Northern District of Illinois

CHICAGO — The United States and the State of Illinois have jointly filed a civil lawsuit accusing the owners of a Chicago-area youth counseling center of defrauding Medicaid out of millions of dollars through a fraudulent billing scheme.

The suit alleges that LAYNIE FOUNDATION INC. and its owners, SUMMER MATHESON and TERRENCE EWING, violated the federal False Claims Act by fraudulently billing Medicaid for more mental health counseling services than the foundation actually provided.   The suit further alleges that Matheson and Ewing directed the Matteson-based foundation to seek payment from Medicaid for non-reimbursable activities such as internal case reviews, staff training, clinical supervision, and recordkeeping.

The government’s suit was filed Tuesday in U.S. District Court in Chicago.  The government is intervening in a lawsuit that a private citizen initially filed under seal in 2014 pursuant to the qui tam, or whistleblower, provisions of the False Claims Act.

The lawsuit was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Lisa Madigan, Illinois Attorney General; and 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.  The Illinois State Police assisted in the investigation.

According to the suit, Matheson and Ewing instructed Laynie Foundation employees to fraudulently inflate the mental health services they provided to youths.  Matheson and Ewing exploited the fact that most of the foundation’s counselors and social workers were new to the profession, and for many, working at Laynie Foundation was their first job in the mental health field, the suit alleges.  When multiple employees questioned Matheson about billing practices, Matheson warned that Laynie Foundation would lose its eligibility and funding from Medicaid if the employees did not bill as instructed.  If employees did not comply, the suit alleges, Matheson and Ewing would tell them “not to mess with [Matheson’s and Ewing’s] money.”

From January 2012 through February 2016, Laynie Foundation submitted approximately $8.2 million in claims for purported mental health services.  The foundation received approximately $6.3 million for these claims, the suit states.

In addition to the fraudulent billing scheme, the suit contends that Laynie Foundation violated state clinical supervision requirements by failing to have a licensed mental health professional certify that the services Laynie Foundation provided were medically necessary and met professional standards of care.

The False Claims Act permits private individuals to sue for false claims on behalf of the government and to share in any recovery.  The Act also allows the government to intervene or take over the lawsuit, as it has done in this case, and to recover three times damages plus civil penalties ranging from $5,500 to $11,000 for each false claim submitted by the defendants. 

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

The public is reminded that civil allegations are accusations only, and there has been no determination of liability.  The government is represented by Assistant U.S. Attorney Prashant Kolluri of the U.S. Attorney’s Office, and Assistant Attorneys General Elisa C. Hamilton and Robert A. Barba of the Illinois Attorney General’s Office.

CHICAGO — A Wisconsin man has been indicted on federal sex trafficking charges for allegedly transporting an underage girl to Chicago from West Virginia to engage in prostitution.

A three-count indictment charges BLAKE STECKEL, 33, of Pleasant Prairie, Wisc., with sex trafficking of a minor, production of child pornography, and transporting an individual in interstate commerce for purposes of prostitution.

Steckel allegedly began communicating with the victim in July via Snapchat and text messages.  Steckel purchased the girl’s plane ticket from West Virginia after promising to arrange work for her as a model or escort in the Chicago area, according to a criminal complaint and affidavit previously filed in the case.  After the girl arrived in Chicago, Steckel took sexually explicit photographs of her and posted them in commercial sex advertisements on Backpage.com and ExplicitChicago.com, the complaint states.  He then arranged multiple meetings for her to engage in prostitution in various hotels in the Chicago suburbs, including Schaumburg, Elk Grove, Itasca and Rosemont, according to the complaint.  Steckel kept a portion of the money the girl earned performing commercial sex acts, the complaint states. 

The indictment was returned Tuesday in federal court in Chicago.  Arraignment has not yet been scheduled.  

The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; John P. Selleck, Acting Special Agent in Charge of the Chicago office of the Federal Bureau of Investigation; James E. Lamkin, Chief of the Schaumburg Police Department; and Michael Nerheim, Lake County State’s Attorney.  The charges are the result of a joint investigation conducted by the Chicago and Milwaukee offices of the FBI and the Schaumburg Police Department.

The government is represented by Assistant U.S. Attorney Sean J.B. Franzblau.

According to the charges, Steckel threatened to post the victim’s sexually explicit photographs on Facebook and Instagram if she refused to engage in prostitution for him.  At one point the victim said she wanted to go home to West Virginia, but Steckel forced her to continue working for him, the complaint states.

Law enforcement rescued the girl in a Schaumburg hotel room on Aug. 21, 2017, after an undercover officer responded to an online posting for a “date” with the victim, the complaint states.  The undercover officer engaged in a series of text messages with Steckel to set up the meeting, the complaint 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. 

The sex trafficking count is punishable by a statutory minimum sentence of 15 years in prison and a maximum of life in prison.  Production of child pornography carries a minimum prison sentence of 15 years and a maximum of 30 years.  Transporting an individual for prostitution is punishable by up to ten years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

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

CHICAGO — The father-and-son executives of two suburban Chicago tutoring companies have been sentenced to federal prison for orchestrating an $11 million fraud scheme that bilked more than 100 school districts around the country, including Illinois.

 

From 2008 to 2012, JOWHAR SOULTANALI and his son, KABIR KASSAM, fraudulently obtained funds from the school districts by misrepresenting the nature of their companies’ tutoring services and falsely inflating invoices for tutoring work that was never performed.  Soultanali and Kassam also paid bribes to school officials and teachers to make sure the fraud was not detected.  The bribes included a Caribbean cruise for an assistant principal in Texas and an outing to a gentleman’s club for a state education official in New Mexico. 

 

Soultanali, 62, of Morton Grove, Ill., and Kassam, 38, of Wheeling, Ill., each pleaded guilty last year to one count of mail fraud.  U.S. District Judge Amy J. St. Eve on Friday sentenced Soultanali to six years in prison, and Kassam to five years and ten months in prison.

 

The sentencings were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; John P. Selleck, Acting Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; and Thomas D. Utz Jr., Special Agent-in-Charge of the North Central Region of the U.S. Department of Education Office of Inspector General.  The Chicago Public Schools Office of Inspector General assisted in the investigation.

 

“Defendants abused the trust that the Department of Education placed in them to carry out a massive fraud that was not merely extensive, but also egregious,” Assistant U.S. Attorneys Kruti Trivedi and Barry Jonas argued in the government’s sentencing memorandum.  “The fraud in this case had a significant impact on both the failing school districts that allocated their federal funds to defendants and on the students at those school districts.”

 

Soultanali served as director of operations for BRILLIANCE ACADEMY INC. and its wholly owned subsidiary, BABBAGE NET SCHOOL INC., both based on Niles, Ill.  Kassam was the president of both companies.  The firms contracted with school districts to provide tutoring services to students on-site at schools and via laptop computers.

 

According to the charges, Soultanali and Kassam furnished the school districts with false applications and marketing materials that fraudulently inflated the companies’ services.  The companies falsely stated that they provided pre-testing of enrolled students, created customized tutoring programs, provided ongoing progress reports to schools and parents, and compiled accurate student improvement results after the tutoring was completed.  In total, Brilliance and Babbage received $33 million from more than 100 school districts and small schools throughout the country.

 

The fraud scheme also involved numerous bribes paid to some school officials, with the expectation that the officials would assist in procuring federal funds for the tutoring services.

 

In addition to Soultanali and Kassam, the investigation resulted in criminal charges against Brilliance and Babbage, as well as three school officials in Texas and one state education official in New Mexico who pocketed the bribes.

Abdella Ahmad Tounisi, 23, of Aurora, Illinois, was sentenced today to 15 years in prison, and a lifetime of supervised release, for attempting to travel overseas to Syria to join Jabhat al-Nusrah, a designated foreign terrorist organization.

 

Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Joel R. Levin for the Northern District of Illinois and Acting Special Agent in Charge John P. Selleck of the FBI’s Chicago field office made the announcement.  The sentence was imposed by U.S. District Judge Samuel Der-Yeghiayan.

 

Tounisi was arrested at O’Hare International Airport in Chicago in April 2013 as he attempted to board a flight to Istanbul, Turkey.  Tounisi had spent four months conducting online research related to overseas travel and violent jihad, focusing specifically on Syria and the violent Jabhat al-Nusrah terrorist organization.

