District of Columbia

WASHINGTON - MacArthur Venable, 36, of Washington, D.C., was sentenced today to 18 years in prison for killing a man near Union Station in October 2018.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Venable pleaded guilty in February 2020, in the Superior Court of the District of Columbia, to a charge of second-degree murder while armed. The plea, which was contingent upon the Court’s approval, called for a sentence between 15 and 18 years. The Honorable Chief Judge Anita Josey-Herring accepted the plea and sentenced Venable accordingly. Following his prison term, Venable will be placed on five years of supervised release.

            According to the government’s evidence, on Oct. 31, 2018, at approximately 9:50 p.m., Venable was walking down Massachusetts Avenue with another individual when he came upon the victim, James Ferrell, near the intersection of North Capitol Street NW. Venable then began to speak to Mr. Ferrell and an argument ensued.  The argument escalated and Venable walked up to the individual who he was walking with, reached into his waistband, and pulled out a firearm.  Venable then pointed and fired the firearm at Mr. Ferrell. Mr. Ferrell was struck in his chest twice and subsequently ran across the street and collapsed in front of the National Postal Museum.  A witness called 911 and police and paramedics arrived at the scene.  Mr. Ferrell, 34, was taken to a hospital, where he was pronounced dead soon afterward.

            Venable was arrested on Dec. 20, 2018 and has been in custody ever since.

            In announcing the sentence,  Acting U.S. Attorney Phillips and Chief Contee commended the work of those who investigated the case from the Criminal Investigations Division Homicide Branch of the Metropolitan Police Department and also the U.S. Capitol Police.  They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Lashone Samuel, Victim/Witness Advocate Marcia Rinker, and Investigative Analyst Zachary McMenamin. Finally, they commended the work of Assistant U.S. Attorney Shehzad Akhtar, who investigated and prosecuted the matter. 

WASHINGTON – Eleanor R. Milligan, 61, a longtime payroll administrator from Laurel, Md., was sentenced today to eight years in prison for carrying out a scheme in which she embezzled more than $1.6 million from her former employer.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips and Wayne A. Jacobs, Special Agent in Charge of the FBI Washington Field Office Criminal Division.  

            Milligan was found guilty by a jury in July 2021, following a trial in the U.S. District Court for the District of Columbia, of wire fraud, aggravated identity theft, and first-degree theft. She was sentenced by the Honorable Timothy J. Kelly. The Court also ordered Milligan to pay restitution in the amount of $1,618,082 as well as a forfeiture money judgment in the same amount. Following her prison term, she will be placed on at least three years of supervised release.

            According to the government’s evidence at trial, except for brief periods, Milligan worked from 1998 to 2016 for a company based in Washington, D.C. Beginning in at least or about August 2009, and continuing until in or about March 2016, Milligan used her fellow employees’ names and personal identifying identification without authority to transmit false payment requests to herself through the employer’s payroll processing system.

            In total, Milligan stole money on more than 500 occasions, totaling $1,618,082. In addition, when she was nearly caught, Milligan created a fake email and mailing address in the name of another employee, whose identity she used to hide her scheme and that she was actually receiving the fraudulent payments herself.

            In announcing the sentence, Acting U.S. Attorney Phillips and Special Agent in Charge Jacobs commended the work of those who investigated the case from the FBI’s Washington Field Office. They also expressed appreciation for the assistance provided by the Metropolitan Police Department (MPD). They commended the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Chad Byron and Michon Tart, Victim-Witness Service Coordinator Tonya Jones, Supervisory Litigation Technology Specialist Leif Hickling, Litigation Technology Specialist Jeanie Latimore-Brown, and Assistant U.S. Attorneys Diane Lucas and Christine Macey, who prosecuted the case.

WASHINGTON – Two Maryland man have pleaded guilty to charges stemming from an armed robbery of an unlicensed marijuana dispensary in Northeast Washington in which four employees were bound with zip ties, announced Acting U.S. Attorney Channing D. Phillips and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Dexter T. Brown, 43, and Gregory Sharps, 42, both of Severn, Md., pleaded guilty on Oct. 15, 2021, in the Superior Court of the District of Columbia, to kidnapping, armed robbery, assault with a dangerous weapon, and a firearms offense. The plea, which is contingent upon the Court’s approval, calls for an agreed-upon prison sentence in the estimated range of 72 to 88 months. The Honorable Neal E. Kravitz scheduled sentencing for Dec. 22, 2021.

            According to the government’s evidence, on Feb. 12, 2019, at approximately 10:50 p.m., Brown, Sharps, and a third man arrived at “Higher Limits,” an unlicensed marijuana dispensary in the 500 block of H Street NE. They pretended to be normal customers perusing the shop’s wares before each of them brandished a firearm at the employees minding the store and announced the robbery. Over the next several minutes, they proceeded to round up the employees and placed four of them in zip ties. One other employee was ordered to open the cash register and a sixth escaped. The assailants gathered marijuana, merchandise, and cash.

            They then fled in a van. Metropolitan Police Department (MPD) officers were called to the scene and gave chase to the van. The suspects ultimately bailed out of the van and fled. Three weapons were eventually recovered along with a bag containing proceeds of the armed robbery. Brown and Sharps were arrested in October 2019 and have been in custody ever since.

            A third defendant previously pleaded guilty to related charges.

            In announcing the plea, Acting U.S. Attorney Phillips and Chief Contee commended the work of those who investigated the case from the Metropolitan Police Department. They also expressed appreciation for the efforts of those who handled the case for the U.S. Attorney’s Office, including Paralegal Specialist Allison Gregory Daniels. Finally, they commended the work of Assistant U.S. Attorneys Felice Roggen, William Hart, and Tamara Rubb, who investigated and prosecuted the case.

 

WASHINGTON – Donnell Owens, a former employee of the American Federation of Government Employees, pleaded guilty today to one count of embezzlement and theft of labor union assets stemming from a scheme in which he stole more than $275,000.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips, Wayne A. Jacobs, Special Agent in Charge of the FBI Washington Field Office Criminal Division, and Mark Wheeler, Director of the Washington District Office of the U.S. Department of Labor, Office of Labor-Management Standards.

            Owens, 34, of District Heights, Md., pleaded guilty in the U.S. District Court for the District of Columbia. The charge carries a statutory maximum sentence of five years in prison and potential financial penalties.  Under federal sentencing guidelines, Owens faces a likely range of 24 to 30 months in prison, a fine of up to $95,000, and restitution.  The Honorable Judge Reggie B. Walton scheduled sentencing for Jan. 21, 2022.

            According to the statement of offense submitted to the Court and admitted by Owens, from October 2014 through June 2018, Owens worked as a Secretary to the Director of Communications at the American Federation of Government Employees (AFGE), a labor organization headquartered in Washington, D.C. which represents workers in various functions of the private sector and the government affecting commerce throughout the United States and overseas.  During this period, Owens embezzled approximately $275,524 in AFGE funds for his use and the use of others. 

            As detailed in court documents, throughout the scheme Owens abused and misused his position and employment at AFGE in order to seek and obtain illegal monetary gains at the expense of the labor organization.  For example, Owens submitted false and fraudulent check requests for payments related to services, such as photography and videography, that were purportedly provided by alleged vendors.  As a result of these submissions, AFGE funds were subsequently disbursed.  These check requests listed fictitious dollar amounts for fake work assignments supposedly performed by vendors, who were not actually hired by AFGE.  In fact, the purported vendors who allegedly performed the fake work assignments were really friends and associates of Owens, who he recruited as part of his illegal scheme. 

            As Secretary to the Director of Communications, Owens also had access to an Amazon account and a union credit card linked to it. During the scheme, Owens also used this account and linked credit card to embezzle items and make dozens of unauthorized personal purchases, including clothing, shoes, jewelry, and party supplies.  Additionally, Owens used union credit cards to purchase items from other online retailers for personal use, including T-shirts for his online business, microphones, and flowers. 

            To avoid detection and cover up the fraud, Owens provided falsified signatures, fraudulent expense vouchers, and altered receipts for these items.  However, the investigation revealed photos of Owens, his family members, and associates wearing the clothing purchased on Amazon with the union credit card on social media accounts belonging to the defendant.

            This investigation was conducted by the FBI’s Washington Field Office and the U.S. Department of Labor, Office of Labor-Management Standards.  The prosecution is being handled by Assistant U.S. Attorney Anne P. McNamara of the U.S. Attorney’s Office for the District of Columbia. Assistance was provided by Assistant U.S. Attorney Emily A. Miller and Paralegal Specialists Amanda Rohde and Mariela Andrade.

            WASHINGTON –Two Maryland men were sentenced today to decades in prison for first-degree felony murder while armed and other charges in the 2017 killing of a man in Southeast Washington, announced Acting U.S. Attorney Channing D. Phillips and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Nyekemia Everett, 36, of Greenbelt, was sentenced to 33 years in prison and Malik Hewitt, 41, of Capitol Heights, was sentenced to 30 years of incarceration. Both were found guilty in July 2021 by a jury in the Superior Court of the District of Columbia of the murder charge, as well as conspiracy, attempted robbery while armed, and related offenses. They were sentenced by the Honorable Neal E. Kravitz. 

            According to the government’s evidence, beginning on April 26, 2017, Everett, Hewitt, and a third individual plotted to rob the victim, Christopher Heard. Over the phone, they lured him to the 2300 block of Ainger Place SE, on the pretense of a drug deal. At approximately 3:30 a.m. on April 27, 2017, Everett, Hewitt and the third individual drove together to the area and parked. In the meeting that followed, roughly 15 minutes later, Everett pointed a gun at Mr. Heard and announced a robbery. Mr. Heard lunged toward Everett, who shot him twice. Mr. Heard, 37, died at the scene. Everett and Hewitt fled the area and were arrested in May 2017. 

            In announcing the sentence, Acting U.S. Attorney Phillips and Chief Contee commended the work of those who investigated the case from the Metropolitan Police Department. They also expressed appreciation for the assistance provided by the FBI, Bode Technology, and the crime scene search unit from the District of Columbia Department of Forensic Services. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Alyse Constantinide and Richard Barker; Paralegal Specialists Lornce Applewhite, Debra Forte, Nicole McGhee, and Lashone Samuels; Victim Witness Specialist Jennifer Allen; Robert Cephas, La June Thames, Katina Adams-Washington, M. LaVerne Perry, Lesley Slade, and Maenylie Watson, all of the Victim Witness Assistance Unit; Supervisory Litigation Technology Specialist Leif Hickling, and Homicide Section Intern Jack Holt.

            Finally, they commended the work of Assistant U.S. Attorneys Michael Liebman and Shehzad Akhtar, who prosecuted the case.

            WASHINGTON – Danielle Bartley, 26, a former Capital One Bank employee from Silver Spring, Md., pleaded guilty today to taking part in a conspiracy that compromised the account information of at least nine bank account holders and sought at least $253,000 in fraudulent withdrawals and transfers.

            The announcement was made by Channing D. Phillips, Acting U.S. Attorney for the District of Columbia, Matthew R. Stohler, Special Agent in Charge, Washington Field Office, U.S. Secret Service, and Daniel A. Adame, U.S Postal Inspector in Charge for the Washington Division.

            Bartley pleaded guilty in the U.S. District Court for the District of Columbia to conspiracy to commit bank fraud.  The charge carries a statutory maximum of 20 years in prison and financial penalties. Under federal sentencing guidelines, she faces a likely range of between 27 and 33 months in prison and a fine of up to $100,000. The plea agreement requires her to pay $50,000 in restitution to Capital One and a forfeiture money judgment of the $3,750 she individually received. The Honorable Thomas F. Hogan scheduled sentencing for Jan. 20, 2022.

            As Bartley admitted in entering her guilty plea, at the time of the conspiracy in 2017, she was a branch associate in Washington, D.C.  Between June and August 2017, Bartley and her co-conspirators, including Krishna Jannor-John Marsh, posed as nine different actual bank account holders and sought at least $253,000 in fraudulent withdrawals and transfers.  They succeeded in obtaining one $50,000 wire transfer using personal identifiers of an account holder that Marsh purchased on the dark web.  Other attempts were stopped, including one by an alert teller.

            In September 2018, as part of his broader conspiracy, Marsh, 25, of New York, N.Y., was sentenced to 46 months in prison, ordered to pay $338,100 in restitution, and had a forfeiture money judgment of $50,000 entered against him.  Despite agreeing to plead guilty in 2018, Bartley fled to Jamaica and was extradited back to the United States earlier this year.

            In announcing the plea, Acting U.S. Attorney Phillips, Special Agent in Charge Stohler, and Inspector in Charge Adame commended the work of those who investigated the case from the U.S. Secret Service and U.S. Postal Inspection Service. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office. including former Paralegal Specialists Joshua Fein and Kristy Penny. Finally, they commended the work of Assistant U.S. Attorney Arvind Lal and former Assistant U.S. Attorney Anthony Saler, who investigated and prosecuted the case.

WASHINGTON – Daquon Brooks, 24, of Washington, D.C., has pleaded guilty to fatally shooting a man in the Third Street Tunnel in July 2019, as well as shooting another person in a separate domestic violence incident the same month, announced Acting U.S. Attorney Channing D. Phillips and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Brooks pleaded guilty on Oct. 18, 2021, in the Superior Court of the District of Columbia, to second-degree murder while armed in the killing of Leon Williams. He also pleaded guilty to charges of assault with a dangerous weapon and stalking, stemming from a domestic violence incident. His guilty plea, which is contingent upon the Court’s approval, calls for an agreed-upon sentence of 13 to 17 years in prison, to be followed by up to five years of supervised release. The Honorable Juliet J. McKenna scheduled sentencing for Jan. 25, 2022.

            According to a proffer of facts submitted at the plea hearing, on July 30, 2019 at 2:50 p.m., Brooks was riding in the passenger seat of his girlfriend’s car; she was driving the car and her minor child sat in the backseat. As the vehicle entered the Third Street Tunnel, Mr. Williams 52, rear-ended her car. Both cars stopped and Brooks’ girlfriend got out of her car, walked over to the driver’s side door of Mr. Williams’ vehicle, and confronted him for rear-ending her.

            A short time later, Brooks got out of the car, walked over to Mr. Williams’ driver’s side door, and pointed a loaded gun at his head. Brooks fired one shot into Mr. Williams’ neck. Both Brooks and his girlfriend ran back to the girlfriend’s car and fled the scene. Mr. Williams was paralyzed and never recovered from his injuries. He died of his injuries on Oct. 18, 2020.

            The other shooting incident occurred on July 15, 2019, roughly two weeks before the tunnel gunfire. According to the proffer of facts, Brooks sent numerous messages via Instagram and text  between July 9, 2019 and July 15, 2019 threatening to kill his former girlfriend after she began a relationship with another man. On July 15, 2019, at approximately 6:10 p.m., Brooks approached his ex-girlfriend’s new boyfriend in the 4800 block of Benning Road SE and fired multiple bullets with a pistol at the new boyfriend, striking him in the leg and foot.

            Brooks has been in custody since his arrest on Aug. 5, 2019.

            In announcing the plea, Acting U.S. Attorney Phillips and Chief Contee commended the work of the officers, detectives and other personnel who investigated the case from the Metropolitan Police Department. They acknowledged the efforts of those who handled the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Colleen Kukowski, Kenya Wells, Jason Feldman, and Dana Joseph; Paralegal Specialists Tasha Harris, Michelle Wicker, and Cynthia Muhammad; Special Agent Mark Crawford, of the Criminal Investigation and Intelligence Unit; Victim/Witness Security Specialist Ashli Tolbert, Victim/Witness Advocate Marcia Rinker, and Victim/Witness Program Specialist Lan Lu.

            Finally, they commended the work of Assistant U.S. Attorney Kristian L. Hinson, who investigated and prosecuted the homicide case, and Assistant U.S. Attorneys Joseph Drummey and Danielle White, who prosecuted the domestic shooting case.

WASHINGTON - Herman Cook, 50, of Washington, D.C., was sentenced today to 40 years in prison on first-degree murder while armed and other charges for an early evening shooting in Northwest Washington in August 2016, announced Acting U.S. Attorney Channing D. Phillips and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Cook was found guilty by a jury in February 2020 of murder and related firearms offenses. The verdict followed a trial in the Superior Court of the District of Columbia. He was sentenced by the Honorable Juliet J. McKenna.

            According to the government’s evidence, on Aug. 8, 2016, shortly after 7 p.m., Cook was standing in the parking lot behind the Emery Recreation Center in the 5700 block of Georgia Avenue NW. The homicide victim, Donald Johnson, Jr., drove into the parking lot to meet a friend.  Cook and Mr. Johnson had been close friends decades earlier but became estranged at some point in the early 1990s.  As captured on video surveillance, after Mr. Johnson got out of his car to talk to the friend, Cook walked up to him slowly and, without any provocation, shot him multiple times at point blank range.  Mr. Johnson was struck four times, including twice in the back and once in the neck.  Cook then calmly walked away in the direction of Cook’s home on 13th Street NW. Mr. Johnson, 45, was pronounced dead later that evening.

            Cook fled the area on foot.  Evidence indicated that he fled to Baltimore that night. He was arrested on Feb. 21, 2017, in Baltimore and has been in custody ever since.

            In announcing the sentence, Acting U.S. Attorney Phillips and Chief Contee commended the work of those who investigated the case from the Metropolitan Police Department. They also expressed appreciation for the assistance provided by the Baltimore Police Department and the U.S. Marshals Service. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Lashone Samuels; Special Agent Nelson Rhone of the Criminal Investigation and Intelligence Unit; Victim/Witness Advocate Marcia  Rinker, and Litigation Technology Specialist Leif Hickling.  Finally, they commended the work of Assistant U.S. Attorneys Michael Spence and Melissa Jackson, who prosecuted the case.

 

WASHINGTON - Nequan Carthens, 21, of Washington, D.C., has pleaded guilty to opening fire last year with a handgun on a Southeast Washington street and killing a woman who was walking in the area, announced Acting U.S. Attorney Channing D. Phillips and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Carthens pleaded guilty on Oct. 15, 2021, in the Superior Court of the District of Columbia, to voluntary manslaughter while armed. The plea, which is contingent upon the Court’s approval, calls for a 10-year prison term. The Honorable Danya A. Dayson scheduled sentencing for Jan. 7, 2022.

            According to the government’s evidence, on March 20, 2020, at approximately 9:55 p.m., Carthens exited from the rear passenger door of a blue-colored, four door sedan as it turned into an alley alongside the 1900 block of 16th Street SE. He was holding a handgun and shot into the 1900 block of 16th Street approximately nine times in the direction of a group of individuals who were congregating across the street. He then ran back into the waiting vehicle and fled the scene. 

            An innocent bystander, Lagoria Brinkley, 36, was walking southbound on 16th Street towards U Street SE and was struck in the head by one of the fired bullets.  Medical personnel arrived at the scene and were unable to revive her. Carthens was arrested on March 26, 2020 and has been in custody ever since.

