Northern District of Illinois
Press releases recorded for this federal judicial district.
Federal Jury Convicts Lockport Woman of Scheming to Defraud a Not-For-Profit Organ Donation NetworkRead the Press Release
CHICAGO — A Lockport woman was convicted on federal fraud charges today for scheming to swindle money from a not-for-profit network that coordinated organ and tissue donations in Illinois and northwest Indiana.
DEBRA A. SCHULTZ received the proceeds of false invoices which had been submitted to the organization by purported physicians for alleged organ and tissue procurement. The procurement work was not actually performed, and the invoices were fraudulent. A co-defendant, SHARI L. HANSEN, who worked as an auditing coordinator for the organization, approved the payments for the bogus invoices, causing the organization to issue checks to Schultz and another co-defendant, ERIC V. MURFF.
The scheme netted the defendants $ 652,298 in illegal profits. Schultz retained thousands of dollars of the stolen funds for her own benefit.
The jury convicted Schultz, 46, on all three counts of wire fraud. The convictions carry a maximum sentence of 60 years in prison. U.S. District Judge Robert M. Dow Jr. scheduled a sentencing hearing for May 19, 2017.
The verdict was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and E.C. Woodson, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. Evidence at trial revealed that the scheme began no later than March 2008 and continued until at least April 2010. Hansen created or caused to be created fraudulent invoices that she submitted to the not-for-profit organization. The invoices requested payment to Schultz and Murff for organ and tissue procurement work that the defendants knew was not actually performed. Many of the false invoices specified that Murff as well as Schultz’s son, identified as Individual A, were doctors who performed organ and tissue procurement, when in reality neither Murff nor Individual A did any such work and was not a physician. Indeed, when the fraud began, Individual A was 17 years old and attending high school.
Hansen, in her role as auditing coordinator, approved the fake invoices, thereby authorizing and directing the organization to issue checks to Murff and Schultz’ son. Murff and Schultz pocketed some of the money and transferred other portions of the funds to one or more bank accounts held in Hansen’s name.
Illinois Business Owner Sentenced to Prison for Stealing Identities to File False Tax ReturnsRead the Press Release
A Northern District of Illinois resident was sentenced to 60 months in prison today announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Zachary T. Fardon for the Northern District of Illinois.
From approximately January 2011 through April 2015, Carlos Smith stole personal identifying information obtained from individuals who sought credit repair or credit card processing services through CLS Financial Services Inc. (CLS), a business Smith operated, and used the information to file false individual income tax returns. Smith also stole identities of individuals who worked for Chicago’s Board of Education and used this information to file false individual income tax returns. Smith filed approximately 92 fraudulent income tax returns, claiming more than $1 million in refunds. Smith directed the fraudulently obtained tax refunds to prepaid debit cards, addresses, and bank accounts he controlled, including accounts opened in the names of individuals whose identities he had stolen. Smith also filed his own false individual income tax returns for 2012 through 2014.
On Oct. 19, 2016, Smith pleaded guilty to aggravated identity theft and theft of government funds. In addition to the term of prison imposed, Smith was ordered to serve two years of supervised release and to pay $ 633,884 in restitution to the IRS.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Fardon commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys John T. Mulcahy and Sonia M. Owens, and former Tax Division Trial Attorney Assistant U.S. Attorney Ryan R. Raybould, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Bank Robber Sentenced to 29 Years in Federal Prison for Firing Gun at Teller and Customer in Orland Park HeistRead the Press Release
CHICAGO — A convicted bank robber has been sentenced to 29 years in federal prison for firing a gun at a teller and customer during a robbery in Orland Park.
CARL P. WILSON pocketed $20,000 from the Oct. 13, 2014, robbery of First Midwest Bank, 11200 W. 143rd St., in Orland Park. During the robbery, Wilson fired a black semi-automatic handgun at a teller and customer, narrowly missing both of them. Wilson, who had an account at the bank, was arrested nine days later after a traffic stop in Joliet.
Wilson, 28, of Joliet, pleaded guilty last year to one count of armed bank robbery, one count of discharging a firearm during the robbery, and one count of being a felon in possession of a firearm. U.S. District Judge Thomas M. Durkin imposed the 29-year sentence Thursday in federal court in Chicago.
The sentencing was announced by Zachary T. Fardon, 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 Joliet Police Department provided valuable assistance.
“While any bank robbery is a serious offense, an armed bank robbery in which the perpetrator discharges a firearm is exceptionally serious,” Assistant U.S. Attorney Ankur Srivastava argued in the government’s sentencing memorandum. “Defendant’s crime was violent, motivated by greed, and put lives in danger.”
According to the charges, Wilson entered the bank wearing a dark hood over his head and a dark cloth draped across his face. Displaying the handgun, Wilson jumped over the teller counter and yelled, “Give me the [expletive] money!” As the teller quickly walked to the cash dispenser, Wilson fired the gun, narrowly missing her. Wilson then shot at a customer who was walking into the bank, barely missing him also. After obtaining the money, Wilson jumped back over the counter, exclaiming, “Have a great [expletive] day!” while waiving his gun in the air.
Wilson also admitted robbing a First Midwest Bank branch in Bolingbrook on Aug. 11, 2014. During the Bolingbrook robbery, Wilson opened fire on a teller within approximately five seconds of entering the bank, striking her in the arm.
At the sentencing hearing in federal court, the victim in the Bolingbrook robbery and several witnesses from the Orland Park robbery testified about their harrowing experiences.
The government was represented by Mr. Srivastava.
Remarks by U.S. Attorney Zachary T. Fardon at News Conference on Investigation of Chicago Police DepartmentRead the Press Release
Thank you Vanita. I am grateful to you, Attorney General Lynch, and to all of the outstanding women and men from the Civil Rights Division and my Office who have spent the last 13 months working so hard to make today happen.
Today, history is made, and it couldn’t come at a more important time. The past year has been among the most brutal in Chicago memory. Gun violence has overwhelmed us. We have been thunderstruck with grief and heartbreak, fear and confusion, uncertainty and sadness. Today’s findings, coupled with the City and Chicago Police Department’s commitment to work with us toward sustained change, are an historic turning point, a major step forward.
This is hard. I’m in law enforcement and have spent much of my career working with CPD. They are a noble institution with thousands of wonderful and brave public servants. The bad officers are fewer; the good officers are many.
But the institution as a whole has some challenges, and those challenges are getting in the way of being as good as we can be at fighting crime. I have seen that first hand.
The first step is taking an honest look at what’s wrong. And to be clear, that doesn’t mean pointing fingers or casting blame; that’s not what this is about. It’s about what an incredibly challenging job it is to be a police officer, and making sure that our police officers have what they need to do the job right.
As Vanita and the Attorney General both mentioned, the City and CPD have not stood still while we conducted this review. I want to thank and commend the City, Mayor Emanuel, Superintendent Johnson, and the many others at CPD and the City who have worked hard and thoughtfully over this past year or more. They have led, and are leading a number of new reforms and efforts to address some of these deficiencies.
In our report, we address each of those new measures -- in some cases simply with applause, because we agree with them; in other cases, by pointing out how or where we find the measures to be insufficient or inadequate. Those critiques, while important, do not detract from the reality that the City and CPD have leaned forward and are pushing for change. And with the City and CPD’s agreement today, we now have a framework – an anticipated Consent Decree that will include an Independent Monitor – for not only making sure change happens, but making sure it sticks.
Let me emphasize that point. The deficiencies we found are longstanding, some decades old. Prior reform efforts in Chicago’s history -- and there have been many -- have not gotten the job done. And over the years, these festering problems have impacted and to a degree even come to define CPD’s culture.
CPD officers need and deserve what the citizens of Chicago want and deserve: a culture of excellence; a culture of integrity; a culture of altruism; a culture of pride in public service. Today is a big step toward manifesting that culture. And I again thank the Superintendent and the Mayor, as well as their leadership teams, for being part of that.
There has been, over the past couple years, a lot of pain and polarization about policing. There are those who are very skeptical about police and want a complete overhaul. And there are those who think that police, particularly in a violence-ridden city, don’t need any reform and should be unfettered by scrutiny.
Neither. There is so much about CPD that is great and worthy of our deepest respect. And yet no one is above scrutiny, especially our public institutions. This report is balanced, and the truth lies in the balance. Today’s findings are consistent with a police force that is proactive, vigilant and effective. One is a means to the other. I strongly believe implementing these findings is a necessary precursor to our long-term fight against violent crime in Chicago.
Chicago is a world class city that faces a tragic and challenging reality in the form of our gun violence epidemic. Especially last year, but for decades now, we have had too many people die from gun violence; too many kids struck by errant bullets; and entire neighborhoods on the south and west sides unfairly, disproportionately afflicted by gun violence. I spend a large chunk of every day working with CPD and others to stop gun violence in those neighborhoods. For over three years, that is what has kept me up at night. And one thing I have learned is that for us to succeed, we need to fix these systemic issues at CPD.
When officers do bad things and there’s no accountability, that hurts us all. It erodes trust. And when you repeat that pattern year after year, that breaks trust. Broken trust seriously impairs law enforcement. As Superintendent Johnson has said, if folks don’t trust and respect CPD, they won’t work with CPD. If victims, victims’ families, and witnesses across entire communities won’t provide information to help solve crimes and take violent criminals off the street, then crimes don’t get solved, and violence continues.
Today, with the City and CPD, we begin to fix that paradigm. By providing CPD officers first-class training, proper supervision, a promotion system that is fair and is perceived to be fair. By having an accountability system, with consistent rules and results, that holds officers accountable when they violate law or policy. By doing those things we rebuild trust and repair relationships, and make Chicago safer and stronger.
I am a public servant who believes police officers are the noblest of our public servants. They are women and men who’ve taken a job at modest pay where every day they wake up not knowing if they may get hurt or even killed. I’ve been in law enforcement most of my career, and I know that the vast majority of officers do that for this simple reason: they are good people; they care; they want to serve and protect; they want to love and live impactful lives as part of our community.
It’s time to give them what they need to succeed, and in doing so, help all of Chicago shine.
I’d like to turn it over to Mayor Rahm Emanuel, who’ll make some remarks, followed by Superintendent Eddie Johnson.
Justice Department Announces Findings of Investigation into Chicago Police DepartmentRead the Press Release
The Justice Department announced today that it has found reasonable cause to believe that the Chicago Police Department (CPD) engages in a pattern or practice of using force, including deadly force, in violation of the Fourth Amendment of the Constitution. The department found that CPD officers’ practices unnecessarily endanger themselves and result in unnecessary and avoidable uses of force. The pattern or practice results from systemic deficiencies in training and accountability, including the failure to train officers in de-escalation and the failure to conduct meaningful investigations of uses of force.
The city of Chicago and the Justice Department have signed an agreement in principle to work together, with community input, to create a federal court-enforceable consent decree addressing the deficiencies found during the investigation.
“One of my highest priorities as Attorney General has been to ensure that every American enjoys police protection that is lawful, responsive, and transparent,” said Attorney General Loretta E. Lynch. “Sadly, our thorough investigation into the Chicago Police Department found that far too many residents of this proud city have not received that kind of policing. The resulting deficit in trust and accountability is not just bad for residents – it’s also bad for dedicated police officers trying to do their jobs safely and effectively. With this announcement, we are laying the groundwork for the difficult but necessary work of building a stronger, safer, and more united Chicago for all who call it home.”
“The failures we identified in our findings – that we heard about from residents and officers alike — have deeply eroded community trust,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “But today is a moment of opportunity, where we begin to move from identifying problems to developing solutions. I know our findings can lead to reform and rebuild community-police trust because we’ve seen it happen in community after community around the country over the past 20 years.”
“The findings in our report, coupled with the City of Chicago and Police Department’s commitment to work together with us, are an historic turning point and a major step toward sustained change,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois. “Implementing these findings is a necessary precursor to our long-term success in fighting violent crime in Chicago.”
On Dec. 7, 2015, Attorney General Lynch announced the investigation into the CPD and the city’s Independent Police Review Authority (IPRA). The investigation focused on CPD’s use of force, including racial, ethnic and other disparities in use of force, and its systems of accountability.
In the course of its pattern or practice investigation, the department interviewed and met with city leaders, current and former police officials, and numerous officers throughout all ranks of CPD. The department also accompanied line officers on over 60 ride-alongs in every police district; heard from over 1,000 community members and more than 90 community organizations; reviewed thousands of pages of police documents, including all relevant policies, procedures, training and materials; and analyzed a randomized, representative sample of force reports and the investigative files for incidents that occurred between January 2011 and April 2016, including over 170 officer-involved shooting investigations and documents related to over 400 additional force incidents.
