Northern District of Illinois

CHICAGO — The executive director of a suburban autism center has been indicted on federal fraud charges for allegedly billing a private insurer for nonexistent therapeutic services.

LATRICE HARRELL operated The Champion Center for Autism Inc., in Oak Forest.  From November 2015 to May 2018, Harrell submitted fraudulent claims to a private insurer for therapeutic services that were not rendered, according to an indictment returned in U.S. District Court in Chicago.  The claims represented that patients had received treatment by the center’s occupational therapist or behavioral analyst, when, in fact, Harrell knew that no such services were provided, the indictment states.  Harrell used the names and information of the therapist and analyst without their knowledge to create the fictitious claim forms, the charges allege.  As a result of the scheme, Harrell fraudulently obtained at least $1.6 million from Blue Cross Blue Shield of Illinois, the indictment states.

The indictment was returned Aug. 29, 2019.  It charges Harrell, 46, of Olympia Fields, with seven counts of health care fraud, two counts of making false statements in a health care matter, and two counts of aggravated identity theft.

Harrell pleaded not guilty today at her arraignment before U.S. District Judge Virginia M. Kendall.  A status hearing was scheduled for Nov. 18, 2019.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The government is represented by Assistant U.S. Attorney Eric Pruitt.

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. 

Each count of health care fraud is punishable by up to ten years in prison, while each false statement count carries a maximum sentence of five years.  Aggravated identity theft carries a mandatory prison sentence of two years, which must be served consecutively to the sentence for the underlying offense.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

CHICAGO — A suburban man has been sentenced to 15 years in federal prison for sharing sexually explicit images of children and sexually assaulting a 13-year-old girl he met online.

Using the screen name “darkangle25,” MATTHEW SMITH, 51, of Burbank, shared sexually explicit images and videos of children on the Kik online messaging application.  Some of the images depicted underage girls being sexually abused.  Smith also sexually assaulted a 13-year-old girl in 2015 after chatting online and luring her to his home.

Smith pleaded guilty earlier this year to federal child pornography charges.  U.S. District Judge Charles R. Norgle on Aug. 30, 2019, sentenced Smith to 15 years in prison, to be followed by ten years of supervised release.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and James M. Gibbons, Special Agent-in-Charge of the Chicago office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.  The Burbank Police Department provided valuable assistance.

“This sentence underscores HSI’s commitment to protecting the most vulnerable members of our society — our children,” said SAC Gibbons.  “We will continue to work in partnership with fellow law enforcement agencies and the U.S. Attorney’s Office to bring those engaged in child exploitation to justice.”

Although many of the children depicted in the images and videos have not been identified, 17 of the victims submitted impact statements to the Court prior to sentencing.  In the statements, the victims detailed the lasting nature of the conduct by Smith and others who shared the images and videos online.

“By downloading [child pornography], storing, and trading it with others, he continued the victimization of children who had been filmed or photographed engaging in acts no child should be part of,” Assistant U.S. Attorney Matthew Hernandez argued in the government’s sentencing memorandum.  “The 17 victim impact statements submitted to the Court speak to the incalculable damage caused to those young victims of child pornography.”

Smith met the 13-year-old victim online and spent two years grooming her via Kik, text message, and phone calls, before enticing her to his apartment.  As detailed in victim impact statements submitted by the victim’s family to the Court, the girl’s disappearance caused her family immense suffering and prompted them to file a missing person report on her behalf.

If you believe you are a victim of sexual exploitation, you are encouraged to contact the National Center for Missing and Exploited Children by logging on to www.missingkids.com/home or by calling 1-800-843-5678.  The service is available 24 hours a day, seven days a week.

CHICAGO — A federal jury in Chicago has convicted a real estate executive of fraudulently concealing assets in a bankruptcy filing.

In his 2009 bankruptcy petition, BRETT IMMEL, 38, of Des Moines, Iowa, and formerly of Chicago, knowingly and fraudulently concealed income and bank accounts, as well as his interests in businesses and partnerships.  The jury returned its verdict Monday in U.S. District Court in Chicago. 

Concealment of assets in a bankruptcy case is punishable by up to five years in prison.  U.S. District Judge Sharon Johnson Coleman did not immediately set a sentencing date.

The conviction was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Craig Goldberg, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.  The government is represented by Assistant U.S. Attorneys Elizabeth Pozolo and Erik Hogstrom.

Evidence at trial revealed that prior to the bankruptcy petition Immel was earning thousands of dollars per month as a general partner at the real estate investment company Hanover Services.  Most of his income was paid into a personal checking account held in the names of Immel and his wife.  In May 2009, Immel incorporated Fourteen Consulting, a new business entity of which he was the sole owner.  Over the next several months, Immel began primarily using the new Fourteen Consulting bank account, as well as a Hanover Services account he controlled, to receive most of his income and to pay out nearly all of his personal expenses, including a home mortgage, lease payments on a luxury car, furniture purchases, shopping at high-end clothing stores, child and pet care expenses, and groceries.  Meanwhile, the personal checking account that he stopped using held only about $1,000.

On Oct. 2, 2009, Immel and his wife filed a joint Chapter 7 bankruptcy petition in the U.S. Bankruptcy Court for the Northern District of Illinois, seeking to discharge more than $6 million in debts.  In required financial disclosures submitted with the petition and signed under penalty of perjury, Immel disclosed only the personal checking account he was no longer using.  He omitted the Hanover and Fourteen Consulting bank accounts, which by that point received most of his income and funded most of the family’s personal expenses.  Immel also denied having interests in partnerships and failed to disclose the true nature and value of his interests in Hanover Services and Fourteen Consulting.

On Nov. 13, 2009, Immel appeared at a required meeting with the trustee appointed to oversee his bankruptcy case.  During the meeting, which was under oath and recorded, Immel falsely swore that the information provided in the petition was true, fair, accurate, and complete.  The bankruptcy petition was approved in January 2010 and all of Immel’s debts were discharged.  Evidence at trial revealed that both before and after the meeting with the trustee, Immel continued to use the concealed bank accounts and business interests to fund the bulk of his family’s personal expenses.

CHICAGO — A federal grand jury has indicted a convicted felon for allegedly illegally possessing more than 50 shotguns, rifles and handguns in his Chicago home.

HENRY REYES, 52, is charged with illegal possession of a firearm by a convicted felon.  Reyes illegally possessed 30 handguns, 15 rifles, and seven shotguns on Aug. 15, 2019, according to an indictment returned Thursday in U.S. District Court in Chicago.  Law enforcement discovered the firearms during a court-authorized search of Reyes’s residence in the Lawndale neighborhood of Chicago, according to a criminal complaint and affidavit previously filed in the case.  Reyes was previously convicted of murder in the Circuit Court of Cook County and he was not lawfully allowed to possess a firearm, the charges allege.

Reyes was arrested on the day of the search, and he remains detained in law enforcement custody.  Arraignment in U.S. District Court in Chicago has not yet been scheduled.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Timothy Jones, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives; and Eddie Johnson, Superintendent of the Chicago Police Department.  The government is represented by Assistant U.S. Attorney Edward A. Liva, Jr., and Special Assistant U.S. Attorney Patricia Pantoja.

Holding convicted felons accountable through federal prosecution is a centerpiece of Project Safe Neighborhoods – the Department of Justice’s violent crime reduction strategy.  In the Northern District of Illinois, U.S. Attorney Lausch and law enforcement partners have deployed the PSN program to attack a broad range of violent crime issues facing the district, including by prosecuting individuals who illegally possess firearms.

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Illegal possession of a firearm by a convicted felon is punishable by up to ten years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

CHICAGO — The owners of a suburban Chicago youth counseling center defrauded Illinois Medicaid out of approximately $4 million through a fraudulent billing scheme, according to an indictment returned in federal court.

From 2011 to 2018, SUMMER MATHESON and TERRENCE EWING, co-owners of Laynie Foundation Inc., along with foundation employee RICHARD GRUNDY, fraudulently billed Illinois Medicaid for more mental health counseling services than the foundation actually provided, the indictment states.  Matheson, Ewing and Grundy also used the Matteson-based foundation to seek payment from Illinois Medicaid for non-reimbursable activities, such as internal case reviews, staff training, clinical supervision and recordkeeping, the indictment alleges.  The indictment additionally accuses Matheson of attempting to cover up the fraud by directing foundation personnel to backdate and falsify patient records to make it appear that a licensed practitioner had reviewed and approved certain mental health services, when, in fact, Matheson knew that a practitioner had not reviewed and approved those services.  As a result of the fraud, Matheson, Ewing and Grundy fraudulently obtained approximately $4 million from Illinois Medicaid and managed-care organizations used by Illinois Medicaid, the indictment states.

The indictment was returned Tuesday.  It charges Matheson, 41, and Ewing, 57, both of Dyer, Ind., with six counts of health care fraud.  Matheson is also charged with one count of obstruction of justice.  Grundy, 34, of Chicago, is charged with five counts of health care fraud.  Arraignments in U.S. District Court in Chicago have not yet been scheduled.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The Illinois Attorney General’s Office and Illinois State Police assisted in the investigation.  The government is represented by Assistant U.S. Attorneys Prashant Kolluri and Charles W. Mulaney.

The U.S. Attorney’s Office and Illinois Attorney General’s Office previously intervened in a civil lawsuit that a private citizen filed against the foundation pursuant to the qui tam, or whistleblower, provisions of the False Claims Act.  The lawsuit is pending in federal court.

Medicaid is a state-administered program, and each state sets its own guidelines regarding eligibility and services.  For Illinois Medicaid recipients, funding is shared between the federal government and the State of Illinois.

The public is reminded that an indictment is not evidence of guilt.  The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  The obstruction count is punishable by up to 20 years in prison, while each health care fraud count carries a maximum sentence of ten years.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

CHICAGO — A federal judge today sentenced a Chicago man to four years in prison for unlawfully supplying guns to a violent street gang.

From February 2015 to May 2016, ANTHONY MORGAN directed and paid for an acquaintance to purchase at least seven guns in New Mexico.  The weapons were shipped through the mail to Morgan’s residence in Chicago.  Morgan then supplied some of the guns to members of his violent street gang on the city’s South Side.  Law enforcement later tied two of the firearms to homicides, including the November 2015 murder of 9-year-old Tyshawn Lee in Chicago’s Auburn Gresham neighborhood. 

Morgan, 32, pleaded guilty earlier this year to a federal firearms conspiracy charge.  U.S. District Judge Charles R. Norgle imposed the 48-month sentence in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Timothy Jones, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives; and Eddie Johnson, Superintendent of the Chicago Police Department.  Substantial assistance was provided by the U.S. Postal Inspection Service and the U.S. Postal Service Office of Inspector General.

During the investigation, law enforcement utilized ATF’s National Integrated Ballistic Information Network.  NIBIN is a proven investigative and intelligence tool that can link firearms from multiple crime scenes, allowing law enforcement to quickly disrupt shooting cycles.  NIBIN is the only national network that allows for the capture and comparison of ballistic evidence to aid in solving and preventing violent crimes involving firearms.

Holding firearms traffickers accountable through federal prosecution is a centerpiece of Project Safe Neighborhoods – the Department of Justice’s violent crime reduction strategy.  In the Northern District of Illinois, U.S. Attorney Lausch and law enforcement partners have deployed the PSN program to attack a broad range of violent crime issues facing the district, including by prosecuting individuals who illegally traffic firearms.

Evidence in the case revealed that Morgan directed his acquaintance in New Mexico to purchase the guns in four separate transactions.  Of the seven guns Morgan received, two were linked to murders, one was linked to a shooting that left two people wounded, and another was recovered in Morgan’s vehicle after CPD responded to an emergency call of shots fired on the Fourth of July 2017.  In addition to the murder of Tyshawn Lee, the other fatality connected to one of Morgan’s guns involved the murder of a man on Chicago’s North Side in January 2016.

“This is a case study in how illegal guns flood this district and terrorize our community,” Assistant U.S. Attorney James P. Durkin argued in the government’s sentencing memorandum.  “Illegal firearms are the lifeblood of violent crime in this city, and they need to be treated as such.”

CHICAGO — A Chicago financial adviser has been arrested on a federal fraud charge for allegedly swindling millions of dollars from clients, including a man who received approximately $5 million in a wrongful conviction settlement.

MARCUS E. BOGGS, 49, is charged with one count of wire fraud.  Boggs was arrested on Aug. 22, 2019, at O’Hare International Airport in Chicago prior to boarding an international flight.  He appeared Monday before U.S. Magistrate Judge Jeffrey Cole and was ordered to remain detained in federal custody without bond.

The complaint and arrest were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  Valuable assistance was provided by the Chicago Regional Office of the U.S. Securities and Exchange Commission, which previously filed a civil enforcement action against Boggs.  The government is represented by Assistant U.S. Attorney John D. Mitchell.

