Eastern District of Arkansas
Press releases recorded for this federal judicial district.
Jordan Pleads Guilty in Scheme to Steal Feeding Program FundsRead the Press Release
Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas announced today that Kattie Jordan, 50, of Dermott, pled guilty to Count 1 of the Superseding Indictment charging her with conspiring to commit wire fraud. The charge relates to a conspiracy to fraudulently obtain United States Department of Agriculture (USDA) program funds intended to feed children in low income areas during the school year and summer.
Today’s plea hearing took place in Little Rock before United States District Judge Susan Webber Wright.
"Jordan and others stole money that was intended to feed poor and hungry children," Thyer said. "We are pleased that Ms. Jordan has accepted responsibility for her conduct. We are committed to investigating and prosecuting those who abuse a system designed to help those in need."
In April 2015, a federal grand jury returned a Superseding Indictment against Gladys Elise Waits, f/k/a Gladys Elise King, Tonique D. Hatton, Jacqueline D. Mills, and Kattie Lannie Jordan, charging them with conspiring to fraudulently obtain USDA program funds. Additionally, Mills is charged with wire fraud, paying bribes, and engaging in money laundering. King and Hatton are charged with accepting bribes. The Superseding Indictment seeks forfeiture of the proceeds obtained as a result of the fraud.
King and Hatton worked for the Arkansas Department of Human Services, and part of their job was to determine eligibility of sponsors to participate in the feeding programs. Jordan and Mills operated as sponsors for separate feeding programs. King and Hatton were responsible for approving Jordan’s and Mills’ programs at various times.
The Superseding Indictment alleges that Mills and Jordan made bribe payments to King and Hatton. Mills and Jordan submitted claims for many more meals than they actually served, and King and Hatton approved these inflated numbers so the programs could receive DHS payments.
King, Hatton, and Mills are scheduled to stand trial beginning January 4, 2016. The statutory penalty for wire fraud and conspiracy to commit wire fraud is not more than 20 years imprisonment, not more than a $250,000 fine, or both, and not more than 3 years supervised release. The statutory penalty for receipt of bribes, paying bribes, and money laundering is not more than 10 years imprisonment, not more than a $250,000 fine, or both, and not more than 3 years supervised release.
Jordan will be sentenced by Judge Wright at a later date.
The investigation remains ongoing and is conducted by the United States Secret Service, Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigations, United States Department of Agriculture—Office of Inspector General, and the United States Marshals Service. The case is being prosecuted by Assistant United States Attorneys Jana K. Harris and Allison W. Bragg. If anyone is aware of any fraudulent activity regarding feeding programs, please email that information to the United States Attorney’s office at [email protected].
Former Saline County Sheriff Pleads Guilty to Wire FraudRead the Press Release
Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, along with David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation (FBI), announced today that Bruce Pennington, age 64, of Fayetteville, Arkansas, the former Saline County Sheriff, pleaded guilty to a one-count Information charging him with wire fraud for using money from his campaign account to pay for personal items and expenses charged to his Sheriff’s Office Visa card.
Pennington held the office of Saline County Sheriff from 2008 until he resigned on October 1, 2013. At his plea hearing in open court on August 3, 2015, before U.S. District Court Judge Kristine G. Baker, and in his plea documents in Case No. 4:15CR00132 KGB, Pennington admitted the following conduct:
On or about December 14, 2007 PENNINGTON opened the "Bruce Pennington Sheriff Campaign Account" bank account at Alcoa Community Federal Credit Union (hereinafter, "campaign account"). PENNINGTON had sole signatory authority over the campaign account. The campaign account was used to fund PENNINGTON’s campaigns, including his 2010, 2012 and 2014 re-election campaigns for Saline County Sheriff. Contributors paid by checks payable to PENNINGTON’s campaign, which were deposited into the campaign account. Between June 1, 2011 and September 9, 2013, campaign deposits were made into the campaign account totaling $36,661.80.
During the Saline County Sheriff’s elections in 2010 and 2012, candidates for county office were required by Arkansas law to
file Campaign Contribution and Expenditure Reports ("CCE reports") with the county clerk to evidence compliance with campaign finance disclosure laws and provide a public record of all contributions and expenditures of a candidate’s campaign. Arkansas Code Annotated § 7-6-203(g)(1) provides, in part, that "a candidate shall not take any campaign funds as personal income." Arkansas Code Annotated § 7-6-203(g)(4)(A) provides, the "a candidate who uses campaign funds to fulfill any commitment, obligation, or expense that would exist regardless of the candidate’s campaign shall be deemed to have taken campaign funds as personal income." Campaign funds may not be used to pay personal expenses. Personal expenses include household food items and supplies, clothing, mortgage, rent, or utility payments, among other items.
PENNINGTON converted contributions for his 2012 and 2014 campaigns to his personal use and profit, and concealed his conversion of campaign funds from the public, the county clerk, and law enforcement authorities. More specifically, PENNINGTON filed CCE reports for the 2012 campaign on or about May 12, 2012; July 2, 2012; October 30, 2012; and December 31, 2012, with the Saline County Clerk. PENNINGTON withdrew from the 2014 Saline County Sheriff’s race before CCE reports came due. In those reports, which were available to the public, including contributors and prospective contributors, PENNINGTON represented that the contributions received were used to pay for campaign related expenses and that all expenditures of campaign funds had been reported. These representations on PENNINGTON’s CCE reports were false.
In fact, PENNINGTON issued checks and withdrew cash from the campaign account to pay for personal items and expenses. These personal items and expenses included mortgage payments, utility bills, household groceries, casino visits, and personal charges on his Saline County Sheriff’s Office First Security Bank Visa (Sheriff’s Office Visa), among other items. Between June 1, 2011 and September 9, 2013, PENNINGTON withdrew approximately $20,969 in cash from the campaign account, and effected a $1000 transfer from his campaign account to his personal bank account, to pay for personal items and expenses. Between June 1, 2011 and September 9, 2013, PENNINGTON made expenditures by checks in the amount of approximately $378.09 from the campaign account to pay for personal items and expenses charged to his Sheriff’s Office Visa.
The checks written by PENNINGTON from the campaign account to pay for personal items and expenses charged to his Sheriff’s Office Visa were written to "Visa" and delivered to a representative of the Saline County Sheriff’s Office. That representative deposited those checks at First Security Bank, Benton, Arkansas. First Security Bank in Benton, Arkansas, then wired those funds to Visa’s account at Wells Fargo Bank in Tampa, Florida.
On or about January 1, 2013, PENNINGTON charged $231.67 in skin-care products to his Sheriff’s Office Visa. On or about January 30, 2013, PENNINGTON wrote a check for $231.67 from his campaign account to Visa and delivered this check to a representative of the Saline County Sheriff’s Office. That representative deposited the check at First Security Bank, Benton, Arkansas, which wired those funds to Visa’s account at Wells Fargo Bank in Tampa, Florida.
In the plea agreement, Pennington stipulated to a sentencing enhancement for abusing a position of public trust. The advisory U.S. Sentencing Guidelines also take into account the dollar amount of the fraud and the number of victims involved in the scheme. The plea agreement also provides that the parties will jointly recommend that any sentence of imprisonment will run concurrent with any sentence imposed in Saline County Circuit Court Case No. 63CR-14-313; however, that recommendation, even if made by the federal court, is not binding on the state court.
"Former Sheriff Pennington betrayed the trust placed in him by the people of Saline County," Thyer said. "Citizens of the Eastern District of Arkansas deserve to know that their law enforcement members are trustworthy, law-abiding citizens and when they are not, they will be held accountable for their illegal actions."
"Pennington defrauded his constituents by using money donated to his election campaign for his own personal use," Resch said. "Along with our federal, state and county partners, we will continue to pursue all such political corruption."
The maximum potential penalty for a violation of Title 18, United States Code, Section 1343 (wire fraud) is up to twenty years imprisonment, up to three years supervised release, and a fine of up to $250,000. Judge Baker will set a sentencing hearing date after a Presentence Investigation Report has been completed.
The case was investigated by the Federal Bureau of Investigation’s Ark Trust Public Corruption Task Force. It is being prosecuted by Assistant U.S. Attorney Julie Peters, in cooperation with Faulkner County Prosecuting Attorney Cody Hiland who is serving as a Special Prosecutor in in Saline County Circuit Court Case No. 63CR-14-313.
Former Insurance Company President Sentenced to Prison for EmbezzlementRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation; and Deborah Perry, Regional Director of the United States Department of Labor, Employee Benefits Security Administration; announced today that United States District Judge Susan Webber Wright sentenced John Mathis “Matt” Lile, III, age 56, of Little Rock, to one year and one day in federal prison for embezzling more than $100,000 while president of a local insurance company.
Lile was President of the now defunct Cosmopolitan Life Insurance Company, based in Little Rock, which funded and managed self-insurance healthcare plans for small businesses around the State. On September 19, 2014, Lile pleaded guilty to embezzling Cosmopolitan funds. Specifically, Lile admitted that he abused his position by using a company-issued American Express credit card to pay for thousands of dollars in personal expenses over a three-year period, including family vacations to Las Vegas, Florida, and Italy, restaurant supplies, luxury cruises, visits to tanning salons, Hannah Montana concert tickets, and outlet mall shopping sprees.
In addition to the prison sentence, Judge Wright ordered Lile to pay $118,500 in restitution to Cosmopolitan (now in receivership with Arkansas Insurance Department) and to serve three years of supervised release upon the conclusion of his prison term.
“We all need healthcare sooner or later. When the time comes, we rely upon insurance providers to help bear the costs,” said U.S. Attorney Thyer. “We trust that those who run such companies will act in the best interest of their insureds. When they do not, the consequences are far reaching. Matt Lile treated Cosmopolitan like his own personal piggy bank. The United States Attorney’s Office will aggressively pursue anyone who, like Lile, abuses our trust.”
“While Lile held a position of trust and responsibility, he inappropriately took thousands of dollars to finance his own lifestyle, and today’s sentencing makes a strong statement that this type of behavior will not be tolerated,” stated Special Agent in Charge Resch. “We appreciate the efforts made by the United States Attorney’s Office and the United States Department of Labor, and together we will remain vigilant in investigating healthcare fraud.”
“I hope this sends a clear message to all who sponsor or transact business with employee benefit plans that the federal government will aggressively pursue those who commit crimes against employees and retirees of private-sector health and pension plans,” said Director Perry.
The FBI and the United States Department of Labor led the investigation. First Assistant United States Attorney Patrick C. Harris and Assistant United States Attorney Alexander D. Morgan prosecuted the case for the United States.
Heber Springs Man Indicted on Multiple Counts of Sexual Exploitation of MinorsRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Cindy Johnson, acting special agent in charge of Homeland Security Investigations New Orleans, announced today the arrest of Spencer Goudy, 22, of Heber Springs, and the unsealing of an indictment against Goudy charging him with multiple counts related to the sexual exploitation of minors.
The seven-count indictment, returned by a Federal Grand Jury on July 7, 2015, charges Goudy with the sexual exploitation of five minors ranging in ages between 13 and 16 at the time of victimization. Goudy is charged with 4 counts of enticement of a minor to engage in a sex act, 2 counts of production of child pornography, and 1 count of possession of child pornography.
Homeland Security agents arrested Goudy on July 14, 2015. He is scheduled to appear before United States Magistrate Judge J. Thomas Ray on July 15, 2015. A trial date will be set at that time.
The investigation began in May 2014, when a 13-year-old female disclosed to the Arkansas State Police Crimes Against Children Division that she was having a sexual relationship with Spencer Goudy. Goudy was arrested and subsequently charged in Cleburne County with Rape of a Minor less than 14 years of age, a violation of Arkansas Code Annotated 5-14-103(a)(3)(A).
Upon Goudy’s arrest, a cellular telephone was seized and later searched pursuant to a federal search warrant. The search of Goudy’s cellular telephone revealed that Goudy was using his cellular telephone to entice multiple minor females to engage in sex acts. 425 West Capitol Avenue, Suite 500 (501) 340-2600 Post Office Box 1229 Little Rock, Arkansas 72203-1229 Further analysis of Goudy’s cellular telephone revealed multiple images of minors engaged in sexually explicit conduct.
“With the advancement of technology and social media, there are now countless ways children can be exploited,” Thyer said. “The arrest of Mr. Goudy today highlights that sad fact and should be another reminder to parents to keep an open dialogue with their children about their use of technology and social media. Our office will continue to prosecute individuals like Mr. Goudy who take advantage of and prey on the vulnerability of children.”
“Individuals who produce child pornography are directly responsible for what is, in plain language, the rape of children. These criminal acts steal the innocence of victims and destroy lives,” Johnson said. “Sexual abuse scars children for life, and HSI will continue to use all the tools in its arsenal to identify the perpetrators of these horrendous acts and seek justice on behalf of their victims.”
Goudy is also charged in White County with Rape of a Minor less than 14 years of age, a violation of Arkansas Code Annotated 5-14-103(a)(3)(A).
Enticement of a Minor to Engage in Sexual Activity, a violation of 18 U.S.C.§ 2422(b), carries a penalty of not less than 10 years to life imprisonment, not less than 5 years to life of supervised release, and a fine of up to $250,000.
Production of Child Pornography carries a penalty of not less than 15 years to life imprisonment, not less than 5 years to life of supervised release, and a fine of up to $250,000. Possession of Child Pornography carries a penalty of not more than 10 years imprisonment, not less than 5 years to life of supervised release, and a fine of up to $250,000.
This investigation was conducted by the Heber Springs Police Department, Arkansas State Police, and HSI. It is being prosecuted by Assistant United States Attorney Kristin Bryant.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
Little Rock Man Arrested in Ongoing Scheme to Steal Feeding Program FundsRead the Press Release
LITTLE ROCK – Another feeding program sponsor has been indicted for his role in a scheme to steal federal money. Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced that Michael R. Lee, age 24, of Little Rock, was arrested Wednesday following the filing of a 20-count indictment.
The indictment, returned by a Federal Grand Jury on July 7, 2015, charges Lee with 20 counts of wire fraud as part of a scheme to fraudulently obtain United States Department of Agriculture (USDA) program funds. Lee appeared Thursday, July 9, 2015, before United States Magistrate Judge J. Thomas Ray and was released on bond.
According to the indictment, the USDA funds the Child and Adult Care Feeding Program, which includes an at-risk after school component. In Arkansas, the feeding programs are administered by the Arkansas Department of Human Services (DHS). Sponsors who want to participate in the feeding programs must submit an application to DHS for approval. Once approved, they can provide meals as part of the feeding program and be reimbursed based on the number of eligible meals they serve.
The indictment states that Lee operated as a sponsor for a feeding program through an organization called Our Children of Tomorrow. It alleges that a relative of Lee worked for DHS and processed applications from sponsors applying to participate in the feeding programs.
Lee applied with DHS to participate as a sponsor and then had his relative at DHS approved his applications. The indictment states that Lee falsely represented his average daily attendance and greatly inflated the number of meals provided. At one location, he reported attendance ranging from 115 to 450 children, when no more than 25-30 children 425 West Capitol Avenue, Suite 500 (501) 340-2600 Post Office Box 1229 Little Rock, Arkansas 72203-1229 were ever seen there. At another location, Lee reported between 76 to 350 children, but no children were seen at that feeding site.
The statutory penalty for wire fraud is not more than 20 years’ imprisonment, not more than a $250,000 fine, or both, and not more than three years’ supervised release.
The investigation is ongoing and is conducted by the United States Secret Service, Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigations, United States Department of Agriculture—Office of Inspector General, and United States Marshals Service. The case is being prosecuted by Assistant United States Attorneys Jana Harris and Allison W. Bragg.
If you are aware of any fraudulent activity regarding these feeding programs, please e-mail that information to the U.S. Attorney’s office at [email protected].”
An indictment contains only allegations. Defendants are presumed innocent until proven guilty.
United States Sues Estate and Trusts of Deceased Man for False Claim to U.S. Treasury to Obtain $17.3 Million Investment in Arkansas BankRead the Press Release
WASHINGTON – The United States has sued the estate and trusts of the late Layton P. Stuart, former owner and president of One Financial Corporation, and its wholly-owned subsidiary, One Bank & Trust N.A., both based in Little Rock, Arkansas, alleging that Stuart made misrepresentations to induce the U.S. Department of the Treasury to invest $17.3 million of Troubled Asset Relief Program (TARP) funds in One Financial as part of Treasury’s Capital Purchase Program (CPP), the Justice Department announced Tuesday.
“TARP was enacted in 2008 to restore liquidity and stability to the financial system of the United States by injecting needed capital into financial institutions,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Obtaining TARP funds based on false representations to the government frustrates those goals and harms the American taxpayer.”
According to the United States’ complaint, Stuart, on behalf of One Financial, applied in late 2008 for a TARP investment totaling $17.3 million. The complaint alleges that Stuart knowingly made false statements about the financial condition of One Bank and its intentions for the use of the TARP funds. In particular, the statements and TARP application allegedly concealed serial frauds that Stuart and other One Financial directors and bank executives had been committing and intended to continue committing on One Bank. As set forth in the complaint, the schemes involved Stuart’s diversion of funds from One Bank for personal use including, within 30 days of receiving the $17.3 million in TARP funds, the diversion of more than $2 million into personal accounts for his own use. Stuart was terminated from One Bank in September 2012.
The investigation was conducted by the U.S. Treasury, Internal Revenue Service-Criminal Investigation Division, the Office of the Special Inspector General for TARP, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Eastern District of Arkansas. The case is captioned United States v. Estate of Layton P. Stuart, et al., No. 1:15-cv-01044-RDM (D.D.C.). The claims asserted by the government are allegations only and there has been no determination of liability.
Two Arrested Following Federal Officer-involved ShootingRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and David Downing, Assistant Special Agent in Charge of the Drug Enforcement Administration (DEA) Little Rock District Office today announced the filing of a federal Complaint and subsequent arrest of two Little Rock men charged with drug crimes. The Complaint and arrest warrants were sought following an early-morning shooting at the home of defendant David Eduardo Verduzco that left a DEA Task Force Officer wounded.
Verduzco, age 22, of Little Rock, was arrested on Thursday morning in Temple, Texas. Gerarto Iriarte, aka “Ed,” age 43, of Little Rock, was arrested at his residence on Laver Circle at approximately 2 a.m. Thursday morning as he and a female holding an infant were getting into a vehicle, approximately 90 minutes following the shooting.
Verduzco and Iriarte are charged with distribution and possession with intent to distribute more than 50 grams of a mixture or substance containing methamphetamine.
On Thursday, Verduzco was scheduled to appear before a United States Magistrate Judge in the Western District of Texas, prior to being transported to the Eastern District of Arkansas. Also on Thursday, Iriarte appeared before United States Magistrate Judge J. Thomas Ray in Little Rock and remains in custody pending the return of a federal Indictment.
According to the Complaint, shortly after midnight on July 2, 2015, two law enforcement agents (Agent 1 and Agent 2), drove to Verduzco’s residence at 57 Jan Drive, Little Rock, Arkansas, as part of an investigation. Agent 1 (a DEA Task Force officer), who was driving a Chrysler 300, dropped off Agent 2 (a DEA Special Agent) at 57 Jan Drive. Agent 1 then drove further down the street. Later, as Agent 1 was driving past 57 Jan Drive on the way to pick up Agent 2, a shot was fired into Agent 1’s Chrysler 425 West Capitol Avenue, Suite 500 (501) 340-2600 Post Office Box 1229 Little Rock, Arkansas 72203-1229 300. Agent 2 heard the gunshot. The gunshot shattered the car’s driver’s side window. The bullet or glass punctured Agent 1’s shoulder, and the glass cut Agent 1’s face and neck. Agent 1 was treated at Saline Memorial Hospital and released.
Law enforcement agents who responded to the shooting at 57 Jan Drive observed a semiautomatic pistol in plain view on the ground underneath Verduczo’s car. At approximately 7 a.m., law enforcement located and stopped Verduczo traveling on I-35 in Temple, Texas, approximately 450 miles from Little Rock and heading in the direction of Mexico. Another Hispanic male was in the car with Verduczo.
