District of Colorado
Press releases recorded for this federal judicial district.
Mother and Son Indicted for Conspiracy to Defraud the IRSRead the Press Release
DENVER – Jaquon Mucsarney, age 35, of Aurora, appeared yesterday before a U.S. Magistrate Judge for his initial appearance, where he was advised of his rights and the charges of defrauding the IRS pending against him, announced United States Attorney John Walsh, IRS Criminal Investigation Special Agent in Charge Stephen Boyd and Social Security Administration Office of Inspection General Special Agent in Charge Wilbert M Craig. MucSarney is one of three defendants indicted and arrested for defrauding the IRS and mail fraud. Last week, Schosche Mucsarney, age 54, of Aurora, appeared on related charges .
Jason Mucsarney, Schosche Mucsarney and co-conspirator, Sherry Charleston where indicted by a Federal Grand Jury in Denver on January 7, 2016. The indictment remained sealed until their arrests. Sherry Charleston and Schosche Mucsarney are free on a bond.
Beginning in January 2011 and continuing through December 2015, Jaquon, Schosche and Sherry as well as others known and unknown to the grand jury devised a scheme to defraud the Internal Revenue Service. As part of the scheme, Jaquon filed tax returns with the IRS which contained false statements and information. At times, he was assisted by his mother, Schosche when making such filings.
As part of the scheme, Jaquon and Schosche caused or attempted to cause the IRS to issue tax refund checks from the United States Treasury based on the false information provided in various tax returns. Jaquon submitted or caused the submission of online applications to the IRS which resulted in the IRS issuing an employer identification number (“EIN”) shell corporations and used stolen identities and social security numbers (“SSN”) of actual persons when providing information to the IRS to obtain an EIN for one of his shell corporations.
Jaquon worked with Schosche and Sherry to receive tax refund checks issued by the IRS. Jaquon directed the IRS to send the refund checks to mailing addresses which he controlled, or to addresses connected to Schosche and Sherry. Jaquon and Schosche submitted approximately 100 tax returns containing false information to the IRS which claimed refunds totaling in excess of $2,000,000. Ultimately, the IRS paid out approximately $300,000 in refunds based on some of the returns.
To further obstruct and impede the IRS, on February 12, 2015, Sherry provided false and misleading information to an IRS Special Agent investigating Jaquon’s activities; on June 22, 2015, Sherry with Jaquon’s advice and counsel intentionally failed to appear for testimony before a Federal Grand Jury.
Jaquon was charged with; 18 counts of mail fraud, one count of conspiracy to defraud the government, 19 counts of false claims, 12 counts of aggravated identity theft and one count of obstruction of justice. Sherry was charged with; 4 counts of mail fraud, one count of conspiracy to defraud the government, 7 counts of false claims, one count of aggravated identity theft and one count of obstruction of justice. Schosche was charged with; 6 counts of mail fraud, one count of conspiracy to defraud the government, and three counts of false claims.
Mail fraud carries a penalty of not more than 20 years in federal prison, and a fine of up to $250,000 per count. Conspiracy to defraud the government carries a penalty of not more than 10 years in federal prison, and a fine of up to $250,000 per count. False claims carry a penalty of not more than 5 years in federal prison, and a fine of up to $250,000 per count. Aggravated Identity Theft carries a penalty of 2 years imprisonment minimum consecutive to underlying felony and a fine of up to $250,000 per count. Obstruction of justice carries a penalty of not more than 3 years in federal prison, and a fine of up to $250,000 per count.
This case was investigated by the Internal Revenue Service – Criminal Investigation and Social Security Administration, Office of Inspection General. This case is being prosecuted by Assistant U.S. Tim Neff.
The charges contained in the indictment are allegations, and the defendant is presumed innocent until proven guilty.
Connecticut Man Arrested in Greeley After Driving for Three Days to Colorado to Have Sex with MinorsRead the Press Release
DENVER – Jason Tremblay, age 28, of Ledyard, Connecticut, was arrested late last week in Greeley, Colorado after driving from his home to Colorado to engage in illicit sexual conduct with a mother and her two minor daughters, who in this case was an undercover Homeland Security Investigations Special Agent, U.S. Attorney John Walsh and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) announced. Today U.S. Magistrate Judge Kristen L. Mix ordered the defendant released on a $50,000 unsecured bond. He was first charged based on a Criminal Complaint on February 4, 2016, and then indicted by a federal grand jury today, February 9, 2016.
According to charging documents, including the affidavit in support of the Criminal Complaint, in December of 2014, an HSI special agent began an investigation targeting individuals who use a particular website to sexually exploit children. They also may create and join a variety of groups based on their sexual interests, including groups called “incest,” “jailbait,” and “teen.” Members may post advertisements in the website’s classified section seeking to meet other members with the same sexual interests such as rape and incest.
In November of 2015, the HSI special agent was working in an undercover capacity in Greeley, adopting a fictional persona of a single mother of two children, ages 10 and 14. On November 30, 2015, the agent received an email via the afore mentioned website from an individual asking if the mom persona was “active with your girls.” After this email, further communications ensued, including chats and other communications.
On January 6, 2016, the undercover agent received an image that then target, now defendant Tremblay claimed to be himself. In return, the special agent sent images that she identified as her with her two minor daughters. After agreeing to a meeting that would involve the sexual exploitation of the minor girls, on February 2, 2016, Tremblay began a drive he estimated would take 29 hours from Ledyard, Connecticut to Greeley, Colorado. On February 4, 2016 at 2:20 a.m., Tremblay was encountered by a Greeley Police Officer, who asked Tremblay about his sobriety and why he was in the vicinity. HSI agents and Colorado State Patrol Officers then arrived on scene and Tremblay was placed under arrest.
According to the indictment, the defendant faces one count of aggravated sexual abuse with children. If convicted on that count he faces not less than 30 years, and up to life in federal prison. Further, he faces one count of travel with intent to engage in illicit sexual conduct. If convicted on that count, he faces not more than 30 years in federal prison. Finally, Tremblay faces two counts of attempted coercion and enticement. If convicted on those counts, he faces not less than 10 years, and not more than life imprisonment, per count. Each of the four counts also carries a fine of not more than $250,000.
This case was investigated by HSI, with support from the Colorado State Patrol and the Greeley Police Department.
Tremblay is being prosecuted by Assistant U.S. Attorney Alecia Riewerts.
The charges contained in the Criminal Complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.
This case was brought 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
Colorado Springs Man Sentenced to 60 Months in Federal Prison for Being a Felon in Possession of a FirearmRead the Press Release
DENVER – Michael Alvares Fykes, age 45, of Colorado Springs, Colorado, was recently sentenced by U.S. District Court Judge R. Brooke Jackson to serve 60 months in federal prison for being a felon in possession of a firearm, U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Denver Division Special Agent in Charge Ken Croke announced. Following his prison sentence, Fykes was ordered to spend 3 years on supervised release. The defendant, who appeared at the sentencing hearing in custody, was remanded at the hearing’s conclusion.
Fykes was first charged by Criminal Complaint on May 8, 2015. He was then indicted by a federal grand jury in Denver on May 21, 2015. On August 28, 2015, following a 3-day jury trial, Fykes was found guilty of being a felon in possession of a firearm. He was sentenced by Judge Jackson on January 29, 2016.
According to the facts presented at trial, as outlined in the government’s sentencing statement, on February 1, 2015, at approximately 4:22 p.m., a male in Colorado Springs called 911 and told the operator he was calling on behalf of a female who was involved in prostitution. Prior to the 911 call, the male caller had contacted the female for sexual services after viewing her website advertisement. When the female arrived at the male’s residence she was visibly nervous and scared. Rather than pursue sexual services, the male called the police for help. The female left the residence with two males in a red Pontiac before the police arrived.
Officers from the Colorado Springs Police Department (CSPD) arrived at the callers location. One officer while responding noticed a 1999 red Pontiac Grand Prix in a driveway. The CSPD officer blocked the driveway with a squad car, preventing the red Pontiac from fleeing. The officer then approached the vehicle’s passenger side and asked the occupant, later identified as Fykes, to exit the vehicle. Another CSPD officer asked the driver to exit the vehicle. Both males complied with CSPD commands.
Officers interviewed the two males in the car, the young female who was the subject of the 911 call who was seated in the back of the red Pontiac, and the original 911 caller. As a result of those interviews, the driver and the passenger (Fykes) were arrested on state charges of human trafficking for sexual servitude. CSPD officers then impounded the Pontiac as it was used in the commission of a felony. Prior to impounding the vehicle, officers did an inventory search. During the search officers found a black backpack. In the unzipped pouch of the backpack the officers found a Taurus .45 caliber revolver. The bag also contained Fykes’ Passport. After finding the weapon, CSPD stopped the inventory search and obtained a search warrant.
Fykes’ criminal history revealed that he was a convicted felon, which by law prohibited him from possessing a weapon. His convictions included a Felony Menacing in Adams County District Court in 1992; Conspiracy to possess with intent to distribute and to distribute cocaine in U.S. District Court in Colorado in 1992; Theft in El Paso County District Court in 1992; and Possession of a controlled substance in Los Angeles Superior Court in 2003. The state charges of human trafficking were dismissed against Fykes and the driver of the vehicle as the victim of the crime fled and could not be found.
“Thanks to the hard work of the Colorado Springs Police Department in conjunction with the ATF, a previously convicted felon who was caught with a firearm will now spend the next 5 years away from his family as punishment for his crime,” said U.S. Attorney John Walsh.
"Fykes is a habitual felon who was indiscriminate in his criminal activity. He has been involved in drug trafficking, illegal possession of firearms and robbery,” said ATF Special Agent in Charge Ken Croke. "Colorado Springs PD should be commended for putting this dangerous felon back behind bars."
This case was investigated by the Colorado Springs Police Department and the ATF.
Fykes was prosecuted by Assistant U.S. Attorneys Jason St. Julien and Kurt Bohn.
RTD Supervisor Found Guilty of Accepting Bribes in Connection with His Official DutiesRead the Press Release
DENVER – Following a 3-day jury trial before Chief U.S. District Court Judge Marcia S. Krieger, Kenneth P. Hardin, age 62, of Aurora, Colorado, was found guilty late yesterday of three of four counts related to accepting bribes in connection with his official duties as a senior manager at RTD, United States Attorney John Walsh, FBI Special Agent in Charge Thomas P. Ravenelle, and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Hardin, who appeared at the trial free on bond, is scheduled to be sentenced by Chief Judge Krieger on May 16, 2016. The jury deliberated for about two hours before reaching their verdicts.
Hardin was indicted by a federal grand jury on November 5, 2014. He was arrested and made his first appearance in federal court in Denver on November 12, 2014. After a series of detailed hearings, Hardin’s jury trial began on February 1, 2016. He was found guilty of three counts of Bribery concerning programs receiving federal funds, on February 3, 2016. He was found not guilty of a similar count.
According to the indictment as well as facts presented to the jury during trial, Hardin was an employee of the Regional Transportation District in Colorado (“RTD”), holding the position of Senior Manager of RTD’s Civil Rights Division. In that position, Hardin’s duties at RTD included directing and managing the operations of RTD’s Civil Rights Division, which was responsible for furthering civil rights goals through regulatory compliance, complaint investigation, community outreach, and programmatic strategy development. The Disadvantaged Business Enterprise program is one of the programs that fell under the umbrella of RTD’s Civil Rights Division. As the Senior Manager of the Civil Rights Division, Hardin also served as RTD’s Diversity Officer. RTD receives money from federal grants.
Hardin was found guilty of corruptly soliciting and accepting money, on or about the dates listed below, from a person intending to be influenced in connection with RTD business involving more than $5,000.
Date Amount of Bribe
May 15, 2014 $1,000
June 26, 2014 $1,000
September 15, 2014 $2,000
Bribery concerning programs receiving federal funds carries a penalty of not more than 10 years in federal prison, and up to a $250,000 fine per count for each of the three counts of conviction.“Public officials get paid to make other people’s lives better. When they take money to line their own pockets, we will hunt them down and punish them,” said U.S. Attorney John Walsh. “The fact that the jury took just under two hours to return guilty verdicts in this case is a testament to the exceptional skill of the federal criminal investigators and the Assistant U.S. Attorneys who handled this case.”
"The guilty verdict against Mr. Hardin shows public servants are not above the law and must be held accountable for failing to uphold their oath to maintain the public's trust," said FBI Denver Division Special Agent in Charge Thomas Ravenelle.
“Offenders who abuse the public’s trust are inherently more culpable. Mr. Hardin made a conscious decision to deceive and benefit personally at the expense of the citizens of Colorado,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “This verdict demonstrates our collective efforts to enforce the laws and ensure public trust.”
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation with substantial assistance from the U.S. Department of Transportation Office of the Inspector General. Hardin was prosecuted by Assistant U.S. Attorneys Pegeen D. Rhyne and J. Chris Larson.
Pakistani Man Makes Appearance in U.S. District Court in Denver Following Indictment and Arrest for Sale and Distribution of New, Misbranded and Counterfeit Prescription DrugsRead the Press Release
DENVER – Junaid Qadir, age 33, of Karachi, Pakistan, appeared in U.S. District Court in Denver late last week on multiple charges of illegal importation and sale of misbranded and unapproved drugs, some of which are further alleged to have been counterfeit or controlled substances, and all of which were manufactured overseas and shipped to the United States, U.S. Attorney John Walsh, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigation (HSI) Special Agent in Charge David Thompson, Food and Drug Administration’s Office of Criminal Investigations’ Kansas City Field Office Special Agent in Charge Catherine Hermsen and U.S. Postal Service Inspector in Charge of the Denver Division Craig Goldberg announced.
Qadir was indicted by a federal grand jury in Denver on August 22, 2012. A superseding indictment was obtained on June 25, 2015. He was arrested last Spring in Germany, a country with U.S. extradition laws after he traveled there from Pakistan. Qadir fought extradition, which resulted in his incarceration in Germany until a court order was obtained mandating is extradition. He first appeared in federal court in Denver on January 25, 2016, where he was read his rights and advised of the charges pending against him. He again appeared on January 28, 2016 for arraignment, where he entered a pro-forma not guilty plea, and was ordered held in custody without bond pending a resolution of his case by a U.S. Magistrate Judge.
According to court documents, Qadir and his brother, Shehzad, who is not in custody, are principals of a family owned and operated business in Karachi, Pakistan known as JNS Impex. This company held itself out to be, among other things, a leading and long-standing exporter of branded and generic pharmaceutical drugs and surgical products. They wrongly claimed it had access to and could supply most brand name pharmaceutical products; that it was affiliated with many multinational pharmaceutical manufacturers; and that it was licensed to distribute and export over-the-counter, prescription and narcotic pharmaceutical drugs. At no time were they associated or registered with the DEA to import controlled substances into the U.S. or to distribute controlled substances in the United States
It was part of the conspiracy that Junaid Qadir, acting in concert with his brother and others known and unknown, used advertisements on internet websites on behalf of their prescription drug distribution company JNS Impex and through business-to-business internet website platforms, to solicit orders for a variety of brand name and generic pharmaceutical prescription, mostly in commercial and wholesale quantities. The defendants would take in these orders over the internet primarily from individuals and entities operating internet pharmacy websites and other types of illicit pharmacy operations who, in turn, were undertaking to sell these drugs to their retail customers without valid prescriptions from licensed medical professionals. The defendants would take in orders for bulk drug shipments directly to these pharmacy operations and for drop shipments directly to the customers of these pharmacy operations. A substantial portion of the orders taken in by the defendant were for shipment to businesses and individuals located in the United States.
The defendants would undertake to fill these drug orders to the United States businesses and residents by procuring brand name and generic drugs that they knew to be unapproved for the United States market by the FDA from suppliers whose drug manufacturing facilities were not approved by the FDA and whose packaging and patient literature for their drugs was also not approved by the FDA. As part of the conspiracy, the defendants, using a series of email addresses, would forward the drug orders to a network of drug suppliers in Pakistan, India, the United Kingdom, and China. Some would obtain stockpiles of the drugs being ordered and, from these stockpiles or from the suppliers directly, would cause the orders to be filled by shipments through the international mail to or on behalf of their customers. With respect to some of the drug shipments ultimately intended for United States recipients, the defendants would alternatively employ a network of individuals located in the United States to receive the imported drugs and re-ship them to the ultimate customers within the United States once the drugs had been safely imported.
Qadir would often cause the drugs being shipped to the United States to evade detection by United States customs and foreign customs authorities by having those drugs concealed, in loose format, in plastic vitamin bottles and plastic water bottles. They would also cause the drug shipments to evade customs detection by causing the shipments to be accompanied by customs declarations that inaccurately or misleadingly described the contents of the shipments or without customs declarations altogether. The drugs would often be shipped in mail parcels without packaging, without labels, and without patient safety leaflets or other written instructions and information.
In order to secure payment for the drug shipments, the defendants and their co-conspirators would have their United States customers send money transfers, by way of Western Union and similar money transferring services, to themselves in their own names or in the names of various individuals located in Pakistan or, alternatively, would have the customers send bank wire transfers to various bank accounts in the names of associated businesses or their own names at financial institutions located and based in the United Arab Emirates and elsewhere. The defendants, on occasion, would also have their domestic operatives transfer money to one another in order to satisfy obligations that the defendants and their co-conspirators had to them.
The illegal drugs imported by the defendants include counterfeit or unapproved versions of: Viagra, Lorazepam, Alprazolam, Diazepam, Zolpidem, and Phentermine.
"This case should be a reminder to everyone that buying counterfeit prescription drugs on line from overseas pharmacies is playing with fire," said U.S. Attorney John Walsh. "An online buyer of such drugs has no idea what drug or substance they are actually receiving. The U.S. Attorney's Office, Homeland Security Investigations and FDA will work tirelessly -- as we did in this case -- to locate, charge and apprehend counterfeit drug traffickers in whatever corner of the world they may hide."
“There’s a misperception that counterfeiting is a victimless crime, but unfortunately it is not – counterfeit pharmaceuticals can and have led to serious injuries and death,” said David A. Thompson, special agent in charge of HSI Denver. “For that reason, and because counterfeiting often funds illegal activity, we take cases like Qadir’s very seriously and work tirelessly with our partners to investigate these crimes and bring those who commit them to justice.”
“The FDA-regulated supply chain for medicines helps protect consumers from prescription drugs that could be harmful or unsafe for them to use. When criminals provide unapproved and counterfeit prescription drugs online, they place the public’s health at risk,” said Catherine A Hermsen, Special Agent in Charge, FDA Office of Criminal Investigations’ Kansas City Field Office. “We will continue to be vigilant in our efforts to bring such criminals to justice.”
“This arrest is evidence that no matter where you are, be it in the United States or abroad, if you use the U.S. Mail to endanger the American public, we will find you,” said Craig Goldberg, Inspector-in-Charge of the Denver Division of the U.S. Postal Inspection Service. “We will continue to use our resources to protect the American public and ensure the integrity of the U.S. Mail. This case is another great example of federal law enforcement agencies partnering together to keep America safe.”
Junaid Qadir faces the following charges: Introduction and Delivery for Introduction of Unapproved New Drugs into Interstate Commerce, Introduction and Delivery for Introduction of Misbranded Drugs into Interstate Commerce, Sale of Counterfeit Drugs, Importation of Schedule IV Controlled Substances, Distribution of Scheduled IV Controlled Substances, Importation of Merchandise Contrary to Law, Conspiracy to Defraud the U.S. and Commit Offenses Against the U.S., Conspiracy to Import Schedule IV Controlled Substances and Conspiracy to Distribute and Possess with Intent to Distribute Schedule IV Controlled Substances. Penalties for these offenses range from not more than 3 years in federal prison per count, to not more than 20 years in federal prison per count. Each count also carries a penalty of up to a $250,000 fine.
HSI further stated that the trafficking of counterfeit goods is the second largest illicit trade activity, valued at roughly $250 billion. In fiscal year 2014, HSI, working through its National Intellectual Property Rights Center, seized more than 23,000 counterfeit items with an MSRP of $1.2 billion. Members of a public who would like to report information about suspected counterfeiters are encouraged to call ICE’s toll-free Tip Line at 1-866-DHS-2-ICE or by completing this online tip form.
This case was investigated by HSI, FDA OCI, and the U.S. Postal Inspection Service.
Qadir is being prosecuted by Assistant U.S. Attorney Kenneth M. Harmon.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
Denver man is found guilty of Conspiracy to Defraud the IRS and False StatementsRead the Press Release
DENVER – Austin Ray, age 48, of Denver, Colorado, who owned and operated Cheapertaxes LLC in Denver, CO, was convicted by a jury late Wednesday night in U.S. District of Colorado on one count of conspiracy to defraud the United States, two counts of assisting in the preparation of false income tax returns, and two counts of signing and submitting his own false tax returns, announced U.S. Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd.
Ray and his co-conspirator Anne Rasamee, were Indicted by a federal grand jury in Denver on April 10, 2014 followed by a superseding Indictment on December 2, 2014 and a 2nd superseding Indictment of January 6, 2015. Rasamee pled guilty on January 20, 2015 to one count of conspiracy to defraud the United States.
