District of Colorado
Press releases recorded for this federal judicial district.
Officer of Now Defunct New Frontier Bank Sentenced to Prison on Charges Related to the Bank's CollapseRead the Press Release
DENVER – Gregory William Bell, age 54, of Weld County, Colorado, was sentenced yesterday by U.S. District Court Judge Lewis T. Babcock to serve 30 months in federal prison for false bank entries, bank misapplication, bank fraud, and money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation and the FDIC – Office of Inspector General announced. Following his prison sentence, Bell was ordered to spend 3 years on supervised release. Judge Babcock has scheduled a hearing on June 12, 2013 to determine how much, and to whom, the restitution Bell could be ordered to pay should go to.
Bell was charged by Information on December 12, 2012 and pled guilty on February 5, 2013. According to the facts contained in the Information as well as the stipulated facts contained in the plea agreement, Gregory Bell was an officer of New Frontier Bank, which was insured by the Federal Deposit Insurance Corporation. On October 31, 2005, Bell made a false entry in a bank book, report or statement with intent to defraud the bank and deceive one or more of the bank’s officers. Specifically, the defendant allegedly prepared a form entitled “Credit Presentation and Committee Approval” for a $5,583,500 loan to two individuals on which he failed to disclose that a certificate of deposit, the value of which was $106,759.00, which the two individuals pledged as collateral, in fact belonged to another individual and that Bell would benefit personally as a result of the loan. On March 14, 2008, Bell willfully misapplied approximately $662,045.79 of New Frontier’s funds.
On June 17, 2008, and continuing until September 9, 2008, Bell devised and participated in a scheme to defraud the bank and to obtain moneys owned by and under the custody and control of the bank by means of materially false and fraudulent pretenses. As part of the scheme, Bell, knowing that state and federal regulators had directed New Frontier Bank to raise capital, arranged for eight bank customers to borrow money from the bank and use the proceeds of those loans to purchase shares of bank stock so New Frontier could inject some of the money paid for the stock into the bank. As part of the scheme, Bell failed to disclose the deteriorating condition of the bank to its customers. He also prepared and caused others to prepare bank forms entitled “Credit Presentation and Committee Approval” for the eight loans described above. Bell failed to disclose on the credit presentation forms that proceeds of the loans would be used to purchase shares of stock in New Frontier Bancorp.
Bell also allegedly caused false and misleading statements to be included on the credit presentation forms. He presented the credit presentation forms to bank loan committees and caused other persons to present them to bank loan committees. As part of the scheme, Bell caused the bank to loan approximately $20,145,979.23 to the eight borrowers mentioned above, and caused those borrowers to use approximately $4,310,215.00 of those proceeds to purchase shares of stock in the bank. On August 29, 2008, Bell executed a scheme by causing the bank to transfer approximately $260,000.00 of the proceeds of one of the bank loans to an account of one of the borrowers of that loan.
On June 27, 2008, Bell conducted a financial transaction affecting interstate commerce. Specifically, he deposited a check in the amount of $160,000.00 into his account at the bank. The transaction involved the proceeds of a specified unlawful activity, knowing that the transaction was designed in whole or in part to conceal and disguise the source and the ownership of the proceeds of the unlawful activity.
“Those responsible for bank failures were also ultimately responsible for the weakening of our economy,” said U.S. Attorney John Walsh. “Thanks to the hard work of the Assistant U.S. Attorneys, the FBI, IRS-Criminal Investigations and the FDIC, the officer of one of these failed banks has been held personally accountable, is now a felon, and will spend time in federal prison.”
“This case demonstrates the FBI’s continued commitment to investigating bank fraud violations,” said FBI Denver Acting Special Agent in Charge Steven Olson. “We place a high priority wherein senior bank officials utilize their positions to defraud financial institutions for personal gain. These criminal acts undermine our banking system and will be aggressively pursued.”
“This sentencing is a direct result of outstanding teamwork between IRS-CI, FBI, FDIC-OIG and the U.S. Attorney’s Office in combating violations of Federal law,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “This sentence should serve as a deterrent to those who might contemplate similar fraudulent actions.”
This case was investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service – Criminal Investigation (IRS-CI), and the Federal Deposit Insurance Corporation – Office of the Inspector General (FDIC-OIG).
The defendant was prosecuted by Assistant U.S. Attorney Suneeta Hazra and another prosecutor from the Economic Crimes Section of the Criminal Division of the U.S. Attorney’s Office.
####
Officer of Now Defunct New Frontier Bank Sentenced to Prison on Charges Related to the Bank's CollapseRead the Press Release
DENVER – Gregory William Bell, age 54, of Weld County, Colorado, was sentenced yesterday by U.S. District Court Judge Lewis T. Babcock to serve 30 months in federal prison for false bank entries, bank misapplication, bank fraud, and money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation and the FDIC – Office of Inspector General announced. Following his prison sentence, Bell was ordered to spend 3 years on supervised release. Judge Babcock has scheduled a hearing on June 12, 2013 to determine how much, and to whom, the restitution Bell could be ordered to pay should go to.
Bell was charged by Information on December 12, 2012 and pled guilty on February 5, 2013. According to the facts contained in the Information as well as the stipulated facts contained in the plea agreement, Gregory Bell was an officer of New Frontier Bank, which was insured by the Federal Deposit Insurance Corporation. On October 31, 2005, Bell made a false entry in a bank book, report or statement with intent to defraud the bank and deceive one or more of the bank’s officers. Specifically, the defendant allegedly prepared a form entitled “Credit Presentation and Committee Approval” for a $5,583,500 loan to two individuals on which he failed to disclose that a certificate of deposit, the value of which was $106,759.00, which the two individuals pledged as collateral, in fact belonged to another individual and that Bell would benefit personally as a result of the loan. On March 14, 2008, Bell willfully misapplied approximately $662,045.79 of New Frontier’s funds.
On June 17, 2008, and continuing until September 9, 2008, Bell devised and participated in a scheme to defraud the bank and to obtain moneys owned by and under the custody and control of the bank by means of materially false and fraudulent pretenses. As part of the scheme, Bell, knowing that state and federal regulators had directed New Frontier Bank to raise capital, arranged for eight bank customers to borrow money from the bank and use the proceeds of those loans to purchase shares of bank stock so New Frontier could inject some of the money paid for the stock into the bank. As part of the scheme, Bell failed to disclose the deteriorating condition of the bank to its customers. He also prepared and caused others to prepare bank forms entitled “Credit Presentation and Committee Approval” for the eight loans described above. Bell failed to disclose on the credit presentation forms that proceeds of the loans would be used to purchase shares of stock in New Frontier Bancorp.
Bell also allegedly caused false and misleading statements to be included on the credit presentation forms. He presented the credit presentation forms to bank loan committees and caused other persons to present them to bank loan committees. As part of the scheme, Bell caused the bank to loan approximately $20,145,979.23 to the eight borrowers mentioned above, and caused those borrowers to use approximately $4,310,215.00 of those proceeds to purchase shares of stock in the bank. On August 29, 2008, Bell executed a scheme by causing the bank to transfer approximately $260,000.00 of the proceeds of one of the bank loans to an account of one of the borrowers of that loan.
On June 27, 2008, Bell conducted a financial transaction affecting interstate commerce. Specifically, he deposited a check in the amount of $160,000.00 into his account at the bank. The transaction involved the proceeds of a specified unlawful activity, knowing that the transaction was designed in whole or in part to conceal and disguise the source and the ownership of the proceeds of the unlawful activity.
“Those responsible for bank failures were also ultimately responsible for the weakening of our economy,” said U.S. Attorney John Walsh. “Thanks to the hard work of the Assistant U.S. Attorneys, the FBI, IRS-Criminal Investigations and the FDIC, the officer of one of these failed banks has been held personally accountable, is now a felon, and will spend time in federal prison.”
“This case demonstrates the FBI’s continued commitment to investigating bank fraud violations,” said FBI Denver Acting Special Agent in Charge Steven Olson. “We place a high priority wherein senior bank officials utilize their positions to defraud financial institutions for personal gain. These criminal acts undermine our banking system and will be aggressively pursued.”
“This sentencing is a direct result of outstanding teamwork between IRS-CI, FBI, FDIC-OIG and the U.S. Attorney’s Office in combating violations of Federal law,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “This sentence should serve as a deterrent to those who might contemplate similar fraudulent actions.”
This case was investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service – Criminal Investigation (IRS-CI), and the Federal Deposit Insurance Corporation – Office of the Inspector General (FDIC-OIG).
The defendant was prosecuted by Assistant U.S. Attorney Suneeta Hazra and another prosecutor from the Economic Crimes Section of the Criminal Division of the U.S. Attorney’s Office.
####
Metro Gang Task Force Arrests Scores of Defendants Charged with Drug Trafficking CrimesRead the Press Release
DENVER – This morning 350 agents and officers of the Metro Gang Task Force and other agencies arrested people who have been charged by indictment for drug trafficking crimes. Thirty-three people were arrested throughout the Front Range today. Five of those indicted are already in custody on unrelated charges. There are three fugitives. In addition to the arrests, agents and officers executed a number of search warrants. Those arrested were transported to U.S. District Court in Denver where they made their initial appearance. The defendants who did not appear in court today will be taken to court tomorrow.
Earlier this week the U.S. Attorney’s Office obtained three indictments charging two unrelated drug trafficking organizations. The investigation and the indictments were obtained by the U.S. Attorney led Organized Crime Drug Enforcement Task Force (OCDETF).
The first indictment charged 19 people with cocaine and crack cocaine trafficking crimes. Many of those charged in this operation, known as “Pig Pen”, are affiliated with a local violent street gang.
The second and third indictments charged a total of 22 people with cocaine and methamphetamine trafficking crimes. This operation is known as “Xterra Range.” The second indictment charged defendants with knowingly and intentionally distribute and possess with intent to distribute 5 kilograms or more of cocaine. The third indictment charged defendants with knowingly and intentionally distribute and possess with the intent to distribute 50 grams or more of methamphetamine (actual) and 500 grams or more of a mixture containing a detectable amount of methamphetamine. The methamphetamine, most of which was 90 percent pure, was trafficked from Mexico to Colorado through California.
In one instance money was found in a sophisticated hidden compartment underneath the seat of a vehicle. In another instance, the methamphetamine was found in a hidden compartment built into the frame of a vehicle. Some of the methamphetamine was sent from California to Colorado in a liquid form, some of which was then crystallized once it arrived in Denver. This is a new way of smuggling methamphetamine into the state. Also, two defendants face federal firearm charges.
In the “Pig Pen” indictment, the following defendants have been charged:
Brandon Lee Brown
Jerrica Allen
Hubert Asberry
Marcus Baker
Brandon Dujuan Brown
Crystal Butler
Wesley Conner
Rodney Delatorre Reyna
Kent Hooks
Stephanie Kirby
Arturo Martinez
Dusty Medeiros
Jamila Powers
Sorl Shead, Jr.
Leon Simmons
Richard Stephenson
Arnell Stewart
Julian Wheeler
Leonard WrightThe highest charge each defendant faces in “Pig Pen” is knowingly and intentionally conspiring to distribute, and possess with the intent to distribute one or more of the following: 280 grams or more of crack cocaine, and 500 grams or more of cocaine. If convicted, each defendant faces a penalty of not less than 10 years, and not more than life in federal prison, as well as a fine of up to $4,000,000.
In the cocaine “Xterra Range” indictment, the following have been charged:
Marco Ontiveros
Pedro Lujano-Gonzalez
Carlos Antillon-Fernandez
Ernesto Garcia
Jose Guadalupe Morales-Martinez
Bernardino Gamillo
Juan Sandoval
Jesus Garcia-SalasThe highest charge each defendant faces is knowingly and intentionally conspiring with each other to distribute and possess with the intent to distribute 5 kilograms or more of cocaine. If convicted, each defendant faces not less than 10 years, and not more than life in federal prison, as well as a fine of up to $4,000,000.
In the methamphetamine “Xterra Range” indictment, the following have been charged:
Fernando Mendoza-Gomez
Eliseo Avalos-Torres
Pedro Lujano-Gonzalez
Carlos Salcido-Garcia
Ernesto Garcia
Raul Mendoza-Lopez
Santos Adolfo Funez
Federico Lopez
Jose Escalera-Garcia
Ruri Escalera
Quang Pham
Bernardino Gamillo
Roberto Trevino
Justin Garcias-Salas
Jamie Graham
Martin Arizmendi-Moreno
Ignacio Gomez-RodriguezIt is important to note that five of the defendants charged in the second indictment were also charged in the third indictment.
The highest charge each defendant (with the exception of the last defendant listed) faces is knowingly and intentionally conspiring with each other to distribute and possess with the intent to distribute 50 grams or more of methamphetamine (actual) and 500 grams or more of a mixture containing methamphetamine. If convicted, each defendant, except the last one listed, faces not less than 10 years, and not more than life in federal prison, as well as a fine of up to $4,000,000.
Each indictment also contains an asset forfeiture allegation. The allegation states that upon conviction, the defendants shall forfeit to the United States any and all property, real or personal, involved in such offense, or any property traceable to such property, including but not limited to a money judgment in the amount of proceeds involved in the offense.
The Metro Gang Task Force is comprised of the following agencies: Denver Division of the Federal Bureau of Investigation, Homeland Security Investigations, Adams County Sheriff's Office, Arapahoe County Sheriff's Office, Aurora Police Department, Colorado National Guard, Commerce City Police Department, Denver District Attorney's Office, Denver Police Department, Englewood Police Department, Jefferson County Sheriff's Office, Rocky Mountain HIDTA and the Thornton Police Department.
In addition, the U.S. Marshals Service and the Greeley Police Department provided assistance with arresting some of the defendants. Further, the Arapahoe County Social Services and the Adams County Social Services are also assisting with the takedowns.
The “Pig Pen” case is being prosecuted by Assistant U.S. Attorney Susan Knox. The “Xterra Range” cases are being prosecuted by Assistant U.S. Attorney Kasandra Carleton.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
####
The Prosecution of Tax Cases Continues as the April 15 Deadline ApproachesRead the Press Release
DENVER – U.S. Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announce the prosecution of several criminal tax offenders this week in the District of Colorado. As the deadline for filing tax returns is this Monday, federal officials remind citizens that it is important to file complete and accurate tax returns. Those who deliberately evade this obligation will be criminally prosecuted.
Recent tax cases prosecuted in the District of Colorado include the following:
Elizabeth A. Eurioste, age 62, of Aurora, Colorado, who was indicted by a federal grand jury in Denver on April 9, 2013 for aiding and assisting in preparing false Form 1040 U.S. Individual Income Tax Returns for years 2006 and 2007. She willfully advised her clients and prepared for them false tax returns, including false deductions, overstated expenses and false business losses when in fact the taxpayers were not entitled to the deductions which resulted in the under-reporting of taxable income. She falsified losses as much as $158,374 on a single 2007 Form 1040 U.S. Individual Income Tax Return. She was charged with twenty counts of aiding and assisting in the preparing of false tax returns which carries a penalty of not more than 3 years imprisonment, and a fine of up to $250,000 per count.
James Stanley Golob, age 54, of Pueblo, Colorado, was charged by Information on April 11, 2013 with income tax evasion for calendar year 2007. According to the information, Golob took a variety of measures to avoid the assessment and payment of income tax $586,618 of income generated during 2007 through rental properties and through his roofing business, including paying his mortgage, utilities, and other personal expenses from business accounts, titling his home in family member’s name, and filing a false tax return for 2007 in which he falsely reported total compensation for the year of $13,800. Income tax evasion carries a penalty of not more than 5 years imprisonment, and a fine of up to $250,000.
