim to question. Simpler but not easy, as Larry rapidly grew tired of repeated interviews delving into the details of his prostitution habits, including cross-checking dates of sex assignations with dates of money transfers, reviewing photographs taken during these assignations, identifying the persons depicted (none of whom were clothed) and reviewing endless poorly spelled texts from M.N.G.

The detective issued search warrants for bank records from M.N.G.'s and Larry's bank accounts. The detective's examination of these records showed 41 wire transfers from Larry's account to M.N.G.'s account and cash withdrawals that went to M.N.G. totaling $113,000. The detective's — and Larry's — other challenge was separating the sex fee transfers from the coercion transfers. Thankfully, M.N.G. herself established the timeline between the end of the commercial-sexual relationship (at approximately the four-month mark) and the coercion activity.

Larry was charged with hiring a prostitute, which was dismissed after he completed a probationary term. M.N.G. was charged with one count of felony coercion. She pleaded guilty shortly after Larry died of natural causes, and her prison sentence ran concurrently with several other convictions for drug-related offenses.

A human weakness

Paradoxically, dirty secrets can give us an illusory feeling of power, but in reality they make us very vulnerable. And if there's one thing all financial predators have in common, it's the ability to sniff out and exploit human weakness. It's perhaps surprising that in this hyper-connected, tell-all world secrets still abound — but they do. And wherever they are, an extortionist might be nearby.

Annette Simmons-Brown, CFE, most recently was a senior paralegal at the Hennepin County Attorney's Office in Minneapolis, Minnesota. She's now a paralegal in Tallahassee, Florida, working in administrative law and statutory rulemaking for regulated professions and occupations. Her email address is: simmonsbrown22@msn.com.
 




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