The drug charges stem from earlier conduct. According to the Complaint, on June 3, 2015, DEA agents conducting surveillance on a suspected methamphetamine dealer, Individual A, observed Verduzco meet with Individual A at the K-Mart on Rodney Parham and Shackleford Road. After this meeting law enforcement agents followed and stopped Individual A, who gave consent to search the vehicle. After agents located approximately 65 grams of suspected methamphetamine, Individual A admitted meeting with Verduzco at K-Mart to obtain the methamphetamine. Individual A stated that he/she normally purchases methamphetamine from Iriarte, but on this occasion Verduzco supplied the methamphetamine. Individual A has also seen Verduzco supply Iriarte with methamphetamine in the past.
One day prior to Thursday’s shooting, on July 1, 2015, Individual A, under law enforcement supervision, placed a recorded call to Iriarte for the purpose of setting up a controlled purchase of methamphetamine. Individual A asked to purchase two ounces for $1600, and Iriarte agreed to supply the methamphetamine. Individual A and Iriarte later met at the Academy Sports on Markham Street in Little Rock, where Iriarte provided two ounces of methamphetamine. Iriarte later told DEA agents that he purchased those two ounces of methamphetamine from Verduzco.
The charge of distribution and possession with intent to distribute more than 50 grams of a mixture or substance containing methamphetamine carries a statutory penalty of not less than five years’ imprisonment, not more than 40 years’ imprisonment, not more than a $5,000,000 fine, and not less than four years of supervised release. This case is being investigated by the DEA and the Little Rock Police Department. The case is being prosecuted by Assistant United States Attorney Julie Peters.
The criminal complaint contains only allegations. A federal Grand Jury will decide whether to indict on these or any additional charges. Verduzco and Iriarte are presumed innocent until proven guilty.
Woodring Sentenced to 15 Years for Attacks on Central Arkansas Power GridRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, Assistant Attorney General for National Security John P. Carlin, David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation, and Grover Crossland, Resident Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF)—Little Rock Field Office announced today that Jason Woodring, 38, of Jacksonville, Arkansas, was sentenced to 15 years imprisonment on charges related to his attacks on central Arkansas’ power grid between August and October 2013.
In addition to the term of imprisonment, Woodring will be required to pay $4,792,224.06 in restitution to Entergy for Woodring’s attacks on the power lines and electrical tower near Cabot, Ark., and a switching station in Scott, Ark. Woodring will also have to pay $48,729.39 to First Electric Cooperative for damage to the downed power lines and poles in Jacksonville, Ark. There is no parole in the federal system. Upon his release from prison he must serve five years of supervised release.
Woodring’s 2013 attacks included sabotaging an electrical support tower and downing a 500,000-volt power line onto a railroad track near Cabot, Ark., which resulted in approximately $550,000 worth of damage; setting fire to and destroying an Extra High Voltage (EHV) switching station in Scott, Ark., causing over $4,000,000 in damages; and cutting down two power poles, which led to the temporary loss of power to approximately 9,000 people in Jacksonville, Ark. Woodring was charged in an eight-count indictment by a federal grand jury on November 6, 2013.
On March 10, 2015, Woodring pleaded guilty to counts 2, 3, 4, and 8 of the indictment, including destruction of an energy facility for downing the Cabot power lines (Count Two) and for setting fire to the Scott power station (Count Three). He also 425 West Capitol Avenue, Suite 500 (501) 340-2600 Post Office Box 1229 Little Rock, Arkansas 72203-1229 pleaded guilty to using fire to commit a felony (Count Four) in relation to the arson in Scott. Finally, Woodring pleaded guilty to being an illegal drug user in possession of various firearms and ammunition (Count Eight) and agreed to forfeit the firearms and ammunition.
On Thursday, United States District Judge Billy Roy Wilson accepted the parties’ plea agreement and imposed the recommended 15-year sentence. Upon acceptance of the plea and sentence, the United States dismissed counts 1, 5, 6, and 7 of the indictment against Woodring.
This investigation was conducted by the FBI, Joint Terrorism Task Force, ATF, Union Pacific Police, Entergy, First Electric, Lonoke County Sheriff’s Office, Cabot Police, Arkansas State Police, Conway Police Department, Little Rock Police Department and Arkansas Game and Fish Commission.
Street Gang Member Sentenced to 30 Years Imprisonment on Firearm and Drug ChargesRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, along with Gregory Gant, Special Agent in Charge of the Kansas City Field Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), announced today that Marcus Allen, aka “House,” age 39, of Little Rock, was sentenced to 30 years in federal prison for unlawful possession of firearms, possession with intent to distribute cocaine, crack cocaine, and methamphetamine, and possession of a firearm in furtherance of a drug trafficking crime. Allen, a multi-convicted firearm and drug felon, is a self-admitted member of the Bloods street gang.
On November 19, 2014, Allen was convicted following a three-day jury trial of the following offenses charged in the superseding indictment in Case No. 4:14-cr-00057 KGB:
• Count One: Felon in Possession of a Firearm, 18 U.S.C. § 922(g)(1)
• Count Two: Possession with Intent to Distribute Cocaine, Crack Cocaine, and Methamphetamine, 21 U.S.C. § 841(a)(1)
• Count Three: Possessing a Firearm in Connection with a Drug Trafficking Crime, 18 U.S.C. § 924(c)
At today’s sentencing hearing United States District Court Judge Kristine G. Baker found that Allen qualified as an Armed Career Criminal under 18 U.S.C. § 924(e) and a Career Offender under United States Sentencing Guideline § 4B1.1. Allen’s Guidelines range reflected that the offense involved a semiautomatic firearm capable of accepting a large capacity magazine. Allen also received sentencing enhancements because the offense involved three or more firearms and the offense involved a stolen firearm. Judge Baker then sentenced Allen to 300 months on Count One and 240 months 425 West Capitol Avenue, Suite 500 (501) 340-2600 Post Office Box 1229 Little Rock, Arkansas 72203-1229 on Count Two, to run concurrent to each other, and 60 months on Count Three, to run consecutive to Counts One and Two, for a total of 360 months or 30 years.
There is no parole in the federal system. When Allen is released upon completion of his 30 year sentence, he will serve six years of supervised release. As a result of Allen’s convictions, he also forfeited the following property seized from his home on March 6, 2014: four firearms and $3,443 in drug proceeds.
At trial, the evidence established that on March 6, 2014, law enforcement agents executed a search warrant at Allen’s residence at 7815 Burnelle, Little Rock, Arkansas. Allen had been distributing drugs from 7815 Burnelle since at least November 2013. Agents found 35.23 grams of cocaine with scales used for weighing the cocaine for later distribution in the kitchen. Agents found 1.5 grams of crack cocaine and 5.6 grams of methamphetamine packaged for distribution in Allen’s bedroom. Also in Allen’s bedroom agents found four firearms, namely, a Colt model M4 Carbine 5.56mm caliber semi-automatic rifle; a Taurus model PT92AFS 9mm semi-automatic pistol; a Norinco model MAK90 Sporter .762 caliber rifle; and a Charter Arms model Bulldog Pug .44 caliber revolver, along with ammunition. One of the firearms had been stolen from a residence in Carruthersville, Missouri, prior to Allen’s purchase of that firearm.
“Marcus Allen is a gang member and repeat offender whose main contribution to our community is a long history of drug trafficking, violence and illegal possession of firearms,” Thyer said. “Arkansas is a safer place with this individual in federal prison for the next thirty years.”
The case was prosecuted as part of the Department of Justice’s “Project Safe Neighborhoods” program—a nationwide gun-violence reduction strategy led by ATF, in cooperation with federal, state, and local law enforcement officials. The case was investigated by the ATF, the Carruthersville, Mo., Police Department, and the Pemiscot County, Mo., Sherriff’s Office.
Lead Defendant in Blytheville Drug Conspiracy, Kenneth Brown, II, Is Sentenced to 151 MonthsRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Gregory Gant, Special Agent in Charge of the Alcohol, Tobacco, Firearms, and Explosives (ATF) Kansas City Field Division, announced today the conclusion of a three-year case involving the large-scale distribution of methamphetamine in Blytheville, Ark. United States District Court Judge J. Leon Holmes today sentenced Kenneth Brown, II, aka “Iceman,” the lead defendant in a 11-defendant indictment, to 151 months imprisonment for his role as the leader of the drug conspiracy. Brown, II, age 29, of Blytheville, is the final defendant to be sentenced in the case, which was comprised of 11 Blytheville defendants indicted by a federal grand jury on March 6, 2013, in Case No. 4:13-cr-00068 JLH.
Brown, II, was the lead defendant in the original 53-count indictment that involved a drug trafficking organization responsible for selling hundreds of pounds of methamphetamine. He pleaded guilty on December 1, 2014, to a superseding indictment charging him in nine drug or firearms counts. There is no parole in the federal system. Brown, II’s, sentence also includes five years of supervised release and the forfeiture of multiple firearms, and $7,530 in drug proceeds. Brown, II, entered into a plea agreement with the United States in which he pleaded guilty to conspiracy to distribute methamphetamine, with enhancements for using a firearm in connection with the offense and maintaining a drug premises. The United States dismissed the remaining eight counts of the superseding indictment.
“The commitment this office has made to eradicating drug trafficking and violent crime in Northeast Arkansas and the entire Arkansas Delta has never wavered,” Thyer said. “The citizens of Blytheville will not have to deal with these 11 individuals, who were bringing drugs, guns, and violence into the community, for many years. Kenneth Brown, II, in particular, was responsible for importing many kilograms of methamphetamine into Northeast Arkansas, and today’s sentence is the end result of that behavior. Let the sentences in this case be a warning: If you traffic in guns or drugs, you will serve time in prison.”
All members of the conspiracy pleaded guilty pursuant to plea agreements, and most were sentenced in April 2014. Renaldre Jackson was sentenced in September 2014. The other sentences in this case include:
• Tyrone McCray, 200 months, for possession with intent to distribute methamphetamine and felon in possession of a firearm (also qualified as a career offender under United States Sentencing Guideline § 4B1.1)
• Andre Robinson, 151 months, distribution of methamphetamine (also qualified as a career offender)
• Derrick Rhodes, 151 months, distribution of methamphetamine (also qualified as a career offender)
• Renaldre Jackson, 120 months, conspiracy to distribute methamphetamine
• Tremayne Brown, 120 months, conspiracy to distribute methamphetamine
• Kenneth Brown, Sr., 120 months, distribution of methamphetamine
• Brian Robinson, 120 months, possession with intent to distribute methamphetamine and possessing a firearm in connection with a drug-trafficking crime
• Bobby Knight, 72 months, possession with intent to distribute methamphetamine and possessing a firearm in connection with a drug-trafficking crime
• Issac Black, 60 months, possession with intent to distribute methamphetamine
• Rashead Staton, 60 months, distribution of methamphetamine
The investigation into Brown, II’s, organization, which included his father, Brown, Sr., brother, Tremayne Brown, and cousins Knight and McCray, began in early 2012. During the course of the investigation more than 15 controlled purchases of methamphetamine were made from members of the conspiracy resulting in the seizure of more than one kilogram of methamphetamine from these controlled purchases. Including other seizures during the execution of search warrants and traffic stops, approximately 1.7 kilograms of methamphetamine was recovered by law enforcement from this organization.
On January 18, 2013, law enforcement agents executed a search warrant at 1305 Dogwood, Blytheville, Ark., a drug stash house used by Brown, II, and others. Inside the home agents located Brown, II, in a bedroom that contained multiple firearms, 228.5 grams of methamphetamine and 26 pounds of marijuana. In Brown, II’s, pocket was a drug ledger that detailed more than $100,000 in drug debts owed to him.
The investigation was conducted by ATF, in partnership with the 2nd Judicial Drug Task Force, which includes officers from the Blytheville Police Department, the Osceola Police Department and the Mississippi County Sheriff’s Office.
Former Little Rock Tax Preparer Sentenced to 46 Months for Preparation of Fraudulent Tax ReturnsRead the Press Release
LITTLE ROCK - Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Christopher A. Henry, Special Agent in Charge of the IRS-Criminal Investigation Nashville Field Office announced today that United States District Judge Kristine G. Baker sentenced former Little Rock tax preparer Christopher T. Craig, age 48, to 46 months in prison to be followed by one year of supervised release. Craig was also ordered to pay $1,092,177.79 in restitution to the IRS.
On August 25, 2014, Craig pleaded guilty to two counts of aiding and assisting in the preparation of fraudulent income tax returns. According to court documents, Craig, in his capacity as a paid return preparer, prepared false employment tax returns on behalf of other taxpayers for tax years 2010 and 2011. Unknown to the taxpayers, Craig filed the returns in a way that reduced the amount of taxes owed to the IRS by the taxpayers. Craig collected tax payments from the taxpayers for the correct amount of taxes and diverted to himself the difference between the correct amount owed and the amount paid to the IRS. As a result of Craig’s fraudulent conduct, which affected more than 50 victims, the total loss to the government was $1,092,177.79.
“Tax violations have been erroneously referred to as victimless crimes, but it’s the honest law-abiding citizen who is harmed when someone tries to manipulate our nation’s tax system,” Henry said. “The courts have overwhelmingly and consistently shown that you will be held accountable for such actions, and today’s sentencing is a costly reminder.”
This investigation was conducted by IRS Criminal Investigation.
Medical Assistant Pleads Guilty to Aggravated Identity TheftRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced today that Mesha White, age 34, of Little Rock, appeared before United States District Court Judge Susan Webber Wright on June 3, 2015, and pled guilty to an indictment charging her with aggravated identity theft.
In April 2014, a federal grand jury returned a 14-count indictment charging White with seven counts of misusing a Social Security number and seven counts of aggravated identity theft. After pleading guilty to one count of aggravated identity theft the remaining counts in the indictment were dismissed. Under 18 U.S.C. § 1028A, the aggravated identity theft count carries with it a mandatory sentence of two years imprisonment with one year of supervised release to follow. Restitution will also be required.
White was formerly employed as a medical assistant at a dermatology clinic in Little Rock. The job afforded her regular access to medical files that contained sensitive, personally identifiable information such as patient dates of birth and social security numbers. Over several weeks in November and December 2012, White used this patient information to open fraudulent lines of credit through various online retailers from which she proceeded to make thousands of dollars in purchases. Law enforcement subsequently linked these fraudulent transactions to the IP address of the dermatologist’s clinic, where internal records revealed that many of the transactions had processed on dates and times when White was alone in the office.
Additional investigation uncovered that had White shipped many of the fraudulent purchases to a vacant unit in a housing complex where she formerly resided. A complex resident had observed White collect boxes left at the vacant unit’s door and depart in a blue BMW sedan, which law enforcement later traced to White’s mother. In all, White 425 West Capitol Avenue, Suite 500 (501) 340-2600 Post Office Box 1229 Little Rock, Arkansas 72203-1229 misused sensitive information belonging to thirteen different patients. Under the terms of her plea agreement, White will serve a mandatory two-year term of imprisonment, face up to three years’ of supervised release, and be compelled to make complete restitution to all victims of her offense.
White will be sentenced by Judge Wright at a later date.
The case was investigated by the Special Agents Chad Yielding and John Stump of the United States Secret Service and Detectives Karen Farley and Linda Hudson of the Little Rock Police Department. Assistant United States Attorney Alexander D. Morgan prosecuted the matter for the United States.
Parks Pleads Guilty to Wire Fraud, Agrees to Forfeit MillionsRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced today that Stephen K. Parks, 61, of Little Rock, Arkansas, pled guilty on May 27, 2015, to a one-count Federal Information charging him with wire fraud relating to a fraudulent investment scheme involving the sale of refined coal tax credits.
Wednesday’s plea hearing took place in Little Rock before U.S. District Judge J. Leon Holmes. The plea agreement is governed by Federal Rule of Criminal Procedure 11(c)(1)(C), which, if accepted by Judge Holmes, binds the Court to the terms of the plea agreement. In the plea agreement the parties stipulate to a sentence of 27 months imprisonment, plus multiple forfeitures. If at the time of sentencing the Court does not accept the plea agreement and all terms, Parks will have the opportunity to then withdraw his guilty plea.
“Stephen K. Parks’ fraudulent sale of non-existent refined coal tax credits was a flagrant abuse of the tax code,” Thyer stated. “Despite the fact that no federal tax return for Global Coal LLC was filed; no coal was produced, refined, or sold to an unrelated third party; and Global Coal LLC had no facility in place to refine coal, Parks approved the sale of the non-existent federal tax credits. He then used the fraudulently obtained funds to give his wife $40,000 and purchase a house in the Heights, which was intended to be torn down and used as a back yard for his family. The tireless work of the IRS and FBI has resulted in the resolution of this investigation and the recovery of approximately $7.5 million, a house, an office building, two investment accounts, and five vehicles, including a 2008 Bentley.”
“With today’s guilty plea, Parks admitted his role in a scheme to finance his own lifestyle at the expense of the American taxpayer,” stated Assistant Special Agent in Charge David Shepard with the Federal Bureau of Investigation in Little Rock. “We appreciate the hard work of our partners at the U.S. Attorney’s Office and the Internal Revenue Services, and we will continue to work together to pursue those who choose to use their official position for personal gain.”
In addition to serving 27 months in federal prison, if the agreement is accepted, the plea agreement contemplates $845,000 in restitution payable to the IRS, forfeiture of all jewelry purchased with money obtained from the sale of Ecotec Coal and Global Coal tax credits, and consent to the forfeiture of all property seized to date, including approximately $7.5 million, plus other pieces of real and personal property in Case No. 4:13-CV-00054 SWW, with the exception of a home at 2020 N. Spruce Street, Little Rock, AR, and approximately $73,000 seized from that home.
“IRS-Criminal Investigation is committed to unraveling complex fraud schemes,” stated Christopher A. Henry, IRS Special Agent in Charge. “We are proud to work with our law enforcement partners to investigate and prosecute individuals who attempt to enrich themselves by fraudulent means, and the IRS will continue to work to identify and prosecute these types of schemes.”
The refined coal tax credit was added to the tax code by the American Jobs Creation Act of 2004. The credit requires that the refined coal be produced by the taxpayer at a refined coal production facility during the 10-year period beginning on the date the facility was originally placed in service, and sold by the taxpayer to an unrelated person during such 10-year period and such taxable year.
On or about June 1, 2010, Parks formed Global Coal, LLC, and served as its CEO, President and Manager. He was also President of Ecotec Coal, LLC and King Coal, LLC. Global Coal has never refined any coal or sold any refined coal to an unrelated third party, as required by 26 U.S.C. § 45. Global Coal has never had a facility in place to refine coal, as required by 26 U.S.C. § 45. As of March 2015, Global Coal has failed to file any federal income tax returns and has never purported to create refined coal tax credits pursuant to 26 U.S.C. § 45 in any federal tax return. Despite knowledge of these facts, Parks approved and facilitated the sale of nonexistent Global Coal refined coal tax credits through a broker to the investor, representing that the tax credits were valid and available for sale. Parks subsequently used a large portion of the proceeds of that sale for his personal use and the use of his family.
In late 2011, a broker acting on behalf of Parks and Global Coal began communicating with the representative of a potential investor regarding Global Coal and Ecotec Coal refined coal tax credits. Parks represented to the broker that Global Coal tax credits were available for sale and was in communication with the broker throughout the course of the Global Coal tax credit transaction.
On January 9, 2012, the investor agreed to purchase 845,000 Global Coal tax credits and 268,000 Ecotec Coal tax credits for total payment of $723,450. On January 13, 2012, the investor wired $549,250 from a bank in Iowa into King Coal Holding LLC’s account at Delta Trust & Bank in Arkansas. A backdated invoice dated December 30, 2011, reflected the sale of 845,000 Class C Units of interest of Global Coal, LLC, the sole benefit of which is $845,000 of Refined Coal Tax Credits to the investor. The invoice reflected the total due as $549,250 to be wired to a Delta Trust & Bank account with account name “KHC, LLC c/o Global Coal”. The Global Coal, LLC subscription documents reflect that Stephen Parks is the manager and CEO and contain his signature. The documents also acknowledge receipt by Global Coal of $549,250 from the investor. A separate invoice was sent for the Ecotec Coal tax credits, which directed that $174,200 be wired Ecotec Coal’s account at First Security Bank.
