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Friday, May 31, 2019

THE FIRST ONE AT THE TABLE GETS THE BEST DEAL: Robert Buckhannon Strikes Deal With Federal Prosecutors, Pleads Guilty To Conspiracy To Commit Wire Fraud In Battle Creek's On Deck Sports Bar & Grill Case

BREAKING NEWS: ROB ROLLS OVER ON KELLY! (“CROOKED CHIROPRACTOR” BECOMES COOPERATING WITNESS): Convicted felon Robert Buckhannon formally struck a plea deal yesterday in U. S. District Court, agreeing to plead guilty to one count of conspiracy to commit wire fraud. 

The deal stems from a criminal indictment filed August 8, 2018 against Buckhannon and co-defendant Kelly DeMoss, shown together above in an undated photo taken at Battle Creek's On Deck Sports Bar.

As detailed in the factual basis for the plea, Buckhannon admitted his role in a scheme to defraud Blackburne & Sons Realty Capital Corporation, perpetrated with DeMoss: 


Between in or about June 2013 to in or about October 2013, in Calhoun County, Michigan, the defendant knowingly and voluntarily agreed with his co-defendant, Kelly Jane DeMoss, to devise and execute a scheme to defraud Blackburne & Sons Realty Capital Corporation (“Blackburne”) to obtain money by false and fraudulent pretenses, representations, and promises. 

The object of this illegal agreement was to unlawfully enrich themselves by converting to their own personal use a portion of the business loan proceeds that were intended for the On Deck Sports Bar & Grill in Battle Creek, Michigan. 

As part of the scheme to defraud, the defendant and DeMoss falsely represented to a Blackburne representative that On Deck was located in a 5-unit mixed use building with four rentable office spaces, and that three of those spaces already were leased to three tenants. 

In truth, the second floor of the building had no rentable offices and the third floor was an unfinished storage area. 

The defendant sent Blackburne three “Lease Agreement” documents that falsely represented to Blackburne that On Deck had three one-year signed lease agreements totaling $42,000 per year of rental income. 

Both the defendant and DeMoss knew that On Deck did not have valid, signed lease agreements obligating three tenants to pay $42,000 per year of rental income. 

The defendant also sent to Blackburne two purported rent checks, which falsely and fraudulently represented to Blackburne that On Deck had valid lease agreements with, and genuine first month rent checks, from both of those tenants. 

Because Blackburne had requested proof of this additional income in the form of signed lease agreements and first month rent checks, the Defendant and DeMoss knew that the additional income was important to Blackburne’s decision whether to extend a business loan to On Deck.

Another component of the scheme to defraud Blackburne was an agreement to use a portion of On Deck’s business loan proceeds to help finance the purchase of a personal residence for the defendant and DeMoss. 

At no time did the defendant or DeMoss tell Blackburne that they intended to use a portion of On Deck’s business loan proceeds to help finance the purchase of a personal residence for the defendant and DeMoss, nor did they obtain approval from Blackburne to use the proceeds for a personal residence. 

224 Wahwahtaysee Way
In about October 2013, DeMoss purchased a personal residence at 224 Wahwahtaysee Way in Battle Creek. 

The true source of the approximately $36,000 in down payment money for the residence was proceeds from Blackburne’s business loan to On Deck. 

Blackburne, having no knowledge of the diversion of the loan proceeds to fund DeMoss’s purchase of the personal residence at 224 Wahwahtaysee Way, had no mortgage on that property. 

Buckhannon’s plea deal reveals that he agrees to “fully cooperate with the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, the U. S. Attorney’s Office, and any other law enforcement agency in this investigation of charges” contained in the original indictment as well as the investigation of crimes “over which they have actual or apparent jurisdiction”. 

The U. S. Attorney’s Office agreed to drop the other charges against Buckhannon contained in the original indictment, including one count of wire fraud and three counts of money laundering. 

Buckhannon’s cooperation will consist of “all steps need to uncover and prosecute such crimes, including, but not limited to, providing investigators with a full, complete and truthful statement” concerning his knowledge of “any and all criminal activity of which he is aware; truthfully answering investigators’ questions; meeting with prosecutors before testifying; truthfully testifying before grand juries and in any court proceedings; and providing all relevant tangible evidence” in his possession or under his control. Included are “objects, documents, and photographs”. 

Buckhannon’s plea deal requires him to “not commit any criminal offense during the cooperation with the United States.” 

Buckhannon will be required to “submit to polygraph examination(s) upon request”. 

In addition, Buckhannon’s obligation is a “continuing one, and shall continue after sentencing until all investigations and prosecutions in which the defendant’s cooperation is deemed relevant by the U. S. Attorney’s Office have been completed.” 

The plea agreement does not bar the U. S. Attorney’s Office from seeking a sentence “within the statutory maximum, and to argue for any criminal history category” adjustments. 

According to federal sentencing guidelines, the maximum penalty for a Conspiracy to Commit Wire Fraud conviction is not more than 20 years in prison and a fine of $250,000 or the greater of twice the gross gain or gross loss. 

Restitution is mandatory, and imprisonment is followed by a period of supervised release of not more than three years.

Although Buckhannon's plea deal bars him from any criminal activity, in recent months Buckhannon has been actively involved with longtime associate, Zia Shlaimoun, in a cryptocurrency mining scheme.

As recently as April 30, 2019, when Buckhannon filed a Colorado business report for Phoenix Rising Ventures LLC, he's been seeking investors for the venture, including one email to prospect promising a “22% to 28% annual return with potential” .

Buckhannon even provided an Excel spreadsheet demonstrating those purported projected gains, and photos he claimed were taken at PowerServer's Orange County, California mining operation:

DeMoss, who filed for bankruptcy on February 22, 2019, recently revealed in a revised financial disclosure related to her bankruptcy (May 21, 2019) that the Rosé Florist and Wine Room (“The Store With The Pink Door”) is apparently awash with red ink.

Compelled to amend her original filing with a business income statement for the business owned by her husband, Greg, DeMoss (who now uses the name Kelly Jane Flees) revealed the business is losing money.

On May 28, the trustee in DeMoss/Flees' bankruptcy case filed the following notice, indicating there was no property available for distribution from the DeMoss/Flees, over and above that exempted by law.

Nearly $65,000 in creditor claims will be discharged without payment, while DeMoss/Flees has $105,114.87 in assets exempt from her creditors.

More on this story as it develops.

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