Daniel Dinner, age 61, of Denver, Colorado, was charged by Information on April 12, 2013 with willfully filing a false U.S. individual income tax return for calendar year 2009. According to the information, Dinner’s return falsely reported his net income as $17,495, which resulted in a tax deficiency of approximately $28,810. He faces a penalty of not more than 3 years imprisonment, and a fine of up to $250,000.
Richard K. Sears, age 64, of Parker, Colorado, was formally charged by criminal Information on April 12, 2013 with three counts of willfully failing to file U.S. individual income tax returns. Failing to file U.S. individual income tax returns carries a penalty of not more than 1 year imprisonment, and a fine of up to $100,000 per count.
“As citizens and residents of the United States, we all have an obligation to file tax returns, and to ensure that those tax returns are complete and accurate,” said U.S. Attorney John Walsh.
“Tax evasion is not a victimless crime; we all pay when others attempt to defraud the government,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “This is a reminder that all taxpayers should file complete and accurate tax returns.”
Charges in an indictment and information are allegations and the defendants are presumed innocent unless and until proven guilty.
The criminal cases are being prosecuted by Assistant United States Attorneys Anna K. Edgar, Matthew T. Kirsch, Suneeta Hazra and Tim R. Neff, respectively, all of the U.S. Attorney’s Office Economic Crimes Section for the District of Colorado, with assistance from Department of Justice Trial Attorney Kevin F. Sweeney.
####
Third Defendant in Real Estate Fraud Case Pleads GuiltyRead the Press Release
DENVER – Alois Craig Weingart, age 59, of Castle Rock, Colorado pled guilty to one count of making a false statement to a bank, U.S. Attorney John Walsh, IRS Criminal Investigation Special Agent in Charge Stephen Boyd and FBI Denver Acting Special Agent in Charge Steven Olson announced. Weingart entered his guilty plea before Chief U.S. District Court Judge Marcia S. Krieger, and is scheduled to be sentenced on July 8, 2013. In the same case, Waunita Weingart pled guilty to two counts of wire fraud on March 13, 2013 and is scheduled to be sentenced on June 17, 2013. John Gallegos pled guilty to one count of making a false statement to a bank and is scheduled to be sentenced on May 6, 2013.
According to the stipulated facts contained in Waunita Weingart’s plea agreement, beginning in 2000 and continuing through 2008, she devised a scheme to defraud lenders that funded residential mortgage loans. She was an experienced mortgage broker, settlement agent, and licensed title insurance producer. Alois Craig Weingart is her husband; John Gallegos is her son. As part of her scheme, she, John Gallegos, and Craig Weingart each repeatedly obtained mortgage loans for their properties in Castle Rock and Boulder, Colorado, pledging the same properties again and again as collateral to each successive lender without paying off the prior loans. Waunita Weingart used her mortgage brokerage, G-4 Holding, as well as two escrow/title companies she controlled, Colorado County and Community Title and Real Estate Title, to facilitate her fraud.
For each new loan, Waunita Weingart made it appear as though the lender would obtain a first priority security interest in the property, knowing that it would not. In preparing the loan applications and providing information to the lenders for the applications, she incorporated false representations as necessary to assure that the borrowers would qualify for the loans. Each application substantially overstated the borrower’s true income, falsely representing that he or she had high monthly earnings from employment at another company Waunita Weingart controlled. Each application also falsely represented that the borrower owned numerous properties that he or she did not in fact own. As a result of her scheme, lenders lost over 12 million dollars.
Alois Craig Weingart pled guilty to making a false statement to obtain loans for his Castle Rock property; John Gallegos pled guilty to making a false statement to obtain a loan for another property he owned in Seattle, Washington.
“The defendants in this case thought they could out-smart the financial system,” said U.S. Attorney John Walsh. “Crimes such as this ultimately hurt our economy as well as those who applies for a mortgage.”
“IRS Criminal Investigation is committed to work diligently with our law enforcement partners to ensure that those who engage in these illegal activities are vigorously investigated and brought to justice,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
“Investigating mortgage fraud is a priority for the FBI as it hurts homeowners, businesses and the economy,” said FBI Denver Acting Special Agent in Charge Steven Olson. “Working closely with the IRS Criminal Investigations and the U.S. Attorney’s Office, we were able to see that the three defendants were charged and ultimately convicted for fraud.”
Waunita Weingart faces not more than 20 years imprisonment, and up to a $250,000 fine per count for two counts of wire fraud. Craig Weingart and John Gallegos face not more than 30 years imprisonment, and up to a $1,000,000 fine for making a false statement to a bank.
This case was investigated by special agents with IRS Criminal Investigation and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorneys Linda Kaufman and Martha Paluch.
####
Aurora Driving School Owner and Clerk Arrested for Taking Bribes for Documents to Obtain Driver LicensesRead the Press Release
DENVER – The United States Attorney’s Office, Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Internal Revenue Service – Criminal Investigations and the Colorado Department of Revenue, Motor Vehicle Investigations Unit announced that today Stuart Bryan King, age 52, of Centennial, who is the owner of Little Lake Driving Academy, and Griselda Trevino De Valenzuela, age 42, of Aurora, the driving academy’s clerk, were arraigned in U.S. District Court in Denver on charges of conspiracy to commit wire and mail fraud, aggravated identity theft, Social Security Fraud and Bribery. A tentative trial date of June 3, 2013 has been set.
According to the indictment, Little Lake Driving Academy, located at 1415 Havana Street in Aurora, Colorado, acted as a third party tester for the State of Colorado’s Department of Revenue, Division of Motor Vehicles, administering written and driving examinations on behalf of the State of Colorado in order for an individual to obtain a Colorado Driver’s License. All driving schools must meet specific requirements and comply with Colorado State law in order to be a third party tester for the Division. The company provided the requisite testing for individuals to obtain a basic operators driver’s license and/or instruction permit in the State of Colorado. The defendant, King, owns Little Lake Driving Academy, and is a licensed tester with the State of Colorado. King was authorized to conduct driver education classes as well as certify an applicant’s successful written and driving examinations so they could receive the valid Colorado driving documents.
Co-defendant Griselda Trevino De Valenzuela acted as the secretary/manager of Little Lake Driving Academy. Her responsibilities included informing applicants of the documentation required to obtain a Colorado driver’s license, collecting the documentation from the applicants, translating certain documents from English to Spanish, providing applicants with a study guide, administering the written test to applicants, grading those tests and collecting money from the applicants. She would then give the money to King.
From August 2009 through November 2012, King and De Valenzuela knowingly devised and participated in a scheme to defraud the Colorado Department of Revenue, Division of Motor Vehicles (DMV) by falsely certifying that applicants for a Colorado Driver’s License and instruction permit had successfully completed the required testing. As part of the scheme, the two defendants falsely certified that applicants had taken and passed the written tests. The applicants then presented the certified documents to the DMV and received by mail a State of Colorado driver’s license and/or instruction permit.
As part of the scheme, defendants charged approximately $130 to $420 in cash payments from applicants in return for fraudulently issuing passing grades. The defendants are also alleged to have falsified the written test results for applicants who could not speak, read and/or write English adequately, or could not pass the written test for other reasons.
The investigation into King, De Valenzuela and Little Lake Driving Academy revealed that conspirators transported people who could not speak, read or write English from Missouri and other states to Colorado. Those transported to Colorado from Missouri had previously purchased the identities of U.S. citizens and obtained Missouri identification cards in the names of the stolen identities. These individuals, after utilizing the services of Little Lake, turned in their Missouri identification cards to obtain Colorado driver’s licenses and instruction permits. Last year, as part of this same investigation, 20 individuals who had utilized the services of Little Lake and who turned in Missouri identification cards were indicted in Colorado for Aggravated Identity Theft. To date, Catarina Alcon, Elias Garcia-Perez, Jose Antonio Rivera, and Candelario Hernandez-Perez have been arrested based on the Aggravated Identity Theft indictments.
As a result of this investigation, the Colorado DMV is working on notifying the affected parties in this case. The DMV is working internally on the procedure and protocol for handling each individual applicant.
“Shutting down these types of illegal operations is an important process in maintaining the integrity of one of the most used forms of identification in the United States – the driver’s license,” said Kumar C. Kibble, special agent in charge of HSI Denver. “HSI leads the Document and Benefit Task Force, which includes many other government agencies, to specifically address these threats to national security.”
“The IRS is aggressively pursuing those who steal others’ identities and we will work with our law enforcement partners to bring those to justice who commit such crimes,” said Stephen Boyd, Special Agent in Charge for IRS – Criminal Investigation, Denver Field Office.
“Little Lake is one of 114 driving schools that provide customers with written and driving testing,” said Michael Dixon, Senior Director, Division of Motor Vehicles. “These schools provide a valuable service to the citizens of Colorado. It is unfortunate when a tester may be taking advantage of customers, but it is the exception rather than the rule. The DMV audits 100 percent of the driving schools each year.”
King faces one count of conspiracy to commit wire and mail fraud. If convicted of this count, he faces not more than 20 years in federal prison, and up to a $250,000 fine. He also faces one count of bribery concerning programs receiving federal funds. If convicted of this count, he faces not more than 10 years in federal prison, and up to a $250,000 fine.
De Valenzuela faces one count of conspiracy to commit wire and mail fraud. If convicted of this count, he faces not more than 20 years in federal prison, and up to a $250,000 fine. She faces one count of aggravated identity theft. If convicted of this crime she faces not more than 2 years imprisonment consecutive to any felony conviction herein, and up to a $250,000 fine. Lastly, she faces one count of Social Security Fraud, which carries a penalty of not more than 5 years in federal prison and up to a $250,000 fine.
This case is being investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service – Criminal Investigation, and the Colorado Department of Revenue, Motor Vehicle Investigations Unit.
The defendants are being prosecuted by Assistant U.S. Attorney Joseph Mackey.
The charges contained in the Indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
####
Thornton Man Arrested at Denver International Airport (DIA) After Abusive Sexual Contact Wiht Flight Attendant on Spirit AirlinesRead the Press Release
DENVER – Evan Nathaniel Castle, age 24, of Thornton, Colorado, was arrested Friday on charges of abusive sexual contact, after groping a Spirit Airlines flight attendant, United States Attorney John Walsh and FBI Denver Acting Special Agent in Charge Steven Olson announced. Castle appeared in U.S. District Court in Denver this afternoon, where he was advised of his rights, and the charges pending against him.
According to the affidavit in support of the Criminal Complaint, obtained today, Monday, 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. Ultimately, one of the flight attendants told Castle to stop using vulgar language and to quiet down. He refused, and commented that he should date the flight attendant.
As another flight attendant was walking down the aisle of the aircraft, Castle told her she was beautiful. He then told her to “blow off work and come with me.” The flight attendant ignored the comments. As she passed his row, Castle deliberately groped the right cheek of her buttocks and said, “Oh sexy.” This made the flight attendant not want to walk past his seat. The flight attendant that was groped then told the other flight attendant that Castle had “grabbed her butt.”
If convicted, Castle faces not more than 2 years in federal prison, and up to a $250,000 fine.
This case was investigated by the Federal Bureau of Investigation (FBI).
Castle is being prosecuted by Assistant U.S. Attorney James Allison, Chief of the U.S. Attorney’s Office Criminal Division.
A Criminal Complaint is a probable cause charging document. Anyone accused of committing a federal felony crime has a Constitutional right to be indicted by a federal grand jury in Denver.
The charges contained in the Complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.
UPDATE
The crime (abusive sexual contact) took place on Friday, April 5, 2013 aboard Spirit Airlines Flight #562, which landed at DIA at 11:56 a.m. Castle was arrested at that time, and was held in custody over the weekend pending the filing of charges, which took place today, Monday, April 8, 2013. Castle appeared in court this afternoon before a U.S. Magistrate Judge. At that hearing, Castle was released on a personal recognizance bond, with the conditions that he cannot drink alcohol while his case is pending and that he cannot fly on commercial aircraft while his case is pending. He is next due in court on May 6, 2013 for a preliminary hearing. Attached for your information is the Criminal Complaint, which includes things said by Castle to the flight attendants.
####
Former Pastor Sentenced to Serve 10 Years in Federal Prison for Possession of Child PornographyRead the Press Release
DENVER – Richard Howard Craft, age 69, of Thornton, Colorado, was sentenced today by U.S District Court Judge R. Brooke Jackson to serve 120 months (10 years) in federal prison for possession of child pornography, United States Attorney John Walsh and FBI Denver Acting Special Agent in Charge Steven Olson announced. Following his 10 years in prison, Craft is to spend 5 years on supervised release. He is also to register as a sex offender. Judge Jackson scheduled a hearing for June 6, 2013 to determine the amount of restitution victims should receive. Craft, who is free on bond, was ordered to report to a Bureau of Prison facility once one is designated.
Craft was indicted by a federal grand jury in Denver on August 20, 2012. He pled guilty before Judge Jackson on November 5, 2012. He was sentenced on April 1, 2013.
Prior to his arrest, Craft was an interim pastor of Family of Christ Presbyterian Church of Greeley.
According to the facts contained in court documents, on December 23, 2009, an FBI special agent in Philadelphia, operating in an undercover capacity, accessed the Internet and connected to a publicly available peer-to-peer file-sharing program. The FBI agent observed numerous files depicting child pornography. Further investigation revealed that the files were being shared from Craft’s computer located at his Thornton, Colorado residence.
As a result of the investigation, the U.S. Attorney’s Office obtained an indictment. Ultimately, Craft pled guilty to the possession of child pornography that had been shipped and transported in interstate and foreign commerce by any means, including by computer, between July 2007 and January 2008.
Craft also forfeited any and all of his rights, title and interest in the child pornography images, the computers containing child pornography, and any other real or personal property he used or intended to be used to commit or promote the commission of the offenses.
“As the defendant told Judge Jackson during his sentencing hearing, sexual predators view children as objects for gratification, not human beings to nurture,” said U.S. Attorney John Walsh. “The lengthy prison sentence is a result of the fact of the defendant’s compulsive viewing of child pornography.”
“The FBI’s Violent Crimes Against Children Program will continue to aggressively investigate cases that involve possession of child pornography in order to protect our children from predators on the streets and online,” said FBI Denver Acting Special Agent in Charge Steven Olson.
This case was investigated by the Federal Bureau of Investigation (FBI) Violent Crimes Against Children Program.
Craft was prosecuted by Assistant U.S. Attorneys Ryan Bergsieker and Alecia Riewerts Wolak and Department of Justice Child Exploitation and Obscenity Section Trial Attorney Michael Grant.
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."
####
Longmont Man and Business Charged with Illegally Discharging Sewage into the UnionRead the Press Release
DENVER – John Albert Paquette, age 52, of Longmont, Colorado, and his company, East Point, LLC, have been charged by Information with knowingly discharging a pollutant without a permit from a point source into waters of the United States, the U.S. Attorney’s Office and the Environmental Protection Agency (EPA) Criminal Investigation Division announced. Paquette and an attorney representing the company appeared in U.S. District Court yesterday afternoon, where they were advised of their rights and the charges pending against them.
According to the Information, 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.
