W.K. Kellogg FDN scammer pleads guilty

BATTLE CREEK, Mich. (WOOD) - A defendant in a children's charity fraud case has pleaded guilty to federal money laundering and income tax charges.

Nehemiah Muzamhindo faces a maximum sentence of 23 years in prison, restitution and fines, and deportation. Sentencing has not yet been scheduled.

Federal agents investigated Muzamhindo in 2008 for his role in a scheme to obtain fraudulent U.S. passports. While conducting a search warrant on his home, agents discovered evidence that Muzamhindo had received large wire transfers from bank accounts held by the W.K. Kellogg Foundation (WKFF) in the Republic of South Africa.

WKKF is headquartered in Battle Creek and is one of the world's largest children's charities.

The investigation ultimately determined Muzamhindo was part of a fraudulent scheme to submit bogus invoices for payment to WKKF, which paid members of the scheme about $800,000 between 2006 and 2008 before learning it was being swindled.

By pleading guilty to a federal money laundering charge, Muzamhindo admitted to being part of the scheme, and to wiring roughly half of the fraudulent funds back to Africa, where one of his accomplices lived.

He also admitted he had filed false income tax returns during 2006 and 2008 because he did not report any of the money he received from WKKF during those years.

"The positive result in this case is directly attributable to the dedicated and coordinated efforts of federal law enforcement, beginning with the Diplomatic Security Service uncovering Muzamhindo's scheme in the course of an unrelated passport fraud investigation," said U.S. Attorney Patrick Miles. "Their diligence prevented the loss of even more money meant to help disadvantaged children. Then agents of the IRS worked to have Muzamhindo held accountable for his attempt to cheat on his taxes, reinforcing the message that swindlers will be held accountable for the full measure of their deceit in this district."
 
"The worldwide presence and investigative capabilities of the Diplomatic Security Service enabled us to pull all of the pieces together -- uncovering the connections to South Africa; allowing DS agents to compile the evidence that assisted the prosecution team to accepting Muzamhindo's guilty plea," said Scott Collins, assistant special agent in charge of the Chicago Field Office of the Diplomatic Security Service. "Our Detroit Resident Office led our investigation and worked collaboratively with the IRS and U.S. Attorney's Office. DSS takes very seriously our charge to protect the integrity of the U.S. passport and visa. Those who fraudulently acquire U.S. travel documents often do so in order to commit other crimes."

Special Agent in Charge of the Internal Revenue Service Criminal Investigation Erick Martinez said Muzamhindo's crime was worse than many typical fraud cases. "He diverted money intended for children for his own greedy purposes."

The case was prosecuted by Assistant U.S. Attorney Timothy VerHey and investigated by special agents of the IRS-Criminal Investigation and of the Diplomatic Security Service.