            In announcing the plea, Acting U.S. Attorney Phillips and Chief Contee commended the work of those who investigated the case from the Metropolitan Police Department.  They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Lashone Samuels; Victim/Witness Program Specialist Jennifer Allen, and Investigative Analyst Zachary McMenamin. Finally, they expressed appreciation for the work of Assistant U.S. Attorney Shehzad Akhtar, who investigated and prosecuted the case.

            WASHINGTON - Isabelle Garcia, 56, former controller for the George Town Club, was sentenced today to 27 months in prison on a federal charge of wire fraud stemming from a scheme in which she defrauded the establishment of more than $300,000. 

            The announcement was made by Acting U.S. Attorney Channing D. Phillips and Wayne A. Jacobs, Special Agent in Charge of the FBI Washington Field Office Criminal Division.  

            Garcia pleaded guilty in July 2021 in the U.S. District Court for the District of Columbia. She was sentenced by the Honorable John D. Bates. Following her prison term, she will be placed on three years of supervised release. She also is required to pay $300,422 in restitution and an identical amount in a forfeiture money judgment.

            According to a statement of offense submitted to the Court at the time of her guilty plea, Garcia began work in 2006 as the controller for the George Town Club, a private dining club located in the District of Columbia. She was responsible for maintaining the club’s financial affairs and had a great deal of discretion. From December 2006 to September 2013, Garcia used her control over financial accounts to make payments to herself and to third parties for her personal benefit.  Through her scheme, Garcia wrongfully obtained $300,442.

            An investigation led to Garcia’s indictment in 2018 and her subsequent arrest.

            In announcing the sentence, Acting U.S. Attorney Phillips and Special Agent in Charge Jacobs commended the work of those who investigated the case from the FBI’s Washington Field Office.  They also expressed appreciation for the work of Paralegal Specialist Stephanie Frijas.  Finally, they commended the work of Assistant U.S. Attorney Peter Lallas and former Assistant U.S. Attorney Anthony Saler, who prosecuted the case.

WASHINGTON – Jean-Paul Gamarra, 45, of Copiague, N.Y., was sentenced today on federal charges of threatening the President of the United States and the White House complex during an incident in March 2017, announced Acting U.S. Attorney Channing D. Phillips and Matthew R. Stohler, Special Agent in Charge, Washington Field Office, U.S. Secret Service.

            Gamarra was found guilty on May 27, 2021, following a trial in the U.S. District Court for the District of Columbia, of one count each of threats to the President and threatening and conveying false information concerning the use of an explosive. He was sentenced by the Honorable John D. Bates. Gamarra already had been in custody for 41 months, and the judge sentenced him to the time already served, which is an effective sentence at the higher end of the applicable guidelines range. Under the sentencing order, Gamarra will be placed on three years of supervised release. During that time, he must meet a number of conditions, including staying away from the White House, maintaining mental health treatment, cooperating with the Secret Service in assessing his future risk, and avoiding all physical and online contact with any Secret Service protectee.

            As established at trial, on March 28, 2017, at about 10:17 a.m., Gamarra approached a uniformed, on-duty officer of the U.S. Secret Service at a pedestrian access gate l on Pennsylvania Avenue NW, within 100 yards of the White House. He presented the officer with a priority mail package, stating it contained a “nuclear bomb detonator” that was being presented for “safekeeping.” Written on the package, in what appeared to be Gamarra’s handwriting, were the words: “Warning this is a tre threat on the President and Senator life” and “Warning 100% threat Brand New Electronic Detonator Device,” as well as Gamarra’s name and address.

            In response to Gamarra’s claims, the U.S. Secret Service cleared the surrounding area, including the north fence line of the White House, Lafayette Park, and other areas near 15th Street and Pennsylvania Avenue NW. People inside nearby buildings were instructed to shelter in place while the Metropolitan Police Department Explosive Ordnance Disposal Unit evaluated the package. After approximately 90 minutes, the package was declared “safe,” and the area reopened. Inside the package was a Bluetooth keyboard and letter. Gamarra was arrested at the scene and was in custody until August 2020.

            Gamarra was previously interviewed by the U.S. Secret Service in 2014 regarding threats to then-President Barack Obama. In 2014, Gamarra admitted to Secret Service agents that he had threatened President Obama in order to gain the “attention” of the Secret Service so he could “expose” “corruption.” During that interview, agents warned Gamarra that threats on the President of the United States are not protected speech and counseled Gamarra that such conduct was taken seriously by the Secret Service.

            In announcing the sentence, Acting U.S. Attorney Phillips and Special Agent in Charge Stohler commended the work of those who investigated the case from the U.S. Secret Service and those who provided assistance from the Metropolitan Police Department (MPD).

            They also acknowledged the efforts of those who handled the case from the U.S. Attorney’s Office for the District of Columbia, including Assistant U.S. Attorneys Karen Seifert, Nicholas Coleman, and Daniel Lenerz, and Paralegal Specialists Genevieve De Guzman and Jorge Casillas. They expressed appreciation for the work of former Special Assistant U.S. Attorneys Nicole Hutchinson and Mary Freeman, and former Assistant U.S. Attorney Jeffrey Pearlman, who handled prior stages of the matter.

 

            WASHINGTON – Stacy Higa, 58, a former public official from Hilo, Hawaii, pleaded guilty today to embezzling more than $38,000 from AmeriCorps and also to offering a bribe in return for grants under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

            The announcement was made by Channing D. Phillips, Acting U.S. Attorney for the District of Columbia, Deborah Jeffrey, Inspector General of AmeriCorps, and Steven Merrill, Special Agent in Charge of the FBI’s Honolulu Field Office.

            Higa pleaded guilty in the U.S. District Court for the District of Columbia to one count each of embezzlement and bribery. Both charges carry statutory maximums of 10 years in prison and financial penalties. Under the federal sentencing guidelines, Higa faces a likely range of between 46 and 57 months in prison and a fine of up to $200,000. The plea agreement requires him to pay $38,642 in restitution to AmeriCorps and an identical amount in a forfeiture money judgment. The Honorable Reggie B. Walton scheduled sentencing for Jan. 13, 2022.

            “This defendant has admitted taking money from programs that were designed to help the most vulnerable Americans,” said Acting U.S. Attorney Phillips. “The United States Department of Justice will aggressively prosecute and seek to hold accountable those individuals who choose to abuse their positions of power to enrich themselves at the cost of the American people.”

            “Again and again, Stacy Higa betrayed his neighbors, the people of Hawaii, and American taxpayers to serve his greed and vanity by embezzling funds set aside to help communities in need,” said Inspector General Jeffrey of AmeriCorps. “OIG will vigorously pursue allegations of fraud in AmeriCorps programs and will work tirelessly to see that those responsible are brought to justice.  I want to thank the FBI’s Honolulu Field Office for its partnership in pursuing this investigation and the U.S. Attorney’s Office in D.C. for overseeing the prosecution.” 

            “Our communities place great trust and responsibility in our public figures. Stacy Higa ultimately betrayed this trust when he abused his power to embezzle federal funds and participate in bribery,” said FBI Special Agent in Charge Merrill. “The FBI will not tolerate these crimes and will hold perpetrators accountable for their actions. Today’s guilty plea is a direct result of the hard work and dedication the FBI and our law enforcement partners put towards obtaining justice.”

            AmeriCorps is a federally funded network of national service programs that address critical community needs like increasing academic achievement, mentoring youth, fighting poverty, sustaining national parks, preparing for disasters, and more.  AmeriCorps’ national service members commit to service for a set period, usually a year, in exchange for a living allowance, funding to be used for college tuition, and other benefits.

            From June 2011 until May 2020, Higa, a former Hawaii County council member and mayoral candidate, served as the Executive Director of the Hawaii Commission for National and Community Service, the state service commission responsible for administering AmeriCorps programs in Hawaii. From February 2018 through his resignation from the Commission, Higa embezzled more than $38,000 in AmeriCorps funds by signing and authorizing contracts and purchase orders between the Hawaii Commission and two companies that he owned or controlled, without disclosing his control of the companies. Higa spent the embezzled funds on personal expenses including paying for approximately $20,000 of elective aesthetic dental care.

            In his plea today, Higa also admitted to carrying out a scheme involving the CARES Act, which was signed into law in March 2020 to provide financial relief to individuals, businesses, states, and localities suffering the economic effects of the COVID-19 pandemic. Among other relief programs, the CARES Act created a $150 billion Coronavirus Relief Fund (CRF) to be distributed to states, localities, and tribal governments to support expenditures incurred due to COVID-19. Government entities that received money from the CRF could use the funds, among other things, to make grants to small businesses to reimburse the costs of business interruption caused by required closures and to provide economic relief for those suffering employment interruption.

            In that scheme, Higa admitted to offering financial benefits to Hanalei Aipoalani, who was hired in August 2020 as Honolulu City and County’s Department of Community Service’s CARES Program Administrator. Aipoalani was responsible for administering CRF programs. From August 2020 through October 2020, Higa offered to provide financial benefits to Aipoalani in order to influence the approval of Higa’s applications for two grants totaling $845,000 under the CARES Act. Higa then directed an employee to draft and submit false and backdated invoices under the grants. Higa and Aipoalani discussed opening LLCs on Oahu and using their wives as principals in order to launder the money. As part of his plea agreement, Higa admitted to expecting to receive at least $250,000 in profit from the CARES Act funds.

            Aipoalani, 42, of Waianae, Hawaii, separately pleaded guilty in the U.S. District Court for the District of Columbia to embezzling from AmeriCorps and agreeing to accept a bribe under the CARES Act. Aipoalani was sentenced on June 30, 2021 to 46 months in prison and ordered to pay over $532,730 in restitution to AmeriCorps.

            On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.

            For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

            Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form

            Additionally, anyone who is aware of fraud, waste, or abuse affecting AmeriCorps or any of its programs, is encouraged to contact the AmeriCorps Office of Inspector General Hotline at 1-800-452-8210 or [email protected].

            In announcing the plea, Acting U.S. Attorney Phillips, Inspector General Jeffrey, and Special Agent in Charge Merrill commended the work of those who investigated the case from the Inspector General for AmeriCorps and the FBI’s Honolulu Field office. They also acknowledged the efforts of those who worked on the investigation from the U.S. Attorney’s Office for the District of Columbia, including Assistant U.S. Attorneys Peter Lallas and Amanda Vaughn and Paralegal Specialist Mariela Andrade. Finally, they expressed appreciation for the work of Assistant U.S. Attorney Leslie A. Goemaat, also of the U.S. Attorney’s Office for the District of Columbia, who is prosecuting the case.

 

WASHINGTON – Davon Robinson, 28, of Washington, D.C., was sentenced today to a 10 ½-year prison term for robbing a fast-food restaurant in Northeast Washington at gunpoint earlier this year and shooting a man at close range on a busy street in Southeast Washington last year, announced Acting U.S. Attorney Channing D. Phillips.

            Robinson pleaded guilty in June 2021, in the Superior Court of the District of Columbia, to armed robbery, assault with a dangerous weapon, and firearms offenses. The plea, which was contingent upon the Court’s approval, called for an agreed-upon sentence of 10 ½ years. The Honorable Robert D. Okun accepted the plea and sentenced Robinson accordingly. Following his prison term, Robinson will be placed on five years of supervised release.

            The armed robbery took place at about 12:05 p.m. on Feb. 25, 2021, at a Chick-fil-A in the 1400 block of Maryland Avenue NE. According to the government’s evidence, Robinson entered the restaurant while holding a pistol with an extended magazine. He then brandished the weapon at multiple employees and forced them back. He grabbed the arm of one employee and ordered the worker to open the cash register, threatening to kill the worker if his orders were not followed. Robinson then grabbed a handful of bills and attempted to flee. However, as Robinson exited the restaurant, he was shot by an on-duty Special Police Officer. Robinson was apprehended and taken to a hospital for a gunshot wound to the face. Police recovered the pistol, which was later determined to be a 9 mm “ghost gun” loaded with 22 rounds of ammunition.

            The shooting took place on Aug. 21, 2020, in front of a gas station in the 3000 block of Martin Luther King Jr. Avenue SE. According to the government’s evidence, Robinson approached the victim at approximately 8 p.m. They began a conversation and, soon afterward, Robinson stepped back, pulled out a pistol, and shot the victim once at close range. The victim was struck in the hip and was admitted to the hospital for a gunshot wound. The incident was captured on surveillance video and Robinson was identified through DNA that was recovered from a hat he dropped while fleeing the scene. 

            In announcing the sentence, Acting U.S. Attorney Phillips commended the work of those who investigated the case from the Metropolitan Police Department (MPD). He also acknowledged the efforts of those who handled the case for the U.S. Attorney’s Office, including Paralegal Specialist Alesha Matthews and Assistant U.S. Attorney Miles E. Janssen, who is prosecuting both matters.

 

WASHINGTON – A Metropolitan Police Department (MPD) Officer was indicted today on a federal bank fraud charge stemming from a scheme involving $18,345 in Paycheck Protection Program (PPP) loans.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips and Wayne A. Jacobs, Special Agent in Charge of the FBI Washington Field Office’s Criminal Division.

            Roberto Adams, 34, was indicted by a grand jury in the U.S. District Court for the District of Columbia. He was arrested on Aug. 13, 2021, following the filing of a criminal complaint in the case and remains free on personal recognizance pending further proceedings. The indictment includes a forfeiture count seeking an $18,345 money judgment.

            According to the indictment, Adams made false and fraudulent claims last year to take advantage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law that is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of forgivable loans to small businesses for job retention and certain other expenses through the PPP.  The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent.  Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities.  The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set timeframe and use at least a certain percentage of the loan towards payroll expenses.

            As alleged in the indictment, Adams sought and received approximately $18,345 in PPP loans through an application to a participating financial lender on behalf of SUPERKLEAN LLC, a Maryland corporation.  On loan documents submitted to an FDIC-insured financial institution, Adams claimed to be an eligible self-employed individual with a monthly payroll of $7,338 and sought a forgivable loan to cover payroll expenses.  Adams further certified that his business was in operation on Feb. 15, 2020, and “had employees for whom it paid salaries and payroll taxes or paid independent contractors, as reported on Form(s) 1099-MISC.”  He also certified that all loan proceeds would be “used only for business-related purposes as specified in the loan application.”  Adams submitted a false and fraudulent 2019 Form 1040 Schedule C reporting $94,250 in gross income, $4,120 in expenses, and $88,060 in profits for SUPERKLEAN (which calculates to net profits of $7,338 per month). The Schedule C form indicated that Adams was the sole proprietor and that the business provided janitorial services.  Tax records confirm that this 2019 Form 1040 Schedule C was never filed with the Internal Revenue Service, as was falsely and fraudulently claimed in the PPP loan application. 

            The loan application was approved, and the funds were electronically deposited in Adams’s bank account on Aug. 4, 2020.

            An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

            The case was investigated by the FBI’s Washington Field Office. It is being prosecuted by Assistant U.S. Attorney Joshua S. Rothstein of the Fraud Section of the U.S. Attorney’s Office for the District of Columbia.

            On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.

            For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

            Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form

 

WASHINGTON – Vaughn Kosh, 50, of Washington, D.C., was sentenced today to 20 years in prison for killing one woman and shooting another after breaking into a neighbor’s apartment in Northeast Washington, announced Acting U.S. Attorney Channing D. Phillips and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Kosh pleaded guilty in July 2021, in the Superior Court of the District of Columbia, to charges of second-degree murder while armed, aggravated assault while armed, assault with a dangerous weapon, and simple assault. The plea, which was contingent upon the Court’s approval, called for an agreed-upon prison term of 15 to 20 years. The Honorable Marisa Demeo accepted the plea and sentenced the defendant accordingly. Following his prison term, Kosh will be placed on five years of supervised release.

            According to the government’s evidence, on Dec. 7, 2019, at approximately 5:15 a.m., Kosh accosted a man who was entering an apartment building in the 1700 block of Capitol Avenue NE. He then forced his way into an apartment unit that the man was entering. During this assault, Kosh fired a shot at the man and then stabbed him with a knife. The man then raced outside to summon police.

            In addition to the man, three people were inside the apartment at the time that Kosh barged inside: Alayna Howard, who was an amputee, her 12-year-old son, and Ms. Howard's female relative. Kosh first shot the female relative – who was sitting in a wheelchair in the living room – in the face and neck and then went to the bedroom and fatally shot Ms. Howard. The child pleaded, “Please don’t get me,” and Kosh responded, “If I wanted to get you, I would like I did your mom.”

            Ms. Howard, 38, was pronounced dead at the scene. Kosh was arrested soon after the shootings in another apartment in the building.

            In announcing the sentence, Acting U.S. Attorney Phillips and Chief Contee commended the work of those who investigated the case from the Metropolitan Police Department (MPD). They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Forensic Interviewer Tracy Owusu, Victim/Witness Advocate Marcey Rinker, and Paralegal Specialist Stephanie Siegerist. Finally, they commended the work of Assistant U.S. Attorneys Monica Trigoso and Prava Palacharla, who investigated and prosecuted the matter.

 

WASHINGTON – An indictment was unsealed today charging four men with taking part in a drug trafficking conspiracy, including two who were charged with conspiring to rob pharmacies and unlawful possession of a machine gun.

            The indictment was announced today by Acting U.S. Attorney Channing D. Phillips, Charlie J. Patterson, Special Agent in Charge of the Washington Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            All four defendants were arrested yesterday. They include Juwuan Champion, 22, of Bowie, Md., also known as “Big Money;” Fitzgerald Hunt, 24, of Washington, D.C., also known as “GMoney;” Joshua Johnson, 18, of Capitol Heights, Md., also known as “Lil Josh,” and Keyshawn Lavender, 20, of Washington, D.C., also known as “Key.” They made their initial appearances this afternoon in the U.S. District Court for the District of Columbia, and all remain detained pending further proceedings.

            The indictment follows an investigation by ATF and MPD into a crew operating from approximately January 2021 through October 2021 in the Potomac Gardens area of Southeast Washington. As described in the indictment, members of the crew are alleged to traffic in Oxycodone, Alprazolam, and other illegal narcotics. Champion and Hunt are accused of conspiring to rob pharmacies and the driver of a truck delivering narcotics to a pharmacy, and of unlawful possession of a machine gun. Champion and Hunt also are alleged to have possessed a “converter switch” device designed and intended to convert a semiautomatic Glock-style handgun into a machine gun capable of fully automatic fire, without manual reloading, by a single function of the trigger.

            “Drug trafficking and the prevalence of guns on our streets continue to plaque our community at alarming and unacceptable rates,” said Acting U.S. Attorney Phillips. “Working together with our law enforcement partners, we will aggressively investigate and prosecute individuals who are terrorizing and making our neighborhoods unsafe with their armed drug trafficking activities, such as those alleged in this indictment.”

            “This investigation is focused on armed robberies, possession of machine guns, illegal possession of firearms, distribution of narcotics and other acts of violence within our community. Thanks to the hard work and dedication of the men and women of ATF and our valued law enforcement partners; we are making every effort to collaborate and work collectively to take violent criminals off our streets,” said Special Agent in Charge Patterson. “We will continue to do as such until people feel safe to live and enjoy life. We will not tolerate violent crime, especially gun violence on our streets.”