“Protecting our environment, including the water we rely on, is a top priority of this U.S. Attorney’s Office,” said U.S. Attorney John Walsh. “Thanks to the investigative work of the EPA, we’ve been able to bring charges against a person and a company who intentionally dirtied water in the city of Longmont.”
“The defendant has been charged with dumping untreated sewage directly into a tributary of Union Reservoir, a popular recreational lake,” said Jeffrey Martinez, Special Agent in Charge of EPA’s criminal enforcement program in Colorado. “Illegally discharged sewage can sicken people, fish and wildlife. This case shows that those who try to save a buck by cutting corners will be vigorously prosecuted.”
If convicted, the company faces not more than 5 years probation, a fine of at least $5,000 and not more than $50,000 per day of violation. Paquette, if convicted, faces up to 1 year in prison and a fine of at least $2,500 and not more than $25,000 per day of violation.
This case is being investigated by the Environmental Protection Agency Criminal Investigation Division.
The defendants are being prosecuted by Assistant U.S. Attorney Suneeta Hazra.
The charges contained in the Information are allegations, and the defendants are presumed innocent unless and until proven guilty.
####
Former El Paso County Deputy Sheriff Pleads Guilty as Part of Ponzi SchemeRead the Press Release
DENVER – David N. Hawkins, age 43, of Colorado Springs, Colorado, pled guilty late last week before U.S. District Court Judge Robert E. Blackburn to one count of wire fraud and one count of money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation, and IRS – Criminal Investigation announced. Hawkins, who is free on bond, is scheduled to be sentenced by Judge Blackburn on June 7, 2013 at 11:00 a.m.
Hawkins was originally charged by Information on January 2, 2013. He waived his 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, Hawkins was employed as a deputy sheriff for the El Paso County, Colorado Sheriff's Office. In 2006 Hawkins attended training courses on how to trade profitably in foreign currencies and the exchanges of foreign currencies (hereinafter, the "FOREX" or "foreign currency exchange" markets). He also attempted to self-educate himself concerning trading in the FOREX markets.
From in or about November 2009, when Hawkins obtained his first FOREX trading client, and continuing through early December 2011, he obtained in excess of $1.2 million from his colleagues at the El Paso County Sheriff’s Office, other law enforcement officers in El Paso County, and their respective friends and relatives for the purpose of trading these funds in the FOREX markets on their behalf. He had approximately 73 investors, most investors using personal savings or retirement funds accumulated over the years as their source of the investment funds. Estimated losses to investors collectively total approximately $215,643.
Hawkins made several false representations to investors, including investors would be guaranteed a return of 10% per month (or 120% per annum). These representations were false and at no time were the investments ever profitable.
Over time Hawkins removed investor funds from FOREX trading accounts into bank accounts he controlled. He would then use these funds either for his own personal expenses, for personal investments unrelated to FOREX investments, or to fund payments to those of his investors who requested to withdraw their principal investments. At one point, he used investor funds toward the purchase of two personal automobiles and mid- 2011 he used in excess of $150,000 in investor funds to purchase franchises and to set up operations for two semi-professional indoor arena football teams, one located in Danville, Illinois and the other in Mesquite, Texas. The teams never became operational.
“Ponzi schemes have taken the hard earned money of all too many Americans in the last few years,” said U.S. Attorney John Walsh. “In this case, a Deputy Sheriff took money meant for investment, and spent it on a variety of things, including personal items, giving no thought to the financial damage he is causing the colleagues, family and friends who trusted him. He will now face the consequences of his crimes.”
“If it sounds too good to be true it probably is. People should diligently check out claims of unusually high rates of return before investing. Don't become a victim of an investment scam", said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
“Working with our partners, the FBI is committed to investigating complex white collar crimes, especially when someone in a position of trust misuses that position to exploit innocent investors,” said FBI Denver Acting Special Agent in Charge Steve Olson.
Hawkins faces one count of wire fraud which carries a penalty of not more than 20 years in federal prison and a fine of up to $250,000. He also faces one count of money laundering which carries a penalty of not more than 10 years in federal prison and a fine of up to $250,000.
This case was investigated by the Federal Bureau of Investigation (FBI), and Internal Revenue Service – Criminal Investigation (IRS-CI).
The case is being prosecuted by Assistant U.S. Attorney Kenneth Harmon.
####
Two Co-Conspirators Sentenced for Mortgage Fraud SchemeRead the Press Release
DENVER – Michael Jacoby, age 44, of Castle Rock, Colorado, and Derek Zar, age 30, of Commerce City, Colorado, were sentenced last Friday by visiting U.S. District Court Judge Kathryn H. Vratil to serve 108 months in prison and 63 months in prison respectively, for a mortgage fraud scheme, the U.S. Attorney’s Office, the Federal Bureau of Investigation, and IRS-Criminal Investigation announced. Following his 108-month prison sentence, Jacoby was ordered to spend 5 years on supervised release and pay $2,979,712 in restitution. Following his 63-month sentence, Zar was ordered to spend 3 years on supervised release and pay $1,417,902 in restitution.
Michael Jacoby, Derek Zar and co-conspirator Susanne Zar were found guilty by a jury on August 30, 2012. The guilty verdicts were the result of a four-week trial. Susanne Zar is scheduled to be sentenced on July 2, 2013. All were indicted by a federal grand jury in Denver on September 27, 2010. A superseding indictment was filed on September 15, 2011.
According to the indictments and testimony at trial, between January 2005 and continuing through September 2006, in the State and District of Colorado, the defendants, knowingly devised and intended to devise a scheme to defraud various financial institutions and other commercial lenders that funded residential mortgages, and to obtain moneys, funds, and other property owned by and under the custody and control of those financial institutions and commercial lenders by means of materially false and fraudulent pretenses and representations. In furtherance of the scheme, one or more of the defendants participated in real estate transactions involving 18 properties located in Colorado.
It was part of the scheme that Derek Zar and a co-defendant bought homes at purported discounted rates because they paid cash. Jacoby often lent them the cash for these initial purchases and was then was paid back with interest. Furthermore, Jacoby acted as the realtor for the sales. Derek Zar and a co-defendant usually bought the homes through limited liability companies they owned and operated and then resold these homes within a very short time period to themselves as individuals at inflated prices financed by mortgage loans. Additionally, Susanne Zar often refinanced the homes with mortgage loans based on an inflated value. Sometimes the inflated value was supported by false documentation showing a higher initial purchase price than the actual initial purchase price. The defendants also prepared and submitted and caused to be prepared and submitted applications for loans which contained various materially false and fraudulent representations.
It was further part of the scheme for the co-defendants to cause to be submitted false appraisals for some of the properties. Jacoby usually recommended an appraiser to the mortgage broker for the loan approval. He supplied the appraiser with inflated values of comparable homes or omitted information concerning the home sales so the appraiser would overvalue the current home. At closing, through a grant program, the defendants funneled money back to the home buyer who was one of the defendants. They concealed from the lenders and other parties associated with the transactions that the home buyer was receiving a kickback for buying the home.
“As the financial crisis of 2008 showed, mortgage fraud harms all Americans, not just banks and homeowners,” said U.S. Attorney John Walsh. “In this case, two people who scammed the system of millions ended up spending years in federal prison.”
“Mortgage fraud undermines public confidence in achieving the American dream and jeopardizes the well-being and stability of our financial institutions,” said FBI Denver Acting Special Agent in Charge Steve Olson. “The sentences announced today redress some of the damage caused by these defendants. The FBI will continue to work diligently to identify and investigate those who perpetrate these types of schemes.”
“Mortgage fraud directly threatens the financial health of the communities in which we live; IRS CI will work diligently with our law enforcement partners to insure mortgage fraud is vigorously investigated and individuals are brought to justice,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
The case was investigated by special agents with the Federal Bureau of Investigation and IRS-Criminal Investigation.
The case was prosecuted by Assistant U.S. Attorneys Suneeta Hazra and Jamie Mendelson.
####
Owner and Manager of Disaster Restoration, Inc. Sentenced to Prison for Conspiracy and Mail FraudRead the Press Release
DENVER – The owner/operator of Disaster Restoration, Inc., Michael Arthur Griggs, age 58, of Lafayette, Colorado, was sentenced today by Chief U.S. District Court Judge Marcia S. Krieger to serve 50 months in federal prison today for conspiracy and mail fraud, the U.S. Attorney’s Office and the U.S. Postal Inspection Service announced. Following his prison sentence, Chief Judge Krieger sentenced Griggs to serve 3 years on supervised release. He was also ordered to pay a $500,000 fine, and $477,643.49 in restitution. He was ordered to report to a facility designated by the Bureau of Prisons within 15 days of designation.
A co-defendant, Charles Sharp, age 52, of Broomfield, Colorado, the chief operating officer/general manager, was sentenced by Chief Judge Krieger on March 11, 2013, to serve 36 months in prison, followed by 3 years of supervised release. He was also ordered to pay restitution totaling $477,643.49 joint and several with Griggs. In August of 2012, a jury found Griggs guilty of one count of conspiracy and 13 counts of mail fraud. The jury also found Sharp guilty of one count of conspiracy and 9 counts of mail fraud.
Disaster Restoration, Inc., (DRI), was a Colorado corporation located in Denver, Colorado. DRI engaged in the repair, restoration, and reconstruction of commercial and residential real estate properties that have been damaged by fire, water, and other disasters. DRI acted as a general contractor, which regularly hired and paid subcontractors to restore damaged properties and then submitted the cost of the repairs made by these subcontractors to insurance companies for payment.
At trial the government proved that beginning in or about the Fall of 2003, and continuing until approximately early 2007, the defendants knowingly agreed and conspired with each other to commit mail fraud. Further, every Tuesday, DRI would hold an internal meeting where they often discussed how to instruct many of the subcontractors working for DRI to inflate their original bid proposals by 20% to 30%. DRI employees regularly instructed subcontractors to provide DRI with two different documents reflecting their bids, one inflated and one non-inflated, for the same work they would perform for DRI. The inflated price was to be submitted to the insurance company for payment while DRI would pay the subcontractor based on the lower original price. DRI pocketed the difference between the inflated price paid by the insurance company and the lower price paid out to the subcontractor thereby increasing, often substantially, DRI’s profit margin on DRI’s restoration projects.
The insurance companies relied on these false and inflated subcontractor prices when they made payments for the restoration projects performed and supervised by DRI. Most of these insurance payments were sent through the United States Postal System. DRI would, in turn, issue checks payable to the subcontractors and mail them as well.
“Insurance fraud results in higher premiums for everyone,” said U.S. Attorney John Walsh. “I would like to recognize the hard work of the prosecutors from the U.S. Attorney’s Office, for obtaining a conviction in this case. I would also like to thank the Postal Inspectors who worked so diligently preparing this case for prosecution.”
“Insurance fraud, like many financial crimes, erodes the integrity of our Insurance Industry, and threatens the financial health of our communities,” said Adam P. Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division. “It is critical we make every effort to protect the public from insurance fraud and its impact on our consumers by ensuring the integrity of the U.S. Mail.”
The case was investigated by the U.S. Postal Inspection Service and was prosecuted by Assistant U.S. Attorney Pegeen Rhyne.
####
Englewood Woman Pleads Guilty for Failure to Pay over $4.7 Million in Employment TaxesRead the Press Release
DENVER – Beth Ann Pettyjohn, age 60, of Englewood, Colorado, pled guilty Monday, (March 11, 2013) before U.S. District Court Judge William J. Martinez for failure to pay over employment tax, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Pettyjohn waived her right to be indicted by a federal grand jury on January 17, 2013 and was charged by Information. Pettyjohn is schedule to be sentenced by Judge Martinez on September 10, 2013 at 10:00 am.
According to the stipulated facts contained in the plea agreement, as well as the information, Pettyjohn is the co-owner and vice president of Overhead Door Company of Denver (OHD). From September 2003 to June of 2009, Beth Ann Pettyjohn stopped paying over the payroll taxes (income taxes withheld & FICA) OHD withheld from employee wages as well as the matching portion of FICA totaling almost 4.7 million dollars owed to the IRS. Pettyjohn admitted that she knew she had a duty to pay over the amounts withheld from employee wages, but she told an IRS agent she failed to do so because the IRS was not beating down her door. Pettyjohn managed the accounting department at OHD and determined which bills were paid, and then issued and signed the related checks. Pettyjohn has a bachelor's degree in business with a major in accounting, and she has an inactive CPA license issued by the State of Colorado. During the relevant years, the defendant employed both hourly and salaried employees.
During the period in question and for many prior years, Pettyjohn and her husband lived in a home valued at over $1 million dollars. Between 2005 through 2007, Pettyjohn received wages from OHD averaging approximately $133,000 per year. Also, after Mrs. Pettyjohn stopped paying over the payroll taxes at OHD, she purchased pieces of real estate. In August of 2007, Mr. and Mrs. Pettyjohn purchased a condominium in Gypsum, Colorado for $349,900 with a $100,000 down payment. In 2009, Pettyjohn paid $285,000 in cash to purchase her son's condominium in suburban Denver. The condo was resold to an unrelated party a few months later.
“An employer who withholds payroll taxes from her employees, but keeps those tax amounts for herself instead of paying them to the IRS, has committed a theft that hurts both her employees and the taxpayers of the United States,” said U.S. Attorney John Walsh. “In this case, the defendant is well educated, knows the tax laws, and knows that the tax laws applied to her company, like every other. She now faces the criminal consequences of her illegal acts.”
“Employers who commit Employment Tax Fraud by failing to remit employment taxes are not only defrauding the United States government, they are creating financial havoc for their employees,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
Pettyjohn was charged with one count of failure to pay over tax. She faces not more than 5 years in federal prison, and a fine of up to $250,000.
This case was investigated by IRS-Criminal Investigation and prosecuted by Assistant U.S. Attorney Matt Kirsch.
####
Denver Business Owner Pleads Guilty to Mail Fraud and Money Laundering as Part of A Ponzi SchemeRead the Press Release
DENVER – Michael James Turnock, age 68, of Denver, Colorado, pled guilty earlier this week before U.S. District Court Judge Christine M. Arguello to one count of mail fraud and one count of money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation, IRS – Criminal Investigation and the United States Postal Inspection Service announced. Turnock, who is free on bond, is scheduled to be sentenced by Judge Arguello on May 28, 2013.
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 fifty-eight who had invested, and lost approximately $4,168,145.
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.
“Ponzi schemes in this case hurt both those who were defrauded into investing, and the economy as a whole,” said U.S. Attorney John Walsh. “One of this office’s top priorities is identifying and prosecuting investment fraud scams like this one.”
“The FBI will continue to protect the financial markets by working closely with its law enforcement and regulatory partners,” said FBI Denver Special Agent in Charge James Yacone. “We trust that the outcome of this investigation will deter others who are seeking to engage in similar criminal activity and attempting to defraud innocent investors.”
“The U.S. Postal Inspection Service will continue to vigorously pursue those who utilize the U.S. Mail to perpetrate fraud schemes and steal our customers’ hard earned money,” said Adam Behnen, Inspector in Charge of the U.S. Postal Inspection Service Denver Division. “We are appreciative of our quality law enforcement relationships with the Federal Bureau of Investigation and IRS Criminal Investigation for their hard work in this case.”
“Investment fraud is like a 'house of cards’; the underlying structure can fall apart at any time leaving many investors in financial ruin,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “Defrauding investors is a serious offense and those who do will be held accountable.”
