District of Colorado
Press releases recorded for this federal judicial district.
Denver Insurance Executive Michael Van Gilder Sentenced for Insider TradingRead the Press Release
DENVER – Insurance executive Michael Van Gilder, age 45, of Denver, was sentenced today by Senior U.S. District Court Judge Wiley Y. Daniel to serve 5 years’ probation with the first 6 months in home detention with electronic monitoring, U.S. Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. In the course of sentencing proceedings, Judge Daniel formally accepted Van Gilder’s guilty plea and adjudged him guilty of a count of securities fraud based on illegal insider trading. In addition, Judge Daniel ordered Van Gilder to pay a fine of $5,000.
The Van Gilder case was prosecuted in conjunction with the U.S. Attorney’s Office for the Southern District of New York. The U.S. Securities and Exchange Commission conducted a parallel civil investigation and substantially contributed to the criminal investigation of the case as well. Van Gilder was indicted by a federal grand jury on October 24, 2012. He pled guilty before Judge Daniel on May 1, 2013. He was sentenced today, August 14, 2013.
According to publicly available records, including the indictment and plea agreement, Van Gilder was the chief executive officer and a member of the board of directors of Van Gilder Insurance Company, an insurance business owned by the defendant’s family. Van Gilder was a close personal friend of a senior executive at Delta Petroleum. Delta Petroleum was a Denver-based oil and gas exploration and development company whose core area of operations was in the Gulf Coast and Rocky Mountain regions. The company’s stock was traded on NASDAQ under the ticker symbol “DPTR.” Van Gilder at times arranged for and provided insurance policies covering certain of Delta’s business operations.
From November 5, 2007 and continuing until at least January 9, 2008, Van Gilder committed securities fraud by trading in securities based on material, non-public information.
Specifically, on November 8, 2007, Delta publicly announced and filed with the U.S. Securities and Exchange Commission (SEC) a quarterly report disclosing its operational performance, revenues, earnings and other financial performance for its quarterly period which ended September 30, 2007. Three days prior to the disclosure, the financial publication Barron’s disseminated an article entitled “Day of Reckoning” focusing on Delta, expressing pessimism about the company and its stock. Following the publication of the article, the price of Delta’s common stock dropped $1.49 per share. Van Gilder was, at the time, a shareholder of Delta and held shares of its common stock and long-term call options to purchase Delta common stock in a brokerage account with Merrill Lynch and Company.
The Barron’s article was brought to Van Gilder’s attention. Based on the article, the defendant called his stockbroker and asked whether he should sell his shares of Delta. Later that day, Van Gilder spoke with the senior Delta executive. According to court documents, the executive conveyed to the defendant that Delta planned on announcing figures in its third quarter financial report that would not miss its third quarter forecasts and projections for its financial and operational performance, a first in a number of quarters that Delta would meet its projected numbers. At the time Van Gilder received this information, the financial and operational performance had not yet been publicly released and was not generally known to the investing public.
Based on this confidential material, Van Gilder decided not to sell his Delta investment but instead instructed his stockbroker to buy more Delta common stock on his behalf. As a result, the stockbroker purchased an additional 1,250 shares of Delta common stock at $15.55 per share. Several hours after he purchased the additional stock, Van Gilder emailed two friends and told them that the Barron’s article was “bogus” and that they should buy Delta stock because Delta “will hit their numbers.” In the November 8, 2007 third quarter results Delta disclosed earnings and other financial figures that were in line with or exceeding previous forecasts and predictions of its performance for the quarter.
In late November 2007, discussions also began for Delta to get a large cash infusion from a privately held investment company called Tracinda, owned by California resident Kirk Kerkorian, through a large equity investment by Tracinda in the oil and gas company. The indictment alleges that the Delta senior executive shared confidential information about the possible investment with defendant Van Gilder, and that, on November 26, 2007, following a series of calls and other communications, Van Gilder contacted his stockbroker and purchased an additional 1,750 shares of Delta common stock at $13.87 and $13.88 per share.
As court documents further relate, this Delta senior executive continued to share information about the confidential discussions about the contemplated Tracinda equity investment in Delta with defendant Van Gilder, as the confidential discussions progressed over the course of early December 2007. As a result, according to court documents, on December 8, 2007, Van Gilder, in turn, emailed his stockbroker to advise him that he “wanted to purchase as much Delta stock as possible” and two days later arranged through the stockbroker to purchase an additional 4,000 shares of Delta common stock at $17.64 per share. Within minutes of execution of these purchases, Van Gilder spoke by phone with a family member, who, several minutes later, instructed his own stockbroker to purchase Delta common stock.
On December 17, 2007, the senior Delta executive advised its board of directors of his discussions with Tracinda. The board authorized the executive to proceed with negotiations with Tracinda. That evening, the executive exchanged a series of text messages with the defendant regarding the board’s decision. Several hours later Van Gilder directed that $40,000 be wire transferred from a bank account to his Merrill Lynch brokerage account.
On December 19, 2007, a representative of Tracinda contacted the senior Delta executive and made an offer for Tracinda to purchase a one-third interest in Delta through a purchase of Delta’s common stock at $17 per share. At the time, Delta’s stock was trading at approximately $14.65 per share. Tracinda’s overture remained confidential. Van Gilder, knowing about the overture, purchased 200 call options, entitling him to purchase up to 20,000 shares of Delta common stock at $20 per share. Delta continued negotiations with Tracinda, and on December 22, 2007, Tracinda agreed to increase its stock purchase to $19 per share. The court documents state that in a series of calls Van Gilder was informed of the progress of the confidential negotiations. Immediately following one of these conversations between Van Gilder and the senior Delta executive, Van Gilder sent an email to two of his family members, with the subject line entitled “Xmas present.” In the email, he advised the family members to purchase Delta stock because “something significant will happen in the next 2-4 weeks.”
On December 24, 2007, Van Gilder, through his stockbroker, purchased 3,000 more shares of Delta common stock at prices ranging between $15.63 and $15.65 per share, and 90 more call options to purchase up to 9,000 additional shares at $20 per share. On December 28, 2007, during the course of working to finalize the Tracinda stock purchase, the senior Delta executive exchanged a series of cell phone text messages with Van Gilder. As a result, the defendant caused $272,212 from a bank account to be wire transferred into his Merrill Lynch brokerage account. The following day Van Gilder emailed his stockbroker, requesting the broker to “get it on Delta asap.”
On December 29, 2007, Delta’s board of directors approved a finalized stock purchase agreement for Tracinda to purchase approximately 35% of Delta’s common stock for $19 per share. On Monday, December 31, 2007, before the commencement of NASDAQ’s regular trading hours, Delta and Tracinda issued a press release announcing the stock purchase agreement. Within an hour of the commencement of regular trading hours that day, Van Gilder’s stockbroker purchased an additional 4,000 shares of Delta common stock at prices ranging from $19.28 to $19.33 per share, and 114 additional call options. By the close of regular hours trading that day, Delta’s common stock price had risen $3.34 from its previous close of $15.51. Over the course of the next three trading days, Delta’s stock price continued to rise, closing at $22.82 per share by January 4, 2008. On January 9, 2008, Van Gilder sold the 290 call options that he had purchased between December 19 and December 24, 2007, realizing a profit of approximately $86,100 on the transaction.
Immediately before sentencing, pursuant to the plea agreement in this case, Van Gilder provided the United States a check for $86,100 to repay these illegally derived trading gains.
“Working closely with our partners in the U.S. Attorney’s Office in the Southern District of New York, the FBI and the SEC, we were able to obtain a conviction and sentence of a well-known Denver executive whose greed got the best of him,” said U.S. Attorney John Walsh.
“To ensure our financial markets operate fairly, the FBI is committed to aggressively pursuing those who commit investment fraud,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “I am confident the results of this investigation will deter others who seek to gain illegally from insider information.”
This case was investigated by the Federal Bureau of Investigation, New York and Denver Divisions, with the assistance of and working with the U.S. Securities and Exchange Commission.
Van Gilder was prosecuted by Assistant U.S. Attorney Ken Harmon and Special Assistant U.S. Attorney Michael Levy from the Southern District of New York.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
####
Ute Mountain Ute Member Sentenced to Lengthy Prison Term for Assault with Intent to Commit Murder and Other Assault and Weapon ChargesRead the Press Release
DENVER – Ute Mountain Ute member Matthew Dewayne Jaramillo, age 30, of Towac, was sentenced earlier this week by U.S. District Court Judge Robert E. Blackburn to serve 660 months (55 years) in federal prison for assault with intent to commit murder and other assault and weapon charges, United States Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. Following his prison sentence, Judge Blackburn ordered Jaramillo to spend 5 years on supervised release. Jaramillo appeared at the sentencing hearing in custody, and was remanded immediately after.
Jaramillo was indicted by a federal grand jury in Denver on April 30, 2012. The grand jury returned a superseding indictment on December 3, 2012. A jury trial was held by Judge Blackburn in Durango on May 13, 2013. At the conclusion of that trial, the jury found Jaramillo guilty of 1) assault with intent to commit murder; 2) assault with a dangerous weapon; 3) assault resulting in serious bodily injury; 4) felon in possession of a firearm; and 5) using a firearm during and in relation to a crime of violence. He was found not guilty of one count, and a second count was dismissed by the prosecution prior to trial. An additional count charged in the superseding indictment was determined to be a sentencing enhancement instead of an individual count.
On February 17, 2012, Jaramillo’s live in girlfriend purchased for him a .45 caliber handgun in Cortez, Colorado. The defendant had been previously convicted of a felony and was therefore a prohibited person, and unable to purchase the weapon for himself. Jaramillo wanted the firearm and went with her to pick it out. After the purchase the girlfriend provided Jaramillo with the firearm.
On March 6, 2012, the defendant and others were at a friend’s house on the Ute Mountain Ute Indian Reservation. All four people present were using methamphetamine. Jaramillo then started to become paranoid. He pulled out the .45 caliber firearm provided to him by his girlfriend, and began pointing it at two of the people at the house. He then began patting the two people down and asked them both “who was the snitch.” Thereafter, Jaramillo shot Wilson Ben Jones, Jr. in the center of his chest with the bullet passing through his sternum and damaging organs, muscle and tissue. The defendant then shot Jones again in the upper abdomen. Jones dropped to the living room floor. At some point, Jones tried to move and the defendant shot him again in the left hip. The victim would lay on the floor in a pool of his own blood for nearly two hours before the EMT’s arrived.
The evidence showed that Jones suffered numerous life threatening injuries which the treating surgeon described as fatal if left untreated. Jones also had to have hip replacement surgery.
On March 7, 2012, Jaramillo was spotted in Cortez, Colorado, and failed to obey police commands to surrender. Instead, he led police on a foot chase through downtown Cortez. He was apprehended after being tackled by an officer after a failed Taser attempt. Once apprehended, the police removed a fully loaded .45 caliber firearm from the defendant’s person along with an extra loaded magazine and 23 loose rounds of .45 caliber ammunition.
“The lengthy sentence handed down today is wholly just and necessary in light of the mindlessly violent crimes Jaramillo committed,” said U.S. Attorney John Walsh. “The 660 month sentence fits this defendant’s criminal conduct. He will remain in prison for decades in order to protect the community.”
“This sentence reflects the ongoing efforts of the BIA and FBI to aggressively investigate violent crime on our Nation’s Native American reservations and seek justice for the victims,” said Thomas P. Ravenelle, Special Agent in Charge of the FBI’s Denver Division Field Office.
This case was investigated by the FBI and the Bureau of Indian Affairs. The Cortez Police Department assisted with the arrest.
Jaramillo was prosecuted by Assistant U.S. Attorney James Candelaria, chief of the Durango branch office.
####
Stevie Marie Anne Vigil Indicted for Purchasing Firearm for Evan EbelRead the Press Release
DENVER – Stevie Marie Anne Vigil, age 22, of Commerce City, Colorado, was indicted by a federal grand jury on August 8, 2013 on one count of knowingly transferring a firearm to a convicted felon, 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 Andrew Traver announced.
Vigil was arrested without incident this morning by ATF agents at the Arapahoe County Courthouse. She will make her initial appearance in U.S. District Court in Denver this afternoon where she will be advised of her rights and the federal charges pending against her.
According to the indictment, 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.
“Transferring a gun to a convicted felon is a serious federal crime, period, full-stop,” said U.S. Attorney John Walsh. “Federal and state authorities are working closely together to ensure that the grave crime in this case is prosecuted to the fullest extent of the law.”
“I am pleased to have the opportunity to participate in this collaborative and cooperative prosecution with U.S. Attorney John Walsh’s office,” said George H. Brauchler, District Attorney for the 18th Judicial District. “Our community is well served by vigorously enforcing the laws that keep guns out of the hands of dangerous criminals like Evan Ebel. Unfortunately, this case highlights the worst case scenario when criminals obtain guns.”
“Straw purchasing is not a victimless crime,” said Denver Special Agent in Charge, Andrew Traver. “The results of this careless act can be devastating to the community, and ATF will take every step to hold those individuals who disregard the federal firearms laws accountable.”
If convicted of transferring a firearm to a felon, Vigil faces not more than 10 years in federal prison, and a fine of up to $250,000.
The indictment 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), El Paso County Sheriff’s Office, the Denver Police Department, the Federal Bureau of Investigation (FBI), the Texas Rangers, the Wise County, Texas Sheriff’s Department, the Texas Department of Public Safety, and the Colorado Department of Corrections.
Vigil is being 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.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
####
Metro Denver Man Sentenced to over 11 Years in Federal Prison for Firearm and Drug CrimesRead the Press Release
DENVER – Juan Antonio Martinez, age 25, of Denver, was sentenced earlier this week by Chief Judge Marcia S. Krieger to serve 135 months (over 11 years) in federal prison for firearm and drug crimes, U.S. Attorney John Walsh and ATF Special Agent in Charge Andrew Traver announced. Following his prison sentence, Chief Judge Krieger ordered Martinez to serve 5 years on supervised release. The defendant appeared at the sentencing hearing in custody, and was immediately remanded at its conclusion.
Martinez was first charged by Criminal Complaint on February 2, 2012. He was indicted by a federal grand jury in Denver on February 8, 2012. He pled guilty to selling crack cocaine and firearms on March 20, 2013. Martinez was sentenced by Chief Judge Krieger on August 5, 2013.
According to court documents, including the stipulated facts in Martinez’s plea agreement, between November 3, 2011 and February 3, 2012, the ATF conducted a series of controlled purchases of crack cocaine from the defendant and his co-conspirator. The conspiracy involved the sale of approximately 236.928 grams of crack.
In addition to the sale of crack cocaine, the defendant also contacted the informant and offered to sell an SKS Rifle for $650 and a sawed-off shotgun for $350. The defendant ultimately sold both firearms to the informant for a total of $1,000 in cash. The sawed-off shotgun was not registered in the National Firearms Registry and thus was contraband. Prior to possessing both firearms, Martinez was convicted in 2006 of possession with intent to distribute a Schedule II controlled substance. This conviction made Martinez a prohibited person, meaning it was a violation of law for him to possess any firearm.
“When a felon possesses a firearm and illegal drugs, he commits a serious federal offense – and as today’s prison sentence demonstrates, the court agrees,” said U.S. Attorney John Walsh.
“This investigation exemplifies ATF’s core mission,” said Denver Special Agent in Charge, Andrew Traver. “We make it a top priority to target convicted felons who continue to engage in illicit crime gun trafficking and drug dealing in our communities.”
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Denver Police Department, the Aurora Police Department and the Lakewood Police Department as part of the Project Safe Neighborhoods initiative.
The defendant was prosecuted by Assistant U.S. Attorney Richard Hosley, chief of the U.S. Attorney’s Office Major Crimes section.
####
U.S. Forest Service Implements Closure Order to Prohibit Use of Exploding Targets on National Forest and Grasslands in Rocky Mountain RegionRead the Press Release
Exploding targets have started at least 16 wildfires since 2012 on Forest Service lands in 8 western states, with 7 of those fires occurring in the Rocky Mountain Region causing the federal government to spend approximately $33.6 million in suppression costs
DENVER – The U.S. Forest Service Rocky Mountain Region, working closely with the U.S. Attorney’s Office, today announced that the Regional Forester has signed a regional closure order prohibiting un-permitted explosives on national forest system lands, specifically to prohibit the use of exploding targets.
The closure order was announced by U.S. Attorney John Walsh, Rocky Mountain Regional Forester Dan Jiron, and U.S. Forest Service Rocky Mountain Region Special Agent in Charge Laura Mark during a press conference about the wildfire danger caused by exploding targets.
“Enjoying your public lands is what we encourage and promote every day,” said Regional Forester Jiron. “Hunting and target shooting are welcome recreational experiences on national forest system lands. We just want visitors to have safe and enjoyable experiences."
Exploding targets have been identified as the cause of at least 16 wildfires in the western states, costing taxpayers over $33,000,000 in fire suppression costs. The order applies to all un-permitted explosives, but focuses on exploding targets. The closure order includes all national forests and grasslands in the five-state Rocky Mountain Region. Those states include: Colorado, Wyoming, Kansas, Nebraska, and South Dakota.
Exploding targets can be purchased legally and are intended for use as a target for firearms practice. Exploding targets generally consist of two or more separate chemical components that become an explosive when mixed together. The powder components are kept separate within individual containers for sale and transport. Once mixed, however, the components become explosive, and thus are subject to federal explosive laws and regulations.
The targets explode when struck by a bullet. When detonated, exploding targets often result in a fireball that can ignite vegetation and surrounding materials. The explosion also causes other risks to an individual’s health and safety.
Under the Order, if caught using an exploding target, the user can face a fine of up to $5,000 and imprisonment of not more than 6 months.
“The top priority is for people to be safe. The public should know that exploding targets pose serious dangers, not just in their actual explosion, but in the wildfires they can start,” said U.S. Attorney John Walsh. “By barring the use of exploding targets, today’s action will prevent wildfires and protect the public, including first responders who often come across the explosive. It’s important to note that the Forest Service’s new order does not affect or change the rules regarding target shooting or other safe uses of firearms in the national forest, but only prohibits the use of exploding targets that start wildfires.”
“Exploding targets pose a very real safety threat to visitors and our employees” said U.S. Forest Service Chief Tom Tidwell. “In the past year alone, at least 16 wildfires on national forests have been associated with exploding targets, causing millions of dollars in suppression costs while threatening the safety and well-being of surrounding communities.”
“We have seen a significant increase in the use of exploding targets on National Forest lands within the Region” said U.S. Forest Service Regional Special Agent in Charge Laura Mark. “Our objective is to educate the public on the dangers associated with the use of these targets in vegetation that can ignite a fire, as well as the safety risk they pose to the public, our employees and first responders. In addition to the seven fires caused by exploding targets on national forests in the Region since 2012, explosives ordinance demolition experts have had to respond on three occasions this year to safely dispose of unused targets that had been mixed but not yet used.”
“The Bureau of Land Management (BLM) is working on a Fire Prevention Order that will ban exploding targets on BLM lands in Colorado as well,” said John Bierk, State Staff Ranger for BLM Colorado/Eastern States.
