Western District of Arkansas
Press releases recorded for this federal judicial district.
Van Buren Man Sentenced to 30 Years in Federal Prison for Interstate Transportation of A MinorRead the Press Release
FORT SMITH – A Van Buren man was sentenced yesterday to 360 months in prison followed by 10 years of supervised release on one count of Transportation of a Minor with Intent to Engage in Criminal Sexual Activity. The Honorable Judge P. K. Holmes III presided over the sentencing hearing in the U.S. District Court in Fort Smith.
According to court documents, in September of 2014, Jeffrey Callen Gonzagowski Jr., 39, transported a minor, across state lines from Mt Ida, Arkansas to Oklahoma. During this time Gonzagowski sexually assaulted the minor. Gonzagowski was arrested in December 2020 and pled guilty in March 2021.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The Federal Bureau of Investigations investigated the case.
Assistant U.S. Attorney Tyler Williams prosecuted the case for the United States.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Arkansas Man Sentenced to 9 Years in Federal Prison for Drugs and Firearm SalesRead the Press Release
FAYETTEVILLE – A Marvell man was sentenced today to 108 months in prison followed by three years of supervised release on one count of Distribution of a Controlled Substance Cocaine and one count of Use and Carry of a Firearm During and in Relation to a Drug Trafficking Offense. The Honorable Judge Timothy L. Brooks presided over the sentencing hearing in the United States District Court in Fayetteville.
According to court documents, On February 26, 2020, detectives with the Fourth Judicial District Drug Task Force (DTF) conducted a controlled purchase of cocaine, as well as a firearm, from Katestrant Barefield, 33, in Washington County Arkansas.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The Fourth Judicial District Drug Task Force investigated the case.
Assistant U.S. Attorney David Harris prosecuted the case.
This case was prosecuted as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
Florida Dentist Pleads Guilty in Public Corruption Scheme Involving Former Arkansas State SenatorRead the Press Release
FAYETTEVILLE - A Florida dentist, formerly of Arkansas, pleaded guilty today to one count of conspiracy to commit honest services fraud in a scheme with former Arkansas State Senator Jeremy Hutchinson that occurred between 2014 and 2016.
U.S. District Judge Timothy L. Brooks presided over the change of plea hearing, in which Benjamin Gray Burris, age 49, pleaded guilty to count one of an Indictment issued by a grand jury charging him with conspiracy to commit honest services fraud. Burris was charged with additional counts of honest services wire fraud, but according to the terms of the plea agreement, those charges will be dismissed at sentencing.
According to court documents, between February of 2014 through November of 2016, Burris was the owner of several orthodontic clinics and practiced as an orthodontist through Arkansas. The scheme began when on February 27, 2014, Burris, State Senator Jeremy Hutchinson, and others met for a dinner at a Little Rock restaurant and discussed Burris’s legislative objectives and hiring Hutchinson as Burris’s corporate legal counsel. Jeremy Hutchinson, who then represented state Senate District 33, comprised of portions of Pulaski and Saline County, Arkansas, stated that as part of any arrangement there needed to be “real legal work.” In his plea agreement, Burris admitted that part of his intent in hiring Hutchinson was to enable Burris to influence and request official action from Hutchinson on legislative issues and other matters as the need arose. Throughout the course of their arrangement, Burris’s legal entities paid Hutchinson Law Firm an approximate total of $157,500 at a rate of approximately $5,000 per month as a general retainer and Hutchinson was assigned legal work.
Specifically, Burris sent Hutchinson an email outlining Burris’s “Legislative Objectives” in late February of 2014 in which Burris stated that he wanted specialty restrictions on orthodontists removed. On January 26, 2015, Hutchinson filed a shell bill in the Arkansas Senate entitled “An Act to Clarify the Laws Governing Dental Practice.” Later on, April 6, 2015, Hutchinson filed a related Interim Study Proposal with the Senate Committee on Public Health, Welfare, and Labor. On September 22, 2015, Hutchinson filed another Interim Study Proposal (ISP-2015-154) on the subject. This ISP, among other things, proposed to remove the specialist restriction for orthodontists. According to text messages cited in Burris’s plea agreement, in 2016 Burris texted Hutchinson complaining about a lack of “ROI” also known as “return on investment” in his arrangement with Hutchinson and he requested specific updates on legislative matters. ISP-2015-154 was eventually filed as House Bill 1250 on January 23, 2017, after Hutchinson claimed a belated conflict, in the 91st General Assembly of the State of Arkansas, passed, and was later signed into law on or about March 15, 2017.
Burris sold his businesses and moved to Florida in the spring of 2017 and has not practiced in Arkansas since that time.
“This conviction for a bribe payor is an important milestone for the people of the State of Arkansas in our lengthy public corruption investigation,” said Acting United States Attorney David Clay Fowlkes. “While the bribery conduct of several members of the Arkansas Legislature is disgraceful, the only lasting disgrace would be in meeting these schemes with silence and toleration. The exposure of the truth of this arrangement, from the bribe payor to the bribe recipient, brings honor to our people, our law enforcement, and our Court institutions. They have all displayed great strength in exposing and opposing official corruption and are a credit to our nation of laws. We are also indebted to the many witnesses who came forward to tell their stories. The series of cases in our sprawling corruption investigations has required the coordination of not only this office, but also the Eastern District of Arkansas, the Western District of Missouri, the Federal Bureau of Investigation, and the Internal Revenue Service- Criminal Investigation. We are grateful for their continued assistance.”
“Our nation has a well-established process by which its citizens communicate with their elected officials, and this process can never include bribery or fraud,” said FBI Little Rock Special Agent in Charge James A. Dawson. “When Mr. Burris attempted to illegally induce the alteration of laws to favor his own purposes, he trod directly upon the democratic institutions of our Republic.”
Burris’s sentencing is expected to take place in approximately four months. Burris faces a maximum penalty of 20 years in prison for the crime for which he pled guilty, however, the plea agreement also states that if the Court wishes to sentence Burris to a sentence that is not a year and a day in federal prison, Burris will have the right to withdraw from the plea agreement. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI and the IRS are investigating the case.
Assistant U.S. Attorney Ben Wulff, Allison Bragg and Stephanie Mazzanti are prosecuting the case for the United States.
Two Arkansas Men Found Guilty of Fraud and Money Laundering in Connection with Proposed Elm Springs, Arkansas Wind FarmRead the Press Release
FAYETTEVILLE – A federal jury convicted two Arkansas men today for Wire Fraud, Aiding and Abetting Wire Fraud, Money Laundering and Aiding and Abetting Money Laundering in connection with the development of a wind turbine that was never operational and a proposed wind farm project in Elm Springs, Arkansas, that was never constructed.
According to court documents and evidence presented at trial, Jody Douglas Davis, 46, of Searcy, Arkansas, and Phillip Vincent Ridings 64, of North Little Rock, Arkansas, formed a limited liability company in Texas in 2014 called Dragonfly Industries International, LLC (“Dragonfly”) and Arkansas Wind Power (“AWP”), an Arkansas limited liability company located in Springdale, Arkansas, to develop what they told investors was a revolutionary wind turbine design that was to be installed on a 311-acre wind farm proposed for construction in Elm Springs, Arkansas.
According to the superseding indictment, Davis and Ridings conspired with Cody Fell of Springdale, Arkansas, and others, beginning as early as June 2014 and continuing through and including March 2018, to obtain money from investors who were told that the investors’ money would be used to build a prototype of the wind turbine and develop wind farms in Elm Springs, Arkansas, in Iowa, and other states. The evidence presented at trial showed that Davis and Ridings used most of the $700,000 they obtained from investors for Davis’ and Ridings’ personal use. Specifically, evidence at trial revealed that investors were told that Dragonfly’s wind turbine could produce more energy than the traditional three-blade wind turbines commonly used on existing wind farms; that nationally recognized engineering firms and a University of Memphis mechanical engineering professor had “validated” the Dragonfly wind turbine’s design; that the Department of Defense has expressed strong interest in acquiring Dragonfly’s wind turbines for use in combat zones; that a prototype of the wind turbine was nearing completion; that leaders of underdeveloped countries were ready to buy Dragonfly’s wind turbines; and that a $10 million grant from the Department of Energy was soon to be awarded to Dragonfly, when in truth and fact, none of these representations were true.
Cody Fell pled guilty to Wire Fraud and Tax Evasion in December 2018 and will be sentenced on September 17, 2021. A sentencing date for Davis and Ridings has not yet been scheduled.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation.
Assistant U.S. Attorneys Kyra Jenner and Kenneth Elser prosecuted the case.
Related court documents may be found on the Public Access to Electronic Records website at www.pacer.gov.
Sheriff of Franklin County, Arkansas Found Guilty of Assaulting Two Individuals in CustodyRead the Press Release
FORT SMITH – A federal jury convicted the Sheriff of Franklin County, Arkansas today on two counts of deprivation of rights under color of law.
According to court documents and evidence presented at trial, Anthony Boen, 51, of Ozark, used unreasonable force to punish pretrial detainees on two separate occasions. On Dec. 3, 2018, Boen struck a detainee multiple times in the head with a closed fist while the detainee was sitting on the floor and shackled to a bench inside the Franklin County Jail. On Nov. 21, 2018, Boen slammed a detainee onto the floor and ripped his hair during an interrogation. Both detainees suffered bodily injury as a result of Boen’s actions.
“Anthony Boen swore an oath to support the United States Constitution and the State of Arkansas Constitution,” said Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas. “His actions clearly violated not only the civil rights of these individuals but also the trust of the people of Franklin County. Cases like this are very important to our office because they involve the most personal and basic of civil rights: the rights to be protected and unharmed while in the custody of law enforcement officers. Today’s guilty verdict shows that justice will prevail in cases where a person’s civil rights are violated. We will continue to vigorously pursue cases involving the violation of basic civil rights that should be afforded to everyone.”
“The defendant abused his power as the top law enforcement officer in Franklin County, Arkansas, by assaulting people in his custody,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Justice Department will continue to vigorously prosecute officers who abuse their authority to make clear that no one is above the law.”
“The vast majority of law enforcement officers in the United States steadfastly protect and serve their communities,” said FBI Little Rock Special Agent in Charge James Dawson. “When officers charged with enforcing the law break their oaths and violate the rights of others, they gravely injure the public’s trust in law enforcement. Our FBI office remains committed to upholding the public’s trust by investigating all allegations of civil rights violations throughout Arkansas.”
The FBI investigated the case.
Assistant U.S. Attorney Brandon T. Carter and Civil Rights Division Trial Attorney Michael J. Songer prosecuted the case.
Related court documents may be found on the Public Access to Electronic Records website at www.pacer.gov.
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Two Arkansas Men Plead Guilty to Damaging Historic Mines in Buffalo National RiverRead the Press Release
FORT SMITH, Ark.—Two men pleaded guilty last week to felony violations of the Archaeological Resources Protection Act, in connection with their illegal excavations of archaeological sites in the Historic Rush Mining District of Buffalo National River, and the sale of stolen geological and mineral specimens at a store in Alpena. U.S. District Judge P.K. Holmes III presided over the July 27 change-of-plea hearings, in which Nathan Bradford LeMay, 35, of Hot Springs Village, and Justin Charles Baird, 32, of Hot Springs, each pleaded guilty to the first count of the three-count indictment in which both were named.
According to court documents, on multiple occasions in 2015 and 2016, LeMay and Baird traveled to the Historic Rush Mining District, in Marion County, Arkansas, to dig for mineral and geological specimens to sell at LeMay’s business, Alpena Crystals. The pair’s plans went awry on Feb. 14, 2016, when a U.S. Park Ranger observed them camped in Buffalo National River, which is a United States National Park.
Noticing evidence of their excavations, the Ranger obtained consent to search their campsite and vehicles, recovering digging tools and containers of geological specimens. Two days later, officers were sent to several mines in the area to assess whether or not they had been entered. The Monte Cristo Mine, a gated, locked and controlled mine along Clabber Creek, was observed to have been broken into. Trash, water bottles and other items were located both just inside and outside this mine. On the Rush Creek side of the same mountain, drag marks in high grass, from the Morning Star/Ben Carney Mine, down to Rush Creek and the parking lot, indicated large heavy objects had been dragged down the mountain to the parking area.
A subsequent investigation by the National Park Service, assisted by local law enforcement and the Carroll County Prosecuting Attorney’s Office, established the full extent of the pair’s illegal excavations. LeMay and Baird had excavated and damaged 22 areas within those mines, removing mineral and geological materials, and damaging the historic sites—which add to the knowledge of the mining community in the Ozarks as the industry transitioned from crude mining techniques to modern methods. Dr. Caven Clark, an archaeologist with the National Park Service, now retired, conducted a resource damage assessment, determining that the cost of restoration and repair to the site was approximately $22,241.
Both men were indicted by a federal grand jury in March 2020. In addition to violation of the Archaeological Resources Protection Act, which prohibits excavating, damaging, altering and defacing archaeological sites and resources, both men were also charged with theft of U.S. property and damage to government property. On February 10, 2021, LeMay was arrested at his residence, in Hot Springs Village, and was later released on a cash bond pending trial. Baird self-surrendered to authorities and was arraigned on April 16, 2021. Before they announced their intentions to plead guilty, the case had been scheduled to be tried beginning on July 26.
As a result of their guilty pleas both LeMay and Baird face up to two years in prison and fines of up to $250,000. Additionally, both men have agreed to pay $22,241 in restitution as a shared obligation. The court will determine their sentences at a later date, after reviewing pre-sentence investigation reports prepared by the U.S. Probation Office, and considering the U.S. Sentencing Guidelines and other statutory factors.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The case was investigated by special agents of National Park Service, Investigative Services Branch, and U.S. Park Rangers at Buffalo National River, with the assistance of the Boone County, Ark. Sheriff’s Office, Eureka Springs Police Department, and the Carroll County Prosecuting Attorney’s Office.
Assistant U.S. Attorney Steven Mohlhenrich prosecuted the case for the United States.