The department found that CPD’s pattern or practice of unconstitutional force is largely attributable to deficiencies in its accountability systems and in how it investigates uses of force, responds to allegations of misconduct, trains and supervises officers, and collects and reports data on officer use of force. The department also found that the lack of effective community-oriented policing strategies and insufficient support for officer wellness and safety contributed to the pattern or practice of unconstitutional force.
In addition, the department also identified serious concerns about the prevalence of racially discriminatory conduct by some CPD officers and the degree to which that conduct is tolerated and in some respects caused by deficiencies in CPD’s systems of training, supervision and accountability. The department’s findings further note that the impact of CPD’s pattern or practice of unreasonable force falls heaviest on predominantly black and Latino neighborhoods, such that restoring police-community trust will require remedies addressing both discriminatory conduct and the disproportionality of illegal and unconstitutional patterns of force on minority communities.
In the agreement in principle, the Justice Department and the city of Chicago agreed that compliance with the consent decree will be reviewed by an independent monitor. The agreement in principle provides a general framework for change, but the department will be doing community outreach to solicit input in developing comprehensive reforms. In the days ahead, the department will continue speaking to local authorities, officers and ordinary citizens to gather their perspectives about the challenges facing the city – and the changes needed to address them. Comments from the public may be provided by email to [email protected].
Throughout the department’s investigation, CPD leadership remained receptive to preliminary feedback and technical assistance, and started the process of implementing reforms. Under the leadership of Mayor Rahm Emanuel and Superintendent Eddie Johnson, CPD has taken a number of encouraging steps, including creating the Civilian Office of Police Accountability to replace IPRA; issuing a new transparency policy mandating the release of videos and other materials related to certain officer misconduct investigations; beginning a pilot program for body-worn cameras, to be expanded CPD-wide; and committing to establish an anonymous hotline for employees to report misconduct. While these and other measures are an important start to cooperative reform, a comprehensive, court-enforceable agreement is needed to remedy all of the department’s findings and ensure lasting reform.
In addition, the department has been working with the city of Chicago as part of the Violence Reduction Network, a data-driven, evidence-based initiative that delivers strategic, intensive training and technical assistance. This assistance focuses on developing an overall violence reduction strategic framework; providing immediate technical assistance and expertise to CPD; analyzing high-crime neighborhoods for resource, social service and opportunity gaps; and assisting in building capacity in Chicago’s public safety offices. And in 2016, the U.S. Attorney’s Office for the Northern District of Illinois charged more illegal firearms cases in total, and more as a percentage of its overall cases, than it has in any year since 2004.
This investigation was conducted by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the Northern District of Illinois with the assistance of law enforcement professionals, pursuant to the pattern-or-practice provision of the Violent Crime Control and Law Enforcement Act of 1994. Since 2009, the Special Litigation Section has opened 25 investigations into law enforcement agencies. The section is enforcing 20 agreements with law enforcement agencies, including 15 consent decrees and one post-judgment order. The division recently released a comprehensive report that provides an overview of the police reform work done pursuant to the Violent Crime Control and Law Enforcement Act of 1994, which can be found at the following link: /media/872116/dl?inline.
For more information on the Civil Rights Division and the Special Litigation Section, please visit www.justice.gov/crt.
Chicago Police Department Findings Chicago Agreement in Principle Chicago Police Department Findings Fact Sheet Pattern or Practice Accomplishments DocumentJustice Department Announces Findings of Investigation into Chicago Police DepartmentRead the Press Release
Justice Department Finds a Pattern of Civil Rights Violations by the Chicago Police Department
WASHINGTON – The Justice Department announced today that it has found reasonable cause to believe that the Chicago Police Department (CPD) engages in a pattern or practice of using force, including deadly force, in violation of the Fourth Amendment of the Constitution. The department found that CPD officers’ practices unnecessarily endanger themselves and result in unnecessary and avoidable uses of force. The pattern or practice results from systemic deficiencies in training and accountability, including the failure to train officers in de-escalation and the failure to conduct meaningful investigations of uses of force.
The city of Chicago and the Justice Department have signed an agreement in principle to work together, with community input, to create a federal court-enforceable consent decree addressing the deficiencies found during the investigation.
“One of my highest priorities as Attorney General has been to ensure that every American enjoys police protection that is lawful, responsive, and transparent,” said Attorney General Loretta E. Lynch. “Sadly, our thorough investigation into the Chicago Police Department found that far too many residents of this proud city have not received that kind of policing. The resulting deficit in trust and accountability is not just bad for residents – it’s also bad for dedicated police officers trying to do their jobs safely and effectively. With this announcement, we are laying the groundwork for the difficult but necessary work of building a stronger, safer, and more united Chicago for all who call it home.”
“The failures we identified in our findings – that we heard about from residents and officers alike — have deeply eroded community trust,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “But today is a moment of opportunity, where we begin to move from identifying problems to developing solutions. I know our findings can lead to reform and rebuild community-police trust because we’ve seen it happen in community after community around the country over the past 20 years.”
“The findings in our report, coupled with the City of Chicago and Police Department’s commitment to work together with us, are an historic turning point and a major step toward sustained change,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois. “Implementing these findings is a necessary precursor to our long-term success in fighting violent crime in Chicago.”
On Dec. 7, 2015, Attorney General Lynch announced the investigation into the CPD and the city’s Independent Police Review Authority (IPRA). The investigation focused on CPD’s use of force, including racial, ethnic and other disparities in use of force, and its systems of accountability.
In the course of its pattern or practice investigation, the department interviewed and met with city leaders, current and former police officials, and numerous officers throughout all ranks of CPD. The department also accompanied line officers on over 60 ride-alongs in every police district; heard from over 1,000 community members and more than 90 community organizations; reviewed thousands of pages of police documents, including all relevant policies, procedures, training and materials; and analyzed a randomized, representative sample of force reports and the investigative files for incidents that occurred between January 2011 and April 2016, including over 170 officer-involved shooting investigations and documents related to over 400 additional force incidents.
The department found that CPD’s pattern or practice of unconstitutional force is largely attributable to deficiencies in its accountability systems and in how it investigates uses of force, responds to allegations of misconduct, trains and supervises officers, and collects and reports data on officer use of force. The department also found that the lack of effective community-oriented policing strategies and insufficient support for officer wellness and safety contributed to the pattern or practice of unconstitutional force.
In addition, the department also identified serious concerns about the prevalence of racially discriminatory conduct by some CPD officers and the degree to which that conduct is tolerated and in some respects caused by deficiencies in CPD’s systems of training, supervision and accountability. The department’s findings further note that the impact of CPD’s pattern or practice of unreasonable force falls heaviest on predominantly black and Latino neighborhoods, such that restoring police-community trust will require remedies addressing both discriminatory conduct and the disproportionality of illegal and unconstitutional patterns of force on minority communities.
- the agreement in principle, the Justice Department and the city of Chicago agreed that compliance with the consent decree will be reviewed by an independent monitor. The agreement in principle provides a general framework for change, but the department will be doing community outreach to solicit input in developing comprehensive reforms. In the days ahead, the department will continue speaking to local authorities, officers and ordinary citizens to gather their perspectives about the challenges facing the city – and the changes needed to address them. Comments from the public may be provided by email to [email protected].
Throughout the department’s investigation, CPD leadership remained receptive to preliminary feedback and technical assistance, and started the process of implementing reforms. Under the leadership of Mayor Rahm Emanuel and Superintendent Eddie Johnson, CPD has taken a number of encouraging steps, including creating the Civilian Office of Police Accountability to replace IPRA; issuing a new transparency policy mandating the release of videos and other materials related to certain officer misconduct investigations; beginning a pilot program for body-worn cameras, to be expanded CPD-wide; and committing to establish an anonymous hotline for employees to report misconduct. While these and other measures are an important start to cooperative reform, a comprehensive, court-enforceable agreement is needed to remedy all of the department’s findings and ensure lasting reform.
In addition, the department has been working with the city of Chicago as part of the Violence Reduction Network, a data-driven, evidence-based initiative that delivers strategic, intensive training and technical assistance. This assistance focuses on developing an overall violence reduction strategic framework; providing immediate technical assistance and expertise to CPD; analyzing high-crime neighborhoods for resource, social service and opportunity gaps; and assisting in building capacity in Chicago’s public safety offices. And in 2016, the U.S. Attorney’s Office for the Northern District of Illinois charged more illegal firearms cases in total, and more as a percentage of its overall cases, than it has in any year since 2004.
This investigation was conducted by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the Northern District of Illinois with the assistance of law enforcement professionals, pursuant to the pattern-or-practice provision of the Violent Crime Control and Law Enforcement Act of 1994. Since 2009, the Special Litigation Section has opened 25 investigations into law enforcement agencies. The section is enforcing 20 agreements with law enforcement agencies, including 15 consent decrees and one post-judgment order. The division recently released a comprehensive report that provides an overview of the police reform work done pursuant to the Violent Crime Control and Law Enforcement Act of 1994, which can be found at the following link: https://www.justice.gov/crt/file/922421/download.
For more information on the Civil Rights Division and the Special Litigation Section, please visit www.justice.gov/crt.
Chicago Agreement in Principle Chicago Police Department Findings CPD Findings Factsheet SPL Police AccomplishmentsConvicted Felon from Chicago Sentenced to More Than Five Years in Federal Prison for Illegally Possessing and Trafficking Two Dozen HandgunsRead the Press Release
CHICAGO — A convicted felon from Chicago has been sentenced to more than five years in federal prison for illegally possessing and trafficking two dozen handguns, most of which had been stolen from a shipment of firearms at a railyard on the South Side.
WARREN GATES possessed 24 stolen firearms, 17 of which he illegally purchased from co-defendants who had stolen approximately 111 firearms from a railroad car in Chicago in the early morning hours of April 12, 2015. 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. The stolen 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 the co-defendants broke locks and seals on a train car and walked off with the guns.
Gates, 49, pleaded guilty last year to one count of possession of a firearm by a prohibited person. U.S. District Judge John J. Tharp Jr. imposed the 63-month sentence Wednesday in federal court in Chicago.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and George Lauder, Acting 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.
“The defendant purchased these stolen firearms for the purpose of reselling them to those in our community who would be most interested in purchasing stolen, unregistered and untraceable firearms from an unlicensed firearms dealer,” Assistant U.S. Attorney Christopher Parente argued in the government’s sentencing memorandum. “Those individuals who are willing to pay premiums for firearms on the black market are the individuals who cannot legally purchase firearms and those individuals who cause the most damage to this city by their possession of illegal firearms.”
There were approximately 111 firearms stolen from the cargo train. To date law enforcement has recovered 16 of those firearms at various locations and crime scenes in the Chicago area.
The government is represented by Mr. Parente.
Rockford Man Indicted on Child Pornography ChargesRead the Press Release
ROCKFORD — A Rockford man was indicted yesterday by a federal grand jury on charges of child pornography.
PIERRE D. HAYES, 27, was charged with three counts of transporting child pornography via the internet in 2015.
Each count of transporting child pornography carries a mandatory minimum sentence of five years and a maximum of 20 years in prison, as well as 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 indictment was announced by Zachary T. Fardon, 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 government is represented by Assistant U.S. Attorney Monica V. Mallory.
Former Suburban Middle School Teacher Sentenced to 13 Years for Possessing Child Pornography and Encouraging Underage Boys to Produce Sexually Explicit Images of ThemselvesRead the Press Release
CHICAGO — A former middle school teacher was sentenced today to 13 years in federal prison for accessing child pornography involving a prepubescent minor and encouraging minors to produce sexually explicit images of themselves.
JOHN C. VASTIS began communicating online with one of the victims in 2013. From the outset, the chats were sexually charged. For nearly a year Vastis encouraged the victim to record sexually explicit photos and videos of himself and transmit the images over the internet to Vastis. Several of the images depicted the victim’s private areas. Vastis also admitted in a plea agreement that he watched child pornography involving another victim and possessed images of a prepubescent boy performing a sex act on an adult male.
Vastis, 54, of Lakemoor, pleaded guilty last year to one count of accessing child pornography with the intent to view. U.S. District Judge John J. Tharp Jr. imposed the sentence in federal court in Chicago.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and James M. Gibbons, Special Agent-in-Charge of the Chicago Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. The Lakemoor Police Department, Lake County State’s Attorney’s Office and the Buffalo Grove Police Department provided assistance in the case.
Vastis was arrested in August 2014. He previously worked as a teacher at Meridian Middle School in Aptakisic-Tripp District 102 in Buffalo Grove. The school district cooperated with the investigation, and there were no allegations of sexual exploitation of Vastis’ students.
The investigation was conducted under HSI’s Operation Predator, an international initiative to protect children from sexual predators. Victims of sexual exploitation are encouraged to call HSI’s toll-free tip line at (866) 347-2423, or logon to https://www.ice.gov/predator for further information.
The government was represented by Assistant U.S. Attorney Sarah Streicker.