From the proceeds of the Global Coal tax credit sale, Parks wrote a $40,000 check to his wife for “Coal Rights Arkansas.” This $40,000 was part of approximately $1.3 million paid to Parks’ wife from 2008-2012 for “advanced royalties.” According to a “Royalty Agreement” backdated to December 1, 2007, Parks’ wife “controls certain mineral rights within the state of Arkansas and King Coal, LLC . . . desires to extract coal from these properties . . .” In fact, Parks’ wife had no interest in any land with coal rights in Arkansas and had no mineral rights to coal during the time she was receiving the “advanced royalties.” In 2014 tax court pleadings, the explanation of Parks’ wife’s receipt of royalties was altered, alleging that Parks’ wife “assisted and facilitated the negotiations” between the parties to a lease agreement regarding coal rights, but witnesses state that Parks’ wife was not involved in the negotiations of the lease agreements.
Also from the proceeds of the Global Coal tax credit sale, a check to Delta Trust & Bank for $301,271.50 was used to purchase a cashier’s check. That cashier’s check was used to purchase 4817 Stonewall Road, Little Rock, Arkansas, a residence located behind the Parks family residence, and was purchased to be torn down and used as a back yard for the Parks family.
The wire fraud charge carries a statutory sentence of not more than 20 years imprisonment, not more than a $250,000 fine, and not more than three years of supervised release. If the plea agreement is accepted, Parks will be sentenced by Judge Holmes at a later date.
The case was investigated by special agents from the Federal Bureau of Investigation and the IRS-Criminal Investigations.
140 Charged in Arkansas as Part of National Prescription Drug InitiativeRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and David Downing, Assistant Special Agent in Charge of the Little Rock District Office of the Drug Enforcement Administration (DEA), were joined today by DEA New Orleans Division Special Agent in Charge Keith Brown in announcing the charging and arrests of multiple individuals in several federal indictments presented as part of a DEA national initiative.
In January 2014, as part of the national effort, the DEA New Orleans Field Division—which includes the DEA Little Rock office—launched an aggressive campaign that targeted the largest sources of illegally diverted pharmaceuticals in Arkansas, Louisiana, Mississippi, and Alabama. This effort, dubbed Operation Pilluted, involved the extensive investigation of rogue medical practitioners, pharmacists, and other DEA Registrants, as well as the aggressive pursuit of more traditional criminal organizations involved in the distribution of pharmaceuticals. Under the auspices of Operation Pilluted, concerted efforts were initiated to heighten community awareness concerning the perils of prescription drug diversion and the strategic implementation/strengthening of pharmaceutical drug laws. Nearly 1,000 law enforcement officers across four states took part in the operation.
In 2014, investigations by DEA and state and local law enforcement agencies resulted in several indictments for the illicit distribution of pharmaceutical narcotics. The most recent Eastern District of Arkansas indictments focus on the illicit distribution of pharmaceuticals in the central Arkansas area, including Pulaski, Faulkner, Perry, Lonoke and Saline Counties. The organization at the center of each investigation is alleged to have been responsible for the diversion and distribution of hundreds of thousands of Schedule II, III, and IV narcotic drugs, including hydrocodone, oxycodone, and alprazolam (Xanax) during the time period of July 2014 through April 2015.
In total, throughout Operation Pilluted Arkansas state and federal authorities have charged 140 individuals with prescription drug crimes, including 94 federal defendants in five separate indictments, and 46 state defendants. Included in that total are 4 doctors, 4 nurses, and 5 pharmacists.
“The abuse of prescription pills is perhaps the greatest drug problem Arkansas currently faces,” Thyer said. “Today’s arrests, and arrests over the course of this operation, include doctors, nurses, and pharmacists, as well as street-level dealers. It is extremely disheartening when trusted professionals such as your local pharmacist or family doctor are engaged in the illegal sale and distribution of controlled substances. My office is committed to stopping the abuse of prescription pills at every level, from the prescribing doctor to individuals trying to sell these drugs on the street. Today’s announcement should signal to those in the medical community and elsewhere that we will aggressively seek to prosecute anyone who violates our prescription drug laws.”
Seven arrests were made today at the KJ Medical Clinic, including Dr. Jerry Reifeiss, prescribing physician, Kristen Holland, pharmacist at Bowman Curve Pharmacy, and Aaron Borengasser, physician’s assistant, formerly with Artex Medical Clinic. In July 2014, DEA received information from local Walgreens and Wal-Mart pharmacies that they were seeing numerous controlled substance prescriptions being written from a clinic in west Little Rock called Artex Medical Clinic. The prescriptions were suspicious, in that they contained typographical errors and were written by the same physician’s assistant for identical pharmaceuticals, namely hydrocodone and alprazolam. Evidence obtained in the investigation revealed that Artex, which later changed its name to KJ Medical Clinic, was operating as a “pill mill,” where individuals obtained prescriptions for narcotic drugs without having legitimate medical need. Beginning in November 2014, individuals were directed by clinic staff to fill the prescriptions at a local pharmacy, Bowman Curve Pharmacy, rather than with a large chain store, such as Walgreens or Wal-Mart. As part of the operation, the homeless and other individuals were recruited to obtain prescriptions at the clinic, after which they would fill the prescriptions, hand over the pills to the recruiter, and receive a small fee.
During the investigation undercover officers and confidential informants working for law enforcement posed as clinic patients, paying $200 and obtaining prescriptions for narcotic drugs without receiving an examination from a physician, or after receiving an inadequate examination. The indictment includes 16 counts against 18 individuals who participated in the clinic’s illicit distribution of pharmaceutical narcotics, including the clinic owners, doctors, nurses, recruiters, and staff, as well as the pharmacists at Bowman Curve Pharmacy. Several individuals known to frequent the clinic have been charged with selling hydrocodone to undercover officers. The operation of KJ Medical Clinic was found to be related to several “pill mills” in the Dallas, Texas area, operators of which are under federal indictment in Texas.
This case was investigated by the DEA—Little Rock Tactical Diversion Squad composed of officers from the Conway Police Department, Beebe Police Department, Little Rock Police Department, Pine Bluff Police Department, Jefferson County Sheriff’s Office, and the Benton Police. Also involved in the investigation were the United States Marshals Service, Little Rock Police Department, and the Saline County Sheriff’s Office.
The case against KJ Medical Clinic is the latest in a series of cases in Operation Pilluted. On Monday, May 18, 2015, the Lonoke County Sheriff’s Office took Dr. Richard Johns of Little Rock into custody charging him with 187 counts of Fraudulent Practices, a class C felony. This investigation first began November 2014 when detectives responded to an overdose death outside of Cabot. The Sheriff’s Office solicited the assistance of the DEA and began a joint investigation into the doctor and the suspected criminal enterprise headed by Dr. Johns. The investigation determined that 187 fraudulent prescriptions have been filled and distributed within the illicit market in Lonoke County alone. That is approximately 16,830 oxycodone pills with a street value of $505,000 since July 2014. Dr. Johns is currently released on bond and a trial is scheduled for July 20, 2015.
On May 6, 2015, the Grand Jury for the Eastern District of Arkansas returned a superseding federal indictment against Perryville pharmacist Christopher Watson and 27 others. In July 2014, the DEA and the Arkansas State Police (ASP) initiated an investigation into Christopher Watson, a licensed pharmacist, who was engaging in the unauthorized distribution of Schedule II, III and IV pharmaceutical narcotics from his family owned and operated store in Perryville, Arkansas. Watson and his father, Tommy Watson, own and operate the Perry County Food and Drug store, and Christopher Watson was the managing pharmacist at that location. Evidence obtained in the investigation showed that Christopher Watson sold tens of thousands of hydrocodone pills and other pharmaceuticals from the pharmacy shelves after hours and forged prescriptions to account for the missing pills, as well as filled fraudulent prescriptions presented by pharmacy customers.
Christopher Watson was federally arrested and indicted in a two-count indictment in February 2015. The present superseding indictment includes 44 counts against 28 individuals who participated in the conspiracy to illicitly distribute pharmaceutical drugs, or who obtained pharmaceuticals by fraud, several firearms charges and forfeiture allegations, as well as a scheme to commit insurance fraud by Christopher Watson wherein Watson falsely billed Medicare Part D for patients’ claims.
The operation resulted in the issuance of an Immediate Suspension Order to the Perry County Food and Drug store, the first Order of its kind issued in Arkansas. This Order was issued by the Administrator of DEA on the grounds that the pharmacy constitutes an imminent danger to public health and safety, and it immediately suspends the DEA Registration of the Perry County Food and Drug store required to dispense controlled substances. As a result of this Order, the Perry County Food and Drug store is prohibited from possessing and/or dispensing controlled substances pending the results of a federal administrative hearing. Trial is currently scheduled in the case for September 21, 2015.
This case was investigated by the DEA—Little Rock Tactical Diversion Squad composed of officers from the Conway Police Department, Beebe Police Department, Little Rock Police Department, Pine Bluff Police Department, Jefferson County Sheriff’s Office, and the Benton Police Department. Also involved in the investigation were the Federal Bureau of Investigation (FBI), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), United States Secret Service, United States Marshals Service, Arkansas State Police, and the Perry County Sheriff’s Office.
On October 8, 2014, the Grand Jury for the Eastern District of Arkansas returned an indictment against Charolda Walton and 32 others involved in an oxycodone distribution ring in Little Rock. In early 2014, DEA received information about large scale oxycodone distribution from a residence at 1723 S. Grant Street in Little Rock. Investigation of this residence identified Charolda Walton, Felicia Holmes, Tim McCain, and others selling bulk amounts of oxycodone tablets for $23-27 per tablet to numerous individuals. Through undercover work, wiretaps, and other operations, the DEA identified mid-level and street-level distributors of oxycodone who received their supplies from the individuals associated with 1723 S. Grant Street. The investigation resulted in the indictment of 33 distributors, including former NFL and Arkansas Razorback running back Cedric Cobbs, the seizure of approximately $22,000, 6 vehicles, a handgun, and 2,210 oxycodone, 189 hydromorphone, and 259 hydrocodone tablets. Distribution of the controlled substances took place at various public locations in Little Rock, Benton, and Sheridan, including restaurant and retail store parking lots. Trial is currently scheduled in the case for June 29, 2015.
A joint investigation into a Dilaudid (hydromorphone) distribution network in the Little Rock area conducted in the fall of 2013 through August 2014 by the DEA and Little Rock Police Department led to a federal indictment against Stephen Otey and his distribution network. Otey was identified as the source of supply for Dilaudid and other pharmaceutical drugs, distributing approximately 2,500 pills per month. It is estimated that the distribution organization profited approximately $25,000 per month from the sale of these pills. The Grand Jury for the Eastern District of Arkansas returned a second superseding indictment on February 4, 2015, charging Otey and seven others co-defendants. Execution of a search warrant at Otey’s residence resulted in the seizure of cash and two firearms, along with various prescription narcotics. Trial is currently scheduled in the case for December 7, 2015.
The final Arkansas case under the Operation Pilluted umbrella stems from an oxycodone distribution ring in central Arkansas that involved Josh Oliver and six other individuals. The DEA, working with local law enforcement agencies in Pulaski, Faulkner, and Saline County, initially discovered people obtaining valid prescriptions for oxycodone and then illegally selling the pills. Ultimately, members of the conspiracy forged prescriptions using computer templates and fraudulently obtained oxycodone. The Grand Jury for the Eastern District of Arkansas returned an indictment on April 2, 2014, and currently all seven defendants have entered guilty pleas and are awaiting sentencing.
“Although prescription medication in the right hands, at the right time and in the right place is safe, the reality is they are deadly to those who abuse the drug,” DEA Assistant Special Agent in Charge David Downing said. “These enforcement activities are the results of our continued commitment to investigating those responsible for turning a blind eye on the fraudulent prescriptions for profit. DEA works side by side with our state and local law enforcement partners in order to keep our neighborhoods free from drug abuse and the dangers that stem from drug trafficking.”
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
(Recently Announced Indictments)
Sixteen Hospitals to Pay $15.69 Million to Resolve False Claims Act Allegations Involving Medically Unnecessary Psychotherapy ServicesRead the Press Release
Washington – The Justice Department announced today that 16 separate hospitals and their respective corporate parents have agreed to collectively pay $15.69 million to resolve False Claims Act allegations that the providers sought and received reimbursement from Medicare for services that were not medically reasonable or necessary, the U.S. Department of Justice announced today.
“Hospitals that participate in the Medicare program must ensure that the services they provide and bill for are based on the medical needs of patients rather than the desire to maximize profits,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “The Department of Justice is committed to ensuring that those who seek to abuse the Medicare program will be held accountable for their actions.”
This case concerns claims to Medicare for Intensive Outpatient Psychotherapy (IOP) services. IOP services represent a continuation of ambulatory psychiatric services and provide active treatment to individuals with mental disorders using a variety of treatment methods. Medicare will pay for an appropriate course of IOP treatment provided a number of specific requirements are met including, most notably, that the services in question are reasonable and necessary for the diagnosis and treatment of the patient’s condition.
These settlements resolve allegations that, beginning as early as 2005 and in some cases continuing into 2013, the hospitals knowingly submitted claims for IOP services that did not qualify for Medicare reimbursement because: the patient’s condition did not qualify for IOP; the patient’s treatments were not provided pursuant to an individualized treatment plan designed to help the patient address specific mental health needs and reach achievable goals; the patient’s progress was not being adequately tracked or documented; the patient received an inappropriate level of treatment; and/or the therapy provided was primarily recreational or diversional in nature, and not therapeutic. The IOP services in question were typically performed on the providers’ behalf by Allegiance Health Management (Allegiance), a post-acute healthcare management company based in Shreveport, Louisiana, but billed to Medicare by the providers.
The providers who have reached agreements to resolve these allegations with the United States include:
- Health Management Associates Inc. (HMA), and the following 14 hospitals formerly owned and operated by HMA: Central Mississippi Medical Center in Mississippi, Crossgate River Oaks in Mississippi, Dallas Regional Medical Center in Texas, Davis Regional Medical Center in North Carolina, East Georgia Regional Medical Center in Georgia, Gilmore Regional Medical Center in Mississippi, Lake Norman Regional Medical Center in North Carolina, Lehigh Regional Medical Center in Florida, Medical Center of Southeastern Oklahoma in Oklahoma, Natchez Community Hospital in Mississippi, Northwest Mississippi Regional Medical Center in Mississippi, Santa Rosa Medical Center in Florida, Southwest Regional Medical Center in Arkansas, and Summit Medical Center in Arkansas, which agreed to collectively pay $15 million;
- Health Management Associates Inc. (HMA), and the following 14 hospitals formerly owned and operated by HMA: Central Mississippi Medical Center in Mississippi, Crossgate River Oaks in Mississippi, Dallas Regional Medical Center in Texas, Davis Regional Medical Center in North Carolina, East Georgia Regional Medical Center in Georgia, Gilmore Regional Medical Center in Mississippi, Lake Norman Regional Medical Center in North Carolina, Lehigh Regional Medical Center in Florida, Medical Center of Southeastern Oklahoma in Oklahoma, Natchez Community Hospital in Mississippi, Northwest Mississippi Regional Medical Center in Mississippi, Santa Rosa Medical Center in Florida, Southwest Regional Medical Center in Arkansas, and Summit Medical Center in Arkansas, which agreed to collectively pay $15 million;
- North Texas Medical Center in Texas, which agreed to pay $480,000.
In October 2013, the United States resolved similar allegations with LifePoint Hospitals Inc. and two of its subsidiaries, PHC-Minden L.P., doing business as Minden Medical Center, and PHC-Cleveland Inc., doing business as Bolivar Medical Center, which collectively paid $4,672,469.80.
“This case demonstrates that the U.S. Attorney’s Office for the Eastern District of Arkansas will aggressively pursue civil health care fraud cases, where the integrity of the Medicare system has been undermined,” said U.S. Attorney Christopher R. Thyer of the Eastern District of Arkansas. “Medical care providers who abuse Medicare hurt all taxpayers, and today’s announcement highlights our commitment to protecting our national health care system, as well as the Arkansans who depend on it.”
“Our agency is dedicated to investigating health care fraud schemes such as this, which divert scarce taxpayer funds meant to provide for legitimate patient care, including services for the often underserved mentally ill population,” said Special Agent in Charge Mike Fields of U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG).
The allegations resolved by today’s settlements arose from a lawsuit filed under the False Claims Act. The act allows private individuals known as “relators” to sue on behalf of the United States and to share in the proceeds of any settlement or judgment that may result. The relator in this case will receive $2,667,300.
These settlements were the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Eastern District of Arkansas and HHS’ Office of Audit Statistics and OIG.
These settlements illustrate the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
The claims settled by these agreements are allegations only, and there has been no determination of liability.
ExxonMobil to Pay $5 Million to Settle U.S. and Arkansas Claims for 2013 Mayflower Oil SpillRead the Press Release
WASHINGTON – ExxonMobil Pipeline Company and Mobil Pipe Line Company (ExxonMobil) have agreed to pay civil penalties, fund an environmental project and implement corrective measures to resolve alleged violations of the Clean Water Act and state environmental laws stemming from a 2013 crude oil spill from the Pegasus Pipeline in Mayflower, Arkansas, the Department of Justice and the Environmental Protection Agency (EPA) announced today.
Under a consent decree lodged today in federal court, ExxonMobil will pay $3.19 million in federal civil penalties and take steps to address pipeline safety issues and oil spill response capability. In addition, ExxonMobil will pay $1 million in state civil penalties, $600,000 for a project to improve water quality at Lake Conway, and $280,000 to the Arkansas Attorney General’s Office for the state’s litigation costs.
The oil spill occurred on March 29, 2013, after the Pegasus Pipeline, carrying Canadian heavy crude oil from Illinois to Texas, ruptured in the Northwoods neighborhood of Mayflower, Arkansas. Oil flowed through the neighborhood, contaminating homes and yards, before entering a nearby creek, wetlands and a cove of Lake Conway. Some residents were ordered to evacuate their homes after the spill and remained displaced for an extended period of time. The spill volume has been estimated at approximately 3,190 barrels, or 134,000 gallons.
“This settlement holds ExxonMobil accountable for this very serious oil spill and its disastrous impact on the Mayflower community and environment,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “This agreement is also an excellent example of federal and state cooperation that will benefit public health and the environment for years to come and most importantly prevent future disasters by requiring better pipeline safety and response measures.”
“Oil spills like this one in Mayflower, Arkansas have real and lasting impacts on clean water for communities,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “Companies need to take the necessary precautions to make sure oil is transported safely and responsibly. This settlement puts in place essential
Solaroli Pleads Guilty to Money LaunderingRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; Christopher A. Henry, Special Agent in Charge of the IRS-Criminal Investigation Nashville Field Office; David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation; and Christy Romero, Special Inspector General for TARP (SIGTARP), announced today that Alberto Solaroli, 60, of Jacksonville, Fla., pled guilty on April 10, 2015, to an Information charging him with money laundering. The charge relates to a $120,000 wire transfer from One Bank and Trust of Little Rock, Ark. (Onebanc), to a bank in Florida where Solaroli controlled an account.
Friday’s plea hearing took place in Little Rock before Chief District Judge Brian S. Miller. An indictment charging Solaroli with bank fraud was dismissed after he pled guilty to money laundering.
“Deceiving banks through fraudulent pretenses ends up hurting our entire banking industry,” Thyer said. “We are committed to investigating and prosecuting those who take advantage of the good will of bank depositors. When people try to steal from banks by deceiving banking officers all banking customers suffer, and our faith in the banking industry is undermined. Those who try to steal from our community’s banks with lies rather than force will be prosecuted.”
In November 2013 a federal grand jury returned an indictment against Solaroli, a Canadian citizen purporting to be the owner of patents for technology related to engine technology for race cars, related to a $1.5 million personal line of credit he borrowed from Onebanc in 2007. In early 2007, Solaroli was introduced to a Senior Vice President at Onebanc by a friend who was also Onebanc customer. As a result of the introduction, Solaroli met with the Onebanc Senior Vice President in Jacksonville, Fla., where the defendant lived and worked. The defendant requested a $1,500,000 loan from Onebanc in April 2007, stating that his cash flow was tied up at the time. As a result of Solaroli’s personal written financial statement submitted to Onebanc, which listed his net worth as $169,473,680, the bank made a $1,500,000 line of credit available to the defendant to be repaid in one year.
Immediately after receiving the approval of his loan application, Solaroli instructed the Onebanc Senior Vice President to wire $120,000 to a bank account in Florida that Solaroli controlled, in the name of CET Racing. The defendant eventually received all $1,500,000, but never made a payment on any of the monies he received from the line of credit. In later efforts by the bank to collect on a judgment against Solaroli, Solaroli admitted under oath that the financial statement he submitted to Onebanc was false.