 

Tounisi pleaded guilty in 2015 to one count of attempting to provide material support to a foreign terrorist organization.  According to his plea agreement, Tounisi in early 2013 made online contact with an individual he believed to be a recruiter for Jabhat al-Nusrah.  He and the purported recruiter exchanged a series of emails, during which Tounisi shared his plan to go to Syria by way of Turkey, as well as his willingness to fight for the jihadist cause, the plea agreement states.  Unbeknownst to Tounisi, the purported recruiter was actually an FBI employee.

 

Tounisi, a U.S. citizen, requested an expedited passport and purchased an airline ticket for the flight from Chicago to Istanbul.  He arrived at O’Hare on the evening of April 19, 2013, and was arrested after passing through security in the international terminal.

 

The defendant was a close friend of Adel Daoud, of Hillside, Illinois, who was arrested on Sept. 14, 2012, for allegedly attempting to detonate a bomb outside a bar in downtown Chicago.  Tounisi recommended certain attack techniques to Daoud but ultimately decided against participating in the attack.  Daoud was charged separately and is awaiting trial in federal court in Chicago.

 

The investigation was led by the Chicago FBI’s Joint Terrorism Task Force, which is comprised of Special Agents of the FBI, officers of the Chicago Police Department and representatives from an additional 20 federal, state and local law enforcement agencies.

 

The government is represented by Assistant U.S. Attorney Barry Jonas of the Northern District of Illinois and Trial Attorney Lolita Lukose of the National Security Division’s Counterterrorism Section.

CHICAGO — A federal judge today sentenced a suburban Chicago man to 15 years in prison for attempting to travel overseas to join a jihadist militant group in Syria.

ABDELLA AHMAD TOUNISI, 23, of Aurora, Ill., was arrested at O’Hare International Airport in Chicago in April 2013 as he attempted to board a flight to Istanbul, Turkey.  Tounisi had spent four months conducting online research related to overseas travel and violent jihad, focusing specifically on Syria and the violent Jabhat al-Nusrah terrorist organization.

Tounisi pleaded guilty in 2015 to one count of attempting to provide material support to a foreign terrorist organization.  U.S. District Judge Samuel Der-Yeghiayan 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; Dana J. Boente, Acting Assistant Attorney General for National Security; and John P. Selleck, Acting Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.  The investigation was led by the Chicago FBI’s Joint Terrorism Task Force, which is comprised of Special Agents of the FBI, officers of the Chicago Police Department, and representatives from an additional 20 federal, state and local law enforcement agencies.

According to his plea agreement, Tounisi in early 2013 made online contact with an individual he believed to be a recruiter for Jabhat al-Nusrah.  He and the purported recruiter exchanged a series of emails, during which Tounisi shared his plan to go to Syria by way of Turkey, as well as his willingness to fight for the jihadist cause, the plea agreement states.  Unbeknownst to Tounisi, the purported recruiter was actually an FBI employee.

Tounisi, a U.S. citizen, requested an expedited passport and purchased an airline ticket for the flight from Chicago to Istanbul.  He arrived at O’Hare on the evening of April 19, 2013, and was arrested after passing through security in the international terminal.

Tounisi was a close friend of Adel Daoud, of Hillside, Ill., who was arrested on Sept. 14, 2012, for allegedly attempting to detonate a bomb outside a bar in downtown Chicago.  Tounisi recommended certain attack techniques to Daoud but ultimately decided against participating in the attack.  Daoud was charged separately and is awaiting trial in federal court in Chicago.

The government is represented by Assistant U.S. Attorney Barry Jonas of the Northern District of Illinois, and Trial Attorney Lolita Lukose of the National Security Division’s Counterterrorism Section.

CHICAGO — The United States today filed a civil lawsuit against the husband-and-wife owners of a suburban Chicago health care company for allegedly falsely billing Medicare for millions of dollars in unnecessary or nonexistent services.

The complaint alleges that GATEWAY HEALTH SYSTEMS INC. and its owners, AJIBOLA AYENI and JOY H. TURNER-AYENI, violated the federal False Claims Act by seeking and receiving Medicare payments for home health services purportedly rendered to homebound individuals who were not actually in need of such services.  The suit also alleges that DOCS AT THE DOOR P.C., a home-visiting physician company owned by Ajibola Ayeni, falsely certified the non-homebound individuals as in need of home-health services, and fraudulently “upcoded” home physician visits to the second highest billing level in order to increase compensation from Medicare.

The government’s complaint was filed today in U.S. District Court in Chicago.  The government is intervening in a lawsuit that a private citizen initially filed under seal in 2013 pursuant to the qui tam, or whistleblower, provisions of the False Claims Act.

The government’s complaint was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; John P. Selleck, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and 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.

Ajibola Ayeni, 58, of Flossmoor, also faces separate criminal charges relating to his conduct while operating Docs at the Door.  An eleven-count indictment returned earlier this year alleges that Ajibola Ayeni committed health care fraud from 2011 to 2015.  Ayeni has pleaded not guilty to the criminal charges, and a trial date in federal court in Chicago has not yet been set.

According to the government’s suit, Docs at the Door and Gateway each claimed and were paid millions of dollars for services purportedly provided to Medicare beneficiaries.  At the direction of the Ayenis, the companies created false documentation to cover up the fact they were claiming services not rendered, as well as services that were not medically necessary because the beneficiaries were not confined to the home, the suit states.  The Ayenis’ fraud scheme netted them millions of dollars in federal health care funds to which they were not entitled, the suit states.

In addition to the alleged fraud scheme, the government’s suit contends that the Ayenis attempted to conceal certain assets from the government after learning of the investigation.  In the summer of 2016, the Ayenis transferred several of their properties into trusts, the suit states.  The transfers involved apartments in the Oakland and Edgewater neighborhoods of Chicago, a residence in Flossmoor, and two properties in Frankfort, according to the suit.  The Ayenis “either intentionally transferred the properties to avoid paying a judgment to the United States for their fraud, or at a minimum, knew that they had incurred debts that they would not be able to pay,” the suit states.  The suit asks the Court to void the property transfers on the basis of fraud.

The False Claims Act permits private individuals to sue for false claims on behalf of the government and to share in any recovery.  The Act also allows the government to intervene or take over the lawsuit, as it has done in this case, and to recover three times damages plus civil penalties ranging from $5,500 to $11,000 for each false claim submitted by the defendants.

The public is reminded that civil allegations are accusations only, and there has been no determination of liability.  The government is represented in the civil case by Assistant U.S. Attorney Sarah J. North.

The public is reminded that the criminal charges against Ajibola Ayeni are not evidence of guilt.  He 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 sentencing statutes and the advisory U.S. Sentencing Guidelines.  The government is represented in the criminal case by Assistant U.S. Attorney Stephen Chahn Lee.

CHICAGO — Federal authorities today arrested a west suburban man for allegedly enticing underage girls to produce sexually explicit images of themselves.

Using the screen name “davidbanks1014,” RICHARD BARNETT chatted with at least four underage girls on the social network musical.ly and enticed them to produce pornographic images of themselves and send them to him, according to a criminal complaint and affidavit filed in federal court in Chicago.  Barnett threatened at least one of the victims with physical harm, including threatening to shoot her, if she did not comply with his demands to send the sexually explicit images, the complaint states.

Barnett, 39, of Aurora, was arrested this morning.  During a court-authorized search of his residence, agents seized multiple electronic devices and several firearms.

The complaint charges Barnett with one count of producing child pornography and one count of transporting child pornography.  A detention hearing is set for Oct. 18, 2017, at 3:00 p.m., before U.S. Magistrate Judge Maria Valdez in Chicago.

The complaint was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and John P. Selleck, Acting Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.  Valuable assistance in the investigation was provided by the New Orleans office of the FBI, the Buffalo office of the FBI, the Jacksonville (Fla.) Sheriff’s Office, and the Ouachita Parish (La.) Sheriff’s Office.

According to the complaint, some of the underage victims reported to police that earlier this year they received sexually explicit messages on musical.ly from an individual with the username davidbanks1014.  Some of the victims reported that davidbanks1014 claimed to be 13 years old when he corresponded with them, the complaint states.

The investigation revealed that the musical.ly account for davidbanks1014 was created on April 22, 2017, using Barnett’s cellular telephone number, 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 on the count of producing child pornography, Barnett faces a mandatory minimum sentence of 15 years’ imprisonment and a maximum potential sentence of 30 years’ imprisonment.  If convicted on the count of transporting child pornography, Barnett faces a mandatory minimum sentence of 5 years’ imprisonment and a maximum potential sentence of 20 years’ 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. Attorney Timothy J. Chapman.