The Historic Rush Mining District
Located within the Buffalo National River is a designated historical district known as the Historic Rush Mining District, a 1316-acre former zinc mining district located on the lower Buffalo River and two of its tributaries, Rush Creek and Clabber Creek. It is a remnant industrial landscape with the remains of both open-pit and underground zinc mines, processing facilities, and worker housing. Waste rock piles form a dominant feature of the landscape. Within this district, are dozens of historic and archaeological sites and mines, including the Monte Cristo, Ben Carney, and Morning Star mines. The Rush Historic District buildings and structures, through isolation, have retained their historic design features and use and convey the sense of a turn-of-the century mining operation and Ozarks community. The ruins and archaeological sites fill in the community layout and add to the knowledge of historic mining techniques and mining community construction; they retain and contribute to the feeling of the widespread activity of this once bustling Ozarks mining community. The Rush Historic District portrays the story of the zinc mining industry in the Ozarks as the industry moved from crude mining techniques to modern methods.
The Archaeological Resources Protection Act
The National Park Service wishes to remind the public that all public lands are protected by federal law and regulation. In 1979, the Congress found that archaeological resources on public and Indian lands are an irreplaceable part of the Nation’s heritage. The Archaeological Resources Protection Act of 1979 makes it a violation of federal law to excavate, remove, damage, or otherwise alter or deface any archaeological resource located on public (federal) or Indian (Native American) lands, or attempt to do so. If convicted of a felony, penalties include up to two years imprisonment and a fine of up to $250,000. Subsequent violations are punishable by up to five years imprisonment.
Hot Springs Village Businessman Pleads Guilty to Not Paying Employment Taxes and Failure to File A Tax ReturnRead the Press Release
HOT SPRINGS, Ark.—A Hot Springs Village business owner pleaded guilty yesterday to one count of willfully failing to pay over employment taxes and one count of failing to file a tax return.
Chief U.S. District Judge Susan O. Hickey presided over the plea hearing, in which Donald Lee Owen, 61, waived indictment by a grand jury and pleaded guilty to a criminal information charging him with violating two different federal statutes.
According to court documents, Owen owned and operated National Golf Classics, Inc. also known as All American Classics, located in Hot Springs Village. The company produced sports memorabilia for use in charity auctions and conducted charity auctions. From 2010 through 2018, Owen’s company paid wages to employees and withheld employment taxes from those wages. These taxes included federal income tax, Social Security tax, and Medicare, also known as the "trust fund" taxes. Owen hired an accounting firm to calculate the taxes due and to prepare the IRS Forms 941, Employers Quarterly Federal Tax Return, for reporting those taxes to the IRS. However, Owens did not actually file those forms with the IRS, as he was required to do, nor did he pay over the employment taxes due to the IRS.
From 2010 through 2018, Owen willfully failed to file Forms 941 with the IRS, and to pay the at least $818,158 in employment taxes to the IRS, despite having ample funds to do so.
Court documents also reveal that during the period when the employment taxes were due to be paid to the IRS, Owen chose to pay millions of dollars to his company’s creditors, $800 per month for a tract of real estate having nothing to do with the company and transferred $1,000 per month to a family member to pay his share on a cabin they were buying on the Buffalo River.
In addition, Owen failed to pay $430,000 of the employer portions of the employment taxes and Federal Unemployment Tax Act taxes. Owen also failed to pay $169,883 to the state of Arkansas that were withheld from his employees' wages. This negatively impacted multiple employees who did not receive credit with the Social Security Administration for wages earned and taxes withheld. At the same time, Owen used the additional funds to support a lavish lifestyle, including purchasing and improving a luxury home in Hot Springs Village, buying 32.6 acres in Newton County, a cabin on the Buffalo River, a 2017 GMC Yukon SUV for which he paid $64,206, and a 2016 39-foot Tiffin Allegro recreational vehicle with a list price of $188,099.
When audited by the Arkansas Department of Finance on two occasions—on September 19, 2013 and on July 19, 2018—Owen falsely told the auditors he did not have regular employees, but instead used family and friends to help him during busy season. However, when approached by employees who had not received credit with the Social Security Administration for wages earned and employment taxes withheld, Owen admitted he had not reported or paid over the employment taxes to the IRS.
Owen’s second charge relates to his willful failure to file a personal federal income tax return for the year 2018. Owen acknowledged he knew he was required to file a tax return and that he willfully failed to do so. Additionally, Owen failed to file and pay $301,544 of his federal and $69,405 of his Arkansas state personal income taxes for the years 2008 through 2018. Finally, Owen also failed to file and his company’s federal corporate income taxes for the years 2014 through 2018.
As a result of his guilty plea, Owen may be sentenced to a maximum of six years in prison. The court will determine his sentence at a later date, after reviewing a pre-sentence investigation report prepared by the U.S. Probation Office and considering the U.S. Sentencing Guidelines and other statutory factors.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The Internal Revenue Service-Criminal Investigations are investigating the case.
Assistant U.S. Attorney Steven Mohlhenrich is prosecuting the case for the United States.
Louisiana Doctor Pleads Guilty to Workers’ Comp Fraud ConspiracyRead the Press Release
FAYETTEVILLE, Ark.—A Lake Charles, La., physician pleaded guilty today to one count of conspiracy to commit mail fraud, wire fraud, health care fraud, fraud to obtain federal employees’ compensation, and illegal remunerations (taking kickbacks), in connection with a scheme to defraud the U.S. government and private insurance companies by over-billing for unnecessary medications provided to workers’ compensation patients.
U.S. District Judge Timothy L. Brooks presided over the plea hearing, in which Robert Dale Bernauer, Sr., 74, waived indictment by a grand jury and pleaded guilty to a criminal information charging him with conspiracy to violate five different federal statutes. According to court documents, Bernauer, an orthopedic surgeon and clinician who practiced in Louisiana, made more than $1,000,000 off of the scheme, which ran from 2011 until 2017 and defrauded both federal and private workers’ compensation insurers.
Court documents allege that the basic premise of the scheme was that individuals associated with an Arkansas company recruited Bernauer to dispense pain creams and patches to his workers’ compensation patients by offering him a 50 percent split of the profits collected from successfully billing insurers. The company billed insurers at markups of anywhere from 1,500 to 2,000 percent—in other words, 15 to 20 times what the medications actually cost. The unnamed company acted as the billing agent for Bernauer, handling all of the paperwork and submitting the allegedly fraudulent claims to both the U.S. Department of Labor, Office of Workers’ Compensation Programs, which covers all federal employees, and to private insurers as well.
Bernauer admitted that both he and his co-conspirators knew he did not have a license to dispense medications from his clinic, which was required under Louisiana law, but proceeded anyway to sign two contracts under which he agreed to buy topical medications from the Arkansas company at set rates, and dispense them exclusively to his workers’ compensation patients. In turn, the contracts provided that Bernauer and the company would each get half of all amounts successfully collected from insurers.
Although such profit-splitting arrangements violated both federal and Louisiana laws, in pleading guilty Bernauer admitted he joined the scheme knowing it was, in his words, “too good to be true.” Bernauer further admitted he deliberately blinded himself to the illegality of the business arrangement, despite all the “red flags” he knew to be present. Bernauer’s plea agreement states that while not offering any excuses for his conduct, he joined in the conspiracy because he needed the money, and continued to participate due to expenses associated with his wife’s final illness.
Court documents indicate that Bernauer was not the only physician involved in this scheme, and the total financial harm to federal and private workers’ compensation insurers is not listed. However, Bernauer alone accounted for a loss of approximately $2,050,546, of which $664,176.50 was suffered by the federal agencies whose employees were Bernauer’s patients.
“The Department of Justice and this U.S. Attorney’s Office are committed to combatting health care fraud and holding accountable the perpetrators of schemes like the one alleged here,” said David Clay Fowlkes, Acting U.S. Attorney for the Western District of Arkansas.
“Today’s guilty plea highlights the commitment of the Department of Defense Inspector General, Defense Criminal Investigative Service, and our law enforcement partners to protect the integrity of the workers’ compensation program that serves our federal workforce,” said Special Agent in Charge Michael Mentavlos of the Defense Criminal Investigative Service Southwest Field Office. “Physicians, marketers and billing companies who attempt to take advantage of the program by paying and receiving kickbacks for prescribing unnecessary medications expose our workforce to potential physical harm and waste valuable taxpayer dollars.”
“An important mission of the Office of Inspector General is to investigate allegations of fraud related to the Department of Labor’s Office of Workers’ Compensation Programs. We will continue to work with our law enforcement partners and the Office of Workers’ Compensation Programs to protect the integrity of the department’s benefit programs and hold those who defraud them accountable as demonstrated in today’s guilty plea,” stated Steven Grell, Special Agent in Charge, Dallas Region, U.S. Department of Labor Office of Inspector General.
“Billing for unnecessary medications undermines the integrity of federal health care programs,” stated Jeffrey Breen, Special Agent in Charge at the Department of Veterans Affairs Office of Inspector General. “This guilty plea holds the defendant accountable for his criminal actions placing profits before his patients’ health. We thank our law enforcement partners for their collaboration in this important investigation.”
“Today’s guilty plea is a testament to the dedication and determination of the investigative and legal teams,” said Special Agent in Charge Scott Pierce, U.S. Postal Service Office of Inspector General, Southern Area Field Office. “The Postal Service spends hundreds of millions of dollars annually on health care related costs and these monies are critical to those who legitimately need medical services. As in this case, our criminal investigators will diligently pursue any individual or organization intent on defrauding the Postal Service with an eye on both federal prosecution and returning lost monies to the affected program.”
In his plea agreement, Bernauer promised to immediately start making amends, by within 30 days paying $664,176.30 directly to the Department of Labor, as restitution to the federal agencies that were primary targets of the fraudulent scheme, and a further $361,096.70 to the court clerk’s office, to be distributed to other insurers victimized by the conspiracy. Bernauer also acknowledged that he would be subject to an additional restitution order of approximately $1,025,273, as a shared obligation with any of his co-conspirators who are later convicted.
As a result of his guilty plea to the single conspiracy count, Bernauer may be sentenced to a maximum of five years in prison. The court will determine his sentence at a later date, after reviewing a pre-sentence investigation report prepared by the U.S. Probation Office, and considering the U.S. Sentencing Guidelines and other statutory factors.
The case was investigated by the Department of Defense, Defense Criminal Investigative Service, the Department of Labor Office of Inspector General, the Department of Veterans Affairs Office of Inspector General, the U.S. Postal Service Office of Inspector General, with the assistance of the Internal Revenue Service-Criminal Investigation, the Louisiana Department of Justice, the Louisiana State Board of Medical Examiners, and the Louisiana Board of Pharmacy.
Assistant U.S. Attorneys Steven Mohlhenrich and Hunter Bridges prosecuted the case for the United States.
Fort Smith Trio Sentenced to over 38 Years Combined in Federal Prison for Firearms PossessionRead the Press Release
FORT SMITH – Trio sentenced to over 38 years combined in federal prison on one count each of Being a Felon in Possession of a Firearm. The Honorable Judge P.K Holmes, III, presided over the sentencing hearing’s in the United States District Court in Fort Smith.
According to court documents, In November 2020, members of the 12th/21st Drug Task Force (DTF) received information that Charlene M. Elmore, 26, and Frankie Leon Hunter, 29, possessed numerous firearms that were suspected to have been stolen. Elmore was a parolee with an active absconder warrant issued by the Arkansas Parole Board due to her absconding from parole supervision on or about July 31, 2020. Hunter was also a parolee. On November 9, 2020, DTF members went to their residence in Fort Smith, Arkansas. When DTF members arrived at the residence, they saw Elmore, the driver, and Hunter, the passenger, leaving in a green Chevrolet Equinox. Patrol officers attempted a traffic stop, but Elmore stopped only when her vehicle became disabled. Elmore and Hunter were taken into custody. After Elmore and Hunter were taken into custody, law enforcement officers returned to the residence where Jeremy Robinson, 29, another parolee living at the residence, answered the door. Arkansas State Parole Officers had parole search waivers on file for all three individuals that allowed them to search the residence. Eighteen firearms were found, six of which had been reported stolen in Roland, Oklahoma.
Elmore was sentenced yesterday to 92 months in prison followed by three years of supervised release.
Hunter was sentenced on July 21, 2021 to 192 months in prison followed by five years of supervised release.
Robinson was sentenced on June 10, 2021 to 180 months in prison followed by five years of supervised release.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The 12th/21st Drug Task Force investigated the case.
Assistant U.S. Attorney Kyra Jenner prosecuted the case.
This case was prosecuted as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
Arkansas Man Sentenced to over 16 Years in Federal Prison for Interstate Transportation of A MinorRead the Press Release
FORT SMITH – A Harrison man was sentenced yesterday to 200 months in prison followed by 5 years of supervised release on one count of Transportation of a Minor with Intent to Engage in Criminal Sexual Activity. The Honorable Judge P. K. Holmes III presided over the sentencing hearing in the U.S. District Court in Fort Smith.
According to court documents, in July 2020, Edgar Benjamin Davidson, 32, transported a minor, across state lines from Harrison, Arkansas to multiple states. During this time Davidson sexually assaulted the minor on multiple occasions. Davidson was arrested in November 2020 and pled guilty in March 2021.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The Boone County Sheriff’s Department and the Federal Bureau of Investigations investigated the case.
Assistant U.S. Attorney Tyler Williams prosecuted the case for the United States.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
Convicted Felon Sentenced to over 9 Years in Federal Prison for Firearms PossessionRead the Press Release
FAYETTEVILLE – A Fayetteville man was sentenced today to 110 months in federal prison followed by three years of supervised release on one count of being a Felon in Possession of a Firearm. The Honorable Timothy L. Brooks presided over the sentencing hearing in the United States District Court in Fayetteville.
According to court documents, on February 7, 2021, the 4th Judicial District Drug Task Force obtained a search warrant for the residence of Marcellius Ricardio Phillips, 38, for drug trafficking offenses in the Western District of Arkansas. Prior to executing the search warrant, Detectives made contact with Phillips outside his residence. After Phillips was placed under arrest for an outstanding warrant, Detectives searched his pants pocket and located a loaded handgun. Phillips is a convicted felon and is prohibited from possessing any firearms.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The 4th Judicial District Drug Task Force investigated the case.
Assistant U.S. Attorney David Harris prosecuted the case.
This case was prosecuted as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
Career Offender Sentenced to 12 Years in Federal Prison for Drug TraffickingRead the Press Release
FORT SMITH – A Berryville man was sentenced yesterday to 151 months in prison followed by 3 years of supervised release on one count of Distribution of a Controlled Substance methamphetamine. The Honorable Judge P.K Holmes, III, presided over the sentencing hearing in the United States District Court in Fort Smith.
