District of Colorado
Press releases recorded for this federal judicial district.
Colorado Springs Convict Arrested Three Days After Getting Out of Prison for Possessing Sawed-off ShotgunRead the Press Release
DENVER – Anthony Ishmael Medina, age 20, of Colorado Springs, Colorado, was sentenced Tuesday by U.S. District Court Judge R. Brooke Jackson to serve 51 months in federal prison for being a felon in possession of a firearm, U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Denver Special Agent in Charge Luke Franey announced. Following his prison sentence, Judge Jackson ordered Medina to serve 3 years on supervised release. The defendant appeared in custody, and was remanded immediately following the sentencing hearing.
Medina was indicted by a federal grand jury on September 25, 2013. He pled guilty before Judge Jackson on November 21, 2013. He was sentenced on Tuesday, April 22, 2014.
According to the stipulated facts contained in the plea agreement, on July 22, 2013, state parole officers went to Medina’s home in Colorado Springs. The defendant had been convicted on March 9, 2012 of Vehicular Assault – DUI, a class 4 felony, in El Paso County, Colorado. He was sentenced to serve two years in prison. Medina had been released from prison only three days prior to the search, as he was beginning his term of parole. During a search of the residence, parole officers found a JC Higgins, model 20, 12-gauge sawed-off shotgun in Medina’s bedroom closet. Colorado Springs Police officers and ATF agents later determined that Medina admitted to possessing the weapon, and that he couldn’t figure out how to get rid of it. During the sentencing hearing it was revealed that Medina was an admitted member of the “Los Meadows Varrios” street gang, which is affiliated with the Surenos.
“The defendant was out of prison for only three days before being found with a sawed-off shotgun,” said U.S. Attorney John Walsh. “Instead of getting rid of the weapon in a lawful way, he decided to keep it. The result is he will now have to serve 51 months in prison for possessing that firearm for three days.”
“Not only was this individual a convicted felon, but he was also in possession of an unregistered sawed-off shotgun,” said Denver ATF Special Agent in Charge Luke Franey. “Protecting the public by holding convicted felons accountable for their actions will remain a top priority for ATF.”
This case was investigated by the Colorado Division of Parole, the Colorado Springs Police Department, and the ATF.
Medina was prosecuted by Assistant U.S. Attorney Richard Hosley, Chief of the Major Crimes Section of the Criminal Division of the U.S. Attorney’s Office in Colorado.
United State Settles False Claims Act Allegations Against Otterbox for $4,300,000Read the Press Release
DENVER – The United States Attorney’s Office for the District of Colorado and the Department of Homeland Security, U.S. Customs and Border Protection, announce that OtterBox, a Colorado corporation headquartered in Fort Collins, has paid $4,300,000 to the United States to resolve allegations that OtterBox violated the False Claims Act and the Tariff Act of 1930, as amended, by knowingly underpaying customs duties owed to the United States.
OtterBox sells protective cases for smartphones and tablets. Between 2006 and 2011, OtterBox manufactured many of its products overseas, and then imported those products into the United States for distribution and retail sale. OtterBox was responsible for the submission of entry documents to Customs and for the payment of any customs duties owed on those imported products.
The United States alleged that from January 1, 2006 through December 31, 2011, OtterBox knowingly omitted the value of “assists” from the dutiable value OtterBox declared to Customs on entry documents for imported products. The United States further alleged that OtterBox knowingly made or caused to be made false statements in other documents submitted to Customs concerning the value of assists, and the customs duties OtterBox owed on the value of those assists, for products that OtterBox imported between January 1, 2006 through December 31, 2011. According to the United States, as a result of OtterBox’s omissions and false statements concerning the value of assists for its imported products, OtterBox knowingly underpaid customs duties it owed to the United States.
The settlement stems from a lawsuit filed by a former OtterBox employee in 2011 under seal pursuant to the qui tam provisions of the False Claims Act. The False Claims Act empowers private citizens with knowledge of fraud against the United States to present those allegations to the government by bringing a lawsuit on behalf of the United States under seal. If the investigation substantiates those allegations, the private citizen is entitled to share in any recovery. Of the $4,300,000 OtterBox paid to the United States, the United States paid $830,000 to the former employee who filed the qui tam lawsuit.
“America’s economic security and prosperity are at the heart of U.S. trade law,” said United States Attorney John Walsh. “Customs duties are a significant source of revenue for the United States, and this settlement demonstrates that the Department of Justice will zealously enforce their lawful collection.”
“Trade enforcement is a priority for U.S. Customs and Border Protection due to the significant role that it plays in the economic security of the United States,” said Richard Di Nucci, Acting Assistant Commissioner for the Office of International Trade. “CBP is responsible for facilitating the legitimate flow of trade, while enforcing the laws against the evasion of duties that protect against unfair trade practices.”
The claims settled by this agreement are allegations only. There has been no determination of liability.
The agreement was negotiated by Assistant U.S. Attorney Amanda Rocque.
Former Denver Woman Appears on Charges Related to Aggravated Identity TheftRead the Press Release
DENVER - Libia Hernandez-Garcia, age 60, of Miami, Florida, formerly of Denver, Colorado, appeared yesterday on charges related to aggravated identity theft and tax fraud, visa fraud and social security fraud, federal authorities announced. Hernandez-Garcia was originally indicted by a federal grand jury in Denver on May 21, 2013, which remained sealed until her arrest in Miami, Florida on February 26, 2014. A superseding indictment was filed on February 25, 2014. She made her initial appearance yesterday, April 16, 2014, before U.S. Magistrate Judge Kristen L. Mix, where she was advised of her rights and the charges pending against her. Her indicted co-conspirator, Diana Aleph Aguilar Hernandez, made her initial appearance on March 13, 2014, on one count of visa fraud.
According to the charging documents, from 2009 through 2011, Hernandez-Garcia made five 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. Furthermore, for her personal 2009 through 2011 federal income tax returns, she submitted false claims for federal income tax returns totaling over $16,000.
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. By misusing the SSN in such a manner, Hernandez-Garcia further allegedly committed aggravated identity theft.
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.
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; and the rate of pay for the beneficiary would be $51,000 and $35,425 a year, respectively.
Hernandez-Garcia was charged with; two counts of visa fraud, which carries a penalty of not more than 10 years in federal prison, and a fine of up to $250,000 per count; five counts of false claims, which carries a penalty of not more than 5 years in federal prison, and a fine of up to $250,000, per count; thirteen counts of misuse of a SSN, which carries a penalty of not more than 5 years in federal prison, and a fine of up to $250,000, per count; six counts of aggravated identity theft claims, which carries a penalty a mandatory 2 years in federal prison, and a fine of up to $250,000, per count; four counts of aiding in a false tax return, which carries a penalty of not more than 3 years in federal prison, and a fine of up to $100,000, per count.
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.
The charges contained in the indictment are allegations, and the defendant is presumed innocent until proven guilty.
Montezuma County Man Indicted for Child Pornography and Marijuana DistributionRead the Press Release
DENVER – Stephen Paul Redwood, age 31, of Montezuma County, Colorado, was placed into federal custody based on a grand jury indictment on child pornography and marijuana distribution charges, United States Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Redwood was indicted by a federal grand jury in Durango, Colorado on April 3, 2014. He surrendered on April 10, 2014 in Denver, and appeared before a U.S. Magistrate Judge that afternoon, where he was advised of his rights and the charges pending against him. Yesterday, April 15, 2014, Redwood had a detention hearing and arraignment. He is due back in court tomorrow, April 17, 2014 at 11:00 a.m. for a further discussion regarding detention.
According to the indictment, between July 7, 2012 and November 24, 2013, Redwood transported and shipped child pornography within interstate commerce, using any means, including a computer. Further, on August 25, 2012, January 21, 2013, August 14, 2013, and December 3, 2013, the defendant knowingly received child pornography, also by computer. On January 15, 2014, Redwood was found in possession of child pornography.
In addition to the child pornography charges, between October 31, 2013 and January 15, 2014, Redwood did knowingly and intentionally distribute and possess with intent to distribute marijuana. On January 15, 2014, Redwood did knowingly and intentionally manufacture and possess with intent to manufacture marijuana.
During the course of the investigation, the FBI determined that Redwood was receiving, transporting, and possessing child pornography. On January 15, 2014, FBI agents, working with the Colorado Bureau of Investigation (CBI), Immigration and Customs Enforcement (ICE) Homeland Security Services (HSI), United States Marshals Service, Montezuma County Sheriff’s Office and the Cortez Police Department, executed a search warrant at Redwood’s residence. In addition to the computer and computer media they found, which contained child pornography, agents also found a marijuana grow, including dried marijuana ready for use and live marijuana plants. During a detention hearing, the government proffered to the court that Redwood sold marijuana to a 14 year old and other minors as well.
Redwood faces one count of transportation of child pornography and four counts of receipt of child pornography which carries a penalty of not less than 5 years, and not more than 20 years in federal prison, as well as not more than a $250,000 fine for each count. He faces, one count of possession of child pornography, which carries a penalty of not more than 10 years in federal prison. He faces one count of distribution of marijuana and one count of manufacture/cultivation of marijuana, each count of which carries a penalty of not more than 5 years in federal prison, and up to a $250,000 fine.
This case was investigated by the Federal Bureau of Investigation (FBI) with the assistance of the Colorado Bureau of Investigation (CBI), Immigration and Customs Enforcement (ICE) Homeland Security Services (HSI), United States Marshals Service, Montezuma County Sheriff’s Office and the Cortez Police Department.
Redwood is being prosecuted by Assistant U.S. Attorney Todd Norvell, based in the Colorado U.S. Attorney’s Durango Branch Office. Assistant U.S. Attorney Alecia Riewerts Wolak is providing support in Denver.
The charges contained in the indictment are allegations. 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.
Fort Collins Man Appears in Court for Tax Evasion ChargesRead the Press Release
DENVER – Brian Eugene Annis, age 55, of Fort Collins, Colorado, was indicted by a federal grand last week on charges of tax evasion, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Annis appeared in court today for his initial appearance before U.S. Magistrate Judge Kristen L. Mix, where he was advised of the charges pending against him. He is scheduled to be arraigned Magistrate Judge Mix’s courtroom on April 18, 2014 at 1:30 p.m.
According to the indictment, from 2001 through at least the end of 2010, Annis was a resident of Fort Collins, Colorado and for those years he willfully did not file personal federal income tax returns. From at least on or about April 15, 2002, and continuing until at least March 21, 2010, Annis willfully evaded the payment of federal income taxes due and owing by him for the tax years 2001 through 2006, in an amount totaling approximately $131,307, plus interest and penalties allowed by law, by committing and causing to be committed affirmative acts of tax evasion.
Particularly, in 2004 Annis paid Creative Consulting Group and J.H. $2,100 to create an “International Business Trust” called Glacier Mountain Holdings and to appoint J.H. as the “Managing Fiduciary Party.” In December 2004 Annis and his spouse signed a Grant Deed to convey to Glacier Mountain Holdings their “equitable interest” in their personal residence located in Fort Collins, Colorado. In December 2005, a Grant Deed signed by J.H. conveyed back to Annis and his spouse the “equitable interest” in their personal residence.
In August 2006, the IRS mailed Annis multiple correspondences, which included substitute returns for the tax year 2001 and 2002 that the IRS prepared for Annis informing him that he owed the IRS taxes in the amount of $22,640 and $25,145, respectively.
In September 2006, Annis sent two letters to the IRS, for the two corresponding tax years aforementioned. In both letters, Annis disputed that he was subject to federal income taxes. In response to further correspondence by the IRS Annis sent the IRS additional letters stating: “I do not agree with any of the findings/adjustments in your letter dated 20-Oct-2006…. The federal income tax is an excise tax on privileged pursuits, not on common-occupation labor. As a private sector worker engaged only in un-privileged activity, compensation for my ‘common wage’ labor is outside the scope/jurisdiction of the federal income tax.” Throughout the course of the next several months into 2007, Annis sent similar correspondence to the IRS.
In November 2007, Annis sent J.H. an email in which Annis stated, “For now, we need to get the house back into the trust……I don’t know when the IRS is going to do an asset search (maybe they already have).” On December 4, 2007, Annis and his spouse signed a Grant Deed to convey to Glacier Mountain Holdings their “equitable interest” in their personal residence. Between at least December 4, 2007, and March 21, 2010, Annis annually paid Creative Consulting Group and J.H. to maintain Glacier Mountain Holdings.
“As we are all aware, today is tax day and most Americans will have fulfilled their tax obligation by the end of the day. Those individuals who commit tax fraud are merely stealing money and creating an unfair tax burden on honest tax paying citizens. Rest assured, IRS Special Agents will continue doing their job to ensure honest individuals do not have to pick up the tab of those committing tax evasion,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
Annis was charged with; 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; four counts of failure to file a tax return, 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 and 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.Denver Man Sentenced to 21 Years in Federal Prison for Producing Child PornographyRead the Press Release
DENVER – Jesse Evans, age 33, of Denver, Colorado, was sentenced today by U.S. District Court Judge William J. Martinez to serve 252 months (21 years) in federal prison for production of child pornography, U.S. Attorney John Walsh, FBI Denver Division Special Agent in Charge Thomas Ravenelle and Denver Police Department Chief Robert White announced. Following his prison sentence, Evans was ordered to serve 25 years on supervised release. He will also have to register as a sex offender. The defendant, who appeared at the sentencing hearing in custody, was remanded at its conclusion.
Evans was first charged by Criminal Complaint on June 29, 2012. He was indicted by a federal grand jury on July 26, 2012. He was later charged by Information on June 12, 2013. He pled guilty before Judge Martinez to the sole count of the Information, production of child pornography, on that same date. He was sentenced today, April 1, 2014.
According to the facts contained in public court documents, on January 3, 2012, a Denver Police Department (DPD) detective initiated a child exploitation investigation. The DPD detective, acting in an undercover capacity, downloaded child pornography from another computer that was using peer-to-peer software to share files. The IP address the detective was downloading the files from had file names indicative of child pornography.
As the investigation continued, a search warrant was obtained and executed by the DPD on February 8, 2012 for Evans' residence. There were multiple computers in the residence, including two laptops. The DPD detective conducted a preview of one of the laptops, and located the downloaded file he obtained at the beginning of the investigation. It was later determined that Evans had access to three prepubescent minors.
On June 28, 2012, an FBI Special Agent who is an expert in child exploitation crimes spoke with the DPD detective. The FBI agent obtained a copy of the investigative file, which included all information obtained during the course of the investigation. The agent conducted review of the computers and located a total of nearly 100 images and videos of child pornography that the defendant produced of the three minors.
“Sexually assaulting children and recording that assault in photos or video, is an unspeakable crime that deserves severe and swift justice,” said U.S. Attorney John Walsh. “Our hearts go out to the victims in this case and their families. The defendant in this case was brought to justice by the hard work of the Denver Police Department and the FBI, working alongside a determined and able Assistant U.S. Attorney from this office. Their unflagging commitment to protecting children from predators like Evans deserves our profound thanks.”
“The work on this case is representative of the high priority the FBI places on finding those who exploit and perpetrate crimes against children,” said FBI Denver Division Special Agent in Charge Thomas Ravenelle. “The FBI will continue to vigorously investigate and prosecute individuals who prey on our most vulnerable victims.”
Denver Police Chief Robert C. White said: “We have to continue to conduct operations of this nature to protect the most vulnerable members of our community – our children. We cannot allow an adult to ever exploit or take advantage of a child.”
This case was investigated by the Denver Police Department (DPD) and the Federal Bureau of Investigation (FBI). The Denver District Attorney’s Office filed state charges, and referred potential federal charges to the U.S. Attorney’s Office.
The defendant was prosecuted by Assistant U.S. Attorney Judith Smith.
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.
Littleton Man Is Sentenced to Two Years in Prison for Running A Ponzi SchemeRead the Press Release
DENVER – Michael B. Gale, age 66, of Littleton, Colorado, was sentenced today by U.S. District Court Judge Robert E. Blackburn to serve 24 months in federal prison for wire fraud and money laundering the U.S. Attorney’s Office, Internal Revenue Service Criminal Investigation (IRS CI) and the Federal Bureau of Investigation (FBI) announced. Following his prison sentence he was ordered to serve 3 years on supervised release. Gale was also ordered by Judge Blackburn to pay $425,878.71 in restitution to his victims. After the hearing, Gale was released on bond. He will report to a Bureau of Prison facility once one is designated.
Gale was charged by an information on October 22, 2013 and pled guilty on December 19, 2013 to the charges. According to the information and plea agreement, beginning in February 2009 Gale individually and as Capital Management Group ("CMG"), fraudulently solicited and accepted at least $893,346 from nine individuals for the purpose of operating a commodity pool to trade commodity futures contracts on the Pool's behalf. Gale did not register as a commodity pool operator ("CPO") with the Commodity Futures Trading Commission, but held himself out as a CPO to investors. Gale maintained two futures trading account and represented on both accounting documents that the funds on deposit were his and did not belong to any other investors or pools when in fact they were investor funds.