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

ROCKFORD — A Huntley businessman pleaded guilty today before U.S. District Judge Frederick J. Kapala to causing false statements to be made on forms required by the Employee Retirement Income Security Act (ERISA) to be filed, and failing to collect and pay Federal Insurance Contribution Act (FICA) taxes.

 

THOMAS MANNING, 60, president of T. Manning Concrete Inc. in Huntley, admitted in a written plea agreement that as president of T. Manning Concrete he hired union laborers and cement masons in northern Illinois.  The unions provided benefits to their members through various employee benefit plans.  Each benefit plan was required to file an annual report stating the total contributions received.  T. Manning Concrete was required by collective bargaining agreements to submit monthly reports to the benefit plans that stated the number of hours each covered employee worked, and to pay the company’s contributions to those benefit plans. 

 

According to the plea agreement, since at least 2007 Manning defrauded the benefit plans by understating the number of hours worked by T. Manning Concrete’s covered employees in the monthly reports, and under-paying the monthly contributions that were required on behalf of its covered employees.  Manning admitted that in order to conceal the understatement of hours and defraud the benefit plans, he caused the covered employees to be paid for the additional hours “under the table,” using checks drawn upon non-payroll bank accounts under Manning’s control. 

 

Manning admitted that between 2007 and 2010 he failed to report and pay almost $2 million due to the employee benefit funds.  Manning further admitted that by falsely reporting the number of hours worked by covered employees he caused the benefit plans to make false statements in their annual reports they were required by ERISA to file.

 

Manning also admitted that between 2007 and 2010, as president of T. Manning Concrete, he failed to collect, account for, and pay $600,680 for its employees’ share of FICA taxes due to the IRS on the wages paid using “under the table” checks.

 

The charge of filing a false statement and concealment of facts in relation to documents required by ERISA, and the charge of willful failure to collect or pay FICA taxes, each carry a maximum penalty of five years’ imprisonment and a $250,000 fine.  Each count also carries a maximum period of up to three years of supervised release following imprisonment.  The actual sentence will be determined by the United States District Court, guided by the Sentencing Guidelines.  Sentencing for Manning is set for Jan. 24, 2018, at 2:30 p.m.

 

The guilty plea 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, Office of Inspector General; Jeffrey A. Monhart, Regional Director for the Chicago Regional Office of the U.S. Department of Labor, Employee Benefits Security Administration; Gabriel L. Grchan, Special Agent-in-Charge of the Internal Revenue Service - Criminal Investigation Division in Chicago; and Craig Goldberg, Postal Inspector-in-Charge of the Chicago Division of the U.S. Postal Inspection Service.

 

The government is represented by Assistant U.S. Attorney Scott R. Paccagnini.

ROCKFORD — A Poplar Grove resident was sentenced today in federal court by U.S. District Judge Frederick J. Kapala for distributing 448 grams of methamphetamine. 

 

ARMAN M. DINO, 46, who pleaded guilty to the charge on May 30, 2017, was sentenced to nine years in federal prison, to be followed by eight years’ supervised release.

 

According to the written plea agreement, on May 19, 2016, Dino was at his residence on Candlewick Lake when he sold more than a pound of methamphetamine to an individual who was cooperating with the government.  After the cooperating individual paid Dino $10,000 and left, law enforcement agents executed a search warrant on Dino’s residence and seized an additional 37 grams of methamphetamine and $10,790 in cash.  Dino was arrested that day.

 

The sentencing was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; John P. Selleck, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Dennis A. Wichern, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration; Boone County Sheriff David Ernest; and Belvidere Police Chief Jan Noble. 

 

The multi-jurisdictional investigation was conducted by the Belvidere/Boone County Metro Narcotics Unit, along with agents from the FBI, DEA and Rockford Police Department.

 

The government was represented by Assistant U.S. Attorney Joseph C. Pedersen.

CHICAGO — The head of Amtrak transportation at Union Station in Chicago admitted in federal court today that he steered work to his wife’s company to photograph Amtrak’s “Polar Express” train event last holiday season.

BENJAMIN SHEETS, an Amtrak employee and superintendent of transportation at Union Station, admitted in a plea agreement that he steered work to his wife’s suburban photography company to photograph train riders and families at Amtrak’s “Polar Express” event.  Sheets also worked for his wife’s company as the business manager – a fact he failed to disclose to Amtrak.  When Sheets learned that Amtrak’s Office of Inspector General was investigating the contract, he created false records and made false statements to the Inspector General’s investigators.

Sheets, 50, of Downers Grove, pleaded guilty to making false statements to Amtrak’s Office of Inspector General.  U.S. District Judge Charles P. Kocoras set sentencing for Feb. 27, 2018, at 9:45 a.m.

The guilty plea was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Thomas Howard, Inspector General of Amtrak.

“The American people deserve fair and honest services from those entrusted to manage aspects of our nation’s passenger rail service,” said Inspector General Howard.  “Amtrak personnel who make false statements in an effort to achieve personal gain will be held accountable.  Our office will vigorously investigate and help bring to justice those who engage in such criminal activity as we work to protect Amtrak funds, American taxpayers, and the traveling public.”

Amtrak’s “Polar Express” event is a family-oriented holiday celebration that includes festively decorated trains departing Union Station on a daily basis in December, with actors re-enacting the train ride from the 2004 “Polar Express” film starring Tom Hanks. 

On Nov. 2, 2016, Sheets received an email from his wife that listed debts in excess of $25,000, prompting Sheets to respond, “We need to write an agreement for Polar Express,” according to a criminal information previously filed in the case.  Soon thereafter, Sheets steered the work for Polar Express photography to his wife’s Downers Grove-based company, without following Amtrak procurement procedures.  During the “Polar Express” event in December 2016, the wife’s company set up a photo booth in Union Station’s Great Hall and sold 3,679 photos for $10 each.

When Sheets learned in early 2017 that Amtrak Inspector General investigators were looking into the award of work, Sheets had the promotions company that staged the event prepare a back-dated, phony contract to make it appear that the wife’s photography business had been hired by the promotions company prior to the commencement of the Polar Express event.  Sheets tendered the contract to Inspector General investigators in March 2017, even though he knew it was phony. 

Making false statements is punishable by up to five years in prison.  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 Terry M. Kinney.

CHICAGO — A lawyer licensed to practice in Illinois has been convicted on federal fraud charges for scheming to provide falsified documents to prevent foreclosure on a nearly $2 million parcel of land in Aurora.  The fraud left an elderly couple out of $300,000.

The jury in federal court in Chicago convicted ROBERT JON SCHLYER, 47, of Portage, Ind., of two counts of wire fraud affecting a financial institution, and one count of bank fraud. 

Schlyer’s fraud scheme occurred while representing two clients, co-schemers KEVIN LEBEAU and BRIAN BODIE, in connection with a foreclosure lawsuit.  Evidence at trial revealed that Schlyer provided false and fraudulent documents to an elderly couple and Amcore Bank in order to postpone foreclosure on the Aurora property. 

The jury returned the guilty verdicts on Oct. 6, 2017, after a four-day trial.  U.S. District Judge Amy J. St. Eve set sentencing for Jan. 31, 2018, at 9:15 a.m.  Each count carries a maximum sentence of 30 years in prison.

The conviction was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and John P. Selleck, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

According to evidence at trial, in 2004 Amcore Bank received a mortgage on the 10.4-acre property in Aurora after issuing a $1.9 million loan for the refinancing and redevelopment of the property.  Lebeau and Bodie executed a full personal guarantee for the loan.  By the fall of 2005, Lebeau and Bodie had failed to make the required payments, the loan was in default, and the bank filed a foreclosure lawsuit to seize the property.

During the scheme, Schlyer, who acted as Lebeau’s and Bodie’s attorney in the foreclosure suit, obtained $300,000 from an elderly retired couple by providing them with fake documents that made it seem like they were making a safe investment in the redevelopment and that it would be secured by a trust.  Schlyer also claimed to be the trustee of the purported trust.  In reality, there was no trust and Schlyer was not a trustee.  Schlyer and his co-schemers also concealed from the elderly couple the foreclosure suit and LeBeau’s and Bodie’s inability to pay the bank debt.  A portion of funds obtained from the elderly couple through the fraud was used to pay down the bank loan.

Together with his co-schemers, Schlyer furnished fraudulent and fabricated documents to the bank, including forged documents that made it appear that investors had committed approximately $1.5 million to the redevelopment of the property.  Eventually the foreclosure occurred, and the property was sold in 2010 at a significant loss to the bank. 

LeBeau, of Aurora, and Bodie, of Chicago, were previously convicted in the case and are awaiting sentencing before U.S. District Judge Robert W. Gettleman.