According to court documents, In July of 2020, Homeland Security Investigations Fayetteville initiated an investigation into James Russell Clark, 37, for drug trafficking offenses in the Western District of Arkansas. On July 9, 2020, investigators were able to conduct a controlled purchase of methamphetamine from Clark at his residence. The methamphetamine purchased was subsequently sent to the Department of Homeland Security Laboratory in Savannah, Georgia and tested positive for methamphetamine. Clark was also held accountable at sentencing for possessing a firearm on July 18, 2020, following a traffic stop by the Berryville Police Department. Clark is a multi-convicted felon and prohibited from possessing firearms.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
Homeland Security Investigations Fayetteville investigated the case.
Assistant U.S. Attorney David Harris prosecuted the case.
This case was prosecuted as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
Third Arkansas Physician Sentenced to Federal Prison for Prescription FraudRead the Press Release
FORT SMITH – A Fort Smith physician, Donald E. Hinderliter, was sentenced today to 4 years in federal prison followed by 1 year of supervised release on one count of Distribution of a Controlled Substance without an Effective Prescription. The Honorable Judge P. K. Holmes III presided over the sentencing hearing in the U.S. District Court in Fort Smith.
According to court documents, Hinderliter, 85, of Fort Smith, pleaded guilty to a felony Information charging unlawful distribution of a controlled substance namely, alprazolam. From approximately January 2016 and through November 8, 2018, Hinderliter was an owner and practitioner at Hinderliter Pain Clinic that operated as a pain management clinic in Barling, Arkansas. In May 2017, the Drug Enforcement Administration (DEA) received several anonymous complaints that Hinderliter was operating a “pill mill” under the name Hinderliter Pain Clinic. The complaints stated that Hinderliter and his associate, Dr. Cecil W. Gaby, charged cash, prescribed hydrocodone and benzodiazepines in the same amount to patients regardless of a particular patient’s prognosis or need, and that patients traveled great distances within the state of Arkansas and surrounding states seeking large quantities and dangerous combinations of oxycodone, hydrocodone, alprazolam, and methadone, among other controlled substances. As part of the plea, Hinderliter admitted that he prescribed opioids and benzodiazepines to more than 150 individuals, often not for a legitimate medical purpose and not in the usual course of professional practice. Specifically, on October 17, 2016, Hinderliter prescribed 84 alprazolam 2mg pills, a Schedule IV controlled substance to a patient that was not for a legitimate medical purpose and not in the usual course of professional practice.
On May 27, 2021, Dr. Cecil W. Gaby was sentenced to 120 months imprisonment for his role in the Hinderliter Pain Clinic and Gaby Medical Clinic in Fort Smith, Arkansas. On the same date, Dr. Robin Cox was sentenced to 36 months imprisonment for distribution of opioid medications outside legitimate medical practice at an unrelated clinic in Rogers, Arkansas.
U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The Drug Enforcement Administration (DEA), DEA Diversion Little Rock, Federal Bureau of Investigation (FBI), the United States Department of Health and Human Services Office of Inspector General (HHS), Arkansas State Medical Board and the Fort Smith Police Department investigated the case.
Special Assistant U.S. Attorney Anne Gardner and Assistant U.S. Attorney Brandon Carter prosecuted the case for the United States.
Two Arkansas Physicians Sentenced to a Total of 150 Months in Federal Prison for Prescription FraudRead the Press Release
FORT SMITH – Fort Smith physician and Rogers physician were sentenced today on one count each of Distribution of a Controlled Substance without an Effective Prescription. The Honorable Judge P. K. Holmes III presided over the sentencing hearings in the U.S. District Court in Fort Smith.
According to court documents, Cecil W. Gaby, 71, of Fort Smith, a licensed physician in the State of Arkansas, pleaded guilty on December 18, 2019 to acting and intending to act outside the usual course of professional practice without a legitimate medical purpose in dispensing a Schedule II controlled substance namely, oxycodone, to an individual, thereby causing the death of the individual. Between January 2016 and July 2018, Gaby was an owner and operator of the Hinderliter Pain Clinic in Barling, Arkansas and from July 2018 through November 2018, was owner and operator of the Gaby Medical Clinic in Fort Smith, Arkansas. From January 2016 through November 2018, Gaby issued more than 11,000 prescriptions for opioids and/or benzodiazepines. Gaby prescribed approximately 1,156,044 dosage units of Schedule II controlled substances to 347 patients (3,332 pills per patient over the course of 2 years); 98% of Gaby’s patients were prescribed at least one opioid (hydrocodone, oxycodone, methadone, etc.); 94% of Gaby’s patients received either multiple narcotics or a combination of narcotics and sedatives; and 27% of Gaby’s patients were age 40 or younger. Evidence in the case revealed that Gaby issued a large number of prescriptions without a legitimate medical purpose and not in the usual course of professional practice. From 2016 through 2018, several of Gaby’s patients died of drug overdose or related causes. As part of his plea, Gaby admitted that prescriptions he issued directly resulted in the death of one of his patients. Gaby was sentenced to 120 months in federal prison followed by 3 years of supervised release.
Robin Ann Cox, 64, of Rogers, was employed by the Arkansas Medical Clinic (AMC) in Rogers, Arkansas. Cox and the owner of AMC contacted the DEA by telephone to report that prescriptions from Cox's previous employment had been fraudulently written and filled. Cox specifically identified a prescription for a patient written and filled on May 17, 2019, and a prescription for a patient dated May 19, 2019 and filled on May 20, 2019. During the investigation into these prescriptions, the DEA discovered that the prescriptions were for Schedule II opioid medications, and that Cox had written one of the prescriptions while meeting with the patient in the parking lot of a restaurant in Fort Smith, Arkansas, in the Western District of Arkansas, Fort Smith Division. The prescription was not written in conjunction with an appropriate medical examination and therefore was issued outside the course of a legitimate medical practice. Cox was sentenced to 30 months in federal prison followed by 3 years of supervised release
“The abuse of opioids and other pain medications is an epidemic that is destroying the lives of many people across the Western District of Arkansas. We will continue to use all the investigation and prosecution tools available to us to identify and prosecute those who are responsible for the over-prescription of these dangerous drugs. It is my sincere hope that these cases today send a strong message to all of those in our District who would consider operating a “pill mill” or otherwise seeking to profit from the over-prescribing of opioid drugs and other pain-killers,” said Acting U.S. Attorney David Clay Fowlkes.
“The abuse of prescription drugs remains a significant problem in our communities. This abuse often leads to addiction, shattered lives, and even death. For the health and safety of our citizens, DEA and our law enforcement partners in Arkansas and beyond will continue to target those who illegally distribute these potentially dangerous drugs. It is particularly disappointing when trusted medical professionals are engaged in the diversion of controlled substances. We hope that the convictions and sentencings of these Physicians will serve as a reminder to anyone who might illegally divert pharmaceuticals that they will be held accountable for the harm they cause,” said DEA Special Agent in Charge Brad L. Byerley.
The Drug Enforcement Administration (DEA), DEA Diversion Little Rock, Federal Bureau of Investigation (FBI), the United States Department of Health and Human Services Office of Inspector General (HHS), Arkansas State Medical Board, the Fort Smith Police Department, the Springdale Police Department, and the Rogers Police Department investigated the case.
Special Assistant U.S. Attorney Anne Gardner prosecuted the case for the United States.
Cox’s prosecution is part of the Western District of Arkansas’ Operation Pillusional, which is part of the Department of Justice’s Organized Crime and Drug Enforcement Task Force (OCDETF) program. The OCDETF program is the centerpiece of the Department of Justice’s drug supply reduction strategy. OCDETF was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. Today, OCDETF combines the resources and expertise of its member federal agencies in cooperation with state and local law enforcement. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s illicit drug supply.
DOJ Announces Coordinated Law Enforcement Action to Combat Health Care Fraud Related to COVID-19Read the Press Release
FORT SMITH – The Department of Justice today announced criminal charges against 14 defendants, including 11 newly-charged defendants and three who were charged in superseding indictments, in seven federal districts across the United States for their alleged participation in various health care fraud schemes that exploited the COVID-19 pandemic and resulted in over $143 million in false billings.
“The multiple health care fraud schemes charged today describe theft from American taxpayers through the exploitation of the national emergency,” said Deputy Attorney General Lisa O. Monaco. “These medical professionals, corporate executives, and others allegedly took advantage of the COVID-19 pandemic to line their own pockets instead of providing needed health care services during this unprecedented time in our country. We are committed to protecting the American people and the critical health care benefits programs created to assist them during this national emergency, and we are determined to hold those who exploit such programs accountable to the fullest extent of the law.”
As part of the national takedown, Billy Joe Taylor, 42, of Lavaca, Arkansas, was charged by criminal complaint with health care fraud in connection with an alleged scheme to defraud the United States of over $88 million, including over $42 million in false and fraudulent claims during the COVID-19 health emergency that were billed in combination with claims that were submitted for testing for COVID-19 and other respiratory illnesses. Taylor, the owner and operator of Vitas Laboratories LLC and Beach Tox LLC, two testing laboratories, allegedly used access to beneficiary and medical provider information from prior laboratory testing orders to submit fraudulent claims for urine drug tests and other laboratory tests, including respiratory pathogen panel and COVID-19 tests, that were not actually ordered or performed. The complaint also alleges that hundreds of claims were submitted for beneficiaries after they had died or otherwise ceased providing samples.
“While the COVID-19 pandemic was raging, and Americans were suffering from the economic and health crisis brought on by this pandemic, these defendants were allegedly scheming to steal millions of dollars set aside to help ailing Americans through COVID-19 testing and other federal health-care programs,” said Acting U.S. Attorney David Clay Fowlkes. “This case demonstrates the importance of investigating and prosecuting those who would seek to line their own pockets by stealing funds set aside to help those struggling with the symptoms of COVID-19 and other health ailments.”
Additionally, the Center for Program Integrity, Centers for Medicare & Medicaid Services (CPI/CMS) separately announced today that it took adverse administrative actions against over 50 medical providers for their involvement in health care fraud schemes relating to COVID-19 or abuse of CMS programs that were designed to encourage access to medical care during the pandemic.
“Medical providers have been the unsung heroes for the American public throughout the pandemic,” said FBI Director Christopher Wray. “It’s disheartening that some have abused their authorities and committed COVID-19 related fraud against trusting citizens. The FBI, along with our federal law enforcement and private sector partners, are committed to continuing to combat healthcare fraud and protect the American people.”
The defendants in the cases announced today are alleged to have engaged in various health care fraud schemes designed to exploit the COVID-19 pandemic. For example, multiple defendants offered COVID-19 tests to Medicare beneficiaries at senior living facilities, drive-through COVID-19 testing sites, and medical offices to induce the beneficiaries to provide their personal identifying information and a saliva or blood sample. The defendants are alleged to have then misused the information and samples to submit claims to Medicare for unrelated, medically unnecessary, and far more expensive laboratory tests, including cancer genetic testing, allergy testing, and respiratory pathogen panel tests. In some cases, and as alleged, the COVID-19 test results were not provided to the beneficiaries in a timely fashion or were not reliable, risking the further spread of the disease, and the genetic, allergy, and respiratory pathogen testing was medically unnecessary, and, in many cases, the results were not provided to the patients or their actual primary care doctors. The proceeds of the fraudulent schemes were allegedly laundered through shell corporations and used to purchase exotic automobiles and luxury real estate.
“It’s clear fraudsters see the COVID-19 pandemic as a money-making opportunity — creating fraudulent schemes to victimize beneficiaries and steal from federal health care programs,” said Deputy Inspector General for Investigations Gary L. Cantrell of Health and Human Services – Office of Inspector General (HHS-OIG). “Our agency and its law enforcement partners are aggressively and effectively investigating these egregious crimes, which is made equally clear given the results of this takedown. We will continue to support the unprecedented COVID-19 public health effort by holding accountable people who use deceptive tactics to profit from the pandemic.”
In another type of COVID-19 health care fraud scheme announced today, defendants are alleged to have exploited policies that were put in place by CMS to enable increased access to care during the COVID-19 pandemic. For example, pursuant to the COVID-19 emergency declaration, telehealth regulations and rules were broadened so that Medicare beneficiaries could receive a wider range of services from their doctors without having to travel to a medical facility. The cases announced today include first in the nation charges for allegedly exploiting these expanded policies by submitting false and fraudulent claims to Medicare for sham telemedicine encounters that did not occur. As part of these cases, medical professionals are alleged to have offered and paid bribes in exchange for the medical professionals’ referral of medically unnecessary testing.
The law enforcement action today also includes the third set of criminal charges related to the misuse of Provider Relief Fund monies. The Provider Relief Fund is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted March 2020 designed to provide needed medical care to Americans suffering from COVID-19.
The Fraud Section is prosecuting the cases in the following districts: Western District of Arkansas, Northern District of California, Middle District of Louisiana, Central District of California, Southern District of Florida, District of New Jersey, and the Eastern District of New York.
Today’s enforcement actions were led and coordinated by Assistant Chief Jacob Foster and Trial Attorneys Rebecca Yuan and Gary A. Winters of the National Rapid Response Strike Force of the Health Care Fraud Unit of the Criminal Division’s Fraud Section, in conjunction with the Health Care Fraud Unit’s Medicare Fraud Strike Forces (MFSF) in Miami, Los Angeles, the Gulf Coast, and Brooklyn, as well as the U.S. Attorneys’ Offices for the Northern District of California, Western District of Arkansas, and Middle District of Louisiana.
The case here in the Western District of Arkansas is being prosecuted by Senior Litigation Counsel James Hayes and Trial Attorney D. Keith Clouser of the National Rapid Response Strike Force, and Assistant U.S. Attorney Kenneth Elser of the U.S. Attorney’s Office for the Western District of Arkansas.
The MFSF is a partnership among the Criminal Division, U.S. Attorneys’ Offices, the FBI and HHS-OIG. In addition, U.S. Postal Inspection Service, Internal Revenue Service Criminal Investigation, Veterans Affairs Office of Inspector General, Department of Defense Office of Inspector General, Federal Deposit Insurance Corporation, Louisiana Medicaid Fraud Control Unit, and other federal and state law enforcement agencies participated in the law enforcement action.