Boggs worked as a financial adviser in the Chicago office of a large wealth management firm, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  From 2009 to 2018, Boggs stole at least $2 million from client funds and used the money to make mortgage payments, travel to lavish international locations, and pay other personal expenditures, the complaint states.

The complaint describes the misappropriation of funds from four of Boggs’s clients.  One of those clients received approximately $5 million in a 2014 settlement after being wrongfully convicted of murdering a 14-year-old girl, the complaint states.  The man invested some of the settlement funds with Boggs’s firm on the understanding that Boggs would manage the money and ensure that he had enough funds for the rest of his life.  Boggs instead stole approximately $815,000 from the man’s accounts to pay personal credit card debt, the complaint states.

Another victim cited in the complaint sold his home and invested the proceeds with Boggs.  The victim understood that Boggs would manage the funds in safe investments to generate retirement income, the complaint states.  When the value of his accounts began decreasing, Boggs misrepresented that it was due to fluctuations in the stock market, the complaint states.  In reality, Boggs had used approximately $127,000 from the man’s accounts to pay personal credit card debt, the charge alleges.

The public is reminded that a complaint is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. 

Wire fraud is punishable by up to 20 years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

ROCKFORD — A Rockford man pleaded guilty today before U.S. District Judge Philip G. Reinhard to aiming the beam of a laser pointer at an aircraft. 

BRENTON WELLS, 45, admitted in a written plea agreement that on Dec. 6, 2018, while standing in the backyard of a residence in Rockford, he knowingly aimed his laser pointer at an aircraft flying over the residence. Wells also admitted that he continued to aim his laser pointer at the aircraft for a period of time even as the aircraft moved through the sky over the residence.

Sentencing is set for Dec. 10, 2019, at 9:00 a.m.  Wells faces a maximum potential penalty of up to five years in prison and a fine of up to $250,000.  The actual sentence will be determined by the United States District Court, guided by the Sentencing Guidelines.

The guilty plea was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI, and Dan O’Shea, Rockford Chief of Police. The government is represented by Assistant U.S. Attorney Scott R. Paccagnini.

CHICAGO — A Chicago man has been arrested on federal criminal charges for allegedly threatening to commit violence at a women’s reproductive health clinic.

FARHAN SHEIKH, 19, is charged with transmitting a threat in interstate commerce.  Sheikh was arrested Friday night and made an initial court appearance this morning before U.S. Magistrate Judge Susan E. Cox.  Judge Cox ordered Sheikh to remain in custody pending a detention hearing set for Tuesday at 2:30 p.m.

The complaint and arrest were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The case was investigated by the FBI’s Joint Terrorism Task Force. The U.S. Marshals Service and the Chicago Police Department provided valuable assistance. The government is represented by Assistant U.S. Attorney Jordan M. Matthews.

Sheikh posted the threating communications on or about Aug. 13, 2019, on the social media platform iFunny, according to a criminal complaint and affidavit filed Saturday in U.S. District Court in Chicago.  In one of the posts, Sheikh allegedly stated, “I am done with my state and their (sic) [expletive] abortion laws and allowing innocrnt (sic) kids to be slaughtered for the so called ‘womans right’ [expletive].”  According to the complaint, Sheikh wrote later in the post that he would visit the clinic on Aug. 23, 2019, and “proceed to slaughter and murder any doctor, patient, or visitor I see in the area and I will not back down.  consider this a warning for anyone visiting…”

Sheikh also wrote that his iFunny account is “NOT a satirical account.  I post what I mean, and i WILL carry out what I post,” according to the complaint.

The charge in the complaint is punishable by a maximum sentence of five years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines. 

The public is reminded that a complaint is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

CHICAGO — Three Chicago men have been charged in a murder-for-hire conspiracy that resulted in two fatal shootings in the city’s Lawndale neighborhood.

DESHAWN MORGAN, 37, DARIUS MURPHY, 19, and DEMOND BROWN, 26, are charged with conspiracy to use an interstate facility in the commission of a murder for hire, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  All three defendants are in law enforcement custody.  U.S. Magistrate Judge Susan E. Cox scheduled a detention hearing for Brown for Aug. 19, 2019, at 4:30 p.m., and preliminary hearings for Morgan and Murphy for Aug. 20, 2019, at 10:30 a.m.

The charges were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Timothy Jones, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives; Eddie Johnson, Superintendent of the Chicago Police Department; Kathy A. Enstrom, Special Agent-in-Charge of the Chicago office of the Internal Revenue Service Criminal Investigation Division; Brian McKnight, Special Agent-in-Charge of the Chicago Field Division of the U.S. Drug Enforcement Administration; and Kimberly M. Foxx, Cook County State’s Attorney.  Valuable assistance was provided by the Cook County Sheriff’s Office, the FBI, the Chicago High Intensity Drug Trafficking Area program (HIDTA), and the Organized Crime Drug Enforcement Task Force (OCDETF).  The government is represented by Assistant U.S. Attorneys John D. Mitchell and Grayson S. Walker.

According to the complaint, Morgan has been involved in violence and illegal narcotics trafficking on the West Side of Chicago.  Morgan believed Donald Holmes, Jr., was working with law enforcement as a confidential informant and Morgan sought to have him killed, the complaint states.  In the fall of 2017, Morgan hired Murphy and Brown to murder Holmes in exchange for $5,000 and an assault rifle, the charges allege.

On the night of Jan. 31, 2018, the defendants lured Holmes to the 4700 block of West Arthington Street in Chicago, the complaint states.  Holmes arrived with his girlfriend, Diane Taylor, and the pair was sitting in Holmes’s Jeep Cherokee parked on the street when Murphy entered the vehicle and shot Holmes and Taylor multiple times in the back of their heads, the complaint states.

Although Holmes had previously worked as a cooperating source for law enforcement, he was not working with law enforcement at the time of the murders, the complaint states.

The day after the murders, Brown purchased a used Buick LeSabre for $900 in cash, the complaint states.  Brown then allegedly traveled to Minneapolis, Minn., where he traded the handgun used in the murders for a different firearm.  Law enforcement eventually recovered the gun used in the murders after it was discovered in the possession of a Minnesota resident who was arrested in February 2018 in Milwaukee, Wisc., according to the complaint. 

The public is reminded that a complaint is not evidence of guilt.  The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The charge in the complaint carries a mandatory sentence of life in prison, while a sentence of death is also possible.  Only the Attorney General of the United States has the authority to seek the death penalty.  If convicted, the Court must impose reasonable sentences under federal statutes and the advisory U.S. Sentencing Guidelines.

CHICAGO — A north suburban man has been sentenced to 25 years in federal prison for distributing thousands of sexually explicit images and videos of children.

RONALD FEDER offered to give child pornography to an individual he met online in exchange for what Feder thought would be access to molest the individual’s nephew and niece.  During a December 2017 meeting in a coffee shop in Lincolnwood, Feder handed the individual a flash drive containing approximately 453 videos and 7,932 images of child pornography.  Unbeknownst to Feder, the individual was an undercover law enforcement officer, and the nephew and niece did not exist.   Feder was arrested at the coffee shop and has remained in custody since then. 

The online communication and coffee shop meeting occurred while Feder was free on bond in connection with a previous child pornography charge.

Feder, 32, of Skokie, pleaded guilty earlier this year to child pornography charges in both cases.  U.S. District Judge Matthew F. Kennelly on Tuesday imposed a total sentence of 25 years in prison, to be followed by 25 years of supervised release.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Brian Benczkowski, Assistant Attorney General of the U.S. Department of Justice’s Criminal Division; Leo Lamont, Special Agent-in-Charge of the Naval Criminal Investigative Service, Resident Agency Great Lakes; James M. Gibbons, Special Agent-in-Charge of the Chicago office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and Josh Kaul, Wisconsin Attorney General.  Substantial assistance was provide by the Skokie Police Department.  The government is represented by Assistant U.S. Attorneys Andrew Dixon and Jennifer Maguire.

In the first case against Feder, a grand jury in Chicago indicted him in 2016 for possessing a sexually explicit image of a minor under the age of twelve.  The conduct occurred while Feder was working as a civilian employee of the Armed Forces and living overseas.  Feder initially pleaded not guilty to that charge and was ordered released on bond in September 2016, with a condition of the release prohibiting him from accessing the internet.

Feder violated the bond condition when he went online and began communicating with the undercover officer.  Using the online aliases “Tom Bradly” and “Jack Wayne,” Feder engaged in online and telephone communications with the undercover officer prior to the meeting in the Lincolnwood coffee shop.

If you believe you are a victim of sexual exploitation, you are encouraged to call the National Center for Missing and Exploited Children at 1-800-843-5678.  The hotline is available 24 hours a day, seven days a week.

CHICAGO — A convicted felon has been charged with a federal firearm violation for allegedly illegally possessing a semi-automatic rifle at the Jesse Brown VA Medical Center in Chicago.

BERNARD HARVEY, JR., 40, of Indianapolis, Ind., is charged with one count of illegal possession of a firearm by a convicted felon.  Harvey illegally possessed the rifle on Aug. 12, 2019, at the medical center, 820 S. Damen Ave. in Chicago, according to a criminal complaint and affidavit filed today in U.S. District Court in Chicago.  Harvey is scheduled to make an initial court appearance today at 2:00 p.m. before U.S. Magistrate Judge Susan E. Cox.

The complaint was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; and Eddie Johnson, Superintendent of the Chicago Police Department.  The Jesse Brown VA Police Department provided valuable assistance.  The government is represented by Assistant U.S. Attorney Corey B. Rubenstein.

Holding convicted felons accountable through federal prosecution is a centerpiece of Project Safe Neighborhoods – the Department of Justice’s violent crime reduction strategy.  In the Northern District of Illinois, U.S. Attorney Lausch and law enforcement partners have deployed the PSN program to attack a broad range of violent crime issues facing the district, including by prosecuting individuals who illegally possess firearms.

According to the complaint, Harvey entered the Taylor Street entrance of the medical center while holding the rifle.  Law enforcement officers saw Harvey in the clinic area and ordered him to drop the rifle, which he did, the complaint states.  The officers then ordered Harvey to the ground and placed him under arrest.

Harvey was previously convicted in the Circuit Court of Cook County of multiple felonies, including gun offenses, and he was not lawfully allowed to possess a firearm.  The rifle in Harvey’s possession at the VA medical center had been reported stolen last month from a federal firearms licensee in Indiana, the complaint states.

The public is reminded that a complaint is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Illegal possession of a firearm by a convicted felon is punishable by up to ten years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

CHICAGO — A former high-ranking member of the Sinaloa drug cartel in Mexico was sentenced today to 28 years in federal prison for his role in transporting large amounts of illegal drugs to the Chicago area and throughout the United States.

From at least 2009 until his arrest in November 2014, JESUS RAUL BELTRAN LEON conspired with other Sinaloa Cartel members to transport multi-ton quantities of illegal drugs into the United States.  Beltran Leon invested in shipments comprising hundreds of kilograms of drugs that were purchased in Central and South America, imported into Mexico, and eventually smuggled into the U.S. for distribution in Chicago and throughout the country.  Beltran Leon also sought to acquire from other cartel members numerous kilograms of drugs that already had been imported into the U.S. so that he could further distribute those narcotics to his own wholesale drug customers in Chicago and throughout the country.

Beltran Leon, 35, of Culiacan, Sinaloa, Mexico, pleaded guilty earlier this year to a drug conspiracy charge.  U.S. District Judge Ruben Castillo imposed the sentence in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Brian McKnight, Special Agent-in-Charge of the Chicago Field Division of the U.S. Drug Enforcement Administration.  Valuable assistance was provided by the Internal Revenue Service Criminal Investigation Division in Chicago.  The government is represented by Assistant U.S. Attorneys Andrew C. Erskine and Erika L. Csicsila.

Beltran Leon is one of more than 20 members of the Sinaloa or Beltran-Leyva drug cartels to be charged in federal court in Chicago.  The investigation has resulted in seizures of approximately $30.8 million, approximately eleven tons of cocaine, 265 kilograms of methamphetamines, and 78 kilograms of heroin.

CHICAGO — Two Chicago men who carjacked a sport-utility vehicle at gunpoint in the city’s Goose Island neighborhood have each been sentenced to eleven years in federal prison.

JASON DORTCH, 20, and DAVONTAE JONES, 20, forcibly took the Jeep Grand Cherokee on Nov. 13, 2017.  During the carjacking, the Jeep’s owner was struck on the back of the head with a gun, while a second gun was pointed at the heads of both the owner and a passenger.

Dortch and Jones pleaded guilty earlier this year to carjacking and weapons offenses.  U.S. District Judge John J. Tharp, Jr., on Thursday sentenced Dortch and Jones to eleven years apiece in federal prison.

The sentencings were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; and Eddie Johnson, Superintendent of the Chicago Police Department.  The Cook County State’s Attorney’s Office, Cook County Sheriff’s Office, Oak Park Police Department, and Illinois State Police provided valuable assistance.