To further the scheme, Gale lied about his past trading successes telling some investors they could expect a 100% return on their investment while telling others that they could not lose on their investment. He also provided investors false documents to encourage them to invest or stay invested. Specifically he provided two investors with false tax documents that falsely represented the investors' profits in the Pool and to another investor he provided a false trading account statement that falsely represented that the value of the pool exceeded 3.5 million dollars. He also sent numerous emails to investors in which he lied about the Pool's profits.
Instead of investing the funds as promised, Gale took the investor funds and commingled them with his personal money and spent some of it on personal expenses. On one occasion, Gale transferred investment funds to his personal bank and subsequently transferred $100,000 of that money to the trading account to make it appear that the funds in that account were his personal money and not investor money. The investments Gale made actually lost money. He sometimes used later investors' funds to make partial payments to previous investors and returned approximately $447,477 to investors during the course of his scheme.
“The prison sentence handed down in this case is appropriate given the defendant’s criminal conduct,” said U.S. Attorney John Walsh. “Thanks to the work of the prosecuting Assistant U.S. Attorney, Suneeta Hazra, and the investigation conducted by special agents from the IRS Criminal Investigation and the FBI, another con man has been held accountable for taking people’s hard earned money.”
“Investors should always be wary and cautioned of investment proposals that promise high returns on their investment. 'If it seems too good to be true', it is probably an investment scheme,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
“The FBI is fully committed to protecting innocent victims by aggressively investigating those who perpetrate investment fraud schemes,” said FBI Denver Division Special Agent in Charge Thomas Ravenelle said.
This case was investigated by agents with IRS-Criminal Investigation and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Suneeta Hazra.
Palisade Man Pleads Guilty to Attempted Armed Bank RobberyRead the Press Release
DENVER – Jose O. Jimenez, age 27, of Palisade, Colorado, pled guilty last week to attempted armed bank robbery, United States Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Jimenez was one of three people indicted for their involvement in, or knowledge of, the attempted armed robbery of the Palisades National Bank. Jimenez pled guilty before U.S. District Court Judge R. Brooke Jackson on March 20, 2014. He is scheduled to be sentenced on July 23, 2014.
Co-defendant Bryan Morrow, age 22, of Palisade, Colorado, pled guilty before Judge Jackson on October 8, 2013. He is scheduled to be sentenced on April 30, 2014. 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 is scheduled to be sentenced by Judge Blackburn on May 28, 2014.
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 violent attempted bank robbery victimized many innocent people and was thwarted by the resourceful actions of a police officer on the scene,” said U.S. Attorney John Walsh. “We are aggressively pursuing all those involved in this robbery to obtain justice for those victims.”
“The convictions of those who participated in this violent crime illustrate the ongoing relationship with our partners to ensure justice is served and our communities are protected,” said FBI Denver Division Special Agent in Charge Thomas P. Ravenelle.
Attempted armed bank robbery carries a penalty of not more than 25 years in federal prison, and up to a $250,000 fine.
This case was investigated by the FBI and the Palisade Police Department.
The defendants are being prosecuted by Assistant U.S. Attorney Michelle Heldmyer.
Three Defendants Involved in Robbery of Postal Carrier Plead Guilty to Theft of Special Mail KeyRead the Press Release
DENVER –Cheston Jermone Foster (aka Rome or Romeo), age 30, of Denver, Colorado, pled guilty yesterday before Senior U.S. District Court Judge John L. Kane to postal robbery and violation of his supervised release from an earlier criminal matter, U.S. Attorney John Walsh and Denver U.S. Postal Inspector in Charge Adam P. Behnen announced. In addition to Foster’s guilty plea, two co-conspirators, Terrance Hurt, age 34, of Denver, and Zachary Langel, age 35, of Denver, previously pled guilty to similar charges. The three defendants were involved in the December 17, 2013 robbery of a postal collections driver in north Denver.
The lead defendant, Foster, was indicted by a federal grand jury on June 4, 2013. On October 23, 2013, Foster, along with Hurt and Langel were charged in a superseding indictment. On March 11, 2014, Hurt and Langel entered guilty pleas. Foster pled guilty on March 20, 2014. Foster is scheduled to be sentenced on June 17, 2014. Hurt and Langel are scheduled to be sentenced on June 13, 2014. All three defendants are being held in federal custody without the possibility of bond, pending a resolution of this case.
On December 15, 2012, Foster, drove co-defendants Hurt and Langel around in his GMC Yukon to the area of 23rd and Oneida in north Denver, to determine if the U.S. Postal Service collected mail from the blue collection box placed in that area for the public to use. The defendant saw that there was a specific time for collection of that box on weekdays. Foster then communicated with his co-conspirators by text and phone to arrange to meet on December 17, 2012, to rob the postal clerk and take his “Arrow Key”, a master key issued by the U.S. Postal Service to access the collection boxes in a particular geographic region.
On December 17, 2012, Foster picked up Hurt and Langel. That afternoon, the three co-conspirators drove around in the defendant’s Yukon to familiarize themselves with the area around the blue collection box at 23rd and Oneida. After doing so, they went to a residence approximately four blocks away. Foster went inside the residence and retrieved a large kitchen knife. The three coconspirators returned to the area of 23rd and Oneida to await the postal carrier’s arrival. The three followed their plan, robbed the postal carrier, and took his “arrow key.” One of the co-conspirators got into the mail truck vehicle after it had stopped. The other two acted as lookouts. The coconspirator inside the truck brandished a kitchen knife and ordered the postal carrier to turn over his Arrow key. After robbing the postal carrier of the Arrow key, the three coconspirators returned to the defendant’s Yukon and drove away from the area.“Thanks to excellent investigative work, those responsible for this violent crime have been held accountable for their criminal conduct,” said U.S. Attorney John Walsh. “Protecting Postal employees who patrol our streets daily is important, as the hard work on this case demonstrates.”
“These convictions are a result of determination and good old-fashioned police work exhibited by our Denver Postal Inspectors,” said Adam P. Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division. “A large part of the Postal Inspection Service mission is assuring the safety of postal employees and we want them to have confidence that they can focus on their duties. These types of crimes against postal employees are rare, but when they do occur, they become top priority for us.”
Each defendant faces not more than 25 years in federal prison, and up to a $250,000 fine.
This case was investigated by the U.S. Postal Inspection Service and the Denver Police Department.
The defendants are being prosecuted by Assistant U.S. Attorney Rick Hosley and Special Assistant U.S. Attorney Beth Gibson.
Littleton Man Found Guilty of Implementing Mortgage Fraud SchemeRead the Press Release
DENVER – Peter V. Capra, age 56, of Littleton, Colorado, was found guilty by a jury today of wire fraud, mail fraud and money laundering, federal law enforcement authorities announced. The guilty verdict was the result of a 8 day trial before U.S. District Court Judge R. Brooke Jackson. The jury deliberated for nearly two days before reaching their verdicts. At the conclusion of the trial Capra was taken into custody pending a bond hearing, scheduled for April 2, 2014 at 1:00 p.m.
Capra was indicted by a federal grand jury in Denver on April 15, 2012, followed by a superseding indictment on May 23, 2012. As part of the mortgage fraud scheme, Demetrious G. Gianopoulos, and Brian Waring were charged in two separate indictments and Justin Knight was charged by an information. Gianopoulos pled guilty to one count of money laundering and was sentenced to five years’ probation. Knight pled guilty to destruction of records in a federal investigation and was sentenced to 12 months of home confinement. Waring pled guilty to conspiracy to commit mail fraud, wire fraud, and money laundering and is scheduled to be sentenced on May 30, 2014.
According to the indictment, superseding indictment and evidence presented at trial, Capra was the President of Golden Design Group, Inc. (GDG), a company which built and sold houses in the Denver metropolitan area. Capra was also the registered agent for Distinctive Mortgages, LLC, which used space within GDG’s office building and provided mortgages to some of the customers buying houses from GDG.
From January 2005 through July 2008, Capra, along with others, executed a scheme to defraud several mortgage lenders. The scheme was executed in connection with applications for residential mortgage loans and related documents associated with real estate purchases including but not limited to 33 properties in Parker, Colorado. Capra structured transactions involving GDG homes to allow buyers to receive substantial amounts of the lenders’ money at the time of closing without the knowledge of the lenders. He also sold a large volume of homes to otherwise unwilling or unqualified buyers. The evidence at trial showed that Capra netted over $11,000,000 as a result of his scheme.
Loan applications for the buyers were submitted through several different mortgage brokers that assisted with providing, or at least failing to question the accuracy of, false information submitted in connection with the applications, including materially false and fraudulent representations about the buyers’ income, liabilities, source of down payment, and intent to occupy the properties as their primary residences. At closing, funds ranging from $85,000 to over $200,000 were distributed to the buyers in ways that prevented the lenders from discovering that these funds were actually going to the buyers; these funds were not disclosed in the HUD-1 closing statements or were disguised in those statements.
Capra was charged with and found guilty of fourteen counts of wire fraud, two counts of mail fraud, and ten counts of money laundering. He was found not guilty of one count of obstruction of justice. Each count of wire and mail fraud carries a penalty of not more than 20 years in federal prison, and a fine of the greater of up to $250,000 or twice the gain or loss from the offense. Each count of money laundering carries a penalty of not more than 10 years in federal prison, and a fine of the greater of up to $250,000 or the value of the property involved in the transaction. At sentencing, the Judge will also consider entering an order of asset forfeiture, including all property constituting or derived from proceeds traceable to the commission of the offense, or a money judgment equal to the total proceeds taken.
This case was investigated by IRS Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service. The case was prosecuted by First Assistant U.S. Attorney Robert Troyer and Assistant U.S. Attorney Mathew Kirsch.
Aurora Man Indicted for Sending Three Threatening Letters Containing White PowderRead the Press Release
DENVER –Tim Schwartz, of Aurora, Colorado, appeared before a U.S. Magistrate Judge this afternoon and was advised that on March 11, 2014, a federal grand jury in Denver, returned a one count indictment, charging him with mailing threatening communications, the United States Attorney’s Office, the U.S. Postal Inspector’s Office, the Federal Bureau of Investigation, the Aurora Police Department and the Denver Police Department announced. Schwartz was originally charged by Criminal Complaint on March 5, 2014 with sending threatening letters containing white powder to three separate addresses using the U.S. Mails. Schwartz will next appear in court on March 26th for arraignment.
According to court documents, including the affidavit in support of the criminal complaint, and the indictment, Schwartz was in a romantic relationship with an Aurora woman that ended disagreeably. He had recently spent 60 days in the Adams County Jail for domestic violence related charges involving the Aurora woman. The woman was living with her children in Schwartz’s home. When he got out of jail he learned that she had sold a fair number of his tools, which allegedly angered him.
On March 2, 2014, Schwartz brought an unopened letter into the lobby of the Denver Police Department’s headquarters building. He told the officer he was fearful of what might be in the envelope, and asked the officer to open it. The officer refused, so Schwartz opened it in the officer’s presence. Inside the envelope was a threatening letter and a light powder substance. The Denver Police Department immediately called a Hazardous Materials Unit to handle the letter and powder, which was ultimately collected, bagged and held. The letter was address to Schwartz, and had a return address of the ex-girlfriend.
On March 3, 2014, authorities learned that a second envelope containing a threatening letter and light colored powder was found at the ex-girlfriend’s address. That letter was addressed to the Adams County Detention Facility, with her return address. Writing on the envelope “return to sender – addressee no longer at this address.” This letter had similar characteristics to the letter opened at the Denver Police Department. Aurora Fire Department’s Hazardous Materials Unit and the FBI responded, screened and secured the envelope and its contents.
On March 4, 2014, a third letter was discovered at the Aurora Police Department. The third letter had similar characteristics to the other two. This letter was addressed to the Aurora Police Department with the ex-girlfriend’s return address. A hazardous materials unit responded to handle the letter and powder. All three letters had been sent via U.S. Mail.
The night of March 3, 2014, agents and officers talked with Schwartz at the Denver Police Department. During the course of the investigation, and as confirmed during the conversation, it was determined that Schwartz assembled the letters in an attempt to get back at his ex-girlfriend. Also, his handwriting matched the three letters. Schwartz was ultimately arrested by the Aurora Police Department on a violation of an order of protection.
“When someone threatens others using white powder in mailed envelopes, they will be prosecuted, as law enforcement and public safety officials have to respond as if the contents are harmful,” said U.S. Attorney John Walsh. “In this case, the defendant was trying to use threatening letters to get his ex-girlfriend in trouble. Clearly that tactic has backfired.”
“Securing the nation’s mail system and ensuring public trust in the mail is a priority for the U.S. Postal Inspection Service,” said Adam P. Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division. “We take threats and hoaxes via the U.S. Mail seriously and will continue to work diligently to hold those responsible accountable for their actions.”
“The FBI and our law enforcement partners treat all threats seriously, even false threats, because they terrorize the victims and divert first responder resources from other public safety needs,” said FBI Denver Division Special Agent in Charge Thomas P. Ravenelle. “The FBI's determination to pursue justice and our dedication to work in full cooperation with local, state, and federal partners are reflected in this investigation.”
If convicted, the defendant faces not more than 10 years in federal prison, and a fine of up to $250,000.
This case was investigated by the U.S. Postal Inspection Service, the FBI, the Aurora Police Department and the Denver Police Department. Hazardous Material Units from the Aurora and Denver Fire Departments assisted authorities as well.
This case is being prosecuted by Assistant U.S. Attorney Greg Holloway.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
Western Slope Man Pleads Guilty to Defrauding the IRS and for Possession of A FireamRead the Press Release
DENVER –Michael L. Roy, age 50, of Clifton, Colorado, pled guilty before U.S. District Court Judge Raymond P. Moore on March 17, 2014, to 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, who is free on a bond, is scheduled to be sentenced by Judge Moore on June 16, 2014. Roy waived his right to be indicted by a federal grand jury and was charged by an Information on January 28, 2014. On September 19, 2013, Special Agents with IRS Criminal Investigation executed a search warrant on Roy’s home in Clifton, Colorado.
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.
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.
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.
Conspiracy to defraud the United States and felon in possession of a firearm, both carry 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 IRS-Criminal Investigation, and the United States Postal Inspection Service. The case is being prosecuted by Assistant U.S. Attorney Michelle M. Heldmyer.Grand Junction Resident Sentenced to Lengthy Prison Term for Distribution of Child PornographyRead the Press Release
DENVER – James Boblett, age 34, of Grand Junction, Colorado, was sentenced last week by U.S. District Court Judge Raymond P. Moore to serve 204 months (17 years) in federal prison for the distribution of child pornography, U.S. Attorney John Walsh and Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Denver Special Agent in Charge Kumar Kibble announced. Following his 17 year prison sentence, Judge Moore ordered Boblett to serve 10 years on supervised release. The defendant appeared at the sentencing hearing in custody, and was remanded at its conclusion.
Boblett was charged by Information on October 2, 2013. He pled guilty before Judge Moore on December 19, 2013. He was sentenced on March 13, 2014.
According to the stipulated facts contained in the defendant’s plea agreement, on July 8, 2011, a police officer with the Kenton County (Kentucky) Police Department Internet Crimes Against Children Task Force accessed the Internet using the undercover persona of a divorced mother with minor daughters. Between July 2011 and February 2012 James Boblett engaged the undercover officer in multiple Internet chats. The defendant distributed more than 50 images and 20 videos depicting child pornography to the undercover officer, including a video of child pornography depicting a 3-year-old child. In addition to distributing child pornography during the communications, Boblett showed himself on a webcam chatting and masturbating.
During the chats Boblett sent the undercover officer a sexually explicit image of a 13-year-old minor child, who authorities were later able to identify. Investigators determined that Boblett had been chatting with the minor child over the course of approximately one year, encouraging her to take sexually exploitive pictures of herself and send them to him. Boblett also sent the minor child images of child pornography and images and videos of his penis. At the change of plea hearing, Boblett admitted to distributing child pornography.
“The defendant distributed child pornography to countless others which is reason enough for this lengthy sentence,” said U.S. Attorney John Walsh. “As a result of the defendant’s conduct, the innocent children portrayed in those images were systematically victimized.”
“This significant federal prison sentence removes from the streets another child sexual predator for a long time,” said Kumar C. Kibble, special agent in charge of HSI Denver. “HSI routinely works with other law enforcement agencies to identify, locate and pursue prosecution against predators like Boblett who target the most vulnerable members of our society – our children.”
The investigation was conducted by Kenton County, Kentucky Police Department and Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
Boblett is being prosecuted by Assistant U.S. Attorneys Alecia Riewerts Wolak and Michelle Heldmyer.
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."
Denver Man Sentenced to 20 Years in Federal Prison for Being A Felon in Possession of 10 Rounds of AmmunitionRead the Press Release
DENVER – Gregory Lozado, age 34, of Denver, Colorado, was sentenced earlier this week by U.S. District Court Judge Philip A. Brimmer to serve 235 months (just under 20 years) for being a felon in possession of 10 rounds of ammunition, U.S. Attorney John Walsh and Denver Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Luke Franey announced. When pronouncing the sentence Judge Brimmer ruled that Lozado was an Armed Career Criminal based on his having three prior felony convictions for crimes of violence. After serving his sentence, Lozado was ordered to serve 5 years on supervised release. The defendant appeared at the sentencing hearing in custody, and was remanded at its conclusion.