The law enforcement action was brought in coordination with the Health Care Fraud Unit’s COVID-19 Interagency Working Group, which is chaired by the National Rapid Response Strike Force and organizes efforts to address illegal activity involving health care programs during the pandemic.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 federal districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
The Department of Justice needs the public’s assistance in remaining vigilant and reporting suspected fraudulent activity. To report suspected fraud, contact the National Center for Disaster Fraud (NCDF) at (866) 720-5721 or file an online complaint at: https://www.justice.gov/disaster-fraud/webform/ncdf-disaster-complaint-form. Complaints filed will be reviewed at the NCDF and referred to federal, state, local, or international law enforcement or regulatory agencies for investigation.
To learn more about the department’s COVID response, visit: https://www.justice.gov/coronavirus. For further information on the Criminal Division’s enforcement efforts on PPP fraud, including court documents from significant cases, visit the following website: https://www.justice.gov/criminal-fraud/ppp-fraud.
Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
An indictment, complaint, or information is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
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DOJ Announces Coordinated Law Enforcement Action to Combat Health Care Fraud Related to COVID-19Read the Press Release
The Department of Justice today announced criminal charges against 14 defendants, including 11 newly-charged defendants and three who were charged in superseding indictments, in seven federal districts across the United States for their alleged participation in various health care fraud schemes that exploited the COVID-19 pandemic and resulted in over $143 million in false billings.
“The multiple health care fraud schemes charged today describe theft from American taxpayers through the exploitation of the national emergency,” said Deputy Attorney General Lisa O. Monaco. “These medical professionals, corporate executives, and others allegedly took advantage of the COVID-19 pandemic to line their own pockets instead of providing needed health care services during this unprecedented time in our country. We are committed to protecting the American people and the critical health care benefits programs created to assist them during this national emergency, and we are determined to hold those who exploit such programs accountable to the fullest extent of the law.”
Additionally, the Center for Program Integrity, Centers for Medicare & Medicaid Services (CPI/CMS) separately announced today that it took adverse administrative actions against over 50 medical providers for their involvement in health care fraud schemes relating to COVID-19 or abuse of CMS programs that were designed to encourage access to medical care during the pandemic.
“Medical providers have been the unsung heroes for the American public throughout the pandemic,” said FBI Director Christopher Wray. “It’s disheartening that some have abused their authorities and committed COVID-19 related fraud against trusting citizens. The FBI, along with our federal law enforcement and private sector partners, are committed to continuing to combat healthcare fraud and protect the American people.”
The defendants in the cases announced today are alleged to have engaged in various health care fraud schemes designed to exploit the COVID-19 pandemic. For example, multiple defendants offered COVID-19 tests to Medicare beneficiaries at senior living facilities, drive-through COVID-19 testing sites, and medical offices to induce the beneficiaries to provide their personal identifying information and a saliva or blood sample. The defendants are alleged to have then misused the information and samples to submit claims to Medicare for unrelated, medically unnecessary, and far more expensive laboratory tests, including cancer genetic testing, allergy testing, and respiratory pathogen panel tests. In some cases, and as alleged, the COVID-19 test results were not provided to the beneficiaries in a timely fashion or were not reliable, risking the further spread of the disease, and the genetic, allergy, and respiratory pathogen testing was medically unnecessary, and, in many cases, the results were not provided to the patients or their actual primary care doctors. The proceeds of the fraudulent schemes were allegedly laundered through shell corporations and used to purchase exotic automobiles and luxury real estate.
“It’s clear fraudsters see the COVID-19 pandemic as a money-making opportunity — creating fraudulent schemes to victimize beneficiaries and steal from federal health care programs,” said Deputy Inspector General for Investigations Gary L. Cantrell of Health and Human Services – Office of Inspector General (HHS-OIG). “Our agency and its law enforcement partners are aggressively and effectively investigating these egregious crimes, which is made equally clear given the results of this takedown. We will continue to support the unprecedented COVID-19 public health effort by holding accountable people who use deceptive tactics to profit from the pandemic.”
In another type of COVID-19 health care fraud scheme announced today, defendants are alleged to have exploited policies that were put in place by CMS to enable increased access to care during the COVID-19 pandemic. For example, pursuant to the COVID-19 emergency declaration, telehealth regulations and rules were broadened so that Medicare beneficiaries could receive a wider range of services from their doctors without having to travel to a medical facility. The cases announced today include first in the nation charges for allegedly exploiting these expanded policies by submitting false and fraudulent claims to Medicare for sham telemedicine encounters that did not occur. As part of these cases, medical professionals are alleged to have offered and paid bribes in exchange for the medical professionals’ referral of medically unnecessary testing.
The law enforcement action today also includes the third set of criminal charges related to the misuse of Provider Relief Fund monies. The Provider Relief Fund is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted March 2020 designed to provide needed medical care to Americans suffering from COVID-19.
The Fraud Section is prosecuting the cases in the following districts: Western District of Arkansas, Northern District of California, Middle District of Louisiana, Central District of California, Southern District of Florida, District of New Jersey, and the Eastern District of New York.
Today’s enforcement actions were led and coordinated by Assistant Chief Jacob Foster and Trial Attorneys Rebecca Yuan and Gary A. Winters of the National Rapid Response Strike Force of the Health Care Fraud Unit of the Criminal Division’s Fraud Section, in conjunction with the Health Care Fraud Unit’s Medicare Fraud Strike Forces (MFSF) in Miami, Los Angeles, the Gulf Coast, and Brooklyn, as well as the U.S. Attorneys’ Offices for the Northern District of California, Western District of Arkansas, and Middle District of Louisiana.
The MFSF is a partnership among the Criminal Division, U.S. Attorneys’ Offices, the FBI and HHS-OIG. In addition, U.S. Postal Inspection Service, Internal Revenue Service Criminal Investigation, Veterans Affairs Office of Inspector General, Department of Defense Office of Inspector General, Federal Deposit Insurance Corporation, Louisiana Medicaid Fraud Control Unit, and other federal and state law enforcement agencies participated in the law enforcement action.
The law enforcement action was brought in coordination with the Health Care Fraud Unit’s COVID-19 Interagency Working Group, which is chaired by the National Rapid Response Strike Force and organizes efforts to address illegal activity involving health care programs during the pandemic.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 federal districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Case Summaries
Western District of Arkansas
- Billy Joe Taylor, 42, of Lavaca, Arkansas, was charged by criminal complaint with health care fraud in connection with an alleged scheme to defraud the United States of over $88 million, including over $42 million in false and fraudulent claims during the COVID-19 health emergency that were billed in combination with claims that were submitted for testing for COVID-19 and other respiratory illnesses. Taylor, the owner and operator of Vitas Laboratories LLC and Beach Tox LLC, two testing laboratories, allegedly used access to beneficiary and medical provider information from prior laboratory testing orders to submit fraudulent claims for urine drug tests and other laboratory tests, including respiratory pathogen panel and COVID-19 tests, that were not actually ordered or performed. The complaint also alleges that hundreds of claims were submitted for beneficiaries after they had died or otherwise ceased providing samples. The case is being prosecuted by Senior Litigation Counsel James Hayes and Trial Attorney D. Keith Clouser of the National Rapid Response Strike Force, and Assistant U.S. Attorney Kenneth Elser of the U.S. Attorney’s Office for the Western District of Arkansas.
Northern District of California
- Mark Schena, 58, of Los Altos, California, the president of Arrayit Corporation, is charged along with two others, the Arrayit Vice President of Marketing and the President of an Arizona marketing organization, in connection with the submission of over $70 million in false and fraudulent claims for allergy and COVID-19 testing. The superseding indictment against Schena includes new counts of health care fraud, a conspiracy to pay kickbacks, and payment of kickbacks in connection with false and fraudulent statements about the existence, regulatory status, and accuracy of an Arrayit COVID-19 test. The conspiracy allegedly sought to induce the ordering of the Arrayit COVID-19 test and to bundle, i.e., require combination with, the COVID-19 test and Arrayit’s medically unnecessary allergy test. The COVID-19 test results were not provided in a timely fashion and were not reliable in detecting COVID-19. The cases are being prosecuted by Acting Principal Deputy Assistant Chief Justin Weitz of the Market Integrity and Major Fraud Unit of the Fraud Section, Assistant Chief Jacob Foster of the National Rapid Response Strike Force, and Assistant U.S. Attorney Wil Frentzen of the U.S. Attorney’s Office for the Northern District of California.
Central District of California
- Petros Hannesyan, 36, of Burbank, California, was charged with the theft of government property and wire fraud in connection with $229,454 that he obtained from COVID-19 relief programs. Hannesyan, the owner of Hollywood Home Health Services, Inc., a home health agency located in Los Angeles, allegedly misappropriated funds from the CARES Act Provider Relief Fund and submitted false loan applications and a false loan agreement to the Economic Injury Disaster Loan Program, rather than use the funds for COVID-19 patient care and to support small businesses experiencing disruption due to the COVID-19 pandemic. The case is being prosecuted by Trial Attorney Alexis Gregorian of the Los Angeles Strike Force.
Southern District of Florida
- Michael Stein, 35, and Leonel Palatnik, 42, both of Palm Beach County, Florida, were charged in connection with an alleged $73 million conspiracy to defraud the United States and to pay and receive health care kickbacks during the COVID-19 pandemic. Stein, the owner and operator of purported consulting company 1523 Holdings, LLC, and Palatnik, an owner and operator of Panda Conservation Group, LLC, a Texas company that owned and operated testing laboratories in Dallas and Denton, Texas, allegedly exploited temporary waivers of telehealth restrictions enacted during the pandemic by offering telehealth providers access to Medicare beneficiaries for whom they could bill consultations. In exchange, these providers agreed to refer beneficiaries to Panda’s laboratories for expensive and medically unnecessary cancer and cardiovascular genetic testing. The case is being prosecuted by Trial Attorney Ligia Markman of the National Rapid Response Strike Force.
- Juan Nava Ruiz, 44, and Eric Frank, 47, both of Coral Springs, Florida, were charged for an alleged $9.3 million health care kickback scheme, along with Christopher Licata, 44, of Boca Raton, Florida, who was previously charged in a separate Indictment. Licata, an owner of Boca Toxicology, LLC, a clinical laboratory based in Boca Raton, allegedly offered and paid kickbacks to patient brokers, including Ruiz and Frank, in exchange for referring Medicare beneficiaries to Boca Toxicology for various forms of genetic testing and other laboratory testing that they did not need, including the submission of $422,748 in claims related to medically unnecessary respiratory pathogen panel testing and genetic testing that was improperly bundled with COVID-19 testing. The cases are being prosecuted by Trial Attorney Jamie de Boer of the Miami Strike Force.
Middle District of Louisiana
- Malena Lepetich, 38, of Belle Chase, Louisiana, was charged for an alleged $15 million scheme to commit health care fraud, to defraud the United States, and to pay and receive health care kickbacks. Lepetich, the owner of MedLogic, LLC, a clinical laboratory based in Baton Rouge, Louisiana, allegedly solicited and received kickbacks in exchange for referrals of urine specimens for medically unnecessary testing. Lepetich also allegedly offered to pay kickbacks for referrals of specimens for COVID-19 and respiratory pathogen testing. Finally, Lepetich allegedly caused the submission of over $10 million in claims to Medicare, Medicaid, and Blue Cross Blue Shield of Louisiana for panels of expensive respiratory testing that was medically unnecessary. The case is being prosecuted by Trial Attorney Justin M. Woodard of the Gulf Coast Strike Force and Assistant U.S. Attorney Kristen Craig of the U.S. Attorney’s Office for the Middle District of Louisiana.
District of New Jersey
- Alexander Baldonado, 65, of Queens, New York, was charged with six counts of health care fraud. Baldonado, a medical doctor, allegedly participated in an event that advertised COVID-19 testing. In addition to authorizing the COVID-19 tests, Baldonado allegedly ordered expensive and medically unnecessary cancer genetic testing for Medicare beneficiaries who attended the event. Baldonado also allegedly billed Medicare for services, including lengthy office visits, that he never provided to these beneficiaries. Approximately $2 million in claims were submitted as a result of Baldonado’s COVID-19 health care fraud scheme, and approximately $17 million in claims were submitted as a result of Baldonado’s broader health care fraud scheme. The case is being prosecuted by Trial Attorney Rebecca Yuan of the National Rapid Response Strike Force.
- Donald Clarkin, 65, of Staten Island, New York, was charged in connection with a $5.4 million conspiracy to defraud the United States and pay and receive health care kickbacks. Clarkin, a partner at a diagnostic testing laboratory, allegedly exploited the pandemic by offering kickbacks in exchange for respiratory pathogen panel tests that would be improperly bundled with COVID-19 tests and billed to Medicare. Clarkin also allegedly paid and received kickbacks and bribes in exchange for arranging for the ordering of medically unnecessary genetic tests that were ineligible for Medicare reimbursement. The case is being prosecuted by Trial Attorney Rebecca Yuan of the National Rapid Response Strike Force.
Eastern District of New York
- Peter Khaim, 41, and Arkadiy Khaimov, 38, both of Forest Hills, New York, who owned and controlled several New York pharmacies and sham pharmacy wholesaling companies, were charged in a superseding indictment for their participation in an alleged $45 million health care fraud, wire fraud, and money laundering scheme. The defendants and their co-conspirators allegedly obtained billing privileges for multiple pharmacies by using nominees to serve as the purported owners and supervising pharmacists. The defendants then allegedly submitted false and fraudulent claims to Medicare, including by using COVID-19 “emergency override” billing codes to circumvent otherwise applicable pre-authorization requirements and limits on the frequency of refills for expensive drugs (primarily, the cancer treatment gels Targretin and Panretin). The defendants allegedly used an elaborate network of international money laundering operations to conceal and disguise the proceeds of the scheme. The case is being prosecuted by Trial Attorney Andrew Estes of the Brooklyn Strike Force.
The Department of Justice needs the public’s assistance in remaining vigilant and reporting suspected fraudulent activity. To report suspected fraud, contact the National Center for Disaster Fraud (NCDF) at (866) 720-5721 or file an online complaint at: https://www.justice.gov/disaster-fraud/webform/ncdf-disaster-complaint-form. Complaints filed will be reviewed at the NCDF and referred to federal, state, local, or international law enforcement or regulatory agencies for investigation.