            The ongoing investigation has focused on violent crimes, including a series of pharmacy robbery-related incidents in the District of Columbia and Maryland, culminating in the March 30, 2021 robbery of a pharmaceutical delivery van driver outside a pharmacy in Waldorf, Md.

            ATF and other law enforcement partners yesterday executed search warrants for four residences in the District of Columbia, two residences in Maryland, and one vehicle.   Agents recovered three firearms, including one with an obliterated serial number, ammunition, multiple bags of apparent marijuana, and cash currency totaling approximately $75,000. 

            Champion and Hunt are charged with a number of offenses related to these crimes, including conspiracy to interfere with interstate commerce by robbery. All told, Champion was indicted on 12 felony counts, including conspiracy, narcotics, and weapons offenses. Hunt was indicted on 11 similar charges. Lavender faces three felony counts, and Johnson, one. The indictment also includes a forfeiture count seeking all proceeds from the crimes.

            An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

            This case is being investigated by the ATF Washington Field Office and the Metropolitan Police Department (MPD). Critical support was provided by the Charles County, Md. Sheriff’s Office, and additional assistance was provided by the U.S. Marshals Service, the Prince George’s County, Md. Police Department, and Anne Arundel County, Md. Police Department. The case is being prosecuted by Assistant U.S. Attorney Candice Wong of the Violent Crime and Narcotics Trafficking Section of the U.S. Attorney’s Office for the District of Columbia. Assistance was provided by former Special Assistant U.S. Attorney Jonathan Jacobs.

 

WASHINGTON – A Maryland businesswoman pleaded guilty today to paying cash bribes to an officer with the Metropolitan Police Department (MPD) in return for information contained in non-public police paperwork identifying individuals involved in traffic accidents.

            Raquel DePaula, 43, of Beltsville, Md., pleaded guilty in the U.S. District Court for the District of Columbia, to one count of bribery of a public official. The Honorable Emmet G. Sullivan did not schedule a sentencing date. Under federal sentencing guidelines, she faces a likely range of 18 to 24 months in prison, as well as financial penalties. As part of her plea agreement, she must pay $15,001 in a forfeiture money judgment.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips, Wayne A. Jacobs, Special Agent in Charge of the FBI’s Washington Field Office Criminal Division, and Robert J. Contee III, Chief of the Metropolitan Police Department.

            DePaula and the police officer were indicted in June 2021. The officer has pleaded not guilty to charges and is awaiting further court proceedings.

            DePaula owns RD Legal Solutions, LLC, a corporation that, among other things, acts as a “runner” providing contact information for traffic accident victims to attorneys in exchange for referral fees. According to a statement of offense submitted as part of the plea, from approximately April 2019 through August 2019, she paid cash to the officer to get confidential information from MPD Traffic Accident Reports. An MPD General Order limited the distribution of these reports to individuals involved in traffic accidents and their representatives. 

            In the statement of offense, DePaula admitted paying the officer between approximately $600 and $1,300 per week, though the amount varied, in exchange for the victim contact information. Over the course of the scheme, she admitted to paying over $15,000 to the officer and receiving contact information for 2,667 victims.

            In announcing the plea, Acting U.S. Attorney Phillips, Special Agent in Charge Jacobs, and Chief Contee commended the work of those who are investigating the case from the FBI’s Washington Field Office and MPD’s Internal Affairs Division.  They also expressed appreciation for the work of Assistant U.S. Attorney Joshua S. Rothstein, who is prosecuting the matter.

 

WASHINGTON – A former employee of the Metropolitan Police Department (MPD) was sentenced today to 78 days in jail, to be spent on weekends, for accepting more than $40,000 in bribes in exchange for providing personal identifying information of traffic crash victims and for carrying out a separate scheme involving insurance fraud.

            Kendra Coles, 46, of Beltsville, Md., pleaded guilty in March 2019, in the U.S. District Court for the District of Columbia, to one count each of bribery of a public official and conspiracy to commit insurance fraud. She was sentenced by the Honorable Emmet G. Sullivan.  The judge also placed her on three years of probation. She is also required to pay more than $6,000 in restitution to an insurance carrier as well as a $40,0001 forfeiture money judgment.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips, Wayne A. Jacobs, Special Agent in Charge of the FBI’s Washington Field Office Criminal Division, and Robert J. Contee III, Chief of the Metropolitan Police Department.

            According to the government’s evidence, Coles began work for the Metropolitan Police Department in 2006 as a customer service representative. In late 2012, she became a staff assistant and was assigned to the Patrol Services and School Safety Bureau. Coles was in that position when, in approximately 2015, she conspired with two individuals who were “runners.”  These “runners” were in the business of connecting lawyers and accident victims.

            These “runners” were able to identify potential clients by obtaining police reports of recent traffic accidents, referred to as Traffic Crash Reports.  Before 2015, these reports were publicly available and could be obtained from a clerical office at MPD.  In January 2015, however, MPD issued a general order restricting the distribution of Traffic Crash Reports to persons involved in a crash and certain family members and representatives.  The order aimed to protect crash victim confidentiality and limit solicitations by “runners.”

            To circumvent the general order, the “runners” began paying Coles cash in exchange for her providing Traffic Crash Reports, to which she had access by virtue of her employment at MPD.  Specifically, one “runner” paid Coles approximately $400 to $500 per week and another “runner” paid her approximately $350 per week.  Over the two years she engaged in the scheme, Coles received more than $40,000 from at least two “runners.”

            In exchange, Coles accessed the reports and created handwritten ledgers.  These ledgers contained the reports’ essential information, including crash victims’ identity and contact information.  Coles would also provide information regarding the nature of the crash, including whether it included an injury, property damage, or was a hit and run.  Coles would then take a picture of the ledger and send them to “runners” via email or text.

            An audit conducted by MPD revealed that between June 1, 2017 and October 6, 2017, alone, Coles had accessed Traffic Crash Reports 3,367 times.

            The investigation is continuing. One of the "runners," Marvin Parker, 62, of Silver Spring, Md., pleaded guilty to a bribery charge and was sentenced in January 2020 to 18 months in prison.

            In a separate scheme, Coles committed insurance fraud.  In late June 2017, her car required between $1,000 and $2,400 for parts and an additional $700 for labor.  In addition, Coles owed $1,505 to the D.C. Department of Motor Vehicles for unpaid parking tickets and fees.  Rather than incur these costs, Coles conspired with a family friend to have the car “disappear” so she could file an insurance claim.  In furtherance of her scheme, on July 31, 2017, Coles abandoned her car and her co-conspirator set it on fire.  After filing a false theft report, Coles collected more than $1,000 from her insurance carrier.

            In announcing the sentence, Acting U.S. Attorney Phillips, Special Agent in Charge Jacobs, and Chief Contee commended the work of those who assisted the case from the FBI’s Washington Field Office and MPD’s Internal Affairs Division. They also acknowledged the work of those who handled the case at the U.S. Attorney’s Office, including Paralegal Specialist Angeline Thekkumthala, and Assistant U.S. Attorneys Joshua Rothstein, Katherine Rakoczy, and Veronica Sanchez, who investigated and prosecuted this matter.

 

WASHINGTON – Mahsa Azimirad, the former office manager for Universal Smiles, a Washington, D.C.-based dental practice, was sentenced today to 12 months in prison on a federal charge of health care fraud stemming from a scheme in which she was paid over $813,000 by defrauding the District of Columbia’s Medicaid program.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips; Wayne A. Jacobs, Special Agent in Charge, FBI Washington Field Office, Criminal Division; Maureen R. Dixon, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General for the region that includes Washington, D.C., and Daniel W. Lucas, Inspector General for the District of Columbia.

            Azimirad, 41, of Rockville, Md., was indicted in January 2019, along with Bilal Ahmed, the dentist who ran the dental practice. She pleaded guilty in May 2021 in the U.S. District Court for the District of Columbia. She was sentenced by the Honorable Colleen Kollar-Kotelly. Following completion of her prison term, Azimirad will be placed on three years of supervised release. The Court entered a $813,184 forfeiture money judgment and also ordered her to pay $813,184 in restitution.

            According to the statement of offense submitted to the Court and admitted by Azimirad, she was the marketing and operations manager for Universal Smiles, a dental practice in Northwest Washington. Through Universal Smiles, she and Ahmed engaged in a scheme to enrich themselves by defrauding D.C. Medicaid, a health care benefits program jointly funded by the federal government and the District of Columbia to provide health care services to residents who meet the income qualifying requirements.  As part of the scheme, Ahmed applied to be a Medicaid provider.  Once approved to bill Medicaid, Azimirad and Ahmed then billed D.C. Medicaid for thousands of provisional crowns, a significant number of which were not provided to the Medicaid patients.  From Aug. 9, 2012, through Feb. 26, 2014, D.C. Medicaid paid Universal Smiles approximately $5.4 million for provisional crowns.  Of the $5.4 million that D.C. Medicaid paid for provisional crowns, Azimirad received approximately $813,184.

            In a related case, Ahmed, 49, pleaded guilty in 2017 to sexually assaulting five former dental patients and one former employee and improperly touching another former employee. The victims were attacked in separate incidents between 2010 and 2014. He was sentenced to 16 ½ years in prison for those offenses and is serving a concurrent sentence after pleading guilty in 2019 to a federal health care fraud charge in this case.

            In announcing the sentence, Acting U.S. Attorney Phillips, Special Agent in Charge Jacobs, Special Agent in Charge Dixon, and Inspector General Lucas commended the work of those who investigated the case from the FBI’s Washington Field Office, the U.S. Department of Health and Human Services Office of Inspector General, and the District of Columbia Office of Inspector General.  They also expressed appreciation for the work of Paralegal Specialist Chad Byron and Forensic Financial Analyst Bryan Snitselaar.  Finally, they commended the work of Criminal Division Trial Attorney Gary Winters, Assistant U.S. Attorney Melissa Jackson, Assistant U.S. Attorney Emily Miller, and former Assistant U.S. Attorneys Denise A. Simmonds, Michelle Bradford, and Lionel André, who prosecuted the case.

            The FBI, the Department of Health and Human Services’ Office of Inspector General, the District of Columbia’s Office of the Inspector General’s Medicaid Fraud Control Unit, and the U.S. Attorney’s Office are committed to investigating and prosecuting individuals who defraud the D.C. Medicaid program. The government relies on the public for tips and assistance in helping stop health care fraud. If you have information about individuals committing health care fraud, please call the Department of Health and Human Services’ Office of Inspector General hotline at (800) HHS‑TIPS [(800) 447-8477.

WASHINGTON – Lawrence Paul Schmidt, aka Lawrence Schmid, 61, formerly of Washington, D.C., pleaded guilty today to bank fraud after being extradited from the United Kingdom to the District of Columbia in late 2020 in connection with federal charges related to an investment fraud scheme.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips and Wayne A. Jacobs, Special Agent in Charge of the FBI’s Washington Field Office Criminal Division.

            Schmidt was indicted in November 2018 on two counts of bank fraud, two counts of wire fraud, and six counts of engaging in monetary transactions in property derived from specified unlawful activity. He pleaded guilty to a bank fraud charge in the U.S. District Court for the District of Columbia.  The remaining charges will be dismissed at sentencing.  Bank fraud carries a statutory maximum sentence of 30 years in prison and potential financial penalties.  Under federal sentencing guidelines, Schmidt faces a likely range of 41 to 51 months in prison, a fine of up to $150,000, and restitution. The Honorable Amy Berman Jackson scheduled sentencing for Dec. 17, 2021. Schmidt remains in custody pending sentencing.

                According to the statement of offense submitted to the Court and admitted by Schmidt, beginning in 2008, Schmidt created several investment entities and related corporations, including Commercial Equity Partners, Ltd. (“CEP”) and FutureGen Company (“FGC”), through which he solicited funds. Between June 2008 and April 2014, Schmidt raised over $22 million in funds, which he then comingled and transferred between the various entities and his personal accounts. Schmidt knew that by January 2014, the bank accounts for the various CEP and FGC entities contained insufficient funds to meet the companies’ financial obligations.  By March 2014, the approximate combined balance of all the entities’ bank accounts was just $8,600.

                As a result, over a roughly four-month period in early 2014, Schmidt masterminded a scheme to defraud and attempt to defraud Bank of America and SunTrust Bank of approximately $746,885.59 in funds controlled by the banks.  Specifically, using various methods, Schmidt deposited fraudulent and forged checks into investment fund bank accounts that he controlled, then transferred and used the money for, amongst other things, his own benefit and use.  In doing so, according to the government’s evidence, Schmidt abused his position of private trust with the investors of the various CEP and FGC-related entities.

                As the scheme continued to unravel, on April 10, 2014, Schmidt boarded a one-way flight from the United States to London, where he remained until his arrest and extradition. Prior to leaving the United States, Schmidt wrote two letters to family members in which he stated, among other things, “[a]t this point in my life I have three choices, suicide, prison more than likely or to try and start over and make right by everyone.”  Thereafter, on or about July 24, 2015, in responding to a message sent to him on LinkedIn from one of his investors, Schmidt wrote, “I know the federal government would like to prosecute me and I cannot blame them.”

            On June 1, 2014, the U.S. Securities and Exchange Commission filed suit in U.S. District Court for the District of Columbia, in Civil Action No. 14-cv-1002 (CRC), against Schmidt, CEP, FGC, and the entities Schmidt controlled.  The court entered final judgment against Schmidt on Oct. 3, 2018, and entered final judgment against CEP, FGC, and the additional entities that Schmidt controlled on March 11, 2019.

            This investigation was conducted by the FBI’s Washington Field Office Criminal Division.  The Office of International Affairs in the Justice Department’s Criminal Division, the United States Marshals Service, and the government of the United Kingdom provided substantial assistance in securing Schmidt’s arrest and extradition. The SEC also provided substantial assistance in this investigation.

            The prosecution is being handled by Assistant U.S. Attorneys Anne P. McNamara and David B. Kent of the U.S. Attorney’s Office for the District of Columbia.

WASHINGTON – Two men, both from Washington, D.C., have been indicted on federal charges alleging that they conspired for nearly two years to deal firearms -- including “ghost guns” -- to people in the District of Columbia who were prohibited or otherwise unable to legally obtain them.

            The indictment was returned yesterday and announced today by Acting U.S. Attorney Channing D. Phillips, Charlie J. Patterson, Special Agent in Charge of the Washington Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Milique Wilson, 37, and Joseph Vincent Smith, 36, were each indicted on charges of conspiracy, engaging in the business of dealing in firearms without a license, and unlawful possession of a firearm and ammunition by a felon. Both are detained pending further proceedings in the U.S. District Court for the District of Columbia.

            According to the indictment, Wilson, Smith, and others conspired to obtain firearms from outside of the District of Columbia, including in locations in Maryland and Virginia, and transfer and transport these firearms to the District of Columbia and elsewhere. The indictment alleges that, on multiple occasions, Wilson and Smith contacted individuals prohibited from purchasing and possessing firearms and sold at least five firearms -- including two unserialized privately manufactured firearms (also known as “PMFs” or “ghost guns”) -- to buyers.  PMFs are unserialized and untraceable firearms that can be bought online and assembled at home with a kit. In addition to firearms trafficking charges, Wilson and Smith are each charged with possessing firearms and ammunition as convicted felons.

            Wilson was arrested on Aug. 27, 2021 by officers with the Metropolitan Police Department after he was allegedly seen brandishing a firearm in Southeast Washington. Officers located him in a vehicle in the drive-through of a fast-food restaurant in the 1400 block of Maryland Avenue NE and recovered an unserialized firearm (PMF) and ammunition. He has been in custody ever since. Smith was arrested at his residence on Sept. 22, 2021 for allegedly possessing a firearm and 20 rounds of ammunition. He also has been in custody since his arrest.

            An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

            This case is being investigated by the ATF Washington Field Office, with support from the Metropolitan Police Department (MPD) and the U.S. Marshals Service. The case is being prosecuted by Assistant U.S. Attorneys Rachel Fletcher and David Henek, of the Violent Crime and Narcotics Trafficking Section of the U.S. Attorney’s Office for the District of Columbia.

 

WASHINGTON – An indictment was unsealed today charging two members of the Metropolitan Police Department (MPD) with offenses stemming from the Oct. 23, 2020, police vehicular pursuit in Northwest Washington that caused the death of Karon Hylton-Brown.

            Terence Sutton, 37, an officer, was indicted on a District of Columbia charge of second-degree murder and federal charges of conspiracy and obstruction of justice. Andrew Zabavsky, 53, a lieutenant, was indicted on federal charges of conspiracy and obstruction of justice.

            “Police officers are sworn to uphold the law and ensure the safety of the community. The vast majority of officers execute their duties in an exemplary manner, and we are grateful for their dedicated service,” said Acting U.S. Attorney Channing D. Phillips. “But when a select few violate their oath by engaging in criminal conduct, they cannot do so with impunity and must be held accountable.  This indictment seeks to do just that.”

            “As alleged in the indictment, these sworn law enforcement officers showed a careless disregard for Mr. Hylton-Brown’s life and then conspired to obstruct the investigation of their actions,” said Wayne A. Jacobs, Special Agent in Charge of the FBI Washington Field Office Criminal Division. “The FBI has an obligation to ensure that law enforcement officers do not abuse their positions of trust and authority to the detriment of the communities they serve.”

            The indictment was returned by a grand jury yesterday and unsealed today. Sutton and Zabavsky made their first appearances this afternoon before the Honorable Magistrate Judge Zia M. Faruqui in the U.S. District Court for the District of Columbia. They were released under certain conditions set by the Court, with the next hearing set for Oct. 4, 2021.

            According to the indictment, at the time of the police pursuit, Sutton was assigned to the Crime Suppression Team in MPD’s Fourth Police District. Zabavsky supervised the Fourth Police District’s Crime Suppression Team officers, including Sutton. The pursuit began at approximately 10 p.m. on Friday, Oct. 23, 2020, after officers observed Mr. Hylton-Brown, 20, driving a moped on a sidewalk in the Brightwood Park area of Northwest Washington. The pursuit continued on neighborhood streets for more than 10 blocks and into an alley off the 700 block of Kennedy Street NW. Immediately upon exiting the alley and entering Kennedy Street, Mr. Hylton-Brown was struck by an oncoming civilian vehicle. He suffered severe head trauma and died on Oct. 25, 2020.

            The indictment alleges that Sutton caused Mr. Hylton-Brown’s death by driving a police vehicle in conscious disregard for an extreme risk of death or serious bodily injury to Mr. Hylton-Brown. It also alleges that Sutton and Zabavsky conspired and combined to hide from MPD officials the circumstances of the traffic crash leading to Mr. Hylton-Brown’s death.

            The charge of second-degree murder carries a statutory maximum of 40 years in prison. The conspiracy charge carries a statutory maximum of five years and the obstruction of justice charge carries a maximum of 20 years. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

            An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

            This case was investigated by the Criminal Investigation and Intelligence Unit of the U.S. Attorney’s Office for the District of Columbia and the FBI’s Washington Field Office. The case is being prosecuted by the Public Corruption and Civil Rights Section of the U.S. Attorney’s Office for the District of Columbia.