####
Former Parker Man Pleads Guilty to over $1.7 Million Fraudulent Ponzi SchemeRead the Press Release
DENVER – Shawon McClung, age 27, formerly of Parker, Colorado, pled guilty today before U.S. District Court Judge R. Brooke Jackson to one count of wire fraud, U.S. Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. McClung is free on bond. Judge Jackson is scheduled to sentence McClung on November 6, 2013 at 8:30 a.m. McClung waived his right to indictment, and was therefore charged by Information on June 12, 2013.
According to court documents, including the stipulated facts contained in the plea agreement, in 2009, McClung began Flint-McClung Capital, LLC (“FMC”) in Indiana. In November 2010, McClung moved FMC from Indiana to Denver, Colorado. In early 2009, McClung entered into financing discussions with a software programmer for the development of proprietary software to make automated trades on the foreign currency (“FOREX”) market. The goal was to develop a software program that would perform numerous automated trades during a short time based on an algorithm designed to predict and exploit differences in foreign exchange rates. On December 15, 2010, an agreement was reached by McClung and the software programmer to provide funding for the software program. However, McClung only provided approximately $213,000 of the promised $614,790, and the software program was never developed and was never available for FMC’s use.
Despite the fact that the software program had not been developed, from approximately March 2009 to approximately April 2011, McClung solicited investor money by falsely representing that FMC owned and used a proprietary “massively parallel automated trading system” to trade currencies on the FOREX market. McClung falsely told investors that this proprietary software was already being used at FMC and had a history of success. Both verbally and in writing, McClung falsely represented to investors, potential investors and others that investors in the investment programs he was offering “historically” received returns of 15% to 100% approximately every 14 to 30 days. In reality, as McClung well knew, the software program did not exist and had no history of success.
Both verbally and in written “Investment Contracts” and “Joint Venture Agreements,” McClung falsely represented to investors, potential investors and others that FMC guaranteed from loss the principal of the investment placed with FMC. McClung also falsely represented to investors, potential investors and others that FMC would use their entire investment to trade in currencies using FMC’s proprietary system, which McClung knew did not exist. In fact, McClung did not place any of the investors’ money in trades.
McClung did make some promised payouts to early investors using money he received from other investors. Some of those early investors told other potential investors about their successful “investments” with FMC, which reassured others about investing their money with McClung and FMC.
After McClung and FMC failed to make promised payments to investors via email and other forms of communication, McClung made a number of false excuses to investors and others regarding why the payments had not been made. He also made a number of false promises about future payments. In March 2011, McClung sent to several investors via email a document entitled “Cancellation of Contract and Account Settlement” in which he falsely represented that FMC would return an amount of money specified in the document if the investor signed and released McClung and others of any liability. After receiving signed “Cancellation of Contract and Account Settlement” from many investors, McClung failed to make the promised payouts and failed to return the investors’ principal.
At sentencing, the government intends to prove 17 victims sustained an aggregate loss of $1,756,750.
“When a promised high rate of return on your investment seems too good to be true, it usually is,” said U.S. Attorney John Walsh. “Ponzi schemes take people’s hard earned investment funds with no intention of investing them or returning them. The Ponzi schemer benefits, while the investor suffers. These economic crimes are among our most important cases, and will be prosecuted to the full extent of the law.”
“To ensure our financial markets operate fairly, the FBI is committed to aggressively pursuing those who commit investment fraud,” said FBI Denver Division Special Agent in Charge Thomas P. Ravenelle. “We are confident the results of this investigation will deter others who may engage in these types of fraudulent schemes.”
McClung faces up to 20 years in federal prison, a fine of not more than the greater of $250,000 or twice the gain or loss from the offense, or both; not more than 3 years of supervised release; a $100 special assessment fee; plus $1,756,750 restitution.
This case was investigated by the Federal Bureau of Investigation (FBI).
McClung is being prosecuted by Special Assistant U.S. Attorney Pegeen Rhyne.
####
Longmont Man and Business Sentenced for Illegally Discharging Sewage into the Union ReservoirRead the Press Release
DENVER – John Albert Paquette, age 53, of Longmont, Colorado, and his company, East Point, LLC, have been sentenced today by Chief U.S. District Court Judge Marcia S. Krieger for illegally discharging sewage into the Union Reservoir, the U.S. Attorney’s Office and the Environmental Protection Agency (EPA) Criminal Investigation Division (CID) announced.
Paquette was sentenced to pay a $10,000 fine. His company, East Point, LLC, was also sentenced to pay a $10,000 fine.
On March 19, 2013, Paquette and East Point were charged by Information. On April 4, 2013 both defendants entered guilty pleas before Chief Judge Krieger. Paquette and East Point were sentenced on July 29, 2013.
According to court documents, on June 20, 2012, Paquette and East Point, LLC, knowingly discharged 1,000 gallons of raw sewage from a hose into the Oligarchy Ditch, which flowed into the Union Reservoir, located in Longmont, Colorado. The sewage came from Paquette’s nearby self-storage company.
“Dumping sewage into a public irrigation ditch that leads to a public water reservoir has serious environmental and health consequences,” said U.S. Attorney John Walsh. “The defendant in this case now knows there are criminal penalties for his conduct.”
“Illegally discharged sewage can sicken people, fish and wildlife,” said Jeffrey Martinez, Special Agent in Charge of EPA’s criminal enforcement program in Colorado. “This case shows that those who try to save a buck by cutting corners will be vigorously prosecuted.”
This case was investigated by the Environmental Protection Agency Criminal Investigation Division.
The defendants were prosecuted by Assistant U.S. Attorney Suneeta Hazra.
####
Executive Recycling Company and Executives Sentenced for Fraud and International Environmental CrimesRead the Press Release
DENVER – Executive Recycling, Inc. (a corporation) and Brandon Richter, age38, of Highlands Ranch, Colorado, the owner and chief executive officer of Executive Recycling, were sentenced today by U.S. District Court Judge William J. Martinez for their roles in a fraudulent scheme related to the disposal and exportation of electronic waste to foreign countries, announced United States Attorney John Walsh, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Kumar Kibble and EPA Criminal Investigation Division Special Agent in Charge Jeffrey Martinez. Executive Recycling, the corporation, was sentenced to pay a $4,500,000 fine and serve 3 years on probation. Richter was ordered to serve 30 months in federal prison, followed by 3 years on supervised release. Judge Martinez also ordered Richter to pay a $7,500 fine and $70,144 in restitution joint and several with the victims of the crime. Richter was ordered to report to a Bureau of Prisons facility within 15 days of designation. Judge Martinez also ordered $142,241.10 in asset forfeiture.
The defendants were convicted in December 2012 of multiple counts of mail and wire fraud and environmental crimes related to the illegal disposal of electronic waste, smuggling, and obstruction of justice, following an 11-day trial.
Last week former vice president of operations, Tor Olson, age38, of Parker, Colorado, was sentenced to serve 14 months in prison, pay a $5,000 fine, and pay over $15,000 in restitution. Olson remains free on bond pending appeal.
Executive Recycling, Inc., as a corporation, Brandon Richter and Tor Olson were indicted by a federal grand jury in Denver on September 15, 2011. The jury trial before Judge Martinez began on December 3, 2012. The jury reached their verdict on December 21, 2012. Olson was sentenced on July 17, 2013.
According to the indictment, as well as the facts presented at trial, Executive Recycling was an electronic waste recycling business located in Englewood, Colorado with affiliated locations in Utah and Nebraska. The company collected electronic waste from private households, businesses, and government entities. Executive Recycling was registered with the Colorado Department of Public Health and Environment as a “Large Quantity Handler of Universal Waste.” Richter, as owner and CEO, was responsible for supervising all aspects of the company. Olson, the vice president of operations, was responsible for running day-to-day operations.
A significant portion of electronic waste collected by the defendants were Cathode Ray Tubes (CRTs). CRTs are the glass video display component of an electronic device, usually a computer or television monitor, and are known to contain lead. The defendants engaged in the practice of exporting electronic waste, including CRTs, from the United States to foreign countries, including the People’s Republic of China. The defendants regularly negotiated the sale of electronic waste to brokers who represented foreign buyers or who sold the electronic waste overseas. The foreign buyers often paid the defendants directly. To transport the electronic waste, the defendants used shipping cargo containers which were loaded at the company’s facility. The containers were then transported by rail to domestic ports for export overseas.
Executive Recycling appeared as the exporter of record in over 300 exports from the United States between 2005 and 2008. Approximately 160 of these exported cargo containers contained a total of more than 100,000 CRTs.
Between February 2005 and continuing through January 2009, the defendants knowingly devised and intended to devise a scheme to defraud various business and government entities who wanted to dispose of their electronic waste, and to obtain these business and government entities’ money by means of materially false and fraudulent pretenses. The defendants represented themselves on a website to have “extensive knowledge of current EPA requirements.” The defendants falsely advertised to customers that they would dispose of electronic waste in compliance with all local, state and federal laws and regulations. It was part of the scheme that the defendants falsely represented that they would dispose of all electronic waste, whether hazardous or not, in an environmentally friendly manner. Specifically, the defendants falsely represented that the defendant company recycled electronic waste “properly, right here in the U.S.” They also stated that they would not send the electronic waste overseas.
The defendants’ misrepresentation induced customers to enter into contracts or agreements with the defendants for electronic waste disposal. Each victim paid the defendants to recycle their electronic waste in accordance with the representations made by the defendants. Contrary to their representations, the defendants sold the electronic waste they received from customers to brokers for export overseas to the People’s Republic of China and other countries.
“The defendants in this case not only caused actual harm to the environment by shipping electronic waste overseas for dumping, they defrauded their customers by falsely claiming to be disposing of that waste in an environmentally safe way,” said U.S. Attorney John Walsh. “As cases like this one show, federal investigators and the U.S. Attorney’s Office can and will reach beyond our country’s borders to investigate crime and prosecute wrongdoers.”
“This prison sentence and fine awarded to this CEO demonstrate that there are no shortcuts to following U.S. export laws,” said Kumar Kibble, special agent in charge of HSI Denver. “This CEO also intentionally deceived the public for years by falsely advertising an environmentally friendly recycling business plan within the United States. Instead, he regularly exported tons of obsolete and discarded electronic equipment containing toxic materials to third-world countries, and took actions to illegally hide these practices from government officials.”
“The defendants claimed to safely recycle e-waste in the U.S., but regularly exported obsolete and discarded electronic equipment with toxic materials to third-world countries,” said Jeff Martinez, Special Agent in Charge of EPA’s criminal enforcement office in Colorado. “Pollution and greed respect no boundaries and EPA is committed to combating the illegal traffic of e-waste, which poses particularly significant environmental health risks in developing countries.”
This case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Environmental Protection Agency Criminal Investigation Division and the Colorado Attorney General’s Office, Special Prosecutions Unit.
The defendants were prosecuted by Assistant U.S. Attorneys Suneeta Hazra and Valeria Spencer and Special Assistant U.S. Attorney Lillian Alves.
####
Littleton Police Officer Arrested for Drug Trafficking CrimesRead the Press Release
DENVER – Jeffery Allan Johnston, age 46, of Parker, Colorado, has been arrested based on a Criminal Complaint charging him with the drug trafficking related crimes, United States Attorney John Walsh, FBI Denver Special Agent in Charge Thomas Ravenelle and Littleton Police Chief Doug Stephens announced. Johnston was arrested without incident at his Parker home by the FBI on Friday, July 19, 2013. The Criminal Complaint was unsealed by the court today. Johnston appeared in U.S. District Court in Denver this afternoon, where he was advised of his rights and the charges pending against him. The government is asking the court that Johnston be held in custody without bond pending a resolution of his case. A detention hearing and a preliminary hearing is scheduled to take place on July 25, 2013 at 3:00 p.m.
The Criminal Complaint charges Johnston with possession of a mixture and substance containing a detectable amount of MDMA with intent to distribute; maintaining a drug-involved premises; possessing a firearm in furtherance of a drug trafficking crime; and using a telephone to facilitate a drug trafficking felony.
According to the affidavit in support of the arrest warrant, on July 15, 2013, Johnston contacted a friend via telephone. During the call, Johnston said he wanted to “catch up” with the friend. The person Johnston contacted is a known narcotics trafficker who has been invited to Johnston’s residence previously to distribute narcotics to guests at parties Johnston hosts. According to the friend, Johnston paid for 3,4-methylenedioxy methamphetamine (known as MDMA, Ecstasy or X) for his parties.
During the phone call Johnston asked if he could purchase between 40 and 50 Ecstasy pills from the source for between $15 to $20 each. They discussed the fact that some of the Ecstasy currently available was not well made. Johnston offered to use a test kit to confirm the quality of the Ecstasy. On July 19, 2013, the FBI conducted a controlled delivery of 37 Ecstasy pills and 6.3 grams of Ecstasy powder. Johnston paid $1,300 for the delivery. Following the exchange of Ecstasy and money, Johnston was taken into custody, and a search warrant was executed a Johnston’s residence.
Agents found the 10 grams of Ecstasy just delivered to Johnston in a kitchen drawer and a stainless steel Colt Officers Model .45 caliber pistol which was located in a small black bag on the counter above the drawer containing the Ecstasy. The pistol was loaded with seven .45 rounds of ammunition in the magazine and one .45 round in the chamber. Investigators also found suspected cocaine, suspected steroids, hundreds of suspected prescription pills, additional firearms, and hundreds of rounds of ammunition, all in his residence. Further, agents discovered evidence of drug trafficking in a kitchen drawer. In that drawer was empty pill pouches, a drug test kit and a scale.
In the Complaint, the preliminary charging document, Johnston faces: One count of possession of a mixture and substance containing a detectable amount of MDMA with intent to distribute, which carries a penalty of not more than 20 years in federal prison, and a fine of not more than $1,000,000; One count of maintaining a drug involved premises, which carries a penalty of not more than 20 years in federal prison, and a fine of not more than $500,000; One count of possession of a firearm in furtherance of a drug trafficking crime, which carries a penalty of not less than five years, and not more than life in federal prison, and a fine of up to $250,000; One count of using a telephone to facilitate a drug trafficking felony, which carries a penalty of not more than 4 years in federal prison, and up to a $500,000 fine.
This case was investigated by the Federal Bureau of Investigation (FBI). Those who may have information regarding this matter should contact the FBI at 303-629-7171.
Johnston is being prosecuted by Assistant U.S. Attorneys Guy Till and David Conner.
A Criminal Complaint is a probable cause charging document. Anyone accused of committing a federal felony crime has a Constitutional right to be indicted by a grand jury, thus finalizing the charges.
The charges contained in the Complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.
####
Larimer County Residents Indicted and Arrested on Conspiracy and Possession of A Schedule I Controlled Substance with Intent to Manufacture and DistributeRead the Press Release
DENVER – Five Larimer County residents were arrested late last week for conspiracy to distribute a controlled substance and possession of a controlled substance with intent to manufacture and distribute, U.S. Attorney John Walsh and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Kumar Kibble announced. The controlled substance in this case is commonly known as “Spice”. Playing a critical role in the investigation was the Northern Colorado Drug Task Force. The indictment was unsealed by the court today.
The five defendants arrested, Dien Le, Ponlue Pim, Pirun Pim, Ricky Pim, and Kenneth Barnes appeared in U.S. District Court in Denver this afternoon, where they were advised of their rights and the charges pending against them. They are due back in court on July 25, 2013 at 10:00 a.m. for arraignment and a detention hearing.
On last Friday, July 19, 2013 HSI agents and Northern Colorado Task Force officers executed search warrants at seven locations, including residences and businesses in Fort Collins. During the course of executing those warrants, agents and officers seized: money from several bank accounts used by the defendants (amounts to be determined), $26,000 in cash, 75 pounds of Spice and the chemicals and dry products to make Spice, thousands of packaging units of Spice for later sale, and several firearms.
According to the indictment, from October 11, 2012 through approximately April 30, 2013, and continuing within the State of Colorado and elsewhere, the defendants did knowingly and intentionally conspire to manufacture, possess with the intent to distribute, and to distribute mixtures or substances containing detectable amounts of JWH-018 [1-pentyl-3-(1-naphthoyl)indole], also known as synthetic cannabinoid, a Schedule I controlled substance. The street name for this drug is Spice.
During the spring of 2013, the defendants engaged in knowingly and intentionally possessing with intent to manufacture and distribute mixtures or substances containing synthetic cannabinoid controlled substance.
The investigation revealed that Barnes would order JWH-018, which is a white powder, from China. He would have the powder delivered from China to New York City. From there, he’d have the illegal substance sent from New York to Fort Collins. Barnes also had a green leafy type substance sent to Fort Collins from San Antonio, Texas. In Fort Collins, Barnes, Le and the Pims would mix the substances together, wet it, let it dry, thus creating Spice. They would then package the product and take it to head shops, gas stations and other local stores to sell it. The cost of 1.5 gram packets would be $10, and the cost for 3 gram packets would be $20.
The product used by the defendants, JWH-018, is manufactured in China, with no Food and Drug Administration or other type of oversight. It can contain substances that are dangerous to an individuals’ health. Some purchase Spice because they cannot purchase marijuana. Both substances are dangerous to an individual’s health, which is why both JWH-018 and marijuana are both listed as Schedule I Controlled Substances, which are banned from use.
Most defendants face conspiracy to distribute a controlled substance. Others face possession of a controlled substance with intent to manufacture and distribute. All charges carry a penalty of not more than 20 years in federal prison, and a fine of up to $1,000,000, per count.
“Spice is a very dangerous substance that is being used by people as young as teenagers,” said U.S. Attorney John Walsh. “When a person uses Spice they have no actual idea what they are putting into their body – as a key part of the product is made in China without regulatory controls.”
“Illicit smuggling schemes involving synthetic marijuana pose a growing threat to public health and safety,” said Kumar Kibble, special agent in charge of HSI Denver. “Because these drugs are unregulated and untested, it is impossible to know what chemicals are being ingested, making them incredibly dangerous. With these latest arrests, HSI and our law enforcement partners have struck a huge blow to the synthetic drug industry.”
“This is another excellent example of federal and local law enforcement personnel working well together,” said Lt. Greg Yeager, Commander of the Northern Colorado Drug Task Force. “The dismantling of this drug trafficking organization will have a lasting impact on the presence of illegal drugs not only in the City of Fort Collins, but across the nation.”
Those charged with conspiracy to distribute a controlled substance face not more than 20 years in federal prison, and a fine of up to $1,000,000. Those charged with possession of a controlled substance with intent to manufacture or distribute also face not more than 20 years in federal prison, and up to a $1,000,000 fine, per count.
This investigation was conducted by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) and the Northern Colorado Drug Task Force. The Northern Colorado Drug Task Force is made up of the Fort Collins Police Department, the Loveland Police Department and Colorado Adult Parole.
This case was prosecuted by Assistant U.S. Attorney Jeremy Sibert.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
####
Felon Sentenced to 100 Months in Prison for Possession of A FirearmRead the Press Release
DENVER – Daniel S. Prieto, age 33, was sentenced yesterday by U.S. District Court Judge R. Brooke Jackson to serve 100 months (over 8 years) in federal prison for possession of a firearm by a prohibited person, United States Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives Special Agent in Charge Andrew Traver announced. After serving his prison sentence, Judge Jackson ordered Prieto to serve 3 years on supervised release. Prieto, who appeared at the hearing in custody, was remanded at the conclusion of the hearing.