To learn more about the department’s COVID response, visit: https://www.justice.gov/coronavirus. For further information on the Criminal Division’s enforcement efforts on PPP fraud, including court documents from significant cases, visit the following website: https://www.justice.gov/criminal-fraud/ppp-fraud.
An indictment, complaint, or information is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Armed Career Criminal Sentenced to 15 Years in Federal Prison for Firearms PossessionRead the Press Release
FORT SMITH – A Fort Smith man was sentenced today to 180 months in prison followed by five years of supervised release on one count of Being a Felon in Possession of a Firearm. The Honorable Judge P.K Holmes, III, presided over the sentencing hearing in the United States District Court in Fort Smith.
According to court documents, On September 15, 2020, an Arkansas state arrest warrant was issued out of Sebastian County for Christopher Lee Stowell, 37. On September 17, 2020, the United States Marshals Service was delegated as primary apprehension authority. On September 22, 2020, Stowell was arrested and taken into custody by investigators. During the arrest investigators located a loaded handgun lying next to him.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The Sebastian County Sheriff’s Office and The Unites States Marshals Service investigated the case.
Assistant U.S. Attorney David Harris prosecuted the case.
Stowell was sentenced under the Armed Career Criminal Act, which provides a sentencing range of fifteen years to life for individuals who have been convicted of federal gun crimes and have at least three prior felony convictions for crimes of violence and/or serious drug offenses.
This case was prosecuted as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
Acting U.S. Attorney David Clay Fowlkes Recognizes Police WeekRead the Press Release
FORT SMITH— In honor of National Police Week, Acting U.S. Attorney David Clay Fowlkes recognizes the service and sacrifice of federal, state, local, and Tribal law enforcement. This year, the week is observed Sunday, May 9 through Saturday, May 15, 2021.
“This week is a time to honor our law enforcement officers who have made the ultimate sacrifice in service to our nation,” said Attorney General Garland. “I am constantly inspired by the extraordinary courage and dedication with which members of law enforcement act each day, putting their lives on the line to make our communities safer. To members of law enforcement and your families: we know that not a single day, nor a single week, is enough to recognize your service and sacrifice. On behalf of the entire Department of Justice, you have our unwavering support and eternal gratitude.”
“We are very privileged in Western Arkansas to work with some of the best law enforcement officers in the United States. Our law enforcement partners in federal, state, and local offices across Western Arkansas work very hard every day to make our communities safer. They deserve our thanks and our deepest appreciation for the sacrifices they make and the dangers they face on our behalf.”
In 1962, President Kennedy issued the first proclamation for Peace Officers Memorial Day and National Police Week to remember and honor law enforcement officers for their service and sacrifices. Peace Officers Memorial Day, which every year falls on May 15, specifically honors law enforcement officers killed or disabled in the line of duty.
Each year, during National Police Week, our nation celebrates the contributions of law enforcement from around the country, recognizing their hard work, dedication, loyalty, and commitment to keeping our communities safe. This year the COVID-19 pandemic has highlighted law enforcement officers’ courage and unwavering devotion to the communities that they have sworn to serve.
During the Roll Call of Heroes, a ceremony coordinated by the Fraternal Order of Police (FOP), more than 300 officers will be honored. Based on data submitted to and analyzed by the National Law Enforcement Officer Memorial Fund (NLEOMF), of the law enforcement officers who died nationwide in the line of duty in 2020, nearly 60 percent succumbed to COVID-19.
Additionally, according to statistics reported by the Federal Bureau of Investigation (FBI) through the Law Enforcement Officer Killed and Assaulted (LEOKA) Program, 46 law enforcement officers died as a result of felonious acts and 47 died in accidents in 2020. LEOKA statistics can be found on FBI’s Crime Data Explorer website.
The names of the 394 fallen officers who have been added in 2020 to the wall at the National Law Enforcement Officer Memorial will be read on Thursday, May 13, 2021, during a Virtual Candlelight Vigil, which will be livestreamed to the public at 8:00 pm EDT. The Police Week in-person public events, originally scheduled for May, have been rescheduled due to ongoing COVID-19 concerns to October 13-17, 2021. An in-person Candlelight Vigil event is scheduled for October 14, 2021.
Those who wish to view the Virtual Candlelight Vigil on May 13, 2021, can watch on the NLEOMF YouTube channel found at https://www.youtube.com/user/TheNLEOMF. The FOP’s Roll Call of Heroes can be viewed at www.fop.net. To view the schedule of virtual Police Week events in May, please view NLEOMF’s Police Week Flyer.
To learn more about National Police Week in-person events scheduled for October, please visit www.policeweek.org.
Harrison Man Sentenced to 60 Months in Federal Prison for Setting Fire in the Buffalo National RiverRead the Press Release
FORT SMITH – A Harrison man was sentenced on May 5, 2021, to five years in prison followed by three years of supervised release and ordered to pay $12,494.14 in restitution on one count of Willfully and Without Authority and Consent of the United States Set on Fire Timber, Underbrush, Grass and Other Inflammable Material Upon a Public Domain within the Buffalo National River. The Honorable US District Judge P.K. Holmes, III, presided over the sentencing hearing in the United States District Court in Fort Smith.
According to court documents, In March 2020, Jacob Edward Walls, 29, was indicted by a federal grand jury, of setting a wildland fire within Buffalo National River, in Newton County, near Pruitt, on February 5, 2019. Federal investigators determined Walls set a fire within the park, which threatened nearby private structures and lands, and subsequently fled the area.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The National Park Service, Investigative Services Branch, and the U.S. Park Rangers at Buffalo National River investigated the case. The Newton County Sheriff’s Office assisted in the case
Assistant U.S. Attorney Kyra Jenner prosecuted the case.
Bella Vista Man Sentenced to 20 Years in Federal Prison for Drug PossessionRead the Press Release
FAYETTEVILLE – A Bella Vista man was sentenced today to 20 years in prison followed by five years of supervised release on one count of Possession with Intent to Distribute Methamphetamine. The Honorable Judge Timothy L. Brooks presided over the sentencing hearing in the United States District Court in Fayetteville.
According to court documents, Stewart Anthony Carr, 41, was stopped on or about June 3, 2019, after officers with the Lowell Police Department witnessed him run a red light while operating a moped. Officers attempted to stop Carr, but he initially refused to stop. While following Carr, officers witnessed him throw various objects into a ditch from his moving moped. Carr was stopped, arrested, and searched. During the search Officers located a small blue plastic container containing what appeared to be methamphetamine residue in his backpack. While searching the side of the road where Carr was seen dropping items, Officers located drug paraphernalia and a black case containing a large amount of suspected methamphetamine. The suspected methamphetamine was sent to the DEA crime lab, who determined the substance was 84.2 grams of actual methamphetamine.
U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The Lowell Police Department investigated the case.
Assistant U.S. Attorney Hunter Bridges prosecuted the case.
Arkansas Man Arrested for Receipt and Possession of Child PornographyRead the Press Release
FAYETTEVILLE – A Springdale man was arrested yesterday for receiving and possessing material depicting the sexual abuse of children.
According to court documents, Joshua James Duggar, 33, allegedly used the internet to download child sexual abuse material. Duggar allegedly possessed this material, some of which depicts the sexual abuse of children under the age of 12, all in May 2019.
Duggar is charged by indictment with receiving and possessing child pornography. If convicted he faces up to 20 years of imprisonment and fines up to $250,000.00 on each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
This case is being prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit: www.justice.gov/psc.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas; and Acting Special Agent in Charge Jack Staton of Homeland Security Investigations New Orleans made the announcement.
This case is being investigated by Homeland Security Investigations Fayetteville and the Northwest Arkansas Internet Crimes Against Children (ICAC) Task Force.
The case is being prosecuted by Assistant U.S. Attorneys Carly Marshall and Dustin Roberts, and Trial Attorney William G. Clayman of the Justice Department’s Child Exploitation and Obscenity Section.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Hot Springs Couple Sentenced to 28 Years Combined in Federal Prison for Drug Trafficking and Firearms PossessionRead the Press Release
Hot Springs, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced that Steven Mark Zuber, age 57, of Hot Springs, Arkansas, was sentenced on April 20, 2021 to 216 months in federal prison followed by three years of supervised release on one count of Conspiracy to Distribute Methamphetamine and one count of Possession of a Firearm in Furtherance of a Drug Trafficking Crime and Tammy Ronette Lent, age 54, of Hot Springs, Arkansas, was sentenced today to 120 months in federal prison followed by three years of supervised release on one count of Distribution of Methamphetamine. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearings in the United States District Court in Hot Springs.
In August of 2018, investigators with the 18th Judicial Drug Task Force and agents with Homeland Security Investigations Little Rock launched an investigation into Zuber’s drug trafficking in the Western District of Arkansas. Over the course of the investigation, investigators and agents were able to conduct several controlled purchases of methamphetamine from Zuber and Lent. During the arrest of Zuber and Lent, a search of their residence was conducted by investigators and agents. The search resulted in locating three firearms, methamphetamine, drug paraphernalia and approximately $14,161.00.
Zuber and Lent were indicted by a federal grand jury in Dec. of 2018 and entered guilty plea’s in Nov. of 2020.
This case was investigated by the 18th Judicial Drug Task Force and Homeland Security Investigations Little Rock. Assistant United States Attorney David Harris prosecuted the case for the Western District of Arkansas.
This case was prosecuted as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
Six Defendants Convicted and Sentenced to over 75 Years Combined in Federal Prison for Trafficking MethamphetamineRead the Press Release
Fort Smith, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas,announced that on April 14, 2021, the final of six (6) individuals were sentenced by the United States District Court for their roles in a methamphetamine trafficking ring which operated in Benton County, Arkansas and other jurisdictions such as California and Missouri. This investigation and prosecution, named “Operation Inner Circle,” lasted from approximately January of 2019 through today’s final sentencing hearing. The Honorable Judge Timothy L. Brooks presided over the sentencing hearings in the United States District Court in Fayetteville.
According to court records, in early 2019, Homeland Security Investigations Fayetteville initiated an investigation which revealed that a methamphetamine distributor in Los Angeles, Zeache Dupree Rose, would supply methamphetamine to local sellers of methamphetamine Michael James Smith, Craig Ryan Kelley and Joseph A. James, who would sell it in smaller amounts locally in Northwest Arkansas and Southwest Missouri. In order to facilitate the transportation of the methamphetamine from California to Arkansas, Rose would utilize couriers DaJohn Alexander and Marcus A. Jones, who would transport the methamphetamine in luggage smuggled on to commercial aircraft or buses traveling from California to Arkansas. In total, more than 13 kilograms of pure methamphetamine was seized as part of this operation.
Defendants in this conspiracy received the following sentences:
Zeache Dupree Rose, age 25, the leader of the organization from Los Angeles, California was sentenced December 18, 2020 to 180 months in federal prison followed by five years of supervised release on one count of Conspiracy to Distribute Methamphetamine and one count of money laundering. Rose was indicted in the Western District of Arkansas on March 4, 2020 and plead guilty on July 1, 2020.
Michael James Smith, age 43, a distributor of methamphetamine from Anderson, Missouri was sentenced October 7, 2020 to 151 months in federal prison followed by five years of supervised release on one count of Possession With Intent to Distribute More Than Fifty (50) Grams of Methamphetamine. Smith was indicted in the Western District of Arkansas on November 20, 2019 and plead guilty on December 9, 2019.
Joseph A. James, age 39, a distributor of methamphetamine from Siloam Springs, Arkansas was sentenced December 8, 2020 to 121 months in federal prison followed by four years of supervised release on one count of Conspiracy to Distribute More Than Five-Hundred (500) Grams of a Mixture or Substance Containing Methamphetamine. James was indicted in the Western District of Arkansas on August 16, 2019 and plead guilty on October 3, 2019.
Craig Ryan Kelley, age 45, a distributor of methamphetamine from Eureka Springs, Arkansas was sentenced August 12, 2020 to 240 months in federal prison followed by five years of supervised release on one count of Distribution of More Than Five (5) Grams of Methamphetamine. Kelley was indicted in the Western District of Arkansas on March 4, 2020 and plead guilty on May 1, 2020.
DaJohn Lequor Alexander, age 21, a transporter of methamphetamine from Los Angeles, California, was sentenced November 4, 2020 to 97 months in federal prison followed by three years of supervised release on possession of methamphetamine with intent to distribute. Alexander was charged by Information and entered a plea of guilty on July 2, 2020.
Marcus Alan Jones, age 27, a transporter of methamphetamine from Los Angeles, California, was sentenced April 14, 2021 to 120 months in federal prison followed by three years of supervised release for conspiracy to distribute methamphetamine. Jones was charged by Information and entered a plea of guilty on December 2, 2020.
This prosecution was part of the Western District of Arkansas’ Operation Inner Circle, which is part of the Department of Justice’s Organized Crime and Drug Enforcement Task Force (OCDETF) program. The OCDETF program is the centerpiece of the Department of Justice’s drug supply reduction strategy. OCDETF was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. Today, OCDETF combines the resources and expertise of its member federal agencies in cooperation with state and local law enforcement. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s illicit drug supply.
This OCDETF case was investigated by Homeland Security Investigations in Fayetteville, Arkansas and Los Angeles, California, The Internal Revenue Service in Fayetteville, Arkansas, the Benton County, Arkansas Sheriff’s Office, the Rogers, Arkansas Police Department, the Bentonville, Arkansas Police Department and the Northwest Arkansas National Airport (XNA) Police Department. Assistant United States Attorney Brandon Carter prosecuted the case for the Western District of Arkansas.
Fayetteville Man Sentenced to over 7 Years in Federal Prison for Child PornographyRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced that William Lee Murray, age 49, of Fayetteville, Arkansas, was sentenced today to 87 months in federal prison followed by 15 years of supervised release on one count of Receipt of Child Pornography. The Honorable Timothy L. Brooks presided over the sentencing hearing in the United States District Court in Fayetteville.
According to court records, in April 2019 the Northwest Arkansas Internet Crimes Against Children (ICAC) Task Force received a cyber tip from the National Center for Missing and Exploited Children (NCMEC) in reference to suspected child pornography being uploaded to a Google account. Further investigation revealed that the IP address associated with the Google account was assigned to Murray’s residence and that the account containing the child pornography belonged to Murray.