The money laundering charge carries a statutory sentence of not more than 10 years’ imprisonment, not more than a $250,000 fine, and not more than three years of supervised. Solaroli will be sentenced by Judge Miller at a later date.
The case was investigated by special agents from the IRS-Criminal Investigations, Federal Bureau of Investigation, SIGTARP, and the Federal Reserve. The case is prosecuted by First Assistant United States Attorney Pat Harris and Assistant United States Attorney Angela Jegley.
Greenbrier Man Arrested for Aggravated Identity TheftRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, today announced the unsealing of a federal complaint charging a Greenbrier, Ark., man with multiple counts related to an identity theft that had been continuously occurring for more than 20 years. On April 9, 2015, federal agents with the Office of the Inspector General, the United States Secret Service, and the Federal Bureau of Investigation, along with assistance from the Faulkner County Sheriff’s Office, arrested William Marshall, 51, at his home in Greenbrier. Upon arrest, agents executed a federal search warrant on Marshall’s residence and vehicle.
Later that day Marshall appeared for arraignment in front of Federal Magistrate Judge Beth Deere. On April 10, 2015, Marshall was released on bond. The arrest stemmed from a federal complaint signed by Judge Deere that charged Marshall with aggravated identity theft, misrepresentation of a social security number, and providing a false statement to a federal agency.
“The extent of damage to the true victim’s identity is beyond measure,” Thyer said. “Thanks to security measures that the Social Security Administration has in place while filing for disability benefits, Marshall’s scheme was finally identified and stopped. These types of crimes continue to plague not only businesses and government entities, but individuals as well. Our office, along with our law enforcement partners, will continue to vehemently seek justice for those who are victimized by these crimes.”
The investigation began when Marshall allegedly fraudulently applied for Social Security benefits under a false identity earlier this year at the Conway, Ark., Social Security office. The subsequent investigation revealed that Marshall has been living under the false identity of the true victim for more than 20 years. The investigation also revealed that Marshall moved back to Arkansas in 1992, where he has lived as a fugitive from California.
This case was investigated by the Office of the Inspector General—Social Security Administration with the assistance of the Arkansas Department of Insurance—Criminal Investigation Division. The case is being prosecuted by Assistant United States Attorney Erin O’Leary.
The charges of misrepresentation of a social security number and providing a false statement to a federal agency each carry a statutory penalty of not more than five years’ imprisonment, not more than a $250,000 fine, and not more than three years of supervised release. Aggravated identity theft has a maximum statutory penalty of two years’ imprisonment consecutive to any other sentence imposed, not more than a $250,000 fine, and not more than one year of supervised release.
The criminal complaint contains only allegations. A federal Grand Jury will decide whether to indict on these charges. Marshall is presumed innocent until proven guilty.
Phillips County Man Indicted on Weapons ChargeRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Grover Crossland, Resident Agent in Charge of the Little Rock Field Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), announced today that a Federal Grand Jury has returned an indictment charging Dentrel Maurice Bragg, 20, of Helena-West Helena, with unlawful possession of a firearm by a felon.
The one-count indictment, returned on April 8, 2015, charges that on February 6, 2015, Bragg possessed a loaded Smith & Wesson, model SD40VE, .40 caliber pistol, and a loaded Colt, model Mustang, .380 caliber pistol.
“For more than four years my office, working in partnership with all federal law enforcement agencies, has focused significant attention on the entire Arkansas Delta region,” Thyer said. “While I am committed to continuing that focused attention in the Delta, today’s announcement highlights an additional commitment to support state and local law enforcement efforts to make Phillips County and the entire Arkansas Delta a safer place to live and work. Removing weapons from the streets in Phillips County is a high priority for all law enforcement.”
On February 6, 2015, a Helena-West Helena patrol officer initiated a traffic stop on a cream-colored four door Lincoln town car for no vehicle tags. The Lincoln Town Car stopped in a parking lot, and as the officer approached the vehicle, the officer smelled a strong odor of marijuana. The officer asked the driver and sole occupant, Bragg, to step out of the vehicle. While conducting a pat-down of Bragg, another officer found the loaded Smith & Wesson .40 caliber pistol in Bragg’s pocket. The loaded Colt .380 caliber pistol was located inside the vehicle. The Helena-West Helena Police 425 West Capitol Avenue, Suite 500 (501) 340-2600 Post Office Box 1229 Little Rock, Arkansas 72203-1229 Department determined that the Colt .380 caliber pistol had been reported stolen out of Jonesboro.
Bragg was previously convicted of Battery First Degree and Terroristic Act, felony offenses, on October 22, 2012, in Phillips County Circuit Court Case No. 2012-123. The offense of Felon in Possession of a Firearm, 18 U.S.C. § 922(g)(1), carries the following penalties: Not more than 10 years imprisonment; not more than 3 years supervised release; and up to a $250,000 fine.
Bragg will appear before United States Magistrate Judge Beth Deere for plea and arraignment later this month, at which time a trial date will be set.
The case is being prosecuted as part of the Department of Justice’s “Project Safe Neighborhoods” program—a nationwide, gun-violence reduction strategy led by ATF, in cooperation with federal, state, and local law enforcement officials. This investigation was conducted by the ATF and the Helena-West Helena Police Department, along with the Arkansas State Police. It is being prosecuted by Assistant United States Attorney Julie Peters.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
Dermott Woman Charged in Superseding Indictment in Scheme to Steal Feeding Program FundsRead the Press Release
LITTLE ROCK – Another feeding program sponsor for the Department of Human Services (DHS) has been indicted for her role in a conspiracy to steal federal money earmarked to feed hungry children. Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced that Kattie L. Jordan, 50, of Dermott, previously identified as “Co-Conspirator ‘A’” in an indictment that was returned by a Federal Grand Jury on December 11, 2014, was added as a defendant to the original indictment. The indictment already named Gladys Elise King, 34, of England; Tonique D. Hatton, 37, of North Little Rock; and Jacqueline D. Mills, 39, of Helena, as defendants in the case.
The Superseding Indictment, returned by a Federal Grand Jury on April 8, 2015, charges Hatton, Jordan, King, and Mills with conspiracy to fraudulently obtain United States Department of Agriculture (USDA) program funds. Additionally, Mills is charged with wire fraud, paying bribes, and engaging in money laundering. King and Hatton are also charged with accepting bribes. The Superseding Indictment also seeks forfeiture of the proceeds obtained as a result of the fraud from the defendants.
According to the Superseding Indictment, the USDA funds the Child and Adult Care Feeding Program, which includes an at-risk afterschool component. USDA also funds the Summer Food Service Program. In Arkansas, the feeding programs are administered by DHS. Sponsors who want to participate in the feeding programs must submit an application to DHS for approval. Once approved, they can provide meals as part of the feeding program and be reimbursed based on the number of eligible meals they serve.
The Superseding Indictment states that Hatton and King worked for DHS, and part of their job was to determine eligibility of sponsors to participate in the feeding programs. Jordan and Mills operated as sponsors for separate feeding programs. Hatton and King were responsible for approving Jordan’s programs and Mills’ programs at various times.
The Superseding Indictment alleges that Mills and Jordan made bribe payments to DHS employees Hatton and King. In exchange for those bribes, Mills and Jordan would submit inflated numbers of meals purportedly served from their sites. Hatton and King provided protection from DHS scrutiny.
The statutory penalty for wire fraud and conspiracy to commit wire fraud is not more than 20 years imprisonment, not more than a $250,000 fine, or both, and not more than 3 years supervised release. The statutory penalty for receipt of bribes, paying bribes, and money laundering is not more than 10 years imprisonment, not more than a $250,000 fine, or both, and not more than 3 years supervised release.
The investigation is ongoing and is conducted by the United States Secret Service, Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigations, United States Department of Agriculture—Office of Inspector General, and the United States Marshals Service. The case is being prosecuted by Assistant United States Attorneys Jana K. Harris and Allison W. Bragg. If anyone is aware of any fraudulent activity regarding these feeding programs, please email that information to the United States Attorney’s office at [email protected].
An indictment contains only allegations. Defendants are presumed innocent until proven guilty.
North Little Rock Drug Ring DismantledRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas and David Downing, Assistant Special Agent in Charge for the Drug Enforcement Agency, announced the unsealing of a 77-count superseding indictment charging multiple defendants in central Arkansas with numerous drug and weapon charges. Today, 26 defendants were arraigned by Federal Magistrate Judge Jerome T. Kearney. Six additional defendants will be arraigned on March 24, 2015. The four defendants who remain at large are Jesse Berry, Heather Grady, Michelle Zomaya, and Billy Crews.
“The charges set forth in the 77-count indictment are only possible because of the investigative cooperation of many law enforcement agencies,” stated Thyer. “Their commitment to excellent investigative teamwork, not only takes the meth out of our neighborhoods, but also allows my office to bring large multi-count indictments against the drug dealers to remove them and their weapons from our streets.”
“These arrests mark the final blow reflecting the successful dismantlement of this large scale methamphetamine trafficking organization,” said DEA Assistant Special Agent in Charge David Downing. “By removing these criminals from the streets of Arkansas and Arizona, they can no longer distribute this toxic poison to our communities. Through remarkable partnerships with local law enforcement, we are making major progress in preventing meth trafficking from taking hold in our communities. This investigation is a compelling example of that success,” said Downing.
An investigation into large-scale methamphetamine trafficking organization based in North Little Rock resulted Tuesday in the early-morning arrests of 20 defendants. Twelve defendants had been previously arrested on the original indictment, and four defendants remain at large. The superseding indictment charges these 36 defendants with conspiracy to distribute methamphetamine, multiple counts of distribution and possession with intent to distribute methamphetamine, and multiple gun charges.
The DEA investigation, which began in January 2014, used undercover officers to conduct multiple controlled purchases of methamphetamine and numerous other law enforcement actions, including seizures of methamphetamine. In Operation Falcons’ Ridge the DEA made 16 controlled purchases and executed nine search warrants in seizing nearly two pounds of methamphetamine. In addition, during the execution of the search warrant in Arizona which led to the arrest of four defendants, agents found evidence of approximately 11 pounds of methamphetamine which was destroyed as the search team was entering the residence. The street value of one pound of meth is $13,000 to $15,000.
This organization, headed in Arkansas by Michael Glover and in Arizona by Michael Polito, was based in North Little Rock. It is believed that Glover and associates made numerous trips to Arizona to obtain bulk quantities of methamphetamine, which was then brought back to central Arkansas and distributed. Included in the indictment were several counts which called for the forfeiture of multiple firearms and more than $10,000 which is believed to be the proceeds of drug trafficking.
The superseding indictment charges 36 defendants in 77 separate counts. All defendants except for Polito are residents of central Arkansas. Glover, John Boyce, Brent McNair, and Kallie Shae Lewis were arrested in Arizona following a trip to acquire bulk methamphetamine in October 2014, and later charged in a federal criminal complaint. The original indictment, which charged 12 defendants, including the four arrested in Arizona, was handed down by a Federal Grand Jury on November 5, 2014, The superseding indictment was handed down by a Federal Grand Jury on March 3, 2015. The counts include conspiracy to possess with intent to distribute more than 500 grams of methamphetamine, distribution of methamphetamine, possession with intent to distribute methamphetamine, felon in possession of firearms, possession of a firearm in furtherance of a drug trafficking crime, and the use of telephone to facilitate a drug trafficking crime. If convicted of conspiracy to distribute more than 500 grams of methamphetamine each defendant will face a sentence of not less than 10 years to life imprisonment.
The investigation was conducted by the DEA, with assistance from several law enforcement agencies including the North Little Rock Police Department, the Little Rock Police Department, the Sherwood Police Department, the Benton Police Department, the Pulaski County Sherriff’s Office, the Faulkner County Sherriff’s Office, the Lonoke County Sherriff’s Office, the Saline County Sherriff’s Office, and the Arkansas National Guard. The case is being prosecuted by Assistant United States Attorneys Chris Givens and Michael Gordon.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
DEFENDANTS/CHARGES (defendants still at large in BOLD)
Conspiracy to possess with intent to distribute methamphetamine:
- Gregory Barns, 34, Sherwood, AR
- Jesse Berry, 35, North Little Rock, AR
- Joshua Boozy, 31, North Little Rock, AR
- Linnie Boozy, 33, North Little Rock, AR
- John Boyce, 50, Mayflower
- Justin Cobb, 37, Sherwood, AR
- Billy Crews, 56, Benton, AR
- Joshua Dickerson, 34, Sherwood, AR
- Michael Glover, 31, Cabot, AR
- Chris Grady, 42, Ward, AR
- David Grady, 44, Sherwood, AR
- Heather Grady, 31, North Little Rock, AR
- Misty Hoggard, 35, Benton, AR
- Lindsey Hosford, 32, Little Rock, AR
- Kaylen Johnson, 29, Little Rock, AR
- Kallie Shea Lewis, 25, Austin, AR
- Moneque Lewis, 48, Austin, AR
- Marc Massa, 36, North Little Rock, AR
- Marissa McCullough, 26, Little Rock, AR
- Brent McNair, 35, Mayflower, AR
- Curtis McNair, 32, Mayflower, AR
- Dustin Murphy, 37, North Little Rock, AR
- Tonya Nelson, 46, Benton, AR
- Michael Sean Nicholson, 47, North Little Rock, AR
- Michael Ryan Polito, 33, Phoeniz, AZ
- Christy Ramsey, 40, Little Rock, AR
- Jason Riley, 39, Cabot, AR
- Amy Scarborough, 37, Austin, AR
- Scott Shrum, 36, North Little Rock, AR
- Cassondra Spears, 39, North Little Rock, AR
- Ronald Heath Swaim, 33, North Little Rock, AR
- Amanda Thomson, 38, Mayflower, AR
- Aaron Williams, 32, North Little Rock, AR
- Joe Willis, 33, Lonoke, AR
- Michele Zomaya, 33, North Little Rock, AR
Distribution of methamphetamine:
- Michael Glover, 31, Cabot, AR
- Lindsey Hosford, 32, Little Rock, AR
- Kaylen Johnson, 29, Little Rock, AR
- Aaron Williams, 32, North Little Rock, AR
- Michele Zomaya, 33, North Little Rock, AR
Possession with intent to distribute methamphetamine:
- Justin Cobb, 37, Sherwood, AR
- Michael Glover, 31, Cabot, AR
- Lindsey Hosford, 32, Little Rock, AR
- Marc Massa, 36, North Little Rock, AR
- Brent McNair, 35, Mayflower, AR
- Curtis McNair, 32, Mayflower, AR
- Moneque Lewis, 48, Austin, AR
- Amy Scarborough, 37, Austin, AR
Felon in possession of a firearm:
- Lindsey Hosford, 32, Little Rock, AR
- Brent McNair, 35, Mayflower, AR
Possession of a firearm to further a drug trafficking crime:
- Lindsey Hosford, 32, Little Rock, AR
- Brent McNair, 35, Mayflower, AR
- Curtis McNair, 32, Mayflower, AR
Use of a telephone to facilitate a drug trafficking crime:
- Gregory Barns, 34, Sherwood, AR
- Jesse Berry, 35, North Little Rock, AR
- Joshua Boozy, 31, North Little Rock, AR
- Linnie Boozy, 33, North Little Rock, AR
- John Boyce, 50, Mayflower
- Justin Cobb, 37, Sherwood, AR
- Billy Crews, 56, Benton, AR
- Michael Glover, 31, Cabot, AR
- Chris Grady, 42, Ward, AR
- David Grady, 44, Sherwood, AR
- Heather Grady, 31, North Little Rock, AR
- Misty Hoggard, 35, Benton, AR
- Lindsey Hosford, 32, Little Rock, AR
- Kallie Shea Lewis, 25, Austin, AR
- Moneque Lewis, 48, Austin, AR
- Marissa McCullough, 26, Little Rock, AR
- Brent McNair, 35, Mayflower, AR
- Curtis McNair, 32, Mayflower, AR
- Dustin Murphy, 37, North Little Rock, AR
- Tonya Nelson, 46, Benton, AR
- Michael Ryan Polito, 33, Phoeniz, AZ
- Christy Ramsey, 40, Little Rock, AR
- Jason Riley, 39, Cabot, AR
- Amy Scarborough, 37, Austin, AR
- Scott Shrum, 36, North Little Rock, AR
- Cassondra Spears, 39, North Little Rock, AR
- Ronald Heath Swaim, 33, North Little Rock, AR
- Aaron Williams, 32, North Little Rock, AR
- Joe Willis, 33, Lonoke, AR
- Michele Zomaya, 33, North Little Rock, AR
STATUTORY SENTENCES
Conspiracy to possess with intent to distribute and to distribute more than 500 grams of methamphetamine is punishable by not less than 10 years, not more than life, incarceration in the Bureau of Prisons with a possible fine of up to $10,000,000, and not less than 5 years supervised release.
Distribution of more than 50 grams of actual methamphetamine is punishable by not less than 10 years, not more than life, incarceration in the Bureau of Prisons with a possible fine of up to $10,000,000, and not less than 5 years supervised release.
Distribution of more than 5 grams but less than 50 grams of actual methamphetamine is punishable by not less than 5 years, not more than 40 years’ incarceration in the Bureau of Prisons with a possible fine of up to $5,000,000, and not less than 4 years supervised release.
Distribution of less than 50 grams of a mixture or substance containing methamphetamine is punishable by not more than 20 years’ incarceration in the Bureau of Prisons with a possible fine of up to $1,000,000, and not less than 3 years supervised release.
Possession with the intent to distribute more than 50 grams of actual methamphetamine is punishable by not less than 10 years, not more than life, incarceration in the Bureau of Prisons with a possible fine of up to $10,000,000, and not less than 5 years supervised release.
Possession with the intent to distribute more than 50 grams but less than 500 grams of a mixture or substance containing methamphetamine is punishable by not less than 5 years, not more than 40 years’ incarceration in the Bureau of Prisons with a possible fine of up to $5,000,000, and not less than 4 years supervised release.
Possession with the intent to distribute less than 50 grams of a mixture or substance containing methamphetamine is punishable by not more than 20 years’ incarceration in the Bureau of Prisons with a possible fine of up to $1,000,000, and not less than 3 years supervised release.
Possession of a firearm by a felon is punishable by not more than 20 years’ incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 3 years supervised release.
Possession of a firearm in furtherance of a drug trafficking crime is punishable by not less than 5 years, not more than life, consecutive to any other imposed sentence, incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 3 years supervised release.
Use of a communication facility to facilitate a drug trafficking crime is punishable by not more than 4 years’ incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 1 year supervised release.
Woodring Pleads Guilty to Federal Charges Related to Attacks on Power GridRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation; and Grover Crossland, Resident Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) – Little Rock Field Office announced today that Jason Woodring, age 38, of Jacksonville, Arkansas, pleaded guilty today to charges related to his attacks on Central Arkansas’ power grid between August and October of 2013. Those attacks included sabotaging an electrical support tower and downing a 500,000-volt power line onto a railroad track near Cabot, Arkansas, which resulted in approximately $550,000 worth of damage; setting fire to and destroying an Extra High Voltage (EHV) switching station in Scott, Arkansas, causing over $4,000,000 in damages; and cutting down two power poles, which led to the temporary loss of power to approximately 9,000 people in Jacksonville, Arkansas. According to First Electric Cooperative representatives, damages from this incident exceeded $48,000. Woodring was charged in an 8-count indictment by a federal grand jury on November 6, 2013. He has been in federal custody since that time.
Pursuant to a plea agreement with the United States, Woodring pleaded guilty to Destruction of an Energy Facility for downing the Cabot power lines (Count Two) and for setting fire to the Scott power station (Count Three). He also pleaded guilty to Using Fire to Commit a Felony (Count Four) in relation to the arson in Scott. Finally, Woodring pleaded guilty to being an illegal drug user in possession of various firearms and ammunition (Count Eight) and agreed to forfeit the firearms and ammunition.