Prieto and co-defendant Saul Galvan, age 26, were indicted by a federal grand jury in Denver on December 4, 2012. Each faces one count of being a felon in possession of a firearm. Prieto requested a jury trial. That trial started on March 11, 2013, before Judge Jackson. That same day, in Judge Jackson’s courtroom, co-defendant Galvan pled guilty to being a felon in possession of a firearm. Galvan was sentenced that same day by Judge Jackson to serve 21 months in federal prison, followed by 3 years on supervised release. On March 13, 2013, following a three-day jury trial, Prieto was convicted of being a felon in possession of a firearm.
According to court documents, including a sentencing statement filed by the government, on August 3, 2012, a Greely Police Officer, who was parked at a street corner, heard the music from a vehicle from over 100 yards away. The officer then pulled over the vehicle for a violation of a Greeley Municipal Ordinance for loud music as it passed his location. The driver, Prieto, and passenger, Galvan occupied the vehicle. When the officer approached the vehicle he observed a glass pipe with white residue in the center console area of the vehicle. The officer assumed that the white residue was methamphetamine based on his experience. In addition, the officer observed an open box of beer bottles inside the vehicle and could smell the odor of alcohol.
Based on the pipe and alcohol as probable cause, officers pulled the defendants out of the vehicle. Officers on both sides of the vehicle observed firearms between the seats and their respective doors. The firearm located by Galvan was a Hi-Point .45 caliber pistol with one .45 caliber round of ammunition in the chamber. The firearm located by Prieto was a Jimenez Arms .380 caliber pistol with a fully loaded magazine and one round of ammunition in the chamber. Record checks determined that Prieto and Galvan were prior convicted felons. Both were then transported to jail.
“Felons in possession of firearms will be prosecuted, and face stiff prison sentences that take years of their life away from them and their families,” said U.S. Attorney John Walsh. “Thanks to the Greeley Police Department and the ATF, two felons sitting in a car in possession of firearms are now sitting in federal prison.”
“This investigation illustrates the collaborative effort of law enforcement agencies at the federal, state, and local levels working together to keep crime guns out of the hands of convicted felons,” said Special Agent in Charge Andrew Traver, ATF Denver Field Division. “We will continue to combine resources to protect our citizens and make our communities a safer place to live.”
This case was investigated by the Greely Police Department and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).
Prieto and Galvan were prosecuted by Assistant U.S. Attorney Jeremy Sibert.
####
Cliffton Man Sentenced to Prison for Making Threats Against Fruita Oil Refinery and Conveying False InformationRead the Press Release
DENVER – Michael Leroy Schonlau, age 37, of Clifton, Colorado, was sentenced yesterday by Chief U.S. District Court Judge Marcia K. Krieger to serve 15 months for willfully making a threat and maliciously conveying false information, and for being a felon in possession of a firearm, U.S. Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. Chief Judge Krieger was presiding over the sentencing hearing in U.S. District Court in Grand Junction. Following his prison sentence, Schonlau was ordered to serve 3 years on supervised release. The defendant appeared at the sentencing hearing on bond, and was ordered to report to a Bureau of Prisons facility within 15 days of designation.
Schonlau was indicted by a federal grand jury in Denver on August 21, 2012. He pled guilty before Chief Judge Krieger on April 1, 2013. He was sentenced on July 15, 2013.
According to the stipulated facts contained in the defendant’s plea agreement, on August 5, 2012, at approximately 4:00 p.m., the defendant called the Federal Bureau of Investigation (FBI) using his cellular telephone. It was determined that the defendant was located at an area known as the Gilsonite Refinery in Fruita, Colorado, at the time of the call, though he refused to directly identify his whereabouts.
Schonlau stated that he was in possession of an explosive device which was connected to a 200 million gallon propane tank on the property, and he had his hand on a “Dead Man’s Switch.” He indicated he could see all around him, and that he would detonate the tank if anyone came near. He further indicated that he had already told his family that he would not be coming home.
Police quarantined the area because of the possible explosion. The major highway through Fruita, Highway 6 & 50, and surrounding roads were closed, businesses and homes were evacuated, and the Union Pacific Railroad was shut down for approximately two hours during this threat event.
After telephone calls with an FBI negotiator, the defendant was eventually persuaded to leave the refinery. Police moved into the area of the refinery and the Grand Junction Bomb Squad searched extensively for explosives. None were found. Law enforcement surveilled the defendant has he left in a green truck, and they stopped him after he left the refinery. The officer conducting the traffic stop found an unloaded Ruger Single Six revolver underneath the front passenger seat of the vehicle. The defendant was previously convicted of Felony Theft in May 2004, and thus was prohibited from possessing a firearm.
It was eventually determined the defendant did not possess the materials necessary to carry out his threat to detonate explosives at the refinery. The site contained several large propane tanks and other explosive substances, and the defendant had brought with him two barbeque-sized propane tanks, which he left at the refinery. However, no detonation or explosives device was found, meaning he had no way of igniting any flammable substance.
“Thanks to the FBI, and the FBI’s hostage negotiator, the defendant was located, identified, and apprehended,” said U.S. Attorney John Walsh. “Schonlau’s prison sentence is just as his actions closed down most of Fruita for several hours.”
This case was investigated by the Federal Bureau of Investigation (FBI), the Mesa County Sheriff’s Office, the Mesa County Bomb Squad, and the Fruita Police Department.
Schonlau was prosecuted by Assistant U.S. Attorney Michelle Heldmyer.
####
Littleton Man Sentenced to 10 Years in Prison for Possession of Child PornographyRead the Press Release
DENVER – Calvin Dawdy, age 52, of Littleton, Colorado, was sentenced yesterday by Chief U.S. District Court Judge Marcia S. Krieger to serve 10 years in federal prison for possession of child pornography, United States Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. After serving his prison sentence, Chief Judge Krieger ordered Dawdy to serve 5 years on supervised release, and ordered him to pay restitution totaling $6,000 to the victims of his crime. The defendant must also register as a sex offender. Dawdy, who appeared at the hearing free on bond, was remanded into custody.
Dawdy was indicted by a federal grand jury in Denver on November 8, 2012. He pled guilty before Chief Judge Krieger on April 3, 2013. Dawdy was sentenced on July 11, 2013.
According to court documents, including the stipulated facts contained in the plea agreement, in December 2010, Dawdy knowingly possessed approximately 15,070 images and video files depicting child pornography on his laptop computer and external hard drive. Of the child pornography images and videos in Dawdy’s possession, approximately 95% depicted children under 12 years old, most of whom were girls. In February 2010 and in September 2010, Dawdy shared portions of his extensive collection of child pornography with federal agents working in undercover capacities.
As a condition of his guilty plea, Dawdy agreed to forfeit and abandon any and all of his rights, title and interest in the child pornography images, the computer and external hard drive containing child pornography, and any other real or personal property used or intended to be used to commit or promote the commission of the offenses alleged in the indictment.
“Lengthy prison sentences should send a deterrent message that possessing child pornography is a serious crime with serious consequences,” said U.S. Attorney John Walsh.
“Our nation’s children are the most vulnerable victims,” said FBI Denver Division Special Agent in Charge Thomas P. Ravenelle. “The FBI remains committed to working with our state and local law enforcement partners and the United States Attorney’s Office to aggressively investigate all cases involving the sexual exploitation of children.”
This case was investigated by the Federal Bureau of Investigation (FBI) Violent Crimes Against Children Program.
Dawdy was prosecuted by Assistant U.S. Attorney Alecia Riewerts Wolak.
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."
####
Clifton Man Pleads Guilty to Production of Child PornographyRead the Press Release
DENVER – Robert Arthur Brewster, age 41, of Clifton, Colorado pled guilty earlier this week before U.S. District Court Judge R. Brooke Jackson to the production of child pornography, U.S. Attorney John Walsh and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Kumar Kibble announced. Brewster appeared at the change of plea hearing in custody. Judge Jackson is scheduled to sentence Brewster on September 24, 2013 at 8:00 a.m.
Brewster was indicted by a federal grand jury on February 26, 2013. He pled guilty on July 10, 2013.
According to court documents, including the stipulated facts contained in the plea agreement, beginning on January 7, 2010, the defendant initiated contact using an instant message program with an individual whom he believed to be a 13 year old girl living in Kentucky. In truth, the 13 year old girl was an undercover Kentucky based Internet Crimes Against Children task force officer. Over the following month, the defendant engaged in multiple conversations where he actively shared multiple images and videos depicting child pornography in an effort to entice the undercover officer to participate in the production of child pornography for him. Brewster went as far as sending a brand new web camera to the undercover officer.
During the conversations, the defendant admitted to producing child pornography himself and sent 3 of the images he produced as proof. All 3 of the pictures constituted child pornography, were of a minor child to whom he had access, and in each of the pictures the tattoo on his lower left arm was visible.
A search warrant was executed at his residence in Clifton, Colorado. Media seized from the defendant’s residence yielded 870 images of child pornography and 22 videos of child pornography on the Defendant’s computer. Among the media were the images of the minor child to whom he had access to as described above -- revealing 23 images of that minor child of which 20 were actual child pornography.
“The production of child pornography is one of the most serious crimes prosecuted by the U.S. Attorney’s Office,” said U.S. Attorney John Walsh. “Thanks to the hard work of Homeland Security Investigations and the Mesa County Sheriff’s Office, working closely with Assistant U.S. Attorneys, the defendant was arrested, and thus prevented from continuing the sexual assaults of his minor victim, in essence rescuing his victim from continued exploitation.”
“The sexual exploitation of children is a heinous crime that can scar and debilitate its victims forever,” said Kumar Kibble, special agent in charge of HSI Denver. “To rescue these innocent victims, HSI works in tandem with the U.S. Attorney’s Office and our international, state and local law enforcement partners to vigilantly protect our communities from child sex predators.”
Brewster faces a mandatory minimum 15 years in federal prison, and a maximum of not more than 30 years in federal prison. He also faces a term of supervised release of not less than 5 years, and up to life. In addition, Brewster faces a fine of up to $250,000 as well as restitution. He will also be required to register as a sex offender. Finally, he has agreed to forfeit all of his computers and computer media used in the production of and or containing child pornography, including 3 laptop computers, a computer tower, 2 cameras, a web camera, 2 thumb drives, and one external hard drive.
This case is being investigated by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), the Mesa County Sheriff’s Office, and officers from the Internet Crimes Against Children Task Force.
Brewster is being prosecuted by Special Assistant U.S. Attorney Shana Martin and Assistant U.S. Attorney Alecia Riewerts Wolak.
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 Business Owner Is Sentenced to 77 Months in Prison as Part of A Ponzi SchemeRead the Press Release
DENVER – Michael James Turnock, age 69, of Denver, Colorado, was sentenced late yesterday by U.S. District Court Judge Christine M. Arguello to serve 77 months in federal prison for mail fraud and one count of money laundering as part of a Ponzi Scheme, the United States Attorney’s Office, IRS – Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service announced. Following his prison sentence, Turnock was ordered to spend 3 years on supervised release. Judge Arguello also ordered him to pay $4,187,143.90 in restitution. The judge also granted the government’s request for the defendant to forfeit certain assets.
Turnock was originally charged by Information on February 14, 2013. He waived his right to be charged by an Indictment. According to the facts contained in the Information as well as the stipulated facts contained in the plea agreement, beginning no later than January 2002, and continuing through August of 2012, Turnock devised a scheme to defraud note-holders by obtaining money by means of materially false and fraudulent pretenses, representations and promises. The scheme ended on August 14, 2012, when the Securities and Exchange Commission (SEC) filed a complaint in federal court in Denver and obtained a court order freezing Bridge Premium Finance’s (BPF) assets. At that point, BPF’s note-holders included more than fifty people who had invested more than $4,000,000.
In about 1996, Turnock became the majority owner of Berjac of Colorado, LLC, and in 2004 he became the sole owner. Two years later, Turnock changed the name of the company to Bridge Premium Finance, LLC. BPF was in the business of providing financing to clients. The clients were small businesses whose insurance carriers required them to pay the full amounts of their annual premiums in advance. BPF’s clients paid 25% of the premiums, and BPF loaned the remaining 75%. The clients usually repaid the principal amounts of the loans over eight- or nine-month periods, and made interest payments to BPF at rates between 12% and 18%. Nearly all of the money coming into BPF during this time came from investors, who received a promissory note from BPF, signed by Turnock. At times, BPF had more than one hundred note-holders.
Turnock told prospective note-holders that by charging its clients interest rates higher than the rates at which note-holders were paid, BPF generated enough funds to pay principal and interest to note-holders. However, Turnock knew BPF had not been a profitable business since at least 1998 and since 2002 its financing of small businesses had not generated sufficient revenue to make interest payments to note-holders or to repay them. For each year from 2002 through 2011 and into 2012, the amount that BPF owed to note-holders exceeded the amount of money that BPF had on hand. During that time, Turnock used most of the money invested by note-holders for purposes other than to make loans to BPF’s clients. He used note-holders’ money to pay BPF-related expenses, and he also diverted the note-holders’ money to fund his other businesses, make loans to an entity involved in real estate transactions, pay fees to himself and pay personal expenses. He used money from new investments to pay redemptions requested by note-holders who had invested earlier and to make interest payments to earlier note-holders. Turnock also prepared false and misleading reports, which misrepresented BPF’s financial position.
In early 2012, a note-holder asked to withdraw a portion of his investment. Turnock misrepresented that $150,000 was available at that time. Because BPF did not have that much money, Turnock persuaded two other individuals to invest $500,000 in BPF. On the same day, Turnock used those funds to write a $150,000 check to the note-holder requesting the withdrawal. Turnock solicited and obtained the additional investment in an effort to continue to operate his scheme.
This case was investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service – Criminal Investigation (IRS-CI), and the United States Postal Inspection Service.
This matter is being prosecuted by the Economic Crimes Section of the United States Attorney’s Office for the District of Colorado. The Asset Forfeiture was handled by Assistant U.S. Attorney Tonya Andrews.
####
Colorado Springs Man Using "PerveyMcPerv" Screen Name Sentenced to 97 Months in Federal Prison for Possession of Child PornographyRead the Press Release
DENVER –Kevin Shea, age 43, of Colorado Springs, Colorado, was sentenced yesterday by U.S. District Court Judge Phillip A. Brimmer to serve 97 months (8 years) in federal prison for possession of child pornography, United States Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. After serving his prison sentence, Judge Brimmer ordered Shea to serve 10 years on supervised release, and pay restitution totaling $7,000 to the victims of his crime. The defendant must also register as a sex offender. Shea, who was originally remanded after his guilty plea, appeared at today sentencing in custody. He was remanded following the hearing.
Shea was indicted by a federal grand jury in Denver on November 8, 2012. He pled guilty before Judge Brimmer on February 14, 2013. Shea was sentenced on July 8, 2013.
According to court records, on January 12, 2011, Shea possessed computer disks and other material that contained images of child pornography that had been shipped or transported in and affecting interstate and foreign commerce by any means, including by computer.
Specifically, according to an affidavit in support of a search warrant executed at the beginning of the case, the defendant used a peer-to-peer software program, using the name “pervymcperv”. He distributed 97 images of child pornography and 3 videos of child pornography. As a result of the search warrant, FBI agents seized two laptop computers and an external hard drive that combined contained approximately 4,838 images of child pornography including images of bondage and torture, and 228 videos featuring child pornography.
This case was investigated by the Federal Bureau of Investigation’s Violent Crimes Against Children Program.
Shea was prosecuted by Assistant U.S. Attorney Colleen Covell.
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 40 Years in Federal Prison for Distribution of Child PornographyRead the Press Release
DENVER – Jon Christopher Baker, age 33, of Denver, Colorado, was sentenced late yesterday by U.S. District Court Judge John L. Kane to serve 480 months (40 years) in federal prison for the distribution of child pornography, U.S. Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. This was the maximum possible sentence Baker faced. Following his prison sentence, Baker was sentenced to a lifetime of supervised release. Baker appeared at the sentencing hearing in custody, and was remanded at the conclusion of the hearing.
Baker was first charged by Criminal Complaint on April 27, 2012. He was indicted by a federal grand jury on May 21, 2012. He pled guilty on March 8, 2013. Baker was sentenced on July 2, 2013.
According to court documents, on February 21, 2012, an FBI Special Agent working on an Innocent Images Operations Unit in Maryland in an undercover capacity came across a person using a peer-to-peer file sharing program. The person was sharing two folders containing approximately 23,865 files, or about 99.7 gigabytes. The undercover special agent downloaded approximately 14 image files directly from the person, in addition to approximately 1,016 thumbnail images, the majority of which were indicative of child pornography and erotica. The FBI launched an investigation and determine the person sharing the files had an IP address in Denver, and was named Jon C. Baker. A search of the Colorado Sex Offender Registry revealed one positive result for a Jon C. Baker, also with an address in Denver. The Maryland FBI agent then sent all reports and images to the FBI in Denver for further investigation.
The Denver FBI special agent, working in an undercover capacity, communicated with Baker via the chat feature of the peer-to-peer program. The chat resulted in the undercover agent downloading images containing child pornography from Baker. On April 27, 2012, a search warrant was executed at Baker’s apartment. Agents found a computer and a separate hard drive. A folder on the hard drive associated with the file sharing program Baker was using contained approximately 30,000 images and 1,400 videos of child pornography. Baker was then taken into custody.
Testimony at the sentencing hearing demonstrated that the defendant also solicited at least 25 minor boys online by posing as a minor girl. While posing as a minor girl, the defendant used a chat/webcam site to request that minor boys show their genitalia and/or masturbate on camera. The defendant then recorded the minor boys complying with his requests, and sent those videos to other collectors of child pornography.
The defendant had a prior conviction for Attempted Sexual Exploitation of a Child under Colorado state law, which resulted in an increase in his sentence. The 1998 conviction came out of Colorado Springs, Colorado. Baker’s prior crime occurred when he worked as a babysitter.
“Baker helped countless other people view and download child pornography,” First Assistant U.S. Attorney Bob Troyer said. “He sexually exploited children for his own and others’ gratification. Given his prior conviction for similar conduct, Baker will be in federal prison until he’s in his 70's, and he deserves every minute of it.”
“The sentence handed down represents the FBI’s dedication to pursing those that exploit children,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “Our Innocent Images Task Force is committed to protecting children by identifying and prosecuting sexual predators that victimize them.”
This case was investigated by the Federal Bureau of Investigation’s Innocent Images Task Force.
Baker was prosecuted by Assistant U.S. Attorney Judith Smith, Chief of the Special Prosecutions Section and Assistant U.S. Attorney Alecia Riewerts Wolak, the Project Safe Childhood Coordinator for the U.S. Attorney’s Office.
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.
####
Thornton Man Pleads Guilty and Is Sentenced for Assaulting A Spirit Airlines Flight AttendantRead the Press Release
DENVER – Evan Nathaniel Castle, age 24, of Thornton, Colorado, pled guilty to and was sentenced yesterday for misdemeanor assault of a Spirit Airlines flight attendant, United States Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced.