The government is represented by Assistant U.S. Attorneys Kartik K. Raman and Amarjeet S. Bhachu.

CHICAGO — Attorney General Jeff Sessions today announced several Department of Justice actions to reduce violent crime in America.  Foremost of these actions is the reinvigoration of “Project Safe Neighborhoods,” a program that has been historically successful in bringing together all levels of law enforcement to reduce violent crime and make neighborhoods safer for everyone.

 

In announcing this recommitment to Project Safe Neighborhoods, the Attorney General issued a memorandum directing United States Attorneys to implement an enhanced violent crime reduction program that incorporates the lessons learned since Project Safe Neighborhoods was first launched in 2001.

 

The reinvigoration includes a federal award of $499,443 to the City of Chicago to implement various crime-reduction strategies.

 

Joel R. Levin, Acting United States Attorney for the Northern District of Illinois, commented, “As part of a revitalized PSN, our office will continue to prioritize the prosecution of cases involving illegal firearms and violence.  We look forward to continuing our collaboration with our state and local partners to address the unacceptable level of violent crime in Chicago.”

 

“The Department of Justice today announces the foundation of our plan to reduce crime: prioritizing Project Safe Neighborhoods, a program that has been proven to work,” the Attorney General said.  “Let me be clear – Project Safe Neighborhoods is not just one policy idea among many; this is the centerpiece of our crime reduction strategy.  Taking what we have learned since the program began in 2001, we have updated it and enhanced it, emphasizing the role of our U.S. Attorneys, the promise of new technologies, and above all, partnership with local communities.  With these changes, I believe that this program will be more effective than ever and help us fulfill our mission to make America safer.”

 

The Attorney General also announced the following Department of Justice initiatives to help reduce violent crime:

 

-Additional Assistant United States Attorney Positions to Focus on Violent Crime: The Department is allocating 40 prosecutors to approximately 20 United States Attorney’s Offices nationwide to focus on violent crime reduction.

-More Cops on the Streets (COPS Hiring Grants): As part of our continuing commitment to crime-prevention efforts, increased community policing, and the preservation of vital law enforcement jobs, the Department will be awarding approximately $98 million in Fiscal Year 2017 COPS Hiring Grants to state, local, and tribal law enforcement agencies.

-Organized Crime and Drug Enforcement Task Force’s (OCDETF) National Gang Strategic Initiative: The National Gang Strategic Initiative promotes creative enforcement strategies and best practices that will assist in developing investigations of violent criminal groups and gangs into enterprise-level OCDETF prosecutions.  Under this initiative, OCDETF provides “seed money” to locally-focused gang investigations, giving state, local, and tribal investigators and prosecutors the resources and tools needed to identify connections between lower-level gangs and national-level drug trafficking organizations.

-Critical Training and Technical Assistance to State and Local Partners: The Department has a vast array of training and technical assistance resources available to state, local and tribal law enforcement, victims groups, and others.  To ensure that agencies in need of assistance are able to find the training and materials they need, the Office of Justice Programs will make available a Violence Reduction Response Center to serve as a “hot line” to connect people to these resources. 

-Crime Gun Intelligence Centers (CGIC): The Department has provided grant funding to support a comprehensive approach to identifying the most violent offenders in a jurisdiction, using new technologies such as gunshot-detection systems combined with gun crime intelligence from NIBIN, eTrace, and investigative efforts.  These FY 2017 grants were awarded to Phoenix, Ariz., and Kansas City, Mo. 

-Expand ATF’s NIBIN Urgent Trace Program: The Department will expand ATF’s NIBIN Urgent Trace Program nationwide by the end of the year.  Through this program, any firearm submitted for tracing that is associated with a NIBIN “hit” (which means it can be linked to a shooting incident) will be designated an “urgent” trace and the requestor will get information back about the firearm’s first retail purchaser within 24 hours, instead of 5 to 6 business days.

CHICAGO — A federal judge today sentenced a convicted felon to ten years in prison for stealing hundreds of firearms from a cargo train on the South Side of Chicago and selling more than a dozen of them.

 

On April 12, 2015, ANDREW SHELTON and several acquaintances burglarized the cargo train while it was parked overnight in a railyard in Chicago’s Avalon Park neighborhood.  The cargo train was en route from a Ruger factory in New Hampshire to Spokane, Wash.  The thieves broke locks on a train car and walked off with approximately 111 firearms, with Shelton keeping 13 guns for himself.  He quickly sold the 13 firearms on the black market.

 

To date, law enforcement has recovered 19 of the 111 stolen firearms at various locations and crime scenes in Chicago and the surrounding area.

 

Shelton, 43, of Riverdale, had previously been convicted of a felony and was not legally allowed to possess a firearm.  He pleaded guilty earlier this year to one count of illegal possession of a firearm by a felon, and one count of possession of a stolen firearm.  U.S. District Judge John J. Tharp Jr. imposed the 120-month sentence in federal court in Chicago.

 

The sentencing 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 and the Norfolk Southern Railroad Police Department provided valuable assistance.

 

“No efforts by law enforcement to stop the senseless killings in this city by keeping guns out of the hands of felons will be successful when there are individuals like the defendant and his codefendants who are willing to profit off of illegal arms trafficking in Chicago,” Assistant U.S. Attorneys Christopher V. Parente and Eric Pruitt argued in the government’s sentencing memorandum.

 

The investigation into the theft and trafficking of the firearms resulted in charges against eleven defendants, including Shelton.  Ten have been convicted, while one defendant, DANDRE MOODY, is awaiting a jury trial on Dec. 11, 2017.

 

The ten convictions include FREDERICK LEWIS (scheduled to be sentenced by Judge Tharp on Oct. 5, 2017, at 2:00 p.m.); PATRICK EDWARDS (scheduled to be sentenced by Judge Tharp on Oct. 12, 2017, at 2:00 p.m.); TERRY WALKER (scheduled to be sentenced by Judge Tharp on Dec. 6, 2017, at 2:00 p.m.); WARREN GATES (sentenced to five years and three months in prison); NATHAN DRIGGERS (sentenced to eight years in prison); LORI SHELTON (sentenced to three years of probation); ELGIN LIPSCOMB (awaiting sentencing); MARCEL TURNER (awaiting sentencing); and ALEXANDER PEEBLES (awaiting sentencing).

CHICAGO — Nine defendants, including four Chicago-area men, have been indicted on fraud charges for allegedly using inside information about an impending corporate acquisition to earn illegal trading profits.

 

The indictment alleges that SHANE FLEMING, a vice president of corporate sales at Minnesota-based Life Time Fitness Inc., obtained material, non-public information about the potential sale of the company to two private equity firms in 2015.  Fleming learned that the sale would likely cause an increase in the company’s stock price, and he shared the inside information with BRET BESHEY, a longtime friend and business partner, the indictment states.  Beshey and Fleming agreed to use the information to execute financial trades, and further agreed to share the profits, the indictment charges.  Beshey then allegedly shared the information with his girlfriend CHASITY CLARK, his friend and business partner PETER KOURTIS, and Clark’s friend CHRISTOPHER BONVISSUTO.

 

Kourtis and Bonvissuto agreed to use the information to purchase Life Time Fitness stock options and share the profits with Beshey and Clark, the indictment states.  Kourtis then shared the material, non-public information with friends ERIC WELLER, AUSTIN MANSUR, ALEX CARLUCCI and DIMITRI KANDALEPAS, all of whom knew the information came from an insider at Life Time Fitness, and they agreed to use the information to make trades, according to the charges.

 

The securities purchases were executed before news of the potential sale became public via a media report, which caused the stock price to increase substantially, the indictment states.  The defendants earned approximately $866,629 in illegal profits from the trades, the indictment states.

 

The indictment was returned Sept. 28, 2017, in federal court in Chicago.  It charges all nine defendants with conspiracy to commit securities fraud.  Arraignments have not yet been scheduled.

“Our economy relies on the integrity of the markets, which is a core principle upon which the American financial system is built,” said Joel R. Levin, Acting United States Attorney for the Northern District of Illinois.  “The U.S. Attorney’s Office is committed to aggressively using federal securities laws to hold insiders and investors accountable for using market-moving information to line their own pockets.”

 

Acting U.S. Attorney Levin announced the charges along with 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.