Former Owner of Rooftop Building Across from Wrigley Field Sentenced to 18 Months for Defrauding Chicago Cubs and Municipal Taxing AgenciesRead the Press Release
CHICAGO — A federal judge today sentenced the former owner of a rooftop building overlooking Wrigley Field to 18 months in prison for defrauding the Chicago Cubs and municipal taxing agencies.
R. MARC HAMID, 48, of Lincolnwood, was convicted last year on four counts of mail fraud and five counts of illegally structuring financial transactions. U.S. District Judge Thomas M. Durkin imposed the sentence in federal court in Chicago.
“Time and again, Hamid returned to one principle above all others: wherever he thought he could cut corners and put more money in his own pocket, he did it,” Assistant U.S. Attorney Barry Jonas argued in the government’s sentencing memorandum. “If there was a way to benefit himself even if to another’s detriment, he did it.”
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; E.C. Woodson, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; and James D. Robnett, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation in Chicago.
Hamid was a licensed Illinois attorney and a former owner and operator of Right Field Rooftops LLC, which did business as Skybox on Sheffield, a rooftop entertainment venue located across the street from Wrigley Field’s right field wall. Hamid also owned and operated JustGreatTickets.com Inc. and Just Great Seats LLC, companies that purchased and re-sold tickets to entertainment and sporting events.
Skybox on Sheffield and other rooftop venues surrounding Wrigley Field had an agreement with the Cubs that required, among other things, that each rooftop pay the Cubs a royalty of 17% of their gross annual revenues. In addition, Cook County and the city of Chicago required the rooftops to pay an amusement tax on admission fees, and to report its amusement tax returns to the municipalities. The state of Illinois also required Skybox on Sheffield to file sales tax returns and to pay the state a certain dollar amount per ticket sold.
Evidence at Hamid’s nine-day trial revealed that for the years 2008 through 2011, Hamid caused Skybox on Sheffield to submit false annual royalty statements to the Cubs that under-reported attendance figures by thousands of paid attendees, and under-reported gross revenues by $1.4 million. At Hamid’s direction, sales from Skybox on Sheffield were diverted to the two ticket companies, thus concealing from the Cubs, Cook County and the city of Chicago Skybox on Sheffield’s true revenue.
Hamid’s accountant, JOSEPH GURDAK, further reduced the attendance and revenue figures reported to the Cubs. Gurdak pleaded guilty last year to one count of mail fraud and one count of willfully filing a false income tax return.
The government is represented by Mr. Jonas and Assistant U.S. Attorneys Sean Driscoll and Katherine Welsh.
United States Announces Settlement with YMCA of Metro Chicago to Ensure Compliance with Americans with Disabilities ActRead the Press Release
CHICAGO — The United States Attorney’s Office today announced a settlement with the YMCA of Metro Chicago to resolve a complaint of discrimination filed on behalf of a child with type 1 diabetes.
The settlement agreement requires the YMCA of Metro Chicago to administer the emergency medicine glucagon to program enrollees with diabetes who have requested it. Glucagon is a potentially lifesaving treatment for hypoglycemia (low blood sugar). It is pre-measured and injectable and is intended to be administered to unconscious or unresponsive individuals by properly trained laypersons.
The settlement agreement also requires the YMCA of Metro Chicago to adopt and implement a comprehensive policy on diabetes management.
The settlement agreement was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois.
The U.S. Attorney’s Office received a discrimination complaint on behalf of a nine-year-old girl with type 1 diabetes who participates on a YMCA swim team. The girl has been prescribed glucagon injections for use in the rare event that she develops severe hypoglycemia and cannot self-administer diabetes treatment. The YMCA of Metro Chicago initially refused to administer glucagon. As a result, the girl could not participate on the YMCA swim team without being accompanied by a family member who could administer glucagon in an emergency.
An investigation by the U.S. Attorney’s Office concluded that the YMCA of Metro Chicago discriminated against the girl by denying her, on the basis of disability, the opportunity to participate in the program, and by failing to make reasonable modifications in its policies regarding the administration of medication.
The YMCA of Metro Chicago denied the allegations of discrimination and made no admission of liability in this matter. Nevertheless, to ensure full compliance with the Americans with Disabilities Act, the YMCA of Metro Chicago agreed to implement a comprehensive training program and establish several other procedures to afford individuals with disabilities, including diabetes, an equal opportunity to participate in its services.
The settlement agreement became effective on Dec. 21, 2016. Although the United States agreed not to presently institute a civil action alleging discrimination under the ADA, it may review the YMCA of Metro Chicago’s compliance with the settlement at any time during the two-year duration of the agreement. If the government believes the agreement has been violated, it reserved the right to institute a civil action in the appropriate U.S. District Court to enforce the agreement.
The government is represented by Assistant U.S. Attorney Virginia Hancock.
Six Members of Violent Chicago Street Gang Convicted on Federal Racketeering Conspiracy ChargesRead the Press Release
CHICAGO — A federal jury today convicted six members of a Chicago street gang known as the Hobos of participating in a criminal organization that engaged in narcotics distribution and committed murders, attempted murders and armed robberies.
The verdicts were rendered after a 15-week trial in federal court in Chicago. In convicting the six defendants of racketeering conspiracy, the jury found the Hobos were a criminal enterprise that robbed from other drug dealers, retaliated against rival gangs, and violently prevented witnesses from cooperating with law enforcement. For nearly a decade the gang engaged in murders, attempted murders, robberies and narcotics distribution, primarily on the south and west sides of Chicago.
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 Chicago High Intensity Drug Task Force (HIDTA). The Task Forces have been responsible for disrupting some of the Chicago area’s most sophisticated drug-trafficking organizations.
The verdicts were announced by Zachary T. Fardon, 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 James D. Robnett, 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.
Convicted of racketeering conspiracy were GREGORY CHESTER, of Chicago; ARNOLD COUNCIL, of Chicago; PARIS POE, of Chicago; GABRIEL BUSH, of Chicago; WILLIAM FORD, of Chicago; and DERRICK VAUGHN, of Chicago. Council, Bush, Poe and Vaughn were also convicted of committing murder in aid of racketeering. Poe was convicted of committing murder to obstruct justice, and the jury convicted Council of using a firearm during a robbery of a clothing store. The jury also convicted Ford on a gun charge and a drug charge.
The convictions carry maximum sentences of life in prison. U.S. District Judge John J. Tharp Jr. scheduled sentencing hearings for June 23, 2017.
The guilty verdicts bring to ten the total number of Hobos convicted in the case. Four members of the gang, including Chester’s cousin, pleaded guilty prior to trial. An eleventh Hobo was identified in the indictment as a coconspirator, but he died before the charges were brought.
Evidence at trial revealed the Hobos were comprised of members from other street gangs that were once rivals. The Hobos allied together in order to more profitably distribute narcotics, accumulate wealth, 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. Members of the gang shared the wealth with each other, buying luxury items and taking trips to Hawaii and Florida. Although the Hobos lacked a traditional hierarchy, Chester was recognized as its leader. From 2004 to 2013 the Hobos engaged in narcotics trafficking, home invasions and armed robberies, often of rival drug dealers.
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 today’s convictions.
The government is represented by Assistant U.S. Attorneys Patrick Otlewski, Derek Owens and Timothy Storino.
U.S. Attorney’s Office Collected Nearly $60 Million in Civil, Criminal and Asset Forfeiture Actions in Fiscal Year 2016Read the Press Release
CHICAGO — The United States Attorney’s Office for the Northern District of Illinois collected nearly $60 million in criminal, civil and asset forfeiture actions in Fiscal Year 2016, Zachary T. Fardon, United States Attorney for the Northern District of Illinois, announced today.
The 2016 collections included $16,872,634 in criminal actions, $11,240,052 in civil actions, and $31,823,808 in asset forfeiture actions. The total of $59,936,494 is more than double the Office’s Fiscal Year 2016 budget of approximately $28.6 million. The total includes more than $3.6 million in criminally forfeited drug proceeds from convicted members of the Sinaloa Cartel, and more than $200,000 in administrative and criminal forfeitures arising from the prosecution of Steven M. Brazile, a corporate executive who used fraud proceeds to operate a classic car business.
The Office this year was able to restore $15.4 million to victims of federal crimes. It also collected $3,584,521 in criminal and civil cases pursued jointly with other U.S. Attorneys’ Offices and components of the U.S. Department of Justice.
“Our attorneys and staff place a high priority on recovering funds for the federal treasury and for victims of federal crimes,” said U.S. Attorney Fardon. “The Office continues to deliver a valuable return to the taxpayers of our district.”
Nationally, Attorney General Loretta E. Lynch recently announced that the Justice Department collected more than $15.3 billion in civil and criminal actions in Fiscal Year 2016, which ended Sept. 30, 2016. This figure represents more than five times the approximately $3 billion budget appropriated to the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department in that period.
“Every day, the men and women of the Department of Justice work tirelessly to enforce our laws, ensuring that taxpayer dollars are used properly and that the American people are protected from exploitation and abuse,” said Attorney General Lynch. “I want to thank the prosecutors and trial attorneys who made this year’s collections possible, and I want to emphasize that the department remains committed to the well-being of our people and our nation.”
The largest collections nationally were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct, or collected fines imposed on individuals or corporations for violations of federal health, safety, mortgage, financial, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Former President of St. Charles Company Sentenced to 70 Months in Federal Prison for Wire Fraud and Income Tax EvasionRead the Press Release
ROCKFORD — The former President of Baytree Investors Inc., a defunct St. Charles company, was sentenced Wednesday by U.S. District Judge Frederick J. Kapala.
CHRISTOPHER A. JANSEN, 64, of St. Charles, was sentenced to 70 months in federal prison, to be followed by three years of supervised release, and ordered to pay $269,978 in restitution. Jansen pleaded guilty on Oct. 14, 2008, to charges of wire fraud and evading income taxes.
According to the written plea agreement, Jansen was President of Baytree Investors Inc., an Illinois corporation engaged in acquiring trucking companies. In 2001 Jansen learned DFC Transportation, a trucking company headquartered in Huntley, was for sale. Jansen admitted in his plea agreement that he created a Delaware corporation, DFCTC Holding Inc., and arranged for DFCTC to purchase DFC with money Jansen would borrow using DFC receivables as collateral. Jansen further admitted that he arranged for other individuals to be the owners of DFCTC, some of whom were previous investors in Baytree business acquisitions that had failed. Jansen also admitted that he represented to others that he was the corporate secretary and controlled both DFCTC and DFC, without appointment or authority, and avoided having shareholder or director meetings.
After its purchase, Jansen arranged for DFC to use its receivables to borrow more money from a bank, and without authorization ordered employees to transfer money from DFC to DFCTC. Jansen admitted he then distributed the money to himself and others for their personal use and benefit without disclosing it to the shareholders and directors. Specifically, on March 22, 2002, Jansen ordered the transfer of $250,000 by wire from a DFC account in Utah to a DFCTC account in St. Charles, for his own personal benefit and the benefit of others, without disclosing it to the shareholders or directors of either corporation.
In pleading guilty, Jansen further admitted that he attempted to evade income tax for the year 2002 that he owed to the United States. Specifically, Jansen admitted he failed to file a federal income tax return for that year, knowing federal income taxes would be calculated and due. Jansen also admitted he used a bank account in the name of a dissolved corporation, Talcott Financial Corporation, to receive his income and disburse his expenditures and intentionally failed to have Talcott file informational forms with the IRS for taxable income distributed to him from the account. Jansen also admitted in the plea agreement that he controlled Baytree and DFCTC and intentionally failed to have those corporations file informational forms with the IRS, such as Form 1099, regarding distributions of taxable income to him. Further, Jansen admitted he did not have a bank account in his name in order to avoid easy tracing of his income and avoid reporting to the IRS.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; James D. Robnett, Special Agent-In-Charge of the Chicago Office of the Internal Revenue Service - Criminal Investigation Division; Michael J. Anderson, Special Agent-In-Charge of the Chicago Office of the Federal Bureau of Investigation; and Jeffrey A. Monhart, Regional Director of the Chicago Regional Office of the U.S. Department of Labor, Employee Benefits Security Administration.
The government was represented by Assistant U.S. Attorney Michael D. Love.
Redflex Traffic Systems Enters into Non-Prosecution Agreement with United StatesRead the Press Release
CHICAGO — The Department of Justice and the United States Attorney’s Offices for the Northern District of Illinois and the Southern District of Ohio (collectively, “DOJ”) have entered into a Non-Prosecution Agreement with Redflex Traffic Systems Inc., a Phoenix-based automated safety company.
The agreement was announced by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Benjamin C. Glassman, United States Attorney for the Southern District of Ohio.
The agreement was reached in part due to Redflex’s extensive and thorough cooperation over recent years, which is detailed in the agreement. It included cooperation with the successful prosecutions of several individuals, including a high-ranking city of Chicago official and Redflex’s prior Chief Executive Officer.
