Northern District of Illinois
Press releases recorded for this federal judicial district.
Lakewood Man Charged with Social Security FraudRead the Press Release
ROCKFORD — A Lakewood man was indicted today by a federal grand jury on fraud charges.
VALENTINO VALERIU AGIGNOAE, 50, was charged with two counts of wire fraud, one count of stealing Social Security disability insurance funds that he and his dependents were not entitled to, and four counts of making false statements or concealing facts with the intent to fraudulently secure Social Security benefit payments.
As alleged in the indictment, Agignoae began receiving Social Security disability insurance benefits in 1996. The benefits were paid via direct deposit to Agignoae’s bank account. The indictment alleges that from approximately January 2007 through April 2015, Agignoae schemed to defraud and to obtain money from the U.S. Social Security Administration by failing to notify the Social Security Administration that he was managing Valentino’s Club Café in Chicago, even though he knew that he was required to do so. It is also alleged that Agignoae’s misrepresentations and concealment of facts caused the U.S. Government, through the Social Security Administration, to suffer losses of approximately $157,503, in the form of monthly disability insurance payments to Agignoae and his dependents, to which Agignoae was not entitled.
Each count of wire fraud carries a maximum potential penalty of up to 20 years in prison; stealing disability insurance funds carries a maximum potential penalty of up to ten years in prison; and each count of making a false statement or concealing facts for use by the Social Security Administration in determining rights to Social Security disability insurance benefits payments carries a maximum potential penalty of up to five years in prison. Each count also carries a fine of up to $250,000, and full restitution. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
Agignoae will appear for arraignment in Rockford before U.S. Magistrate Judge Iain D. Johnston on a date yet to be determined.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Tracey Thanos, Special Agent-in-Charge of the Chicago Office of the Social Security Administration – Office of Inspector General.
The government is represented by Assistant U.S. Attorney Michael D. Love.
Real Estate Developer Sentenced to Three Years in Federal Prison for Defrauding Banks and the City of ChicagoRead the Press Release
CHICAGO — A federal judge today sentenced a Chicago real estate developer to three years in prison in connection with a fraud scheme related to a $105 million line of credit secured by city and suburban properties, including the Streets of Woodfield Mall in Schaumburg.
The fraud perpetrated by LAURANCE H. FREED, the president of Joseph Freed & Associates LLC, also involved the theft of millions of dollars from his business partner, Kimco Realty Corp. Freed also fraudulently obtained more than $575,000 in publicly funded loans from the city of Chicago, and attempted to fraudulently obtain an additional $1 million from the city.
A federal jury last year convicted Freed, 54, of Chicago, on three counts of bank fraud, one count of mail fraud, and four counts of making a false statement to a financial institution. In addition to the 36-month prison term, U.S. District Judge Robert M. Dow also fined Freed $250,000, and ordered him to pay $575,759 in restitution to a victim bank.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Joseph M. Ferguson, Inspector General for the City of Chicago.
“These were serious offenses that merit serious punishment,” Assistant U.S. Attorney Matthew F. Madden argued in the government’s sentencing memorandum. “The defendant was at the heart of this scheme to defraud and the lies told in furtherance of it.”
The investigation also resulted in the conviction of JFA’s vice president, CAROLINE WALTERS. Walters, of Palatine, pleaded guilty last year to one count of making a false statement to a financial institution. Judge Dow previously sentenced Walters to six months in prison.
According to evidence at Freed’s trial, the city of Chicago in 2002 issued two Tax Increment Financing notes to Uptown Goldblatts Venture LLC, a company formed by JFA to redevelop the former Goldblatt’s store in the Chicago’s Uptown neighborhood. The TIF notes had a combined principal of $6.7 million, and Freed pledged one of the notes to Cole Taylor Bank as collateral.
Four years later, JFA-affiliated entities entered into agreements with a bank consortium for a revolving line of credit worth up to $105 million. Uptown Goldblatts became a borrower under the revolving loan agreement through a subsequent deal with LaSalle Bank, which was one of the banks in the consortium and had recently been acquired by Bank of America. In the LaSalle deal, Uptown Goldblatts pledged the two TIF notes as collateral and also represented that the notes were owned free of other secured interests. The deal did not mention that one of the notes had already been pledged to Cole Taylor.
Evidence at trial also revealed that in 2009 and 2010 Freed signed false affidavits seeking to obtain more than $1.5 million in TIF payments from the city, knowing that he was not entitled to the payments.
As Freed’s business experienced financial difficulties, he withdrew more than $7 million from the Streets of Woodfield partnership without the knowledge and consent of his business partner Kimco, which owned 45% of the venture. Freed fraudulently recorded the money as “loans.”
Two More Members of Violent “Hobos” Street Gang Sentenced to Life in Prison on Federal Racketeering ChargesRead the Press Release
CHICAGO — Two Chicago men today became the fifth and sixth members of the violent “Hobos” street gang to be sentenced to life in prison on federal racketeering charges.
The Hobos were a criminal enterprise in Chicago that dealt narcotics, robbed from other drug dealers, retaliated against rival gangs, and violently prevented witnesses from cooperating with law enforcement. For nearly a decade the gang committed murders, attempted murders and robberies, primarily on the city’s south and west sides. All ten Hobos charged in the federal investigation were either convicted by a jury or pleaded guilty prior to trial. An eleventh Hobo died shortly before charges were brought.
DERRICK VAUGHN and WILLIAM FORD today became the fifth and sixth members of the gang to receive life sentences. Three others previously received sentences ranging from seven to 40 years in prison. One defendant, RODNEY JONES, cooperated with the government and will be sentenced later this year.
The sentencings were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Eddie T. Johnson, Chicago Police Superintendent; and Gabriel L. Grchan, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division. The Illinois State Police, Illinois Department of Corrections and Illinois Secretary of State Police provided assistance.
Federal, state and local authorities uncovered the gang activity through an extensive investigation conducted by the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI Chicago Safe Streets Gang Unit. The Task Forces have been responsible for disrupting some of the Chicago area’s most sophisticated drug-trafficking organizations.
Evidence at the 15-week trial last year revealed that the Hobos were comprised of former members of other gangs that were once rivals. The Hobos allied together in order to more profitably distribute narcotics and establish control of territories on the south and west sides of Chicago. The Hobos were violent and ruthless, often using high-powered guns and assault rifles. From 2004 to 2013 the Hobos engaged in narcotics trafficking, home invasions and armed robberies, often of rival drug dealers. Members of the gang shared the wealth with each other, buying luxury items and taking trips to Hawaii and Florida.
In addition to today’s sentencings of Ford and Derrick Vaughn, U.S. District Judge John J. Tharp Jr. previously sentenced four other Hobos to life in prison on racketeering conspiracy charges: ARNOLD COUNCIL, PARIS POE, GABRIEL BUSH, and BYRON BROWN, all of Chicago. Judge Tharp previously sentenced GREGORY CHESTER, of Richton Park, to 40 years in prison; STANLEY VAUGHN, of Chicago, to 20 years in prison, which must be served consecutively to a 23-year prison term previously imposed in a separate case; and Gregory Chester’s cousin, GARY CHESTER, of Chicago, to seven years in prison.
The sentencing for Jones, of Chicago, is set for Nov. 20, 2017, before Judge Tharp. The eleventh Hobo, Byron Brown’s twin brother, BRANDON BROWN, was identified in the indictment as a coconspirator, but he died before the charges were brought.
Although the Hobos lacked a traditional hierarchy, Gregory Chester was recognized as its leader. When the Hobos learned that individuals were cooperating with law enforcement, the gang resorted to murder in order to prevent it. In 2006 Council and Poe fatally shot Wilbert Moore, whose cooperation with Chicago Police had led to state gun and drug charges against Council. In 2013 Poe shot and killed Keith Daniels after Daniels cooperated with the federal investigation that led to these convictions.
The government is represented by Assistant U.S. Attorneys Patrick Otlewski, Derek Owens and Timothy Storino.
Rockford Man Arrested on Child Pornography ChargesRead the Press Release
ROCKFORD — A Rockford man was arrested today on charges of child pornography.
GREGORY GREENE, 57, was indicted by a federal grand jury in Rockford on Aug. 8, 2017, on two counts of transporting child pornography via the internet in 2016, and one count of possessing a computer and thumb drive in 2016 containing child pornography, including an image of a minor under 12 years of age.
Each count of transporting child pornography carries a mandatory minimum sentence of five years in prison and a maximum of 20 years in prison. Possessing child pornography carries a maximum of ten years in prison and up to 20 years in prison for an offense involving a minor under 12 years of age. Each count carries a $250,000 maximum fine. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The arrest was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and James M. Gibbons, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Chicago. The U.S. Postal Inspection Service in Chicago assisted in the investigation.
The government is represented by Assistant U.S. Attorney Margaret J. Schneider.
Investment Manager Indicted on Fraud Charges for Allegedly Swindling Nearly $1 Million from a Retired School TeacherRead the Press Release
CHICAGO — An investment manager has been indicted for allegedly swindling nearly $1 million from a retired school teacher.
TYRIS D. MAXEY, the owner of RB Mister Enterprises LLC, a Wyoming company with an office in Chicago, persuaded the retired teacher to give him approximately $950,000 for purported investments, according to an indictment returned in federal court in Chicago. Maxey claimed that his investment firm was highly successful and that he put up his own money in the firm’s investments. In reality, Maxey’s investment activity was minimal, and he spent nearly all of the victim’s money to cover personal expenses, the indictment states. The few real investments that Maxey purchased with the victim’s money sustained heavy losses, the indictment states.
The indictment was returned Aug. 10, 2017, and ordered unsealed after Maxey’s arrest on Monday morning. The indictment charges Maxey, 43, of Chicago, with six counts of wire fraud.
Maxey pleaded not guilty at a Monday afternoon arraignment before U.S. Magistrate Judge Sidney I. Schenkier in Chicago. Maxey was ordered released from custody on a $10,000 appearance bond, and a status hearing was set for Sept. 12, 2017, before U.S. District Judge Harry D. Leinenweber.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and E.C. Woodson, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.
According to the indictment, Maxey fraudulently represented to the victim that RB Mister Enterprises invested in various sectors, including medical marijuana, construction, oil, real estate, sugar and concerts. Maxey attempted to conceal the scheme by returning some of the victim’s money and fraudulently describing it as a positive return on investment, the indictment states. Maxey also furnished the victim and the victim’s accountant with fraudulent account statements that purported to relate to investments.
The fraud scheme alleged in the indictment began no later than January 2010 and continued until at least November 2013.
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 the indictment 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.
The government is represented by Assistant U.S. Attorney Yusef Dale.
Chicago Man Sentenced to Seven Years in Federal Prison for Illegally Brokering the Sale of More Than 75 GunsRead the Press Release
CHICAGO — A convicted felon from Chicago has been sentenced to seven years in federal prison for illegally brokering the sale of more than 75 guns.
JOHN THOMAS illegally brokered at least 23 transactions involving the total sale of 77 guns, including rifles, shotguns and handguns. Some of the guns had obliterated serial numbers or were previously reported stolen. The case against Thomas arose out of a larger federal investigation that has removed more than 100 illegal guns from the streets of Chicago. The federal probe involved controlled firearm sales to cooperating individuals.
Thomas, 33, also known as “Batman,” pleaded guilty earlier this year to two counts of illegal possession of a firearm by a felon, and one count of dealing firearms without a license. U.S. District Judge Andrea R. Wood on Friday imposed the 84-month sentence in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Celinez Nunez, Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives.
Thomas admitted in a plea agreement that he either obtained the firearms himself and then sold them to individuals, or he arranged for the owner of the firearms to sell the guns in exchange for a fee to Thomas for setting up the transaction. Unbeknownst to Thomas, the individuals who purported to purchase the guns were cooperating with law enforcement.
Thomas was previously convicted of a felony and was not legally authorized to possess any firearms.
One of the sales occurred on July 23, 2014, when Thomas arranged a meeting between a man identified in court records as Individual A, along with JAMEL DAVIS and a cooperating individual. The transaction, which took place in Davis’ garage in the Auburn Gresham neighborhood on Chicago’s South Side, involved the sale of two .38-caliber revolvers. A federal jury last year convicted Davis of illegal possession of a firearm by a felon, and he was sentenced to two years in prison.
Drug Trafficker Sentenced to 37 Years in Prison for Supplying Heroin to Chicago’s West Side and Murdering a Federal InformantRead the Press Release
CHICAGO — A federal judge has sentenced a violent drug trafficker to 37 years in prison for supplying large amounts of heroin to Chicago’s West Side and murdering a friend who cooperated with law enforcement.
For seven years DAVID PRICE operated a violent drug operation responsible for supplying more than 90 kilograms of heroin to numerous open-air markets. Price used his drug proceeds to fund a lavish lifestyle that included luxury homes in Chicago and the suburbs, high-end vehicles, diamond jewelry and designer fashion. He ruthlessly protected his heroin operation through violence, including by personally murdering a former business partner who cooperated with law enforcement. Price also ordered the murder of another former drug partner, who was shot but survived and testified against Price at trial.
A federal jury in 2014 convicted Price, 38, of Brookfield, on all 13 counts against him, including charges of heroin conspiracy, money laundering and illegally possessing an Uzi-style, semi-automatic pistol with an extended magazine. U.S. District Judge Harry D. Leinenweber imposed the sentence Thursday in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Dennis A. Wichern, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration; Gabriel L. Grchan, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; Celinez Nunez, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; and Eddie T. Johnson, Superintendent of the Chicago Police Department. Substantial assistance was provided by the Woodridge Police Department and the DuPage County Major Crimes Task Force.
“Defendant’s senseless violence was motivated by greed and his love for money,” Assistant U.S. Attorneys Angel M. Krull and Erik Hogstrom argued in the government’s sentencing memorandum. “Defendant is a lifelong criminal, becoming a millionaire by pushing heroin on a suffering community, and putting money, power, and unspeakable violence above his family, above his childhood friends, above his community, and above everything.”
Evidence at trial showed that Price ran the heroin distribution ring from 2005 through 2011. Price used the profits to purchase or lease luxury residences, including a high-rise apartment on South Michigan Avenue in Chicago and homes in Naperville, Country Club Hills, Bolingbrook, Lombard, Darien and Brookfield. Price also owned numerous vehicles, including a Chevrolet Corvette and a Harley-Davidson “Touring” motorcycle.
Price and others involved in the conspiracy used an apartment in the Austin neighborhood to mix heroin with a sleeping pill and package it for sale on the street. Price then “fronted” wholesale quantities of the drug to be sold at locations on the West Side of Chicago, including at open-air drug markets in various neighborhoods. Price shared the profits with supervisors of those locations.