 

WASHINGTON – Aurelia Stanton, 39, of Baltimore, Maryland, and formerly of Washington, D.C., pleaded guilty today to embezzling hundreds of thousands of dollars from her former employer, announced Acting U.S. Attorney Channing D. Phillips and Special Agent in Charge of the FBI Washington Field Office Criminal Division Wayne A. Jacobs.

            Stanton pleaded guilty in the U.S. District Court for the District of Columbia, to one count of bank fraud. The Honorable Trevor N. McFadden scheduled her sentencing for Dec. 10, 2021. Under federal sentencing guidelines, she faces a likely range of 27 to 46 months in prison, as well as financial penalties. She also has agreed to pay about $233,000 in restitution. She also has agreed to pay an identical amount in a forfeiture money judgment.

            Stanton worked as an office manager from approximately June 2014 through May 2017 for a business, identified in court documents as “Company A.” She was responsible for ensuring timely payment of bills and invoices, accurate bookkeeping, and managing the office. From August 2015 through May 2017, according to court documents, she embezzled more than $233,000 writing checks to herself on the company’s check stock. She used a computer software program to conceal the fraudulent disbursements by editing the company’s bank statements to remove references to the fraudulently drafted, forged, and negotiated checks. In total, she deposited 187 checks with forged signatures.

            In announcing the guilty plea, Acting U.S. Attorney Phillips and Special Agent in Charge Jacobs commended the work of those who investigated the case from the FBI’s Washington Field Office. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including former Paralegal Specialists Brittany Phillips and Jessica Mundi. Finally, they commended the work of former Assistant U.S. Attorney Derrick Williams, who investigated and indicted the case, and Assistant U.S. Attorney Kondi Kleinman.

            WASHINGTON –Micheal Antonio Smith, 33, of Washington, D.C., has been sentenced to 51 months of imprisonment for robbing three Wells Fargo Bank branches within the District of Columbia.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips, Special Agent in Charge of the FBI Washington Field Office Criminal Division Wayne A. Jacobs, and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Smith pled guilty in June 2021, in the U.S. District Court for the District of Columbia, to two counts of bank robbery. A third count charging attempted bank robbery was dismissed at sentencing as part of the plea agreement.  He was sentenced on Sept. 22, 2021, by the Honorable Judge Christopher R. Cooper. Following his prison term, he will be placed on three years of supervised release.

            Smith robbed all three banks within a span of approximately two hours on Sept. 29, 2020. The first robbery took place at approximately 12:18 p.m. at a branch in the 3200 block of Pennsylvania Avenue SE. The others took place at branches in the 600 block of H Street NE and the 1900 block of 14th Street NW. According to the government’s evidence, Smith entered all three branches wearing a grey hooded sweatshirt with a prominent BMW logo and a balaclava style face and head covering. In each bank, Smith presented a note to the demanding large bills and no dye pack. During one of the robberies, Smith reached inside his sweatshirt in a way that suggested his possession of a handgun or other weapon. 

            Smith took the demand note with him after each robbery and robbed the three banks of $1,510 before fleeing the District of Columbia in a rented Tesla Model S. The FBI was able to locate and track that vehicle to Philadelphia, Pennsylvania, where Smith was located and arrested on Oct. 6, 2020. During a search of the Tesla, FBI agents discovered and seized a grey hooded sweatshirt with a BMW logo and a demand note. Smith has been in custody since his arrest.

            This case was investigated by the FBI Washington Field Office’s Violent Crime Task Force, which is composed of FBI Special Agents and Task Force Officers from MPD and other law enforcement agencies. The task force is charged with investigating and bringing cases to prosecution against violent offenders within the District of Columbia. 

            In announcing the sentence, U.S. Attorney Phillips, Special Agent in Charge Jacobs and Chief Contee commended the work of the MPD officers and FBI agents who investigated the case. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Rommel Pachoca. Finally, they commended the work of Assistant U.S. Attorney James B. Nelson, who investigated and prosecuted the case.

An indictment was unsealed today in the District of Columbia charging a Kentucky man and a Florida man both with conspiracy to solicit and cause an illegal campaign contribution by a foreign national, effect a conduit contribution and cause false records to be filed with the Federal Election Commission (FEC) and related substantive offenses.

According to court documents, Jesse R. Benton, 43, of Louisville, Kentucky, who previously worked as a campaign manager for two campaigns for U.S. Senate and one campaign for president, and Roy Douglas “Doug” Wead, 75, of Bonita Springs, Florida, who previously served as an advisor to multiple presidential campaigns, conspired together to solicit a political contribution from a Russian foreign national (Foreign National 1). As described in the indictment, Wead conveyed to Foreign National 1 that he could meet Political Candidate 1, a candidate for president during the 2016 election cycle, in exchange for a payment. Shortly after Foreign National 1 committed to transfer the funds, Benton reached out to individuals at Political Committee B, the national party committee for Political Candidate 1’s political party. He then arranged for Foreign National 1 to attend a political fundraising event and get a photograph with Political Candidate 1, in exchange for a political contribution to Political Committee C, a joint fundraising committee comprised of the campaign committee for Political Candidate 1, Political Committee B, and related state committees. Foreign National 1 ultimately wired $100,000 to Company A, a political consulting firm owned by Benton. To disguise the true purpose of the transfer of funds, Wead and Benton created a fake invoice for “consulting services” and invented a cover story.

Wead and Foreign National 1 attended the political fundraising event for Political Candidate 1 on Sept. 22, 2016. Foreign National 2, who worked as a Russian/English translator for Wead, also attended. All three individuals had photographs taken at the event with Political Candidate 1. Following the event, Benton repeatedly represented to a consultant working for Political Committee B and Political Committee C that he had already sent the promised contribution for the event, but in actuality he delayed sending the contribution. Benton ultimately filled out a contributor form, indicated that he was the contributor, and used a personal credit card to make a $25,000 contribution. Benton retained the remaining $75,000 of Foreign National 1’s money. Because Benton falsely claimed to have given the contribution himself, three different political committees unwittingly filed reports with the FEC that inaccurately reported Benton, rather than Foreign National 1, as the source of the funds.

Benton and Wead are both charged with one count of conspiracy to solicit and cause an illegal campaign contribution by a foreign national, effect a conduit contribution, and cause false records to be filed with the FEC, one count of contribution by a foreign national, one count of contribution in the name of another and three counts of making false entries in an official record. The defendants made their initial court appearance today before U.S. Magistrate Judge Zia Faruqui of the U.S. District Court for the District of Columbia. If convicted, Benton and Wead face a range of maximum penalties from five to 20 years in prison, per count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI’s San Diego Field Office is investigating the case.

Trial Attorneys Rebecca G. Ross and Michelle K. Parikh of the Justice Department’s Public Integrity Section and Special Assistant U.S. Attorney Michelle L. Wasserman of the U.S. Attorney’s Office for the District of Columbia are prosecuting the case.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

WASHINGTON – A criminal complaint was unsealed this week in the District of Columbia charging a doctor with unlawful distribution of a controlled substance outside the scope of his professional practice.  As detailed in court documents, the case relates to defendant Dr. Robert M. Cao prescribing various narcotic pain medications in the months and days leading up to a man’s May 31, 2021 overdose death.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips and Special Agent in Charge of the FBI Washington Field Office Criminal Division Wayne A. Jacobs.  

            Cao, 38, of Falls Church, Va., was arrested on Sept. 14 and made his initial appearance the following day before Magistrate Judge Zia M. Faruqui in the U.S. District Court for the District of Columbia.  His next hearing is scheduled for Oct. 28, 2021. The charge carries a statutory maximum of 20 years in prison and potential financial penalties.

            Cao’s arrest is part of a nationwide initiative targeting health care fraud. The Department of Justice announced today that criminal charges have been filed against 138 defendants, including 42 doctors, nurses, and other licensed medical professionals, in 31 federal districts across the United States for their alleged participation in various healthcare fraud schemes that resulted in approximately $1.4 billion in alleged losses.

            Nationwide, the charges target approximately $1.1 billion in fraud committed using telemedicine (the use of telecommunications technology to provide health care services remotely), $29 million in COVID-19 health care fraud, $133 million connected to substance abuse treatment facilities, or “sober homes,” and $160 million connected to other health care fraud and illegal opioid distribution schemes across the country.

            “This nationwide enforcement action demonstrates that the Criminal Division is at the forefront of the fight against health care fraud and opioid abuse by prosecuting those who have exploited health care benefit programs and their patients for personal gain,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The charges announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of health care benefit programs, even amid a continued pandemic.” 

            “Health care fraud and opioid abuse have imposed enormous economic consequences and caused thousands of tragic deaths nationwide,” said Acting U.S. Attorney Phillips. “As today’s announcement shows, we are committed to using the full extent of the law to protect the public from those who illegally sell and prescribe opioids and other dangerous drugs as well as those who carry out schemes to defraud the public health system of taxpayer dollars.”

            “Physicians are entrusted to care for our citizens and prescribe necessary medications in legitimate doctor-patient relationships,” said Special Agent in Charge Jacobs of the FBI Washington Field Office's Criminal Division. “The FBI and our partners will continue to investigate and stop those medical professionals who provide illegal prescriptions and distribute controlled substance medications that fuel the opioid epidemic in our country. Not only are these actions criminal, but as we have seen all too often – they have deadly consequences.”

            According to court documents, Cao is a physician who is licensed to practice medicine in the District of Columbia and Virginia.  Between in or around at least Jan. 9, 2021, and continuing through in or around May 30, 2021, the documents allege, Cao knowingly and intentionally wrote a man identified in court documents as “V.C.” at least five prescriptions for oxycodone and hydrocodone, Schedule II controlled substances with a high potential for abuse.

            On May 31, 2021, first responders were dispatched to a Fairfax, Va. residence in response to a 911 call for assistance regarding “V.C.,” after his girlfriend found him cold and non-responsive. He was pronounced deceased under suspicious circumstances. 

            A subsequent autopsy report documented the cause of death as acute combined oxycodone and ethanol poisoning.  On the nightstand next to where “V.C.” was found were prescription bottles, including one containing Percocet (a brand name of the narcotic analgesic oxycodone/acetaminophen) pills filled on May 23, 2021.  Cao was the prescribing doctor listed on the bottle.

            Court filings also detail text message exchanges between Cao and “V.C.”, including discussions about Cao prescribing narcotic pain medications to “V.C.”; “V.C.” agreeing to give Cao a kickback on some of those pills; and meetings between the two, including a meeting in a parking lot on the night before the man’s death.

            The charges in criminal complaints are merely allegations and every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.  If convicted of any offense, a defendant’s sentence will be determined by the court based on the advisory U.S. Sentencing Guidelines and other statutory factors.

            The case is being prosecuted by Assistant U.S. Attorney Anne P. McNamara of the U.S. Attorney’s Office for the District of Columbia.  The investigation into this matter was conducted by the FBI’s Washington Field Office in partnership with the Fairfax County, Va. Police Department.

            Nationally, the cases announced today involving the illegal prescription and/or distribution of opioids involve a total of 19 defendants, including several charges against medical professionals and others who prescribed over 12 million doses of opioids and other prescription narcotics, while submitting over $14 million in false billings.

            Prior to the charges announced as part of today’s nationwide enforcement action and since its inception in March 2007, the Health Care Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,600 defendants who have collectively billed the Medicare program for approximately $23 billion. In addition to the criminal actions announced today, CMS, working in conjunction with HHS-OIG, announced 28 administrative actions to decrease the presence of fraudulent providers.

The national announcement can be found at this link:

https://www.justice.gov/opa/pr/national-health-care-fraud-enforcement-action-results-charges-involving-over-14-billion

To view Assistant Attorney General Polite’s remarks:

https://www.justice.gov/opa/video/assistant-attorney-general-kenneth-polite-jr-delivers-remarks-health-care-enforcement.

 

WASHINGTON – Michael Hilliard, 62, formerly of Washington, D.C, pleaded guilty today to sexually abusing two women, both of whom were strangers to him, announced Acting U.S. Attorney Channing D. Phillips.

            Hilliard pleaded guilty to two counts of misdemeanor sex abuse. He faces a statutory maximum of 360 days of incarceration – 180 days for each conviction. Additionally, as part of the plea agreement, he agreed to register as a sex offender for the next 10 years. Hilliard will be sentenced on Nov. 17, 2021, by the Honorable Jonathan H. Pittman in the Superior Court of the District of Columbia.

            According to the government’s evidence, in the first offense, on May 21, 2021, at about 11:25 a.m., Hilliard approached the victim as she walked toward the PNC Bank at the corner of 14th and P Streets NW. He made verbal sexual advances toward the victim, who ignored him as he proceeded to follow her. The victim later left the bank and entered her vehicle. As she waited at the traffic light on the corner of 14th and P Streets, Hilliard approached the driver’s side of her vehicle, reached into the open window, and grabbed her breast.

            In the second offense, on July 10, 2021, at about 2:05 p.m., Hilliard approached another victim during her shift at a convenience store located near Thomas Circle NW and told her that he was hungry. As the victim went to prepare a sandwich for him, he reached behind her and grabbed her buttocks. When the victim turned around, Hilliard reached between her legs and grabbed her vaginal area.

            Following these guilty pleas, Hilliard now has 24 misdemeanor sexual abuse convictions since 1999. Hilliard was arrested in these cases on July 12, 2021 and has since been detained.

            In announcing the pleas, Acting U.S. Attorney Phillips commended the work of those who investigated the case from the Metropolitan Police Department (MPD). He also expressed appreciation for the work of those who handled the case at the U.S. Attorney’s Office, including Veronica Vaughan and Lezlie Richardson of the Victim/Witness Assistance Unit. Finally, he commended the work of Assistant U.S. Attorney Sandra R. Braschi, who prosecuted both cases.

 

WASHINGTON – Sophia Kim, the former Treasurer and Comptroller for the Universal Ballet Foundation, which operated the Kirov Academy of Ballet, was sentenced today to 42 months in prison for embezzling more than $1.5 million from the organization.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips and Special Agent in Charge of the FBI Washington Field Office Criminal Division Wayne A. Jacobs.

            Kim, a/k/a “Sophia Kim Sebold” and “Sookyeong Kim Sebold,” pleaded guilty in May 2021 in the U.S. District Court for the District of Columbia to a charge of bank fraud. She was sentenced by the Honorable Rudolph Contreras. In addition to the prison term, Kim 60, of Temple Hills, Md., was ordered to pay more than $1.5 million in restitution and an identical amount in a forfeiture money judgment. Following completion of her prison term, she will be placed on four years of supervised release.

            The Kirov Academy of Ballet is a non-profit organization located in the District of Columbia. According to court documents, between approximately January 2018 and September 2018, Kim misappropriated approximately $1.5 million from the organization’s bank accounts through unauthorized check, debit, and credit card transactions.

            This consisted of 68 unauthorized checks to “Cash” or to “Sophia Kim,” in whole-dollar amounts ranging from $500 to $12,000, totaling approximately $377,200, 197 unauthorized debits and cash withdrawals, totaling approximately $479,283, and 139 unauthorized credit card transactions, totaling approximately $681,751.  More than $1 million of unauthorized debits and withdrawals and credit card charges were at MGM National Harbor Casino in Oxon Hill, MD, totaling approximately $1,068,026. 

            At the time that Kim began committing these offenses, she had just completed a period of supervised release for an earlier conviction stemming from her work as a bookkeeper and treasurer of another non-profit. In that case, she was convicted in 2012 in the U.S. District Court for the Eastern District of Virginia on charges of filing a false tax return and tax evasion and sentenced to two years in prison, to be followed by three years of supervised release.

            In announcing the sentence, Acting U.S. Attorney Phillips and Special Agent in Charge Jacobs commended the work of those who investigated the case from the FBI’s Washington Field Office. They also acknowledged the efforts of those who handled the case for the U.S. Attorney’s Office, including Paralegal Specialist Angeline Thekkumthala, as well as Assistant U.S. Attorneys Joshua Rothstein and David Kent, who investigated and prosecuted this matter.

 

WASHINGTON – On Sept. 7, U.S. citizens, Marc Baier, 49, and Ryan Adams, 34, and a former U.S. citizen, Daniel Gericke, 40, all former employees of the U.S. Intelligence Community (USIC) or the U.S. military, entered into a deferred prosecution agreement (DPA) that restricts their future activities and employment and requires the payment of $1,685,000 in penalties to resolve a Department of Justice investigation regarding violations of U.S. export control, computer fraud and access device fraud laws. The Department filed the DPA today, along with a criminal information alleging that the defendants conspired to violate such laws.

            According to court documents, the defendants worked as senior managers at a United Arab Emirates (U.A.E.)-based company (U.A.E. CO) that supported and carried out computer network exploitation (CNE) operations (i.e., “hacking”) for the benefit of the U.A.E government between 2016 and 2019. Despite being informed on several occasions that their work for U.A.E. CO, under the International Traffic in Arms Regulations (ITAR), constituted a “defense service” requiring a license from the State Department’s Directorate of Defense Trade Controls (DDTC), the defendants proceeded to provide such services without a license.

            These services included the provision of support, direction and supervision in the creation of sophisticated “zero-click” computer hacking and intelligence gathering systems – i.e., one that could compromise a device without any action by the target. U.A.E. CO employees whose activities were supervised by and known to the defendants thereafter leveraged these zero-click exploits to illegally obtain and use access credentials for online accounts issued by U.S. companies, and to obtain unauthorized access to computers, like mobile phones, around the world, including in the United States.

            “This agreement is the first-of-its-kind resolution of an investigation into two distinct types of criminal activity: providing unlicensed export-controlled defense services in support of computer network exploitation, and a commercial company creating, supporting and operating systems specifically designed to allow others to access data without authorization from computers worldwide, including in the United States,” said Acting Assistant Attorney General Mark J. Lesko for the Justice Department’s National Security Division. “Hackers-for-hire and those who otherwise support such activities in violation of U.S. law should fully expect to be prosecuted for their criminal conduct.”

            “Left unregulated, the proliferation of offensive cyber capabilities undermines privacy and security worldwide. Under our International Traffic in Arms Regulations, the United States will ensure that U.S. persons only provide defense services in support of such capabilities pursuant to proper licenses and oversight,” said Acting U.S. Attorney Channing D. Phillips of the District of Columbia. “A U.S. person’s status as a former U.S. government employee certainly does not provide them with a free pass in that regard.”

            “The FBI will fully investigate individuals and companies that profit from illegal criminal cyber activity,” said Assistant Director Bryan Vorndran of the FBI’s Cyber Division. “This is a clear message to anybody, including former U.S. government employees, who had considered using cyberspace to leverage export-controlled information for the benefit of a foreign government or a foreign commercial company – there is risk, and there will be consequences.”

            “Today’s announcement shines a light on the unlawful activity of three former members of the U.S. Intelligence Community and military,” said Assistant Director in Charge Steven M. D’Antuono of the FBI’s Washington Field Office. “These individuals chose to ignore warnings and to leverage their years of experience to support and enhance a foreign government’s offensive cyber operations. These charges and the associated penalties make clear that the FBI will continue to investigate such violations.”