Turnock faces one count of mail fraud which carries a penalty of not more than 20 years in federal prison and a fine of up to $250,000. He also faces one count of money laundering which carries a penalty of not more than 20 years in federal prison and a fine of up to $500,000.
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.
####
Owner of Colorado Car Dealership and Two Associates Arrested for Structuring and Money LaunderingRead the Press Release
DENVER – Raul Mendoza, age 48, Julia Castillo-Caraveo, age 28, both of Denver, Colorado, and Isidro Noe Mendoza-Ortiz, age 25, of Thornton, Colorado were arrested this morning for structuring and money laundering, the United States Attorney’s Office, IRS Criminal Investigation, the Drug Enforcement Agency (DEA) and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) announced. All three defendants were named in a sealed indictment returned by a federal grand jury in Denver on February 14, 2013. The defendants appeared this afternoon before a U.S. Magistrate Judge, where they were advised of their rights, and the charges pending against them. All three are scheduled to appear in court on Friday, March 8, 2013 at 10:00 a.m. for a detention hearing and for arraignment.
This morning, in addition to the three arrests, agents and officers executed search warrants at a residence and an automobile business. Twenty automobiles with clear titles from the car dealership were seized.
According to the indictment, beginning in February 2008, and continuing through May 2012, Raul Mendoza (Mendoza) and Isidro Noe Mendoza-Ortiz (Mendoza-Ortiz), conspired with each other and others to structure currency (the depositing of just under $10,000) by depositing transactions with the intent to evade the reporting requirements as required by law. Daily cash receipts from the business, Chopeque Auto Sales, which is owned by Mendoza, were received at the business and structured into separate accounts at various banks to avoid the $10,000 reporting requirements. From February 26, 2008 through May 29, 2012, they structured over 700 deposit totaling $4,543,714.
As part of the conspiracy, on June 4, 2011, Mendoza, Mendoza-Ortiz and Julia Castillo-Caraveo (Castillo-Caraveo), knowingly caused Chopeque Auto Sales, a non-financial trade or business, to fail to file a Federal IRS Form 8300, a report required by law for all currency transactions over $10,000 received by a business. Particularly, they sold a 2004 Dodge Ram 1500 in exchange for $10,500 that was represented by undercover law enforcement officers to be the proceeds of a specified unlawful activity (drug distribution) and that they did so with the intent to conceal the nature of the proceeds of the specified unlawful activity and to avoid IRS Form 8300 reporting requirements. On March 8, 2012, Mendoza and Castillo-Caraveo followed a similar pattern and sold a 2008 Chevrolet Silverado 1500 in exchange for $20,900 that was represented by undercover law enforcement officers to be the proceeds of a specified unlawful activity (drug distribution); no IRS From 8300 was filed.
The defendants conspired to conceal the nature and source of the specified unlawful activity and attempted to launder drug proceeds. Particularly, Chopeque Auto Sales sold automobiles to known drug dealers, prepared false documents relating to the sale of vehicles to known drug dealers, structured currency deposits to conceal the source, falsely claimed to law enforcement authorities to be a valid lien holder of a seized vehicle in order to assist a known drug dealer in seeking the return of the vehicle. Upon conviction of the offenses above, they shall forfeit to the United States all of the defendants right, title and interest in all property, real or personal, involved in such offenses, or all proceeds traceable to such property, for which the defendants are joint and severally liable.
“Working with our federal, state and local law enforcement partners, we were able to uncover a sophisticated scheme where the defendants hid drug dealing proceeds by laundering the money through the sale of automobiles,” said U.S. Attorney John Walsh.
“I applaud the fine work of the investigators and prosecutors who used very innovative techniques to shut down this financial conspiracy facilitating illicit drug trafficking organizations,” said DEA Denver Field Division Special Agent in Charge Barbra M. Roach.
“Helping drug dealers launder drug money is unacceptable and illegal. IRS CI will work with our law enforcement partners to ensure those who do are brought to justice,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
“Drug smugglers use various creative means to launder and conceal their illegal drug profits,” said Kumar C. Kibble, special agent in charge of HSI Denver. “HSI and our law enforcement counterparts were able to pool our law enforcement authorities and expertise to identify and investigate the significant structured deposits made under the guise of a legitimate car dealership.”
Mendoza was charged with three counts of structuring and three counts of money laundering. Castillo-Caraveo was charged with two counts of structuring and three counts of money laundering. Mendoza-Ortiz was charged with two counts of structuring and two counts of money laundering. If convicted, each count of structuring and money laundering carries a penalty of not more than 10 years in federal prison, and a fine of up to $500,000.
This case was investigated by agents with IRS-Criminal Investigation (IRS-CI), the Drug Enforcement Administration (DEA) and the Department of Homeland Security. In addition, Denver Police Department, Commerce City Police Department, Thornton Police Department, and Department of Revenue – Auto Industry Division assisted in the execution of the warrants.
The case is being prosecuted by Assistant U.S. Attorney Jim Boma. The asset forfeiture is being handled by Assistant U.S. Attorney Tonya Andrews.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
####
Owner of Colorado Car Dealership and Two Associates Arrested for Structuring and Money LaunderingRead the Press Release
DENVER – Raul Mendoza, age 48, Julia Castillo-Caraveo, age 28, both of Denver, Colorado, and Isidro Noe Mendoza-Ortiz, age 25, of Thornton, Colorado were arrested this morning for structuring and money laundering, the United States Attorney’s Office, IRS Criminal Investigation, the Drug Enforcement Agency (DEA) and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) announced. All three defendants were named in a sealed indictment returned by a federal grand jury in Denver on February 14, 2013. The defendants appeared this afternoon before a U.S. Magistrate Judge, where they were advised of their rights, and the charges pending against them. All three are scheduled to appear in court on Friday, March 8, 2013 at 10:00 a.m. for a detention hearing and for arraignment.
This morning, in addition to the three arrests, agents and officers executed search warrants at a residence and an automobile business. Twenty automobiles with clear titles from the car dealership were seized.
According to the indictment, beginning in February 2008, and continuing through May 2012, Raul Mendoza (Mendoza) and Isidro Noe Mendoza-Ortiz (Mendoza-Ortiz), conspired with each other and others to structure currency (the depositing of just under $10,000) by depositing transactions with the intent to evade the reporting requirements as required by law. Daily cash receipts from the business, Chopeque Auto Sales, which is owned by Mendoza, were received at the business and structured into separate accounts at various banks to avoid the $10,000 reporting requirements. From February 26, 2008 through May 29, 2012, they structured over 700 deposit totaling $4,543,714.
As part of the conspiracy, on June 4, 2011, Mendoza, Mendoza-Ortiz and Julia Castillo-Caraveo (Castillo-Caraveo), knowingly caused Chopeque Auto Sales, a non-financial trade or business, to fail to file a Federal IRS Form 8300, a report required by law for all currency transactions over $10,000 received by a business. Particularly, they sold a 2004 Dodge Ram 1500 in exchange for $10,500 that was represented by undercover law enforcement officers to be the proceeds of a specified unlawful activity (drug distribution) and that they did so with the intent to conceal the nature of the proceeds of the specified unlawful activity and to avoid IRS Form 8300 reporting requirements. On March 8, 2012, Mendoza and Castillo-Caraveo followed a similar pattern and sold a 2008 Chevrolet Silverado 1500 in exchange for $20,900 that was represented by undercover law enforcement officers to be the proceeds of a specified unlawful activity (drug distribution); no IRS From 8300 was filed.
The defendants conspired to conceal the nature and source of the specified unlawful activity and attempted to launder drug proceeds. Particularly, Chopeque Auto Sales sold automobiles to known drug dealers, prepared false documents relating to the sale of vehicles to known drug dealers, structured currency deposits to conceal the source, falsely claimed to law enforcement authorities to be a valid lien holder of a seized vehicle in order to assist a known drug dealer in seeking the return of the vehicle. Upon conviction of the offenses above, they shall forfeit to the United States all of the defendants right, title and interest in all property, real or personal, involved in such offenses, or all proceeds traceable to such property, for which the defendants are joint and severally liable.
“Working with our federal, state and local law enforcement partners, we were able to uncover a sophisticated scheme where the defendants hid drug dealing proceeds by laundering the money through the sale of automobiles,” said U.S. Attorney John Walsh.
“I applaud the fine work of the investigators and prosecutors who used very innovative techniques to shut down this financial conspiracy facilitating illicit drug trafficking organizations,” said DEA Denver Field Division Special Agent in Charge Barbra M. Roach.
“Helping drug dealers launder drug money is unacceptable and illegal. IRS CI will work with our law enforcement partners to ensure those who do are brought to justice,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
“Drug smugglers use various creative means to launder and conceal their illegal drug profits,” said Kumar C. Kibble, special agent in charge of HSI Denver. “HSI and our law enforcement counterparts were able to pool our law enforcement authorities and expertise to identify and investigate the significant structured deposits made under the guise of a legitimate car dealership.”
Mendoza was charged with three counts of structuring and three counts of money laundering. Castillo-Caraveo was charged with two counts of structuring and three counts of money laundering. Mendoza-Ortiz was charged with two counts of structuring and two counts of money laundering. If convicted, each count of structuring and money laundering carries a penalty of not more than 10 years in federal prison, and a fine of up to $500,000.
This case was investigated by agents with IRS-Criminal Investigation (IRS-CI), the Drug Enforcement Administration (DEA) and the Department of Homeland Security. In addition, Denver Police Department, Commerce City Police Department, Thornton Police Department, and Department of Revenue – Auto Industry Division assisted in the execution of the warrants.
The case is being prosecuted by Assistant U.S. Attorney Jim Boma. The asset forfeiture is being handled by Assistant U.S. Attorney Tonya Andrews.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
####
Department 0f Justice Settles Civil Complaint Against Two Employers for Violations of Federal Statutes Relating to Military ServiceRead the Press Release
DENVER – A settlement agreement was filed in U.S. District Court in Denver resolving a complaint alleging that two employers, Delaware Resource Group of Oklahoma LLC (DRG), and FlightSafety Services Corporation (FlightSafety), violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by not paying money into two U.S. Air Force veterans’ 401(k) plans, announced Assistant Attorney General for the Civil Rights Division Thomas E. Perez and U.S. Attorney for the District of Colorado John Walsh.
USERRA prohibits employers from discriminating against or taking any adverse employment action against any person because that person has performed service in the uniformed services. USERRA also allows returning service members to make “catch up” contributions to their civilian employers’ 401(k) retirement plans, and receive the employers’ matching contributions that were missed while they were on military leave. The Justice Department’s Civil Rights Division and the U.S. Attorney’s Offices have given a high priority to the enforcement of service members’ rights under USERRA.
The two veterans, Michael J. Sipos and Gary D. Smith, are the plaintiffs in this case. According to the complaint, their employers, DRG and FlightSafety, violated USERRA by not allowing the veterans to make “catch up” contributions to their company’s 401(k) plans upon their return from duty and not matching contributions that the veterans missed while on active duty in the Air Force.Under the settlement agreement, the defendants, DRG and FlightSafety, will allow the plaintiffs to make their “catch up” contributions to theirrespective 401(k) plans. In addition, DRG and FlightSafety will provide matching employer contributions to each of the veterans’ 401(k) plans.
“We rely on our servicemembers to protect us, and the Department of Justice is committed to ensuring that their civilian employment benefits are protected as well,” said Assistant Attorney General Perez. “The department commends FlightSafety and DRG for agreeing to resolve this matter amicably without contested litigation, which shows a good faith commitment by the companies to ensure that they are in compliance with USERRA.”
The case was litigated by Assistant U.S. Attorney Juan G. Villaseñor in the U.S. Attorney’s Office for the District of Colorado, in collaboration with the Civil Rights Division of the Justice Department. The lawsuit was filed after the Veterans’ Employment and Training Service (VETS) of the Department of Labor referred Sipos’ and Smith’s complaints to the Justice Department upon completion of its investigation and failed settlement efforts. The Departments of Labor and Justice work cooperatively together to protect the jobs and benefits of National Guard and Reserve service members upon their return to civilian life. More information about USERRA is available at www.dol.gov/vets/programs/userra/main.htm
####
Department 0f Justice Settles Civil Complaint Against Two Employers for Violations of Federal Statutes Relating to Military ServiceRead the Press Release
DENVER – A settlement agreement was filed in U.S. District Court in Denver resolving a complaint alleging that two employers, Delaware Resource Group of Oklahoma LLC (DRG), and FlightSafety Services Corporation (FlightSafety), violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by not paying money into two U.S. Air Force veterans’ 401(k) plans, announced Assistant Attorney General for the Civil Rights Division Thomas E. Perez and U.S. Attorney for the District of Colorado John Walsh.
USERRA prohibits employers from discriminating against or taking any adverse employment action against any person because that person has performed service in the uniformed services. USERRA also allows returning service members to make “catch up” contributions to their civilian employers’ 401(k) retirement plans, and receive the employers’ matching contributions that were missed while they were on military leave. The Justice Department’s Civil Rights Division and the U.S. Attorney’s Offices have given a high priority to the enforcement of service members’ rights under USERRA.
The two veterans, Michael J. Sipos and Gary D. Smith, are the plaintiffs in this case. According to the complaint, their employers, DRG and FlightSafety, violated USERRA by not allowing the veterans to make “catch up” contributions to their company’s 401(k) plans upon their return from duty and not matching contributions that the veterans missed while on active duty in the Air Force.Under the settlement agreement, the defendants, DRG and FlightSafety, will allow the plaintiffs to make their “catch up” contributions to theirrespective 401(k) plans. In addition, DRG and FlightSafety will provide matching employer contributions to each of the veterans’ 401(k) plans.
“We rely on our servicemembers to protect us, and the Department of Justice is committed to ensuring that their civilian employment benefits are protected as well,” said Assistant Attorney General Perez. “The department commends FlightSafety and DRG for agreeing to resolve this matter amicably without contested litigation, which shows a good faith commitment by the companies to ensure that they are in compliance with USERRA.”
The case was litigated by Assistant U.S. Attorney Juan G. Villaseñor in the U.S. Attorney’s Office for the District of Colorado, in collaboration with the Civil Rights Division of the Justice Department. The lawsuit was filed after the Veterans’ Employment and Training Service (VETS) of the Department of Labor referred Sipos’ and Smith’s complaints to the Justice Department upon completion of its investigation and failed settlement efforts. The Departments of Labor and Justice work cooperatively together to protect the jobs and benefits of National Guard and Reserve service members upon their return to civilian life. More information about USERRA is available at www.dol.gov/vets/programs/userra/main.htm
####
Colorado U.S. Attorney John Walsh Testifies Before U.S. Senate Judiciary Committee in Support of Proposed Assault Weapon and High Capacity Magazine BansRead the Press Release
DENVER – Colorado United States Attorney John Walsh this morning appeared before the United States Senate Judiciary Committee, where he testified on behalf of the Department of Justice in support of the proposed Assault Weapon ban and High Capacity Magazine Ban. The hearing was entitled “Hearing on the assault weapon ban of 2013.”
During his testimony, U.S. Attorney Walsh addressed the Assault Weapons Ban and the High-Capacity Magazine Ban. Walsh’s testimony can be found attached to this document. A video of the hearing can be found at: http://www.c-span.org/Events/Senate-Judiciary-Cmte-Looks-at-Assault-Weapons-Ban/10737438374-1/
Former Colorado Springs Man Sentenced to 43 Months in Prison for Orchestrating Mortgage Fraud SchemeRead the Press Release
DENVER – William M. Silvi, age 45, was sentenced today by U.S. District Court Judge Wiley Y. Daniel to serve 43 months in federal prison for wire fraud U.S. Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Silvi was ordered to spend 3 years on supervised release after he serves his term of imprisonment. Judge Daniel also ordered Silvi to pay restitution totaling $606,096.81. Silvi is currently serving time for state charges and will be turned over to the Bureau of Prisons once his time is served on the state charges.