On April 8, 2013, Castle was a passenger on Spirit Airlines Flight 562 en route from Las Vegas, Nevada to Denver International Airport. During the flight Castle was served several alcoholic drinks. He then became loud and used profane language, and he physically harassed one of the flight attendants.
As a result of his conduct, Castle was sentenced to serve 2 years’ probation and ordered to attend alcohol counseling by U.S. Magistrate Judge Craig B. Shaffer.
This case was investigated by the Federal Bureau of Investigation (FBI).
Castle was prosecuted by Assistant U.S. Attorney James Allison, Chief of the U.S. Attorney’s Office Criminal Division.
####
Morrison Man Pleads Guilty to Possession of Destructive DevicesRead the Press Release
DENVER – Richard Lawrence Sandberg, age 35, of Morrison, Colorado, pled guilty late last week before U.S. District Court Judge Philip A. Brimmer to two counts of possession of firearms (which includes destructive devices) which are not registered in the National Firearm Registration and Transfer Record, United States Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives Special Agent in Charge Andrew Traver announced. Sandberg, who appeared in custody, was remanded at the conclusion of the hearing. Sandberg is scheduled to be sentenced by Judge Brimmer on September 25, 2013 at 9:00 a.m.
Sandberg was arrested on January 24, 2013 based on a Criminal Complaint obtained on January 23, 2013. He was indicted by a federal grand jury in Denver on January 28, 2013. He pled guilty on June 27, 2013.
According to court documents, including the stipulated facts contained in the plea agreement, the investigation began when a Denver Police detective learned from a confidential informant that there was an individual who possessed destructive devices. The detective contacted ATF regarding this information. ATF, acting on this information, worked to introduce an undercover agent to meet the subject, who turned out to be Richard Sandberg. Eventually, the undercover agent met with Sandberg at his residence, where he was shown the destructive devices. Sandberg reportedly said he wanted to trade the devices for cocaine, or sell them for $300 each.
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.
Following Sandburg’s arrest, law enforcement officers conducted a search of his residence. During the search, law enforcement located an additional 28 homemade destructive devices, several hundred rounds of ammunition, and 3 firearms.
For each count of possession of a firearm (which includes destructive devices) which is not registered in the National Firearms Registration and Transfer Record; Sandberg faces not more than 10 years in federal prison, and a fine of not more than $250,000. Additionally, the defendant agrees to relinquish all claims, title, and interest the defendant has to all the ammunition seized in this case; 5.56 caliber rifle, model Low 16; a Remington, model 870 12 gauge shotgun; and a Beretta, model 92FS, 9mm pistol to the United States of America.
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’s Bomb Squad and the Colorado Springs Regional Explosives Unit provided assistance at Sandberg’s residence, where the destructive devices were found.
Sandberg is being prosecuted by Assistant U.S. Attorney Jeremy Sibert.
####
Highlands Ranch Man Found Guilty of Human Trafficking and Other OffensesRead the Press Release
DENVER – Kizzy Kalu, age 49, of Highlands Ranch, was found guilty today of 89 counts of mail fraud, visa fraud, human trafficking and money laundering by a federal jury, the U.S. Attorney’s Office for the District of Colorado announced. The four week jury trial was before Chief U.S. District Court Judge Marcia S. Krieger. The jury deliberated for approximately a day and a half before reaching its verdicts. Kalu was found not guilty of 6 counts. Kalu, who was in custody during the trial, was remanded into custody following the reading of the verdict. The defendant is scheduled to be sentenced by Chief Judge Krieger on September 23, 2013 at 9:00 a.m.
Prior to trial, co-defendant, Philip Langerman, age 78, of McDonough, Georgia, pled guilty for his role in the criminal scheme. A sentencing date has not yet been scheduled for Langerman.
Kalu was indicted by a federal grand jury in Denver on March 1, 2012. A superseding indictment was obtained on February 12, 2013. The jury trial started on June 3, 2013. Kalu was found guilty of a vast majority of counts today, July 1, 2013.
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 earning below the prevailing wage.
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.
Kalu was convicted of 19 counts of commercial carrier/mail fraud, which carries a penalty of not more than 20 years in federal prison, per count. He was convicted of 3 counts of visa fraud, which carries a penalty of not more than 10 years in federal prison, per count. He was convicted of 9 counts of trafficking in forced labor, which carries a penalty of not more than 20 years in federal prison, per count. He was found guilty of 13 counts of forced labor, which carries a penalty of not more than 20 years per count. He was found guilty of 15 counts of encouraging and inducing aliens to enter the U.S., which carries a penalty of not more than 10 years in prison, per count. Kalu was convicted of 30 counts of money laundering, which carries a penalty of not more than 20 years in prison per count. Each of the 89 counts also carries a fine of up to $250,000.
“We don’t tolerate lying to the United States,” said First Assistant U.S. Attorney Bob Troyer. “And we don’t tolerate victimizing laborers and cheating folks out of their hard-earned money. Today’s guilty verdict on 89 criminal counts confirms these simple truths, and it comes as a direct result of the determination and skill of the prosecution team and the talented agents from the State Department’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.”
“Today’s verdict reflects Diplomatic Service’s commitment to aggressively protect U.S. borders and the integrity of our travel document and labor laws,” said Michael Bayer, Special Agent in Charge of the Department of State’s Diplomatic Security Service. “Diplomatic Security is committed to working with the U.S. Attorney’s Office, DHS-HSI, and other Law Enforcement Agencies around the world to investigate allegations of Passport and visa fraud, trafficking in humans, forced labor and other associated offenses, and to bring those who commit these crimes to justice.”
“Homeland Security Investigations aggressively investigates human trafficking, which is modern-day slavery,” said Kumar Kibble, special agent in charge of HSI in Denver. “These human traffickers use force, fraud and coercion to obtain free or cheap labor from their victims so the traffickers can maximize their profits.”
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 Special Assistant U.S. Attorney Beth Gibson and Assistant U.S. Attorney Robert Brown.
####
Pueblo Man Arrested for Tax Evasion, Bank Fraud and Interfering with IRS LawsRead the Press Release
DENVER – Michael Destry Williams, age 49, of Pueblo, Colorado, was arrested without incident on Wednesday, June 26th on charges of tax evasion, structuring, bank fraud, and interfering with IRS laws, the U.S. Attorney’s Office, Internal Revenue Service – Criminal Investigation, Treasury Inspector General for Tax Administration and the U.S. Marshals Service announced. Williams was indicted by federal grand jury in Denver on March 22, 2012, followed by a superseding indictment on July 26, 2012. Both indictments remained under seal until his arrest. The U.S. Marshals with assistance from the Pueblo County Sheriff located and apprehended Williams in Pueblo, Colorado after being on the run for over a year from state and federal charges. Williams was later transported to Denver yesterday for his initial appearance where he was advised of his rights and the charges filed against him. He is due back in court on July 2, 2013 at 2:00 p.m. for arraignment and a detention hearing.
According to the indictment and superseding indictment, 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 attempt to evade a substantial amount of income tax and self-employment tax due and owing by him to the United States of America for calendar years 2005, 2006 and 2007, among other ways, by failing to file income tax returns and to pay to the IRS income tax and self-employment tax. The indictments allege that Williams established and used trusts as part of his tax evasion scheme. Furthermore, Williams structured over $90,000 in deposited funds from July 2008 through September 2008.
In November or 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 attempted to negotiate.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, according to the superseding indictment, 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. The superseding indictment alleges, in particular, that Williams sent the 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.
Williams was charged with two counts of tax evasion, one count of structuring, two counts of bank fraud, three counts of fictitious obligations and one count of interfering with the administration of internal revenue laws. Tax evasion and structuring carries a penalty of not more than 5 years in federal prison, and a fine of up to $250,000 per count. Bank fraud carries a penalty of not more than 30 years in federal prison, and a fine of up to $1,000,000 per count. Fictitious obligations carries a penalty of not more than 25 years in federal prison, and a fine of up to $1,000,000 per count. Interfering with the administration of internal revenue laws carries a penalty of not more than 3 years in federal prison, and a fine of up to $250,000 per count.
This case was investigated by agents with IRS Criminal Investigation and U.S. Treasury Inspector General for Tax Administration (TIGTA). U.S Marshals with the assistance of the Pueblo County Sheriff’s Office located and apprehended Williams. The case is being prosecuted by Assistant U.S. Attorney Kenneth Harmon.
The charges contained in the indictment are allegations, and the defendant is presumed innocent until proven guilty.
####
Denver Man Pleads Guilty to Multi-Million Dollar Real Estate SchemeRead the Press Release
DENVER – Roger K. Howard, age 50, of Englewood, Colorado, pled guilty recently before U.S. District Court Judge R. Brooke Jackson to three counts of wire fraud and one count of money laundering, the United States Attorney’s Office, IRS Criminal Investigation and the Federal Bureau of Investigation announced. Howard, who is free on bond, is scheduled to be sentenced by Judge Jackson on August 26, 2013. Howard’s co-defendant, Oai Quang Luong pled guilty to three counts of wire fraud on May 22, 2013 and is scheduled to be sentenced on August 15, 2013.
Howard and Luong were indicted by a federal grand jury in Denver on January 25, 2012. 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. At that point, there were about twelve different lenders holding the mortgages on the town homes, and they lost approximately $7,609,729.31.
“The real estate fraud perpetrated by the two defendants in this case not only impacts the victims who were caught up in the scheme, it also impacts the mortgage lending system, which ultimately effects everyone who is interested in home ownership,” said U.S. Attorney John Walsh.
"Buyer beware, schemes like this can cause financial havoc for those that are left holding the mortgage, said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. "Those who line their pockets with profits from these schemes should know they will not go undetected and will eventually be held accountable."
“This guilty plea should send a strong message to anyone considering deceiving others with mortgage fraud,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “The FBI will continue to work with our law enforcement partners to protect financial institutions and our economy from those engaged in these types of fraudulent schemes.”
Wire fraud carries a penalty of not more than 20 years in federal prison and a fine of up to $250,000 per count. Money Laundering carries a penalty of not more than 10 years in federal prison and a fine of up to $250,000 per count.
This case was investigated by agents with Internal Revenue Service Criminal Investigation (IRS-CI) and the Federal Bureau of Investigation (FBI).
The case is being prosecuted by Assistant United States Attorney Suneeta Hazra.####
Colorado U.S. Attorney's Office, in Cooperation with the Food and Drug Administration, Seizes over 1,600 Websites Selling Counterfeit or Misbranded MedicationRead the Press Release
DENVER – U.S. Attorney John Walsh announced today that the Colorado U.S. Attorney’s Office, as part of International Internet Week of Action, and in conjunction with Interpol’s Operation Pangea VI, obtained seizure warrants in the United States District Court for the District of Colorado in Denver for over 1,600 websites that were illegally selling counterfeit or misbranded drugs purported to be brand name pharmaceuticals. The seizure of those sites was executed by the Food and Drug Administration’s Office of Criminal Investigations last week.
Many of these websites operated as a part of an online network of pharmaceutical sites, which falsely purported that its websites were legitimate online pharmacies. Many of these sites falsely claimed to be hosted in Canada, while others falsely claimed to be affiliated with major U.S. pharmacy retailers by using the names of those retailers in the website names. The organizers also used bogus licenses and certifications in an attempt to convince U.S. consumers to purchase drugs that the sites falsely advertised as “brand name” and “FDA Approved.” Drugs purchased from these sites proved not to be from Canada, and they were neither brand name drugs nor were they FDA approved. The shipments originated from either India or Singapore. The FDA’s Office of Criminal Investigations Cybercrime Investigations Unit banner is now displayed on all seized 1,677 websites to alert consumers that the sites were identified as engaging in illegal activity. Below is a list of three of the website names seized:
www.canadianhealthandcaremall.com
www.walgreens-store.com
www.c-v-s-pharmacy.comMedications offered and sold by these websites included the following: Avandaryl (a diabetes and heart drug), Celebrex (a non-steroidal anti-inflammatory product used to treat arthritis and to manage pain), Levitra and Viagra (erectile dysfunction drugs), and Clozapine (a severe schizophrenia medication).
“Ordering a prescription medication from a website that doesn’t require a prescription is dangerous,” said Colorado U.S. Attorney John Walsh. “That’s both because a doctor’s authorization and supervision is important, but also because overseas drug manufacturers may not be complying with FDA safety rules. The sites seized as a part of this important operation were selling drugs manufactured overseas without FDA supervision to people who didn’t necessarily have prescriptions, and who can’t be sure they are actually receiving the drug they thought they were ordering. Thanks to the hard work of the FDA Office of Criminal Investigations and the Assistant U.S. Attorneys from the District of Colorado, over 1,600 websites have been shut down ensuring that the public does not accidentally purchase a counterfeit or misbranded drug.”
“Protecting U.S. consumers is the agency’s top priority. We know that illegal online pharmacies put U.S. consumers’ health at risk,” said John Roth, Director of the FDA’s Office of Criminal Investigations. “While this is an ongoing battle in the United States and abroad, the agency nonetheless will not cease its criminal law enforcement and regulatory efforts and is pleased to participate in Operation Pangea to protect consumers and strengthen relationships with international partners who join the FDA in this fight.”
During Operation Pangea VI, the largest Internet-based action of its kind in the United States, the U.S. Attorney’s Office for the District of Colorado and the FDA targeted websites selling unapproved and potentially dangerous prescription medicines that could pose significant public health risks. These medicines should only be used with a valid prescription and under the supervision of a licensed health care provider. In addition, these online-purchased products bypass existing safety controls required by the FDA, and protections provided when used under a doctor’s care.
In addition to health-related risks, members of the public who used these websites also potentially exposed themselves to financial risks, including credit card fraud, identity theft or computer viruses. If you believe you have been a victim of these websites please visit www.fda.gov/oci.
The United States portion of this investigation was handled by the FDA’s Office of Criminal Investigations.
Assistant U.S. Attorneys Tonya Andrews, Ken Harmon and Judith Smith, chief of the Special Prosecutions Section, assisted in obtaining the seizure warrants.
####
Metro Denver Man Sentenced to Federal Prison for Health Care Related FraudRead the Press Release
DENVER – John Edward Mullikin, age 51 of Arvada, was sentenced today by U.S. Circuit Judge David M. Ebel to serve 72 months in federal prison, the United States Attorney’s Office and the Food and Drug Administration’s Office of Criminal Investigations announced. Mulliken was also ordered to pay $5,376 in restitution, and following his prison sentence, the defendant will have to serve 3 years on supervised release. Mullikin, who appeared at the sentencing hearing in custody, was remanded the hearing’s conclusion.
Mullikin was indicted by a federal grand jury on November 14, 2011. A superseding indictment was obtained on August 21, 2012. Following an 8 day trial, on February 13, 2013, a federal jury found him guilty of 17 counts of mail fraud. He was sentenced today, June 24, 2013.
According to the court documents and evidence presented at trial, between April 2006, and continuing through July 2008, John Edward Mullikin, devised and knowingly executed and attempted to execute a scheme to defraud various individuals throughout the United States. The scheme to defraud involved luring individuals throughout the United States into paying monies to him in order to participate in a bogus clinical study with the promise the monies would be returned along with further compensation. During this same period of time, the defendant was serving a term of parole in relation to four separate felony convictions involving theft in Adams, Arapahoe and Denver counties. John Edward Mullikin promoted a study of his weight loss product, which he referred to as “medication”, that he claimed was not a placebo, and that he named “DBL-824" on one website and “Evaril II” on another website. In truth and in fact, the substance was a placebo that merely contained small amounts of vitamins E and C. He then recruited study participants by advertising throughout the United States in newspapers, magazines and on the internet, in the names of various business entities, which contained materially false and fraudulent representations in order to convince participants to enroll in his clinical trial. John Edward Mullikin made materially false and fraudulent representations that the study was part of the National Institutes of Health Obesity Research Task Force and was the subject of a legitimate clinical study “conducted by a respected university research center.”
John Edward Mullikin also made materially false and fraudulent representations that clients would be participating in an “observational efficacy study” of his weight loss product, that “DBL-824 has demonstrated significant effect in Phase I, Phase II, and Phase III clinical trials,” and that “This observational study will obtain further data to complement the recently completed control studies,” when in fact no such clinical studies had ever been conducted. He required all participants to pay an advance fee of $150 “refundable deposit” for the Evaril II study and $144 “one-time refunded deposit” for the DBL-824 study, both of which he falsely represented would be refunded along with the promised compensation. John Edward Mullikin lured participants into the study by making materially false and fraudulent representations that participants would be compensated over $1,000 by the conclusion of the 6 month Evaril II Study and $319.72 per month for 24 months (a total of $7,673.52) by the conclusion of the DBL-824 study. During the scheme, John Edward Mullikin created non-profit corporations, registered trade names, and did business under assumed names, including but not limited to Progenics Research, Inc., IUCDHSC, Inc., RAND Corporation, Metacor labs, Evaril Study, and Research Study UCDHSC Evaril.
He also opened checking accounts at financial institutions in Colorado in his name and in the names of various business entities in order to receive checks and monies derived from the scheme. Further, John Edward Mullikin assumed names such as John Milliken, Jack Edwards, John Edwards and Tim Alexander to conceal his true identity. He provided documents to his victims supporting those false and fraudulent representations, such as medical questionnaires, study descriptions, FAQ’s (frequently asked questions), and other materials stating the benefits of participating in a clinical trial. He also directed prospective clients to print and complete the “Enrollment Form” provided on his website and directed them to “mail the completed Enrollment Form and contact information” to various company names at various Post Office boxes in Colorado registered to and utilized by him. He thereby caused study participants to send checks, money orders, and monies written to various business entities, which he then caused to be deposited in bank accounts he controlled. Once he received the victims’ advance fee for participation in the study, John Edward Mullikin withdrew or spent the monies and ceased contact with his victims. Mr. Mullikin did not pay the victims the compensation promised in exchange for their participation in his bogus clinical study, nor did he refund the advance fee that he described as a deposit.
The Mullikin case was investigated by Special Agent Mary LaFrance of the United States Food and Drug Administration Office of Criminal Investigations.
The defendant was prosecuted by Assistant U.S. Attorney Jaime Pena.
####
Colorado Inmate Indicted for Defrauding Elderly VictimRead the Press Release
DENVER – Akihiko Siegfried, age 54, formerly of Denver, CO, was indicted last week by a federal grand jury in Denver for mail fraud and money laundering, the Justice Department announced. At the time of Siegfried’s indictment, he was in the custody of Colorado Department Corrections where he remains today. At some point, he will be transferred to the United States Marshals were he will be advised of the charges filed against him.
According to the indictment, beginning in or about early 2008 and continuing until in or about April 2013, Siegfried devised a scheme to defraud an elderly victim. In early 2008, Siegfried knocked on the door of the 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.
Siegfried borrowed from the victim several times and in the middle of 2008 and 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. From early 2008 through April of 2013, Siegfried pretended to have great affection for the victim, repeatedly telling him “I love you.”
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 repeatedly 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 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.
Siegfried was charged with seventeen counts of mail fraud and one count of money laundering. Mail fraud carries a penalty of not more than 20 years in federal prison, and a fine of up to $250,000 per count. Money Laundering carries a penalty of not more than 10 years in federal prison, and a fine of up to $250,000 per count.