The case was investigated by the Chicago 11th District Violent Crimes Task Force, which consists of agents and officers from the FBI, CPD, U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Drug Enforcement Administration, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

“In a city that has seen carjackings and shootings in staggering numbers, violent crimes like the ones the defendants committed should not be tolerated,” Assistant U.S. Attorneys Jeannice W. Appenteng and Kalia Coleman argued in the government’s sentencing memorandum.  “The defendants’ conduct demonstrates profound disrespect for the law and complete disregard for fellow citizens and the community.”

According to evidence in the case, the owner of the Jeep complied with the defendants’ demands for the keys, and also handed over $40.  About 30 minutes later and a mile away, a CPD officer observed the defendants in the stolen Jeep.  Dortch and Jones refused to stop and instead led police on a high-speed chase onto the Eisenhower Expressway.  The defendants eventually lost control of the vehicle, crashing it just east of the Harlem Avenue exit in Oak Park.  They were arrested nearby after a foot chase.

CHICAGO — A Streamwood man has pleaded guilty to a federal child pornography charge and admitted enticing a 16-year-old boy to produce sexually explicit videos of himself.

MICHAEL LIEDTKE, 34, pleaded guilty Friday to one count of receipt of child pornography.  He faces a mandatory minimum sentence of five years in federal prison and a maximum sentence of 20 years.  U.S. District Judge Elaine E. Bucklo set sentencing for Oct. 28, 2019, at 10:30 a.m.

The guilty plea was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Kevin Keithley, Deputy Special Agent-in-Charge of the Chicago office of the FBI; and Robert Berlin, DuPage County State’s Attorney.  The Carol Stream Police Department provided valuable assistance.  The government is represented by Assistant U.S. Attorney Abigail Peluso.

Liedtke admitted in a plea agreement that in December 2016 he enticed the 16-year-old boy to create two sexually explicit videos and send them to Liedtke via cellphone.  During a court-authorized search of Liedtke’s home earlier this year, law enforcement discovered an external disk drive that contained 29 images and six videos of children engaged in sexually explicit conduct, the plea agreement states.  Each of the children depicted in the images and videos was identified as a known child victim by the National Center for Missing and Exploited Children. 

Liedtke also admitted in the plea agreement that in January 2019 he possessed and operated a video camera that he intentionally hid in the ceiling of a public restroom at the DuPage County Training Academy in Carol Stream.  Recordings from the camera depicted the unclothed body parts of approximately 400 people using the restroom, including approximately 300 children under the age of 18, the plea agreement states.  Liedtke acknowledged in the plea agreement that he placed the video camera in the restroom to obtain the lewd images.

“This office will continue to prosecute and hold accountable those individuals who prey upon our youth,” said U.S. Attorney Lausch.  “This plea agreement does just that, as Mr. Liedtke now stands as a convicted felon.  We appreciate the outstanding work of our colleagues at the DuPage County State’s Attorney’s Office, as well as our federal, state, and local law enforcement partners, who worked together to bring justice to Mr. Liedtke.”

“Mr. Liedtke betrayed our community by victimizing children entrusted to his care,” said FBI Deputy Special Agent-in-Charge Keithley.  “The FBI is charged with protecting our most vulnerable citizens from exploitation, and this guilty plea demonstrates our commitment to working with law enforcement partners to ensure that predators like Mr. Liedtke answer for their crimes.”

“Mr. Liedtke violated the trust placed in him by the parents of the athletes he trained,” DuPage County State’s Attorney Berlin said.  “I would like to thank the U.S. Attorney’s Office for their work in holding Mr. Liedtke responsible for his vulgar behavior.  Today’s plea in federal court is an outstanding example of state and federal authorities working together to protect the public.”

As set forth in the federal plea agreement, now that the defendant has pleaded guilty and stipulated to a wide range of criminal conduct, the DuPage County State’s Attorney’s Office will move to dismiss the parallel state criminal charges pending against Liedtke.

If you believe you are a victim of sexual exploitation, you are encouraged to call the National Center for Missing and Exploited Children at 1-800-843-5678.  The hotline is available 24 hours a day, seven days a week.

CHICAGO — A federal grand jury in Chicago has indicted Illinois State Sen. THOMAS E. CULLERTON on embezzlement charges for allegedly fraudulently receiving salary and benefits from a labor union for which he did little or no work.

Cullerton, 49, of Villa Park, is charged with one count of conspiracy to embezzle from a labor union and employee benefit plans, 39 counts of embezzlement from a labor union, and one count of making false statements in a health care matter, according to an indictment returned Thursday in U.S. District Court in Chicago.  Arraignment in federal court has not yet been scheduled.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; and Irene Lindow, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General in Chicago.  The government is represented by Assistant U.S. Attorneys Amarjeet S. Bhachu and Abigail Peluso.

According to the indictment, Cullerton was a member of Teamsters Local Union 734 prior to assuming office as an Illinois State Senator.  After his election in November 2012, Cullerton was no longer an eligible participant in Local 734’s health and pension funds.  In March 2013, while Cullerton was serving in the Illinois Senate, the president of Teamsters Joint Council 25 hired him as a purported union organizer.  The full-time, salaried position included benefits from Local 734’s health and pension funds, due to an agreement Joint Council 25 entered into with Local 734 that same month, the indictment states.

The charges allege that for the next three years Cullerton did little or no work as an organizer.  When Joint Council 25 supervisors requested that he perform his job duties, Cullerton routinely ignored them, the indictment states.  From March 2013 to February 2016, Cullerton fraudulently obtained from Joint Council 25 and its members approximately $188,320 in salary, bonuses, and cellphone and vehicle allowances, as well as approximately $64,068 in health and pension contributions, according to the indictment.  Cullerton used the proceeds of the payments to pay personal expenses, such as his mortgage, utilities and groceries, the charges allege.

The indictment alleges that Cullerton also fraudulently obtained approximately $21,678 in reimbursed medical claims from Local 734’s Health and Welfare Fund.  Cullerton submitted or caused to be submitted to medical providers information that made it appear he was a “route salesman” for Local 734, the indictment states.  The false information concealed and covered up the fact that Cullerton was not eligible for participation in the fund since he was not regularly scheduled to work at least 30 hours per week for Local 734, Joint Council 25, or any other employer that participated in the fund, according to the indictment.

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  The charges in the indictment are each punishable by up to five years’ imprisonment.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

CHICAGO — A former high-ranking official in a labor union admitted in federal court today that he accepted $325,000 in unlawful cash payments from a Chicago business and failed to report the payments on his federal tax returns.

JOHN T. COLI SR., 59, of Chicago, pleaded guilty to one count of receiving a prohibited payment as a union officer, and one count of making a false income tax return.  The charges are punishable by a combined maximum sentence of eight years in federal prison.  U.S. District Chief Judge Rebecca R. Pallmeyer did not immediately schedule a sentencing date.  A status hearing was set for Oct. 31, 2019, at 9:30 a.m.

The guilty plea was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; Irene Lindow, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General in Chicago; and Tara Sullivan, Acting Special Agent-in-Charge of the Chicago office of the Internal Revenue Service Criminal Investigation Division.  The government is represented by Assistant U.S. Attorneys Amarjeet S. Bhachu and Abigail Peluso.

Coli served from 2000 to 2017 as the Secretary-Treasurer of Teamsters Local Union 727.  Coli admitted in a plea agreement that from 2014 to 2017, he received quarterly payments of $25,000 from a Chicago business that employed workers represented by Local 727.  The money was paid to Coli in cash in order to conceal Coli’s receipt of the payments, the plea agreement states.  Coli acknowledged in the plea agreement that had law enforcement not intervened, he expected to receive four more quarterly payments from the company and then retire from the union.

The tax count pertains to Coli’s knowing and willful failure to report the secret cash payments as income for the calendar years 2014 through 2016.  This conduct resulted in a federal tax loss of approximately $105,000, and a State of Illinois tax loss of approximately $12,500.  In addition, Coli acknowledged in the plea agreement that he received income and other benefits from representatives of businesses that dealt with Local 727 that were not properly disclosed to the U.S. Department of Labor.  According to the plea agreement, the benefits included meals in Las Vegas and other cities, free box seat tickets to National Football League and Major League Baseball games, use of a yacht in the U.S. and Italy, and periodic cash payments.

CHICAGO — A federal investigation that previously led to bank fraud and identity theft charges against a north suburban businessman has resulted in indictments against two additional defendants, including the businessman’s brother.

JASON SCHIFF, 40, of Lincolnwood, is charged with three counts of bank fraud, according to a superseding indictment returned July 24, 2019, in U.S. District Court in Chicago.  The superseding indictment also charges Jason Schiff’s brother, YALE SCHIFF, 44, of Riverwoods, with 12 counts of bank fraud and two counts of aggravated identity theft.  Yale Schiff was initially charged in the case last month.  The Schiffs pleaded not guilty today during arraignments before U.S. Magistrate Judge Young B. Kim in Chicago.

A separate indictment returned July 17, 2019, charges Yale Schiff’s business associate, DAVID IZSAK, 44, of Chicago, with eleven counts of bank fraud and one count of aggravated identity theft.  During the investigation, federal authorities seized Izsak’s 57-foot Carver 570 Voyager yacht known as the “Flying Lady.”  The indictment seeks forfeiture of the yacht, as well as a personal money judgment against Izsak of approximately $4 million.  Izsak pleaded not guilty at his arraignment earlier this month.

The indictments were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; and Craig Goldberg, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.  The government is represented by Assistant U.S. Attorney Sheri H. Mecklenburg.

According to the charges against the Schiffs, Yale Schiff made false statements in loan applications to obtain millions of dollars in mortgage loans secured by a variety of properties.  The charges allege that Yale Schiff filed with the Cook County Recorder of Deeds fraudulent letters from financial institutions claiming that loans on the properties were paid in full and that the mortgages were released, when, in fact, the loans were not paid in full and the mortgages had not been released.  Yale Schiff then kept the financing paid by the banks, as well as proceeds from the eventual sales of the properties, without paying the mortgages, the indictment states.  The fraud allegedly committed by Jason Schiff arose out of bank loans for vehicles and a loan secured by real estate purchased from Yale Schiff.

The charges against Izsak accuse him of fraudulently obtaining loans secured by real estate and vehicles.  Izsak allegedly submitted or caused to be submitted to the Cook County Recorder of Deeds fake letters purporting to be from the lender, purporting to congratulate Izsak for paying his loan in full and releasing the lien.  In reality, the letters were not from the lender, the loans were not paid in full, and the liens were not released, the indictment states. 

Izsak and Yale Schiff are each accused of fraudulently obtaining loans by using names, Social Security numbers and dates of birth that did not belong to them.  Izsak also used a stolen identity to obtain a credit card, while Yale Schiff used fake and stolen identities to fraudulently obtain a charge card at Nordstrom department store and loans for a Jeep Grand Cherokee and a Lexus RX350, the indictment states.

The public is reminded that an indictment is not evidence of guilt.  The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Each bank fraud count is punishable by a maximum sentence of 30 years in prison, while each count of aggravated identity theft carries a mandatory sentence of two years.  If convicted, the Court must impose reasonable sentences under federal statutes and the advisory U.S. Sentencing Guidelines.

CHICAGO — A Chinese businesswoman has been indicted in Chicago on federal fraud charges for allegedly providing false verifications of employment for Chinese nationals seeking to stay in the United States on F-1 or H-1B visas.

WEIYUN HUANG, also known as “Kelly Huang,” 30, of Beijing, China, is charged with one count of conspiracy to commit visa fraud and five counts of visa fraud, according to an indictment returned Thursday in U.S. District Court in Chicago.  Huang has been in federal custody since March after her arrest in the Northern District of California.  Arraignment in federal court in Chicago has not yet been scheduled.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; and James M. Gibbons, Special Agent-in-Charge of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Chicago.  The government is represented by Assistant U.S. Attorney Shoba Pillay. 

An F-1 visa permitted a foreign national to study in the United States at a university or other academic institution.  An F-1 visa-holder could extend the visa by participating in a program that required the student to obtain temporary employment in their area of study.  An H-1B visa permitted U.S.-based employers to temporarily employ foreign nationals in specialty occupations. Foreign nationals with an H-1B visa were permitted to stay in the U.S. for three years, with the possibility of extending their stay to six years.

According to the indictment, Huang founded two companies – FINDREAM LLC and SINOCONTECH LLC – for the purported purpose of employing foreign nationals in the United States.  Huang advertised Findream as a “startup company in technology services and consulting,” with clients in China and the U.S.  Huang used a China-based website, “Chinese Looking for Job,” and a China-based WeChat platform, “Job Hunters of North America,” to advertise Findream and Sinocontech to F-1 visa-holders in the U.S. seeking employment and H-1B visas.