Murray was indicted in January of 2020 and plead guilty to an Information in October of 2020.
This case was investigated by the Department of Homeland Security Investigations (HSI) and the Northwest Arkansas Internet Crimes Against Children (ICAC) Task Force. Assistant United States Attorneys Carly Marshall and Amy Driver prosecuted the case for the United States.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Hot Springs Man Sentenced to 18 Years in Federal Prison for Drug Trafficking and Firearms PossessionRead the Press Release
Hot Springs, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced that Robert Arthur Blackstead Jr., age 56, of Hot Springs, Arkansas, was sentenced today to 216 months in federal prison followed by three years of supervised release on one count of Possession with Intent to Distribute Methamphetamine and one count of Possession of a Firearm in Furtherance of a Drug Trafficking Crime. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearing in the United States District Court in Hot Springs.
In January of 2019, investigators with the 18th Judicial Drug Task Force and agents with Homeland Security Investigations Little Rock launched an investigation into Blackstead’s drug trafficking in the Western District of Arkansas. Over the course of the investigation, investigators and agents were able to conduct several controlled purchases of methamphetamine from Blackstead.
During the arrest of Blackstead, a search of his residence was conducted by investigators and agents. The search resulted in locating three firearms, a distribution amount of methamphetamine and drug paraphernalia.
Blackstead was indicted by a federal grand jury in March of 2019 and entered a guilty plea in September of 2019.
This case was investigated by the 18th Judicial Drug Task Force and Homeland Security Investigations Little Rock. Assistant United States Attorney David Harris prosecuted the case for the Western District of Arkansas.
This case was prosecuted as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
Hot Springs Man Pleads Guilty to Charges in Connection with Obtaining Coronavirus Relief FundsRead the Press Release
Hot Springs, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced that James Heritage, age 38, of Hot Springs, Arkansas, pleaded guilty today to two charges stemming from his attempts to unlawfully obtain COVID-19 relief funds. The first count charged Heritage with making a false statement on a loan application to obtain money through the Small Business Administration’s Paycheck Protection Program (PPP) and the second count is one count of mail fraud, in connection with a scheme to collect Pandemic Unemployment Assistance (PUA), a form of supplemental unemployment insurance, from various state PUA administrators.
According to the plea agreement, Heritage received a PPP loan of approximately $180,000 by representing to the Small Business Administration that he was the owner of a Hot Springs business in need of financial assistance. Law enforcement discovered that the represented business did not exist, and the information in Heritage’s loan application was false. Agents also discovered that Heritage had applied for, and in many cases received, PUA benefits from state administrators in at least 40 different states and the District of Columbia, resulting in Heritage receiving approximately $350,000 in these benefits.
Heritage’s sentencing will be determined by the court at a later date, following the U.S. Probation Office’s completion of a presentence investigation. Based on his guilty plea, the maximum penalty on Count 1 includes imprisonment up to five years and a fine of up to $250,000, and on Count 2 includes up to 30 years imprisonment and a fine of $1,000,000.
The PPP allows qualifying small-businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on the PPP loan to be forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses at least a certain percentage of the PPP loan proceeds on payroll expenses.
The case was investigated by the Department of Labor’s Office of the Inspector General, the Federal Bureau of Investigation, the United States Postal Inspection Service, and the Small Business Administration’s Office of the Inspector General. Assistant United States Attorney Hunter Bridges is prosecuting the case for the United States.
Springdale Man Sentenced to over Nine Years in Federal Prison for Firearms PossessionRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas announced that Trent Guida, age 37, of Springdale Arkansas was sentenced today to 110 months in federal prison followed by three years of supervised release on one count of Felon in Possession of a Firearm. The Honorable Judge Timothy L. Brooks presided over the sentencing hearing today in the United States District Court in Fayetteville.
In January of 2020, detectives with the 4th Judicial Drug Task Force learned that Guida was staying at a hotel in Springdale Arkansas. Knowing that Guida had a search waiver on file, detectives located and approached Guida while he entered his room. While speaking with Guida, he spontaneously admitted to everything in the room belonging to him. During the search of Guida’s room and vehicle, Detectives located 2 firearms, approximately 2.2 grams of heroin, and drug paraphernalia.
Guida was indicted by a federal grand jury in July of 2020 and entered a guilty plea in December of 2020.
This case was investigated by the State of Arkansas Fourth (4th) Judicial District Drug Task Force. Assistant United States Attorney David Harris prosecuted the case for the Western District of Arkansas.
This case was prosecuted as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
Mountain Home Couple Plead Guilty to Charges in Connection with Obtaining Covid-19 Relief FundsRead the Press Release
Fort Smith, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced that James Read, age 44, and his wife, Crystal Payne, age 42, both of Mountain Home, Arkansas, pleaded guilty to charges stemming from their attempts to obtaining pandemic relief funds unlawfully. The Honorable Judge P. K. Holmes III accepted the pleas in the U.S. District Court in Fort Smith.
According to the plea agreement in his case, Read applied to the Small Business Administration for Payment Protection Program (PPP) funds, which, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, are forgivable loans intended for businesses struggling with essential expenses, such as payroll, during the pandemic. In that application, Read provided inflated wage and employee data about his business, SnowbirdBob LLC, and provided falsified tax documents. He further admitted to laundering the PPP loan proceeds by purchasing a new vehicle.
Read also pleaded guilty to one count of wire fraud for attempting to obtain unemployment benefits for himself and others in Louisiana. He falsely represented that he lived and worked in Louisiana to Louisiana’s state unemployment administrator.
Payne pleaded guilty to a single count for false statements made in her own PPP loan application.
Read and Payne’s sentencings will be later determined by the court, following the U.S. Probation Office’s completion of a presentence investigation.Based on his guilty plea, the maximum penalties Read faces include imprisonment for up to 30 years and a fine of up to $1,000,000. Payne faces up to five years imprisonment and a fine of up to $250,000.
The PPP allows qualifying small-businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on the PPP loan to be forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses at least a certain percentage of the PPP loan proceeds on payroll expenses.
The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The case was investigated by IRS-Criminal Investigations, the Federal Bureau of Investigations, the Treasury Inspector General for Tax Administration (TIGTA), and the Small Business Administration Office of the Inspector General. Assistant United States Attorney Hunter Bridges is prosecuting the case for the United States.
Texas Man Sentenced to 10 Years in Federal Prison for Possessing over 20 Pounds Combined of Fentanyl and CocaineRead the Press Release
Hot Springs, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced today that Johnny Rodriguez, age 22, of Houston, Texas, was sentenced to 120 months in federal prison followed by five years of supervised release on one count of Possession with Intent to Distribute more than 400 grams of Fentanyl. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearing in the United States District Court in Hot Springs.
In August 2019, an Arkansas State Police Trooper stopped a vehicle operated by Rodriguez, for a traffic offense. After receiving consent and searching the vehicle, the Trooper discovered a false compartment in the vehicle. A search of the compartment resulted in the Trooper locating approximately 12 kilograms of a controlled substance that field tested positive for cocaine. Rodriguez was arrested without incident.
The substance was submitted to the Drug Enforcement Administration’s Crime lab for testing and tested positive for 4909 grams of fentanyl and 4469 grams of cocaine.
Rodriguez plead guilty to an information in June of 2020.
This case was investigated by the Arkansas State Police and the Drug Enforcement Administration. Assistant United States Attorney Bryan Achorn prosecuted the case for the Western District of Arkansas.
Hot Springs Man Sentenced to over 10 Years in Federal Prison for Drug TraffickingRead the Press Release
Hot Springs, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced today that Mark Joseph Geurin, age 32, of Hot Springs, Arkansas, was sentenced to 130 months in federal prison followed by three years of supervised release on one count of Possession with Intent to Distribute Methamphetamine. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearing in the United States District Court in Hot Springs.
In February 2018, a Hot Springs Police Officer attempted to stop a vehicle operated by Geurin, for a traffic offense. A high-speed chase ensued, and officers had to execute a pit maneuver to terminate the pursuit. Geurin then fled on foot and was apprehended by officers. A search of Geurin’s person revealed a glass pipe with methamphetamine residue. Officers conducted an inventory search of the vehicle Geurin was driving and located a black jacket behind the driver's seat. Inside the jacket a baggie of methamphetamine was located, which contained approximately 25 grams of methamphetamine. Geurin was transported to the Garland County Detention Center and an additional 10.5 grams of methamphetamine were located on his person.
The suspected methamphetamine was submitted to the Arkansas State Crime lab for testing and tested positive for methamphetamine.
In August 2018, after posting bond from the February incident, Geurin led Troopers with the Arkansas State Police on a second high-speed chase, reaching speeds of up to 144 miles per hour and nearly colliding with another motorist.
Geurin was indicted by a federal grand jury in December of 2018 and entered a guilty plea in May of 2020.
This case was investigated by the Hot Springs Police Department and the Arkansas State Police. Assistant United States Attorney David Harris prosecuted the case for the Western District of Arkansas.
Texarkana Man Sentenced to 70 Months in Federal Prison for Drug TraffickingRead the Press Release
Texarkana, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced that Gerson Eduardo Magana, 25, of Texarkana, Arkansas, was sentenced today to 70 months in federal prison, followed by five years of supervised release, for the Distribution of more than 50 grams or more of pure methamphetamine. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearing, in the United States District Court’s Texarkana Division.
According to court records, the Federal Bureau of Investigation (FBI) and the Bi-State Narcotics Task Force conducted a controlled purchase of methamphetamine from Magana in June of 2018. The substance purchased from Magana was submitted to the Arkansas State Crime Laboratory, which found it to contain at least 70.8 grams of pure methamphetamine.
Magana was indicted by a federal grand jury in June of 2019 and entered a guilty plea in October of 2019.
This case was investigated by the FBI and the Bi-State Narcotics Drug Task Force. Assistant United States Attorney Graham Jones prosecuted the case for the Western District of Arkansas.
Northwest Arkansas Man Sentenced to 7 Years in Federal Prison for Being A Felon in Possession of A FirearmRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced that Nicolas Brown, age 40, of Springdale, Arkansas, was sentenced today to 84 months in federal prison followed by three years of supervised release for one count of being a Felon In Possession of a Firearm. The Honorable Timothy L. Brooks presided over the sentencing hearing in the United States District Court in Fayetteville.
According to court records on June 15, 2020, detectives with the 4th Judicial District Drug Task Force along with Springdale Police Officers executed a search warrant at a residence that Brown had been residing in. During the search, officers located and seized a handgun, a rifle (reported stolen) and a shot gun (reported stolen), several rounds of ammunition, methamphetamine, and drug paraphernalia. Brown was taken into custody without incident.
Brown was indicted by a federal grand jury in August 2020 and entered a guilty plea in October of 2019.
This case was prosecuted as a part of the Department of Justice's Project Safe Neighborhoods Initiative, which is aimed at reducing gun and gang violence, deterring illegal possession of firearms, and improving the safety of residents in the Western District of Arkansas. Participants in the initiative include federal, state, and local law enforcement agencies.
This case was investigated by the 4th Judicial District Drug Task Force, the Springdale Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Assistant United States Attorney David Harris prosecuted the case for the United States.
Mineral Springs Man Sentenced to 10 Years in Federal Prison for Drug TraffickingRead the Press Release
Texarkana, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced that Andre Scoggins, 50, of Mineral Springs, Arkansas, was sentenced today to 120 months in federal prison, followed by five years of supervised release, for Distributing more than 50 grams of methamphetamine. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearing in the United States District Court’s Texarkana Division.
According to court records, Detectives with the Hempstead County Sheriff’s Department conducted a controlled purchase of methamphetamine from Scoggins in November 2018. The substance purchased from Scoggins was submitted to the DEA Crime Laboratory, which found to contain 69.7 grams of pure methamphetamine.
Scoggins was indicted by a federal grand jury in June of 2019 and entered a guilty plea in October of 2020.
This case was investigated by the Hempstead County Sheriff’s Department, the Federal Bureau of Investigation, and the Drug Enforcement Administration. Assistant United States Attorney Graham Jones prosecuted the case for the Western District of Arkansas.
El Dorado Man Sentenced to 7 Years in Federal Prison for Drug TraffickingRead the Press Release
El Dorado, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced that, Justin Dewayne Johnson, 30, of El Dorado, was sentenced today to 84 months in federal prison, followed by four years of supervised release, for Possession with Intent to Distribute Heroin. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearing, in the United States District Court’s El Dorado Division.
According to court records, on December 22, 2019, at approximately 12:50 AM, an officer with the El Dorado Police Department was driving behind a black 2006 Honda Accord operated by Johnson. After establishing probable cause, the officer attempted to stop the vehicle by activating his emergency blue lights. After a vehicle pursuit resulting in Johnson wrecking the vehicle and fleeing on foot, he was apprehended and arrested by officers. A search of the vehicles trunk resulted in officers locating approximately 414.5 grams of heroin.
Johnson was indicted by a federal grand jury in March of 2020 and entered a guilty plea in August of 2020.
This case was investigated by the El Dorado Police Department and the FBI. Assistant United States Attorney Graham Jones prosecuted the case for the Western District of Arkansas.
Arkansas Couple Sentenced to A Combined Four Years in Federal Prison for Aggravated Identity Theft and Mail FraudRead the Press Release
El Dorado, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced today that Patrick Wayne Watson, age 24, now of Conway, Arkansas, and Kennan Dane O’Bier, age 24, now of Nash, Texas, were sentenced in Federal Court for their roles in a Mail Fraud and Identity Theft scheme in Magnolia, Arkansas. O’Bier was sentenced to 30 months in federal prison followed by three years of supervised release and Watson was sentenced to 18 months in federal prison followed by three years of supervised release, both on one count of Mail Fraud and Aggravated Identity Theft. They were each ordered to pay $200 in special assessments and to pay restitution in the amount of $42,113.12. The Honorable Susan O. Hickey, Chief United States District Judge, presided over the sentencing hearing in the United States District Court in El Dorado, Arkansas.
According to court records, between August of 2018 through January 31st of 2019, Watson, who was employed at a local bank, used his position at the bank to review personally identifiable information and banking information of customers. While doing so, Watson took photographs of the personally identifying information of over one hundred bank customers on his cellular phone. Watson and O’Bier together then used at least six (6) of those customer’s information to open PayPal, Amazon, and Wayfair accounts in the names of the unsuspecting bank customers.