“The citizens of Central Arkansas can rest a bit easier today with the plea of Jason Woodring,” stated Thyer. “The power grid attacks had the potential to put many lives at risk. When we depend on electrical power not only for comfort and convenience, but also for safety, security and life-sustaining equipment, not knowing where the next attack would occur held the public hostage to an unknown attacker. I am extremely grateful to all the investigators from the FBI, Joint Terrorism Task Force, Bureau of Alcohol, Tobacco, Firearms and Explosives, Union Pacific Police, Entergy, First Electric, Lonoke County Sheriff’s Office, Cabot Police, Arkansas State Police, Conway Police Department, Little Rock Police Department and Arkansas Game and Fish Commission for their cooperation and commitment to this investigation these past few months.” Under the plea agreement, the United States and Woodring have agreed that Woodring should be sentenced to 180 months (or 15 years) in federal prison. The presiding judge, the Honorable Billy Roy Wilson, will determine his actual sentence. The amount of restitution owed by Woodring will be determined at or before his sentencing hearing scheduled for June 18, 2015, at 10:30 a.m.
The charge of Destruction of an Energy Facility carries a possible sentence of not more than 20 years in prison. Use of a Fire to Commit a Felony has a statutory sentence of ten years which must be served consecutive to the underlying felony. The charge of being a Drug User in Possession of a Firearm or Ammunition carries a possible sentence of not more than ten years in prison. Woodring could also face not more than a $250,000 fine for each charge against him and not more than three years of supervised release.
This investigation was conducted by the FBI, Joint Terrorism Task Force, Bureau of Alcohol, Tobacco, Firearms and Explosives, Union Pacific Police, Entergy, First Electric, Lonoke County Sheriff’s Office, Cabot Police, Arkansas State Police, Conway Police Department, Little Rock Police Department and Arkansas Game and Fish Commission.
Baptist Health Medical Center North Little Rock Enters into Settlement Agreement Under False Claims ActRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced that, the government, acting through the United States Department of Justice and on behalf of the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) (collectively the "United States"), and Baptist Health Medical Center North Little Rock (BHMC-NLR) entered into a settlement agreement under the False Claims Act. BHMC-NLR agreed to pay $2,700,000 to resolve its liability.
BHMC-NLR is a 248-bed hospital in North Little Rock, Arkansas. OIG's Office of Audit Services (OAS) referred the preliminary results of an audit finding that BHMC-NLR submitted improper short stay claims to the U.S. Attorney's Office for the Eastern District of Arkansas.
The United States contended that it had certain civil claims against BHMC-NLR arising from claims BHMC-NLR submitted between January 1, 2008 and December 31, 2009 to Medicare for certain "short stay" inpatient patient encounters, which were hospital stays that lasted less than two (2) nights at BHMC-NLR. BHMC-NLR allegedly submitted short stay inpatient claims as a result of: (a) improper orders for inpatient status converted from outpatient status; (b) improper inpatient standing orders for admission without proper involvement of a physician; and, (c) improper orders for inpatient status following scheduled outpatient procedures.
In exchange for a release of its exclusion liability under section 1128(b)(7) of the Social Security Act, BHMC-NLR agreed to enter into a five year corporate integrity agreement (CIA). Among other requirements, the CIA requires both the North Little Rock hospital and its sister hospital in downtown Little Rock, Arkansas to be subject to independent annual claims reviews.
The investigation was conducted by the Office of Inspector General of the Department of Health and Human Services, Office of Audit Services and Office of Investigations.
Former State Senator Pleads Guilty to Mail FraudRead the Press Release
LITTLE ROCK – Patrick C. Harris, Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. §515, Jack McQuary, Special Prosecutor for the State of Arkansas and Special Assistant United States Attorney, David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation, and Colonel William J. Bryant, Director of the Arkansas State Police, announced today that former Arkansas State Senator Paul J. Bookout, age 52, of Jonesboro, Arkansas waived indictment and entered a plea of guilty to a felony information charging him with one count of mail fraud related to a scheme in which Bookout converted contributions for his 2010 and 2012 election campaigns to his personal use and profit. The waiver and plea hearing took place today in Little Rock before Chief District Judge Brian S. Miller.
“In a betrayal of his oath of office and his duty to the citizens of Arkansas, Mr. Bookout violated the integrity of our government and disrespected those he served by selfishly and brazenly spending campaign funds for his personal use,” stated David Shepard, Assistant Special Agent in Charge of the Little Rock FBI, “The FBI will continue to work together with the United States Attorney’s Office and the Arkansas State Police to ensure that all those who participate in political corruption will be held accountable for their actions.
“I appreciate the cooperation of the United States Attorney’s Office, the FBI, and the Arkansas State Police, who assisted in this case in order to effectively bring a resolution to both the State and Federal violations committed by Mr. Bookout,” stated Special Prosecutor Jack McQuary. “State prosecutors will continue to work with our federal counterparts to bring justice to the citizens of the State of Arkansas with regard to public corruption.”
In 2006, Bookout was elected to the Arkansas State Senate, representing Arkansas Senate District 14. In 2011 and 2012, Bookout served as President Pro Tempore of the Arkansas State Senate. He resigned in August 2013. According to the Information filed today, Bookout deposited campaign contributions for his 2010 and 2012 elections into two bank accounts. Between May 2009 and December 2012, campaign donations totaling $126,500 were deposited into one of those accounts. Between March 2012 and July 2013, campaign donations totaling $62,750 were deposited into the second account. The Information alleges that between May 2009 and July 2013, Bookout unlawfully made payments totaling $150,048.12 from those accounts for personal items and expenses, including clothing for Bookout and family members, a sound system installed in Bookout’s home, golf clubs, country club pro shop expenses, sporting goods, liquor, household furnishing, tanning sessions, manicures, and travel expenses unrelated to his re-election campaigns.
During his 2010 and 2012 re-election campaigns, Bookout was required to file monthly Campaign Contribution and Expenditure Reports (“CCE reports”) with the Arkansas Secretary of State’s office in Little Rock to evidence compliance with campaign finance disclosure laws and provide a public record of all contributions and expenditures related to his campaigns. According to the Information, the monthly CCE reports prepared, signed, and filed by Bookout in 2010 and 2012 falsely claimed that the unlawful payments made from his campaign accounts were legitimate campaign related expenses. Additionally, the Information alleges that in filing false CCE reports, Bookout represented to the Secretary of State’s Office, the public, and his contributors that all of the claimed expenditures were lawful and related to his campaigns, when in fact they were not. The mail fraud count charged relates to Bookout’s mailing of a fraudulent CCE report to the Secretary of State’s Office on about December 28, 2012.
The statutory penalty for mail fraud is not more than twenty (20) years imprisonment and a fine of up to $250,000.
The investigation was conducted by the Federal Bureau of Investigation and the Arkansas State Police. This case was prosecuted in the Eastern District of Arkansas by Assistant United States Attorney Patricia S. Harris and Special Assistant United States Attorney and Special Prosecutor for the State of Arkansas Jack McQuary.
Little Rock Models Owner Indicted on Federal Enticement ChargesRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Special Agent in Charge Raymond R. Parmer, Jr., of the New Orleans Field Office for Homeland Security Investigations, announced that Seth Christian Ganahl, age 42, of Maumelle, Arkansas, was indicted on multiple counts related to the sexual exploitation of minors. The U. S. Attorney’s Office announced today that it has set-up a phone number, 501-340-2647, if you have any information on Seth Ganahl, also known as Christian Canon, or regarding Little Rock Models in this on-going investigation.
The indictment, handed down by a Grand Jury in the Eastern District of Arkansas on February 4, 2015, charges Ganahl with two counts of attempted enticement of a minor to engage in sexual activity, one count of enticement of a minor to engage in sexual activity, one count of transportation of a minor with the intent to engage in sexual activity, one count of attempted production of child pornography, and two counts of production of child pornography. Ganahl made his initial appearance before United States Magistrate Judge J. Thomas Ray on February 18, 2015. He entered a plea of not guilty and was ordered to remain detained. His trial is set for March 23, 2015 before United States District Judge Kristine G. Baker.
Electronic devices seized in a search pursuant to federal search warrants revealed that Ganahl was using the name Christian Canon, and his business, Little Rock Models, to entice minors to send him photographs and videos of the minors engaged in sexually explicit conduct. Ganahl would then pay the minors for the photographs and videos. The evidence presented to the Grand Jury also included testimony from two minors that they went to Ganahl’s residence for the purpose of taking sexually explicit photographs. One minor, while at Ganahl’s residence, engaged in sexually explicit conduct with Ganahl, which he recorded.
The charges in the Indictment are based on an investigation that began in August 2014, when a minor disclosed to her mother and the Maumelle Police Department that Ganahl had previously asked her to engage in illicit sexual activity on multiple occasions. After the minor’s disclosure, a second minor disclosed that Ganahl had also asked her to engage in illicit sexual activity.
Ganahl was arrested by the Maumelle Police Department on August 27, 2014. He is currently charged in Pulaski County Circuit Court with 2 counts of sexual indecency with a child and 2 counts of sexual assault in the 2nd degree.
The investigation was conducted by the Little Rock Office of Homeland Security Investigations, the Arkansas State Police Crimes Against Children Division, and the Maumelle Police Department.
Statutory Penalties
18 U.S.C. 2422(b): Enticement of a Minor and Attempted Enticement of a Minor to Engage in Sexual Activity carries a penalty of NLT 10 years to life imprisonment, NLT 5 years to Life of supervised release, and a fine of up to $250,000.
18 USC 2423(a): Transportation of a Minor with intent to engage in criminal sexual activity carries a penalty of NLT 10 years to life imprisonment, NLT 5 years to Life of supervised release, and a fine of up to $250,000.
18 USC 2251(a): Production and Attempted of Child Pornography carries a penalty of NLT 15 years to life imprisonment, NLT 5 years to Life of supervised release, and a fine of up to $250,000.
North Little Rock Man Indicted on 10 Counts of Wire Fraud in Scheme to Steal Feeding Program FundsRead the Press Release
LITTLE ROCK – Another feeding program sponsor has been indicted for his role in a scheme to steal federal money. Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced that Christopher Nichols, age 24, of North Little Rock, has surrendered to authorities after the filing of a 10-count indictment.
The indictment, returned by a Federal Grand Jury on February 4, 2015, charges Nichols with wire fraud as part of a scheme to fraudulently obtain United States Department of Agriculture (USDA) program funds.
According to the indictment, the USDA funds the Child and Adult Care Feeding Program, which includes an at-risk afterschool component. In Arkansas, the feeding programs are administered by the Arkansas Department of Human Services (DHS). Sponsors who want to participate in the feeding programs must submit an application to DHS for approval. Once approved, they can provide meals as part of the feeding program and be reimbursed based on the number of eligible meals they serve.
The indictment states that Nichols operated as a sponsor for a feeding program through an organization called A Vision For Success. It alleges that a relative of Nichols worked for DHS and processed applications from sponsors applying to participate in the feeding programs.
The indictment alleges that Nichols applied with DHS to participate as a sponsor and that his relative at DHS approved his applications. The only employees Nichols listed on his applications were additional family members. The indictment states that he falsely represented his average daily attendance and greatly inflated the number of meals provided; few or no children were actually fed.
“With reportedly over 200,000 children at risk of hunger in Arkansas because they are not getting nutritious food needed to thrive, this indictment is a small step toward ensuring the funding for nutritious feeding programs in Arkansas is actually feeding children,” stated Thyer. “This is the second indictment and fourth person charged in connection to feeding programs in Arkansas. In December, 2014, my office indicted three individuals for their roles in a conspiracy to steal federal money through feeding programs administered by the Department of Agriculture. I expect that as the investigation into Arkansas’ feeding programs continues, there will be additional indictments. We will not tolerate the blatant disregard of the welfare of Arkansas’ children by those who steal the very money meant to alleviate the burgeoning need to put nutritious food in the mouths of hungry children. If you are aware of any fraudulent activity regarding these feeding programs, please email that information to my office at [email protected].”
“It is again another example of the collaborative efforts of local, state and federal agencies to aggressively investigate and prosecute these individuals whose depravity has no bounds,” stated Secret Service Special Agent in Charge Brian Marr. “This manipulator of the system who took food from children, and expensed it off to the people of the state of Arkansas, deserves every bit of punishment allowable by law.”
United States Department of Agriculture, Office of Inspector General, Assistant Special Agent-in-Charge Dax Roberson, Southwest Region said, “I want to thank the U.S. Attorney’s office, OIG special agents, and our investigative partners for their hard work on this investigation. When the integrity of nutrition programs for needy children is violated by criminal conduct, the Office of Inspector General will pursue justice to the fullest extent of the law.”
“Stealing money from a fund that was reputedly feeding underprivileged and disadvantaged children is deplorable,” stated Assistant Special Agent in Charge James Hendricks with the Little Rock FBI, “We appreciate the tireless efforts of our partners, Internal Revenue Service, United States Department of Agriculture, United States Secret Service and the U.S. Attorney’s Office for their diligent resolve to investigate this appalling crime.”
“IRS Criminal Investigation is proud to work with our law enforcement partners to identify, investigate and prosecute financial fraud schemes, especially when the victims of the fraud are disadvantaged children that programs such as this are meant to benefit,” stated Christopher A. Henry, Special Agent in Charge of the IRS- Criminal Investigation Nashville Field Office.
The statutory penalty for wire fraud is not more than 20 years imprisonment, not more than a $250,000 fine, or both, and not more than 3 years supervised release.
The investigation is ongoing and is conducted by the United States Secret Service, Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigations, United States Department of Agriculture – Office of the Inspector General, and United States Marshals Service. The case is being prosecuted by Assistant United States Attorneys Jana Harris and Allison W. Bragg.
An indictment contains only allegations. Defendants are presumed innocent until proven guilty.
Stuttgart Man Charged with Arson in Courthouse Annex FireRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas and Grover Crossland, Resident Agent in Charge for the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) announced the unsealing of a two-count Indictment on Monday, February 9, 2015, charging Donald Aaron, age 45 of Stuttgart, with arson in the destruction of the Stuttgart Courthouse Annex, which housed the Arkansas County Sheriff’s office, among numerous other government agencies.
The ATF took a lead role in investigating a fire on September 23, 2014, that took place in the Stuttgart Courthouse Annex Building on 312 South College. This building housed the Arkansas County Sheriff’s Office, offices of the Arkansas State Police, the 911 coordinator, the Office of Emergency Management, the Arkansas County Tax Assessor and County Tax Collector, the County Judge and the Emergency Operations Center. The ATF investigation determined the fire to be incendiary, or intentionally set.
“This fire essentially destroyed millions of tax-payer dollars and put the lives of people in the area at risk when the 911 operations were not operational,” stated Thyer. “Thankfully, 911 operations were able to be rerouted and the services were able to relocate and continue serving the citizens of the Stuttgart area. I’m grateful for the diligent work of the ATF investigators who were able to determine, not only the cause, but also the alleged perpetrator of this crime.”
For a period of time 911 operations were interrupted. Ultimately, the building had to be demolished with estimated damage of $2.5-$3 million. During suppression and clean-up efforts following the fire, a Stuttgart city employee was injured in a construction equipment accident.
Aaron was arrested Monday morning in Stuttgart and appeared before United States Magistrate Judge J. Thomas Ray Monday afternoon. He was remanded to the custody of the U.S. Marshals pending trial. If convicted, Aaron will face a statutory minimum sentence of seven years’ imprisonment on each count.
The investigation was conducted by the ATF, with assistance from several law enforcement agencies including the Stuttgart Police Department, Stuttgart Fire Department, Arkansas County Sheriff’s Office, Arkansas County Prosecuting Attorney’s Office, Arkansas County Office of Emergency Management, and Arkansas Community Correction. The case is being prosecuted by Assistant United States Attorney Chris Givens.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
Delta Blues Drug Kingpin Sentenced to Life Plus 10 Years ImprisonmentRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, along with David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation (FBI), announced today that Demetrius Colbert, age 39, of Marianna, was sentenced to life imprisonment plus ten years in prison for his leadership of a drug conspiracy and for firearms violations, including assault on a federal officer. On June 6, 2014, Colbert was convicted following a one-week jury trial of the following offenses in the Superseding Indictment in Case No. 4:11CR00210-1:
Count One – Conspiracy to Distribute and to Possess with Intent to Distribute Cocaine and Crack Cocaine, 21 U.S.C. § 846
Count Four – Use of a Telephone in Furtherance of a Drug Trafficking Crime, 21 U.S.C. § 843(b)
Count Five – Use of a Telephone in Furtherance of a Drug Trafficking Crime, 21 U.S.C. § 843(b)
Count Twenty-One – Felon in Possession of a Firearm, 18 U.S.C. § 922(g)(1)
Count Twenty-Two – Assault of a Federal Officer, 18 U.S.C. § 111
Count Twenty-Three – Discharging a Firearm in Connection with a Drug Trafficking Crime and a Federal Crime of Violence, 18 U.S.C. § 924(c)
At the Sentencing Hearing on February 5, 2015, U.S. District Court Judge James M. Moody Jr. found that Colbert was responsible for trafficking at least 200 kilograms of cocaine and at least 21 kilograms of crack cocaine during the conspiracy period of January 2010 to October 2011. Judge Moody also found that Colbert was and organizer and leader of the drug conspiracy. Judge Moody further found that Colbert committed his offense as part of a pattern of conduct engaged in as a livelihood. Judge Moody applied an enhancement to Colbert’s advisory sentencing guideline range to reflect that Colbert caused serious bodily injury to a federal law enforcement officer when Colbert fired at agents serving a search warrant at his home in Marianna on October 11, 2011. Judge Moody then sentenced Colbert to life imprisonment plus ten years. As a result of Colbert’s convictions, he forfeited the following property seized from his home and vehicles on October 11, 2011: $424,519 in U.S. currency and jewelry valued at $32,750.
“Every day there are unsung heroes who put their lives on the line to protect and safeguard the citizens of Arkansas,” stated Thyer. “These valiant men and women in law enforcement are dedicated to keeping our cities and towns safe for all to enjoy. Now, because of the efforts of these heroes, Demetrius Colbert, a man with total disregard for the lives of others, including law enforcement, has learned the price to pay for his indifference is spending the rest of his life in prison.”
“Demetrius Colbert is a parasite whose contributions to our community include drugs and violence,” stated David T. Resch, Special Agent in Charge at the Federal Bureau of Investigation in Little Rock, “We appreciate the U.S. Attorney’s steadfast pursuit of justice. Arkansas is a better place with Demetrius Colbert in federal prison.”
The charges stemmed from multiple Organized Crime and Drug Enforcement Task Force (OCDETF) investigations collectively referred to as “Operation Delta Blues,” which focused on public corruption, drug trafficking, and unlawful firearms activities in the Helena-West Helena and Marianna, Arkansas, areas. The United States Attorney’s Office utilized sixteen court-authorized wiretaps over the course of Operation Delta Blues. Approximately 800 federal, state, and local law enforcement personnel participated in the October 11, 2011 arrests.
The Colbert case was investigated by the FBI, the Drug Enforcement Administration, and the Arkansas State Police. It was prosecuted by Assistant United States Attorneys Julie Peters, Benecia Moore, and Michael Gordon.
The sole remaining defendant from the original Delta Blues cases, Milton Johnson, is currently set for trial before Judge Moody in Case No. 4:11CR00209 JM on February 17, 2015.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
TSA Employee Indicted on Child Pornography ChargesRead the Press Release
LITTLE ROCK –A Transportation Security Administration employee has been indicted on child pornography charges. Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced that Raymond Kinney, age 54, of Jacksonville, a Transportation Security Inspector for the TSA, was indicted by a federal grand jury on February 4, 2015, on one count of distribution of child pornography.
Kinney was arrested on Wednesday, January 28, when he drove to meet two minors with whom he planned to have sex, according to online chats that were recovered from his account. A search incident to arrest revealed that Kinney had brought sex toys and children’s clothing with him.
According to the criminal complaint, this investigation began in January 2015, when undercover officers were monitoring a social networking site and encountered an individual seeking a minor for sexual contact. Through further conversations, this individual sent several pictures and videos of child pornography over the internet. They ultimately arranged a meeting at a motel, and when Raymond Kinney arrived, officers arrested him.
The indictment alleges that on or about January 27, 2015, Kinney knowingly distributed child pornography. If convicted, Kinney faces at least five but not more than twenty years of imprisonment, up to a $250,000 fine, and five years of supervised release.
The investigation was conducted by Homeland Security Investigations with substantial assistance from local task force officers. The case is being prosecuted by Assistant United States Attorneys Allison W. Bragg and Kristin Bryant.
The charges set forth in an Indictment are allegations. The defendant is presumed innocent until proven guilty.