Silvi was indicted by a Federal Grand Jury in Denver on August 9, 2010. At the time of his indictment, he was in custody in New Jersey pending state charges, but lived in Colorado Springs during the time of the offenses. Silvi appeared in Denver on March 14, 2011 where he was advised of the charges pending against him and remand in custody. He pled guilty on November 2, 2011 to one count of wire fraud.
According to the information contained in the indictment as well as the plea agreement, beginning in March 2005, and continuing through January 2008, Silvi devised and executed a scheme to defraud various financial institutions and commercial lenders in connection with the residential mortgage loans related to eleven properties in Colorado Springs, Larkspur and Fountain, CO, some of which were bought and sold multiple times during the scheme.
To execute the fraudulent scheme, Silvi found people he knew to purchase residential properties. In order to qualify each buyer for the mortgage loans needed to purchase these residential properties, Silvi made false statements on the Uniform Residential Loan Applications ("URLA") and in the supporting documentation, including: (1) inflating or fabricating the employment income, rental income, and/or assets of the buyer; (2) providing a false IRS Form W-2 and/or paycheck stub for the buyer; (3) false verifications of rent for the buyer; and (4) falsely stating that the property would be a primary residence for the buyer.
As part of the transactions for these property purchases, Silvi and the property seller inflated the sale price of the property so that Silvi would receive the inflated portion of the sale price at, or shortly after, the closing of the purchase transaction. This money was usually paid to the seller at the closing of the purchase transaction; however, the seller then paid Silvi from the disbursement funds. These disbursements to Silvi were not disclosed on the HUD-1 Settlement Statement. In furtherance and execution of the scheme, interstate wires were used to send the funds for the mortgage loans.
"In this case, the defendant approached people he knew to participate in this mortgage fraud scheme," said U.S. Attorney John Walsh. "Entangling friends with false promises of easy money will almost certainly get you in trouble, including going to prison."
"Mortgage fraud creates significant financial harm to individuals, businesses and our economy,” 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 be held accountable."
This case was investigated by Internal Revenue Service - Criminal Investigation (IRS - CI), and was prosecuted by Assistant U.S. Attorney Pegeen Rhyne.
####
Colorado Springs Man Sentenced to Federal Prison for Armed Robbery and Possession of A Firearm During A Crime of ViolenceRead the Press Release
DENVER – Joshua Bodean Smith, age 22, of Colorado Springs, was sentenced today by U.S. District Court Judge Christine M. Arguello to serve 483 months (40 years and 3 months) followed by 8 years of supervised release for two counts of armed robbery (Hobbs Act) and two counts of possession of a firearm during a crime of violence, United States Attorney John Walsh and FBI Denver Special Agent in Charge James Yacone announced. Smith, who appeared at the hearing in custody, was also ordered to pay $895 in restitution to the two victims of his crime.
Smith was charged by Criminal Complaint on November 16, 2010. He was indicted by a federal grand jury on December 13, 2010. On November 21, 2012, the defendant was found guilty following a two week trial of the robbery (Hobbs Act) and gun charges. Smith was sentenced today, February 22, 2013.
According to the indictment, and facts presented at trial, on August 31, 2010 Smith, robbed a Cricket Communication Store located on South Nevada Avenue in Colorado Springs, Colorado. He used a firearm in relation to that crime of violence. On October 11, 2010, Smith robbed a Burger King restaurant on base within Fort Carson. He used a firearm during the commission of that crime of violence as well.
This case was investigated by the Federal Bureau of Investigation, the Colorado Springs Police Department and the Army Criminal Investigation Division at Fort Carson.
This case was prosecuted by Assistant U.S. Attorney Kurt Bohn and Special Assistant U.S. Attorney Beth Gibson.
####
Phoday Dumbuya to Appear in U.S. District Court in Denver This AfternoonRead the Press Release
DENVER – Phoday Dumbuya, who is charged with failure to depart after escaping from two ICE officers at Denver International Airport on January 29, 2013, will appear this afternoon in federal court at 2:00 p.m. before U.S. Magistrate Judge Kristen L. Mix. Magistrate Judge Mix is located in the Byron G. Rogers Courthouse, in courtroom C204. If convicted of failure to depart, Dumbuya faces not more than 4 years in federal prison, and up to a $250,000 fine. The defendant in this case is presumed innocent unless and until proven guilty.
####
Metro Denver Man Found Guilty of Health Care Related Fraud Following Jury TrialRead the Press Release
DENVER – Late yesterday afternoon a federal jury found a Metro Denver man guilty of 17 counts of mail fraud, the United States Attorney’s Office and the Food and Drug Administration’s Office of Criminal Investigations announced. John Edward Mullikin, age 51 of Arvada, was remanded into the custody of the U.S. Marshals Service immediately after the guilty verdicts were announced. The case was heard by Senior Tenth Circuit Court Judge David Ebel, who is scheduled to sentence the defendant on May 15th at 2:00pm. Mullikin faces a maximum sentence of 20 years in federal prison and a fine of not more than $250,000.00 per count for each of the 17 counts.
According to the Indictment, as well as evidence presented to the jury, 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 Mullikinpromoted 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 alsoopened 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 defendant used the vulnerability of people seeking health solutions to steal from them,” said U.S. Attorney John Walsh. “Thanks to the excellent team work between the U.S. Attorney’s Office and the FDA, a man with no ethics has been convicted of 17 felonies related to mail fraud.”
“This verdict demonstrates the FDA’s commitment to investigating cases of modern-day snake oil salesman; those individuals and businesses that bilk people of their money with the false promise of phony medical treatments,” said Special Agent in Charge Patrick J. Holland of FDA’s Office of Criminal Investigations, Kansas City Field Office. “We applaud the U.S. Attorney’s Office for their commitment and dedication to this case.”
The Mullikin case was investigated by the United States Food and Drug Administration Office of Criminal Investigations.
The defendant was prosecuted by Assistant U.S. Attorney Jaime Pena.
####
Former Cortez Resident Indicted for Wire Fraud and Income Tax EvasionRead the Press Release
DENVER – Brian K. Shoults, age 42, of Mesa, Arizona, was indicted last week by a federal grand jury in Durango, Colorado, for wire fraud and income tax evasion, the United States Attorney’s Office and IRS – Criminal Investigation announced. Shoults was arrested on February 8, 2013, and on that date appeared before a U.S. Magistrate Judge in Durango. He was released on a $50,000 unsecured bond. He is expected to be back in court on April 19, 2013 for arraignment, which will also take place in Durango.
According to the indictment, from April 8, 2008, through August 25, 2011, Shoults executed a scheme to defraud the Copy Shop Inc. (doing business as Office Outpost), located in Cortez, Colorado, in an effort to embezzle more than $250,000 from that company.
Shoults, a bookkeeper for Office Outpost, would allegedly electronically wire money from the Office Outpost accounts for his own personal use without the knowledge of any other employees or owners of the Office Outpost. He electronically logged into Office Out Post's accounts at Community Banks of Colorado, located in Cortez, Colorado, to transfer money from the Office Outpost's accounts into two of his personal bank accounts over which he had signatory authority.
As bookkeeper, Shoults oversaw Office Outpost's payroll, including the calculation and payment of payroll checks to Office Outpost's employees. He had authority to access Office Outpost accounts and draw on those funds in order to pay payroll expenses as well as other business expenses incurred by Office Outpost. He also had sole responsibility for reconciling the Office Outpost's bank statements with its internal books and records. This allowed Shoults to write checks from the Office Outpost's accounts without supervision from or the knowledge of other employees or owners of Office Outpost.
Shoults allegedly committed tax evasion for years 2008, 2009, 2010, and 2011 by willfully failing to report all income he actually received from Office Outpost. For each corresponding year, he was required to report all income on his U.S. Individual Income Tax Form 1040 which was required to be filed the following year by April 15. Using his position at Office Outpost, he manipulated his W-2 form to show less income then he actually received from Office Outpost. Such additional taxable income substantially increases the amount of tax due and owing to the United States of America.
“The old adage ‘Trust but Verify’ is particularly important for business’ books and financial records,” said U.S. Attorney John Walsh. “All too often, leaving one person in charge of bookkeeping opens the door to massive theft,” as in this case.”
“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. “It’s important for business to have good internal controls which includes segregation of duties to help reduce fraud and errors.”
“This case like most embezzlement cases is a prime example of how only having one employee overseeing the businesses’ banking accounts can end up in a big loss for the business,” said Cortez Police Department Detective Lieutenant Jim Kingery said. “The thefts start out small but once they’ve tested the waters and gotten away with it they generally go for more. Thankfully with the Cortez Police Department and the IRS – Criminal Investigations working together there can be a positive outcome. When you have specific crimes like this it is good to be able to work with an agency that does this on an everyday basis.”
Shoults was charged with one hundred and twenty-three counts of wire fraud and four counts of attempting to evade or defeat tax (income tax evasion). If convicted of wire fraud he faces not more than 20 years in federal prison, and a fine of up to $250,000 per count. If convicted of tax evasion he faces not more than 5 years in federal prison, and a fine of up to $250,000 per count.
This case was investigated by IRS-Criminal Investigation and the Cortez Police Department. The case is being prosecuted by Assistant U.S. Attorney James Candelaria.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
####
Man Who Interfered with Flight Crew on JetBlue Flight from New York to California SentencedRead the Press Release
DENVER – Marcus Covington, age 33, of New York City, New York, was sentenced today by Senior U.S. District Court Judge Wiley Y. Daniel to serve 172 days (time served) for Interference with a Flight crew, U.S. Attorney John Walsh and FBI Denver Special Agent in Charge James Yacone announced. Following his prison sentence, Covington was ordered to spend 2 years on supervised release. While on supervised release the judge ordered that he not have any alcohol. The defendant was also ordered to pay JetBlue, the victim, $4,170 in restitution for costs incurred in the unexpected landing in Denver.
Covington was first charged by Complaint on August 20, 2012. He was then indicted by a federal grand jury on August 22, 2012. He pled guilty on November 28, 2012, and was sentenced on February 7, 2013.
According to court documents, on August 19, 2012, Covington intimidated a flight crew member and a flight attendant on JetBlue Flight 677, an Airbus A-320, carrying approximately 150 passengers, which was flying from John F. Kennedy International Airport in New York to Los Angeles International Airport. Covington also groped a 27 year-old pregnant female.
As a result of his assaultive and intimidating behavior, an FBI special agent, who was traveling on the flight as a passenger, was asked by flight crew to assist in dealing with Covington. Following consultation with the FBI agent and the Captain of JetBlue Flight 677, the Captain decided to divert the flight to Denver International Airport. The FBI agent and another passenger sat next to Covington to keep him under control while the plane made this unscheduled landing. While seated, the agent noticed Covington taking a number of unidentifiable pills.
Upon the aircraft’s arrival at the gate, Covington was escorted off the plane in handcuffs. While Denver Police Department officers were attempting to get Covington to sit in a chair, he kicked at, and spit on them while threatening to kill them.
This case was investigated by the Denver Police Department and the Federal Bureau of Investigation.
Covington was prosecuted by James Allison, Chief of the Criminal Division of the U.S. Attorney’s Office in Colorado.
####
Boulder Man Arrested for Money Laundering Charges in Relation to Distribution of A Controlled SubstanceRead the Press Release
DENVER – Taylor Smith Hills, age 25, of Boulder, Colorado, was arrested last week for drug related money laundering charges, the United States Attorney’s Office, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), IRS-Criminal Investigation, U.S. Postal Inspection Service and the Boulder County Drug Task Force announced. Hills was indicted by a federal grand jury in Denver on January 29, 2013, for money laundering in relation to distribution of a controlled substance, illegal use of the mail, false statement in a loan application and failure to pay taxes. His initial appearance took place the following day in Denver, where he was advised of his rights.
According to the indictment, from March 31, 2011 through May 1, 2012, Hills allegedly engaged in financial transactions, which transactions involved the proceeds of specified unlawful activity, that is, the distribution of controlled substances. The indictment further states that the defendant allegedly conducted financial transactions while knowing that the property involved in each transaction represented the proceeds of some form of unlawful activity.
Furthermore, Hills did knowingly and willfully make a false statement or report for the purpose of influencing the action of JP Morgan Chase, a federally insured financial institution, in connection with a vehicle loan application. Lastly, beginning on or about April 15, 2012, and continuing through on or about January 29, 2013, Hills knowingly and willfully failed to file an income tax return and pay income tax due and owing to the United States for the calendar year 2011.
Upon conviction of the violations alleged in the indictment Hills shall forfeit to the United States, any and all of the defendants’ right, title and interest in all property, real or personal, involved in such offenses, or all property traceable to such property, including but not limited to the following: 2008 Ducati motorcycle, and U.S. currency located in a Roth IRA.
“Thanks to the joint efforts of local, state and federal law enforcement and prosecutorial agencies, a defendant involved in money laundering proceeds from the distribution of a controlled substance has been arrested for his misdeeds,” said U.S. Attorney John Walsh.
“Drug trafficking organizations have to launder large sums of their illicit proceeds, often through financial institutions and other investment vehicles,” said Kumar Kibble, special agent in charge of HSI Denver.
“This investigation is another example of HSI working with our law enforcement partners to disrupt and dismantle these organizations by removing the assets they need to continue dealing in illicit drugs.”
“This is a great example of law enforcement agencies working together. IRS Criminal Investigation’s goal in drug cases is to help put drug dealers in jail and financially disrupt their efforts by seizing the drug proceeds,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.“Individuals who use the U.S. Mail to facilitate the transportation of illegal drugs and related proceeds are violating federal law. These are priority investigations for our agency,” said Adam Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division.
“The cases that have resulted from this investigation are based on a joint investigation involving the United States Attorney’s Office, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, IRS-Criminal Investigation, U.S. Postal Inspection Service and the Boulder County Drug Task Force. The investigation demonstrates the effectiveness of federal agencies working in cooperation with local law enforcement. The District Attorney’s Office of the 20th Judicial District and the Boulder County Drug Task Force would like to thank all the federal agencies and agents involved in making this investigation possible,” said Ken Kupfner, Chief Trial Deputy, 20th Judicial District.
Taylor Hills was charged with seventeen counts of money laundering, twelve counts of illegal use of the mail, one count of a false statement in loan application, and one count of failing to file a tax return. If convicted of money laundering, he faces not more than 20 years in federal prison, and a fine of up to $500,000 per count. If convicted of illegal use of the mail, he faces not more than 4 years in federal prison, and a fine of up to $250,000 per count. If convicted of false statement in loan application, he faces not more than 30 years in federal prison, and a fine of up to $1,000,000 per count. If convicted of failing to file a tax return, he faces not more than 1 year in federal prison, and a fine of up to $25,000 per count.