This case was investigated by agents with IRS Criminal Investigation, Federal Bureau of Investigation (FBI), 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.
The charges contained in the indictment are allegations, and the defendants are presumed innocent until proven guilty.
####
Two Moffat County Ranchers Indicted for Building Trash Dumps on Public Lan and Illegally Diverting WaterRead the Press Release
DENVER – Leland Ray (John) Smith, age 70, and his younger brother, Bradford Moroni (Brad) Smith, age 65, both from Craig, Colorado, were indicted by a federal grand jury in Denver on Tuesday, charged with two counts of committing crimes on BLM land, the United States Attorney’s Office and the Bureau of Land Management announced. The brothers appeared in U.S. District Court in Grand Junction this afternoon, where they were advised by a U.S. Magistrate Judge of their rights and the charges pending against them. They were released on a personal recognizance bond, and ordered to return to court on Monday, June 24, 2013, at 2:00 p.m. in Grand Junction for arraignment.
According to the indictment, the defendants dug trenches on land owned by the United States and administered by the Bureau of Land Management, into which they dumped and buried garbage, waste, and debris generated from their private property. They are also accused of using heavy equipment to excavate pits, create artificial ponds, and affect the flow of the Woodbury Gulch water channel – specifically at a riparian area along the Woodbury Gulch, upon land owned by the United States and administered by the Bureau of Land Management.
If convicted, each defendant faces up to 10 years imprisonment and up to a $250,000 fine per count.
This case was investigated by the Bureau of Land Management (BLM).
The defendants are being prosecuted by Assistant U.S. Attorney Michelle Heldmyer.
The charges contained in the indictment are allegations, and the defendants are presumed innocent until proven guilty.
####
Denver Man Indicted on Charges of Distribution of Child PornographyRead the Press Release
DENVER – Michael Keith Forrester, age 40, of Denver, Colorado, was indicted by a federal grand jury in Denver this week on five counts of distribution of child pornography, United States Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. Forrester made his initial appearance in U.S. District Court in Denver this afternoon before a U.S. Magistrate Judge where he was advised of his rights and the charges pending against. He is next due in court on Tuesday, June 25, 2013 at 10:00 a.m. for arraignment and a detention hearing.
According to the indictment, on five separate dates between October 19, 2009 and October 29, 2010, Forrester knowingly distributed and attempted to distribute child pornography that has been shipped and transported in and affecting interstate and foreign commerce by any means, including by computer.
If convicted, Forrester faces not less than 5 years and not more than 20 years imprisonment and up to a $250,000 fine per count for each of the five counts. He also faces not less than 5 years and not more than life on supervised release. The indictment also contains an asset forfeiture allegation where if convicted of any of the violations alleged in the indictment, Forrester shall forfeit to the United States any and all of the defendant’s right, title and interest in any property, real or personal, used or intended to be used to commit or to promote the commission of such offense or any property traceable to the crime.
This case is being investigated by the Federal Bureau of Investigation.
Forrester is being prosecuted by Assistant U.S. Attorney Valeria Spencer.
The charges contained in the indictment 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."
####
San Luis Valley Man Sentenced to Nine Years in Federal Prison for Being A Felon in Possession of A FirearmRead the Press Release
DENVER – Lawrence Rolland Thiel, of San Luis, Colorado, was sentenced this month by U.S. District Court Judge William J. Martinez to serve 110 months (just over 9 years) in federal prison for possession of a firearm by a previously convicted felon, United States Attorney John Walsh and ATF Denver Special Agent in Charge Andrew Traver announced. After serving his sentence, Judge Martinez ordered Thiel to spend 3 years on supervised release. Thiel, who appeared at the hearing in custody, was remanded.
Thiel was indicted by a federal grand jury on October 1, 2012. He pled guilty before Judge Martinez on February 11, 2013. He was sentenced on June 4, 2013.
According to court records, beginning on August 11, 2012, Thiel drove past a home at a high rate of speed and fired a small black pistol in the direction of the house. The house belonged to a man who was involved in a foreclosure proceeding against Thiel’s home. While police were still investigating the initial crime, Thiel was identified as running a woman and her three children off the road while they were driving. He also pointed a small black pistol at them.
Having obtained an arrest warrant for Thiel, on August 20, 2012, a police officer observed Thiel driving the same truck involved with the two earlier crimes. Police pulled over Thiel’s vehicle. Thiel was driving, and his ex-wife, who he lived with sporadically, occupied the passenger seat. Thiel was placed under arrest. After being taken to Costilla County Jail, Thiel consented to a lawful search of his vehicle. During the search, officers discovered a Ruger P95DC 9mm pistol. A subsequent search of Thiel's home, pursuant to a search warrant, uncovered a Savage Arms Model 24C Series P, over/under shotgun/rifle. The serial number of this weapon had been obliterated.
Prior to the execution of the search warrant, Thiel’s ex-wife initially made claims that the firearms were hers. However, after the searches turned up the second firearm and pictures of Thiel shooting and posing with the pistol dating back to April of 2012, Thiel’s ex-wife admitted that Thiel had asked her to purchase them for him, and that they were his.
Thiel has a criminal history dating back to 1981. Among convictions for other minor crimes, Thiel has at least ten felony convictions from jurisdictions across Colorado and California. This is Thiel’s first conviction for a federal crime.
This case was investigated by the ATF and the San Luis Police Department.
Thiel was prosecuted by Assistant U.S. Attorney Kurt Bohn.
####
Frontier Airlines Passenger Indicted by Federal Grand JuryRead the Press Release
DENVER – Mark Michael Bote, age 23, of Thornton, Colorado, was indicted by a federal grand jury in Denver late yesterday, the United States Attorney’s Office and the FBI announced. The charges are one count of interference with flight crew members and attendants and one count of false information and threats. Bote is scheduled to appear before U.S. Magistrate Judge Craig B. Shaffer tomorrow morning, Thursday, June 20, 2013 at 10:00 a.m. for a detention hearing and possibly arraignment. The government has notified the court that it intends to seek detention of the defendant, meaning Bote would not be eligible for bond. The Magistrate Judge will make that decision. Bote could also be asked to enter a plea at tomorrow’s hearing. The defendant is represented by the Federal Public Defender’s Office. The case has been assigned to U.S. District Court Judge Robert E. Blackburn for proceedings once detention and arraignment have been addressed.
According to the FBI affidavit in support of the Criminal Complaint, on June 14, 2013 at 7:20 p.m., the FBI’s airport liaison was notified of an inflight disturbance aboard Frontier Airlines Flight 601 en route from McGhee Tyson Airport in Knoxville, Tennessee to Denver International Airport. Federal agents and task force officers responded to the airport based on the notification.
On board the flight, one passenger noticed Bote seemed nervous, was shaking, had his eyes closed, and was rocking back and forth. A second passenger also noticed that Bote looked nervous, and that his eyes were glazed over. When Bote took his seat he kept his backpack on. A flight attendant asked that he remove it. He put it under the seat in front of him, but would not let completely go of it. Later in the flight a flight attendant asked Bote if he was ok. He reply with the word “bomb” and some other words the flight attendant couldn’t make out. The flight attendant confirmed with him twice to make sure he knew he was saying the word “bomb”.
A third passenger on board who sat next to defendant noted that Bote spent a majority of the flight sleeping. When he suddenly awoke Bote allegedly said “help me help me.” The flight attendant asked what was wrong, and Bote responded “There’s a bomb. There’s a bomb.” He was shaking as he held the backpack. Later, Bote’s backpack was taken from him.
Toward the end of the flight the flight attendants discussed the situation. When Bote said he had a bomb in his carry-on bag the flight attendants consulted with the Captain. On Captain’s orders, the flight attendants initiated bomb procedures which included moving passengers and bags.
One of the passengers advised the flight attendants that she was traveling with Bote, and was a member of his church group. They had been in Tennessee helping build a church. She stated that the defendant was not well.
Further investigation by the FBI revealed that Bote thought someone was stalking him. He was holding on to the backpack because he thought someone put a bomb in it because it felt heavier than it had previously. Bote was arrested pending federal charges.
If convicted of interference with flight crew members and attendants, Bote faces not more than 20 years in federal prison, and a fine of up to $250,000. If convicted of false information and threats, the defendant faces not more than 5 years in federal prison, and up to a $250,000 fine.
This case was investigated by the FBI and the Denver Police Department.
The defendant is being prosecuted by Assistant U.S. Attorney James Allison, Chief of the Criminal Division of the Colorado U.S. Attorney’s Office.
The charges contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty.
####
Passenger on Frontier Airlines Flight Charged with False Information and ThreatsRead the Press Release
UPDATE
Mark Bote Appears in Federal Court
DENVER – Mark Michael Bote, the man charged with false information and threats while aboard a Frontier Airline Flight that landed in Denver last Friday night appeared in U.S. District Court in Denver this afternoon. He appeared before U.S. Magistrate Judge Craig B. Shaffer. Magistrate Judge Shaffer found that Bote was eligible for court appointed counsel and ordered the court to appoint an attorney to represent the defendant at no cost. James Allison, the Assistant U.S. Attorney representing the government, who is also the Chief of the Criminal Division of the U.S. Attorney’s Office, notified the court that it will be asking that the defendant be held without bond pending a resolution of this case. The Magistrate Judge scheduled the detention hearing, to decide that issue, as well as a preliminary hearing, to determine if there is probable cause that the defendant committed the crimes alleged, for Thursday, June 20th at 10:00 a.m. Until that hearing, Bote will remain in federal custody, under the control of the United States Marshals Service. The Marshals will determine where the defendant will be held pending that hearing.
DENVER – Mark Michael Bote, age 23, of Thornton, Colorado, was charged yesterday by Criminal Complaint with one count of false information and threats while aboard Frontier Airlines Flight 601 en route from Knoxville, Tennessee to Denver, Colorado, United States Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. Bote is scheduled to make his initial appearance before U.S. Magistrate Judge Craig B. Shaffer at 2:00 p.m. this afternoon before U.S. Magistrate Judge Craig B. Shaffer, barring unforeseen circumstances, where he will be advised of his rights and the charges pending against him.
According to the FBI affidavit in support of the Criminal Complaint, on June 14, 2013 at 7:20 p.m., the FBI’s airport liaison was notified of an inflight disturbance aboard Frontier Airlines Flight 601 en route from McGhee Tyson Airport in Knoxville, Tennessee to Denver International Airport. Federal agents and task force officers responded to the airport based on the notification.
On board the flight, one passenger noticed Bote seemed nervous, was shaking, had his eyes closed, and was rocking back and forth. A second passenger also noticed that Bote looked nervous, and that his eyes were glazed over. When Bote took his seat he kept his backpack on. A flight attendant asked that he remove it. He put it under the seat in front of him, but would not let completely go of it. Later in the flight a flight attendant asked Bote if he was ok. He reply with the word “bomb” and some other words the flight attendant couldn’t make out. The flight attendant confirmed with him twice to make sure he knew he was saying the word “bomb”.
A third passenger on board who sat next to defendant noted that Bote spent a majority of the flight sleeping. When he suddenly awoke Bote allegedly said “help me help me.” The flight attendant asked what was wrong, and Bote responded “There’s a bomb. There’s a bomb.” He was shaking as he held the backpack. Later, Bote’s backpack was taken from him.
Toward the end of the flight the flight attendants discussed the situation. When Bote said he had a bomb in his carry-on bag the flight attendants consulted with the Captain. On Captain’s orders, the flight attendants initiated bomb procedures which included moving passengers and bags.
One of the passengers advised the flight attendants that she was traveling with Bote, and was a member of his church group. They had been in Tennessee helping build a church. She stated that the defendant was not well.
Further investigation by the FBI revealed that Bote thought someone was stalking him. He was holding on to the backpack because he thought someone put a bomb in it because it felt heavier than it had previously. Bote was arrested pending federal charges.
If convicted of false information and threats, the defendant faces not more than 5 years in federal prison, and up to a $250,000 fine.
This case was investigated by the FBI and the Denver Police Department.
The defendant is being prosecuted by Assistant U.S. Attorney James Allison, Chief of the Criminal Division of the Colorado U.S. Attorney’s Office.
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 Criminal Complaint are allegations. The defendant is presumed innocent unless and until proven guilty.
####
Man Who Sent Threatening Communications to President and U.S. Senator While in Larimer County Jail Sentenced to Federal PrisonRead the Press Release
DENVER – Thomas Daniel Sanchez, age 25, of Larimer County, was sentenced earlier this week by Senior U.S. District Court Judge Wiley Y. Daniel to serve 84 months (7 years) in federal prison for threatening the President of the United States, U.S. Senator Michael Bennet, and assaulting an FBI agent, U.S. Attorney John Walsh, FBI Denver Special Agent in Charge Thomas Ravenelle and U.S. Secret Service Denver Office Special Agent in Charge Bruce Ward announced. Following his prison sentence, Sanchez will then have to serve 3 years on supervised release. The defendant appeared at the sentencing hearing in custody, and was remanded at its conclusion.
Sanchez was indicted on September 1, 2011. A superseding indictment was obtained on November 30, 2011. Sanchez pled guilty to mailing a threat to kill U.S. Senator Michael Bennet, mailing a threat to kill the President of the United States, and forcibly assaulting an FBI Special Agent. He was sentenced by Judge Daniel on June 12, 2013.
According to the stipulated facts contained in the plea agreement, on June 7, 2011, U.S. Capitol Police reported that Thomas Daniel Sanchez, an inmate at the Larimer County Detention Center, had written a letter addressed to United States Senator Michael Bennet, stating that he was in contact with a “terrorist group” with plans to kill the Senator. He also suggested that there were plans against the President. That day, two FBI Special Agents went to interview Sanchez. During the interview, Sanchez reiterated the information contained in the threatening letter. At the end of the interview, Sanchez stood up and deliberately spit in the face and eyes of one of the FBI agents. When warned not to do that again, the defendant leaned forward and threatened the agent. Perceiving the threat, the FBI agent restrained Sanchez until prison officials took control and escorted him out of the interview room.
Following the interview, Sanchez continually called the FBI Fort Collins office, reiterating various threats. He stated that he was “anti-government” and “a known terrorist.” He also claimed to have access to guns and a plane. On June 14, 2011, Sanchez was again interviewed by the FBI. He stated that he fully intended to kill the President. Sanchez continued writing letters between June and September 2011. He repeated and reaffirmed his threats. He also wrote a letter to the Secret Service threatening Secretary of Homeland Security Janet Napolitano and various other government officials.
“Threatening a government official, or assaulting a federal agent, carries severe consequences,” said U.S. Attorney John Walsh. “Threatening the life of the President of the United States, and a United States Senator, and assaulting an FBI agent results in a serious prison sentence.”
“The FBI considers threats against the President and members of Congress, and assaults on federal agents as serious criminal violations,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “Working with our partners, we will pursue these matters with vigor.”
This case was investigated by the Federal Bureau of Investigation (FBI) and the United States Secret Service (USSS).
The defendant was prosecuted by Assistant United States Attorney Mark Barrett.
####
Colorado U.S. Attorney's Office Participated in Settlement Where Walgreens Agrees to Pay A Record $80 Million for Civil Penalties Under the Controlled Substances ActRead the Press Release
DENVER -- Walgreens Corporation (Walgreens), the nation’s largest drug store chain, has agreed to pay $80 million in civil penalties for violations of the Controlled Substances Act, resolving an investigation in which the United States Attorney’s Office for the District of Colorado and the DEA’s Denver Field Division participated. The agreement was announced by the United States Attorney’s Office for the Southern District of Florida. The United States Attorney’s Offices in the Eastern District of Michigan and the Eastern District of New York participated as well. The details of the nationwide resolution, announced by the Southern District of Florida U.S. Attorney’s Office, are below.
The Colorado U.S. Attorney’s Office along with DEA’s Denver Field Division identified over 1,600 violations of the Controlled Substances Act at Walgreens stores located in Colorado. The majority of these violations were found at Walgreens stores located in Canon City and Pueblo. The investigation uncovered instances of Walgreens stores filling fraudulent prescriptions; filling prescriptions written by a physician with an expired DEA registration; filling prescriptions lacking an address and/or DEA registration number, in violation of DEA regulations; and dispensing controlled substances to customers without a prescription. The investigation also uncovered hundreds of examples of inaccurate or incomplete recordkeeping for controlled substances at Walgreens stores located throughout Colorado. Such inaccurate or incomplete recordkeeping violates the Controlled Substances Act.“Stores that sell controlled substances must keep careful track of their inventory,” said U.S. Attorney John Walsh. “Those that don’t, like Walgreens in this case, face severe penalties, like the record $80 million penalty announced today.”
Accurate and efficient record-keeping and administrative procedures are critical for the safe dispensing and use of pharmaceutical drugs. As this case shows, DEA will ensure that DEA registrants adhere to the law to protect public health and safety, or face the consequences for failing to do so,” said Barbra Roach, Special Agent in Charge of the DEA’s Denver Division.
PRESS RELEASE FROM THE SOUTHERN DISTRICT OF FLORIDA
For more information contact Alicia Valle at 305-961-9001Walgreens Agrees to Pay a Record Settlement of $80 Million for Civil Penalties Under the Controlled Substances Act
Largest Fine Paid by a DEA Registrant
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Mark R. Trouville, Special Agent in Charge, Drug Enforcement Administration (DEA), Miami Field Division, announced that Walgreens Corporation (Walgreens), the nation’s largest drug store chain, has agreed to pay $80 million in civil penalties, resolving the DEA’s administrative actions and the United States Attorney’s Office’s civil penalty investigation regarding the Walgreens Jupiter Distribution Center and six Walgreens retail pharmacies (collectively “Registrants”) in Florida. The settlement further resolves open civil investigations in the District of Colorado, Eastern District of Michigan, and Eastern District of New York, as well as civil investigations by DEA field offices nationwide, pursuant to the Controlled Substances Act (the Act).
The settlement, the largest in DEA history, resolves allegations that the Registrants committed an unprecedented number of record-keeping and dispensing violations under the Act. According to documents filed in the underlying administrative actions, the Registrants negligently allowed controlled substances listed in Schedules II – V of the Act, such as oxycodone and other prescription pain killers, to be diverted for abuse and illegal black market sales.
According to the most recent report from the U.S. Center for Disease Control and Prevention, prescription drug overdose deaths exceeded motor vehicle deaths and deaths from illegal street drugs, such as cocaine, heroin, and amphetamines in 2009. Oxycodone is a powerful addictive narcotic that is one of the most abused prescription medications in Florida and throughout the United States. Walgreens’ Distribution Center in Jupiter, Florida was the largest supplier of oxycodone to retail pharmacies in the State of Florida.
U.S. Attorney Wifredo A. Ferrer stated, “Prescription drug abuse is a tremendous problem in Florida and throughout the country. Every day, individuals die from prescription drug overdoses. The record-keeping requirements of the Controlled Substances Act and DEA regulations are designed to prevent prescription pain killers, like oxycodone, from ending up on our streets. For this reason, we cannot allow pharmacies to circumvent their regulatory record-keeping and dispensing obligations.”
DEA Special Agent in Charge Mark R. Trouville stated, “National pharmaceutical chains are not exempt from following the law. This settlement sends out a clear message that all DEA registrants will be held accountable when they violate the law and threaten public health and safety. The DEA will continue its efforts to work with our registrants and our law enforcement partners to combat pharmaceutical drug abuse and diversion in Florida.”