Among the company’s obligations under the agreement, which shall continue for two years, Redflex will pay restitution and compensatory damages to the City of Chicago, the amount of which will be determined either by a final judgment or a settlement agreement in Chicago’s pending civil lawsuit against Redflex. Redflex will also pay restitution of $100,000 to the City of Columbus, Ohio.
Further, Redflex agreed to cooperate fully with DOJ and any other law enforcement agency designated by DOJ, including the Australian Federal Police and other Australian law enforcement authorities. As part of that obligation, Redflex must, among other things, provide DOJ, the Australian Federal Police, and other Australian law enforcement authorities, upon request, all non-privileged information, documents, records, or other tangible evidence. Notwithstanding the two-year time period of the agreement, Redflex agreed to cooperate with DOJ, the Australian Federal Police, and other Australian law enforcement authorities until all of their investigations or prosecutions are concluded.
In exchange for Redflex’s fulfillment of its obligations under the agreement, DOJ agreed that it will not criminally prosecute Redflex for any of the conduct arising out of investigations in Chicago and Columbus. The agreement does not relate to any potential tax charges.
Redflex Traffic Systems is wholly owned by Redflex Holdings Group of Melbourne, Australia, which owns and operates a network of digital speed and red-light cameras worldwide. The company installs cameras that automatically record and ticket drivers who run red lights. As part of the Non-Prosecution Agreement, Redflex accepted responsibility for its conduct related to the illegal activities of its employees in recent U.S. investigations.
Its former CEO was convicted as part of the probes into bribes paid to elected officials to procure or expand Redflex’s contracts with Chicago and Columbus. The investigations also resulted in the convictions of a Chicago official and a Columbus lobbyist. John Bills, a former Chicago assistant transportation commissioner, was convicted of accepting cash and benefits from Redflex in exchange for expanding the company’s business with Chicago. The lobbyist, John Raphael, pleaded guilty to extorting cash from Redflex to pass on to elected officials in Ohio in an effort to obtain red-light camera contracts.
Since the inception of the U.S. investigations, Redflex has initiated substantial additions and changes to its compliance program, policies and procedures. The company agreed in the Non-Prosecution Agreement to revise and address any deficiencies in its compliance code, policies and procedures regarding compliance with applicable anti-bribery and anti-corruption laws. Redflex agreed to adopt new policies to ensure that it maintains a rigorous anti-bribery and anti-corruption compliance code, and to install procedures designed to detect and deter violations of such laws.
During the term of the agreement, Redflex must prepare at least four follow-up reports and periodically submit them to DOJ. If DOJ determines that Redflex has violated any provision of the Non-Prosecution Agreement, Redflex shall be subject to prosecution for any applicable violation of U.S. law, including perjury and obstruction of justice.
The government was represented in the Chicago case by Mr. Fardon and Assistant U.S. Attorneys Laurie Barsella and Timothy Storino of the Northern District of Illinois. The Chicago case was investigated by the FBI’s Chicago Field Office, the IRS Criminal Investigation Division, and the City of Chicago’s Inspector General’s Office.
The government in the Columbus case was represented by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio. The Columbus case was investigated by the FBI’s Cincinnati Field Office, Columbus Resident Agency, the IRS Criminal Investigation Division, and the Ohio Bureau of Criminal Investigation.
Redflex Traffic Systems Enters into Non-Prosecution Agreement with United StatesRead the Press Release
The Department of Justice and the United States Attorney’s Offices for the Northern District of Illinois and the Southern District of Ohio (collectively, “DOJ”) have entered into a non-prosecution agreement with Redflex Traffic Systems Inc., a Phoenix-based automated safety company.
The agreement was announced by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Benjamin C. Glassman, United States Attorney for the Southern District of Ohio.
The agreement was reached in part due to Redflex’s extensive and thorough cooperation over recent years, which is detailed in the agreement. It included cooperation with the successful prosecutions of several individuals, including a high-ranking city of Chicago official and Redflex’s prior Chief Executive Officer.
Among the company’s obligations under the agreement, which shall continue for two years, Redflex will pay restitution and compensatory damages to the City of Chicago, the amount of which will be determined either by a final judgment or a settlement agreement in Chicago’s pending civil lawsuit against Redflex. Redflex will also pay restitution of $100,000 to the City of Columbus, Ohio.
Further, Redflex agreed to cooperate fully with DOJ and any other law enforcement agency designated by DOJ, including the Australian Federal Police and other Australian law enforcement authorities. As part of that obligation, Redflex must, among other things, provide DOJ, the Australian Federal Police, and other Australian law enforcement authorities, upon request, all non-privileged information, documents, records, or other tangible evidence. Notwithstanding the two-year time period of the agreement, Redflex agreed to cooperate with DOJ, the Australian Federal Police, and other Australian law enforcement authorities until all of their investigations or prosecutions are concluded.
In exchange for Redflex’s fulfillment of its obligations under the agreement, DOJ agreed that it will not criminally prosecute Redflex for any of the conduct arising out of investigations in Chicago and Columbus. The agreement does not relate to any potential tax charges.
Redflex Traffic Systems is wholly owned by Redflex Holdings Group of Melbourne, Australia, which owns and operates a network of digital speed and red-light cameras worldwide. The company installs cameras that automatically record and ticket drivers who run red lights. As part of the non-prosecution agreement, Redflex accepted responsibility for its conduct related to the illegal activities of its employees in recent U.S. investigations.
Its former CEO was convicted as part of the probes into bribes paid to elected officials to procure or expand Redflex’s contracts with Chicago and Columbus. The investigations also resulted in the convictions of a Chicago official and a Columbus lobbyist. John Bills, a former Chicago assistant transportation commissioner, was convicted of accepting cash and benefits from Redflex in exchange for expanding the company’s business with Chicago. The lobbyist, John Raphael, pleaded guilty to extorting cash from Redflex to pass on to elected officials in Ohio in an effort to obtain red-light camera contracts.
Since the inception of the U.S. investigations, Redflex has initiated substantial additions and changes to its compliance program, policies and procedures. The company agreed in the non-prosecution agreement to revise and address any deficiencies in its compliance code, policies and procedures regarding compliance with applicable anti-bribery and anti-corruption laws. Redflex agreed to adopt new policies to ensure that it maintains a rigorous anti-bribery and anti-corruption compliance code, and to install procedures designed to detect and deter violations of such laws.
During the term of the agreement, Redflex must prepare at least four follow-up reports and periodically submit them to DOJ. If DOJ determines that Redflex has violated any provision of the non-prosecution agreement, Redflex shall be subject to prosecution for any applicable violation of U.S. law, including perjury and obstruction of justice.
The government was represented in the Chicago case by Mr. Fardon and Assistant U.S. Attorneys Laurie Barsella and Timothy Storino of the Northern District of Illinois. The Chicago case was investigated by the FBI’s Chicago Field Office, the IRS Criminal Investigation Division, and the City of Chicago’s Inspector General’s Office.
The government in the Columbus case was represented by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio. The Columbus case was investigated by the FBI’s Cincinnati Field Office, Columbus Resident Agency, the IRS Criminal Investigation Division, and the Ohio Bureau of Criminal Investigation.
North Suburban Man Charged with Fraud in Connection with Ponzi-Type Scheme That Swindled Elderly InvestorsRead the Press Release
CHICAGO — A north suburban man defrauded more than a dozen clients, some of whom were elderly and had pledged their retirement savings, in a Ponzi-type scheme that netted him at least $1 million, according to a criminal complaint filed in federal court in Chicago.
RICHARD K. BOOY, the founder of Principal Financial Strategies LLC and the now-defunct Safe Financial Strategies Inc., used the promise of no-risk investments and guaranteed returns to persuade at least 15 clients to hand over at least $1 million, the complaint states. Although Booy claimed to be affiliated with the widely known investment firm Principal Financial Group, he had no actual relationship with the firm and was not authorized to invest client funds with it. Instead of investing the funds as promised to clients, Booy used the victims’ money to cover personal expenses, including credit card debt and purchases at Best Buy and DirecTV, and to pay earlier investors through Ponzi-type payments, the complaint states.
The complaint was filed Wednesday in U.S. District Court in Chicago. It charges Booy, 48, of Vernon Hills, with one count of mail fraud. He is scheduled to make an initial appearance today at 3:00 p.m. before U.S. Magistrate Judge M. David Weisman.
The complaint was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; E.C. Woodson, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; Jeffrey A. Monhart, Regional Director of the Chicago Regional Office of the U.S. Department of Labor, Employee Benefits Security Administration; and Tanya Solov, Director of the Illinois Securities Department of the Illinois Secretary of State.
The complaint alleges that the fraud scheme began in approximately June 2014 and remained ongoing as of this month. Most of Booy’s victims are elderly, and some paid him their entire life savings or funds from retirement accounts, the complaint states. The victims include a Chicago pastor, a retired painter, a retired government worker, and an individual who suffers from Parkinson’s Disease. Booy often met personally with the victims in their homes, misrepresenting to them that their investments were guaranteed to return a profit, the complaint states.
Booy continued his investment scheme even after Principal Financial Group in September obtained a temporary restraining order against him that led to a court-authorized seizure of his computer and other evidence from Booy’s home, according to the complaint.
The public is reminded that a complaint 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.
Mail fraud carries a maximum sentence of 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. Attorney Matthew Ebert.
Three Rockford-Area Men Sentenced on Arson Conspiracy ChargeRead the Press Release
ROCKFORD — Three Rockford-area men have been sentenced for their roles in an arson conspiracy to use an explosive to damage a pickup truck.
Today, JASON VANDUYN, 41, of Machesney Park, was sentenced by U.S. District Judge Philip G. Reinhard to 151 months in federal prison, to be followed by three years of supervised release. On Sept. 19, 2016, Vanduyn pleaded guilty to the conspiracy charge.
According to the written plea agreement, Vanduyn admitted that between June 7, 2015, and June 12, 2015, he recruited co-defendants BRIAN BURD, 48, and ROBERT WARMOTH, 43, both of Rockford, to blow up a pickup truck. As stated in the plea agreement, Vanduyn had been in a fistfight with the owner of the truck on June 7, 2015, and Vanduyn wanted to exact revenge on the owner. Vanduyn offered to pay Burd and Warmoth to blow up the truck and provided them with an explosive to use. During the early morning hours of June 12, 2015, Warmoth drove Burd to an area near Theodore Street in Loves Park, where the truck was parked. Burd smashed a window on the truck and placed the explosive in the truck where it detonated. No one was injured in the ensuing explosion.
Burd and Warmoth pleaded guilty to the conspiracy charge on Aug. 8, 2016. On Dec. 12, 2016, Burd and Warmoth were each sentenced to 30 months in federal prison, to be followed by three years of supervised release. Judge Reinhard also ordered restitution of $12,000, jointly and severally, to be paid by the three co-defendants.
The sentencings were announced by Zachary T. Fardon, 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; George Lauder, Acting Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; and, Chuck Lynde, Chief of the Loves Park Police Department. The investigation was conducted under the auspices of the FBI Safe Streets Task Force, which includes representatives from FBI, ATF, Loves Park Police Department, Winnebago County Sheriff’s Department, and Rockford Police Department.
The government was represented by Assistant U.S. Attorney Margaret J. Schneider.
Sycamore Attorney Indicted on Bankruptcy Fraud ChargesRead the Press Release
ROCKFORD — A Sycamore attorney was indicted today by a federal grand jury on charges of bankruptcy fraud.
KEVIN O. JOHNSON, also known as “K.O. Johnson,” 50, of Sycamore, was charged with four counts of bankruptcy fraud and four counts of making a false oath in a bankruptcy case under penalty of perjury, fraudulently concealing or withholding information in the books or records of the financial affairs of the debtor, and concealing assets.
As alleged in the indictment, Johnson, a Sycamore attorney whose practice included bankruptcy law, filed a Chapter 7 Bankruptcy Petition on Dec. 31, 2011. The indictment alleges that Johnson fraudulently concealed property from the bankruptcy trustee, creditors, and the United States Trustee, including complete information about $1,790,000 of account receivables owed to Johnson by his present and former clients. The indictment charges that Johnson failed to comply with a court order requiring Johnson to turn over all proceeds from the collection of the account receivables. Johnson is further charged with having directed clients not to send any payments to the Bankruptcy Trustee and asking clients to sign misleading documents about the nature of payments they made, despite Johnson knowing that all future account receivable payments were required to be made to the Trustee.
The indictment also alleges that Johnson made false statements concerning his security interests and liens on the $1,790,000 of account receivables, removed invoices and fee agreements from client files, and obstructed the Bankruptcy Trustee by omitting a bank account Johnson used to deposit a check received in payment of an account receivable owed to Johnson at the time he filed for bankruptcy.