Lozado was indicted by a federal grand jury on April 22, 2013. He went to trial, which started on November 18, 2013 and concluded on November 20, 2013 with the jury returning a verdict of guilty to the sole count of the indictment, which charged him with being a felon in possession of ammunition. He was sentenced on March 12, 2014.
According to the Government’s Sentencing Statement, which was filed on December 12, 2013; on March 21, 2013, at approximately 3:30 p.m., two uniformed Denver Police Officers, patrolling in a marked unit, observed a Chevrolet Impala with a badly cracked windshield and an expired temporary Texas license tag. The officers initiated a traffic stop of the Impala. The driver that vehicle pulled over, and then immediately jumped from the vehicle and fled on foot. Denver officers pursued the individual both on foot and by patrol car. As they were chasing the individual, who was later identified as Gregory Lozado, they noticed he was running holding a black handgun. At one point, when officers thought they had him cornered, they ordered he drop the gun. Lozado did not comply with the order. Instantly after a door near Lozado opened, and he continued fleeing on foot. Officers set up a perimeter around the building. They eventually convinced Lozado to surrender.
An inventory search of the Chevrolet Impala being driven by Lozado turned up a number of items, including a black zipper bag with ten rounds of live 9mm Winchester ammunition. Officers also recovered a spent (fired) .38 caliber shell casing. The gun officers saw in Lozado’s hand was never recovered.
Lozado had multiple prior convictions, which for sentencing purposes qualified him for being an Armed Career Criminal. The prior convictions include: robbery conviction in Adams County; theft from a person conviction in Denver; second degree burglary of a building conviction in Denver; and a conviction for felony menacing in Denver. In addition, Lozado was on parole for the felony menacing conviction.
“The old saying ‘Where’s there’s smoke, there’s fire was never truer than in this case,” said U.S. Attorney John Walsh. “Defendant’s possession of multiple bullets and a spent cartridge, combined with his three prior violent felony convictions, demonstrates that he was a danger to the public and fully warranted this severe penalty.”
“The collaboration between the Denver Police Department and our federal law enforcement partners goes a long way to keeping our community safe,” said Denver Police Chief Robert C. White. “This arrest and conviction is a good example of that collaboration.”
“ATF makes it a priority to identify repeat offenders who continue to victimize our communities through the illegal use of crime guns,” said Denver ATF Special Agent in Charge, Luke Franey. “This sentence sends a clear message that career criminals who continue to disregard the law will be held accountable.”
This case was investigated by the Denver Police Department and the ATF.
Lozado was prosecuted by Assistant U.S. Attorneys David Conner and Anna Edgar.
Colorado Man Sentenced to 63 Months in Federal Prison for Defrauding Elderly VictimRead the Press Release
DENVER – Akihiko Siegfried, age 55, formerly of Denver, Colorado, was sentenced Monday, March 10, 2014, by U.S. District Court Judge Philip A. Brimmer to serve 63 months in federal prison for mail fraud and money laundering, federal law enforcement authorities announced. Siegfried was also ordered to serve a 3 year term of supervised release following his prison sentence. Judge Brimmer also ordered him to pay $512,341.97 in restitution to the victim. Siegfried is currently in custody and will ultimately be designated to a Bureau of Prisons facility to complete service of his term of imprisonment.
Siegfried was indicted by a federal grand jury in Denver on June 17, 2013. He pled guilty on October 28, 2013 to one count of mail fraud and one count of money laundering. According to the facts contained in the indictment as well as the stipulated facts contained in the plea agreement, in January of 2008, Siegfried knocked on the door of the elderly victim’s residence and when the door opened Siegfried pretended to be distraught and was crying. Siegfried falsely told the victim that Siegfried’s parents had just died in a car crash and that he had no money and no family to turn to for help. Siegfried asked to borrow money. The victim was then an 89-year-old widower of Japanese descent with little family, asked Siegfried if he was Japanese which he replied that he was. He felt sorry for Siegfried and, in part because of their shared Japanese heritage, decided to help Siegfried.
Siegfried borrowed from the victim several times and in the middle of 2008 falsely told the victim he would inherit substantial money as a result of his parents’ death, but that it would be tied up in probate for some time and he needed money for paying the associated fees and taxes. During the entire scheme, Siegfried told the victim he would repay all of the money when Siegfried received his inheritance. In fact, Siegfried’s father died in the 1990s, his mother died in 2002, and there was never any inheritance held up in probate; however, from mid-2008 through March of 2013 Siegfried repeatedly falsely told the victim the inheritance was held up in probate.
From March of 2009 through March of 2013, Siegfried frequently spent time as an inmate in the Colorado Department of Corrections. When he was in jail during that time frame, he repeatedly called and sent letters through the mail asking for money, directing the victim to deposit and wire transfer money to Siegfried’s inmate account with the Colorado Department of Corrections. Siegfried told the victim he needed the money because he was required to pay for his diabetes medicine while he was in jail and because he needed to pay more probate fees and taxes for his purported inheritance. In fact, Siegfried has never been diagnosed with diabetes, has never taken medication for diabetes, and inmates of the Colorado Department of Corrections are not required to pay for medicine prescribed to them while they are in custody.
In October of 2012, when Siegfried was released from prison, he received a check payable to himself in the amount of $49,655.30 from the State of Colorado, Department of Corrections. At least $10,000 of this money was proceeds of the fraud scheme involving the elderly victim.“In this case, the defendant targeted his victim not only because he was a senior, but by manipulating his victim’s Japanese-American heritage,” said U.S. Attorney John Walsh. “By that cold, calculating manipulation, the defendant stole a lifetime of savings. The lengthy prison sentence handed down by Judge Brimmer was appropriate and just.”
“We hear all too often of elderly victims robbed of their life’s savings,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “Let this sentencing be a reminder, those who prey on elderly victims will be put in jail.”
“The FBI is confident the outcome of this case will deter future con-artists who seek to get rich by preying on elderly victims,” said FBI Denver Special Agent in Charge Thomas P. Ravenelle.
This case was investigated by agents with IRS Criminal Investigation, Federal Bureau of Investigation (FBI), the Drug Enforcement Administration (DEA) and the Colorado Department of Correction. The case is being prosecuted by Assistant U.S. Attorney Pegeen Rhyne. AUSA James Russell is handling the asset forfeiture.
Colorado Horse Breeder Sentenced to Prison for Income Tax EvasionRead the Press Release
DENVER – Nikitis A. Mangeris, age 70, of Berthoud, Colorado, was sentenced yesterday by U.S. District Court Judge R. Brooke Jackson to serve 4 months in federal prison for tax evasion the U.S. Attorney’s Office and Internal Revenue Service - Criminal Investigation (IRS CI) announced. Mangeris was also ordered to serve 24 months home detention following his prison sentence as part of a 3 year term of supervised release. Mangeris was also ordered by Judge Jackson to pay a $1,200 fine and $891,955.28 in restitution to the IRS. He will report to a Bureau of Prison facility within 15 days from the date of his designation.
Mangeris was indicted by a federal grand jury in Denver on January 9, 2013 and pled guilty to tax evasion on October 1, 2013. According to the indictment and plea agreement, Mangeris owned and operated several vitamin businesses since the mid-1990s. In 1992 he owned twenty-five percent of a vitamin business called Kaire International. The company generated on average between $5 million and $6 million in monthly gross proceeds and Mangeris receive income from Kaire International until approximately 1997 to 1999 when he left the company. He also owned and operated a horse business during this time period.
Beginning as early as 1994, Mangeris began investing in Arabian horses with the intent of breeding them for a profit. The values of the horses were linked to their lineage; therefore, each horse had to be verified and registered with the Arabian Horse Association. Mangeris registered the horses under business names Les Beaux Chevaux and Tenet Investment Group in order to avoid having to disclose his interest in them in public records. He further disguised his ownership interest in Tenet Investment Group by using a nominee name. There were two horses that generated significant proceeds for Mangeris. These horses were named MHR Nobility and Bentlee and Mangeris utilized the Colorado State University Equine Reproductive Laboratory to assist him in extracting and storing semen from MHR Nobility and Bentlee for future sales. Based upon its lineage, Mangeris was able to sell MHR Nobility's semen for, on average, $2,500 to $3,000 per breeding.
In 2002 Mangeris was audited by the IRS for calendar years 1997-1999. In February 2004 he agreed to with the IRS assessment and collection of back taxes, penalties, and interest for calendar years 1997-1999 in the amount of $891,955.28. Within 5 months of agreeing to the IRS assessment, Mangeris opened back accounts in nominee names and started depositing money into these accounts to conceal money. In December 2004 and January 2007 Mangeris falsified IRS Forms 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, which is a form that lists income and assets for an individual.
Particularly, in January 2007 Mangeris falsified Form 433-A and made false verbal representations during a meeting with a revenue officer. He stated on the form that he was self-employed, had no real assets, had no income, lived with friends and relatives, and maintained no bank accounts. This information was false when in fact, Mangeris owned and operated a horse business, earned over $80,000 from this business in calendar year 2006, and controlled a bank account into which he made over $375,000 in deposits in 2006. Furthermore, he and his wife were renting a residence for $3,450 per month at the time of his meeting with the revenue officer. To this day Mangeris has made no voluntary payments towards his tax debt and has also taken overt acts to evade the payment of his tax debt.
This case was investigated by agents with IRS-Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Kenneth Harmon and Department of Justice Tax Division Trial Attorney Kevin Sweeney.
U.S. Attorney's Office Announces A Federal Forfeiture Action Against A Marijuana Warehouse and Related Marijuana FundsRead the Press Release
DENVER -- Colorado U.S. Attorney John Walsh announced today that his office has filed in United States District Court in Denver a civil forfeiture complaint seeking forfeiture of a Denver area marijuana warehouse and illegally connected funds. The forfeiture case stems from a criminal case indicted by a state-wide grand jury that returned indictments that were ultimately prosecuted in Jefferson County.
As revealed by the Verified Complaint, in the Summer of 2012, the Criminal Tax Enforcement Section of the Colorado Department of Revenue, subsequently joined by the Drug Enforcement Administration (DEA), initiated an investigation into an illegal marijuana growing and distribution operation based in a warehouse at 5105 East 39th Avenue in Denver. Investigators determined that the Warehouse produced hundreds of pounds of processed marijuana, and then illegally distributed the drugs to several retail marijuana stores in the metropolitan area in violation of Colorado and Federal law.
The investigation resulted in a Colorado State Grand Jury Indictment charging numerous individuals and entities with 71 counts of drug, tax, and fraud violations of Colorado state law; 8 guilty pleas have been entered, and several cases remain pending in the Jefferson County, Colorado District Court. The individuals involved in the Drug Trafficking Organization utilized various Limited Liability Companies to hold ownership of the assets, and utilized various bank accounts to buy and equip the Warehouse, fund the operations, and receive the illegal proceeds. In addition to the warehouse, the Complaint seeks forfeiture of over $850,000 in seized funds that are the proceeds of the illegal operation, which were used to promote the illegal operation, and which were involved in money laundering.
According to the indictment referred to above, and other information from state authorities, the underlying case involves out of state diversion of marijuana, fraud on investors, false reporting to state law enforcement and regulatory authorities, filing of false and incomplete tax returns, and other broad-scale criminal activity that necessitated action to protect and enforce federal priorities as outlined in the Department of Justice’s marijuana enforcement guidance published on August 29, 2013.
“The U.S. Attorney’s Office continues to engage in focused enforcement of violations of federal law as it pertains to marijuana, and to work closely with our local and state law enforcement partners,” said U.S. Attorney John Walsh. “In this case, the warehouse and money that is the subject of this forfeiture action were proceeds of an illegal scheme perpetrated by certain individuals who were not only violating federal law, they were violating Colorado state law, as is demonstrated by the guilty pleas obtained in Jefferson County.”
Click here for the Verified Complaint for Forfeiture.
Englewood Man Arrested for Production of Child Pornography and Travel with Intent to Engage in Illicit Sexual ConductRead the Press Release
DENVER – U.S. Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced that Mervin Edy Wolf, age 61, of Englewood, Colorado, was arrested and charged with travel with intent to engage in illicit sexual conduct and production of child pornography. Wolf appeared before a U.S. Magistrate Judge on March 6, 2014 for an initial appearance, where he was advised of the charges pending against him, as well as his rights. He is due back in court Tuesday, March 11, 2014 at 10:00 a.m. for a detention hearing and preliminary hearing.
According to the affidavit in support of the Criminal Complaint, Wolf formerly resided in California but moved to Englewood, Colorado with his wife sometime after 1999. Wolf and his wife visited relatives regularly in California, usually for two-week periods at a time. Beginning on or about September of 2007, Wolf began producing pornographic photographs of a minor child who lived in the home of California relatives. Over the next seven years Wolf and his wife would travel to California to visit the same relatives, sometimes up to three times a year. During each of these trips Wolf would force the same minor child to perform and participate in an escalating pattern of sexual acts which Wolf would photograph and or video tape. During several of the molestations, Wolf’s wife and relatives would be in the house unaware of what was happening.
In January 2013, the minor child contacted Wolf via telephone and told him that she was afraid she may be pregnant due to his sexual activity with her. Wolf told the minor child he would pay for an abortion if she was in fact pregnant by Wolf. Wolf mailed two home pregnancy tests to the minor child; after she took the tests and learned she was not pregnant.
When the minor child learned that Wolf was planning to visit California in June 2014, she made the decision to disclose all of the sexual abuse by Wolf. The minor child explained she was afraid Wolf would start molesting her younger sibling. Once the minor child’s family learned of the abuse by Wolf, other family members came forward to also report abuse by Wolf. During the course of the California investigation, it was also learned that Wolf and his wife were foster parents in 2003. Two foster children who were both girls and under the age of seven, both disclosed sexual abuse by Wolf. The allegations were investigated by the Arapahoe County Department of Human Services and the Englewood Police Department. No charges were filed against Wolf. However, due to the allegations, the Wolfs’ foster care license was revoked.
On March 5, 2014, a federal search warrant was executed at the residence of Mervin Wolf in Englewood, Colorado. Minutes before the execution of the search warrant, the minor child contacted Wolf on his cell phone at the direction of the investigating agency in California; the call was recorded. During the call, Wolf confirmed the sexual relationship between him and the minor child. He also confirmed the production of pictures and videos of the sex acts with the minor child. However, Wolf told the minor child that the pictures had been destroyed and no one would find them. During the subsequent search of Wolf’s home, FBI agents seized a 8mm video camera, a digital camera, a camera tripod, and a laptop among other items. Electronic media are currently undergoing forensic examination.
“As this case demonstrates, our society will not tolerate sexual abuse of children,” said U.S. Attorney John Walsh. “In this case, the defendant not only traveled across state lines to sexually exploit a minor child, he also documented that horrible behavior using video recording devices. Prosecuting cases such as this are a priority to protect innocent victims.”
“The FBI and our partners will continue to vigorously investigate all allegations of conduct that exploits and jeopardizes the wellbeing of our children,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “We encourage anyone who suspects this type of activity to immediately report their information to law enforcement.”
If convicted of travel with intent to engage in illicit sexual conduct, Wolf faces not less than 30 years and up to life in federal prison, as well as up to a $250,000 fine. If convicted of production of child pornography, Wolf faces not less than 15 years and up to 30 years in federal prison, as well as up to a $250,000 fine.
This case was investigated by the FBI with support from the Tehama County Sheriff’s Office. If you have any information about this case contact the Denver FBI at 303-629-7171.
Wolf is being prosecuted by Assistant U.S. Attorney Judith Smith, chief, Special Prosecutions Section, Criminal Division of the Colorado U.S. Attorney’s Office.
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 the Complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.
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."
Pueblo Man Sentenced to 71 Months in Federal Prison for Tax Evasion, Bank Fraud and Interfering with IRS LawsRead the Press Release
DENVER – Michael Destry Williams, age 49, of Pueblo, Colorado, was sentenced yesterday by U.S. District Court Judge Christine M. Arguello to serve 71 months in federal prison for tax evasion, currency structuring, bank fraud, and interfering with the IRS’s administration of the internal revenue laws, the U.S. Attorney’s Office, Internal Revenue Service - Criminal Investigation (IRS CI) and Treasury Inspector General for Tax Administration (TIGTA) announced. Williams was also ordered to serve a five year term of supervised release, following his prison sentence, and to pay a $10,000 fine and $60,597.80 in restitution to the IRS. Williams has remained in federal custody in this case since his arrest on June 26, 2013 and will ultimately be designated to a Bureau of Prisons facility to complete service of his imprisonment term.
Williams was found guilty by a jury on November 5, 2013 following a 6 day trial before Judge Arguello. Williams was indicted by federal grand jury in Denver on March 22, 2012, followed by a superseding indictment on July 26, 2012.