The settlement agreement covers conduct that was the subject of DEA’s administrative actions and the U.S. Attorney’s Office civil penalty investigation. More specifically, the settlement covers allegations against Walgreens’ Jupiter Distribution Center and six Walgreens’ retail pharmacies. First, the Jupiter Distribution Center failed to comply with DEA regulations that required it to report to the DEA suspicious prescription drug orders that it received from Walgreens’ retail pharmacies. Walgreens’ alleged failure to sufficiently report suspicious orders was a systematic practice that resulted in at least tens of thousands of violations and allowed Walgreens’ retail pharmacies to order and receive at least three times the Florida average for drugs such as oxycodone.
Second, the six retail pharmacies in Florida that received the suspicious drug shipments from the Jupiter Distribution Center, in turn, filled customer prescriptions that they knew or should have known were not for legitimate medical use. In addition, these retail pharmacies and others elsewhere in the United States failed to properly identify and mark, as required by DEA regulations, hardcopy controlled substance prescriptions that were outsourced to a “central fill” pharmacy for filling. Without Walgreens’ retail pharmacies identifying these outsourced prescriptions, DEA could not accurately determine which prescriptions were filled from the retail pharmacies’ own drug supplies and which prescriptions were filled by a “central fill.” Consequently, DEA could not determine the accuracy of the retail pharmacies’ drug records. The DEA’s administrative actions demonstrated millions of violations of this type.
In addition to the $80 million civil penalty for the above violations, the settlement revokes the Registrants’ ability to distribute or dispense controlled substances listed in Schedules II – V for two years, ending in 2014. As part of the settlement, Walgreens admitted that it failed to uphold its obligations as a DEA registrant regarding the above-described conduct. Furthermore, Walgreens has agreed to create a Department of Pharmaceutical Integrity to ensure regulatory compliance and prevent the diversion of controlled substances. Walgreens has also agreed to enhance its training and compliance programs, and to no longer monetarily or otherwise compensate its pharmacists based on the volume of prescriptions filled.
Since 2009, the DEA, along with its federal, state, and local counterparts, have partnered to combat the prescription drug abuse epidemic that has plagued Florida, culminating in Operation Pill Nation I and II and Operation Oxy Alley. These investigations have resulted in charges against more than 172 individuals, including 51 doctors and 24 clinic/pharmacy owners, the seizure of approximately 2.5 million dosage units of controlled substances, approximately $16.6 million, real property, and exotic cars. In addition, approximately 42 doctors and 11 pharmacies have lost their DEA registrations through the issuance of Immediate Suspension Orders. As well, approximately 192 doctors and 68 pharmacies have voluntarily surrendered their DEA registrations following an official visit from the DEA. Lastly, DEA has also taken action against seven other Florida-based distributors.
This investigation was conducted by the DEA’s Miami Field Office and the U.S. Attorney’s Office for the Southern District of Florida, with the assistance of DEA’s Office of Chief Counsel.
Mr. Ferrer thanked U.S. Attorney for the District of Colorado, John Walsh, U.S. Attorney for the Eastern District of Michigan, Barbara L. McQuade, and U.S. Attorney for the Eastern District of New York, Loretta E. Lynch, for their cooperation in this case. Mr. Ferrer also commended the investigative work of the DEA’s Miami Field Office, as well as its DEA counterparts throughout the country for their work and assistance in this matter.
The civil penalty case was investigated and negotiated by Assistant U.S. Attorney Franklin Monsour of the U.S. Attorney’s Office for the Southern District of Florida. The administrative case was principally negotiated by Lee Reeves, Associate Chief Counsel for DEA’s Diversion and Regulatory Litigation Section, and also by Scott Lawson, who acted as lead trial counsel for the DEA in the administrative actions.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
####
Army National Guard Member Indicted for Theft of Public MoneyRead the Press Release
DENVER – Thurman L. Foster, age 43, of Fountain, Colorado, was indicted by a federal grand jury in Denver on June 4, 2013 on sixteen counts of theft of public money, the United States Attorney’s Office and the United States Army, Criminal Investigation Command announced. Foster was ordered by summons to appear on June 26, 2013 before U.S. Magistrate Judge Kathleen M. Tafoya for an initial appearance.
In September of 2005, the Army National Guard Bureau, located in Arlington, Virginia, entered into a contract with a company located in Alabaster, Alabama to administer a program called the Guard Recruiting Assistance Program. The Program was designed to offer monetary incentives in the form of recruiting referral bonuses to Army National Guard soldiers, known as Recruiter Assistants (RA), to recruit other individuals to serve in the U.S. Army National Guard. After enrolling online and completing an online training course in recruiting, the RA would establish an online account to record the RA’s recruiting efforts.
If a potential soldier, known as a nominee, signed an enlistment contract, the RA who recruited that nominee would receive a $1,000 payment through direct deposit into a bank account designated by the RA, and another $1,000 if the nominee attended basic training. If the nominee had previously served in the Armed Forces, and thus did not need basic training, the RA would be paid $2,000. The RA was required to obtain a nominee’s personal information directly from that nominee in order to receive the bonus money for that nominee.
According to the indictment, Foster, an Army National Guard solider, who acted as a Recruiter Assistant, did allegedly knowingly steal $22,000 in referral bonuses for a number of nominees from the Guard Recruiting Assistance Program (GRAP), by causing the money to be directly deposited into his bank account despite the fact that he did not personally recruit these nominees.
“This reservist was caught stealing public funds,” said U.S. Attorney John Walsh. “Thanks to the hard work of the Army’s Criminal Investigation Command, the defendant is now in the process of being held accountable.”
“The Colorado National Guard will support the U.S. Attorney’s Office any way possible,” said Major General H. Michael Edwards, The Adjutant General of Colorado and commander of the Colorado National Guard. “This activity is totally contrary to the values and culture of the Colorado National Guard and will not be tolerated. This should serve as an example for those who would abuse public trust. Due to similar issues with this program, nationwide, the GRAP recruiting programs have been cancelled.”
This case was investigated by the United States Army, Criminal Investigation Command.
The defendant is being prosecuted by Assistant United States Attorney Martha A. Paluch.
####
Former Fort Collins Resident Sentenced for Denial of Service Attack on Larimer County Government ComputersRead the Press Release
DENVER – David Joseph Rezendes, aka Joseph David Rezendes, aka Joe Rezendes, age 27, was sentenced Tuesday by U.S. District Court Judge R. Brooke Jackson to serve 18 months in federal prison for intentionally damaging a protected computer and for possession of unauthorized access devices (credit card information), United States Attorney John Walsh, FBI Denver Special Agent in Charge Thomas Ravenelle and Larimer County Sheriff Justin Smith announced. Rezendes was responsible for a denial of service attack he implemented to retaliate against the Larimer County government. After serving his sentence, Judge Jackson ordered Rezendes to spend 3 years on supervised release. Rezendes, who appeared at the hearing in custody, was remanded.
Rezendes was indicted by a federal grand jury on August 27, 2012. He pled guilty before Judge Jackson on March 8, 2013. He was sentenced on June 4, 2013. A hearing has been scheduled for July 23, 2013 for the court to set the amount of restitution Rezendes must pay to Larimer County.
According to court records, starting on Wednesday, September 22, 2010, a debilitating denial of service attack was launched against Larimer County government’s computer network. A denial of service attack makes a computer resource, such as a network or processor, unavailable to its intended users. A common denial of service attack involves a computer or computer network saturating a targeted victim computer system or network, overwhelming that system or network with traffic or communications requests. The attack lasted until September 24, 2010. A second attack occurred between October 4, 2010 and October 6, 2010. The denial of service attacks affected Larimer County employees’ ability to access email and county records. Two departments’ telephone systems were affected, as was the public’s ability to access county services online.
The Larimer County Sheriff’s Department and the FBI investigated the attack. As part of their investigation, law enforcement executed a court authorized search warrant of Rezendes’ residence. Computers and computer components were seized during the search. FBI case agents and Larimer County Sheriff’s Department computer forensic experts performed an analysis examining the data on the computers, uncovering evidence that the defendant was in fact responsible for the denial of service attack. They also uncovered evidence that Rezendes possessed stolen credit card information for more than 100 individuals.
As a consequence of his earlier guilty pleas, Rezendes is subject to a criminal asset forfeiture, which states that upon conviction of the violations stated in the guilty plea, the defendant shall forfeit to the United States any and all of the defendant’s right, title and interest in all property constituting and derived from any proceeds obtained directly and indirectly as a result of such offense, or property used to commit the offense, to include computers and computer components. In this case the defendant had to forfeit: 3 desktop computers, 3 laptop computers, 9 computer hard drives, 2 routers, 3 cable modems, a 32GB SDHC card, a USB thumb drive, a Camcorder, a WiFi Network Adapter, an omni-directional antenna, and a magnetic stripe card reader/writer.
“Rezendes attacked the Larimer County computer system because he was angry about a traffic ticket,” said U.S. Attorney John Walsh. “His denial of service attack impacted thousands of people for several days. Thanks to the excellent work of the Larimer County Sheriff and the FBI, Rezendes will spend 18 months in prison.”
“In this case, a personal vendetta against a government agency turned into a criminal act,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “Regardless of motivation, the FBI is committed to tracking down cybercriminals who launch such malicious, targeted attacks.”
“The computer attack in this case had a significant impact on Larimer County both operationally and financially,” said Larimer County Sheriff Justin Smith. “Cyber-crimes of this nature underscore the importance of cooperation between local and federal officials and the need for their expertise and assistance.”
This case was investigated by the Larimer County Sheriff’s Office and the Federal Bureau of Investigation.
The defendant was prosecuted by Assistant United States Attorney Ryan Bergsieker.
####
Denver Man Charged with Receipt of Child Pornography for Ordering Illegal Images Sent via United States MailRead the Press Release
DENVER – Clifford Eric Perian, age 53, of Denver, Colorado, was arrested last week based on a Criminal Complaint charging one count of receipt of child pornography, the United States Attorney’s Office and the U.S. Postal Inspection Service announced. Late last week U.S. Magistrate Judge Boyd N. Boland determined Perian was a danger to the community, and therefore ordered him held without bond pending a resolution of his criminal case. The following facts are alleged in an affidavit filed in support of a Criminal Complaint – the facts of which will have to be proven beyond a reasonable doubt by the government. Further, the facts contained in the Complaint are allegations, and the defendant is presumed innocent until proven guilty. Anyone charged with a felony by Criminal Complaint has a Constitutional right to be indicted by a federal grand jury.
Based on a law enforcement tip, the United States Postal Inspection Service (USPIS) began an investigation into Clifford Eric Perian, and determined that he had on multiple occasions purchased several child pornography films.
With the help of the National Center for Missing and Exploited Children, the United States Postal Inspection Service investigated numerous CyberTipLine reports relating to emails and online postings by an individual using three different email addresses going back as far as November 11, 2007. The NCMEC and the USPIS were able to establish that evidence existed indicating that all three accounts were used by Clifford Perian. In the postings, Perian was soliciting parents of minor boys or looking for minor volunteers to be subjected to various acts of sexual torture and/or abuse.
On May 23, 2013, Postal Inspectors executed a search warrant at the residence of Perian in Denver. Inspectors found the bondage and sexual paraphernalia Perian boasted about online. They also found DVD’s containing child pornography or child erotica. Computers were also seized. Following the execution of the search warrant, Postal Inspectors contacted Perian. Investigators then determined that Perian ordered videos online, and then received them in the U.S. Mail. It was also determined that Perian received images of young males under the age of 18 engaged in sexual activity with male adults through internet chat rooms and via email. There were also allegations that Perian sexually touched and was sexually touched by at least three boys ages 16 to 17 in approximately 2004 through 2006. Law enforcement also determined that Perian had been to local water parks taking non-explicit pictures of young boys he did not know under the age of 18.
“While most child pornography is now distributed and received via the internet, there are still companies that mail these horrible images exploiting children through the U.S. Mail,” said U.S. Attorney John Walsh.
“The arrest of this defendant is critical because Postal Inspectors and Assistant U.S. Attorneys were able to identify someone who was using the U.S. Mail to sexually exploit children. The defendant in this case received the images in the mail, which is a crime.”
“Protecting children from these egregious crimes is a top priority for the U.S. Postal Inspection Service,” said Craig Goldberg, Acting Inspector in Charge of the U.S. Postal Inspection Service in Denver. “We continue to aggressively investigate, apprehend and assist in the prosecution of individuals who seek to exploit children via the U.S. Mail.”
Perian faces not less than 5 years and up to 20 years in federal prison for receipt of child pornography. He also faces up to a $250,000 fine, as well as possible restitution and forfeiture.
This case is being investigated by the U.S. Postal Inspection Service.
Perian 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."
####
Colorado Springs Felon Sentenced for Possession of DynamiteRead the Press Release
DENVER – Arthur Ray Hickman, age 45, of Colorado Springs, Colorado, was sentenced last week by U.S. District Court Judge William J. Martinez to serve 24 months in prison for being a felon in possession of explosives, United States Attorney John Walsh, and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Andrew Traver announced. After serving his sentence, Judge Martinez ordered Hickman to spend 3 years on supervised release. Hickman, who appeared at the hearing in custody, was remanded.
Hickman was indicted by a federal grand jury in Denver on July 11, 2012. He pled guilty to on February 11, 2013. He was sentenced on May 29, 2013.
According to court records, including the stipulated facts contained in the plea agreement, on February 17, 2012, an officer with the Colorado Springs Police Department (CSPD) responded to money advancing business on North Academy Blvd., in Colorado Springs, Colorado, to investigate a fraud allegation. The officer interviewed a vault teller at the business, who reported the a person, who turned out to be Hickman, had tried to cash what she believed to be a fraudulent check.
Colorado Springs police officers conducted an investigation into the fraud allegation, with Hickman as a suspect. A CSPD detective took over the investigation since he was familiar with Hickman and his activities, mostly focused on identity theft and forgeries. The detective noted that Hickman was previously identified as possibly conducting illegal activity involving the use of computers for producing fake identifications. He was also suspected of stealing a machine that makes ID cards from a Denver Department of Motor Vehicle office, a micro SD card containing templates for all 50 states’ drivers licenses, and a VIN plate maker.
On April 12, 2012, officers executed a search warrant at Hickman’s home. During the subsequent search, detectives found in Hickman’s bedroom a box containing three sticks of dynamite. Hickman, a prior felon, knowingly illegally possessed the dynamite. Hickman had done research to determine how safe it was to store dynamite in his bedroom. The dynamite that Hickman possessed is an explosive under federal law.
Prior to Hickman’s possession of the dynamite he had been convicted of: receiving/known stolen property (San Diego County, CA); felon/addict/possess firearm (Minnehaha County, SD); possession of controlled substance (El Paso County, CO); forgery-government issued document (El Paso County, CO); ID theft-possess with intent to use, conspiracy (El Paso County, CO); ID theft-possess with intent to use (El Paso County, CO).
“Thanks to the outstanding work of the Colorado Springs Police Department and the ATF, an individual who was a felon in possession of dynamite and involved in identity theft has been sent to prison for his crimes,” said U.S. Attorney John Walsh.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Colorado Springs Police Department.
Hickman was prosecuted by Assistant U.S. Attorney Jeremy Sibert.
####
U.S. Attorney John Walsh Appointed by Attorney General Eric Holder to Serve as Co-Chair of Attorney General's Advisory Board White Collar/Fraud SubcommitteeRead the Press Release
DENVER – Attorney General Eric Holder has appointed Colorado U.S. Attorney John Walsh to serve as co-chair of Holder’s White Collar/Fraud Subcommittee. The subcommittee is part of the Attorney General’s Advisory Committee (AGAC), which is comprised of U.S. Attorneys from across the country to provide the Attorney General with guidance on a variety of critical Department of Justice issues. Walsh recently concluded a two-year appointment to that committee. U.S. Attorney Walsh joins U.S. Attorney Melinda Haag, who serves the Northern District of California, who is currently serving as co-chair of the White Collar/Fraud Subcommittee.
The White Collar/Fraud Subcommittee has been in the forefront of the U.S. Attorney’s efforts to prosecute white collar crime, including investor fraud. In Colorado, while Walsh has been U.S. Attorney, there have been a number of significant fraud cases, including the prosecution of Philip Lochmiller Jr. and Sr., Mark Yost, Michael Van Gilder, Gerald Rising and James Burg.
In addition to Walsh’s role as co-chair of the White Collar/Fraud Subcommittee, he also serves as one of five national co-chairs of the Attorney General’s Residential Mortgage-Backed Securities (RMBS) Fraud Working Group. The Residential Mortgage-Backed Security (RMBS) Working Group of the Financial Fraud Enforcement Task Force was established by the Attorney General in late January 2012. The working group has been dedicated since February 2012 to initiating, organizing, and advancing new and existing investigations by federal and state authorities into fraud and abuse in the RMBS market that helped precipitate the 2008 financial crisis. The RMBS Working Group is part of the Financial Fraud Enforcement Task Force (FFETF).
“It is an honor to serve as co-chair of these critical white collar crime prosecution groups,” said U.S. Attorney John Walsh. “Since first becoming an Assistant U.S. Attorney in the 1980s, prosecution of white collar offenses has been a focus and a passion of mine, as reflected in the many cases I’ve worked both while an Assistant U.S. Attorney in Los Angeles as well as while serving as U.S. Attorney here in Colorado.”
Walsh has served as Colorado’s U.S. Attorney since August 2010, after being nominated by President Barack Obama and subsequently unanimously confirmed by the U.S. Senate.
####
Hotchkiss Man Pleads Guilty to Theft of Detective's Assault RifleRead the Press Release
DENVER – Keaton Bell, age 24, of Hotchkiss, Colorado, pled guilty late last week before Senior U.S. District Court Judge John L. Kane to one count of possession of stolen firearms and ammunition, and to one count of possession of machine gun the United States Attorney’s Office, the Eagle County Sheriff’s Office, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Federal Bureau of Investigation (FBI) announced. Judge Kane is scheduled to sentence Bell on August 22, 2013 at 10:00 a.m.
According to court documents, including the stipulated facts contained in the plea agreement, in October 2012, an Eagle County Sheriff’s Office detective and SWAT team member was in Denver undergoing cancer treatment. He lived in Gypsum, Colorado, with his girlfriend, who visited him periodically in Denver during his cancer treatment. The detective’s girlfriend gave her girlfriend permission to stay at the detective’s Gypsum home while the two were in Denver for the cancer treatment. The person staying at the home invited her boyfriend, Keaton Bell, to stay with her in Gypsum.
While Bell and his girlfriend were at the home between October 5 through October 7, 2012, they got into a fight. Bell eventually left, taking the detective’s SWAT equipment, including a machine gun, a hand gun, ammunition and tactical gear, which had been stored in the basement of the home. Some of the equipment and weapons were owned by Eagle County.