 

Charged in the conspiracy are Fleming, 54, of Chanhassen, Minn.; Beshey, 44, of Puerto Vallarta, Mexico; Clark, 34, of Puerto Vallarta, Mexico; Bonvissuto, 41, of Buffalo, N.Y.; Kourtis, 51, of Niles, Ill.; Weller, 52, of Hermosa Beach, Calif.; Mansur, 46, of Chicago, Ill.; Carlucci, 51, of Clarendon Hills, Ill.; and Kandalepas, 28, of Schaumburg, Ill.

 

Each of the defendants also faces individual counts of securities fraud.  Fleming and Beshey are each charged with nine counts; Kourtis eight; Weller three; Mansur two; and one each for Clark, Bonvissuto, Carlucci and Kandalepas.

 

Life Time Fitness owned a chain of fitness centers in the United States and Canada.  The company’s common stock traded on the New York Stock Exchange, and options in its stock were traded on the Chicago Board Options Exchange.  According to the indictment, Fleming learned on Feb. 23, 2015, that the company was in advanced acquisition negotiations with the private equity firms.  Fleming shared the information with Beshey later that day, the indictment states.  As other conspirators became aware of the inside information, they made arrangements to execute securities transactions and pay a portion of the proceeds to the fellow conspirator who passed them the tip, the indictment states.

 

From Feb. 25, 2015, to March 3, 2015, the defendants purchased hundreds of call options in Life Time Fitness stock, the indictment states.  On March 5, 2015, the company’s share price was $57.67.  After markets closed for the day, the Wall Street Journal published an article about the acquisition discussions.  On March 6, 2015, the share price increased to a high of $69.13.  On March 16, 2015, Life Time Fitness issued a news release announcing that two private equity firms were purchasing all of the company’s shares for $72.10 per share.

 

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

 

The conspiracy charge carries a maximum sentence of five years in prison.  Each count of securities fraud is punishable by up to 20 years in prison.  If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

 

The government is represented by Assistant U.S. Attorneys John D. Mitchell and William R. Hogan.

CHICAGO — The U.S. Attorney’s Office in Chicago today charged a financial analyst and a former investment banker with securities fraud for allegedly earning profits from trades they made with non-public information.

JASON NAPODANO, a former Managing Director of a Chicago investment research firm, used material, non-public information he obtained while preparing equity research reports about companies to purchase and sell stock in those companies, according to a criminal information filed in federal court in Chicago. The illegal trading profits netted Napodano approximately $143,000, the information states.  

In a related case, BILAL BASRAI, a former Managing Director of a Chicago investment banking firm, used material, non-public information to earn approximately $37,157 in illegal profits from the purchase and sale of stock in three companies.  Through his legal counsel, Basrai authorized the U.S. Attorney’s Office to disclose that Basrai has cooperated with the government’s investigation and intends to plead guilty to the charge contained in the information.

Napodano, 43, of Waxhaw, N.C., and Basrai, 43, of Naperville, Ill., are each charged with one count of securities fraud.  Arraignments in federal court in Chicago have not yet been scheduled.

The charges were filed by the Securities and Commodities Fraud Section of the U.S. Attorney’s Office in Chicago.  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 Federal Bureau of Investigation.  The U.S. Securities and Exchange Commission provided valuable assistance.

According to the charges, Napodano’s alleged fraud scheme began in October 2012 and continued through May 2015.  The charges allege that, prior to the public release of equity research reports that contained positive recommendations about the companies, Napodano purchased stock in those companies.  He then allegedly sold the stock for a profit after his reports were publicly released and the stock prices of the companies increased.  In doing so, Napodano allegedly misappropriated material, non-public information – the timing and contents of the research reports – that belonged to his employer.  Napodano also traded based on inside knowledge of a company’s announcement of an in-licensing agreement, the information states.

Basrai’s fraud scheme spanned the first seven months of 2014.  Basrai allegedly learned non-public information about a secondary stock offering, an in-licensing agreement, and the release date of a research report, and used it to make profitable trades of three companies’ stock. 

The public is reminded that an information 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. 

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

The government is represented by Assistant U.S. Attorneys Jason Yonan and Matthew Kutcher.

CHICAGO — A federal indictment unsealed this week charges nine alleged members of the Four Corner Hustlers street gang with participating in a criminal organization that murdered six people and violently protected drug-dealing territories on the West and Southwest Sides of Chicago.

 

Authorities uncovered the alleged gang activity through a lengthy investigation conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF), with assistance from the Chicago FBI’s Safe Street Task Force, the High Intensity Drug Trafficking Area Task Force (HIDTA), the ATF’s Chicago Crime Gun Strike Force, and the Chicago Police Gang Investigations Division.

 

The indictment charges that the Four Corner Hustlers dealt drugs and robbed rival dealers, used violence and intimidation to prevent victims and witnesses from cooperating with law enforcement, and tried to avoid detection by monitoring police scanners and outfitting its members with a security detail.  The gang engaged in numerous acts of violence, including murder, robbery, extortion and aggravated battery, according to the indictment. 

 

The gang operated primarily in the Chicago neighborhoods of West Garfield Park and Humboldt Park on the West Side, and in the former LeClaire Courts public housing development on the Southwest Side, the indictment states.

 

Nine alleged Four Corner Hustlers are charged with racketeering conspiracy.  Two other defendants are charged in the indictment with participating in an extortion conspiracy, bringing the total number of charged defendants to eleven.  The indictment identifies three Four Corner Hustlers who engaged in the racketeering conspiracy but died before they could be charged.

 

The indictment was returned Sept. 14, 2017, and ordered unsealed after several of the defendants were arrested this week.  The defendants have begun making initial appearances in federal court in Chicago.

 

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; 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 Illinois Secretary of State Police Department, the U.S. Bureau of Prisons, the Illinois Department of Corrections, and the Illinois State Police.

 

Charged with racketeering conspiracy are LABAR SPANN, 38; SAMMIE BOOKER, 43; TREMAYNE THOMPSON, 33; JUHWUN FOSTER, 37; MARCHELLO DEVINE, 30; RONTRELL TURNIPSEED, 24; KEITH CHATMAN, 29; STEVON SIMS, 27; and DEANDRE SPANN, 40; all of Chicago.

 

The indictment holds all nine members of the racketeering conspiracy criminally responsible for the murders of six people: Carlos Caldwell on Jan. 19, 2000; Maximillion McDaniel on July 25, 2000; Levar Smith on Aug. 14, 2000; George King on April 8, 2003; Willie Woods on April 16, 2003; and Rudy Rangel on June 4, 2003.  Specifically, the indictment charges that Labar Spann participated in all six slayings, with assistance in five of them from at least one other member of the conspiracy.  Individual counts in the indictment charge Labar Spann, Thompson and Foster with committing the murder of Woods; and Labar Spann with committing the murder of Rangel.  The charges allege that the Woods and Rangel murders were carried out for the purpose of maintaining and increasing position in the Four Corner Hustlers.

 

Charged with participating in an extortion conspiracy are Labar Spann; Thompson; MIKAL JONES, 33, of Chicago; and ANTONIO DEVINE, 25, of Chicago.

 

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 an indictment contains 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.

 

The racketeering conspiracy charge generally carries a maximum sentence of 20 years in prison, but a life sentence is possible for certain underlying racketeering activities referenced in the indictment.  The murder counts in connection with the slayings of Woods and Rangel each carry a mandatory minimum sentence of life imprisonment and a maximum potential sentence of the death penalty.  The extortion conspiracy is punishable by up to 20 years in prison.  If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

 

The government is represented by Assistant U.S. Attorneys Peter S. Salib, Timothy J. Storino and William Dunne.

ROCKFORD — A former Huntley man was indicted today by a federal grand jury on charges of bankruptcy fraud.

 

TRACY L. SUNDERLAGE, 71, was charged with one count of making false statements in a bankruptcy case and one count of making false statements under oath in a bankruptcy proceeding.

 

As alleged in the indictment, Sunderlage filed a Chapter 11 Bankruptcy Petition on Aug. 12, 2011. On Aug. 30, 2011, Sunderlage filed various bankruptcy schedules and a Statement of Financial Affairs, both signed under penalty of perjury. According to the indictment, Sunderlage made false statements on his Statement of Financial Affairs, concealing fraudulent transfers of 100,000 shares of Gulf Keystone Petroleum Ltd. and approximately $63,242 and $109,493 to a relative, and concealing his receipt of $241,000 of income from the sale of ownership interest in Gulf Keystone Petroleum, his receipt of $25,000 of income from the sale of ownership interests in other companies, his personal property interests in various financial accounts, and his 2002 Jaguar vehicle.