According to the indictment, superseding indictment and evidence presented at trial, Williams was self-employed as a general contractor focusing primarily on residential construction projects, including roofing, remodeling and the repair and restoration of residential structures sustaining fire and water related damage. He was also self-employed as a real estate investor involved in the purchase, renovation and resale (commonly known, as “fixing and flipping”) of residential properties. Williams operated under the name of Greenview Construction, Inc., a Colorado corporation.
From April 2005 and continuing through January 2008, Williams willfully attempted to evade a substantial amount of income tax and self-employment tax due and owing by him to the United States for calendar years 2005, 2006 and 2007. He failed to file income tax returns and failed to pay to the IRS income tax and self-employment tax. To conceal his income, Williams established and used trusts as part of his tax evasion scheme and structured over $90,000 in deposited funds from July 2008 through September 2008.
In November of 2009, Williams attempted to defraud a Colorado financial institution by depositing worthless fabricated United States Treasury checks for his own benefit. There were two false treasury checks totaling $55,000 payable to Greenview Construction. In February of 2010, there was a third fabricated United States Treasury check in the amount of $250,000 that Williams tendered to the El Paso County Court to settle a criminal misdemeanor case for which he had been sentenced to a jail term.
From October 2008 through December 2010, Williams mailed numerous frivolous correspondences to the Secretary of the Treasury as well as various IRS offices in an attempt to obstruct and impede the administration of the internal revenue laws. The obstructive efforts included attempts by Williams to target State of Colorado judicial officers who had presided over three separate state cases in which Williams was named as a defendant. In particular, Williams sent IRS criminal referrals accusing one of these judicial officers and the Clerk of the El Paso County District Court with committing criminal tax and related offenses.
“As part of his wholesale disregard for his legal obligations, Mr. Williams decided simply to pocket money due to the IRS for both his income tax and his self-employment tax,” said U.S. Attorney John Walsh. “Because of his criminal actions, the defendant is going to spend nearly 6 years in federal prison.”
“This sentencing is a reminder there are serious and significant consequences for those who commit tax fraud. IRS CI will continue their pursuit of those who attempt to defraud and intentionally interfere with America's tax system,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
“Congratulations all around for the excellent work on this case,” said J. Russell George, the Treasury Inspector General for Tax Administration. “This is another example of outstanding collaboration between TIGTA and the Internal Revenue Service’s Criminal Investigation Division to stop fraudulent schemes in their tracks. Those who engage in such schemes will be investigated and referred for prosecution. Thanks to the work of Mr. Harmon and his entire office, such individuals are prosecuted to the fullest extent of the law.”
This case was investigated by agents with IRS Criminal Investigation (IRS CI) and U.S. Treasury Inspector General for Tax Administration (TIGTA). The case was prosecuted by Assistant U.S. Attorney Kenneth Harmon with assistance from the Department of Justice Tax Division Trial Attorney Kevin Sweeney.
U.S. Attorney John Walsh's Testimony Before Congress Regarding Departrment of Justice's Marijuana Enforcement EffortsRead the Press Release
Click on link at bottom of page to read Colorado U.S. Attorney John Walsh's testimony presented to the House Committee on Oversight and Government Reform, Subcommittee on Government Operations, on March 4, 2014, regarding the Department of Justice's marijuana enforcement policy.
March 4, 2014 testimony of U.S. Attorney John Walsh, District of Colorado
U.S. Attorney John Walsh to Testify Before Congress Regarding Departrment of Justice's Marijuana Enforcement EffortsRead the Press Release
U.S. Attorney John Walsh, District of Colorado, and DEA Deputy Administrator Thomas Harrigan will testify before the House Committee on Oversight and Government Reform, Subcommittee on Government Operations, regarding the Department of Justice's marijuana enforcement policy. The testimony is scheduled for tomorrow, Tuesday, March 4th at 11:30 a.m. MST.
Stevie Marie Anne Vigil Sentenced to Federal Prison for Purchasing Firearm for Evan EbelRead the Press Release
Click here for the government's sentencing statement regarding the Stevie Vigil case
DENVER -- Stevie Marie Anne Vigil, of Commerce City, Colorado, was sentenced today by U.S. District Court Judge Christine M. Arguello to serve 27 months in federal prison for knowingly transferring a firearm to a convicted felon. Following her prison term, Vigil was ordered to serve 3 years on supervised release. At the conclusion of the sentencing hearing Vigil was remanded into federal custody. Today’s sentencing was announced by United States Attorney John Walsh, 18th Judicial District Attorney George Brauchler and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Denver Special Agent in Charge Luke Franey, and Colorado Bureau of Investigations Director Ron Sloan.
Vigil was indicted by a federal grand jury in Denver on August 8, 2013. She pled guilty before Judge Arguello on October 22, 2013. Vigil was sentenced today, Monday, March 3, 2014.
According to the indictment, and other court documents, on March 8, 2013, Vigil knowingly disposed of and transferred a firearm to Evan Ebel, knowing and having reasonable cause to believe that Evan Ebel had been convicted of a crime punishable by imprisonment for a term exceeding one year. Ebel used the firearm he received from Vigil to murder Colorado Department of Corrections Executive Director Tom Clements and a hard working family man named Nathan Leon. It was also used to shoot a Texas law enforcement officer in the chest and head during a routine traffic stop. Finally, Ebel fired the weapon out the window at law enforcement officers while engaged in a high speed pursuit that reached speeds of over 120 miles per hour.
“Today’s sentence was just,” said U.S. Attorney John Walsh. “Defendant Vigil unlawfully bought a gun for Evan Ebel, knowing he was a felon, and knowing that he was capable of violence. Today’s sentence cannot restore Tom Clements or Nate Leon to their families, or undo the damage done by Ebel with that weapon. But it sends a clear message of the determination of local, state and federal law enforcement in Colorado to work together to ensure the safety of the public, and to bring wrongdoers to justice.”
“Today, Stevie Vigil lost her freedom for giving a handgun to a known felon,” said George H. Brauchler, District Attorney for the 18th Judicial District. “Her reckless disregard for the law resulted in the cold-blooded murder of two good men-- two good fathers, husbands, and sons. The cooperative efforts of Assistant District Attorney Mark Hurlbert and the U.S. Attorney’s Office in the pursuit of justice are the reasons Ms. Vigil received the sentence that she did. We will continue to vigorously enforce laws that seek to keep guns out of the hands of convicted violent felons. Those who would wantonly provide a gun to a convicted felon should note that their treatment by the justice system will be a direct reflection of the worst outcome of that felon’s use of the gun.”
“We know that gun crime in Colorado is fueled by weapons that have been trafficked into the wrong hands,” said Denver ATF Special Agent in Charge Luke Franey. “Unfortunately, this case is an example of the destruction and violence that is inflicted on our communities and is the direct result of straw purchasing. ATF is committed to reducing gun violence by continuing to investigate and arresting those who illegally supply firearms to prohibited individuals.”
“The investigation involving Stevie Vigil was a collaborative effort of the local, state and federal public safety community, and it was the tireless work by the investigative and prosecution teams that yielded the results of today's sentencing,” said Colorado Bureau of Investigation Director Ron Sloan. “However, as law enforcement spent countless hours on this case, the families of the victims remained in the forefront with all of us. Their journey this past year is difficult to comprehend, and it is the hope that Vigil's sentencing brings some solace to the families of Tom Clements, Nathan Leon and to Deputy James Boyd."
The prosecution of this case is a result of a joint federal and state investigation involving multiple agencies, including: Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Colorado Bureau of Investigation (CBI), the 18th Judicial District Attorney’s Office, the Denver Police Department, the Federal Bureau of Investigation (FBI), the Englewood Police Department, the El Paso County Sheriff?s Office, the Texas Rangers, the Wise County, Texas Sheriff’s Department, the Texas Department of Public Safety, and the Colorado Department of Corrections.
Vigil was prosecuted by Assistant U.S. Attorney Richard Hosley, Chief of the U.S. Attorney’s Major Crimes Section, and Special Assistant U.S. Attorney Mark Hurlbert, Assistant District Attorney for the 18th Judicial District.
Several Colorado Residents Are Prosecuted for over $2 Million in Tax FraudRead the Press Release
DENVER – U.S. Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announce the prosecution of several criminal tax offenders this week in the District of Colorado. With tax filing season in full swing, federal officials remind citizens that it is important to file complete and accurate tax returns. Those who commit tax fraud and related crimes will be criminally prosecuted. Recent tax cases prosecuted in the District of Colorado include the following:
Byron Thomas Warnes, age 60, of Silverthorne, CO, pled guilty on February 13, 2014 to one count of obstructing and impeding the administration of the internal revenue laws. He was charged by an Information on September 25, 2013. Beginning in 2005, and continuing into August 2008, he undertook a series of acts, and structured his financial and business affairs in a way, which made it difficult for the IRS to be able to determine what assets he had available for collection of the back taxes and to be able to determine his taxable income and income tax liabilities for 2005 and subsequent years. Particularly he owed the IRS $140,144 in back taxes which he failed to pay from his 1992 tax return. Over the course of 2005 through 2007, he made at least $233,308 in real estate commissions as well as other income, but failed to report the majority of his income. As part of this pattern of obstructive conduct, Warnes also filed a false income tax return under reporting his real estate commission income by approximately $98,000. The government calculates the tax owed by Warnes for tax years 1992, 2005, 2005 and 2007 to be a total of $335,211. This case is being prosecuted by Assistant United States Attorney Ken Harmon.
Elizabeth A. Eurioste, age 64, of Aurora, CO, 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 indicted by a federal grand jury in Denver on April 9, 2013. 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 same types of false entries on returns and for the years covered by the indictment, she had approximately 1200 clients. The total amount of tax loss resulting from Eurioste’s actions for tax years 2004 through 2007 is at least $400,000. This case is being prosecuted by Assistant United States Attorneys Anna Edgar and Suneeta Hazra.
Mathew Zuckerman, age 69, of Woody Creek, CO, pled guilty on February 18, 2014 to one count of tax evasion. He was Indicted by a federal grand jury in Denver on April 25, 2012. From 1986 through 2009, Zuckerman either failed to file an income tax return, or filed a return using incorrect amounts. In 1998, Zuckerman and a business partner formed Silicon Valley New Issues, Inc. and began to specialize in taking small companies public through reverse mergers of existing corporate shells. Zuckerman evaded corporate income taxes on several million dollars of taxable income in 1999 from Silicon Valley New Issues, Inc. and concealed his profits by not filing Form 1120 corporate tax returns, filing false Form 1120-S tax returns, filing false Form 1040 individual tax returns, and by acquiring assets such as personal residences and stock investments in corporate/trust nominee names. Over the course of the next 10 years, Zuckerman, continued to conceal his assets and business affairs from the IRS by utilizing additional corporations and trusts. For his efforts to avoid payment and collection of outstanding tax liabilities, he agrees to make restitution to the IRS in the amount of $693,706. Zuckerman is scheduled to be sentenced on July 31, 2014. This case is being prosecuted by Assistant United States Attorney Tim Neff.
Randall Vannoy Heath, age 52, of Colorado Springs, CO, was sentenced on February 18, 2014 to serve 84 months in federal prison for a false claim against the IRS and aggravated identity theft followed by 3 years on supervised release. He was also ordered to pay $172,756 in restitution to the IRS. In August 2010, Heath stole records consisting of personal information of clients from College Consultant Group, Inc. after the business had ceased operations. Heath used the records to engage in a variety of identity theft-related activities, to include production of counterfeit driver’s licenses and counterfeit government photo identifications. With this information Heath filed false 2010 Form 1040, U.S. Individual Income Tax Returns, in the victims’ names. As part of the scheme, he also created false Form W-2, Wage and Tax Statements. Heath received fraudulent refunds ranging from $7,000 to $23,000 for each of the false claims filed with the IRS, totaling over $275,000 of which resulted in the IRS issuing $172,756 in fraudulent tax refunds to Heath. The United States Postal Inspection Service assisted in the investigation. This case was prosecuted by Assistant United States Attorney Richard Hosley.
“All of us have a responsibility to follow the law, which includes filing tax returns when required and paying any taxes due,” said U.S. Attorney John Walsh. “Willfully failing to comply with the law can result in criminal consequences, as these cases show.”
“Every one of these cases falls on the IRS Dirty Dozen Tax Scam list which was released last week,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “Honest taxpayers should be aware of these scams to help protect themselves. Individuals who perpetrate such scams, beware it is a simple matter of time, we will find you and bring you to justice.”
Denver Man Sentenced to Federal Prison for Being A Felon in Possession of A FirearmRead the Press Release
DENVER – Reginald Jerome Wray, age 35, of Denver, was recently sentenced by U.S. District Court Judge Raymond P. Moore to serve 77 months in federal prison, followed by 3 years on supervised release, for being a felon in possession of a firearm, U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Luke Franey announced. Wray, who appeared at the sentencing hearing in custody, was remanded at the end of the proceeding.
Wray was indicted by a federal grand jury in Denver on May 8, 2013. He pled guilty before Judge Moore on November 4, 2013. Wray was sentenced on February 19, 2014.
According to the stipulated facts contained in the plea agreement, on April 1, 2013, shortly before 2:00 a.m., Denver police attempted to make a traffic stop of a speeding Jeep Commander SUV. When the officer turned on his overhead lights, the SUV took off at a high rate of speed and eluded the officer. The SUV turned a corner and crashed into two parked cars. The driver, who was the sole occupant of the vehicle, fled from the SUV on foot. Police officers gave chase and found the defendant, Reginald Jerome Wray, hiding behind a wall near the scene of the accident. The defendant admitted that he was the driver of the SUV.
Police conducted an inventory search of the SUV. Inside, officers found a firearm, specifically a Charter Arms, Bulldog .44 caliber revolver, loaded with 5 rounds of ammunition. Officers also found marijuana, Diazepam (Valium), a portable scale, and two cell phones in the vehicle. The defendant intentionally fled from police because he was on the run, as he was on parole and had an active warrant for a parole violation.
Prior to April 1, 2013, the defendant was a convicted felon and prohibited person. He had previously been convicted of the following felony offenses punishable by more than one year imprisonment:
* 8/16/2010: Marijuana - Possession of 8 oz or More, Boulder County, Colorado, District Court Case No. 2010CR0221;
* 6/18/2010: Escape - Attempt from Felony Pending, Boulder County, Colorado, District Court Case No. 2010CR00008;
* 10/8/2009: Possession of Weapon by Previous Offender, Boulder County, Colorado, District Court Case No. 2008CR1488;
* 11/15/2002: Possession of Schedule 2 Controlled Substance, Denver County, Colorado, District Court Case No. 2002CR3054;
* 2/3/2000: Felony Menacing, Arapahoe County, District Court, Case No. 1999CR3166
During sentencing, Judge Moore ruled that the defendant’s prior statutory rape conviction, a misdemeanor under Colorado law, qualified as a felony crime of violence for sentencing purposes. Specifically, in 2007, the defendant was convicted in Jefferson County of Sex Assault – 10 Year Age Difference. In that case, the defendant, 29-years-old at the time, had sexual intercourse with a 16-year-old minor in an automobile. He received 24-months in jail for that offense. A violation of this state law is a Class 1 misdemeanor and an “extraordinary risk” crime under Colorado law, punishable by up to 24 months imprisonment. While the crime may be classified as a “misdemeanor” under state law, it is considered a felony for sentencing purposes because it carries a potential penalty of more than one year imprisonment. The judge’s ruling increased the defendant’s prison sentence.
“The defendant’s long criminal record demonstrates that he remains a danger to the community,” said U.S. Attorney John Walsh. “As today’s sentence shows, felons in possession of firearms face stiff prison sentences.”
“ATF will continue to identify violent offenders who violate federal firearms law,” said Denver ATF Special Agent in Charge Luke Franey. “Taking these felons off the streets of Denver will make our communities a safer place to live.”
“This is a great example of how the Denver Police Department works closely with our State and Federal Law Enforcement partners,” said Denver Police Chief Robert White.
This case was investigate by the ATF and the Denver Police Department.
Wray was prosecuted by Assistant U.S. Attorney Richard A. Hosley, Chief of the Major Crimes Section, Criminal Division.
Human Trafficking Awareness Day: JFW CommentsRead the Press Release
[Thank you, Gov Hickenlooper] I would like to thank the organizers of today’s events, including event Chair Tamra Farah, and the many representatives of law enforcement who are here today and committed to fighting human trafficking, ranging from Colorado Attorney General John Suthers, to key federal law enforcement officials, elected officials and and members of victim communities.
Human trafficking is a crime that hides in plain sight, all around us. Women, children and men from the United States and around the world, are kidnapped, coerced or tricked into working in conditions that are little different than slavery or indentured servitude. They are forced to work in the sex industry, but also in other jobs where they are forced to pay their captors much of their earnings – construction, or other jobs where they are left with barely enough to eat.
Due to the hard work of community groups and law enforcement, this terrible, insidious crime is being fought and victims rescued every day.
Just last week, the U.S. Attorney’s Office, working with Homeland Security and the State Department, obtained a stiff sentence in federal court against one trafficker – Kizzy Kalu. With false promises of university teaching jobs, Kalu enticed hundreds of foreign nurses to come to Colorado. Once they arrived here, however, they found the promised jobs did not exist. Instead, Kalu forced them to find and work at menial jobs and pay him tens of thousands of dollars -- or face deportation on his accusation.