Ray and Rasamee owned and operated Cheapertaxes LLC, a tax preparation business in Colorado. Beginning in March 2006 through April 2010, they conspired to defraud the IRS by preparing fraudulent income tax returns containing false income and deductions, for the purpose of obtaining inflated tax refunds for their clients. They falsified itemized deductions on Schedule A, business losses on Schedule C and personal exemptions.
They used ProSeries tax software to prepare their clients' returns. The software included a function that summarized the tax due and the amount of the refund as the preparer entered information in to the tax return. This summary continuously updated as information was added or deleted. Rasamee and Ray watched this summary as they entered information on the tax return, inflating and/or fabricating taxpayers' expenses and deductions in order to maximize the refund and minimize the tax due and owing. In short, they "played with the numbers" until they had entered enough deductions and expenses that as much of the tax due and owing as possible was converted into a refund.
They usually charged their clients a flat fee of $200 to $250 for the return preparation. If clients could not pay the fee at the time of the return preparation, they would take the fee out of the taxpayer's refund. To do so, they caused the refund to be deposited into the Cheapertaxes bank account. To further conceal the scheme, they would list a third party who had not prepared the fraudulent tax return as the return preparer on the client’s return.
Ray and Rasamee shared the proceeds from their business and spent the funds on living expenses for their family as well as luxury items. For example, in 2009, Rasamee and Ray purchased a used Bentley and a used Maserati for $140,000 cash.
Conspiracy to defraud the United States carries a penalty of not more than 5 years in federal prison, and a fine of up to $250,000. A false statement to the IRS carries a penalty of not more than 3 years in federal prison, and a fine of up to $250,000.
“The defendant thought he could become wealthy on the back of U.S. taxpayers," said U.S. Attorney John Walsh. "Thanks to the hard work of the jury, the presentation by the two Assistant U.S. Attorneys, and the investigation conducted by the IRS CI, this tax cheat will be held accountable for his crimes."
"This is a prime example of a return preparer you want to avoid. As we approach filing season, choose carefully when hiring a tax preparer and avoid tax preparers who claim they can obtain larger refunds than other preparers," said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
For tips on Choosing a Tax Professional go to www.irs.gov.
This case was investigated by Internal Revenue Service – Criminal Investigation with assistance from the Special Enforcement Program of the Internal Revenue Service and prosecuted by Assistant U.S. Attorneys Anna Edgar and Tim Neff.
Two Colorado Men Plead Guilty to Production of Child Pornography in Separate Unrelated CasesRead the Press Release
DENVER – Two Colorado men recently pled guilty to the production of child pornography, with the produced videos and images involving children who were 4 weeks old (United States v. Sailas) and 3 to 7 years old (United States v. Gallegos) in each respective case, the U.S. Attorney’s Office, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the Federal Bureau of Investigation (FBI) announced. The two men were prosecuted in unrelated cases.
Jamie Sailas, age 30, of Metro Denver, pled guilty on January 15, 2016 to the production of child pornography before U.S. District Court Judge William J. Martinez. Sailas is scheduled to be sentenced by Judge Martinez on April 28, 2016 at 9:30 a.m. According to the stipulated facts contained in the defendant’s plea agreement, Sailas came to law enforcement attention when an HSI agent working in Washington, DC conducted a proactive undercover investigation upon an Internet website that hosted chat rooms. Users of these chat rooms have the ability to upload content to the chat room in the form of pictures and video. While conducting the investigation, the HSI agent came across a link to a video that depicted an adult male engaging in intercourse with a minor female. The investigation led the agent to specific subscriber information which had been submitted to the National Center for Missing and Exploited Children (NCMEC) by the Internet Service Provider. The link was associated with an online storage account that belonged to Jamie Sailas, who at the time resided in Brighton, Colorado. There were nearly 2,900 uploaded file names associated with Sailas’s online storage account, consistent with file names of videos containing child pornography. An email account associated with the online storage account was also determined to belong to Sailas. During the investigation, the local HSI agent learned that two additional NCMEC reports had been generated regarding Sailas, one which involved the email address associated with the online storage account. A legal search of the defendant’s email account reflected that Sailas used the account to send or receive approximately 5500 images and 240 videos of child pornography. The material included minors as young as infants, with a large majority of content depicting prepubescent minor females. It was ultimately determined that in addition to living in Brighton, the defendant worked at Game Trader in Brighton. Search warrants were executed for Sailas’s home, workplace, and vehicle in November 2014. Numerous electronic devices belonging to Sailas were recovered during the execution of the search warrants. During the forensic examination of the electronic devices recovered during the search warrants, numerous images and videos depicting child pornography were recovered, including an image of child pornography that was recovered from one of Sailas’s cell phones. The image of child pornography depicted a penis in the mouth of an approximately 4-week-old infant. The image was taken by Sailas. The defendant had access to the infant because he was a friend of the child’s mother.
Luis Alfonso Aragon Gallegos, age 29, of Glenwood Springs, Colorado, pled guilty on January 13, 2016 to the production of child pornography and to the possession of child pornography before U.S. District Court Judge R. Brooke Jackson. Gallegos is scheduled to be sentenced by Judge Jackson on April 20, 2016 at 8:30 a.m. According to the stipulated facts contained in Gallegos’ plea agreement, the defendant produced approximately 110 images and/or videos of a Colorado child while she performed sex acts on him. The child was between 3 and 7 years old when the images and videos were created. In addition, approximately 266,000 images and 16,100 videos of child pornography, which did not involve the Colorado child and were not produced by the defendant, were found on the defendant’s hard drives. The majority of these files were of prepubescent children, including infants, who were recorded either nude in a sexually provocative manner or engaged in a sex acts. Further, the files involving the Colorado child showed that sexual assaults occurred on 22 days, sometimes in multiple settings during the day. During a child forensic interview, the Colorado child said that the defendant’s conduct continued until he was arrested in 2015. Gallegos also shared child pornographic images peer-to-peer.
“Children were victimized in this case in an unspeakable way,” said U.S. Attorney John Walsh. “Thanks go to Homeland Security and FBI agents, along with federal prosecutors, whose hard work identified and apprehended the defendants of this terrible crime.”
“For good reason, there are significant penalties for predators convicted of sexually exploiting children,” said David A. Thompson, special agent in charge of HSI Denver. “Jamie Sailas faces at least 15 years in federal prison after admitting he produced child pornography. Homeland Security Investigations conducts these child sexual exploitation investigations to obtain justice for their victims, and remove these predators from decent society so they can’t harm other innocent children.”
"The FBI will continue to aggressively pursue those like Gallegos who prey on children, especially those who advertise, trade, and/or produce child pornography," said FBI Denver Special Agent in Charge Thomas Ravenelle. "Crimes of this nature threaten to destroy our most precious resource, offend every sensibility, and cannot be tolerated. The FBI and our partners will spare no expense or resource to bring them to justice."
Sailas pled guilty to one count of production of child pornography, which carries a penalty of not less than 15 years, and up to 30 years in federal prison, and up to a $250,000 fine. Gallegos pled guilty to 22 counts of production of child pornography, each of which also carries a penalty of not less than 15 years, and up to 30 years in federal prison, and up to a $250,000 fine per count. He also pled guilty to one count of possession of child pornography, which carries a penalty of not more than 10 years in federal prison, and up to a $250,000 fine.
Jamie Sailas was investigated by HSI with assistance from the Brighton Police Department. Sailas was prosecuted by Assistant U.S. Attorney Alecia Riewerts. Luis Alfonso Aragon Gallegos was investigated by the FBI with assistance from the Garfield County Sheriff’s Office, the 9th Judicial District Attorney’s Office, and the Glenwood Springs Police Department. Gallegos was prosecuted by Assistant U.S. Attorney David Tonini.
These cases were brought 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.
Former Denver Massage Parlor Owner Pleads GuiltyRead the Press Release
DENVER – Jung Yoon Choi, age 55, formerly of Aurora, Colorado, pled guilty yesterday before U.S. District Court Judge Robert E. Blackburn to obstructing and impairing the laws of Internal Revenue Service, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Judge Blackburn is scheduled to sentence Choi on April 21, 2016. Choi agreed to be charged by an Information, waiving her Constitutional right to be indicted by a federal grand jury.
According to the information and plea agreement, from January 1, 2009, through December 31, 2010, Choi owned and operated three massage parlors in the Denver Metropolitan area, specifically; Ivy Spa located at 2260 S. Quebec Way, Denver, CO (during 2009); New Image Spa located at 17783 Cottonwood Drive, Parker, CO (during 2010); and Blue Pine Spa located at 6212 East Pine Lane, Douglas County, CO (during 2010).
Choi typically staffed each of her spas with an on-site manager and a number of workers who provided services to customers. The primary service provided by her workers was giving massages. Each of the spas typically had a fee schedule according to which customers paid a door fee ordinarily ranging from $40 to $50, depending on the amount of time requested (30 to 60 minutes were the norm). In addition, customers at the various spas often paid an additional fee which was characterized as a “tip” in many instances for “extra services” provided by Choi’s workers. At times, the “extra services” consisted of prostitution services in violation of Colorado Revised Statute, 18-7-201. Specifically, the workers would engage in sexual acts with customers in exchange for money. Choi was aware that such illicit activity was occurring at times in each of her spas and that business income was being generated from such activity. Choi regularly advertised for her spas using Westword newspaper and Sowet.com. Choi paid the owner of Sowet.com a monthly fee to post favorable reviews on his website touting her various businesses and the women who worked there.
Choi generated substantial income from each of her spas for tax years 2009 to 2010. However, she failed to file personal income tax returns for 2009 and 2010, and thus she did not report her business income for either year and she did not pay any taxes to the IRS. In addition to not filing tax returns and not paying taxes, Choi further impeded the IRS’s collection of taxes by several means, including: using nominees on bank accounts so as to conceal her business income; conducting cash and business transactions using nominees; conducting financial transactions in amounts that were less than $10,000 so as not to trigger the filing of currency transaction reports; and hiding and storing income in the form of cash hoards at various locations.
IRS Special Agents conducted a financial analysis of the Ivy Spa bank account for 2009 and the account showed deposits totaling $118,418. The vast majority of such deposits, $106,322, came from credit card payments from customers at Ivy Spa. The $118,418 in funds deposited into this account represented gross income generated by Choi for tax year 2009.
Choi also utilized nominees to conduct financial transactions in bank accounts for New Image Spa and Blue Pine Spa in 2010. Choi received substantial business income from New Image and Blue Pine Spa throughout 2010 in the form of cash and credit card deposits which she concealed. She regularly took a portion of her cash earnings and secreted the funds in cash hoards at various locations. Particularly, on December 17, 2010, pursuant to a federal search warrant, IRS Special Agents seized approximately $118,575, in cash from a locker at the U-Store-It. In total, Special Agents seized $219,388 in cash from Choi or her associates in late 2010. Such funds represented gross, business income which Choi generated during 2010.
Choi agrees to the forfeiture of $118,575.00 seized on December 17, 2010. The forfeiture of Choi’s assets, including the $118,575.00 identified above, shall not be treated as satisfaction of any fine, restitution, cost of imprisonment, or any other penalty the court may impose.
Choi pled to one count of obstructing and impairing IRS laws which carries a penalty of not more than 3 years in federal prison, and a fine of up to $250,000 per count.
This case was investigated by Internal Revenue Service – Criminal Investigation with assistance from the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Tim R. Neff.
Three Self-Admitted Denver Gang Members Arrested by ATF for Firearms TraffickingRead the Press Release
DENVER – Three Denver self-admitted gang members were arrested late last night in an operation led by the ATF, U.S. Attorney John Walsh and ATF Denver Division Special Agent in Charge Ken Croke announced. Two of the three men appeared in U.S. District Court in Denver this afternoon, where they were advised of their rights, as well as the charges pending against them. The third will appear tomorrow afternoon. A detention hearing has been scheduled for Friday, January 15, 2016 at 2:00 p.m. All three defendants will remain in custody, held without bond, prior to that hearing.
Arrested were Mychael Eitwan Thomas, age 29, Deondrey Brandon, age 21, and Jasirii Quadami Thomas, age 20, all of Denver. The three face Conspiracy charges. Mychael Thomas also faces five counts of being a felon in possession of firearms, and one count of sale of a stolen firearm. Brandon also faces two counts of sale of a stolen firearm. Finally, Jasirii Thomas also faces one count of sale of a stolen firearm. .
According to the indictment, defendants Brandon and Jasirii Thomas acquired and delivered firearms, including stolen firearms, to Mychael Thomas, who was prohibited from possessing firearms as a result of a prior conviction for a crime punishable by imprisonment for a term exceeding one year. The defendants, Mychael Thomas, Brandon, and Jasirii Thomas, concealed firearms in containers when transporting them. The defendants would then sell the firearms for cash. Firearms included a Glock 26, a Smith & Wesson .38 caliber revolver, an AR-15, a Jimenez Arms .380 caliber handgun, and a Mac 11, among others. The defendants alleged one was a machine gun.
“Many of the firearm sold by the defendants were stolen during residential burglaries throughout Metro Denver,” said U.S. Attorney John Walsh. “Thanks to the ATF, working closely with state and local partners, we were able to identify the three culprits, which resulted in their indictment and arrest.”
“The 17 firearms recovered in this investigation are 17 fewer guns in the hands of gangs; the three suspects in jail are three less criminals preying on our communities,” said ATF Special Agent in Charge Ken Croke. “Disrupting gang activities prevents further crimes and puts all criminals on notice. Their lawless acts do not go undetected or uninvestigated.”
If convicted of Conspiracy, each defendant faces not more than 5 years in federal prison, and up to a $250,000 fine. If convicted of being a felon in possession of a firearm, each count carries a penalty of not more than 10 years in federal prison, and up to a $250,000 fine. Finally, if convicted of sale of a stolen firearm, each count carries a penalty of not more than 10 years in federal prison, and up to a $250,000 fine.
This case was investigated by the ATF, Denver Police Department, Aurora Police Department, the Lakewood Police Department, and the Department of Corrections Division of Adult Parole.
The defendants are being prosecuted by Assistant U.S. Attorney Beth Gibson.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
Denver Man Sentenced to over 12 Years in Federal Prison for Sex Trafficking of Minors Across State LinesRead the Press Release
DENVER – Terrell Layne Smith, aka “Swiss”, age 35 of Denver, Colorado, was sentenced by U.S. District Court Judge Christine M. Arguello to serve 151 months (over 12 years) in federal prison for Transportation with Intent to Engage in Criminal Sexual Activity, U.S. Attorney John Walsh, and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. The sentenced was handed down last Thursday, January 7, 2016. In addition to the prison sentence, Judge Arguello ordered Smith to serve 5 years on supervised release and once released from prison, he is to register as a sex offender. The defendant, who appeared at the sentencing hearing in custody, was remanded at its conclusion.
Smith was first charged by Criminal Complaint on April 10, 2014. He was indicted by a federal grand jury on May 7, 2014. He pled guilty before Judge Arguello on September 10, 2015. He was sentenced on January 7, 2016.
According to court documents, including the stipulated facts contained in the plea agreement, two minor girls, Minor #1 and Minor #2 met through high school. In early August 2012, Defendant Smith became acquainted with the mother of Minor #2. The defendant began to live at the home of the mother of Minor #2, along with Minor #2 and her four siblings. Minor #1 also came to live at the home of Minor #2 sometime during the late summer of 2012. The defendant knew that Minor #1 was 16 or 17 years of age and knew that Minor #2 was 17 years of age. While the defendant was living with Minor #1 and Minor #2, he told them they could earn money by going out on “dates,” referring to prostitution or commercial sex acts.
The defendant used his cell phone to take pictures of Minor #1 in Colorado and in Arizona. In the pictures, Minor #1 was posed in sexual poses in various sorts of attire, including lingerie. Minor #1 took pictures of Minor #2 posed in sexual poses while partially nude. The photographs were used to advertise the availability of Minor #1 and Minor #2 for prostitution on a website named “Backpage.com.” The defendant used his cell phone to access the Internet and post the images on “Backpage.com,” advertising the availability of the minors in the ad. In many of the “Backpage.com” postings, the number for the defendant’s cell phone was listed as the contact number for individuals who wanted to respond to the ads. The ads implied that the images of Minor #1 and Minor #2 posted in conjunction with the advertisements were 20 or 21 years of age. Minor #1 also started posting her own ads on “Backpage.com” using the defendant’s phone, although she did not have a “Backpage.com” account. On those occasions, Minor #1 was given a pre-paid credit card either by the defendant or by an adult prostitute associated with the defendant to post the ads.
From September 19, 2012, to approximately October 4, 2012, the defendant transported the minors to various locations in Colorado, including private homes and hotels, so that one or both minors could participate in prostitution. Beginning on October 4, 2012, the defendant, Minor #1, and Minor #2 embarked upon a trip to the Phoenix, Arizona metropolitan area, in a vehicle rented by the mother of Minor #2. Prior to the trip from Colorado to Arizona, both minors understood that they would be engaging in prostitution in Arizona based on communications with the defendant. Advertisements were posted on “Backpage.com” in the Phoenix, Arizona, metropolitan area advertising that the Minors were available for prostitution during the time period they were in Arizona. Minor #1 engaged in prostitution in Arizona during this time period. The defendant, and the two minors then returned to Colorado on approximately October 10, 2012.
The defendant transported Minor #1 to Arizona again on approximately October 11, 2012 so that she could participate in prostitution. Minor #1 engaged in at least one act of prostitution on the trip. On October 14, 2012, Minor #1 was arrested on a runaway warrant in Phoenix, Arizona. The investigation revealed that the defendant prostituted the minors, receiving a percentage of the money paid to the minors by the prostitution customers for commercial sex acts. The defendant also bought the minors clothing, food, and provided them with marijuana during the above-described time period.
“This case involved one of the worst forms of human trafficking – sex trafficking of minors across state lines,” said U.S. Attorney John Walsh. “Thanks to the hard work of the FBI’s Innocence Lost Task Force and federal prosecutors, Defendant Smith was captured, convicted and sentenced to an appropriately heavy sentence.”
“Terrell Smith’s sentence is an illustration of the FBI’s commitment to protect our most vulnerable citizens, our children,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “The FBI’s Rocky Mountain Innocence Lost Task force will continue to diligently work with our local, state, and federal partners to identify and prosecute child predators.”
This case was investigated by the FBI’s Innocence Lost Task Force.
Smith was prosecuted by Assistant U.S. Attorney Alecia Riewerts.
This case was brought 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.
Man Sentenced to 10 Years for Traveling to Colorado to Engage in Sexual Acts with a MinorRead the Press Release
DENVER – A Nevada man was sentenced to 120 months in prison yesterday in U.S. District Court in Denver for traveling across state lines with the intent to engage in illicit sexual conduct with a minor, announced Colorado U.S. Attorney John Walsh and Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.
Brian Franklin Howard, 38, of Las Vegas, pleaded guilty on Sept. 11, 2015, to one count of travel with intent to engage in illicit sexual conduct with a 10-year-old minor child. He has been in custody since his arrest on April 2, 2015. U.S. District Judge Christine M. Arguello of the District of Colorado, who sentenced Howard, also ordered the defendant to serve 10 years of supervised release.
According to the plea agreement, a U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) agent, posing undercover as a single mother of two minor children, came into contact with Howard online. Howard then arranged to meet the mother and her children and flew from Las Vegas to the Denver International Airport, where he met the undercover agent, confirmed his intent to have sex with children and was arrested.
“Defendant’s chilling and detailed effort to come to Colorado to rape children fully deserves the severe sentence imposed by Judge Arguello,” said U.S. Attorney John Walsh. “Let this case serve as a warning.”
“Anyone who travels hundreds of miles across state lines to have sex with a 10-year-old is a danger to children everywhere,” said David A. Thompson, special agent in charge of HSI Denver. “Under our Operation Predator program, HSI identifies and targets these predators to rescue and bring justice to their young victims, and help protect other children by apprehending these predators in our communities.”
ICE-HSI investigated this case. Assistant U.S. Attorney Alecia Riewerts of the District of Colorado and Trial Attorney James E. Burke IV of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) prosecuted the case.
This case was brought 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.
Nevada Man Sentenced to 10 Years for Traveling to Colorado to Engage in Sexual Acts with a MinorRead the Press Release
A Nevada man was sentenced to 120 months in prison today in Denver for traveling across state lines with the intent to engage in illicit sexual conduct with a minor, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney John F. Walsh of the District of Colorado.
Brian Franklin Howard, 38, of Las Vegas, pleaded guilty on Sept. 11, 2015, to one count of travel with intent to engage in illicit sexual conduct with a 10-year-old minor child in violation of 18 U.S.C. § 2423(b). He has been in custody since his arrest on April 2, 2015. U.S. District Judge Christine M. Arguello of the District of Colorado also ordered Howard to 10 years of supervised release.