Local Merchants Sentenced for Distribution of Designer DrugsRead the Press Release
LITTLE ROCK - Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and David Downing, Assistant Special Agent in Charge of the Little Rock District Office of the Drug Enforcement Administration (DEA), announced that on January 28, 2015, Amjad Kattom, 37, and Fadi Qtouf, 29, were sentenced after pleading guilty to Conspiracy to Distribute and Possess with Intent to Distribute Controlled Substances and Analogues of Controlled Substances. The charges stem from Project Synergy, the largest coordinated law enforcement strike against designer drugs, specifically synthetic cannabinoids (often referred to as “K2” or “Spice”) and synthetic cathinones (often referred to as “bath salts”). Kattom and Qtouf, who are brothers, were two of the lead defendants in the case. Kattom was sentenced to 70 months imprisonment, 3 years of supervised release, a $5,000 fine, and a $100 special assessment. Qtouf was sentenced to 60 months imprisonment, 3 years of supervised release, a $5,000 fine, and a $100 special assessment.
The investigation was conducted by the DEA - Tactical Diversion Squad composed of DEA Special Agents, DEA Diversion Investigators, and Task Force Officers from: Little Rock Police Department, Conway Police Department, Jefferson County Sheriff’s Office, and Pine Bluff Police Department. Also taking part in the investigation was Homeland Security Investigations; the Internal Revenue Service - Criminal Investigation Division including Task Force Officers from Benton Police Department and Pulaski County Sheriff’s Office; with the United States Postal Inspectors and the Little Rock Police Department. Assisting agencies were the Arkansas National Guard; the Federal Bureau of Investigation; the Bureau of Alcohol, Tobacco, and Firearms; the United States Secret Service; the Arkansas State Police and the Arkansas Tobacco Control Board.
For more information on this case, see previous news release at: http://www.justice.gov/usao/are/news/2013/June/Synergy_kattom_complaint_DEA_062613.html
Perry County Pharmacist Arrested on Federal Drug ChargeRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; and David Downing, Assistant Special Agent in Charge of the Drug Enforcement Administration (DEA) announced unsealing of a Complaint and the arrest this morning of Christopher Watson, a Perry County pharmacist, charging him with illegal distribution of a controlled substance. Watson turned himself in to the DEA this morning and was taken into custody. Watson made his initial appearance before United States Magistrate Judge H. David Young this afternoon and is being held pending his bond hearing scheduled for Thursday, January 29, 2015, at 2:00 p.m. before Judge Young.
“Arrests such as the arrest of pharmacist Christopher Watson today are never taken lightly by this office,” stated Thyer. “While we recognize the impact this will have on people who have legitimate prescriptions, it was nonetheless necessary to stop the flow of prescription medications to persons who obtained them without a valid prescription. When a pharmacist knowingly fills a falsified prescription, medications are dispensed without appropriate oversight by medical professionals and subsequently are not used according to precise instructions meant to protect the user. Without these protections, the risk of side effects, addiction, and even death are greatly multiplied. It is imperative that we take action to ensure that controlled medications are not putting lives at risk.”
“It is disheartening when trusted professionals like your local pharmacist are engaged in the diversion of controlled substances,” said DEA Assistant Special Agent in Charge David Downing. “All DEA Registrants have an obligation to ensure that medications are getting into the hands of legitimate patients. Any registrant who violates or blatantly ignores their obligations will be held accountable for allowing these good medicines to get into the hands of drug dealers and addicts. The arrest of Christopher Watson and the issuance of an Immediate Suspension Order for the Perry County Food and Drug store is the result of DEA’s continued commitment to hold accountable those who participate in illegally dispensing controlled substances in our communities,” stated Downing.
According to the Affidavit filed with the Complaint, beginning in the Fall of 2014, the Drug Enforcement Administration (DEA), in connection with state and local law enforcement agencies, began an investigation into the unlawful distribution of Schedule II and III pharmaceutical narcotics by pharmacist Christopher Watson at the Perry County Food and Drug store in Perryville, Arkansas. Information received was that Mr. Watson was distributing Scheduled narcotics to individuals who had no prescriptions or false prescriptions.
On November 7, 2014, based on the information received during the investigation, DEA agents fabricated a prescription for Hydrocodone and Alprazolam (Xanax) tablets. The prescription was utilized during an undercover operation at Perry County Food and Drug. A DEA agent, working in an undercover capacity, presented a fabricated prescription to Mr. Watson at the Perry County Food and Drug store pharmacy. Mr. Watson reviewed the prescription and acknowledged that it was a forged prescription by informing the undercover agent to “work on” the official DEA registration number, and giving him specific instructions of how to make the prescription look like a valid prescription. Mr. Watson filled the fabricated prescription with (120) Hydrocodone tablets and (60) Alprazolam (Xanax) tablets.
The operation resulted in the issuance of an Immediate Suspension Order to the Perry County Food and Drug store. This Order was issued by the Administrator of DEA on the grounds that the pharmacy constitutes an imminent danger to public health and safety, and it immediately suspends the DEA Registration of the Perry County Food and Drug store required to dispense controlled substances. As a result of this Order, the Perry County Food and Drug store is prohibited from possessing and/or dispensing controlled substances pending a federal administrative hearing.
The investigation is ongoing and is conducted by DEA. The case is being prosecuted by Deputy Criminal Chief Anne Gardner.
The charges set forth in a Complaint are merely allegations. A federal Grand Jury will decide whether to indict on these charges. Watson is presumed innocent until proven guilty.
Former Judge Pleads Guilty to Bribery for Accepting A Bribe During His Campaign to Be Elected to the Arkansas Court of AppealsRead the Press Release
LITTLE ROCK - Patrick Harris, First Assistant United States Attorney for the Eastern District of Arkansas, along with Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, and David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation (FBI), announced today that a former state circuit judge pleaded guilty to accepting a bribe in exchange for reducing a negligence jury verdict against a Conway, Arkansas business during his campaign to be elected to the Arkansas Court of Appeals.
Michael A. Maggio, age 53, of Conway, Arkansas, pleaded guilty before U.S. District Chief Judge Brian S. Miller to a one-count Information charging Maggio with bribery concerning programs receiving federal funds.
At his plea hearing in open court on December 9, 2015, and in his plea documents, Maggio admitted that in 2013 he served as an elected circuit judge for the State of Arkansas, Twentieth Judicial District, Second Division, presiding over a civil matter filed in Faulkner County Circuit Court. The plaintiff in that matter, the estate of a decedent, filed a complaint alleging, among other things, that a Conway business, its owner, and others had neglected and mistreated the decedent leading to the decedent’s death while he was in their care. In early May 2013, the lawsuit proceeded to trial, with the business as the only defendant. On May 16, 2013, a jury returned a verdict in the plaintiff’s favor, awarding damages against the business in the amount of $5.2 million. Approximately one month later, on June 17, 2013, the business filed a motion for new trial or remittiture, seeking, among other things, to reduce the amount of damages awarded by the jury to the plaintiff.
According to court documents, Maggio formally announced his candidacy for the Arkansas Court of Appeals on June 27, 2013, while the defendant’s post-trial motions were pending. On June 29, 2013, Maggio’s campaign fundraiser told him that the first $50,000 from the business was “on the way.” Maggio knew at the time that his money included donations from the business owner. On or about July 8, 2013, Maggio’s campaign fundraiser received approximately $24,000 in donations from the business owner. Two days later—and after the campaign fundraiser and Maggio had communicated extensively regarding the litigation and the campaign—Maggio reduced the plantiff’s verdict to $1 million.
As part of his plea, Maggio admitted that his decision to remit the judgment was improperly influenced by the donations that his campaign received from the business owner. Maggio further acknowledged that he attempted to delete text messages between the campaign fundraiser and himself after the contributions from the business owner were disclosed by the media.
The maximum potential penalty for a violation of Title 18, United States Code, Section 666(a)(1)(B) (Bribery Concerning Programs Receiving Federal Funds) is up to ten years imprisonment, up to three years supervised release, and a fine of up to $250,000 or twice the pecuniary gain or loss. The Court will set a sentencing hearing at a later date.
The case was investigated by the FBI’s Little Rock Field Office, and is being prosecuted by Assistant U.S. Attorney Julie Peters of the Eastern District of Arkansas and Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section.
Three Individuals Indicted in Federal Feeding Program ConspiracyRead the Press Release
LITTLE ROCK – A former and one current Arkansas Department of Human Services (DHS) employee and one feeding program sponsor have been indicted for their roles in a conspiracy to steal federal money. Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced unsealing of an indictment and the arrest Thursday morning of Gladys Elise King, age 34, of England; Tonique D. Hatton, age 37 of North Little Rock; and Jacqueline D. Mills, age 39 of Helena on a 76-count Indictment.
The Indictment, returned by a Federal Grand Jury on December 11, 2014, charges Hatton, King, and Mills with conspiracy to fraudulently obtain United States Department of Agriculture (USDA) program funds. Additionally, Mills is charged with wire fraud, paying bribes, and engaging in money laundering. King and Hatton are also charged with accepting bribes.
According to the indictment, the USDA funds the Child and Adult Care Feeding Program, which includes an at-risk afterschool component. USDA also funds the Summer Food Service Program. In Arkansas, the feeding programs are administered by DHS. Sponsors who want to participate in the feeding programs must submit an application to DHS for approval. Once approved, they can provide meals as part of the feeding program and be reimbursed based on the number of eligible meals they serve.
The indictment states that Tonique Hatton and Gladys King worked for DHS, and part of their job was to determine eligibility of sponsors to participate in the feeding programs. Mills operated as a sponsor for feeding program. Hatton and King were responsible for approving Mills’ programs at various times.
The indictment alleges that Mills made bribe payments to DHS employees Hatton and King. In exchange for those bribes, Mills would submit inflated numbers of meals purportedly served from her sites. Hatton and King would provide protection from DHS scrutiny.
“As alleged in the Indictment, these three individuals and others were literally stealing money that was supposed to be used to feed poor and hungry children,” stated Thyer. “While I am pleased that we were able to uncover and prosecute this behavior, I am at the same time sickened that it could happen at all.”
“The Secret Service is committed to aggressively investigating those associated with this type of financially motivated crime,” stated Special Agent in Charge Brian Marr. “To steal from the mouths of hungry children in this state is unacceptable.”
“This crime directly targeted funds designated to feed disadvantaged children in Arkansas,” stated David T. Resch, Special Agent in Charge of the Little Rock FBI. “The partnership of the IRS, USDA, USSS and the FBI are committed to investigating and prosecuting these crimes to the fullest extent of the law.”
Special Agent in Charge Mary L. Lewis, Southwest Region of the United States Department of Agriculture – Office of the Inspector General stated, “I want to thank the U.S. Attorney’s Office, OIG special agents, and our investigative partners for their hard work on this investigation. When the integrity of nutrition programs for needy children is violated by criminal conduct, the Office of Inspector General will pursue justice to the fullest extent of the law.”
“These programs are designed to ensure financially disadvantaged children are provided with good nutritious meals throughout the year, they are not designed to enrich the program administrators,” stated Christopher A. Henry, Special Agent in Charge of the IRS- Criminal Investigation Nashville Field Office. “Individuals who engage in this type of fraud to line their own pockets with public funds should know they will not go undetected and will be held accountable.”
The statutory penalty for wire fraud and conspiracy to commit wire fraud is not more than 20 years imprisonment, not more than a $250,000 fine, or both, and not more than 3 years supervised release. The statutory penalty for receipt of bribes, paying bribes, and money laundering is not more than 10 years imprisonment, not more than a $250,000 fine, or both, and not more than 3 years supervised release.
The investigation is ongoing and is conducted by the United States Secret Service, Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigations, United States Department of Agriculture – Office of the Inspector General, and United States Marshals Service. Assisting with the arrests this morning were deputies from the Lonoke County Sheriff’s Office and officers and detectives from the North Little Rock Police Department. The case is being prosecuted by Assistant United States Attorneys Jana K. Harris and Allison W. Bragg.
An indictment contains only allegations. Defendants are presumed innocent until proven guilty.
United States Attorney Asks Court to Dismiss Remaining Counts of Indictment Against Former State Treasurer Martha ShoffnerRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, has filed a motion to dismiss the remaining counts of the Second Superseding Indictment against former Arkansas State Treasurer Martha Shoffner, age 70, of Newport, Arkansas.
Following a jury trial, on March 11, 2014, Shoffner was found guilty of six counts of extortion under color of official right, one count of attempted extortion under color of official right, and seven counts of receipt of a bribe by an agent of a state government receiving federal funds. A federal grand jury in the Eastern District of Arkansas had previously indicted Shoffner in a Second Superseding Indictment in February 2014, for ten counts of mail fraud. These additional charges were severed by the United States District Court and are set for trial on February 2, 2015.
The mail fraud charges in the Second Superseding Indictment which are the subject of the motion to dismiss alleged that Shoffner used $9,800.00 of campaign funds from her re-election campaign for Treasurer of the State of Arkansas for personal expenses, including clothing and cosmetics, on a Wells Fargo credit card from November 5, 2010, through October 9, 2011.
“As set forth in our motion, we have given this matter considerable and careful thought prior to announcing the decision today,” stated Thyer. “Based on our estimate of the anticipated sentencing guideline range that Ms. Shoffner faces as a result of the March 11th convictions and our expectation that if she was convicted on the mail fraud charges, there would be minimal, if any, impact on the sentencing guideline range, I have determined that the appropriate course for the United States is to dismiss these charges. My determination included careful consideration of the resources necessary to pursue a second trial,” Thyer went on to say. “What Ms. Shoffner did was wrong on many levels—not the least of which was the breach of the trust placed in her by the electorate. However, at this time, it is best to move forward with sentencing on the bribery and extortion convictions, and we anticipate presenting evidence related to the mail fraud at that time,” Thyer concluded.
Failure to File Federal Taxes Charges Levied Against North Little Rock ManRead the Press Release
LITTLE ROCK – Christopher R. Thyer, Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Christopher A. Henry, Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, Nashville Field Office, announced that an Information was filed, on Gregory Warren, age 52, a resident of North Little Rock, for five counts of failure to file his federal income tax returns with the IRS.
According to the information that was filed, Warren received taxable income of $199,165.00, $228,291.00, $108,198.00, $80,336.00 and $100,985.00, for tax years 2007, 2008, 2009, 2010 and 2011, respectfully, which required him to file federal income tax returns with the IRS for each year. Knowing he was required to file, Warren willfully failed to file his personal tax returns for 2007 through 2011.
"The IRS Criminal Investigation Division takes tax violations of law very seriously," said Special Agent in Charge Christopher A. Henry of the Nashville Field Office. “It is important for the American taxpayers to have confidence that when they file and pay their taxes, their neighbors and co-workers are doing the same.”
The statutory penalty for failure to file federal income tax returns is not more than 1 year imprisonment and/or not more than a $25,000 fine with not more than 1 year supervised release.
The investigation was conducted by IRS Criminal Investigation.
Note: An Information is only an allegation of wrongdoing. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
Former Arkansas State Police Lieutenant Sentenced to 135 Months’ Imprisonment for Drug ConspiracyRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, along with David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation (FBI) announced today that former Arkansas State Police Lieutenant Sedrick L. Reed, age 44, was sentenced to 135 months in prison for his role in a conspiracy to distribute and to possess with intent to distribute cocaine. The charge stemmed from an investigation by the Federal Bureau of Investigation’s ArkTrust Public Corruption Task Force with the full cooperation of the Arkansas State Police. The investigation was also referred to as Organized Crime and Drug Enforcement Task Force (OCDETF) operation “Diverted Justice.”
“Citizens of the Eastern District of Arkansas deserve to know that their law enforcement members are trustworthy law abiding citizens and when they are not, they will be held accountable for their illegal actions,” stated Thyer. “This sentence demonstrates that violating the public trust is taken seriously.”
Reed was charged in a five-count indictment handed down by a grand jury on August 7, 2013. On July 30, 2014, Reed pleaded guilty to participating in a conspiracy to distribute and to possess with intent to distribute controlled substances. The United States dismissed the remaining four counts against Reed upon acceptance of the guilty plea. Reed faced a potential sentence of not less than 10 years and up to life imprisonment; not less than 5 years and up to life supervised release; up to a $10 million fine, and a $100 special assessment. Reed also agreed to the forfeiture of bank accounts, real property, firearms, vehicles, and more than $30,000 in cash constituting proceeds of his illegal conduct.
At his plea hearing before U.S. District Court Judge Billy Roy Wilson, Reed admitted in open court to participating in a conspiracy to distribute between five and fifteen kilograms of cocaine between 2006 and 2013. Reed admitted that he abused a position of public trust in a manner that significantly facilitated the conspiracy. Reed also admitted to possessing a firearm during the conspiracy. Reed admitted to diverting drugs from a traffic stop and taking drugs from the ASP evidence locker. Reed further admitted that during the course of the conspiracy, he profited in excess of $200,000 from the resale of these stolen drugs.
The investigation was conducted by the FBI’s ArkTrust Public Corruption Task Force. It is being prosecuted by Assistant United States Attorneys Julie Peters and Chris Givens.
The remaining defendant in the indictment, Lamont Johnson, is set for trial before Judge Wilson on February 3, 2015.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
Joint Press Release by Arkansas United States Attorneys Relating to November 2014 ElectionsRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Connor Eldridge, United States Attorney for the Western District of Arkansas, announced today that Assistant United States Attorney (AUSA) Tricia Harris and First Assistant United States Attorney (FAUSA) Kenny Elser will lead the efforts of their Offices in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 4, 2014, general elections. AUSA Harris has been appointed to serve as the District Election Officer (DEO) for the Eastern District of Arkansas, and FAUSA Elser will serve as the DEO for the Western District of Arkansas. As DEOs, they are responsible for overseeing their District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.
In a joint statement, United States Attorneys Thyer and Eldridge said, “Every citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud. The Department of Justice will act promptly and aggressively to protect the integrity of the election process.”
The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on election day.
Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.
The franchise is the cornerstone of American democracy. We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice. In order to respond to complaints of election fraud or voting rights abuses on November 4, 2014, and to ensure that such complaints are directed to the appropriate authorities, AUSA/DEO Harris will be on duty in the Eastern District and FAUSA/DEO Elser will be on duty in the Western District while the polls are open. They can be reached by the public at the following telephone numbers: AUSA Harris- 501-340-2600; FAUSA Elser- 479-494-4071.
In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day. FBI special agents will be available on election day in Arkansas and can be reached by the public at 501-221-9100.
Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to [email protected] or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.
United States Attorneys Thyer and Eldridge said, “Ensuring free and fair elections depends in large part on the cooperation of the American electorate. It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to my Office, the FBI, or the Civil Rights Division.”
33 Defendants Charged in Oxycodone ConspiracyRead the Press Release
LITTLE ROCK - Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; along with David Downing, Assistant Special Agent in Charge of the Drug Enforcement Administration (DEA) announced the arraignment of 27 defendants in a 78-count indictment charging 33 defendants with prescription drug charges. One defendant, Timmy Larvale McCain, 38, of Little Rock, was also charged with a weapons charge.
“According to the 2007 National Survey on Drug Use and Health, non-medical use of prescription drugs is higher than abuse of cocaine, heroin and hallucinogens combined,” stated Thyer. “Just because oxycodone is prescribed medically, doesn’t make it a safe drug to abuse. Arkansas has consistently ranked among the top 10 states with the highest rate of non-medical use of pain relievers by 12-25 year olds since state estimates first began in 2002. My office is committed to support the work of DEA and other law enforcement partners by prosecuting those who set-up and run illegal pill distribution networks. This 78-count indictment against distributors in a Little Rock-based network demonstrates that commitment.”
“The abuse of prescription drugs, such as oxycodone, is a serious problem in our communities. All too often, this abuse leads to addiction, shattered lives, and even death. For the health and safety of our citizens, DEA and our local law enforcement partners will continue to target those who illegally obtain and distribute these potentially dangerous drugs. We hope that the arrests in this case serve as a reminder to anyone who might illegally divert pharmaceuticals that they will be held accountable for the harm they cause,” said DEA Assistant Special Agent in Charge David Downing.