At the time the crime was reported, Bell was reportedly in Alberta, Canada, working for a mining company. Officers went to Bell’s home in Hotchkiss, Colorado on November 2, 2012, and were unable to reach anyone. Investigators continued to locate Bell when he responded via text about his location. He then called the officers when he became available. Officers asked for permission to search Bell’s pickup. He granted them permission as along as a family member was present. During the search officers found, among other things, a leg holster for a taser that the Special Operations Unit of the Sheriff’s Office, to which Hall was assigned, uses. Hall confirmed the leg holster was his. Officers then issued a state warrant for Bell’s arrest.
On November 20, 2012, Bell was reported as a suspicious person at a Wal-Mart in Glenwood Springs, Colorado, and police were called. The Glenwood Springs Police Department arrested Bell on the Eagle County arrest warrant. Investigators confirmed that Bell stole from Hall a Colt rifle, a Glock, a .380 pistol, magazines, and a suppressor for the rifle. They also found out that once Bell returned from Canada that put the stolen items into his truck.
The Eagle County Sheriff’s Office obtained a state search warrant for the truck, and found a camouflage-colored rifle case under the driver’s side rear wheel well which contained the following items stolen from Hall’s home: a Colt M4 Commando .223 Fully Automatic Rifle, an EOTech Sight System, a Surefire Light System, a GemTech Halo Suppressor, a Glock 9mm model 26 semi-automatic pistol, and two .223 magazines. They also found the Bersa .380 with holster under the hood and in the engine compartment of the vehicle.
The Colt rifle is imprinted with information that the weapon is fully automatic. Further, the firearm was clean when it was stolen and dirty when recovered, evidencing that it had been fired.
Bell faces up to ten years imprisonment and up to a $250,000 fine for each of the counts that he has pled guilty to.
This case has been investigated by the Eagle County Sheriff’s Office, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Federal Bureau of Investigation (FBI).
The defendant is being prosecuted by Assistant U.S. Attorney Michelle Heldmyer.
####
Former Preschool Teacher David Moe Pleads Guilty to Distribution of Child PornographyRead the Press Release
NOTE: Click here for a copy of the signed plea agreement
DENVER – Former Paddington Station preschool teacher David Moe, age 46 of Denver, pled guilty this afternoon before U.S. District Court Judge William J. Martinez to distribution of child pornography, U.S. Attorney John Walsh and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Kumar Kibble announced. Moe appeared at the change of plea hearing in custody. Judge Martinez is scheduled to sentence Moe on September 10, 2013 at 3:00 p.m.
According to court documents, including the stipulated facts contained in the plea agreement, on May 4, 2012, a detective with the Loveland Police Department, who is a member of the Internet Crimes Against Children (ICAC) Task Force, while working in an undercover capacity, logged on to the Internet and accessed a peer-to-peer file sharing program. The undercover detective attempted to download a digital file believed to contain child pornography from a remote host computer. The detective was able to connect directly to the remote host computer and the requested file was placed in queue. He remained in queue to receive the file until May 6, 2012, when the connection was terminated. The detective was unable to complete the download.
Using investigative techniques, the detective was able to determine that the defendant was offering a child pornography file for distribution. It was later determined that the Internet Protocol (IP) address offering the child pornography file for distribution resolved to Moe’s residence in Denver, Colorado. A federal search warrant was obtained by HSI and was executed on July 24, 2012. During the execution of the search warrant, items containing child pornography were seized, including two desktop computers, numerous external hard drives, and 383 CDs and DVDs. All of the items seized by HSI belonged to the defendant.
During the execution of the warrant, agents learned from the defendant that he had been a teacher at Paddington Station preschool for the last 18 years. At the time of the search warrant, Moe taught Cultural Rhythms/Enrichments (3 to 5 year olds) and had been the Director of Enrichments and Before and After School Care programs since 2005.
A forensic examination was conducted of the defendant’s computers, external hard drives, CDs and DVDs. Evidence of distribution and receipt of child pornography was found on the defendant’s two computers and an external hard drive. Evidence of child pornography possession was found on the defendant’s computers, external hard drives, and 383 CDs and DVDs. At least 800,000 child pornography/erotica images and over 13,000 child pornography/erotica videos were located on the defendant’s computers and computer media, including the video that had been made available to the undercover detective in May 2012.
A forensic examination reflected that the child pornography possessed by the defendant was well organized and archived. The examination revealed that the defendant possessed child pornography for at least 10 years. Further, the examination revealed that the defendant distributed and received child pornography since at least 2007. The defendant’s child pornography collection included pornographic depictions of children as young as toddlers.
As described in the plea agreement, a forensic examination was conducted on the defendant’s computers and computer media. All images and videos of child pornography recovered during forensic examination were provided to the National Center for Missing and Exploited Children (NCMEC). A thorough review of all of the images and videos possessed by the defendant reflected no evidence that the defendant himself created or produced child pornography. Today he pled guilty to distributing existing child pornography.
“Combating the exploitation of children is one of the highest priorities of the U.S. Attorney’s Office here in Colorado, and of federal law enforcement,” said U.S. Attorney John Walsh. “Thanks to the excellent forensic work of HSI, and the hard work of the prosecutors in the U.S. Attorney’s Office, we have obtained a stiff guilty plea from a defendant who distributed large quantities of child pornography, while working with children in a school.”
“Predators who possess child pornography like David Moe, share their huge collections with other predators as if they were trading baseball cards, without any thought or care that each image represents a traumatized helpless child victim,” said Kumar C. Kibble, special agent in charge, HSI Denver. “HSI’s ongoing Operation Predator initiative is an extremely active program targeting and pursuing prosecution for these callous criminals who sexually exploit children.”
Moe faces a mandatory minimum five years in federal prison, and a maximum of not more than 20 years in federal prison. He also faces a term of supervised release of not less than 5 years, and up to life. In addition, Moe faces a fine of up to $250,000 as well as restitution. He will also be required to register as a sex offender. Finally, he has agreed to forfeit all of his computers and computer media containing child pornography.
This case is being investigated by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI).
Moe is being prosecuted by Assistant U.S. Attorney Alecia Riewerts Wolak.
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 Pleads Guilty to Filing False Tax Return as Part of Running Illegal Sports Betting BusinessRead the Press Release
DENVER – Daniel Dinner, age 61, of Denver, Colorado, pled guilty today before U.S. District Court Judge Robert E. Blackburn to one count of filing a false income tax return, the United States Attorney’s Office and IRS Criminal Investigation announced. Dinner, who is free on bond, is scheduled to be sentenced by Judge Blackburn on August 8, 2013.
Dinner was originally charged by Information on April 12, 2013 after waiving his Constitutional right to be charged by Indictment. According to the facts contained in the Information as well as the stipulated facts contained in the plea agreement, from 2005 through 2009, Dinner ran an illegal sports betting business in the Denver metro area and on line for which most of his proceeds were cash. In March 2011, agents executed a search warrant and recovered approximately $1.2 million in cash from the defendant's properties and safe deposit boxes which came from both legitimate and illegitimate sources. Dinner owned two homes with an aggregate assessed value of more than one million dollars.
During 2005 through 2009 Dinner filed tax returns reporting some legitimate income from an agricultural business owned by a family trust but he also made money from his illegal sports betting business which he did not report on his tax returns. He signed and filed tax returns under penalty of perjury with the IRS for each of these years. He reported less income than he actually made.
The total tax loss to the government is $165,193 which Dinner has agreed to pay to the Internal Revenue Service as part of his plea agreement.
“While illegal sports betting is not a legitimate business, the income the defendant received is still taxable,” said U.S. Attorney John Walsh. “In this case the defendant faces criminal consequences for not declaring all of his income to the IRS and for not paying his income tax.”
“This is a reminder that all taxpayers should file complete and accurate tax returns; all income regardless of the source is taxable,” said Steven Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
Dinner faces one count of filing a false income tax return which carries a penalty of not more than 3 years in federal prison and a fine of up to $250,000.
This case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI). The case is being prosecuted by Assistant United States Attorney Suneeta Hazra.
####
Metro Denver Federal, State and Local Law Enforcement and Prosecutors Come Together to Enforce Firearm Laws with Goal to Prevent Summer of Firearm ViolenceRead the Press Release
DENVER – Agencies from across Metro Denver have come together in an effort to prevent firearm violence this summer, the group announced today. The effort, which includes federal, state and local law enforcement agencies as well as federal and state prosecutors, will focus on firearm violations. The goal is to reduce gun crime.
The agencies involved in the Metro Denver Firearm Initiative include: The U.S. Attorney’s Office, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Aurora Police Department, the Denver Police Department, the Lakewood Police Department, the Arapahoe and Douglas County District Attorney’s Office, the Adams County District Attorney’s Office, the Jefferson County District Attorney’s Office and the Denver District Attorney’s Office.
These law enforcement agencies and prosecutors will work closely together to review gun crime investigations to determine which venue, federal court or state court, has the most severe prison sentence. Based on that analysis, charges will be filed in the venue with the toughest penalties.
“We have assembled a strong team to investigate and prosecute firearm violations,” said U.S. Attorney John Walsh. “It is our goal to reduce gun crime by focusing on the worst of the worst in Metro Denver who possess or use firearms.”
The penalties can be severe. In federal court, a prohibited person in possession of a firearm faces not more than 10 years in federal prison, and up to a $250,000 fine. Those who cannot possess firearms include: felons, illegal aliens, those addicted to drugs, and those adjudicated mentally ill. Also, if someone is the subject of a restraining order, or if they have a misdemeanor conviction for domestic violence they are also prohibited from possessing a firearm. If a defendant has three prior violent felony convictions or drug trafficking offenses, the defendant could be sentenced as an Armed Career Criminal. Armed Career Criminals face not less than 15 years and up to life in prison.
In addition to those who are prohibited from possessing a firearm, there are other crimes that have increased penalties for firearm possession and use.
* If someone uses or carries a firearm during a drug trafficking crime, the defendant faces a mandatory minimum of 5 years in federal prison consecutive to any other sentence.
* If someone possesses a firearm during a crime of violence, they also face a mandatory minimum of 5 years in prison consecutive to any other sentence.
* If a person brandishes a firearm during a crime of violence or during a drug trafficking crime, the penalty goes to a mandatory minimum of 7 years in prison consecutive to any other sentence.
* If a person discharges a weapon during a crime of violence or a drug trafficking crime, the defendant faces a mandatory minimum of 10 years in prison consecutive to any other sentence.
In each of these cases, the penalty goes up to life in prison, as well as a $250,000 fine.
If someone has information about a prohibited person carrying a firearm, or the illegal use of a firearm, please call your local police department, or 911 if it is an emergency. You can also reach the ATF at 800-800-3855.
####
Wheat Ridge Doctor Pleads Guilty for the Illegal Distribution of Oxycodone and Knowingly Engaging in A Monetary Transaction Using Property Derived from Proceeds of Unlawful ActivityRead the Press Release
DENVER – Dr. Kevin R. Clemmer, age 59, of Evergreen, Colorado, pled guilty today before U.S. District Court Judge Robert E. Blackburn to illegally distributing Oxycodone, a Scheduled II Controlled Substance, and engaging in a monetary transaction in property criminally derived from proceeds of a specified unlawful activity, U.S. Attorney John Walsh, DEA Rocky Mountain Division Special Agent in Charge Barbra Roach and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced today. Clemmer appeared at the hearing free on bond. Judge Blackburn is scheduled to sentence Clemmer on September 19, 2013 at 10:00 a.m. Clemmer and several co-defendants were indicted on May 16, 2011.
Co-defendant Tina Sheldon, one of Clemmer’s staff assistants, received a sentence of time served and 3 years of supervised release. Defendant Noah Ziegler, who assisted in distributing the Oxycodone, received a sentence of 3 years’ probation. The remaining defendant, Angela Lee, who also helped distribute the Oxycodone, received a sentence of time served and 3 years of supervised release.
According to court records, including the stipulated facts contained in the plea agreement, the underlying investigation in this case began on April 1, 2009, and went through September 17, 2010. Clemmer knowingly and intentionally distributed and dispensed oxycodone, a scheduled II controlled substance, outside the scope of professional practice and not for legitimate medical purposes. During the course of the investigation the defendant did distribute by prescription oxycodone to an undercover officer as well as two co-defendants.
On September 2, 2010, the defendant did prescribe oxycodone to one individual. On September 3, 2010, that individual died. The cause of death is listed as an accidental aspiration of gastric contents associated with oxycodone toxicity. The prescription written by the defendant (with numerous pills missing) was found at the scene of the death, as well as other oxycodone pills which were not prescribed by the defendant. The defendant’s prescription helped contribute to the death of this individual. The death, however, was not a charged offense as part of this investigation or indictment.
On May 20, 2010, the defendant met with an undercover officer. The undercover officer described minimal pain management needs and symptoms which did not require, as part of the scope of professional practice, the prescription of oxycodone. However, the defendant did prescribe 120 pills of 15 milligram oxycodone to the undercover officer after a very limited medical screen and evaluation.
On May 29, 2010, the defendant did purchase a 1999 Lincoln Continental, using cash which was derived from the illegal distribution of a schedule II controlled substance. The monetary transaction, which did affect interstate commerce, was for a value greater than $10,000.
As part of the plea agreement, the defendant agreed not to contest the seizure of a building, currency, funds from bank accounts, two vehicles and gold and silver coins, totaling over $300,000 in ill-gotten proceeds from Clemmer’s criminal scheme.
“Regrettably, unscrupulous doctors in our community are prescribing powerful pain medications not for medical purposes, but for their own personal financial gain, heedless of the addiction and personal ruin they are inflicting on their patients,” said U.S. Attorney John Walsh. “When doctors overprescribe these drugs, they place the public in danger. All too often, accidental overdose deaths are the result, as in this tragic case.”
“The diversion of pharmaceutical drugs has become an epidemic in America,” said DEA Special Agent in Charge Barbra Roach. “The conviction of Dr. Clemmer serves notice to other medical professionals that, regardless of one’s professional status, the illegal distribution of prescription drugs makes one a drug trafficker subject to DEA investigation and federal prosecution.”
“IRS – Criminal Investigation (IRS-CI) is committed to fighting to stop doctors from over prescribing prescription drugs in conjunction with our law enforcement partners,” said Stephen Boyd, Special Agent in Charge of IRS – Criminal Investigation, Denver Field Office. “IRS-CI has the financial investigators and expertise to disrupt these doctors and their organizations to deprive them of their illicit gains.”
As a result of the plea to knowingly and intentionally distributed, dispensed, and possessed with intent to distribute Oxycodone, a Schedule II controlled substance, Clemmer faces not more than 20 years in federal prison, and up to a $1,000,000 fine. As a result of the plea of engaging in monetary transaction affecting interstate commerce, Clemmer faces not more than 10 years in prison, and a fine of up to $1,000,000.
This case was investigated by the Drug Enforcement Administration (DEA) Tactical Diversion Squad and the Internal Revenue Service (IRS) Criminal Investigation, Denver Field Office.
The defendants are being prosecuted by Assistant U.S. Attorney Zachary Phillips with assistance from Assistant U.S. Attorneys Jim Russell and Tonya Andrews with the Asset Forfeiture Unit.
####
Wheat Ridge Doctor and Others Indicted for Conspiracy and Illegal Distribution of Prescription MedicationRead the Press Release
“Today the U.S. Attorney’s Office took action against two doctors responsible for illegally prescribing powerful pain killers for non-medical purposes. Overdose deaths were involved in both cases. The first doctor, Kevin Clemmer, pled guilty to illegally distributing Oxycodone and money laundering. A second doctor, Joseph Ferrara, was indicted and arrested on Conspiracy and illegally distributing prescription medication. These actions are part of an ongoing U.S. Attorney and federal law enforcement emphasis on combating “pill mills” throughout the state of Colorado, in conjunction with the Colorado Attorney General’s Office and state and local law enforcement.”
John Walsh, U.S. Attorney, District of Colorado
WHEAT RIDGE DOCTOR AND OTHERS INDICTED FOR CONSPIRACY AND ILLEGAL DISTRIBUTION OF PRESCRIPTION MEDICATION
Dr. Ferrara faces Bankruptcy Fraud charges and he and his co-defendants also charged with Money Laundering
DENVER – Dr. Joseph Ferrara and five others were indicted by a federal grand jury in Denver this week on charges related to the illegal distribution of prescription medication and money laundering, U.S. Attorney John Walsh, DEA Special Agent in Charge Barbra Roach and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Ferrara had a medical practice in Wheat Ridge and in Dillon. At least one patient who received drugs from Ferrara died as a result. Ferrara and Keith Schwartz were arrested this morning in Summit County. Karyne Smith, Karen Plaia and Melissa Toothman were arrested in Metro Denver. All of these defendants made initial appearances in U.S. District Court in Denver this afternoon, where they were advised of the charged pending against them as well as their rights. Lauren Schwartz is out of state, and is in the process of arranging her surrender.
According to the indictment, beginning on May of 2011, and continuing until February of 2013, defendants Dr. Joseph Ferrara, of Dillon, Colorado, in conjunction with co-conspirators Keith Schwartz, Lauren Schwartz, Karen Plaia, Karyn Smith, Melissa Toothman and others known and unknown to the Grand Jury, knowingly conspired and agreed to work interdependently to dispense and distribute, or facilitate the dispensing and distribution of controlled substances to patients at times and in circumstances outside the usual course of professional medical practice, and for a purpose other than legitimate medical purpose, with death resulting from the use of the controlled substances.
During the course of the scheme, Dr. Ferrara allegedly prescribed drugs such as: oxycodone, morphine, methadone, oxymorphone, hydromorphone, hydrocodone, amphetamines, carisoprodol, alprazolam, clonazepam, lorazepam, triazolam, and zolpidem tartrate to patients without determining a sufficient medical necessity for the prescription of these controlled substances. In concert with his co-conspirators, the doctor dispensed and distributed these drugs to patients in quantities and dosages that would allow patients to abuse, misuse, and become addicted to them, while failing to adequately address the misuse and abuse of the prescribed controlled substances by patients.
Dr. Ferrara and his co-conspirators, worked interdependently to obtain payment for services rendered outside the course of usual professional practice by taking cash, checks, and credit cards from those he distributed to. Insurance was not accepted. The dispensing and distribution of controlled substances to patients were in such high quantities, in such combinations, and at such levels that retail pharmaceutical outlets called the Drug Enforcement Administration to report suspicious prescribing practices.
Further, the indictment alleges that the defendants and co-conspirators did knowingly conduct and conceal the true nature of their financial transactions, concealing proceeds to facilitate, promote and expand the drug distribution operation for financial gain, using the concealed proceeds from the unlawful sale and distribution of the narcotics and related activities to acquire personal assets. In one instance Dr. Ferrara engaged in a cash purchase of a 2010 Honda Crosstour.
Beginning on December 13, 2010, and continuing through March 26,2012, Ferrara devised, intended to devise, and participated in a scheme to defraud the Bankruptcy Court, and his creditors in relation to a bankruptcy proceeding by taking a variety of steps to conceal his ownership and control of substantial assets from the Bankruptcy Court, the Chapter 7 trustee, and his creditors.
The indictment includes an asset forfeiture allegation, which states: As a result of the foregoing offenses, the defendants shall forfeit to the United States any and all property, real or personal, constituting or derived from any proceeds obtained directly or indirectly as a result of the violations and any and all property used or intended to be used in an y manner or part to commit and to facilitate the commission of the criminal violations, including but not limited to a money judgment in the amount of proceeds obtained as a result of the foregoing offenses, for which the defendants are joint and severally liable.
