District of Colorado
Press releases recorded for this federal judicial district.
Ukraine Man Arrested at Denver International Airport After Interfering with Delta Flight Crew MembersRead the Press Release
UPDATE: Pecherskyi is scheduled to appear in U.S. District Court in Denver on Monday, November 3, 2014, before U.S. Magistrate Judge Kathleen M. Tafoya at 10:00 a.m. for a preliminary hearing and a detention hearing. Magistrate Judge Tafoya is located on the 2nd floor of the Byron G. Rogers Courthouse, located at 1929 Stout Street. The hearing will likely involve an interpreter, which could prolong the court appearance. The defendant is represented by a federal public defender.
DENVER – Vadym Pecherskyi, age 42, of Kiev, Ukraine, was arrested late last night after he interfered with two flight attendants aboard a Delta Airlines flight from Atlanta’s Hartsfield-Jackson Airport to Denver International Airport, U.S. Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Pecherskyi is scheduled to appear before a U.S. Magistrate Judge tomorrow, where he will be advised of his rights, as well as the charges pending against him. Those charges are contained in a Criminal Complaint filed this morning.
On October 27, 2014 at 9:03 p.m. an FBI Special Agent was notified by the DIA Communications Center that a disturbance had occurred onboard a Delta Flight. The agent, after responding to the airport, learned that passenger Vadym Pecherskyi, who was on Delta Flight 2525, had made unwanted sexual advances toward two female flight attendants. The defendant had been served at least two alcoholic drinks before his behavior.
As a result of his sexual advances, both flight attendants felt they could not adequately perform their assigned duties aboard the airplane. A passenger onboard the flight also confirmed the defendant’s sexual advances towards the flight attendants.
This conduct would generally result in a charge of interference with flight crew members, where the defendant would face not more than 20 years in federal prison, and up to a $250,000 fine.
This case was investigated by the Federal Bureau of Investigation (FBI) and the Denver Police Department (DPD).
The defendant is being prosecuted by Assistant U.S. Attorney Robert Brown.
A Criminal Complaint is a probable cause charging document. Anyone accused of committing a federal felony crime has a Constitutional right to be indicted by a federal grand jury.
The charges contained in this press release are allegations, and the defendant is presumed innocent unless and until proven guilty.
Manager/Owner of Pain Clinic Convicted of Conspiracy, Distribution of A Controlled Substance and Money Laundering F0llowing Jury TrialRead the Press Release
DENVER -- Keith A. Schwartz, age 47, of Silverthorne, Colorado, was found guilty today of conspiracy, distribution of a controlled substance and money laundering following a 14-day jury trial before Senior U.S. District Court Judge John L. Kane. The jury deliberated for a day and a half before reaching their verdict. A sentencing date has not yet been set. Schwartz, who has been in custody since his indictment, was remanded following the jury verdict. This is the first case of its kind that has gone to a jury trial in the U.S. District Court in the District of Colorado.
Schwartz was indicted by a federal grand jury in Denver on May 22, 2013. He was found guilty of one count of conspiracy to distribute and dispense controlled substances, prescription drugs outside the course of usual professional medical practice, two counts of distribution and dispensing a controlled substance and aiding and abetting the same, four counts of use of a telephone to facilitate a drug crime, one count of conspiracy to commit money laundering, and 36 counts of money laundering. The defendant was found not guilty of two counts of use of a telephone to facilitate a drug crime and two counts of money laundering.According to the indictment and evidence presented at trial, Schwartz, in conjunction with co-conspirators, all of but one of whom have previously pled guilty, knowingly conspired and agreed to dispense and distribute, or facilitate the dispensing and distribution of controlled substances, to patients at times and in circumstances outside the usual course of professional medical practice. He then laundered the proceeds from the patients through bank accounts in his wife’s name. The patients didn’t have a sufficient medical necessity for the prescription of the controlled substances. The primary prescription drug involved in the case was Oxycodone, with over one half million dosage units prescribed in an 18 month period.
Specifically, Schwartz, using an alias, approached a pain doctor named Kevin Clemmer in May of 2011, who at the time was housed in the Federal Detention Center in Englewood, Colorado after his indictment for the unlawful prescription of controlled substances. Schwartz offered to purchase the list of Clemmer’s patient lists, most of whom received substantially more narcotic or other controlled substance medication than was medically necessary.
That same month, after obtaining the patient list, Schwartz, and his co-conspirators, first saw Dr. Clemmer’s patients in a Holiday Inn in Wheat Ridge, Colorado, where they enlisted and worked with co-conspirator Dr. Joseph Ferrara, who was registered with the DEA to write prescriptions for controlled substances. The pain clinic eventually moved into office space, and Schwartz, who was the owner, manager, organizer and operator, had direct communications with patients regarding Dr. Ferrara’s treatment regimen. The defendant induced Dr. Ferrara to unlawfully write opioid and benzodiazepine prescriptions in large numbers to addicted patients – the amounts of which far exceeded the amount medically necessary and safe to use. In fact, the government presented expert testimony that proved that many of the controlled substance prescriptions written were up to four times the safe medical limit. As a result of the unlawful distribution of controlled substances, medication prescribed by Schwartz’s pain clinic contributed to the death of at least three patients.
The relationship among the co-conspirators began in the summer of 2009, when Schwartz recruited and Dr. Ferrara to write medical marijuana recommendations to support Schwartz’s marijuana grow in his house. During 2009 and 2010, the medical marijuana business expanded to include travel throughout the state of Colorado, where Dr. Ferrara wrote medical marijuana recommendations. In May of 2011, the conspiracy shifted its primary focus to distribution of prescription controlled substances while also maintaining the medical marijuana recommendation business.
Schwartz laundered the money obtained by the pain clinic by placing it in bank accounts in corporations in the name of his wife. Schwartz used some of the illegally obtained money to purchase his $1.6 million house out of foreclosure.
Schwartz faces up to life in federal prison, as well as a fine of not more than $1,000,000 for his convictions.
This case was investigated by the Tactical Diversion Squad of the DEA, which includes members of the IRS Criminal Investigation and the Greenwood Village Police Department. The Arvada Police Department assisted in the investigation as well.The defendant is being prosecuted by Assistant U.S. Attorney M.J. Menendez.
DaVita to Pay $350 Million to Resolve Allegations of Illegal KickbacksRead the Press Release
WASHINGTON –DaVita Healthcare Partners, Inc., one of the leading providers of dialysis services in the United States, has agreed to pay $350 million to resolve claims that it violated the False Claims Act by paying kickbacks to induce the referral of patients to its dialysis clinics, the Justice Department announced today. DaVita is headquartered in Denver, Colorado and has dialysis clinics in 46 states and the District of Columbia.
The settlement today resolves allegations that, between March 1, 2005 and February 1, 2014, DaVita identified physicians or physician groups that had significant patient populations suffering renal disease and offered them lucrative opportunities to partner with DaVita by acquiring and/or selling an interest in dialysis clinics to which their patients would be referred for dialysis treatment. DaVita further ensured referrals of these patients to the clinics through a series of secondary agreements with the physicians, including entering into agreements in which the physician agreed not to compete with the DaVita clinic and non-disparagement agreements that would have prevented the physicians from referring their patients to other dialysis providers.
“Health care providers should generate business by offering their patients superior quality services or more convenient options, not by entering into contractual agreements designed to induce physicians to provide referrals,” said Deputy Assistant Attorney General for the Justice Department’s Civil Division Jonathan F. Olin. “The Justice Department is committed to protecting the integrity of our healthcare system and ensuring that financial arrangements in the healthcare marketplace comply with the law.”
The government alleged that DaVita used a three part joint venture business model to induce patient referrals. First, using information gathered from numerous sources, DaVita identified physicians or physician groups that had significant patient populations suffering renal disease within a specific geographic area. DaVita would then gather specific information about the physicians or physician group to determine if they would be a “winning practice.” In one transaction, a physician’s group was considered a “winning practice” because the physicians were “young and in debt.” Based on this careful vetting process, DaVita knew and expected that many, if not most, of the physicians’ patients would be referred to the joint venture dialysis clinics.
Next, DaVita would offer the targeted physician or physician group a lucrative opportunity to enter into a joint venture involving DaVita’s acquisition of an interest in dialysis clinics owned by the physicians, and/or DaVita’s sale of an interest in its dialysis clinics to the physicians. To make the transaction financially attractive to potential physician partners, DaVita would manipulate the financial models used to value the transaction. For example, to decrease the apparent value of clinics it was selling, DaVita would employ an assumption it referred to as the “HIPPER compression,” which was based on a speculative and arbitrary projection that future payments for dialysis treatments by commercial insurance companies would be cut by as much as half in future years. These manipulations resulted in physicians paying less for their interest in the joint ventures and realizing returns on investment which were extraordinarily high, with pre-tax annual returns exceeding 100 percent in some instances.
Last, DaVita ensured future patient referrals through a series of secondary agreements with their physician partners. These included paying the physicians to serve as medical directors of the joint venture clinics, and entering into agreements in which the physicians agreed not to compete with the clinic. The non-compete agreements were structured so that they bound all physicians in a practice group, even if some of the physicians were not part of the joint venture arrangements. These agreements also included provisions prohibiting the physician partners from inducing or advising a patient to seek treatment at a competing dialysis clinic. These agreements were of such importance to DaVita that it would not conclude a joint venture transaction without them.The Government’s complaint identifies a joint venture with a physicians’ group in central Florida as one of several examples illustrating DaVita’s scheme to improperly induce patient referrals. The group had previously been in a joint venture arrangement involving dialysis clinics with Gambro, Inc., a dialysis company acquired by DaVita in 2005. Prior to the acquisition, Gambro had entered into a settlement with the United States to resolve alleged kickback allegations that, among other things, required Gambro to unwind its joint venture agreements. As a consequence, Gambro purchased the group’s interest in the joint venture clinics and agreed to a “carve-out” of the associated non-competition agreement which allowed the group to open its own dialysis clinic nearby, which it did. After acquiring Gambro, DaVita bought a majority position in the group’s newly established dialysis clinic, and sold a minority position in three DaVita-owned clinics. Despite the fact that each of the clinics involved were roughly comparable in terms of size and profits, DaVita agreed to pay $5,975,000 to acquire a 60 percent interest in the group’s clinic, while selling a 40 percent interest in the three clinics it owned for a total of $3,075,000. As part of this joint venture, the group agreed to enter into new non-compete agreements.
“This case involved a sophisticated scheme to compensate doctors illegally for referring patients to DaVita’s dialysis centers. Federal law protects patients by making buying and selling patient referrals illegal, so as to ensure that the interest of the patient is the exclusive factor in the referral decision,” said U.S. Attorney John Walsh. “When a company pays doctors and/or their practice groups for patient referrals, the company’s focus is not on the patient, but on the profit to be extracted from providing services to the patient.”
In conjunction with today’s announcement, the U.S. Attorney’s Office noted that after extensive review, it is closing its criminal investigation of two specific joint ventures.
As part of the settlement announced today, DaVita has also agreed to a Civil Forfeiture in the amount of $39 million based upon conduct related to two specific joint venture transactions entered into in Denver, Colorado. Additionally, DaVita has entered into a Corporate Integrity Agreement with the Office of Counsel to the Inspector General of the Department of Health and Human Services which requires it to unwind some of its business arrangements and restructure others, and includes the appointment of an Independent Monitor to prospectively review DaVita’s arrangements with nephrologists and other health care providers for compliance with the Anti-Kickback Statute.
“Companies seeking to boost profits by paying physician kickbacks for patient referrals – as the government contended in this case – undermine impartial medical judgment at the expense of patients and taxpayers,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services. “Expect significant settlements and our continued investigation of such wasteful business arrangements.”
The settlement resolves allegations originally brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The suit was filed by David Barbetta, who was previously employed by DaVita as a Senior Financial Analyst in DaVita’s Mergers and Acquisitions Department. Mr. Barbetta’s share of the recovery has yet to be determined.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $22.4 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.
The case was handled by the United States Attorney’s Office for the District of Colorado, the Civil Division of the United States Department of Justice, and the U.S. Department of Health and Human Services, Office of Inspector General.
The lawsuit is captioned United States ex rel. David Barbetta v. DaVita, Inc. et al., No. 09-cv-02175-WJM-KMT (D. Colo.). The claims settled by this agreement are allegations only; there has been no determination of liability.
HIDTA Front Range Drug Task Force Takes Down Major Heroin Drug Trafficking Organization with A Connection to MexicoRead the Press Release
DENVER – The Front Range Task Force, working with the U.S. Marshals Service, U.S. Attorney’s Office, Drug Enforcement Administration, Denver Police Department, Arapahoe County Sheriff’s Office, Aurora Police Department, Internal Revenue Service – Criminal Investigation, U.S. Immigration and Customs Enforcement, and the Bureau of Alcohol, Tobacco, Firearms & Explosives, has dismantled a major Denver Metropolitan Area heroin trafficking organization with roots in Sinaloa, Mexico, authorities announced today. A total of 50 defendants were arrested over the course of this investigation on either federal or state charges. During the final phase of the investigation 28 additional arrests were made during an operation conducted last week in the Denver area. Thirteen of the defendants were indicted by a federal grand jury in Denver. Some of the federally indicted defendants remain at large. Also, a total of 16 search warrants were executed during the latter part of the investigation.
During the course of this multi-state investigation, which began in October 2012, over 23 pounds of heroin, 4 firearms, $300,000 in currency and 7 vehicles were seized.
The underlying investigation disclosed that the target drug organization has a source of supply echelon with roots in Sinaloa, Mexico. In the Denver metropolitan area, in the last several years, the most plentiful kind of heroin has been “black tar heroin” originating in Mexico. A substantial portion of the black tar heroin distributed in the Denver metropolitan area originates in the State of Sinaloa, Mexico.Source of supply echelon members arranged to have large amounts of black tar heroin brought to Colorado on a periodic basis. Using their inventory of heroin, the source of supply members provided ounce sized portions of heroin to street level dealers in the Denver metropolitan area on a regular basis. The underlying investigation showed the source of supply level members would charge the street level dealer members approximately $700.00 an ounce for heroin. The street level dealers, in turn would sell heroin in gram and half gram quantities to customers, users, and lower level re-distributors, generally charging $60.00 for a gram of heroin.
The source of supply echelon members in the Denver metro area during the period of the underlying investigation generally consisted of three or four adult males at any given time. The source of supply echelon members apparently remained in the Denver metropolitan area for a period of time on assignment, and periodically returned to Mexico. One of the three to four males would act as the primary contact for communications with the street level dealers, setting appointments, handling potential issues of suitable quality or proper quantity, timely payment, operational security, etc.
“Trafficking and abuse of heroin in Colorado has skyrocketed,” said U.S. Attorney John Walsh. “With no way for users to determine purity, heroin has the potential of not only making people sick, but killing them outright, as rising overdose death statistics tragically demonstrate. The Front Range Task Force’s work to get this staggering amount of high grade heroin off the street makes our communities safer, and makes it harder for those who use heroin to find the drug.”
The Special Agent in Charge of the Drug Enforcement Administration for the Denver area, Barbra M. Roach, said that “This sustained investigation and enforcement has disrupted a well-entrenched heroin distribution cell in the Denver Metro area controlled by a Sinaloa, Mexico Cartel”
Denver Police Chief White stated that “The Front Range Task Force is proud to have partnered with the U.S. Attorney’s Office, DEA and several local and state law enforcement entities to investigate this drug trafficking group. The investigation of the DTO involved a two year investigation targeting street level heroin dealers and working the case up to an international drug organization. With the amount of heroin seizures, assets and weapons, the investigation dismantled the Denver cell of this Drug Organization. This case was unique because it required investigators to work with several different levels of drug dealers, including street deals, mid-level operations and ultimately, a major drug trafficking organization. The Front Range Task Force relied heavily on other jurisdictions and DEA Groups in dismantling the Denver Cell of this Drug Trafficking Organization and is proud of the fact the case was able to reduce the amount of heroin on the streets today.”
The defendants charged in the federal case each face conspiracy to distribute and possess with intent to distribute a quantity of a mixture and substance containing a detectable amount of heroin. If convicted, each defendant faces not more than 20 years in federal prison, and up to a $1,000,000 fine.The Front Range Task Force is comprised of the DEA, the Denver Police Department, the Arapahoe County Sheriff’s Office, the Aurora Police Department, and the Douglas County Sheriff’s Office. The Internal Revenue Service – Criminal Investigation (IRS CI) participated in this investigation as well.
This case is being prosecuted by Assistant U.S. Attorney Guy Till, with the U.S. Attorney’s Office Organized Crime Drug Enforcement Task Force.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty
Boulder Man Sentenced to Federal Prison for Failing to Register as A Sex OffenderRead the Press Release
DENVER – Douglas Wayne Delling, age 53, of Boulder, Colorado, was sentenced last week by U.S. District Court Judge Robert E. Blackburn to serve 41 months in federal prison for failure to register as a sex offender, U.S. Attorney John Walsh and U.S. Marshal John Kammerzell announced. Following his prison sentence, Judge Blackburn ordered Delling to spend 15 years on supervised release. The defendant appeared at the sentencing hearing in custody, and was remanded at its conclusion.
Delling was first charged by Criminal Complaint on January 30, 2014. He was indicted by a federal grand jury in Denver on February 10, 2014. He entered a guilty plea to the indicted charge, failing to register as a sex offender, on July 8, 2014. He was sentenced on October 16, 2014.
According to court documents, including the stipulated facts contained in the plea agreement, beginning on March 10, 2008, in the state of Arkansas, Delling was required to register under the Sex Offender Registration and Notification Act, as he was a sex offender. Delling subsequently moved to Colorado without notifying law enforcement officers. When a verification check was conducted by law enforcement officers in Arkansas, they determined that the defendant no longer resided at his registered address. A non-extraditable warrant was issued, and the U.S. Marshal’s Service in Arkansas launched a fugitive investigation.
During the subsequent investigation, the U.S. Marshal’s Service obtained a current telephone number for the defendant. Delling was contacted by phone on October 21, 2013, and informed agents that when he first moved to Colorado he lived in a camp ground in Nederland, Colorado, and worked in Boulder, Colorado. At the time he was contacted, he stated that he was currently living at a homeless shelter in Boulder, and that he knew he needed to register yet had not because he did not want to go to jail. Delling was informed that he needed to register in Colorado.
Delling was arrested nine days later on October 20, 2013, after neither registering in Colorado nor changing his registration in Arkansas. Records show that Delling had resided in Colorado from at least September 23, 2013 to October 30, 2013. The defendant had been employed with a “Ready to Work” program in Colorado, with which he had falsely reported “no” to questions of “have you been in jail or prison” and “Convicted of a Sex Offense”. The defendant said that he knew he had to register as a sex offender in Colorado but feared being arrested if he registered.
“Sex offenders are required to register in the communities they reside in so that local law enforcement and area residents are aware of their presence,” said U.S. Attorney John Walsh. “When a sex offender fails to register, no matter the excuse, that person is violating the law by not notifying the authorities or their neighbors of their residence and prior sex conviction.”
“I am extremely proud of the work of our deputy marshals on this case,” said U.S. Marshal John L. Kammerzell. “As an agency, we take these cases very seriously with the safety of the community as our highest priority.”
This case was investigated by the U.S. Marshals Service.
Delling was prosecuted by Assistant U.S. Attorney David Tonini.
Thornton Woman Pleads Guilty and Aiding and Assisting in the Preparation of False Tax ReturnsRead the Press Release
DENVER – Geraldine Juanita Sotelo, age 64, of Thornton, Colorado, pled guilty last week before U.S. District Court Judge R. Brooke Jackson to aiding and assisting in the preparation of false tax returns, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Judge Jackson is scheduled to sentence Sotelo on January 26, 2015. Sotelo was indicted by a federal grand jury in Denver on January 28, 2014.
According to information contained in the plea and indictment, Sotelo began preparing and filing tax returns for clients around 1999 under the name J&G Bilingual Services in Thornton, Colorado. Sotelo was a co-owner and the manager of the business. J&G Bilingual Services typically followed a set procedure in preparing a tax return for a client. The client would come into J&G's office, met with one of Sotelo's employees, and provided information about his or her income and expenses. The J&G employee entered the information into a computer, and a software program generated a draft of the client's tax return. The draft then was reviewed by Sotelo.
For tax returns during the years 2007, 2008, and 2009, Sotelo would make changes to draft returns during her reviews or directed her employees to make change which often included increased charitable contributions, unreimbursed employee expenses, personal property taxes, and other itemized deductions without discussing the changes with the clients. Each of the twenty-six returns mentioned in the Indictment requested a refund, in amounts ranging from $1,282 to $7,140, and each was false in more than one respect. On Schedule A of all twenty-six returns were false itemized deductions, overstating the amount clients paid in personal property taxes and the amounts of their gifts to charities. All but two schedules misstated unreimbursed employee expenses and two schedules falsified medical and dental expenses.
