Maryland: Brian O’Neill Charged With Escrow Fraud

Maryland Attorney, Brian O’Neill Charged In Manhattan Federal Court With Over $8 Million Escrow Fraud

(STL.News) Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a Complaint in Manhattan federal court charging BRIAN O’NEILL, the managing partner of O’Neill & Partners LLC (“O’Neill & Partners”) with wire fraud, perjury, and making false statements.

As alleged, O’NEILL defrauded two victim companies of over $8 million that he had promised to hold in escrow.  O’NEILL was arrested this morning in Chevy Chase, Maryland, and will be presented later today before United States Magistrate Judge Timothy J. Sullivan in the District of Maryland.

U.S. Attorney Damian Williams said: “As alleged, Brian O’Neill violated the canons of his profession to put self-interest above the interests of his clients; to be blunt, he stole their money.  Further, as alleged, when ordered by the federal court in this District to deposit escrow funds he had failed to return to one client, O’Neill misappropriated escrow funds from a second client to make partial satisfaction of the court’s order pertaining to the first client.  In addition, as alleged, O’Neill lied to the FBI about his robbing Peter to pay Paul.  Now he faces serious criminal charges for his alleged misdeeds.”

FBI Assistant Director Michael J. Driscoll said: “As alleged, Brian O’Neill didn’t just hold his clients’ money in escrow, he held it hostage, and eventually lied to the FBI about his unlawful deeds.  His alleged actions weren’t only unethical, they’re punishable by federal law.  Today’s charges reflect our ongoing commitment to weeding out criminals who use other people’s money for their own personal gain.”

As alleged in the Complaint unsealed today in Manhattan federal court:[1]

Beginning at least as early as August 2020, O’NEILL engaged in two related fraudulent schemes.

First, O’NEILL engaged in a scheme to defraud a medical equipment company headquartered in Pennsylvania (“Victim-1”) by falsely promising to hold over $5 million of the company’s funds in escrow.  pecifically, in August 2020, Victim-1 entered into an agreement with a Florida-based medical wholesale company (“Seller-1”) for the purchase of Personal Protective Equipment (“PPE”).  Victim-1 sought to purchase PPE from Seller-1 in order to donate the PPE to the Federal Emergency Management Agency (“FEMA”) to help fight the COVID-19 pandemic.  Contemporaneously with the execution of the Purchase Order, Victim-1 and Seller-1 entered into an escrow agreement (“Escrow Agreement-1”) with O’Neill & Partners.

Pursuant to Escrow Agreement-1, O’Neill & Partners was to act as escrow agent for the transaction and hold $5.1 million deposited by Victim-1 in escrow.  Instead of holding the deposited $5.1 million in escrow, however, O’NEILL secretly used the funds to execute personal deals for the purchase of PPE; O’NEILL dissipated the $5.1 million by approximately November 2020.

In November 2020, Victim-1 served a cancellation notice on O’Neill & Partners and Seller-1 cancelling the transaction (the “Cancellation Notice”).  In light of the Cancellation Notice, counsel for Victim-1 sent a letter to O’Neill & Partners requesting that the $5.1 million in escrowed funds be returned to Victim-1 within 48 hours, pursuant to the terms of Escrow Agreement-1.  When O’Neill & Partners refused to return Victim-1’s deposited funds, Victim-1 filed a civil action in U.S. District Court for the Southern District of New York (the “Civil Action”).

In connection with the Civil Action, the Court ordered O’Neill & Partners to deposit the $5.1 million of escrowed funds with the Clerk of the Court.  On September 22, 2021, O’NEILL deposited $3.3 million with the Clerk.  Because O’NEILL’s deposit was $1.8 million short of the full $5.1 million he had been ordered to deposit, the Court held O’Neill & Partners and O’NEILL in civil contempt and ordered O’NEILL’s arrest.

Relatedly, O’NEILL engaged in a second scheme that defrauded a Hong Kong-based investor (“Victim-2”) out of over $3 million.  Specifically, on April 19, 2021, a Delaware-based company involved in the PPE market (“Buyer-2”) entered into a sale and purchase agreement to purchase certain PPE from an Australia-based medical supply company (“Seller-2”).  Funding for the deal was to be provided by Victim-2.

At the same time that Buyer-2 and Seller-2 entered into the Sale and Purchase Agreement, they, along with Victim-2, entered into an escrow agreement (“Escrow Agreement-2”) with O’Neill & Partners.  Pursuant to Escrow Agreement-2, O’Neill & Partners was to hold certain funds associated with the transaction in escrow.  Instead of holding the funds deposited by Victim-2 in escrow, however, O’NEILL used $3.3 million of the funds to attempt to satisfy the Court’s order in the Civil Action by Victim-1 directing him to deposit $5.1 million with the Clerk of the Court.

In an effort to conceal his wrongful conduct, O’NEILL made false statements to the FBI and submitted a false declaration, sworn to under penalty of perjury, to the U.S. District Court for the Southern District of New York in connection with the Civil Action.

In particular, on or about September 10, 2021, O’NEILL stated to FBI agents that the $5.1 million placed in escrow pursuant to Escrow Agreement-1 remained in an escrow account.  Similarly, on or about October 1, 2021, O’NEILL submitted a declaration in the Civil Action stating, under penalty of perjury, that he “still [had] control of the $1.8 million of the subject escrow funds . . . remaining to be deposited pursuant to the interpleader ordered by [the] Court.” Neither of those statements was true.

* * *

O’NEILL, 48, of Chevy Chase, Maryland, is charged with two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison, and one count each of false statements and perjury, each of which carries a maximum sentence of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Williams praised the investigative work of the FBI.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Maggie Lynaugh is in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

SOURCE: USDOJ.Today