I am proud to say that the hard work of the U.S. Attorney’s Office and federal law enforcement – and the bravery of the nurses who testified -- resulted last week in Kalu receiving a nearly 13 year federal prison sentence.
But victories like this are just one step. Today in Colorado, thousands of women, children and men remain the victims of human trafficking, forced labor and sexual exploitation. We in federal law enforcement pledge our continued determined efforts to rescue them and prosecute their tormentors.
Thank you very much.
Final Defendant Pleads Guilty to Wire Fraud and Money Laundering as Part of A $5 Million Ponzi SchemeRead the Press Release
DENVER – Stanley W. Anderson, age 69, of Arvada, Colorado pled guilty before U.S. District Court Judge Christine M. Arguello late last week to one count of wire fraud and one count of money laundering, federal law enforcement announced. Anderson, who is free on bond, is scheduled to be sentenced by Judge Arguello on May 6, 2014. 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 twelve and thirty months, respectively, to federal prison.
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.
Colorado U.S. Attorney Issues Statement Regarding Marijuana Banking GuidanceRead the Press Release
DENVER -- Colorado U.S. Attorney John Walsh issued the following statement:
“Today the Deputy Attorney General for the Department of Justice issued guidance to U.S. Attorney's Offices as to the exercise of prosecutorial discretion regarding banking and marijuana. That guidance seeks to mitigate the public safety concerns created by high-volume cash-based businesses without access to banking and the financial system, while at the same time ensuring that criminal organizations, gangs and drug cartels do not have access to the financial system to launder criminal proceeds. The Colorado U.S. Attorney's Office will follow this guidance. In addition, the Department of Treasury (FinCEN) today is issuing a guidance memo to the banking industry on this subject.”
John Walsh
U.S. Attorney, District of ColoradoClick here to view the Department of Justice's marijuana banking guidance
Thornton Woman Indicted for Aiding and Assisting in the Preparation of False Tax ReturnsRead the Press Release
DENVER – Geraldine Juanita Sotelo, age 64, of Thornton, Colorado, was indicted by a federal grand jury in Denver on January 28, 2014 on charges of aiding and assisting in the preparation of false tax returns, the United States Attorney’s Office and IRS – Criminal Investigation announced. The indictment remained under seal until Sotelo made her initial appearance on Tuesday in U.S. District Court in Denver. At that hearing, U.S. Magistrate Judge Craig B. Shaffer advised the defendant of her rights as well as the charges pending against her. She was also arraigned and then released on bond. A tentative trial date of April 14, 2014 has been set.
According to the indictment, from February 2008 continuing through March 2008, Geraldine Sotelo willfully aided and assisted in, procured, counseled, and advised, in the preparation and presentation of six 2007 Form 1040, U.S. Individual Income Tax Returns for various taxpayers. The tax returns were fraudulent and false in that they included claims for credits for child and dependent care expenses, child tax credits, personal property taxes paid, gifts to charity paid by cash or check, and unreimbursed employee expenses. This fraudulent tax returns gave certain taxpayers credits who were not entitled to receive them, did not make the described payments or did not have unreimbursed employee expenses which all fraudulently reduced the taxpayer’s income.
Sotelo continued a similar pattern in 2009 and 2010 during tax filing season by assisting or preparing ten 2008 and ten 2009 Form 1040, U.S. Individual Income Tax Returns for various taxpayers. The tax returns were fraudulent and false as they included expenses and credits as mentioned above and further including business losses, medical and dental expenses for which the taxpayers were not entitled to which also fraudulently reduced they taxpayer’s income.
“We all have a responsibility to file our tax returns accurately, and not to take fraudulent advantage of our fellow taxpayers,” said U.S. Attorney John Walsh. “Filing false tax returns not only hurts the American taxpayer, it is also a crime with serious consequences.”
"As we approach tax filing season, this is a reminder taxpayers should choose carefully when hiring a tax preparer. In the end the taxpayer is ultimately responsible for their tax liability,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. For tips on Choosing a Tax Professional go to www.irs.gov .
Sotelo was charged with 26 counts of aiding and assisting in the preparation of false tax returns, which carries a penalty of not more than 3 years in federal prison, and a fine of up to $100,000 per count.
This case was investigated by Internal Revenue Service – Criminal Investigation.
The charges contained in the indictment are allegations, and the defendant is presumed innocent until proven guilty.
Denver Man Sentenced to Prison Term for Multi-Million Dollar Real Estate Fraud SchemeRead the Press Release
DENVER – Roger K. Howard, age 51, of Englewood, Colorado, was sentenced on Tuesday by U.S. District Court Judge R. Brooke Jackson to serve 108 months in federal prison for wire fraud and money laundering, the United States Attorney’s Office, IRS Criminal Investigation and the Federal Bureau of Investigation announced. Following his prison sentence, Howard was ordered to serve 3 years on supervised release. He also has to pay $8.9 million in restitution to the victims of his crime. The defendant, who appeared at the sentencing hearing free on bond, was ordered to report to a facility designated by the U.S. Bureau of Prison within 15 days from the date of designation.
Howard, along with a co-defendant, Oai Quang Luong, age 45, were indicted by a federal grand jury in Denver on January 25, 2012. Howard pled guilty on June 21, 2013. He was sentenced on February 11, 2014. Howard’s co-defendant, Oai Quang Luong pled guilty to wire fraud on May 22, 2013 and was sentenced by Judge Jackson on August 15, 2013 to serve 18 months in prison. Luong was ordered to pay restitution totaling $3.2 million joint and several with Howard.
According to the facts contained in the indictment as well as the stipulated facts contained in the plea agreement, in 2006 and 2007, Howard devised and participated in three similar but separate mortgage-fraud schemes. The first and larger scheme involved the sales of twenty-six town homes in a development known as Oliveglen Villas on East Princeton Place, Aurora, Colorado. The second scheme involved the sale of a residence in Castle Rock, Colorado, and the third a house in Denver, Colorado. During the relevant times, Howard operated under the business names of Spring Creek Mortgage Real Estate Services and Open Range Development LLC. Howard controlled bank accounts in the names of both companies. Also at the relevant time, Howard’s co-defendant, Oai Luong, worked for a company that processed mortgage loan applications on behalf of potential home buyers. Both Howard and Luong had offices in the same building in Centennial, Colorado.
By the middle of 2006, the developer of Oliveglen Villas had accumulated an inventory of unsold town homes. At that time, two real estate agents attempted to obtain the right to buy some of the town homes, but they were unsuccessful. The agents then were referred to Howard, who told them that he could arrange for individuals, whom he described as investors, to purchase the properties. In August 2006, Howard asked Luong to obtain the $250,000, and Luong did so, using funds loaned by another individual. Howard persuaded seventeen individuals, his so-called investors, to purchase the town homes.
Howard arranged for the individuals to obtain the mortgage loans, and in doing so he knowingly caused the applications for those mortgages to include false or misleading information or omit material information. Many of the applications overstated borrowers’ monthly incomes, often claiming incomes were more than double the actual amounts. Loan applications also contained false information about borrowers’ assets, usually bank account balances. As part of the mortgage application process, a borrower obtained from his or her bank a form known as a Request for Verification of Deposit (VOD), which verified the balance of an account. In this case, VODs were misleading because Howard and others working at his direction arranged for bank account balances to be inflated temporarily; that is, money was deposited into the accounts and, after the balances were verified and the VODs were completed, the money was withdrawn. All of the town-home sales prices were supported by appraisals, most of which were done by an associate of Howard’s which he told the appraiser the amount he wanted.
For each closing, the closing agent prepared a settlement statement, reflecting that the disbursements of loan proceeds included a payment “from Seller’s Funds at Settlement” to Open Range Development. These payments were the “service fees” mentioned in the contract with the developer; they ranged from $85,700 to $117,204. After the closings, Howard used some of that money to make payments to all but one of the buyers, but those payments were not disclosed to the lenders or their underwriters. Howard for a time wrote checks payable to the borrowers to cover the differences between rental incomes and mortgage payments, but he stopped doing so on April 19, 2007. A few borrowers thereafter used their own money to make mortgage payments, but eventually all of the mortgages went into default and the lenders foreclosed. Ultimately there were 20 different victim lenders for the three fraudulent schemes, causing a $8.9 million loss.
“Real estate fraud hurts both individual home buyers, and as the events of 2007 and 2008 so clearly showed, the entire economy as well,” said U.S. Attorney John Walsh. “This lengthy sentence reflects the harm this defendant caused to his 20 victim lenders.”
“The FBI is committed to aggressively pursuing those who commit mortgage fraud. Falsifying information on a loan application and lying to a lender to facilitate approval for a loan is a felony,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “We hope the results of this investigation will deter others who engage in these types of fraud schemes.”
“This sentencing is a strong reminder how serious law enforcement and our courts deal with mortgage fraud,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “IRS Criminal Investigation is committed to identifying and pursuing individuals who commit such callous fraud.”
This case was investigated by agents with Internal Revenue Service Criminal Investigation (IRS-CI) and the Federal Bureau of Investigation (FBI).
The case was prosecuted by Assistant United States Attorney Suneeta Hazra.United States Reaches Settlement with Natural Supplement Stores for Violations of the Controlled Substances ActRead the Press Release
DENVER -- John Walsh, U.S. Attorney for the District of Colorado, today announced that two natural supplement stores in Colorado Springs have entered into a civil settlement with the United States and will pay $20,000 in civil penalties to resolve allegations that they violated certain provisions of the Controlled Substances Act (“the CSA”) related to the sale of ephedrine, a List 1 chemical. List 1 chemicals have legitimate purposes, but can also be used in the manufacture of controlled substances.
Ephedrine is a decongestant and bronchodilator. It works by reducing swelling and constricting blood vessels in the nasal passages and widening in the lung airways, allowing the user to breathe more easily. It can also be used to manufacture methamphetamine.
The United States alleged that between 2009 and the present, Andrew S. Holmes, as the owner and operator of Crazy Horse Nutrition, Inc. (“Crazy Horse”) and Holmestyle Nutrition LLC d.b.a. Complete Nutrition Center (“Holmestyle”), violated various provisions of the Controlled Substances Act related to the sale of ephedrine. The United States contends, among other allegations, that Holmes, Crazy Horse, and Holmestyle: sold ephedrine to customers after failing to complete periodic training and self-certifying to the DEA that the manager and all employees were following the applicable rules to sell the substance; failed to comply with the CSA’s packaging requirements for the sale of ephedrine; failed to maintain complete and accurate logbook records regarding ephedrine sales; sold ephedrine on at least one occasion to a customer without proper identification; and imported ephedrine from Canada without a registration.
“Although Ephedrine has legitimate uses, its sale is closely regulated because it can also be used to create illegal dangerous drugs – drugs that can seriously damage people’s lives,” said U.S. Attorney John Walsh.
“This action is unique in the District of Colorado and is important in that it shows the retailers will be held accountable in combating the methamphetamine epidemic in our communities,” said Drug Enforcement Administration (DEA) Denver Division Special Agent in Charge Barbra Roach.
In entering into a civil settlement, Holmes, Crazy Horse and Complete Nutrition did not admit to liability, and the agreement indicates that the parties entered into the settlement to avoid the uncertainty and expense of further litigation.
The investigation was conducted by the Drug Enforcement Administration. The United States was represented in this matter by Assistant United States Attorney Amanda Rocque and Special Assistant United States Attorney Matthew Mussetter of the U.S. Attorney’s Office in Denver, Colorado.
Highlands Ranch Man Sentenced for Forced Labor and Trafficking in Forced Labor as Well as Other OffensesRead the Press Release
DENVER – Kizzy Kalu, age 49, of Highlands Ranch, was sentenced today by Chief U.S. District Court Judge Marcia S. Krieger to serve 130 months in federal prison after earlier being found guilty of mail fraud, visa fraud, human trafficking and money laundering. Following his prison sentence, Kalu was ordered to serve 3 years on supervised release, and pay $3,790,338.55 in restitution to the victims of his crime. Kalu, who appeared at the sentencing hearing in custody, was remanded at its conclusion.
Kalu was first indicted by a federal grand jury in Denver on March 1, 2012. After a 17‑day jury trial, Kalu was found guilty of 89 counts of mail fraud, visa fraud, human trafficking and money laundering on July 1, 2013. He was found not guilty of 6 counts. The jury deliberated for approximately a day and a half before reaching its verdict.
Prior to trial, co-defendant, Philip Langerman, age 78, of McDonough, Georgia, pled guilty for his role in the criminal scheme. Langerman was sentenced by Chief Judge Krieger to serve 3 years on probation. He was also ordered to pay restitution totaling $3,790,338.55 joint and several with Kalu. Langerman appeared at the hearing free on bond.
According to the indictment and evidence presented at trial, Kalu and Langerman were involved in a scheme making false representations to foreign nationals, to the State of Colorado, to the United States of America, and others for the purpose of obtaining money. Kalu and Langerman provided false information to the U.S. government to obtain the apparent lawful presence in the U.S. of foreign nationals. The foreign nationals then worked for nursing homes and other long‑term care facilities. Those facilities paid Kalu’s company, Foreign Healthcare Professionals Group, for the hours the foreign nationals worked. Kalu retained approximately 40% of the money earned from the labor of the foreign nationals.
Among the false information provided to the U.S. government was that the foreign nationals would be employed by Adam University as nurse instructor supervisors (which were considered "specialty occupations" under U.S. immigration law and regulations) and earn more than the prevailing wage so as not to undermine the wages of U.S. workers. Adam University existed largely in name only and had no genuine need for nurse instructor supervisors. The foreign nationals were granted H‑1B visas based on fraudulent representations permitting them to be employed as nurse instructors/supervisors by the largely nonexistent Adam University. Rather than working in specialty occupations, the foreign nationals worked as nurses.
Kalu also made false representations to the foreign nationals, including that they would have full time work available in Colorado. Upon their arrival, they learned that they would have to interview for positions and would not be employed by Adam University in a clinical setting. Some were unable to find full time work. Some learned that Kalu would not allow them to travel freely. Kalu threatened to cause their deportation if the foreign nationals did not provide him their labor and services. As Kalu’s scheme evolved, Kalu directed that the foreign nationals find work on their own and be paid directly by the healthcare facilities. However, Kalu demanded that the foreign nationals pay him between $800 to $1,200 a month or face deportation. Kalu threatened to notify the U.S. Department of Homeland Security and have their visas canceled if they did not pay him the money he demanded. Kalu used debt to help keep the foreign nationals with him. Many had gone deeply into debt to pay him for assistance in obtaining the visas. In addition, Kalu required the foreign nationals to sign employment contracts that provided they would owe Kalu $25,000 if they left his employment.
“Forced labor is a deplorable crime that is intolerable in a free society,” commented Acting Assistant Attorney General Jocelyn Samuels. “These defendants used fraud and deception to lure the victims into the United States, then used a scheme of debts and threats to hold the guest workers in fear. The Civil Rights Division commends the District of Colorado for bringing these traffickers to justice.”
“One of the most important missions the U.S. Attorney’s Office has is protecting the civil liberties and civil rights of individuals, including those who come here from other countries,” said U.S. Attorney John Walsh. “The defendant brought people to the United States under false pretenses, made them work for little pay, and threaten to have them deported if they spoke up. This is classic human trafficking, and as today’s sentence demonstrates, we are committed to stopping those who commit this serious federal crime.”
"The sentencing in this case is indicative of the seriousness of these crimes and the degree that the Diplomatic Security Service is committed to fighting human trafficking and ensuring the integrity of our documents," said Daniel M. Childs, Resident Agent in Charge, Denver Resident Office, Diplomatic Security Service, U.S. Department of State. "This is a textbook case of large‑scale fraud, exploiting workers who are seeking a better life. The tireless efforts of our partners have guaranteed a result that will punish and discourage these acts in Colorado and throughout the world."
"Mr. Kalu fraudulently enticed many foreign nurses to the United States with false promises of jobs," said Kumar C. Kibble, special agent in charge of HSI Denver. "Then, after threatening them with deportation, he coerced money from them on a monthly basis. Homeland Security Investigations, with our law enforcement partners, aggressively investigates and pursues prosecution against modern‑day slavery criminals like Mr. Kalu. For the desperation he has caused to so many people, he deserves every day of the prison sentence he was awarded."
"Today's sentencing highlights our efforts to investigate fraud against the Department of Labor's foreign labor certification program. The defendant devised a scheme to falsify labor certification applications and illegally obtain H-1B visas for foreign nationals, whose earnings he then stole for personal gain. The Office of Inspector General and its law enforcement partners remain committed to investigating these types of crimes," said David C. Wickersham, Special Agent‑in‑Charge for the Dallas Regional Office of the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.
This case was investigated by the Department of State’s Diplomatic Security Service, ICE Homeland Security Investigations, and the U.S. Department of Labor’s Office of the Inspector General, Office of Labor Racketeering and Fraud Investigations. Further critical support was provided by U.S. Citizenship and Immigration Services, Office of Fraud Detection and National Security and the Douglas County Sheriff’s Office.