The Defendants’ Applicable Conduct

            After leaving U.S. government employment, Baier, Adams and Gericke worked for a U.S. Company (U.S. Company One) that provided cyber services to a U.A.E. government agency in compliance with the ITAR pursuant to a DDTC-issued Technical Assistance Agreement (TAA) signed by U.S. Company One, the U.A.E. government, and its relevant intelligence agency. U.S. Company One’s TAA specifically required the parties to abide by U.S. export control laws; obtain preapproval from a U.S. government agency prior to releasing information regarding “cryptographic analysis and/or computer network exploitation or attack,” and; not “target or exploit U.S. Persons (i.e., U.S. citizens, permanent resident aliens, or U.S. companies or entities, or other persons in the United States) . . .” While employed by U.S. Company One, the defendants received periodic ITAR and TAA training.

            In January 2016, after receiving an offer for higher compensation and an expanded budget, the defendants joined U.A.E. CO as senior managers of a team known as Cyber Intelligence-Operations (CIO). Prior to their departure, U.S. Company One repeatedly informed its employees, including the defendants, that the services they were providing constituted “defense services” under the ITAR, and that U.S. persons could not lawfully provide such services to U.A.E. CO without obtaining a separate TAA. After joining U.A.E. CO, the defendants sought continued access to U.S. Company One’s ITAR-controlled information, including from U.S. Company One employees, in violation of the TAA and the ITAR.

            Between January 2016 and November 2019, the defendants and other U.A.E. CO CIO employees expanded the breadth and increased the sophistication of the CNE operations that CIO was providing to the U.A.E. government. For example, over an 18-month period, CIO employees, with defendants’ support, direction and supervision, created two similar “zero-click” computer hacking and intelligence gathering systems that leveraged servers in the United States belonging to a U.S. technology company (U.S. Company Two) to obtain remote, unauthorized access to any of the tens of millions of smartphones and mobile devices utilizing a U.S. Company Two-provided operating system. The defendants and other CIO employees colloquially referred to these two systems as “KARMA” and “KARMA 2.”

            CIO employees whose activities were supervised by and/or known to the defendants used the KARMA systems to obtain, without authorization, targeted individuals’ login credentials and other authentication tokens (i.e., unique digital codes issued to authorized users) issued by U.S. companies, including email providers, cloud storage providers, and social media companies. CIO employees then used these access devices to, again without authorization, log into the target’s accounts to steal data, including from servers within the United States.

            U.S. Company Two updated the operating system for its smartphones and other mobile devices in September 2016, undercutting the usefulness of KARMA. Accordingly, CIO created KARMA 2, which relied on a different exploit.  In the summer of 2017, the FBI informed U.S. Company Two that its devices were vulnerable to the exploit used by KARMA 2. In August 2017, U.S. Company Two updated the operating system for its smartphones and other mobile devices, limiting KARMA 2’s functionality. However, both KARMA and KARMA 2 remained effective against U.S. Company Two devices that used older versions of its operating system.

The DPA’s Terms

            Under the terms of the DPA, Baier, Adams and Gericke agreed to pay $750,000, $600,000, and $335,000 respectively, over a three-year term, which they may not be reimbursed for without the express approval of the U.S. government. In addition to the financial penalties, as part of the DPA, the defendants agreed to full cooperation with the relevant Department and FBI components; the immediate relinquishment of any foreign or U.S. security clearances; a lifetime ban on future U.S. security clearances; and certain future employment restrictions, including a prohibition on employment that involves CNE activity or exporting defense articles or providing defense services under the ITAR (e.g., CNE techniques), and restrictions on employment for certain U.A.E. organizations.

            The investigation was conducted jointly by the U.S. Attorney’s Office for the District of Columbia, the Justice Department’s National Security Division (NSD), and the FBI’s Washington Field Office.

            Assistant U.S. Attorneys Demian Ahn and Tejpal Chawla of the U.S. Attorney’s Office for the District of Columbia and Counsel for Cyber Investigations Ali Ahmad and Trial Attorney Scott Claffee of NSD’s Counterintelligence and Export Control Section led the investigation for the government.

On Sept. 7, U.S. citizens, Marc Baier, 49, and Ryan Adams, 34, and a former U.S. citizen, Daniel Gericke, 40, all former employees of the U.S. Intelligence Community (USIC) or the U.S. military, entered into a deferred prosecution agreement (DPA) that restricts their future activities and employment and requires the payment of $1,685,000 in penalties to resolve a Department of Justice investigation regarding violations of U.S. export control, computer fraud and access device fraud laws. The Department filed the DPA today, along with a criminal information alleging that the defendants conspired to violate such laws.

According to court documents, the defendants worked as senior managers at a United Arab Emirates (U.A.E.)-based company (U.A.E. CO) that supported and carried out computer network exploitation (CNE) operations (i.e., “hacking”) for the benefit of the U.A.E government between 2016 and 2019. Despite being informed on several occasions that their work for U.A.E. CO, under the International Traffic in Arms Regulations (ITAR), constituted a “defense service” requiring a license from the State Department’s Directorate of Defense Trade Controls (DDTC), the defendants proceeded to provide such services without a license.

These services included the provision of support, direction and supervision in the creation of sophisticated “zero-click” computer hacking and intelligence gathering systems – i.e., one that could compromise a device without any action by the target. U.A.E. CO employees whose activities were supervised by and known to the defendants thereafter leveraged these zero-click exploits to illegally obtain and use access credentials for online accounts issued by U.S. companies, and to obtain unauthorized access to computers, like mobile phones, around the world, including in the United States.

“This agreement is the first-of-its-kind resolution of an investigation into two distinct types of criminal activity: providing unlicensed export-controlled defense services in support of computer network exploitation, and a commercial company creating, supporting and operating systems specifically designed to allow others to access data without authorization from computers worldwide, including in the United States,” said Acting Assistant Attorney General Mark J. Lesko for the Justice Department’s National Security Division. “Hackers-for-hire and those who otherwise support such activities in violation of U.S. law should fully expect to be prosecuted for their criminal conduct.”

“Left unregulated, the proliferation of offensive cyber capabilities undermines privacy and security worldwide. Under our International Traffic in Arms Regulations, the United States will ensure that U.S. persons only provide defense services in support of such capabilities pursuant to proper licenses and oversight,” said Acting U.S. Attorney Channing D. Phillips of the District of Columbia. “A U.S. person’s status as a former U.S. government employee certainly does not provide them with a free pass in that regard.”

“The FBI will fully investigate individuals and companies that profit from illegal criminal cyber activity,” said Assistant Director Bryan Vorndran of the FBI’s Cyber Division. “This is a clear message to anybody, including former U.S. government employees, who had considered using cyberspace to leverage export-controlled information for the benefit of a foreign government or a foreign commercial company – there is risk, and there will be consequences.”

“Today’s announcement shines a light on the unlawful activity of three former members of the U.S. Intelligence Community and military,” said Assistant Director in Charge Steven M. D’Antuono of the FBI’s Washington Field Office. “These individuals chose to ignore warnings and to leverage their years of experience to support and enhance a foreign government’s offensive cyber operations. These charges and the associated penalties make clear that the FBI will continue to investigate such violations.”

The Defendants’ Applicable Conduct

After leaving U.S. government employment, Baier, Adams and Gericke worked for a U.S. Company (U.S. Company One) that provided cyber services to a U.A.E. government agency in compliance with the ITAR pursuant to a DDTC-issued Technical Assistance Agreement (TAA) signed by U.S. Company One, the U.A.E. government, and its relevant intelligence agency. U.S. Company One’s TAA specifically required the parties to abide by U.S. export control laws; obtain preapproval from a U.S. government agency prior to releasing information regarding “cryptographic analysis and/or computer network exploitation or attack,” and; not “target or exploit U.S. Persons (i.e., U.S. citizens, permanent resident aliens, or U.S. companies or entities, or other persons in the United States) . . .” While employed by U.S. Company One, the defendants received periodic ITAR and TAA training.

In January 2016, after receiving an offer for higher compensation and an expanded budget, the defendants joined U.A.E. CO as senior managers of a team known as Cyber Intelligence-Operations (CIO). Prior to their departure, U.S. Company One repeatedly informed its employees, including the defendants, that the services they were providing constituted “defense services” under the ITAR, and that U.S. persons could not lawfully provide such services to U.A.E. CO without obtaining a separate TAA. After joining U.A.E. CO, the defendants sought continued access to U.S. Company One’s ITAR-controlled information, including from U.S. Company One employees, in violation of the TAA and the ITAR.

Between January 2016 and November 2019, the defendants and other U.A.E. CO CIO employees expanded the breadth and increased the sophistication of the CNE operations that CIO was providing to the U.A.E. government. For example, over an 18-month period, CIO employees, with defendants’ support, direction and supervision, created two similar “zero-click” computer hacking and intelligence gathering systems that leveraged servers in the United States belonging to a U.S. technology company (U.S. Company Two) to obtain remote, unauthorized access to any of the tens of millions of smartphones and mobile devices utilizing a U.S. Company Two-provided operating system. The defendants and other CIO employees colloquially referred to these two systems as “KARMA” and “KARMA 2.”

CIO employees whose activities were supervised by and/or known to the defendants used the KARMA systems to obtain, without authorization, targeted individuals’ login credentials and other authentication tokens (i.e., unique digital codes issued to authorized users) issued by U.S. companies, including email providers, cloud storage providers, and social media companies. CIO employees then used these access devices to, again without authorization, log into the target’s accounts to steal data, including from servers within the United States.

U.S. Company Two updated the operating system for its smartphones and other mobile devices in September 2016, undercutting the usefulness of KARMA. Accordingly, CIO created KARMA 2, which relied on a different exploit.  In the summer of 2017, the FBI informed U.S. Company Two that its devices were vulnerable to the exploit used by KARMA 2. In August 2017, U.S. Company Two updated the operating system for its smartphones and other mobile devices, limiting KARMA 2’s functionality. However, both KARMA and KARMA 2 remained effective against U.S. Company Two devices that used older versions of its operating system.

The DPA’s Terms

Under the terms of the DPA, Baier, Adams and Gericke agreed to pay $750,000, $600,000, and $335,000 respectively, over a three-year term, which they may not be reimbursed for without the express approval of the U.S. government. In addition to the financial penalties, as part of the DPA, the defendants agreed to full cooperation with the relevant Department and FBI components; the immediate relinquishment of any foreign or U.S. security clearances; a lifetime ban on future U.S. security clearances; and certain future employment restrictions, including a prohibition on employment that involves CNE activity or exporting defense articles or providing defense services under the ITAR (e.g., CNE techniques), and restrictions on employment for certain U.A.E. organizations.

The investigation was conducted jointly by the U.S. Attorney’s Office for the District of Columbia, the Justice Department’s National Security Division (NSD), and the FBI’s Washington Field Office.

Assistant U.S. Attorneys Demian Ahn and Tejpal Chawla of the U.S. Attorney’s Office for the District of Columbia and Counsel for Cyber Investigations Ali Ahmad and Trial Attorney Scott Claffee of NSD’s Counterintelligence and Export Control Section led the investigation for the government.

            WASHINGTON –Laketia Hazelwood, 33, of Washington, D.C., has been sentenced to a four-year prison term for an arson that took place in June 2019 at Pennsylvania House, a 43-unit apartment building in Southeast Washington.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips, Charlie J. Patterson, Special Agent in Charge of the Washington Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), Robert J. Contee III, Chief of the Metropolitan Police Department (MPD), and John A. Donnelly, Sr., Chief of the D.C. Fire and Emergency Medical Services Department.

            Hazelwood pleaded guilty in May 2021 to one count of transporting an explosive with intent to damage property. She was sentenced on Sept. 2, 2021, by the Honorable Richard J. Leon in the U.S. District Court for the District of Columbia. Following her prison term, she will be placed on one year of supervised release.

            According to the government’s evidence, on June 17, 2019, at approximately 10 p.m., Hazelwood poured gasoline into a plastic trash can liner and carried it into the lobby of Pennsylvania House, in the 3900 block of Pennsylvania Avenue SE.  There, she tossed the gasoline-filled bag onto the lobby floor and threw a series of matches onto it, eventually igniting a large fire.  The flames consumed much of the lobby area and caused extensive damage before being extinguished by members of the D.C. Department of Fire and Emergency Medical Services.

            Surveillance footage of Hazelwood’s actions was posted publicly at https://www.youtube.com/watch?v=wtlv3AOqo3c&t=5s, resulting in several important tips from the public.

            In announcing the sentence, U.S. Attorney Phillips, Special Agent in Charge Patterson, Chief Contee, and Chief Donnelly commended the work of the MPD officers, ATF agents, and Fire Marshals who investigated the case. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Kate Abrey and Teesha Tobias, and Supervisory Litigation Technology Specialist Leif Hickling. 

            Finally, they commended the work of Assistant U.S. Attorneys James Nelson and Andrew Floyd, who investigated and prosecuted the case.

 

WASHINGTON – Ashanti West, 27, of Washington, D.C., was sentenced today to 118 months in prison for carrying out armed robberies of a convenience store and sandwich shop within a two-hour period in the fall of 2019.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips, Special Agent in Charge of the FBI Washington Field Office Criminal Division Wayne A. Jacobs, and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            West is one of three defendants, all from Washington, D.C., who pleaded guilty to federal charges in the robberies. One co-defendant, Andre Thomas Jr., 27, was earlier sentenced to 112 months in prison, and another, Jaron Willis, 21, was sentenced to 42 months in prison and an additional six months of home incarceration. 

            West pleaded guilty in March 2021, in the U.S. District Court for the District of Columbia, to charges of robbery and using, carrying, possessing, and brandishing a firearm during a crime of violence. He was sentenced by the Honorable Timothy J. Kelly. Following his prison term, he will be placed on five years of supervised release.

            According to the government’s evidence, on Nov. 5, 2019, at about 11:37 p.m., West and Thomas entered a 7-Eleven in the 4400 block of Benning Road NE, unmasked and scoping out the store. Then, roughly 90 minutes later, at 1:16 a.m. on Nov. 6, 2019, West, Thomas and Willis entered the store, all wearing masks. Once the lone store patron completed her transaction, West retrieved a pistol from his coat pocket and brandished it in the face of a 7-Eleven employee, demanding that the cash register be opened. Willis then hopped over the cashier-counter and began to steal cartons of cigarettes. At that point, a second store employee, who had been stocking shelves, realized what was happening and started to move swiftly toward the exit. Thomas grabbed the employee by the neck and squeezed until the victim lost consciousness. The defendants fled after collectively stealing cash and multiple cartons of cigarettes.

            The second robbery took place at approximately 2:50 a.m. All three defendants, again wearing masks, entered a Subway sandwich shop in the 4500 block of Benning Road SE. At the time of this robbery, the door to the left of the register was propped open as the store was actively receiving a delivery. Once again, West pulled out a firearm, pointing it at a store employee before heading to the back of the establishment. When West reached the back of the store, he encountered another employee, who was stocking the freezer with the new deliveries. West forced this victim at gunpoint to lie down on the floor on his stomach, in the entryway to the freezer. Meanwhile, Willis physically pulled and pushed the other employee to the register. Once that employee opened the register, Willis and Thomas told him to hide in the bathroom. The three men took cash, including the entire cash till, and beverages and fled.

            The three defendants were arrested soon after the robberies by the Metropolitan Police Department and have been in custody ever since.

            This investigation was conducted by Metropolitan Police Department and the FBI Washington Field Office’s Violent Crime Task Force, which is composed of FBI Agents, working in partnership with MPD Detectives, and task force officers from other federal agencies to include the U.S. Department of Homeland Security, Federal Protective Service, U.S. Marshals Service, U.S. Capitol Police, U.S. Department of Energy, and other partners. The task force investigates violent offenders within the D.C. metropolitan area. 

            In announcing the sentence, Acting U.S. Attorney Phillips, Special Agent in Charge Jacobs, and Chief Contee commended the work of those who investigated the case. They also expressed appreciation for the efforts of those who handled the case for the U.S. Attorney’s Office, including Assistant U.S. Attorney Jeffrey Poulin and Paralegal Specialist Tasha Tobias, as well as Assistant U.S. Attorney Kaitlin A. Vaillancourt, who prosecuted the matter.

 

WASHINGTON – A 57-year-old man, of Washington, D.C., pleaded guilty today to sexually abusing a 14-year-old girl while he was living with her and her mother in Northwest Washington, Acting U.S. Attorney Channing D. Phillips announced.

            The man, who is not identified here to protect the privacy of the victim, pleaded guilty in the Superior Court of the District of Columbia to a charge of second-degree child sexual abuse, with aggravating circumstances. He also pleaded guilty to a related charge of contempt of court. The plea, which is contingent upon the Court’s approval, calls for an agreed-upon prison term in the range of four years to eight and a half years. Following his prison term, the man will be required to register for 10 years as a sex offender and complete a term of supervised release. The Honorable Juliet J. McKenna scheduled sentencing for Jan. 14, 2022.

            In connection with his guilty plea, the defendant admitted engaging in sexual abuse against the victim on more than one occasion between October 2015 and December 2016. The victim disclosed what took place to her mother in March 2019. The defendant was arrested on April 5, 2019 and was initially detained pending trial. In May 2019, the Court released him with conditions that included a requirement that he have no contact and stay away from the victim and her mother. However, the Court learned that he continued to have contact with the mother, and as a result, he has been detained since August of 2019.

            In announcing the plea, Acting U.S. Attorney Phillips commended the work of those who investigated the case from the Metropolitan Police Department’s Youth and Family Services Division. He also expressed appreciation for the assistance provided by the Children’s Advocacy Center. He acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including former Victim/Witness Advocate Juanita Harris, Paralegal Specialist ReShawn Johnson, Investigators Sean Ricardi, Bryan Molnar, Nelson Rhone, and Nick Boffi. Finally, he commended the work of Assistant U.S. Attorneys Stuart Allen, Jason Feldman, and Angela Buckner, who investigated and prosecuted the case.

 

WASHINGTON – Charles M. Thomas, 47, was sentenced today to 14 months in prison for paying bribes to two employees of U.S. Department of Housing and Urban Development (HUD) as well as to an employee of the District of Columbia Office of the State Superintendent of Education (OSSE) in return for favorable treatment on contracts for his business.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips, Robert E. Bornstein, Acting Special Agent in Charge of the FBI Washington Field Office, Criminal Division, Christopher Gaffney, Special Agent in Charge, Office of Special Investigations, HUD Office of Inspector General, and Daniel W. Lucas, Inspector General for the District of Columbia.

            Thomas, of Lusby, Md., pleaded guilty in May 2018 in the U.S. District Court for the District of Columbia., to one count of conspiracy to commit bribery and two counts of conspiracy to pay gratuities and violate the Procurement Integrity Act. He was sentenced by the Honorable Randolph D. Moss. As part of his plea agreement, he is required to pay restitution to the D.C. Office of the State Superintendent of Education in the amount of $179,999. He also must pay a forfeiture money judgment in the same amount. Additionally, following his prison term, he will be placed on two years of supervised release.