In reality, the companies did not deliver any technology or consulting services nor did they employ any of the individuals who responded to the advertisements, the indictment states.  In exchange for a fee, Huang and the companies provided written proof of employment to their customers, knowing that the companies did not actually employ them, the charges allege.  Huang, Findream and Sinocontech also provided false offer letters and verification of employment letters as purported evidence of employment, knowing the forms were bogus, the indictment states. 

The fraud scheme allowed at least approximately 2,685 customers to list Findream or Sinocontech as their employer in order to stay in the U.S. on the visas, according to the indictment.  Huang and her two companies received at least approximately $2 million from customers for whom they agreed to falsely certify employment, the indictment states.

Findream, which was incorporated in California, and Sinocontech, which was incorporated in Delaware, are also charged in the indictment.  Findream is charged with one count of conspiracy to commit visa fraud and four counts of visa fraud, while Sinocontech is charged with one count of conspiracy to commit visa fraud and one count of visa fraud.

The public is reminded that an indictment contains only charges and is not evidence of guilt.  The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Each count of visa fraud is punishable by up to ten years in prison, while the conspiracy count carries a maximum sentence of five years.

CHICAGO — A con man who operated a fraudulent immigration services business that defrauded hundreds of undocumented immigrants has been sentenced to ten years in federal prison.

JAMES KEEGAN fraudulently offered immigration advocacy services, including guaranteed permanent resident status in the United States, in exchange for a fluctuating fee that averaged $3,000 per applicant.  Keegan falsely claimed that he formerly worked as an attorney for the U.S. Department of Homeland Security and that he still had connections there who could quickly approve the permanent resident applications for legal status.  More than 200 undocumented immigrants paid him more than $687,000, with many of the fees paid in cash at Keegan’s storefront office in Berwyn.  In reality, Keegan was never an attorney and had not worked for DHS, and he never filed any immigration applications on behalf of his undocumented immigrant “clients.”  Keegan spent all of the fees on personal expenses, including gambling losses.

Keegan, 57, of Cicero, pleaded guilty in March to one count of wire fraud.  U.S. District Judge John Robert Blakey imposed the sentence Wednesday in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; James M. Gibbons, Special Agent-in-Charge of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Chicago; and Craig Goldberg, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.  Special Assistant U.S. Attorney Christine M. Young represented the government.

According to evidence in the case, Keegan carried out the fraud scheme during a nine-month period in 2017.  He attempted to conceal his scam by creating fake approval notices and attempting to purchase bogus immigration documents.  A law enforcement search of Keegan’s computers and cell phone revealed that he sought to purchase 35 blank residency cards from an online provider of novelty identification documents. 

At the time of his immigration fraud scheme, Keegan was on court supervision after recently being released from federal prison for a prior conviction involving investment fraud.

CHICAGO — A former Chicago resident who laundered illegal drug proceeds on behalf of two cartels in Mexico has been sentenced to five years in federal prison.

MARIO HERRERA was a member of a Mexico-based conspiracy that laundered more than $100 million in narcotics proceeds on behalf of the Jalisco New Generation and Sinaloa cartels.  Herrera was personally responsible for laundering or attempting to launder at least $1.07 million in proceeds from the sale of cartel narcotics.  Herrera was among 30 defendants charged as part of the Chicago-based federal investigation dubbed “Operation King’s Gold.”

Herrera, 55, of Michoacán, Mexico, and formerly of Chicago, pleaded guilty last year to one count of conspiracy to commit money laundering.  U.S. District Judge Andrea R. Wood imposed the five-year sentence Wednesday in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; James M. Gibbons, Special Agent-in-Charge of the Chicago office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Tara Sullivan, Acting Special Agent-in-Charge of the Chicago office of the Internal Revenue Service Criminal Investigation Division; and Timothy Jones, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms & Explosives.  Substantial assistance was provided by the U.S. Drug Enforcement Administration, Cook County Sheriff’s Office, DuPage County Sheriff’s Office, Chicago Police Department, Buffalo Grove Police Department, Joliet Metropolitan Area Narcotics Squad, and the U.S. Marshals Service.

The probe was conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership between federal, state and local law enforcement agencies, whose principal mission is to identify, disrupt and dismantle the most serious drug trafficking and money laundering organizations.

“Money is the lifeblood that allows cartels to poison U.S. streets and wage war on innocent men, women, and children on both sides of the border,” Assistant U.S. Attorneys Peter M. Flanagan, Sean K. Driscoll and Aaron R. Bond argued in the government’s sentencing memorandum.  Herrera “took part in an organization that shuttled over $100 million in drug proceeds from street corners of the United States to the pockets of the individuals in Mexico who control the drug trade.  The people who import these narcotics do so for money, and that is exactly what the defendant delivered.”

“This sentence sends a resounding message that transnational criminal organizations will be investigated and their operatives brought to justice,” said HSI Special Agent-in-Charge Gibbons.  “The amount of cooperation between HSI and our state, federal, and international partners is invaluable to halting the deadly actions of complex drug organizations.”

“The laundering of illegal drug profits is as important and essential to drug traffickers as the very distribution of their illegal drugs,” said IRS-CI Acting Special Agent-in-Charge Sullivan.  “Without these ill-gotten gains, the traffickers could not finance their organizations.  IRS Criminal Investigation, along with the Department of Justice, is committed to taking the profit away from the drug traffickers and putting those individuals in jail.”

The leader of the money laundering organization, DIEGO PINEDA SANCHEZ, of Guadalajara, Mexico, was sentenced last fall to 15 years in federal prison for laundering more than $61 million in drug proceeds.  Pineda Sanchez personally negotiated agreements with cartel members in Mexico to launder drug profits in exchange for percentages of the laundered proceeds, keeping the largest percentages for himself and co-defendant CARLOS PARRA-PEDROZA. 

Parra-Pedroza, of Guadalajara, Mexico, directed members of the conspiracy to collect drug proceeds from dozens of couriers throughout the U.S., use those proceeds to purchase scrap and fine gold from local U.S. businesses, and then ship the gold to refineries in Florida and California.  The refineries, in turn, transmitted the cash value of the gold to Parra-Pedroza and co-conspirators in Mexico.  From 2011 to 2014, Parra-Pedroza personally managed the movement of more than $100 million in drug proceeds from the U.S. to cartel members in Mexico who controlled the drug trade on both sides of the U.S.-Mexico border. 

Parra-Pedroza was repeatedly heard in undercover recordings boasting about his organization’s connections with the violent cartels.  During a June 2013 meeting in which Parra-Pedroza urged an informant to more quickly launder the cartel’s money, Parra-Pedroza told the informant about an incident in which drug dealers punished a man who had lost their money by taking his personal possessions and “chopp[ing] off his fingers.”  Parra-Pedroza endorsed this maiming, stating, “[Expletive] had to, even I would’ve agreed.”  In another meeting with the same informant and an undercover law enforcement agent who posed as a gold supplier, Parra-Pedroza explained that the couriers who transport cartel money are entrusted to do so because they “leave their families and everyone over there” in Mexico, and cartel members there tell them, “‘If you take off, I will kill your entire family here.’”

Judge Wood in December sentenced Parra-Pedroza to 13 years in federal prison.

CHICAGO — The former Chief Executive Officer of a publicly traded engine manufacturer in a northwest suburb of Chicago has been indicted on federal fraud charges for allegedly deceiving investors about the company’s financial performance.

GARY S. WINEMASTER served as CEO and Chairman of the Board of Directors of a Wood Dale-based manufacturing company.  He was also the company’s largest shareholder.  From 2014 to 2016, Winemaster schemed with the company’s vice president of sales, CRAIG M. DAVIS, its general manager, JAMES F. NEEDHAM, and others to fraudulently inflate – by millions of dollars – the revenue reported by the company to the investing public, according to an indictment returned Thursday in U.S. District Court in Chicago.  In doing so, the trio deceived shareholders and other investors about the company’s financial health and performance, the indictment states.

The indictment charges Winemaster, 61, of Mundelein, with one count of securities fraud, ten counts of wire fraud, two counts of making false statements to an auditor, and one count of failing to certify financial reports.  Davis, 45, of Batavia, and Needham, 57, of Leavenworth, Kansas, are each charged with one count of securities fraud and ten counts of wire fraud.  U.S. Magistrate Judge M. David Weisman scheduled arraignments for July 25, 2019, at 10:00 a.m.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The U.S. Securities and Exchange Commission, which filed a civil enforcement lawsuit against Winemaster, Davis, and Needham, provided valuable assistance.  The government is represented by Assistant U.S. Attorneys Paul Tzur and Heidi Manschreck.

According to the indictment, the defendants schemed to defraud shareholders and other investors in connection with the company’s common stock, which was listed on the Nasdaq Stock Market.  The defendants concealed material information about special terms of sales to customers, causing the company’s accounting department to recognize inflated revenue figures for those transactions, the indictment states.  Winemaster and Davis also authorized shipments of products to customers who had not agreed to accept delivery, the indictment states.  The shipments falsely supported the accounting department’s treatment of the transactions as final sales, thus fraudulently causing the company to book revenue from the deals, the charges allege. 

The defendants also arranged additional transactions by the company’s customers that were meant to fraudulently support the company’s accounting for earlier sales, the indictment states.

The public is reminded that an indictment is not evidence of guilt.  The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. 

The maximum sentence for securities fraud is 25 years in prison, while wire fraud and making false statements to an auditor are each punishable by up to 20 years.  Failing to certify financial reports is punishable by up to ten years and a fine of up to $1 million.  If convicted, the Court must impose reasonable sentences under federal statutes and the advisory U.S. Sentencing Guidelines.

CHICAGO — A convicted felon has been sentenced to more than six years in federal prison for illegally possessing a loaded assault rifle on an elevated train platform in Chicago’s Lakeview neighborhood.

JORDAN WATKINS, 31, of Chicago, illegally possessed the gun on the morning of July 29, 2017, at the Chicago Transit Authority’s Belmont Station, which serves multiple elevated train lines.  The rifle was strapped across Watkins’s chest underneath his grey sweatshirt.  It was loaded and had one live round in the chamber.  Watkins was also carrying a messenger bag that contained two 30-round magazines, one of which was loaded with four rounds.  After a 911 call reported a man who “has a gun on him and like a really big clip,” multiple Chicago Police officers responded to the station and arrested Watkins on the southbound platform.

Watkins, who was on parole at the time he possessed the rifle, had previously been convicted of multiple felonies and was not legally allowed to possess a firearm.  He pleaded guilty last year in the federal case to one count of illegal possession of a firearm by a felon.  U.S. District Judge Andrea R. Wood on Wednesday sentenced Watkins to six years and four months in federal prison.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; and Eddie Johnson, Superintendent of the Chicago Police Department.  The Illinois Department of Corrections provided valuable assistance.

“By carrying a loaded assault rifle into a CTA station, Watkins committed a serious offense that jeopardized public safety,” Assistant U.S. Attorney Grayson S. Walker argued in the government’s sentencing memorandum.

Holding convicted felons accountable through federal prosecution is a centerpiece of Project Safe Neighborhoods – the Department of Justice’s violent crime reduction strategy.  In the Northern District of Illinois, U.S. Attorney Lausch and law enforcement partners have deployed the PSN program to attack a broad range of violent crime issues facing the district, including by prosecuting individuals who illegally possess firearms.

CHICAGO — A convicted felon has been charged with a federal firearm violation for allegedly illegally possessing a loaded semiautomatic handgun in the Old Town neighborhood on Chicago’s North Side.

GASTON TUCKER, 32, of Chicago, is charged with one count of illegal possession of a firearm by a convicted felon.  Tucker illegally possessed the gun on Feb. 17, 2019, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  On July 9, 2019, U.S. Magistrate Judge Maria Valdez ordered Tucker detained in federal custody without bond.

The complaint and detention order were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; and Eddie Johnson, Superintendent of the Chicago Police Department.

Holding convicted felons accountable through federal prosecution is a centerpiece of Project Safe Neighborhoods – the Department of Justice’s violent crime reduction strategy.  In the Northern District of Illinois, U.S. Attorney Lausch and law enforcement partners have deployed the PSN program to attack a broad range of violent crime issues facing the district, including by prosecuting individuals who illegally possess firearms.

According to the complaint, Tucker was a backseat passenger in a sedan that was parked in front of a fire hydrant in the 1300 block of North Sedgwick Street in Chicago.  A Chicago Police officer approached the vehicle and obtained identification from the vehicle’s occupants.  As the officer walked back to her car to review the identifications, Tucker got out and ran down the street, the complaint states. 

As officers began searching the area, security guards from a nearby housing complex reported seeing a man run through the complex and drop an object underneath a dumpster, the complaint states.  Officers later searched underneath the dumpster and recovered the handgun, according to the complaint.

Tucker was previously convicted in state court of aggravated battery with a firearm, a felony for which he was on parole at the time of the alleged federal offense.

The public is reminded that a complaint is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Illegal possession of a firearm by a convicted felon is punishable by up to ten years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

CHICAGO — Chicago recording artist ROBERT SYLVESTER KELLY, also known as “R. Kelly,” has been arrested on federal child pornography and obstruction charges.