Evidence at trial established that one of the supervisors, James Brown, 35, of Chicago, was wounded in a shooting ordered by Price. Price directed two members of his crew to shoot and kill Brown on Jan. 25, 2008, because Price believed Brown was cooperating with law enforcement. Brown survived the shooting and testified against Price at trial.
After hearing two days of evidence during the sentencing hearing, Judge Leinenweber found that, in addition to ordering Brown’s shooting, Price also personally murdered Greg Holden, a lifelong friend and business partner who cooperated with law enforcement. On Dec. 8, 2011, Price broke into Holden’s apartment in Woodridge and shot him approximately 20 times while Holden was home with his two young daughters.
The federal investigation resulted in the convictions of several other conspirators, including Price’s cousin, KEITH CARR, 35, of Chicago. Carr was sentenced in 2016 to 20 years in prison. Two others, RASHID BOUNDS and CHRISTOPHER SAUNDERS, were convicted at trial and are serving prison terms of 17 and a half years apiece.
Chicago Police Officer Convicted of Obstruction of Justice for Passing Law Enforcement Information to Target of Federal Drug ProbeRead the Press Release
CHICAGO — A federal jury today convicted a Chicago Police officer on an obstruction charge for notifying a high school friend that he was the target of a federal drug investigation.
RONALD COLEMAN notified his friend's cousin that police were planning to search 10-12 houses in the friend's neighborhood, including the friend's house, as part of an investigation into drug sales. The probe involved surveillance and wiretaps and centered on the primary drug supplier, RODNEY BEDENFIELD, who was an associate of Coleman’s friend. Coleman, a Chicago Police officer working the case with the U.S. Drug Enforcement Administration, knew that his friend was involved in Bedenfield’s drug trafficking activities. On June 9, 2014, Coleman contacted the friend’s cousin about the impending search. Upon learning of it, the friend in turn passed along the information to Bedenfield, who quickly moved drugs and other contraband to an alternative location.
After a four-day trial in federal court in Chicago, the jury on Thursday convicted Coleman, 46, of Chicago, on one count of obstruction of justice. The conviction is punishable by up to 20 years in prison. U.S. District Judge Charles Norgle set sentencing for Nov. 15, 2017, at 11:30 a.m.
The verdict was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
As a result of the leaked information, Bedenfield was observed via law enforcement surveillance carrying large bags out of a residence in the North Lawndale neighborhood and transporting them to an alternative location around the corner. On June 12, 2014, agents and officers executed an additional search warrant on the alternative location and discovered approximately 400 grams of heroin, two containers of lactose, five handguns, one rifle, multiple handgun magazines, ammunition, three digital scales, two heat sealers, a hand mixer, plastic baggies and a bill counter.
Bedenfield, 43, of Chicago, was indicted separately on multiple drug trafficking and firearms charges. He pleaded guilty to the narcotics-related counts and was convicted of the firearms-related counts at a bench trial in federal court in Chicago. He was sentenced to 18 years in prison.
The government is represented by Assistant U.S. Attorneys Shoba Pillay and Megan Cunniff Church.
Convicted Felon Who Fired Handgun near Wrigley Field Sentenced to 7 Years in Federal PrisonRead the Press Release
CHICAGO — A convicted felon who fired a handgun near Wrigley Field was sentenced today to seven years in federal prison.
HOYTUAN PIERCE discharged the handgun on Oct. 13, 2015, during a dispute with several individuals in the 3400 block of North Clark Street in Chicago. No one was injured. Pierce had previously been convicted of a felony and was not legally allowed to possess the gun.
The incident occurred at approximately 11:30 p.m., while the area was crowded with baseball fans. Earlier that evening at nearby Wrigley Field, the Chicago Cubs defeated the St. Louis Cardinals to clinch the National League Division Series.
Pierce, 33, of Chicago, pleaded guilty last year to one count of illegal possession of a firearm by a felon. U.S. District Judge Elaine E. Bucklo imposed the 84-month sentence in federal court in Chicago.
The guilty plea was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Celinez Nunez, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; and Eddie Johnson, Chicago Police Superintendent.
“Gun-related deaths and injuries have taken an immeasurable toll on the citizens of the Northern District of Illinois over the past couple of years,” Assistant U.S. Attorney Cornelius Vandenberg argued in the government’s sentencing memorandum. “Defendant’s actions on October 13, 2015, showed a blatant disregard for the safety of those around him.”
Mr. Vandenberg represented the government along with Assistant U.S. Attorney Ankur Srivastava.
Chicago Cousins Facing Federal Firearms Charges for Allegedly Dealing Guns on City’s South SideRead the Press Release
CHICAGO — Two cousins from Chicago are facing federal firearms charges for allegedly dealing guns on the city’s South Side.
Over a four-month period earlier this year, BENJAMIN VASQUEZ JR. illegally sold 16 firearms, including a sawed-off shotgun and an AK-47 rifle, according to criminal complaints and affidavits filed in federal court in Chicago. Unbeknownst to him, the buyer was cooperating with law enforcement and had secretly recorded the transactions, the complaints state. One of the deals occurred in a residence in the New City neighborhood of Chicago on Feb. 21, 2017, involving the sale of a .22-caliber pistol, the complaints state.
Benjamin Vasquez’s cousin, JORGE VASQUEZ, has also been involved in dealing illegal firearms, the charges state. On Feb. 13, 2017, Jorge Vasquez sold a rifle to an individual who was cooperating with law enforcement, the complaints state. The deal, which occurred in an alley in the West Englewood neighborhood of Chicago, netted Jorge Vasquez $1,000, according to the complaints.
Benjamin Vasquez Jr., 26, was arrested Aug. 4, 2017, on a charge of knowingly possessing a firearm with an altered, removed or obliterated serial number. A preliminary hearing is set for Aug. 10, 2017, at 9:30 a.m., before U.S. Magistrate Judge Jeffrey Cole.
Jorge Vasquez, 27, is charged with illegal possession of a firearm by a felon. He was arrested last month and remains in federal custody. His next court date has not been set.
The complaints were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Celinez Nunez, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; and Eddie T. Johnson, Superintendent of the Chicago Police Department.
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.
Knowingly possessing a firearm with an altered, removed or obliterated serial number is punishable by a maximum sentence of five years in prison. Possession of a firearm by a felon is punishable by up to ten years in prison. If convicted, the Court must impose reasonable sentences under federal statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant U.S. Attorney Matthew L. Kutcher.
Suburban Man Charged with Arson for Allegedly Setting Fire to His Employer’s Auto DealershipRead the Press Release
CHICAGO — An employee of a Rosemont auto dealership has been charged with arson for allegedly setting a fire that heavily damaged the dealership’s vehicles and office equipment.
BRYANT CAMERON set the fire at Epic Motorsports, 9739 Farragut St. in Rosemont, on the evening of July 24, 2017, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago. Cameron poured gasoline in the front office, reception and warehouse areas, and lit it on fire with the embers from his cigarette, the complaint states. He then quickly drove away from the scene, according to the complaint.
Fire departments from five different municipalities worked to extinguish the blaze. One firefighter suffered injuries consistent with dehydration, the complaint states. The fire damaged multiple vehicles, tools, office equipment, files and miscellaneous goods, according to the complaint.
Cameron, 28, of Broadview, was arrested on July 27, 2017. The complaint charges him with one count of arson. The charge is punishable by a minimum sentence of seven years in prison and a maximum of 40 years. A detention hearing is set for Aug. 7, 2017, at 1:30 p.m. before U.S. Magistrate Judge Michael T. Mason in Chicago.
The complaint was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Celinez Nunez, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. Substantial assistance was provided by the Rosemont Public Safety Department; Chicago Police Department’s Bomb and Arson Unit; Chicago Fire Department’s Office of Fire Investigation; and the Broadview Police Department.
The government is represented by Assistant U.S. Attorney Aaron R. Bond.
According to the complaint, Cameron’s duties at Epic Motorsports involved cleaning and moving cars, and picking up vehicles from neighboring states. Cameron was the last person to leave the facility on the night of the fire, the complaint states. A court-authorized search of Cameron’s vehicle on July 27, 2017, revealed items that had been reported stolen from Epic Motorsports, 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. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
Judge Sentences Former U.S. Air Force Member to 4 Years in Prison for Stealing Personal Information of Service Members and Distributing It to OthersRead the Press Release
CHICAGO — A former member of the United States Air Force was sentenced today to four years in federal prison for stealing the personal identifying information of fellow service members and distributing it to others.
On the eve of his dismissal from the military, RONNIE ALLEN II stole a personnel roster containing the names, dates of birth, Social Security numbers and other personal identifying information of more than 1,400 Air Force members stationed at Mountain Home Air Force Base in Idaho. Hoping to make money, Allen distributed the stolen information to others, including co-defendant ANTORONDI BENION. The Air Force members’ information was then fraudulently used to open accounts at various financial institutions, and to file tax returns with the Internal Revenue Service in the names of the Air Force members.
A federal jury earlier this year convicted Allen, 28, of Greensboro, N.C., on two counts of identity theft, two counts of access device fraud, and two counts of aggravated identity theft. U.S. District Judge Matthew F. Kennelly imposed the 48-month sentence in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois, and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. Valuable assistance was provided by the Air Force Office of Special Investigations.
“Identity theft is a serious crime,” Special Assistant U.S. Attorney Jared Jodrey and Assistant U.S. Attorney Brian Hayes argued in the government’s sentencing memorandum. “Allen betrayed his fellow service members and displayed an alarming indifference to the financial havoc they would experience.”
Allen was an enlisted member of the Air Force who held a clerical position in the maintenance group. The position gave him access to the Alpha Roster, a database of detailed personal identifying information for Air Force members assigned to the base. Evidence presented at trial showed that two weeks prior to his discharge on Jan. 31, 2013, Allen downloaded the Alpha Roster and sent a copy from his work e-mail account to his personal e-mail account. Allen then asked an acquaintance if he knew anyone who could help him make money using the Alpha Roster.
Eventually Allen was put in touch with Benion, and on April 30, 2014, Allen e-mailed Benion the entire Alpha Roster. In the email to Benion, Allen wrote, “Man here is the whole list i trust u if u make money off of it u will pay me for the info.”
Benion used the Alpha Roster identities to fraudulently open financial accounts and to conduct “account takeovers,” which involved adding himself and others as authorized users on existing accounts and causing the banks to issue credit cards in their names. From April 2013 to January 2016, Benion was involved in establishing at least 63 accounts at various financial institutions in the names of 35 Alpha Roster victims, which resulted in losses totaling approximately $163,389.
Benion, of Bellwood, Ill., pleaded guilty earlier this year to one count of access device fraud and one count of aggravated identity theft. On May 30, 2017, Judge Kennelly sentenced Benion to 70 months in prison.
Former Melrose Park Police Detective Sentenced to 11 Years in Prison for Dealing Drugs Stolen from Police Evidence RoomRead the Press Release
CHICAGO — A former Melrose Park Police Detective has been sentenced to eleven years in federal prison for dealing narcotics stolen from the police evidence room.
In the spring of 2014, GREGORY SALVI obtained a kilogram of cocaine that the Melrose Park Police Department had stored in the evidence room after seizing it during an investigation. He then sold the cocaine to an individual for cash. Later in 2014 and early 2015, Salvi sold additional grams of heroin and cocaine that he had removed from the evidence room.
Salvi, 44, of Melrose Park, pleaded guilty earlier this year to one count of attempted possession of cocaine with the intent to distribute, and one count of carrying a firearm during a drug trafficking crime. U.S. District Judge Amy J. St. Eve on Wednesday sentenced Salvi to 72 months in prison on the drug charge and 60 months in prison for the firearm charge, to be served consecutively.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
“There is no question that defendant’s actions were a disgrace to his police department and a significant breach of the public trust,” Assistant U.S. Attorneys Patrick M. Otlewski and Nicole Kim argued in the government’s sentencing memorandum. “Salvi not only breached the trust that his local police department gave him when he swore to uphold and protect the law, but he also breached the community’s trust in him as an officer and in his local police community.”
The gun charge stemmed from an incident in April 2015, when Salvi, carrying a loaded handgun and driving a law enforcement vehicle, went to a storage facility in Hanover Park to obtain approximately five kilograms of cocaine. Salvi intended to transport the cocaine to two individuals in exchange for cash. Unbeknownst to Salvi, the individuals were cooperating with law enforcement.
Chicago Man Sentenced to 15 Years in Federal Prison for Sharing Images of Child PornographyRead the Press Release
CHICAGO — A Chicago man who shared dozens of images of child pornography was sentenced today to 15 years in federal prison.
From August 2012 to September 2014, DONALD BOWEN used an electronic file-sharing network to trade the pornographic images with others via the Internet. In September 2014, Bowen granted access to his password-protected folder to an individual with whom he was chatting online. Unbeknownst to Bowen, the individual was actually an undercover law enforcement officer. The officer downloaded 39 images of child pornography from Bowen’s folder. The images viewed by the officer included young children engaging in sexually explicit conduct.
A subsequent forensics search of Bowen’s computer revealed more than 4,000 videos and 6,000 images of child pornography.
Bowen, 54, of Chicago, pleaded guilty last year to one count of transportation of child pornography. Bowen’s prior conviction for a misdemeanor offense related to child abuse triggered the mandatory minimum sentence of 15 years imposed by U.S. District Judge Charles Norgle.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and James M. Gibbons, special agent-in-charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Chicago.
“Defendant used his computer to share images of child pornography with others and, in doing so, continued the cycle of exploitation,” Assistant U.S. Attorney Elizabeth R. Pozolo argued in the government’s sentencing memorandum. “The public needs to be protected from individuals like the defendant.”
In addition to trading the pornographic images, Bowen admitted in a plea agreement that he possessed images of child pornography on various electronic devices, including a cellular phone and 15 optical discs. Bowen also admitted possessing a three-ring binder with a white cover that contained hundreds of printed photographs depicting child pornography.
Federal Law Enforcement Seizes Large Amounts of Cocaine, Heroin and Fentanyl; More Than a Dozen Defendants ChargedRead the Press Release
CHICAGO — More than a dozen individuals are facing federal narcotics charges for their alleged roles in distributing cocaine, heroin and fentanyl on Chicago’s Northwest Side and western suburbs.
The federal investigation spanned more than two years and resulted in the seizures of approximately 52 kilograms of cocaine, 45 kilograms of heroin, more than 13 kilograms of fentanyl, and a pound of methamphetamines. Authorities used extensive undercover surveillance to uncover the alleged criminal activities. The probe was jointly led by the U.S. Drug Enforcement Administration and the Federal Bureau of Investigation, and conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF) Chicago Strike Force.
Thirteen defendants are charged with various narcotics offenses in federal court in Chicago. Five of the defendants were arrested Wednesday, while five others were arrested earlier this year. Three defendants are considered fugitives and are being sought by law enforcement.