Kalu was prosecuted by Assistant U.S. Attorney Robert Brown and ICE Special Assistant U.S. Attorney Beth Gibson.
Utah Man Sentenced for Threatening CEO of Anti-Doping AgencyRead the Press Release
DENVER – Robert Hutchins, age 60, of Sandy, Utah, was sentenced this morning by Chief U.S. District Court Judge Marcia S. Krieger to serve 1 year probation, with mental health treatment, for sending interstate communications involving a threat, U.S. Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Chief Judge Krieger also ordered Hutchins to serve 50 hours of community service and pay a fine of $3,300, which represents the cost to supervise a person on probation for a year.
Hutchins was indicted by a federal grand jury in Denver on July 10, 2014. He pled guilty before Chief Judge Krieger on November 4, 2013. The defendant was sentenced today, February 10, 2014.
According to the stipulated facts contained in the plea agreement, in 2012, the United States Anti-Doping Agency (USADA) had been investigating allegations that cyclist Lance Armstrong had achieved his prodigious record by cheating; by “doping” and using drugs and other improper means to win. As the investigation heated up in the summer of 2012, Chief Executive Officer of USADA, Travis Tygart, received a barrage of negative public comment, mostly via emails, about USADA’s investigation. In August 2012, it was anticipated that USADA would announce its findings, including that Lance Armstrong would banned from cycling for life. On August 23, 2012, Lance Armstrong released a press statement that he would not challenge USADA’s findings. The negative emails intensified. On August 24, 2012, USADA, as predicted, made the announcement that Lance Armstrong would be banned from cycling for life and disqualified of all his competitive results from August 1, 1998, through August 24, 2012. This disqualification included being stripped of his seven Tour de France titles.
Among the members of the public who were angry over USADA’s methods and conclusions was the defendant, Mr. Hutchins. Beginning in July 2012, Mr. Hutchins sent two emails USADA voicing his displeasure. Those emails, while scathing in tone and full of invective, were not threatening.
On the evening of August 23, 2012, Mr. Hutchins crossed the line and made threats to Travis Tygart. The email was sent to one of USADA’s email addresses with the subject line “Travis Tygert [sic] Hope you have body guards and bullet proof vest.” The email read as follows:
Travis Tygert [sic], Hope you have body guards and bullet proof vest, your [sic] a dead man mother f@%&*#. You just don’t know what you’ve done!!!
You’re a** is f@%&*#.The email was traced to Mr. Hutchins in Sandy, Utah. As a result of the threatening email sent on August 23, 2012, Mr. Travis Tygart hired private security for himself and his family, and moved his family to a secure location while the FBI investigated the source of the threat.
This case was investigated by the FBI.
The defendant was prosecuted by Assistant U.S. Attorney Valeria Spencer.
Lakewood Man Sentenced to Prison for Taking Dead Aunt's Social Security Benefits for 25 YearsRead the Press Release
DENVER – John W. Stitt, age 66, of Lakewood, Colorado, was recently sentenced by U.S. District Court Judge R. Brooke Jackson to serve one year and a day in federal prison for theft of government funds, U.S. Attorney John Walsh and Social Security Administration Office of the Inspector General Special Agent in Charge Wilbert Craig announced. Following his prison sentence, Stitt was ordered to spend 3 years on supervised release. He was also ordered to pay restitution to the Social Security Administration, the agency he took the funds from, totaling $236,187.70. The defendant appeared at the sentencing hearing free on bond, and was ordered to report to a designated prison on a date certain.
Stitt was indicted by a federal grand jury in Denver on April 25, 2013. He pled guilty before Judge Jackson on November 7, 2013. He was sentenced on January 29, 2014.
According to the stipulated facts contained in the plea agreement, on October 12, 1986, John Stitt’s aunt, Helen L. Stitt, passed away. She was 78 years old. John Stitt was listed as the informant on Helen’s Colorado death certificate. And since March of 1986, seven months prior to her death, he was added as an authorized signer on Helen’s bank account. Following Helen’s death, John Stitt continued to collect Social Security retirement benefits that were deposited in Helen’s bank account. This continued for 25 years – from October 1986 through November, 2011. During that time, Stitt periodically wrote personal checks bearing his deceased aunt’s name and bank account information to himself and then signed the check himself as an authorized signer. He then converted these government funds for his personal use or gain. Stitt failed to notify Social Security that his deceased aunt was still receiving benefit payments following her death. In total, John Stitt received $236,187.70 in Social Security benefits meant for his deceased aunt, all the while knowing these funds were not intended for him.
“Concealing the death of a loved one in order to steal their Social Security benefits is both despicable and criminal,” said Wilbert Craig, Special Agent in Charge of the Social Security Administration’s Office of the Inspector General, Denver Field Division. “This investigation demonstrates the seriousness with which Social Security Administration’s Office of the Inspector General responds to allegations of fraud against the Social Security Administration (SSA) and its beneficiaries. Though SSA has worked hard to improve the process by which deaths are reported and recorded, our agency will aggressively pursue the few determined individuals who attempt to defraud our system. We are pleased with the successful actions of the U.S. Attorney’s Office in bringing this individual to justice.”
This case was investigated by the Social Security Administration Office of the Inspector General’s Office of Investigations.
Stitt was prosecuted by Assistant U.S. Attorney Martha A. Paluch.
Denver Man Indicted and Arrested for Production, Distribution and Possession of Child PornographyRead the Press Release
DENVER – Minh Thong, age 30, of Denver, Colorado, appeared in court today on charges of production, distribution and possession of child pornography, United States Attorney John Walsh and Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Kumar Kibble announced. Thong was originally arrested at Los Angeles International Airport (LAX) as he attempted to travel to Hong Kong. The defendant appeared in federal court in Los Angeles (the Central District of California). A U.S. Magistrate Judge there ordered U.S. Marshals to transport Thong to Denver. Thong made his initial appearance in U.S. District Court in Denver this afternoon before U.S. Magistrate Judge Craig B. Shaffer, where he was advised of his rights and the charges pending against him. Thong is scheduled to next appear before Magistrate Judge Shaffer on Thursday, February 13th, 2014 at 2:00 p.m. for a detention hearing and for arraignment.
Thong was first charged by Criminal Complaint on January 20, 2014. He was then indicted by a federal grand jury on January 27, 2014.
According to court documents, including the affidavit in support of the original Criminal Complaint, on July 10, 2013, a HSI special agent in Seattle, while functioning in an undercover capacity, used the internet to connect to a Peer to Peer file sharing program (a/k/a FSP). The special agent was able to download child pornography from a specific person using a specific username at a unique IP address. The agent was not only able to download child pornography, the agent was also able to view thumbnail images before choosing which images or videos to download.
Further investigation revealed that the IP address resolved at an address in Denver, and was registered to Minh Thong. A federal search warrant for Thong’s residence was then obtained and executed. Special Agents and officers found child pornography on Thong’s computer. Thong obtained child pornography from others using Peer to Peer software. He also produced child pornography by accessing video chat websites where individuals can see each other using a web cam. Thong used a program to play a video of a younger female or younger male so that the minor person on the other end of the web cam chat believed they were chatting with someone other than Thong. During those chats Thong was able to convince users on the other end of the chats to disrobe and/or masturbate. He recorded the video chat and saved the files. Special Agents are in the process of identifying minor victims.
“Our HSI special agents are dedicated to investigating predators who misrepresent themselves on the Internet to sexually exploit our children,” said Kumar C. Kibble, special agent in charge of HSI Denver. “These predators who produce child pornography electronically memorialize their horrific acts against children, and share these images with like-minded depraved individuals. To protect children from being sexually exploited, HSI is a federal law enforcement leader in investigating these crimes against children domestically and internationally.”
Thong is charged with one count of production of child pornography, which carries a penalty of not less than 15, and not more than 30 years imprisonment, and up to a $250,000 fine. He faces one count of distribution of child pornography, which carries a penalty of not less than 5 years, and not more than 20 years imprisonment, and up to a $250,000 fine. Thong also faces one count of possession of child pornography, which carries a penalty of not more than 10 years imprisonment, and up to a $250,000 fine.
This case is being investigated by Homeland Security Investigations (HSI). Anyone who may have been deceived by Thong is asked to contact the HSI Tipline toll-free at 1 (800) 347-2423, or submit a tip on the Internet at: www.ice.gov/tips.
Thong is being prosecuted by Assistant U.S. Attorney Alecia Riewerts Wolak.
The charges contained in the government filings are allegations, and the defendant is presumed innocent unless and until proven guilty.
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."
Former El Paso County Sheriff Deputy Is Sentenced to 30 Months in Federal Prison as Part of Ponzi SchemeRead the Press Release
DENVER – David N. Hawkins, age 46, of Colorado Springs, Colorado, was sentenced yesterday by U.S. District Court Judge Robert E. Blackburn to serve 30 months in federal prison for wire fraud and money laundering, the United States Attorney’s Office, IRS – Criminal Investigation, and the Federal Bureau of Investigation announced. Following his prison sentence, Hawkins was ordered to spend 3 years on supervised release. Judge Blackburn also ordered Hawkins to pay $204,348.91 in restitution to the three remaining victims who have not been paid yet. He was also ordered to forfeit $17,000 which the government has agreed to apply towards victim restitution. Hawkins, who appeared at the sentencing hearing free on bond, was ordered to report to a U.S. Bureau of Prisons facility by noon on a designated date.
Hawkins was originally charged by Information on January 2, 2013. He waived his right to be charged by Indictment. He pled guilty on March 15, 2013 to one count of wire fraud and one count of money laundering. He was sentenced on February 4, 2014.
According to the stipulated facts contained in the plea agreement, as well as the information, Hawkins was employed as a deputy sheriff for the El Paso County, Colorado Sheriff's Office. In 2006 Hawkins attended training courses on how to trade profitably in foreign currencies and the exchanges of foreign currencies (hereinafter, the "FOREX" or "foreign currency exchange" markets). He also attempted to self-educate himself concerning trading in the FOREX markets.
From in or about November 2009, when Hawkins obtained his first FOREX trading client, and continuing through early December 2011, he obtained in excess of $1.2 million from his colleagues at the El Paso County Sheriff’s Office, other law enforcement officers in El Paso County, and their respective friends and relatives for the purpose of trading these funds in the FOREX markets on their behalf. He had approximately 73 investors, most investors using personal savings or retirement funds accumulated over the years as their source of the investment funds. Estimated losses to investors collectively total approximately $204,349.
Hawkins made several false representations to investors, including investors would be guaranteed a return of 10% per month (or 120% per annum). These representations were false and at no time were the investments ever profitable.
Over time Hawkins removed investor funds from FOREX trading accounts into bank accounts he controlled. He would then use these funds either for his own personal expenses, for personal investments unrelated to FOREX investments, or to fund payments to those of his investors who requested to withdraw their principal investments. According to government financial analysis, over the course of the scheme, in addition to making Ponzi scheme payments to investors, Hawkins diverted approximately $175,587 for his own uses and purposes. At one point Hawkins applied investor funds toward the purchase of two personal automobiles and in mid-2011, using in excess of at least $70,000 in investor funds to purchase franchises and to set up operations for two semi-professional indoor arena football teams, one located in Danville, Illinois, and the other in Mesquite, Texas. The teams never became operational, and Hawkins was unable to recoup these funds.
“In this case, a law enforcement officer defrauded his colleagues and the public,” said U.S. Attorney John Walsh. “The sentence imposed today justly reflects the severity of that misconduct and breach of trust.”
“The FBI is committed to investigating complex white-collar crimes, especially when someone misuses a position of trust to exploit innocent investors,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “Hawkins abused his position, preyed on unknowing victims, and will now face the consequences of his actions.”
“All too often we hear of hard working Americans who lose their life savings to investment schemes; before you invest, protect yourself and seek out independent financial advice especially when a high rate of return is promised,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
This case was investigated by the Internal Revenue Service – Criminal Investigation (IRS-CI) and Federal Bureau of Investigation (FBI).
The case was prosecuted by Assistant U.S. Attorney Kenneth Harmon.
Former Littleton Police Officer Sentenced to 48 Months in Federal Prison for Firearm and Drug TraffickingRead the Press Release
DENVER – Jeffery Allan Johnston, age 46, of Parker, Colorado, was sentenced yesterday by U.S. District Court Judge Philip A. Brimmer to serve 48 months in federal prison, followed by 3 years of supervised release for firearm and drug trafficking crimes, United States Attorney John Walsh and Federal Bureau of Investigation (FBI) Denver Division Special Agent in Charge Thomas Ravenelle announced. Judge Brimmer also ordered a preliminary order of $25,000 in asset forfeiture in lieu of forfeiture of his residence, which was used to facilitate his criminal conduct. That money will be paid into the federal asset forfeiture fund. At the conclusion of the hearing Judge Brimmer ordered Johnston be remanded into the custody of the U.S. Marshals.
Johnston was first arrested based on a Criminal Complaint issued on July 19, 2013. He then waived his Constitutional right to indictment, and was charged by Information on August 15, 2013. He pled guilty before Judge Brimmer on October 28, 2013. He was sentenced yesterday, February 3, 2014.
According to court documents, including the stipulated facts contained in the plea agreement, as well as other court documents, in April 2012, a source told law enforcement that he (the source) attended a party at Johnston’s home. While at the party, the source claims he observed behavior consistent with the use of illegal drugs. On July 16, 2013, a source received a message from Johnston. In cooperation with the FBI, the source returned Johnston’s call and had a coded conversation about providing Johnston with MDMA. On July 19, 2013, the source, working with the FBI, traveled to Johnston’s residence. Through monitored and recorded calls before the meeting, the source had agreed to deliver 75 MDMA pills to Johnston. The source and Johnston then met at Johnston’s residence. The exchange of money and MDMA took place in the kitchen of the residence. Johnston received approximately 9.9 grams of MDMA, in the form of 37 pills and 6.3 grams of powder MDMA. Johnston paid the source $1,300 for the drugs. Following the transaction, Johnston was taken into custody and a federal search warrant was executed at the residence.
During the search agents found the MDMA used during the controlled exchange in a kitchen drawer. They also found a stainless steel Colt Officers Model .45 caliber pistol located in a small black bag, loaded with seven rounds in the magazine and one in the chamber located above the kitchen drawer that contained the drugs. Investigators eventually located a small amount of cocaine, steroids, hundreds of prescription pills, additional firearms, and hundreds of rounds of ammunition in the residence. They also found 8 other firearms, including an AR-15 and two 12 gauge shotguns. At all pertinent times, the defendant was employed as a sworn police officer.
“As a police officer who violated the public’s trust, a four year federal prison sentence is just and appropriate given the circumstances,” said U.S. Attorney John Walsh. “The fact that Johnston was involved in trafficking illegal drugs while also serving as a law enforcement officer is particularly disturbing.”
“Yesterday’s sentencing illustrates that public servants are not above the law and must be held accountable for failing to uphold their oath to maintain the public’s trust,” said FBI Denver Special Agent in Charge Thomas Ravenelle.
"Jeff was a good officer who dedicated twenty years to the Littleton community,” said Littleton Police Department Chief Doug Stephens. “His private life choices have cost him greatly and should serve as an example of how drugs ruin lives."
This case was investigated by the Federal Bureau of Investigation (FBI) with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) who traced the firearms.
Johnston was prosecuted by Assistant U.S. Attorneys Guy Till and David Conner with assistance regarding the asset forfeiture from Assistant U.S. Attorney Tonya Andrews.
Denver Paving Company Sentenced for Violating the Law by Hiring Illegal AliensRead the Press Release
DENVER – Premier Paving, Inc., a Denver corporation, was sentenced by U.S. Magistrate Judge Michael J. Watanabe on January 28, 2014 to pay $184,916.58 in forfeiture of criminal proceeds for their criminal practice of hiring illegal aliens. The money will go to the Department of Transportation federal highway fund.
Premier Paving was charged by misdemeanor Information on August 21, 2013. An executive, Russ Otterstein, on behalf of the corporation, signed an agreement on October 9, 2013, where the company pled guilty to engaging in the practice of hiring illegal aliens. On January 28, 2014, the corporation was sentenced.According to the stipulated facts contained in the plea agreement, the defendant is a Colorado corporation. From January 2007 through September 2012, the defendant hired and continued to employ aliens knowing that some of those aliens were not authorized to work in the United States. During this period, PPI hired aliens who lacked the documents required by law to complete an employment eligibility verification form (I-9). In 2007, ICE audited Premier Paving’s employment records, finding violations of hiring employees not authorized to work in the U.S. That investigation resulted in the company entering a settlement agreement with ICE on June 8, 2008 where the company agreed to pay $11,000. The agreement also stated that Premier Paving “can hire only United States citizens and aliens authorized to work in the United States.”
Subsequent to entering into that settlement agreement with ICE, Premier Paving, working with a Denver entity known as Servicios de Migracion Para Todos. As a result of that relationship, Premier Paving again began employing aliens unauthorized to work in the U.S. Another review by ICE in September 2012 determined that the company employed unauthorized workers, and failed to adequately complete I-9 forms for a number of employees hired between January 1, 2011 and September 20, 2012. Some of the employees performed work on federal transportation contracts. After ICE conducted a criminal investigation, the misdemeanor charges were filed in U.S. District Court in Denver. Premier Paving has established new procedures to ensure compliance with federal immigration-related employment laws as a result of this prosecution.
