Mitchellville, Maryland man sentenced to 30 months in prison for his role in fraud scheme. Washington, DC, February 4, 2005

Published by the Department of Education, Office of Inspector General on 2005-02-04.

Below is a raw (and likely hideous) rendition of the original report.

OIG Investigative Reports, Mitchellville, Maryland Man Sentenced to 30 months in Prison for his Role in Fraud Scheme
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U.S. Department of Justice    Kenneth L. Wainstein
United States Attorney for the
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Tuesday, February 4, 2005
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Channing Phillips (202) 514-6933
Mitchellville, Maryland Man Sentenced to 30 months in Prison for his Role in Fraud Scheme
Washington, D.C. - United States Attorney Kenneth L. Wainstein, Michael A. Mason, Assistant Director in Charge of the FBI's Washington Field Office, and Jack P. Higgins, Jr., Inspector General for the United States Department of Education, jointly announced that Diallo Cobham, a 29-year-old resident of Mitchellville, Maryland, was sentenced yesterday to a prison term of 30 months by United States District Judge Reggie B. Walton, who also required the defendant to pay over $9,000 in restitution. Cobham previously pled guilty to a charge of wire fraud relative to his role in defrauding a mortgage company. His fraud was part of a larger scheme to wrongfully divert and spend money from the United States Department of Education (DOE.
According to the government's proffer at the time of defendant's plea, with which defendant agreed, Children's Cottage, Inc. ("Children's Cottage") was a children's day care center incorporated and licensed by the State of Maryland to operate at 5507 46th Avenue in Riverdale, Maryland (the "Riverdale Property"). Children's Cottage was controlled by defendant's mother, Beberly D. Cobham.
DMD Enterprises, Inc. ("DMD Enterprises") was a real estate and entertainment company controlled by the defendant. The defendant maintained a Bank of America account in the name of DMD Enterprises ("DMD account"). His mother also used the DMD account as a business account for Children's Cottage. Specifically, his mother used the DMD account to pay the salary for the Children's Cottage employees.
On or about April 7, 2000, the defendant signed certain paperwork to purchase the Riverdale Property for his mother. At settlement, his mother provided a check to pay for the property in its entirety. The defendant knew that it was unlikely that his mother could get a loan for the Riverdale Property without misrepresenting certain facts in the loan paperwork. The defendant also knew that his mother's home was subject to imminent foreclosure as a result of his mother's failure to pay her home mortgage.
Some time thereafter, in the Spring of 2000, the defendant went to the bank to withdraw money. The bank teller told the defendant that the FBI was investigating the account whose assets were now frozen. The defendant asked his mother why the account was frozen. His mother replied that she had done something wrong and would take care of everything.
On June 22, 2000, the defendant applied for a loan in his name from Capitol City Mortgage. His mother told the defendant that the funds from the loan would be used to make the back-payments on his mother's home mortgage. The collateral for the loan was the Riverdale Property.
To receive the loan, the defendant and his mother met with a mortgage broker in Lanham, Maryland. The defendant signed the credit application and certified that the information in the application was accurate. The loan application falsely stated that he earned $43,000 per year as a Stop & Shop manager. While completing the loan paperwork, the defendant saw bogus W-2 forms, which purportedly showed that the defendant had earned $40,000 per year. Although the defendant did have access to the DMD account, he never withdrew any sum of money remotely approximating $40,000 from the DMD account. Moreover, he never received a paycheck from his mother. The defendant knew that the W-2 forms were fraudulent.
After the defendant signed the credit application, the credit application was sent by facsimile from the broker's office in Lanham, Maryland to Capitol City Mortgage in Washington, D.C. After the loan paperwork was faxed, the defendant received in his name approximately $75,000 from Capitol City Mortgage. The funds from the loan were wired by Capitol City Mortgage into the DMD account.
This matter arose out of an investigation of a diversion of $995,136.17 of Impact Aid funds from the DOE to a banking account of Children's Cottage As is stated above, the account was owned by Beberly Cobham and the diversion was done with the assistance of Roger Bowen. Both Cobham and Bowen previously pled guilty in that diversion and cooperated with the government in the trial of another individual, John Brugada Holmes, but the jury was not able to reach a verdict as to Holmes's actions relative to this diversion of DOE funds. Holmes was convicted, however, of a similar, second diversion of DOE funds at about the same time to a different bank account. He was sentenced last August by Judge Walton to approximately 14½ years in prison and required to pay over $200,000 in restitution. Cobham and Bowen were sentenced in June of last year by Judge Walton. Cobham was given five years of probation, while Bowen was sentenced to four months of imprisonment, followed by four months of home confinement, and both were jointly and severally liable for restitution in the amount of $147,397.76.
In announcing this sentence, U.S. Attorney Wainstein, Assistant Director Mason, and Inspector General Higgins commended the work of FBI Special Agents Thomas Chadwick and Debra LaPrevotte, and Special Agents George Baxavaneos and Gary Mitchell of the Department of Education Office of the Inspector General. They also praised Paralegal Specialist Paula Pagano, litigation support specialist Debbie Dunn, and Legal Assistants Shavonne Jennings-Rush and Teesha Tobias. Finally, they acknowledged the excellent work of Assistant United States Attorneys J. Patrick Rowan and Howard Sklamberg, who handled this matter initially, and Assistant United States Attorneys Jonathan Rosen and Daniel Butler, who prosecuted the trial and the sentencings.
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Last Modified: 11/17/2005
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