Seven of the twenty-six returns misrepresented that taxpayers were eligible for credits for child and dependent care expenses. To support the claim for child and dependent care expenses each return included Form 2441, which listed the care provider's name, SSN and the amount the taxpayer paid to the provider during the tax year. When Sotelo and her employees, acting at her direction, falsified that information, they sometimes consulted what they called the "baby sitter list." The list contained information under three column headings: (1) "NAME," (2) "BABY SITTER SSN/ EIN," and (3) "ZIP CODE." At an employee meeting during the relevant time, Sotelo announced that J&G had to stop using the baby sitter list because "the IRS is catching on."
The tax loss resulting from the false entries on the twenty-six returns was $71,978. In April 2010, two IRS special agents interviewed Sotelo, who at first claimed that all of the information on J&G-prepared returns came from the clients and the returns did not contain false entries. When one of the agents told her that her statements were not consistent with what the IRS had learned, Sotelo admitted that she did "fudge" numbers on her clients' returns.
Sotelo pled guilty to one count of aiding and assisting in the preparation of false tax return, which carries a penalty of not more than 3 years in federal prison, and a fine of up to $100,000.
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 the Economic Crime Section of the U.S. Attorney’s Office’s Criminal Division.
Westminster Man Arrested for Orchestrating A Scheme to Defraud ClientsRead the Press Release
DENVER – Timothy J. Tucker, age 51, of Westminster, Colorado, was arrested today without incident for wire fraud and money laundering, United States Attorney John Walsh, Federal Bureau of Investigation Special Agent in Charge Thomas Ravenelle, and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Tucker appeared in court for his initial appearance this afternoon before U.S. Magistrate Judge Craig B. Shaffer, where he was advised of his rights and the charges pending against him. Tucker was indicted by a federal grand jury in Denver on October 7, 2014. The indictment remained sealed pending his arrest.
According to the facts contained in the Indictment, beginning in February 2010 and continuing until late 2013, Tucker devised a scheme to defraud by obtaining advanced fees from individuals and entities who were seeking multimillion-dollar loans. During the course of the scheme, Tucker operated Assured Venture Group (“AVG”) and The Financial Group, LLC, (“TFG”), which purported to be in the business of finding funding for multimillion-dollar loans for investment projects through the issuance of corporate bonds.Tucker told people and entities seeking multimillion-dollar loans that they were required to pay AVG/TFG fees in advance of AVG/TFG performing work to find funding for the requested loans and that the fees would be spent only on underwriting, due diligence, and closing costs related to the requested loans. For some of these loans, Tucker promised that the advanced fees would be placed in an escrow account to falsely reassure the people and entities seeking the multi-million dollar loans that the advanced fees would be spent only on underwriting, due diligence, and closing costs related to the requested loan, as promised.
Between February 2010 and March 2013, AVG/TFG was paid over $1.8 million in fees on twenty-one different projects, both by individuals and entities. Tucker did not secure funding for any of those twenty-one projects and didn’t return any fees on nineteen of the twenty-one projects. The majority of the fees received by AVG/TFG were used on things unrelated to the requested loans, including Tucker’s other businesses.
Tucker was charged with ten counts of wire fraud, which carries a penalty of not more than 20 years in federal prison and a fine of up to $250,000 per count, and six counts of money laundering, which carries a penalty of not more than 10 years in federal prison and a fine of up to $250,000 per count.
This case was investigated by the Federal Bureau of Investigation (FBI) and IRS Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Pegeen D. Rhyne.The charges contained in the indictment are allegations, and the defendant is presumed innocent until proven guilty.
Centennial Man Sentenced to 6 Years in Prison for Mortgage Fraud SchemeRead the Press Release
DENVER – Chaval Williams, age 53, of Centennial, CO, was sentenced last week by U.S. District Court Judge William J. Martinez to serve 74 months in federal prison for wire fraud, identity theft and money laundering federal authorities announced. Following his prison sentence, Williams was ordered to serve 3 years on supervised release. Williams was also ordered by Judge Martinez to pay $766,800.81 in restitution. He was ordered to report to a Bureau of Prisons facility once one is designated. Williams was indicted by a federal grand jury in Denver on June 8, 2011 and pled guilty on May 29, 2013.
According to the indictment and plea agreement, from March 2005, through December 2006, Williams conducted business in the State of Colorado through his company "TCW of Denver, Inc.", during which time he arranged for or assisted buyers to obtain loans for the purchase of homes. He held himself out to others as a real estate investor, involved in the purchase and sale of residential real estate for investment purposes.
Williams with the assistance of others devised a scheme to defraud real estate lenders, particularly by fraudulently securing real estate financing for the purchase of properties, typically through the use of nominee (or "straw") home buyers. Williams informed some of the buyers that they were making a legitimate real estate purchase for investment purposes. In some instances, he made certain buyers aware in the course of assisting them obtain a home loan based on false representations to the lender. In several instances, Williams along with others used the stolen identity and good credit history of two particular individuals.
Williams sometimes provided false information to lenders including proof of employment such as pay stubs or wage and tax statements, bank statements, verifications of employment, rent or deposit, letters of explanation related to buyers' credit history, affidavits of intent to occupy the purchased residence and identification documents.
Furthermore, Williams sometimes caused or assisted in causing lenders to provide a significant portion of lender funds directly to himself or his company TCW of Denver. To make these payments appear legitimate, he sometimes caused false and fictitious promissory notes, payoff statements, or other documents to be presented in connection with the closing of the property. He arranged for home buyers to receive kickbacks as payment for their role in purchasing a home. Williams on several occasions purchased and then resold a home to a buyer within the same day, collecting a substantial profit from the resale and would conceal from the lender the resale of the property. The total loss amount Williams caused to the functional institutions was over 2.4 million dollars.
“The significant prison sentence pronounced in this case is appropriate given the defendant’s criminal conduct,” said U.S. Attorney John Walsh. “Mortgage fraud schemes, like the one Williams implemented, not only adversely impact the housing market, they also hurt our entire economy.”
"This is a simple case of pure greed" said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. "This is evident by the fact that Williams concealed from lenders the purchase and reselling of homes within the same day."
“Identifying and investigating this fraud was only possible through the collaborative effort of several law enforcement agencies and the United States Attorney’s Office,” stated FBI Denver Special Agent in Charge Thomas Ravenelle. “We are confident this sentence will deter Williams and others from manipulating home buyers and financial institutions in the future.”
This case was investigated by IRS Criminal Investigation, the Federal Bureau of Investigation and the United States Secret Service.
The defendant is being prosecuted by Assistant U.S. Attorney Tiff Neff.
Loan Officer at TARP Bank and Accomplice Sentenced for Bank Related FraudRead the Press Release
DENVER – Two men who defrauded a bank that received Troubled Asset Relief Program (TARP) funds were sentenced this week for their criminal conduct, the U.S. Attorney’s Office for the District of Colorado and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) announced. Christopher Tumbaga, age 37, of Colorado Springs, Colorado a bank loan officer was sentenced by U.S. District Court Judge William J. Martinez to serve 36 months in federal prison, followed by 4 years on supervised release. Tumbaga was also ordered to pay $1,055,918 in restitution to the United States for his crimes of bank fraud and illegally receiving kickbacks. Co-defendant Brian Headle, age 38, also of Colorado Springs, Colorado, was sentenced by Judge Martinez to serve 36 months in prison, followed by 4 years on supervised release for his crime of corruptly influencing a bank officer. He was ordered to pay the $1,055,918 in restitution to the government joint and several with Tumbaga.
Tumbaga and Headle were indicted by a federal grand jury in Denver on September 25, 2013. Tumbaga pled guilty on March 24, 2014. He was sentenced on September 30, 2014. Headle pled guilty on June 26, 2014. He was sentenced on October 3, 2014.
According to court documents, Tumbaga was employed as a loan officer at Colorado East Bank & Trust (Colorado East). From approximately March 2009 to July 2011, Tumbaga obtained more than 14 loans and misapplied funds from a line of credit for the benefit of a high school friend, co-defendant Brian Headle.
In March 2009, Headle contacted Tumbaga to discuss securing a loan or line of credit from Colorado East to finance Headle’s real estate development business. Tumbaga subsequently secured a $250,000 line of credit for Headle based on allegedly false financial information provided by Headle to Tumbaga that Tumbaga intentionally failed to verify. Shortly after, Tumbaga and Headle formed a partnership in which Tumbaga would secure fraudulent loans for Headle’s benefit, and in return, Tumbaga would receive from Headle kickbacks financed by profits from Headle’s real estate venture.
In order to obscure that the loans were intended entirely for Headle’s benefit, Tumbaga obtained the loans in multiple names. Loans were obtained in the name of Headle’s company, Investment One LLC; Headle’s wife; and Headle’s wife’s company. When additional loans were needed in order to maintain payments on outstanding loans, Tumbaga obtained fraudulent loans in the names of Headle’s parents and step-parent. When approval for a loan was needed from the bank’s president, Tumbaga forged the bank president’s signature. Additionally, in one instance, Tumbaga withdrew $100,000 from a bank customer’s line of credit and wired the money to Headle, all unbeknownst to the bank customer. Over the course of the bank fraud scheme, Tumbaga obtained approximately $1.2 million from Colorado East for Headle’s benefit, and Tumbaga purportedly received more than $60,000 in kickbacks from Headle.
“The TARP program was designed to protect our economy by protecting banking institutions from fraud,” said U.S. Attorney John Walsh. “When an officer of a bank defrauds that institution, we will aggressively prosecute and seek to incarcerate those responsible.”
“While taxpayers bailed out Colorado East bank with $10 million in TARP bailout funds, bank loan officer Tumbaga chose to break the law, actively scheming with high school pal Headle to defraud the bank out of $1 million in loans,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “This crime could not have happened without a bank gatekeeper like Tumbaga, who opened the door to Headle while taxpayers ended up losing $2 million on their TARP investment.”
In February 2009, ColoEast Bankshares, Inc. the parent company of Colorado East Bank & Trust, received $10 million in federal taxpayer funds through the U.S. Department of the Treasury Troubled Asset Relief Program (TARP). The bank was later unable to pay more than $1 million it owed to taxpayers as a result of holding the TARP funds. In July 2013, the Treasury Department sold its stake in the company at auction for approximately $9 million. In total, approximately $2 million owed to federal taxpayers was lost on the investment.
This case was investigated by SIGTARP, the Federal Deposit Insurance Corporation Office of the Inspector General, and the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorney Suneeta Hazra.
This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. SIGTARP is a member of the task force. To learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.StopFraud.gov.
About SIGTARP
The Office of the Special Inspector General for the Troubled Asset Relief Program investigates fraud, waste, and abuse in connection with TARP.
To report suspected illicit activity involving TARP, dial the SIGTARP Hotline: 1-877-SIG-2009 (1-877-744-2009).
To receive alerts about quarterly reports, new audits, and media releases issued by SIGTARP, sign up at www.SIGTARP.gov/pages/press.aspx. Follow SIGTARP on Twitter @SIGTARP.
Colorado Springs Doctor Agrees to Pay over $85,000 to Settle Allegations That He Improperly Billed TRICARERead the Press Release
DENVER – A Colorado Springs doctor has agreed to pay $86,675.68 to settle allegations that he inappropriately billed TRICARE, the United States military health insurance program, the U.S. Attorney’s Office for the District of Colorado and the Defense Criminal Investigative Service announced. The U.S. District Court for the District of Colorado also entered a consent judgment against the doctor, David Hatfield, age 48, and his company, DBH. As part of the terms of the settlement Dr. Hatfield has to pay $1,400 per month.
TRICARE is the United States military health insurance program. It pays for, among other things, therapy services to developmentally disabled children who are children of military members. While TRICARE pays for this type of therapy, it does not pay for administrative services.
Dr. Hatfield provided therapy services to developmentally disabled children. The United States alleged that from 2008 through 2013, Dr. Hatfield and DBH also improperly submitted hundreds of claims to the TRICARE program for administrative services. In particular, Dr. Hatfield and DBH improperly collected substantial payments from TRICARE on claims for such things as time spent filling out timesheets, time spent for cancelled appointments where no therapy was provided, or time or money spent on supplies or food.
Dr. Hatfield and DBH have agreed to pay the United States $86,675.68 to resolve these allegations. Dr. Hatfield and DBH further agreed to the entry of a consent judgment against them in the amount of $1,283,027.04 based on this conduct. If Dr. Hatfield does not make the payments based on the settlement agreement, the government can enforce the consent judgment, which would result in Dr. Hatfield having to pay the entire amount of the judgment.
“Healthcare providers can only bill the government for the healthcare services they provide,” said U.S. Attorney John Walsh. “When they charge the government for money not owed to them, such as administrative services in this case, they can and will be held responsible for that conduct.”
“Dr. Hatfield and Developmental Behavioral Health, Inc., overbilled the TRICARE program that provides health care for our military warfighters, their families, and military retirees,” said Janice M. Flores, Special Agent in Charge of the Defense Criminal Investigative Service (DCIS) Southwest Field Office, Arlington, Texas. “If health care providers want to be paid for their services with taxpayer dollars, they have to play by the rules. Americans deserve to know that they are getting their money’s worth. This settlement highlights the Federal Government's continuing resolve to ensure those who defraud the Department of Defense, and ultimately the American taxpayers, are held accountable for their actions.”
This matter was investigated by the Defense Criminal Investigative Service. The Defense Health Agency, Office of Program Integrity, provided significant assistance. It was handled by Assistant U.S. Attorneys Marcy Cook and Zeyen Wu.
U.S. District Court Judge Orders Shannon Conley to Remain in Custody Pending SentencingRead the Press Release
DENVER – U.S. District Court Judge Raymond P. Moore this afternoon issued an order denying Shannon Conley’s request for bond pending sentencing. Conley, therefore, will remain in custody pending sentencing. Judge Moore’s order is attached.
Conley recently pled guilty to conspiracy to provide material support to a designated foreign terrorist organization (ISIS). That charge carries a penalty of not more than 5 years in federal prison, and up to a $250,000 fine. She is scheduled to be sentenced by Judge Moore on January 23, 2015 at 1:30 p.m.
Husband and Wife Sentenced on Tax Charges and Ordered to Pay the IRS Nearly $700,000 in TaxesRead the Press Release
Defendants hide assets in corporations with officers and directors named after their pets
DENVER – Mathew Zuckerman, age 70, of Woody Creek, Colorado, was sentenced on Tuesday, September 16th, 2014 by U.S. District Court Judge Robert E. Blackburn to serve 24 months in federal prison on income tax related charges, United States Attorney John F. Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Following his prison sentence, Mathew Zuckerman was ordered to serve 3 years on supervised release. He was ordered to report to a Bureau of Prisons facility after designation. Mathew Zuckerman’s wife, Sandra Zuckerman, age 67, of Woody Creek, was also sentenced that same day. She was ordered to serve 36 months’ probation by Judge Blackburn. Mathew Zuckerman was ordered to pay $693,706 in restitution to the IRS. Sandra Zuckerman was jointly liable for $112,511 of that restitution.
The Zuckermans were indicted by a federal grand jury in Denver on April 25, 2012. Mathew plead guilty on February 18, 2014 to income tax evasion and Sandra plead guilty to willful failure to pay income taxes on May 30, 2014. According to information contained in court documents, beginning in 1986 and continuing through 2009, the Zuckerman’s either failed to file an income tax return, or filed a return using incorrect income amounts. From 2003 through 2009 no income tax returns were filed with the IRS.
Starting in 1998, Mathew Zuckerman and an associate became 50/50 business partners and began to specialize in taking small companies public through reverse mergers of existing corporate shells. To operate their new venture, Zuckerman and his business partner formed Silicon Valley New Issues, Inc. (SVNI). In addition, he formed Intermountain Marketing & Finance, Inc., a corporation he solely owned which owned 50% of SVNI. As part of the scheme, Mathew Zuckerman evaded corporate income taxes on several million dollars of taxable income in 1999 from Silicon Valley New Issues, Inc. Over the course of the next 10 years, he continued to conceal his assets and business affairs from the IRS by utilizing additional corporations and trusts in order to avoid payment and collection of the Zuckerman's outstanding tax liabilities.
Specifically, to avoid IRS liens, in 1999, the Zuckerman’s caused the deed to their Woody Creek residence, purchased for approximately $1.2 million, to be recorded in the name of Hyperpanel University, Inc. ("Hyperpanel"), a Nevada corporation that listed the names of a cat and a dog as its officers and directors on its filings with the Secretary of State. Similarly, in 2004 Mathew Zuckerman formed a company called Treya, Inc. in Nevada that they used to purchase a $1.8 million home in 2004 in Toluca Lake, California. Based on the directions of Mathew, Sandra used her name from an earlier marriage, Sandra Eberli, to be used in connection with transactions conducted by Treya.
Furthermore, in December of 2004, Mathew Zuckerman created the Mathew Mark Zuckerman Trust ("MMZT") and placed himself in the position as "Trustor" and his CPA was appointed as trustee. In July of 2006, he caused his daughter to be appointed as the trustee and in 2008 caused 4,900,000 shares of Green Earth Technologies (a company for which he served as Chairman) to be issued to the trust using an incorrect employer identification number ("EIN") for MMZT. Then he instructed his daughter to sell shares of the stock and transfer funds to his personal bank accounts. By doing this he received profits in excess of $500,000 while evading payments of taxes owed to the IRS.
“The defendants established multiple entities to engage in a complex scheme to hide money owed to the IRS,” said U.S. Attorney John Walsh. “Despite their best efforts, the defendants were caught and ultimately held accountable for their criminal behavior.”
“For over a decade they committed tax fraud; it was only a matter of time until they were caught and brought to justice,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.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. Attorney Tim Neff.
Aurora Return Preparer Pleads Guilty to Filing False Tax ReturnsRead the Press Release
DENVER – Keith G. Smith, age 54, of Aurora, Colorado, pled guilty yesterday before U.S. District Court Judge Raymond P. Moore for filing and assisting in preparing false tax returns, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Judge Moore is scheduled to sentence Smith on December 9, 2014. Smith was indicted by a federal grand jury in Denver on March 11, 2014.
According to information contained in the indictment and plea agreement, beginning in 1987 Smith operated a tax return preparation business. He told some of his clients that he formerly worked for the IRS and conducted audits, seized assets, and carried a weapon. When in fact, for about four years Smith worked in an administrative positon at the IRS; he was not a criminal investigator, he did not conduct audits, and he did not seize assets. In 2000, the IRS assessed Smith a civil penalty because of underreported tax liabilities on returns that he had prepared for clients. Smith thereafter continued to prepare clients' returns but no longer signed them as preparer, instead indicating on the returns that they were prepared by the taxpayers.
Among the returns that Smith prepared for the years 2006 through 2010 were 40 false tax returns requesting refunds, in amounts ranging from $715 to $7,124, all of which the IRS paid. Many of the returns falsely claimed deductions for medical and dental expenses, home mortgage interest payments, education expenses, and charitable contributions. The false statements on the 40 returns resulted in a total tax loss of $138,148. In addition, Smith falsified his personal income tax returns for years 2008 and 2009.
On December 8, 2011, two IRS special agents interviewed Smith at his residence in Aurora and the agents informed Smith that he was under investigation for preparing false returns for clients and for his own returns. Smith acknowledged that he had been preparing returns for clients since his IRS employment ended and he admitted that he falsified clients' returns. Smith said he falsified Schedules C and misstated other items on clients' returns. "I'm ready to bite the bullet," he said. "I did it. It's done. I'm guilty."
Each of the charges to which Smith pled guilty, one count of aiding and assisting in the preparation of a false tax return and one count of filing a false tax return, carries a penalty of not more than 3 years in federal prison and a fine of up to $100,000.
This case was investigated by Internal Revenue Service – Criminal Investigation.
Attorney General Recognizes Outstanding Performance of Five Employees of the U.S. Attorney's Office in ColoradoRead the Press Release
WASHINGTON – Five people from the Colorado U.S. Attorney’s Office were among the 243 members of the Department of Justice recognized by Attorney General Eric Holder and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson at the 30th annual Director’s Awards Ceremony today in Washington D.C.
The District of Colorado was one of 44 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building on Wednesday, September 10, 2014.
In his prepared remarks to awardees, Attorney General Holder said, “Locally, nationally, and internationally, you represent the very best that this Department has to offer. Your work embodies our ongoing commitment – not merely to win cases, but to do justice; to protect our fellow citizens from crime, violence, and terrorism; to empower the most vulnerable among us; and to uphold the rule of law.”
EOUSA Director Monty Wilkinson echoed those sentiments, saying to the recipients, “You have persevered, and remained focused and motivated – achieving remarkable results in work that makes a difference in the lives of citizens across our great country. The vast scope of your collective accomplishments is nothing short of exceptional.”