            According to court documents, Thomas was the sole owner and president of a Maryland company that provided information technology services to agencies of the federal government and educational services to public school children in the Washington, D.C. metropolitan area. His company had offices in the District of Columbia and Virginia and dozens of employees.

            In his guilty plea, Thomas admitted to carrying out three schemes. One involved his dealings with a former management analyst of OSSE, an agency of the District of Columbia government. The others involved his dealings with a former contract oversight specialist and a former supervisory contract specialist with HUD.

            In 2013 and 2014, according to the government’s evidence, Thomas made approximately $53,000 in payments to OSSE employee Shauntell Harley. In return, she provided him with information needed to create fraudulent invoices reflecting the provision of early intervention services that Thomas’s company did not provide. All told, Harley used her official position to cause $179,999 in payments to be made to Thomas’s company for work that was not performed.

            The activities involving HUD took place from approximately 2010 to 2015. Thomas provided HUD employee Kevin Jones with tickets to sporting events, travel, cash, and other items worth more than $50,000, in exchange for Jones providing Thomas and his company with non-public information about pending HUD contracts. Thomas provided the second employee, former supervisor LaFonda Lewis, with tickets to sporting events, designer handbags, cash, and other items, worth more than $23,000, in exchange for non-public information about contracts.

            Harley pleaded guilty to charges involving two bribery schemes in March 2018 and was sentenced to 56 months in prison. Lewis pleaded guilty to violating the Procurement Integrity Act in January 2019 and was sentenced to a year and a day in prison. Jones pleaded guilty to bribery in March 2019 and was sentenced to 24 months in prison.

            In announcing the sentence, Acting U.S. Attorney Phillips, Special Agent in Charge Bornstein, Special Agent in Charge Gaffney, and Inspector General Lucas commended the work of those who investigated the case from the FBI’s Washington Field Office, HUD’s Office of the Inspector General, and the District of Columbia Office of the Inspector General.

            They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including former Paralegal Specialists Joshua Fein and Kristy Penny. Finally, they expressed appreciation for the work of Assistant U.S. Attorney Peter C. Lallas, who is investigating and prosecuting the matter.

 

WASHINGTON – A Maryland man who advertised the sale of pit bull puppies on various websites pleaded guilty today to a scheme in which he generated at least $158,000 in money transfers from more than 100 victims who never got the dogs.

            The guilty plea was announced by Acting U.S. Attorney Channing D. Phillips and Raymond Villanueva, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Washington, D.C.

            Fonjeck Eric Azoh, 42, of Mount Rainier, Md., pleaded guilty to wire fraud. The charge carries a statutory maximum of 20 years in prison and potential financial penalties. As part of the plea agreement, Azoh agreed that a restitution order of at least $158,000 is appropriate in the case. He also agreed to forfeit $67,000 seized by law enforcement during the investigation and pay an additional $92,000 forfeiture money judgment. Azoh will be sentenced in the U.S. District Court for the District of Columbia on Nov. 17, 2021, by the Honorable Carl J. Nichols.

            According to the government’s evidence, between January 2019 and October 2020, Azoh offered the pit bull puppies, using various websites. He agreed to sell these puppies to victims living throughout the United States even though he never intended to provide them. Azoh directed victims to send money to him through money transfer businesses, which he then collected at retail stores and elsewhere. Throughout the scheme, Azoh collected at least $158,000 from at least 119 victims who lived in 40 different states.

            Azoh was arrested in January 2021 and has been in custody ever since.

            In announcing the plea, Acting U.S. Attorney Phillips and Special Agent in Charge Villanueva commended the work of those who investigated the case from HSI. They also expressed appreciation for the work of those who handled the case at the U.S. Attorney’s Office, including Assistant U.S. Attorney John W. Borchert, who prosecuted the case.

WASHINGTON – A federal grand jury in Washington, D.C., returned an indictment yesterday charging a U.S. citizen and resident of Timor Leste with seven counts of engaging in illicit sexual conduct in a foreign place. 

            According to court documents, Richard Jude Daschbach, 84, is a former priest who is alleged to have engaged in illicit sexual conduct with minor victims in Timor Leste starting in at least 2013. As alleged, Daschbach operated a “shelter home” for children in Timor Leste. Victims disclosed that Daschbach sexually abused them when they were children and resided in the shelter home. Daschbach was defrocked by the Catholic church after some of the victims disclosed the abuse to the church. Daschbach is currently facing related child sexual exploitation charges in Timor Leste. In addition, in 2019, a grand jury in the Northern District of California returned an indictment against Daschbach for wire fraud in connection with his fundraising activity for the shelter home.

            ““This indictment represents a significant step toward accountability for harms suffered by multiple vulnerable children allegedly victimized by this defendant,” said Assistant Attorney General Kenneth A. Polite Jr. for the Justice Department’s Criminal Division. “I’d like to thank the hardworking investigative and prosecution teams for their work today and every day to ensure that child predators face justice and children are kept safe.

            ”This case shows that we will use the full extent of the law to prosecute U.S. citizens who allegedly prey on children, no matter how far we must go to bring them to justice,” said Acting U.S. Attorney Channing D. Phillips for the District of Columbia. “Together with our law enforcement partners, we must ensure that people placed in positions of trust do not betray their responsibilities to help the children who depend upon them.”

            Daschbach is charged with seven counts of engaging in illicit sexual conduct in a foreign place, Timor Leste. If convicted, he faces a maximum penalty of 30 years in prison per count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

            The FBI is investigating the case. The Justice Department’s Office of International Affairs provided significant assistance.

            Trial Attorneys Jessica Urban and Alicia A. Bove of the Justice Department’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Amy Larson of the U.S. Attorney’s Office for the District of Columbia are prosecuting the case. The Criminal Division’s Office of Overseas Prosecutorial Development, Assistance and Training (OPDAT) provided assistance.

            This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

            An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

 

A federal grand jury in Washington, D.C., returned an indictment yesterday charging a U.S. citizen and resident of Timor Leste with seven counts of engaging in illicit sexual conduct in a foreign place. 

According to court documents, Richard Jude Daschbach, 84, is a former priest who is alleged to have engaged in illicit sexual conduct with minor victims in Timor Leste starting in at least 2013. As alleged, Daschbach operated a “shelter home” for children in Timor Leste. Victims disclosed that Daschbach sexually abused them when they were children and resided in the shelter home. Daschbach was defrocked by the Catholic church after some of the victims disclosed the abuse to the church. Daschbach is currently facing related child sexual exploitation charges in Timor Leste. In addition, in 2019, a grand jury in the Northern District of California returned an indictment against Daschbach for wire fraud in connection with his fundraising activity for the shelter home. 

Today’s indictment represents a significant step toward accountability for harms suffered by multiple vulnerable children allegedly victimized by this defendant,” said Assistant Attorney General Kenneth A. Polite Jr. for the Justice Department’s Criminal Division. “I’d like to thank the hardworking investigative and prosecution teams for their work today and every day to ensure that child predators face justice and children are kept safe.”

“This case shows that we will use the full extent of the law to prosecute U.S. citizens who allegedly prey on children, no matter how far we must go to bring them to justice,” said Acting U.S. Attorney Channing D. Phillips for the District of Columbia. “Together with our law enforcement partners, we must ensure that people placed in positions of trust do not betray their responsibilities to help the children who depend upon them.”

Daschbach is charged with seven counts of engaging in illicit sexual conduct in a foreign place, Timor Leste. If convicted, he faces a maximum penalty of 30 years in prison per count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI is investigating the case. The Justice Department’s Office of International Affairs provided significant assistance.

Trial Attorneys Jessica Urban and Alicia A. Bove of the Justice Department’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Amy Larson of the U.S. Attorney’s Office for the District of Columbia are prosecuting the case. The Criminal Division’s Office of Overseas Prosecutorial Development, Assistance and Training (OPDAT) provided assistance.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

WASHINGTON – Henry “Enrique” Tarrio, 37, of Miami, Fla., was sentenced today to a total of 155 days of incarceration on charges stemming from two cases, including one involving the burning of a Black Lives Matter banner stolen from a historically prominent Black church in downtown Washington, announced Acting U.S. Attorney Channing D. Phillips and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Tarrio pleaded guilty on July 19, 2021, in the Superior Court of the District of Columbia, to one count of destruction of property and one count of attempted possession of a large-capacity ammunition feeding device. The Honorable Harold L. Cushenberry, Jr. sentenced Tarrio to 90 days of jail on the destruction of property charge and 150 days in jail on the ammunition offense; the judge suspended all but 155 days of that time on the condition that Tarrio successfully complete three years of probation. Tarrio also must pay $1,000 in fines, as well as $347 in restitution to the church. Tarrio is to begin serving his sentence in two weeks.

            According to a proffer of facts submitted at the plea hearing, on the evening of Dec. 12, 2020, a group of individuals affiliated with the “Proud Boys,” including Tarrio, were in the area of 11th and K Streets NW, near the location of Asbury United Methodist Church. Unidentified members of the group stole the banner from the church’s property. The banner had lettering that read “#BLACKLIVESMATTER.” The banner also contained the Church’s logo and website address.

            The group then walked southbound on 11th Street NW and took the banner to the intersection of 11th and E Streets NW. At the intersection, the group burned the banner, using lighter fluid and lighters. Numerous unidentified individuals crouched down and applied lighters to the edges of the banner. Tarrio posted a picture to his “Parler” social media account depicting himself holding an unlit lighter, inches from the ignited lighters in two other individuals’ hands.

            In the days that followed, Tarrio admitted to burning the banner on social media and in comments to numerous media outlets.

            Tarrio returned to the District of Columbia from Florida on Jan. 4, 2021, and he was arrested on a warrant charging him with the Dec. 12, 2020, destruction of property offense. In a search of his book bag, conducted at the time of his arrest, police recovered two high-capacity firearm magazines. Each magazine bars the insignia of the “Proud Boys.” In an interview with police, Tarrio told detectives that he had intended to transfer the magazines to a customer who was also going to be present in the District of Columbia.

            In announcing the sentence, Acting U.S. Attorney Philips and Chief Contee commended the work of those who investigated the case from the Metropolitan Police Department, as well as those who are prosecuting the matter from the U.S. Attorney’s Office.

WASHINGTON – A District of Columbia man has been indicted on federal charges alleging that he perpetrated a scheme to steal more than $17 million in Paycheck Protection Program (PPP) and Economic Injury and Disaster Loan (EIDL) funds.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips and Acting Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office. The indictment was unsealed today in the U.S. District Court for the District of Columbia.  

            According to the indictment, Elias Eldabbagh, 30, devised a scheme to use tax returns stolen from a Washington, D.C. consulting firm and stolen identities to fraudulently obtain more than $17 million in PPP and EIDL funds in the name of his company, Alias Systems, LLC. The indictment alleges that Eldabbagh attempted to steal a total of $17 million and successfully stole more than $2.3 million from PPP and EIDL programs.

            Eldabbagh was arrested today and appeared this afternoon in the U.S. District Court for the District of Columbia. He was released on home confinement pending a hearing set for Aug. 30.

            The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted in or around March 2020 and designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of billions in forgivable loans to small businesses for job retention and certain other expenses, through a program referred to as the Paycheck Protection Program (PPP). 

            An Economic Injury Disaster Loan (EIDL) is a Small Business Administration administered loan designed to provide assistance to small businesses that suffer substantial economic injury as a result of a declared disaster. An EIDL helps businesses meet necessary financial obligations that could have been met had the disaster not occurred. It provided relief from economic injury that the disaster caused and permitted businesses to maintain a reasonable working capital position during the period that the disaster affected.

            As alleged in the indictment, Eldabbagh carried out a scheme from at least July 2020 to July 2021 in which he filed at least 13 fraudulent PPP loan applications and an EIDL application in the name of Alias Systems, LLC, using stolen identities and stolen tax returns that were fraudulently doctored to appear to be tax returns of Alias Systems, LLC. Based on these applications, Eldabbagh fraudulently obtained more than $2.3 million PPP and EIDL funds, which were then transmitted through numerous financial institutions and used to purchase a 2020 Tesla. The indictment further alleged that Eldabbagh attempted to transfer or obtain funds that had been lawfully seized by Special Agents of IRS Criminal Investigation.

            Eldabbagh is charged with five counts of wire fraud, 14 counts of engaging in monetary transactions in criminally derived property, 14 counts of aggravated identity theft, and one count of destruction or removal of property to prevent seizure. If convicted, Eldabbagh faces a maximum penalty of 20 years in prison for each wire fraud count, ten years in prison for each count of engaging in monetary transactions in criminally derived property, two years in prison for each aggravated identity theft count, to run consecutive to any sentence for wire fraud, and five years in prison for the count of destruction or removal of property to prevent seizure. The indictment includes a notification of the United States’ intent to seek the forfeiture of 20 bank accounts and a 2020 Tesla purchased with the proceeds of the fraud. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

            On May 17, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

            Anyone with information about allegations of fraud related to COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

            An indictment is merely a formal charge that a defendant has committed a violation of criminal law and is not evidence of guilt. Every defendant is presumed innocent until, and unless, proven guilty.

            This case is being investigated by the Washington Field Office of IRS Criminal investigation. Assistance was provided by the Office of the Inspector General for the U.S. Small Business Administration. Assistant U.S. Attorney Leslie A. Goemaat of the Fraud Section of the U.S. Attorney’s Office for the District of Columbia, is prosecuting the case, supported by Paralegal Specialist Mariela Andrade.

 

WASHINGTON – Jessica J. Lucas, 43, of Washington, D.C., was sentenced today to two years in prison for committing a wire fraud scheme against her employer, a company that owns restaurants in the Washington metropolitan area. 

            The announcement was made by Acting U.S. Attorney Channing D. Phillips, Acting Special Agent in Charge of the FBI Washington Field Office Criminal Division Robert Bornstein, and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Lucas pled guilty in February 2020 to one count of wire fraud in the U.S. District Court for the District of Columbia. Today, she was sentenced by the Honorable Thomas F. Hogan. In addition to her prison term, the Court ordered Lucas to pay restitution in the amount $364,004, as well as a forfeiture money judgment in the amount of $364,004.  Following her prison term, she will be placed on three years of supervised release.

            According to court papers, beginning on or about Jan. 1, 2015, and continuing through on or about Feb. 28, 2018, Lucas, who was employed as bookkeeper and cash handler for a restaurant in downtown Washington, implemented a scheme to steal from her employer. Lucas was responsible for ensuring that the restaurant had sufficient cash in its safe and bars to conduct the restaurant’s business of serving food and beverages to customers.

            As part of her employment, Lucas frequently ordered cash from the company’s financial institution in order for the restaurant to have a “cash fund,” which was supposed to be used to provide change to customers who paid in cash rather than by credit card. As part of her scheme, Lucas regularly ordered more cash than was needed for operation of the restaurant. Lucas then stole a portion of the cash ordered and deposited the cash into her personal bank accounts. In an effort to conceal her theft from her employer, Lucas falsified monthly “change fund reconciliation reports” that she sent to company management in which she reported that there was more cash on hand than was actually in the safe.

              In announcing the sentence, Acting U.S. Attorney Phillips, Special Agent in Charge Robert Bornstein and Chief Contee commended the work performed by those who investigated the case from the FBI’s Washington Field Office and the MPD. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys David Gorman and Diane Lucas, who prosecuted the case with assistance from Paralegal Specialist Chad Byron, and former Paralegal Specialist C. Rosalind Pressley.

            WASHINGTON – Endalkachew Asfaw, 48, of Alexandria, Va., pleaded guilty today to aiding and assisting in the filing of a false tax return and causing at least $250,000 of loss to the Internal Revenue Service, announced Acting U.S. Attorney Channing D. Phillips and Darrell J. Waldon, Acting Special Agent in Charge, IRS-Criminal Investigation, Washington Field Office.

            Asfaw pleaded guilty in the U.S. District Court for the District of Columbia. The Honorable John D. Bates scheduled sentencing for Nov. 17, 2021. The charge carries a statutory maximum of three years in prison and potential financial penalties. As part of the plea agreement, Asfaw has agreed to pay restitution to the United States.

            “Our country’s financial system depends on honest and accurate compliance with the U.S. tax laws,” said Acting U.S. Attorney Phillips. “Tax fraud costs U.S. taxpayers billions of dollars each year, and this Office will vigorously prosecute those who commit tax fraud.”

            “Tax Practitioners entrusted to prepare accurate tax returns should not lead their clients astray by falsifying returns prepared on their behalf.  We will continue to investigate those who fraudulently prepare and file income tax returns, effectively stealing money from the government,” said Acting Special Agent in Charge Waldon.

            According to court documents, Asfaw, a Certified Public Accountant in Alexandria, has operated Endalk and Yohannes Associated, L.P. with a business partner in the District of Columbia since 2011. From 2016 through 2019, Asfaw and the business partner prepared approximately 10,000 tax returns.

            According to court documents, Asfaw knowingly aided and assisted in the preparation of false income tax returns for years 2015 through 2017 on behalf of his clients. Asfaw did this by deliberately overstating unreimbursed employee business expenses on his clients’ Schedule A deductions, including uniforms and unreimbursed mileage expenses. As part of his plea, Asfaw also admitted to creating fraudulent Schedule C expenses and deducting exemptions for individuals that his clients were not entitled to claim. Asfaw admitted to fabricating these items to generate larger tax refunds for his clients. As part of his plea, Asfaw admitted that he filed false tax returns resulting in a total tax loss of more than $250,000 to the U.S. government.

            In announcing the plea, Acting U.S. Attorney Phillips and Acting Special Agent in Charge Waldon commended the work of IRS Criminal Investigation, Washington Field Office, which investigated the case.  They also acknowledged the work of those who are handling the case at the U.S. Attorney’s Office, including Paralegal Specialist Mariela Andrade and Assistant U.S. Attorney Leslie A. Goemaat, who is prosecuting this matter.

 

WASHINGTON – An Ohio man pleaded guilty today to a money laundering conspiracy arising from his operation of Helix, a Darknet-based cryptocurrency laundering service. According to court documents, Larry Dean Harmon, 38, of Akron, admitted that he operated Helix from 2014 to 2017. Helix functioned as a bitcoin “mixer” or “tumbler,” allowing customers, for a fee, to send bitcoin to designated recipients in a manner that was designed to conceal the source or owner of the bitcoin. Helix was linked to and associated with “Grams,” a Darknet search engine also run by Harmon. Harmon advertised Helix to customers on the Darknet to conceal transactions from law enforcement.

            “By holding Harmon accountable, the department has disrupted the unlawful money laundering practices of these dangerous criminal enterprises,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The Justice Department, together with our law enforcement and regulatory partners, will continue to take enforcement actions to identify and impede those who use illicit means for financial gain, as well as those who use the Darknet to facilitate and obscure their criminal conduct.”