According to the plea agreement, a U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) agent, posing undercover as a single mother of two minor children, came into contact with Howard online. Howard then arranged to meet the mother and her children and flew from Las Vegas to the Denver International Airport, where he met the undercover agent, confirmed his intent to have sex with children and was arrested.
ICE-HSI investigated this case. Trial Attorney James E. Burke IV of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Alecia Riewerts of the District of Colorado prosecuted the case.
This case was brought 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.
Denver Meth Dealer Sentenced to 20 Years in Federal Prison for Conspiracy and Possession with Intent to Distribute ChargesRead the Press Release
DENVER – Carol Hawley of Denver, Colorado, was sentenced on Monday, December 21st, 2015 by U.S. District Court Judge Raymond P. Moore to serve 240 months (20 years) in federal prison, followed by 10 years on supervised release for Conspiracy to possess methamphetamine with the intent to distribute 50 grams or more of actual meth and Possession of methamphetamine with the intent to distribute 50 grams or more of actual meth, U.S. Attorney John Walsh, Federal Bureau of Investigation (FBI) Denver Division Special Agent in Charge Thomas Ravenelle and Drug Enforcement Administration (DEA) Denver Division Special Agent in Charge Barbra Roach announced. The case was investigated by the Metro Gang Task Force (MGTF). Hawley, who appeared at the sentencing hearing in custody, was remanded at its conclusion.
Hawley, along with six others, were indicted by a federal grand jury in Denver on May 19, 2014. The grand jury returned a superseding indictment on September 23, 2014. She was convicted of the counts outlined above on October 9, 2015 following a 5-day jury trial.
According to the facts presented to the jury during trial, and as outlined in the Government’s Sentencing Statement, in March 2013, agents and officers of the MGTF were conducting a long-term drug trafficking investigation, focusing on an organization run by Debbi Martinez, a/k/a “Payasa.” The investigation revealed that Martinez purchased distribution-sized quantities of methamphetamine for re-sale to various individuals within the Denver metropolitan area. One of her sources of supply included a large-scale drug trafficker whose Mexican-based drug trafficking organization.
During the investigation, it was determined that after a series of phone calls between Martinez called Hawley, Defendant Hawley obtained money and purchased methamphetamine to be sold in Fort Collins. While Hawley was on her way to Fort Collins with the methamphetamine, MGTF officers requested assistance from the Denver Police Department (DPD) in performing a traffic stop of Hawley. Early morning of March 13, 2013, Denver officers observed a traffic violation, and thus pulled Hawley’s vehicle over. The only identification Hawley had was able to produce to law enforcement was her Colorado Department of Correction identification card. DPD called for a drug K-9, and the Aurora Police Department responded with the K-9. After the dog alerted to the vehicle, investigators searched the vehicle.
During the search officers recovered a zippered purse which contained 223 grams of 100 percent pure methamphetamine. Officers also recovered an additional 3.17 grams of methamphetamine, 18.3 grams of MSM (a common cutting agent for methamphetamine), an empty bottle of prescription pills, a sheet of apparent pseudoephedrine, a marijuana pipe, and drug paraphernalia. Hawley was subsequently arrested. The passenger, who was the registered owner of the vehicle Hawley was driving, was released.
"Methamphetamine is a highly addictive, harmful drug, and destroys users, their families and harms the community in which they live," said U.S. Attorney John Walsh. "This severe sentence, handed down to a repeat drug trafficking offender, reflects our efforts to keep the community safe from this scourge."
“Trafficking in methamphetamines is a very serious crime which erodes the basic fabric of our society,” said FBI Denver Division Special Agent in Charge Thomas Ravenelle. "We are fortunate to be able to investigate and prosecute these individuals in partnership with the US Attorney’s Office and the DEA's Strike Force.”
This case was investigated by the Aurora Police Department, and the Metro Gang Task Force with the FBI. The DEA participated in some parts of the larger drug trafficking investigations.
The defendant was prosecuted by Assistant U.S. Attorneys Bradley Giles and Barbara Skalla.
Aurora Gangster Found Guilty of Being a Felon in Possession of a FirearmRead the Press Release
DENVER – David Scott, age 24, of Aurora, Colorado, a known member of the Crenshaw Mafia Gangster 104th Park Hill Blood gang, was found guilty today of being a felon in possession of a firearm, following a four-day jury trial before Chief U.S. District Court Judge Marcia S. Krieger, U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Ken Croke announced. Scott was indicted by a federal grand jury in Denver on January 27, 2015. He is scheduled to be sentenced on March 28, 2016. The defendant, who appeared at the trial in custody, was remanded at the conclusion.
According to the facts presented at trial, Scott, a known felon, was one of three known gang members inside a vehicle on December 31, 2012, that was stopped by the Aurora Police Department after multiple traffic violations were observed. After a search of the vehicle, a .45 caliber semi-automatic handgun was found under Scott’s seat wrapped in a red bandana. Scott is a Blood gang member. During the trial, a DNA expert testified that Scott’s DNA was found on the weapon. Scott had multiple prior convictions in Colorado for felony crimes, including a 2010 Denver District Court conviction for possession of a weapon by a previous offender, a 2009 Arapahoe County District Court conviction for felony menacing, and a 2013 conviction in U.S. District Court in Colorado for being a felon in possession of a firearm.
“Today’s guilty verdict against a violent gang member, a felon caught with a firearm, is a victory for the citizens of Metro Denver,” said U.S. Attorney John Walsh. “Thanks to the hard work of the jury in this case, who made a thorough review of the evidence, Defendant Scott will be off the streets and our community will be safer.”
“Scott is an extremely dangerous felon with a long criminal history,” said ATF Denver Field Division Special Agent in Charge Ken Croke. “Working with the U.S. Attorney’s Office, the government is going to advocate for the longest possible sentence possible for his relentless violence.”
Scott faces up to 10 years in federal prison, and not more than a $250,000 fine for being a felon in possession of a firearm.
This case was investigated by the Aurora Police Department and the ATF Denver Field Division.
The defendant was prosecuted by Assistant U.S. Attorneys Jeremy Sibert and Rebecca Weber.
Grand Junction Business Owner is Sentenced for Income Tax EvasionRead the Press Release
DENVER – Michael E. Ho, age 69, of Grand Junction, Colorado, was sentenced earlier this week by U.S. District Court Judge Christine M. Arguello to serve 24 months in federal prison, followed by 3 years of supervised release, income tax evasion, United States Attorney John Walsh and IRS Criminal Investigation Acting Special Agent in Charge Steven Osborne announced. Judge Arguello also order Ho to pay $202,442 in restitution to the Internal Revenue Service. Ho was indicted by a federal grand jury in Denver on October 28, 2014, pled guilty on July 28, 2015 and was sentenced on December 14, 2015.
According to the indictment and stipulated facts contained in the plea agreement, Ho owned and managed a dental clinic formerly known as Skyline Dental, located in Grand Junction, Colorado, from approximately 1999 through at least 2004 in which he employed licensed dentists to provide dental services to patients. Skyline Dental operated as a “d/b/a” for the parent corporation “Five-O Enterprises” which HO owned and controlled starting in the year 2001. In February of 2004, the State Board of Dental Examiners enjoined Ho from owning and operating Skyline Dental Clinic because Ho was never licensed to practice dentistry and the State Board took the position that only licensed dentists are permitted to own Dental Clinics.
Ho sold the practice in December 2004 to a licensed Dentist and Ho was hired to manage the clinic. In 2006, Ho and the owner had a business dispute which resulted in the dentist defaulting on his purchase agreement with Ho. Ho then sold the practice to a different dentist in November of 2006 for $3.5 million. Ho was then paid a salary for managing the dental practice. In 2010, the Dentist rescinded his contracts with Ho. Ho in turn converted Skyline Dental clinic to a non-profit corporation, Colorado Community Dental Services “CCDS”, which allowed it to operate under state law without a dentist as its owner. An Asset Purchase Agreement was executed between Five-O Enterprises and CCDS in the amount of $2 million. Ho continued to manage Colorado Community Dental Services but did not receive a salary and did not hold a position on the Board of Directors.
During this same period, Ho also operated Preventative Dental as a d/b/a of Five-O Enterprises which sold dental plans to individuals and were then able to receive discounted dental services by the designated provider, Skyline Dental and later Colorado Community Dental Services. Ho received the income from Preventative Dental.
Ho evaded income tax due and owing by committing affirmative acts of evasion. Between 2006 and 2011, the Government has determined that $202,442 is the total tax due and owing by Ho. In an attempt to evade assessment of taxes by the IRS, Ho took a series of steps to include, but are not limited to, utilizing multiple bank accounts (a personal account and business accounts) which he commingled funds from his various income producing activities making the assessment of tax difficult; he received interest income from the sale of Skyline Dental and did not report the interest income to his accountant in the years 2008 and 2009 when he received interest income of $156,005 and $67,225, respectively; he did not report the income from the sale of discount dental plans to his accountant and thus the income from Preventative Dental was not reported on his tax returns; he deposited cash receipts from Skyline Dental and Colorado Community Dental Services to his personal bank accounts in 2010 and 2011 and did not report the income on his tax returns.
“Intentionally hiding income and assets to avoid paying taxes is criminal tax evasion, pure and simple,” said U.S. Attorney John Walsh. “All Americans have an obligation to pay taxes when those taxes are due and owing. Schemes to avoid that shared obligation by intentionally making records confused and commingled, combined with intentional misrepresentations regarding income and assets, pave the road not just to fines and penalties, but federal prison.”
“For over a decade, Ho took extreme measures to conceal his ownership of the dental business,” said Steven A. Osborne, Acting Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “However, in the end, our financial investigators followed the money which ultimately lead to a tax evasion conviction.”
This case was investigated by Internal Revenue Service – Criminal Investigation and was prosecuted by Assistant U.S. Attorney Tim R. Neff.
Denver Man Sentenced to Lengthy Prison Term for Production of Child PornographyRead the Press Release
DENVER – Minh Thong, age 32, of Denver, Colorado, was sentenced Tuesday, December 15, 2015 by Judge Robert E. Blackburn to serve 292 months (over 24 years) in federal prison for the production of child pornography, United States Attorney John Walsh and Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge David Thompson announced. Following his prison term, Thong was ordered to serve 15 years on supervised release. The defendant, who appeared at the hearing in custody, was remanded at its conclusion.
Thong was first charged by Criminal Complaint on January 20, 2014. He was then indicted by a federal grand jury on January 27, 2014. He pled guilty before Judge Blackburn on August 14, 2015.
Thong was identified through Operation Round Table, an extensive international investigation conducted by ICE HSI and the U.S. Postal Inspection Service (USPIS). According to court records in Colorado, including the affidavit in support of the original criminal complaint as well as the stipulated facts contained in the plea agreement, on July 10, 2013, an HSI special agent in Seattle, while functioning in an undercover capacity, used the internet to connect to a Peer to Peer file sharing program (a/k/a FSP). The special agent was able to download child pornography from a specific person using a specific username at a unique IP address. The agent was not only able to download child pornography, the agent was also able to view thumbnail images before choosing which images or videos to download.
Further investigation revealed that the IP address resolved at an address in Denver, and was registered to Minh Thong. A federal search warrant for Thong’s residence was then obtained and executed. HSI found child pornography on Thong’s computer. Thong obtained child pornography from others using Peer to Peer software. He also produced child pornography by accessing video chat websites where individuals can see each other using a web cam. Thong used a program to play a video of a minor female so that the minor person on the other end of the web cam chat believed they were chatting with another minor. During those chats Thong used the video of the minor female, who undressed and fondled herself during the video, to convince users on the other end of the chats to disrobe and/or masturbate. He recorded the video chats and saved the files. Based on the computer forensic examination and additional investigation, there are at least 100 victims depicted in the child pornography videos created by Thong. Thus far, there is no evidence that Thong distributed the child pornography that he produced. Numerous minor victims have been identified during the course of the investigation. The identified victims ranged in age from 12 years old to 16 years old at the time the videos were created.
“The defendant in this case went far beyond viewing and possessing child pornography; he actively manipulated minors through lies and deceit to produce it for him,” said U.S. Attorney John Walsh. “Minh Thong victimized over 100 children young people and is facing the stern consequences for his crimes.”
"This predator used his position as a popular skateboard photographer to prey on his teen-age victims to produce child pornography," said HSI Denver Special agent in charge David A. Thompson. "Due to the egregious nature of his crime as a producer of child pornography, the court sentenced him to serve a significant federal prison term of more than 24 years. HSI has a dedicated program to investigate these crimes, pursue prosecution against these predators, and rescue their child victims." This case was investigated by Homeland Security Investigations (HSI).
Thong was prosecuted by Assistant U.S. Attorney Alecia Riewerts.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, PSC marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about PSC, please visit http://www.justice.gov/psc/ For more information about Internet safety education, please visit http://www.justice.gov/psc/resources.html and click on the tab "resources."
United States Reaches Settlement with Western Slope Pharmacy for Violations of the Controlled Substance ActRead the Press Release
DENVER — John Walsh, U.S. Attorney for the District of Colorado, today announced that Palisade Pharmacy has entered into a civil settlement with the United States and have paid $60,000 in civil penalties to resolve allegations that it violated certain provisions of the Controlled Substances Act and the Combat Methamphetamine Epidemic Act of 2005 (CMEA).
The United States alleges that Palisade Pharmacy, a pharmacy located in Palisade, Colorado, committed over 480 violations of the Controlled Substances Act and the CMEA related to the distribution of controlled substances, including: shipping controlled substances to unregistered locations; failing to verify addresses on DEA order forms to the corresponding addresses registered with the DEA; filling prescriptions for controlled substances despite missing required information on the face of the prescription; failing to maintain, record, and retain complete and accurate records relating to distribution of controlled substances; and selling List I chemical products without a valid self-certification certificate.
With the passage of the Controlled Substances Act, Congress took steps to attempt to create “a closed system” of distribution for controlled substances that is intended to regulate the movement of prescription medications from importation/manufacture through delivery to the ultimate user via the lawful dispensing, administering, or prescribing by a practitioner. A closed system of manufacture and distribution requires that each registrant maintain accounting and security systems so that no controlled substances are lost, stolen, or inappropriately dispensed to abusers or street dealers. This can only be accomplished through complete compliance with the Controlled Substance Act and its accompanying regulations, which are designed to require pharmacies to account for controlled substances.
“Prescription drugs are controlled by federal law to protect the public; violations of the law by a pharmacy can put public health at risk,” said U.S. Attorney John Walsh. “Palisade Pharmacy’s agreement to pay a civil penalty not only addresses the issues in this case, but sends a message to all pharmacies to follow the rules to protect the public.”
“The diversion of pharmaceuticals and chemicals for illicit gain and profit is nothing more than drug trafficking,” stated Barbra Roach, Special Agent in Charge of the Drug Enforcement Administration’s Denver Field Division. “Those occupying positions of trust and responsibility, such as medical practitioners and pharmacists, have to be held accountable when they chose to operate illegally and threaten the safety of our communities.”
In addition to paying the civil penalty, Palisade Pharmacy has also signed an administrative settlement agreement. Under the terms of the administrative settlement agreement, Palisade Pharmacy has agreed to enhanced reporting and training requirements, as well as to a three-year surrender of its CMEA certification that allows it to sell List 1 chemicals.
In entering into a civil settlement, Palisade Pharmacy did not admit to liability, and the agreement indicates that the parties entered into the settlement to avoid the uncertainty and expense of further litigation.
The investigation was conducted by the Drug Enforcement Administration. The United States was represented in this matter by Assistant United States Attorney Amanda Rocque of the U.S. Attorney’s Office in Denver, Colorado.
Man Who Held Nurse Practioner Hostage at VA Hospital Charged and ArrestedRead the Press Release
DENVER – Johnie Wayne Roth, age 77, of Aurora, was arrested by Special Agents with the Veterans Affairs (VA) Office of the Inspector General on charges of assaulting, impeding or interfering with an employee of the United States in performance of official duties and use of a deadly or dangerous weapon, the United States Attorney’s Office announced. Roth, who made his initial appearance on Monday, December 7th, was advised of his rights as well as the charge pending against him. He is in the custody of the U.S. Marshals pending a detention hearing scheduled for Thursday, December 10th. A preliminary hearing has been scheduled for December 21, 2015.
According to the facts contained in the arrest affidavit, on the morning of December 3, 2015, Roth had a medical appointment at the Veterans Affairs Medical Center in Denver with a nurse practitioner in Ambulatory Care. As Roth and the nurse practitioner met in her office, the defendant produced a handgun from a bag that he had brought with him to his appointment. Investigators learned that Roth taken over the room, and pointed the gun at his head, and waived it around the room. He also had additional ammunition in his bag. He intended to fire shots into the ceiling so that the VA Police would respond. He did not fire a shot. Instead, the nurse practitioner was able to call for help. It was determined that Roth brought the gun because he wanted the VA Police to shoot him.
As the VA Police responded, the Acting Deputy Chief was able to enter the room and establish a rapport with Roth. Roth wanted the Deputy Chief to shoot him. Other responding officers, who were outside the door, heard the movement of furniture and stormed into the room. Once inside the Deputy Chief instructed them to stand down, as he was able to recover the weapon, a .22 caliber six shot revolver, from Roth. The VA Police took Roth into custody.
“The Veterans Affairs police officers, including the acting deputy chief, showed courage in confronting the defendant, convincing him to let his hostage go and to drop his weapon,” said U.S. Attorney John Walsh. “Roth wanted to die at the hands of the police, and thanks to their law enforcement training, the VA Police handled this crisis with valor.”
If convicted, Roth faces not more than 20 years in federal prison, and up to a $250,000 fine.
The defendant was arrested by the Veterans Affairs Police Department. The subsequent investigation was conducted by the VA Office of the Inspector General.
This case is being prosecuted by Assistant U.S. Attorney Jason St. Julien.
The charges contained in the Criminal Complaint are allegations, and the defendant is presumed innocent unless and until proven guilty. A Criminal Complaint is a probable cause charging document. Anyone accused of committing a federal felony violation of law has a Constitutional right to be indicted by a grand jury.
Colorado U.S. Attorney's Office Efforts Result in the Collection of over Half a Billion Dollars in Fiscal Year 2015Read the Press Release
DENVER – U.S. Attorney John Walsh today announced that the District of Colorado, working on its own and with other U.S. Attorney’s Offices and components of the Department of Justice collected $539,446,849.97. These collections come from key cases such as those against DaVita, Inc., MetLife, First RF Corporation and others. Of this amount, $15,844.38 was collected in criminal actions and $539,431,005.59 was collected in civil actions.
Of the total, the U.S. Attorney’s Office in Colorado itself collected $6,590,196.05 in Colorado-specific criminal and civil actions. Of this amount, $5,257,087.32 was collected in criminal actions and $1,333,108.73 was collected in civil actions.
Attorney General Loretta E. Lynch announced on December 3, 2015 that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year ending September 30, 2015. Collections in FY 2015 represent more than seven and a half times the approximately $2.93 billion of the Justice Department's combined appropriations for the 94 U.S. Attorney's Offices and the main litigating divisions in that same time period.
"The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources, and protecting the American people from exploitation and abuse,” said Attorney General Loretta Lynch. “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
“Each year the United States Attorney’s Office for the District of Colorado helps recover huge sums on behalf of the taxpayers. This year that amount was over half a billion dollars,” said U.S. Attorney John Walsh. “The extraordinary skill and dedication of our civil attorneys and staff, as well as our financial litigation unit staff, are to thank for the vast majority of these recoveries, and those amounts exceed the total budget of the U.S. Attorney’s Office each year not just by multiples, but by factors of ten and more.”
Included in this year’s collection are three high-level civil cases, some of which the Colorado U.S. Attorney’s Office worked with other U.S. Attorney’s Offices or with litigating divisions within the Department of Justice. They include:
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A $350 million settlement with DaVita, Inc. to resolve allegations that DaVita, a dialysis company, used bogus economic manipulations to artificially reduce the apparent value of its dialysis centers. The United States alleged that DaVita reduced these values to induce doctors to enter into joint ventures with DaVita, so that those doctors would then refer all their patients to DaVita clinics. The United States alleged that these economic manipulations violated the Anti-Kickback Statute and the False Claims Act.
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A $123.5 million settlement to resolve allegations that MetLife Bank N.A. violated the False Claims Act when it underwrote mortgage loans to be insured by the U.S. Department of Housing and Urban Development’s Federal Housing Administration (FHA).The United States alleged that MetLife knowingly failed to follow FHA’s rules and sought insurance for loans that did not meet the applicable requirements, leaving the government on the hook as the insurer when the loans defaulted.
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A $10 million settlement with First RF Corporation to settle allegations that First RF defrauded the United States when it supplied antennas for use in fighting improvised explosive devices in Iraq and Afghanistan.The United States alleged that First RF improperly overcharged the government for the equipment by making misrepresentations during contract negotiations.