Assistant U.S. Attorney (AUSA) Judith Smith received an award for Superior Performance as an Assistant U.S. Attorney who works on criminal prosecutions. AUSA Smith was recognized for her for her groundbreaking child pornography trial prosecutions and appellate advocacy in United States v. Mueller, United States v. Franklin, and United States v. Sturm. As a result of her extraordinary legal and forensic work in Mueller, over 35 child victims were rescued from sexual abuse. In Franklin, AUSA Smith appears to have been the first federal prosecutor ever to obtain a guilty verdict from a jury on child pornography “advertising” charges for the use of Gigatribe software, resulting in a 100 year sentence. In Sturm, she obtained an en banc opinion from the Tenth Circuit Court of Appeals, establishing a pro-government rule for proof of interstate commerce in child pornography cases. Through her dedication and tireless work, AUSA Smith has obtained convictions and rulings that have saved dozens of children and punished their abusers.
Assistant U.S. Attorney (AUSA) Amanda Rocque received an award for Superior Performance as an Assistant U.S. Attorney who works on civil matters. AUSA Rocque was recognized for her outstanding work spearheading a highly successful initiative to pursue oil and gas companies that defraud the United States of royalty payments. AUSA Rocque mastered the complexities of how oil and gas companies should calculate royalties due for mineral resources extracted from federal land. She trained agents to detect potential royalty fraud, thereby building a base of investigative expertise. AUSA Rocque’s tenacity and careful attention to detail in these investigations has resulted in a string of multimillion-dollar recoveries for the United States and a vigorous, ongoing fraud-detection program.
Special Assistant U.S. Attorney (SAUSA) Beth Gibson, who is assigned to the U.S. Attorney’s Office from U.S. Immigration and Customs Enforcement (ICE) received an award for Superior Performance Award as a SAUSA. Gibson was recognized for her outstanding contributions to the District of Colorado, including her work on two complex cases. Ms. Gibson tried two complex cases, involving forced labor and a Hobbs Act robbery, to verdict. She also successfully resolved several complex worksite enforcement investigations. Ms. Gibson carries one of the heaviest caseloads in the Colorado U.S. Attorney’s Office Criminal Division, has taken the lead for the office on the Department’s immigration benefit fraud initiative, and has managed the national Special Assistant United States Attorney program for United States Immigration and Customs Enforcement-Homeland Security Investigations participants.
Lisa Lara received an award for Superior Performance in a Litigative Support Role. Lara was recognized for her outstanding and creative work in developing spreadsheets and databases to track and analyze complex and voluminous medical information in multifaceted health care fraud investigations. In her work as a health care fraud paralegal, Ms. Lara has consistently taken the initiative to create custom electronic mechanisms that make it possible to efficiently track and analyze data, ranging from Medicare policies to patient records. She developed several highly useful templates for tracking data that will streamline future national health care fraud investigations.
Victoria “Tori” Soltis received an award for Superior Performance in Administration. Soltis was recognized for her outstanding service as an Administrative Specialist. Over the past four years, Ms. Soltis has supported all areas of administration including overseeing the Special Assistant United States Attorney/Special Attorney Program, coordinating the upgrading of the office phone system in three offices, and reviewing numerous floor plans that saved hundreds of thousands of dollars for her district.
“The depth of talent at the Colorado U.S. Attorney’s Office is impressive,” said Colorado U.S. Attorney John Walsh. “It was an honor to join these five recipients as they were recognized by the Attorney General and the Department for their outstanding contributions to our mission. Colorado was well represented when looking at the number of districts recognized nationally.”
EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.
Lakewood Business Man Is Sentenced for Failing to File Income Tax Returns and Pays the IRS Approximately $2.9 MillionRead the Press Release
DENVER – Jeremy J. Shull, age 36, of Lakewood, CO, was sentenced earlier this week by U.S. District Court Judge William J. Martinez to serve 4 months in federal prison for failure to file tax returns, United States Attorney John F. Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Following his prison sentence, Shull was ordered to serve one year on supervised release. Shull was charged by an information on September 3, 2013 and plead guilty before Judge Martinez on October 7, 2013. As part of the plea agreement, he agreed to pay $1,268,478 in taxes, over $975,000 in penalties, and nearly $700,000 in interest. Shull paid these amounts in full prior to his sentencing hearing.
According to documents filed with the courts, the defendant’s relevant conduct began in January of 2002. From August 2004, Shull has been the sole owner and operator of Independent Roofing Specialists, LLC, ("Independent") a business which is and has been active in commercial and residential roofing in Colorado since 1999. Prior to August 2004, Shull operated Independent with another individual, first as a partnership and then as a two-member LLC.
During the calendar years 2002 through 2009, Independent was a profitable business that brought in substantial revenues. Shull knew his business had significant gross income for each of the calendar years that required him to file personal federal income tax returns with the Internal Revenue Service ("IRS"). As a result of his income from Independent from 2002 through 2009, Shull had federal income taxes due and owing totaling approximately $1,268,478, in the amounts of approximately: $34,807 for 2002; $46,636 for 2003; $113,422 for 2005; $215,708 for 2006; $548,780 for 2007; $205,538 for 2008; and $103,587 for 2009.
Particularly, for calendar year 2007, Independent had gross income of approximately $4,840,683, requiring Shull to file a personal income tax return on or before April15, 2008 with the IRS. Shull had approximately $548,780 in federal income tax due and owing for calendar year 2007. As part of the plea agreement, Shull agreed to file, and has filed, tax returns for all of the years in question.
“Failing to file income tax returns can come with criminal consequences,” said U.S. Attorney John Walsh. “In Mr. Shull’s case, he intentionally failed to report his income to the IRS. By hiding his income the court held him accountable for not paying his fair share of income taxes.”
The defendant is being prosecuted by Assistant U.S. Pegeen Rhyne.
“Income tax fraud is based on greed; individuals who commit tax fraud are merely stealing money and creating an unfair tax burden on honest tax paying citizens,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
This case was investigated by IRS Criminal Investigation with assistance from the Special Enforcement Program of the Internal Revenue Service.Arvada Woman Pleads Guilty to Conspiracy to Provide Material Support to A Designated Foreign Terrorist OrganizationRead the Press Release
Click here for a copy of the Shannon Conley plea agreement
DENVER – Shannon Conley, age 19, of Arvada, Colorado, pled guilty this morning before U.S. District Court Judge Raymond P. Moore to one count of conspiracy to provide material support to a designated foreign terrorist organization, U.S. Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Conley will be sentenced by Judge Moore on January 23, 2015 at 1:30 p.m. The defendant appeared at the change of plea hearing in custody, and was remanded at its conclusion.
According to court documents, including the stipulated facts in the plea agreement, from about sometime in February 2014 and continuing through April 8, 2014, Conley and a co-conspirator did unlawfully work together and with other individuals known and unknown to commit an offense against the United States, specifically to provide and attempt to provide material support and resources to a designated foreign terrorist organization, specifically Al-Qaeda (AQ) and its affiliates, including Al-Qaeda in Iraq (AQI), a/k/a the Islamic State of Iraq (ISI), a/k/a the Islamic State of Iraq and Al Sham (ISIS), a/k/a the Islamic State of Iraq and the Levant (ISIL).
The conspiracy was accomplished, in part, when Conley met the co-conspirator on the internet. During their communications, they shared their view of Islam as requiring participation in violent jihad. The co-conspirator communicated to Conley that he was an active member of an Al-Qaeda (AQ) affiliate fighting in Syria known as the Islamic State of Iraq and Al Sham (ISIS). The two then decided to become engaged; and, together they worked to have Conley travel to Syria to join her new fiancé. Before traveling to Syria, Conley refined and obtained additional training and skills in order to provide support and assistance to any AQ and/or ISIS fighter. Conley also intended to fight if it became necessary to do so.
In furtherance of the conspiracy, Conley joined the U.S. Army Explorers (USAE) to be trained in U.S. military tactics and in firearms. She traveled to Texas and attended the USAE training. She also obtained first aid/nursing certification and National Rifle Association certification. Conley knew that ISIS was a designated foreign terrorist organization. In fact, on numerous occasions, Special Agents with the FBI met with her in extraordinary attempts to persuade her not to carry out her plans to travel overseas to provide support to a foreign terrorist organization and to engage in violent jihad. On March 29, 2014, the co-conspirator, together with others, arranged for an airline ticket to be purchased for Conley to travel to Turkey, departing from Denver on April 8, 2014. On April 8, 2014, Conley traveled to Denver International Airport and attempted to board the flight to Turkey. She was then arrested by FBI agents.
A subsequent search of Conley’s home revealed DVDs of Anwar Al-Awlaki lectures and a number of books and articles about Al-Qaeda, its affiliate groups, and jihad. Agents also recovered shooting targets labeled with the number of rounds fired and distances.
Conley faces not more than 5 years in federal prison, and up to a $250,000 fine for conspiracy to provide material support to a designated foreign terrorist organization.
This case was investigated by the Federal Bureau of Investigation (FBI) and the Arvada Police Department.
The defendant is being prosecuted by Assistant U.S. Attorney Greg Holloway, with the assistance of Jennifer Levy of the National Security Division’s Counterterrorism Section.
Dentist Sentenced for Obstruction and Interfering with IRS LawsRead the Press Release
DENVER – Jerold R. Sorensen, age 75, of Fresno, CA, was sentenced yesterday by U.S. District Court Judge Raymond P. Moore to serve 18 months in federal prison for obstructing and impeding the Internal Revenue Service, United States Attorney John F. Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Following his prison sentence, Sorensen was ordered to serve one year on supervised release. Sorensen was also ordered by Judge Moore to pay a fine of $100,000.00. The defendant was convicted by a jury on June 16, 2014, following a 6-day trial. The jury deliberated for nearly two hours before returning a verdict of guilty. Sorensen appeared at the sentencing hearing free on bond. He was ordered to report to a Bureau of Prisons facility within 15 days of designation.
Sorensen was indicted by a federal grand jury in Denver on November 20, 2013. According to the indictment and evidence presented at trial, Sorensen was a resident of California and practiced dentistry and oral surgery through a California professional corporation, Jerold R. Sorensen, DDS, PC. Beginning in September of 2000 and continuing through May of 2008, in Colorado and elsewhere, the jury found that Sorensen obstructed and impeded the administration of the Internal Revenue laws.
Specifically, Sorensen worked with an entity known as Financial Fortress Associates, (“FFA”), an organization that promoted and advised its clients on schemes to avoid the payment of income and other federal taxes. Working through FFA, Sorensen established a number of Pure Trust Organizations (“PTOs”) used as vehicles to help disguise Sorensen’s and his son’s receipt of business and personal income and asset ownership. Sorensen worked with Eva Melissa Sugar, an attorney in Denver, Colorado, who was associated with FFA, and he paid her to use an Unincorporated Business Organization (“UBO”) called Northside Management (“Northside”).
Sorensen acted as if the PTOs owned assets that he actually controlled, including his personal residence, his cars, the building where he conducted his dental practice, and the equipment used by that practice. He funneled income from his practice into the PTOs in an effort to reduce his taxable income. Furthermore, Sorensen took additional steps to substantially under-report his income to the IRS for calendar years 2002 through 2007. These steps included filing individual federal income tax returns which failed to report as income any of the millions of dollars deposited into the bank accounts he controlled and which he used for personal expenses. Personal expenses he paid using this unreported income included purchases of automobiles, property taxes, upkeep of his California residence, and over $2 million used to purchase land for and construct two additional homes and a commercial building in Utah. The defendant’s conduct caused approximately $2.3 million in tax loss.
Eva Melissa Sugar, the Denver attorney who helped facilitate the FFA scheme, pled guilty to conspiracy to defraud the United States in connection with the collection for taxes on August 5, 2014 and is scheduled to be sentenced on October 29, 2014. Gregory Nathan Laurence of Germantown, Tennessee was sentenced on September 5, 2014 based on his plea of guilty to attempting to obstruct the administration of internal revenue laws.
“Sorensen participated in a scheme in an attempt to hid his income from the IRS to avoid paying taxes,” said U.S. Attorney John Walsh. “The defendant has been held accountable for his illegal actions. Not only did he have to pay over $2 million in back taxes to the IRS, he also has to pay a $100,000 fine and spend a year and a half in federal prison.”
“For those thinking about promoting or participating in abusive tax schemes should think twice; there is no secret formula that can eliminate a person's tax obligations.” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “We owe it to every American taxpayer to identify and prosecute both those who evade their taxes and those who promote and assist them in evading their tax obligations through fraudulent tax schemes.”
This case was investigated by IRS Criminal Investigation with assistance from the Special Enforcement Program of the Internal Revenue Service.
The defendant is being prosecuted by Assistant U.S. Attorneys Matthew Kirsch, Pegeen Rhyne and Anna Edgar.
El Paso County Man Sentenced to 30 Years in Federal Prison for the Sexual Exploitation of ChildrenRead the Press Release
DENVER – Kenneth Wayne Hugo, age 37, of El Paso County, Colorado, was sentenced yesterday by U.S. District Court Judge Robert E. Blackburn to serve 360 months (30 years) in federal prison for the sexual exploitation of children, United States Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Following his prison term, Hugo will spend the rest of his life on supervised release. The defendant appeared at the hearing in custody, and was remanded by Judge Blackburn at the hearing’s conclusion.
Hugo was indicted by a federal grand jury in Denver on August 6, 2013. He pled guilty before Judge Blackburn on January 22, 2014. He was sentenced on September 4, 2014.
According to the stipulated facts contained in his plea agreement, this investigation began as an offshoot of an Australian investigation into citizens distributing child pornography. This investigation led authorities to Texas. As a result of a search warrant executed in Texas, federal authorities found a computer that contained evidence of emails being exchanged with an individual in Colorado Springs, Colorado, namely, Kenneth Hugo. On January 23, 2013, the FBI and the El Paso County Sheriff's Office executed a search warrant at Hugo’s residence. During the execution of the search warrant agents and deputies found images depicting prepubescent and toddler aged females being sexually penetrated. It was determined that Hugo started his collection by utilizing a Russian-based image-sharing website to download child pornography images and videos. He also used this website to meet online other like-minded individuals. Hugo also posted images on the site for others to download.
During the subsequent investigation authorities learned that the defendant had inappropriate sexual contact with prepubescent minor females. When minor children slept over at his house during the summer of 2012, Hugo would wait until the minor girls were asleep, sneak into their room, pull down the covers, pajamas and panties, and fondle them, all the while taking pictures using his cell phone camera. Forensic analysis of the items seized during the search warrant revealed 1,600 images of child pornography on the desktop computer and over 4,200 images on the laptop computer. The laptop also contained all the images Hugo had taken using his cell phone of the girls during the sleepovers. An external hard drive contained over 4,000 images of child pornography and a thumb drive contained approximately 290 such images.
Hugo was arrested on January 23, 2013 by state authorities for the sexual assault of three minor girls. Hugo pled guilty to the sexual assault of those girls in state court and was sentenced in November 2013 to an indeterminate term of imprisonment in the Colorado Department of Corrections of four years to life.
“The defendant in this case not only collected horrific photos and videos of toddlers and other children being sexually abused, the investigation also determined that Hugo himself was involved in the horrific conduct,” said U.S. Attorney John Walsh. “The lengthy sentence imposed by the Court is a measure of the damage this man has done, and the danger he poses to society and children.”
"Combating the exploitation and victimization of children is one of the FBI’s top priorities,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “The 30 year prison sentence of Kenneth Hugo reflects the consequences of the FBI’s commitment to identifying, arresting and referring for prosecution those who prey on our children. Working in conjunction with state and local authorities, law enforcement has removed another child predator from our community and curtailed the abusive actions of an individual actively preying on children.”
This case was investigated by the FBI and the Colorado Springs Police Department.
The defendant was prosecuted by Assistant U.S. Attorney Valeria Spencer.
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 Intervenes in False Claims Act Lawsuits Against Evercare Hospice and Palliative Care, Now Known as Optum Palliative Care and HospiceRead the Press Release
WASHINGTON – The United States has partially intervened against defendants in two whistleblower lawsuits in the Federal District Court for the District of Colorado alleging Evercare Hospice and Palliative Care (Evercare) submitted false claims for the Medicare hospice benefit. Evercare is now known as Optum Palliative and Hospice Care, which provides hospice services across the United States. One of the suits names Evercare’s parent companies, including UnitedHealth Group Inc.
“The hospice benefit is designed for patients who are terminally ill and need end-of-life care,” said Assistant Attorney General Stuart F. Delery for the Department of Justice’s Civil Division. “We will continue to protect the ability of Medicare recipients to receive appropriate treatment by ensuring that entities providing hospice care are only treating, and billing for, qualified patients.”
The Medicare hospice benefit is available for patients who elect palliative care (medical care focused on providing patients with relief from pain, symptoms or stress) for a terminal illness, and have a life expectancy of six months or less if their illness runs its normal course. When a Medicare patient is admitted to hospice, that individual is no longer entitled to Medicare coverage for care designed to cure his or her illness.
The lawsuits, filed by former employees of Evercare, allege that defendants violated the False Claims Act by knowingly submitting false claims for hospice benefits for patients who did not have a life expectancy of six months or less. The complaints include allegations that management pressured employees and physicians to admit and retain patients who were not terminally ill and challenged or disregarded physicians’ decisions that patients should be discharged.
“Hospice care plays a critical role in our healthcare system, providing for end-of-life care as opposed to curative life care,” said U.S. Attorney John Walsh for the District of Colorado. “When companies systematically overbill Medicare by keeping people in hospice when they don’t need to be there, it jeopardizes this important benefit for others under the program. We will not tolerate such conduct. The District of Colorado and the Civil Fraud Section of the Department of Justice deserve substantial credit for pursuing that mission in these Evercare Hospice cases.”
“The decision to provide hospice services should be prompted by a patient’s terminally ill medical condition and desire for palliative care, not a hospice provider’s desire to boost its profits,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Our agency is dedicated to safeguarding both the Medicare program and Medicare patients.”
The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for the submission of false claims to the government. The private plaintiffs are entitled to receive a share of any funds recovered through the lawsuit. The False Claims Act authorizes the United States to intervene in a whistleblower lawsuit and take over primary responsibility for litigating it as the United States has done here, and permits the government to recover three times its damages plus civil penalties. The United States has notified the court that it intends to file its own complaint.The government’s intervention in these actions is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $22.4 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.
This matter was investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Colorado, and the Department of Health and Human Services’ Office of Inspector General. The claims asserted against defendants are allegations only, and there has been no determination of liability.
The lawsuits are consolidated and captioned United States ex rel. Fowler and Towl v. Evercare Hospice, Inc., et al., No. 11-cv-00642 (D. Colo.); United States ex rel. Rice v. Evercare Hospice, Inc., No. 14-cv-01647 (D. Colo.).
Denver Felon Found Guilty of Gun and Drug Distribution Charges Following Jury TrialRead the Press Release
DENVER – A jury in U.S. District Court in Denver yesterday found Maurice Alyn Mickling, age 28, of Denver, guilty of gun and drug distribution charges, the U.S. Attorney’s Office and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) announced. The three-day jury trial was heard before U.S. District Court Judge Raymond P. Moore. The jury deliberated for approximately three hours before delivering their verdicts. The defendant, who appeared at the trial in custody, was remanded after the jury verdict was read. Mickling is scheduled to be sentenced by Judge Moore on November 19, 2014. Mickling was indicted by a federal grand jury in Denver on January 7, 2014.
According to court documents as well as facts presented during the trial, in December of 2013 Mickling, who was wanted for parole violations, was located at the Ramada Inn on Colfax and Marion. The Denver SWAT Team was called because of Mickling’s prior violent felony convictions and because he was believed to be armed. As SWAT arrived, Mickling saw the team, and immediately ran. The defendant got to the corner of the parking lot, threw a loaded hand gun high into the air over the fence, dropped a bag, and then jumped the fence. Mickling through the firearm so far that it flew across the street and hit a female bystander in the leg.Once Mickling was over the fence he slipped on some ice, and was immediately apprehended by officers. Inside the dropped bag was 3.6 grams of crack and a digital scale, which is traditionally used for drug distribution. He also had $756 in cash on his person.
“The streets of Denver are safer thanks to the work of the Denver Police Department and the ATF,” said U.S. Attorney John Walsh. “This drug dealer with a gun has been convicted of serious crimes, for which he faces a long period of incarceration at sentencing as a result.”
“We know from experience that the use of crime guns and illegal narcotics go hand-in-hand,” said Luke Franey, Special Agent in Charge, ATF Denver Field Division. “Armed narcotics traffickers are a scourge to our society and will not be tolerated. We will continue to fight violent crime by investigating and arresting those who seek to reduce the quality of life in our communities. ATF will continue our great collaboration with the Denver Police Department who is similarly dedicated to this mission.”