“This is the second time Premier Paving has had to pay for knowingly employing illegal aliens since 2008,” said Kumar C. Kibble, special agent in charge of HSI Denver. “Homeland Security Investigations helps ensure that these unscrupulous employers don’t gain an unfair advantage over their competition by knowingly hiring illegal workers who are paid less.”
“This sentencing sends a clear message of the severe penalties in store for those who act in a criminally irresponsible manner,” said Max Smith, U.S. Department of Transportation Office of Inspector General regional Special Agent in Charge. “Both DOT and the OIG are committed to ensuring fair competition for parties seeking to do business with the Department. We will continue to vigorously investigate and work with our law enforcement and prosecutorial colleagues to see that those who violate criminal laws are punished to the fullest extent of the law.”
This case was investigated by Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) and the U.S. Department of Transportation Office of the Inspector General (DOT OIG).
The corporation was prosecuted by ICE Special Assistant U.S. Attorney Beth Gibson and Assistant U.S. Attorney Tonya Andrews handled the forfeiture.
El Paso County Man Pleads Guilty to the Sexual Exploitation of ChildrenRead the Press Release
DENVER – Kenneth Wayne Hugo, age 37, of El Paso County, Colorado, pled guilty before U.S. District Court Judge Robert E. Blackburn recently to the sexual exploitation of children, United States Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Hugo is scheduled to be sentenced by Judge Blackburn on May 22, 2014. The defendant, who appeared at the hearing in custody, was remanded at its conclusion. Hugo was indicted by a federal grand jury in Denver on August 6, 2013. He pled guilty on January 22, 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 faces not less than 15 years, and not more than 30 years in federal prison for the sexual exploitation of children. He also faces a fine of not more than $250,000.
This case was investigated by the FBI and the Colorado Springs Police Department.
The defendant is being 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."
Bureau of Prisons Inmate Sent Back to Prison for Indecent Exposure by Sexually Gratifying HimselfRead the Press Release
DENVER – Todd A. Lawton, age 31, an inmate who was housed at the United States Penitentiary (USP) in Florence, Colorado, at the time of his crime, was sentenced on Monday, January 27, 2014 by U.S. District Court Judge Philip A. Brimmer to serve one year and a day in federal prison for indecent exposure, the Department of Justice announced. Lawton will also have to register as a sex offender. The defendant appeared at the sentencing hearing in the custody of the United States Marshal. He was remanded at the conclusion of the sentencing hearing.
Lawton was indicted by a federal grand jury in Denver on June 3, 2013. He pled guilty to two counts of indecent exposure on October 16, 2013. He was sentenced on January 27, 2014. According to the stipulated facts contained in the plea agreement, between May 21, 2012 and January 22, 2013, Lawton on multiple occasions would stand on the toilet or another object in his cell in order to make his groin area visible through the cell door window to those near his cell. Then he would sexually gratify himself when female medical or food service staff approached. He was ordered many times to cease his lewd behavior, but failed to comply with correctional staff orders.
The defendant was being incarcerated in USP Florence for various crimes while incarcerated: federal inmate possessing contraband -- weapon and assault on a federal officer. He was first incarcerated for distribution of cocaine, robbery and carrying a pistol without a license, all out of the District of Columbia. Lawton was released from the Federal Bureau of Prison custody on July 18, 2013, but was picked up by U.S. Marshals Deputies to appear before a U.S. Magistrate Judge on the indecent exposure charge. Lawton was later ordered to be detained without bond pending a resolution of his case.
“This case involved calculated acts of sexual intimidation aimed at female medical and food service staff at the United States Penitentiary at Florence,” said U.S. Attorney John Walsh. “This case and sentence reflects our commitment to protect Prison staff – and also other prison inmates – from sexual abuse of whatever form.”
This case was investigated by the Federal Bureau of Prisons Special Investigative Services Department at USP Florence.
Lawton was prosecuted by Assistant U.S. Attorney David Tonini.
Statements Regarding the Sentencing of Eric and Ryan JensenRead the Press Release
DENVER -- Eric and Ryan Jensen, owners of Jensen Farms, were sentenced this morning by U.S. Magistrate Judge Michael E. Hegarty to serve 5 years’ probation, with the first 6 months in home detention. Each defendant was also sentenced to 100 hours of community service. Finally, the Jensen brothers were each ordered to pay restitution totaling $150,000, or $25,000 per count for each of the six counts charged, consecutive, with the money going to the victims of their crime.
STATEMENT FROM U.S. ATTORNEY JOHN WALSH
“No sentence of incarceration, restitution or financial penalty can undo the tragic damage done as a result of the contamination at Jensen Farms. Today's sentence serves as a powerful reminder of farmers’ legal and moral responsibility for ensuring their product is safe. Because of the Jensen Farms case and this prosecution, changes have been made regarding how fruit is processed and transported across the country. The prosecution recommended probation in this case because of the defendants' unique cooperation, including their willingness to meet with Congress and their willingness to meet with and be confronted by the victims of their misconduct. They have committed to continue their cooperation, and have publicly and privately expressed sincere remorse. In short, they have done everything we have asked of them to mitigate the damage done. I would like to thank Assistant U.S. Attorney Jaime Peña and Special Agent Dan Burke of the FDA's Office of Criminal Investigation for their tireless efforts to bring this case to resolution, and to help the victims and their families understand what has happened, how it happened, and that everything possible has been done to reduce the chances of it ever happening again.”
STATEMENT FROM FDA OFFICE OF CRIMINAL INVESTIGATION ACTING SPECIAL AGENT IN CHARGE SPENCER MORRISON
“We sincerely hope that today’s sentencing will provide some small measure of justice to the victims of this awful tragedy. FDA will continue to appropriately utilize its resources to ensure the integrity of our nation’s food supply. “
NOTE: Spencer Morrison is the Acting Special Agent in Charge of the FDA’s Office of Criminal Investigation’s Kansas City Field Office
Pastor Sentenced to Federal Prison for Wire Fraud as Part of A $5 Million Ponzi SchemeRead the Press Release
DENVER – Pastor Charles Lawrence Kennedy, Jr., age 71, of Tampa, Florida was sentenced last week by U.S. District Court Judge Christine M. Arguello to serve one year and a day in federal prison for one count of wire fraud, federal law enforcement announced. Following his prison sentence, Kennedy was ordered to serve three years on supervised release. He was also ordered to pay restitution of approximately $315,000 to the victims of his crime. Kennedy appeared at the sentencing hearing free on bond, and was ordered to report to a facility designated by the U.S. Bureau of Prisons on a certain date.
Kennedy was indicted by a federal grand jury in Denver on March 22, 2012, along with co-defendants Stanley Wayne Anderson of Arvada, Colorado and Edwin Alexander Smith of Denver, Colorado. Smith pled guilty to one count of wire fraud on August 27, 2013. Smith is scheduled to be sentenced by Judge Arguello on February 4, 2014. Anderson has a change of plea hearing scheduled for February 6, 2014.
According to the facts contained in the indictment as well as the stipulated facts contained in the plea agreement, 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.
3Kennedy began soliciting investments in December of 2005 from fellow pastors and members of their congregations through his company Keys to Life Corporation and falsely promised that for every $1,000 invested, the minimum return would be $1,000,000 which would be paid within 90 days. From December 2005 through April 2006, Kennedy collected $460,000 from nine investors and forwarded only $145,000 to Trinity for use in the investment pool, and as a result has agreed to pay $315,000 in restitution. Kennedy in fact took a portion of investor funds for his own personal benefit.
“When a person abuses his position of trust to take fraudulent financial advantage of the people who trust him, he will face criminal consequences,” said U.S. Attorney John Walsh. “Pastor Kennedy will spend a year of his life in prison to reflect on his criminal conduct.”
“Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “Those individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable.”
“The investigation of investment fraud is an FBI priority,” said FBI Denver Division Special Agent in Charge Thomas P. Ravenelle. “We are confident the outcome of this case will deter others who seek to defraud innocent investors.”
“The defendants’ position of trust as a Religious Leader gave him the opportunity to prey on vulnerable victims causing them emotional and financial harm,” said Adam P. Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division. “It is important we stop this victimization and bring these perpetrators to justice.”
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.
Morrison Man Sentenced to Federal Prison for Possession of Destructive DevicesRead the Press Release
DENVER – Richard Lawrence Sandberg, age 36, of Morrison, Colorado, was sentenced today by U.S. District Court Judge Philip A. Brimmer to serve 51 months in federal prison for two counts of possession of unregistered firearms, U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Luke Franey announced. Following his prison sentence, Judge Brimmer ordered Sandberg to serve 3 years on supervised release. The defendant appeared at the hearing in custody, and was remanded at the hearing’s conclusion.
Sandberg was first charged by Criminal Complaint on January 23, 2013. He was then indicted by a federal grand jury in Denver on January 28, 2013. The defendant pled guilty on June 27, 2013. He was sentenced today, January 27, 2014.
According to court documents, the investigation began when a Denver Police detective learned from a confidential informant that an individual possessed destructive devices. The detective contacted ATF regarding this information. ATF, working with the confidential informant, introduced an undercover agent to meet the subject. The subject turned out to be Richard Sandberg. After a number of phone conversations the undercover agent and the confidential informant went to Sandberg’s residence, where they were shown the destructive devices. Sandberg reportedly said he wanted to trade the devices for cocaine.
During the meeting, Sandberg made numerous threatening statements towards law enforcement and specifically the ATF. At the conclusion of the meeting, Sandberg gave the undercover agent three devices, which contained explosive powder, a fuse and shrapnel in the form of stainless steel ball bearings. ATF confirmed that Sandberg was not allowed to possess such devices. A subsequent search of Sandberg’s residence resulted in the seizure of 28 additional destructive devices, several hundred rounds of ammunition, a 5.56 caliber rifle and a 12 gauge shotgun. All of the seized items were found in the garage.
“Possession of unregistered destructive devices are dangerous not only to the person who possesses them, but also to others who live nearby,” said U.S. Attorney John Walsh. “Sandberg possessed these illegal unregistered devices in a residential neighborhood, putting many, including children, at risk. His prison sentence will ensure that neighborhood is a safer place.”
“We are extremely happy with the outcome of this investigation,” said Denver ATF Special Agent in Charge Luke Franey. “Our agents have dedicated their careers to protecting the public and preventing violent crime. This investigation is a great example of both.”
This case was investigated by ATF, the Denver Police Department and the Jefferson County Sheriff’s Office. The Denver Police Department Bomb Squad, the Jefferson County Sheriff Bomb Squad and the Colorado Springs Regional Explosives Unit provided assistance at Sandberg’s residence, where the destructive devices were found.
Sandberg was prosecuted by Assistant U.S. Attorney Jeremy Sibert with assistance from Assistant U.S. Attorney David Tonini.
Three Men Arrested for Trafficking Heroin and Methamphetamine to Rocky Ford, ColoradoRead the Press Release
DENVER – Three men were arrested yesterday following a controlled delivery of heroin and methamphetamine to a house in Rocky Ford, Colorado, the U.S. Attorney’s Office and Southern Colorado law enforcement announced. The three men who were arrested appeared this afternoon in U.S. District Court in Denver, where they were advised of their rights and the charges pending against them. All three were remanded pending a detention and preliminary hearing, which is scheduled for Wednesday, January 29, 2014 at 10:00 a.m. before U.S. Magistrate Judge Boyd N. Boland.
Arrested by DEA agents and task force officers were Raymond Abeyta, age 34, Frank Gonzales, age 41, and Eric Garcia, Jr., age 29, all of Rocky Ford, Colorado. The arrest was based on a Criminal Complaint signed by a U.S. Magistrate Judge and obtained today.
According to the affidavit in support of the Criminal Complaint, on Wednesday, January 22, 2014, Arizona Department of Public Safety stopped a 2009 Nissan Maxima as it was traveling east on I-40 in Flagstaff, Arizona. A search of the vehicle was initiated. Two packages of heroin, weighing approximately 4.75 pounds were found in the padding of the rear seat back rests. Officers also recovered 3 pounds of methamphetamine which was concealed behind the glove compartment. Authorities learned that the drugs were destined for an address in Rocky Ford, Colorado. The driver had made one previous delivery of drugs three weeks prior.
The driver of the Nissan cooperated with authorities. The DEA Flagstaff Post of Duty worked with the DEA Colorado Springs Resident Office to establish a controlled delivery of the heroin and methamphetamine. On Thursday, January 23rd, 2014, the driver delivered the drugs to the Rocky Ford address. Immediately after the delivery was made, a federal search warrant was executed and three defendants were arrested. Seized from the residence was the heroin and methamphetamine, as well as approximately $100,000 in U.S. currency and a money counter.
All three defendants face one count of conspiracy to possess heroin, a Schedule I Controlled Substance, with intent to distribute over 1 kilogram. If convicted on that count, each defendant faces not less than 10 years, and not more than life in federal prison, as well as up to a $10,000,000 fine. The three defendants also face one count of conspiracy to possess methamphetamine, a Schedule II Controlled Substance, with the intent to distribute 500 grams or more. If convicted, all three face not less than 10 years, and not more than life in federal prison, as well as up to a $10,000,000 fine.
This investigation is being conducted by the DEA Colorado Springs Resident Office, the DEA Flagstaff Post of Duty, the Arizona Department of Public Safety, the Rocky Ford Police Department, and the Otero County Sheriff’s Office. The Southern Colorado Drug Task Force, which participated in this investigation, includes: DEA, FBI, and HSI/ICE, Colorado Springs Police Department, Pueblo Police Department, El Paso County Sheriff’s Office, Pueblo County Sheriff’s Office, Colorado State Patrol, and HIDTA.
The defendants are being prosecuted by Assistant U.S. Attorney Bradley Giles.
A Criminal Complaint is a probable cause charging document. Anyone accused of committing a felony violation of federal law has a Constitutional right to be indicted by a federal grand jury.
The charges in the Complaint are allegations, and the defendants are presumed innocent unless and until proven guilty.
Former Glendale Police Officer and Associate Indicted for Crimes Related to Cocaine Trafficking, Including Lying to the FBI and Illegally Accessing Crime DatabasesRead the Press Release
DENVER – Scott T. Black, age 39, of Firestone, Colorado, and Oscar S. Garcia, age 35, of Aurora, Colorado, were indicted by a federal grand jury on charges related to drug trafficking, making false statements, and unauthorized access of law enforcement databases, U.S. Attorney John Walsh, FBI Denver Special Agent in Charge Thomas Ravenelle and DEA Denver Division Special Agent in Charge Barbra Roach announced. Garcia was arrested early Thursday morning without incident. Black, a Glendale Police Officer at the time of the alleged crimes, turned himself in to FBI Special Agents at the Lakewood Police Department mid-day Thursday. Garcia appeared in U.S. District Court in Denver yesterday afternoon, where he was advised of his rights and the charges pending against him. Black is scheduled to appear in U.S. District Court in Denver at 2:00 p.m. this afternoon before U.S. Magistrate Judge Kristen L. Mix to be advised of his rights and the charges pending against him. The U.S. Attorney’s Office is seeking detention.
According to the indictment, which was returned by a federal grand jury on January 6, 2014, but restricted from public view prior to the arrest of the defendants, Garcia is charged with trafficking cocaine to people known and unknown to the grand jury. Black allegedly assisted Garcia with the cocaine trafficking by using his official law enforcement position to request Glendale Police Department dispatchers to “run” license plates through the Colorado Crime Information Center (CCIC) and the National Crime Information Center (NCIC). This was done in order to facilitate the defendants’ alleged drug trafficking. Black is also accused on two separate instances of lying to an FBI agent. The trafficking conspiracy alleged in the indictment allegedly started in March of 2011 and continued through December 2013. To the best of our knowledge no other Glendale Police Officers were involved in this incident.
Garcia faces three counts of possession with intent to distribute and knowingly distribute cocaine, which carries a penalty of not more than 20 years in federal prison, and up to a $1,000,000 fine, per count. He faces one count of use of a communications facility to facilitate drug trafficking, which carries a penalty of not more than 4 years imprisonment, and up to a $250,000 fine. He faces one count of intentionally gaining unauthorized access to a computer, which carries a penalty of not more than 5 years imprisonment, and up to a $250,000 fine. Garcia faces one count of conspiracy to possess with intent to distribute cocaine, which carries a penalty of not less than 5 years and not more than 40 years in federal prison, and up to a $5,000,000 fine. Lastly, defendant Oscar Garcia faces one count of conspiracy to gain unauthorized access to a computer data base. That crime carries a penalty of not more than 5 years in federal prison, and up to a $250,000 fine.