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A $550,000 settlement with Esri, Inc. involving alleged overcharging of the Bureau of Land Management in contracts for time and materials.The Federal Acquisition Regulations for T&M contracts set rules for government contractors, and prevent them from submitting bills that include certain kinds of fees, such as travel and the cost of subcontractors. The United States alleged that Esri added prohibited profit and fees to invoices for payment in T&M contracts without BLM’s knowledge or approval.
The 2015 collections related to criminal cases include two tax fraud related cases, U.S. v. Gregory Laurence and U.S. v. Matthew Zuckerman. Additional money was collected following a trial in U.S. v. Michael Griggs, an executive with Disaster Restoration, Inc. who conspired with subcontractors to inflate their bids for restoration costs.
The largest civil collections in 2015 were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Additionally, the U.S. Attorney's Office in Colorado, working with partner agencies and divisions, collected $45,938,911.00 in asset forfeiture actions in FY 2015. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
In addition to the substantial 2015 collections, the U.S. Attorney’s Office, working with other Department of Justice components, continues to recover large amounts of money for the taxpayers. One example that will be applied to the FY 2016 collection, is the recent settlement with Franklin American Mortgage, who agreed to pay the United States $70 million to resolve allegations it violated the False Claims Act by knowingly originating and underwriting bad mortgage loans insured by the U.S. Department of Housing and Urban Development.
The U.S. Attorneys’ Offices, along with the Justice Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
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Metro Denver Bank Senior Vice President Sentenced for EmbezzlementRead the Press Release
DENVER – Candice L. White, age 43, of Centennial, Colorado, was sentenced today by U.S. District Court Judge Raymond P. Moore to serve 3 months in prison, followed by 5 years supervised release with a condition of 200 hours of community service, for the crime of embezzlement by a bank officer or employee, U.S. Attorney’s Office announced with the Special Inspector General for Troubled Asset Relief Program (SIGTARP). White was also ordered to pay restitution totaling $92,780.27 to Front Range Bank. On August 12, 2015, White pled guilty to two counts of embezzlement by a bank officer. White was first indicted by a federal grand jury in Denver on March 24, 2015.
According to the stipulated facts contained in the plea agreement, from at least July 2009 through March 2011, White, a Senior Vice President of Front Range Bank, knowingly and intentionally embezzled $92,930.27 from client accounts at the Bank. The plea agreement calls for White to pay restitution in this amount back to the Bank, which has already reimbursed its clients for their losses. The defendant accomplished her embezzlement by requesting cashier’s checks and withdrawing cash from escrow accounts and other accounts that were not closely monitored by the victim account holders. She would then use the embezzled money for her own personal use.
White was familiar with the victim accounts because she was the bank representative assigned to the accounts. To carry out her embezzlement, the defendant approached a teller at the bank with a type of withdrawal slip and falsely informed the teller that she needed the cashier’s check or cash for the client or to pay a bill on the client’s behalf. Due to her status as a Senior Vice President at the Bank, the tellers trusted that White was telling the truth and had the required supporting documentation for the transactions.
“As this case demonstrates, the Department of Justice and the U.S. Attorney’s Office takes seriously holding bank officials accountable for violations of federal law,” said U.S. Attorney John Walsh. “The defendant admitted to embezzlement, and will not only experience prison, but will also do substantial community service and pay significant restitution.”
"White took advantage of unsuspecting bank customers who trusted her to keep their money safe. Instead, she deceived everyone by embezzling their money for her own personal use," said FBI Denver Special Agent in Charge Thomas Ravenelle. "The FBI will continue to work with our law enforcement partners to protect people's bank accounts from embezzlers and other fraudulent schemes."
“While she was a senior vice president at a TARP bank, Candice White embezzled from the bank, a crime for which she will now serve time in prison,” said Christy Goldsmith Romero, Special Inspector General for TARP (SIGTARP). “Ripping off a TARP bank is akin to ripping off taxpayers who funded the bailout. White embezzled from bank customers, abused the trust of the American taxpayer, and used her position of authority to deceive her co-workers. The TARP bailout was not created to bailout bank executives. SIGTARP will work tirelessly to bring justice to all those committing crime inside TARP banks.”
Because Front Range Bank received TARP funds, the Special Inspector General (SIGTARP) assisted the FBI in the investigation.
White was prosecuted by Assistant U.S. Attorney Pegeen Rhyne.
Franklin American Mortgage Company Agrees to Pay $70 Million to Resolve Alleged False Claims Act Liability Arising from Federal Housing Administration-Insured Mortgage LendingRead the Press Release
WASHINGTON – Franklin American Mortgage Company has agreed to pay the United States $70 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today. Franklin American is headquartered in Franklin, Tennessee.
“Franklin promised that its loans met HUD’s quality standards in order to obtain HUD insurance, but ignored widespread, systemic defects in those loans,” said U.S. Attorney John F. Walsh of the District of Colorado. “This case is the latest step in our ongoing effort to hold lenders accountable for fraudulent conduct that wreaked havoc on our housing market.”
“This settlement is another step forward in the government’s efforts to hold lenders accountable for the harm caused by years of improper and inadequate underwriting of mortgages insured by the federal government,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “As this settlement makes clear, we will hold accountable anyone whose conduct results in loss to the government, whether it is a large bank or a smaller mortgage lender.”
During the time period covered by the settlement, Franklin American participated as a direct endorsement lender (DEL) in the FHA insurance program. A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance. If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, the FHA’s parent agency, for the losses resulting from the defaulted loan. Under the DEL program, neither the FHA nor HUD reviews a loan before it is endorsed for FHA insurance. DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance; to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices; and to self-report any deficient loans identified by their quality control program.
The settlement announced today resolves allegations that Franklin American failed to comply with certain FHA origination, underwriting and quality control requirements. As part of the settlement, Franklin American admitted to the following facts: between Jan. 1, 2006, and March 31, 2012, it certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements. Franklin American’s FHA loan production grew substantially from 2006 until 2010. During this time, Franklin American employed unqualified junior underwriters to perform important underwriting functions. Franklin American also set high quotas for its underwriters and subjected underwriters to discipline if they did not meet their quotas. The company also sought to incentivize the production of loans by offering bonuses to its FHA underwriters. Loans underwritten by Franklin American were later reviewed in post-close audits. Oftentimes, those audits did not satisfy HUD’s requirements. Nevertheless, the audits identified substantial percentages of seriously deficient loans underwritten by Franklin American. Although these deficient loans were shared with management, Franklin American reported very few deficiencies to HUD. Franklin American’s conduct caused the FHA to insure hundreds of loans that were not eligible and, as a result, the FHA suffered substantial losses when it later paid insurance claims on those loans.
“The resolution of this matter against Franklin American reflects that all loan originators, whether large or small, receive the same scrutiny of their FHA loan underwriting practices,” said Inspector General David A. Montoya of the HUD Office of Inspector General (OIG). “The FHA program depends on the good faith and utmost integrity of the participants in the program and we will continue to devote substantial resources to identify instances in which participants in the FHA program fail to meet those standards.”
“Today’s settlement demonstrates HUD’s commitment to hold lenders accountable for serious violations of FHA requirements,” said General Counsel Helen R. Kanovsky of HUD’s Office of General Counsel. “We’re pleased that Franklin American accepted financial responsibility for its actions, which will restore funds to FHA.”
The settlement was the result of a joint investigation conducted by HUD, HUD OIG, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the District of Colorado.
Salt Lake City Residential Mortgage Lender Enters into Settlement Agreement to Resolve Non-Compliance with Housing and Urban Development RegulationsRead the Press Release
DENVER – U.S. Attorney John Walsh today announced that the U.S. Attorney’s Office, working on behalf of the U.S. Department of Housing and Urban Development (HUD), entered into a settlement agreement with RANLife, Inc., a Salt Lake City, Utah corporation that originates and underwrites residential mortgage loans that are insured by HUD’s Federal Housing Administration (FHA). The settlement agreement resolves allegations that RANLife was not complying with HUD’s regulations regarding issuing residential loans.
FHA insurance protects lenders, such as RANLife, against losses due to defaults on the FHA-insured loans. If the borrower of an FHA-insured mortgage loan defaults, the holder of the mortgage can submit a claim to HUD for any loss from the default. In return, lenders are required to comply with HUD rules and regulations in originating and underwriting the FHA-insured mortgage loans to ensure the borrowers and mortgage loans are creditworthy of FHA insurance.
According to the settlement agreement, between January 1, 2007, and March 31, 2012, RANLife originate, underwrote and endorsed for FHA insurance a total of 96 loans, all of which went into default within the first two years of the loan, and ultimately resulted in FHA insurance claims paid by HUD. The United States contends for certain of these loans that RANLife failed to comply with HUD rules and regulations in originating, underwriting, and endorsing the loans for FHA insurance. The settlement agreement is neither an admission of liability by RANLife nor a concession by the United States that its claims are not well founded.
The agreement requires RANLife to pay the U.S. a total of $1,032,714.96 over the next three years to satisfy the terms of the settlement agreement.
“RANLife falsely claimed to be in compliance with HUD rules on mortgage loans so that HUD – and U.S. taxpayers – would insure RANlife from losses on those loans,” said U.S. Attorney John Walsh. “This sort of conduct contributed to the mortgage crisis of 2008 and hurt not only the housing market, but the entire economy. As a result of this misconduct, RANlife will pay the taxpayers over $1,000,000 to compensate for giving faulty loans that ultimately went into default.”
“The settlement announced today is the culmination of over three years of work by HUD OIG and our continued efforts to identify and properly respond to instances of fraud against HUD’s mortgage insurance program,” said Special Agent in Charge David R. Barnes, HUD OIG.
This matter was investigated by the U.S. Housing and Urban Development’s Office of the Inspector General. The settlement agreement was obtained by the work of Assistant U.S. Attorney Jamie Mendelson.
Owner of Colorado Car Dealership Sentenced for Structuring and Money LaunderingRead the Press Release
DENVER – Raul Mendoza, age 51, of Denver, Colorado was sentenced on November 20, 2015 by U.S. District Court Judge R. Brooke Jackson to serve 48 months in federal prison, followed by three years of supervised release, the United States Attorney John Walsh announced, along with Special Agents in Charge of the IRS Criminal Investigation (IRS-CI), the Drug Enforcement Administration (DEA) and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI). Judge Jackson also ordered the forfeiture of 19 vehicles and currency in the amount of $5,277.16.
According to the indictment and plea agreement, beginning in February 2008 and continuing through May 2012, Raul Mendoza (Mendoza) and Isidro Noe Mendoza-Ortiz (Mendoza-Ortiz), conspired with each other and others to structure currency (the depositing of cash in amounts just under $10,000) by depositing transactions with the intent to evade the reporting requirements as required by law. Daily cash receipts from the business Chopeque Auto Sales, which is owned by Mendoza and located at 6011 Quebec Street, in Commerce City, were received at the business and structured into separate accounts at various banks to avoid the $10,000 reporting requirements. From February 26, 2008 through May 29, 2012, they structured over 700 deposits totaling $4,543,714.
As part of the conspiracy, on March 8, 2012, Mendoza and Julia Castillo-Caraveo (Castillo-Caraveo), knowingly caused Chopeque Auto Sales, a non-financial trade or business, to fail to file a Federal IRS From 8300, a report required by law for all currency transactions over $10,000 received by a business. Particularly, they sold a 2008 Chevrolet Silverado 1500 in exchange for $20,900 that was represented by undercover law enforcement officers to be the proceeds of a specified unlawful activity (drug distribution) and that they did so in order to conceal the nature of the specified unlawful activity and to avoid IRS Form 8300 reporting requirements.
Mendoza, along with his co-conspirators, conspired to conceal the nature and source of the specified unlawful activity and attempted to launder drug proceeds. Particularly, Chopeque Auto Sales sold automobiles to known drug dealers, prepared false documents relating to the sale of vehicles to known drug dealers, structured currency deposits to conceal the source, and falsely claimed to law enforcement authorities to be a valid lien holder of a seized vehicle in order to assist a known drug dealer in seeking the return of the vehicle.
“Money is the fuel that drives and motivates drug dealers, and for that reason, laundering drug money is a serious federal offense,” said U.S. Attorney John Walsh. “During the investigation of a drug trafficking organization, it was determined that this car dealer was laundering proceeds to hide illegal conduct. Thanks to banking laws, it was one key way law enforcement was able to identify the dealership’s involvement in the unlawful activity.”
“This is a great example of law enforcement agencies working together as we each brought our expertise to the table. As with this case, IRS CI Special Agents fill a unique role in the war on drugs; because of our financial background and expertise, we are able to follow the money trail and focus on money laundering activities and the seizure of assets derived from the drug proceeds,” said Steven A. Osborne, Acting Special Agent in Charge of IRS Criminal Investigation, Denver Field Office.
“Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) is committed to working with its federal, state and local partners to investigate crimes and bring those to justice who attempt to conceal and launder money to fund illegal activities, in this case a drug trafficking operation,” said David A. Thompson, special agent in charge of HSI Denver. “Dismantling drug trafficking operations is a critical aspect of our investigations and a vital step in combatting crime as a whole and making our communities safer.”
“Individuals who assist in or facilitate the illegal activities of drug traffickers will also be held accountable for their actions,” stated Barbra Roach, Special Agent in Charge of the Drug Enforcement Administration’s Denver Field Division. “DEA will target all levels of these criminal enterprises.”
This case was investigated by agents with IRS-Criminal Investigation, the Drug Enforcement Administration and Homeland Security Investigations with assistance from the Denver Police Department, Commerce City Police Department, Thornton Police Department, and the Colorado Department of Revenue – Auto Industry Division.
This case was prosecuted by Assistant U.S. Attorneys Celeste Rangel and Stephanie Podolak. The asset forfeiture was handled by Assistant U.S. Attorney Tonya Andrews.
Statement by Colorado U.S. Attorney John Walsh Regarding Colorado Springs Mass ShootingRead the Press Release
DENVER – Colorado U.S. Attorney John Walsh issued the following statement today regarding the mass shooting in Colorado Springs:
"Our thoughts today are with the victims of this terrible crime, their families, and also with the City of Colorado Springs, the University of Colorado at Colorado Springs Police Department and Planned Parenthood, all of whom were victims of this senseless violence. Selfless acts of great courage and determination by law enforcement officers prevented far greater bloodshed. One of those officers gave his life, and others were wounded as they fought to confront the threat and protect others. They deserve our undying gratitude.
"The United States Attorney's Office and federal law enforcement have been working throughout in close support of Colorado Springs, El Paso County, and State of Colorado law enforcement, as well as Fourth Judicial District Attorney Dan May. We also have been in close contact with both the National Security Division and Civil Rights Division of the Department of Justice. The federal investigation is ongoing and focused."
John Walsh, United States Attorney, District of Colorado
Two Indicted by Federal Grand Jury Following Additional Marijuana Raids in Western ColoradoRead the Press Release
DENVER – A federal grand jury has indicted two individuals who, after investigation, were found tending to a large marijuana grow in western Colorado, U.S. Attorney John Walsh, and DEA Denver Division Special Agent in Charge Barbra Roach announced. The two men charged, Luis Adolfo Garcia, age 33 of Parachute, and Luis Rios-Cortes, age 23, a Mexican National in the country illegally, have made their initial appearance, where they were advised of the pending charges as well as their rights. Both were also arraigned by a U.S. Magistrate Judge. Both defendants were ordered held without bond by a U.S. Magistrate Judge. Approximately 1,720 pounds of marijuana was recovered during the November 13, 2015 raids.
According to court documents, in April of 2015, a Bureau of Land Management (BLM) Ranger noticed two trucks conspicuously but consistently appearing in an area along the Dolores River. Ultimately the BLM found two large marijuana grows on their property, one on September 15th, which resulted in the arrest of four defendants, and a second on September 30, 2015, four miles from the first location, where six people were arrested. After those raids, the DEA, along with the BLM, the Delta County Sheriff and the Seventh Judicial Drug Task Force, continued to investigate potential illegal marijuana grows in the area. The two trucks seen in the area, one a Chevy Silverado, and the other a maroon Ford F-150, were continually seen in the area. Additional investigative techniques were used which resulted in the identification of two addresses.
On Friday, November 13th, the DEA, along with the other investigative partners, executed two search warrants. The first was at a residence in Parachute, and the other was identified as the “San Juan Vista Property”. Evidence of illegal marijuana activity, including the names of some of the defendants arrested in September, was found in the residence. At the San Juan Vista Property, law enforcement found approximately 1,720 pounds of dried marijuana. The property containing the marijuana was owned by Luis Garcia’s sister, Esther Garcia. The residence searched was Esther Garcia’s as well. Luis Garcia was stopped multiple times while driving the Chevy Silverado, which is owned by Esther Garcia. The investigation continues.
Luis Adolfo Garcia and Luis Rios-Cortes each face one count of Conspiracy to manufacture and possess with intent to distribute 100 kilograms or more of marijuana, which carries a penalty of not less than 5 years, and not more than 40 years, and up to a $5,000,000 fine. They also each face one count of Manufacture and possession with intent to distribute 100 kilograms or more of marijuana, which carries the same penalty. In addition, Rios-Cortes faces one count of being an illegal alien in possession of a firearm. That count carries a penalty of not more than 10 years, and up to a $250,000 fine.
“We have seen a notable increase this year in illegal marijuana grows in Western Colorado,” said U.S. Attorney John Walsh. “As we work with the DEA, BLM, and our local law enforcement partners, we are seizing large amounts of marijuana. In addition, we have charged a total of 12 individuals, many here illegally from Mexico, for tending to these marijuana grows.”
“The Drug Enforcement Administration will continue to investigate illegal marijuana cultivation,” stated Barbra Roach, Special Agent in Charge of the DEA’s Denver Field Division. “Criminal Organizations outside the state continue to attempt to use both public and private lands in Colorado to further their illegal activities at the expense of the citizens of our community. These individuals and organizations will be held accountable for their actions.”
“The teamwork between the DEA, BLM and the Delta County Sheriff’s Department and the Seventh Judicial Drug Task Force was outstanding.” stated Delta County Sheriff Fred McKee. “All the agencies worked together to apprehend these felons engaged in the illegal cultivation and distribution of marijuana.”
This investigation is being conducted by the DEA, BLM, the Delta County Sheriff, and the Seventh Judicial Drug Task Force.
The defendants are being prosecuted by Assistant U.S. Attorney Rebecca Weber.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
Denver Resident Sentenced to Federal Prison for Escape and Failure to Register as a Sex OffenderRead the Press Release
DENVER – Eric Eugene Hartwell, age 53, of Denver, Colorado, was sentenced last Friday U.S. District Court Judge Philip A. Brimmer to serve 120 months (10 years) in federal prison, followed by 5 years on supervised release for escape and failure to register as a sex offender, U.S. Attorney John Walsh and U.S. Marshal Ken Deal announced. The sentence is the result of a guilty verdict following a four-day jury trial. The jury deliberated for approximately over two hours before reaching their verdicts. Hartwell, who was in custody, was remanded at the conclusion of the hearing. The defendant was indicted by a federal grand jury in Denver on July 22, 2014, and found guilty following the jury trial on August 13, 2015.
According to facts presented to the jury during trial, as well as from the Sentencing Statement filed by the prosecution, Hartwell was convicted on March 19, 2010, in U.S. District Court for the Northern District of Texas for failure to register as a sex offender. As a result of this conviction, he was sentenced to a 60-month term of imprisonment and ordered to serve a life time of supervised release. After Hartwell served his federal prison sentence, he was transferred to Colorado to begin his term of supervised release and to begin a term of parole in conjunction with a 2011 Colorado Failure to Cancel Registration conviction. On January 6, 2014, during a meeting with a Senior U.S. Probation Officer, the defendant was provided information in relation to his federal supervised release requirements, both verbally and in writing, including his sex offender registration requirements. He signed an acknowledgement that he understood the conditions of his federal supervision, including that he was required to “register with state and local law enforcement as directed by the U.S. Probation Officer in each jurisdiction where the defendant resides, is employed, or is a student” and that he was required “no later than 3 business days after each change of name, residence, employment, or student status, appear in person in at least one jurisdiction and inform that jurisdiction of all changes in the information required in the sex offender registry.”
Additional conditions of federal supervised release included that the defendant was required to reside in a halfway house. Hartwell began residing at a residential reentry center in Denver on January 22, 2014. He updated his sex offender registration as required on January 24, 2014, to reflect his change of residence to the halfway house. On February 21, 2014, Hartwell packed his personal items and departed the halfway house without permission. A state warrant was issued in Colorado and a federal warrant was issued by the Northern District of Texas. The U.S. Marshal Service Violent Offender Task Force (COVOTF) conducted an investigation to locate Hartwell. It was confirmed that the defendant, who originally reserved his travel using the name “John Miller,” purchased an Amtrak train ticket from Denver, Colorado, to Chicago, Illinois on February 21, 2014. On that same day and before purchasing the Amtrak ticket, the defendant withdrew $3,600 from an ATM in Denver and removed and discarded a GPS-tracking ankle monitor that he was required to wear as a condition of his Colorado state-parole.