Mickling faces not more than 10 years in federal prison, and up to a $250,000 fine for possession of a firearm by a convicted felon. He faces not more than 30 years imprisonment and up to a $2,000,000 fine for unlawfully possessing with intent to distribute a controlled substance (crack cocaine). Lastly, he faces not less than 5 years, and up to life in federal prison, and a fine of not more than $5,000,000 for possession of a firearm in furtherance of a drug trafficking offense, which will run consecutive with the sentence for the drug trafficking offense.
This case was prosecuted by Assistant U.S. Attorneys Jeremy Sibert and David Tonini.
Former Aurora Driving School Owner Is Sentenced to Prison for Mail Fraud and Filing A False Tax ReturnRead the Press Release
DENVER – Stuart Bryan King, age 54, of Centennial, who is the owner of Little Lake Driving Academy, was sentenced today by U.S. District Court Judge William J. Martinez to serve 15 months in federal prison for mail fraud and filing a false tax return the U.S. Attorney’s office, IRS-Criminal Investigation, Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the Colorado Department of Revenue, Motor Vehicle Investigations Unit announced. Following his prison sentence he was ordered to serve 3 years on supervised release. King was also ordered by Judge Martinez to pay a $3,500 fine as well as $33,772 in restitution to the IRS. King was charged by a complaint on March 5, 2013 and subsequently charged by a Grand Jury in Denver on April 8, 2013. He pled guilty on March 7, 2014 to a two count information.
According to the charging documents and plea, Little Lake Driving Academy (LLDA), located at 1415 Havana Street in Aurora, Colorado, acted as a third party tester for the State of Colorado’s Department of Revenue, Division of Motor Vehicles, administering written and driving examinations on behalf of the State of Colorado in order for an individual to obtain a Colorado Driver’s License. All driving schools must meet specific requirements and comply with Colorado State law in order to be a third party tester for the Division. The company provided the requisite testing for individuals to obtain a basic operator’s driver’s license and/or instruction permit in the State of Colorado. King owns Little Lake Driving Academy, and is a licensed tester with the State of Colorado. King was authorized to conduct driver education classes as well as certify an applicant’s successful written and driving examinations so they could receive the valid Colorado driving documents.
From August 2009 through November 2012, King and an employee of LLDA knowingly devised and participated in a scheme to defraud the Colorado Department of Revenue, Division of Motor Vehicles (DMV) by falsely certifying that applicants for a Colorado Driver’s License and instruction permit had successfully completed the required testing. As part of the scheme, the two defendants falsely certified that applicants had taken and passed the written tests. The applicants then presented the certified documents to the DMV and received by mail a State of Colorado driver’s license and/or instruction permit.
As a result of the scheme, driver's licenses were mailed to applicants and during 2009 through 2012, and King administered nearly 1,000 of these "tests" collecting $323,050 in fees. King owned La Lagunilla, Inc. and Sovereign Enterprises, Ltd. which did business as Little Lake Driving Academy. For tax years 2009 through 2011, King failed to file business tax returns and under reported income which resulted in a tax loss of $33,772.
Furthermore, the investigation revealed that people who could not speak, read or write English traveled from Missouri and other states to Colorado. Those who traveled to Colorado from Missouri had previously purchased the identities of U.S. citizens and obtained Missouri identification cards in the names of the stolen identities. These individuals, after utilizing the services of Little Lake, turned in their Missouri identification cards to obtain Colorado driver’s licenses and instruction permits. In separate charging documents, 20 individuals who had utilized the services of Little Lake and who turned in Missouri identification cards were indicted in Colorado for Aggravated Identity Theft. To date, Catarina Alcon, Freddy Castro-Alcon, Lucia Contreras Perez, Juan Garcia, Elias Garcia-Perez, Diego Hernandez-Batz, Candelarlio Hernandez-Perez, Martha Jimenze-Ortiz, Gustavo Monteroso-Velasquez, Isnael Raymundo, Jose Antonio Rivera, Felix Solis, Carlos Villa-Flores and Elias Zetino-Vicente have been arrested based on the Aggravated Identity Theft indictments.
“The fraud committed by this defendant put the public’s safety at risk,” said U.S. Attorney John Walsh. “By providing documentation authorizing the issuance of driver licenses to those who have not properly qualified not only puts the driving public at risk, it also potentially hides individuals’ true identities.”
“Investigating and prosecuting tax fraud and identity theft are priorities for IRS Criminal Investigation,” Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “We will continue to work with our law enforcement partners to bring those to justice who commit these crimes harming our citizens whose identities are stolen.”
“The fraudulent use of identification documents, both real and counterfeit, may allow the bearer to board an aircraft, improperly obtain a government benefit or allow a criminal to remain in the shadows undetected. These crimes represent a very real threat to our public safety and the security of our nation,” said Kumar Kibble, special agent in charge of HSI Denver. “Through the combined authorities and expertise of our federal, state and local law enforcement partners, we will continue to aggressively target those participating in or facilitating these crimes.”
This case was investigated by the Internal Revenue Service – Criminal Investigation, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the Colorado Department of Revenue, Motor Vehicle Investigations Unit.
The defendants were prosecuted by Assistant U.S. Attorney Robert M. Brown.
Colorado Springs Man and Member of "North American Man-Boy Love Association" Sentenced to Federal Prison for Possession of Child PornographyRead the Press Release
DENVER – U.S. District Court Judge Christine M. Arguello recently sentenced Clifton Brett Bennett, age 56, of Colorado Springs, Colorado, to serve 57 months in federal prison, followed by 10 years of supervised release, the U.S. Attorney’s Office, the U.S. Postal Inspection Service, and the Colorado Springs Police Department – Internet Crimes Against Children Task Force (ICAC) announced. Once released the defendant will also have to register as a sex offender. Further, Bennett, who appeared at the hearing in custody, was remanded after the sentence was pronounced.
Bennett was indicted by a federal grand jury in Denver on September 25, 2013. He pled guilty before Judge Arguello on May 1, 2014. He was sentenced on August 18, 2014.
According to court records, between November 1, 2008 and April 15, 2011 Bennett knowingly received material that contained child pornography. Further, on January 23, 2013, Bennett knowingly possessed child pornography. According to a state affidavit of probable cause, a United States Postal Inspector contacted an ICAC detective regarding a child pornography investigation. Postal Inspectors had identified an individual who lived in Colorado Springs who made over $4,000 in purchases for over 100 child pornography videos over a number of years. Follow up investigation determined the individual was Clifton Bennett.
A search warrant was executed at Bennett’s residence. During the execution of the warrant a detective conducted a forensic preview of the computer, and found images of prepubescent boys who were nude and posed in sexually explicit positions with their genitals exposed. They also found DVDs containing child pornography – many of which were delivered via U.S. Mail from New York. He also allegedly bought and downloaded child pornography as well. Investigators also determined that Bennett was a member of the “North American Man-Boy Love Association.” Following the execution of the search warrant Bennett was arrested and held in state custody. Once the federal indictment was returned the state dismissed their case in its entirety.
This case was investigated by the United States Postal Inspection Service and the Colorado Springs Police Department -- Internet Crimes Against Children Task Force (ICAC).
Bennett was prosecuted by Assistant U.S. Attorney Valeria Spencer.
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."
Shannon Conley, Through Her Attorney, Files A Notice of DispositionRead the Press Release
DENVER – Shannon Conley, age 19, of Arvada, Colorado, has, through her attorney, filed a notice of disposition in her criminal case (14-CR-163-RM). A notice of disposition is generally filed by the defense to notify the court that an agreement between the prosecution and the defense has been reached, where the defendant has agreed to plead guilty. The details of that plea agreement cannot be made public until the change of plea hearing, which has not yet been scheduled. At the change of plea hearing, Conley will be given an opportunity to change her plea from not guilty to guilty.
Conley currently is charged in a one count Information with Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization.
No additional information is available regarding what Conley has agreed to plead guilty to or the details of that agreement.
Denver Attorney Pleads Guilty to Conspiracy to Defraud the IRSRead the Press Release
DENVER – Eva Melissa Sugar, age 61, of Aurora, Colorado, pled guilty yesterday before U.S. District Court Judge John L. Kane to Conspiracy to Defraud the United States in connection with the collection of taxes, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Judge Kane is scheduled to sentence Sugar on October 29, 2014. Sugar and two co-defendants, Jerry L. Roberts and Gregory N. Laurence, were indicted by a federal grand jury in Denver on May 8, 2013. Roberts pled guilty to failure to file tax returns on July 15, 2014 and is scheduled to be sentenced by Judge Kane on November 18, 2014. Laurence pled guilty to attempting to obstruct the administration of internal revenue laws on February 6, 2014 and is scheduled to be sentenced by Judge Kane on September 4, 2014.
According to information contained in the indictment and plea agreements, Sugar was a practicing attorney in Denver, Colorado and obtained an L.L.M. in Taxation from the University of Denver. Around 1999, Sugar began receiving referrals from a group called Financial Fortress Associates (FFA). FFA promoted the use of so-called Constitutional Pure Trust Organizations (PTOs) as a part of various schemes to avoid tax reporting requirements, including transferring ownership of most or all assets belonging to a taxpayer or a taxpayer’s business to trusts and treating payments to the same trusts as business deductions. FFA further advised clients not to file tax returns or any other documents with the IRS on behalf of the trusts. FFA recruited clients through the internet and in seminars or “meetings” conducted in hotel conferences rooms around the country, including locations in Colorado, Georgia, Texas, and elsewhere. At some of these meetings, Sugar explained how the FFA’s banking program worked, and others associated with FFA explained other aspects of FFA’s program.
Sugar charged her clients fees for her services, including an initial fee to set up bank accounts and associated unincorporated business organizations (UBOs), as well as annual maintenance fees. For additional fees, Ms. Sugar allowed her clients to control funds in the UBO bank accounts through the use of blank checks that she would sign, for a fee, as the account signer or trustee. The clients would then fill in the checks, spending the money from the accounts in whatever manner they desired. Sugar provided these services for more than 150 clients, and in so doing, performed various overt acts in furtherance of the conspiracy. The tax loss resulting from Sugar’s activities as part of the conspiracy is between $2.5 million and $7 million.
Roberts and Laurence were clients of Sugar. Roberts was a resident of Polk County, Florida and worked for Roberts Enterprises, a family business which assisted charitable organizations, primarily religious ones, with fundraising. Beginning in 2001 through at least May of 2007, Roberts used the services of Sugar, to take steps to prevent the IRS from learning his true income and assessing taxes on that income. Roberts then failed to file tax returns reporting his income.
Laurence was a resident of Germantown, Tennessee and practiced medicine through two entities in which he was the sole physician, Germantown Family Care and Obstetrics, LP and Germantown Aesthetics, LP. Beginning in 2002 through the end of 2007, Dr. Laurence used the services of Melissa Sugar to disguise his true income from the IRS and to support the false business and personal tax returns he filed during the relevant period.
Another client of Sugar’s, Jerold Sorensen, was charged in a separate indictment with attempted obstruction of the administration of the internal revenue laws and was found guilty by a jury in Denver in June of 2014. Sorensen is scheduled to be sentenced by U.S. District Court Judge Raymond P. Moore on September 8, 2014.
The charge to which Sugar pled guilty, 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. Failing to file income tax returns, the charges to which Roberts pled guilty, carry a penalty of not more than 1 year in federal prison and a fine of up to $100,000 per count. Attempted obstruction of the administration of the internal revenue laws, the charged to which Laurence pled guilty and of which Sorensen was convicted at trial, 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 Special Enforcement Program of the Internal Revenue Service and prosecuted by Assistant U.S. Attorneys Matthew T. Kirsch, Anna Edgar, Pegeen Rhyne, and J. Chris Larson.
Palisade Man Sentenced to Federal Prison for Attempted Armed Bank RobberyRead the Press Release
DENVER – Jose O. Jimenez, of Palisade, Colorado, was recently sentenced by U.S. District Court Judge R. Brooke Jackson to serve 210 months (over 17 years) in federal prison for attempted armed bank robbery, United States Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Following his prison sentence, Jimenez was ordered to serve 5 years on supervised release. Jimenez was one of three people indicted for their involvement in, or knowledge of, the August 2011 attempted armed robbery of the Palisades National Bank. Jimenez pled guilty before Judge Jackson on March 20, 2014. He was sentenced by Judge Jackson on July 25, 2014.
Co-defendant Bryan Morrow, of Palisade, Colorado, pled guilty before Judge Jackson on October 8, 2013. He was sentenced by Judge Jackson on June 18, 2014 to serve 120 months (10 years) in federal prison, followed by 5 years on supervised release. Finally, Nicole Kozic, age 25, of San Bernardino, California, who knew that Jimenez and Morrow were involved in the attempted bank robbery, pled guilty to a Class A misdemeanor, interfering with an extradition agent before U.S. District Court Judge Robert E. Blackburn also on March 20, 2014. Kozic lied to an FBI agent who was working on locating Jimenez to extradite him to Washington State to face earlier criminal charges there. She was sentenced by Judge Blackburn to serve 5 years’ probation.
According to the stipulated facts in Jimenez’s plea agreement, as well as other court documents, on Saturday morning, August 20, 2011, co-defendant Bryan Morrow drove defendant Jose Jimenez from Morrow’s home in Palisade, Colorado, to the Palisades National Bank, just a few blocks away. Morrow was driving a yellow Nissan XTerra. At approximately 8:20 a.m., Morrow dropped off Jimenez near the bank and positioned himself so he could watch the outside of the bank building. He and Jimenez had two-way radios to communicate with each other. At 8:25 a.m. the Manager of the Palisades National Bank entered the bank by the side door before it opened to the public. As per his usual routine, he checked the bank for security, and then let in the two waiting tellers through the front door. He then went back to the side entrance and opened the door, with the intent to go back to his car to retrieve items. The tellers were setting up their stations. When the bank manager opened the door, he saw work boots underneath the apricot trees by the back door. He was then confronted by Jimenez, who was carrying a gun in his right hand, wearing a black hoodie covered by a reflective work vest, a camouflage mask over half his face, jeans and work boots. He ordered the manager back into the bank. When one of the tellers realized a man with a gun was in the bank, she discretely pushed the silent alarm.
Jimenez ordered the bank manager to call the tellers to his location. He ordered the tellers to kneel, and place their hands on the wall. A third teller arrived and knocked on the door, and Jimenez ordered that she be let in. She joined the other two tellers kneeling at the wall. Jimenez went through her purse and pulled out her car keys. He asked that teller what kind of car she drove, and she responded that she drove a white mini-van.
Jimenez ultimately got the bank manager and a teller to open the bank’s vault. He ordered a teller to spread the money out on the counter to ensure it contained no dye packs. The tellers then put the money into a backpack Jimenez had found behind the counter in the bank and had emptied. The backpack belonged to a teller. Jimenez had a two-way radio, with which he spoke to Morrow. Morrow told Jimenez that someone was coming. Jimenez cocked the weapon and took the manager to the front door while the tellers continued with the money. A Palisade Police Officer arrived at the front door and knocked. Jimenez told the manager to meet the police officer. The bank door was opened, and the officer asked, “Is everything ok?” The manager discretely shook his head “no” and the officer saw Jimenez. Jimenez ordered the officer onto the floor and touched the muzzle of his gun to the officer’s head. Jimenez then obtained the officer’s weapon. The officer’s radio was on, and dispatch was requesting a status check. Jimenez told him to tell dispatch everything was fine, which he did.
When Jimenez went to check on the tellers’ progress, the officer leapt up and ran out of the bank. He immediately called for backup. Jimenez ran out of the bank after the officer. Because the bank was not yet open to the public, the door of the bank locked behind Jimenez and he could not get back into the bank after he broke off pursuit of the officer, who escaped unharmed. Jimenez, who could not access the substantial sum of money being prepared for him inside, entered the white mini-van and then met up with Morrow. Jimenez abandoned the mini-van and got into the front passenger seat of Morrow’s XTerra, and Morrow drove away from the bank.
This case was investigated by the FBI and the Palisade Police Department.
The defendants were prosecuted by Assistant U.S. Attorney Michelle Heldmyer.
Aurora Drug Dealer Pleads Guilty to Distributing CocaineRead the Press Release
DENVER – Robert Bellender, age 39, of Aurora, Colorado, pled guilty earlier this week before U.S. District Court Judge Christine M. Arguello to possession with intent to distribute cocaine and money laundering, federal authorities announced. Judge Arguello is scheduled to sentence Bellender on October 28, 2014. Bellender was originally charged by a criminal complaint on May 10, 2013, followed by a superseding indictment on June 18, 2013. Other defendants charged in the superseding indictment include Korian Bascombe (aka k-Mac), Victor Rivas-Pinzon, Andrew T. Sorensen and Bruce Thomas. Sorensen pled guilty and will be sentenced on August 21, 2014. Rivan-Pinzon and Thomas plead guilty and were sentenced to 42 and 38 months in prison, respectively. Bascombe is scheduled for trial on September 22, 2014.
According to information contained in court documents, including the stipulated facts contained in Bellender’s plea agreement, the investigation started in October of 2011 and continued through the date of Bellender’s arrest on May 28, 2013. Numerous cocaine purchases from Bellender were made by a DEA undercover agent. Through investigative techniques, agents noted that codefendants Thomas, Sorensen and numerous other individuals, both known and unknown, were ordering quantities of powder and crack cocaine from Bellender on numerous occasions.
Bellender’s initial supplier of cocaine stopped distributing to him. At that point, Bellender began to purchase distribution quantities of powder cocaine and crack cocaine from Bascombe who was in turn being supplied with powder cocaine by Rivas-Pinzon. Bellender was selling both forms of cocaine during this entire period. Bellender and Bascombe were converting or “cooking” powder cocaine to convert it into the crack form.
Based on the investigation of the Front Range Task Force, which includes DEA, IRS CI and Aurora PD, from October of 2011 through May of 2013, Bellender and his coconspirators purchased and distributed or sold a conservatively estimated 20 kilograms or more of cocaine and 5 kilograms or more of crack cocaine. Bellender was purchasing cocaine from Bascombe for $1,200 per ounce. Twenty kilograms is the equivalent of approximately 705 ounces.
Bellender pled guilty to ten counts of possession with the intent to distribute cocaine which carries a penalty of not more than 20 years in federal prison and a fine of up to $1,000,000 per count; and one count of money laundering, which carries a penalty of not more than 20 years in federal prison, and a fine of up to $500,000 per count.This case was investigated by agents with the Front Range Task Force which includes the Drug Enforcement Administration, IRS Criminal Investigation (IRS CI) and the Aurora Police Department. The case is being prosecuted by Assistant U.S. Attorney James R. Boma.
Two Delta Men Arrested on Gun Charges in Connection to Wildlife PoachingRead the Press Release
DENVER – Two Delta men were arrested this morning by federal agents and state and local law enforcement officers on gun charges, U.S. Attorney John Walsh and ATF Special Agent in Charge Luke Franey announced. Brandon C. Cook, age 30, and Jonathan M. Boyd, age 29, both of Delta, were arrested without incident. They were then taken to the U.S. District Courthouse in Grand Junction where they made their initial appearance before U.S. Magistrate Judge Gordon P. Gallagher. During the court appearance both defendants were advised of their rights as well as the charges pending against them. Both Cook and Boyd were then released on bond. They are due back in U.S. District Court in Grand Junction on Monday, August 4, 2014 at 4:00 p.m.
According to the indictment, obtained by a federal grand jury in Grand Junction on May 27, 2014, Boyd knowingly provided a Weatherby model Mark V, .270 caliber rifle to Cook, knowing and having reasonable cause to know that Cook had been convicted of a felony crime punishable by a term of imprisonment of a year or more. The indictment further alleges that Cook possessed the rifle in violation of federal law as he had a prior felony conviction.
Cook allegedly used the rifle purchased in this case for him by Boyd for poaching. Cook has been charged and has pled guilty in state court to the felony charge of willful destruction of wildlife on a trophy class bull elk.
“Felons who are prohibited from owning firearms sometimes put others up to purchasing guns illegally for them,” said U.S. Attorney John Walsh. “Make no mistake, serving as a gun buyer for a felon is a felony as well. The hard work of ATF and Colorado Parks and Wildlife, with the assistance of the community, has stopped this crime in its tracks, and, we expect, prevented future poaching as well.”
“We cannot underscore the tremendous assistance of the public in calling our attention to the sheer quantity of wildlife and firearms violations in the Delta, Montrose and Olathe communities,” said Renzo DelPiccolo, Montrose Area Wildlife Manager. “We greatly appreciate the ATF, U.S. Marshals and U.S. Attorney’s Office in pursing the federal firearms violations associated with this case.”