A 13-count indictment returned Thursday in U.S. District Court in Chicago charges Kelly with producing and receiving child pornography, and enticing minors to engage in criminal sexual activity.  The charges accuse Kelly of engaging in sex acts with five minors and recording some of the abuse on multiple videos.  The indictment also charges Kelly with conspiring to intimidate victims and conceal evidence in an effort to obstruct law enforcement, including an investigation in the 2000s that resulted in his trial in 2008 in Cook County on state child pornography charges. 

Kelly, 52, of Chicago, was arrested Thursday night.  He is scheduled to appear for an arraignment and detention hearing on Tuesday at 1:00 p.m. before U.S. District Judge Harry D. Leinenweber in Chicago.  Kelly is charged with one count of conspiracy to receive child pornography, two counts of receiving child pornography, four counts of producing child pornography, five counts of enticement of a minor to engage in criminal sexual activity, and one count of conspiracy to obstruct justice.

The indictment also charges two former employees of Kelly’s music business: DERREL MCDAVID, 58, of Chicago (one count of conspiracy to receive child pornography, two counts of receiving child pornography, one count of conspiracy to obstruct justice), and MILTON BROWN, also known as “June Brown,” 53, of Chicago (one count of conspiracy to receive child pornography).  McDavid is scheduled to make an initial court appearance today at 11:00 a.m. before U.S. Magistrate Judge Young B. Kim in Chicago, while Brown is scheduled to make an initial appearance before Judge Kim on July 19, 2019, at 11:00 a.m. 

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; James M. Gibbons, Special Agent-in-Charge of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Chicago; and Tara Sullivan, Acting Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.  Substantial assistance was provided by the Cook County State’s Attorney’s Office and the Chicago Police Department.  Assistant U.S. Attorneys Angel Krull, Abigail L. Peluso and Jeannice W. Appenteng represent the government.

“This indictment demonstrates our office’s commitment to holding individuals such as Kelly accountable for criminal sexual abuse of minors, protecting the victims of such crimes, and punishing those who obstruct law enforcement investigations,” said U.S. Attorney Lausch.  “I thank the courageous individuals who provided law enforcement with important information related to these allegations, and I encourage others with helpful information to do the same.  Together with our law enforcement partners and with the help of victims and other witnesses, we will continue to vigorously investigate and prosecute individuals who sexually exploit children.”

“Today’s arrest serves as a reminder of HSI’s commitment to protecting the most vulnerable members of our society – our children,” said HSI Special Agent-in-Charge Gibbons.  “We will continue to work in partnership with fellow law enforcement agencies and prosecutors to bring those engaged in child exploitation to justice.”

A separate federal indictment was unsealed today in the Eastern District of New York charging Kelly with racketeering for allegedly operating a criminal enterprise that promoted Kelly’s music and recruited women and girls to engage in illegal sexual activity.  Kelly will appear for a removal hearing on the New York charges today at 1:45 p.m. before U.S. Magistrate Judge Sheila Finnegan in Chicago.

Kelly is an award-winning recording artist and record producer who has operated various music businesses in Chicago.  According to the indictment in the Northern District of Illinois, Kelly met the five victims in the late 1990s.  Kelly engaged in sex acts with the victims while they were all under the age of 18, and he created numerous explicit videos with four of them, the indictment states.  The charges allege that Kelly and McDavid in 2001 began paying an acquaintance hundreds of thousands of dollars to collect the videos for the purpose of concealing and covering up their existence.  When the acquaintance later planned to hold a news conference to publicly announce that he recovered the videos, Kelly, McDavid and others paid him approximately $170,000 in exchange for agreeing to cancel the event, the indictment states.

Kelly and McDavid also agreed to pay one of the minors and another individual for their efforts to return the videos, but only after they took polygraph examinations to confirm they returned all copies in their possession, the charges allege.

The indictment seeks forfeiture of a personal money judgment of approximately $1.55 million.

The public is reminded that charges contain only accusations and are not evidence of guilt.  The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. 

Producing child pornography carries a mandatory minimum sentence of ten years in prison and a maximum of 20 years.  Receiving child pornography and conspiring to receive child pornography are each punishable by a mandatory minimum sentence of five years in prison and a maximum of 20 years.  The maximum sentence for enticement of a minor is ten years.  Conspiracy to obstruct justice is punishable by up to five years.  If convicted, the Court must impose reasonable sentences under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.

If you believe you are a victim of sexual exploitation by Robert Sylvester Kelly, you are encouraged to contact HSI’s confidential tip line by calling 1-866-DHS-2-ICE (1-866-347-2423) or by logging on to https://www.ice.gov/webform/hsi-tip-form.  The service is available 24 hours a day, seven days a week.

CHICAGO — A software engineer at a suburban Chicago locomotive manufacturer stole proprietary information from the company and took it to China, according to an indictment unsealed this week in federal court in Chicago.

XUDONG YAO, also known as “William Yao,” 57, is charged with nine counts of theft of trade secrets.  Yao is currently at large.  He is believed to be residing in China.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; John C. Demers, Assistant Attorney General for National Security; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.  The government is represented by Assistant U.S. Attorney Peter M. Flanagan.

According to the indictment, Yao began working for the suburban Chicago manufacturer in August 2014.  Within two weeks, Yao downloaded more than 3,000 unique electronic files containing proprietary and trade secret information relating to the system that operates the manufacturer’s locomotives, the indictment states.  Over the next six months, Yao downloaded numerous other electronic files containing proprietary and trade secret information, including technical documents and software source code, the indictment states.  During that time, Yao allegedly sought, negotiated, and accepted employment with a business in China that provided automotive telematics service systems.

The suburban Chicago manufacturer terminated Yao in February 2015 for reasons unrelated to the alleged theft, which at that time had not been discovered.  Shortly thereafter, Yao made copies of the stolen trade secret information, the indictment states.  He allegedly traveled to China in July 2015 and began working for the Chinese company.

On Nov. 18, 2015, Yao traveled from China to O’Hare International Airport in Chicago, according to the indictment.  At the time, he had in his possession the stolen trade secret information, including nine complete copies of the suburban Chicago company’s control system source code and the systems specifications that explained how the code worked, the indictment states.  Yao returned to China at some point thereafter.

The indictment was returned in December 2017 and ordered unsealed Wednesday.

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Theft of trade secrets is punishable by a maximum sentence of ten years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

A software engineer at a suburban Chicago locomotive manufacturer stole proprietary information from the company and took it to China, according to an indictment unsealed this week in federal court in Chicago.

Xudong Yao, also known as “William Yao,” 57, is charged with nine counts of theft of trade secrets.  Yao is currently at large and believed to be residing in China.

The indictment was announced by Assistant Attorney General for National Security John C. Demers, U.S. Attorney John R. Lausch Jr. for the Northern District of Illinois and Special Agent-in-Charge Jeffrey S. Sallet of the FBI’s Chicago Field Office.  The government is represented by Assistant U.S. Attorney Peter M. Flanagan of the Northern District of Illinois.

According to the indictment, Yao began working for the suburban Chicago manufacturer in August 2014.  Within two weeks of being hired, Yao downloaded more than 3,000 unique electronic files containing proprietary and trade secret information relating to the system that operates the manufacturer’s locomotives, the indictment states.  During the next six months, Yao downloaded numerous other electronic files containing proprietary and trade secret information, including technical documents and software source code, the indictment states.  During the time of this illicit downloading of trade secrets, Yao allegedly simultaneously sought, negotiated, and accepted employment with a business in China that provided automotive telematics service systems.

The suburban Chicago manufacturer terminated Yao in February 2015 for reasons unrelated to the alleged theft, which at that time had not been discovered.  Shortly thereafter, according to the indictment, Yao made copies of the stolen trade secret information and then traveled to China in July 2015 and began working for the Chinese company.

On Nov. 18, 2015, Yao traveled from China to O’Hare International Airport in Chicago, according to the indictment.  At the time, he had in his possession the stolen trade secret information, including nine complete copies of the suburban Chicago company’s control system source code and the systems specifications that explained how the code worked, the indictment states.  Yao returned to China at some point thereafter.

The indictment was returned in December 2017 and ordered unsealed Wednesday. 

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Theft of trade secrets is punishable by a maximum sentence of 10 years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines. 

CHICAGO — A former technician at a Chicago pharmacy has been sentenced to a year and a day in federal prison for stealing thousands of pills of Hydrocodone and selling them for a profit.

JACQUELINE GREEN worked at Allcare Discount Pharmacy, located in the 2700 block of West North Avenue in Chicago.  From October 2015 to December 2017, Green and a co-defendant, ELIZABETH CRUZ, conspired to steal approximately 56,108 pills of Hydrocodone and sell them outside the pharmacy for a profit.  Green and Cruz received at least $10,800 in proceeds from the sale of the stolen pills.

Green, 28, of Chicago, pleaded guilty earlier this year to one count of conspiracy to possess a controlled substance with the intent to deliver.  U.S. District Judge Ronald A. Guzman imposed the prison sentence Wednesday in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Brian McKnight, Special Agent-in-Charge of the Chicago Field Division of the U.S. Drug Enforcement Administration. 

“The opioid epidemic has devastated the lives of countless individuals through addiction and overdose,” Assistant U.S. Attorney Nani M. Gilkerson argued in the government’s sentencing memorandum.  “Defendant contributed to this national crisis by helping make opiates available on the street to individuals who otherwise would not and should not have access to them.”

“Pharmacies and their employees are trusted to handle dangerous pharmaceutical medications responsibly,” said DEA Assistant Special Agent-in-Charge Robert Bell.  “When pharmacy employees illegally divert potent pain medications for illegitimate purposes, they put individuals and their families at risk of drug dependence and overdoses.  The DEA will continue to work closely with the U.S. Attorney’s Office to bring violators to justice.”

The government was represented by Ms. Gilkerson and Assistant U.S. Attorney David Rojas.

Cruz, of Stone Park, pleaded guilty earlier this year to the same charge as Green.  Cruz admitted in a plea agreement that she concealed the theft by falsifying the pharmacy’s inventory to make it look like the pills had either not been received from the distributor or had been dispensed to patients.  Judge Guzman set Cruz’s sentencing for Sept. 5, 2019, at 2:00 p.m.

ROCKFORD — The former director of operations of a Rockford non-profit organization was sentenced Tuesday by U.S. District Judge Philip G. Reinhard to 37 months in prison for mail fraud and tax fraud.

LEILANI HILLIS, 60, formerly of Rockford, was also ordered to pay restitution of $632,718.99 on the mail fraud charge and $151,186.91 on the tax fraud charge.  Hillis pleaded guilty to the charges in March.

The sentencing was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; and Tara Sullivan, Acting Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. The government was represented by Assistant U.S. Attorney Scott R. Paccagnini.

According to a written plea agreement, since 2001 Hillis was an employee of a non-profit organization whose mission was to attract, retain and expand jobs in the Rockford area.  The organization received funding from private sources and local governments. During her employment, Hillis handled the organization’s payroll, human resource matters and accounting, and oversaw the annual audit.  As of 2009, Hillis had signatory authority on the organization’s bank account and access to the organization’s PayPal account.  The organization issued employees, including Hillis, a credit card in the employee’s name.  From 2009 through April 2018, Hillis used her employee issued credit card to make unauthorized purchases for her personal benefit totaling $632,718.99.  Hillis concealed her crime by using the organization’s accounting codes to make it appear the purchases were for the organization’s benefit, and she forged the initials of the organization’s president on the expense reports.  Hillis issued and signed checks from the organization’s account to the bank, knowing the payments included money to pay for her unauthorized purchases made with the organization’s credit card.

Hillis also admitted that she did not report as income the money from the organization that she used to pay the organization’s credit card for her unauthorized personal purchases.  As a result, for the tax years 2014 to 2017, Hillis failed to pay $151,186.91 in federal income taxes.

CHICAGO — A federal grand jury in Chicago has indicted an Evanston man on robbery and firearm charges in connection with three violent gas station heists in the north suburbs.

MARIO BANKS JR., 24, is charged with three counts of robbery and three counts of using, carrying, and brandishing a firearm during a crime of violence.  The indictment accuses Banks of robbing three gas stations at gunpoint:

• Nov. 4, 2018: Bucky’s Express Mobil, 6400 block of North Cicero Avenue, Lincolnwood.
• Feb. 16, 2019: Shell Oil, 3300 block of Howard Street, Skokie.
• Feb. 19, 2019: Bucky’s Express Mobil, 6400 block of North Cicero Avenue, Lincolnwood.

The indictment was returned June 20, 2019, in federal court in Chicago.  Banks has pleaded not guilty to the charges and he remains detained in federal custody.  A status hearing is set for Sept. 12, 2019, before U.S. District Judge Virginia M. Kendall.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Demitrous Cook, Chief the Evanston Police Department; Jay Parrott, Chief of the Lincolnwood Police Department; Anthony F. Scarpelli, Chief of the Skokie Police Department; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The government is represented by Assistant U.S. Attorney Eric S. Pruitt.