The charges were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Dennis A. Wichern, Special Agent-in-Charge of the Chicago Field Division of the DEA; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the FBI. Substantial assistance was provided by the Chicago Police Department; U.S. Marshals Service; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Berwyn Police Department; Illinois State Police; DuPage County Metropolitan Enforcement Group; LaSalle County Sheriff’s Office; Downers Grove Police Department, and Peru, Ill., Police Department.
Authorities since 2015 have been investigating drug trafficking activities on the city’s Northwest Side and western suburbs, according to criminal complaints and affidavits filed in U.S. District Court in Chicago. The investigation uncovered numerous illegal drug transactions, including the distribution of three kilograms of cocaine on a street in Melrose Park, and the distribution of five kilograms of fentanyl at a gas station in Aurora.
The investigation revealed that AURELIO ABREGO, 45, of Chicago, and JOSE MIGUEL PEREZ, 54, of Chicago, worked together to obtain wholesale quantities of cocaine and heroin from others, and distributed the drugs to wholesale customers. The pair received the drugs from, among others, JAVIER MORENO, 49, of Chicago, and RICHARD ALVARADO, 28, of Chicago, for distribution to Abrego’s and Perez’s customers, the complaints state. FERNELLY LLANOS, 51, of Chicago, and PEDRO SAAVEDRA-FITZ, 28, of Chicago, served as brokers, supplying smaller distribution quantities of the narcotics to wholesale customers on credit – a practice known as “fronting” – and collected proceeds after the customers sold the narcotics, the charges state. The complaints identify one of the wholesale customers as FERNANDO GOMEZ, 30, of Schiller Park.
The complaint describes several drug transactions on the Northwest Side of Chicago. On July 17, 2015, Abrego and Perez distributed a kilogram of heroin to a customer of Saavedra-Fitz, the complaint states. At the time, a kilogram of heroin retailed in the Chicago area for approximately $49,000 to $54,000, the complaint states. On Sept. 29, 2015, Abrego allegedly distributed a kilogram of heroin to Llanos during a meeting in an alley in the Belmont Gardens neighborhood of Chicago. Authorities later seized the heroin after Llanos distributed it to another individual, according to the charges.
Abrego, Perez, Alvarado, Gomez and Llanos were arrested Wednesday on charges of drug distribution. U.S. Magistrate Judge Michael T. Mason scheduled detention hearings for July 28, 2017, Aug. 1, 2017, and Aug. 2, 2017.
Four defendants were charged in May: RICARDO CASTANEDA, 31, of Peru, Ill.; SANTOS GODINA, 32, of West Brooklyn, Ill.; EUGENE ALEXANDER, 44, of Bensenville; and JENNIFER REPPIN, 33, of Peru, Ill. They are awaiting trial on drug distribution charges.
One defendant, CARLOS FUENTES, 40, of Riverside, was charged in an indictment with drug distribution. Fuentes, who remains in federal custody since his arrest in January, has pleaded not guilty and is awaiting trial.
Saavedra-Fitz and Moreno are considered fugitives, as is ROLANDO ESTRADA, 41, of Elmwood Park. The three are facing drug distribution charges and are being sought by law enforcement.
The investigation was conducted under the umbrella of the OCDETF program, a partnership between federal, state and local law enforcement agencies. The principal mission of OCDETF is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations.
The public is reminded that charges are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. If convicted, the Court must impose reasonable sentences under federal statutes and the advisory U.S. Sentencing Guidelines.
The government has been represented by Assistant U.S. Attorneys Eric Pruitt, Matthew Kutcher, John Mitchell and Patrick Otlewski.
Chicago Trader Sentenced to Five and a Half Years in Federal Prison for Misappropriating More Than $1.7 Million in Client FundsRead the Press Release
CHICAGO — A Chicago trader was sentenced today to more than five and a half years in federal prison for defrauding clients out of more than $1.7 million by pocketing their money instead of investing it.
RANDALL RYE, the owner of Faster Than Light Trading LLC, promised substantial profits from his proprietary trading program. Rye claimed that he would invest his clients’ money in options and futures contracts using a computer algorithm. In reality, Rye misappropriated the investors’ funds for his own personal use. He made large cash withdrawals and spent heavily on travel expenses to St. Lucia and Bali. Rye also used investor funds to purchase expensive tickets to several events, including $47,000 for five tickets to the 2016 Lollapalooza music festival in Chicago, $110,000 for 14 tickets to the 2016 World Series, and $75,000 for one premium package ticket to the 2016 Masters golf tournament in Augusta, Georgia.
As a result of the scheme, Rye fraudulently misappropriated a total of $1.72 million from approximately 20 investors.
Rye, 26, of Chicago, pleaded guilty earlier this year to one count of wire fraud. U.S. District Judge Ronald A. Guzman imposed the 70-month sentence in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
“Randall Rye is a con man,” Assistant U.S. Attorney Sunil Harjani argued in the government’s sentencing memorandum. “His brazen scheme, executed with little regard for his victims, is truly appalling. His victims, many of whom gave him part of their retirement savings, are suffering the consequences of his fraud.”
According to the charges, Rye attempted to conceal the fraud by sending his investors false account statements purporting to show that their funds were invested and profitable. In reality, there was no proprietary algorithmic trading program, and the client funds were not actually maintained at any financial services companies. Rye often spent his clients’ funds soon after they were invested with him.
Businessman Indicted for Allegedly Stealing Employer’s Trade Secrets While Planning for New Job with Rival Firm in ChinaRead the Press Release
CHICAGO — A 30-year employee of a McHenry County manufacturing firm stole proprietary information from the company while planning to move to China to begin work for a rival firm, according to an indictment returned in federal court in Chicago.
On Sept. 13, 2015, ROBERT O’ROURKE allegedly downloaded electronic data belonging to his employer, a Woodstock-based manufacturer of cast-iron products. At the time, O’Rourke had already accepted a new job with a rival firm in Jiangsu, China, according to the indictment. Two days later he officially resigned from the Woodstock company, the indictment states. The following week O’Rourke packed up the proprietary information and went to O’Hare International Airport in Chicago to board a flight to China, the indictment states. Federal authorities intervened and seized the stolen electronic data, along with stolen paper documents, before O’Rourke traveled to China to begin work for the new firm.
The 13-count indictment was returned Wednesday in U.S. District Court in Chicago. It charges O’Rourke, 57, of Lake Geneva, Wisc., with theft of trade secrets. Arraignment is set for July 25, 2017, at 10:15 a.m., before U.S. District Judge Andrea R. Wood in Chicago.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
According to the charges, O’Rourke worked for the Woodstock company since 1984, holding the positions of plant metallurgist, quality assurance manager and salesperson. He also helped the company develop international business in, among other places, China, the indictment states. In December 2013, O’Rourke allegedly began discussions with a Chinese firm to take a similar job there. After several months of discussions and negotiations, O’Rourke accepted the position of Vice President at the Chinese company, the indictment states.
O’Rourke initially advised the Woodstock company on Aug. 12, 2015, that he intended to resign, according to the indictment. At that time, O’Rourke did not mention that he was negotiating employment with the Chinese firm, and he continued to work for the Woodstock company for another month, the indictment states. During that month he purchased his plane ticket to China and stole the proprietary trade secrets, the charges state.
The indictment does not identify the name of the Woodstock company or the Chinese firm.
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 the indictment is punishable by a maximum penalty of ten years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant U.S. Attorney Shoba Pillay.
United States Attorney’s Office in Chicago Creates New Unit to Prosecute Criminal Health Care Fraud ViolationsRead the Press Release
CHICAGO — Joel R. Levin, Acting United States Attorney for the Northern District of Illinois, today announced the creation of a new unit dedicated to the prosecution of criminal health care fraud violations.
The newly created Health Care Fraud Unit will operate within the office’s Criminal Division. The unit will be tasked with prosecuting defendants in all types of health care fraud, from providers who engage in fraudulent billing schemes to doctors who falsify patients’ diagnoses to justify expensive tests or procedures that aren’t medically necessary.
“Every year, health care fraud causes millions of dollars in losses to Medicare and private insurers,” said Acting U.S. Attorney Levin. “Health care fraud also often exploits patients through unnecessary or unsafe medical procedures. Health care providers who cheat the system must be held accountable. Our office has successfully prosecuted numerous health care fraud cases in recent years. The new Health Care Fraud Unit will build on that success and bring even greater focus, efficiency and impact to our efforts in this important area.”
The unit will include five prosecutors, led by Assistant U.S. Attorney Heather McShain. Assistant U.S. Attorney Stephen Chahn Lee will serve as the unit’s Senior Counsel.
The office has a long history of prosecuting significant health care fraud cases, and the new unit is expected to expand on those efforts. Last week the office participated in the largest health care fraud enforcement action in Department of Justice history. The national takedown involved more than 400 defendants, including 15 individuals charged in the Northern District of Illinois.
Other significant health care fraud prosecutions include a north suburban chiropractor and his brother and father, each of whom was sentenced to prison in connection with a phony billing scheme that bilked insurance carriers out of more than $10.8 million. DR. VLADIMIR GORDIN JR., VLADIMIR GORDIN SR. and ALEXSANDER GORDIN used their chiropractic clinic, Gordin Medical Center S.C., to falsely bill for medical services that were either not provided or weren’t medically necessary. The Gordins were sentenced to prison terms earlier this year. Vladimir Gordin Jr. was sentenced to seven years; Vladimir Gordin Sr. was sentenced to two and a half years; and Alexsander Gordin was sentenced to two years.
The office also recently secured ten criminal convictions as part of a multi-year investigation into Sacred Heart Hospital in Chicago. For more than a decade, Sacred Heart executives conspired to pay kickbacks and bribes to physicians to induce them to refer patients for services that would be reimbursed by Medicare and Medicaid. The fraud scheme earned Sacred Heart millions of dollars from Medicare and Medicaid. The convictions include EDWARD NOVAK, the hospital’s owner and chief executive officer; ROY PAYAWAL, the chief financial officer; CLARENCE NAGELVOORT and ANTHONY J. PUORRO, chief operating officers; DR. VENKATESWARA R. “V.R.” KUCHIPUDI, a physician; as well as four other physicians. Sacred Heart closed in 2013.
Fraud in the home health care and hospice industries have also been the subject of prosecutions, and the Health Care Fraud Unit will continue those efforts. The office’s investigation of home health care fraud has resulted in convictions of doctors, nurses, marketers, and executives at multiple companies, including DIKE AJIRI, the former owner of Chicago-based Mobile Doctors; BANIO KOROMA, a physician at Mobile Doctors; and DIANA JOCELYN GUMILA, the former clinical head of Schaumburg-based Doctor at Home. An investigation of PASSAGES HOSPICE in Lisle recently resulted in prison sentences for multiple defendants, including owner SETH GILLMAN, who was sentenced earlier this year to six and a half years in prison; and ANGELA ARMENTA, Passages’ former director of certified nursing assistants, who was sentenced last month to 20 months in prison.
The Health Care Fraud Unit will also focus on prosecutions related to the diversion of controlled substances, which is an area of emphasis for the office as it continues to battle the opioid crisis. The office has previously prosecuted significant diversion cases, including procuring the guilty plea of DR. SATHISH NARAYANAPPA BABU, who formerly owned Anik Life Sciences Medical Corp. in southwest suburban Darien. Dr. Babu prescribed controlled substances, including OxyContin and Hydrocodone, to certain patients without having examined them. Dr. Babu was sentenced in 2015 to 18 months in prison.
In announcing the new unit, Acting U.S. Attorney Levin acknowledged the cooperation and determination of the office’s investigative partners, including, among others, the Chicago offices of the Federal Bureau of Investigation, U.S. Department of Health and Human Services Office of Inspector General, U.S. Department of Labor’s Office of Inspector General, U.S. Food and Drug Administration, and U.S. Postal Inspection Service.
McHenry County Man Sentenced to 70 Months in Federal Prison on Robbery ChargesRead the Press Release
ROCKFORD — A McHenry County man was sentenced today by U.S. District Judge Frederick J. Kapala on four charges of robbery.
SHAWN M. RANK, 48, of Woodstock, was sentenced to 70 months in federal prison, to be followed by three years of supervised release, for the 2016 robberies of the Heartland Bank and Trust Company in Genoa, the Cash Store in Belvidere, the Harvard Savings Bank in Harvard, and the Alpine Bank in Belvidere. Rank was also ordered to pay restitution totaling $6,972 to the banks and the Cash Store.
Rank pleaded guilty to the robbery charges on March 10, 2017.
According to a written plea agreement, Rank admitted that on Jan. 15, 2016, he walked into the Heartland Bank and Trust Company, 327 W. Main St. in Genoa, pushed a blue zippered bank bag across the counter to a teller and told the teller to fill the bag with $50s and $100s. Rank opened his jacket and showed the teller a gun tucked in his waistband. The teller put $1,250 in the bank bag. Rank took the bag and fled.
In his plea agreement, Rank also admitted to robbing the Cash Store, 1479 N. State St. in Belvidere, of $1,232 on April 1, 2016, and to the armed robbery of the Harvard Savings Bank, 58 N. Ayer St. in Harvard, of $2,700 on May 6, 2016. Finally, Rank pleaded guilty and admitted to robbing the Alpine Bank, 600 S. State St. in Belvidere, of $1,790 on June 13, 2016.
The sentencing was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois, and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The DeKalb County Sheriff’s Office, and the Harvard, Genoa, and Belvidere Police Departments, assisted in the investigation.
The government was represented by Assistant U.S. Attorney Margaret J. Schneider.
National Healthcare Fraud Takedown Results in Charges Against More Than 400 Individuals, Including Several Chicago-Area Medical ProfessionalsRead the Press Release
CHICAGO — Several Chicago-area medical professionals, including two licensed physicians, are facing federal criminal charges as part of the largest health care fraud enforcement action in Department of Justice history, federal authorities announced today.
The national enforcement action taken by the Medicare Fraud Strike Force involved more than 400 defendants charged in 41 federal districts across the country, including 115 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving approximately $1.3 billion in false billings. More than 20 state Medicaid Fraud Control Units participated in today’s arrests. In addition, the HHS Centers for Medicare & Medicaid Services (CMS) is suspending payment to 295 providers, including doctors, nurses and pharmacists.
The national enforcement action was announced by U.S. Attorney General Jeff Sessions and U.S. Department of Health and Human Services Secretary Tom Price, M.D., along with Acting Assistant U.S. Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; Acting Federal Bureau of Investigation Director Andrew McCabe; Acting Drug Enforcement Administration Administrator Chuck Rosenberg; Inspector General Daniel Levinson of the HHS Office of Inspector General (OIG); IRS-Criminal Investigations Chief Jon Fort; CMS Administrator Seema Verma; and Deputy Director Kelly P. Mayo of the Defense Criminal Investigative Service (DCIS).