This case was investigated by agents with Homeland Security Investigations, IRS-Criminal Investigation, U.S Postal Inspection Service, officers from the Boulder County Drug Task Force and the Boulder County District Attorney’s Office. The case is being prosecuted by Assistant U.S. Attorney Michele Korver.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
####
Officer of Now Defunct New Frontier Bank Pleads Guilty to Charges Related to the Bank's CollapseRead the Press Release
DENVER – Gregory William Bell, age 54, of Weld County, Colorado, pled guilty yesterday before Senior U.S. District Court Judge Lewis T. Babcock to one count of false bank entries, one count of bank misapplication, one count of bank fraud and one count of money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation and the FDIC-Office of the Inspector General announced. Bell, who appeared at the hearing free on bond, is scheduled to return on April 30, 2013 for sentencing. The judge continued Bell’s bond.
Bell was originally charged by Information on December 5, 2012. According to the facts contained in the Information as well as the stipulated facts contained in the plea agreement, Gregory Bell was an officer of New Frontier Bank, which was insured by the Federal Deposit Insurance Corporation. On October 31, 2005, Bell made a false entry in a bank book, report or statement with intent to defraud the bank and deceive one or more of the bank’s officers. Specifically, the defendant allegedly prepared a form entitled “Credit Presentation and Committee Approval” for a $5,583,500 loan to two individuals on which he failed to disclose that a certificate of deposit, the value of which was $106,759.00, which the two individuals pledged as collateral, in fact belonged to another individual and that Bell would benefit personally as a result of the loan. On March 14, 2008, Bell willfully misapplied approximately $662,045.79 of New Frontier’s funds.
On June 17, 2008, and continuing until September 9, 2008, Bell devised and participated in a scheme to defraud the bank and to obtain moneys owned by and under the custody and control of the bank by means of materially false and fraudulent pretenses. As part of the scheme, Bell, knowing that state and federal regulators had directed New Frontier Bank to raise capital, arranged for eight bank customers to borrow money from the bank and use the proceeds of those loans to purchase shares of bank stock so New Frontier could inject some of the money paid for the stock into the bank. As part of the scheme, Bell failed to disclose the deteriorating condition of the bank to its customers. He also prepared and caused others to prepare bank forms entitled “Credit Presentation and Committee Approval” for the eight loans described above. Bell failed to disclose on the credit presentation forms that proceeds of the loans would be used to purchase shares of stock in New Frontier Bancorp.
Bell also allegedly caused false and misleading statements to be included on the credit presentation forms. He presented the credit presentation forms to bank loan committees and caused other persons to present them to bank loan committees. As part of the scheme, Bell caused the bank to loan approximately $20,145,979.23 to the eight borrowers mentioned above, and caused those borrowers to use approximately $4,310,215.00 of those proceeds to purchase shares of stock in the bank. On August 29, 2008, Bell executed a scheme by causing the bank to transfer approximately $260,000.00 of the proceeds of one of the bank loans to an account of one of the borrowers of that loan.
On June 27, 2008, Bell conducted a financial transaction affecting interstate commerce. Specifically, he deposited a check in the amount of $160,000.00 into his account at the bank. The transaction involved the proceeds of a specified unlawful activity, knowing that the transaction was designed in whole or in part to conceal and disguise the source and the ownership of the proceeds of the unlawful activity.
Finally, the Information includes an asset forfeiture allegation, which states that Bell shall forfeit any real or personal property that was involved in the offenses, or any property constituting or derived from the proceeds obtained from the offenses, and any property traceable to any property involved in said offenses.
Bell faces one count of false bank entries, one count of misapplication, and one bank fraud. Each of those counts carry a penalty of not more than 30 years in federal prison and a fine of up to $1,000,000. He also faces one count of money laundering. If convicted of money laundering Bell faces not more than 20 years in federal prison and a fine of up to $500,000, or twice the value of the property involved in the transaction, whichever is greater.
“With this guilty plea, we are one step closer to addressing the fraud and abuse at New Frontier Bank that helped lead to its failure,” said U.S. Attorney John Walsh.
“The FBI will continue to aggressively investigate bank officers and directors when their criminal actions contribute to the failure of financial institutions,” said FBI Denver Special Agent in Charge James Yacone.
“These failures can have a significant impact on the stability of our banking system, and it is the FBI’s duty to investigate bank personnel who violate their fiduciary obligations to the institution and depositors.”
“The IRS, along with our law enforcement partners, will vigorously pursue bank officers and others who defraud banks,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.“The Federal Deposit Insurance Corporation Office of the Inspector General is pleased to join our law enforcement colleagues in announcing this guilty plea. We are particularly concerned when officers of a bank abuse their positions of trust and engage in schemes to deceive the regulators. We will continue to pursue such offenders in the interest of maintaining the integrity of our nation’s banks and protecting the Deposit Insurance Fund,” said FDIC Inspector General Jon T. Rymer.
This case was investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service – Criminal Investigations (IRS-CI), and the Federal Deposit Insurance Corporation – Office of the Inspector General (FDIC-OIG).
The defendant is being prosecuted by Assistant U.S. Attorneys Suneeta Hazra.
####
Longmont Man Sentenced to over 6 Years in Federal Prison for Possession of A Firearm by A Previously Convicted FelonRead the Press Release
DENVER – Shawn Stephen Russell, age 30, of Longmont, Colorado, was sentenced late last week by U.S. District Court Judge Philip A. Brimmer to serve 75 months (over 6 years) in federal prison for possession of a firearm by a convicted felon, United States Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Denver Special Agent in Charge Andrew Traver announced. After serving his prison term, Judge Brimmer ordered Russell to serve 3 years on supervised release. Russell appeared at the sentencing hearing in custody, and was immediately remanded at the hearing’s conclusion.
Russell was indicted by a federal grand jury on April 6, 2011. He pled guilty before Judge Brimmer on September 6, 2011. He was sentenced on February 1, 2013.
According to the stipulated facts contained in the plea agreement, at approximately 2:00 p.m. on November 4, 2010, the renter of a home in Longmont, Colorado reported to police that Russell was at her residence, and that there was a warrant out for his arrest. The renter stated that she decided to come forward because earlier that day, Russell had come to her residence, entered her bedroom, laid down and placed a firearm between his legs while he went to sleep. After the police received the report, the Longmont Police Department and the Boulder County SWAT teams were deployed to the renter’s residence. Police lawfully obtained a state search warrant to look for the firearm the renter saw. SWAT officers then surrounded the renter’s residence, and began making announcements for all individuals in the residence to exit.
Soon after the announcement, a man and woman exited the residence. The man stated that he was upstairs in a bedroom with Russell, and that Russell had an old .41 caliber revolver with a six-inch barrel. The man also stated that after he heard the announcement he saw Russell run down the stairs with the revolver, and heard the defendant say he was going into the crawl space. The defendant also said he was not going back to prison and was going to go out with a bang.
Russell proceeded to engage in an approximately 12-hour standoff with police. During the standoff, the SWAT team repeatedly ordered Russell to exit the residence, using loudspeakers to communicate with him. Police also fired a substantial amount of chemical munitions of various types into the residence in an attempt to force Russell to exit. Eventually the SWAT team entered the residence. At approximately 5:13 a.m. on November 5, 2010, Russell was taken into custody by SWAT team members in the attic of the residence.
Thereafter, police began searching the residence for the firearm. At approximately 7:30 a.m. police located a firearm matching the description given by the various witnesses who had exited the residence. The firearm, a Smith & Wesson Model 58, .41 caliber revolver, was in the crawl space. It was loaded with four rounds of .41 caliber ammunition.
Russell, who was a convicted felon who possessed the revolver, had nine separate convictions. The convictions were:
1. Second degree burglary in Larimer County
2. Identity theft in Larimer County
3. Check fraud in Larimer County
4. Aggravated motor vehicle theft in Boulder County
5. Identity theft in Boulder County
6. Identity theft in Boulder County
7. Attempted first degree trespass of an automobile in Boulder County
8. Menacing with a deadly weapon in Boulder County
9. Attempted stalking in Boulder County“Shawn Stephen Russell showed bad judgment 9 different times before this case – and was convicted of 9 different felonies,” said U.S. Attorney John Walsh. “His 10th felony came after an armed standoff. Longmont is a safer place today because this 10 time felon is behind bars.”
“ATF is committed to protecting the citizens of Colorado,” said Special Agent in Charge, Andrew Traver. “We will continue to offer our resources and expertise in making sure violent offenders are taken off our streets and put behind bars.”
“The great but dangerous work performed by our police officers in removing Russell from our community will make this neighborhood and our City safer,” said Longmont Public Safety Chief Mike Butler.
This case was investigated by the Longmont Police Department and ATF with support from the Boulder County SWAT team.
Russell was prosecuted by Assistant U.S. Attorney Ryan Bergsieker.
####
Littleton Man Sentenced for Shredding Documents in an Attempt to Obstruct Mortgage Fraud InvestigationRead the Press Release
DENVER – Justin H. Knight, age 36, of Littleton, Colorado, was sentenced last Friday by U.S. District Court Judge Robert E. Blackburn to serve five years probation, with the first 12 months in home detention for shredding documents in an attempt to obstruct an investigation into a mortgage fraud scheme, U.S. Attorney John Walsh, FBI Denver Special Agent in Charge James Yacone, IRS – Criminal Investigation Special Agent in Charge Stephen Boyd, and U.S. Postal Inspector in Charge Adam Behnen announced. Judge Blackburn ordered Knight to pay a $100 special assessment as well as the cost of the electronic monitoring.
Knight was charged by an Information on November 14, 2011. He pled guilty to destruction of records on February 10, 2012. He was sentenced on February 1, 2013. As part of the larger mortgage fraud scheme, Peter V. Capra, Demetrious G. Gianopoulos and Brian Waring were charged in three separate indictments.
Gianopoulos pled guilty to one count of money laundering on May 10, 2011 and was sentenced to serve 5 years probation. Warning pled guilty to one count of conspiracy to commit mail fraud, wire fraud, and money laundering and is expected to be sentenced later this year. Capra was indicted on April 25, 2012, which was then followed by a superseding indictment on May 23, 2012 for obstruction of justice, mail fraud, wire fraud and money laundering. The Capra case is currently scheduled for trial on September 23, 2013 in front of Judge R. Brooke Jackson.
According to court documents, between on or about January 1, 2005, and continuing through on or about July 31, 2008, in the State and District of Colorado and elsewhere, Capra and others knowingly executed and attempted to execute a scheme to defraud various mortgage lenders. The scheme was executed in connection with applications for residential mortgage loans and related documents associated with real estate purchases including but not limited to properties in Parker, Colorado.
Capra was the president of Golden Design Group, Inc. (GDG), a company which built and sold houses in the Denver metropolitan area. It was a part of the scheme to structure transactions involving GDG homes to allow buyers to receive substantial amounts of the lenders’ money at the time of closing without the knowledge of the lenders. The scheme also allowed GDG to sell a large volume of homes to otherwise unwilling or unqualified buyers. The perpetrators of the scheme would arrange for the buyers to submit applications for first and second mortgages to support their purchases of GDG homes. Many of the buyers bought multiple properties at or near the same time.
Loan applications for the buyers were submitted through several different mortgage brokers, which included false information submitted in connection with the applications, including materially false and fraudulent representations about the buyers’ income, liabilities, source of down payment, and intent to occupy the properties as their primary residences. Applications for different properties were also submitted to different lenders to prevent the lenders from discovering the extent of the buyers’ real estate liabilities. Furthermore, at closing or soon thereafter, funds were distributed to the buyers in ways that prevented the lenders from discovering that these funds were actually going to the buyers.
In the Knight case mentioned above, on April 10, 2007, a grand jury subpoena was served on defendant Knight's employer at the time, GDG. After a meeting with Capra, Knight and another employee of GDG began shredding documents responsive to the subpoena allegedly based on instructions received from Capra. The shredding was accomplished using a new, high-volume shredder purchased by Capra for this task. Documents that were shredded included sales contracts between GDG and various other people involved in the mortgage fraud scheme.
“Targets of an investigation may think that obstructing a federal investigation by shredding subpoenaed documents will protect them from prosecution. As this case demonstrates, the exact opposite is true,” said U.S. Attorney John Walsh.
“The FBI will continue to work with our federal partners to pursue those who defraud financial institutions and also those who attempt to obstruct justice by destroying critical evidence,” said FBI Denver Special Agent in Charge James Yacone.
“We are very appreciative of the working relationship between our agency, the Federal Bureau of Investigation, and the Internal Revenue Service – Criminal Investigation, as it was instrumental in bringing these subjects to justice in such a complex investigation,” said U.S. Postal Inspector in Charge Adam Behnen.
“IRS – Criminal Investigation stands ready to partner with law enforcement agencies to pursue individuals who commit Mortgage Fraud," said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
This case was investigated by IRS – Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service. The case was prosecuted by Assistant U.S. Attorney Matthew Kirsch.
If convicted, Capra faces not more than 10 years in federal prison, and up to a $250,000 fine for obstruction of justice. He faces not more 20 years in federal prison, and up to a $250,000 fine, or two times the gain or loss from the offense, for each of the 14 counts of wire fraud and for each of the 2 counts of mail fraud. Capra faces not more than 10 years in federal prison, and up to a $250,000 fine, or the value of the property involved in the transaction, or both, for each of the 10 counts of money laundering.
The charges against Peter Capra are allegations, and he is presumed innocent unless and until proven guilty.
####
Westminster Man Is Sentenced to 72 Months in Prison for Orchestrating A $1.7 Million Real Estate SchemeRead the Press Release
DENVER – Steven J. Mascarenas, 53, of Westminster, Colorado, was sentenced recently by U.S. District Court Judge Robert E. Blackburn to serve 72 months in federal prison for wire fraud, making a false statement to a pretrial services officer, and escape, U.S. Attorney John Walsh, Denver FBI Special Agent in Charge James Yacone and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Mascarenas was ordered to spend 3 years on supervised release after he serves his term of imprisonment. Judge Blackburn also ordered Mascarenas to pay restitution totaling $1,776,152.21. Mascarenas will surrender to the Bureau of Prisons once a facility is designated.
Steven Mascarenas was indicted on April 22, 2010 along with co-defendants Kathy Mascarenas (wife of Steven) and Katrina Roberts. He pled guilty on July 3, 2012 before Judge Blackburn. Katrina Roberts pled guilty and was sentenced to 20 months in prison on July 27, 2012. Kathy Mascarenas pled guilty and was sentenced to 24 months in prison on November 6, 2012.
According to court documents, in 2004, Defendant Steven J. Mascarenas, then an attorney and licensed real estate broker, orchestrated the purchase and resale of residential properties in “The Broadlands”, a subdivision in Broomfield, Colorado. He arranged to have individuals serve as “credit buyers” to obtain loans, purchase the properties, and resell them shortly thereafter at inflated prices to other “credit buyers” in his select group. He concealed from the lenders that these “credit buyers” were only acting at his direction and were being compensated after the closings for their participation in having obtained the loans and purchased the properties.
Mascarenas had Roberts prepare appraisal reports in which she fraudulently inflated the fair market values of the properties by $100,000 to $325,000. To make the inflated values in all of her reports appear legitimate, she falsely represented that the purchases, which were actually sales at market value, were “distressed” sales or “quick” sales below market value.
Then, based on the fraudulent appraisals, Steven Mascarenas set the prices for the resales far beyond their true market values, and arranged for the buyers to obtain 100% financing for them.
To ensure that the desired funding would be approved for the buyers for both the purchases and the resales, Steven Mascarenas caused false information about their qualifications to be incorporated into their loan applications to enable them to qualify for the loans.
He caused the proceeds from the second sales to be directed to entities of his choice.
