Feds bust Dallas lawyer for vodka fraud, FBI investigation continues

Having already pleaded guilty to criminal infringement of a copyright in July 2014, 54 year-old Andrew Lee Siegel faces up to 5 years in jail and a possible $250,000 fine for that conviction, and up to 20 years in behind bars and a possible $250,000 fine for the mail fraud.

Siegel remains on bond or bail pending sentencing, with the date set for April 22 2015, before U.S. District Judge Ed Kinkeade.

To understand the nuances of this eye-catching case, some background is necessary. In Autumn 2010 Andrew Lee Siegel founded Dynasty Spirits LLC and Speak Easy Distillers LLC to distil and bottle the Nue Vodka brand.

In February 2012 he produced a private placement memorandum authorizing the sale of up to $2m of common stock shares by Dynasty.

Unlawful use of $410,000 for personal benefit​

From September 2011 through to July 2012, Siegel collected almost $1.6m from 35 investors for the sale of Dynasty stock certificates, but concealed from the owners that he had unlawfully used $410,000 of that amount for his personal benefit – collected from no more than six of the 35.

Where did the money go? Well, Siegel used $175,000 tendered by investors to Dynasty to issue himself 700,000 shares of the Dynasty stock on June 15 2012.

By November 2012, Dynasty stockholders suspected Siegel of unlawfully using investor funds. When confronted the lawyer said he had tried to wire $185,000 in funds to Dynasty but that the transfer mis-routed.

December 2012 was a busy month for Siegel. He spent it creating fraudulent and fictitious emails to Dynasty owners representing his attempts to wire the $185,000 from his bank account to theirs.

Some of these emails used copyrighted writings and the logo of international financial services firm The Northern Trust Company.

Federal Reserve Bank Services victim of fraudulent, fictitious emails​

The Federal Reserve Bank Services was Siegel’s next victim – he used its copyrighted writings, letterhead and logos to create several fraudulent and fictitious emails falsely representing to Dynasty owners that he was in contact with that institution and The Northern Trust in connection with his ‘attempted’ wire transfer.

An FBI statement issued on Tuesday reads: “Siegel engaged in this fraudulent conduct to deceive the owners of Dynasty and convince them he was making a good faith effort to transfer investor funds to the investors of Dynasty.”​

In June 2013 Siegel and Dynasty reached a civil settlement over various civil claims and counter-claims arising from the two parties’ business relationship – before the commencement of the federal investigation into Siegel’s criminal infringement of a copyright that led to his July 2014 conviction.

But it didn’t end there…​

No siree! When Siegel pleaded guilty last July Siegel made no admission or reference to activities that began in June 24 2013 when he fraudulently took $210,000 from a client’s escrow account to use as part of a legal settlement payment to owners of Dynasty Spirits, the 2012 victims of his infringement conviction.

He continued disburse funds from this client account until November 2014, reimbursing it by secretly disbursing $285,000 from investor funds belonging to Vanguard Spirits LLC, which he became registered agent for and manager of in June 2013.

The FBI continues to investigate these practices, with assistant US attorney general David Jarvis in charge of the prosecution.