Thirty-one of the 33 defendants have been arraigned this week. Twenty-seven were arraigned today by United States Magistrate Judge J. Thomas Ray after being issued summonses and arrest warrants. These defendants have been released from federal custody. Four other defendants -- Charolda Walton, 41; Felicia Holmes, 51; William James Johnson, 31; and Timmy U.S. Attorney’s Office News Release Page 2 of 5 Larvale McCain, 38, all of Little Rock -- were arrested in an early-morning operation on Monday. Those four have since been released on bond with special conditions of release. Michael Carrier will be arraigned November 20, 2014. One defendant has not yet been located and served with an arrest warrant.
The DEA investigation, which began in June 2013, used multiple undercover operations and numerous other law enforcement actions. Charolda Walton was determined to be a primary distributor of these pills, and operated out of her home in Little Rock.
Working with the Little Rock Police Department and the Saline County Sheriff’s Office, the DEA made 22 controlled purchases of Schedule II narcotics in this case, including oxycodone, morphine, and hydromorphone. All told, in this investigation the DEA purchased or seized approximately 2,230 oxycodone 30 mg pills. In this organization these pills were being sold for anywhere for $22 to $28 per pill, giving these pills a street value of approximately $49,060-$62,440. In addition, agents seized 22 morphine pills, 178 hydromorphone pills, and more than $21,000 in suspected drug proceeds.
The indictment charges 33 defendants in 78 separate counts stemming from a large-scale investigation into prescription pill trafficking in central Arkansas. The indictment was handed down by a Federal Grand Jury on October 7, 2014. The indictment was unsealed by the court on Tuesday, October 21, 2014. The counts include conspiracy to possess with intent to distribute oxycodone, distribution of oxycodone and morphine, possession with intent to distribute oxycodone and hydromorphone, possession of a firearm in furtherance of a drug trafficking crime, and the use of telephone to facilitate a drug trafficking crime. If convicted of conspiracy to distribute oxycodone each defendant will face a sentence of up to 20 years in prison.
The investigation was conducted by the DEA, with assistance from the Little Rock Police Department, the Benton Police Department, and the Saline County Sheriff’s Office. The case is being prosecuted by Assistant United States Attorneys Chris Givens and Alex Morgan.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
Arrests Dismantle Craighead County Methamphetamine Trafficking OrganizationRead the Press Release
LITTLE ROCK - Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; along with David Downing, Assistant Special Agent in Charge of the Drug Enforcement Administration (DEA); Jonesboro Police Department Chief Kenton Buckner; and Craighead County Sheriff Marty Boyd announced the unsealing of a 43-count indictment charging multiple defendants in Arkansas and California, with multiple drug charges. An investigation into a large-scale drug trafficking organization based in Jonesboro resulted in the early-morning arrests of ten defendants on charges involving the distribution of methamphetamine.
“The arrests today effectively dismantled this Jonesboro-based drug trafficking organization,” stated Thyer. “We not only made arrests here in Eastern Arkansas, but also have traffickers from San Jose, California and Michigan in custody. Together, with the DEA and our federal, state and local partners in Arkansas and across the nation, we will investigate, arrest and prosecute those who seek to bring meth into our neighborhoods.”
The investigation began in February 2013. Multiple undercover operations and numerous other law enforcement actions, including multiple seizures of methamphetamine were used during the investigation. All told, the DEA seized approximately 96 pounds of methamphetamine which has an estimated street value of $1.9 million.
Through the course of the investigation, DEA learned that Joseph Farrell was a large-scale methamphetamine dealer in the Jonesboro area, selling between 5 and 15 pounds of methamphetamine per week. Farrell had sources of supply for methamphetamine in both Blytheville and San Jose, California, and Farrell occasionally received shipments of methamphetamine and marijuana from his source in California through FedEx.
The indictment, unsealed today, was handed down by a Federal Grand Jury on October 8, 2014. The indictment charges 22 defendants in 43 separate counts. The counts include conspiracy to possess with intent to distribute more than 500 grams of methamphetamine, distribution of methamphetamine, possession with intent to distribute methamphetamine, and using a communication facility in furtherance of a drug-trafficking crime. If convicted of conspiracy to distribute more than 500 grams methamphetamine, each defendant will face a sentence of not less than 10 years to life imprisonment.
The investigation was conducted by the DEA, with assistance from multiple law enforcement agencies including: the Jonesboro Police Department, the Craighead County Sheriff’s Office, Arkansas State Police, and United States Marshal Service. The case is being prosecuted by Assistant United States Attorneys Chris Givens and Benecia Moore.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
Owner of Mountain Pure Water Found Guilty of Wire Fraud and Money Laundering ViolationsRead the Press Release
LITTLE ROCK, AR – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, Christopher A. Henry, Special Agent in Charge of the IRS-Criminal Investigation, and Scott Dennis, Special Agent in Charge of the Small Business Administration Office of Inspector General announced that John B. Stacks, owner of Mountain Pure Water, was found guilty on Thursday, October 9, 2014, by a jury on three counts of wire fraud, one count of submitting a false claim, and three counts of false statements. The jury was unable to reach a unanimous verdict concerning the three counts of money laundering. The Honorable J. Leon Holmes presided over the seven day trial and three days of jury deliberation in the United States District Court in Little Rock.
“In times of recovery after the destruction caused by recent tornados, people have depended on the help provided through Small Business Administration loans to rebuild their businesses,” stated Thyer. “Unfortunately, there are some who lie, cheat and steal from, essentially, their neighbors to obtain funds that should go toward recouping legitimate business losses. I am grateful that this jury has weighed the evidence in this case and found Mr. Stacks guilty of wire fraud, submitting a false claim and making false statements. This verdict is the culmination of many hours of investigation by the IRS and SBA OIG. Their efforts have brought this injustice to light and have righted a wrong perpetrated on local business owners.”
"Today's verdict is a direct result of the excellent partnership the IRS, the U.S. Attorney’s office and our law enforcement partners have in combating violations of Federal law," said Christopher A. Henry, Special Agent in Charge, IRS-Criminal Investigation. "Stealing from the government is not a victimless crime; it is a crime against the American public. This verdict should serve as a deterrent to those who might contemplate similar fraudulent actions."
“Today’s verdict sends a strong message that taxpayers have zero tolerance for fraud in disaster assistance programs,” said Special Agent-in-Charge Scott Dennis. “SBA disaster assistance loans are for persons and businesses that have suffered damage, not for persons seeking personal gain. I want to thank the U.S Attorney's Office and our law enforcement partners for their dedication and hard work throughout this investigation.”
Stacks was originally indicted on December 3, 2013, and charged with 3-counts of wire fraud, 3-counts of money laundering, 1-count of submitting a false claim to the Small Business Administration (SBA), and 4-counts of making a false statement.
According to evidence presented at trial, in 2009, Stacks obtained an SBA loan for $703,300 under false pretenses. Stacks claimed he had over $500,000 worth of Mountain Pure Water equipment at his farm in Damascus, Arkansas, that was destroyed when a tornado touched down in the area in May 2008. The wire fraud and money laundering charges stem from three transfers of money from the SBA in Kansas City, Missouri to Stacks’ General Account at Home Bank of Arkansas in Greenbrier. The false claim and statement charges are related to the Loan Authorization and Agreement and other related documents and statements Stacks submitted to the SBA to induce the SBA to make the loan.
Sentencing will be scheduled by the Court at a later date. Stacks faces a statutory maximum penalty for Wire Fraud of not more than 20 years; a statutory penalty for False Claim of not more than 5 years; and a statutory penalty for false statement of not more than 5 years of imprisonment.
The case was investigated by IRS-Criminal Investigation and the SBA Office of Inspector General. Assistant United States Attorney Angela Jegley and First Assistant United States Attorney Pat Harris prosecuted the case for the United States.
Forest Place Apartments’ Arsonist Sentenced to 16 Years in Federal PrisonRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced that Lacey Rae Moore, 44, who pleaded guilty to intentionally starting fires at Forest Place Apartments, including one that destroyed an entire building, was sentenced to 16 years in prison and ordered to pay more than $12 million in restitution on Friday.
Today, the Honorable Billy Roy Wilson sentenced Moore to nine years on Count 4 and seven years on Count 7, and then ordered that sentences be run consecutively for a total of 16 years, with five years of supervised release to follow. In addition, Judge Wilson ordered Moore to pay $12,558,802.82 in restitution, which accounts for the property damage to Forest Place as well as personal property insurance claims from multiple victims.
“Today’s sentence shows just how serious Lacey Moore’s crimes were and the harm it caused to the residents of Forest Place Apartments,” stated Thyer. “I hope today’s sentence will give some measure of closure to the many families that were impacted by these fires.”
On August 1, 2014, Moore pleaded guilty to Counts 4 and 7 of an eight-count indictment that charged her with the seven fires, plus the use of an unregistered explosive device in another fire at a Little Rock residence. Count 4 was for a May 16, 2013, fire at Forest Place Apartments in Little Rock that completely destroyed the North Building and forced the evacuation of 350-400 people. As a result of that fire at least 79 people were permanently displaced. A Little Rock Firefighter was injured suppressing the fire. Count 7 was for a June 28, 2013, fire in the South Building the forced the evacuation of 100 people and permanently displaced another 11.
The investigation was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, with substantial assistance from the Little Rock Fire Department, the Arkansas State Police and the Little Rock Police Department. The case is being prosecuted by Assistant United States Attorney Chris Givens.
Former Deputy Director of the Largest State Agency in Arkansas Pleads Guilty to Bribery SchemeRead the Press Release
Washington – A former deputy director of the Arkansas Department of Human Services (ADHS), a multi-billion dollar state agency, pleaded guilty today for providing official assistance in exchange for bribes from the owner of two mental health companies.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and First Assistant United States Attorney Patrick C. Harris of the Eastern District of Arkansas made the announcement.
Steven B. Jones, 49, of Marion, Arkansas, pleaded guilty to a two-count information charging him with conspiracy and bribery concerning programs receiving federal funds. A sentencing hearing is scheduled for April 2, 2015, before U.S. District Judge Billy Roy Wilson of the Eastern District of Arkansas.
According to his plea agreement, Jones served as deputy director of ADHS from approximately April 2007 until July 2013. While serving in that capacity, Jones solicited and accepted multiple cash payments and other things of value from the owner of two businesses that provided inpatient and outpatient mental health services to juveniles. This individual provided the cash payments and other things of value to Jones through the use of two intermediaries, a local pastor and a former county probation officer and city councilman.
As part of his plea, Jones admitted that in return for the bribes, he provided official assistance, including providing internal ADHS information about the individual’s businesses. Jones further admitted that he and other members of the conspiracy concealed their dealings by, among other things, holding meetings at restaurants in Memphis, Tennessee, or rural Arkansas, where they would not be easily recognized; funneling the cash payments through the pastor’s church; providing the bribe payments in cash so that the transactions would not be easily traceable; and speaking in code during telephone conversations.
The case was investigated by the FBI’s Little Rock Field Office, and is being prosecuted by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Patricia S. Harris and Angela S. Jegley of the Eastern District of Arkansas.
Fake Nurse Sentenced to 4-year Prison TermRead the Press Release
LITTLE ROCK, AR – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced today that United States District Judge Brian S. Miller sentenced Susan Elaine Boyce, 60, formerly of Pleasant Plains, Arkansas, to four years in prison to be followed by three years of supervised release. Judge Miller also ordered Boyce to pay $175,099.24 in restitution to the Searcy Special School District.
Boyce was indicted by a federal grand jury on September 5, 2012. The seven-count indictment charged her with wire fraud, aggravated identity theft and misuse of a social security number. Boyce used an Arkansas State Board of Nursing license number and a Social Security Number belonging to another person to obtain employment as a school nurse in Searcy, Arkansas, from the 2007-08 school year through the 2011-12 school year. On February 26, 2014, Boyce pleaded guilty to one count of wire fraud, one count of aggravated identity theft, and one count of misuse of a Social Security Number.
The matter was investigated by Special Agent Jeffrey Hannah of the Office of the Inspector General for the U.S. Department of Health and Human Services and Special Agent Mark McElrath of the Office of the Inspector General of the Social Security Administration. Assistant United States Attorney Alexander Morgan prosecuted the case for the United States.
Arrests Dismantle Clinton-based Drug Trafficking OrganizationRead the Press Release
LITTLE ROCK, AR – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; along with David Downing, Assistant Special Agent in Charge of the Drug Enforcement Administration (DEA); 20th Judicial Prosecuting Attorney Cody Hiland; and Van Buren County Sheriff Scott Bradley announced an investigation into a large-scale drug trafficking organization based in Clinton resulted in the early-morning arrests of multiple defendants on charges involving possession with intent to distribute methamphetamine, distribution of methamphetamine, and weapons possession. Ten of the defendants were already in state custody on separate charges.
“Today, a major drug trafficking organization in Van Buren County was dismantled,” stated Thyer. “This organization put the citizens and children of Clinton and the surrounding community at risk every day. Through the efforts of law enforcement at all levels, we have brought federal charges against these drug-dealing criminals to get them off and keep them off the streets for years to come.”
“Methamphetamine destroys the lives of its abusers and has far-reaching negative effects in the communities where it takes hold,” said DEA Assistant Special Agent in Charge David Downing. “By targeting local distribution networks in Arkansas, DEA and our federal, state and local law enforcement partners are working to reduce overall crime and improve the quality of life for area residents. The numerous arrests and seizures in this investigation are the result of our close cooperation and part of our on-going efforts to ensure that drug traffickers are held responsible for the harm they cause.”
Prosecutor Cody Hiland added, “today's arrests are the culmination of an 18 month criminal investigation that began with a local tire shop in Clinton. I think today's operation certainly highlights the value of our local drug task forces and the virtue of working with other state and federal law enforcement agencies in helping make our communities more safe. The operation today is historic in scope and size and its impact on the illegal drug trade in Van Buren County will continue to be felt in the years to come.”
The DEA and 20th Judicial Drug Task Force investigation began in January 2011. Multiple undercover operations and numerous other law enforcement actions, including multiple seizures of methamphetamine were used during the investigation. All told, the Task Force purchased and seized more than 6 pounds of methamphetamine from the Jeffery Weaver drug trafficking organization (DTO) through controlled purchases and search warrants. The DEA and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) also seized a total of 52 firearms. In addition, the defendants charged in the indictment are responsible for distributing or possessing over 300 pounds of methamphetamine.
The indictment, unsealed this afternoon, was handed down by a Federal Grand Jury on September 11, 2014. The indictment charges 34 defendants in 45 separate counts. The counts include conspiracy to possess with intent to distribute more than 500 grams of methamphetamine, aiding and abetting the distribution of methamphetamine, felon in possession of firearms, possession of a firearm in furtherance of a drug trafficking offense, and the use of telephone to facilitate a drug trafficking crime.
If convicted of conspiracy to distribute more than 500 grams of methamphetamine each defendant will face a sentence of not less than 10 years to life imprisonment.
The investigation and prosecution of this case is a coordinated effort through the David G. Wilhelm OCDETF Strike Force and the High Intensity Drug Trafficking Areas (HIDTA) and was conducted by the DEA and the 20th Judicial Drug Task Force with assistance from several law enforcement agencies including the ATF, Arkansas State Police, Van Buren County Sheriff’s Office, Arkansas National Guard, Conway Police Department, and the United States Marshal Service. The case is being prosecuted by Assistant United States Attorneys Kristin Bryant and Stephanie Mazzanti.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
WEAVER DTO INDICTMENT
DEFENDANTS/CHARGES
Conspiracy to possess with intent to distribute more than 500 grams of methamphetamine:
- JEFFERY WEAVER;
- BRIAN MAHANEY;
- RICHARD BRIAN REYNOLDS;
- NATHAN LESTER RAMER;
- CHARLES NEIL WEAVER;
- MEGAN RILEY OXLEY;
- JAMES ZACHARY CALDWELL;
- ISAAC DE JESUS JAUREGUI-ESTRADA;
- ISAAC M JAUREGUI,
- MICHAEL ALLEN, aka Hippie;
- JENNIFER JAMES;
- JEREMY LEE PECK;
- JOHN B. BLACK;
- DAVID WAYNE HEASLET;
- KIM DAVIDSON;
- JEREMY DALE DUNIGAN;
- CYRUS ADRIAN DOWELL;
- MARNI LEIGH CHAGALA;
- JERALD GLENN BELL;
- AMBER SUE THARP;
- JAMES PERRY KNOTT, aka Uncle Jimmy
- JANEL DAWN HATCHETT
- SORRELL JOE HONEA, JR.,
- RICHARD JOE LEE,
- LOUIS MICHAEL TICHELI,
- CRYSTAL MICHELLE LANGRELL,
- FRED HAROLD WESSELL,
- JOSH DENHAM,
- THURMAN KIRKENDOLL,
- DENNIS PATRICK HENNEBERRY,
- DEREK CHARLES STILL,
- HIRO SASAKI, and
- DON ALLEN PEARSON
Felon in possession of a firearm:
- NATHAN LESTER RAMER
- JAMES ZACHARY CALDWELL
- DENNIS PATRICK HENNEBERRY
- MICHAEL ALLEN
Possession of a Firearm in Furtherance of a Drug Trafficking Offense:
- MICHAEL ALLEN
- JENNIFER JAMES
- ISAAC M. JAUREGUI
- ISAAC DE JESUS JAUREGUI-ESTRADA
- JAMES ZACHARY CALDWELL
Use of a communication facility:
- CRYSTAL MICHELLE LANGRELL
- CHARLES NEIL WEAVER
- SORRELL JOE HONEA, JR.
- JEFFERY WEAVER
STATUTORY SENTENCES
Conspiracy to possess with intent to distribute and to distribute more than 500 grams of methamphetamine is punishable by not less than 10 years, not more than life, incarceration in the Bureau of Prisons with a possible fine of up to $10,000,000, and not less than 5 years supervised release.
Conspiracy to possess with intent to distribute and to distribute more than 50 grams but less than 500 grams of methamphetamine is punishable by not less than 5 years, not more than 40 years’ incarceration in the Bureau of Prisons with a possible fine of up to $5,000,000, and not less than 4 years supervised release.
Possession of a firearm by a felon is punishable by not more than 20 years’ incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 3 years supervised release.
Possession of a Firearm in Furtherance of a Drug Trafficking Offense is punishable by not less than 5 years to life incarceration in the Bureau of Prisons, consecutive to any sentence imposed, with a possible fine of up to $250,000, and not more than 5 years of supervised release.
Use of a communication facility to facilitate a drug trafficking crime is punishable by not more than 4 years’ incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 1 year supervised release.
Two Sentenced for Structuring Financial TransactionsRead the Press Release
LITTLE ROCK, AR – Christopher R. Thyer,United States Attorney for the Eastern District of Arkansas, and Christopher A. Henry, Special Agent in Charge of the IRS-Criminal Investigation Nashville Field Office announced today that Unites States District Judge D.P. Marshall, Jr. sentenced Anas N. Atrach of McAllen, Texas, to 3 years’ probation, the first six months of probation TO be home detention with electronic monitoring. Atrach was also ordered to serve 300 hours of community service with at least 100 hours each year. A $5,000 fine plus interest was imposed to be paid immediately or at least $500 per month. A Cadillac Escalade was forfeited. Anas N. Atrach pled guilty to one count of Conspiracy to Structure Currency Transactions on April 10, 2014.
Special Agent in Charge Henry commented, “Structuring financial transactions to avoid currency reporting requirements is a criminal violation of federal law under the Bank Secrecy Act. Deliberately avoiding BSA requirements is a form of money laundering that will be vigorously investigated by IRS Criminal Investigation."
In March 2013, Doris Ann Miles, Anas N. Atrach, and Anwar Alatrach were indicted by a federal grand jury for conspiracy to structure currency transactions, structuring, and causing a business to file a report containing a material omission and/or misstatement.
The charges in the Superseding Indictment, state that in July 2011, Doris Ann Miles, Anas N. Atrach, and Anwar Alatrach knowingly and intentionally conspired with each other to structure currency transactions with financial institutions in order evade the reporting requirements of those financial institutions. The structured currency was used to purchase a 2011 Cadillac Escalade in the amount of $82,035. The Escalade was ordered and a down payment was made with a $9,800 cashier’s check from an e-Banking account at Bank of America in Little Rock on July 22, 2011. On July 25, 2011, Miles deposited and then purchased a cashier’s check for $9,800. On July 26th, Miles and Anas N. Atrach both gave separate unnamed individuals $9,800 cash to purchase a cashier’s check. On July 27, 2011, Miles gave another two individuals cash and Atrach gave two individuals cash to purchase cashier’s checks. That same day, Anwar Alatrach deposited $9,800 in cash at a bank in Little Rock to purchase a cashier’s check. All of the cashier’s checks were taken to Parker Cadillac, Inc. on July 27, 2011. The next day, July 28th, Miles and Alatrach picked up the 2011 Escalade after Alatrach paid the remaining $200 balance with a VISA checkcard.