The U.S. Marshal’s investigation revealed that on February 27, 2014, Hartwell withdrew $503 from his bank account, leaving a balance of $5.87 in that account, from an ATM in Washington, DC. He then traveled on the Greyhound Bus Line under the name “John Miller” from Washington, DC to Norfolk, Virginia. On February 28, 2014, Hartwell was arrested after he was located by the U.S. Marshals in a motel in Norfolk, Virginia. The prosecution proved that on February 21, 2014, the defendant escaped the halfway house at which he was registered in Colorado, and, as of February 28, 2014, he had failed to register as a sex offender or update his sex offender registration in Colorado or any other state.
One of the factors for the lengthy sentence was the defendant’s previous criminal history. In addition to the convictions noted above, Hartwell was convicted on September 11, 1991, of the felony of Rape of a Child in the First Degree in the Snohomish County Superior Court in the state of Washington. The conviction was a result of Hartwell having sexual contact with a six-year-old child in his neighborhood. Hartwell was also convicted on September 1, 1996, of Attempted Indecent Liberties and Sex Offender Failure to Register in the Skagit County Superior Court in the state of Washington. This conviction was a result of Hartwell picking up a pregnant teenage hitchhiker and telling her that he was going to rape her; she was able to escape from the car after fighting him off. This is the Hartwell’s fifth conviction for an offense involving the failure to register as a sex offender.
“Defendant Hartwell had a history of being a child sex predator,” said U.S. Attorney John Walsh. “Thanks to the hard work of the U.S. Marshals Service, and their Violent Offender Task Force, Hartwell was found after leaving a halfway house and failing to register as a sex offender.”
This case was investigated by the U.S. Marshals Service, including the U.S. Marshals Service Violent Offender Task Force.
Hartwell is being prosecuted by Assistant U.S. Attorneys David Tonini and Alecia Riewerts.
Colorado Springs Man Sentenced to 10 Years in Federal Prison for Being a Felon in Possession of AmmunitionRead the Press Release
DENVER – Yesterday Phinehas Lee McNeal, of Colorado Springs, Colorado, was sentenced by U.S. District Court Judge Raymond P. Moore to serve 10 years in federal prison for being a felon in possession of ammunition, U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Denver Division Special Agent in Charge Ken Croke announced. McNeal, who appeared at the hearing in custody, was remanded at its conclusion. On July 22, 2015, McNeal was found guilty following a jury trial of being a felon in possession of ammunition. He was acquitted of another charge. The defendant’s mother, Anne Marie McNeal, of Colorado Springs, was also convicted following a separate jury trial, held on October 22, 2015, of making a straw purchase of a firearm, namely buying a firearm for her son, Phinehas.
According to evidence presented during trial, and as outlined in a Sentencing Statement filed with the court, on November 29, 2014, Colorado Springs Police responded to a shoplifting incident at a Sportsman’s Warehouse. They found that Phinehas McNeal had been detained by the store for shoplifting arrowheads. While being detained, Phinehas McNeal was found to be in possession of two boxes of ammunition. He had a receipt showing he purchased the ammunition from the Sportsman’s Warehouse store. Evidence found during the subsequent investigation, including images from the store’s video surveillance system, clearly show the defendant purchasing the ammunition that he was found in possession of when detained.
The defendant’s mother was also taken into custody for obstructing officers. They both were taken to Colorado Springs Police Department for questioning. During the questioning, Ann Marie McNeal admitted to purchasing at least one of the firearms for Phinehas McNeal. During that period, law enforcement executed a search warrant at the mother, Anne Marie McNeal’s residence. Law enforcement found additional ammunition, and a number of firearms in Phinehas McNeal’s bedroom. It was determined during the investigation that Phinehas McNeal also purchased ammunition at a local Walmart. The defendant has at least four felony convictions, including two for felony menacing, one for possession of a firearm by a previous juvenile offender, and theft, all in El Paso County Court.
During a separate trial of the defendant’s mother, Anne Marie, before U.S. District Court Judge Moore, a jury found she had illegally purchased a firearm for her son. That conviction carries a maximum penalty of not more than 10 years in federal prison, and up to a $250,000 fine. She is scheduled to be sentenced on January 14, 2016.
“This defendant was a convicted felon many times over and was prohibited from possessing ammunition by law many times over as well,” said U.S. Attorney John Walsh. “This sentence should send a message to those convicted of felony violations of the law that even the possession of ammunition is a federal felony and can result in severe punishment.”
“McNeal had a long, violent criminal career that he was determined to continue,” said ATF Special Agent in Charge Ken Croke. “Illegally providing him a firearm was both dangerous and irresponsible on his mother’s part.”
This case was investigated by the Colorado Springs Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).
Both defendants were prosecuted by Assistant U.S. Attorneys Kurt Bohn and Jason St. Julien.
Fort Collins Man Indicted by Federal Grand Jury for Being a Felon in Possession of a Firearm After Threatening to Shoot and Burn Down Front Range Community CollegeRead the Press Release
DENVER – Fort Collins resident and former Front Range Community College student David Aaron Moscow, age 30, has been indicted by a federal grand jury in Denver on two counts of being a felon in possession of a firearm, the U.S. Attorney’s Office, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and Fort Collins authorities announced. Moscow came to the attention of law enforcement after telling a clinical neuropsychologist that he planned to shoot people at Front Range Community College and burn down the school. Firearms were found in Moscow’s home and vehicle, along with a large amount of ammunition found in his home.
According to federal court documents, David Moscow was a student at Front Range Community College in Fort Collins in 2012, but left voluntarily. After leaving he made inappropriate calls to college personnel. He also posted questionable information online about the school. In October 2015, Moscow went back to the school in an attempt to re-enroll. During that process he was questioned about his former inappropriate conduct. After the meeting at the community college Moscow met with several clinical neuropsychologists, telling one of them he had desires to shoot people at the school and burn it down. This prompted a neuropsychologist to contact law enforcement.
An investigation into Moscow revealed that he had a prior felony conviction for Aggravated DUI in 2007 in Arizona. While the neuropsychologist put a Mental Health Hold on Moscow, law enforcement obtained a search warrant for his residence. Moscow was taken into custody on October 23, 2015 for his own safety based on the mental health hold. Also on that date, Fort Collins Police Services executed a search warrants at Moscow’s residence and in his car. They found an AR-15, fully loaded with a 30 round clips in his bedroom closet. They also found hundreds of rounds of ammunition. In addition, a Glock .40 caliber handgun was found in his vehicle. Moscow was also in possession of controlled substances, namely hydrocodone and Ecstasy.
Moscow, possessing the weapons after his Arizona felony conviction, was a felon in possession of a firearm. He was charged in federal court by Criminal Complaint on November 2, 2015. He was indicted by a federal grand jury on November 16, 2015. The defendant has made his initial appearance, where he was advised of the charges against him. He was advised of his rights, and was arraigned, entering a not guilty plea. U.S. Magistrate Judge Michael J. Watanabe ordered Moscow to be held in the custody of U.S. Marshals without bond.
In addition to the federal charges, Moscow was charged in Fort Collins by the Larimer County District Attorney with multiple violations of state law, including Felony Menacing (F5), Violation of Bail Bond Conditions (F6), Violation of a Protection Order (M1), Possession of a Weapon by a Previous Offender (F6), Prohibiting a Large Capacity Magazine During A Crime (F6), Possession of a Controlled Substance (DF4), and Interference with a School-Credible Threat (M1). It has been determined that in order to facilitate the federal prosecution of the firearm charges that the District Attorney’s Office is going to dismiss both the Possession of a Weapon by a Previous Offender charge as well as the charge Prohibiting a Large Capacity Magazine During a Crime. Larimer County District Attorney’s Office will retain the remaining charges.
If convicted of being a felon in possession, the defendant faces not more than 10 years, and up to a $250,000 fine, per count for each of the two counts.
The Moscow case was investigated by Fort Collins Police Services and the ATF with support from Front Range Community College Security. The matter also received substantial attention from Larimer County District Attorney Clifford Riedel’s Office.
This case is being prosecuted by Assistant U.S. Attorney Rebecca Weber.
The charges contained in the indictment are allegations, and the defendant is presumed innocent until proven guilty.
Justice Department Sues Lakewood, Colorado, Apartment Complex for Discriminating Against Families with ChildrenRead the Press Release
The Justice Department filed a lawsuit today against the owners and manager of the Westland Apartments (Westland), a 28-unit apartment complex in Lakewood, Colorado, alleging that they have discriminated against families with children in violation of the Fair Housing Act.
The lawsuit, filed in the U.S. District Court for the District of Colorado in Denver, alleges that the defendants have implemented a policy of generally not allowing families with children to live in the front building at Westland, and generally restricting them to apartments in the rear building instead. The suit was filed against Roger and Eileen Loecher, who own Westland, and Miriam Yehudah, the resident property manager.
“Apartment owners cannot limit where children live in their apartment complexes,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “If an apartment is within their budget and meets their needs, the family, not the landlord, should be able to decide whether it is appropriate for them.”
“The Fair Housing Act ensures that all Americans have equal access to housing, a basic human need,” said U.S. Attorney John F. Walsh of the District of Colorado. “This case involved a shocking and direct violation. The complaint filed in federal district court demonstrates that the U.S. Attorney’s Office, working with our partners at the Civil Rights Division of the Department of Justice and the U.S. Department of Housing and Urban Development, will not allow those who rent properties to discriminate against families with children.”
The lawsuit arose from a complaint filed with the Department of Housing and Urban Development (HUD) by the Denver Metro Fair Housing Center, a non-profit organization that works to promote equal housing opportunities in the Denver metropolitan area. The center sent testers posing as prospective renters to Westland to determine whether they were complying with the Fair Housing Act. The center’s testing revealed that Westland’s property manager told prospective renters that families with children were generally placed in apartments in the rear building, and did not offer prospective renters with children the opportunity to consider available apartments in the front building. After investigating the complaint, HUD determined that Westland was violating the Fair Housing Act and issued a charge of discrimination. After one of the parties chose to have the charge litigated in federal court, the matter was referred to the Justice Department.
“Families looking for a safe place to call home shouldn’t have that housing limited to certain units of a complex,” said HUD Assistant Secretary Gustavo Velasquez of Fair Housing and Equal Opportunity. “That kind of steering is not only unfair – it is against the law. HUD will continue to work with the Justice Department to take action when the rental policies of housing providers violate the rights of families with children.”
The suit seeks monetary damages for the Fair Housing Center and other persons who were harmed by the defendants’ conduct, civil penalties and a court order barring future discrimination and requiring additional preventive measures.
The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.
Individuals who believe they may have been discriminated against at Westland because they have children, or who may have other information about this lawsuit should contact the Justice Department toll-free at 1-800-896-7743, mailbox 92, or e-mail the Justice Department at [email protected]. Westland is located at 9905 West 21st Avenue in Lakewood.
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Persons who believe that they have experienced unlawful housing discrimination elsewhere can contact the Justice Department at 1-800-896-7743, e-mail [email protected] or contact the Department of Housing and Urban Development at 1-800-669-9777.
Loecher Complaint
Fort Collins Businessman Pleads Guilty to Failing to File an Income Tax Return with the IRSRead the Press Release
DENVER – Donald Dale Smith, age 67, of Fort Collins, Colorado, pled guilty today before U.S. Magistrate Judge Michael E. Hegarty to two counts of willful failure to file a tax return, United States Attorney John Walsh and IRS Criminal Investigation Acting Special Agent in Charge Steven Osborne announced. Judge Hegarty is scheduled to sentence Smith on January 19, 2016 at 10:00 a.m. Smith was charged by an Information in Denver on April 8, 2015.
According to the Information and the stipulated facts contained in the plea agreement, in late 2005, Smith became the owner/operator of Mountain West Children’s Academy, LLC (“MWCA”), a daycare center in Ft. Collins, Colorado. Smith had previously worked as a construction contractor. MWCA operated under Smith from September 2005 through June 2011. Smith was the only owner and operator of the business throughout the relevant tax years.
During the calendar years 2008 through 2010, MWCA was a profitable business and bank records reflect gross business deposits of $447,871 (2008), $439,182 (2009) and $442,169 (2010). As a result of his ownership of and draws from MWCA, Smith had a gross income for each of the calendar years 2008 through 2010 that required him to file personal federal income tax return with the IRS for each of those years. Specifically, Smith had gross income for each of the years as follows: $117,893 (2008), $110,770 (2009), and $134,138 (2010). As a result of Smith’s income, he had federal income taxes due and owing for years 2008 through 2010 in the total amount of $117,954.
In June 2013, IRS conducted an examination of Smith’s tax situation. From 2008 through 2010, Smith used money from the daycare business for gambling at casinos in Blackhawk, substantial country club and golf-related expenses, and cigars. Specifically, between January 1, 2008 and December 31, 2010, Smith spent a total of $110,500 for these expenditures.
Smith pled to two counts of willful failure to file a tax return, which each carries a penalty of not more than 1 year in federal prison, and a fine of up to $25,000.
This case was investigated by Internal Revenue Service – Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Patricia Davies.
Harrisburg, Pennsylvania Man Sentenced to 13 Years in Federal Prison for Traveling with Intent to Engage in Illicit Sexual Conduct with a MinorRead the Press Release
DENVER – Matthew Hornung, age 34, of Harrisburg, Pennsylvania, was sentenced today by U.S. District Court Judge Raymond P. Moore to serve 156 months (13 years) in federal prison, followed by 10 years on supervised release, for traveling with intent to engage in illicit sexual conduct with a minor, United States Attorney John Walsh and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge David A. Thompson announced. The defendant, who appeared at the sentencing hearing in custody, was remanded at its conclusion.
Hornung was first charged by Criminal Complaint on March 28, 2015. He waived his right to indictment by a federal grand jury, and instead allowed the government to proceed by Information on April 20, 2015. He pled guilty before Judge Moore on June 8, 2015, and was sentenced today, October 26, 2015.
According to court documents, including the stipulated facts contained in the plea agreement, Hornung was arrested by HSI and the Colorado State Patrol on March 28, 2015, after driving from his home in Harrisburg, Pennsylvania to Colorado with the intent of having sex with children. The investigation was initiated after Hornung met an undercover special agent on line who was actually a special agent was using the persona of a single mother with children ages 10 and 14. The defendant and the special agent (using the undercover person), planned for the defendant to travel to Colorado with the intent of him having sex with the children. Hornung made it to Colorado, although his vehicle started to fail before he reached the agreed upon meeting place in Greeley. He was arrested by HSI and the Colorado State Patrol after he approached the marked CSP car for vehicle assistance and it was confirmed that he traveled to Colorado to have sex with the minor children.
“Traveling across the country in hopes of engaging in illicit sex with a minor victim is an act that shock the conscious,” said U.S. Attorney John Walsh. “This is a grave federal offense, and as demonstrated by Judge Moore, carries a lengthy prison sentence.”
"This significant prison sentence reflects the serious criminal nature of child exploitation, and the resulting permanent trauma inflicted on its young and helpless victims," said David A. Thompson, special agent in charge of HSI Denver. "Our HSI special agents are specially trained to identify, investigate and pursue prosecution against these child predators, and rescue their victims - and we take that responsibility very seriously.”
This case was investigated by HSI with assistance from the Colorado State Patrol.
The defendant was prosecuted by Assistant U.S. Attorneys Beth Gibson and Alecia Riewerts.
Two Denver Area Gang Members Receive Prison Sentences for Firearm and Drug CrimesRead the Press Release
DENVER – Two individuals who are self-proclaimed gang members have been sentenced by federal judges to lengthy prison sentences for gun and drug crimes, U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Ken Croke announced. The defendants, whose cases are unrelated, Jonathan Fricks, age 35, and Jesse Garis, age 32, both of Metro Denver, were prior felons caught with guns and drugs, as well as drug distribution paraphernalia.
Defendant Jesse Dale Garis was sentenced to 120 months (10 years) in federal prison, followed by 3 years on supervised release by U.S. District Court Judge John L. Kane. Garis was indicted by a federal grand jury on February 25, 2014. He pled guilty before Judge Kane to possession of a firearm by a previously convicted felon and possession of a firearm in furtherance of a drug trafficking crime on June 15, 2015. He was sentenced on September 10, 2015.
According to court documents, including the stipulated facts contained in the plea agreement, on January 30, 2014, Garis was arrested by the Aurora Police Department for possession of a weapon by a previous offender. Garis was a suspect in the theft of a police computer taken from inside a marked police car while parked at an automobile dealership for service. Police located the defendant inside his vehicle outside his residence as he was observed doing a narcotic transaction involving the sale of methamphetamine. When police officers contacted Garis, he had a SKS rifle in his immediate possession, located along his leg of the driver’s seat. Garis was placed under arrest. In addition to the SKS, officers located a rifle magazine that contained 25 rounds of 7.62 ammunition. They also found 7.36 grams of methamphetamine. The defendant was a self-admitted member of the 211 Crew/Aryan Empire prison gang, and was on federal probation for a conviction for previously possessing a firearm by a convicted felon. He had three additional felony convictions in the state of Colorado. The SKS Garis possessed was to further his drug trafficking.
Defendant Jonathan Thomas Fricks was sentenced to 170 months (just over 14 years) in federal prison followed by 4 years on supervised release by U.S. District Court Judge Christine M. Arguello. Fricks was indicted by a federal grand jury in Denver on December 16, 2014. He pled guilty to possession of methamphetamine with intent to distribute and possession of a firearm in furtherance of a drug trafficking crime on June 8, 2015. Fricks was sentenced by Judge Arguello on September 22, 2015.
According to court documents, including the stipulated facts contained in the plea agreement, between August 15, 2014, the defendant and a woman were observed driving from a Denver motel to a fast food restaurant and then to a grocery store in Edgewater. The defendant, who was in the passenger seat when the car was being driven, was arrested in the grocery store by a Community Parole Officer. Upon his arrest, officers found $3,755 in cash in the defendant’s pants pocket. Officers then searched the car the defendant rode in. They noticed an unzipped black and white bag with a loaded magazine to a firearm showing in the butt of a gun. Upon discovering the firearm, the Community Parole Officer called the ATF for assistance. A full search of the car by ATF agents revealed a 9mm pistol loaded and chambered with seventeen rounds; a second magazine containing five rounds of ammunition; three baggies containing 47 grams of methamphetamine, a small digital scale with meth reside, a large digital scale with met reside, and an obscene photograph showing the defendant’s private part with the firearm in view. The defendant knowingly possessed 47 grams of 95 percent pure methamphetamine. He carried the 9mm pistol in furtherance of his drug trafficking crime. It was determined that Fricks was a documented member of the Oldies 13 Gang and has “Oldies 13” tattooed on his back.
“Local law enforcement, ATF and federal prosecutors have again teamed up to send gang members with guns and drugs to federal prison,” said U.S. Attorney John Walsh. “By focusing on those who traffic drugs while carrying a firearm with lengthy criminal histories, we are focusing on removing those who cause the most harm from our streets.”
“These sentencings, along with others, demonstrate the commitment of law enforcement in Colorado to investigate and prosecute violent criminals and keep them in prison for as long as possible,” said ATF Denver Division Special Agent in Charge Ken Croke.
The Garis case was investigated by the Aurora Police Department. The Fricks case was investigated by the Denver Police Department. The ATF was involved in both investigations.
Garis was prosecuted by Assistant U.S. Attorney Jeremy Sibert. Fricks was prosecuted by Assistant U.S. Attorney Peter McNeilly.
U.S. Attorney John Walsh Participates in Panel Discussion with President Obama Regarding Criminal Justice ReformRead the Press Release
DENVER – Following on the heels of the announcement of the foundation of Law Enforcement Leaders to Reduce Crime and Incarceration, U.S. Attorney John Walsh, District of Colorado, today participated in a panel discussion at the White House with President Barack Obama and Los Angeles Police Chief Charles Beck regarding Criminal Justice Reform. The panel discussion was moderated by Bill Keller, editor-in-chief of the Marshall Project.
Walsh said, “Today I had the honor of discussing potential common sense reforms of our criminal justice system with President Obama and Los Angeles Police Chief Charles Beck. I participated as a representative of the prosecution component of our justice system – those who make criminal charging decisions on a daily basis which determine what potential prison sentences defendants will face. I look forward to continuing to work with the President, the Attorney General, and those involved in Criminal Justice Reform to ensure that the recommendations recently released by a thorough reform committee continue to be refined and get implemented as appropriate.”
President Barack Obama joins, left to right, Bill Keller, Editor-in-Chief of The Marshall Project, Los Angeles Police Chief Charlie Beck and U.S. Attorney John Walsh, Colo., for a panel discussion on criminal justice reform with law enforcement leaders in the South Court Auditorium of the White House, Oct. 22, 2015. (Official White House Photo by Lawrence Jackson)
To view the panel discussion go to: https://www.themarshallproject.org/2015/10/22/watch-president-obama-and-the-marshall-project-in-a-conversation-today-about-criminal-justice?ref=hp-1-100
Men from Colorado Springs and Nevada Indicted for Multi-Million Dollar Investment Fraud SchemeRead the Press Release
DENVER – Two men, one from Colorado Springs, and the other from Nevada, have been indicted by a federal grand jury in Denver on investment fraud related charges, U.S. Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. The two men, Daniel Coddington, age 59, of Colorado Springs, and Jesse Erwin, age 48, of Nevada, appeared before a U.S. Magistrate Judge earlier this week, where they were read their rights and advised of the charges pending against them.