Ferrara is charged with one count Conspiracy to distribute and dispense controlled substances resulting in the death of an individual (punishable by not less than 20 years to life); six counts of Distribution and Dispensing of a controlled Substance and Aiding and Abetting the same (punishable up to 20 years per count); one count Distribution and Dispensing of a Controlled Substance and Aiding and Abetting the same resulting in the death of an individual (punishable by not less than 20 years to life); four counts Use of a Telephone to Facilitate Drug Crime (punishable up to 4 years per count); two counts of Conspiracy to Commit Money Laundering (punishable up to 20 years per count); twenty seven counts of Money Laundering (punishable up to 20 years per count); and four counts of Bankruptcy Fraud (punishable up to 5 years per count). Ferrara’s co-defendants face a variety of the charges listed above.
“The illegal distribution of prescription narcotics is becoming an epidemic,” said U.S. Attorney John Walsh. “Doctors who are improperly prescribing medication outside the scope of their practice for profit should be put on notice that they will face criminal penalties.”
“Prescription drug misuse and abuse is a rapidly growing problem leading to addiction, suffering, and even death for many people,” said DEA Special Agent in Charge Barbra Roach. “While the vast majority of doctors offer healing and compassionate care to their patients, there remain some who violate their oath and the law. DEA and our law enforcement partners will continue to identify, investigate, and prosecute doctors and other medical professionals who abuse their trust and power by engaging in criminal drug trafficking of prescription drugs.”
“Prescription drug abuse is a serious problem and IRS Criminal Investigation is committed to investigate along with our law enforcement partners those individuals that are responsible for the illegal distribution of prescription medicines and deprive them of their ill-gotten gains,” said Stephen Boyd, Special Agent in Charge of IRS Criminal Investigation, Denver Field Office.
This case was investigated by the Drug Enforcement Administration and the IRS Criminal Investigations.
The defendants are being prosecuted by Assistant U.S. Attorney M.J. Menendez and Special Assistant U.S. Attorney Alison Goldenberg.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
####
Florence Inmate Sentenced for Stabbing Fellow Inmate with Homemade KnifeRead the Press Release
DENVER – Michael Kelewood, age 27, an inmate in the U.S. Bureau of Prisons system, was sentenced last week by U.S. District Court Judge William J. Martinez to serve 84 months for assault with a dangerous weapon, U.S. Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. Judge Martinez ordered that Kelewood serve his 84 month prison sentence consecutive to his prior sentence of 71 months for assault with a dangerous weapon with intent to do bodily harm. If Kelewood had not committed the assault he would have gotten out of prison next month (June 2013). Once Kelewood ultimately is released from prison, he was ordered to spend 3 years on supervised release.
Kelewood was indicted by a federal grand jury in Denver on August 20, 2012. He pled guilty February 12, 2013. He was sentenced on May 15, 2013.
According to court records, including the stipulated facts contained in the plea agreement, on April 5, 2012, at approximately 12:46 p.m., Kelewood, an inmate at the United States Penitentiary in Florence, Colorado, pulled out a homemade knife and stabbed a fellow inmate as the victim watched television in the common recreation room. Kelewood stabbed the victim inmate several times in the neck, shoulder and eye, resulting in hospitalization for several weeks, with injuries that included a fractured bone in his spine. The investigators determined that Kelewood believed it was his responsibility as a member of the Natives prison gang to stab the victim, with the intention of hurting but not killing him.
“Prosecuting prison assault cases is a critical part of protecting inmates and maintaining the good order of the prison system,” said U.S. Attorney John Walsh. “Vicious attacks like this one will not be tolerated. Those who are responsible will be prosecuted to the full extent of the law.”
“The FBI’s partnership with the Federal Bureau of Prisons and the United States Attorney’s Office ensures that violent criminals, even when incarcerated, are held accountable for their actions,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “This serves as a deterrent to promote a safe and orderly environment for both staff and inmates in the Federal Prison System.”
This case was investigated by the FBI with support from the U.S. Bureau of Prisons.
Kelewood was prosecuted by Assistant U.S. Attorney Colleen Covell.
####
Two Men Indicted for Attempted Armed Robbery of Palisades National BankRead the Press Release
DENVER – Two men, Jose O. Jimenez and Bryan R. Morrow, have been indicted by a Federal Grand Jury charging them both with attempted armed bank robbery, the U.S. Attorney’s Office, the Federal Bureau of Investigation, and the Palisade Police Department announced. In addition, Jimenez also faces firearms offenses. Jimenez was arraigned on the indictment in U.S. District Court in Denver yesterday (May 16th). Morrow is currently being held on unrelated charges, and is expected to make his initial appearance in U.S. District Court in Grand Junction on May 22, 2013 at 2:00 p.m.
According to the Indictment, on August 20, 2011 Jimenz and Morrow did knowingly by force and violence, and by intimidation, attempt to take money from Palisades National Bank, located in Palisade, Colorado. The indictment further alleges that Jimenez, a fugitive from Washington State, did knowingly possess a firearm which previously had been transported in interstate commerce. Jimenz is also accused of possessing a Glock 22 .40 caliber semi-automatic pistol he obtained during the armed bank robbery.
“This was a brazen attempt to rob this bank,” said U.S. Attorney John Walsh. “Thanks to the efforts of the FBI and the Palisade Police Department, the community, which was traumatized by this crime, can rest easy knowing those responsible have been apprehended.”
“These indictments illustrate the FBI’s commitment to work with its partners to address violent crime,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “We extend our gratitude to the Palisade and Grand Junction Police Departments, the Mesa County Sheriff’s Office and the United States Attorney’s Office for working together to further this investigation and bringing charges forward on Jimenez and Morrow.”
“The armed bank robbery was incredibly traumatic for the victims of the crime, especially the bank tellers and for the officer who responded to the bank,” said Palisade Police Chief Tony Erickson. “The robbery has not only impacted the bank employees, it also has had an impact on the police officers and the citizens of Palisade. Thanks to the hard work of the Palisade Police Department and the FBI, we were able to identify those responsible for the crime.”
If convicted, both men face not more than 25 years in federal prison, and up to a $250,000 fine for attempted armed bank robbery. In addition, Jimnez faces not more than 10 years in prison and a fine of up to $250,000 for both being a fugitive from justice in possession of a handgun and for possession of a stolen firearm.
This case was investigated by the Federal Bureau of Investigation (FBI) and the Palisade Police Department with assistance from the Grand Junction Police Department and the Mesa County Sheriff’s Office. The defendants are being prosecuted by Assistant U.S. Attorney Michelle Heldmyer.The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
####
Denver Attorney Indicted Along with Clients for Defrauding the IRSRead the Press Release
DENVER – Eva Melissa Sugar, age 59, of Denver, Colorado, Jerry Lynn Roberts, age 45, of Polk City, Florida, and Gregory Nathan Laurence, age 46, of Germantown, Tennessee, were indicted by a federal grand jury in Denver on May 8, 2013 for various charges related to obstructing and defrauding the Internal Revenue Service, the United States Attorney’s Office and IRS Criminal Investigation announced. The indictment was sealed pending the defendants’ first appearance in U.S. District Court. Sugar, a practicing attorney, appeared before a Magistrate Judge in U.S. District Court in Denver last Friday, May 10, 2013, where she was advised of her rights and the charges. Laurence was issued a summons to appear in U.S. District Court in Denver on May 29, 2013. Roberts is at large.
According to the indictment, Sugar and her co-conspirators both known and unknown to the Grand Jury conspired to defraud the United States for the purpose of impeding, impairing, obstructing, and defeating the lawful Government functions of the Internal Revenue Service. Sugar was a resident of Aurora, Colorado, and was self-employed as an attorney specializing in tax and other legal matters in Denver, Colorado. Sugar worked with Financial Fortress Associates (FFA) clients. FFA was an organization that promoted and advised its clients on schemes to avoid the payment of income and other federal taxes.
FFA promoted Pure Trust Organizations (“PTO”) and “private banking” using so-called Unincorporated Business Organizations (“UBOs”) and Banking Unincorporated Business Organizations (“BUBOs”) as vehicles to conceal business and personal income and asset ownership to avoid paying income, employment, and other federal taxes to the IRS. FFA held seminars and workshops around the country to promote its schemes, which individuals paid to attend. Sugar occasionally attended and spoke at FFA seminars. At those seminars, FFA’s promoters explained the schemes and provided referrals to their co-conspirators, including Sugar, who charged fees to execute the schemes for FFA clients. Generally, the FFA client either caused the understating of business gross receipts or overstated expenses for the FFA client’s legitimate business, thereby decreasing the business’s income.
Sugar provided various services to her clients, which as described, included establishing UBOs, applying for EINs for the UBOs, and opening associated BUBO bank accounts that her clients used to conceal assets and income and to avoid paying taxes to the IRS. Sugar generally was the trustee for the UBOs and had signatory authority for the bank accounts. To prevent the client’s name being associated with the BUBO account, Sugar and the client would identify a third party for the fictitious trust entity or account. That person would be given signatory authority but exercised no authority or control the fictitious trust entity and Sugar and her clients had signature stamps created for these individuals.
Roberts was a resident of Florida who worked for Roberts Enterprises, a family-owned fundraising business, and he was a client of FFA and Sugar. Beginning in November 1999 and continuing through April 2008, Roberts and Sugar, aiding and abetting each other, did corruptly endeavor to obstruct and impede the due administration of the Internal Revenue laws by setting up and using BUBO accounts as described in the above paragraphs. Furthermore, in 2008 Roberts attempted to influence, obstruct, and impede the due administration of justice, by making a variety of threats to Internal Revenue Service criminal investigators after the service of Grand Jury subpoenas relating to UBOs he controlled and other organizations.
Laurence was a resident of Tennessee and was a doctor who operated two businesses, Germantown Aesthetics, LP (“GA”) and Germantown Family Care & Obstetrics, LP (“GFCO”). Laurence was also a client of FFA and Sugar. Beginning in January 2002 and continuing through October 2008, Laurence and Sugar, aiding and abetting each other, did corruptly endeavor to obstruct and impede the due administration of the Internal Revenue laws by setting up and using BUBO accounts as described in the above paragraphs. In March 2008 continuing through January 2009, Laurence attempted to influence, obstruct, and impede the due administration of justice, in that, after contact by Internal Revenue Service criminal investigators and the service of Grand Jury subpoenas relating to GA and GFCO.
“As citizens, we all have an obligation to pay our taxes,” said U.S. Attorney John Walsh. “Hiding income on purpose to avoid paying taxes leads to criminal prosecutions and all the consequences that brings.”
“For those thinking about promoting or participating in fraudulent tax schemes should think twice, there is no secret formula that can eliminate a person's tax obligations.” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “We owe it to every American taxpayer to identify and prosecute both those who evade their taxes and those who promote and assist them in evading their tax obligations through fraudulent tax schemes.”
Sugar was charged with one count of conspiracy to defraud the United States, one count of failing to file a tax return and two counts of obstructing of IRS laws. Roberts and Laurence were each charged one count of obstructing of IRS laws and one count of obstruction of justice. Conspiracy to defraud the United States carries a penalty of not more than 5 years in federal prison, and a fine of up to $250,000. Obstructing of IRS laws carries a penalty of not more than 3 years in federal prison, and a fine of up to $250,000. Failing to file a tax return carries a penalty of not more than 1 year in federal prison, and a fine of up to $100,000. Obstruction of justice carries a penalty of not more than 10 years in federal prison, and a fine of up to $250,000.
This case was investigated by agents with IRS Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorneys Anna Edgar and Matthew Kirsch.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
####
Juvenile Held Accountable for Weber Canyon FireRead the Press Release
DURANGO – A juvenile charged in the Weber Canyon Fire has been adjudicated as a juvenile delinquent for two acts of juvenile delinquency, for willfully and without authority, lighting timber on fire upon public lands and destruction of government property in excess of $1,000. The juvenile apologized for the acts of delinquency and to those who were damaged by the action of the juvenile.
The juvenile has been sentenced and the court is in the process of determining an amount of restitution.
No other information is available regarding this matter.
####
Colorado Man Sentenced for Defrauding the IRS Out of $1.8 Million DollarsRead the Press Release
DENVER – Thomas William Quintin, age 66, formerly of Denver, Colorado, was sentenced yesterday by U.S. District Court Judge R. Brooke Jackson to serve 63 months in federal prison for conspiracy to defraud the United States, the United States Attorney’s Office and Internal Revenue Service Criminal Investigation announced. Following his prison sentence, Quintin was ordered to spend 3 years on supervised release. Judge Jackson also ordered the defendant to pay $626,451.62 in restitution to the IRS.
Quintin was indicted by a federal grand jury in Denver on February 8, 2012. Quintin pled guilty on January 3, 2013, and was sentenced yesterday, Wednesday, May 8, 2013.
According to the stipulated facts contained in the plea agreement, starting in July 2009, Quintin participated in a conspiracy during the period of July 2009 through October 2009 to submit to the IRS thousands of false federal individual income tax returns claiming a total of $1,834,011 in refunds in the names of deceased individuals. As part of the scheme, the conspirators established, controlled, and operated a Colorado entity known as Total Tax Services and/or Total Tax and Accounting (TTS), which maintained an office location in Englewood, Colorado.
According to court records, Quintin and his coconspirator obtained from an online database the names, dates of birth, Social Security Numbers and other identifying information of deceased individuals which they then used to prepare and file tax returns in their names. They hired at least one individual whose job was to create email accounts for those deceased individuals. Establishing email accounts in the names of the deceased individuals was necessary in order to file the tax returns on-line. They also obtained employer identification numbers (EINs) for various businesses, which they used to claim falsely on tax returns that the deceased individuals had worked at those businesses during the year 2008, earned income, and had taxes withheld from that income; all to allow Quintin to claim false refunds based on that false income tax withholding.
“When criminals defraud the United States by obtaining false tax refunds they harm all Americans,” said U.S. Attorney John Walsh.
"The intent of this scheme was to swindle the government and the taxpaying public," said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “Furthermore, the IRS is aggressively pursuing those who steal others' identities in order to file false returns.”
This case was investigated by IRS Criminal Investigation and the Social Security Administration Office of the Inspector General, and is being prosecuted by Tax Division Trial Attorney John Scully and a member of the Economic Crime Section of the U.S. Attorney’s Office, District of Colorado.
####
Monte Vista Man Sentenced to Nine Years in Federal Prison for Receipt of Child PornographyRead the Press Release
DENVER – Timothy John Vanderwerff, age 65, of Monte Vista, Colorado, was recently sentenced by U.S. District Court Judge John L. Kane to serve 108 months (9 years) in federal prison for receipt of child pornography, U.S. Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. Following his 9 year prison sentence, Vanderwerff was ordered by Judge Kane to serve a lifetime of supervised release. The judge deferred making a decision on restitution. A hearing regarding restitution will be scheduled at a later date. Vanderwerff, who appeared at the hearing free on bond, was ordered to report to a Bureau of Prisons facility within 30 days of designation.
Vanderwerff was indicted by a federal grand jury in Denver on February 8, 2012. He pled guilty to the receipt of child pornography on August 9, 2012. He was sentenced on Monday, May 6, 2013.
According to the stipulated facts contained in the plea agreement, in October 2009, law enforcement officials were contact by the defendant’s sister-in-law. She told law enforcement that the defendant’s wife had found thousands of images of child pornography on the defendant’s computer, as well as pictures of child pornography printed off the internet. The wife also believed the defendant had an improper infatuation with an 11-year old neighbor. After the initial call to law enforcement, officers and agents executed a state authorized search warrant. They seized Vanderweff’s computer and the printed images of child pornography. The defendant had obtained all of his child pornography from the internet.
The computer and hard drive were submitted to the Rocky Mountain Regional Computer Forensic Laboratory for examination. The forensic examination located more than 900 files containing images of child pornography on the computer. There were approximately 292 files containing images of child pornography with prepubescent minors. There were approximately 27 files containing images of child pornography involving sadistic or masochistic conduct. There were 2 video files showing child pornography involving prepubescent minors.
The child pornography images were sent to the National Center for Missing and Exploited Children (NCMEC) for review by the Child Victim Identification Program (CVIP). CVIP catalogues “known” child pornography images and “known” victims of child pornography, meaning those images have been previously identified by law enforcement. CVIP discovered 87 known image files of child pornography on the computer.
Simultaneous with the federal child pornography investigation, state law enforcement officers investigated allegations of improper sexual contact between the defendant and the 11-year old female neighbor. The defendant plead guilty and was convicted of the state charge of Sexual Assault on a Child - Victim Less Than 15 (years of age) in Rio Grande County, Colorado. The defendant received 90 days of jail followed by 10 years of sex offender specific probation.
“This case demonstrates the resources that law enforcement devotes to protecting children from exploitation,” said U.S. Attorney John Walsh. “The FBI’s efforts, the Regional Forensic Lab, and the National Center for Missing and Exploited Children work in concert with the U.S. Attorney’s Office to ensure those involved in child pornography are held accountable for their illegal actions.”
“The sentence handed down represents the FBI’s dedication to pursuing those intent on harming children,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “The identification and apprehension of child predators roaming our communities is a priority for the FBI, and this case should serve as a deterrent to those who utilize the Internet to promote the victimization of children.”
This case was investigated by the Federal Bureau of Investigation (FBI).
Vanderwerff was prosecuted by Assistant U.S. Attorneys Richard Hosley and Judith Smith.
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 Strip Club DJ Sentenced to Prison for Possession of Child PornographyRead the Press Release
DENVER – Walden Allen Schmidt, age 46, of Denver, Colorado, was sentenced yesterday by U.S. District Court Judge Robert E. Blackburn to serve 97 months (over 8 years) in federal prison for possession of child pornography, U.S. Attorney John Walsh and FBI Denver Acting Special Agent in Charge Steven Olson announced. Judge Blackburn ordered Schmidt to serve 10 years on supervised release at the conclusion of his prison sentence. He was also ordered to pay $5,000 to victims of his crimes. Schmidt appeared at the sentencing hearing free on bond, but was remanded into custody at the hearing’s conclusion.
On April 9, 2012, Schmidt was indicted by a federal grand jury in Denver on child exploitation charges. On December 20, 2012, he pled guilty to possession of child pornography. He was sentenced on Thursday, May 2, 2013.
According to court records, including the stipulated facts contained in the plea agreement, Schmidt obtained over 13, 000 images of child pornography using peer-to-peer file-sharing software. He also distributed child pornography to an undercover FBI agent. Schmidt worked as a DJ at a local strip club.
“People from all walks of life have been caught possessing child pornography,” said U.S. Attorney John Walsh. “Regardless of their station in life, if they exploit children they will be held accountable.”
“The nation’s children are our most vulnerable victims,” said FBI Denver Acting Special Agent in Charge Steven Olson. “The FBI remains committed to working with our state and local law enforcement partners and the United States Attorney’s Office to aggressively investigate all cases involving the sexual exploitation of children.”
This case was investigated by the Federal Bureau of Investigation (FBI). The case was prosecuted by Assistant U.S. Attorney Ryan Bergsieker.
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."
####