 

It is further alleged in the indictment that on May 14, 2012, Sunderlage falsely testified under oath at a meeting of creditors, fraudulently concealing assets from the bankruptcy trustee, creditors, and the United States Trustee, including complete information on a transfer of $63,242 Sunderlage made to a relative.

 

Each charge in this case carries a maximum potential penalty of up to five years in prison, a term of supervised release of up to three years following imprisonment, and a fine of up to $250,000 or twice the gross gain or gross loss resulting from that offense, whichever is greater. 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 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; James Vanderberg, Special Agent-In-Charge of the Chicago Regional Office of the U.S. Department of Labor, Office of Inspector General; Jeffrey A. Monhart, Director for the Chicago Region of the U.S. Department of Labor - Employee Benefits Security Administration; 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 Michael D. Love.

CHICAGO — A Chicago man has been charged with a federal drug violation after agents seized more than 50 kilograms of heroin and cocaine from his attic apartment on the South Side.

MARCELINO NUNEZ-HURTADO, 47, is charged with possession of a controlled substance with the intent to distribute. On Aug. 22, 2017, agents searched an attic apartment Nunez-Hurtado rented in Chicago’s Gage Park neighborhood and discovered tools used to measure and package narcotics, according to a criminal complaint and affidavit filed in federal court in Chicago. After noticing a screwdriver on the floor just inside the attic door, agents discovered an access panel above the landing of the stairs leading to the attic, the complaint states. The panel led to a compartment where agents discovered numerous rectangular bricks of heroin weighing more than 41 kilograms, and multiple bricks of cocaine weighing more than nine kilograms, the complaint states.

Nunez-Hurtado was arrested on Sept. 13, 2017. A detention hearing is scheduled for Sept. 26, 2017, at 2:30 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 James M. Gibbons, Special Agent-in-Charge of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Chicago.

According to the complaint, ICE uncovered the alleged drug trafficking through the use of a confidential informant and extensive surveillance. The informant provided information in July that Nunez-Hurtado was involved in drug trafficking activities throughout the Chicago area, the complaint states. Hours before the attic search, agents observed Nunez-Hurtado hand suspected cocaine to an individual sitting in the passenger seat of a Cadillac Escalade parked in an alley behind the Gage Park residence, the complaint states.

The drug charge carries a maximum sentence of life in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

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

The government is represented by Assistant U.S. Attorney Rebekah Holman.

CHICAGO — The former superintendent of Lincoln-Way Community High School District 210 has been indicted on federal fraud charges for allegedly misappropriating school funds for his own benefit and concealing the district’s true financial deficit from the public.

LAWRENCE WYLLIE fraudulently used at least $50,000 in school district funds to build and operate Superdog, a dog obedience training school that provided no benefit to the four high schools in the southwest suburban district, according to the indictment. Wyllie also misappropriated at least $16,500 of school district funds by paying himself a retirement stipend that was not in his employment contract, the indictment states. Wyllie fraudulently pocketed another $14,000 of school district funds by falsely describing it as compensation for unused vacation days – another benefit that was not in his contract, the charges state.

Wyllie also fraudulently inflated the district’s financial health by using bond funds to pay the district’s general operating expenses, causing the district to assume at least $7 million in additional debt.

The indictment was returned Wednesday in federal court in Chicago. It charges Wyllie, 79, of Naperville, with five counts of wire fraud and one count of embezzlement. Arraignment in U.S. District Court has not yet been scheduled.

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 Kathleen S. Tighe, Inspector General of the U.S. Department of Education.

District 210 operated four high schools that drew students from New Lenox, Frankfort, Mokena, Manhattan, Tinley Park and Orland Park. According to the indictment, one of the factors the district’s seven-member school board considered in renewing Wyllie’s employment contract was the financial performance of the district. In 2009, at the request of Wyllie and with approval of the school board, the district issued $29 million in bonds. Wyllie represented to the school board and bond purchasers that $10 million of the bond proceeds would be used for capital expenditures, including construction or renovation of the high schools, when in fact Wyllie knew that he would spend the money on the district’s general operating expenses and payroll, the charges allege. Wyllie transferred millions of dollars from a bank account where the district maintained its bond funds to a separate account that the district used for paying general operating expenses.

As a result, the district’s net operating expenditures and cost-per-pupil calculation appeared lower than they actually were, thus fraudulently inflating the district’s financial health, the charges state. Wyllie’s fraud scheme caused the district to assume at least $7 million in additional debt from the bond issuance, on which Lincoln-Way continues to pay interest, the indictment states.

Wyllie retired as district superintendent in June 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 wire fraud is punishable by up to 20 years in prison, while embezzlement carries a maximum sentence of ten years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant U.S. Attorney Sunil Harjani.

CHICAGO — A federal jury has convicted a U.S. Customs and Border Protection agent of pocketing $5,000 in cash from an overseas passenger at a screening station of O’Hare International Airport.

SALVATORE PICARDI took the cash on Feb. 22, 2016, after the female passenger had arrived at O’Hare on a flight from China. The woman noticed her money was missing when the customs inspection ended and she was allowed to leave. As other officers began searching for the money, Picardi tried to avoid detection by stuffing the cash into a jacket belonging to the woman and claiming he had discovered it.

The jacket, however, had been searched multiple times before Picardi’s purported discovery.

Picardi, 38, of Park Ridge, was convicted of one count of embezzlement by a federal officer under color of law. The jury returned its verdict on Wednesday after a three-day trial in the Chicago courtroom of U.S. District Judge Thomas M. Durkin.

The conviction was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Armando Lopez, Special Agent-in-Charge of the U.S. Department of Homeland Security - Office of Inspector General (DHS-OIG) Chicago Field Office; and Aaron Poyer, Special Agent-in-Charge of the U.S. Customs and Border Protection - Office of Professional Responsibility (CBP-OPR).

The conviction is punishable by up to ten years in prison. Judge Durkin scheduled a sentencing hearing for Dec. 12, 2017, at 12:00 p.m.

The government is represented by Assistant U.S. Attorneys Laurie J. Barsella and Lindsay C. Jenkins.

CHICAGO — A convicted felon was sentenced today to eight years in federal prison for illegally possessing 30 guns that had been stolen from a shipment of firearms at a railyard on the South Side of Chicago.

 

NATHAN DRIGGERS possessed the guns on April 12, 2015, at his store in the 12700 block of South Halsted Street in Chicago’s West Pullman neighborhood. Driggers had previously been convicted of a felony and was not legally allowed to possess a firearm.

 

All 30 of the guns were among approximately 111 firearms stolen from a railroad car in Chicago earlier that day. The firearms were aboard a cargo train en route from a Ruger factory in New Hampshire to Spokane, Wash. The train was parked overnight on the South Side of Chicago when thieves broke locks on a train car and walked off with the guns.

 

A jury in April convicted Driggers, 44, of Richton Park, on one count of illegal possession of a firearm by a felon. U.S. District Judge John J. Tharp Jr. imposed the 96-month sentence in federal court in Chicago.

 

The sentencing 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 and the Norfolk Southern Railroad Police Department provided valuable assistance.

 

A co-defendant, WARREN GATES of Chicago, was sentenced in January to five years and three months in prison for illegally possessing 24 firearms, 17 of which had been stolen from the train. Gates admitted purchasing the 17 stolen firearms for purposes of reselling them for a profit, and he sold eleven of them prior to his arrest.

 

To date, law enforcement has recovered 19 of the 111 stolen firearms at various locations and crime scenes in the Chicago area.

 

The government is represented by Assistant U.S. Attorneys Christopher V. Parente and Eric Pruitt.

ROCKFORD — A Rockford man pleaded guilty today before U.S. District Judge Frederick J. Kapala to mail fraud.

 

CHARLES R. (“CHUCK”) HANSEN, 63, a financial planner, admitted that he schemed to defraud investors out of more than $700,000, using the mail to further his scheme.

 

According to a written plea agreement Hansen between 1996 and 2014 operated financial planning and real estate companies, including Senior Securities of Rockford LLC and Chicago Wealth Partners LLC. As part of his financial planning business, Hansen sold fixed annuities to retirement-age investors. In 2008, Hansen began to encourage some individuals to whom Hansen had previously sold fixed annuities to move their money from the secure investments to investments in Senior Securities and Chicago Wealth Partners, which Hansen told investors were real estate companies in which the investors could make a higher rate of return on their investment. Hansen used the investments in those two companies to rehab and sell homes in the Rockford and Chicago areas. Hansen admitted that he did not explain the risky nature of that sort of investment, and he told investors that their investments would remain secure.