Today’s enforcement actions were led and coordinated by the Criminal Division Fraud Section’s Health Care Fraud Unit, in conjunction with its Medicare Fraud Strike Force partners – a partnership between the Criminal Division, U.S. Attorney’s Offices, the FBI and HHS-OIG. In addition, the operation includes the participation of the DEA, DCIS, and State Medicaid Fraud Control Units.
“Too many trusted medical professionals like doctors, nurses, and pharmacists have chosen to violate their oaths and put greed ahead of their patients,” said Attorney General Sessions. “While today is a historic day, the Department's work is not finished. In fact, it is just beginning. We will continue to find, arrest, prosecute, convict, and incarcerate fraudsters and drug dealers wherever they are.”
Several Chicago-area medical professionals, including two doctors, were charged as part of investigations in the Northern District of Illinois, announced Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the FBI; Gabriel L. Grchan, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago; and Lamont Pugh III, Special Agent-in-Charge of the Chicago Regional Office of the U.S. Department of Health and Human Services Office of Inspector General.
“Health care fraud is a serious crime that can have devastating consequences,” said Acting U.S. Attorney Levin. “Our office will continue to vigorously investigate and prosecute those who seek to enrich themselves through fraudulent health care schemes.”
“This week, we arrested once trusted doctors, nurses, and other medical professionals who were corrupted by greed and preyed on the vulnerable utilizing them to bill for services or drugs that were unnecessary or never provided,” said FBI Chicago Special Agent-in-Charge Anderson.
One of the Illinois cases involved BEATTA KABBANI, a licensed physical therapist, who was charged in a 13-count indictment with health care fraud and aggravated identity theft. Kabbani is the owner of MedCare Medical Group in Glenview. The indictment charges Kabbani with submitting more than $2 million in false claims to Blue Cross Blue Shield of Illinois and United Health Care. The charges state that Kabbani used a physician’s National Provider Identification number to substantiate some of those false claims. Kabbani is scheduled to be arraigned on July 26, 2017, before U.S. District Judge Gary Feinerman. The Kabbani case is being handled by Assistant U.S. Attorneys Heather McShain and Matthew Kutcher.
Another Illinois case involved JEFFREY WITEK and STEPHEN HOESLEY, licensed chiropractors who were charged in an 18-count indictment with health care fraud. The charges stem from their alleged participation in a scheme to defraud Blue Cross Blue Shield of Illinois. Witek and Hoesley submitted at least approximately $1.1 million in fraudulent claims to Blue Cross Blue Shield of Illinois that falsely represented that certain health care services were provided to patients, knowing that those services were not actually provided. Witek and Hoesley are scheduled to be arraigned on Aug. 2, 2017, before U.S. District Judge Matthew F. Kennelly. The Witek and Hoesley case is being handled by Special Assistant U.S. Attorney Jared Jodrey.
One of the Illinois investigations involved multiple medical professionals. ZOSIMA VICTUELLES, MYLENE MASICLAT, MARIBEL CABRERA, YASEEN ODEH and MOHAMMAD RAZA KHAN were charged in a 28-count indictment with conspiracy to offer and pay, and to solicit and receive, kickbacks and bribes for the referral of Medicare beneficiaries to Sure Care Home Health Corp. The indictment also charges substantive violations of the anti-kickback statute. Victuelles, Masiclat and Cabrera were the owners of Sure Care, a home health agency with offices in Glendale Heights and Rockford. Victuelles and Cabrera are also licensed nurses, while Odeh and Khan are licensed medical doctors. The charges stem from Victuelles, Masiclat, Cabrera and others paying Dr. Odeh, Dr. Khan and others more than $435,000 in kickbacks and bribes for the referral of Medicare beneficiaries to Sure Care. Arraignments in federal court in Chicago have not yet been scheduled. The case is being handled by Assistant U.S. Attorney Matthew Madden.
The Medicare Fraud Strike Force operations are 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. The Medicare Fraud Strike Force operates in nine locations nationwide. Since its inception in March 2007, the Medicare Fraud Strike Force has charged more than 3,500 defendants who collectively have falsely billed the Medicare program for more than $12.5 billion.
The public is reminded that an indictment is merely an allegation, and all defendants are presumed innocent until proven guilty.
Chicago Resident Convicted of Conspiring to Manufacture Marijuana in Rockford WarehouseRead the Press Release
ROCKFORD — A Chicago man was found guilty of conspiracy to manufacture and distribute marijuana following a four-day jury trial in federal court in Rockford.
YOUSIF Y. PIRA, 64, was found guilty of conspiring to manufacture, possess and distribute 1,000 or more marijuana plants.
The conviction was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Celinez Nunez, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms & Explosives; Derek Bergsten, Chief of the Rockford Fire Department; and Anthony Scarpelli, Chief of the Skokie Police Department. The Winnebago County Sheriff’s Department Narcotics Unit and the Rockford Police Department Narcotics Unit assisted in the investigation.
According to the indictment and the evidence at trial, between Jan. 2, 2013, and Jan. 6, 2015, Pira conspired with JEREMIAH N. CLEMENT, 39, of Des Plaines, GEORGE H. BACUS, 53, of Niles, JUSTIN T. PAGLUSCH, 36, of Ingleside, SHLIMON SHIMON, 49, of Chicago, and CASEY WILLIAMS, 30, and DESTINY FREEMAN, 23, both of Great Falls, Mont., to illegally grow, store and distribute marijuana in a warehouse at 1916 11th Street in Rockford. The warehouse was destroyed by a fire on Jan. 6, 2015.
As part of the conspiracy, among other things, Pira purchased grow lights and other equipment and supplies for the illegal operation to grow marijauna in the warehouse, and installed wiring for the lights used to grow marijuana.
Conspiring to manufacture 1,000 or more marijuana plants carries a maximum sentence of life imprisonment, and a statutory mandatory minimum sentence ten years’ imprisonment. The charge also carries a term of supervised release following imprisonment of at least five years and up to life, and a maximum fine of $10 million.
Clement pleaded guilty and was sentenced to ten years’ imprisonment on June 3, 2016. Pagluach pleaded guilty and was sentenced to ten years’ imprisonment on June 23, 2016. Bacus, Williams and Freeman have pleaded guilty and are awaiting sentencing. An arrest warrant was issued for Shimon, who is still at large.
The government is represented by Assistant U.S. Attorneys Joseph C. Pedersen and Margaret J. Schneider.
Federal Grand Jury Indicts Union Official for Allegedly Extorting Cash Payments from Local BusinessRead the Press Release
CHICAGO — A high-ranking official in a Chicago-area labor union threatened a local business with economic loss if it didn’t pay him quarterly cash payments of $25,000, according to a federal indictment returned today.
JOHN T. COLI SR. used the threat of economic harm to extort quarterly payments of $25,000 from a local company, according to the indictment. The attempted extortion occurred from approximately October 2016 to April 2017, while Coli served as President of Teamsters Joint Council 25, a labor organization that represents more than 100,000 workers in the Chicago area and northwest Indiana. The organization has approximately 26 local union affiliates, including Teamsters Local Union 727, where Coli also served as Secretary-Treasurer during the time period referenced in the indictment.
The indictment was returned today in U.S. District Court in Chicago. It charges Coli, 57, of Chicago, with one count of attempted extortion and five counts of demanding and accepting a prohibited payment as a union official. The indictment seeks forfeiture from Coli of at least $100,000.
Arraignment in federal court in Chicago will be held at a future time to be set by the Court.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General in Chicago.
According to the charges, Coli accepted a $25,000 cash payment on July 7, 2016; two cash payments totaling $25,000 on Oct. 4, 2016, and Nov. 29, 2016; and $25,000 cash payments on Dec. 22, 2016, and April 4, 2017. The indictment does not identify the individual who made the payments nor the company Coli allegedly extorted.
Coli previously served as International Vice President of the Central Region of the International Brotherhood of Teamsters, the indictment states.
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.
Attempted extortion is punishable by a maximum penalty of 20 years in prison. Each count of demanding and accepting a prohibited payment is punishable by up to five years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant U.S. Attorneys Amarjeet S. Bhachu and Abigail Peluso.
Former Social Security Administration Employee Sentenced to 5 Years in Prison for Authorizing More Than $1.9 Million in Fraudulent BenefitsRead the Press Release
CHICAGO — A former benefits authorizer at the Social Security Administration in Chicago was sentenced today to five years in federal prison for authorizing more than $1.9 million in fraudulent benefits.
JAYSON CRUZ, 41, who worked at the SSA’s Great Lakes Program Service Center in Chicago, authorized the fraudulent payments from 2009 to 2013 to more than 150 recipients. In exchange, the recipients kicked back approximately half of the fraudulent payments to Cruz or to others whom Cruz had recruited into the scheme. As a result of his fraud scheme, Cruz caused the SSA to pay approximately $1,908,290 in fraudulent benefits.
Cruz used the proceeds of the fraud to, among other things, purchase his home in the South Chicago neighborhood of Chicago, shop at Gucci, Bloomingdale’s and Saks Fifth Avenue, and travel to the National Basketball Association’s All-Star Game and the Black Entertainment Television awards show.
Cruz pleaded guilty last year to one count of wire fraud. U.S. District Judge Virginia M. Kendall imposed the 60-month sentence in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois, and Tracey Thanos, Special Agent-in-Charge of the Chicago Social Security Administration’s Office of Inspector General.
“Defendant abused a position of public trust,” Special Assistant U.S. Attorney Daniel W. Glad argued in the government’s sentencing memorandum. “The 165 million people who pay into the system expect that their hard-earned tax dollars are appropriately allocated.”
“This investigation was one of the most egregious employee cases we have ever investigated,” said Special Agent-in-Charge Thanos. “This type of dishonesty and deceit from government employees cannot be tolerated. I would like to thank the U.S. Attorney’s Office for their efforts in prosecuting this case.”
According to the charges, Cruz and his co-schemers recruited recipients of Old-Age, Survivors, and Disability Insurance Benefits to receive additional payments on top of what they were legitimately owed. Cruz authorized the fraudulent payments by entering false codes into the SSA’s electronic system. Cruz made sure that each of the fraudulent payments was for slightly less than $6,000 in order to avoid triggering the need for his supervisor’s approval.
Including Cruz, all five defendants charged in the federal investigation have been convicted.
Federal Grand Jury in Chicago Indicts Two Former Tech Executives for Allegedly Conspiring to Obstruct SEC Probe into Sale of CompanyRead the Press Release
CHICAGO — A federal grand jury in Chicago has indicted two former executives of a Florida technology company for allegedly conspiring to obstruct an investigation by the U.S. Securities and Exchange Commission.
CHRISTOPHER YOUNG, the former President of Tampa-based M2 Interactive Group Inc., and JOSHUA CARLUCCI, M2 Interactive’s former Chief Executive Officer, are charged with conspiracy to obstruct, influence, and impede an official proceeding. The pair allegedly conspired with executives from Schaumburg-based Quadrant 4 System Corp. to obstruct an SEC investigation into Quadrant 4’s 2013 purchase of M2 Interactive.
The indictment was returned Thursday in federal court in Chicago. In addition to the conspiracy count, Young, 35, of Norwich, N.Y., and Carlucci, 39, of Tampa, Fla., are also charged with attempting to obstruct, influence, and impede an official proceeding. Carlucci also faces a charge of making false statements to the Federal Bureau of Investigation. The Court will schedule arraignments for Young and Carlucci at a later date.
New and expanded criminal charges were also filed Thursday against the two Quadrant 4 executives, NANDU THONDAVADI and DHRU DESAI. A criminal information filed in federal court in Chicago charged them with wire fraud. Arraignments for Thondavadi, 63, of North Barrington, and Desai, 55, of Barrington, have been scheduled for July 6, 2017, at 10:00 a.m., before U.S. District Judge Charles Norgle.
The charges were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent in Charge of the Chicago office of the FBI. The Chicago office of the SEC provided valuable assistance.
M2 Interactive was a technology company that developed applications for mobile devices and conducted business under the name Momentum Mobile. Quadrant 4 provides software products, platforms and consulting services to customers in the healthcare and education sectors. As a public company, Quadrant 4 is required to provide to the SEC a detailed report of its financial condition.
In 2015 the SEC launched an investigation of Quadrant 4 based on indications that the firm may have violated federal securities laws. The FBI initiated an investigation of Quadrant 4 in 2016. As set forth in the information against Thondavadi and Desai, the investigation revealed that Thondavadi and Desai engaged in a wide-ranging scheme to defraud Quadrant 4’s shareholders by misappropriating more than $3 million from the company, fraudulently inflating Quadrant 4’s revenue, and regularly concealing Quadrant 4’s liabilities. The information charges that Thondavadi and Desai certified false SEC reports, including Quadrant 4’s 2014 Form 10-K, in which the defendants fraudulently inflated Quadrant 4’s revenue by more than $4.2 million – nearly 10% of Quadrant 4’s reported income that year.
The fraud scheme also involved numerous misrepresentations related to Quadrant 4’s acquisitions, including misrepresentations about the terms of Quadrant 4’s purchase of Momentum Mobile in 2013. Quadrant 4 purchased Momentum Mobile for $100,000 in cash and 250,000 shares of Quadrant 4 stock, plus assumption of approximately $165,000 in Momentum Mobile liabilities, according to the indictment against Young and Carlucci. Federal authorities discovered that Thondavadi and Desai later concealed the true terms of the deal from Quadrant 4’s auditor and its shareholders, according to the charges. The pair furnished the auditor with a fictitious agreement that Thondavadi created, the charges state. The bogus document inflated the purchase price and failed to mention the liabilities Quadrant 4 assumed, according to the charges.
As set forth in the charges, the investigation further revealed that Thondavadi and Desai attempted to obstruct the SEC’s investigation of Quadrant 4 as it related to the Momentum Mobile acquisition. In July 2016 SEC attorneys sought to question Young and Carlucci, who were unaware of the fictitious acquisition agreement that Thondavadi created. Carlucci notified Thondavadi and Desai of the SEC’s inquiry, and the Quadrant 4 executives responded by striking a deal with Young and Carlucci to pay them cash in exchange for their agreement to send Thondavadi an e-mail falsely stating that Momentum Mobile had previously authorized the terms of the fictitious agreement, according to the charges. The defendants attempted to disguise the payments – $102,900 to Young and $60,000 to Carlucci – as “consulting” fees, the charges state.
The public is reminded that charges 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.
The conspiracy, obstruction and wire fraud charges are each punishable by up to 20 years in prison, while making false statements to the FBI is punishable by up to five years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant U.S. Attorney Matthew Madden.
Rockford Man Sentenced to 13 Years for the Robberies of Rockford Banks and a Stamp StoreRead the Press Release
ROCKFORD — A Rockford man was sentenced today by U.S. District Judge Frederick J. Kapala to 13 years in federal prison for bank robbery, robbery affecting interstate commerce, and a related firearm charge.