According to the indictment, from at least early 2010 through late 2011, Coddington held himself out to investors and intermediaries to be the principal and owner of a company called Golden Summit Investors Group Ltd. (“Golden Summit”). He operated Golden Summit from Colorado Springs, Colorado. From at least early 2010 through late 2011, Erwin held himself out to investors and intermediaries to be the attorney and general counsel for Golden Summit.
From at least early 2010 through at least late 2011, the defendants described to investors and intermediaries a program through which investor money would be used to purchase collateralized mortgage obligations or CMOs -- an investment consisting of a pool of mortgages organized by maturity and risk. They told investors that the CMOs had face values exponentially larger than their purchase price and market value. According to defendants, the CMOs would then be “hypothecated” to obtain loans in the amount of a percentage of the face value of the CMO. The amount of these loans would still be exponentially larger than the purchase price and market value of the CMOs (known as the “CMO Trade Program”).
Coddington and Erwin told most of the investors that, from the proceeds of the loans, the investors would receive pre-trade distributions and that the remainder of the loan proceeds would be placed into an investment program that would yield high returns. From at least 2010 through late 2011, both defendants described to investors and intermediaries that investors who owned CMOs could transfer their CMOs to Golden Summit for the purpose of participating in the CMO Trade Program.
In approximately April 2011, the defendants told an investor, who ultimately invested $9,000,000 dollars with Golden Summit that $60,000,000 of the loan proceeds obtained from “monetizing” the CMOs purchased with the investor’s money would be provided to the investor in the form of two non-recourse loans in the amount of $30,000,000 each (known as the “CMO Loan Program”).
From at least 2010 through late 2011, defendant Coddington falsely represented to investors and intermediaries that he had the experience and contacts necessary to successfully conduct and complete the CMO Trade Program and the CMO Loan Program. Further, from at least 2010 through at least mid-2011, Coddington and Erwin falsely told investors and intermediaries that all of the money provided by investors would be used to purchase CMOs that would be used in the CMO Trade Program and the CMO Loan Program. They also falsely told investors and intermediaries that any fees, commissions, compensation, and payments to Golden Summit and its affiliates would be taken only from the profits of the CMO Trade Program and CMO Loan Program and not from investor money placed into the CMO Trade Program and CMO Loan Program.
During that same time, the defendants falsely represented that, once investor money was received into an account controlled by defendants, all of the stages of the CMO Trade Program would be accomplished quickly and investors would receive their pre-trade distribution within weeks of their investment followed shortly thereafter by the returns on their investments. In or about April 2011, Coddington and Erwin falsely represented to the investor in the CMO Loan Program that, once the that investor’s money was received into an account controlled by defendants, the purchase of the CMOs would occur in approximately one banking day. Defendants further falsely represented to that investor that the funding process for the loan on the CMOs would take approximately three banking days from the time the CMOs were obtained.
From at least November of 2010 through at least June of 2011, the defendants diverted substantial amounts of investor money placed into the CMO Trade Program and the CMO Loan Program for their own personal use and for purposes other than for purchasing CMOs. Further, the defendants did not successfully “hypothecate” or “monetize” any CMOs to obtain loans for either the CMO Trade Program or the CMO Loan Program.
From at least October 2010 through April of 2011, Coddington and Erwin obtained from investors more than $17,000,000 for the CMO Trade Program and the CMO Loan Program. Despite their failure to successfully complete either the CMO Trade Program or the CMO Loan Program, the defendants did not return most of the investors’ money or any CMO purchased with the investors’ money.
From at least early 2010 through late 2011, the defendants also received CMOs from several investors for purposes of participating in the CMO Trade Program. Coddington kept most of the monthly interest that was paid out on those CMOs while the CMOs were in his and Golden Summit’s possession. For purposes of executing the Scheme, the defendants used, and caused to be used, a number of interstate wires, including emails and money transfers.
Coddington and Erwin both face 13 counts of wire fraud and 2 counts of security fraud. Each wire fraud count charged carries a penalty of not more than 20 years in federal prison, and up to a $250,000 fine. Each securities fraud count charged carries a penalty of not more than 20 years in federal prison, and up to a $5,000,000 fine. The court could also order both defendants to pay restitution to the investment fraud victims.
“These defendants stole millions of dollars from investors,” said U.S. Attorney John Walsh. “Thanks to the hard work of the prosecution and the FBI team that unraveled this scheme, these defendants will now face harsh consequences for that greed.”
“The FBI is committed to investigating complex financial crimes to include investment fraud, especially when someone misuses a position of trust to exploit innocent investors.” said FBI Denver Division Special Agent in Charge Thomas Ravenelle. “The defendants abused their positions, preyed on unknowing victims, and will now face the consequences of their actions.”
This case was investigated by the Federal Bureau of Investigation (FBI).
The defendants are being prosecuted by Assistant U.S. Attorney Pegeen Rhyne.
The charges contained in the Indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
Evergreen Business Owner Pleads Guilty to Filing False Income Tax ReturnRead the Press Release
DENVER – John Michael Askins, age 61, of Evergreen, Colorado, pled guilty yesterday before U.S. District Court Judge Christine M. Arguello to filing a false income tax return, United States Attorney John Walsh, IRS Criminal Investigation Acting Special Agent in Charge Steven Osborne announced. Judge Arguello is scheduled to sentence Askins on January 21, 2016. Askins was indicted by a federal grand jury in Denver on July 7, 2015.
According to the indictment and plea agreement, Askins owns three Service Master carpet cleaning franchises in the Denver area. In October 2011, the Internal Revenue Service, Criminal Investigation (IRS-CI) received a referral from the Small Business/Self Employed Section of the IRS regarding Askins. The referral arose as a result of an audit of the defendant’s 2007 through 2009 personal tax returns.
The returns in question were prepared by a CPA based upon profit and loss statements for Service Master businesses, mortgage interest statements, and information about rental property owned by Askins. Askins reviewed the prepared returns and on more than one occasion told the CPA that the return at issue was not correct because he did not make that much net income and the CPA made the changes requested. Askins failed to file an income return for 2010 even after the CPA attempted to contact Askins several times.
An IRS-CI Special Agent employed a bank deposit analysis of the Service Master business bank accounts and determined that Askins underreported his income by $33,762 for 2007, $127,472 for 2008, and $153,577 for 2009 which resulted in a tax loss of $9,453, $35,692, and $43,001, respectively. As for the failure to file for the year 2010, Askins gross receipts for this year amounted to $213,041. However, Askins did not provide any books or records regarding 2010 business transactions, deductions, or expenses; therefore, using the applicable tax rate of 20%, the government asserts that the tax loss for the failure to file for 2010 was $42,608. The total tax loss for all four counts charged in the Indictment is $130,755.
Askins pled to one count of filing a false income tax return, which carries a penalty of not more than 3 years in federal prison, and a fine of up to $250,000.
This case was investigated by Internal Revenue Service – Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Martha A. Paluch.
Aurora Gang Member Sentenced to 20 Years in Federal Prison for Gun and Drug CrimesRead the Press Release
DENVER – Michael Eugene Simpson, age 35, of Aurora, Colorado, was sentenced late last week to 240 months (20 years) in federal prison for gun and drug charges U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Ken Croke announced. The defendant was also ordered to spend 3 years on supervised release after serving his prison sentence. He was remanded into custody at the end of the sentencing hearing.
Simpson was first charged by Criminal Complaint on June 20, 2014. He was indicted by a federal grand jury in Denver on June 30, 2014. On January 1, 2015, Simpson was charged in a superseding indictment. He was convicted on April 9, 2015 following a three day jury trial of 13 of the 14 counts charged in the superseding indictment. The jury deliberated for approximately 5 hours before delivering their verdicts. Simpson was convicted of possession of cocaine with the intent to distribute, possession of a firearm by a convicted felon, and possession of an unregistered destructive device and possession of ammunition by a convicted felon. The defendant was sentenced on October 9, 2015.
According to court documents, as well as information presented to the jury during trial, on June 19, 2014, at approximately 3:00 a.m., law enforcement special agents and officers executed a search warrant in Aurora, Colorado. The address was the residence of Michael Simpson. Aurora Police Department and ATF had previously received information that Simpson, a convicted felon, was in possession of numerous firearms and was participating in drug activity. That morning, upon approaching the residence, law enforcement officials found Simpson in a vehicle in the driveway. He did not comply with commands and instead turned the vehicle on and tried to flee. He attempted to back out the driveway but could not because a law enforcement vehicle was parked directly behind him. He proceeded to back up into the vehicle several times until law enforcement officers broke the driver side window and tased him.
Agents and officers then conducted a lawful search of the residence, law enforcement officers found: (1) a loaded .40 Smith and Wesson firearm in a vehicle outside the house; (2) a loaded, Cobray 12 gauge Streetsweeper shotgun in the garage; (3) a loaded, .380 Bersa handgun in a safe from a downstairs closet; and, (4) 19.9 grams of cocaine in a plastic bag on the kitchen counter. In the same safe where the .380 Bersa handgun was found, law enforcement officers found over 100 rounds of ammunition, a digital scale, a beaker, and plastic bags used to distribute cocaine. Law enforcement officers found ammunition in two kitchen cabinets, on top of the refrigerator, and on a desk downstairs. A razor blade, digital scale, and plastic bags were also found in a kitchen cabinet.
Simpson, a member of the 83 Gangster Crips, has previous drug-related felony convictions. His felony convictions prohibit him from legally possessing firearms or ammunition.
“A small number of criminals account for a large part of the crime problem, and this case is a perfect example,” said U.S. Attorney John Walsh. “Because of close team work between with Aurora Police Department and ATF that produced the key evidence, our office was able to prosecute this dangerous gang member successfully, obtain a severe sentence from the court and make the streets of Aurora safer.”
“Simpson is a dangerous felon with little regard for the safety of those around him. Bringing this criminal to justice was a team effort, and we appreciate the great work done by our partners in the Aurora Police Department and the Colorado Attorney’s Office during this case,” Agent Croke said. “The ATF is proud to play a role in making Colorado’s streets safer.”
"We are fortunate to have positive working relationships with our law enforcement partners at the local, state and federal level. The joint efforts in this case led to a successful arrest and conviction," said Chief Metz.
This case was investigated by the ATF and the Aurora Police Department.
The defendant was prosecuted by Assistant U.S. Attorneys Jason St. Julien and Robert Brown.
Husband and Wife Indicted for Income Tax Evasion and Bankruptcy FraudRead the Press Release
DENVER – Daryl F. Yurek, age 60, and Wendy M. Yurek, age of 60, both of Littleton, Colorado were indicted by a Federal Grand Jury in Denver on October 7, 2015 for income tax evasion and bankruptcy fraud, announced United States Attorney John Walsh and IRS Criminal Investigation Acting Special Agent in Charge Steven Osborne. The Yureks, husband and wife, had their initial appearance yesterday before U.S. Magistrate Judge Kathleen Tafoya. The Yureks were remanded, and a detention hearing was set for October 13, 2015.
From 1999 through 2012 Daryl Yurek was a partner in Bolder Venture Partners, and Wendy Yurek was a partner from 2008 through 2012. Daryl Yurek acted as a consultant to start-up and growing companies and provided a variety of services, including temporary management and fundraising. Daryl Yurek also exerted significant control over other companies, including ID Watchdog, and Veracity Credit Consultants.
According to the information contained in the Indictment, Daryl and Wendy Yurek reported taxes due and owing for tax years 1999 and 2004 of $624,127 and $53,978, respectively. In 2006, the Yureks attempted to settle this tax obligation with the IRS for $75,000 through an Offer in Compromise in which the Yureks claimed to have insufficient funds to pay the full amount owed. Later, in September 2010, the Yureks filed with the United States Bankruptcy Court in the District of Colorado a Voluntary Chapter 7 Bankruptcy Petition. During the bankruptcy proceeding, Daryl Yurek testified that their primary reason for pursuing bankruptcy was "the $1.2 million that the IRS wants."
According to information contained in the Indictment, during the time that the Yureks claimed to have insufficient money to pay the owed taxes, the Yureks caused Veracity Credit Consultants and Bolder Venture Partners to pay for substantial personal expenses for the Yureks. In March 2006, the Yureks purchased a loft in downtown Denver for $1.3M in the name of one of their sons. Between 2006 and 2011, Veracity Credit Consultants made mortgage payments on that downtown loft, which was the Yureks’ personal residence, totaling approximately $ 528,635. Bolder Venture Partners paid Condo Association Fees on the loft totaling approximately $43,866. Between 2006 and 2010, Veracity Credit Consultants made rental payments totaling approximately $115,719 for a vacation house in Tabernash, Colorado, which was used by the Yureks. Between 2007 and 2013, Veracity Credit Consultants also made payments totaling approximately $116,009 to the Pinehurst Country Club for Daryl Yurek’s membership dues and other expenses associated with the membership.
According to the indictment, the Yureks also committed numerous affirmative acts of evasion, including submitting to the IRS false and misleading statements on Forms 433-A, IRS Collection Information Statement for Wage Earners and Self-Employed Individuals. In 2008 and 2009, Daryl Yurek also transferred shares that he held in ID Watchdog to Veracity Credit Consultants and to his sons while falsely claiming to the IRS that he had not made any transfers for less than full value.
Daryl Yurek was charged with one count of tax evasion, one count of bankruptcy fraud, one count of making a false oath in connection with bankruptcy, and two counts of subscribing to a false document. Wendy Yurek was charged with one count of tax evasion and one count of bankruptcy fraud. Subscribing to a false document carries a penalty of not more than 3 year in federal prison and a fine of up to $250,000. The other charges each carry a penalty of not more than 5 year in federal prison and a fine of up to $250,000.
This case was investigated by the Internal Revenue Service – Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Pegeen Rhyne.
The charges contained in the Indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
Confronting Wave of Illicit Marijuana Cultivation, Federal, State and Local Authorities Discover and Destroy Major Marijuana Grows in Locations Across ColoradoRead the Press Release
DENVER. – Over the course of the last six weeks, federal, state, and local law enforcement agencies have identified and dismantled a large number of illicit marijuana cultivation sites across Colorado, and seized a large amount of marijuana. Some illicit grows were located in multiple residences and outbuildings, while many others were located on federal land, causing environmental damage to the land that may take years to mitigate. In every case, the marijuana grows were both illegal under federal law and unlicensed by state authorities under Colorado’s marijuana regulatory system. In several cases, the marijuana grown was destined for users outside of Colorado.
These raids, executed by federal law enforcement (DEA, the U.S. Forest Service, the Bureau of Land Management, and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI)) and state law enforcement (multiple sheriff’s offices) have resulted in the arrest of 32 individuals in connection with the cultivation sites, and the discovery and seizure or destruction of nearly 20,000 marijuana plants – often mature and ready for harvest -- and over 300 kilograms of dried marijuana. In addition to the marijuana, firearms and cash have been recovered. Further, there are ongoing investigations in a number of the grows listed below.
The 32 individuals arrested face federal drug trafficking charges brought by the United States Attorney’s Office in federal court in Denver and Grand Junction.
As alleged in court documents, nearly all of those arrested are from outside Colorado, either other states or from other countries, and include Mexican and Cuban nationals. Some of those arrested are in the United States illegally. Court documents allege that some of those responsible for the marijuana growing and/or trafficking appear to be working for drug trafficking organizations. To date, the following illicit grows have been identified and dismantled:
- * Private Land, September 1st, Cotopaxi and Westcliffe in Freemont and Custer County, 20 people arrested.
A DEA-led task force executed 8 search warrants in Cotopaxi and Westcliffe as part of a major drug trafficking organization investigation. Agents and officers found well over 1,000 marijuana plants, 50 pounds of dried marijuana, 28 firearms, and $25,000 in cash. The investigation and seizures resulted ultimately in the arrest of 20 individuals, many from Cuba, acting in an organized manner. Those arrested were growing the marijuana in Cotopaxi and Westcliffe, and then either driving or using UPS to send the marijuana to Florida.
- * Pike National Forest, August 19th, in the Green Mountain Area in Jefferson County, investigation is ongoing.
Law Enforcement Officers from the U.S. Forest Service, Department of Homeland Security Investigations (HSI), Jefferson County Sheriff’s Office and the Colorado National Guard Joint Counter Drug Task Force joined together to complete an eradication of an illegal marijuana grow site in the Pike National Forest. The eradication team collected more than 3,900 plants and over 3,000 pounds of irrigation pipe, pesticides, flammable liquids, camping gear and trash.
- * Routt National Forest, August 28th, Buffalo Pass Area in Routt County, 2 arrested.
Law Enforcement Officers from the U.S. Forest Service, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Routt County Sheriff’s Office joined together to eradicate an illegal marijuana grow site located in the Buffalo Pass area, northeast of Steamboat Springs, Colorado. The eradication team collected approximately 1,000 plants and removed camping gear from the site. Further, a handgun was found. Additional site clean-up of trash and other items will be ongoing by the U.S. Forest Service. Two Mexican Nationals in the country illegally were arrested.
- * San Isabel National Forest, September 7th, Cordova Pass Area northwest of Trinidad in Huerfano County, 2 arrested.
Hunters discovered an illegal marijuana grow site located in the Cordova Pass area approximately 40 miles northwest of Trinidad. The eradication team collected more than 11,700 plants as well as irrigation pipe, pesticides, flammable liquids, camping gear and trash. The U.S. Forest Service and Huerfano County Sheriff’s Office are working together to identify the individuals. The cultivation site spread across 10 acres with some of the growing areas above 10,000 feet in elevation. The overall grow area included a kitchen structure, three sleeping areas, and a rifle. Two men were arrested at one of the camp sites within the cultivation area.
- * Bureau of Land Management Land, September 15th, along the Dolores River corridor between Gateway and Naturita in Montrose County, 4 arrested.
BLM Rangers discovered more than 1,200 fully mature marijuana plants, many exceeding six-feet-tall, along with 211 kilograms of dried marijuana and a rifle. Because of the size of the operation, officers spent two and a half days eradicating and removing the plants. The rangers arrested four Mexican nationals who were on-scene and believed to be working the grow site.
- * Bureau of Land Management Land, September 30th, also along the Dolores River corridor between Gateway and Naturita in Montrose County, 6 arrested.
Law enforcement officers identified a marijuana grow site, also along the Dolores River. Evidence of at least a thousand marijuana plants appeared recently harvested with approximately 69.6 kilograms of processed marijuana still on site. The rangers arrested one Honduran and five Mexican nationals at or near the site.
These matters represent a wave of illicit marijuana cultivation in violation of federal law and operating outside Colorado’s marijuana regulatory structure. Federal, state and local authorities are working in close cooperation to address this unusually large and widespread group of illicit marijuana grows. In addition, federal, state and local authorities are engaged in investigation of other potential illicit grows around the state.
Each of these enforcement actions is pursuant to, and consistent with, the Department’s Guidance Memorandum of August 29, 2013 to federal prosecutors, also known as the “Cole Memo.” The Cole Memo set forth eight areas of federal interest (the “Cole Factors”) and advised federal prosecutors to focus federal law enforcement resources on those priority areas. The enforcement actions summarized in this press release implicate many of those federal interests, including but not limited to:
- Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels;
- Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
- Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
- Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
- Preventing marijuana possession or use on federal property.
In addition, these marijuana grows represent systematic efforts to evade and sidestep Colorado’s ongoing regulatory efforts under state law, and as a result implicate the Cole Memo’s emphasis on ensuring that state regulatory regimes are effective in practice.
“These joint federal-state law enforcement actions against large illicit marijuana grows represent a new phase in the challenges facing law enforcement after Colorado’s legalization and regulation of marijuana under state law,” said United States Attorney John Walsh. “Illegal activity of this kind underscores the need for strong, joint law enforcement efforts by federal and state authorities to identify, cut off and destroy the efforts of drug trafficking organizations to use Colorado as a ‘source state’ for export of illegal marijuana around the country. State and local authorities deserve our appreciation and support for their efforts on the ground to team up with federal authorities on this critically important effort to keep Colorado safe.”
“The illegal cultivation of marijuana is a serious threat to our communities, especially when it’s done on public land,” stated Barbra Roach, Special Agent in Charge of the Drug Enforcement Administration’s Denver Field Division. “Our parks and public lands are for everyone to enjoy, and the health and safety of visitors must not be threatened by the illegal activities of criminal organizations and the cultivators they employ. Those responsible must be stopped and held accountable.”
“Since many of the suspects of the recently discovered marijuana grow operations in Colorado are undocumented aliens, Homeland Security Investigations can provide unique and extensive law enforcement authorities to investigate these cases,” said David A. Thompson, special agent in charge of HSI Denver. “Our partnership with other local, state and federal law enforcement agencies helps ensure that these criminal organizations are totally dismantled, making communities and public lands safer.”