Cook faces not more than 10 years in federal prison, and up to a $250,000 fine for being a felon in possession of a firearm. Boyd faces not more than 10 years in federal prison, and up to a $250,000 fine for unlawfully transferring a firearm to a known convicted felon.
This case was investigated by the State of Colorado Department of Natural Resources Parks and Wildlife Office and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Cook was apprehended by the U.S. Marshals Service Fugitive Task Force, with assistance from the FBI and U.S. Forest Service.
The defendants are being prosecuted by Assistant U.S. Attorney Michelle Heldmyer of the U.S. Attorney’s Grand Junction branch office.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
Grand Junction Real Estate Developers Plead Guilty to Money LaunderingRead the Press Release
DENVER – Franklin Thad Harris, age 58, and Merlin D. Unruh, age 53, both of Grand Junction, Colorado, pled guilty yesterday before U.S. District Court Judge Christine M. Arguello to money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation and IRS Criminal Investigation announced. Judge Arguello is scheduled to sentence Harris and Unruh on November 10, 2014. Harris and Unruh were indicted by a federal grand jury in Denver on January 8, 2013, for charges of bank fraud and money laundering. The indictment remained under seal until their arrest on January 11, 2013. A superseding information was filed on April 14, 2014.
According to information contained in court documents, including the stipulated facts contained in their plea agreements, Harris was in the business of constructing housing developments throughout the Grand Junction, Colorado, area. In the mid to late 2000s, Harris was involved in the purchase of several acres of land for various planned housing developments in Grand Junction. Financing for the projects came in the form of secured loans from First National Bank of the Rockies (FNBR). Harris’s partner, Unruh, was in the construction business and was the general contractor on building projects with Harris. TDSM was a Colorado real estate development company incorporated in February 2003 and Harris and Unruh were sole members of the board of directors of TDSM. HARRIS was the President and Registered Agent of TDSM. Unruh was Secretary/Treasurer of TDSM. Unruh incorporated and was the registered agent for McGleeson, Inc., a construction company.
In 2010, several construction loans to Harris had become problem loans as they were in default with FNBR. The Special Assets Department of FNBR began to review the loans and identified potential fraud and requested an outside forensic audit which eventually lead to federal law enforcement agencies being notified. Between October 2007 and December 2008, Harris and Unruh obtained loan disbursements totaling $3,718,351.83. They submitting false and fraudulent expense documentation, primarily false invoices, which represented various types of construction work completed at both sites. In fact, much of the work reflected in the invoices had not been performed at the Chatfield site, and no work was done on the Thunder Valley development.
An IRS Special Agent conducted an analysis of the flow of funds and found Harris and Unruh, on numerous occasions, conducted a series of financial transactions after the draw money was deposited into their construction business account. They diverted funds meant to pay subcontractor invoices to private bank accounts and retirement accounts owned/controlled by them and their spouses.
Harris and Unruh each pled guilty to one count of money laundering which carries a penalty of not more than 10 years in federal prison, and a fine of up to $250,000 per count.
This case was investigated by agents with Federal Bureau of Investigation (FBI) and IRS Criminal Investigation (IRS CI). The case is being prosecuted by Assistant U.S. Attorney Michelle Heldmyer.
Aurora Return Preparer Sentenced to Prison for Preparing False Tax ReturnsRead the Press Release
DENVER – Elizabeth A. Eurioste, age 64, of Aurora, Colorado was sentenced earlier this week by U.S. District Court Judge R. Brooke Jackson to serve 6 months in federal prison for aiding or assisting in the preparation of a false individual federal income tax return, U.S. Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announce. Following her prison sentence, Eurioste, was ordered to spend 1 year on supervised release.
Eurioste was indicted by a federal grand jury in Denver on April 9, 2013. She pled guilty on February 14, 2014 to one count of aiding or assisting in the preparation of a false individual federal income tax return. She was sentenced on July 15, 2014.
Eurioste has been preparing individual and business income tax returns since 1971. For purposes of her plea agreement, the period of relevant conduct covered is tax years 2004 through 2007, and she worked out of her own business, Eurioste Accounting, Inc. She entered false deductions, expenses, business losses, and underreported income and gains on her clients’ tax returns to reduce the amount of tax due and owing.
Eurioste repeatedly created the false entries on income tax returns for the years covered by the indictment and she had approximately 1200 clients. The total amount of tax loss resulting from Eurioste’s actions for tax years 2004 through 2007 was at least $400,000.
Particularly, on March 30, 2007, Eurioste prepared the individual income tax return for tax year 2006 for a married couple. She included false and unsupported deductions on their Form 1040 including a $3,000 capital loss, $93,950 loss from the sale of a business property, and $27,351 in itemized deductions. These were false entries that material affected the calculation of the tax due and owing. Eusrioste knew that entries on the income tax return she prepared were false and in violation of the internal revenue laws.
This case was investigated by Internal Revenue Service – Criminal Investigation with assistance from the Special Enforcement Program of the Internal Revenue Service. This case was prosecuted by Assistant United States Attorneys Anna Edgar and Suneeta Hazra.
Denver Man Arrested for Pointing Laser at Denver Police Department HelicopterRead the Press Release
DENVER – Nathan James Finneman, age 26, of Denver, Colorado, will appear today before a U.S. Magistrate Judge to be advised that he faces charges of aiming a laser pointer at an aircraft, United States Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Finneman is scheduled to appear before U.S. Magistrate Judge Boyd N. Boland at 1:30 p.m. this afternoon in U.S. District Court in Denver for his initial appearance.
According to an indictment returned by a federal grand jury on July 2, 2014, twice on April 19, 2013 and once on April 20, 2013, Finneman allegedly aimed the beam of a laser pointer at an aircraft, namely a Bell helicopter operated by the Denver Police Department. The police helicopter, known as “Air One”, was able to use equipment on board to identify the source of the laser pointer.
“Pointing a laser at the pilot of a helicopter or airplane not only puts the pilot and passengers of the aircraft at risk, it exposes the public on the ground to the danger of an emergency landing or even a crash,” said U.S. Attorney John Walsh. “What might seem like a harmless prank is far from it – laser blinding of pilots is a serious and dangerous crime that we will prosecute.”
“This case demonstrates the FBI's commitment to ensuring the safety of the nation's aviation transportation system and those on the ground," said FBI Denver Special Agent in Charge Thomas Ravenelle. “With assistance from our law enforcement partners, the FBI will continue to aggressively investigate incidents involving laser attacks on aircraft.”
“Aiming a laser pointer at a helicopter or aircraft is not game – it is a crime,” said Denver Police Chief Robert White. “We are thankful that Air One has the technology to identify persons committing this type crime, as it did in this case.”
If convicted, Finneman faces not more than 5 years imprisonment, and up to a $250,000 fine, per count for each of his three counts.
This case was investigated by Federal Bureau of Investigation (FBI).
Finneman is being prosecuted by Assistant U.S. Attorney James Allison, Chief of the U.S. Attorney’s Office Criminal Division.
The charges contained in the indictment are allegations, and the defendant is presumed innocent until proven guilty.
For more information regarding the dangers associated with pointing lasers at aircraft please visit http://www.fbi.gov/news/stories/2014/february/protecting-aircraft-from-lasers .
Co-conspirators Who Ran Store in Johnstown Arrested for Tax Evasion and Conspiracy to Defraud the IRSRead the Press Release
DENVER –Alan Timothy Hershey, age 49, of Gilcrest, Colorado, and Renee F. Molinar, age 46, of Johnstown, Colorado, were arrested yesterday without incident for tax evasion and conspiracy to defraud the Internal Revenue Service, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Hershey and Molinar appeared in court for their initial appearance before U.S. Magistrate Judge Boyd N. Boland yesterday afternoon, where they were advised of their rights and the charges pending against them. They were indicted by a federal grand jury in Denver on July 3, 2014. The indictment remained sealed pending their arrests.
According to the facts contained in the Indictment, from March 2001 through April 2012, Alan Timothy Hershey and Renee Molinar, conspired together to defraud the Internal Revenue Service. Johnstown Liquor is a retail liquor store located in Johnstown, Colorado. In March of 2001 Hershey transferred the store into Molinar’s name. They concealed from the IRS the fact that Molinar, who for much of the period of the conspiracy lived with Hershey, was the owner of Johnstown Liquor in name only, and that Hershey continued to control the operation of the business as its true owner.Hershey directed Molinar and others as to how to operate the business, usually by speaking to them at his home or by speaking to them by phone during business hours. Hershey dealt as much as possible in cash, and minimized his own use of bank accounts. Molinar opened bank accounts in the name of Johnstown Liquor over which she and individuals other than Hershey had signature authority. She also obtained a liquor license to operate Johnstown Liquor in her name.
They used a point of sale record-keeping system which was connected to the store’s cash registers and accurately recorded the business’s cash, check, and credit card receipts. It also maintained an accurate record of the items sold, the cost of each item sold, and the price for which it was sold. An unindicted co-conspirator, typically reconciled the sales receipts to the daily point of sale close-out reports, then placed the cash and checks in a safe in the store each night. At Hershey’s direction, Molinar then removed most of the cash receipts before preparing the deposit slips and causing the bank deposits to be made. She gave that cash to Hershey. To conceal the existence of the cash receipts that had been removed, they used a second set of books.
They also used the check-cashing business operated by Johnstown Liquor to conceal the true amount of the business’s cash receipts. Hershey filed no federal income tax returns for the entire period of the conspiracy and made no payments of income taxes to the IRS. Molinar sent payments to the IRS for each tax year from 2001 through 2010, but filed no returns with those payments to explain the amounts she sent. The amounts she paid were roughly consistent with what she may have earned as an employee at Johnstown Liquor, but not consistent with her income as sole proprietor of the business. In 2008, after she had been confronted by an IRS revenue agent about her failure to file federal income tax returns, she filed returns for 2005 and 2006. On these, she held herself out as the true owner of Johnstown Liquor and substantially understated the gross receipts of the business.
Johnstown Liquor was also required to withhold employment taxes from each employee’s wages and submit those withholdings, along with an Employer’s Quarterly Federal Tax Return (Form 941), to the IRS along with an annual Employer’s Annual Federal Unemployment Tax Return (Form 940). Molinar paid certain employees in cash at the direction of Hershey. No taxes were withheld from the wages paid in cash. To ensure the IRS would not discover employees paid in cash, Hershey instructed the employees who were paid in cash not to file tax returns.
To conceal Hershey’s control of Johnstown Liquor, its cash receipts, his income, and his assets from the IRS, he arranged for residential properties and businesses to be purchased in the names of nominees.
Renee Molinar was charged with one count of conspiracy to defraud the United States, which carries a penalty of not more than 5 years in federal prison and a fine of up to $250,000.
Alan Timothy Hershey was charged with one count of conspiracy to defraud the United States, which carries a penalty of not more than 5 years in federal prison and a fine of up to $250,000, and 10 counts of tax evasion, which carries a penalty of not more than 5 years in federal prison, and a fine of up to $100,000 per count.
This case was investigated by IRS-Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Linda Kaufman.
The charges contained in the indictment are allegations, and the defendants are presumed innocent until proven guilty
U.S. Attorney John Walsh's Remarks at Citigroup Settlement Regarding Securities Containing Toxic MortgagesRead the Press Release
Click here for link to Department of Justice press release and settlement documents
Press Conference on Citi Settlement
July 14, 2014, 10:00 a.m.Remarks by John Walsh
United States Attorney for the District of ColoradoThank you, Tony. I am John Walsh, U.S. Attorney for the District of Colorado. I also serve as one of the national co-chairs of the Department’s RMBS Working Group.
The settlement announced today holds Citigroup responsible for its actions. It holds Citigroup responsible for using false representations to sell billions of dollars of residential mortgage-backed securities full of toxic mortgage loans.Citigroup’s conduct had far-reaching and financially devastating consequences for investors, including investors in Colorado, the housing market and ultimately, the global economy. Investors suffered billions of dollars in losses on the value of these RMBS securities.
Citi knew that when it sold these securities to investors, its representations about the mortgage loans were crucial. The mortgage loans had to have the quality and characteristics that Citi represented the loans to have. If not, then Citi was responsible. This settlement holds Citi to its word: The mortgage loans Citi packaged and sold to investors were not what Citi said they were. They were far worse, and Citi knew it. And now, Citi is being held responsible.
As U.S. Attorney Lynch will describe for you, the resolution announced today reflects the extraordinary hard work of prosecutors and staff in the U.S. Attorney’s Offices both in Brooklyn and in Colorado. Our investigation focused on whether Citi told the truth when it securitized and sold billions of dollars mortgage loans. Some details of what the investigation showed are set forth in a statement of facts that Citi has itself acknowledged. Let me briefly summarize those facts, as even Citi has acknowledged them.
In the years leading up to the global financial crisis of 2008, Citi securitized numerous pools of mortgage loans from loan originators such as Ameriquest, Accredited, and New Century. Each loan pool could contain hundreds or thousands of mortgage loans, worth billions of dollars. Citi packaged those loan pools into securities and sold them as safe investments.
When Citi sold those securities, it provided representations to investors about the underlying mortgage loans. Citi knew those representations were important. Investors, after all, did not have direct access to the loan files in order to make their own assessment of the loans.
But Citi did. It could review the loan files. And before securitizing the loan pools, Citi did conduct a review -- due diligence -- of some loans in the loan pools. Citi hired outside underwriting firms to review a limited sample of loan files from the pool.
Those firms checked some basic facts on the sample of loans. The firms looked at whether the loan originator – the lender -- had followed its “underwriting guidelines,” which were criteria used to check if a borrower could pay the mortgage. The firms checked whether the lender had followed federal, state, and local laws, laws that were designed to protect borrowers. And the firms reviewed house values and appraisals.
Those firms gave each loan a grade. Some loans were graded as passing. Other loans were graded as rejects.
The “reject” loans had material defects. For example, a loan might be a reject if the borrower did not the ability to pay the mortgage, or if the lender violated the law when issuing the loan, or if the home appeared to be worth far less than what was being reported, or if the borrower was underwater on the mortgage. Under its own procedures and from its representations made to investors, Citigroup knew these “reject” loans should be excluded from the securitization.
But as our investigation learned, Citi employees often personally ordered the due diligence firms to change the loan grades, from reject to acceptable. Citi frequently ordered these grade changes without giving a reason.
And even after Citi ordered these changes in the grades, the outside firms often still reported to Citi that significant percentages of the sampled loans were rejects. In certain instances, these “reject rates” indicated that a significant and likely comparable percentage of the unsampled loans in the pools were also “rejects.” In other words, a small sample of the loan pools showed high reject rates, but Citi did not attempt to find those same sort of reject loans that Citi knew would be included in the rest of the loan pool, which Citi had not reviewed.
Those significant reject rates told Citi that the representations Citigroup was providing about the loans were not true. But despite seeing these significant problems in the samples, Citi went ahead and securitized the remainder of the loan pools, and sold the resulting securities, while providing false representations about the loans.
The statement of facts, which Citi has acknowledged today, provides a few brief examples. Let me describe two examples.
First, in 2007, Citi bought thousands of loans from a loan originator. The due diligence firm told Citi that large numbers of the sampled loans had material defects. In fact, the words of a Citi trader say it all: “[I] went thru the Diligence Reports and think that we should start praying… I would not be surprised if half of these loans went down. There are a lot of loans that have unreasonable incomes, values below the original appraisals (CLTV would be >100), etc. It’s amazing that some of these loans were closed at all.” Despite this, Citi employees then changed hundreds of loan grades from reject to acceptable. And then Citi securitized the loans into two deals in 2007.
Second, the statement of facts also describes another series of four deals in 2007 in which Citi bought and securitized thousands of loans from a loan originator. In early 2007, Citi explored purchasing that originator’s assets as a way to be sure that Citi’s pipeline of mortgage loans to securitize did not run dry as the residential real estate market turned down. Citi conducted due diligence on the originator, and on the pools of loans that the originator sold to Citi. Through its own due diligence, Citi learned that there were substantial percentages of the originator’s loans that failed to adhere to the lender’s underwriting guidelines. Through its own due diligence, Citi learned that the originator lacked key internal quality control measures. The problems were spelled out for Citi in the originator’s own internal audit reports. Citi’s response to the serious issues raised about the underwriting violations and reject rates was to ignore the defects, and to purchase and securitize the loans in four securitizations in 2007.
To its credit, in this settlement, Citi has agreed to take responsibility for its conduct, in several ways, by paying a large penalty, by providing valuable consumer relief, and by acknowledging a statement of facts that describes its conduct. Taking responsibility for the conduct is an important step to restoring faith in the financial markets. The strength of our markets depends on the truth of the representations that banks provide to investors and the public every day. However, the work of the RMBS working group continues, because many other banks that have not yet accepted responsibility for their actions in selling RMBS securities full of toxic mortgages.The strength of our financial markets depends on the truth of the representations that banks provide to investors and the public every day. Today's $7 billion settlement is a major step toward restoring public confidence in those markets. Due to the tireless work by the Department of Justice, Citigroup is being forced to take responsibility for its home mortgage securitization misconduct in the years leading up to the Financial Crisis. As important a step as this settlement is, however, the work of the RMBS working group is far from done, we will continue to pursue our investigations and cases vigorously because many other banks have not yet taken responsibility for their misconduct in packaging and selling RMBS securities.
I want to thank the Attorney General for his strong support of the RMBS Working Group, as well as Associate Attorney General Tony West, U.S. Attorney Lynch and the entire team from the Eastern District of New York, and FHFA-OIG for their hard work in this case. I also particularly want to recognize Colorado Assistant U.S. Attorneys Kevin Traskos, J. Chris Larson and Lila Bateman, as well as the many other hardworking members of the team, for their outstanding work on this matter.Colorado Springs Man Sentenced to 92 Months in Federal Prison for Being A Felon in Possession of A Firearm and for Violating the Terms of His Supervised ReleaseRead the Press Release
DENVER – Jeffrey Scott Taylor, age 42, of Colorado Springs, was sentenced last week by Senior U.S. District Court Judge John L. Kane to serve 92 months in federal prison for being a felon in possession of a firearm and for violating that terms of his supervised release for an earlier felon in possession of a firearm conviction. The sentencing was announced by U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Denver Special Agent in Charge Luke Franey. Taylor, who appeared at the sentencing hearing in custody, was remanded.
Taylor was indicted by a federal grand jury in Denver on September 25, 2013. He pled guilty to being a felon in possession of a firearm on December 23, 2014. He was sentenced by Senior Judge Kane on July 8, 2014.
According to the stipulated facts contained in the plea agreement and other court documents, on July 18, 2013, Colorado Springs Police were dispatched to a local residence to investigate a reported domestic disturbance. Officers spoke with the reporting party who told the officers that Jeffrey Scott Taylor had started an argument with other members of his family. Taylor apparently then left the home and walked away. While officers were speaking with the reporting party, Taylor was spotted walking towards the residence. The caller pointed out Taylor and identified him to the officers, who saw that Taylor had his hand in his pocket. An officer asked Taylor to remove his hand from his pocket. Taylor ignored the officers. The officers asked Taylor to come over and speak to them. Taylor walked over to the side of the house, bent down and placed an item on the ground. The officers subsequently detained Taylor and walked over to the place where Taylor had bent down. Officers found a .380 caliber pistol lying on the ground. The firearm was loaded with six rounds of .380 caliber ammunition.
Taylor is a prohibited person and convicted felon. Taylor had been convicted of the following felony offenses prior to his possession of the firearm:
- 12/13/1991; El Paso County District Court; Assault in the Second Degree;
- 12/13/1991; El Paso County District Court; Robbery;
- 05/12/1997; El Paso County District Court; Attempted Escape; and
- 06/01/2003; United States District Court, District of Colorado, Case No. 03-cr-288-JLK; Felon in Possession of a Firearm.Taylor was on supervised release for the 2003 felon in possession of a firearm offense at the time he was charged with this crime.
This case was investigated by the Colorado Springs Police Department and the ATF.
The defendant was prosecuted by Assistant U.S. Attorney Richard Hosley.
Western Slope Man Sentenced to 46 Months in Federal Prison for Defrauding the IRS and for Possession of A Firearm by A FelonRead the Press Release
DENVER –Michael L. Roy, age 50, of Clifton, Colorado, was sentenced yesterday by U.S. District Court Judge Raymond P. Moore to serve 46 months in federal prison for conspiracy to defraud the United States and being a felon in possession of a firearm, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Roy was ordered to spend 3 years on supervised release following the service of his term of imprisonment. Judge Moore also ordered him to pay $65,263 in restitution to the IRS.
Roy had waived his right to be indicted by a federal grand jury and was charged by an Information on January 28, 2014. He pled guilty on March 17, 2014.