Kathy Mascarenas conducted financial transactions as necessary to facilitate, perpetuate, and conceal the fraud.
All of the loans went into default, and the loss to the lenders was approximately $1,776,162.21.
While out on bond in the Fall of 2011, Mascarenas repeatedly lied to his supervising pretrial services officer, telling him that he was employed making sandwiches at a local Quizno’s restaurant. In fact, he was managing the store under the assumed name of “Steven Jay”, in violation of the conditions of his bond.
In June of 2011, as a condition of Steven’s bond, he was required to reside in a halfway house and he was not permitted to leave the facility without permission. Hours before he was to be taken to a prison facility, he fled. An arrest warrant was issued, and on December 4, 2011, Steven was arrested by the Lakewood Police department at a motel in Lakewood, Colorado.
“Mortgage fraud harms everyone involved in buying a home – buyers, appraisers, real estate agents, and bankers,” said U.S. Attorney John Walsh. “Lying on mortgage applications is a fraud, and a federal criminal felony. As the financial crisis of 2007 and 2008 showed us, following the rules in real estate transactions matters – and those who don’t, face time in federal prison.”
“Mortgage fraud has had a significant impact in Colorado,” said Denver FBI Special Agent in Charge James Yacone. “Mascarenas was an attorney and licensed realtor who used his professional license to instill trust in others. His conviction and recent sentencing sends a clear message that using positions of trust to commit fraud will not be tolerated.”
“Mortgage fraud erodes our economy, and threatens the financial health of the communities in which we live; this sentence reminds us there are consequences for committing such fraud," said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
This case was investigated by the Federal Bureau of Investigation and the IRS Criminal Investigation and prosecuted by Assistant U.S. Attorneys Linda Kaufman and James Allison.
####
Thornton Man Sentenced to 90 Months in Federal Prison for Possession of Child PornographyRead the Press Release
DENVER – Daniel Ivan Ashby, age 40, of Thornton, Colorado, was sentenced late last week by Senior U.S. District Court Judge Wiley Y. Daniel to serve 90 months in federal prison for possession of child pornography, United States Attorney John Walsh and FBI Special Agent in Charge James Yacone announced. Following the 90 month (over 7 year) sentence, Ashby was ordered to serve 5 years on supervised release. Ashby appeared at the sentencing hearing on bond, and was remanded at its conclusion.
In 2011, Ashby was affiliated with Calvary Community Baptist Church and Community Christian School in Northglenn as a school administrator.
Ashby was indicted by a federal grand jury in Denver on July 9, 2012. He pled guilty to the possession of child pornography charge on October 4, 2012. He was sentenced on January 25, 2013.
According to the stipulated facts contained in a plea agreement, an investigation initiated by the FBI determined that a particular computer was sharing depictions that could be child pornography files from a computer that was used both in Peru and in Colorado. Further investigation determined that at least 125 such files of interest had been shared from the target computer between January 5 and October 30, 2011. FBI agents then determined through investigative means that the computer had accessed the internet from an Internet Protocol (IP) address assigned to a residence in Thornton, Colorado, where Daniel Ivan Ashby resided. FBI agents also found that the potential child pornography images had also been shared from another Colorado IP address, this one assigned to Calvary Community Baptist Church in Northglenn. Calvary Community Baptist Church operates a school named Community Christian School. The school’s website identified Ashby as the school administrator.
During undercover computer sessions, FBI agents were able to determine that the computer in Thornton was sharing multiple files of interest. After downloading the files of interest the FBI determined the images were in fact child pornography. On December 2, 2011, the FBI obtained a search warrant for the Thornton residential address. During the execution of that warrant, law enforcement officers seized several electronic items, including two laptops. Interviews with the occupants of the residence revealed that Daniel Ivan Ashby did download child pornography.
Following the execution of the search warrant in Thornton, law enforcement officers and Ashby drove separately to Calvary Community Baptist Church/Community Christian School in Northglenn. Agents obtained consent to search the computers at this location. Church and school computers did not contain child pornography.
“The defendant in this case ran a Christian school while possessing child pornography,” said U.S. Attorney John Walsh. “His 90 month sentence demonstrates that those who possess child pornography, especially those in a position of trust, face lengthy prison sentences.”
“Individuals who are investigated, prosecuted and appropriately sentenced for their heinous acts against defenseless children can never be disregarded as merely someone who is looking at pictures,” said FBI Denver Special Agent in Charge James Yacone. “This case demonstrates what investigative agencies and our United States Attorney’s Office can accomplish by working together.”
This case was investigated by the Federal Bureau of Investigation (FBI), Innocent Images Task Force.
Ashby 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."
####
Morrison Man Indicted by Federal Grand Jury for Possession of Destructive DevicesRead the Press Release
DENVER – Richard Lawrence Sandberg, age 35, of Morrison, Colorado, was indicted by a federal grand jury in Denver earlier this week on three firearm (destructive device) related charges United States Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives Special Agent in Charge Andrew Traver announced. The indictment was obtained on January 28, 2013. Sandberg was originally arrested on January 24, 2013 based on a Criminal Complaint obtained on January 23, 2013.
On January 29, 2013, the government argued during a detention hearing that Sandberg should be held without bond pending a resolution of his case. That hearing was continued until today, January 30, 2013, to allow the court and defense to view a video recorded by an ATF undercover agent. U.S. Magistrate Judge Michael J. Watanabe after reviewing the video ordered that Sandberg be held without bond pending a resolution of his case.
Counts one and two of the indictment charge Sandberg with possession of firearms (destructive devices) not registered to him in the National Firearms Registration and Transfer Record. Count three of the indictment charges Sandberg with one count of being a prohibited person in possession of firearms (destructive devices) because he is an unlawful user of and addicted to any controlled substance.
According to the original affidavit in support of the Criminal Complaint, the investigation began when a Denver Police detective learned from a confidential informant that an individual who possessed destructive devices. The detective contacted ATF regarding this information. ATF, acting on this information, worked with the confidential informant to introduce an undercover agent to meet the subject, who turned out to be Richard Sandberg. After a number of phone conversations the undercover agent and the confidential informant went to Sandberg’s residence, where they were shown the devices. Sandberg reportedly said he wanted to trade the devices for cocaine, or for $300 each.
During the meeting, Sandberg made numerous threatening statements towards law enforcement and specifically 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.
Sandberg is charged with two counts of possession of a firearm (which includes destructive devices) which is not registered in the National Firearms Registration and Transfer Record. If convicted, the defendant faces not more than 10 years in federal prison, and a fine of not more than $10,000. He also faces one count of possession of a firearm (which includes destructive devices) by an individual who is an unlawful user or addict to any controlled substance. If convicted of that count, he faces not more than 10 years in federal prison, and a fine of up to $250,000.
This case was investigated by ATF, the Denver Police Department and the Jefferson County Sheriff’s Office. The Denver Police Department Bomb Squad, the Jefferson County Sheriff Bomb Squad and the Colorado Springs Regional Explosives Unit provided assistance at Sandberg’s residence, where the destructive devices were found.
Sandberg is being prosecuted by Assistant U.S. Attorney Jeremy Sibert.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
####
Morrison Man Arrested for Possession of Improvised Explosive DevicesRead the Press Release
DENVER – Richard Lawrence Sandberg, age 35, of Morrison, Colorado, was arrested this morning by Special Agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), United States Attorney John Walsh and ATF Special Agent in Charge Andrew Traver announced. Sandberg appeared in U.S. District Court this afternoon where he was advised of his rights and the charges pending against him. He is being held without bond pending a detention hearing. The detention hearing and a preliminary hearing is scheduled for January 29, 2013 at 10:00 a.m. before U.S. Magistrate Judge Michael Watanabe.
Because there was a likelihood of improvised explosive devices in the Sandberg home, ATF agents, working closely with the Jefferson County Sheriff’s Office cordoned off an area around the home while conducting their search. Agents ultimately removed multiple improvised explosive devices, which were taken to a remote location and rendered safe. Three different bomb squads assisted the ATF, including the Denver Police Department Bomb Squad, the Jefferson County Sheriff Bomb Squad and the Colorado Springs Regional Explosives Unit. All were at the scene this morning, documenting evidence and assisting in handling the devices.
According to the affidavit in support of the Criminal Complaint, the investigation began when a Denver Police detective learned from a confidential informant that an individual who possessed improvised explosive devices. The detective contacted ATF regarding this information. ATF, acting on this information, worked with the confidential informant to introduce an undercover agent to meet the subject, who turned out to be Richard Sandberg. After a number of phone conversations the undercover agent and the confidential informant went to Sandberg’s residence, where they were shown improvised explosive devices. Sandberg reportedly said he wanted to trade the devices for cocaine, or for $300 each.
During the meeting Sandberg made numerous threatening statements towards law enforcement and specifically ATF. He stated that he was a former Marine, which is when he learned how to build powerful explosive devices. 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 according to the National Firearms Registry.
“Improvised Explosive Devices – IEDs – are against federal law, and with good reason: They have no legitimate purpose, and put an entire neighborhood at risk,” said U.S. Attorney John Walsh. “Thanks to strong cooperation between state, local and federal law enforcement in this case, a person who built IEDs has been apprehended and those devices recovered and neutralized.”
“ATF agents, working closely with our local law enforcement partners, identified and arrested a potentially violent individual who was posing a significant danger to the community,” said ATF Special Agent in Charge, Andrew Traver. “Through this cooperative effort, we were able to remove numerous destructive devices and stop any further potential harm to the citizens of Morrison, Colorado.”
Sandberg is currently charged with one count of possession of a firearm (which includes explosive devices) which is not registered in the National Firearms Registration and Transfer Record. If convicted, the defendant faces not more than 10 years in federal prison, and a fine of not more than $250,000.
This case was investigated by ATF, the Denver Police Department and the Jefferson County Sheriff’s Office.
Sandberg is being prosecuted by Assistant U.S. Attorney Jeremy Sibert.
A Criminal Complaint is a probable cause charging document. Anyone accused of committing a federal felony crime has a Constitutional right to be indicted by a federal grand jury.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
####
Federal Authorities Share Seized Assets with Arapahoe County Sheriff's OfficeRead the Press Release
DENVER – United States Attorney John Walsh and IRS – Criminal Investigation Special Agent in Charge Stephen Boyd presented the Arapahoe County Sheriff’s Office with a check yesterday for $589,826.12, which represents proceeds forfeited by a criminal defendant who was convicted of operating an interstate prostitution business. The check was presented to Undersheriff David Walcher during a private ceremony.
The money seized, forfeited and ultimate presented to the Arapahoe County Sheriff’s Office was part of a $1 million seizure that came from an investigation into the prostitution business dealings of Michelle Schramm, aka Uk Chin Schramm, of Aurora, Colorado. Schramm was indicted, pled guilty, and was sentenced to four months in federal prison. Part of her plea agreement was the stipulation that she not contest the forfeiture of the money seized by law enforcement. Schramm was deported to South Korea immediately after serving her prison sentence, and she is not allowed to return to the United States.
Beginning on December 7, 2005, and continuing through March 17, 2009, the defendant, Michelle Schramm, controlled and operated three businesses in the Denver Metropolitan Area. The businesses were: Bali Spa, located in Arapahoe County, Malley Spa, located in Northglenn, and Green Garden Spa, also known as Beach Tanning Spa, located in Edgewater. In the course of running her spas, the she regularly provided prostitution services, provided by a rotating staff of prostitutes. The prostitutes would provide messages as well as routinely perform sexual acts for customers in exchange for money.
“The citizens of Arapahoe County and Metro Denver benefit twice thanks to the hard work of the Arapahoe County Sheriff and IRS – Criminal Investigation,” said U.S. Attorney John Walsh. “The community benefits by the dismantling of an interstate prostitution organization. They also benefit because that organization’s financial assets were forfeited and shared with the Arapahoe County Sheriff’s Office, for law enforcement use to protect the citizens of Arapahoe County.”
“In cases like this we take away the prize from the crime,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
“The money received as a result of this effort with our federal partners will benefit public safety at the local level. We will invest the money in our continued efforts to protect the citizens of Arapahoe County,” said Arapahoe County Undersheriff David Walcher.
The Schramm case was investigated by IRS Criminal Investigation and the Arapahoe County Sheriff’s Office.
Schramm was prosecuted by Assistant U.S. Attorneys Tim Neff and Tonya Andrews.
####
Indiana Resident Sentenced to Serve 34 Years in Federal Prison for Child Exploitation CrimesRead the Press Release
DENVER – Steven Raines, age 35, of Fort Wayne, Indiana, was sentenced today by U.S. District Court Judge R. Brooke Jackson to serve 412 months (over 34 years) in federal prison for attempted coercion and enticement (to engage in unlawful sexual activity with a minor child) and distribution of child pornography, United States Attorney John Walsh and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Kumar Kibble announced. Following his prison sentence, Raines was ordered to serve a life time on Supervised Release. He appeared at the hearing in custody, and was remanded immediately after.
Raines was first charged by Criminal Complaint on July 2, 2012. He was indicted by a federal grand jury in Denver on July 9, 2012. He pled guilty on October 24, 2012. He was sentenced on January 22, 2013.
According to the stipulated facts contained in the plea agreement, on April 1, 2012, an HSI Special Agent based in Glenwood Springs, Colorado was chatting online in an undercover capacity. Specifically, the agent’s undercover persona was that of a single mother of two daughters under the age of 16. The agent entered a chat room, accessible by anyone, whose topic focused on sex with children. While in the chat room the undercover agent engaged in a chat with an individual who expressed interest in having sex with the undercover and the two minor children. The individual went on to say that he had been searching for 20 years for someone like the undercover who would provide sexual access to her children, and that he discovered that he was a “pedo” when he was 15. He also said that he had been previously accused of molesting a child to whom he had access, and that he previously attempted to meet someone like the undercover agent in person, but the person failed to show up.
The individual continued chatting and emailing the undercover using his smart phone for the next three months. He told the undercover that he did not have a computer. Eventually investigators identified the individual as 35-year old Steven Raines, who lived in Fort Wayne, Indiana. As the chats between Raines and the undercover progressed, Raines began to send pictures, some of which depicted child pornography. Eventually Raines and the undercover agent began to make plans for him to travel to Colorado in order to have sex with, or rape, the two young girls. The defendant’s main interest, however, was one of the children who was under the age of 6. He discussed wanting to father a child with the undercover agent. Raines also discussed other children he knew from church or his neighborhood, in whom he had a sexual interest and with whom he attempted to have some sort of contact.
As the travel plans were finalized, Raines stated that he was going to bring his child pornography collection with him to Colorado in order to “teach” the girls and stated an interest in producing child pornography with the undercover agent and the two minor girls. The content of the child pornography he was bringing featured mostly prepubescent females engaged in sexual acts and included sadistic or masochistic conduct. During the communications between Raines and the agent he made statements about both of his children, and about sexually molesting a minor child to whom he had access, and that he produced images of child pornography of his sexual abuse of that child.
The defendant began his travel to Colorado on June 29, 2012. He sent texts to the undercover agent during the duration of the trip. On June 30, 2012, near Topeka, Kansas, the defendant’s van broke down. He rented a vehicle to complete his journey. On June 30, 2012, the defendant arrived at a residence in Garfield County, Colorado, which was the address provided to him by the undercover agent. After his arrival he was taken into custody. Agents and officers seized the defendant’s cell phone, which has the capacity to take photographs and video, contained approximately 130 images and 84 videos of child pornography. During a lawful search of Raines’ home, agents and officers found various discs containing child pornography. The National Center for Missing and Exploited Children identified 23 known series of child pornography featuring real child victims among the images the defendant had on his cell phone and in his email.