DAVID J. SANDERS, 34, was sentenced to 96 months for the robbery of BMO Harris Bank, 1480 South Alpine Rd., in Rockford, on May 31, 2016, and the robbery of Rockford Coin and Stamps, 4402 Center Terrace, in Rockford, on June 11, 2016, to be served concurrently. In addition, the Court sentenced Sanders to serve a consecutive term of 60 months’ imprisonment for using and carrying a firearm in furtherance of the robbery on June 11, 2016. After serving his sentence in federal prison, Sanders will be placed on three years of supervised release.
Sanders pleaded guilty to the charges on March 1, 2017. According to the written plea agreement, on May 31, 2016, Sanders attempted to rob a different BMO Harris Bank branch, located at 2510 South Alpine Rd. in Rockford. Sanders approached the branch manager and pulled a note out of his pocket that stated he had a gun and demanded money. However, when a bank employee came out of a door into the lobby, Sanders took the note and walked out.
A short time later, Sanders entered the BMO Harris Bank at 1480 South Alpine, approached the teller counter and was greeted by the bank manager. Sanders handed the bank manager a note that stated, “I have a gun give me 1000.” The bank manager said she could not give Sanders money, and when she attempted to keep the note, Sanders took it away from the manager and said, “I want $1,000.” The manager opened the teller drawer and gave Sanders $2,260. Sanders then left the bank.
Sanders further admitted in the plea agreement that on June 11, 2016, he entered Rockford Coin and Stamps, 4402 Center Terr., in Rockford. Sanders admitted he walked behind the display counter and obtained a Remington pistol-grip shotgun with five live shells attached to the side of it. Sanders admitted that while holding the shotgun he demanded money. An employee gave Sanders approximately $500. Sanders then fled with the money and the shotgun.
Sanders also stipulated and admitted in the plea agreement to robbing PNC Bank, 4615 East State St., in Rockford, of approximately $3,010, on June 14, 2016.
As part of his sentence, Sanders was also ordered to pay restitution of $2,260 to BMO Harris Bank, $500 to Rockford Coin and Stamps, and $3,010 to PNC Bank.
The sentencing was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; and Dan O’Shea, Chief of the Rockford Police Department. The investigation was conducted under the auspices of the FBI Safe Streets Task Force, which includes representatives from the FBI, ATF, Loves Park Police Department, Winnebago County Sheriff’s Department, and Rockford Police Department.
The government was represented by Assistant U.S. Attorney Joseph C. Pedersen.
Lake County Resident Sentenced to Ten Years in Federal Prison for Conspiring to Manufacture Marijuana in Rockford WarehouseRead the Press Release
ROCKFORD — A Lake County man was sentenced today by U.S. District Judge Frederick J. Kapala for his role in a conspiracy to manufacture and distribute marijuana.
JUSTIN T. PAGLUSCH, 35, of Ingleside, was sentenced to ten years in federal prison, to be followed by five years of supervised release.
On Oct. 6, 2015, a federal grand jury in Rockford charged Paglusch and six other individuals with conspiring to manufacture, possess and distribute 1,000 or more marijuana plants. The indictment alleged that between Jan. 2, 2013, and Jan. 6, 2015, the defendants conspired to illegally grow and store marijuana in a warehouse at 1916 11th Street in Rockford. The warehouse was destroyed by fire on Jan. 6, 2015.
Paglusch pleaded guilty to the charge on March 3, 2017. He stated in a plea agreement that in November 2014, Paglusch’s cousin, Jeremiah N. Clement, 39, formerly of Des Plaines, asked Paglusch to work with others in a marijuana growing operation at the warehouse. Paglusch agreed, and during the time of the conspiracy he lived at the warehouse. When Paglusch arrived at the warehouse in November 2014, over 1,000 marijuana plants growing on the fourth floor in the warehouse were almost ready to be harvested. There was also a smaller room on the fourth floor of the warehouse that housed the baby or "clone" marijuana plants.
As stated in the plea agreement, Paglusch and Clement, along with three other co-defendants, started harvesting the crop of finished marijuana plants in December 2014. The harvested marijuana was weighed and packaged into one pound amounts and vacuum sealed. The processed marijuana was stored in a vault at the warehouse, which had a combination lock. Paglusch admitted that during the period of the conspiracy, he was aware that Clement kept a .357 Ruger revolver at the warehouse.
The sentencing was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Celinez Nunez, Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms & Explosives; Derek Bergsten, Chief of the Rockford Fire Department; and Anthony Scarpelli, Chief of the Skokie Police Department. The Winnebago County Sheriff’s Department Narcotics Unit and the Rockford Police Department Narcotics Unit assisted in the investigation.
The government is represented by Assistant U.S. Attorney Joseph C. Pedersen.
Chicago Businessman Arraigned on Fraud Charges in Connection with $7 Million Reverse Mortgage Scheme That Targeted Elderly HomeownersRead the Press Release
CHICAGO — A Chicago businessman has been arraigned on federal fraud charges for his alleged role in a scheme to bilk elderly homeowners out of millions of dollars.
MARK STEVEN DIAMOND, a mortgage loan originator with offices in Chicago and Calumet City, engaged in a home repair and loan fraud scheme that targeted elderly homeowners and lenders, according to the indictment. Diamond fraudulently caused lenders to make reverse-mortgage loans to homeowners who either did not sign up for the loans or did so unwittingly after Diamond intentionally misrepresented the terms, the indictment states. Diamond fraudulently pocketed the loan checks by causing title company representatives, including an unindicted co-schemer, to provide the checks to Diamond rather than the homeowners. The indictment seeks forfeiture of $7 million from Diamond.
Diamond, 60, of Chicago, pleaded not guilty at his arraignment Wednesday to seven counts of wire fraud. U.S. District Judge Robert M. Dow Jr. scheduled a status hearing for Aug. 28, 2017, at 9:00 a.m.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Brad Geary, Special Agent-in-Charge of the U.S. Department of Housing and Urban Development’s Office of Inspector General in Chicago; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
According to the indictment, Diamond targeted his victims, who ranged in age from 62 to 97, based on the equity in their homes and their relative lack of financial sophistication. If a victim’s relative questioned Diamond on the need for a reverse mortgage, Diamond would schedule a time to visit the victim’s home when he knew the relative would not be there, the indictment states.
Also charged in the indictment is CYNTHIA WALLACE, 47, of Chicago. Wallace solicited homeowners to have home repairs performed by Diamond, knowing that Diamond would not actually perform the work, the indictment states. Wallace, who used the aliases “Shree Box,” “Regina Johnson,” and “Sherry Rice,” also posed as a representative of the U.S. Department of Housing and Urban Development to fraudulently obtain money from victims, the indictment states.
Wallace has pleaded not guilty to nine counts of wire fraud and two counts of falsely pretending to be an employee of the United 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. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is represented by Assistant U.S. Attorneys Brian Netols and Matthew Ebert.
Chicago Man Charged with the Sex Trafficking of a 16-Year-Old Girl Who Was Allegedly Murdered by a CustomerRead the Press Release
CHICAGO — A Chicago man was arrested today on a federal sex trafficking charge for allegedly arranging a commercial sex encounter for a 16-year-old girl that ended in the child’s murder in a south suburban garage on Christmas Eve.
JOSEPH HAZLEY, 33, posted the girl’s information in commercial sex advertisements on Backpage.com, and arranged multiple meetings in December 2016 for her to engage in prostitution, according to a criminal complaint filed in U.S. District Court in Chicago. Hazley drove the girl to several meetings in the Chicago area, including an encounter in the early morning hours of Christmas Eve in a garage in south suburban Markham, the complaint states. During this encounter, the customer allegedly murdered the girl.
Hazley was arrested this morning at his home in Chicago. The complaint charges him with one count of sex trafficking. The charge is punishable by a minimum sentence of ten years in prison and a maximum of life in prison.
Hazley made an initial court appearance this morning before U.S. Magistrate Judge Daniel G. Martin in Chicago. Judge Martin ordered Hazley to remain in federal custody until a detention hearing on June 23, 2017, at 10:30 a.m.
The complaint was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent in Charge of the Chicago office of the Federal Bureau of Investigation; Cook County Sheriff Thomas J. Dart; and Chicago Police Superintendent Eddie T. Johnson. Substantial assistance was provided by the Markham Police Department and the Cook County State’s Attorney’s Office.
The government is represented by Assistant U.S. Attorney Christopher V. Parente.
According to the complaint, the customer responded to Hazley’s Backpage.com posting to arrange the Christmas Eve meeting with the minor. Hazley drove the girl to Markham and waited in his car a few yards from the garage while she met with the customer, the complaint states. During the encounter in the garage, the customer allegedly murdered the girl, the complaint states.
The customer was subsequently arrested by the Chicago Police Department and charged with murder in Cook County Criminal Court.
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. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
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, 7 days a week.
Six Defendants Charged in “Card Cracking” Scheme That Targeted U.S. Military MembersRead the Press Release
CHICAGO — Six suburban men have been indicted on fraud charges for their alleged roles in a “card cracking” scheme that targeted members of the U.S. military and defrauded a federally-insured savings bank out of more than $830,000.
The defendants deposited counterfeit checks into accounts at USAA Federal Savings Bank belonging to military members and others who had been recruited to provide their account information, according to the 53-count indictment. After depositing the checks, the defendants withdrew funds from the accounts which the bank had advanced before it learned the checks were counterfeit, the indictment states. The scheme spanned more than two years and defrauded the bank out of more than $830,000, the indictment states.
The indictment was returned June 15, 2017, in federal court in Chicago. Charged with bank fraud are KIERRE PERKINS, 22, of South Holland; STEVEN VANCE, 22, of Calumet City; IAN MYVETT, 23, of South Holland; LAMONTE POWELL, 24, of Calumet City; TOREY MARTIN, 24, of Calumet City; and JERMEL SANDERS, 29, of Matteson. Arraignments in federal court in Chicago have not yet been scheduled.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and John A. Koleno, Special Agent-in-Charge of the Chicago office of the U.S. Secret Service.
According to the charges, the defendants used postings on social media sites, such as Instagram, Twitter and Facebook, among other means, to recruit USAA Federal Savings Bank customers to provide their debit cards and PINs. The postings, which featured individuals in camouflage military uniforms holding large amounts of cash, advertised opportunities to earn money in a short amount of time, according to criminal complaints and affidavits previously filed in the case. When a USAA Federal Savings Bank customer responded to a posting, the schemers would falsely reply that the customer could receive money if they provided their account information, including usernames, passwords, PINs and answers to security questions, according to the charges. In some instances the bank customers provided their actual debit cards to the defendants as well, the charges state.
After obtaining the account information, some of the defendants deposited counterfeit checks into the accounts, the charges state. They would then withdraw the portion of the purported funds that the bank had credited shortly after the deposit, leaving the bank to bear the loss, the charges state.
Some of the defendants created the counterfeit checks and used account and routing information from other, unsuspecting bank account holders, the charges state. Others posted pictures and videos on their social media accounts containing bank receipts from victim bank account holders, the charges state.
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.
Bank fraud is punishable by up to 30 years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is represented by Assistant U.S. Attorney Brian S. Wallach and Special Assistant U.S. Attorney Jared C. Jodrey.
Dolton, Illinois Man Indicted for Stealing Firearms from A Licensed Gun Dealer in Loves Park, Ill.Read the Press Release
ROCKFORD — A Dolton, Illinois man was indicted Tuesday, June 13, 2017, by a federal grand jury in Rockford on gun charges. KELVIN CULPS, 20, of Dolton, Ill., also known as “Forty,” was charged with stealing twelve firearms from a licensed firearms dealer in Loves Park, Ill., on May 8, 2017, illegally possessing stolen firearms, and illegally possessing those firearms as a convicted felon. Culps, who has been in federal custody since his arrest on May 30, 2017, was arraigned before U.S. Magistrate Iain D. Johnston today and has pleaded not guilty. Culps remains in federal custody awaiting trial.
Each count of stealing firearms from a licensed firearms dealer, illegally possessing stolen firearms, and illegally possessing firearms as a convicted felon carries a maximum potential penalty of up to 10 years in prison, to be followed by up to 3 years of supervised release, and a fine of up to $250,000. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines, and the defendant shall be required to pay restitution to any victims of the alleged theft of the firearms.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Celinez Nunez, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; and Chuck Lynde, Chief of the Loves Park Police Department.
The government is represented by Assistant U.S. Attorney Talia Bucci.
Indictment.pdfConvicted Felon Sentenced to 8 Years in Federal Prison for Illegally Possessing Handgun and Using It to Intimidate Ex-GirlfriendRead the Press Release
CHICAGO — A federal judge has sentenced a convicted felon to eight years in prison for illegally possessing a handgun, which he used to intimidate his ex-girlfriend.
JOSEPH RILEY, 44, of Chicago, possessed the Sig Sauer P229 .40-caliber pistol on at least four occasions in 2015, according to his written plea agreement. During one of those occasions, Riley brandished the gun and used it to intimidate his ex-girlfriend, according to the plea agreement.
Riley was not lawfully allowed to possess the gun because he had prior felony convictions, including two felonies for illegally possessing firearms.
Riley pleaded guilty earlier this year to one count of illegal possession of a firearm by a felon. U.S. District Judge John J. Tharp Jr. on Tuesday imposed the 96-month sentence in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Celinez Nunez, Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. The Chicago Police Department provided valuable assistance.
“Each instance in which defendant possessed the gun was dangerous and threatening,” Assistant U.S. Attorney Matthew L. Kutcher argued in the government’s sentencing memorandum. The government’s memorandum noted Riley’s prior firearm convictions and the seriousness of the current offense, and it requested that the Court impose the 96-month sentence, which was significantly above the advisory guideline range.
Suburban Musician Arrested on Child Pornography Charges for Allegedly Enticing Underage Girls to Produce Sexually Explicit VideosRead the Press Release
CHICAGO — Federal authorities have arrested a west suburban musician for allegedly enticing underage girls to produce sexually explicit videos of themselves.
AUSTIN JONES, 24, of Bloomingdale, chatted with two underage girls on Facebook and enticed them to produce pornographic videos of themselves and send them to him, according to a criminal complaint and affidavit filed in federal court in Chicago. Jones is a musician with a significant following on social media sites such as Facebook and Twitter, the complaint states. His music videos have been viewed millions of times on the Internet, including on YouTube, the complaint states.
The complaint charges Jones with two counts of producing child pornography. Jones was arrested on Monday at O’Hare International Airport in Chicago. He made his initial court appearance this afternoon before U.S. Magistrate Judge Michael T. Mason. Judge Mason ordered Jones to remain in federal custody until a detention hearing on June 14, 2017, at 2:30 p.m.