            “Darknet markets and the dealers who sell opioids and other illegal drugs on them are a growing scourge,” said Acting U.S. Attorney Channing D. Phillips for the District of Columbia. “They may try to hide their identities and launder millions in sales behind technologies like Helix. But the department and its law enforcement partners will shine a light on their activities, dismantle the infrastructure such criminal marketplaces depend on, and prosecute and convict those responsible.”

            “Criminals may think they can mask financial transactions by using services like Helix to conceal the source of illicit funds,” said Assistant Director Calvin A. Shivers of the FBI’s Criminal Investigative Division. “The FBI and our state, local, federal and international law enforcement partners are working together every day in a complex and ever-changing digital environment to protect the American people from sophisticated money launderers and financiers.”

            “The Darknet is driven in part by the criminal marketplaces which peddle their nefarious goods and services,” said Chief James C. Lee of the IRS Criminal Investigation. “But these marketplaces thrive in large measure because of the infrastructure that supports them. Harmon profited by facilitating the back-channel support of these marketplaces and helped criminals launder money they received via illicit activities. He then hid those funds from the government. He admitted his role today in these activities and will now be held accountable.”

            “Harmon admitted that he conspired with Darknet vendors to launder bitcoin generated through drug trafficking and other illegal activities,” said Assistant Director in Charge Steven M. D’Antuono of the FBI’s Washington Field Office. “Today’s guilty plea demonstrates the FBI’s commitment to infiltrate and shut down the cryptocurrency money-laundering networks that support cyber-criminal enterprises.”

            Harmon admitted that Helix partnered with several Darknet markets, including AlphaBay, Evolution, Cloud 9 and others, to provide bitcoin money laundering services for market customers. In total, Helix moved over 350,000 bitcoin – valued at over $300 million at the time of the transactions – on behalf of customers, with the largest volume coming from Darknet markets. Harmon further admitted that he conspired with Darknet vendors and marketplace administrators to launder such bitcoins generated through illegal drug trafficking offenses on those Darknet marketplaces.

            As part of his plea, Harmon also agreed to the forfeiture of more than 4,400 bitcoin, valued at more than $200 million at today’s prices, and other seized properties that were involved in the money laundering conspiracy. Harmon will be sentenced at a date to be determined and faces a maximum penalty of 20 years in prison, a fine of $500,000 or twice the value of the property involved in the transaction, a term of supervised release of not more than three years, and mandatory restitution. Chief Judge Beryl Howell of the U.S. District Court for the District of Columbia accepted Harmon’s guilty plea and will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

            The IRS-CI Cyber Crimes Unit and the FBI’s Washington Field Office investigated the case, with valuable assistance provided by the Criminal Division’s Office of International Affairs, the U.S. Attorney’s Office for the Northern District of Ohio, the IRS’s Washington, Cincinnati and Oakland Field Offices, the FBI’s Criminal Investigative Division and Cleveland, Newark and San Francisco Field Offices, and the State Department’s Diplomatic Security Service.

            The Belize Ministry of the Attorney General and the Belize National Police Department provided essential support for the investigation, coordinated through U.S. Embassy Belmopan. The investigation was coordinated with the Financial Crimes Enforcement Network, which assessed a $60 million civil monetary penalty against Harmon in a parallel action.

            Trial Attorneys S. Riane Harper and C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Christopher B. Brown of the U.S. Attorney’s Office for the District of Columbia prosecuted the case. Additional assistance was provided by Trial Attorneys Emily Siedell and Brian Nicholson of the Criminal Division’s Office of International Affairs, former CCIPS Trial Attorney W. Joss Nichols and Assistant U.S. Attorney Daniel Riedl of the Northern District of Ohio.

An Ohio man pleaded guilty today to a money laundering conspiracy arising from his operation of Helix, a Darknet-based cryptocurrency laundering service.

According to court documents, Larry Dean Harmon, 38, of Akron, admitted that he operated Helix from 2014 to 2017. Helix functioned as a bitcoin “mixer” or “tumbler,” allowing customers, for a fee, to send bitcoin to designated recipients in a manner that was designed to conceal the source or owner of the bitcoin. Helix was linked to and associated with “Grams,” a Darknet search engine also run by Harmon. Harmon advertised Helix to customers on the Darknet to conceal transactions from law enforcement.

“By holding Harmon accountable, the department has disrupted the unlawful money laundering practices of these dangerous criminal enterprises,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The Justice Department, together with our law enforcement and regulatory partners, will continue to take enforcement actions to identify and impede those who use illicit means for financial gain, as well as those who use the Darknet to facilitate and obscure their criminal conduct.”

“Darknet markets and the dealers who sell opioids and other illegal drugs on them are a growing scourge,” said Acting U.S. Attorney Channing D. Phillips for the District of Columbia. “They may try to hide their identities and launder millions in sales behind technologies like Helix. But the department and its law enforcement partners will shine a light on their activities, dismantle the infrastructure such criminal marketplaces depend on, and prosecute and convict those responsible.”

“Criminals may think they can mask financial transactions by using services like Helix to conceal the source of illicit funds,” said Assistant Director Calvin A. Shivers of the FBI’s Criminal Investigative Division. “The FBI and our state, local, federal and international law enforcement partners are working together every day in a complex and ever-changing digital environment to protect the American people from sophisticated money launderers and financiers.”

“The Darknet is driven in part by the criminal marketplaces which peddle their nefarious goods and services,” said Chief James C. Lee of the IRS Criminal Investigation. “But these marketplaces thrive in large measure because of the infrastructure that supports them. Harmon profited by facilitating the back-channel support of these marketplaces and helped criminals launder money they received via illicit activities. He then hid those funds from the government. He admitted his role today in these activities and will now be held accountable.”

“Harmon admitted that he conspired with Darknet vendors to launder bitcoin generated through drug trafficking and other illegal activities,” said Assistant Director in Charge Steven M. D’Antuono of the FBI’s Washington Field Office. “Today’s guilty plea demonstrates the FBI’s commitment to infiltrate and shut down the cryptocurrency money-laundering networks that support cyber-criminal enterprises.”

Harmon admitted that Helix partnered with several Darknet markets, including AlphaBay, Evolution, Cloud 9 and others, to provide bitcoin money laundering services for market customers. In total, Helix moved over 350,000 bitcoin – valued at over $300 million at the time of the transactions – on behalf of customers, with the largest volume coming from Darknet markets. Harmon further admitted that he conspired with Darknet vendors and marketplace administrators to launder such bitcoins generated through illegal drug trafficking offenses on those Darknet marketplaces.

As part of his plea, Harmon also agreed to the forfeiture of more than 4,400 bitcoin, valued at more than $200 million at today’s prices, and other seized properties that were involved in the money laundering conspiracy. Harmon will be sentenced at a date to be determined and faces a maximum penalty of 20 years in prison, a fine of $500,000 or twice the value of the property involved in the transaction, a term of supervised release of not more than three years, and mandatory restitution. Chief Judge Beryl Howell of the U.S. District Court for the District of Columbia accepted Harmon’s guilty plea and will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The IRS-CI Cyber Crimes Unit and the FBI’s Washington Field Office investigated the case, with valuable assistance provided by the Criminal Division’s Office of International Affairs, the U.S. Attorney’s Office for the Northern District of Ohio, the IRS’s Washington, Cincinnati and Oakland Field Offices, the FBI’s Criminal Investigative Division and Cleveland, Newark and San Francisco Field Offices, and the State Department’s Diplomatic Security Service.

The Belize Ministry of the Attorney General and the Belize National Police Department provided essential support for the investigation, coordinated through U.S. Embassy Belmopan. The investigation was coordinated with the Financial Crimes Enforcement Network, which assessed a $60 million civil monetary penalty against Harmon in a parallel action.

Trial Attorneys S. Riane Harper and C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Christopher B. Brown of the U.S. Attorney’s Office for the District of Columbia prosecuted the case. Additional assistance was provided by Trial Attorneys Emily Siedell and Brian Nicholson of the Criminal Division’s Office of International Affairs, former CCIPS Trial Attorney W. Joss Nichols and Assistant U.S. Attorney Daniel Riedl of the Northern District of Ohio.

WASHINGTON – Andrew Robertson, 54, of Harrison, N.J., formerly of the Washington, D.C., metropolitan area, was sentenced today to 41 months in prison for embezzling hundreds of thousands of dollars from an international law firm with offices in Washington, D.C., and Northern Virginia, among other locations.

            The sentencing was announced by Acting U.S. Attorney Channing D. Phillips, Matthew R. Stohler, Special Agent in Charge of the U.S. Secret Service’s Washington Field Office, and Robert J. Contee III, Chief of the Metropolitan Police Department (MPD).

            Robertson pleaded guilty in April 2021 to one count of mail fraud. He was sentenced in the U.S. District Court for the District of Columbia by the Honorable Colleen Kollar-Kotelly. Following his prison term, Robertson will be placed on three years of supervised release. The judge also ordered Robertson to pay $425,000 in forfeiture.

            According to the government’s evidence, Robertson was employed by the law firm as an office manager of the Washington, D.C., and Northern Virginia offices. Between February 2017 and November 2018, he used his firm-issued corporate credit card to make $425,000 in unauthorized personal purchases from retailers, unauthorized payments of personal expenses, and unauthorized payments to his own personal PayPal account.

            Robertson attempted to cover up these unauthorized transactions by creating and submitting fraudulent invoices and accounting classifications to the law firm’s billing department to make it seem as though these expenditures were for legitimate law firm purposes, when, in fact, he knew that these expenditures were solely for his own personal benefit. 

            In announcing the sentencing, Acting U.S. Attorney Phillips, Special Agent in Charge Stohler, and Chief Contee commended the work of those who investigated the case from the Secret Service’s Washington Field Office and the Metropolitan Police Department. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Amanda Rohde and Assistant U.S. Attorney Kate Rakoczy, who prosecuted the matter.

 

WASHINGTON – Kelvin Otunyo, 37, of Hyattsville, Md., was sentenced today to 90 months in prison on federal charges stemming from his role in at least six schemes to deposit and launder stolen and unauthorized checks valued at more than $350,000.

            The announcement was made by Acting U.S. Attorney Channing D. Phillips, Robert E. Bornstein, Acting Special Agent in Charge of the FBI Washington Field Office, Criminal Division, and Special Agent in Charge Shimon R. Richmond, of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG).

            Otunyo, a Nigerian national, pleaded guilty on April 1, 2021, in the U.S. District Court for the District of Columbia, to two counts of bank fraud, one count of aggravated identity theft, and two counts of conspiracy to commit money laundering. He was sentenced by the Honorable Chief Judge Beryl A. Howell. Following his prison term, he will be placed on four years of supervised release. Otunyo also was ordered to pay a restitution judgment in the amount of $124,157, and a forfeiture money judgment in the amount of $303,207.

            According to court papers, between August 2017 and at least August 2018, Otunyo and co-conspirators engaged in a series of schemes in which they obtained stolen or unauthorized checks from victims, established fraudulent shell corporations and bank accounts, and deposited or attempted to deposit the checks before laundering the resulting proceeds.  The frauds were committed using false IDs and fraudulent aliases. Otunyo also procured the real name and Social Security number of an identity theft victim for use in one of the schemes. 

            In total, the six schemes involved nine stolen or unauthorized checks from eight victims totaling $355,745.29. 

            As part of the larger investigation of Otunyo and others involved in laundering the proceeds of various frauds, business email compromises, and bad check schemes, at least three other defendants have been charged. In June 2019, Chief Judge Howell sentenced Michael Orji, 42, formerly of Washington D.C, to 10 years of incarceration, five years of supervised release, and $905,274 in restitution.  One of Otunyo’s co-conspirators, Samson Olawale Afolabi, 36, of Hyattsville, Md., has pleaded guilty and is awaiting sentencing on Oct. 1, 2021.  Another defendant, Jamar Skeete, 37, of Washington, D.C., has been indicted in connection with similar, related fraud and money laundering; he has pleaded not guilty to charges.

            The case was investigated by the FBI’s Washington Field Office and the Federal Deposit Insurance Corporation-Office of Inspector General. Assistance was provided by the U.S. Postal Inspection Service, and the U.S. Department of Homeland Security-Homeland Security Investigations. The case was prosecuted by Assistant U.S. Attorneys Christopher B. Brown and Charles Willoughby, Jr., with assistance from Paralegal Specialists Chad Byron, Rhonda Richardson, and former Paralegal Specialist C. Rosalind Pressley. 

WASHINGTON – Nicole Gogan, 41, of Washington, D.C., pleaded guilty this week to charges stemming from two assaults that took place this spring, including one that was prosecuted as a hate crime, Acting U.S. Attorney Channing D. Phillips announced today.

            Gogan pleaded guilty on Aug. 9, 2021, in the Superior Court of the District of Columbia, to one count of bias-related assault and one count of simple assault. She was sentenced by the Honorable Neal E. Kravitz to a total of 180 days in jail, with all but 90 days suspended on the condition that she complete a year of probation.

            According to the government’s evidence, the first incident took place on April 6, 2021. At approximately 9:30 that night, Gogan assaulted a U.S. Postal Service worker who was making deliveries in the vicinity of the 400 block of 4th Street NE. Gogan shoved the worker, who is a Black female, while using racial slurs against her. The worker tried to flee, but Gogan pursued her and continued her assault by repeatedly shoving her while using racial slurs.

            The second incident took place on May 7, 2021. That evening, at about 7:15, Gogan initiated an encounter with a woman at 12th and H Streets NE, and then assumed a fighting stance while yelling, “Do you want to fight?”

            Gogan was arrested on May 7 and has been detained ever since.

            In announcing the plea and sentencing, Acting U.S. Attorney Phillips commended the work of those who investigated the cases from the Metropolitan Police Department. He also acknowledged the efforts of those who worked on the cases from the U.S. Attorney’s Office, including Assistant U.S. Attorney Travis Wolf, who investigated and prosecuted both matters.

 

WASHINGTON – Christopher A. Parris, 41, formerly of Rochester, New York, and currently of Lawrenceville, Georgia, pleaded guilty today to conspiracy to commit mail fraud related to a Ponzi scheme, as well as to wire fraud involving the fraudulent sale of purported N95 masks during the pandemic.

            “The fraud schemes at issue here, including the purported sales of personal protective equipment that the defendant could not actually provide, are particularly egregious,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The Department of Justice is committed to prosecuting anyone who would try to profit through this kind of conduct.”

            “Preying on companies and the Department of Veterans Affairs as they sought to protect their employees and patients from this pandemic is beyond the pale,” said Acting U.S. Attorney Channing D. Phillips for the District of Columbia. “The department and our law enforcement partners will catch and stop those who take advantage of public health emergencies to perpetrate such frauds.”

            “Defendant Parris, together with his co-defendant Perry Santillo, bilked millions of dollars from unsuspecting investors in their Ponzi scheme,” said U.S. Attorney James P. Kennedy Jr. for the Western District of New York. “Their web of deceit spread far and wide as they purchased established investment advisor or broker businesses from across the country in order to gain access to new victims. This office remains committed to working with all of our partners to identify and bring to justice those who seek to enrich themselves by defrauding others.”

            “Financial frauds are grounded in greed, so it's no surprise that when multiple people are behind a single scheme the greed runs deeper and the damage hits harder,” said Special Agent-in-Charge Stephen Belongia of the Buffalo Office of the FBI. “The only guarantee in a Ponzi scheme is that it will fall short, and the founders who contrived them will too.”  

            “The urgent need to protect veterans and VA health care workers during this fast-moving pandemic required the Department of Veterans Affairs to rapidly purchase personal protective equipment” said Inspector General Michael J. Missal of the Department of Veterans Affairs (VA). “Working with our law enforcement partners, the VA Office of Inspector General (OIG) stopped a criminal who was attempting to profit from this horrible crisis and prevented the government and taxpayers from being defrauded of hundreds of millions of dollars. The VA OIG will continue to work zealously to ensure schemes like this are uncovered, investigated and prosecuted to the fullest extent of the law.”

            “Since the onset of the pandemic, HSI quickly adapted to investigate the increasing and evolving threat posed by COVID-19-related fraud and criminal activity,” said Acting Special Agent in Charge Jack P. Staton of Homeland Security Investigations (HSI), New Orleans Field Office. “This guilty plea is a testament to the commitment we have, along with our law enforcement partners, to protecting the American public in times of crisis.”

The Ponzi Scheme

            Between January 2011 and June 2018, Parris conspired with co-defendant Perry Santillo and others to obtain money through an investment fraud, commonly known as a Ponzi scheme. Specifically, in 2007, Parris and Santillo, as equal partners, formed a business known as Lucian Development in Rochester. Prior to approximately July 2007, Lucian Development raised millions of dollars from investors in Rochester, and elsewhere, by soliciting investments for City Capital Corporation, a business operated by Ephren Taylor. In July 2007, Parris and Santillo were advised by Ephren Taylor that their investors’ money had been lost. In response, in August 2007, Parris and Santillo agreed to acquire the assets and debts of City Capital Corporation. The acquisition proved financially ruinous, with the amount of the acquired debt far exceeding the value of the acquired assets. Taylor was later prosecuted and convicted of operating a Ponzi scheme.

            Subsequently, Parris and Santillo chose not to disclose the truth to investors that their money, entrusted to Lucian Development for investment in City Capital Corporation, was gone. Instead, Parris and Santillo continued to solicit ever-increasing amounts of money from new investors in an unsuccessful attempt to recoup the losses. In order to find potential investors to solicit and defraud, Parris and Santillo purchased businesses from established investment advisors or brokers who were looking to exit their businesses. Between approximately 2008 and September 2017, Parris and Santillo, using money obtained from prior investors, purchased the businesses of at least 15 investment advisors or brokers, located in Tennessee, Ohio, Minnesota, Nevada, California (five businesses), Florida, South Carolina (two businesses), Texas, Pennsylvania, Maryland and Indiana.

            The investment offerings pitched by Parris and Santillo consisted principally of unsecured promissory notes and preferred stock issued by various entities controlled by Parris and Santillo. Potential investors were offered an apparent array of investment options to create the illusion of a diversified investment portfolio. Those investment options included products issued by purported issuers such as First Nationle Solutions (FNS), Percipience Global Corporation, United RL Capital Services, Boyles America, Middlebury Development Corporation and NexMedical Solutions, among others. None of these issuers had substantial bona fide business operations or used investor money in the manner and for the purposes represented to investors. To the extent that an issuer may have had some minor legitimate business activities, it was not profitable, and insufficient revenues were generated to pay investors any returns (let alone return the principal amounts of their investments).

            Over the years, to keep the Ponzi scheme from being detected, a substantial portion of incoming new investor monies were depleted by making promised interest and other payments to earlier investors. Most of the rest of incoming investor money was used by Parris, Santillo and other co-conspirators to finance lavish lifestyles of the conspirators, their families and associates; to expand the scheme by purchasing investment advisor/brokerage businesses to obtain access to fresh investors; and to pay operating expenses – salaries for a sales force and administrative staff, office rents and related expenses, housing for employees, and interest on loans – all of which were used to keep the scheme going and maintain  façade of legitimate business operations.