The firearm counts each carry a mandatory minimum sentence of five years in prison and a maximum sentence of life, while each robbery count is punishable by up to 20 years.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines. 

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

CHICAGO — A Michigan man has been arrested on federal criminal charges for allegedly conducting illegal charter boat operations on Chicago waterways.

CHRISTOPHER MIKE GARBOWSKI used a 40-foot powerboat known by the names “Anchorman,” “Sea Hawk” and “Manaje III,” to conduct illegal commercial charter operations on Chicago waterways, including Lake Michigan and the Chicago River, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  Garbowski charged money to charter the boat to various groups of passengers, such as bachelorette parties and family celebrations.  Garbowski conducted the charter operations during the 2017 and 2018 boating seasons even though the vessel had not been inspected and certified by the U.S. Coast Guard, as required by federal regulations, the complaint states.  Garbowski also captained the charters even though he lacked the proper Coast Guard credentials to do so, the charges allege.

Garbowski, also known as “Christopher Michael Garbowski” and “Michael Gunnman,” 33, of Sterling Heights, Mich., is charged with one count of violating an order of the captain of the port.  Garbowski was arrested Saturday.  He made an initial court appearance Saturday afternoon before U.S. Magistrate Judge Young B. Kim, who ordered Garbowski released on a $10,000 unsecured bond.  Garbowski’s next court date was set for July 8, 2019.

The complaint was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Neal R. Marzloff, Special Agent-in-Charge of the Coast Guard Investigative Service, Central Region; and Jerry Costello, Director of the Illinois Department of Natural Resources Conservation Police.  The government is represented by Assistant U.S. Attorney Timothy J. Chapman.

“The safety of the boating public is a top priority for the Coast Guard,” said CGIS Special Agent-in-Charge Marzloff.  “Illegal charters pose a safety risk to passengers, but also impact the livelihood of licensed mariners that abide by the rules.  The Coast Guard Investigative Service (CGIS), in coordination with our partners, is committed to investigating those who knowingly violate maritime laws and regulations.”

According to the complaint, Garbowski advertised his charter business on websites and apps such as Get My Boat and Boatbound.  The Coast Guard notified Garbowski about the federal regulations on multiple occasions, including at Monroe Harbor in Chicago on Aug. 19, 2017, when Coast Guard personnel boarded the boat moments before Garbowski was set to begin a five-hour charter for eight female passengers who booked the “Sea Hawk” for $2,400, the complaint states.  As the women were walking down the dock to board the boat, Garbowski called one of them on her cell phone and told her to lie to Coast Guard personnel by pretending they were all friends with Garbowski, the complaint states.

The public is reminded that a complaint is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  The charge in the complaint is punishable by a maximum sentence of five years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

CHICAGO — The U.S. Attorney’s Office in Chicago has charged two Chicago teenagers with robbing a Near North Side sandwich shop earlier this week.  Law enforcement is also investigating whether the pair committed other robberies this month in the city’s downtown Loop neighborhood.

BRANTEZ EVANS, 18, and LAMARR BROWN, 19, are charged with one count of robbery for allegedly taking $307 during a heist Tuesday at a Subway restaurant, 1234 N. Halsted St. in Chicago, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  According to the complaint, Evans and Brown entered the restaurant, and Brown approached the counter, lifted the right side of his shirt and displayed what appeared to be a firearm.  Brown then told a clerk, “give me the money,” the complaint states.  When the clerk briefly hesitated, Brown allegedly stated, “Come on man you don’t want to get shot.”

Evans and Brown fled the restaurant with the cash but were arrested about 15 minutes later by officers from the Chicago Police Department’s 18th District.  The officers recovered a black BB gun that was consistent with the weapon described by the robbery victims, the complaint states.  Evans and Brown are also suspected of robbing two other Subway restaurants, a Dunkin Donuts, and a Mini-Mart, all in the downtown Loop neighborhood this month, according to the complaint.  The investigation remains ongoing.

Brown was scheduled to appear for a detention hearing this afternoon before U.S. Magistrate Judge Young B. Kim in Chicago.  Evans is set to appear for a detention hearing before Judge Kim on Monday at 1:00 p.m.

The complaint and arrests were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; Jason R. Wojdylo, Acting Chief Deputy U.S. Marshal for the Northern District of Illinois; and Eddie Johnson, Superintendent of the Chicago Police Department.  The Federal Protective Service provided valuable assistance.  The government is represented by Assistant U.S. Attorney Charles W. Mulaney.

The robbery charge is punishable by up to 20 years in prison.  If convicted, the Court must impose reasonable sentences under federal statutes and the advisory U.S. Sentencing Guidelines.  The public is reminded that a complaint is not evidence of guilt.  The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

CHICAGO — Former City of Chicago Alderman WILLIE B. COCHRAN was sentenced today to a year and a day in federal prison for pocketing money from a charitable fund intended to help families and children in his South Side ward.

Cochran, 67, of Chicago, pleaded guilty earlier this year to one count of wire fraud.  U.S. District Judge Jorge L. Alonso imposed the sentence in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.  The FBI initiated the investigation after receiving information from the former City of Chicago Legislative Inspector General’s Office, which was headed at that time by Faisal Khan.  The government is represented by Assistant U.S. Attorneys Heather McShain and Christopher Stetler.

While representing the 20th Ward in the Chicago City Council, Cochran operated the “20th Ward Activities Fund,” which he purported to use for charitable endeavors to help families and children living in the ward.  Cochran controlled a bank account connected to the fund.  When soliciting donations to the fund, Cochran falsely represented that all contributions would be used for charitable events, including a back-to-school picnic, a Valentine’s Day party for senior citizens, and events during the holiday season in November and December.

Cochran admitted in a plea agreement that he used some of the contribution money for his own personal use, including paying his daughter’s college tuition, withdrawing cash at casino ATMs, and purchasing items for his home.  From January 2010 to April 2014, Cochran pocketed approximately $14,285 from the fund and converted the money to his own personal use, the plea agreement states.

CHICAGO — Two men from a north suburb of Chicago have been convicted of conspiring to provide material support to the Islamic State of Iraq and al Sham, a foreign terrorist organization also known as ISIS.

The jury in federal court in Chicago on Thursday convicted JOSEPH D. JONES, 37, and EDWARD SCHIMENTI, 37, both of Zion, on one count of conspiring to provide material support and resources to ISIS.  Schimenti was also convicted on one count of making false statements to the FBI.

The material support charge is punishable by a maximum sentence of 20 years in prison, while the false statement count carries a maximum sentence of eight years.  U.S. District Judge Andrea R. Wood did not immediately set a sentencing date.  A status hearing was scheduled for Aug. 14, 2019.

The case was investigated by the Chicago Joint Terrorism Task Force, which is comprised of numerous federal, state and local law enforcement agencies.

The convictions were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; John C. Demers, Assistant Attorney General for National Security; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The Zion Police Department provided valuable assistance.  The government is represented by Assistant U.S. Attorneys Barry Jonas, Rajnath Laud and David Rojas of the Northern District of Illinois, and Trial Attorney Alexandra S. Hughes of the National Security Division’s Counterterrorism Section.

Evidence at trial revealed that Jones and Schimenti advocated on social media for violent extremism in support of the terrorist group.  In 2015, Jones and Schimenti began meeting with undercover FBI employees and individuals who were cooperating with law enforcement.  During the meetings, Jones and Schimenti discussed their devotion to ISIS and their commitment to ISIS principles.  Many of these meetings occurred in the north suburbs of Chicago.  Jones and Schimenti at one point shared photographs of themselves holding the ISIS flag at the Illinois Beach State Park in Zion.

In 2017, the pair furnished cellular phones to a cooperating individual, believing the phones would be used to detonate explosive devices in ISIS attacks overseas.  On April 7, 2017, Jones and Schimenti drove the cooperating individual to O’Hare International Airport in Chicago, with the understanding that the cooperating individual would be traveling to Syria to fight with ISIS.

The false statement conviction against Schimenti stems from the materially false statements he gave to the FBI after his arrest.  During the interview, Schimenti said he had never engaged in conversations about bomb detonators, and that he was under the impression the phones would be repaired and re-sold and not used for any other purpose.

Two men from a north suburb of Chicago have been convicted of conspiring to provide material support to the Islamic State of Iraq and al Sham, a foreign terrorist organization also known as ISIS. Assistant Attorney General for National Security John C. Demers, U.S. Attorney John R. Lausch Jr. and Special Agent-in-Charge Jeffrey S. Sallet of the FBI’s Chicago Field Office made the announcement.

The jury in federal court in Chicago on Thursday convicted Joseph D. Jones, 37, and Edward Schimenti, 37, both of Zion, Illinois, on one count of conspiring to provide material support and resources to ISIS.  Schimenti was also convicted on one count of making false statements to the FBI.

The material support charge is punishable by a maximum sentence of 20 years in prison, while the false statement count carries a maximum sentence of eight years.  U.S. District Judge Andrea R. Wood did not immediately set a sentencing date.  A status hearing was scheduled for Aug. 14, 2019.

The case was investigated by the Chicago Joint Terrorism Task Force, which is comprised of numerous federal, state and local law enforcement agencies.

Evidence at trial revealed that Jones and Schimenti advocated on social media for violent extremism in support of the terrorist group.  In 2015, Jones and Schimenti began meeting with undercover FBI employees and individuals who were cooperating with law enforcement.  During the meetings, Jones and Schimenti discussed their devotion to ISIS and their commitment to ISIS’ violent extremist principles.  Many of these meetings occurred in the north suburbs of Chicago.  Jones and Schimenti at one point shared photographs of themselves holding the ISIS flag at the Illinois Beach State Park in Zion.

In 2017, the pair furnished cellular phones to a cooperating individual, believing the phones would be used to detonate explosive devices in ISIS attacks overseas.  On April 7, 2017, Jones and Schimenti drove the cooperating individual to O’Hare International Airport in Chicago, with the understanding that the cooperating individual would be traveling to Syria to fight with ISIS.

The false statement conviction against Schimenti stems from the materially false statements he gave to the FBI after his arrest.  During the interview, Schimenti said he had never engaged in conversations about bomb detonators, and that he was under the impression the phones would be repaired and re-sold and not used for any other purpose.

The Zion Police Department provided valuable assistance.  The government is represented by Assistant U.S. Attorneys Barry Jonas, Rajnath Laud and David Rojas of the Northern District of Illinois and Trial Attorney Alexandra S. Hughes of the National Security Division’s Counterterrorism Division.

CHICAGO — A federal judge has sentenced a man to life in prison for forcing women and children to engage in commercial sex acts in Chicago and the suburbs.

SAMUEL NICHOLS led a sex trafficking operation that violently forced at least 12 women and children into the commercial sex trade.  Some of the minors were as young as 13 years old when Nichols trafficked them.  Nichols kept the money earned by his victims, often taking in $1,000 per day.  He openly flaunted his role as a trafficker, flashing money in Instagram posts, having “#1 Pimp” tattooed on his stomach, and using the trafficking proceeds to fund a Chicago-area rap group that posted music videos on websites such as YouTube. 

Nichols, 34, formerly of Chicago, has been in law enforcement custody since October 2014.  A federal jury in Chicago last year convicted Nichols on multiple counts of sex trafficking.  U.S. District Judge Virginia M. Kendall on Monday sentenced Nichols to life in prison.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The Carol Stream Police Department provided valuable assistance.

“The depth and breadth of defendant’s crimes are horrific,” Assistant U.S. Attorneys Sarah Streicker, Michelle Petersen and Elizabeth Pozolo argued in the government’s sentencing memorandum.  “While these women and children had sex with dozens of strangers, defendant took the money they earned and used it to fund his own extravagant lifestyle.”

A co-defendant, CHARLES FEARS, 26, of Chicago, pleaded guilty last year to conspiracy and sex trafficking charges.  Fears is scheduled to be sentenced by Judge Kendall on July 16, 2019.

Evidence in the case revealed that Nichols and Fears carried firearms and would often hit, slap and choke the victims who worked for them, including one incident in which Nichols beat a female so badly she had to be hospitalized.  The pair also supplied the victims with drugs and alcohol while coercing them to participate in the commercial sex acts.

If you believe you are a victim of sexual exploitation, you are encouraged to contact the National Center for Missing and Exploited Children by logging on to www.missingkids.com/home or by calling 1-800-843-5678.  The service is available 24 hours a day, seven days a week.

CHICAGO — A federal jury has convicted a Chicago man of shooting an agent from the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives.

ERNESTO GODINEZ shot the agent on May 4, 2018, in the Back of the Yards neighborhood of Chicago.  At the time of the early morning shooting, the agent and several other law enforcement officers were conducting a covert law enforcement activity in the 4300 block of South Hermitage Avenue.  The agent was wounded but survived, and he testified at the trial.