The indictment was announced by Zachary T. Fardon, 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 charge in this case carries a maximum penalty of up to five years in prison, and a fine of up to $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater. The Court may also impose a sentence of probation of one to five years, and a term of supervised release of up to three years. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. 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 government is represented by Assistant U.S. Attorney Michael D. Love.
Ohio Man to Be Arraigned Today on Federal Drug Charge in First Chicago-Area Prosecution of Synthetic Opioid CarfentanilRead the Press Release
CHICAGO — An Ohio man will be arraigned today on a federal drug charge in the first Chicago-area prosecution related to the synthetic opioid carfentanil.
CLIFFORD REED allegedly purchased multi-kilogram quantities of heroin from various sources in Chicago, and then mixed it with carfentanil to increase the amount of heroin he could distribute. Carfentanil is a synthetic opioid listed federally as a Schedule II controlled substance. The drug is approximately 100 times stronger than fentanyl and approximately 10,000 times stronger than morphine. Carfentanil is most frequently used as a tranquilizer for elephants and other large mammals in zoos and wildlife environments.
Reed, 27, of Cincinnati, Ohio, was indicted earlier this month by a federal grand jury in Chicago on one count of distributing a kilogram or more of a substance containing a mixture of heroin, fentanyl and carfentanil. His arraignment is scheduled for 1:30 p.m. today before U.S. District Judge Sara L. Ellis.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and James M. Gibbons, Special Agent-in-Charge of the Chicago Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. The Illinois State Police provided assistance in the investigation.
“Investigating heroin and opioid trafficking is the number one narcotics enforcement priority in our office,” said U.S. Attorney Fardon. “Carfentanil-laced narcotics pose an extremely serious threat to our communities, and anyone who attempts to distribute it will be held accountable.”
“Carfentanil is an insidious opioid with deadly consequences for users and first responders alike,” said Special Agent-in-Charge Gibbons. “This is the first carfentanil case to be charged in federal court here, clearly demonstrating the tenacity with which HSI is combatting the ongoing epidemic affecting our country. We are committed to protecting public safety by keeping this dangerous substance out of our communities and holding those responsible for fueling this public health crisis to the fullest extent of the law.”
The federal investigation revealed that Reed traveled to the South Side of Chicago earlier this year to distribute carfentanil-laced heroin to an individual who, unbeknownst to Reed, was cooperating with law enforcement, according to a criminal complaint and affidavit previously filed in the case. The transaction between Reed and the cooperating source occurred on Sept. 9, 2016, in a vehicle near 93rd Street and Stony Island Avenue, the complaint states. Shortly after the audio-recorded deal, law enforcement officers stopped the vehicle and arrested Reed on an outstanding warrant from Ohio, the complaint states. The officers seized from the vehicle approximately one kilogram of the carfentanil-laced heroin, according to the complaint.
Federal authorities recently took custody of Reed and transported him to Chicago for the arraignment. His indictment marks the first time a defendant has been charged in the Northern District of Illinois with distributing carfentanil-laced heroin.
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 distribution count in the indictment is punishable by a mandatory minimum sentence of ten years in prison, and a maximum sentence of life. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant U.S. Attorney Christopher Hotaling.
Owner of Two Recycling Businesses Arrested in Multi-Million Dollar Fraud Scheme Involving Landfilling and Re-Selling of Potentially Hazardous Electronic WasteRead the Press Release
CHICAGO — The owner of two recycling businesses was arrested today for allegedly operating a multi-million dollar fraud scheme involving the illegal landfilling or re-selling of potentially hazardous electronic waste.
BRIAN BRUNDAGE, the former owner of Intercon Solutions Inc. and the current owner of EnviroGreen Processing LLC, caused thousands of tons of e-waste and other potentially hazardous materials to be landfilled, re-sold to customers who shipped the materials overseas, or stockpiled, according to an indictment returned in U.S. District Court in Chicago. Brundage fraudulently misrepresented to his customers that the materials had been disassembled and recycled in an environmentally sound manner, the indictment states.
The indictment was returned earlier this month and ordered unsealed after Brundage's arrest this morning. The indictment charges Brundage, 45, of Dyer, Ind., with five counts of income tax evasion, four counts of mail fraud and two counts of wire fraud. He is scheduled to make an initial appearance at 3:00 p.m. today before U.S. Magistrate Judge M. David Weisman in Chicago.
The indictment seeks forfeiture of $10 million in cash.
The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John K. Gauthier, Acting Special Agent-in-Charge the U.S. Environmental Protection Agency’s Criminal Investigation Division in Chicago; James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division; James M. Gibbons, Special Agent-in-Charge of the Chicago Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and Carol Fortine Ochoa, Inspector General of the U.S. General Services Administration.
According to the indictment, several private companies and governmental entities hired Chicago Heights-based Intercon and Gary, Ind.-based EnviroGreen for the disassembly, recycling or destruction of e-waste and other materials. The customer agreements stipulated that Intercon and EnviroGreen would handle all materials in an environmentally sound manner, without landfilling or exporting, and without reselling the materials in whole form. Intercon specifically represented that it engaged in “absolutely no reselling, no remarketing, no landfilling, no incineration, and no exportation,” the indictment states.
Unbeknownst to their customers, Intercon and EnviroGreen for more than a decade knowingly sold the e-waste and other materials, including potentially hazardous glass and batteries, to vendors whom Brundage knew would ship the materials overseas. Some of the materials contained Cathode Ray Tubes, which are the glass video display components of certain electronic devices, such as computer and television monitors, and which contain potentially hazardous amounts of lead, according to the indictment. The indictment further alleges that Brundage caused multiple tons of CRT glass and other potentially hazardous materials to be destroyed in environmentally unsafe ways and later landfilled, all in direct contravention to Intercon’s public representations regarding its recycling practices.
At one point in 2011, Intercon was publicly accused of shipping potentially hazardous materials to Hong Kong. In response, Brundage began a fraudulent effort to publicly deny and conceal Intercon’s involvement in the shipment, the indictment states. Brundage destroyed business records related to the shipment and made efforts to conceal other overseas shipments of large quantities of e-waste, according to the indictment. The fraud scheme continued for another five years, the indictment states.
The tax charges relate to Brundage’s efforts to evade paying thousands of dollars in income taxes during the scheme, according to the indictment. Brundage often caused Intercon to pay his own personal expenses, including wages for his nanny and payments to the Horseshoe Casino in Hammond, Ind., while later deducting the expenditures as business expenses on Intercon’s corporate tax returns, the indictment states.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Each count of income tax evasion is punishable by up to five years in prison. The wire fraud and mail fraud counts each carry a maximum sentence of 20 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 Sean J.B. Franzblau and Special Assistant U.S. Attorney Crissy Pellegrin.
Man Posing as a Highly Decorated Navy Seal Sentenced to Federal PrisonRead the Press Release
ROCKFORD — A California man claiming to have been a Navy SEAL was sentenced today by U.S. District Judge Philip G. Reinhard to federal prison for defrauding non-profit organizations.
WILLIAM J. BURLEY, 36, formerly of Yucaipa, Calif., was sentenced to three years in federal prison, to be followed by three years of supervised release for defrauding International Aid Services – USA Inc. (IAS America), a non-profit organization located in Crystal Lake, and International Aid Services (IAS International), a non-profit organization based in Stockholm, Sweden. Burley was also ordered to pay full restitution of $32,454 to IAS America. Burley pleaded guilty on Aug. 30, 2016, to wire fraud.
In his written plea agreement, Burley admitted that between July 17, 2012, and Oct. 8, 2012, he devised a scheme to defraud IAS America and IAS International. The two non-profit organizations provided relief to, and assistance in, the economic development of poverty-stricken individuals in Africa. On July 11, 2012, while doing humanitarian work, four IAS International workers were ambushed and assaulted in Somalia. Three of the workers, including a woman, were kidnapped. The fourth worker was shot and left behind.
Burley approached IAS International and offered to assist it in negotiating with the Somali captors for the release of the employees and, if necessary, to assist in the rescue of the captives. In so doing, Burley claimed to have been a former Navy SEAL and to have received numerous citations while in the Navy, including a Presidential Unit Citation, an Afghanistan Campaign Medal, a Silver Lifesavings Medal, and a Global War on Terrorism Medal.
All of those claims were false. The defendant also falsely claimed to have attended the University of Delaware and University of Maryland and to have been a consultant for the Navy, the Department of Defense, and the Department of State.
Burley was able to convince IAS America to pay him $30,000 and to pay for his travel expenses to Kenya. At Burley’s request, IAS America also paid for another individual to fly to Kenya to assist Burley in Burley’s efforts to either negotiate with the Somali pirates or to arrange for a rescue operation. When he was unable to obtain the release of the hostages, Burley returned to the United States. In September 2012 he went to Crystal Lake, where he presented a “rescue plan” for the hostages to IAS America and made additional false representations about his past achievements. When IAS America learned that Burley was not a SEAL, it ended its relationship with him.
The three hostages in Somalia were not released until May 2014.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
The government was represented by Assistant U.S. Attorney John G. McKenzie.
Suburban Investment Advisor Charged with Securities Fraud for Engaging in Fraudulent Allocation SchemeRead the Press Release
CHICAGO — A suburban investment advisor has been indicted on federal fraud charges for allegedly allocating profitable trades to his personal accounts while assigning unprofitable trades to his clients.
CHARLES J. DUSHEK, the president of Lisle-based Capital Management Associates Inc., placed more than $400 million in securities trades without designating in advance whether he was trading personal funds or client funds, according to the indictment. He then waited up to five days to allocate the trades so that he could select the profitable ones for his personal accounts and assign the losing trades to the accounts of unsuspecting clients, the indictment states. From July 2008 to August 2012, Dushek withdrew from his personal accounts more than $1 million in gains realized from the scheme, according to the indictment.
The ten-count indictment was returned Wednesday in U.S. District Court in Chicago. It charges Dushek, 72, of Warrenville, with nine counts of securities fraud and one count of employing a scheme to defraud a client. Arraignment has been scheduled for Dec. 20, 2016, at 9:30 a.m., before U.S. District Judge Virginia M. Kendall.
The indictment was announced by Zachary T. Fardon, 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, which previously filed a civil enforcement lawsuit against Dushek, provided valuable assistance.
According to the indictment, Dushek made more than 16,000 purchases of publicly traded securities valued at more than $400 million at the time of purchase. The purchases included shares in Walgreens, Avon Products, British Petroleum, Caterpillar and PepsiCo. Dushek maintained spreadsheets that identified whether particular trades should be allocated to client accounts or his personal account, knowing that he had manipulated the allocations by waiting one to five days after the trades were complete before allocating them, the indictment states. The delay fraudulently ensured that profitable trades were allocated to Dushek’s personal accounts while unprofitable trades were assigned to client accounts, the indictment states.
The public is reminded that an indictment 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.
Each count of securities fraud is punishable by up to 25 years in prison. Employing a scheme to defraud a client carries a maximum sentence of five years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant U.S. Attorneys Rick Young and Kruti Trivedi.
Oklahoma Man Sentenced to 25 Years in Federal Prison for Producing Sexually Explicit Images of Children He Met OnlineRead the Press Release
CHICAGO — An Oklahoma man has been sentenced to 25 years in federal prison for producing sexually explicit images of children with whom he communicated online.
In several online conversations in 2014 and 2015, TODD NOBLE persuaded three minor girls to take sexually explicit photographs and videos of themselves. He then convinced the girls to send the images to him via text message or online messaging service. Several of the images depicted the victims’ private areas.
Noble was arrested in April 2015 after the parents of one of the girls, who lived in Evanston, discovered the images on their child’s iPhone.
Noble, 51, of Lindsay, Okla., pleaded guilty earlier this year to one count of production of child pornography. U.S. District Judge Andrea R. Wood imposed the sentence Thursday in federal court in Chicago.
The sentence was announced by Zachary T. Fardon, 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.
“Defendant preyed upon the most innocent and vulnerable of victims – children,” Assistant U.S. Attorney April M. Perry argued in the government’s sentencing memorandum. “Defendant invaded the sanctity of these girls’ homes, victimizing them when they were just yards away from their parents who believed that that their daughters were safe.”
The Evanston victim was eleven years old when Noble began communicating with her online. In numerous conversations over the course of several weeks, Noble asked her to take sexually explicit photos and videos of herself and send them to him. According to Noble’s plea agreement, in one conversation the girl told him she was “not so sure,” and that she had “never done it before.” Noble responded with instructions on how to make the images more sexually explicit, the plea agreement states.
Noble admitted in the plea agreement that he engaged in similar online conduct with minor girls from Texas and Oklahoma. Noble told those girls that he was a teenager, and he sent the Oklahoma victim a photograph of what appeared to be a teenage boy, the plea agreement states.
The government is represented by Ms. Perry.