“Sexually exploiting children carries extraordinarily severe penalties – decades in federal prison, followed by a life term of Supervised Release,” said U.S. Attorney John Walsh. “It is a top priority of the U.S. Attorney’s Office and the Department of Justice to protect children by prosecuting predators such as Raines.”
“This significant prison sentence removes another child predator from the streets for decades to come, which helps protect children everywhere,” said Kumar C. Kibble, special agent in charge of HSI Denver. “Unfortunately, there are many predators like Steven Raines who pretend to lead normal lives. But our HSI special agents, partnering with other law enforcement agencies, go to extraordinary lengths to help protect and rescue these child victims, while also targeting and prosecuting those who prey on them.”
This case was investigated by HSI and the Garfield County Sheriff’s Office. The HSI Resident Agent in Charge’s Office in Indianapolis, and the United States Attorney’s Office in Fort Wayne, Indiana, also played an important role in this investigation and prosecution.
Raines was prosecuted by Assistant U.S. Attorneys Michelle Heldmyer and ICE Special Assistant U.S. Attorney Lillian Alves with support from 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.”
####
Colorado Horse Breeder Arrested for Income Tax EvasionRead the Press Release
DENVER – Nikitis A. Mangeris, age 69, of Berthoud, Colorado, was arrested last Friday (January 18, 2013) at his home for income tax evasion, the United States Attorney’s Office and IRS Criminal Investigation announced. Mangeris was indicted by a federal grand jury in Denver on January 9, 2013 for tax evasion and aiding and abetting in tax evasion. The indictment remained sealed until his arrest and subsequent initial appearance. Mangeris appeared in U.S. District Court in Denver on the day he was arrested and was advised of his rights and the charges pending against him. Mangeris was then released on a $10,000 unsecured personal appearance bond. He is scheduled to appear in court on January 24, 2013 at 10:30 a.m. for arraignment.
According to the indictment, Mangeris operated the Les Beaux Chevaux and Tenet Investment Group businesses. The businesses held Arabian horses (“businesses’ horses”) and provided horse breeding services. Approximately twelve of the businesses’ horses were registered with the Arabian Horse Association in the name of Les Beaux Chevaux and approximately two of the businesses’ horses were registered with the Arabian Horse Association in the name of Tenet Investment Group. Mangeris kept and cared for, at his residence, some of the horses including a breeding stallion known as MHR Nobility.
Mangeris has not filed a U.S. Individual Income Tax Return, Internal Revenue Service (“IRS”) Form 1040, for calendar years 1997-2003, 2005-2007, or 2010. Beginning in 2002, the IRS conducted an audit of Mangeris for calendar years 1997-1999. On or around February 6, 2004, Mangeris signed an IRS Form 4549, consenting to the IRS assessment and collection of back taxes, penalties, and interest from him for calendar years 1997, 1998, and 1999 for amounts totaling approximately $850,235.77, $18,349.27, and $23,370.24, respectively.
Despite agreeing to these back taxes, penalties, and interest, Mangeris has evaded payment of these amounts. In or around 2004 and 2007, he filed IRS Forms, 433-A - Collection Information Statement for Wage Earners and Self-Employed Individuals, which failed to list all income, assets, liabilities and other information. In or around 2005, he filed an IRS Form 1040, for calendar year 2004, which failed to report, on a Schedule C or otherwise, substantial amounts of income from his horse breeding businesses and receipts from semen sales. Furthermore, Mangeris directed third-party buyers to make payments for the purchase of semen and offspring derived from his businesses’ horses to other individuals and entities holding bank accounts he controlled and paid his own personal expenses through such accounts.
“With tax season around the corner this indictment should serve as a reminder that anyone who evades paying their taxes will be held criminally accountable,” said U.S. Attorney John Walsh.
“As tax filing season approaches, this is a reminder that all taxpayers should file complete and accurate tax returns; all income regardless of the source is taxable,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
Mangeris was charged with one count of income tax evasion and aiding and abetting. If convicted, he faces not more than 5 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. Attorney Kenneth Harmon and Special Assistant U.S. Attorney Kevin Sweeney. Kevin Sweeney is a trial attorney from the Justice Department’s Tax Division,
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
####
Chief Executive Officer of Superior Discount Coins Appears in Court in Colorado for Defrauding Gold Coin Investors Out of over $2.4 MillionRead the Press Release
DENVER – James P. Burg, age 61, formerly of Fairplay, Colorado, faces fraud charges related to a scheme to defraud gold coin investors, the U.S. Attorney’s Office, the FBI, the IRS-CI and the U.S. Postal Inspection Service announced. Burg was indicted by a federal grand jury in Denver on November 6, 2012 for charges of wire fraud, mail fraud, money laundering, and failure to file tax returns. The indictment remained sealed until his arrest in California on November 29, 2012. Burg then appeared in U.S. District Court for the Southern District of California. In court there Burg was ordered to be detained and transferred by U.S. Marshals from California to Colorado. Burg’s first Colorado court appearance occurred on January 2, 2013, where he was advised of his rights and the charges pending against him. He appeared in court on January 7, 2013 and again on January 14, 2013 for the purpose of a detention hearing. On January 14, 2013, U.S. Magistrate Judge Michael E. Hegarty ordered that Burg could be released prior to trial on a $50,000 secured property or cash bond. Once released on that pre-trial bond, Magistrate Judge Hegarty ordered Burg to a halfway house (once bed space is available), pending the resolution of the criminal case.
According to the indictment, beginning on or about October 1, 2007, and continuing through and including on or about January 12, 2012, in Colorado and elsewhere, James P. Burg devised and intended to devise a scheme to defraud customers that ordered coins from a business known as Superior Discount Coins and Gold Run Investments and for obtaining money from those customers by means of materially false and fraudulent pretenses, representations and promises. Burg took and received $2,464,099 from customers that ordered coins and he failed to deliver the coins as promised.
As part of the scheme, Burg represented that he was the Chief Executive Officer of a company known as Superior Discount Coins (“SDC”) and that SDC was in the business of selling coins. Burg also conducted business using a company known as Gold Run Investments (“GRI”) and represented that GRI was in the business of selling coins. At times, Burg operated GRI using the alias “Tim Burke”. Burg advertised and solicited customers through radio advertisements and over the internet using websites he controlled, including; www.superiordiscountcoins.com, www.yourcoinbroker.com, and www.goldruninvestments.net
Burg misrepresented and promised customers that if they ordered coins from SDC or GRI and paid him for those coins, he would deliver the coins to them or to accounts designated by them. He sent, and caused to be sent to customers that ordered coins from SDC or GRI invoices stating amounts of money owed for the coins and, in some cases, providing information about a bank account to which the customers should transfer their money to purchase the coins.
The money Burg received from customers was not used to purchase coins for such customers but instead he converted the money to his own use and benefit. Burg refused to refund money to customers in several instances where the customers requested a return of their money after he failed to deliver coins as originally promised. To prevent the scheme’s detection, Burg sometimes filled customers’ orders for coins only after such customers threatened to take legal action or report him to law enforcement authorities. Burg used one customer’s payment for coins to refund funds to another customer.
For calendar years 2006, 2007, 2008 and 2009, Burg failed to file income tax returns with the Internal Revenue Service as required by law. These returns were required to be filed with the IRS on April 15 following the subsequent above mentioned years.
“A core mission of the U.S. Attorney’s Office is to protect victims from scam artists who try to trick them out of their hard earned money,” said U.S. Attorney John Walsh.
“The FBI has made protecting innocent investors a priority,” said FBI Special Agent in Charge James Yacone. “As such, we will vigorously investigate those who engage in schemes to swindle and defraud.”
“The U.S. Postal Inspection Service has no shortage of investment investigations and this is another example of greed overcoming honest business practices,” said Adam Behnen, Inspector in Charge, with the U.S. Postal Inspection Service. “These criminal charges illustrate the commitment of the U.S. Postal Inspection Service to protect the American public by investigating individuals who use the U.S. Mail to further their schemes.”
“Fraud schemes are often described as a house of cards and will eventually fall apart exposing the individuals responsible,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “This is a great example of federal agencies working together.”
Burg was charged with six counts of wire fraud, nine counts of mail fraud, four counts of money laundering and four counts of willful failure to file tax returns. If convicted of the wire fraud and mail fraud counts, he faces not more than 20 years in federal prison, and a fine of up to $250,000 per count. If convicted of the money laundering counts, he faces not more than 10 years in federal prison, and a fine of up to $250,000 per count. If convicted of failing to file tax returns he faces not more than 1 year in federal prison, and a fine of up to $25,000 per count.
This case was investigated by special agents with the Federal Bureau of Investigation (FBI), the IRS-Criminal Investigation and the U.S. Postal Inspection Service.
Burg is being prosecuted by Assistant U.S. Attorney Timothy Neff.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
####
Grand Junction Real Estate Developers Arrested for Bank FraudRead the Press Release
DENVER – Franklin Thad Harris, age 57, and Merlin D. Unruh, age 51, both of Grand Junction, Colorado, were arrested today in Grand Junction for a bank fraud scheme, the United States Attorney’s Office, the Federal Bureau of Investigation and IRS Criminal Investigation announced. Harris and Unruh were indicted by a federal grand jury in Denver on January 8, 2013, for charges of bank fraud and money laundering. The indicted remained under seal until their arrest. There initial appearance took place in Grand Junction earlier today, where they were advised of their rights. The two were released on bond, and are due back in court in Grand Junction on Tuesday, January 15, 2013 at 3:00 p.m. for arraignment.
According to the indictment, on or about October 2007 through December 2008, Harris and Unruh executed a scheme to defraud First National Bank of the Rockies (FNBR) by using false and fraudulent representations and documentation, which were material to FNBR’s decision to approve requests to withdraw funds for construction expenses. Harris engaged primarily in the business of constructing housing developments throughout the Grand Junction area. Unruh was also in the construction business and was utilized as a general contractor for projects with Harris.
Chatfield was a residential housing subdivision project developed by Harris and Unruh. Chatfield IV was a proposed fourth section of the Chatfield subdivision, to be constructed on 11.75 acres located at 3152 E Road, Grand Junction, Colorado. Harris had another project named Thunder Valley, a proposed residential subdivision with single-family detached units, to be constructed on 12.9 acres at 3079 F ½ Road, Grand Junction, Colorado. TDSM was a Colorado real estate Company owned and operated by Harris and Unruh.
On October 19, 2007, TDSM obtained a draw-down line of credit loan in the amount of $2,050,000.00, for the purpose of developing Chatfield IV. Over the course of the Chatfield IV loan, from October 2007 through July 2008, Harris and Unruh made five draw requests, resulting in a total disbursement by FNBR of $1,524,112.83. On or about April 4, 2008, TDSM obtained a draw-down line of credit loan in the amount of $2,625,000.00 for the purpose of developing Thunder Valley. Over the course of the Thunder Valley I Loan, from April 2006 through December 2008, Harris and Unruh made nine draw requests, resulting in a total disbursement by FNBR of $2,290,474.48.
For the purpose of executing and facilitating their fraud scheme, Harris, Unruh and others committed acts and made material misrepresentations and omissions to FNBR including submitting: false and fraudulent information, altered invoices, duplicate invoices and false information concerning costs incurred for work done. Harris and Unruh knowingly and fraudulently misrepresented to FNBR the nature of the work performed and progress made at the Chatfield and Thunder Valley development sites when in fact they diverted Chatfield IV and Thunder Valley I Loan proceeds for their personal use. Furthermore, they conducted financial transactions to conceal and disguise the use and control of the construction draw proceeds obtained; and when confronted by representatives of FNBR about their fraudulent draw requests, Harris and Unruh either knowingly provided false information or refused to provide any information or supporting documentation.
“Individuals who defraud banks impose costs on all Americans who use our banking system, and will be held accountable,” said U.S. Attorney John Walsh. “In this case, the defendants lined their pockets claiming to access their line of credit to develop residential housing.”
“The FBI will continue to work in collaboration with our law enforcement partners to protect financial institutions against individuals who fraudulently exploit banking practices in furtherance of their criminal schemes,” said FBI Denver Special Agent in Charge James Yacone.
“IRS Criminal Investigation will work diligently with our law enforcement counterparts to insure bank fraud is vigorously investigated and brought to justice, said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
Harris and Unruh were each charged with thirty-five counts of bank fraud, six counts of money laundering and one count of conspiracy to commit money laundering. If convicted of bank fraud they face not more than 30 years in federal prison, and a fine of up to $1,000,000 per count. If convicted of money laundering they face not more than 10 years in federal prison, and a fine of up to $250,000 per count.
This case was investigated by agents with Federal Bureau of Investigation (FBI) and IRS-Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Michelle Heldmyer.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
####
Yates Petroleum Pays $416,000 to Resolve Allegations It Violated the False Claims ActRead the Press Release
DENVER – John Walsh, the United States Attorney for the District of Colorado, today announced that Yates Petroleum Corporation has paid $416,000.00 to resolve allegations that the company submitted false statements about the royalties the company owed for natural gas removed from federal leases in Wyoming.
According to the terms of the settlement, the United States contends that Yates made false statements to the Department of the Interior concerning the volume of natural gas that Yates produced from twelve leases in the Powder River Basin in Wyoming. Specifically, Yates used gas measurement devices that did not meet the gas measurement standards of the Bureau of Land Management (BLM) and were unapproved for field use. On January 20, 2009, the Buffalo Field Office of the BLM issued an Order stating that the measurement devices – also known as 1” V-Cone Meters – were not approved for use on federal leases. Yates submitted compliance plans indicating that the company would comply with the BLM’s Order.
However, Yates continued to use 1” V-Cone Meters. From May 2009, to and until April 2012, Yates used the unapproved gas meters to measure gas produced from twelve leases and may have under-reported the volume of gas collected from and the royalties owed to the United States.
“When companies lease federal lands for oil and natural gas production they must accurately measure the oil and gas that they take from federal lands and pay the American taxpayer appropriately,” said United States Attorney John Walsh. “Companies face stiff penalties if they break the rules and fail to accurately measure the natural resources removed from federal lands.”
“This settlement demonstrates the benefits of the Office of Natural Resources Revenue’s (ONRR’s) continuing efforts to further strengthen its enforcement program to ensure that energy companies report and pay all the royalties that are due to the American public,” said Paul A. Mussenden, DOI’s Deputy Assistant Secretary for Natural Resources Revenue Management. “We will continue to pursue those companies who under report production and under pay their royalties to make certain that American taxpayer assets are protected.”
“This settlement, the result of collaboration and cooperation between the OIG, DOJ, ONRR and BLM, should send a clear message to deter companies from engaging in fraudulent and noncompliant activities,” said Mary Kendall, Deputy Inspector General for the Department of the Interior.
“This is a good example of how BLM Wyoming takes seriously our regulatory duties on behalf of the American public,” said Don Simpson, BLM Wyoming State Director.
The United States Attorney’s Office thanks the Department of the Interior, Office of the Inspector General, the Bureau of Land Management and the Office of Natural Resources Revenue (ONRR) for the hard work and cooperation that made this recovery possible. The claims settled by this agreement are allegations only. There has been no determination of liability.
Assistant United States Attorney J. Chris Larson handled this matter for the United States Attorney’s Office.
####