Over the six months of the scheme, Watson and O’Bier then used those accounts to order thousands of dollars in products from Amazon and Wayfair and had them delivered to multiple addresses, to include their home in Magnolia, Arkansas. On April 23, 2019, a federal search warrant was obtained by the FBI and executed on their Magnolia home. Many of the shipped items were found as well as additional evidence of the Mail Fraud and Identity Theft scheme. Subsequent to this search warrant, a search of Watson’s cell phone resulted in law enforcement discovering the photographs of additional bank customers’ information which were not, to date, used in the scheme.
Watson and O’Bier were indicted on the scheme in August of 2019. Watson entered a plea to Mail Fraud and Aggravated Identity Theft charges on June 22, 2020. O’Bier entered his plea to Mail Fraud and Aggravated Identity Theft on July 20, 2020.
This case was investigated by the Federal Bureau of Investigation (FBI), the Hot Spring County Sheriff’s Office, the Hempstead County Sheriff’s Office and the Miller County Sheriff’s Office. Assistant United States Attorney Benjamin Wulff prosecuted the case for the United States.
Siloam Springs Man Sentenced to over 7 Years in Federal Prison for Child Pornography OffenseRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced today that Jon Anderson, age 44, of Siloam Springs, Arkansas, was sentenced today to 87 months in federal prison without the possibility of parole followed by 20 years of supervised release on one count of Accessing the Internet with the Intent to View Child Pornography. The Honorable Judge Timothy L. Brooks, United States District Judge, presided over the sentencing hearing in the United States District Court in Fayetteville.
According to court records, in May 2019, the Cyber Crimes Division of the Benton County Sheriff’s Office received information that a residence in Northwest Arkansas was downloading images of child pornography. On July 31, 2019, detectives with the Benton County Sheriff’s Office traveled to the residence in Siloam Springs, and encountered Anderson. During that interaction detectives found evidence of child pornography on the devices in the home. On or about August 1, 2019, Anderson was arrested.
Anderson was indicted in January of 2020 and was convicted after a trial in Fayetteville in October 2020.
This case was investigated by the Benton County Sheriff’s Office and the Department of Justice-Office of Inspector General. Assistant United States Attorneys Carly Marshall and Dustin Roberts prosecuted the case for the United States.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Fayetteville Woman Sentenced to over 17 Years in Federal Prison for Drug TraffickingRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas, announced today that Donna Sara Daosavanh, age 33, was sentenced to 210 months in federal prison without the possibility of parole followed by five years of supervised release on one count of Distribution of Methamphetamine. The Honorable Judge Timothy L. Brooks presided over the sentencing hearing today in the United States District Court in Fayetteville.
Detectives with the Fourth Judicial District Drug Task Force (4th JDDTF) identified Daosavanh as a source of supply for methamphetamine in Northwest Arkansas. On March 6, 2020, detectives with the 4th JDDTF, operating in an undercover capacity, purchased a half-pound of suspected methamphetamine from Daosavanh.
The 227g of suspected methamphetamine purchased from Daosavanh was subsequently sent to the DEA laboratory in Miami and was determined to contain 180.1 grams of pure methamphetamine.
Daosavanh was indicted by a federal grand jury in August of 2020 and entered a guilty plea in October of 2020. Daosavanh had previously been convicted in 2012 in the Western District of Arkansas of Aiding and Abetting in the Distribution of Methamphetamine.
This case was investigated by the 4th Judicial District Drug Task Force. Assistant United States Attorney Aaron Jennen prosecuted the case for the Western District of Arkansas.
Fayetteville Doctor Sentenced to 20 Years in Federal Prison for Mail Fraud and Involuntary ManslaughterRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, Acting United States Attorney for the Western District of Arkansas and Michael Missal, Inspector General of the Department of Veterans Affairs, announced that Robert Morris Levy age 54, of Fayetteville, Arkansas was sentenced today to 240 months in federal prison, followed by three years of supervised release and ordered to pay $497,745.70 in restitution for one count each of Mail Fraud and Involuntary Manslaughter. The Honorable Timothy L. Brooks presided over the sentencing in the U.S. District Court in Fayetteville.
According to the plea agreement, Levy held a medical license issued by the Mississippi State Board of Medical Licensure issued in 1997. In 2005, the Veterans Health Care System of the Ozarks (“Fayetteville VA”) hired Levy to serve as the Chief of Pathology and Laboratory Medical Services, a position he held until his termination in 2018.
In 2015, Levy was interviewed by an administrative fact-finding panel regarding reports that Levy was under the influence of alcohol while on duty. Levy denied the allegations. In 2016, Levy appeared to be intoxicated while on duty, and a subsequent drug and alcohol test revealed Levy’s blood alcohol content was .396.0 mg/dL. As a result, the Fayetteville VA summarily suspended Levy’s privileges to practice medicine and issued Levy a written notice of removal and revocation of clinical privileges. Levy acknowledged that the pending proposed removal and revocation of clinical privileges was “due to unprofessional conduct related to high blood alcohol content while on duty” and in July 2016, Levy voluntarily entered a three-month in-patient treatment program, which he completed in October 2016.
Toward the end of the treatment program, Levy executed a contract with the Mississippi Physician Health Program and the Mississippi State Board of Medical Licensure in anticipation of returning to practice medicine at the Fayetteville VA. In the contract, Levy agreed to maintain sobriety to ensure his ability to practice medicine with reasonable skill and safety to patients. Levy agreed to “abstain completely from the use of . . . alcohol and other mood-altering substances” and to submit to random urine and/or blood drug screens. Non-compliance would potentially subject Levy to loss of his medical license and, in turn, his employment by the Fayetteville VA. Levy returned to work at the Fayetteville VA in October 2016.
As part of the contract, Levy randomly provided urine specimens and blood samples for drug testing from November 2016 through June 2018. Each blood sample and urine specimen tested was reported negative for the presence of drugs and alcohol. On twelve occasions beginning in June 2017 and continuing through 2018, while Levy was contractually obligated to submit to random drug and alcohol screens, Levy purchased for personal consumption 2-methyl-2-butanol (2M-2B), a chemical substance that enables a person to achieve a state of intoxication but is not detectable in routine drug and alcohol testing methodology. On July 2, 2017, in furtherance of the scheme to defraud, Levy caused a package containing 2M2B to be shipped in interstate commerce from a chemical supply company in Virginia to Levy’s residence in Fayetteville, Arkansas. The package containing 2M2B was sent from Virginia and delivered to Levy’s home in the Western District of Arkansas by United Parcel Service, a commercial interstate carrier.
On February 4, 2014, Levy conducted a cursory and rudimentary workup of a biopsy of a tumor in the lymph node of an Air Force veteran and rendered a diagnosis of diffuse large B cell lymphoma. The Government’s evidence would show this diagnosis was incorrect and that Levy’s workup prior to finalizing the incorrect diagnosis was cursory and rudimentary. The Government’s evidence also showed that Levy made a patently false entry in the veteran’s medical record by stating that another pathologist agreed with Levy’s diagnosis, when in truth and fact, Levy well knew when he made the false entry in the veteran’s medical record that no other pathologist agreed with Levy’s diagnosis. The evidence also revealed that prior to Levy entering the false diagnosis, another pathologist had written to Levy, urging Levy to perform more diagnostic tests in the case due to the concern that Levy’s diagnosis of large B cell lymphoma was wrong. The veteran died at the VHSO on July 26, 2014, of small cell carcinoma for which the veteran received no treatment to prolong his life. The veteran was not treated for small cell carcinoma due to Levy’s grossly and criminally negligent conduct that demonstrated a wanton and reckless disregard for the veteran’s life.
“There is no more important work for our office than seeking justice for the most vulnerable members of our communities in Western Arkansas,” said Acting US Attorney David Clay Fowlkes. “The victims of this case are people who gave selflessly to ensure the safety and security of the United States. They deserve the best medical care that we can provide for them. They deserve to have doctors in charge of their treatment who are dedicated and vigilant, just as these victims were in their service to our Country. Instead, this defendant’s criminal conduct in this case caused irreparable harm to the victims and their families. We are very proud to work with the dedicated VA OIG agents to achieve this conviction and sentence. While we can never repair what this defendant has broken, it is our hope that this sentence will serve as an important step towards comforting the victim’s families and striving to ensure that this criminal conduct will not occur again.”
“This sentence should send a strong message that those who abuse their positions of trust in caring for veterans will be held accountable. I thank the VA OIG special agents who worked tirelessly on this case and the US Attorney’s Office for its outstanding efforts,” said VA Inspector General Michael J. Missal. “Our thoughts are with all those harmed by Dr. Levy’s actions and we hope they find some small measure of comfort from what happened here today.”
A federal grand jury indicted Levy in August 2019, and he entered a guilty plea in June 2020.
The Department of Veterans Affairs Office of Inspector General conducted the investigation. Criminal Chief Kyra Jenner and Assistant United States Attorney Bryan Achorn prosecuted the case for the United States.
Rogers Man Sentenced to 10 Years in Federal Prison for Drug TraffickingRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas, announced today that Juan Garcia-Maldonado, age 47, was sentenced to 120 months in federal prison without the possibility of parole followed by three years of supervised release on one count of Distribution of Methamphetamine. The Honorable Judge Timothy L. Brooks presided over the sentencing hearings today in the United States District Court in Fayetteville.
Agents with the Drug Enforcement Administration (DEA) Fayetteville Resident Office assisted by detectives and officers with local law enforcement agencies are actively investigating the distribution of methamphetamine in the Western District of Arkansas. During the course of this investigation, law enforcement identified Garcia-Maldonado, as a distributor of methamphetamine in Northwest Arkansas. In January of 2020, agents with the DEA, operating in an undercover capacity, purchased multiple ounces of methamphetamine from Garcia-Maldonado.
The methamphetamine purchased was subsequently sent to the DEA laboratory in Miami and tested positive for 79.7 grams of pure methamphetamine.
Garcia-Maldonado was indicted by a federal grand jury in March of 2020 and entered a guilty plea in August of 2020.
This case was investigated by the Drug Enforcement Administration. Assistant United States Attorney Dustin Roberts prosecuted the case for the Western District of Arkansas.
Former Sulphur Springs Office Administrator Sentenced to over Two and Half Years in Federal Prison for Theft of Government FundsRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas, announced today that Codi Dannell Bates, age 34, of Gravette, Arkansas, was sentenced today to 32 months in federal prison without the possibility of parole followed by three years supervised release and ordered to pay $184,934.06 in restitution on one count of Theft from an Agency Receiving Federal Funds. The Honorable Timothy L. Brooks, United States District Judge, presided over the sentencing hearing in the United States District Court in Fayetteville.
According to court records, from 2017 through 2019, while Bates was employed as the Office Administrator for the city of Sulphur Springs, she stole funds from the city in a variety of means. She obtained the signatures of city officials under false pretenses, then wrote those checks to herself and her husband. She also used cash funds paid to the city for water services to pay for her personal expenses. Bates’s criminal conduct was initially uncovered in detail by the Arkansas Bureau of Legislative Audit. Bates was arrested on state charges in May of 2019. The investigation was then referred to the Federal Bureau of Investigation. According to the investigation, Bates converted $184,934.06 from Sulphur Springs for her own personal use during her period of employment from August of 2017 through March of 2019. In 2018, the city of Sulphur Springs received over $180,000 from FEMA alone.
Bates waived formal Indictment and pled guilty to an Information filed by the U.S. Attorney’s Office on September 18, 2020.
This case was investigated by the Federal Bureau of Investigation, the Benton County Sheriff’s Department and the Arkansas Bureau of Legislative Audit. Assistant United States Attorney Benjamin Wulff prosecuted the case for the United States.
Hot Springs Man Sentenced to over 8 Years in Federal Prison for Child Pornography OffenseRead the Press Release
Hot Springs, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas, announced today that Alejandro Aurioles, age 32, of Hot Springs, Arkansas, was sentenced today to 97 months in federal prison without the possibility of parole followed by 10 years of supervised release on one count of accessing the Internet with the intent to view child pornography. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearing in the United States District Court in Hot Springs.
According to court records, on October 26, 2018, detectives with the Hot Springs Police Department received a Cybertip report of child pornographic images being downloaded to a Hot Springs telephone number. Detectives traced the phone number back to a cell phone associated with Aurioles. On or about December 21, 2018, Aurioles was arrested on a state charge and admitted to Hot Springs detectives that he had downloaded images of child pornography using his cell phone and sold those images to others on two occasions. During a search of his two cellular phones, thousands of child pornography images and videos of child sexual abuse were forensically recovered.
Aurioles was indicted in March of 2019 and entered a guilty plea to a related case in September of 2019.
This case was investigated by the Hot Springs Police Department and the FBI. Assistant United States Attorneys Kim Harris and Ben Wulff prosecuted the case for the United States.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Three from Northwest Arkansas Plead Guilty to Making False Statements to Obtain Coronavirus Relief FundsRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas, announced that Melvin Stout, age 40, of Fayetteville, AR, pleaded guilty today to making a false statement on a loan application to obtain money through the Small Business Administration’s Paycheck Protection Program (PPP). Earlier this month, Stout’s wife, Tiffany Acuff, age 36, of Fayetteville, and sister, Valarie Watson, age 43, of Fayetteville, also pleaded to charges in connection with obtaining loans through the PPP, which is intended for businesses struggling through the coronavirus pandemic.
The program, which provides low-interest, forgivable loans for businesses who use the funds for essential business expenses, such as payroll, is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in March 2020.
According to the plea agreements in each case, Stout, Acuff, and Watson submitted PPP loan applications that falsely represented their ownership of small businesses, which they alleged were eligible for PPP funds. Stout, was approved and received $9,400.00, Acuff, was approved and received $20,800.00, while Watson, applied for $20,800.00, but was declined. Along with the applications, the defendants submitted falsified tax documents and business receipts. None of the defendants owned the businesses listed in the applications.
Stout, Acuff, and Watson’s sentencings will be determined by the court at a later date, following the U.S. Probation Office’s completion of a presentence investigation. Based on their guilty pleas, the maximum penalties for each defendant include imprisonment for up to five years and a fine of up to $250,000.