According to the facts contained in the Information as well as the stipulated facts contained in the plea agreement, in July 2013, the United States Postal Service intercepted eleven envelopes containing U.S. Treasury checks (IRS refund checks) and addressed to the home address of Michael and Kandiann Roy in Clifton, CO. Each of the envelopes were addressed to a different individual, and each check had a processing date of July 2013. Postal employees had also noticed Roy received letters from individuals within the Arizona State prison system. The mail carrier found a typed list with eleven names taped inside Roy’s mail box. The list appeared to serve as notification that the owner of the box would be receiving mail for these individuals.
IRS records showed that the list included eleven names for individuals who purported to file IRS Forms 1040EZ , U.S. Individual Income Tax Return, using Roy’s address. A total of 30 IRS Form 1040EZ returns, submitted for the 2012 tax year, were filed using either Roy’s current or former home address. All of the returns requested tax refunds. Twenty-six of the returns each list an identical income of $37,429, withholdings of $12,976 and refund amounts of $9,260 and were filed by mail; the refunds of eight of those returns were deposited into Roy’s bank account. The loss to the government to date is calculated at $65,263. Had all of the tax refunds requested by Roy been paid by the IRS, the loss would have amounted to $265,915.
Twenty of the returns filed using one of the Roy's addresses purported to be from taxpayers who are incarcerated prisoners. Eighteen of these prisoners are incarcerated in the Arizona State prison, located in Eyman, Arizona. Roy, previously known as Michael Demes, was convicted in Arizona of the felonies of robbery and aggravated assault and incarcerated under that name in the Arizona prison system beginning in 1999. He was sentenced to a seven-year prison term.
On September 19, 2013, Special Agents with IRS Criminal Investigation executed a search warrant on Roy’s home in Clifton, Colorado. During the search warrant, IRS Special Agents found documentary evidence that Roy had filed the bogus tax returns. They also found Moneygram receipts and letters to and from an inmate in the Arizona State prison, which included details of the conspiracy to file false income tax returns using the identity of other inmates. In addition, agents found a firearm, a Hi-Point .380 caliber handgun.
This case was investigated by IRS-Criminal Investigation, and the United States Postal Inspection Service. The case was prosecuted by Assistant U.S. Attorney Michelle M. Heldmyer.
St. Louis Man Arrested After Traveling to Denver to Have Sex with Mother and Two Minor DaughtersRead the Press Release
The mother was actually an Homeland Security Investigations undercover agent
DENVER – Darwin Gilbert Gowen, age 61, of St. Louis, Missouri, was arrested by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) agents at Denver International Airport (DIA) after he traveled with intent to have sex with two minor children, U.S. Attorney John Walsh and HSI Special Agent in Charge Kumar Kibble announced. Gowen has previously made his initial appearance, where he was advised of his rights and the charges pending against him. He is due back in court on Wednesday, July 2, 2014 at 10:00 a.m. before U.S. Magistrate Judge Kristen L. Mix for a detention hearing. The Criminal Complaint was filed on June 20, 2014. Gowen was arrested by HSI agents at DIA on that same day.
The affidavit in support of the Criminal Complaint was written by an HSI special agent based in Greeley, Colorado, who was working in an undercover capacity. In her undercover role as a 37-year-old single mother of two minor daughters, ages 15 and 11, she communicated with an individual who expressed an interest in having sex with the mother and both daughters.
During the conversations, which took place primarily via email and text, the defendant stated that he was “a 60 year old male, widowed . . . wanting to experience the wild side of life.” He also said he “adored chubby girls” . . . and was “looking for naughty daughters . . . who love to hook up with a kinky mom for mom daughter fun.” Further investigation revealed that the individual was Darwin Gilbert Gowen of St. Louis, Missouri.
Gowen told the undercover agent that he was going to fly to Denver to see her and have sex with her and her daughters. HSI agents confirmed that the defendant had arranged to fly to Denver on June 19th. He was observed by HSI agents leaving the St. Louis Airport. He was then seen at DIA. Gowen met a female HSI agent at the DIA baggage check. After the two discussed that he flew to Denver for the express purpose of having sex with the two minor children, he was arrested.
“Individuals who travel to have sex with minors are dangerous, as there is always the chance that they communicate with a vulnerable woman with children as opposed to an undercover agent,” said U.S. Attorney John Walsh. “Thanks to the work of HSI, another person who was planning to sexually exploit innocent children now faces criminal charges.”
“Crimes against children are some of the most loathsome our agency investigates," said Special Agent in Charge Kumar Kibble, of HSI Denver. "These criminal charges serve as warning to other child predators. We will find you, arrest you and make sure that you are prosecuted to the fullest extent of the law."
If convicted of travel with intent to engage in illicit sexual conduct, the defendant faces not more than 30 years in federal prison, and up to a $250,000 fine. If convicted of attempted coercion and enticement, the defendant faces not less than 10 years, and up to life in federal prison, and up to a $250,000 fine, per count for each of the two counts charged.
This case was investigate by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI). The Denver Police Department assisted with the arrest at DIA.
Gowen is being prosecuted by Assistant U.S. Attorney Alecia Riewerts Wolak, the coordinator of the Project Safe Childhood initiative for the District of Colorado.
A criminal complaint is a probable cause charging document. Anyone accused of committing a federal felony crime has a Constitutional right to be indicted by a grand jury.
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 United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (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.projectsafechildhood.gov.
Denver Man Found Guilty of Gun and Drug Crimes Following Jury TrialRead the Press Release
Defendant faces a mandatory minimum of 5 years to life consecutive to any other sentence for possessing a firearm during a drug trafficking crime
DENVER – Dontae Daniel Hines, age 30, of Denver, Colorado, was found guilty earlier this week of gun and drug charges following a 3-day jury trial before U.S. District Court Judge William J. Martinez. The jury deliberated for 4 hours before reaching their verdicts. Hines is scheduled to be sentenced by Judge Martinez on October 8, 2014 at 11:00 a.m. Hines was indicted by a federal grand jury on May 8, 2013. The indictment charged Hines with being a felon in possession of a handgun, possession of crack cocaine with intent to distribute, and possession of a firearm in furtherance of a drug trafficking crime. Hines trial began on June 23, 2014.
According to the facts presented at trial, Hines was selling crack cocaine from inside an apartment building in Denver. During an undercover operation, Hines agreed to sell an undercover officer $40 worth of crack. After the transaction was complete, the undercover officers gave a signal to have an arrest team enter the apartment building. Before the arrest team could arrive, Hines told the undercover officer to smoke the crack in front of him so that he can prove he was not a police officer. Hines, seeing the officers enter the property, fled to the second level of the apartment building. Following a 25 second foot chase, Hines gave up and was taken into custody. During that chase he placed a black firearm onto a blue storage container sitting outside of a second level apartment. Officers very soon after the chase recovered the weapon. Hines having previous felony convictions was prohibited from possessing the firearm. Further, he was using the weapon, which had been reported stolen in the weeks leading up to the incident, in furtherance of drug trafficking – namely the sale of crack.
Hines faces not more than 10 years in federal prison, and up to a $250,000 fine for the one count of being a felon in possession of a firearm. He faces not more than 20 years in federal prison, and up to a $1,000,000 fine for one count of possession of cocaine base (crack) with intent to distribute. Finally, Hines faces not less than 5 years, and up to life imprisonment, consecutive to any other sentence imposed, for one count of possession of a firearm in furtherance of a drug trafficking crime.
This case was investigate by the Denver Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).
Hines is being prosecuted by Assistant U.S. Attorney Jeremy Sibert and Special Assistant U.S. Attorney Geoffrey Rieman.
Illegal Backcountry Outfitter Sentenced for Operating Without A Special Use Permit on National Forest System LandsRead the Press Release
DENVER – Chris Burandt of Kremmling, Colorado, was fined $1,000, assessed $5,000 in restitution and sentenced to 10 hours of community service as well as two years’ probation for operating an illegal snowmobile outfitting guide service since 2007 on multiple national forests in Colorado. Burandt plead guilty yesterday to selling or offering for sale any merchandise or conducting any kind of work activity or service unless authorized by Federal law, regulation, or special use authorization.
In January 2010, Burandt was issued a violation notice by the U.S. Forest Service for guiding a snowmobile trip. In February 2011 while guiding another snowmobile trip with paying clients, Burandt was contacted by U.S. Forest Service law enforcement officers. Subsequently, Burandt was charged by the U.S. Forest Service through the U.S. Attorney’s Office for conducting any kind of work activity or service unless authorized by Federal law, regulation, or special use authorization.
“The U.S. Forest Service works hard to protect our natural resources so that everyone is able to enjoy them,” said U.S. Attorney John Walsh. “When someone makes a living using Forest Service land without the proper permit that person should know there are criminal consequences for that conduct.”
“Outfitter and guiding without a special use permit is a serious offense. Clients assume when they pay for a guiding service that outfitters are carrying insurance and operating legally. The U.S. Forest Service requires outfitters and guides to operate under a special permit so that the safety of visitors and the protection of national forest resources is ensured,” said Laura Mark, Special Agent in Charge for the Rocky Mountain Region of the U.S. Forest Service.
The U.S. Forest Service requires special use permits to conduct work, or commercial activities on national forest system lands. Outfitting and guiding operations such as snowmobile outfitting on national forest system lands is a competitive and profitable so the U.S. Forest Service strictly regulates operations to provide safe conditions for the public and to conserve natural resources. Permitted outfitters are authorized to conduct business in specific areas on national forests, operate with an approved business plan, and show proof of liability insurance.
This matter was investigated by the U.S. Forest Service Rocky Mountain Region and prosecuted Assistant U.S. Attorney Michelle Heldmyer.
Mesa County Man Connected to Raided Massage Parlor Arrested for False Use of A Social Security NumberRead the Press Release
Four massage parlors were raided yesterday as part of an ongoing investigation
DENVER – A Mesa County man, Wei Li, age unknown, a resident of Clifton, was arrested without incident at the Balanced Healing Massage and Spa for false use of a Social Security Number, the U.S. Attorney’s Office, FBI, Grand Junction Police Department and the Mesa County Sheriff’s Office announced. The defendant appeared this afternoon before a U.S. Magistrate Judge in Grand Junction where he was advised of his rights, and the charges pending against him. Li is due back in court tomorrow at 2:30 p.m.
According to the affidavit in support of the Criminal Complaint, on November 15, 2013, Bank of the West provided information regarding banking activity in accounts held by Balanced Healing, which included defendant Wei Li as a co-signer. According to the investigation, when the Balanced Healing account was opened at the bank by Li and another person, Li presented a signature card, including information that Li stated he resided in Clifton, Colorado. Li also presented a Washington driver’s license and provided a Social Security Number. Li represented himself to be an unemployed truck driver and a non-resident alien.
Further investigation determined that Balanced Healing was in the client massage business and advertised erotic full body massages. Starting in November 2012 through March 13, 2014, large amounts of cash was deposited in the Balanced Healing’s bank accounts and was used for the defendant and another person’s personal expenses.
During the course of the investigation into possible human trafficking, it was determined from the Social Security Administration (SSA) Office of Inspector General that Li’s Social Security Number/ITIN is not a valid number and has never been issued. Further, the Internal Revenue Service – Criminal Investigation determined the ITIN number was also not valid.
Yesterday Li was present at Balanced Healing Massage and Day Spa in Grand Junction during the execution of a federal search warrant. Li provided a Social Security Card dated 02/19/2014 with a different number, with “Valid for work only with DHS Authorization” written upon it.
If convicted of false use of a Social Security Number, the defendant faces not more than 5 years imprisonment, and up to a $250,000 fine.
This case is being investigated by the FBI, Grand Junction Police Department, the Mesa County Sheriff’s Office, the Internal Revenue Service – Criminal Investigation, and U.S. Immigration and Customs Enforcement (ICE) Enforcement and Removal Operations (ERO).
The defendant is being prosecuted by Assistant U.S. Attorney Michelle Heldmyer.A criminal complaint is a probable cause charging document. Anyone accused of committing a federal felony crime has a Constitutional right to be indicted by a grand jury.
The charges contained in the Criminal Complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.
Denver Man Ordered Held Without Bond After Being Arrested for Receipt and Possession of Child PornographyRead the Press Release
U.S. Postal Inspectors and U.S. Attorney’s Office release photo of defendant and ask for the public’s help to see if the defendant had inappropriate sexual contact with minors
DENVER – A Denver man facing child pornography charges was ordered held without bond yesterday by U.S. Magistrate Judge Michael J. Watanabe after the court found the defendant, John Lee Mudgett, was a danger to the community. Mudgett, age 67 of Denver, faces charges of receiving and possessing child pornography, United States Attorney John Walsh and Denver Division U.S. Postal Inspector in Charge Adam P. Behnen announced. He was arrested without incident on June 4, 2014.
According to the affidavit in support of the Criminal Complaint, during an undercover investigation, it was determined that Mudgett had made 34 orders of child pornography via the internet, purchasing 70 items costing him a total of $2,047.92. These orders were made between July 9, 2007 and April 1, 2011. On June 4, 2014, Postal Inspectors and other law enforcement agents executed a search warrant at the residence of John Lee Mudgett. The majority of the items he ordered from the website and that were delivered via U.S. Mail were recovered from his residence. Inspectors also found a large cache of child pornography and child erotica during the search. The child pornography and child erotica were located in both electronic and hard copy formats.
The residence consisted of two bedrooms, one of which was utilized as a home office. Both the bedroom and home office contained framed photographs of nude, prepubescent males and females hanging on the walls. In addition to the framed photographs, there were printouts of child pornography and child erotica in plain view in the residence. Some of the photographs contained visual depictions of minors engaging in sexually explicit conduct. Numerous pairs of boy’s underwear were also located in Mudgett’s home as was a collection of newspaper articles that were about rape and/or the murder of children.
Postal Inspectors and prosecutors are asking for the public’s help to determine if Mudgett had inappropriate sexual contact with minor children. Please refer to attached photo of John Mudgett. If anyone has information about potential criminal activity regarding Mudgett and minors they are asked to call the U.S. Postal Inspection Service at 303-313-5345.
“The defendant faces serious charges related to the receipt and possession of child pornography,” said U.S. Attorney John Walsh. “There is some concern that Mudgett may have had inappropriate sexual contact with minors. I want to encourage anyone who may have knowledge of this type of conduct to come forward and notify the U.S. Postal Inspection Service.”
“The demand for child pornography facilitates sex crimes against children. Protecting children from these egregious crimes is a high priority for the U.S. Postal Inspection Service,” said Adam P. Behnen, Inspector in Charge of the U.S. Postal Inspection Service in Denver. “We continue to aggressively investigate, apprehend and assist in the prosecution of individuals who seek to exploit children via the U.S. Mail.”
If convicted of the one count of receipt of child pornography, Mudgett faces not less than 5 years, and up to 20 years imprisonment, and up to a $250,000 fine. If convicted of the one count of possession of child pornography, the defendant faces not more than 10 years imprisonment, and up to a $250,000 fine.
This case is being investigated by the U.S. Postal Inspection Service.
The defendant is being prosecuted by Assistant U.S. Attorneys Judith Smith and Colleen Covell.
A criminal complaint is a probable cause charging document. Anyone accused of committing a federal felony crime has a Constitutional right to be indicted by a grand jury.
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 United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (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.projectsafechildhood.gov.
Two Metro Denver Drug Trafficking Organizations Dismantled by Metro Gang Task ForceRead the Press Release
Well over 300 special agents and officers arrested 28 defendants for drug trafficking and related crimes during early morning raids
DENVER – Following a two year criminal drug investigation, 54 defendants were named in four separate indictments charging various violations of the Controlled Substances Act, the United States Attorney’s Office and the Metro Gang Task Force announced. Of the 54 defendants indicted, 28 were arrested during raids early this morning. There are 12 defendants who have not been apprehended, and are actively being sought by law enforcement. Finally, there are 14 defendants who were already in custody prior to today’s takedown.
In addition to the arrests, agents and officers this morning recovered 2 pounds of methamphetamine, approximately $40,000 in cash, and 2 firearms. These seizures were in addition to evidence found during the pendency of the two unrelated investigations. The investigations, which were initiated in March of 2012, have resulted in the confiscation of 19,329.88 gross grams of methamphetamine, 614 gross grams of cocaine, 11.14 gross grams of heroin, 6.5 gross grams of MDMA (Ecstasy), and 18,287.8 gross grams of marijuana. In addition, 13 guns, 2 cars and $94,825, not counting items seized today.
The four indictments charged defendants from two separate and unrelated drug trafficking organizations (DTOs). The drugs being trafficked by both DTOs include: cocaine, crack, methamphetamine, heroin and marijuana. The investigations determined that some of the drugs being distributed throughout Metro Denver and along the Front Range came from Mexico. Some of the defendants who were responsible for trafficking these drugs are known for being involved with or having ties to others involved in violent crimes.
In the first DTO, known as “Operation Gangster Disciples”, 21 defendants were named in two separate related indictments returned by a federal grand jury in Denver on charges ranging from Conspiracy to possess with intent to distribute to distribution of various drugs, including: cocaine, crack, methamphetamine, and heroin. The DTO was allegedly run by defendant Ricky Kamil Garrison. In addition to drug trafficking charges, Garrison faces a charge for travel with the purpose of engaging in interstate prostitution. Another defendant, James Tillmon, faces state charges for hit and run. Some of the defendants in this DTO are members or associates of the Gangster Disciples (GD) gang. All face various drug trafficking related charges. In addition to the drug charges, various members in these indictments also face charges, including felons in possession of firearms, and distribution of dangerous drugs within 1,000 feet of a school.
Those arrested today include:
Francisco Aguilar, age 38, Denver
Shawn Beardsley, age 45, Aurora
Travis Edwards, age 52, Aurora
Dondrai Fisher, age 41, Aurora
Jesus Molina-Villarreal, age 45, Aurora
Archie Poole, age 37, Aurora
Francisco Ramirez, age 32, Aurora
Simeon Ramirez, age 40, Denver
Javier Segura-Cisneros, age 27, Aurora
Khari Smith, age 37, Aurora
Sidney Taylor, age 48, Denver
Christopher Vigil, age 27, Denver
Latoya Wimbush, age 29, Aurora
Melvin Turner, age 38, AuroraThose indicted by not yet arrested include:
Christopher Martinez, age 33, Aurora
Luis Ramirez, age 25, Thornton
Gregory Williams, age 53, Arvada
Name Unknown, age and residence unknownThose already in custody include:
Ricky Kamil Garrison, age 30
James Tillmon, age 30
Robert Painter, age 44In the second DTO, known as the “Gonzalez-Cepeva/Quintero” Drug Trafficking Organization, a federal grand jury in Denver handed down two additional indictments, unrelated to the Gangster Disciples DTO. In the Gonzalez-Cepeva/Quintero DTO, 33 defendants were named in two separate related indictments on charges ranging from drug trafficking to engaging in a continuing criminal enterprise, conspiracy to import various drugs from Mexico, cash smuggling, running a drug controlled premises, possession of a weapon by an illegal alien, possession of a weapon by a felon, interstate transportation in aid of racketeering, and possession of a weapon in connection with a drug trafficking crime. The Gonzalez-Cepeva/Quintero DTO was involved in the possession with intent to distribute, and the distribution of: methamphetamine, cocaine, and marijuana. The marijuana was allegedly imported to Colorado from California. The Gonzalez-Cepeva/Quintero DTO has individuals with ties to the “211 Crew.”
Of the defendants indicted in this case, those arrested today include:
Jose Castaneda-Zamora, age 38, unknown
Noe Chavez-Gomez, age 20, unknown
Debbi Martinez, age 24, Denver
Rafael Quintero Gomez, age 21, unknown
Jesus Montelongo-Talavera, age 24, Westminster
Alberto Quintero, age 23, Aurora
Juan Manuel Quintero, age 22, unknown
Racquel Ramos-Sanchez, age 58, San Elizario, Texas
Alberto Roel, age 45, Edinburg, Texas
Robert Schaffer, age 65, Fort Collins
Mark Singer, age 41, Colby, Kansas
John Howard Smith, age 55, Denver
Jessica Trejo-Huerta, age 23, Mexico
Servando Gandara-Chavez, age 43, DenverThose indicted by not yet arrested include:
Jose Oceguera-Ramirez, age unknown, Mexico
Tomas Gonzalez-Villalobos, age 43, Mexico
Ramona Haro-Iniquez, age 44, Denver
Marcus Marler, age 38, unknown
Juan Montelongo, age 25, Westminster
Sergio Salazar-Torres, age unknown, Mexico
Raul Ramirez-Munoz, age 42, Mexico
Hector Jesus Trejo-Huerta, age 27, MexicoThose already in custody include:
Antonio Gonzalez-Cepeva, age 25
Elias Rafael Gonzalez-Cabrera, age 22
Jesus Quintero, Jr., age 26
Gabriel Sowell, age 38
William Brewer, age 58
Porfiria Alejandra Faias-Contreras, age 24
Maria Farias-Contreras, age 23
Jesus Quintero, Sr., age 46
Carol Hawley, age 45
Gina Salcido, age 42
David Hall, age 56“Make no mistake: As a result of these raids, Colorado is a safer place,” said U.S. Attorney John Walsh. “Gangs that traffic in drugs also traffic in violence – whether by intimidation and fear, or by actual force. And while the exact impact these arrests have on the drug trade is difficult to quantify, it is safe to say that the quantity of cocaine, crack, meth and heroin available on the street have been substantially reduced as a result of today’s operation.”