“The Forest Service remains committed to provide public safety and protection of the natural resources on national forest lands by aggressively working to locate illegal marijuana sites, arrest and pursue prosecution of the growers and clean up the sites,” said U.S. Forest Service Special Agent in Charge Laura Mark. “The significant safety concerns and environmental damage caused by these marijuana sites is a priority for Forest Service Law Enforcement.”
"Illegal marijuana cultivation on public land brings hazards like illegal waste disposal, use of illegal pesticides, herbicides, and rodenticides; and the illegal use of the public's water," said BLM Colorado Special Agent in Charge Gary Mannino. "In order to protect the public as well as the public's natural resources, BLM will continue to enforce federal prohibitions on marijuana cultivation on public lands. This is particularly timely during hunting season, when so many Coloradans head out to enjoy their public lands."
“It is vitally important that we work together with our law enforcement partners in the endeavor to locate and eliminate illegal marijuana grow operations off of our public lands and out of our neighborhoods,” said Jefferson County Sheriff Jeff Shrader.
“As the elected sheriff of Routt County, I am proud of the working relationship with our Federal partners regarding all matter of public safety,” said Garrett Wiggins, Sheriff of Routt County. “Earlier this year, the Routt County Sheriff’s Office partnered with numerous federal and state law enforcement agencies in a large, illegal marijuana grow investigation located in the Routt National Forest. Even though the State of Colorado passed state laws legalizing limited marijuana use, the practice of growing illegal marijuana crops on our public lands continues. This illegal practice creates serious public safety concerns for our citizens enjoying the many outdoor activities in our areas. In addition, these clandestine activities cause serious concerns to our natural resources associated with erosion and contamination of water sources from chemical and sometimes illegal substances being introduced through the fertilization process. Our goal is to continue to work with all our local, state and federal partners in investigating all public safety issues and hold those individuals accountable who participate in illegal activity.”
“Huerfano County is experiencing the same problems with marijuana that many other counties are – that citizens think because it is legal they can do whatever they want,” said Huerfano County Sheriff Bruce Newman. “Those who don’t follow the law will be arrested and their marijuana confiscated and destroyed.”
“I would like to extend my appreciation to the U.S. Attorney’s Office, DEA, Fremont County Sheriff’s Office, Pueblo County Sheriff’s Office and the Pueblo Police Department for their direct assistance in this operation,” said Custer County Sheriff Shannon K. Byerly. “Their help was critical in conducting this without incident. I would also like to recognize the efforts of the men and women of the Custer County Sheriff’s Office who contributed to this mission. This was an important step to gain control over the illegal production and sales of Marijuana in our area and we will continue to investigate those attempting to take advantage of the Marijuana laws in Colorado. Our communities earned an important victory today.”
“Because of the negative impact illegal drug trafficking has on our communities, we are very appreciative of the superb relationships that have been fostered between the federal agencies and all the local agencies involved. With this cooperative effort, we have come together to address a mutual problem,” said Fremont County Undersheriff Ty Martin.
Many agencies have worked together to identify and eradicate these public grows. Those agencies include: the Drug Enforcement Administration, the U.S. Forest Service, the Bureau of Land Management, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), and local and state law enforcement.
Those arrested are being prosecuted by Assistant U.S. Attorneys from the Major Crimes Section and the Drug Task Force Section of the Colorado U.S. Attorney’s Office.
BLM Rangers Discover Two Large Marijuana GrowsRead the Press Release
DENVER. – The United States Attorney’s Office and the Bureau of Land Management, working in concert with local and state law enforcement, discovered and dismantled two large unrelated marijuana grows on Bureau of Land Management (BLM) land. The locations were identified after rangers acting on two separate tips discovered the marijuana grow operations on public land south of Gateway, Colo.
BLM rangers discovered the first illegal grow on September 15th, on National System of Public Lands managed by the U.S. BLM along the Dolores River corridor between Gateway and Naturita, Colorado. They discovered more than 1,200 fully mature marijuana plants, many exceeding six-feet-tall, along with 211 kilograms of dried marijuana and a rifle. The rangers arrested four Mexican nationals who were on-scene and believed to be working the grow site. Because of the size of the operation, officers spent two and a half days eradicating and removing the plants.
A second illegal grow was discovered by the same rangers with the assistance of Mesa and Montrose County Sheriff’s Offices on September 30th near the first site. Law enforcement officers arrested one Honduran and five Mexican nationals at the second grow site. Evidence of thousands of marijuana plants appeared recently harvested with approximately 69.6 kilograms of processed marijuana still on site. Both grow locations were located in Montrose County.
"Illicit marijuana grows on public lands violate the drug laws and harm the environment," said U.S. Attorney John Walsh. "This Fall, Colorado has seen an explosion in the number and size of illicit marijuana grows on public land, which federal and state authorities are aggressively investigating and prosecuting."
“In addition to being illegal, these grow-sites create impacts to public lands, including destruction of native vegetation, hazardous materials and significant trash,” said Grand Junction Field Manager Katie Stevens. “We appreciate the cooperation of a number of other agencies including the Mesa and Montrose county sheriff’s offices, the U.S. Forest Service and the U.S. Drug Enforcement Administration.”
"This case is a good example of why a multi-jurisdictional drug task force is so beneficial," said Sergeant Tyler Wallace, 7th Judicial District Drug Task Force.
“It is encouraging to see the coordinated efforts put forth by multiple agencies to combat illegal marijuana grows in Montrose County," said Montrose County Undersheriff Adam Murdie.
For information regarding the status of those individuals charged in relation to these public marijuana land grows, please contact the U.S. Attorney’s Office.
These marijuana grows and the subsequent investigation was conducted by the BLM, Drug Enforcement Administration (DEA), the Mesa County Sheriff’s Office, the Montrose County Sheriff’s Office, 7th Judicial District Drug Task Force, the U.S. Forest Service and the U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI).
Those arrested and face criminal charges are presumed innocent unless and until proven guilty.
Lone Tree businessman sentenced for conspiracy involving false statements to SBA and false income tax returnsRead the Press Release
DENVER – Hemal Ramesh Jhaveri, the owner and former CEO of SofTec Solutions Inc. of Englewood, Colorado, was sentenced in federal court in Denver earlier this week to six months in prison. Jhaveri pleaded guilty earlier this year to conspiring to commit the crimes of making false statements to influence the Small Business Administration (SBA) and of filing false federal income tax returns. The conspiracy began in 2006 and continued to 2013.
Chief Judge Marcia Krieger of the U.S. District Court, who imposed the sentence, ordered Jhaveri to serve a two-year term of supervised release following his release from incarceration, perform one thousand hours of community service, and pay a fine of $250,000. Prior to the sentencing hearing, Jhaveri paid restitution to the Internal Revenue Service in the amount of $1,171,179. Jhaveri, age 52, is a resident of Lone Tree, Colorado.
A Plea Agreement and other documents that were filed in the case described the factual basis for Jhaveri’s guilty plea:
The SBA’s 8(a) Business Development Program is available to small businesses that are owned by socially and economically disadvantaged individuals. A business ad- mitted to the program receives various benefits, including sole-source, or non-competitive, government contracts.
The SBA admitted SofTec Solutions to the program in 2001, and the company thereafter received sole-source contracts under which it provided clerical and administrative support and other services to federal departments and agencies. Following the start of the conspiracy in 2006, those departments and agencies paid SofTec Solutions more than seventeen million dollars pursuant to the contracts.
The SBA required SofTec Solutions to annually provide Jhaveri’s financial statements and other information, which the agency used to determine whether the company met the requirements to remain in the program. One requirement was that Jhaveri’s net worth remain under $750,000. Another was that his withdrawals from his company not exceed $300,000 in any fiscal year. In order to circumvent those rules, Jhaveri, with the assistance of his chief financial officer and others, diverted money from SofTec Solutions to bank accounts that Jhaveri controlled, to bank accounts of associates, and to other places for his personal use and benefit. The government took the position in court that the amount diverted was $4,494,305.79.
Some of the diverted funds were transferred to accounts in California, India, Hong Kong, and Singapore. At Jhaveri’s direction, SofTec Solutions’ CFO misrepresented in the company’s accounting records that those transfers were payments of business expenses, making it appear that those to whom the money was sent had provided services. The money in fact went to accounts controlled by Jhaveri’s associates, who deducted commissions and then, at his direction, passed on the remaining funds to his bank accounts. Jhaveri created false invoices and agreements to make it appear that there was support for the recording of the transfers as expenses.
Much of the other money diverted from SofTec Solutions was used for expenses related to a restaurant in Lone Tree in which Jhaveri had an interest. In January 2007, Jhaveri used $300,000, which was transferred from SofTec Solutions to his personal bank account, to make a partial payment for the purchase of the property where the restaurant was located. In 2008 and 2009, another $984,194.40 moved from SofTec Solutions to accounts of Jhaveri and related entities and used to pay restaurant ex- penses. And, in late 2009, after the restaurant had closed, $116,000 was moved out of SofTec Solutions to make mortgage payments and pay other expenses related to the restaurant property.
The remaining diverted funds included $40,000, which was wire transferred in March 2008 from SofTec Solutions to an account in Jhaveri’s name at ABN AMRO Bank in India. One year later, Jhaveri diverted $558,590.39 from his company and used it to make a partial payment for the purchase of his residence in Lone Tree. Also in March 2009, a SofTec Solutions check in the amount of $177,240 was made payable to the Internal Revenue Service to pay Jhaveri’s personal taxes. In late 2009, funds were transferred from SofTec Solutions to the account of a dormant Jhaveri-controlled company. Jhaveri used that money to make three alimony payments, each in the amount of $15,000.
As part of the conspiracy, the CFO of SofTec Solutions kept track of two different profit figures: “Profit per Books” and “True Profit.” The former was based on the company’s books, where the CFO had falsely classified the diverted money as expenses. The latter was a larger number, representing the profit the company would have recorded if the diverted money had not been booked falsely as expenses. In emails and memoranda, the CFO informed Jhaveri of the two numbers and explained the differences between the two.
Jhaveri never informed the SBA that money had been diverted from SofTec Solutions for his use and benefit. If he had provided that information, the government maintained, the SBA would have seen that his withdrawals from the company exceeded $300,000 in each of the years 2006 through 2009.
Beginning in 2006 and continuing to 2009, the annual financial statements that Jhaveri submitted to the SBA were, as he knew, false. They underreported the amounts of his cash on hand and in bank accounts, and they failed to report a condominium in Vail, Colorado, which he had bought for $740,000 in January 2006. The financial statements for the four years represented that Jhaveri’s net worth amounts were $186,000, $202,000, $218,000, and $587,942, respectively. If, however, the financial statements had included the value of the condominium and Jhaveri’s true bank-account balances, the SBA would have seen that each year the value of his assets was more than reported and his net worth was greater.
For each of the years 2006 through 2009, Jhaveri willfully filed federal income tax returns that were false in that they failed to report much of the diverted money as in- come. Because the diverted money was mischaracterized on SofTec Solutions’ books as expenses, it was not passed on to Jhaveri’s returns, as it should have been. The government took the position that the total amount of diverted money that was un- reported on Jhaveri’s returns for the four years was $3,349,111.39 and his failure to re- port it as such caused a tax loss of $1,171,179.
The investigation was conducted by special agents of the IRS Criminal Investigation division, the Offices of Inspectors General of the Small Business Administration and the General Services Administration, the Defense Criminal Investigative Service, and the Major Procurement Fraud Unit of the Army Criminal Investigation Command.
The defendant was prosecuted by the Economic Crime Section of the Colorado U.S. Attorney’s Criminal Division.
Statement by U.S. Attorney John Walsh regarding jury finding Harold Henthorn guilty of murderRead the Press Release
“Today a jury in federal court has spoken – finding Harold Henthorn guilty of the First Degree Murder of his wife, Toni Henthorn. Henthorn, who has been in custody since his arrest, will not again experience life outside a prison cell. Thanks to the hard work of the Assistant U.S. Attorneys Suneeta Hazra and Valeria Spencer, and the federal agents, FBI Special Agent John Grusing and National Park Service Special Agent Beth Shott, the facts of this murder were uncovered and justice was obtained. Toni Henthorn’s family, especially her daughter and the entire Bertolels family, can now rest easier knowing that justice has been done. I also want to recognize the Rishell family, Henthorn’s first wife, who has also experienced great pain. Finally, I would like to thank the jurors for their service. These individuals, who were asked to see graphic photos and listen to difficult testimony, should be recognized for their dedication to justice and their service as citizens of this great state.”
John Walsh, United States Attorney, District of Colorado.
Telluride man convicted and sentenced for massive littering of the Uncompahgre National ForestRead the Press Release
DENVER – Benjamin Yoho, age 41, currently of Telluride and Ouray, was convicted and sentenced earlier this week following a one day bench trial before U.S. Magistrate David L. West in Durango of crimes related to the massive littering of an area north of Telluride within the Uncompahgre National Forest, the U.S. Attorney’s Office, the U.S. Forest Service, and the San Miguel County Sheriff announced. From a period of October, 2014, through April, 2015, Yoho not only lived and maintained a structure on National Forest System Lands, but also transported large quantities of items from the Telluride “Free Box” to National Forest System Lands where he littered a large area near the Jud Wiebe Trail. A volunteer effort was mobilized in May, 2015, and with the help of 48 volunteers and numerous crewpersons with the Colorado Division of Fire Prevention and Control, approximately 8500 pounds of debris was removed from the forest by helicopter.
Yoho was charged and convicted of Residing on National Forest System Lands, Maintaining a Structure on National Forest System Lands, and Leaving Debris on National Forest System Lands. He was sentenced to 6 months in the Federal Bureau of Prisons, to be followed by one year of probation. Conditions of Probation include Yoho’s placement at a halfway house upon release from prison and a ban from Forest and BLM lands. Additionally, the Court recommended that the defendant receive mental health treatment while at the Federal Bureau of Prisons. The issue of restitution will be decided at a later date.
“This was no ordinary case of littering in the National Forest – this was full-scale trashing of the public lands, and merited a term of incarceration,” said U.S. Attorney John Walsh.
“The Forest Service greatly appreciates the cooperative effort with the San Miguel County Sheriff’s Office and the local community with this case,” said U.S. Forest Service Special Agent in Charge Laura Mark. “Individuals residing on national forest lands is not only illegal, it poses a significant public safety concern and causes damage to the resources and watersheds, as well as threatening wildlife and in some cases prevents the public from being able to safely recreate in the national forest.”
"This case was an excellent example of the U.S. Forest Service, the Department of Justice and the local community working together to solve a terrible environmental problem,” said San Miguel County Sheriff Bill Masters. “I hope this serves as a warning to all that trashing our National Forest is unacceptable behavior. Unfortunately the defendant in this case took advantage of the charitable nature of the Telluride community and made a mockery of it. In the future law enforcement and citizens need to be more vigilant in controlling abuses of the "Freebox" and other giving institutions to make certain people are not using donated items for criminal purposes."
This case was investigated by the U.S. Forest Service with support from the San Miguel County Sheriff.
Yoho was prosecuted by Assistant U.S. Attorney Dondi Osborne of the U.S. Attorney’s Durango Branch Office.
Denver Man Sentenced for Taking His Deceased Mother's Government BenefitsRead the Press Release
DENVER – Ernie Atchley, a 73 year old Denver resident, was sentenced to serve 15 months in federal prison, followed by 3 years of supervised release after previously pleading guilty to failure to disclose an event affecting entitlement to Social Security benefits, the U.S. Attorney’s Office and the Social Security Administration Office of the Inspector General announced. The defendant was also ordered to pay restitution of $465,349.13 to the Social Security Administration as well as two state government entities in California. The sentence was pronounced by U.S. District Court Judge Wiley Y. Daniel.
Atchley was indicted by a federal grand jury on October 8, 2014. He pled guilty before Judge Daniel on March 17, 2015 and was sentenced on August 19, 2015.
According to court documents, including the stipulated facts contained in the defendant’s plea agreement, Atchley’s mother was receiving Social Security survivor’s benefits when she died on July 21, 2001. Although her entitlement to these benefits terminated at her death, monthly benefit payments continued to be made into her bank account through August 2012. At the time she died, the defendant’s mother was receiving $897 per month in Social Security benefits. By 2012, that had increased to $1277 a month. By the time the payments terminated, $151,526 worth of benefits had been overpaid into the account.
Atchley’s mother had also been receiving retirement benefits from the California Public Employees’ Retirement System (CalPERS) and the Los Angeles County Employees’ Retirement Association (LACERA). These payments, too, erroneously continued after her death. LACERA payments continued through March 2013. CalPERS payments continued through June 2013. At the time of death, LACERA was paying $706.24 per month and CalPERS was paying $1126.72 a month. Those amounts increased over time. LACERA’s final payment (in March 2013) was $1017.57. CalPERS’ final payment (in June 2013) was $1503.94. Altogether, LACERA paid $114,492.12 after death. CalPERS paid $203,178.94 after death.
Prior to his mother’s death, the defendant was appointed in state court to be her conservator. All of the payments Atchley received after his mother’s death went into a bank account held by him jointly with a relative whom had no knowledge of the fraud.
Shortly after her death, Atchley began illegally taking money from the account. He would write checks for “medical supplies” or “medical services” to a relative with whom he held a joint account. Defendant would then forge that relative’s endorsement on the check and deposit it into that joint account. From there, he would use the funds to pay various bills—primarily credit cards, but also phone and energy bills.
“Concealing the death of a loved one in order to steal their Social Security benefits is reprehensible,” said Wilbert Craig, Special Agent in Charge of the Social Security Administration’s Office of the Inspector General. “The Social Security Administration’s (SSA) Office of the Inspector General (OIG), in partnership the United States Attorney’s Office, will continue to vigorously respond to allegations of fraud against the SSA and its beneficiaries.”
This case was investigated by the Social Security Administration Office of the Inspector General. The defendant was prosecuted by Special Assistant U.S. Attorney Daniel Burrows.
Dea-Led Multi-Agency Task Force Dismantles Large Marijuana Grow Operation in Cotopaxi and Westcliffe ColoradoRead the Press Release
DENVER – On Tuesday, September 1, 2015, DEA-led special agents, task force officers and other members of law enforcement, including the Sheriffs’ Offices of Custer and Fremont Counties, executed eight search and arrest warrants in and around the towns of Cotopaxi and Westcliffe, Colorado. The warrants were the result of a large multi-jurisdictional investigation into the illegal growth and distribution of marijuana. As a result of the search warrants, over 1,000 marijuana plants were found, as were approximately 50 pounds of dried marijuana, 28 firearms (13 rifles, 8 shotguns and 7 handguns), and over $25,000 in cash. In addition to the seizures, a superseding indictment was obtained that charged 20 individuals with Conspiracy and marijuana trafficking. Of the 20 defendants charged, 17 are in custody. The remaining defendants are fugitives.
According to court documents, the investigation began in May of 2014, where after a traffic stop, a drug investigation began. During the investigation agents and officers noted that a target vehicle left Cotopaxi on October 20, 2014. That vehicle, which was with another vehicle traveling in tandem, was pulled over on October 21, 2014 in Pennsylvania. As a result of that traffic stop, three duffel bags containing approximately 34 pounds of marijuana were found in the car. On November 3, 2014, another target vehicle under surveillance was followed to a UPS store in Colorado Springs, where the occupants unloaded two large boxes, using the UPS service to send them to Florida addresses. The boxes were seized. Later UPS called stating that they had two additional boxes dropped off containing marijuana at a different Colorado Springs UPS store. Those boxes were seized as well. The packages in total contained approximately 26 pounds of marijuana.
As a result of the seizure of marijuana from vehicles leaving Cotopaxi and going to locations out of state, the U.S. Attorney’s Office, in conjunction with the DEA, obtained the search and arrest warrants. Those warrants were executed.
All 20 defendants face a variety of drug trafficking charges, including Conspiracy to distribute and possess with intent to distribute more than 1,000 plants of marijuana. They each face penalties of not less than 10 years, and up to life in federal prison.
The search warrants were executed at addresses in Custer and Fremont Counties. The Sheriffs and their offices for both counties were invaluable during the investigation and during the execution of the warrants. Residents from both counties had made multiple complaints about the defendants’ conduct not only to law enforcement, but also to elected officials. As this investigation is on-going, additional arrests are possible.
“This heavily armed, rogue drug trafficking organization was transporting a substantial amount of marijuana to people outside Colorado,” said U.S. Attorney John Walsh. “And the drug traffickers were making a large profit in return.”
“Colorado’s permissive Marijuana policies and laws continue to be exploited by large scale Marijuana trafficking organizations, who are establishing their Marijuana grow operations in Colorado to support their nationwide Marijuana distribution network,” said DEA Denver Division Special Agent in Charge Barbra Roach.
