Maryland Attorney Charged In Manhattan Federal Court With Over $8 Million Escrow Fraud | USAO-SDNY

Damian Williams, US attorney for the South District of New York, and Michael J. Driscoll, assistant director of the New York branch of the Federal Bureau of Investigation (“FBI”), today announced the unsealing of a lawsuit in federal court in Manhattan, Charging BRIAN O’NEILL, the managing partner of O’Neill & Partners LLC (“O’Neill & Partners”) of wire fraud, perjury and misrepresentation. As claimed, O’NEILL defrauded two victim companies out of over $ 8 million that he had promised to hold in trust. O’NEILL was arrested this morning in Chevy Chase, Maryland and will be tried later in the day before US Judge Timothy J. Sullivan in the Maryland borough.

US Attorney Damian Williams said, “Brian O’Neill has allegedly broken the rules of his profession to put self-interest above the interests of his clients; to be honest, he stole your money. Additionally, as alleged, when ordered by federal court in that district to deposit fiduciary funds that he failed to return to a customer, O’Neill misappropriated fiduciary funds from a second customer in order to partially fulfill the injunction relating to the first customer . Additionally, as claimed, O’Neill lied to the FBI for robbing Peter to pay Paul. Now he has to expect serious criminal charges for his alleged offenses. ”

FBI Assistant Director Michael J. Driscoll said, “As claimed, Brian O’Neill not only held his clients’ money in trust, but held it hostage and eventually lied to the FBI about his illegal activities. Not only were his alleged acts unethical, they are punished under federal law. Today’s charges reflect our continued commitment to weed out criminals who use other people’s money for their personal gain. “

As claimed in the unsealed lawsuit in Manhattan Federal Court today:[1]

As of at least August 2020, O’NEILL was involved in two related fraudulent schemes.

First, O’NEILL participated in a fraud scheme against a Pennsylvania-based medical device manufacturer (“Victim-1”) by falsely promising to hold over $ 5 million of the company’s funds in trust. In August 2020, Victim-1 entered into an agreement with a Florida-based medical wholesaler (“Seller-1”) to purchase personal protective equipment (“PPE”). Victim-1 attempted to buy PPE from Seller-1 to donate the PPE to the Federal Emergency Management Agency (“FEMA”) to help fight the COVID-19 pandemic. Simultaneously with the execution of the order, Victim-1 and Seller-1 entered into an escrow agreement (“Trust Agreement-1”) with O’Neill & Partners. Under Fiduciary Agreement-1, O’Neill & Partners was to act as trustee for the transaction, holding in trust $ 5.1 million deposited by Victim-1. Instead of holding the deposited $ 5.1 million in trust, O’NEILL uses the funds clandestinely to conduct personal deals for the purchase of PSA; O’NEILL has paid off the $ 5.1 million by approximately November 2020.

In November 2020, Victim-1 submitted a cancellation notice to O’Neill & Partners and Seller-1 canceling the transaction (the “Cancellation Notice”). In response to the notice of termination, Victim-1’s attorney sent O’Neill & Partners a letter demanding that the $ 5.1 million in trust funds be returned to Victim-1 within 48 hours under the terms of the Trust Agreement-1 to be repaid. When O’Neill & Partners refused to return the funds deposited by Victim-1, Victim-1 filed a civil lawsuit in the United States District Court for the Southern Borough of New York (the “Civil Action”). In connection with the civil lawsuit, the court ordered O’Neill & Partners to deposit the $ 5.1 million in trust funds with the bailiff. On September 22, 2021, O’NEILL deposited $ 3.3 million with the clerk. Since O’NEILL’s deposit was $ 1.8 million below the full $ 5.1 million he was sentenced to deposit, the court sentenced O’Neill & Partners and O’NEILL to civil and ordered O’NEILL’s arrest.

In this regard, O’NEILL participated in a second scheme in which a Hong Kong-based investor (“Victim-2”) was defrauded of over $ 3 million. In particular, on April 19, 2021, a Delaware corporation active in the PPE market (“Buyer-2”) entered into a purchase agreement to purchase certain PPE from an Australia-based medical utility company (“Seller-2”) closed. ). Funding for the deal should be provided by Victim-2. Simultaneously with the conclusion of the purchase agreement between buyer-2 and seller-2, they and victim-2 concluded an escrow agreement-2 with O’Neill & Partners. Under Trust Deed-2, O’Neill & Partners was required to hold certain funds associated with the transaction in trust. However, instead of holding the funds deposited by Victim-2 in trust, O’NEILL used $ 3.3 million of the funds to attempt to comply with the court’s order on the civil lawsuit by instructing Victim-1 to use 5.1 Millions of dollars to be deposited with the registry of the court court.

In order to hide his wrongful conduct, O’NEILL made false statements to the FBI and presented an oath sworn false statement in connection with the civil complaint in the US District Court for the Southern District of New York. Specifically, on or about September 10, 2021, O’NEILL told FBI agents that the $ 5.1 million deposited under Escrow 1 remained in an escrow account. Similarly, on or about October 1, 2021, O’NEILL filed a statement under threat of perjury in the civil lawsuit that he was “still” [had] Control of the $ 1.8 million in trust funds in question. . . remaining to be deposited according to the interpreader ordered by [the] Court. “Neither statement was true.

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O’NEILL, 48, of Chevy Chase, Maryland, is charged with fraud on two counts, each with a maximum sentence of 20 years in prison, and one misrepresentation and perjury case, each with a maximum sentence of imprisonment of five years. The maximum possible sentences are prescribed by Congress and are provided here for informational purposes only, as every conviction of the accused is determined by a judge.

Mr. Williams praised the investigative work of the FBI.

This case is being handled by the Bureau’s General Crime Department. U.S. Assistant Attorney Maggie Lynaugh leads the indictment.

The allegations in the complaint are merely allegations and the defendant is presumed innocent until proven guilty.

[1] As the opening sentence suggests, the entire text of the complaint and the description of the complaint set forth herein constitute allegations only, and any fact described should be treated as an allegation.

https://www.justice.gov/usao-sdny/pr/maryland-attorney-charged-manhattan-federal-court-over-8-million-escrow-fraud