Black faces one count of use of a communications facility to facilitate drug trafficking, which carries a penalty of not more than 4 years imprisonment, and up to a $250,000 fine. He faces two counts of intentionally gaining unauthorized access to a computer, which carries a penalty of not more than 5 years imprisonment, and up to a $250,000 fine per count. Black faces two counts of knowing and willfully making a materially false representation (to an FBI agent), which carries a penalty of not more than 5 years imprisonment, and up to a $250,000 fine. Lastly, the defendant faces one count of conspiracy to gain unauthorized access to a computer data base. That crime carries a penalty of not more than 5 years in federal prison, and up to a $250,000 fine.
This case was investigated by the Drug Enforcement Administration (DEA), the Federal Bureau of Investigation (FBI), the Colorado Bureau of Investigation (CBI), and the Aurora Police Department. The Glendale Police Department cooperated during all aspects of the investigation.
The defendants are being prosecuted by Assistant U.S. Attorneys David Conner and Guy Till.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
Florida Man Sentenced for Sending Interstate Threatening Communications to CEO of U.S. Anti-Doping AgencyRead the Press Release
DENVER – Gerrit Kuechle Keats, age 72, of Clearwater, Florida, was sentenced this afternoon by U.S. District Court Judge R. Brooke Jackson to serve 3 years’ probation for sending threatening communications via email to the Chief Executive Officer of the U.S. Anti-Doping Agency, Travis Tygart, U.S. Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. In addition, Judge Jackson ordered Keats to pay a $5,000 fine and serve at least 540 hours of community service throughout probation. Keats was also ordered to undergo psychological treatment.
Keats was indicted by a federal grand jury on July 10, 2013. He pled guilty before Judge Jackson on October 7, 2013. He was sentenced today, January 23, 2014.
According to the stipulated facts contained in the plea agreement, in 2012, the United States Anti-Doping Agency (USADA) had been investigating allegations that cyclist Lance Armstrong had achieved his prodigious record by cheating; by “doping” and using drugs and other improper means to win. As the investigation heated up in the summer of 2012, Chief Executive Officer of USADA, Travis Tygart, received a barrage of negative public comment, mostly via emails, about USADA’s investigation. In August 2012, it was anticipated that USADA would announce its findings, including that Lance Armstrong would banned from cycling for life. On August 23, 2012, Lance Armstrong released a press statement that he would not challenge USADA’s findings. The negative emails intensified. On August 24, 2012, USADA, as predicted, made the announcement that Lance Armstrong would be banned from cycling for life and disqualified of all his competitive results from August 1, 1998, through August 24, 2012. This disqualification included being stripped of his seven Tour de France titles.
Among the members of the public who were angry over USADA’s methods and conclusions was the defendant, Keats. On October 24, 2012, Keats made threats to Tygart and his family. The email read, in part: “ . . . Travis Tygart is a f*&#ing pig who should be nailed to a tree and skinned while he watches his toady staff and filthy children being castrated.” The threatening email further said: “The greatest service I could do to mankind is kill that f*&#ing pig.”
As a result of the threatening emails, Mr. Tygart hired private security for himself and his family, and moved his family to a secure location while the FBI investigated the source of the threat.
In an unrelated case, Robert Hutchins of Sandy, Utah, pled guilty on November 4, 2013 to sending threatening communications over the internet to Mr. Tygart for similar reasons. Hutchins is scheduled to be sentenced by Chief U.S. District Court Marcia S. Krieger on February 10, 2014.
“When someone, such as the defendant, uses email to send a threat, the recipient has no way of knowing if the threat is real, resulting in severe stress,” said U.S. Attorney John Walsh. “Emailed threats are not anonymous. Law enforcement has the tools to determine who sent them, and will act to hold those responsible accountable.”
"Today's decision reaffirms the FBI's vigilance to pursue those who hide behind a computer and make death threats," said FBI Denver Special Agent in Charge Thomas P. Ravenelle.
This case was investigated by the Federal Bureau of Investigation (FBI).
The defendant was prosecuted by Assistant U.S. Attorney Valeria Spencer.
Grand Junction Man Sentenced to Prison for Sending Interstate Threatening CommunicationsRead the Press Release
DENVER -- Kenneth Royal Wheeler, of Grand Junction, Colorado, was sentenced today by U.S. District Court Judge William J. Martinez to serve 40 months in federal prison for sending interstate threatening communications, U.S. Attorney John Walsh and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Securities Investigations (HSI) Special Agent in Charge Kumar Kibble announced. Following his prison sentence, Judge Martinez ordered Wheeler to serve 3 years on supervised release. Wheeler appeared at the sentencing hearing in custody. He was remanded at the sentencing hearing’s conclusion.
Wheeler was found guilty of two counts of sending interstate threatening communications following a four-day jury trial before Judge Martinez. The jury deliberated for 75 minutes before reaching a verdict.
Wheeler was first charged by Criminal Complaint on March 20, 2012. He was indicted by a federal grand jury in Denver on March 22, 2012. A superseding indictment was obtained on May 21, 2013. The jury trial began on September 23, 2013. The verdict was handed down on September 26, 2013.
According to court documents, as well as facts presented to the jury during trial, a person called the Grand Junction Police Department to report threatening Facebook posts. The Grand Junction Police Department, working with Homeland Security Investigations, conducted an investigation and determined that the threatening posts were made by Wheeler. It was also determined the Wheeler was in Rome, Italy when he made the posts. In fact, one of the posts stated that Wheeler believed he could post anything he wanted and not be prosecuted because he was not physically in the United States.
Among Wheeler’s posts were instructions for people to kill children at a local Daycare. He also told his “followers” to kill specific police officers, as well as their families and children. In one post Wheeler said: “the americans cant punish me for what i say here in rome italy on facebook. so. kill cops. drown them in the blood of their children, hunt them down and kill their entire blood lines.”
Wheeler was arrested at the Grand Junction Airport, once he returned to the United States from Rome.“Regardless of where you are in the world, if you send a threatening communication and it crosses state lines or international boundaries, you can and will be held accountable,” said U.S. Attorney John Walsh. “The defendant thought that he could threaten people from afar, and return without consequences. He clearly learned that is not the case.”
“Individuals who make threats of violence overseas are not immune from prosecution in the United States,” said Kumar C. Kibble, special agent in charge of HSI Denver. “Anyone who threatens law enforcement officers or their families is a serious threat to everyone.”
This case was investigated by Homeland Security Investigations and the Grand Junction Police Department.
The jury trial was handled by Assistant U.S. Attorneys Colleen Covell and David Tonini. Assistant U.S. Attorney Michelle Heldmyer in the U.S. Attorney’s Grand Junction branch office provided substantial assistance during the investigation and pendency of the case.
Colorado U.S. Attorney's Office Joins in Collections of over $100 Million in Civil and Criminal Actions and Asset Forfeiture in Fiscal Year 2013Read the Press Release
DENVER -- U.S. Attorney John Walsh announced today that in Fiscal Year 2013 the United States Attorney’s Office for the District of Colorado collected a total of $94,388,632.41 for the United States, composed of collections by the Office independently in Colorado and collections obtained jointly with other offices and Department of Justice components. Of the total, the U.S. Attorney’s Office in Colorado collected $85,344,392.38 in important national level cases working with other U.S. Attorney’s Offices and the Department of Justice, some of which are described below, and collected $9,044,240.03 independently in criminal and civil actions in Colorado. Of the Colorado-specific collections, $6,887,564.95 was collected in criminal actions and $2,156,675.08 was collected in civil actions. In addition to these substantial funds, the U.S. Attorney’s Office also collected $7,634,919.00 in asset forfeiture actions in Fiscal Year 2013. Total collections joined by the Colorado office and others in Fiscal Year 2013 exceeded $100 million, more than 6 ½ times the Colorado U.S. Attorney’s budget for Fiscal Year 2013, $15,414,747.00.
Attorney General Eric Holder recently announced that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending September 30, 2013. The more than $8 billion in collections in FY 2013 represents over three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“The department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the American people,” said Attorney General Holder. “It is critical that Congress provide the resources necessary to match the department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”
“In addition to the many millions of dollars that the U.S. Attorney’s Office in Colorado collects year-in and year-out on our regular caseload, this office has taken the lead in national-level cases, working with other U.S. Attorney’s Office and the Department of Justice in Washington, DC. In Fiscal Year 2013 alone, our overall efforts resulted in the collection of over one hundred million dollars,” said U.S. Attorney John Walsh. “This is critical work on behalf of the taxpayers, who have reason to be proud of the efforts of our Colorado team on behalf of both Colorado and the entire country. Every year, this office is responsible for collecting far more money for the United States taxpayer than our own annual budget.”
Two national cases deserve emphasis. The Colorado U.S. Attorney’s Office, working with colleagues in the Eastern District of New York, the Southern District of Florida and the Eastern District of Michigan, resolved an action for civil penalties against Walgreens Pharmacies for its repeated violations of the Controlled Substances Act. Certain Walgreen stores repeatedly filled bogus prescriptions for highly addictive painkillers that they knew or should have known had no legitimate medical purpose. In addition, the office also worked with the Department of Justice’s Civil Division and other agencies to resolve allegations that NEK Advanced Securities, Inc. was overcharging for their work to develop and deploy teams of specialized personnel in Iraq and Afghanistan to combat improvised explosive devices.
In cases brought solely by the U.S. Attorney’s Office in Colorado, several have been notable. Shawn Merriman operated an investment fraud scheme for over 14 years. The Postal Inspection Service investigated the fraud scheme, determining that Merriman defrauded victim investors of over $20 million. In addition to criminal charges, the United States seized, forfeited and disposed of numerous assets belonging to Merriman. All of the assets were finally sold in 2013, and totaled $3,292,804.05 altogether. The United States was able to remit all of these funds to the victims in 2013.
In addition, in March 2013, Thomas Bader,one of the defendants involved in the College Pharmacy case, in which the defendant was illegally distributing human-growth hormone, was sentenced to 40 months in prison. In addition to his prison sentence, the Court entered a Final Order of Forfeiture, forfeiting to the United States a commercial building worth approximately $2 million, as well as ten other real properties. The Court had previously entered a $4.7 million money judgment against Mr. Bader. In fiscal year 2013, the United States collected $1,242,100.00 in the College Pharmacy case. Additional assets continue to be sold and liquidated. The United States is expecting at least an additional $2 million this next fiscal year.
The U.S. Attorneys’ Offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Additionally, the U.S. Attorney's Office in Colorado, working with partner agencies and divisions, collected $7,634,919.00 in asset forfeiture actions in FY 2013. Forfeited assets deposited into the Department of Justice Asset Forfeiture and Treasury Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
Oil Company Settles Allegations That It Knowingly Avoided Paying Federal Royalties for Several YearsRead the Press Release
DENVER – Big Sandy Oil Company, solely owned by James E. Cochran, has agreed to pay the United States $73,500, plus interest, to settle allegations that it violated the False Claims Act by knowingly failing to pay oil revenues Big Sandy owed to the United States.
The Department of the Interior’s Office of Natural Resources Revenue, which is primarily based in Lakewood, Colorado, is responsible for the collection, disbursement, and verification of oil and gas royalty payments to the government from companies that extract federal mineral resources across the country and in the Gulf of Mexico.
According to the United States, Big Sandy owes the United States a one-eighth share in revenues on oil it extracted from two parcels of land in the Allegheny National Forest in Warren County, Pennsylvania. After Big Sandy bought the parcels in 1990, the government informed Big Sandy multiple times about the government’s interest in the revenues from oil produced on this land. From 1990 through 2005, however, Big Sandy only sporadically paid royalties due and owing to the United States. Beginning in 2005 and continuing through 2013, Big Sandy failed to remit to the government any royalties at all from the subject parcels. In 2009, the government contacted Big Sandy about its failure to pay, and Big Sandy responded with assurances that it would pay the royalties it owed. Despite these assurances, Big Sandy avoided its obligation to pay for another four years.
In conjunction with efforts by the Office of Natural Resources Revenue, the settlement was the result of investigative efforts by the Department of the Interior’s Office of Inspector General and the Bureau of Land Management’s Special Investigations Group.
Special Assistant U.S. Attorney Zeyen Wu and Assistant U.S. Attorney Amanda Rocque handled this matter on behalf of the government.
The settlement agreement is neither an admission of liability by Big Sandy Oil Company, nor a concession by the United States that its claims are not well founded.
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Denver Man Pleads Guilty for Failure to Pay over Million in Employment TaxesRead the Press Release
DENVER – Lucilious J. Ward, age 63, of Denver, Colorado, pled guilty before U.S. District Court Judge Lewis T. Babcock today to one count of failure to account for and pay over the employment taxes withheld from his employees’ paychecks and one count of making a false claim against the United States, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Ward, who is free on a bond, is scheduled for further sentencing proceedings before Judge Babcock on February 3, 2014. Ward was indicted by a federal grand jury on October 2, 2012. On September 8, 2011, Special Agents with IRS Criminal Investigation executed a search warrant on Ward’s business, Global Access, LLC, dba, Global Transportation (“Global Access”), located at 5455 East 52nd Avenue, Commerce City, Colorado.
According to the facts contained in the Indictment as well as the stipulated facts contained in the plea agreement, since at least 2004, Ward has owned and operated Global Access. Global Access has provided public and private transportation services including hotel and airport shuttles, para transit services, and charter bus tours. Its largest client has been the Regional Transportation District (“RTD”), which contracted with Global Access to provide a portion of RTD’s Access-a-Ride bus services. RTD has paid Global Access more than $35,000,000 during the period 2003 through 2012, and Global Access incurred substantial costs under the RTD contract. During this time, the Internal Revenue Code required Global Access to withhold its employees' shares of Federal Insurance Contribution Act taxes ("FICA" or social security and Medicare taxes) and income taxes (collectively referred to as "employment taxes") from the salaries or wages of its employees, and to account for and pay over the withheld amounts to the IRS.
From January 2005 through the second quarter in 2011, Ward withheld employment taxes from Global Access’s employees’ paychecks. Ward knowingly and willfully failed to file with the IRS Forms 941 (employment tax forms) as required by law and failed to pay to the IRS the employment taxes that Ward had withheld from their paychecks. With the exception of the first quarter of 2008 which was paid in part and filed automatically by a payroll company Ward hired. Ward also failed to pay the required employer’s matching portion of FICA. Rather than paying the IRS the employment taxes owed by Global Access, Ward kept that money in Global Access’s bank account(s) and spent it on a variety of expenses.
At the end of 2008 Global Access’s office manager recommended to Ward that he elect to have a payroll company take care of paying the employment taxes for Global Access; however, defendant Ward declined. Furthermore, a CPA who performed various accounting functions for Global Access and Ward repeatedly told Ward about Global Access’s growing employment tax liability, he needed to pay these taxes, and about the consequences associated with not paying these taxes.
Additionally, in 2010, Ward filed with the IRS an amended personal tax return (Form 1040X) for the tax year 2007 which falsely claimed that $76,479.44 of federal income tax withholdings had been withheld from his paychecks by Global Access and paid to the IRS. At the time Ward filed this Form 1040X, he knew that he and Global Access had not paid to the IRS the $76,479.44. Ward intentionally filed this false return so that he would be assessed a refund of $76,479 to which he was not legitimately entitled.
The government asserts that the employment tax due and owing for restitution purposes is approximately $5,955,866
Failure to account for and pay over employment taxes and filing a false claim against the United States both carry a penalty of not more than 5 years in federal prison, and a fine of up to $250,000, per count.
This case was investigated by IRS-Criminal Investigation and is being prosecuted by Assistant U.S. Attorneys Pegeen Rhyne and Anna Edgar.
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Colorado Springs Real Estate Agents Settle Allegations That They Engaged in Real Estate FraudRead the Press Release
DENVER -- Jana DeWitt and Kenneth Westfall, licensed real estate agents operating in Colorado Springs, have paid the United States $93,500 in civil penalties to settle allegations that they engaged in deceptive conduct that violated the Financial Institutions Reform Recovery and Enforcement Act (FIREEA).
According to the United States, Jana DeWitt engaged in fraud in at least seventeen bank-owned properties, by falsely listing her daughters as the buyers, in order to conceal the fact that Ms. DeWitt herself was the real party in interest. Ms. DeWitt’s employing broker, Mr. Westfall, was the listing agent for each of these transactions. He had a responsibility, and in some cases a duty based on the language of the listing contracts used in the transactions, to disclose to the sellers that the real party in interest purchasing the property was affiliated with him and his company. But he did not do so, despite the fact that he knew that Ms. DeWitt, his employee, was the real party in interest purchasing the properties.
To facilitate each of these transactions, Ms. DeWitt wired money from her own accounts to the closing company as the purchase funds for the transaction. She falsified her own bank account statements to make them appear that the account was held in the name of her daughters, thus providing the seller with proof of funds for purchase while concealing that she was the real party in interest. For each of these transactions, Mr. Westfall knowingly failed to notify the seller that Ms. DeWitt was the real party in interest purchasing the property and that Ms. DeWitt was affiliated with him and his company.
The investigation leading to the settlement was conducted in conjunction with the Federal Bureau of Investigation (FBI).
Assistant U.S. Attorney Jamie Mendelson handled this matter on behalf of the government.
The settlement agreement is neither an admission of liability by Ms. DeWitt or Mr. Westfall, nor a concession by the United States that its claims are not well founded.
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