The jury returned its verdict on Monday in federal court in Chicago.  Godinez, 29, was found guilty on both counts against him, including one count of assault of a federal officer, which is punishable by up to 20 years in prison, and one count of discharging a firearm during a crime of violence, which is punishable by a minimum sentence of ten years in prison that must be served after any term of imprisonment imposed on the assault conviction.  U.S. District Judge Harry D. Leinenweber set sentencing for September 19, 2019.

The conviction was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Timothy Jones, Special Agent-in-Charge of the Chicago Field Division of ATF; and Eddie Johnson, Superintendent of the Chicago Police Department.  Substantial assistance was provided by the Chicago Police Department, U.S. Marshals Service, Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, U.S. Drug Enforcement Administration, and Illinois State Police.  The government is represented by Assistant U.S. Attorneys Kavitha J. Babu and Nicholas J. Eichenseer.

CHICAGO — At the request of the U.S. Food and Drug Administration, U.S. Marshals have seized more than 300,000 containers of dietary supplements, including tablets, capsules and teas, from a suburban Chicago company.

The containers were held by Life Rising Corp., a Willowbrook-based manufacturer and distributor of dietary supplement products bearing the brand names Life Rising, Holicare, and HopeStream, among others.  The goods were seized Friday at Life Rising’s facilities in the 7800 block of South Quincy Street in the southwest suburb.  The seized goods consisted of more than 500 products, valued at approximately $3.5 million.

The products were seized after the U.S. Attorney’s Office in Chicago filed a civil forfeiture complaint on behalf of the FDA.  The U.S. District Court for the Northern District of Illinois determined there was probable cause that Life Rising prepared, packed and/or held dietary supplements under conditions that do not conform to the dietary supplement current good manufacturing practice (cGMP) requirements.

The complaint and seizures were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Melinda K. Plaisier, the FDA’s Associate Commissioner for Regulatory Affairs; and Jason R. Wojdylo, Acting Chief Deputy U.S. Marshal for the Northern District of Illinois.  The government is represented by Assistant U.S. Attorney Ernest Y. Ling.

“When dietary supplement manufacturers deviate from proper manufacturing requirements, they put the public health at risk,” said U.S. Attorney Lausch.  “The U.S. Attorney’s Office will continue to work closely with the FDA to prevent dietary supplement manufacturers from jeopardizing public health.”

“This seizure underscores the agency’s commitment to taking aggressive action when manufacturers distribute adulterated dietary supplements that have the potential to put consumers at risk,” said Associate FDA Commissioner Plaisier.  “The FDA has a variety of enforcement tools at its disposal, and when products don’t comply with FDA regulations, we will not hesitate to take appropriate action.”

“Were it not for civil asset forfeiture, these products would remain in commerce and a danger to the community,” said Acting Chief Deputy U.S. Marshal Wojdylo.  “Civil forfeiture ensures that no individual or company profits from misconduct, especially when that profit comes from putting the citizens of our communities at risk.”

According to the civil complaint, the FDA earlier this year conducted an inspection of Life Rising’s facility and observed, among other things, significant and continuing deviations from the dietary supplement manufacturing regulations, many of which were similar or identical to violations noted during a prior FDA inspection of Life Rising in 2016 and in a warning letter the FDA issued to Life Rising in 2017.  The FDA inspection found that the company failed to establish product specifications for the identity, purity, strength, and composition of each finished batch of dietary supplement.  The company also lacked written procedures for pest control, and for maintaining, cleaning, and sanitizing equipment that came in contact with the dietary supplements, according to the FDA.

The FDA last month issued an Administrative Detention Order to prevent the products from reaching consumers until they could be seized.  The FDA also issued a safety alert for three Life Rising products (Life Rising Holder-W Holder Warmer capsules, Life Rising NECK-ND Neck Clear capsules, and HoliCare Metabolism Cleansing tablets) because those products may be contaminated with lead.  These products were recalled by Life Rising on May 2, 2019, shortly before the FDA’s safety alert.

The FDA discourages consumers from purchasing or using dietary supplement products bearing brand names Life Rising, Holicare, or HopeStream.  Health care professionals and consumers should report to the FDA any adverse events related to Life Rising’s products by completing and submitting the report online at www.fda.gov/medwatch/report.htm, or by downloading the form, completing it, and faxing it to 1-800-FDA-0178.

The public is reminded that a complaint contains only allegations and is not evidence of liability.  The government has the burden of proving the civil case by a preponderance of the evidence.

CHICAGO — The former president of the village of Posen pleaded guilty in federal court today to charges he embezzled money from the south suburb and spent it at casinos.

DONALD W. SCHUPEK, 79, of Posen, pleaded guilty to one count of embezzlement.  The conviction carries a maximum penalty of ten years in prison and a fine of up to $250,000, plus mandatory restitution.  U.S. District Judge Robert W. Gettleman set sentencing for Sept. 12, 2019, at 10:30 a.m.

The guilty plea was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The government is represented by Assistant U.S. Attorney Terry Kinney.

According to his plea agreement, Schupek, while serving as Posen president, directed the village bookkeeper to issue checks on the village’s checking account made payable to Schupek.  From June 2014 to August 2016, Schupek directed the issuance of nine checks, totaling $27,000, the plea agreement states.  At the time, Schupek did not inform the village treasurer nor the village board that he had issued these checks to himself.

Schupek admitted in the plea agreement that he converted the funds to his own use, including gambling expenses at two casinos in Joliet.

CHICAGO — The former Chief Executive Officer of a northwest suburban nutrition company has pleaded guilty to securities fraud for engaging in a market manipulation scheme to artificially inflate the company’s stock price.

ANDREW J. KANDALEPAS, 67, of Schaumburg, pleaded guilty Tuesday to one count of securities fraud.  U.S. District Judge Gary Feinerman set sentencing for Sept. 5, 2019.

The guilty plea was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The U.S. Securities and Exchange Commission provided valuable assistance.  The government is represented by Assistant U.S. Attorneys John D. Mitchell and William Hogan.

Kandalepas was the CEO, President and Chairman of the Board for Wellness Center USA Inc., whose principal place of business was in Hoffman Estates.  The company raised more than $19 million from investors through the sale of common stock, and Kandalepas himself held more than three million shares.  Kandalepas admitted in a plea agreement that from December 2012 to June 2015, he bought and sold Wellness Center shares for the purpose of artificially inflating the stock price. 

Many of his trades occurred at or near the close of normal trading hours in a form of market manipulation known as “marking the close.”  According to an example cited in the plea agreement, Kandalepas, using a brokerage account in the name of an acquaintance, executed a trade to buy 300 Wellness Center shares within the last five seconds of the trading day on May 4, 2015.  The trade artificially raised Wellness Center’s share price by 4%, from $0.27 to $0.28, causing a profit for Kandalepas of approximately $30,000.

In all, Kandalepas netted at least $136,176 in trading profits for his personal use.

Securities fraud is punishable by up to 20 years in prison.  The Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

ROCKFORD — A Rockford man was convicted today of aggravated bank robbery after a 3-day jury trial in federal court. 

EDWARD EVERETT JOHNSON III, also known as “Edward Everett,” 34, was found guilty of robbing Chase Bank, 4425 Harrison Ave. in Rockford, on April 20, 2016.

Johnson faces a maximum penalty of 25 years in prison, up to three years of supervised release following imprisonment, a fine of up to $250,000, and full restitution.  The Court must impose a reasonable sentence guided by the advisory United States Sentencing Guidelines.  Sentencing for Johnson is set for Sept. 9, 2019, at 11:30 a.m.

The conviction was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; and Daniel O’Shea, Rockford Police Chief.  The Rockville City, Md., Police Department, Montgomery County, Md., Police Department, and Amtrak Police Department assisted in the investigation.  The government is represented by Assistant U.S. Attorneys Monica V. Mallory and Scott R. Paccagnini.

According to the indictment and evidence at trial, Johnson arrived in the parking lot at Chase Bank mid-afternoon on April 20, 2019, driving a taxi mini-van.  At approximately 3:00 p.m., Johnson entered the bank and approached a bank teller, pulled out a handgun and a backpack and told the teller he wanted all the money in her money drawer.  After the teller emptied her drawer and placed the money in the backpack, Johnson left the bank, jumped through the sunroof of the taxi mini-van, and drove it out of the parking lot.  The mini-van was found abandoned in Rockford a few hours later. Later the same day Johnson left the Rockford area and was driven to Chicago by taxi.  

Evidence at trial indicated that Johnson was identified as the suspect, and an arrest warrant was issued.  Johnson then travelled by Amtrak train for Washington, D.C.  When the train stopped in Rockville, Md., Johnson exited the train.  Amtrak Police Department Officers tracked Johnson’s movements and identified him when he left the train station.  The officers attempted to stop Johnson when he fled on foot.  Johnson was apprehended shortly thereafter and placed into the custody of the Rockville City Police Dept.  The Rockville City Police Dept., assisted by a canine unit from the Montgomery County Police Dept., recovered evidence of the bank robbery at the scene of Johnson’s arrest.

CHICAGO — The U.S. Attorney’s Office in Chicago today announced that a Chicago-area physical therapy center and four nursing facilities have agreed to pay $9.7 million to resolve civil allegations that they violated the False Claims Act by providing unnecessary services to increase Medicare payments.

The settlements and consent judgments resolve allegations that skilled therapy service provider QUALITY THERAPY & CONSULTATION INC. and its owner, FRANCES PARISE, worked with the four skilled nursing facilities — THE CARLTON AT THE LAKE INC., RIDGEVIEW REHAB AND NURSING CENTER, LAKE SHORE HEALTHCARE AND REHABILITATION CENTRE LLC, and BALMORAL HOME INC. — to increase Medicare reimbursements by “upcoding” their patients’ “Resource Utilization Group” scores.  A “RUG” score indicates a patient’s care requirements based on the level of physical-, occupational-, and speech-rehabilitation therapy the patient receives, and the complexity of the skilled nursing care the patient requires.  The higher the RUG score, the higher the amount paid by Medicare to the nursing facility.  The allegations also contend that the providers rendered skilled therapy to patients who did not need it or could not benefit from it, as part of an effort to bill the highest possible amount to Medicare.

The settlements and consent judgments resolve a civil lawsuit filed in U.S. District Court in Chicago by a former employee of Quality Therapy and Consultation under the qui tam, or whistleblower, provisions of the False Claims Act.  The Act permits private citizens to bring lawsuits on behalf of the United States for false claims, and to share in any recovery.  The United States intervened in the lawsuit prior to the settlements and consent judgments.

The settlements and consent judgments were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The government is represented by Assistant U.S. Attorney Sarah J. North.

Per the terms of the settlements and consent judgments, Parise and the companies agreed to pay the following amounts:

• Carlton at the Lake, located in the Buena Park neighborhood of Chicago: $3.63 million.
• Lakeshore Healthcare, located in the Rogers Park neighborhood of Chicago: $2.73 million.
• Balmoral Home, located in the Bowmanville neighborhood of Chicago: $1.17 million.
• Quality Therapy and Consultation, formerly located in suburban Orland Park: $1.09 million.
• Ridgeview Rehab, located in the Rogers Park neighborhood of Chicago: $1 million.
• Frances Parise: $160,000.

Frances Parise also agreed to be excluded from all participation as a provider in Medicare, Medicaid and all federal health care programs for a period of five years.

The public is reminded that civil allegations are accusations only, and there was no determination of liability as part of the settlements and consent judgments.

CHICAGO — A north suburban businessman has been indicted on bank fraud and identity theft charges for allegedly fraudulently obtaining millions of dollars in mortgage and vehicle loans and using stolen identities to secure credit from financial institutions.

YALE SCHIFF made false statements in loan applications to obtain mortgage loans secured by a variety of properties, according to an indictment returned in U.S. District Court in Chicago.  The charges allege that Schiff filed with the Cook County Recorder of Deeds fraudulent letters from financial institutions claiming that loans on the properties were paid in full and that the mortgages were released, when, in fact, the loans were not paid in full and the mortgages had not been released.  Schiff then kept the financing paid by the banks, as well as proceeds from the eventual sales of the properties, without paying the mortgages, the indictment states.

The indictment was returned Wednesday.  It charges Schiff, 44, of Riverwoods, with eleven counts of bank fraud and two counts of aggravated identity theft.  Arraignment in federal court in Chicago has not yet been scheduled.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; and Craig Goldberg, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.  The government is represented by Assistant U.S. Attorney Sheri H. Mecklenburg.

The identity theft charges pertain to Schiff’s alleged use of multiple fake and stolen identities to fraudulently obtain loans for vehicles, including a Jeep Grand Cherokee and a Lexus RX350.  The indictment accuses Schiff of submitting to the Recorder’s office fake letters from financial institutions and false releases of the vehicle liens, claiming that the loans were paid in full.  In reality, Schiff knew the letters were bogus and that the loans were not paid in full, the indictment states.  Schiff then allegedly sold the vehicles, keeping the proceeds without paying the loans. 