            Very little investor money was deployed in productive investments, and when so deployed, the investments yielded meager income and were not profitable, or failed altogether. The Ponzi scheme was headquartered and based out of locations in Rochester, with a number of satellite offices around the country. Administrative and banking functions were largely performed out of Rochester. The conspiracy employed a variety of salespeople, including Parris and Santillo, who traveled around the country to meet with and solicit new investors.

            Between January 2012 and June 19, 2018, Parris and Santillo obtained at least $115.5 million from approximately 1,000 investors. By the time the scheme collapsed in late-2017/early 2018, Parris and Santillo, doing business through an array of corporate entities, had returned approximately $44.8 million to investors as part of their scheme, but continued to owe investors approximately $70.7 million in principal.

            Among the Rochester area victims of the Ponzi scheme were the following: a resident of Webster, New York, who held a total asset value of $94,341.89 with a fictitious company known as First Nationle Solutions (FNS), which, as of Dec. 31, 2017, was in fact worthless or close to worthless; and a  resident of Victor, New York, and his wife, who invested approximately $221,758.67 with FNS and Middlebury Development. The couple received three payments of $2,500 but lost approximately $214,258.67.

            Parris and Santillo controlled hundreds of different business bank accounts opened under numerous different business names at various financial institutions, including but not limited to Bank of America, Citizens Bank, Genesee Regional Bank and ESL Federal Credit Union. Santillo and Parris directed and authorized the transactions that occurred in the accounts, including deposits, withdrawals, check writing and funds transfers. The various bank accounts were used to transfer money from one account to another. Incoming investor money was routinely transferred through several accounts before the funds were finally spent on whatever purpose Parris and/or Santillo authorized. By moving investors’ funds through various accounts in various entity names, Parris and Santillo were able to conceal and obscure the fact that new investor money was being used to repay earlier investors, finance the operations of the Ponzi scheme, and fund their lifestyles.

            Santillo was previously convicted and is awaiting sentencing.

The COVID-19 Fraud Scheme

            Parris also pleaded guilty in a case originally charged in the U.S. District Court for the District of Columbia to defrauding the U.S. Department of Veterans’ Affairs (VA), as well as at least eight other victim companies, in a scheme involving personal protection equipment (PPE). Between February and April 10, 2020, the defendant, as the owner and operator of Encore Health Group, a company based in Atlanta, that purported to broker medical equipment, offered to sell scarce PPE, including 3M-brand N95 respirator masks, to various medical supply companies and governmental entities. In these proposals, Parris knowingly misrepresented his access to, and ability to obtain and deliver on time, vast quantities of 3M N95 masks and other PPE. The defendant falsely represented that he was able to obtain 3M N95 masks directly from authorized sources in the United States, when in fact, he had no ready access to 3M factories or 3M N95 masks or other PPE, no proven source of supply, and no track record of procuring and delivering such items.

            For example, in March 2021, Parris offered to sell the VA 125 million 3M N95 masks at a cost of $6.45 per mask. In this process, the defendant attempted to obtain an upfront payment of $3.075 million from the VA, even though he knew at the time that he had no access to the promised masks or present ability to deliver the promised masks.

            As part of his guilty plea, Parris admitted that, in addition to attempting to defraud the VA, he actually obtained upfront payments totaling approximately $7.4 million from at least eight clients for 3M N95 masks that he knew he had no access to or present ability to obtain or deliver on time. Parris also admitted that the proceeds of the scheme totaled approximately $6,218,525. In total, Parris sought orders in excess of $65 million for the non-existent PPE equipment.

**

            Parris is scheduled to be sentenced on Dec. 8 before U.S. District Judge Frank P. Geraci Jr. He faces a maximum penalty of 20 years in prison for conspiracy regarding the Ponzi scheme, 30 years in prison for wire fraud in connection to a presidentially-declared emergency, and 10 years in prison for committing the offense originally charged in the District of Columbia while on release from the Western District of New York.

            The plea is the result of an investigation by the U.S. Postal Inspection Service, under the direction of Acting Inspector-in-Charge Joshua W. McCallister of the Boston Division; the FBI, Buffalo Division, under the direction of Special Agent-in-Charge Stephen Belongia, the IRS, Criminal Investigation Division, under the direction of Thomas Fattorusso, Acting Special Agent-in-Charge; the U.S. Department of Labor, Office of Inspector General, Office of Investigations – Labor Racketeering and Fraud, under the direction of Nikitas Splagounias, Acting Special Agent-in-Charge, New York Region, the New York State Department of Financial Services, under the direction of Superintendent Linda A. Lacewell; the Securities and Exchange Commission; the VA OIG, under the direction of Michael J. Missal, Inspector General, and HSI, under the direction of Acting Special Agent in Charge Jack P. Staton of the New Orleans Field Office.

            Assistant U.S. Attorney John J. Field is handling the prosecution in the Western District of New York, and Trial Attorney Patrick Runkle of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Peter Lallas are handling the prosecution in the District of Columbia.

            On May 17, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

            Anyone with information about allegations of fraud related to COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

 

Christopher A. Parris, 41, formerly of Rochester, New York, and currently of Lawrenceville, Georgia, pleaded guilty today to conspiracy to commit mail fraud related to a Ponzi scheme, as well as to wire fraud involving the fraudulent sale of purported N95 masks during the pandemic.

“The fraud schemes at issue here, including the purported sales of personal protective equipment that the defendant could not actually provide, are particularly egregious,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The Department of Justice is committed to prosecuting anyone who would try to profit through this kind of conduct.”

“Defendant Parris, together with his co-defendant Perry Santillo, bilked millions of dollars from unsuspecting investors in their Ponzi scheme,” said U.S. Attorney James P. Kennedy Jr. for the Western District of New York. “Their web of deceit spread far and wide as they purchased established investment advisor or broker businesses from across the country in order to gain access to new victims. This office remains committed to working with all of our partners to identify and bring to justice those who seek to enrich themselves by defrauding others.”

“Preying on companies and the Department of Veterans Affairs as they sought to protect their employees and patients from this pandemic is beyond the pale,” said Acting U.S. Attorney Channing D. Phillips for the District of Columbia. “The department and our law enforcement partners will catch and stop those who take advantage of public health emergencies to perpetrate such frauds.”

“The U.S. Postal Inspection Service aggressively conducts investigations of those who fraudulently use the U.S. Mail to facilitate complex fraud schemes,” said Acting Inspector in Charge Joshua W. McCallister of the U.S. Postal Inspection Service, Boston Division. “Today’s plea demonstrates our ongoing work with law enforcement partners to stop those who are engaged in these types of fraudulent activities.”

“Financial frauds are grounded in greed, so it's no surprise that when multiple people are behind a single scheme the greed runs deeper and the damage hits harder,” said Special Agent-in-Charge Stephen Belongia of the Buffalo Office of the FBI. “The only guarantee in a Ponzi scheme is that it will fall short, and the founders who contrived them will too.”  

“The urgent need to protect veterans and VA health care workers during this fast-moving pandemic required the Department of Veterans Affairs to rapidly purchase personal protective equipment” said Inspector General Michael J. Missal of the Department of Veterans Affairs (VA). “Working with our law enforcement partners, the VA Office of Inspector General (OIG) stopped a criminal who was attempting to profit from this horrible crisis and prevented the government and taxpayers from being defrauded of hundreds of millions of dollars. The VA OIG will continue to work zealously to ensure schemes like this are uncovered, investigated and prosecuted to the fullest extent of the law.”

“Since the onset of the pandemic, HSI quickly adapted to investigate the increasing and evolving threat posed by COVID-19-related fraud and criminal activity,” said Acting Special Agent in Charge Jack P. Staton of Homeland Security Investigations (HSI), New Orleans Field Office. “This guilty plea is a testament to the commitment we have, along with our law enforcement partners, to protecting the American public in times of crisis.”

The Ponzi Scheme

Between January 2011 and June 2018, Parris conspired with co-defendant Perry Santillo and others to obtain money through an investment fraud, commonly known as a Ponzi scheme. Specifically, in 2007, Parris and Santillo, as equal partners, formed a business known as Lucian Development in Rochester. Prior to approximately July 2007, Lucian Development raised millions of dollars from investors in Rochester, and elsewhere, by soliciting investments for City Capital Corporation, a business operated by Ephren Taylor. In July 2007, Parris and Santillo were advised by Ephren Taylor that their investors’ money had been lost. In response, in August 2007, Parris and Santillo agreed to acquire the assets and debts of City Capital Corporation. The acquisition proved financially ruinous, with the amount of the acquired debt far exceeding the value of the acquired assets. Taylor was later prosecuted and convicted of operating a Ponzi scheme.

Subsequently, Parris and Santillo chose not to disclose the truth to investors that their money, entrusted to Lucian Development for investment in City Capital Corporation, was gone. Instead, Parris and Santillo continued to solicit ever-increasing amounts of money from new investors in an unsuccessful attempt to recoup the losses. In order to find potential investors to solicit and defraud, Parris and Santillo purchased businesses from established investment advisors or brokers who were looking to exit their businesses. Between approximately 2008 and September 2017, Parris and Santillo, using money obtained from prior investors, purchased the businesses of at least 15 investment advisors or brokers, located in Tennessee, Ohio, Minnesota, Nevada, California (five businesses), Florida, South Carolina (two businesses), Texas, Pennsylvania, Maryland and Indiana.

The investment offerings pitched by Parris and Santillo consisted principally of unsecured promissory notes and preferred stock issued by various entities controlled by Parris and Santillo. Potential investors were offered an apparent array of investment options to create the illusion of a diversified investment portfolio. Those investment options included products issued by purported issuers such as First Nationle Solutions (FNS), Percipience Global Corporation, United RL Capital Services, Boyles America, Middlebury Development Corporation and NexMedical Solutions, among others. None of these issuers had substantial bona fide business operations or used investor money in the manner and for the purposes represented to investors. To the extent that an issuer may have had some minor legitimate business activities, it was not profitable, and insufficient revenues were generated to pay investors any returns (let alone return the principal amounts of their investments).

Over the years, to keep the Ponzi scheme from being detected, a substantial portion of incoming new investor monies were depleted by making promised interest and other payments to earlier investors. Most of the rest of incoming investor money was used by Parris, Santillo and other co-conspirators to finance lavish lifestyles of the conspirators, their families and associates; to expand the scheme by purchasing investment advisor/brokerage businesses to obtain access to fresh investors; and to pay operating expenses – salaries for a sales force and administrative staff, office rents and related expenses, housing for employees, and interest on loans – all of which were used to keep the scheme going and maintain a façade of legitimate business operations.

Very little investor money was deployed in productive investments, and when so deployed, the investments yielded meager income and were not profitable, or failed altogether. The Ponzi scheme was headquartered and based out of locations in Rochester, with a number of satellite offices around the country. Administrative and banking functions were largely performed out of Rochester. The conspiracy employed a variety of salespeople, including Parris and Santillo, who traveled around the country to meet with and solicit new investors.

Between January 2012 and June 19, 2018, Parris and Santillo obtained at least $115.5 million from approximately 1,000 investors. By the time the scheme collapsed in late-2017/early 2018, Parris and Santillo, doing business through an array of corporate entities, had returned approximately $44.8 million to investors as part of their scheme, but continued to owe investors approximately $70.7 million in principal.

Among the Rochester area victims of the Ponzi scheme were the following:

• A resident of Webster, New York, who held a total asset value of $94,341.89 with a fictitious company known as First Nationle Solutions (FNS), which, as of Dec. 31, 2017, was in fact worthless or close to worthless; and
• A resident of Victor, New York, and his wife, who invested approximately $221,758.67 with FNS and Middlebury Development. The couple received three payments of $2,500 but lost approximately $214,258.67.

Parris and Santillo controlled hundreds of different business bank accounts opened under numerous different business names at various financial institutions, including but not limited to Bank of America, Citizens Bank, Genesee Regional Bank and ESL Federal Credit Union. Santillo and Parris directed and authorized the transactions that occurred in the accounts, including deposits, withdrawals, check writing and funds transfers. The various bank accounts were used to transfer money from one account to another. Incoming investor money was routinely transferred through several accounts before the funds were finally spent on whatever purpose Parris and/or Santillo authorized. By moving investors’ funds through various accounts in various entity names, Parris and Santillo were able to conceal and obscure the fact that new investor money was being used to repay earlier investors, finance the operations of the Ponzi scheme, and fund their lifestyles.

Santillo was previously convicted and is awaiting sentencing.

The COVID-19 Fraud Scheme

Parris also pleaded guilty in a case originally charged in the U.S. District Court for the District of Columbia to defrauding the U.S. Department of Veterans’ Affairs (VA), as well as at least eight other victim companies, in a scheme involving personal protection equipment (PPE). Between February and April 10, 2020, the defendant, as the owner and operator of Encore Health Group, a company based in Atlanta, that purported to broker medical equipment, offered to sell scarce PPE, including 3M-brand N95 respirator masks, to various medical supply companies and governmental entities. In these proposals, Parris knowingly misrepresented his access to, and ability to obtain and deliver on time, vast quantities of 3M N95 masks and other PPE. The defendant falsely represented that he was able to obtain 3M N95 masks directly from authorized sources in the United States, when in fact, he had no ready access to 3M factories or 3M N95 masks or other PPE, no proven source of supply, and no track record of procuring and delivering such items.

For example, in March 2021, Parris offered to sell the VA 125 million 3M N95 masks at a cost of $6.45 per mask. In this process, the defendant attempted to obtain an upfront payment of $3.075 million from the VA, even though he knew at the time that he had no access to the promised masks or present ability to deliver the promised masks.

As part of his guilty plea, Parris admitted that, in addition to attempting to defraud the VA, he actually obtained upfront payments totaling approximately $7.4 million from at least eight clients for 3M N95 masks that he knew he had no access to or present ability to obtain or deliver on time. Parris also admitted that the proceeds of the scheme totaled approximately $6,218,525. In total, Parris sought orders in excess of $65 million for the non-existent PPE equipment.

*          *          *

Parris is scheduled to be sentenced on Dec. 8 before U.S. District Judge Frank P. Geraci Jr. He faces a maximum penalty of 20 years in prison for conspiracy regarding the Ponzi scheme, 30 years in prison for wire fraud in connection to a presidentially-declared emergency, and 10 years in prison for committing the offense originally charged in the District of Columbia while on release from the Western District of New York.

The plea is the result of an investigation by the U.S. Postal Inspection Service, under the direction of Acting Inspector-in-Charge Joshua W. McCallister of the Boston Division; the FBI, Buffalo Division, under the direction of Special Agent-in-Charge Stephen Belongia, the IRS, Criminal Investigation Division, under the direction of Thomas Fattorusso, Acting Special Agent-in-Charge; the U.S. Department of Labor, Office of Inspector General, Office of Investigations – Labor Racketeering and Fraud, under the direction of Nikitas Splagounias, Acting Special Agent-in-Charge, New York Region, the New York State Department of Financial Services, under the direction of Superintendent Linda A. Lacewell; the Securities and Exchange Commission; the VA OIG, under the direction of Michael J. Missal, Inspector General, and HSI, under the direction of Acting Special Agent in Charge Jack P. Staton of the New Orleans Field Office.

Assistant U.S. Attorney John J. Field is handling the prosecution in the Western District of New York, and Trial Attorney Patrick Runkle of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Peter Lallas are handling the prosecution in the District of Columbia.

On May 17, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of fraud related to COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

WASHINGTON – Richard Holman, the former Chief of the U.S. Department of Agriculture (USDA) Office of Homeland Security and Emergency Coordination, Physical Security Division, was sentenced today to 180 days of home detention and fined $110,000 for carrying out a multi-year scheme in which he accepted bribes in exchange for ensuring the awarding of USDA contracts.

            The sentencing was announced by Acting U.S. Attorney Channing D. Phillips and Robert E. Bornstein, Acting Special Agent in Charge of the FBI Washington Field Office, Criminal Division.

            Holman, 69, of Fairfax, Va. pled guilty in May 2021 to one count of bribery. He was sentenced in the U.S. District Court for the District of Columbia by the Honorable Carl J. Nichols. The judge placed Holman on four years of probation, the first 180 days of which must be served under home detention.

            According to court papers, between July 2013 and December 2015, Eric Schneider and Communications Resources, Inc. (CRI) gave Holman and other USDA officials Corvette wheels, concert tickets, PGA tour tickets, meals, alcohol, strip clubs, parking, concierge medical services, prescription drugs, and other cash tips. In exchange, Holman gave Eric Schneider and CRI preferential treatment in the award of USDA contracts worth over $19 million. As part of the scheme, CRI employees drafted procurement documents in such a way as to favor the award of a multi-million dollar contract to CRI, and USDA officials used the documents in the procurement process as if they prepared them. 

           Schneider, 51, also of Fairfax, Va., pleaded guilty in November 2020 to conspiracy and obstruction for his role in the scheme last year. He is to be sentenced on Oct. 4, 2021.

            The FBI’s Washington Field Office and the Beltsville Field Office of the U.S. Department of Agriculture, Office of the Inspector General (OIG) investigated the case, with assistance from the inspector general’s offices of the U.S. Department of Health and Human Services, the U.S. Department of State, and the Small Business Administration OIG.  The cae was prosecuted by Assistant U.S. Attorney Elizabeth Aloi of the Public Corruption and Civil Rights Section of the U.S. Attorney’s Office for the District of Columbia.

WASHINGTON – Clark Calloway, 47, of Washington, D.C., was sentenced today to seven years in prison for possession of a firearm and to acquiring that firearm with the intent to commit assault, announced Acting U.S. Attorney Channing D. Phillips and Nicholas Boshears, Acting Special Agent in Charge of the FBI Washington Field Office's Counterterrorism Division.

            Calloway pleaded guilty in October 2018 in the U.S. District Court for the District of Columbia to charges of interstate transportation of a firearm and ammunition, unlawful possession of a firearm and ammunition, and illegal possession of a machine gun. He was sentenced by the Honorable Richard J. Leon. Upon completion of his prison term, he will be placed on three years of supervised release.

            During the plea colloquy, Calloway admitted that while a subject of an undercover investigation, he agreed to purchase a fully automatic AK-47 for $250. At the time, Calloway stated that he wanted to use the AK-47 on white people. He acknowledged making numerous statements expressing support against non-Muslims, police officers, and white people.  He also acknowledged that he was a former Marine and a felon previously convicted of a felony.

            Calloway was arrested by the FBI on May 4, 2017 when he took delivery of the AK-47.  He has been in custody ever since.

            This case was investigated by the FBI’s Washington Field Office. Assistance was provided by Paralegal Specialists Latina Sanders, Michael Watts, and Donna Galindo, and former Paralegal Specialist Jorge Casillas of the U.S. Attorney’s Office for the District of Columbia. The case was prosecuted by Assistant U.S. Attorneys Tejpal S. Chawla, of the U.S. Attorney’s Office for the District of Columbia, with assistance from former Assistant U.S. Attorney Jeffrey Pearlman, who is now with the Justice Department’s Criminal Division, and Trial Attorneys Justin Sher and Benita Corlett of the Justice Department’s National Security Division.