 

Hansen further admitted that he entered into promissory notes with investors promising a high rate of return and that he convinced investors to renew their promissory notes for additional terms. At the time of the renewals, Hansen did not disclose to the investors that Senior Securities and Chicago Wealth Partners were failing and that he lacked sufficient funds to repay the investors the amounts owed to them pursuant to the original promissory notes.

 

Hansen admitted that as a result of his scheme, he caused investors to invest approximately $842,150 in Senior Securities and Chicago Wealth Partners, and that only $109,792 of that amount was returned to investors, causing the investors to suffer losses totaling approximately $732,257.

 

Hansen faces a maximum sentence of 20 years’ imprisonment, a term of supervised release of up to 3 years following imprisonment, and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from that offense, whichever is greater, as well as full restitution. The sentence will be determined by the United States District Court, guided by the Sentencing Guidelines.

 

The guilty plea was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; E. C. Woodson, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; and Tanya Solov, Director of the Illinois Securities Department of the Illinois Secretary of State.

The government is represented by Assistant U.S. Attorney Margaret J. Schneider.

CHICAGO — Five defendants have been indicted on federal firearms violations for conspiring to “straw purchase” handguns in Michigan and re-sell them in Chicago.

Michigan residents CORNELIUS BATTLE and DALRICK DRAIN purchased firearms from federally licensed dealers in Kalamazoo, Mich., and falsely certified on required forms that they were the actual buyers of the guns, the indictment states. Battle and Drain purchased the guns on behalf of NATHANIEL McELROY, a Chicago resident who identified which firearms he wanted and had paid Battle and Drain a premium over the stores’ prices, according to the indictment. In the first six months of 2017, the trio and two other defendants, REGINALD JOHNSON and LASHON MOORE, caused at least nine handguns to be purchased in Michigan and transported to Chicago, the indictment states.

The two-count indictment was returned Aug. 31, 2017, in federal court in Chicago, and ordered unsealed on Sept. 7, 2017. It charges the defendants with one count of conspiracy to willfully deal firearms without a license, to willfully transfer firearms to non-Michigan residents, and to knowingly make false statements in connection with the acquisition of a firearm; and one count of willfully dealing firearms without a license.

“The United States Attorney’s Office is committed to aggressively using federal firearm laws to keep illegal guns off the streets,” said Joel R. Levin, Acting United States Attorney for the Northern District of Illinois. “We will use whatever federal tools are appropriate to prosecute straw purchasers and hold them accountable for bringing illegal firearms into Chicago.”

Acting U.S. Attorney Levin announced the charges along with Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. The Chicago Police Department provided valuable participation in the investigation.

McElroy, 21, was arrested on Aug. 31, 2017. During a detention hearing in federal court in Chicago last week, U.S. Magistrate Judge Susan E. Cox ordered McElroy detained in federal custody pending trial. McElroy’s next court date has not yet been set.

Battle, 23, of Kalamazoo, Mich., was arrested in Michigan on Sept. 1, 2017. During a detention hearing in federal court in Kalamazoo last week, U.S. Magistrate Judge Phillip J. Green ordered Battle released on home confinement. Judge Green ordered Battle to appear in Chicago on a future date to be determined by the Court.

Moore, 28, of Kalamazoo, Mich., is currently in custody in Michigan on an unrelated state charge. The U.S. Attorney’s Office will seek his removal to Chicago at a future date.

Arrest warrants have been issued for Drain, 27, and Johnson, 24, both of Kalamazoo, Mich. They were not custody as of today.

The indictment describes two purchases made at the Kalamazoo firearm businesses. On Feb. 28, 2017, Drain bought two guns at On Target; and on March 30, 2017, Drain bought two guns from Dunham Sports, the indictment states. Other defendants and an unindicted member of the scheme later conspired to transfer the guns to Chicago, the indictment states. The charges allege that the defendants’ straw purchasing scheme violated a federal law that requires individuals purchasing certain firearms from an out-of-state dealer to first have the firearms transferred to a dealer in the buyer’s state of residency before the individual can legally take possession.

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

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

The government is represented by Assistant U.S. Attorneys Albert Berry III and Ankur Srivastava.

CHICAGO — The self-proclaimed “Grand Sheik” of a Moorish temple in Chicago has been sentenced to nearly six years in federal prison for causing the Internal Revenue Service to issue more than $3.2 million in fraudulent tax returns.

 

MARCEL A. WALTON filed three fraudulent returns seeking $900,000 in refunds, causing the IRS to issue him more than $300,000. Walton also recruited individuals, including the elderly and homeless, to join a Chicago branch of the Moorish Science Temple of America and file similarly fraudulent returns on the false pretense that temple members were entitled to remuneration from the United States government for its purported use of Moorish lands. Walton claimed to be the “Grand Sheik” of the Chicago branch of the temple. At least 17 individuals filed nearly 50 returns seeking more than $15 million in refunds, ultimately obtaining more than $3.2 million from the IRS.

 

Walton, 47, of Chicago, pleaded guilty last year to one count of mail fraud. U.S. District Judge Thomas M. Durkin on Friday imposed the 68-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 Gabriel L. Grchan, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

 

“Walton exploited a vulnerability in our tax system and filed blatantly false trust tax returns,” Assistant United States Attorney Carol A. Bell argued during the sentencing hearing. “He used his position to recruit individuals to further his tax scheme.”

 

In 2010 and 2011, Walton told numerous individuals that, if they became members of the temple, they could claim the money purportedly owed to the Moors by the federal government. Walton told the potential recruits that the Moors were the original discoverers of America and that a Moorish prophet was given a deed to lands making up North America. Walton executed the scheme by preparing and causing the preparation of trust or estate tax returns for himself and the others that contained false information regarding the purported trust’s income, fiduciary fees, exemptions and federal tax withheld.

 

Walton stood to gain from the returns filed by his temple members because he instructed them to pay him ten percent of the money they received from the IRS through the filing of the fraudulent returns. One of the temple members paid Walton $90,000 after receiving $900,000 in refunds from the IRS in 2010.

CHICAGO — An Arkansas man was charged today with federal firearms violations for illegally selling numerous handguns, rifles and a shotgun in Chicago and nearby suburbs.

KLINT KELLEY brought the firearms from Arkansas to Chicago and illegally sold them to a convicted felon, according to a criminal complaint and affidavit filed today in federal court in Chicago. Kelley sold the guns to the felon on three occasions this year, including over the Fourth of July and Labor Day weekends, the complaint states. The most recent sale occurred Sunday in Chicago Ridge, after which authorities arrested Kelley.

Kelley, 27, of Malvern, Ark., is charged with three counts of dealing firearms without a license and across state lines, and one count of selling firearms to a known felon. An initial court appearance is scheduled for today at 1:30 p.m., before U.S. Magistrate Judge M. David Weisman in Chicago.

The charges were 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 and Illinois State Police participated in the investigation.

The complaint describes the three occasions when Kelley allegedly sold firearms to the felon. On April 3, 2017, in a residence in southwest suburban Frankfort, Kelley sold the felon five handguns and three semi-automatic rifles in exchange for $4,750 in cash, the complaint states. On July 3, 2017, near the United Center on Chicago’s West Side, Kelley sold the felon four handguns and one semi-automatic rifle in exchange for $3,000 in cash, the complaint states. On Sept. 3, 2017, in a commercial area of southwest suburban Chicago Ridge, Kelley sold the felon four semi-automatic rifles, three handguns and one semi-automatic shotgun in exchange for $7,000 in cash, the complaint states.

Kelley grew up in Illinois and moved to Arkansas several years ago, the complaint states.

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

The charge of dealing firearms without a license and across state lines is punishable by a maximum sentence of five years in prison, and the charge of selling firearms to a known felon is punishable by a maximum sentence of ten years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant U.S. Attorney Tobara Richardson.

CHICAGO — A Chicago man is facing federal firearms charges for allegedly dealing ammunition and gun accessories on the city’s South Side.

BRENT TURPIN illegally supplied an extended handgun magazine, a laser sight and two boxes of ammunition to a convicted felon who, unbeknownst to Turpin, was cooperating with the Federal Bureau of Investigation, according to a criminal complaint and affidavit filed in federal court in Chicago. Turpin supplied the materials to the informant earlier this month in Turpin’s residence on the South Side of Chicago, the complaint states.

Turpin, 53, was arrested Tuesday. A detention hearing is scheduled for today at 3:00 p.m., before U.S. Magistrate Judge M. David Weisman in Chicago. The complaint charges Turpin with one count of conspiracy to dispose of a firearm and ammunition to a known felon, and one count of disposing of ammunition to a known felon.