“Today’s operations are yet another illustration of how these criminal organizations will not be allowed to operate with impunity in our communities,” said Thomas P. Ravenelle, Special Agent in Charge of the FBI’s Denver Division Field Office.
“Street gangs and drugs are a recipe for a significant percentage of violent crime in cities across the country,” said Kumar C. Kibble, special agent in charge of HSI Denver. “The joint investigations we pursue with many of our Denver-area based law enforcement partners target the resources of gangs and drug dealers -- finances, personnel, drugs and guns – to put them out of business.”
If convicted, the defendants face penalties ranging from not less than 5 years in federal prison to up to life in federal prison, depending on the count of conviction. The defendants’ criminal history, and the type and amount or weight of the drugs being trafficked are factors a judge will consider at sentencing.
The indictments contain an asset forfeiture allegation. The allegation states that upon conviction, the defendants shall forfeit to the United States any and all property, real or personal, involved in such offense, or any property traceable to the crime, such as vehicles or structures, and also including but not limited to a money judgment in the amount of proceeds involved in the offense.
This case was investigated by the Metro Gang Task Force. The Metro Gang Task Force is comprised of the Denver Division of the Federal Bureau of Investigation (FBI), U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Adams County Sheriff’s Office, Arapahoe County Sheriff’s Office, Aurora Police Department, Colorado State Patrol, Commerce City Police Department, Colorado National Guard Counter Drug Unit, Denver District Attorney’s Office, Denver Police Department, Jefferson County Sheriff’s Office, the High Intensity Drug Trafficking Areas Program (HIDTA), the Lakewood Police Department, Douglas County Sheriff’s Office and the Thornton Police Department. Agencies assisting the Metro Gang Task Force include: the Westminster Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the U.S. Marshals Service.
“Gangster Disciples” is being prosecuted by Assistant U.S. Attorney Zachary Phillips. “The Gonzalez-Cepeva/Quintero DTO” is being prosecuted by Assistant U.S. Attorneys Stephanie Podolak and Brad Giles.
The charges contained in the four indictments are allegations, and the defendants named in these indictments are presumed innocent unless and until proven guilty.Husband and Wife Plead Guilty to Tax Charges and Agree to Pay the IRS over $800,000 in TaxesRead the Press Release
DENVER – Sandra J. Zuckerman, age 66, of Woody Creek, Colorado, pled guilty today before U.S. District Court Judge Robert E. Blackburn to willful failure to pay income taxes, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Judge Blackburn is scheduled to sentence Sandra Zuckerman on September 16, 2014. Sandra and her husband, Mathew Zuckerman, were indicted by a federal grand jury in Denver on April 25, 2012. Mathew Zuckerman pled guilty on February 18, 2014 and is scheduled to be sentenced by Judge Blackburn on July 31, 2014.
According to information contained in court documents, beginning in 1986 and continuing through 2009, the Zuckermans either failed to file an income tax return, or filed a return using incorrect amounts. From 2003 through 2009 no income tax returns were filed with the IRS.
Starting in 1998, Mathew Zuckerman and an associate became 50/50 business partners and began to specialize in taking small companies public through reverse mergers of existing corporate shells. To operate their new venture, himself and his business partner formed Silicon Valley New Issues, Inc. (SVNI). In addition, he formed Intermountain Marketing & Finance, Inc., a corporation he solely owned which owned 50% of SVNI. As part of the scheme, Mathew Zuckerman evaded corporate income taxes on several million dollars of taxable income in 1999 from Silicon Valley New Issues, Inc. Over the course of the next 10 years, he continued to conceal his assets and business affairs from the IRS by utilizing additional corporations and trusts in order to avoid payment and collection of the Zuckerman's outstanding tax liabilities.
Specifically, to avoid IRS liens, in 1999, the Zuckermans caused the deed to their Woody Creek residence, purchased for approximately $1.2 million, to be recorded in the name of Hyperpanel University, Inc. ("Hyperpanel"), a Nevada corporation that listed the names of a cat and a dog as its officers and directors on its filings with the Secretary of State. Similarly, in 2004 Mathew Zuckerman formed a company called Treya, Inc. in Nevada that they used to purchase a $1.8 million home in 2004 in Toluca Lake, California. Based on the directions of Mathew, Sandra used her name from an earlier marriage, Sandra Eberli, to be used in connection with transactions conducted by Treya.
Furthermore, in December of 2004, Mathew Zuckerman created the Mathew Mark Zuckerman Trust ("MMZT") and placed himself in the position as "Trustor" and his CPA was appointed as trustee. In July of 2006, he caused his daughter to be appointed as the trustee and in 2008 caused 4,900,000 shares of Green Earth Technologies (a company for which he served as Chairman) to be issued to the trust using an incorrect employer identification number ("EIN") for MMZT. Then he instructed his daughter to sell shares of the stock and transfer funds to his personal bank accounts. By doing this he received profits in excess of $500,000 while evading payments of taxes owed to the IRS.
Mathew Zuckerman agrees to pay the IRS $693,706 in restitution and Sandra agrees to pay $112,511 in restitution to the IRS.
Mathew Zuckerman pled guilty to one count of tax evasion, which carries a penalty of not more than 5 years in federal prison, and a fine of up to $250,000 per count. Sandra Zuckerman pled guilty to three counts of willful failure to pay income taxes, which carries a penalty of not more than 1 year in federal prison, and a fine of up to $100,000, per count.
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. Attorney Tim R. Neff.
Golden U.S. Postal Carrier Sentenced for Stealing MailRead the Press Release
DENVER – A U.S. Postal Service city carrier working in Golden, Colorado was sentenced yesterday by U.S. District Court Judge Robert E. Blackburn for theft of United States Mail by employee. The former Postal Service city carrier, John J. Bonney, age 37, of Westminster, Colorado was sentenced to serve 2 years probation. He resigned from his position, which he held for 15 years, during the course of the criminal investigation.
Bonney was indicted by a federal grand jury in Denver on November 5, 2013. He pled guilty before Judge Blackburn on January 16, 2014. He was sentenced on May 29, 2014.
According to the stipulated facts contained in the plea agreement, the U.S. Postal Service Office of Inspector General (USPS OIG) initiated an investigation after receiving a complaint from a Golden, Colorado resident that four envelopes that were deposited in a Postal Service collection box never reached their intended location. One of the envelopes contained a $100 gift card for Home Depot. The complainant determined the gift card was redeemed at a Home Depot in Westminster, CO. USPS OIG special agents went to the Westminster Home Depot, and after reviewing store surveillance video footage, identified a male wearing a Postal Service uniform as the individual who redeemed the gift card.
The individual in the photographs was later identified as Postal Service city carrier John Bonney. USPS OIG agents then determined Bonney was assigned to pick up mail from the collection box where the missing greeting card was placed on the day the envelopes were deposited. Investigators continued their investigation, including a test to see if Bonney stole mail he delivered. That investigation revealed that he did not. Additional investigation, including conducting video surveillance, revealed he placed certain pieces of mail he picked up in a personal blue duffle bag. He would then put that bag in his personal vehicle before returning his postal vehicle to the parking area.
When Bonney attempted to leave on the day of the video surveillance, USPS OIG special agents stopped him, identified themselves, and then placed him under arrest. Bonney gave consent for the USPS OIG agents to search his vehicle, where they found the blue duffle bag. After his arrest and subsequent subject interview, it was determined that Bonney started stealing mail in December of 2012.
“A long-time Postal Carrier can throw their career away, and become a federal felon, for stealing mail,” said U.S. Attorney John Walsh. “It is important that cards sent to celebrate holidays, provide a gift for a friend or relative, or compensate someone for work done, arrive at their intended destination. When they don’t, it is important to determine why, and hold those that have prevented it accountable.”
Executive Special Agent in Charge Pete Gately said, “The American public trusts the U.S. Postal Service to deliver their letters and parcels on time and intact. When an employee of the Postal Service violates that trust, as Mr. Bonney did, the U.S. Postal Service Office of Inspector General (USPS OIG) thoroughly investigates those matters. The USPS OIG and U.S. Attorney’s Office remain committed to holding anyone responsible for the theft of U.S. Mail accountable, as was demonstrated by the sentencing of Mr. Bonney. The public we serve can rest assured that the USPS OIG will continue to protect their mail and maintain America’s confidence in the integrity of the U.S. Postal Service.”
This case was investigated by the U.S. Postal Service Office of Inspector General, Office of Investigations.
This case was prosecuted by Special Assistant U.S. Attorney Kirsten Sinclair.
Former Denver Woman Pleads Guilty to Charges Related to Identity TheftRead the Press Release
DENVER - Libia Hernandez-Garcia, age 60, of Miami, Florida, formerly of Denver, Colorado, pled guilty recently before U.S. District Court Judge Christine M. Arguello tax fraud, visa fraud and social security fraud, federal authorities announced. Hernandez-Garcia, who is free on a bond, is scheduled to be sentenced by Judge Arguello on September 18, 2014. She was indicted by a federal grand jury on May 21, 2013 followed by a superseding indictment on February 25, 2014. She was arrested on February 26, 2014 in Miami, Florida.
According to the charging documents as well as the stipulated facts contained in the plea agreement, from 2009 through 2011, Hernandez-Garcia made false claims against the Internal Revenue Service which she knew to be false by preparing and filing federal income tax returns for several individuals where the claims for income tax refunds were fraudulent. Particularly, Hernandez-Garcia provided false information to a tax preparer, so refunds not belonging to her would be deposited into her own bank account.
From 2009 through 2012, Hernandez-Garcia misused the Social Security Number (SSN) of several individuals by causing the filing of individual income tax returns which falsely included the name and SSN, as a dependent, for the person identified as the filer of the tax return.
From 2008 through 2011, Hernandez-Garcia assisted in the preparation and filing with the IRS the U.S. Individual Income Tax Return of her husband for tax years 2007 through 2010 which were materially false and fraudulent. Particularly, dependents were claimed on her husband’s tax returns when in fact the dependents were not a person who could lawfully be claimed as a dependent of his. On her own personal tax returns for tax years 2006 through 2011, Hernandez-Garcia followed a similar pattern claiming dependents that could not be claimed as her dependents all in an effort to receive higher refunds.
Furthermore, on two separate occasions, one in 2008 and the second in 2011, Hernandez-Garcia made false statements under penalty of perjury in Petitions for a Nonimmigrant Worker packages. Such statements included: the beneficiary of the H-1B visa petition, Diana Aleph Aguilar Hernandez, would be employed by a local hotel operating under a national brand name as Operations Manager; Libia Hernandez was an authorized official to make such a petition on behalf of that hotel; that Libia Hernandez was authorized by that hotel to act on behalf of the company in labor certification matters.
This case was investigated by the Internal Revenue Service – Criminal Investigation, Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), Bureau of Diplomatic Security Service (DSS), and Office of the Inspector General – Social Security Administration (SSA OIG).
This case is being prosecuted by Assistant U.S. Attorney Robert Brown.
Final Defendant Is Sentenced to 51 Months in Prison for Wire Fraud and Money Laundering as Part of A $5 Million Ponzi SchemeRead the Press Release
DENVER – Stanley W. Anderson, age 70, of Arvada, Colorado was sentenced by U.S. District Court Judge Christine M. Arguello to serve 51 months in federal prison for wire fraud and money laundering, federal law enforcement authorities announced. Following his prison sentence, Anderson, was ordered to spend 3 years on supervised release. Judge Arguello also ordered him to pay $5,226,300 in restitution.
Anderson was indicted by a federal grand jury in Denver on March 22, 2012, along with co-defendants Pastor Charles Lawrence Kennedy, Jr. of Tampa, Florida and Edwin Alexander Smith of Denver, Colorado. Kennedy and Smith pled guilty and were sentenced to federal prison for twelve and thirty months, respectively.According to the facts contained in the indictment as well as the stipulated facts contained in the various plea agreements, beginning in October of 2005 and continuing through December 2008, Anderson, Smith and Kennedy together with each other, and aiding and abetting other persons known and unknown to the Grand Jury, devised a scheme to defraud investors.
Anderson and Smith resided in Colorado and conducted business through “CFO-5, LLC” and “Trinity International Enterprises, Inc”, two companies they controlled. Trinity had no business operations apart from soliciting investment funds related to an investment program. Anderson was the chairman and chief executive officer of CFO-5 and Trinity. Smith was the secretary of CFO-5 and president of Trinity. Kennedy resided in Florida where he worked as a pastor and conducted business through a company identified as “Keys to Life Corporation". Kennedy through a formal partnership with Trinity assisted Anderson and Smith in soliciting investment funds.
They solicited investors' funds for use in an investment program where significant profits would supposedly be generated through the trading of European medium term notes ("MTN program"), when in fact, the MTN program did not exist. Furthermore, they represented that their MTN program would pay nearly immediate returns in amounts ranging from 200 to 1000 percent.
They raised approximately $5 million dollars from approximately 100 investors nationwide over the course of the scheme. The investors' funds were not used to trade in financial instruments, but were instead misappropriated by Anderson, Smith and Kennedy for unauthorized uses. Investors, with the exception of those who received Ponzi scheme-like payments, that is, money taken from one investor to compensate another, lost their total investments. Anderson and Smith generally commingled and deposited investors' funds into bank accounts controlled by Anderson and Smith.
Anderson was the lead person for the investment program and managed the daily operations of the program, made key decisions as it related to the use of investor funds, handled investor communications, and oversaw the relationship with various promoters responsible for soliciting investors. During periodic conference calls with investors, Anderson conducted such calls and provided investors with purported updates. Similarly, Anderson would typically author and distribute e-mail communications to investors in which false information regarding the status of the investment was contained. As it related to the handling of funds collected by investors, Anderson typically controlled and determined the expenditure of such funds. He diverted thousands of dollars in investor funds for personal use including, house payments, meals and entertainment, personal judgments and salary payments for his children.This case was investigated by the Internal Revenue Service – Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service.
This case is being prosecuted by Assistant U.S. Attorney Timothy Neff.
Denver Man Who Lied About War Crimes He Committed in Ethiopia in Order to Come to the United States and Become A Citizen Sentenced to 22 Years in Federal PrisonRead the Press Release
Defendant's citizenship stripped by the judge as a result of his conviction
DENVER – A Colorado man who used a false identity and lied to gain immigration status in the United States to hide his role in the torture and murder of civilians in Ethiopia in the 1970s was sentenced today in federal court to serve 22 years in federal prison. John Doe, a/k/a Habteab Berhe Temanu, a/k/a Habteab B Temanu, a/k/a “TUFA”, a/k/a Kefelegn Alemu, a/k/a Kefelegn Alemu Worku, age approximately 62, a Denver resident of Ethiopian descent, was sentenced this morning by Senior U.S. District Court Judge John L. Kane to the lengthy prison term for unlawful procurement of citizenship, making false statements on immigration documents and identity theft, U.S. Attorney John Walsh and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Kumar Kibble announced. The defendant lied on immigration forms about his involvement in the torturing and murder of people in Ethiopia during the Red Terror. Following his prison sentence, Judge Kane ordered Worku to serve 3 years on supervised release, at which time he will begin proceedings with U.S. Immigration authorities. At the sentencing hearing, Judge Kane stripped Worku of his U.S. citizenship he had obtained after immigrating to the U.S. Taking Worku’s citizenship is required based on the conviction of these crimes. The defendant appeared at the sentencing hearing in custody, and was remanded at its conclusion.
The man we now know as Kefelegn Alemu Worku was indicted by a federal grand jury in Denver on August 20, 2012. He was arrested a short time later. A superseding indictment was obtained on June 18, 2013. The defendant was convicted of all counts of the superseding indictment on October 11, 2013 following a five day jury trial before Judge Kane. The counts of conviction were the unlawful procurement of citizenship or naturalization; aggravated identity theft; and fraud and misuse of Visas, Permits and Other Documents. Worku was sentenced today, May 23, 2014.
According to court documents, and arguments at trial and at sentencing, the defendant did knowingly use the identification of another person, Habteab Berhe Temanu, to unlawfully procure citizenship or naturalization. Further, the defendant made false statements in connection with his application for naturalization which was submitted in November 2009, and which statements the defendant re-affirmed under penalty of perjury in March 2010, including falsely identifying himself as Habteab Berhe Temanu; falsely representing that he was the father of five children; and falsely responding “No” to the question: “Have you ever persecuted (either directly or indirectly) any person because of race, religion, national origin, membership in a particular social group, or political opinion.”
In May 2011, HSI received information from an informant who was a naturalized U.S. citizen, originally a native of Ethiopia, that he had recently encountered a person in Denver who he recognized as Kefelegn Alemu Worku, a prison guard during a period in the late 1970's in Ethiopia known as the “Red Terror.”
In the late 1970's in Ethiopia, Mengistu Haile Mariam assumed unofficial control of the Provisional Military Administrative Committee also known as the Dergue. The Dergue was a committee of nearly 120 military officers that established a Marxist regime and abolished Ethiopia’s Constitution and arrested the former emperor and members of the imperial government for alleged crimes against the Ethiopian people. Mengistu seized full control in 1977 which unleashed a two-year campaign known as the “Red Terror.”
During the Red Terror, tens of thousands of Ethiopian men, women and children suspected of being members or supporters of the anti-Dergue group were arrested, tortured and summarily executed. One prison that held, tortured and killed individuals was known as “Kebele 15" or “Kefetegna 15" which in English roughly translates as “Higher 15.” This prison housed approximately 1500 prisoners who had been imprisoned due to their political opinions and affiliations. During the Red Terror families of the killed or missing were often required to pay the government for the bullet used to kill the family member. Historical accounts indicate that a minimum of 10,000 people were killed in the city of Addis Ababa alone in 1977, with probably comparable numbers in the provinces in 1977 and 1978.
The witness explained that he had become a political prisoner in Ethiopia in 1978 when he was arrested and sent to the Higher 15. He witnessed Worku torture fellow prisoners and learned that other prisoners were being executed at the hands of prison guards, including Worku. The informant managed to escape the prison in September 1979. Two additional Ethiopian refugees who are now naturalized U.S. citizens who testified at sentencing also identified the defendant as Worku and recounted how Worku had personally participated in beating and torturing them at the same prison during the same time period.
HSI agents, using information obtained from the informant, determined that Worku was using the identity of Habteab B. Temanu and living in an apartment in Denver. Immigration records confirmed that Worku, using Temanu’s identity, came to the United States in July 2004 as a refugee. He lived in Denver until his indictment.
“Today, justice was done. By sentencing defendant Worku to the maximum possible term for his crime, Judge Kane sent a stern, determined message that the United States will not allow its generous asylum laws to be manipulated to create a safe haven for murderers and torturers from abroad,” said U.S. Attorney John Walsh. “Our system of justice has successfully removed the defendant from the immigrant community he once terrorized, and in so doing vindicated not only our laws, but the rights of the defendant’s many victims now living here in our country.”
“Homeland Security Investigations aggressively pursues Human Rights and War Crimes Violators like Kefelegn Alemu Worku,” said Kumar C. Kibble, special agent in charge of HSI Denver. “Our HSI investigation and partnership with the U.S. Attorney's Office to prosecute Worku show that we will not allow the United States to become a safe haven for war criminals. In the unlikely event that Worku ever completes his lengthy prison sentence, he will be transferred to ICE custody and placed in deportation proceedings. A federal immigration judge will then determine if he will be deported to Ethiopia.”
This case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
The defendant was prosecuted by Assistant U.S. Attorney Brenda Taylor.Chief Executive Officer of Superior Discount Coins Is Sentenced to 90 Months in Federal Prison for Defrauding Gold Coin Investors Out of over $2.4 MillionRead the Press Release
DENVER – James P. Burg, age 63, formerly of Fairplay, Colorado, was sentenced yesterday by U.S. District Court Judge John L. Kane to serve 90 months in federal prison for mail fraud and failing to file an income tax return, federal law enforcement authorities announced. Following his prison sentence, Burg was ordered to spend 3 years on supervised release. Judge Kane also ordered him to pay just under $2.5 million in restitution to the approximately 40 victims of his crime.
Burg was indicted by a federal grand jury in Denver on November 5, 2012. The indictment remained sealed until his arrest in California on November 29, 2012. He pled guilty on September 12, 2013. According to the indictment as well as the plea agreement, starting in October 2007, and continuing through January 2012, Burg devised a scheme to defraud customers that ordered coins from businesses known as Superior Discount Coins and Gold Run Investments. He obtained money from those customers by means of materially false and fraudulent pretenses, representations and promises. Burg took and received $2,464,099 from customers that ordered coins that he failed to deliver as promised.