On January 29, 2014, Doris Ann Miles, 53, of Eldorado, pled guilty to one count of Conspiracy to Structure Currency Transactions. Miles was sentenced May 15, 2014, to 3 years’ probation and 120 hours of community service. She is required to perform at least 40 hours of community service each year. The forfeiture of the Cadillac Escalade is final as to Miles also.
After his indictment, Anwar Alatrach did not appear for his initial appearance and the judge then issued a bench warrant for his arrest. He is currently a fugitive.
The case was investigated by IRS-Criminal Investigation with valuable assistance from the Benton Police Department. Assistant United States Attorneys Jana K. Harris and Assistant United States Attorney Cameron C. McCree prosecuted the case for the United States.
Former President of Life Insurance Company Pleads Guilty to Embezzlement ChargeRead the Press Release
LITTLE ROCK, AR – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation; and Deborah Perry, Regional Director of the United States Department of Labor, Employee Benefits Security Administration; announced today that John Mathis Lile, III, age 56, of Little Rock has pleaded guilty to theft or embezzlement in connection with health care.
Lile was President of the now defunct Cosmopolitan Life Insurance Company (“Cosmo”), which funded and managed self-insurance health care plans for small businesses around the State. Last April, the Grand Jury for the Eastern District of Arkansas indicted Lile for misusing Cosmo funds. Appearing today before the Honorable Susan Webber Wright in United States District Court, Lile admitted that he abused his position by using a company-issued American Express credit card to pay for thousands of dollars in personal expenses over a three-year period. His charges ran the gamut, including family vacations to Las Vegas, Destin, and Italy, restaurant supplies, cruises, tanning, Hannah Montana tickets, and outlet shopping, among numerous other expenses.
Under the terms of the plea agreement, Lile has agreed to pay full restitution to Cosmo and to serve one year and one day in federal prison. In return, the United States agreed to dismiss a related charge tied to AIBA. The prison sentence and restitution will be imposed by the Court at a later date.
“It is unconscionable for executives to abuse their positions of power by stealing from the very companies that they are bound to serve,” stated Thyer. “The negative consequences of such greed are still greater when those companies play important roles in the health care industry. Honest, hard-working people must be able to trust that the organizations upon which they rely for healthcare will not be bled dry from the inside.”
“I hope this sends a clear message to all who sponsor or transact business with employee benefit plans that the federal government will aggressively pursue those who commit crimes against employees and retirees of private-sector health and pension plans” said Perry.
SAC Resch added, “the FBI enjoys a strong partnership with the United States Department of Labor Employee Benefits Security Administration. We will continue to work with the Department of Labor and the United States Attorney’s Office to aggressively pursue these types of crimes.”
The FBI and the United States Department of Labor led the investigation. First Assistant United States Attorney Patrick C. Harris and Assistant United States Attorney Alexander D. Morgan prosecuted the case for the United States.
United States Attorney Asks Court to Dismiss Federal Child Enticement IndictmentsRead the Press Release
LITTLE ROCK, AR – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, has filed motions with the appropriate district courts to dismiss the federal indictments against Kenneth Wayne Thompson, age 23, of Bradford, Arkansas; Benjamin Cade Vardell, age 20, of Jonesboro, Arkansas; and Lucas Aaron Oden, age 20, of Paragould, Arkansas. The Indictments charged each defendant with one count of using facilities and means of interstate commerce to entice a minor to engage in sexual activity in violation of Title 18, United States Code, Section 2422(b). Prior to filing the motions to dismiss, all three defendants pleaded guilty to sexual assault in the second degree and were sentenced in Craighead County, Arkansas, Circuit Court.
“When I was sworn in as United States Attorney, a friend sent me a copy of the United States Supreme Court’s opinion in United States v. Berger. In that opinion, Justice Sutherland writes:
The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done. As such, he is in a peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt shall not escape or innocence suffer. He may prosecute with earnestness and vigor—indeed, he should do so. But, while he may strike hard blows, he is not at liberty to strike foul ones. It is as much his duty to refrain from improper methods calculated to produce a wrongful conviction as it is to use every legitimate means to bring about a just one.
I strive each day to live up to this ideal.” Thyer stated. “With that in mind, I do not believe that justice will be done in these cases by continuing these particular federal prosecutions. While I am firmly convinced that the defendants’ conduct was unlawful, I do not believe that a possible federal conviction and the ten-year mandatory minimum sentence that would accompany such a conviction would serve the ends of justice. For that reason, I have chosen to exercise my prosecutorial discretion and have directed my office to file motions to dismiss in each of these cases.” Thyer went on to say. “While neither I personally nor any member of my office took any position on the sentences received by these defendants in state court, I personally believe that they were appropriate based on the facts of the cases as I know them.” Thyer concluded.
23 Arrests Made Today in 62-count Federal Drug Trafficking IndictmentRead the Press Release
LITTLE ROCK, AR – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; along with David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation (FBI); and Little Rock Police Department Chief Kenton Buckner announced the unsealing of a 62-count indictment charging multiple defendants in Arkansas, Georgia, Texas and Tennessee, with multiple drug, weapons and money laundering charges. An investigation into a large-scale drug trafficking organization based in Little Rock resulted in the early-morning arrests of 22 defendants on charges involving distribution of cocaine, crack cocaine, and marijuana, weapons possession, and money laundering charges. 20 arrests were made in Little Rock; one, Christian White, was arrested in the Mesquite/Dallas, Texas area; and one, Rachel Green, was arrested in Atlanta, Georgia. Three; Michael Dawkins, Rodriques Davis and Richard Beason, are still at large.
“These large-scale investigations and ultimate arrests take a well-planned coordinated effort by many law enforcement partners on the federal, state and local levels,” stated Thyer. “We are fortunate to have good working relationships where drug trafficking organizations such as this one are dismantled. Not only are the drugs taken off the street, but the associated weapons and criminal enterprise is removed from our neighborhoods.
“We are proud of this partnership which remains focused on dismantling the violent criminal enterprises which attempt to root their networks within our communities,” said Special Agent In Charge David T. Resch of the FBI Little Rock Field Office. “Today’s arrests are the culmination of a long term collaboration between the Little Rock, Benton, and Sherwood Police Departments, as well as the Pulaski County Sheriff’s Department, U.S. Marshals, Arkansas National Guard, Arkansas State Police, the US Attorney’s office, and the FBI.”
“Today’s events provide an excellent example of the partnerships between local, county, state, and federal agencies. We greatly appreciate the FBI and their continued support for this critical mission,” said Chief Kenton Buckner of the Little Rock Police Department.
The FBI investigation began in January 2013. Multiple undercover operations and numerous other law enforcement actions, including multiple seizures of cocaine and crack cocaine were used during the investigation. All told, the FBI purchased more than 1.75 kilos of cocaine from the Freddie Brewster drug trafficking organization (DTO) in a dozen controlled purchases. In addition, agents seized more than nine ounces of crack cocaine and more than 165 pounds of marijuana.
The Brewster DTO was based out of Brewster’s Used Auto and Detail shop on Forbing Road in southwest Little Rock. Included in the indictment were several forfeiture counts which called for the forfeiture of multiple vehicles used by the Freddie Brewster organization, including the inventory of the used car shop. As part of the operation on Tuesday more than 20 vehicles and more than $35,000 in drug proceeds from multiple bank accounts was seized.
The indictment was handed down by a Federal Grand Jury on September 11, 2014. The indictment charges 25 defendants in 62 separate counts. The counts include conspiracy to possess with intent to distribute more than 5 kilograms of cocaine, conspiracy to possess with intent to distribute crack cocaine, conspiracy to possess with intent to distribute marijuana, aiding and abetting the distribution of cocaine, felon in possession of firearms, money laundering, and the use of telephone to facilitate a drug trafficking crime. If convicted of conspiracy to distribute more than 5 kilograms of cocaine each defendant will face a sentence of not less than 10 years to life imprisonment.
The investigation was conducted by the FBI, with assistance from multiple law enforcement agencies including: the Little Rock Police Department, Benton Police Department, Sherwood Police Department, Pulaski County Sheriff’s Office, Arkansas National Guard, Arkansas State Police, Homeland Security Investigations, and United States Marshal Service. The case is being prosecuted by Assistant United States Attorneys Chris Givens and Benecia Moore.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
BREWSTER DTO INDICTMENT
DEFENDANTS/CHARGES
Conspiracy to possess with intent to distribute cocaine:
- Freddie Eugene BREWSTER, 30, Little Rock
- Alton Elijah GIVENS, 30, Little Rock
- Christopher Lamont JONES, 41, Little Rock
- Thomas Stacy CAFFREY, 42, Mabelvale
- Richard BEASON, 42, West Memphis
- Tommie ICE, 24, Little Rock
- Clarence ALLEN, 56, Little Rock
- Rachel LEWIS, 34, Little Rock
- Ladeitrick HAMPTON, 33, North Little Rock
- Ashley RAMAGE, Pine Bluff
- Linda BREWSTER, 52, Little Rock
- David BOWMAN, JR., 40, Little Rock
- D’Angelo CANNON, 29, Mabelvale
- Michael Deshun DAWKINS, 27, Little Rock
- Verna THOMPSON, 35, Conway
- Brunson Jay TAYLOR, 29, Little Rock
- Charles OLIVER, 57, Little Rock
- Taquila SHOTO, 27, Hope
- Freddie Eugene BREWSTER, 30, Little Rock
- Alton Elijah GIVENS, 30, Little Rock
- Thomas Stacy CAFFREY, 42, Mabelvale
- Richard BEASON, 42, West Memphis
- Darrell GREEN, 31, Camden
- Willie Joseph TYLER, JR., 37, Little Rock
- Ashley RAMAGE, Pine Bluff
- David BOWMAN, JR., 40, Little Rock
- Charles OLIVER, 57, Little Rock
- Clinton BREWER, 41, Benton
- Rodriques D’Angelo DAVIS, 30, Little Rock
Conspiracy to possess with intent to distribute marijuana:
- Freddie Eugene BREWSTER, 30, Little Rock
- Jennifer MAY, 38, Sherwood
- Christian WHITE, 24, Mesquite, Texas
Possession with intent to distribute and distribution of cocaine:
- Freddie Eugene BREWSTER, 30, Little Rock
- Alton Elijah GIVENS, 30, Little Rock
- Christopher Lamont JONES, 41, Little Rock
- Darrell GREEN, 31, Camden
- Rachel LEWIS, 34, Little Rock
- David BOWMAN, JR., 40, Little Rock
Possession with intent to distribute crack cocaine:
- Darrell GREEN, 31, Camden
Felon in possession of a firearm:
- Alton Elijah GIVENS, 30, Little Rock
Money laundering:
- Christina Akins BREWSTER, 27, Little Rock
Use of a communication facility:
- Freddie Eugene BREWSTER, 30, Little Rock
- Alton Elijah GIVENS, 30, Little Rock
- Christopher Lamont JONES, 41, Little Rock
- Thomas Stacy CAFFREY, 42, Mabelvale
- Richard BEASON, 42, West Memphis
- Darrell GREEN, 31, Camden
- Tommie ICE, 24, Little Rock
- Clarence ALLEN, 56, Little Rock
- Willie Joseph TYLER, JR., 37, Little Rock
- Ladeitrick HAMPTON, 33, North Little Rock
- Ashley RAMAGE, Pine Bluff
- David BOWMAN, JR., 40, Little Rock
- D’Angelo CANNON, 29, Mabelvale
- Michael Deshun DAWKINS, 27, Little Rock
- Verna THOMPSON, 35, Conway
- Brunson Jay TAYLOR, 29, Little Rock
- Charles OLIVER, 57, Little Rock
- Clinton BREWER, 41, Benton
- Rodriques D’Angelo DAVIS, 30, Little Rock
- Taquila SHOTO, 27, Hope
STATUTORY SENTENCES
Conspiracy to possess with intent to distribute and to distribute more than 5 kilograms of cocaine is punishable by not less than 10 years, not more than life, incarceration in the Bureau of Prisons with a possible fine of up to $10,000,000, and not less than 5 years supervised release.
Conspiracy to possess with intent to distribute and to distribute more than 500 grams but less than 5 kilograms of cocaine is punishable by not less than 5 years, not more than 40 years incarceration in the Bureau of Prisons with a possible fine of up to $5,000,000, and not less than 4 years supervised release.
Conspiracy to possess with intent to distribute and to distribute less than 500 grams of cocaine is punishable by not more than 20 years incarceration in the Bureau of Prisons with a possible fine of up to $1,000,000, and not less than 3 years supervised release.
Conspiracy to possess with intent to distribute and to distribute more than 280 grams of crack cocaine is punishable by not less than 10 years, not more than life, incarceration in the Bureau of Prisons with a possible fine of up to $10,000,000, and not less than 5 years supervised release.
Conspiracy to possess with intent to distribute and to distribute more than 28 grams but less than 280 grams of crack cocaine is punishable by not less than 5 years, not more than 40 years incarceration in the Bureau of Prisons with a possible fine of up to $5,000,000, and not less than 4 years supervised release.
Conspiracy to possess with intent to distribute and to distribute less than 28 grams of crack cocaine is punishable by not more than 20 years incarceration in the Bureau of Prisons with a possible fine of up to $1,000,000, and not less than 3 years supervised release.
Conspiracy to possess with intent to distribute more than 50 kilograms but less than 100 kilograms of marijuana is punishable by not more than 20 years incarceration in the Bureau of Prisons with a possible fine of up to $1,000,000, and not less than 3 years supervised release.
Distribution of less than 500 grams of cocaine is punishable by not more than 20 years incarceration in the Bureau of Prisons with a possible fine of up to $1,000,000, and not less than 3 years supervised release.
Possession with the intent to distribute less than 500 grams of cocaine is punishable by not more than 20 years incarceration in the Bureau of Prisons with a possible fine of up to $1,000,000, and not less than 3 years supervised release.
Possession with intent to distribute more than 28 grams but less than 280 grams of crack cocaine is punishable by not less than 5 years, not more than 40 years incarceration in the Bureau of Prisons with a possible fine of up to $5,000,000, and not less than 4 years supervised release.
Possession of a firearm by a felon is punishable by not more than 20 years incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 3 years supervised release.
Use of a communication facility to facilitate a drug trafficking crime is punishable by not more than 4 years incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 1 year supervised release.
Money laundering is punishable by not more than 20 years incarceration in the Bureau of Prisons with a possible fine of up to $500,000, and not more than 3 years supervised release.
Former Little Rock Tax Preparer Pleads Guilty to Assisting in the Preparation of Fraudulent Tax Returns Admits to over $1 Million Loss to GovernmentRead the Press Release
Little Rock – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Christopher A. Henry, Special Agent in Charge of the IRS-Criminal Investigation Nashville Field Office announced today Christopher T. Craig, 47, formerly of Little Rock, now of Atlanta, Georgia, waived indictment and pled guilty to an Information charging him with two counts of aiding and assisting in the preparation of fraudulent income tax returns.
IRS Criminal Investigation Special Agent in Charge Christopher A. Henry said, "While most return preparers provide excellent service to their clients, a few unscrupulous tax preparers file false and fraudulent returns to defraud the government, the tax-paying public and their own clients. The defendant in this investigation wreaked havoc on the integrity of our tax system in a very short period of time. Taxpayers should be selective in choosing a return preparer, and have confidence knowing that person will prepare accurate tax returns and safeguard their financial information."
Craig admitted that on April 30, 2010, and March 1, 2012, he prepared false employment tax returns, Forms 941, on behalf of other taxpayers. The returns were false and fraudulent, in that, unknown to the taxpayers, Craig filed the returns in a way that reduced the amount of Federal withholdings the taxpayers owed to the IRS. Craig collected payments from the taxpayers for the correct amount of employment taxes, but diverted to himself the difference between the correct amount owed and the amount paid to the IRS. For these two returns, Craig diverted to himself a total of $43,280.50; employment tax payments he collected from the taxpayers which he should have paid over to the IRS.
Craig admitted that the total loss to the government was $1,092,177.79 as a result of his fraudulent conduct
Craig faces a maximum penalty of not more than three years in prison on each of the two counts and/or a fine of up to $500,000. The sentencing date will be set by the court.
This investigation was conducted by IRS Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Patricia S. Harris.
Heber Springs Man Pleads Guilty to Federal Drug Conspiracy ChargeRead the Press Release
Little Rock – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas and Raymond R. Parmer, Jr., Special Agent in Charge of Homeland Security Investigations (HSI) New Orleans, announced that Christopher Arnold Hogan, 47, of Heber Springs pleaded guilty to a federal conspiracy charge related to possession with intent to distribute of 246 grams of Methylone, commonly referred to as “bath salts.”
“Bath salts, the common name for the drugs Christopher Hogan was distributing in the Heber Springs area, are extremely dangerous drugs,” stated Thyer. “They mimic the effects of commonly recognized drugs, such as methamphetamine and MDMA, also known as Ecstacy, but they are more potent and have a greater effect on the user. Through the coordinated efforts of the Cleburne County Sheriff’s Office, Homeland Security Investigations and the United States Postal Inspection Service and the prosecutors in our office, this case has dismantled a drug distribution ring that was threatening the lives of teenagers and young adults in and around Heber Springs.”
“The illegal importation and distribution of bath salts is not only dangerous due to the drug itself, but also because users face potentially deadly contamination from toxic substances added by unregulated backroom manufacturers,” said Raymond R. Parmer Jr., special agent in charge of HSI New Orleans. "Bath salts users frequently require emergency medical treatment, and HSI along with its law enforcement partners will continue to aggressively investigate and seek prosecution of anyone seeking to illegally import and distribute these dangerous illegal drugs."
On July 11, 2012, a grand jury indicted Hogan and five other defendants in an eight count Indictment charging conspiracy as well as possession with intent to distribute and distribution of Methylone, Pentedrone, MDMA, and MDPV. These synthetic narcotics are Schedule I controlled substances or analogs of Schedule I controlled substance, which are illegal to possess and which have no legitimate consumer use.
At the plea hearing before Judge Susan Webber Wright, Assistant United States Attorney Anne Gardner stated that in June, 2011, the Cleburne County Sheriff’s Office was investigating the distribution of synthetic narcotics, generally called “bath salts” in the Heber Springs area. The Sheriff’s Department determined the source for the bath salts was Hogan. In July, 2011, a search warrant was obtained for Hogan’s residence, and evidence of synthetic drug manufacturing, specifically a synthetic cannabinoid, JWH-018, was seized. Hogan was charged in state court and made bond.
In January, 2012, the Department of Homeland Security Investigations intercepted a package in the mail coming from China addressed to Hogan. The package contained Pentedrone, a controlled substance analog of methcathinone. As the investigation continued, it was discovered that another package from China addressed to Hogan had been seized in San Diego, California in June, 2011, during a routine border interdiction of suspicious packages. This package was found to contain 246 grams of Methylone. HSI continued their joint investigation with the Cleburne County Sheriff’s Office and the United States Postal Inspection Service throughout the Spring of 2012, with confidential informants making controlled purchases of Pentedrone from Hogan and others who were obtaining the substance from Hogan.
A number of Hogan’s distributors were charged and pleaded guilty in this case. AUSA Gardner stated that if the charges against Hogan were to be tried in court, the co-defendants would testify that Hogan was receiving distributable quantities of controlled substance analogs that he ordered over the Internet from China. They would further testify that Hogan discussed with them that as long as the substance had a label stating it was not for human consumption, that they could not be prosecuted for distributing the substance. The witnesses would testify that they knew, and the defendant knew, that in fact the substances were intended to be ingested by the people who purchased them to get high.
Hogan faces maximum penalties of not more than 20 years imprisonment, a fine of not more than $1,000,000, and at least 3 years of supervised release following release from prison.
This case was investigated by the Cleburne County Sheriff’s Office, Homeland Security Investigations and the United States Postal Inspection Service. The case is being prosecuted by Assistant United States Attorney Anne Gardner.