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 Police Department participated in the investigation.

In addition to the disposal of the ammunition and materials, the complaint also describes Turpin’s efforts to secure a firearm for the informant at a gun show in Indiana. As the pair traveled together to the show earlier this summer, Turpin allegedly instructed the informant on what to say and do. “If they ask you if you’re from Indiana, say yes,” Turpin told the informant, according to the complaint. “If they say where [are] you from, say like, say South Bend or something, or Indianapolis,” Turpin said, according to the complaint. Turpin and the informant met with a gun dealer at the show, but it did not result in a deal because Turpin declined to present his driver’s license, the complaint states.

Turpin is employed as a teacher at a school on the South Side of Chicago, the complaint states.

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

The charge of conspiring to distribute firearms and ammunition is punishable by a maximum sentence of five years in prison, and the charge of distributing ammunition is punishable by a maximum sentence of ten years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant U.S. Attorneys Ankur Srivastava and Albert Berry.

CHICAGO — A federal jury today convicted a Chicago police officer of federal civil rights violations for using unreasonable force against two individuals while on duty.

MARCO PROANO was convicted on both counts of deprivation of rights under color of law. Proano used unreasonable force with his service weapon while on duty as an officer of the Chicago Police Department on Dec. 22, 2013. Proano fired 16 shots into a vehicle that contained numerous people, wounding two individuals who suffered bodily injuries as a result of the unreasonable force.

The jury returned its verdict against Proano, of Chicago, after a week-long trial in the courtroom of U.S. District Judge Gary Feinerman.

The conviction 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.

Each count of the indictment is punishable by up to ten years in prison. Judge Feinerman scheduled a sentencing hearing for Nov. 20, 2017, at 2:00 p.m.

The government is represented by Assistant U.S. Attorneys Georgia Alexakis and Erika Csicsila.

ROCKFORD — Two out-of-state residents were sentenced this week by U.S. District Judge Frederick J. Kapala for their roles in a conspiracy to manufacture and distribute marijuana.

 

DESTINY FREEMAN, 24, of Palmer, Alaska, was sentenced today to 23 months in federal prison, to be followed by two years of supervised release.

 

CASEY S. WILLIAMS, 30, of Great Falls, Montana, was sentenced Wednesday to 57 months in federal prison, to be followed by three years of supervised release.

 

The sentencings 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 & 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.

 

In 2016, Williams and Freeman pleaded guilty to conspiring with five other individuals to manufacture, possess and distribute marijuana plants. The superseding information alleged that between Jan. 2, 2013, and Jan. 6, 2015, the pair conspired to illegally grow and store marijuana in a warehouse at 1916 11th St. in Rockford. The warehouse was destroyed by fire on Jan. 6, 2015.

 

The five co-defendants are YOUSIF Y. PIRA, 64, of Chicago, JEREMIAH N. CLEMENT, 39, formerly of Des Plaines, GEORGE H. BACUS, 53, of Niles, JUSTIN T. PAGLUSCH, 36, of Ingleside, and SHLIMON SHIMON, 49, of Chicago.

 

According to Williams’ and Freeman’s written plea agreements, in August 2014 Williams’ former employer, Jeremiah N. Clement, asked Williams to travel to Rockford to assist Clement with cleaning out a building and some irrigation construction inside a building in Rockford. At the time, Williams was living in Montana and dating Freeman. Clement recruited Williams to join the conspiracy, and Williams in turn recruited Freeman. Williams and Freeman lived in the warehouse while they assisted in the marijuana-growing operation by watering and caring for the marijuana crop and later assisting in harvesting and processing the marijuana.

 

In July 2017, following a four-day jury trial in U.S. District Court in Rockford, Pira was found guilty of conspiring to manufacture, possess and distribute 1,000 or more marijuana plants. Pira is scheduled to be sentenced on Oct. 17, 2017, at 2:30 p.m.

 

Bacus pleaded guilty on July 6, 2016, and is scheduled to be sentenced on Sept. 22, 2017, at 2:30 p.m.

 

Clement pleaded guilty and was sentenced to ten years’ imprisonment on June 3, 2016.

 

Paglusch pleaded guilty and was sentenced to ten years’ imprisonment on June 23, 2016.

 

An arrest warrant has been issued for Shimon, who is still at large.

 

The government is represented by Assistant U.S. Attorney Joseph C. Pedersen.

ROCKFORD — A Rockford man was sentenced Tuesday in federal court by U.S. District Judge Frederick J. Kapala for illegally possessing a firearm as a convicted felon.

 

DEONTA M. NEWTON, 29, was sentenced to 103 months in prison, to be followed by three years of supervised release. Newton pleaded guilty to the charge on March 17, 2017.

 

According to a written plea agreement, Newton on July 18, 2016, was a passenger in a vehicle driven by another individual on the way to a convenience store on the west side of Rockford. When the other individual went into the store, a blue minivan pulled in the store’s parking lot and someone inside the van fired several shots at Newton while he was in the car. Newton grabbed a .45-caliber semi-automatic pistol, got out of the car with the gun in hand, and ran away. The minivan left and shortly thereafter Newton returned to the parking lot and got back in the passenger side of the vehicle. The other individual got back in the vehicle and drove to his residence with Newton, where Newton took the pistol inside and hid it in the basement. The pistol was later located and seized by officers of the Rockford Police Department.

 

Newton was charged in federal court as part of the Project Safe Neighborhoods program. Project Safe Neighborhoods is an intensive, cooperative effort between local, state and federal law enforcement to attack gun crimes. Additional information about Project Safe Neighborhoods may be found at: www.psn.gov.

 

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; Joseph Bruscato, Winnebago County State’s Attorney; and Dan O’Shea, Chief of the Rockford Police Department.

 

The government was represented by Assistant U.S. Attorney Joseph C. Pedersen.

ROCKFORD — A federal grand jury in Rockford today increased the number of fraud charges previously brought against TODD J. FENDLER, 41, of Rockford.

 

Fendler was initially charged on Feb. 28, 2017, with one count of mail fraud and one count of wire fraud. Today, the grand jury returned a superseding indictment charging Fendler with a total of 19 counts of wire fraud and one count of mail fraud, all in connection with a scheme to defraud former insurance clients of Fendler’s businesses. The superseding indictment alleges that Fendler defrauded over 100 clients of more than $800,000.

 

According to the superseding indictment, Fendler controlled and operated several insurance-related businesses in Rockford, including Surplus Market Solutions LLC, Northern Underwriting Managers Inc., and Northern Illinois Insurance Agency Inc. The superseding indictment alleges that Fendler obtained bank account information from businesses and individuals who had applied for insurance policies through Fendler’s companies, and used that information to withdraw funds from those businesses and individuals. Fendler did so, the superseding indictment states, by causing ACH and EFT withdrawals to be taken from the victims’ accounts without the victims’ knowledge or permission. The superseding indictment also alleges that Fendler created fictitious checks purportedly issued by the insurance applicants and deposited those fictitious checks into bank accounts he controlled.

 

Each count in the superseding indictment carries a maximum penalty of 20 years in prison, and a maximum fine of $250,000. If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines, as well as restitution.

 

Arraignment on the superseding indictment will be set for a later date before U.S. Magistrate Judge Iain D. Johnston in Rockford.

 

The superseding 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.

 

The government is represented by Assistant U.S. Attorney John G. McKenzie.

 

The public is reminded that a superseding indictment is only a charge 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 the defendant’s guilt beyond a reasonable doubt.

ROCKFORD — A Rockford man was indicted today by a federal grand jury on a charge of armed bank robbery.

 

DEMONTRION D. PHILLIPS, 23, was charged with robbing Alpine Bank, located at 2642 Charles St., in Rockford, on July 17, 2017. The indictment alleges that Phillips used a BB gun to commit the robbery and that during the robbery he obtained $28,309 from bank employees.

 

A federal arrest warrant has been issued for Phillips, who is currently in custody in the Winnebago County Jail on unrelated charges. Arraignment in federal court in Rockford has not yet been scheduled.

 

Armed bank robbery carries a maximum penalty of 25 years in prison, to be followed by up to five years of supervised release, and a maximum 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 would be required to pay restitution to Alpine Bank. The public is reminded that an indictment contains only a charge 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; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Dan O’Shea, Chief of the Rockford Police Department.

 

The government is represented by Assistant U.S. Attorney Joseph C. Pedersen.

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.

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.”

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 — 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.

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 — 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.

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 — 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.

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 — 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.

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.

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.

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 — 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.

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 — 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.

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.

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.

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.