Former Rockford Union Local President Sentenced to Federal PrisonRead the Press Release
ROCKFORD — A former union local president was sentenced today by U.S. District Judge Philip G. Reinhard to federal prison for embezzling from the union.
DAVID FLEURY, 50, of Rockford, was sentenced to two years in federal prison, to be followed by three years of supervised release. Fleury was also ordered to pay full restitution of $318,036 to Local 6 of the International Union of Bricklayers and Allied Craftworkers. Judge Reinhard granted the government’s request that it use funds in Fleury’s retirement account to pay restitution. Fleury had pleaded guilty on August 9, 2016, to embezzlement.
Fleury was the president of Local 6 from 2009 until 2015. In his written plea agreement, Fleury admitted that between January 2011 and May 2015, he embezzled over $250,000 from Local 6. He did so, according to the plea agreement, by having additional salary checks paid to him, using a union credit card for his personal expenses, siphoning off union dues that had been paid in cash, and using his union credit card to pay for travel expenses related to various union funds and keeping the reimbursements he received from those funds. Fleury admitted to using the embezzled monies to pay for personal expenses, including vacations and gambling at casinos. Fleury also admitted to signing false reports with the United States Department of Labor.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Purcell, District Director of the Chicago office of the United States Department of Labor – Office of Labor-Management Standards.
The government was represented by Assistant U.S. Attorney John G. McKenzie.
Federal Fugitive Sentenced to 20 Years in Federal Prison on Firearm ChargesRead the Press Release
ROCKFORD — A Belvidere man was sentenced Wednesday on firearms charges by U.S. District Judge Philip G. Reinhard.
MICHAEL TAPIA, 26, was sentenced to a total of 20 years in federal prison and to three years of supervised release following imprisonment. Tapia did not appear at the sentencing and was sentenced in absentia after Judge Reinhard found that Tapia was knowingly and voluntarily absent.
On Aug. 25, 2016, following a four-day jury trial, Tapia was found guilty of one count of conspiring to receive, possess, conceal, store, sell, and dispose of stolen firearms and ammunition; one count of receiving, possessing, concealing, and storing stolen firearms and ammunition; and one count of illegally possessing firearms and ammunition as a convicted felon.
Three other area men who were also charged in the case previously pleaded guilty to firearm charges: TEOVANNI CUNNINGHAM, 32, of Rockford, MICHAEL SCHAFFER, 34, and DARRELL REED, 28, both of Byron.
According to the indictment and evidence at trial, on Dec. 31, 2012, Tapia and Cunningham broke into a residence in northern Illinois and stole over 21 firearms and ammunition. Tapia and Cunningham later transferred some of the stolen firearms to their co-defendants and stored some of the firearms at other locations.
Cunningham pleaded guilty on May 31, 2016, to conspiring to receive, possess, conceal, store, sell, and dispose of stolen firearms and ammunition; receiving, possessing, concealing, and storing stolen firearms and ammunition; and illegally possessing firearms and ammunition as a felon. Cunningham was sentenced on Sept. 20, 2016, to a total of 188 months in federal prison, to be followed by three years of supervised release, and was ordered to pay restitution in the amount of $12,723.99.
Reed pleaded guilty on June 15, 2016, to receiving, possessing, concealing, storing, selling, and disposing of stolen firearms, and was sentenced on Oct. 17, 2016, to one year and one day in federal prison, to be followed by 3 years of supervised release, and ordered to pay restitution in the amount of $750.00.
Schaffer pleaded guilty on June 3, 2016, to conspiring to receive, possess, conceal, store, sell, and dispose of stolen firearms and ammunition. Schaffer has not yet been sentenced.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and George Lauder, Acting Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives. The Federal Bureau of Investigation, Winnebago County Sheriff’s Department, Rockton Police Department and Rockford Police Department assisted in the investigation.
The government was represented by Assistant U.S. Attorneys Talia Bucci and Michael D. Love.
Convicted Felon Who Fired Handgun near Wrigley Field Pleads Guilty to Federal Gun ChargeRead the Press Release
CHICAGO — A convicted felon who fired a handgun near Wrigley Field pleaded guilty today to a federal firearm charge.
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. 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 in a plea declaration to one count of being a felon-in-possession of a firearm. The conviction carries a maximum sentence of ten years in prison. U.S. District Judge Elaine E. Bucklo set sentencing for April 7, 2017.
The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; George Lauder, Acting 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.
The government is represented by Assistant U.S. Attorneys Cornelius Vandenberg and Ankur Srivastava.
City of Chicago Alderman Charged with Using Money from Charitable Fund to Pay Gambling Expenses and Daughter’s TuitionRead the Press Release
CHICAGO — A federal grand jury has indicted City of Chicago Alderman WILLIE B. COCHRAN on charges he pocketed money from a charitable fund that was intended to help families and children in his South Side ward.
The 15-count indictment alleges that Cochran used money from the 20th Ward Activities Fund to pay his daughter’s college tuition and to finance his gambling expenses, as well as to purchase items for use in his home. The indictment also charges Cochran with extorting money from a lawyer and a liquor store owner in exchange for Cochran’s aldermanic support.
The indictment was returned Tuesday in federal court in Chicago. It charges Cochran, 64, of Chicago, with eleven counts of wire fraud, two counts of federal program bribery, and two counts of extortion. An arraignment date has not yet been set.
The indictment was announced by Zachary T. Fardon, 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 FBI initiated the investigation after receiving information from the former City of Chicago Legislative Inspector General’s Office, which was headed at that time by Faisal Khan.
“When an elected official uses public power for personal gain, the average citizen pays and our democratic system suffers,” said U.S. Attorney Fardon. “We will continue to vigorously investigate and prosecute any elected official who attempts to use their office to enrich themselves.”
According to the indictment, Cochran corruptly solicited and demanded $1,500 from an Illinois attorney who represented real estate developers with properties in Cochran’s ward. Cochran solicited and obtained the money for his continued and future aldermanic support of the developments, which included a property developed under the federal Neighborhood Stabilization Program, according to the indictment.
The indictment also charges Cochran with corruptly soliciting and demanding payment from a 20th Ward liquor store owner who sought an amendment to the Municipal Code of Chicago to allow package goods licenses on the store’s side of South Cottage Grove Avenue. Shortly after soliciting the payment, the City Council of Chicago in April 2015 passed a Cochran-sponsored amendment that allowed for issuance of the licenses on that block, according to the indictment.
The indictment alleges that Cochran was the sole signatory on a bank account for the 20th Ward Activities Fund, a charitable endeavor that purported to host ward events such as a summer back-to-school picnic, a Valentine’s Day party for senior citizens, and events during the holiday season. In reality, Cochran used a portion of the money contributed by donors for his own personal use, the indictment states. These expenses included $5,000 toward his daughter’s college tuition, and approximately $25,000 that Cochran withdrew from automated teller machines in or near casinos where he gambled, according to the indictment.
The public is reminded that an indictment 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 charges in the indictment are punishable by a total maximum sentence of 280 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 Heather McShain and Christopher Stetler.
Chicago Man Pleads Guilty to Conspiring to Murder U.S. Citizen in Bali, IndonesiaRead the Press Release
A Chicago man pleaded guilty today to conspiring with his cousin and his cousin’s girlfriend to kill a U.S. citizen at an Indonesian resort in 2014.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zachary T. Fardon of the Northern District of Illinois and Special Agent in Charge Michael J. Anderson of the FBI’s Chicago Division made the announcement.
Robert Ryan Justin Bibbs, 26, of Chicago, pleaded guilty to one count of conspiracy to commit the foreign murder of a U.S. national before U.S. District Judge Rebecca R. Pallmeyer of the Northern District of Illinois, who set sentencing for March 23, 2017.
According to admissions made in connection with his plea agreement, in 2014, Bibbs’s cousin Tommy Schaefer informed Bibbs that Heather Mack, Schaefer’s girlfriend, had offered Schaefer approximately $50,000 to kill her mother, Sheila Von Wiese. In approximately late July or early August 2014, Mack told Bibbs that she wished her mother was dead and she asked Bibbs whether he knew someone who would kill her mother in exchange for money. Bibbs knew that Von Wiese was wealthy and that she and Mack were taking a vacation in Indonesia in early August 2014. Schaefer had conveyed to Bibbs that Mack was planning to kill her mother while they were overseas and Schaefer intended to travel to Indonesia to join Mack.
According to the plea agreement, while Schaefer waited for his flight to depart O’Hare International Airport, he texted Bibbs, “In about a year or so I’ll have all that money . . . Not all of it . . . A couple mil prob.” Bibbs understood this to mean that Von Wiese’s murder was imminent, that Schaefer expected to receive millions of dollars as a result of the murder and that he would share some of this money with Bibbs.
According to the plea agreement, after Schaefer arrived in Bali, he informed Bibbs that Mack had unsuccessfully attempted to kill Von Wiese. Bibbs then texted Schaefer alternative ways to kill Von Wiese, including by drowning her. A short time later, Schaefer texted Bibbs that, “She wants me to right now . . . While she snoozing,” which Bibbs understood to mean that Mack asked Schaefer to help her kill her mother while Von Wiese was asleep. In response, Bibbs texted Schaefer, “Go sit on her face wit a pillow then,” suggesting that Schaefer should suffocate Von Wiese.
In addition, Bibbs admitted that Schaefer then texted asking what Bibbs would do, to which Bibbs replied that Schaefer should murder Von Wiese as long as no cameras were present. Bibbs also counseled Schaefer to be careful and further encouraged his cousin to kill Von Wiese.
A short time later, Schaefer bludgeoned Von Wiese to death, then, with Mack, stuffed Von Wiese’s body into a suitcase, placed the suitcase into a taxi cab and fled the resort. Schaefer and Mack were subsequently arrested and convicted in Indonesian court, and are serving respective 18- and 10-year sentences in prison.
The FBI investigated the case. Trial Attorneys Hope Olds and Christine Duey of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Bolling Haxall of the Northern District of Illinois are prosecuting the case.
Chicago Man Pleads Guilty to Aiding His Cousin and Heather Mack in the Murder of Mack’s Mother in Bali, IndonesiaRead the Press Release
CHICAGO — A Chicago man pleaded guilty in federal court today to charges he aided his cousin and Heather Mack in the 2014 killing of Mack’s mother at an Indonesian resort.
ROBERT RYAN JUSTIN BIBBS, also known as “Ryan Bibbs,” admitted in a plea agreement that he advised his cousin, Tommy Schaefer, and Mack about how to kill Mack’s mother, Sheila A. Von Wiese. Von Wiese, 62, was bludgeoned to death in her hotel room at the St. Regis Bali resort on Aug. 12, 2014.
Bibbs acknowledged in his plea agreement that he was aware of the couple’s plot to carry out the murder, and he counseled Schaefer on how to get away with it. Bibbs believed Schaefer would gain access to Von Wiese’s estate through Mack, and that Schaefer would share a portion of the inheritance with him, according to the plea agreement.
Bibbs, 26, pleaded guilty to one count of conspiracy to commit the foreign murder of a U.S. national. Per the plea agreement, the government and defendant’s counsel have agreed that the maximum sentence will be no more than 20 years in prison. Other than the agreed maximum prison term, the Court remains free to impose the sentence it deems appropriate. U.S. District Judge Rebecca R. Pallmeyer set sentencing for March 23, 2017, at 12:00 p.m.
The guilty plea was announced by Zachary T. Fardon, 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 Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.
An Indonesian court in 2015 convicted Schaefer and Mack of charges related to Von Wiese’s murder. Schaefer was sentenced to 18 years in an Indonesian prison, while Mack was sentenced to ten years.
Evidence discovered by the FBI revealed that Bibbs and Schaefer engaged in several discussions via text message leading up to the killing. Mack and her mother shared a hotel room, and Schaefer arrived at the resort on the morning of the murder. Soon after his arrival, Schaefer sent a text message to Bibbs, who was in the United States. The message stated that Mack had unsuccessfully attempted to kill Von Wiese, the plea agreement states. Bibbs replied with advice about alternative ways to carry out the murder, including by drowning, the plea agreement states.
Later that morning Schaefer sent a text message to Bibbs, stating, in part, “She wants me to right now… While she snoozing,” which Bibbs understood to mean that Mack had asked Schaefer to help her kill Von Wiese, the plea agreement states. Bibbs replied to Schaefer, “Go sit on her face wit a pillow then,” according to the plea agreement. Bibbs intended this message to mean that Schaefer should go and suffocate Von Wiese, the plea agreement states. Subsequent messages from Bibbs encouraged Schaefer to kill Von Wiese but to be careful while doing so, according to the plea agreement.
A short time later, Schaefer entered the hotel room occupied by Mack and Von Wiese and bludgeoned Von Wiese to death, the plea agreement states. Schaefer and Mack subsequently stuffed Von Wiese’s body into a suitcase, placed the suitcase in a taxicab and fled the resort, the plea agreement states.
