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July 12, 2014, 10:15 am

Feds add charges to attorney’s fraud case

Mikel D. Jones falsified tax forms, used shell companies to steal funds, according to U.S. Attorney’s office

 

The United States Attorney’s office has filed additional charges against a prominent Philadelphia attorney already accused of defrauding a venture capital fund that was financed by the State of Pennsylvania.

According to U.S. Attorney Zane Memeger, a superseding indictment has been filed against Mikel D. Jones in connection with an alleged scheme to defraud a private New York-based lender and the Minority Venture Partners Ltd., a firm managed by the now defunct Philadelphia Community Development Corporation.

Memeger said the superseding indictment adds Jones’ wife, Dona Nichols Jones, as a co-conspirator in the scheme. Additionally, a charge of conspiracy was added to the charges already filed against Jones, who now faces sixteen counts of mail fraud, 10 additional counts of wire fraud and two counts of money laundering. Dona Nichols Jones has been charged with conspiracy, money laundering and 14 counts each of wire fraud and mail fraud.

Jones was originally charged with mail fraud, six counts of wire fraud and two counts of money laundering.

According to investigators, Jones owned and operated a personal injury law firm, Mikel Jones Law Firm LLC, which was located at 1831 Chestnut Street in Philadelphia. The indictment alleges that Jones secured at least $150,000 from PCDC and a connected firm known as the Minority Venture Partners Ltd., or MVP to expand his firm. But, federal authorities allege that Jones diverted the funds for his own use, dumping some of the money into a personal bank account, paid off his credit card debt and used other monies to purchase sports tickets and pay personal expenses.

The indictment states that Jones owned and controlled Strata Tech, Inc. and Visions 21st Democratic Club — alleged shell companies that he used to defraud a New York-based lender of hundreds of thousands of dollars. In January 2008, Jones obtained a multi-million dollar line of credit from the lender and agreed that he would only use the line of credit for legitimate expenses related to the operation of his law firm.

But federal prosecutors say that didn’t happen.

Allegedly, Jones and his wife used the shell companies and their daughter’s name to steal the money by supplying false invoices on the companies’ letterheads for services to Jones’ law firm that were never performed.

“Jones created bogus invoices in the name of Strata-Tech, which listed an address of a mail drop in Florida as its business address and stated that Strata-Tech was in the business of, among other things, event management, strategic marketing, speaker placement, corporate identity and advertising. In reality, Strata-Tech was a shell corporation that had no operations,” the indictment said.

In total, it is alleged that between February 2008 and April 2009, the Joneses obtained more than $456,000 by supplying fraudulent invoices.

Mayor Michael Nutter shut down PCDC in June 2009. At the time, Nutter said that reducing administration costs associated with lending would allow the city to better serve small businesses. The Nutter Administration decided, after closely examining the different agencies the city was funding that PCDC’s primary programs were duplicated at the Department of Commerce, PIDC or at other agencies supported by city funding.

According to the indictment against him, in early 2006 Jones applied for funding from Minority Venture Partners Ltd. Based on the information he provided regarding his past legal successes and legal background, MVP agreed to invest $150,000 with the understanding that Jones would repay the funds in 48 months. Jones also agreed to deposit five percent of his sales into a bank account to be used to repay the money.

“In conversations with officials of MVP and PCDC, Jones represented that he would use the $150,000 to expand and operate his law firm and for no other purpose,” said the indictment. “Jones lied to MVP and its operators and did not use the funds as required and did not maintain a bank account in which to deposit a portion of the receipts of the law firm. Instead, Jones transferred the money to his and his wife’s personal bank accounts and used the money to pay his personal expenses.”

Investigators also allege that Jones didn’t file tax returns reporting that he had received the money from MVP in an effort to conceal the fact that he was misusing the funding. When representatives of MVP approached him about repaying the money, Jones allegedly lied about his financial situation and claimed he could only repay $20,000 when he was spending thousands living the high life.