The complaint was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and James M. Gibbons, special agent-in-charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Chicago. The Illinois Attorney General’s Office’s Internet Crimes Against Children Task Force and the Bloomingdale Police Department participated in the investigation.
According to the complaint, Jones chatted with one victim in August 2016, and with the other victim last month. The victim from last August stated in a Facebook chat with Jones that she was his biggest fan, the complaint states. Jones repeatedly told her that she was “lucky” to have his attention, and that she needed to “prove” that she was his biggest fan by producing the sexually explicit videos and sending them to him, 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.
Each count of production of child pornography is punishable by a minimum sentence of 15 years in prison and a maximum of 30 years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
HSI led the investigation. The government is represented by Assistant U.S. Attorney Katherine Neff Welsh.
If you believe you are a victim of sexual exploitation, you are encouraged to call the ICE Tip Line at 1-866-DHS2-ICE (1-866-347-2423) or the National Center for Missing and Exploited Children at 1-800-843-5678. The hotlines are available 24 hours a day, seven days a week.
Suburban Chicago Physician Sentenced to 30 Months in Federal Prison on Bribery ChargeRead the Press Release
ROCKFORD — A Suburban Chicago physician was sentenced Monday by U.S. District Judge Frederick J. Kapala to 30 months in federal prison, to be followed by a term of supervised release of one year, for bribery concerning health care programs receiving federal funds.
NEIL SHARMA, 37, of Lemont, who pleaded guilty to the charge on Feb. 2, 2017, has been a licensed Illinois physician since March 2011. Between September 2013 and March 2015, he was the Medical Director of a company identifed in court records as "Company A," a managed care services company that contracted to provide health care services to Medicare and Medicaid patients. As stated in a plea agreement, the State of Illinois contracted with Company A to provide skilled nursing services to patients located in certain facilities. These patients were covered by Medicare, Medicaid, or both. In early 2015, Company A subcontracted with three other companies to provide skilled nursing services. Sharma admitted that from Feb. 13, 2015 to March 13, 2015, he corruptly solicited bribes from an owner of one of the three subcontractors.
In exchange for the bribes, Sharma stated that he would provide the subcontractor with more skilled nursing patients and with additional Medicaid and Medicare patients through Company A’s anti-depressant monitoring program and hospital re-admission program. As stated in the plea agreement, the additional business Sharma promised in exchange for the bribes would bring in millions of dollars to the subcontractor. Sharma accepted cash payments of $2,500 and $7,500 from the owner of the subcontractor before being arrested by FBI agents.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
The government is represented by Assistant U.S. Attorney Scott R. Paccagnini.
Convicted Felon Pleads Guilty to Illegally Possessing Handgun at Suburban Shooting Range and Obstructing Law Enforcement Investigation into the MatterRead the Press Release
CHICAGO — A convicted felon admitted in federal court today that he illegally possessed a handgun at a suburban shooting range and then obstructed a law enforcement investigation into the matter.
LABAR SPANN, 38, also known as “Bro Man,” possessed and discharged the handgun in a firing range at Midwest Sporting Goods in Lyons on Sept. 14, 2014, according to a written plea agreement. Spann went to the range with two other individuals, and he posted numerous videos and photographs of the visit on his Instagram profile, the plea agreement states. One photograph depicted the silhouette of a person as the shooting target, with holes in the head and chest. According to the plea agreement, Spann posted a caption for the photograph that read: “y’all know I had to go first just to show my [expletive] how this [expletive] work lmao I do this [expletive].”
Spann had previously been convicted of a felony and was not lawfully allowed to possess a firearm.
Spann, of Chicago, pleaded guilty to one count of illegal possession of a firearm by a felon, three counts of obstruction of justice, and one count of possession of a controlled substance with intent to distribute. The conviction carries a maximum sentence of 70 years in prison. U.S. District Judge John J. Tharp Jr. scheduled sentencing for Sept. 5, 2017.
The guilty plea was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; Celinez Nunez, Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; and Eddie T. Johnson, Superintendent of the Chicago Police Department. The investigation was conducted in conjunction with the High Intensity Drug Trafficking Area Task Force (HIDTA).
The obstruction charges stemmed from Spann’s efforts to influence and impede a witness’s testimony before the federal grand jury that was investigating the incident at the firing range. The witness had initially stated truthfully to law enforcement that she accompanied Spann to the firing range and saw Spann load the gun and fire it, the plea agreement states. Soon thereafter, Spann communicated with the witness and others, intending to cause the witness to withhold truthful testimony from the grand jury.
When the witness was called before the grand jury on Jan. 29, 2015, she falsely testified that Spann did not shoot the gun at the range, the plea agreement states. In subsequent text messages between Spann and the witness, Spann asked if she could obtain the grand jury transcript of her testimony to give to him, the plea agreement states.
The government is represented by Assistant U.S. Attorneys Peter Salib, Timothy Storino, Tobara Richardson and William Dunne.
Justice Department and City of Des Plaines Settle Lawsuit over Alleged RLUIPA ViolationsRead the Press Release
CHICAGO – The Justice Department today announced an agreement with the City of Des Plaines to resolve allegations that the City violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) when it denied a rezoning application to allow The Society of American Bosnians and Herzegovinans (SABAH), a Bosnian Muslim religious organization, to use a vacant building as a mosque.
The agreement resolves a lawsuit the Department filed in September 2015, after conducting an investigation into the City’s zoning and land use practices. A separate agreement resolving a similar lawsuit brought by SABAH has also been reached.
“Religious freedom is a fundamental right, and we will not tolerate the unlawful use of zoning or land use restrictions to infringe on that right,” said Joel R. Levin, Acting United States Attorney of the Northern District of Illinois. “The U.S. Attorney’s Office will continue to safeguard the rights of religious groups to establish houses of worship without fear of discriminatory zoning or land use practices.”
“Religious freedom is a fundamental right that belongs to all persons and religious groups in the United States,” said Acting Assistant Attorney General Tom Wheeler of the Justice Department’s Civil Rights Division. “The Department of Justice’s Civil Rights Division will remain vigilant in its enforcement of federal law protecting the rights of religious communities to build and use property for religious worship.”
The United States’ complaint alleged that the City discriminated against SABAH on the basis of religion or religious denomination by treating land use applications by non-Muslim religious groups better than it treated SABAH’s application on the basis of parking requirements and tax-exempt status, and that the City departed from its normal practices and procedures in the treatment and denial of SABAH’s request. The United States also alleged that the City’s denial imposed a substantial burden on SABAH’s religious exercise without serving a compelling governmental interest using the least restrictive means and that the City treated SABAH on less than equal terms with similarly situated non-religious groups, including a school and cultural center.
On Feb. 26, 2017, the U.S. District Court for the Northern District of Illinois ruled that the United States’ claims could proceed to trial. The Court found that the City misapplied its zoning laws by imposing higher parking standards on SABAH than on non-Muslim religious groups, and that the City did not use the least restrictive means to address purported concerns it had with SABAH’s request.
As part of the settlement agreement, the City of Des Plaines will abide by RLUIPA in its determinations involving religious land use requests. The City has agreed to provide training on the requirements of RLUIPA to its officials and employees, and to publicize its non-discrimination policies, among other remedial measures.
RLUIPA prohibits discrimination on the basis of religion in land use and zoning decisions. Persons who believe they have been subjected to such discrimination in land use or zoning decisions may contact the Department of Justice’s Civil Rights Division at (800) 896-7743. In the Northern District of Illinois, they may also call the U.S. Attorney’s Office's Civil Rights Hotline at (855) 281-3339.
Chinese Businessman Sentenced to Ten Years in U.S. Prison for Attempting to Provide Military Equipment to Peruvian Terrorist OrganizationRead the Press Release
CHICAGO — A Chinese businessman was sentenced today to ten years in federal prison for attempting to provide military equipment to a Peruvian terrorist organization.
GUAN YING LI, also known as “Henry Li,” pleaded guilty in 2014 to one count of attempting to provide material support and resources to Shining Path, a terrorist organization whose original goal was to overthrow the government of Peru and replace it with a Maoist socialist system. In 2011 Li brokered several deals with a purported Chicago-area businessman to provide military equipment to Shining Path, knowing that the equipment was to be used to kill Peruvian and U.S. government personnel. Unbeknownst to Li, the purported Chicago-area businessman was actually an undercover law enforcement agent.
U.S. District Judge Joan Humphrey Lefkow imposed the 120-month prison term at a sentencing hearing in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting 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; and Ryan Reihms, Special Agent-in-Charge of the Central Field Office of the Defense Criminal Investigative Service of the U.S. Department of Defense’s Office of Inspector General.
Li, 50, of Hong Kong, acquired and sold to the undercover agent five thermal batteries designed for use in the man-portable air-defense system known as MANPAD. These surface-to-air missiles would allow Shining Path members to shoot down helicopters, including those carrying U.S. personnel. According to Li’s plea agreement, Li caused the batteries to be shipped from Hong Kong to an address in Central America provided by the undercover agent.
Li also sold eight Paratrooper Assault Harnesses, eight Paratrooper backpacks, eight shovels, two VHF radios and four night-vision systems, the plea agreement states. Li caused this equipment to be shipped from China to an address in Elmhurst, Ill., provided by the undercover agent.
Pursuant to his plea agreement, Li agreed to cooperate in any matter in which he is called upon by the U.S. Attorney’s Office for the Northern District of Illinois.
The government is represented by Assistant U.S. Attorney Matt Hiller.
Lake County Woman Sentenced to 4 Years in Federal Prison for Defrauding the State of Illinois out of $6.8 Million in Unemployment BenefitsRead the Press Release
CHICAGO — A Lake County woman was sentenced today to four years in federal prison for defrauding the State of Illinois out of nearly $7 million in unemployment benefits.
LETICIA GARCIA assisted hundreds of individuals, mostly undocumented immigrants, in preparing and filing unemployment insurance claims that Garcia knew contained false information, such as invalid Social Security numbers, false assertions of U.S. citizenship, and phony dependents. As a result of the fraudulent claims, the Illinois Department of Employment Security paid out approximately $6.8 million in unemployment benefits to hundreds of ineligible claimants.
Garcia, 54, of Round Lake Beach, pleaded guilty earlier this year to three counts of mail fraud. U.S. District Judge Edmond E. Chang imposed the sentence in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General in Chicago. The Illinois Department of Employment Security and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations provided valuable assistance.
“Defendant committed wholesale fraud against a state program designed to help some of the most vulnerable state residents get back on their feet after an unexpected job loss,” Assistant U.S. Attorney Nicholas Eichenseer argued in the government’s sentencing memorandum. “Her crime diminished the resources available to eligible UI claimants who played by the rules.”
“Garcia defrauded taxpayers of millions of dollars by assisting hundreds of ineligible workers in their efforts to receive unemployment insurance benefits intended for Americans who were out of work,” said Special Agent-in-Charge Vanderberg. “The Office of Inspector General will continue to work with our law enforcement partners to investigate those who attempt to fraudulently obtain money from Department of Labor Programs.”
Many of Garcia’s clients were Mexican-born immigrants without lawful immigration status or U.S. work permits, making them ineligible for unemployment insurance benefits. From 2006 through May 2012, Garcia operated an office out of a converted garage in her home, where she and her employees saw as many as 15 clients per day. It was understood that Garcia would not ask clients for immigration papers.
Garcia charged each client $300 to $400 to prepare and file a claim online, with half of the fee due upfront and the balance owed when the client received the benefits. Through her fraud, Garcia made tens of thousands of dollars, which she hid in bank accounts in her daughter’s name.
The government is represented by Mr. Eichenseer.
Chicago Trader Sentenced to a Year in Federal Prison for Stealing Proprietary Trading Secrets from His EmployerRead the Press Release
CHICAGO — A Chicago trader has been sentenced to a year and a day in federal prison for stealing his employer’s proprietary trading code.
Over a five-month period in late 2013 and early 2014, DAVID J. NEWMAN downloaded and stole all of the proprietary computer code and trading software belonging to his employer, Chicago-based WH Trading LLC. Newman downloaded more than 400,000 electronic files to multiple USB thumb drives. He resigned from the company in March 2014 after establishing his own trading firm – NTF LLC – through which he intended to use the stolen trade secrets to compete directly with WH Trading.
Newman, 34, pleaded guilty last year to one count of theft of trade secrets. U.S. District Judge Manish S. Shah imposed the sentence on Thursday in federal court in Chicago. Judge Shah also fined Newman $100,000 and entered an order prohibiting him from using or disclosing the stolen trade secrets.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
WH Trading is a proprietary securities trading firm that acts as a market maker and engages in both open outcry and electronic trading of futures contracts and options on exchanges in Chicago, New York, London, Frankfurt, and Singapore. The intellectual property stolen by Newman had taken WH Trading’s mathematicians, statisticians, software developers and traders more than 15 years to develop, at a cost of more than $20 million. WH Trading’s proprietary codes are used for, among other things, pricing futures and options contracts, executing trades on various exchanges, analyzing the risk of trades, and interpreting exchange market data.
Newman had worked for the company since 2004 prior to his resignation.
The government is represented by Assistant U.S. Attorney William R. Hogan Jr. of the Securities and Commodities Fraud Section of the U.S. Attorney’s Office in Chicago.
Chicago Man Sentenced to 9 Years in Prison for Conspiring to Murder U.S. Citizen in Bali, IndonesiaRead the Press Release
A Chicago man was sentenced to serve nine years in prison, and four years supervise for conspiring with his cousin and his cousin’s girlfriend to kill a U.S. citizen at an Indonesian resort in 2014.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joel R. Levin of the Northern District of Illinois and Special Agent in Charge Michael J. Anderson of the FBI’s Chicago Division made the announcement.
Robert Ryan Justin Bibbs, 26, of Chicago, was sentenced before U.S. District Judge Rebecca R. Pallmeyer of the Northern District of Illinois. On Dec. 13, 2016, Bibbs pleaded guilty to one count of conspiracy to commit the foreign murder of a U.S. national.
According to admissions made in connection with his plea agreement, in 2014, Bibbs’s cousin Tommy Schaefer informed Bibbs that Heather Mack, Schaefer’s girlfriend, had offered Schaefer approximately $50,000 to kill her mother, Sheila Von Wiese. In approximately late July or early August 2014, Mack told Bibbs that she wished her mother was dead and she asked Bibbs whether he knew someone who would kill her mother in exchange for money. Bibbs knew that Von Wiese was wealthy and that she and Mack were taking a vacation in Indonesia in early August 2014. Schaefer had conveyed to Bibbs that Mack was planning to kill her mother while they were overseas and that Schaefer intended to travel to Indonesia to join Mack.