Schaefer and Mack were arrested the following day by police in Indonesia. Federal authorities in the U.S. arrested Bibbs on Sept. 23, 2015.
The government is represented by Assistant U.S. Attorney Bolling Haxall, as well as Hope Olds and Christine Duey, trial attorneys from the U.S. Department of Justice’s Human Rights and Special Prosecutions Section.
Former Chicago Police Sergeant Sentenced to Six Months in Prison for Passing Government Information to Store Clerk in Exchange for CashRead the Press Release
CHICAGO — A former sergeant in the Chicago Police Department was sentenced today to six months in federal prison for taking cash payments from a liquor store clerk in exchange for disclosing government information.
RAY M. RAMIREZ served as a sergeant in the 12th Police District on the city’s Near West Side. Ramirez admitted in a plea agreement that he obtained information from law enforcement databases and passed it to the store clerk in exchange for cash payments of $150 to $200. The information included a criminal background check on a prospective store employee, a vehicle registration check, and a review of police incidents occurring in and around the store.
Ramirez also admitted that he shook down the clerk and other store employees for cash payments ranging from $70 to $200. Ramirez often wore his police uniform and was on duty when he demanded the payments.
Ramirez, 53, of Chicago, pleaded guilty last year to one misdemeanor count of exceeding his authorized use a police department computer. U.S. District Judge Ronald A. Guzman imposed the six-month sentence in federal court in Chicago.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
The government is represented by Assistant U.S. Attorney Megan Cunniff Church.
Federal Jury Convicts Chicago Man of Illegally Possessing FirearmsRead the Press Release
CHICAGO — A convicted felon who sold guns out of his garage in the Auburn Gresham neighborhood of Chicago has been found guilty of illegally possessing firearms.
On July 23, 2014, JAMEL DAVIS participated in a gun transaction involving two .38-caliber revolvers in the garage of his home in the 7600 block of South Seeley Avenue in Chicago. Davis was previously convicted of a felony and was not legally authorized to possess the firearms.
The case against Davis arose during the course of a larger federal investigation that has removed more than 100 guns from the streets of Chicago. The probe involved controlled firearm sales to cooperating individuals.
The jury on Wednesday convicted Davis, 28, of illegal possession of a firearm by a felon. The conviction carries a maximum sentence of ten years in prison. U.S. District Judge Sara L. Ellis scheduled a sentencing hearing for March 14, 2017.
The verdict was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and George Lauder, Acting Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives.
Evidence at trial revealed that Davis provided one of the firearms to an individual in the garage of Davis’ home. Unbeknownst to Davis, the individual was cooperating with law enforcement and had surreptitiously recorded the transaction.
The government is represented by Assistant U.S. Attorneys Nicole Kim and Carol Bell.
Chief Executive of Florida-Based Financial Firm Guilty of Fraud in $179 Million Sham Loan SchemeRead the Press Release
CHICAGO — The CEO of a Florida-based financial firm has pleaded guilty to fraud charges in connection with the sale of $179 million in sham loans to a Milwaukee investment company.
NIKESH A. PATEL was the Chief Executive Officer of First Farmers Financial LLC when the company sold three fabricated loans totaling approximately $20 million to a Tennessee-based investment firm, and 26 fabricated loans to a Milwaukee investment firm for $179 million. Between November 2012 and September 2014, Patel created and assisted in creating false documents sent to the investment firms in support of these loans. Patel submitted documents to the Milwaukee investment firm that falsely created the appearance that his company had lent money to borrowers in Florida and Georgia – in amounts ranging from $2.5 million to $10 million – and that a portion of the loans were guaranteed by the federal government under a program administered by the U.S. Department of Agriculture. All 26 loans were completely fabricated with no actual borrower, no pre-existing loan, and no government guarantee.
Patel, 33, of Windermere, Fla., pleaded guilty on Tuesday to five counts of wire fraud. The conviction carries a maximum sentence of 100 years in prison and a fine of $1,250,000. U.S. District Judge Charles P. Kocoras set sentencing for April 6, 2017, at 9:45 a.m.
The guilty plea was announced by Zachary T. Fardon, 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 Jeffrey A. Monhart, Regional Director of the Chicago Regional Office of the U.S. Department of Labor, Employee Benefits Security Administration.
First Farmers’ president, TIMOTHY G. FISHER, was also convicted in connection with the fraud. Fisher, of Pasadena, Calif., pleaded guilty last month to one count of money laundering. Fisher faces up to ten years in prison when he is sentenced by Judge Kocoras on May 4, 2017, at 9:45 a.m.
Evidence in the case revealed that Patel created fictitious business names and false USDA loan identification numbers, and forged the signatures of USDA employees and purported borrowers. Patel also assisted in creating false financial documents, including what purported to be a certified audit by a fictitious accountant that he submitted to the investment firm to obtain the funds.
Based upon the false statements, the Milwaukee firm’s clients, which included community banks, retirement plans, municipalities and subdivisions in Illinois and elsewhere, suffered a loss of $179 million. Although a portion of the funds were used to make interest payments to the investors, the bulk of the funds were used to pay existing debts, acquire assets, pay personal expenses, invest in other unrelated businesses, and repurchase loans that Patel had previously sold to the Tennessee investment advisor.
The government is represented by Assistant U.S. Attorneys Patrick King and Rick Young.
McHenry County Man Indicted on Child Pornography ChargesRead the Press Release
ROCKFORD — A Solon Mills man was indicted today by a federal grand jury on charges of child pornography.
WAYNE GIBBONS, 66, was charged with two counts of transporting child pornography via the Internet in June 2013.
Each count of transporting child pornography carries a mandatory minimum sentence of five years in prison and a maximum of 20 years, as well as 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 indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation.
The government is represented by Assistant U.S. Attorney Michael D. Love.
Rockford Man Pleads Guilty to Robbery and Gun ChargeRead the Press Release
ROCKFORD — A Rockford man pleaded guilty today before U.S. District Court Judge Frederick J. Kapala to robbery and a gun charge.
JAMES T. WOODFORD, 25, of Rockford, pleaded guilty to the July 30, 2015, robbery of the Phillips 66 gas station at 4402 Linden Rd. in Rockford, and to possessing a firearm in furtherance of the robbery.
Also charged with the robbery was co-defendant DAKOTA DIEHL, 21, formerly of Janesville, Wisc.
According to Woodford’s written plea agreement, at approximately 1:13 a.m. on July 30, 2015, Woodford and Diehl ran into the Phillips 66 gas station. Woodford, who was wielding a 12-gauge shotgun, jumped over the cashier’s counter next to the gas station employee and demanded that the employee give him money from the store’s two cash registers. Diehl went behind the counter and stole various tobacco products from the store, while Woodford held the firearm next to the employee and forced the employee to empty the cash registers. Taking approximately $209 and various tobacco products, Woodford and Diehl fled from the Phillips 66 gas station and ran to a getaway vehicle parked nearby.
Woodford faces a maximum sentence of 20 years’ imprisonment, followed by a term of supervised release of up to three years, for the robbery, and a mandatory minimum sentence of five years and a maximum sentence of life imprisonment for the firearms offense. The sentence imposed for the firearms offense is required to be consecutive to any other sentence imposed. Each charge also carries a potential fine of up to $250,000. Sentencing for Woodford is set for March 6, 2017, at 2:30 p.m.
Diehl previously pleaded guilty to robbing the Phillips 66 gas station with Woodford and to possessing a firearm in furtherance of that robbery. Diehl also pleaded guilty to robbing a Mobil gas station at 6536 11th St. in New Milford, on two occasions in July 2015.
The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; Gary Caruana, Winnebago County Sheriff; and Daniel O’Shea, Chief of the Rockford Police Department.
The government is represented by Assistant U.S. Attorney Talia Bucci.
High-Ranking Member of Two Mexican Drug Cartels Sentenced to 27 Years in U.S. Prison for Shipping Narcotics to ChicagoRead the Press Release
CHICAGO — A high-ranking associate of two Mexican drug trafficking organizations has been sentenced to 27 years in U.S. prison for his role in transporting large amounts of cocaine to the Chicago area.
MANUEL FERNANDEZ-VALENCIA, also known as Manuel Fernandez-Navarro, used the shared resources of the Sinaloa Cartel and the Beltran-Leyva Organization to smuggle large quantities of narcotics into the United States from Mexico. The cartels covertly transported the drugs via private aircraft, submarines, container ships, fishing vessels, buses, tractor-trailers and automobiles. The narcotics were initially stashed in safe houses in southern California before being shipped to various parts of the United States, including the Chicago area. The drug trade was protected by guards armed with handguns and assault rifles.
Fernandez-Valencia, 48, pleaded guilty last year to one count of conspiracy to possess with the intent to distribute controlled substances. U.S. District Judge Ronald A. Guzman on Wednesday imposed the 324-month sentence in federal court in Chicago.
“The defendant was operating at the very highest levels of large and violent international drug trafficking organizations,” Assistant U.S. Attorney Erika Csicsila argued in the government’s sentencing memorandum. “The damage that those drugs, and the violence resulting from the drug trade, have caused to communities in Chicago and elsewhere is immeasurable.”
Fernandez-Valencia’s sentence was announced by Zachary T. Fardon, 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; James D. Robnett, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Chicago Police Superintendent Eddie Johnson.
The U.S. Attorney’s Office in Chicago has worked closely with federal and local law enforcement agencies to target senior leadership of the Sinaloa Cartel and the Beltran-Leyva Organization. Fernandez-Valencia is one of more than 20 alleged members of the cartels to be indicted in federal court in Chicago, including the Sinaloa Cartel’s leader, JOAQUIN “CHAPO” GUZMAN, and the former head of the Beltran-Leyva Organization, the late ARTURO BELTRAN-LEYVA. The Chicago-based investigations have resulted in seizures of approximately $30.8 million, approximately eleven tons of cocaine, 265 kilograms of methamphetamine and 78 kilograms of heroin.
Fernandez-Valencia has been in custody since his arrest in his native Mexico in 2010. In his plea declaration, he admitted conspiring with twin brothers from Chicago to distribute cocaine in the fall of 2008. The twins, PEDRO FLORES and MARGARITO FLORES, operated a Chicago-based wholesale distribution network for both the Sinaloa Cartel and the Beltran-Leyva Organization. The cocaine was purchased in South America and delivered to Fernandez-Valencia in Mexicali, a city in northwest Mexico, before being smuggled into the U.S., according to his plea declaration. In three separate raids in November 2008 federal agents seized from Fernandez-Valencia more than a ton of cocaine and more than 93 kilograms of methamphetamine.
The Flores brothers pleaded guilty to federal drug charges in 2012 and were each sentenced to 14 years in prison.
The government is represented by Ms. Csicsila and Assistant U.S. Attorneys Michael Ferrara, Kathryn Malizia, Georgia Alexakis, Sean Franzblau, and James Durkin.
Former Rockford Physician Sentenced for Bankruptcy FraudRead the Press Release
ROCKFORD — A former Rockford physician was sentenced today by U.S. District Judge Frederick J. Kapala for making false statements in a bankruptcy case.
LYNN Y. ZOIOPOULOS, also known as Lynn Shelton-Zoiopoulos, 60, now of Chicago, was sentenced to 30 months in federal prison, to be followed by six months of supervised release, and was also ordered to pay restitution of $858,765.68. Zoiopoulos pleaded guilty to the charge on Feb. 8, 2016.
According to the written plea agreement, Zoiopoulos filed a Chapter Seven Bankruptcy Petition on Aug. 11, 2009, signing a declaration under penalty of perjury that the schedules she filed in the bankruptcy case were true and correct to the best of her knowledge, information, and belief. However, as Zoiopoulos admitted in the plea agreement, she had an interest in the estate of her deceased grandmother that she had intentionally concealed in order to deceive the bankruptcy trustee.
In the plea agreement, Zoiopoulos also admitted to defrauding her grandmother’s estate. According to the plea agreement, Zoiopoulos was appointed Executor of her deceased grandmother’s estate in 2001. As Executor, Zoiopoulos opened a bank account for the estate with the balance reaching $855,178 in May 2006. In October 2008, Zoiopoulos used $550,000 of the estate’s money in that account to purchase an annuity contract. She later embezzled all of the funds in the annuity. Between June 2008 and November 2012, with the intent to deceive and defraud the estate, Zoiopoulos embezzled assets of the estate by converting them to her own use, knowing she had a fiduciary duty not to use the assets of the estate for her personal benefit. Zoiopoulos further admitted she tried to conceal her embezzlements by not filing the required inventory, accounting, tax returns, and status reports for the estate.