“I would like to extend my appreciation to the U.S. Attorney’s Office, DEA, Fremont County Sheriff’s Office, Pueblo County Sheriff’s Office and the Pueblo Police Department for their direct assistance in this operation,” said Custer County Sheriff Shannon K. Byerly. “Their help was critical in conducting this without incident. I would also like to recognize the efforts of the men and women of the Custer County Sheriff’s Office who contributed to this mission. This was an important step to gain control over the illegal production and sales of Marijuana in our area and we will continue to investigate those attempting to take advantage of the Marijuana laws in Colorado. Our communities earned an important victory today.”
“Because of the negative impact illegal drug trafficking has on our communities, we are very appreciative of the superb relationships that have been fostered between the federal agencies and all the local agencies involved. With this cooperative effort, we have come together to address a mutual problem,” said Fremont County Undersheriff Ty Martin.
“ATF maintains a strong relationship with the DEA and is committed to working with them and all of our Federal, State and Local partners to combat firearm and narcotic violations,” said ATF Denver Division Acting Special Agent in Charge Ron Humphreis.
“The indictment of these individuals is due to the successful efforts of various state and federal law enforcement agencies working together. IRS Criminal Investigation special agents are uniquely trained to follow the money and provide financial expertise to the overall investigation,” said Steven Osborne, Acting Special Agent in Charge of IRS Criminal Investigation, Denver Field Office.
The following agencies were involved in the execution of the search and arrest warrants: the DEA, IRS Criminal Investigation, ATF, Immigration and Customs Enforcements (ICE) Homeland Security Investigations (HSI), U.S. Marshals Service, the El Paso County Sheriff’s Department, the Pueblo County Sheriff’s Department, the Pueblo Police Department, the Fremont County Sheriff’s Department, the Florence Police Department, the Colorado State Patrol, the Douglas County Sheriff’s Department, and the Custer County Sheriff’s Department.
The defendants are being prosecuted by Assistant U.S. Attorney Zachary Phillips.
The charges outlined above are allegations, and the defendants are presumed innocent unless and until proven guilty.
Marijuana Grow Site Eradicated on Routt National ForestRead the Press Release
DENVER – Two Mexican Nationals in the country illegally were arrested based on a Criminal Complaint when law enforcement found a large marijuana grow in the Routt National Forest, the U.S. Attorney’s Office, the U.S. Forest Service, Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Routt County Sheriff’s Office announced. The two arrested, Alfonso Rodriguez-Vazquez and Nestor Fabian Sinaloa-Sinaloa, made their initial appearance before a U.S. Magistrate Judge in Denver this afternoon. Both are due back in court on Thursday, September 3, 2015 at 10:00 a.m. for a detention hearing and a preliminary hearing. Both are currently in custody.
The 3/4-acre illegal grow site was located in the Buffalo Pass area, northeast of Steamboat Springs, Colorado. The eradication team collected approximately 1,000 plants and removed camping gear from the site. Additional site clean-up of trash and other items will be ongoing by the U.S. Forest Service.
The grow was found after suspicious activity was reported to the U.S. Forest Service by a citizen, leading to the discovery of the grow site by law enforcement.
The defendants were each charged with the manufacture of marijuana. If convicted, the defendants face not less than 5 years, and not more than 40 years in federal prison. They also each face up to a $5,000,000 fine.
“Abusing the lands that belong to all citizens in order to make drug money is going to get you prosecuted,” said U.S. Attorney John Walsh. “Special thanks to the Forest Service, Homeland Security Investigations and the Routt County Sheriff for putting an end to this abuse in the Routt Forest.”
“Under federal law, marijuana possession, use, or cultivation remains illegal on national forest lands” said U.S. Forest Service Special Agent in Charge, Laura Mark. “The Forest Service remains committed to providing safety to forest visitors and employees and protecting the natural resources.” “This includes taking enforcement action for possession, use and cultivation of marijuana on national forest lands.”
“This now-dismantled extensive marijuana grow operation on federal lands in Colorado shows all the signs of a sophisticated drug trafficking organization,” said David A. Thompson, special agent in charge of HSI Denver. “HSI is working together with our other law enforcement partners to investigate this case to identify all those associated with this operation.”
According to the Forest Service, illegal marijuana cultivation poses a public safety risk and also directly harms the environment. The illegal use of pesticides can cause extensive long-term damage to natural resources. For example, the supply of public drinking water for hundreds of miles may be impacted because of one marijuana growing site. Overall, the negative impact of marijuana sites on natural resources is severe. Human waste, trash and the use of pesticides are widespread, contamination from sites affects fish and wildlife habitats, and soil erosion is common. In addition, water usage is extreme because each marijuana plant is estimated to require a gallon of water per day – water that is critical to native vegetation, wildlife and public drinking water sources.
This matter was investigated by the U.S. Forest Service, Homeland Security Investigations, and the Routt County Sheriff’s Office.
The defendants are being prosecuted by Special Assistant U.S. Attorney Geoffrey Rieman.
The charges contained in the Criminal Complaint are allegations, and the defendants are presumed innocent until proven guilty.
A Criminal Complaint is a probable cause charging document. Anyone accused of committing of felony violation of federal law is entitled to be indicted by a grand jury.
Forest visitors are urged to be observant while recreating in secluded areas and to back out and contact the U.S. Forest Service Law Enforcement at (303) 275-5266, or your local law enforcement agency if they come across suspicious activities.
Spice Distribution Kingpin John Bowen Sentenced to 60 Months in Federal PrisonRead the Press Release
DENVER – U.S. District Court Judge Philip A. Brimmer today sentenced John Bowen, age 68, of Las Vegas to 60 months in federal prison, followed by 3 years of supervised release for his role as the kingpin in a Conspiracy to Defraud the United States, Distribute Controlled Substances, and Money Laundering, federal law enforcement announced today. In addition to the prison sentence, assets were ordered forfeited, including $1,800,000 in cash as well as three real properties in Florida.
Following an eight month investigation by federal, state and local law enforcement in May 2014, a federal grand jury in Denver returned indictments charging nine individuals from across the country with conspiracy and drug distribution charges related to “Spice”.
“Spice” is a common term for synthetic cannabinoids. From August through September 2013, there were 221 documented synthetic cannabinoid related emergency room visits in the Denver and Colorado Springs metro areas. There were hospitalizations in other states as well. The Colorado Department of Public Health and Environment (CDPHE) and the Centers for Disease Control and Prevention (CDC) initially investigated the outbreak of these emergency room visits, declaring an emergency health epidemic in 2013. In response to the crisis, federal, state and local law enforcement and prosecutors came together to identify solutions to protect the public, especially youth, from the purchase and use of Spice and other synthetic cannabinoid products.
The majority of “Spice” victims were between the ages of 12 through 29, with victims ranging in age from 12 to 70 years of age. Seventy-five percent of the victims were male. Local convenience stores and gas stations made retail sales of the spice products. In this case, investigators determined that the original chemical product was sent to the United States from China. The indictment alleges the chemical was imported to Florida and received by defendant Daniel Bernier. In Florida the chemical was sprayed on a green vegetable substance. The chemical-coated substance was then packaged and shipped to both wholesalers and retailers in Colorado and throughout the United States.
The indictment and other court documents stated that the distribution was organized by John Bowen. He first operated under the name “The Really Cool Stuff Company”. After the product received negative media attention, Bowen changed the distribution name to “Heart of Asia.” Creager Mercantile, run by defendant Donald Creager, III, was one of the wholesalers. Creager shipped the product to local corner stores and gas stations in Colorado. Defendant James Johnson of Castle Rock was a salesperson working for “The Really Cool Stuff Company” and later “Heart of Asia.”
The defendants also shipped product to retail outlets in other states, including Avalon on 4th LLC, associated with defendant Kenneth Chastain in Wisconsin; Main Stop, Inc., associated with defendant Altaf Hussain in Illinois; and “Tobacco Hut,” associated with defendants Peter Karfias and Stephanie Christensen in Nebraska.
To date, eight individuals have been convicted and sentenced as follows:
- John Bowen – 60 months in federal prison
- Daniel Bernier – 42 months in federal prison
- James Johnson – 18 months in federal prison
- Donald Creager, III – 5 years’ probation with 1 year home detention as a condition of probation and a $50,000 fine
- Kenneth Chastain – 60 days imprisonment with 3 years of supervised release to follow
- Altaf Hussain Dandia – 5 years’ probation
- Peter Karfias – 5 years’ probation with 6 months home detention as a condition of probation
- Stephanie Christenson – 5 years’ probation with 3 months of home detention as a condition of probation
The investigation encompassed Colorado, Georgia, Florida, Alaska, Illinois, Texas, Wisconsin, Nebraska, Nevada, with documented distribution of synthetic cannabinoids from Heart of Asia to numerous additional states.
Law enforcement agencies emphasizes that no brand of “Spice” or similar products are safe. All synthetic cannabinoids are dangerous. No “Spice” products have been approved by the FDA, and may constitute controlled substances in violation of state and federal law.
“Synthetic cannabinoid, also known as Spice, is a dangerous illegal substance that can make individuals very ill, and even kill them,” said U.S. Attorney John Walsh. “Thanks to the hard work of law enforcement at every level in Colorado, including the Assistant U.S. Attorneys, and the agents from the DEA, FDA Office of Inspector General and the IRS Criminal Investigation, as well as our state partners, the District Attorney’s Office for the 18th Judicial District and the Colorado Attorney General’s Office -- we’ve removed a substantial amount of Spice from the streets of Colorado, and put in prison those who were making and selling the dangerous substance.”
“The investigation of Bowen’s organization was key to one of the most significant synthetic drug investigations conducted by the Drug Enforcement Administration.” said Barbra Roach, Special Agent in Charge of the DEA Denver Field Division. “Synthetic cannabinoids pose significant and dangerous health threats to our communities, and those who would try to profit from them must be held accountable. There is no such thing as safe ‘Spice’.”
“Those who distribute drugs in a manner that defeats the government’s ability to regulate those products put consumers at risk,” said Catherine A. Hermsen, Special Agent in Charge of FDA’s Office of Criminal Investigations’ Kansas City Field Office. “Our agents will continue to work with other federal partners to bring these criminals to justice.”
“Spice is a dangerous concoction of chemicals and can be deadly,” said Steven Osborne, Acting Special Agent in Charge of IRS Criminal Investigation, Denver Field Office. “By using our financial expertise to follow the money and working with other law enforcement partners we were able to dismantle the operation and get Spice off the streets which in the end will save lives.”
This case was investigated by the Drug Enforcement Administration (DEA), the Food and Drug Administration Office of Criminal Investigation (FDA OCI), the Internal Revenue Service – Criminal Investigation (IRS CI), the ATF, the District Attorney’s Office of the 18th Judicial District, the Aurora Police Department, the North Metro Drug Task Force, the West Metro Drug Task Force, the Castle Rock Police Department, the Denver Police Department, the Lakewood Police Department, and the Colorado Department of Revenue.
The United States Attorney’s Office also commends the 18th Judicial District and the Colorado Attorney General’s office for their work to remove Spice from the shelves of stores in Colorado.
The United States Attorney’s Offices for the Central District of Florida, the District of Nebraska, the District of Nevada, the Western District of Wisconsin and the Northern District of Illinois have provided substantial assistance in this matter as well.
The defendants were prosecuted by Assistant U.S. Attorneys Jaime Pena and Tim Neff, with Tonya Andrews handling the asset forfeiture.
U.S. Attorney's Office Closes Investigation into Grand Junction Regional AirportRead the Press Release
DENVER – United States Attorney’s Office today announced that, after a thorough investigation of allegations of criminal conduct related to the Grand Junction Regional Airport, it has decided not to seek criminal charges based on that investigation. The United States Attorney’s Office is publicly announcing the closing of this investigation due to numerous reports about the investigation.
U.S. Attorney’s Office commended the tireless and professional efforts of agents from the FBI, the Department of Transportation Office of Inspector General, and the Internal Revenue Service – Criminal Investigation, who ably performed their duty to investigate allegations of violations of federal law.
Husband and Wife Who Fled to the Bahamas Prior to Trial Sentenced to Federal PrisonRead the Press Release
DENVER – Donald and Karlien Winberg, of Earth, Texas, were sentenced today in separate hearings by U.S. District Court Judge Philip A. Brimmer to serve prison sentences for conspiracy to commit wire fraud, U.S. Attorney John Walsh and FBI Special Agent in Charge Thomas Ravenelle announced. Donald Winberg, age 44, was ordered to serve 87 months (over 7 years) in federal prison, followed by 3 years on supervised release. Karlien Winberg, age 33, was ordered to serve 87 months (over 7 years) in federal prison, followed by 3 years on supervised release in a separate sentencing hearing. Both defendants were ordered to pay $1,541,689.90 in restitution joint and several. The defendants appeared at the sentencing hearings in custody. Each was remanded after their individual hearing concluded.
The defendants were indicted by a federal grand jury in Denver on April 22, 2014. In October 2014, as the case was moving toward trial, the Winbergs fled, at one point staying in the Galveston, Texas area. The defendants purchased a sail boat that they then ran aground not far from the shore. At that time it was believed that they had a large amount of cash. Around that same time, the defendants were the subject of local publicity in the Galveston area. The Winbergs, who were traveling with their seven children, were able to obtain another boat and successfully travelled to the Bahamas. They were arrested without incident on a boat near the Staniel Cay Yacht Club in the Bahamas for failing to have proper identification and travel documents. The arrest was made by Bahamian authorities after a Louisiana family vacationing in the Bahamas recognized the family from a press story out of Galveston. The defendants failed to provide identification documents, and the Bahamian authorities, knowing about the federal arrest warrants, arrested the two defendants. They were then deported back to the United States via Miami, where they were arrested. The Winbergs were ultimately ordered to be transported to Colorado, which was accomplished by the U.S. Marshals Service. A superseding indictment was obtained on February 11, 2015. Donald and Karlien Winberg both pled guilty on April 16, 2015. They were sentenced on August 14, 2015.
According to court documents, including the stipulated facts contained in the plea agreement, the Winbergs, beginning in 2010, advertised on the internet that they had hay and corn for sale. Once a potential buyer contacted the defendants, a sale would be negotiated. Defendants claimed to buyers that they owned extensive farmland in Idaho and Texas; that they produced hay, straw, potatoes, and other agricultural crops in substantial quantities; that they shipped large quantities of agricultural products throughout the United States; that they had between 15,000 and 65,000 tons of hay for sale; and that they had trucks to deliver the large quantities of purchased hay or corn to the buyer. The defendants would then take the victims’ money and not deliver the material that was advertised, purchased and promised. While under pretrial supervision of the U.S. Probation Office, between May 2014 and until fleeing in October 2014, the defendants committed additional fraud against hay sellers.
This case was originally investigated by the FBI. The FBI wants to recognize the following agencies that assisted in the investigation and prosecution of the Winbergs: Drug Enforcement Administration, Customs and Border Protection, American Citizen Services at the U.S. Embassy in Nassau, Bahamas, the Galveston County Sheriff’s Department and the Royal Bahamas Police Force.
The defendants were prosecuted by Assistant U.S. Attorney Patricia Davies. The Justice Department’s Office of International Affairs also provided assistance in this case.
Denver Resident Found Guilty of Escape and Failure to Register as a Sex OffenderRead the Press Release
DENVER – Eric Eugene Hartwell, age 52, of Denver, Colorado, was found guilty yesterday of escape and failure to register as a sex offender following a four-day jury trial before U.S. District Court Judge Philip A. Brimmer, the U.S. Attorney’s Office and the U.S. Marshal’s Service announced. The jury deliberated for approximately over two hours before reaching their verdicts. Hartwell, who was in custody during the trial, was remanded after the jury reached their verdicts. Judge Brimmer is scheduled to sentence the defendant on November 20, 2015. He was indicted by a federal grand jury in Denver on July 22, 2014.
According to facts presented to the jury during trial, Hartwell was convicted on March 19, 2010, in U.S. District Court for the Northern District of Texas for failure to register as a sex offender. As a result of this conviction, he was sentenced to a 60-month term of imprisonment and ordered to serve a life time of supervised release. After Hartwell served his federal prison sentence, he was transferred to Colorado to begin his term of supervised release and to begin a term of parole in conjunction with his Colorado Failure to Cancel Registration conviction. On January 6, 2014, during a meeting with a Senior U.S. Probation Officer, the defendant was provided information in relation to his federal supervised release requirements, both verbally and in writing, including his sex offender registration requirements. He signed an acknowledgement that he understood the conditions of his federal supervision, including that he was required to “register with state and local law enforcement as directed by the U.S. Probation Officer in each jurisdiction where the defendant resides, is employed, or is a student” and that he was required “no later than 3 business days after each change of name, residence, employment, or student status, appear in person in at least one jurisdiction and inform that jurisdiction of all changes in the information required in the sex offender registry.”
Additional conditions of federal supervised release included that the defendant was required to reside in a halfway house. Hartwell began residing at a residential reentry center in Denver on January 22, 2014. He updated his sex offender registration as required on January 24, 2014, to reflect his change of residence to the halfway house. On February 21, 2014, Hartwell packed his personal items and departed the halfway house without permission. A state warrant was issued in Colorado and a federal warrant was issued by the Northern District of Texas. The U.S. Marshal Service Violent Offender Task Force (COVOTF) conducted an investigation to locate Hartwell. It was confirmed that the defendant, who originally reserved his travel using the name “John Miller,” purchased an Amtrak train ticket from Denver, Colorado, to Chicago, Illinois on February 21, 2014. On that same day and before purchasing the Amtrak ticket, the defendant withdrew $3,600 from an ATM in Denver and removed and discarded a GPS-tracking ankle monitor that he was required to wear as a condition of his Colorado state-parole.
The U.S. Marshal’s investigation revealed that on February 27, 2014, Hartwell withdrew $503 from his bank account, leaving a balance of $5.87 in that account, from an ATM in Washington, DC. He then traveled on the Greyhound Bus Line under the name “John Miller” from Washington, DC to Norfolk, Virginia. On February 28, 2014, Hartwell was arrested after he was located by the U.S. Marshals in a motel in Norfolk, Virginia. The prosecution proved that on February 21, 2014, the defendant escaped the halfway house at which he was registered in Colorado, and, as of February 28, 2014, he had failed to register as a sex offender or update his sex offender registration in Colorado or any other state.
Hartwell faces not more than 5 years in prison, and up to a $250,000 fine for escape, and not more than 10 years in prison and up to a $250,000 fine for failure to register as a sex offender.
This case was investigated by the U.S. Marshals Service, including the U.S. Marshals Service Violent Offender Task Force.
Hartwell is being prosecuted by Assistant U.S. Attorneys David Tonini and Alecia Riewerts.
Metro Denver Bank Senior Vice President Pleads Guilty to EmbezzlementRead the Press Release
DENVER – Candice L. White, age 43, of Centennial, Colorado, pled guilty yesterday before U.S. District Court Judge Raymond P. Moore to two counts of embezzlement by a bank officer or employee, the U.S. Attorney’s Office, the Federal Bureau of Investigation (FBI) and the Special Inspector General of Troubled Asset Relief Program (SIGTARP) announced. White, who is free on bond, is scheduled to be sentenced by Judge Moore on November 3, 2015 at 4:00 p.m. White was first indicted by a federal grand jury in Denver on March 24, 2015.
According to the stipulated facts contained in the plea agreement, from at least July 2009 through March 2011, White, a Senior Vice President of Front Range Bank, knowingly and intentionally embezzled $92,930.27 from client accounts at the Bank. The plea agreement calls for White to pay restitution in this amount back to the Bank, which has already reimbursed its clients for their losses. The defendant accomplished her embezzlement by requesting cashier’s checks and withdrawing cash from escrow accounts and other accounts that were not closely monitored by the victim account holders. She would then use the embezzled money for her own personal use.
White was familiar with the victim accounts because she was the bank representative assigned to the accounts. To carry out her embezzlement, the defendant approached a teller at the bank with a type of withdrawal slip and falsely informed the teller that she needed the cashier’s check or cash for the client or to pay a bill on the client’s behalf. Due to her status as a Senior Vice President at the Bank, the tellers trusted that White was telling the truth and had the required supporting documentation for the transactions.
“Americans do not tolerate bank officials stealing money from bank customers. It’s that simple,” said U.S. Attorney John Walsh.
“Candice White’s guilty plea should send a strong message to anyone considering embezzling funds from banking institutions,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “The FBI will continue to work with our law enforcement partners to protect financial institutions from those engaged in these types of schemes."
“As a senior executive at a TARP bank, the American taxpayers placed their trust in White,” said Christy Goldsmith Romero, Special Inspector General for TARP (SIGTARP). “White not only abused that trust, she also took advantage of her position within the bank to deceive her co-workers for her own personal gain. SIGTARP and our law enforcement partners will aggressively investigate allegations of crime undertaken at the expense of taxpayers' TARP investments and bring perpetrators to justice.”
Because Front Range Bank received TARP funds, the Special Inspector General (SIGTARP) assisted the FBI in the investigation.
The defendant faces not more than 30 years in federal prison, and up to a $250,000 fine, per count of conviction.
White is being prosecuted by Assistant U.S. Attorney Pegeen Rhyne.