According to the plea agreement, while Schaefer waited for his flight to depart O’Hare International Airport, he exchanged text messages with Bibbs, which Bibbs understood to mean that Von Wiese’s murder was imminent, that Schaefer expected to receive millions of dollars as a result of the murder, and that Schaefer would spend some of this money on Bibbs. According to the plea agreement, after Schaefer arrived in Bali, he informed Bibbs that Mack had unsuccessfully attempted to kill Von Wiese. Bibbs then provided advice to Schaefer via text message on alternative ways to kill Von Wiese, including by drowning or suffocation. In addition, Bibbs admitted that he counseled Schaefer that he should murder Von Wiese as long as no cameras were present, that he counseled Schaefer to be careful, and that he further encouraged his cousin to kill Von Wiese.
A short time later, Schaefer bludgeoned Von Wiese to death, then, with Mack, stuffed Von Wiese’s body into a suitcase, placed the suitcase into a taxi cab and fled the resort. Schaefer and Mack were subsequently arrested and convicted in Indonesian court, and are serving respective 18-year and 10-year sentences in prison.
Deputy Chief Hope Olds and Trial Attorney Christine Duey of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Bolling Haxall of the Northern District of Illinois prosecuted the case. The FBI investigated the case. The Criminal Division’s Office of International Affairs provided substantial assistance in this matter as well.
Chicago Man Sentenced to 9 Years in Prison for Aiding His Cousin and Heather Mack in the Murder of Mack’s Mother in Bali, IndonesiaRead the Press Release
CHICAGO — A Chicago man was sentenced today to nine years in federal prison for aiding his cousin and Heather Mack in the 2014 killing of Mack’s mother at an Indonesian resort.
ROBERT RYAN JUSTIN BIBBS, also known as “Ryan Bibbs,” admitted in a plea agreement last year that he advised his cousin, Tommy Schaefer, and Mack about how to kill Mack’s mother, Sheila A. Von Wiese. Von Wiese, 62, was bludgeoned to death in her hotel room at the St. Regis Bali resort on Aug. 12, 2014.
Bibbs acknowledged in his plea agreement that he was aware of the couple’s plot to carry out the murder, and he counseled Schaefer on how to get away with it. Bibbs believed Schaefer would gain access to Von Wiese’s estate through Mack, and that Schaefer would share a portion of the inheritance with him, according to the plea agreement.
Bibbs, 26, pleaded guilty to one count of conspiracy to commit the foreign murder of a U.S. national. U.S. District Judge Rebecca R. Pallmeyer imposed the nine-year sentence in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. Indonesian law enforcement provided valuable assistance.
“Repeatedly, the prospect of Von Wiese’s killing was broached and defendant elected to push the plot forward, rather than stop it or extricate himself from it,” Assistant U.S. Attorney Bolling Haxall argued in the government’s sentencing memorandum. “When Schaefer stood at the precipice, defendant provided a push forward.”
Evidence revealed that Bibbs, Schaefer and Mack discussed the murder during a meeting in Bibbs’ Chicago home prior to Mack and Schaefer traveling to Indonesia. Mack and her mother shared a hotel room in Bali, and Schaefer arrived at the resort on the morning of the murder. Soon after his arrival, Schaefer sent a text message to Bibbs, who was in the United States. The message stated that Mack had unsuccessfully attempted to kill Von Wiese, Bibbs’ plea agreement states. Bibbs replied with advice about alternative ways to carry out the murder, including by drowning, the plea agreement states.
Later that morning Schaefer sent a text message to Bibbs, stating, in part, “She wants me to right now… While she snoozing,” which Bibbs understood to mean that Mack had asked Schaefer to help her kill Von Wiese, the plea agreement states. Bibbs texted back to Schaefer, “Go sit on her face wit a pillow then,” according to the plea agreement. Bibbs intended this message to mean that Schaefer should go and suffocate Von Wiese, the plea agreement states. Subsequent messages from Bibbs encouraged Schaefer to kill Von Wiese but to be careful while doing so, the plea agreement states.
A short time later, Schaefer entered the hotel room occupied by Mack and Von Wiese and bludgeoned Von Wiese to death, Bibbs’ plea agreement states. Schaefer and Mack subsequently stuffed Von Wiese’s body into a suitcase, placed the suitcase in a taxicab and fled the resort, the plea agreement states.
Schaefer and Mack were arrested the following day by police in Indonesia. An Indonesian court in 2015 convicted Schaefer and Mack of charges related to Von Wiese’s murder. Schaefer was sentenced to 18 years in an Indonesian prison, while Mack was sentenced to ten years.
The government in Bibbs’ case is represented by Mr. Haxall, as well as Christine Duey, a trial attorney in the U.S. Department of Justice’s Human Rights and Special Prosecutions Section.
Three Men Charged with Stealing Twenty Firearms in Smash-and-Grab Burglary of Livingston County Gun StoreRead the Press Release
CHICAGO — Three men crashed a stolen Jeep Wrangler through the front of a Livingston County gun store last summer and stole 20 firearms, according to a federal indictment announced today.
ROMEO BLACKMAN, RASHAD ANCHANDO and KEITH GULLENS are charged with conspiring to steal firearms from South Post Guns in Streator. The trio stole a black Jeep Wrangler in Spring Valley on June 21, 2016, and used it the following day to smash through the front of the gun shop, according to the indictment. Once inside the store, the defendants smashed the glass casing where the firearms were displayed and took 18 handguns, one rifle and one shotgun, the indictment states.
The indictment was returned on May 25, 2017, in U.S. District Court in Chicago. In addition to the conspiracy count, the trio is also charged with possession of stolen firearms and burglary of a federally licensed firearms business. Blackman and Gullens each face an additional count of illegal possession of firearms by a convicted felon.
Anchando, 22, of Chicago, and Gullens, 27, of Streator, are currently in the custody of the Illinois Department of Corrections, while Blackman, 21, of Chicago, is in the custody of the LaSalle County Sherriff’s Office. Arraignments for Anchando and Gullens are scheduled for June 13, 2017, at 10:00 a.m., before U.S. Magistrate Judge M. David Weisman in Chicago. Arraignment for Blackman is set before Judge Weisman on June 15, 2017, at 10:00 a.m.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Livingston County Sheriff’s Office provided substantial assistance.
According to the indictment, the defendants and others agreed to meet at a house in Streator after the burglary. The defendants and others recorded videos of themselves holding the stolen firearms and posted them online, the indictment states. The defendants and others cut off the price tags from the stolen guns and took them to Chicago, where they conspired to either sell them, use them, or threaten to use them against others, 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 conspiracy count is punishable by up to five years in prison, while the other counts carry a maximum sentence of ten years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is represented by Assistant U.S. Attorneys Albert Berry and Ankur Srivastava.
Joint Federal and State Investigation Seizes More Than 115 Firearms; More Than 45 Members or Associates of Chicago Street Gang ChargedRead the Press Release
CHICAGO — More than 45 members or associates of the Gangster Two-Six Nation street gang are facing federal or state charges for their alleged roles in dealing guns and drugs on Chicago’s South Side and surrounding suburbs.
The joint federal and state investigation, dubbed “Operation Bunny Trap,” spanned more than two years and resulted in the seizures of approximately 118 firearms, including several assault rifles and shotguns, 25 rounds of ammunition, two ballistic vests, more than 800 grams of cocaine, more than 250 grams of fentanyl, and more than 280 grams of crystal meth. Authorities uncovered the alleged criminal activity through the use of undercover narcotics purchases and extensive surveillance. The probe was led by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, and conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF), with assistance from the High Intensity Drug Trafficking Area Task Force (HIDTA).
Twenty-one defendants were charged in federal court, and most of them were arrested Thursday. Some of the federal defendants made initial court appearances Thursday before U.S. Magistrate Judge Jeffrey Cole, while others will appear today.
Twenty-seven defendants are facing state charges. They will be making court appearances in Cook County Criminal Court.
The charges were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Kimberly M. Foxx, Cook County State’s Attorney; Celinez Nunez, Special Agent-in-Charge of the Chicago Field Division of ATF; and Eddie T. Johnson, Superintendent of the Chicago Police Department. The officials recognized the valuable assistance of the Chicago Field Division of the U.S. Drug Enforcement Administration, the Chicago office of the U.S. Marshals Service, and the Chicago office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Federal and local law enforcement agencies since late 2014 have been investigating alleged criminal activities by members and associates of the Gangster Two-Six Nation street gang. The gang is national in scope but particularly prevalent on the South Side of Chicago and the surrounding suburbs, as well as Indiana, Wisconsin, Texas, Georgia and Kansas.
The investigation uncovered numerous illegal gun transactions, including two deals in January 2017 that occurred in the parking lot of a grocery store in the South Loop neighborhood of Chicago. EDUARDO CASTRO sold three handguns to a confidential source who was cooperating with law enforcement, the complaints state. Castro was under law enforcement surveillance when he sold the firearms, the complaints state. Castro, 30, of Chicago, is charged with illegal possession of a firearm by a felon and dealing firearms without a license.
The investigation further revealed gun and drug transactions inside a pizza parlor in the Brighton Park neighborhood of Chicago. ANTHONY LOPEZ sold cocaine and a handgun to a confidential source who was cooperating with law enforcement, the complaints state. The deals occurred in a bathroom of the pizza parlor in January and February 2015, the complaints state. Lopez, 34, of Chicago, is charged with illegal possession of a firearm by a felon.
The charges describe illegal firearm transactions in several other neighborhoods on Chicago’s South Side, including Chicago Lawn, Clearing, Chatham and Englewood, as well as the suburbs of Berwyn, Homewood and Alsip.
In addition to Castro and Lopez, the federal complaints charge 17 other defendants: JULIAN ALEJANDRO, 25, of Chicago: illegal possession of a firearm by a felon; VINCENT AVILA, 45, of Alsip: illegal possession of a firearm by a felon and possession of a controlled substance with intent to distribute; HERIBERTO BALDERAS, 49, of Chicago: possession of a controlled substance with intent to distribute; JOSEPH BUSTOS, 36, of Chicago: illegal possession of a firearm by a felon; JOSEPH CARDENAS, 43, of Chicago: possession of a controlled substance with intent to distribute; FRANCISCO CARDOZA, 36, of Chicago: possession of a controlled substance with intent to distribute; JAMES CORTEZ, 39, of Chicago: dealing firearms without a license; ARBNOR GASHI, 24, of Chicago: illegal possession of a firearm by a felon; JAMES KACHIROUBAS, 20, of Chicago: dealing firearms without a license; JUAN OCHOA, 58, of Alsip: possession of a controlled substance with intent to distribute; JAMES PELIKAN, 29, of Chicago: illegal possession of a firearm by a felon; REY BENITEZ, 33, of Chicago: illegal possession of a firearm by a felon; JOHN REPEL, 37, of Chicago: possession of a controlled substance with intent to distribute and illegal possession of a firearm by a felon; ALEXANDER RIVERA, 26, of East Chicago, Ind.: illegal possession of a firearm by a felon; TARA ZAMBRANO, 24, of Griffith, Ind.: illegal possession of a firearm by a felon; JOSE CORTEZ, 39, of Orland Hills: knowingly possessing a firearm with an obliterated serial number; FRANCISCO SANCHEZ, 50, of Chicago: illegal possession of a firearm by a felon.
Two other federal defendants were previously indicted in federal court in Chicago as part of this investigation: RICHARD GACHO, 43, of Burbank: illegal possession of a firearm by a felon; and DAVID SANTIAGO, 35, of Kansas: illegal possession of a firearm by a felon and possession of a controlled substance with intent to distribute. Gacho and Santiago have pleaded not guilty and are awaiting trial.
The investigation was conducted under the umbrella of the OCDETF program, a partnership between federal, state and local law enforcement agencies. The principal mission of OCDETF is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations.
The public is reminded that complaints contain only charges and are not evidence of guilt. The defendants are presumed innocent and are 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 felon is punishable by up to ten years in federal prison. Dealing firearms without a license and knowingly possessing a firearm with an obliterated serial number are each punishable by up to five years in federal prison. The maximum federal penalties vary for possession of a controlled substance with intent to distribute. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
Assistant U.S. Attorneys Eric Pruitt, Timothy Storino, Andrew Dixon and Allison Ray are representing the government in the federal cases. The Cook County State’s Attorney’s Office is representing the government in the state cases.
Federal Grand Jury Indicts Union Secretary-Treasurer for Scheming to Fraudulently Obtain Social Security BenefitsRead the Press Release
CHICAGO — The Secretary-Treasurer of a local labor union put his wife on the union’s payroll while lowering his own salary in a scheme to fraudulently qualify for early retirement benefits from the Social Security Administration, according to a federal indictment returned in Chicago.
JOHN A. MATASSA JR. served as the Secretary-Treasurer of the Independent Union of Amalgamated Workers Local 711, a labor organization with members in Illinois, Wisconsin and Indiana. In February 2013, Matassa placed his spouse on the Local 711 payroll, even though she had no intended role or job function, while lowering his own salary, the indictment states. In his capacity as Secretary-Treasurer, Matassa personally signed his spouse’s paychecks, and caused them to be deposited into a bank account jointly controlled by the couple, according to the indictment. Two months later, Matassa applied for early retirement benefits from the Social Security Administration’s Old-Age Insurance program, listing his reduced salary amount in the application, according to the indictment. The Social Security Administration approved the application, and Matassa began receiving Social Security benefits, the indictment states.
The indictment was returned Thursday in U.S. District Court in Chicago. It charges Matassa, 65, of Arlington Heights, with two counts of wire fraud, two counts of theft of government funds, four counts of embezzlement from a labor organization, and two counts of making false entries in union records required to be in accordance with federal labor laws. Arraignment is set for June 1, 2017, before U.S. District Judge Matthew F. Kennelly.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; James Vanderberg, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Labor’s Office of Inspector General - Office of Investigations; Michael J. Purcell, District Director of the Chicago District Office of the U.S. Department of Labor - Office of Labor Management Standards; and Tracy Thanos, Special Agent-in-Charge of the Chicago Social Security Administration’s Office of Inspector General.
According to the charges, Matassa falsified the minutes of a Local 711 meeting to reflect that the union’s Executive Board had authorized the hiring of Matassa’s spouse. After the Social Security Administration approved his application for Old-Age Insurance benefits, Matassa caused the agency to wire payments to a bank account jointly controlled by Matassa and his spouse, the indictment states.
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.
Wire fraud is punishable by a maximum penalty of 20 years’ imprisonment. Theft of government funds is punishable by up to ten years’ imprisonment. Embezzlement from a labor organization is punishable by up to five years’ imprisonment. Making false entries in records submitted to the U.S. Department of Labor is punishable by up to one year’s imprisonment. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant U.S. Attorneys Richard M. Rothblatt and Terry Kinney.
Former Chief Financial Officer of Public Computer-Services Company Pleads Guilty to Federal Fraud ChargeRead the Press Release
CHICAGO — The former chief financial officer of a public computer-services company admitted in federal court today that he participated in a scheme to defraud a global telecommunications provider out of at least $3 million.