Schiff also used stolen identities to obtain lines of credit and credit cards, including a charge card at Nordstrom department store that he used for personal use, the indictment states.  He then allegedly left large unpaid balances on the cards and the credit lines.

The charges allege that three of Schiff’s relatives and a business associate aided him in the schemes.  The indictment seeks forfeiture of a personal money judgment of approximately $4.7 million, as well as a property in Riverwoods.

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Each bank fraud count is punishable by a maximum sentence of 30 years in prison, while each count of aggravated identity theft carries a mandatory minimum sentence of two years.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

ROCKFORD — A Rockford man was sentenced Tuesday by U.S. District Judge Philip G. Reinhard to 139 months in prison for attempted robbery and using, carrying, and brandishing a firearm during a crime of violence.

DARNELL LEAVY, 28, admitted in a written plea agreement that at approximately 7:00 p.m. on Nov. 5, 2015, he and others attempted to rob the Zake Convenience store, 824 7th St. in Rockford. As stated in Leavy's plea agreement, co-defendant RICKEY CLAYBRON, 33, of Rockford, entered the store first with a gun pointed at two clerks who were behind a glass enclosure. Leavy then entered and also began pointing a gun at the clerks. A third individual entered the store carrying a bag meant for the proceeds of the robbery. The employees of the store barricaded themselves in the glassed-in area where the registers were located. Leavy's plea agreement further states that Leavy tried to kick the door open, but was unsuccessful. In the meantime, Claybron came around the front of the glass enclosure and pointed his gun through the small hole in the front that is used to conduct business with customers, Leavy's plea agreement states. Eventually, Leavy and the other robbers gave up on the robbery and walked out of the store.

Leavy pleaded guilty to the charges on Feb. 22, 2019.

Leavy's sentencing was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. The federal investigation was conducted by the FBI-led Rockford Area Violent Gang Task Force, which includes law enforcement officers and agents from the FBI, Rockford Police Department, Loves Park Police Department and Freeport Police Department. The government is represented by Assistant U.S. Attorney Margaret J. Schneider.

Claybron is charged with one count of conspiracy to commit robbery, three counts of robbery, one count of attempted robbery, and four counts of using, carrying, and brandishing a firearm during a crime of violence. Also charged in the case is DEANDRE R. HAYWOOD, also known as "Duke," 28, of Rockford. Haywood is charged with one count of conspiracy to commit robbery, three counts of robbery, and three counts of using, carrying, and brandishing a firearm during a crime of violence. Claybron and Haywood have pleaded not guilty to the charges and are in custody pending trial. The public is reminded that an indictment contains only charges and is not evidence of guilt. Claybron and Haywood are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

CHICAGO — A convicted felon has been sentenced to more than seven years in federal prison for illegally possessing a loaded semi-automatic handgun and pointing it at a car full of people, including a 4-year-old child, outside a Chicago convenience store.

ANTHONY DRAYTON, 37, of Berwyn, illegally possessed the gun on the night of Feb. 27, 2018, in the Austin neighborhood on the West Side of Chicago.  Drayton approached a vehicle outside a convenience store and pointed the gun at two occupants in the front seat.  The child was sitting in the back seat.  After the victims told Drayton there was a child in the car, Drayton lowered the gun and walked away.  Chicago Police officers were called to the area and quickly arrested Drayton nearby.

Drayton, who was on parole at the time of the offense, had previously been convicted of multiple felonies, including two shootings, and was not legally allowed to possess a firearm. 

Drayton pleaded guilty last year in the federal case to one count of illegal possession of a firearm by a felon.  U.S. District Judge John Z. Lee on Monday sentenced Drayton to seven years and three months in federal prison.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Timothy Jones, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; and Eddie Johnson, Superintendent of the Chicago Police Department.

“The defendant is the poster child for why guns in the hands of felons are so dangerous and destructive,” Assistant U.S. Attorney Christopher V. Parente argued in the government’s sentencing memorandum.  “It is important for everyone in Chicago to know that gun crime will not be tolerated as a norm in this city, and that if someone possesses an illegal firearm there will be consequences and they will be swift and severe.”

Holding convicted felons accountable through federal prosecution is a centerpiece of Project Safe Neighborhoods – the Department of Justice’s violent crime reduction strategy.  In the Northern District of Illinois, U.S. Attorney Lausch and law enforcement partners have deployed the PSN program to attack a broad range of violent crime issues facing the district, including by prosecuting individuals who illegally possess firearms.

CHICAGO — A federal judge has sentenced a Chicago man to 32 years in prison for arranging commercial sex encounters for a 16-year-old girl and related crimes.

JOSEPH HAZLEY, 35, posted the girl’s information in sexually explicit online advertisements, and arranged multiple meetings for her to engage in commercial sex.  Hazley drove the girl to several meetings in the Chicago area in December 2016.  One of the meetings occurred in the early morning hours of Christmas Eve, after a customer had responded to Hazley’s posting.  Hazley drove the girl to Markham and waited in his car while the girl met with the customer in a nearby garage.  During the encounter, the customer allegedly murdered the girl.  The suspected customer was subsequently arrested by the Chicago Police Department and charged with murder in Cook County Criminal Court.

A jury earlier this year convicted Hazley on federal sex trafficking charges.  U.S. District Judge Sharon Johnson Coleman imposed the sentence Tuesday in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; Thomas J. Dart, Cook County Sheriff; and Eddie Johnson, Chicago Police Superintendent.  The case was investigated by the Chicago FBI South Resident Agency and the Cook County Sheriff’s Police.  Substantial assistance was provided by the Cook County State’s Attorney’s Office, Markham Police Department, and FBI Field Offices in Tampa, Fla., and Cleveland, Ohio.  The government is represented by Assistant U.S. Attorneys Christopher Parente and Kelly Greening.

“The defendant targeted young, vulnerable women to traffic and exploit,” said U.S. Attorney Lausch.  “Our office will continue to seek justice on behalf of sex trafficking victims for whom individuals like the defendant show no remorse.”

“The horror of this case brought to light the plight of thousands of vulnerable young women, taken advantage of via online sex trafficking every year,” said Sheriff Dart.  “This sentence represents justice in this case and for all victims, and so does all that’s happened since – including federal legislation against online sex trafficking and the shuttering of the largest online sex trafficking platform in the country.  My office will continue to fight for all of the victims of this heinous crime.”

If you believe you are a victim of sexual exploitation, you are encouraged to contact the National Center for Missing and Exploited Children by logging on to www.missingkids.com/home or by calling 1-800-843-5678.  The service is available 24 hours a day, seven days a week.

CHICAGO — A federal jury in Chicago has convicted a Silicon Valley businessman of defrauding investors in his computer companies after soliciting and obtaining some of the money via crowdfunding.

JEFFREY BATIO, 50, of Santa Clara, Calif., was found guilty Friday of all 12 counts against him, including six counts of mail fraud and six counts of wire fraud.  Each count is punishable by a maximum sentence of 20 years in prison.  U.S. District Judge Rebecca R. Pallmeyer set sentencing for Sept. 3, 2019.

The conviction was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The government is represented by Assistant U.S. Attorneys Jacqueline Stern and Matthew Schneider.

Batio owned and controlled two computer businesses, Armada Systems LLC and Idealfuture Inc.  The companies claimed to produce a portable computer that would combine a laptop, tablet and smart phone into one device.  The 3-in-1 apparatus was known at various times by the names Stealth, IF Convertible, and Dragonfly Futurefon.  The companies also claimed to produce a device called the Radian, which was billed as a multi-screen laptop computer.

Evidence at trial revealed that for more than a decade Batio made material misrepresentations about his companies and products.  For example, Batio falsely claimed that Armada and Idealfuture had completed the engineering on the 3-in-1 computer and the multi-screen system, and that the products were close to being brought to market.  In reality, Batio knew the products were not complete and that production would not start within the promised timeframe.  Batio also claimed to be involved in discussions with large technology companies concerning partnership deals, licensing arrangements and marketing agreements, when, in fact, Batio’s contacts with those companies typically consisted of nothing more than his opening sales pitch.

The fraud scheme began in 2003 and continued until 2016.  Batio originally sold membership shares in his companies and offered his products for advance sales that were never fulfilled.  From 2003 to 2014, Batio defrauded victims out of $5 million.  As the years passed and he failed to produce or license any products, Batio in 2014 began to solicit funds on the crowdfunding website Indiegogo.com.  From 2014 to 2016, Batio raised more than $700,000 on Indiegogo from investors all over the world by fraudulently promoting and selling the 3-in-1 device.

CHICAGO — A south suburban chiropractor has been indicted on federal fraud charges for allegedly submitting reimbursement claims to private insurers for nonexistent treatment.

JOHN KOSLOSKI operated his own practice, Diagnostic & Therapeutic Rehab, also known as Diagnostic & Therapeutic Rehab Services, in Dolton.  From 2011 to 2018, Kosloski submitted fraudulent claims to private insurers for chiropractic services that were not rendered, the indictment states.  At least five individuals purported to be Kosloski’s patients and allowed their personal identifying information and their family members’ information to be cited by Kosloski in the fraudulent claims, according to the indictment.  After Kosloski received money from the private insurers, he would pay the co-schemers via envelopes of cash, the indictment states.

The indictment charges Kosloski, 55, of Beecher, with six counts of health care fraud.  He pleaded not guilty today at his arraignment before U.S. District Judge Rebecca R. Pallmeyer.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; and Inspector General Kevin H. Winters of the Amtrak Office of Inspector General.  The government is represented by Assistant U.S. Attorney Kelly Greening.

Each count of health care fraud is punishable by up to ten years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

CHICAGO — A federal judge has sentenced a north suburban man to 27 and a half years in prison for attempting to transport a minor to Wisconsin to engage in prostitution.

DERONARTE NORWOOD, 32, of North Chicago, physically and emotionally harmed the 15-year-old girl after meeting her in 2015.  He exploited the girl in graphic online advertisements offering commercial sex, and then sent her to have sex with strangers, leaving her alone in hotel rooms.  Norwood pocketed all of the money she made.

Norwood was arrested in October 2016 in Waukegan, and he has remained in custody since then.  A federal jury in Chicago last year convicted him of attempting to transport a minor to Wisconsin from Illinois to engage in prostitution.  U.S. District Judge Gary Feinerman imposed the 330-month sentence Thursday in federal court.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.  Substantial assistance was provided by the Lake County Special Investigations Group, Winthrop Harbor Police Department, and New Albany, Ind., Police Department.

“Defendant is among those criminals who destroy the lives of our communities’ most precious resource – children,” Assistant U.S. Attorneys Nicole M. Kim and Abigail Peluso argued in the government’s sentencing memorandum.  “Defendant was a predator who targeted, assaulted, and repeatedly exploited [the victim].”

If you believe you are a victim of sexual exploitation, you are encouraged to contact the National Center for Missing and Exploited Children by logging on to www.missingkids.com/home or by calling 1-800-843-5678.  The service is available 24 hours a day, seven days a week.

Two Chicago, Illinois, women pleaded guilty for their roles in a scheme to defraud the U.S. Department of Labor Office of Workers’ Compensation Programs (OWCP) of $1.7 million by falsely billing for services on a 24-hour, seven-day-a-week basis for over seven years.  

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney John R. Lausch Jr. of the Northern District of Illinois, Special Agent in Charge Andre M. Martin of the U.S. Postal Service Office of Inspector General (Postal-OIG), Acting Special Agent in Charge Irene Lindow of the U.S. Department of Labor Office of Inspector General (DOL-OIG) and Special Agent in Charge Jeffrey S. Sallet of the FBI’s Chicago Field Office made the announcement.

Ella Garner, 62, pleaded guilty yesterday to one count of conspiracy to commit health care fraud before U.S. District Judge Elaine Bucklu of the Northern District of Illinois.  On May 24, 2019, Chante Carrothers, 40, pleaded guilty to one count of conspiracy to commit health care fraud for her role in the conspiracy.  Sentencing for Carrothers has been scheduled for August 16 and for Garner on September 6, both before Judge Bucklu.

As part of their guilty pleas, Carrothers and Garner each admitted that from June 2010 through April 2018, they conspired to defraud OWCP by falsely billing for 24-7 services purportedly provided by Garner to a single person in the home.  Garner was not, in fact, providing constant care, the defendants admitted.  OWCP paid Carrothers approximately $1.7 million for the bills she submitted for a single patient, purportedly under Garner’s care.  Carrothers paid Garner approximately $4,500 per month for her role in the conspiracy, the defendants admitted.

This case was investigated by Postal OIG, DOL-OIG and the FBI.  Trial Attorneys Leslie S. Garthwaite and Patrick Mott of the Criminal Division’s Fraud Section are prosecuting the case. 

The Medicare Fraud Strike Force is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.