The case was investigated by IRS, the FBI, and the Treasury Inspector General for Tax Administration (TIGTA). Assistant United States Attorney Hunter Bridges is prosecuting the case for the United States.
Northwest Arkansas Man Sentenced to over 11 Years in Federal Prison for Attempted Enticement of A MinorRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas, announced that Eric Butler, age 46, was sentenced today to 135 months in federal prison without the possibility of parole followed by 20 years of supervised release on one count of Attempted Enticement of a Minor to Engage in Illegal Sexual Activity. The Honorable Timothy L. Brooks, United States District Judge, presided over the sentencing hearing in the United States District Court in Fayetteville.
According to court records, in September of 2019, Homeland Security Investigations (HSI), the Northwest Arkansas Internet Crimes Against Children (ICAC) Task Force, the Arkansas State Police, and several local law enforcement agencies conducted a joint operation to target online sexual predators in Northwest Arkansas. As part of the operation, undercover law enforcement investigators placed multiple advertisements on various online websites and mobile applications representing themselves to be minors.
On September 25, 2019, Butler responded to a Craigslist advertisement and began emailing and text messaging with an undercover law enforcement officer who was posing as a 13-year-old female. Over the course of two days, Butler exchanged several emails with the 13-year-old persona, in which he discussed having sexual intercourse with the purported minor. Butler arranged a meeting with the purported 13 year old for a sexual encounter and was arrested upon arriving at the predetermined meeting location.
Butler was indicted by a federal grand jury in November of 2019, and entered a guilty plea in August of 2020.
This case was investigated by the Department of Homeland Security Investigations Fayetteville, the Internet Crimes Against Children (ICAC) Task Force, and the Arkansas State Police. Assistant United States Attorney Amy Driver prosecuted the case for the United States.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Lowell Man Sentenced to 10 Years in Federal Prison for Money LaunderingRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas announced that, Jonathan Terry, age 35, was sentenced today to 120 months in federal prison followed by three years of supervised release on one count of Money Laundering. The Honorable Judge Timothy L. Brooks presided over the sentencing hearing today in the United States District Court in Fayetteville.
Beginning in July of 2019, Terry began fraudulently obtaining the banking and personally identifying information of individuals throughout the Fayetteville Division of the Western District of Arkansas through various means, primarily from stealing mail from unattended mailboxes. After he obtained that information, Terry opened financial accounts at various financial institutions, to include TD Ameritrade and Fidelity, and funded those accounts with stolen checks. Terry also attempted to take advantage of the “pending” status of large deposits to transfer funds amongst the various accounts he opened. In all, the Court found that Terry attempted $2,256,727.50 in transactions on those fraudulent accounts, though he and his coconspirators only obtained approximately $4,000 in the overall scheme. The Court found that Terry was an “organizer or leader” of the scheme, that he victimized over 10 individuals, and that he obstructed justice during the investigation.
Terry was indicted by a federal grand jury in March of 2020 and entered a guilty plea in June of 2020.
This case was investigated by the Madison County Sheriff’s Office, the Fayetteville Police Department, the Washington County Sheriff’s Office, the Arkansas State Police, IRS, the FBI and the Treasury Inspector General for Tax Administration (TIGTA). Assistant United States Attorney Ben Wulff prosecuted the case for the Western District of Arkansas.
Heber Springs Couple Plead Guilty to Disturbing Archaeological Site in Buffalo National RiverRead the Press Release
Fort Smith, Arkansas – Two people pleaded guilty in federal court today to unlawfully excavating and damaging archaeological resources in Buffalo National River, a National Park under the control of the U.S. Department of the Interior, announced Western District of Arkansas First Assistant U.S. Attorney David Clay Fowlkes.
In U.S. District Court hearings held this afternoon via video teleconference, Michael L. Walters, age 64, of Heber Springs, Ark., and Yvonne Jenay Walters, age 55, formerly of Heber Springs, each pleaded guilty to a criminal information charging violation of the Archaeological Resources Protection Act. Previously, a federal grand jury indicted both defendants for violation of the Archaeological Resources Protection Act, damage to U.S. property and theft of U.S. property. United States Magistrate Judge Mark E. Ford presided over the hearings and accepted the guilty pleas.
According to the plea agreement filed in this case, on Aug. 29, 2015, U.S. Park Rangers patrolling the Grinders Ferry area of the Buffalo National River observed Yvonne Walters taking rocks and minerals from a gravel bar. Rangers then found Michael Walters digging nearby, in what park records list as a prehistoric archaeological site. The couple admitted they had come to the park to search for rocks and artifacts, including Native American arrowheads. Further investigation revealed the couple had been to the same area previously to dig for rocks and artifacts. Both were involved in searching for, locating, excavating, trading, and selling artifacts, and actively engaged in social media group communities with the same interests.
Michael and Yvonne Walters’ sentences will be determined by the court at a later date, following the U.S. Probation Office’s completion of a presentence investigation. Based on their guilty pleas, the maximum penalties for each defendant include imprisonment for up to one year and a fine of up to $100,000. The defendants also agreed to forfeit artifacts, tools and equipment, and to pay $4,111 restitution to the National Park Service.
The case was investigated by special agents of the National Park Service, Investigative Services Branch, and U.S. Park Rangers at Buffalo National River. Assistant United States Attorney Steven Mohlhenrich is prosecuting the case for the United States.
The National Park Service reminds the public that public lands are protected by federal laws and regulations. In 1979, Congress enacted the Archaeological Resources Protection Act to protect an irreplaceable part of the Nation’s heritage. The act prohibits excavating, removing, damaging, or otherwise altering or defacing any archaeological resource located on public or Indian lands, or attempting to do so.
Career Offender Sentenced to over 21 Years in Federal Prison for Drugs and Firearm ChargesRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas announced that, Travis Toss Shell, age 39, was sentenced today to 262 months in federal prison followed by five years of supervised release on one count of Possession with Intent to Distribute Methamphetamine and one count of Possession of a Firearm in Furtherance of a Drug Trafficking Offense. The Honorable Judge Timothy L. Brooks presided over the sentencing hearings today in the United States District Court in Fayetteville.
On January 6, 2020, detectives with the 4th Judicial District Drug Task Force were attempting to locate Shell, based on information that he was selling methamphetamine and had an active warrant for his arrest. Shell was located in the parking lot of a hotel in Springdale driving a Chevrolet Impala. Detectives attempted to stop Shell in the parking lot. After Detectives identified themselves as police, Shell put the vehicle in reverse and fled. After crashing his vehicle, Shell fled on foot, discarded a loaded firearm, and traversed across the interstate during heavy traffic. Detectives searched the vehicle and located a distribution amount of methamphetamine in the console area of the vehicle.
The methamphetamine was subsequently sent to the Arkansas State Crime Lab and tested positive for 28.2 grams of methamphetamine.
Shell was indicted by a federal grand jury in March of 2020 and entered a guilty plea in August of 2020.
This case was investigated by the State of Arkansas Fourth (4th) Judicial District Drug Task Force. Assistant United States Attorney David Harris prosecuted the case for the Western District of Arkansas.
This case was prosecuted as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
Camden Arkansas Man Sentenced to over 8 Years in Federal Prison for Drug PossessionRead the Press Release
El Dorado, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas, announced that Justin Tyrone Seguin, age 37, of Camden, Arkansas, was sentenced today to 100 months in federal prison followed by three years of supervised release on one count of Possession of Methamphetamine with the Intent to Distribute. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearing in the United States District Court in El Dorado.
In July of 2019, investigators with the Camden police department obtained a search warrant for Seguin’s residence in Camden, Arkansas. The search warrant authorized investigators to search the residence for controlled substances and other records indicating ownership and occupancy. On July 19, 2019, Investigators executed the search warrant. When officers entered Seguin’s bedroom, he struck an officer and resisted arrest. After being subdued, a search of his bedroom revealed digital scales containing methamphetamine residue, marijuana and three bags of methamphetamine weighing approximately 45 grams.
Seguin was indicted by a federal grand jury in November of 2019, and entered a guilty plea in February of 2020.
This case was investigated by the Camden Police Department, the FBI, and Assistant United States Attorney Ben Wulff prosecuted the case for the Western District of Arkansas.
Arkansas Project Manager Sentenced in Connection with COVID-Relief FraudRead the Press Release
A project manager employed by a major retailer was sentenced to 24 months in prison followed by five years of supervised release for fraudulently seeking more than $8 million in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney R. Trent Shores of the Northern District of Oklahoma.
Benjamin Hayford, 32, of Centerton, Arkansas, was sentenced today by U.S. District Judge Claire V. Eagan. Hayford pleaded guilty in August to an indictment charging him with fraudulently seeking millions of dollars in forgivable loans guaranteed by the SBA from multiple banks by claiming fictitious payroll expenses. To support his applications, Hayford provided lenders with fraudulent payroll documentation purporting to establish payroll expenses that were, in fact, non-existent. In addition, Hayford admitted to making false representations to a financial institution concerning the date that a Limited Liability Partnership for which he applied for relief was established. The lenders at issue declined to fund the loans that Hayford sought.
The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the Paycheck Protection Program (PPP). In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set period and use a certain percentage of the loan towards payroll expenses.
Deputy Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Victor A.S. Régal for the Northern District of Oklahoma are prosecuting the case. The U.S. Attorney’s Office for the Western District of Arkansas provided valuable assistance in this matter.
The Justice Department acknowledges and thanks the Federal Housing Financial Agency Office of Inspector General, the SBA Office of Inspector General, and the Federal Deposit Insurance Corporation Office of Inspector General for their efforts investigating this matter.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Arizona Adoption Attorney Sentenced to over 6 Years in Prison for Alien Smuggling for Financial GainRead the Press Release
Fayetteville, Arkansas – First Assistant United States Attorney David Clay Fowlkes for the Western District of Arkansas, Special Agent in Charge Diane Upchurch of the FBI Little Rock Field Office, Special Agent in Charge Peter Kapoukakis of the U.S. Department of State’s Diplomatic Security Service, Miami Field Office and Arkansas Attorney General Leslie Rutledge announced that Paul Petersen, age 45, of Mesa, Arizona was sentenced today to 72 months in federal prison, followed by three years of supervised release and ordered to pay a fine and court costs totaling $105,100.00 for Conspiracy to Smuggle Illegal Aliens for Commercial Advantage and Private Financial Gain. The Honorable Timothy L. Brooks presided over the sentencing in the U.S. District Court in Fayetteville.
“The defendant in this case violated the laws of three states and two countries during the course of his criminal scheme,” stated First Assistant United States Attorney Fowlkes.” He exploited a legal loophole and used it to run an International adoption business outside the necessary oversight from the United States or the Republic of the Marshall Islands. During the scheme, the defendant lied to state court judges, falsified records, encouraged others to lie during court proceedings, and manipulated birth mothers into consenting to adoptions they did not fully understand. This unique case merited the strong sentence ordered by the Court today. It is our sincere hope that this sentence sends a message to those who would seek to conduct human trafficking operations in the Western District of Arkansas, and to those who would seek to manipulate and take advantage of people like the Marshallese citizens in this case.”
According to the Plea Agreement filed in this case, the FBI, the DSS and local law enforcement, have been actively investigating the criminal activities of Paul Petersen, 44, of Mesa, Arizona, for several years. During the course of the investigation, law enforcement determined that the defendant, Paul Petersen, among other things, orchestrated the travel of several pregnant women from the Republic of the Marshall Islands to the Western District of Arkansas. The purpose of this travel was for Petersen to arrange adoption of their children by families living in the United States.
The Republic of the Marshall Islands (RMI) is an island country near the equator in the Pacific Ocean, slightly west of the International Date Line. In 1983, the United States entered into a Compact of Free Association (hereinafter, the “Compact”) with the RMI government. The United States and the RMI signed an Amended Compact in 2003, which Congress codified at Public Law 108-188. Section 141 of the Compact grants RMI citizens the ability to freely enter and take up employment within the United States. Section 141(b) prohibits RMI citizens from entering the United States under the Compact agreement if their travel is for the purpose of adoption.
According to the Plea Agreement, the Defendant, Paul Petersen, is a licensed attorney who practices law in Arizona, Utah, and Arkansas. During the course of the investigation, FBI and DSS agents discovered that Petersen used credit card accounts that he controlled to purchase airline tickets for several women, all citizens of the RMI who did not have official authorization to enter or reside in the United States, to travel from the RMI to the Western District of Arkansas. This travel arranged and funded by Petersen was in violation of the Immigration and Nationality Act because the women were all citizens of the RMI and were not eligible for admission into the United States under the terms of the Compact. According to State of Arkansas Circuit Court records, the families who adopted these children paid Petersen significant sums of money for him to act as a legal facilitator of the adoptions. Finally, also according to the Plea Agreement, witness interviews conducted by the agents investigating Petersen revealed that it was part of the conspiracy that Petersen’s co-conspirators offered the women $10,000 to induce them to travel to the United States and consent to the adoptions.
A federal grand jury indicted Petersen in October 2019, and he entered a guilty plea in June 2020.
The FBI and the DSS conducted the investigation. First Assistant United States Attorney David Clay Fowlkes, Deputy Criminal Chief Kim Harris, and Assistant United States Attorney Sydney Butler are prosecuting the case. The Justice Department’s Office of International Affairs of the Department’s Criminal Division also assisted in the investigation.
Pearcy Arkansas Man Sentenced to over 7 Years in Federal Prison for Drug Trafficking and Firearms PossessionRead the Press Release
Hot Springs, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas, announced today that Buddy Lee Harris, age 42, of Pearcy, Arkansas, was sentenced to 90 months in federal prison followed by three years of supervised release on one count of Distribution of Methamphetamine and one count of Possession of a Firearm in Furtherance of a Drug Trafficking Crime. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearing in the United States District Court in Hot Springs.
In the fall of 2019, detectives with the 18th Judicial Drug Task Force launched an investigation into drug trafficking in the Western District of Arkansas. In August of 2019, detectives conducted a controlled purchase of methamphetamine and a firearm from Harris.
Harris was indicted by a federal grand jury in November of 2019, and entered a guilty plea in May of 2020.
This case was investigated by the 18th Judicial Drug Task Force, Homeland Security Investigations Little Rock and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Assistant United States Attorney Bryan Achorn and Special Assistant United States Attorney Trent Daniels prosecuted the case for the Western District of Arkansas.
This case was prosecuted as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.