As part of the scheme, Burg represented that he was the Chief Executive Officer of a company known as Superior Discount Coins (“SDC”) and that SDC was in the business of selling coins. Burg also conducted business using a company known as Gold Run Investments (“GRI”) and represented that GRI was in the business of selling coins. At times, Burg operated GRI using the alias “Tim Burke”. Burg advertised and solicited customers through radio advertisements and over the internet using websites he controlled, including; www.superiordiscountcoins.com, www.yourcoinbroker.com, and www.goldruninvestments.net.
Burg misrepresented and promised customers that if they ordered coins from SDC or GRI and paid him for those coins, he would deliver the coins to them or to accounts designated by them. He sent, and caused to be sent to customers that ordered coins from SDC or GRI invoices stating amounts of money owed for the coins and, in some cases, providing information about a bank account to which the customers should transfer their money to purchase the coins.
A substantial portion of the money Burg received from customers was not used to purchase their coins but instead was used for his own personal benefit. Burg refused to refund money to customers in several instances where the customers requested a return of their money after he failed to deliver coins as originally promised. To prevent the scheme’s detection, Burg sometimes filled customers’ orders for coins only after such customers threatened to take legal action or report him to law enforcement authorities. Burg used one customer’s payment for coins to refund funds to another customer.
For calendar years 2003 through 2009, Burg also failed to file income tax returns with the Internal Revenue Service as required by law. These returns were required to be filed with the IRS on April 15 following the subsequent above mentioned years. The investigation determined during the above years Burg generated a gross income of over $5.5 million for which he failed to pay $1,100,334 in income taxes on that income.
“The defendant’s sentence serves a number of purposes,” said U.S. Attorney John Walsh. “To those who consider implementing investment fraud, let this case be a warning that there are consequences, including prison sentences. To those who are asked to invest, do research before handing over your hard earned money. And to those who have lost money in these schemes, know we will do the best that we can to recover as much money as possible.”
“Investment schemes are motivated by greed and this sentence should serve as a reminder for those who prey on investors for their personal financial gain. These fraudsters will be caught and sent to prison,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
“The collaborative effort between the IRS CI, U.S. Postal Inspection Service, and the FBI is an example of the on-going working relationships federal investigative agencies have to combat violations of federal law,” said FBI Denver Special Agent in Charge Thomas P. Ravenelle. “This investigation highlights the leveraging of federal law enforcement resources to protect innocent investors and our economy from those who engage in these types of fraudulent schemes.”
“The sentence James Burg received reflects the public’s right to expect punishment for those who commit fraud in order to enrich themselves personally,” said Denver Division U.S. Postal Inspector In Charge Adam P. Behnen. “Postal Inspectors will continue to ensure the integrity of the U.S. Mail through these types of investigations and our valued partnerships with other law enforcement agencies.”
This case was investigated by special agents with IRS-Criminal Investigation, the Federal Bureau of Investigation (FBI), and the U.S. Postal Inspection Service.
The case was prosecuted by Assistant U.S. Attorney Tim Neff.
Federal, State and Local Authorities Dismantle National Spice Distribution Organization Reaching into Colorado CommunitiesRead the Press Release
Indictments represent the most significant investigation to date in the United States regarding synthetic cannabinoid trafficking which resulted in more than 220 Spice-related emergency room visits and at least one death in Colorado last year.
DENVER – Following an eight month investigation by federal, state and local law enforcement, a federal grand jury in Denver has returned indictments charging nine individuals from across the country with conspiracy and drug distribution charges related to “Spice”. In addition to the federal indictment, state authorities led by the District Attorney’s Office for the 18th Judicial District (Arapahoe County) also sought and obtained an indictment charging many of the same defendants under Colorado state racketeering statutes. In addition, the Colorado Attorney General’s Office today announced the filing of a civil lawsuit under the Colorado Consumer Protection Act.
“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. At least one death has also been attributed to the illegal substance. 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 have determined that the original chemical product is 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 alleges that the distribution was organized by defendant John Bowen and Bernier. They first operated under the name “The Really Cool Stuff Company”. After the product received negative media attention, the two defendants allegedly changed the distribution name to “Heart of Asia.” Creager Mercantile Company, run by defendant Donald Creager, III, was one of the wholesalers. Creager would then ship the product to local corner stores and gas stations in Colorado. He also allegedly distributed product to defendant Orlando Martinez’s business, “O’s Pipes and Tobacco.” 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.
Defendants face charges ranging from conspiracy to defraud the United States and violate the Controlled Substances Act to distribution and possession with intent to distribute a controlled substance. Penalties range from not more than 5 years in federal prison up to not more than 20 years in federal prison, depending on the nature of the charge.
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 emphasized that no brand of Spice or similar products is 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.
Prosecutors from the 18th Judicial District have obtained a racketeering indictment against many of the same defendants named in the federal indictment. The 18th Judicial District grand jury returned an indictment naming five individuals as part of an enterprise engaged in a pattern of racketeering activity. Those people range from the national suppliers, to a large scale distributor in the Denver Metro area, and the owner of a retail establishment in Aurora. The source of supply for this enterprise would change the chemicals used in their drugs in an attempt to evade federal prosecution, however, Colorado law has prohibited the sale of any synthetic cannabinoids since 2011. Under Colorado state law, the defendants face a mandatory minimum of 8 years in prison.
In addition to the federal and state prosecutions, the Colorado Attorney General’s Office today announced the filing of a separate civil lawsuit against Orlando Martinez, owner of O’s Pipe and Tobacco (or “O’s Pipes and Tobacco” referenced earlier). Martinez and O’s Pipes is accused of violating the Colorado Consumer Protection Act by failing to disclose to consumers that their spice products were harmful and potentially illegal. This is the third spice lawsuit filed by the Colorado Attorney General, having previously sued Tobacco King in Longmont and Paymon’s in Aurora.
“Spice, bath salts, or whatever name this dangerous product goes by, is made up largely of synthetic chemicals imported from abroad without any safety oversight,” said U.S. Attorney John Walsh. “There is nothing natural or organic about it. Spice is a form of foreign-laboratory-produced poison, and has sent many users to the hospital, or even to the morgue. Just because a gas station or convenience store is selling it doesn’t make it legal, let alone safe.”
“This is the most significant synthetic drug investigation ever conducted by the Denver Field Division of DEA, and is part of an on-going international operation conducted by DEA,” said Barbra Roach, Special Agent in Charge of the DEA Denver Division. “The synthetic cannabinoids targeted, and those who would distribute them, posed dangerous health threats to the Denver community resulting in hundreds of hospitalizations and at least one death this past year. This 8 month investigation by federal, state and local authorities sets the example for cooperation in addressing new and developing hazards to the community.”
"Under the Colorado Consumer Protection Act, we are adding civil charges to the list of criminal charges O's Pipe and Tobacco and Orlando Martinez now face,” said Colorado Attorney General John Suthers. “Today's multi-state, multi-agency actions sends a strong message to all purveyors of spice that they will not profit from the sales of these dangerous and illegal synthetic cannabinoids that are harming the public.”
“Spice is poison and pain deceptively packaged as pleasure,” said 18th Judicial District Attorney George Brauchler. “Spice has hurt too many in our community and this coordinated effort by our different agencies demonstrates how seriously this drug is being treated at all levels of government. The danger of Spice is clear and those who continue to distribute it to our children and community should take heed that law enforcement will be relentless in pursuing justice in these matters.”
“Spice is an awful drug and a terrible threat to those who use it,” said Aurora Police Chief Dan Oates. “I am gratified by the efforts of the DEA and the role that the Aurora Police Department played in getting this dangerous drug and those that distribute it off the streets of our community.”
“Drugs that are produced and distributed outside the FDA’s oversight present the prospect of harm to the public’s health,” said Catherine A. Hermsen, acting special agent in charge, FDA’s Office of Criminal Investigations. “FDA-OCI appreciates the coordinated efforts of DEA and other law enforcement agencies to bring to justice all those who evade federal drug laws.”
“This case is a great example of effective collaboration between, local, state and federal law enforcement agencies resulting in the removal of dangerous drugs from our communities and ensuring individuals are held accountable for their actions,” said Castle Rock Police Chief Jack Cauley.
“This is a great example of law enforcement agencies working together,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “We play a unique role in federal law enforcement’s counter-drug effort in that we follow the money trail and deprive drug dealers of their profits and seize their assets.”
This case is being 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 Colorado Attorney General’s office 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.
This investigation is ongoing, and no further information outside of the indictment can or will be provided.
The defendants are being prosecuted by Assistant U.S. Attorneys Jaime Pena and James Russell, along with Deputy District Attorneys of Colorado’s 18th Judicial District.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
Two Tax Preparers Prosecuted in Separate Unrelated Cases for Filing Fraudulent ReturnsRead the Press Release
DENVER – U.S. Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announce the prosecution of return preparers for fraudulently preparing false tax returns. As another filing season comes to an end, Federal officials remind those who prepare and file fraudulent tax returns, they will be criminally prosecuted. Recent return preparer cases prosecuted in the District of Colorado include the following:
Austin Ray, Age 46, of Denver CO and Anne Rasamee, Age 29, of Stockton CA, where arrested last week on charges of conspiracy to defraud the United States and preparing fraudulent tax returns. Ray and Rasamee were indicted by a federal grand jury in Denver on April 10, 2014 which remained sealed until their arrests. Ray was arrested in Denver and had his initial appearance and arraignment last week. He remains in custody of the U.S. Marshals. Rasamee was arrested in Stockton where she had her initial appearance on April 22, 2014 and was released on bond. Her arraignment is scheduled for May 7, 2014 in Denver.
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 which 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.
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 had the taxpayers refunds deposited into Cheapertaxes’s bank account and after deducting their fees pay the difference to the taxpayers. At times, they failed to pay their client’s the balance of the refunds. Rasamee was charged with one count of conspiracy to defraud the United States and thirty counts of preparing fraudulent tax returns. Ray was charged with one count of conspiracy to defraud the United States and five counts of preparing fraudulent tax returns. The defendants are presumed innocent unless and until proven guilty. This case is being prosecuted by Assistant United States Attorney Anna Edgar.
In a separate case, Lance McCuistion, age 46, of Thornton CO, pled guilty on April 28, 2014 to one count of preparing a fraudulent tax return. He was charged by an Information on February 20, 2014 waiving his right to be charged by a federal grand jury.
McCuistion owns and operates LM Tax Services, a tax-preparation business in Thornton, CO. From 2007 through 2009, he prepared and filed at least 1600 tax returns for which at least 18 clients he falsely inflated their Schedule A deductions, resulting in refunds greater than his clients were entitled. False deductions included charitable contributions, unreimbursed business expenses, and child care expenses. The tax loss relevant to his offense is $70,536.
IRS CI Special Agents conducted an undercover operation during which McCuistion prepared a tax return falsely overstating deductions and he openly discussed his fraudulent return preparation. Following the execution of a search warrant at his home and business, McCuistion admitted to the special agents that he had filed returns with false charitable contributions. Furthermore, he also approached several taxpayers during their audit process to discuss false items on their returns to further conceal the fraud. This case is being prosecuted by Assistant United States Attorney Suneeta Hazra.
Conspiracy to defraud the United States carries a penalty of not more than 5 years in federal prison, and a fine of up to $100,000, per count. Preparing a false tax return carries a penalty of not more than 3 year imprisonment, and a fine of up to $250,000, per count.
Denver Attorney and Others Named in Superseding Indictment Alleging Money Laundering Related to Marijuana Cultivation and DistributionRead the Press Release
Money was being wired from bank accounts in Colombia to bank accounts in Colorado for purchase of marijuana grow facility
DENVER – Hector Diaz, age 49, David Jeffrey Furtado, age 48, Luis Fernand Uribe, age 28, and Gerardo Uribe, age 33, were named in a just unsealed superseding indictment, returned by a federal grand jury in Denver on April 22, 2014, federal law enforcement agencies announced. The superseding indictment alleges violations of federal firearms law and money laundering related to marijuana laws. Diaz, who was previously charged, was sent a summons to appear in court Wednesday, April 30, 2014. Furtado and Luis Uribe were arrested on Friday, April 25, 2014. Furtado and Luis Uribe made their initial appearances this afternoon before U.S. Magistrate Judge Boyd N. Boland, where they were advised of their rights and the charges pending against them. Gerardo Uribe has been charged but is not in custody. He is currently considered a fugitive from justice. Furtado, Luis Uribe, and Hector Diaz are scheduled to be back in court on Wednesday, April 30, 2014.
The superseding indictment includes the original charge that Hector Diaz illegally possessed a firearm. The superseding indictment further alleges that Diaz committed visa fraud by making a false statement regarding the purpose of his visit to the United States.
The superseding indictment alleges that all four defendants conspired with each other and others known and unknown to the grand jury, to commit offenses against the United States. The manner and means of their conspiracy include:
- Effect the international transfer of funds from the Republic of Colombia into the United States to facilitate the purchase of real property, with existing physical structures, located at 5200 East Smith Road, in Denver, Colorado.
- The defendants intended to permit the use of the Smith Road property to cultivate, manufacture, and/or distribute marijuana.
- In 2013, Gerardo Uribe filed documents with the Colorado Secretary of State to incorporate a company known as Colorado West Metal, LLC. Attorney David Furtado was the registered agent. Hector Diaz was listed as the person responsible for forming the corporation.
- Furtado opened a bank account at Wells Fargo in the name of Colorado West Metal, LLC, and was the sole signor on that account.
- Furtado used his attorney trust account, held in the name of his law firm, to facilitate the purchase of the Smith Road property.
- It was part of the conspiracy for Furtado, Gerardo Uribe and Hector Diaz to communicate regarding a wire transfer associated with Colorado West Metal, which was later used to purchase the Smith Road property.
- On November 7, 2013, Furtado transferred $424,000 from the Colorado West Metal Wells Fargo account to a Colorado First Bank account, held in the name of Land Title Guarantee Company.
- The conspirators caused and/or agreed for Land Title Guarantee Company to transfer those same funds to Westerra Credit Union – the mortgagor for the Smith Road property.
- Between November 1, 2013 and November 4, 2013, Furtado made and caused to be made two separate wire transfers in the amount of $200,000 each from his attorney trust account into the Colorado First Bank account in the name of Land Title Guarantee to facilitate the purchase of the Smith Road property.
- Members of the conspiracy deposited, and attempted to deposit into financial institutions, and/or converted to cashier’s checks and/or bulk U.S. currency (cash) to facilitate the purchase of the Smith Road property. These bulk currency amounts included proceeds from the cultivation and sale of marijuana.
- On October 31, 2013, Furtado met with Gerardo Uribe and obtained $449,980 in U.S. currency (cash). Those funds represented proceeds of specified unlawful activity, namely the cultivation and sale of marijuana, as derived through the operation of the “VIP Wellness Center”, operated by Gerardo Uribe, Luis Uribe and others.
The superseding indictment also alleges that Diaz, Furtado and Gerardo Uribe did transfer $424,000 using wire transfers from the Banco Bilbao Vizcaya Argenteria (BVVA) in the Republic of Colombia to the Colorado West Metal, LLC Wells Fargo account with the intent to cultivate, manufacture and distribute marijuana. Also, Furtado did two wire transfers, one for $100,000 and a second for $20,000 from the Banco de Occidente, in the Republic of Colombia, to his attorney trust account with Wells Fargo in Colorado, with the intent to promote the cultivation, manufacture and distribution of marijuana.
Finally, Furtado, Luis Uribe and Gerardo Uribe did knowingly engage in money laundering by and through a financial institution affecting interstate and foreign commerce, in criminally derived property greater than $10,000; that is, the attempted deposit of $449,980 in U.S. Currency (cash) into a Wells Fargo bank account, with such property having been derived from a specified unlawful activity, namely the cultivation, manufacture and distribution of marijuana.
The superseding indictment includes an asset forfeiture allegation, which includes the firearms possessed by Diaz, and the money derived from the unlawful activity, namely the cultivation, manufacture and distribution of marijuana, a Schedule I controlled substance.
The investigation and charges closely follow the guidance provided by the Department of Justice in August 2013. More than one of the enforcement priorities outlined in the Department guidance are implicated in this ongoing criminal matter.
In the superseding indictment, Hector Diaz is named in counts one, two, three and four. David Furtado is named in counts three, four, five, six and seven. Luis Uribe is named in counts three and seven. Gerardo Uribe is named in counts three, four and seven.
Count one is possession of a firearm by a prohibited possessor. If convicted, the defendant faces not more than 10 years imprisonment, and up to a $250,000 fine. Count two is false statements with respect to a material fact. If convicted, the defendant faces not more than 20 years imprisonment, and up to a $250,000 fine. Count three is conspiracy to commit money laundering. If convicted, the defendants face not more than 20 years imprisonment, and a $500,000 fine (or twice the value of the property involved in the transaction, whichever is greater). Count four is money laundering and aiding and abetting the same. If convicted, the defendants face not more than 20 years imprisonment, and a $500,000 fine (or twice the value of the property involved in the transaction, whichever is greater). Counts five and six are money laundering and aiding and abetting the same. If convicted, the defendants face not more than 20 years imprisonment, and a $500,000 fine (or twice the value of the property involved in the transaction, whichever is greater). Count seven is engaging in monetary transactions in property derived from specified unlawful activity. If convicted, the defendants face not more than 10 years in federal prison, and up to a $250,000 fine.
This case is being investigated by the Drug Enforcement Administration (DEA), the Internal Revenue Service – Criminal Investigation (IRS CI), the U.S. Department of State, Diplomatic Security Services (DSS) and the Denver Police Department. This investigation is ongoing, and no further information outside of the superseding indictment can or will be provided.
The defendants are being prosecuted by Assistant U.S. Attorneys M.J. Menendez and Bradley Giles. Assistant U.S. Attorney Tonya Andrews is handling the asset forfeiture aspect of this case.
The charges in the superseding indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
Federal Employee Appears in Court After Being Indicted for Scheme to Defraud GovernmentRead the Press Release
DENVER – Jaycee L. Collier, age 29, of Aurora, Colorado, was indicted by a federal grand jury in Denver on April 8, 2014 on charges of wire fraud and bribery of a public official in connection with a military recruiting program. Collier received a summons to appear in U.S. District Court in Denver today, April 25, 2014. He made his initial appearance, where he was advised of his rights and the charges pending against him. He was then released on a $10,000 unsecured bond. He is scheduled to return to court on Wednesday, April 30, 2014 at 10:00 a.m. for arraignment.
According to the indictment, the United States Army Reserve (USAR), located at Fort Bragg, North Carolina, had a contract with Document & Packaging Brokers, Inc. (“Docupak”) to administer a program called the Army Reserve Recruiting Assistance Program (AR-RAP). The AR-RAP offered monetary incentives in the form of recruiting referral bonuses to Army Reserve soldiers, known as Recruiting Assistants (RAs), for encouraging others to join the Army Reserves. The recruiting assistants were required to enroll and complete an online training course. At the conclusion of the training, the RAs would establish an online account to record their nominations of others for enlistment. An RA could receive up to $2,000 for each successful nomination.
Collier was employed as a civilian employee with the Department of Defense at the Military Entrance Processing Station (MEPS) in Denver. In his position as a Lead Human Resources Division Assistant (HRA), Collier was responsible for handling enlistment packets for new recruits joining the USAR and processed through the Denver office. As such, Collier was ineligible to participate in the AR-RAP program.
Between March 10, 2009 and July 25, 2012, Collier knowingly devised a scheme to defraud the USAR by means of materially false and fraudulent pretenses. Specifically, he obtained or caused to be obtained the user names and passwords for eligible RAs so that Collier could enter nominations into those RAs accounts and share in the AR-RAP bonus money. Over the time period alleged, Collier was involved in the nomination of over 65 recruits into the AR-RAP Program.
Approximately $125,000 in fraudulent referral bonuses were wired from Docupak to the RAs’ bank accounts. In most instances, the RAs would pay Collier on average $500 as a kickback for each successful nomination. In total, the indictment alleges that Collier personally received over $28,000 in payments from the RAs for fraudulent nominations.Collier faces five counts of wire fraud. If convicted, he faces not more than 20 years in federal prison, and up to a $250,000 fine, per count. He also faces 13 counts of bribery of a public official. If convicted, he faces not more than 15 years in federal prison, and up to a $250,000 fine, or three times the monetary thing of value, whichever is greater, per count.
This case was investigated by the U.S. Army Criminal Investigation Division and the Defense Criminal Investigative Service.
Collier is being prosecuted by Assistant U.S. Attorney Martha Paluch.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.