ANTHONY ROTH, 52, of Upton, Mass., pleaded guilty to one count of wire fraud. The conviction carries a maximum sentence of 20 years in prison. U.S. District Judge Amy J. St. Eve did not immediately set a sentencing date.
The guilty plea was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. The U.S. Securities and Exchange Commission provided valuable assistance.
Roth served as the chief financial officer of ContinuityX Solutions Inc., a computer-services company based in Metamora, Ill. Roth stated in a plea agreement that he and ContinuityX’s former chief executive officer, DAVID GODWIN, approached certain companies to buy services from an international telecommunications firm that the companies did not need or intend to use. Godwin and Roth promised these companies that they would not have to pay for the services because he had arranged separate side deals with other companies to fund and use the services, according to Roth’s plea agreement. Roth and Godwin then created false financial information to fraudulently inflate the financial condition of the companies, the plea agreement states. They did all of this so that the telecommunications firm would approve the sales to these companies and pay ContinuityX hundreds of thousands of dollars in commissions for purportedly having brought new customers to the telecommunications company, the plea agreement states.
In 2011 and 2012 Roth and Godwin fraudulently caused ContinuityX to receive approximately $3 million in commission payments from the telecommunications company, according to Roth’s plea agreement. The commissions were paid upfront, and Godwin provided some of the money to the companies that signed up for the services, the plea agreement states.
Godwin, 55, of Germantown Hills, Ill., and a third defendant, former ContinuityX sales representative JOHN COLETTI, 56, of Canyon Country, Calif., are also charged in the case. Godwin has pleaded not guilty to 14 counts of wire fraud, while Coletti has pleaded not guilty to five counts of wire fraud and one count of making false statements to the FBI. Godwin and Coletti are scheduled for a jury trial on Sept. 25, 2017.
The public is reminded that charges are not evidence of guilt. Godwin and Coletti are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The government is represented by Assistant U.S. Attorneys Steven Dollear, Brian Wallach and John Mitchell.
Loves Park Man Sentenced to More Than 17 Years in Federal Prison for Producing Child PornographyRead the Press Release
ROCKFORD — A Loves Park man was sentenced in federal court today before U.S. District Judge Philip G. Reinhard for producing child pornography.
ZACHARY RODRIGUEZ, 26, who pleaded guilty on Oct. 14, 2016, was sentenced to 210 months, to be followed by eight years of supervised release.
According to a written plea agreement, Rodriguez admitted that on Nov. 6, 2014, he persuaded and enticed a minor female victim to engage in sexually explicit conduct for the purposes of having the minor victim use a cell phone to take photographs of the sexually explicit conduct and then having the minor victim text the images to Rodriguez by cell phone from Iowa to Loves Park. According to the plea agreement, the female victim was 14 years of age at the time the pictures were produced and transmitted.
Rodriguez further admitted that between Aug. 9, 2014, and Jan. 20, 2015, he similarly persuaded four other minor female victims, who were between the ages of 14 and 17, to do the same. The minor victims resided in Ohio, Arizona, Connecticut and Wisconsin. Each time, Rodriguez persuaded the victims to text the photographs to him in Illinois.
The sentencing was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. The Loves Park Police Department assisted in the investigation.
The government is represented by Assistant U.S. Attorney Michael D. Love.
Former Owner of Chicago Rush Football Team Sentenced to More Than Three Years in Federal Prison for Concealing Debts in Bankruptcy PetitionRead the Press Release
CHICAGO — The former owner of the Chicago Rush football franchise was sentenced today to more than three years in federal prison for concealing debts in his personal bankruptcy case and overstating his net worth when acquiring the football team.
In his 2013 bankruptcy filing, DAVID STARAL did not disclose that he was on probation for theft and that he was subject to a restitution order of $250,000. He also failed to disclose several bank accounts. During his efforts to purchase the Chicago Rush in February 2013, Staral provided the Arena Football League with a personal balance sheet that falsely represented his net worth as more than $5 million. In reality, Staral at that time had a negative net worth and had recently filed the bankruptcy petition.
Based on the false representation about his net worth, he defrauded the AFL into selling the Chicago Rush to him. A few months later the league took over the team from him. The Rush disbanded after the conclusion of its 2013 season.
Staral, 38, of Chicago, pleaded guilty last year to one count of bankruptcy fraud and one count of wire fraud. U.S. District Judge Ronald A. Guzman imposed the 41-month sentence in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Chicago office of the U.S. Trustee Program provided valuable assistance.
“Given the defendant’s total lack of financial ability to operate the Rush, his ownership of the team was predictably brief and disastrous,” Assistant U.S. Attorney Matthew F. Madden argued in the government’s sentencing memorandum. “The defendant caused significant harm to the team’s and league’s brand and reputation.”
In addition to the bankruptcy fraud and his deception in acquiring the Rush, Staral also admitted in his plea agreement that he swindled two individuals out of a combined $89,000. In January 2010, Staral promised a woman that he would invest $39,000 of her money in a restaurant venture. Instead, Staral converted the money to his own benefit. In September 2012, Staral promised another woman that if she gave him $50,000, he would invest it and generate a monthly return of $2,000 to $3,000. Staral instead used her money to, among other things, pay his criminal restitution obligation.
Chicago Dermatologist Convicted on Federal Fraud Charges for Billing Health Insurance Programs for Medically Unnecessary TreatmentsRead the Press Release
CHICAGO — A federal jury has convicted a Chicago dermatologist on fraud charges for billing health-insurance programs for purported pre-cancerous treatments that were not medically necessary.
From 2007 to 2013, Dr. OMEED MEMAR, 48, of Chicago, submitted claims to multiple health-insurance programs, falsely claiming that his treatments were medically necessary to treat actinic keratosis, a pre-cancerous condition that he knew many of his patients did not actually have. Memar documented the false claims by including in his patients’ charts fictitious diagnoses of actinic keratosis that were not based on the patients’ actual signs and symptoms.
After a seven-day trial in federal court in Chicago, the jury on Wednesday convicted Memar on all 16 counts of the indictment. The conviction includes eight counts of health care fraud and eight counts of making false statements in a health care matter. U.S. District Judge Harry D. Leinenweber set sentencing for Sept. 28, 2017.
The verdict was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; 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 James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General in Chicago.
Evidence at trial revealed that Memar owned and operated a clinic in Chicago called the Academic Dermatology & Skin Cancer Institute. Law enforcement agents in 2013 conducted a Court-authorized search of Memar’s offices and seized multiple boxes of materials, including patient files and billing records. The files showed multiple instances in which patients were said to have actinic keratosis lesions and had received intense-pulse light treatments that were billed as the destruction of actinic keratosis lesions.
Multiple patients, however, testified at trial that they were never told they had actinic keratosis lesions and that they believed the intense-pulse light treatments were for reasons different from how they were billed. Three of Memar’s former employees who performed the intense-pulse treatments testified at trial that they followed Memar’s instructions to create patient charts that made it appear the treatments had destroyed large numbers of actinic keratosis lesions on patients’ faces, even though the treatments had been identical to cosmetic treatments and Memar usually had not examined the patient during the visits.
In one example cited at trial, evidence showed that Memar billed one patient’s insurance provider for more than 15 such treatments from September 2010 through January 2013, even though Memar did not examine the patient at all during this period. Records presented at trial showed that another dermatologist had seen this patient multiple times during that period and never diagnosed any actinic keratosis lesions.
The conviction is punishable by a maximum sentence of 120 years in prison. The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is represented by Assistant U.S. Attorneys Stephen Chahn Lee and Kartik K. Raman.
Chicago Scrap Iron Refining Company and Its President Plead Guilty to Criminal Tax Violations for Concealing $11.6 Million from IRSRead the Press Release
CHICAGO — A Chicago-based scrap iron refining business and its president admitted in federal court today that they concealed from the Internal Revenue Service more than $11.6 million in cash wages paid to employees.
ACME REFINING CO., which does business as Acme Refining Scrap Iron & Metal Co., and its president, LAURENCE C. BARON, each pleaded guilty to impairing and impeding the IRS. Acme and Baron admitted in plea agreements that from 2009 to 2013 they paid cash wages of more than $11.6 million to at least 50 employees, but failed to report the payments to the IRS. Acme and Baron also acknowledged that they willfully failed to withhold for the government the required amounts for FICA taxes and Medicare.
As part of their plea agreements, Baron and Acme agreed to pay restitution of $5,878,327 to the IRS and the state of Illinois, with Acme paying $4,545,243 and Baron paying $1,333,084.
The guilty pleas were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Gabriel L. Grchan, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.
Impairing and impeding the IRS is punishable by up to three years in prison. Baron, 70, of Burr Ridge, also pleaded guilty to a separate count of willfully filing a false individual income tax return, which carries the same maximum penalty. U.S. District Judge Harry D. Leinenweber set sentencing for Sept. 14, 2017.
The cases against Acme and Baron are part an ongoing federal investigation of cash transactions in the Chicago-area scrap metal industry that has resulted in several previous convictions.
According to the plea agreements, Baron directed Acme employees to issue multiple vouchers for cash payments due to suppliers that exceeded $10,000, using nominee or fictitious payees as the purported seller. Between 2009 and 2013 the company and Baron obtained approximately $152 million in cash from two currency exchanges, then used the money to pay 85 separate scrap metal suppliers in order to assist those suppliers in underreporting their income and taxes.
Acme – at the direction of Baron – also spent at least $1.6 million to fund construction of a personal residence in Wisconsin that had no business-related purpose, the plea agreements state. The company falsely recorded this expenditure as “cost of goods sold,” in order to reduce Acme’s tax liability and conceal the payment on behalf of its corporate officers. The bogus records included phony invoices that fraudulently identified the payments as purchases of scrap steel.
Baron also admitted filing false individual income tax returns for tax years 2011 and 2012. The fraudulent returns resulted in a total federal and state tax loss of approximately $208,875, the plea agreement states.
The government is represented by Assistant U.S. Attorney Patrick King.
Bank Officers and Bank Customer Charged with Wire Fraud and Making a False Loan ApplicationRead the Press Release
ROCKFORD — Two bank officers and a bank customer were charged Tuesday by a federal grand jury in Rockford with fraud and falsifying statements to the Small Business Administration, an agency of the United States.
RYAN COLE, 45, of Garland, Tex., JAMES GRABER, 57, of Rockton, Ill., and KRISTIN KING, 44, of South Beloit, Ill., were charged with wire fraud in connection with a loan application made to the SBA. Cole was also charged with two counts of making false statements to the SBA on a loan application. Graber and King were each charged with one count of making false statements to the SBA on a loan application.
As charged in the indictment, the SBA provides financial assistance to small businesses, in part, through loan guarantees to local banks. If the SBA approves a loan, it guarantees the lender that if the borrower defaults the SBA will repay part of the loan, thereby transferring the risk of borrower non-payment from the bank to the SBA, up to the amount of the guaranty. The local bank must disclose to the SBA whether the loan will reduce the exposure of the bank, disclose if the loan will be used to repay a debt already due to the bank, and disclose any relationships between the small business, its associates, and the lender.
According to the indictment, SunLee Development owned a commercial building at 4001 North Perryville Rd., in Loves Park, Ill. SunLee had three loans totaling more than $3 million at a local bank where Graber was employed as a Vice President and King was employed as a Vice President and Government Guaranteed Lending Specialist. Cole, a member of SunLee, was a guarantor of the three loans in the event of a default. SunLee was constantly behind on making its loan payments to the bank because tenants at 4001 North Perryville were not paying their rent.
The indictment alleges that Cole organized a group of the tenants at 4001 North Perryville to apply for an SBA guaranteed loan and to purchase the building from SunLee. The group of tenants and Cole became known as the Perryville Investment Group. The indictment alleges that on March 16, 2012, Cole, Graber and King submitted a $3,980,000 loan application to the SBA for the Perryville Investment Group that contained false statements and concealed material facts. Shortly after closing, the Perryville Investment Group had trouble making payments on the SBA loan and ultimately defaulted on the SBA loan.
Each count of wire fraud and making false statements and concealing material facts to the SBA carries a maximum penalty of up to 30 years in prison, a fine of up to $1 million, and restitution. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines. Graber and King are scheduled to appear for arraignment on May 12, 2017, at 2:00 p.m. in federal court in Rockford, before U.S. Magistrate Iain D. Johnston. Cole’s arraignment date has yet to be set.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed to be innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Lawrence Valett, Associate Inspector General of Investigations for the Federal Reserve Board - Office of Inspector General; and Talmadge Gaylor, Special Agent-in-Charge of the Central Regional Office of the SBA - Office of Inspector General.
The government is represented by Assistant U.S. Attorney Scott R. Paccagnini.
Chicago Trader Sentenced to Nine Years in Prison for Defrauding Investors out of More Than $9 MillionRead the Press Release
CHICAGO — A Chicago trader was sentenced today to nine years in federal prison for defrauding investors out of more than $9 million.
NICK WURL, 27, the founder of Chicago-based Ludiera Capital LLC, fraudulently raised approximately $11.2 million from more than 60 investors. From January 2012 through May 2015, Wurl falsely portrayed Ludiera as a successful trading firm that was earning extraordinary profits from the buying and selling of commodities such as corn and soybeans. Wurl created phony bank records and false account statements to fraudulently represent that Ludiera was generating large profits and that investors’ funds were safe.
In reality, Wurl had lost or misappropriated more than $8 million, and he spent another $900,000 on business and personal expenses, including a Corvette and a luxury sport-utility vehicle.
Wurl, of Chicago, pleaded guilty last year to one count of mail fraud. U.S. District Judge John Z. Lee imposed the 108-month sentence in federal court in Chicago. Judge Lee also ordered Wurl to pay restitution of approximately $9.2 million. The government was able to freeze for victims approximately $3.4 million in Ludiera and Wurl assets that had been misappropriated and stashed in trading accounts.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. Substantial assistance was provided by the Kansas City office of the U.S. Commodity Futures Trading Commission, and the Chicago office of the U.S. Securities and Exchange Commission.
“Wurl’s investors suffered significant financial harm and emotional distress as a result of this scheme,” Assistant U.S. Attorneys Jacqueline Stern and Kaarina Salovaara argued in the government’s sentencing memorandum. “Wurl specifically promised investors that their funds were safe, because that was a key issue to the investors, but Wurl’s promise was a flat out lie.”
Wurl received investment funds from clients all over the United States, including California, New Jersey, Iowa, and Wisconsin. Several victims submitted letters to the Court prior to the sentencing hearing, describing how they were duped by Wurl. One of these victims and his mother invested a total of $550,000, only to learn later that Wurl had lied to them. Another victim described how Wurl’s scam had jeopardized his retirement plans and his daughter’s college financing.
Ludiera is now defunct.