Zoiopoulos also admitted she intended to conceal her embezzlements by sending $35,000 to her sister for the purpose of lulling her sister into believing the estate was being properly administered. Along with the payment, Zoiopoulos sent a letter indicating she had invested the rest of the estate money. Zoiopoulos admitted in the plea agreement that she had not reinvested the money, but had embezzled it, and had sent the letter to her sister for the purpose of preventing her sister from making further inquiries into the status of the estate.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation.
Zoiopoulos must surrender to the authorities on Jan. 27, 2017.
The government was represented by Assistant U.S. Attorneys Michael D. Love and Margaret J. Schneider.
CEO of Schaumburg Consulting Firm Arrested on Fraud Charges for Misrepresenting Company’s Financial ConditionRead the Press Release
CHICAGO — The chief executive of a publicly-traded consulting firm has been charged in federal court with fraudulently misrepresenting the company’s financial condition and lying to regulators.
NANDU THONDAVADI, the CEO of Schaumburg-based Quadrant 4 System Corp., intentionally misrepresented the firm’s cash flow and concealed its liabilities in filings with the U.S. Securities and Exchange Commission, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago. Thondavadi certified filings that misrepresented and concealed from the company’s auditors and shareholders the terms of certain acquisitions and the amount of a liability stemming from a lawsuit, the complaint states. The misrepresentations and concealments were intended to artificially inflate the company’s share price, according to the complaint.
The complaint charges Thondavadi and Quadrant 4’s chief financial officer, DHRU DESAI, with one count of wire fraud and one count of willfully certifying false financial reports. Thondavadi faces an additional charge of making false statements to the SEC.
Thondavadi, 62, of North Barrington, and Desai, 55, of Barrington, were arrested this morning. They are scheduled to make initial court appearances today at 11:30 a.m. before U.S. Magistrate Judge Michael T. Mason.
Also this morning, federal authorities executed a search warrant at Quadrant 4’s corporate headquarters in the 1500 block of East Woodfield Road in Schaumburg.
The complaint and arrests were announced by Zachary T. Fardon, 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 SEC assisted in the investigation.
Quadrant 4 has offices in seven U.S. states as well as India. It provides software products, platforms and consulting services to customers in the healthcare and education sectors. As a publicly traded company, Quadrant 4 is required to provide to the SEC on a quarterly and annual basis a detailed report of its financial condition.
Federal authorities launched an investigation of the company earlier this year based on indications that the firm’s recent annual reports to the SEC contained false information, the complaint states. The investigation revealed that Thondavadi and Desai certified the reports even though they knew the documents did not fairly present the true financial condition of the company, according to the complaint. Thondavadi then lied under oath when questioned by the SEC in May about some of the falsehoods, the complaint states.
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.
Wire fraud and willfully certifying false financial reports are each punishable by up to 20 years in prison, while making false statements to the SEC is punishable by up to five years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant U.S. Attorney Matthew Madden.
Rockford Man Indicted on Child Pornography ChargesRead the Press Release
ROCKFORD — A Rockford man has been indicted by a federal grand jury on child pornography charges.
NATHAN R. TAUCK, 25, was charged Thursday with one count of enticing and coercing a minor victim to engage in sexually explicit conduct that exhibited the minor’s genitals and pubic area for the purpose of producing a visual depiction of the sexually explicit conduct; and four counts of transporting child pornography via the internet.
The indictment was announced by Zachary T. Fardon, 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 charge of enticing a minor victim to engage in sexually explicit conduct carries a mandatory minimum sentence of 15 years in prison and a maximum of 30 years, and a $250,000 maximum fine; each count of transporting child pornography carries a mandatory minimum sentence of five years in prison and a maximum of 20 years, as well as $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 government is represented by Assistant U.S. Attorney Michael D. Love.
Justice Department Files Housing Discrimination Suit Against Tinley Park for Refusing to Approve Low-Income Housing DevelopmentRead the Press Release
WASHINGTON – The Justice Department filed a civil lawsuit today against the village of Tinley Park, alleging that the southwest suburb violated the Fair Housing Act when it refused to approve a low-income housing development in response to race-based community opposition.
The suit alleges that in 2015, the Buckeye Community Hope Foundation sought to build a 47-unit apartment complex for low-income individuals just outside of Tinley Park’s downtown. The project would be financed through Low Income Housing Tax Credits administered by the Illinois Housing and Development Authority. The suit alleges that Tinley Park discriminated against prospective tenants of the proposed development when it refused to approve the project despite the Tinley Park Planning Department’s finding that the project was in “precise conformance” with the applicable building requirements. Under Tinley Park’s zoning ordinances, Tinley Park’s Plan Commission should have approved the project and allowed construction to begin. Instead, the lawsuit alleges that in response to vocal and, at times, race-based community opposition, Tinley Park trustees requested the Plan Commission table consideration of the project. The Plan Commission did so, stalling the project indefinitely.
“Our office is committed to fighting unlawful discrimination wherever it occurs, including in fair housing,” said United States Attorney Zachary T. Fardon of the Northern District of Illinois. “Where appropriate, we will pursue local governments that try to reduce affordable housing opportunities for discriminatory purposes.”
“The Fair Housing Act requires that cities make housing-related zoning and land use decisions based on the merits – not on race,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department's Civil Rights Division. “When discrimination interferes with the housing and zoning approval process, entire communities suffer.”
The lawsuit was filed in the U.S. District Court for the Northern District of Illinois. The suit seeks a court order requiring Tinley Park to approve the development and to take other action to ensure compliance with the Fair Housing Act. It also seeks monetary damages for persons harmed by Tinley Park’s actions as well as a civil penalty. A separate suit brought by Buckeye against Tinley Park is also pending in the Northern District of Illinois.
The lawsuit is an allegation of unlawful conduct. The allegations must still be proven in federal court.
The Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, familial status and disability. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Justice Department at 1-800-896-7743, email the Justice Department at [email protected] or contact HUD at 1-800-669-9777.
Justice Department Files Housing Discrimination Lawsuit Against Tinley Park, Illinois, for Refusing to Approve Low-Income Housing DevelopmentRead the Press Release
The Justice Department filed a civil lawsuit today against the village of Tinley Park, Illinois, alleging that the suburb of Chicago violated the Fair Housing Act when it refused to approve a low-income housing development in response to race-based community opposition.
The suit alleges that in 2015, the Buckeye Community Hope Foundation sought to build a 47-unit apartment complex for low-income individuals just outside of Tinley Park’s downtown. The project would be financed through Low Income Housing Tax Credits administered by the Illinois Housing and Development Authority. The suit alleges that Tinley Park discriminated against prospective tenants of the proposed development when it refused to approve the project despite the Tinley Park Planning Department’s finding that the project was in “precise conformance” with the applicable building requirements. Under Tinley Park’s zoning ordinances, Tinley Park’s Plan Commission should have approved the project and allowed construction to begin. Instead, the lawsuit alleges that in response to vocal and, at times, race-based community opposition, Tinley Park trustees requested the Plan Commission table consideration of the project. The Plan Commission did so, stalling the project indefinitely.
“The Fair Housing Act requires that cities make housing-related zoning and land use decisions based on the merits – not on race,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “When discrimination interferes with the housing and zoning approval process, entire communities suffer.”
“Our office is committed to fighting unlawful discrimination wherever it occurs, including in fair housing,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois. “Where appropriate, we will pursue local governments that try to reduce affordable housing opportunities for discriminatory purposes.”
The lawsuit was filed in the U.S. District Court for the Northern District of Illinois. The suit seeks a court order requiring Tinley Park to approve the development and to take other action to ensure compliance with the Fair Housing Act. It also seeks monetary damages for persons harmed by Tinley Park’s actions as well as a civil penalty. A separate suit brought by Buckeye against Tinley Park is also pending in the Northern District of Illinois.
The lawsuit is an allegation of unlawful conduct. The allegations must still be proven in federal court.The Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, familial status and disability. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Justice Department at 1-800-896-7743, email the Justice Department at [email protected] or contact HUD at 1-800-669-9777.
Arlington Heights Man Sentenced to Five Years in Federal Prison for Receiving Sexually Explicit Images of a Child He Met OnlineRead the Press Release
CHICAGO — An Arlington Heights man was sentenced today to five years in federal prison for receiving sexually explicit images of a ten-year-old girl with whom he communicated online.
In several online conversations in 2014, DANIEL SANTIAGO attempted to persuade the girl to engage in sexually explicit conduct. Santiago eventually received an image over the internet that depicted the child’s private area. He then uploaded the image to an online file-sharing application that allowed others to view the image.
Santiago, 25, pleaded guilty in August to one count of knowingly receiving child pornography. U.S. District Judge Robert W. Gettleman imposed the sentence in federal court in Chicago.
“The evidence shows that Santiago actively sought out child pornography,” Special Assistant U.S. Attorney Jared C. Jodrey argued in the government’s sentencing memorandum. “The images that are the subject of the charges in this case concern a ten-year-old girl whom Santiago exploited.”
According to his written plea agreement, Santiago used the file-sharing application to store, access and share other images of child pornography. He amassed a collection of approximately 2,210 pictures and 25 videos, the plea agreement states. Santiago admitted that his collection included images of prepubescent minors, as well as sadistic and masochistic conduct, according to the plea agreement.
The sentence was announced by Zachary T. Fardon, 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 investigation was conducted by the FBI’s Child Exploitation Task Force. The CETF is part of a nationwide effort known as the Innocence Lost National Initiative targeting the commercial sexual exploitation of children in the United States. In Chicago, the CETF is composed of FBI special agents and investigators from the Chicago Police Department, the Cook County Sheriff’s Office, and the Cook County State’s Attorney’s Office.
The government is represented by Mr. Jodrey.
President of Florida-Based Financial Firm Guilty of Money Laundering in $179 Million Sham Loan SchemeRead the Press Release
CHICAGO — The president of a Florida-based financial firm has pleaded guilty to a money laundering charge in connection with the sale of $179 million in sham loans to a Milwaukee investment company.
TIMOTHY G. FISHER was the president and chief operating officer of First Farmers Financial LLC when the company sold 26 non-existent loans to a Milwaukee investment firm for $179 million. The company submitted documents to the Milwaukee investment firm that falsely created the appearance that the loans had been issued to borrowers in Florida and Georgia and were guaranteed in part by the federal government. In fact, the sham loans, which purportedly had principal amounts ranging from $2.5 million to $10 million, did not exist. The Milwaukee firm, which purchased the loans as an investment vehicle for its clients, which included community banks, retirement plans, municipalities, and subdivisions in Illinois and elsewhere, suffered a loss of $179 million.
Fisher, 39, of Pasadena, Calif., pleaded guilty on Thursday to one count of money laundering. The conviction carries a maximum sentence of ten years in prison and a maximum fine of $900,000. U.S. District Judge Charles P. Kocoras set sentencing for May 4, 2017, at 9:45 a.m.
The guilty plea was announced by Zachary T. Fardon, 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 Jeffrey A. Monhart, Regional Director of the Chicago Regional Office of the U.S. Department of Labor, Employee Benefits Security Administration.
According to his plea agreement, Fisher created fictitious financial statements that were sent to the Milwaukee company. After receiving money from the Milwaukee firm, Fisher unlawfully engaged in monetary transactions with a portion of the fraudulently obtained funds, including a wire transfer of $450,000 of scheme proceeds. Fisher caused these proceeds to be transferred from First Farmers’ account in Florida to his personal bank account in California. He then transferred these funds to the bank account belonging to a business in Nevada in connection with an investment in that business.
First Farmers’ chief executive officer, NIKESH A. PATEL, has also been charged in connection with the fraud on the Milwaukee investment business. Patel allegedly submitted false statements to the U.S. Department of Agriculture to obtain certification in a USDA program that guarantees a percentage of loans issued to borrowers who improve the economic and environmental climate in rural communities. First Farmers, which has offices in Florida, Georgia and California, obtained USDA certification after Patel submitted the false statements about the company’s assets and officers, according to his indictment returned last year.
Patel, of Windermere, Fla., has pleaded not guilty to five counts of wire fraud. His next court appearance before Judge Kocoras is set for Dec. 6, 2016, at 9:45 a.m.
The government is represented by Assistant U.S. Attorneys Patrick King and Rick Young.
Illinois Man Sentenced to 40 Months in Federal Prison for Attempting to Provide Material Support to ISILRead the Press Release
Mohammed Hamzah Khan, 21, of Bolingbrook, Illinois, was sentenced to 40 months in federal prison and 20 years supervised release, for attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, by attempting to travel overseas to Syria to join ISIL.
The announcement was made by Acting Assistant Attorney General for National Security Mary B. McCord, U.S. Attorney Zachary T. Fardon for the Northern District of Illinois and Special Agent in Charge Michael J. Anderson of the FBI’s Chicago Field Office.
U.S. District Judge John J. Tharp Jr. imposed the 40-month prison term and ordered that it be followed by 20 years of intensive supervised release. Among the special terms of supervised release, Khan must participate in a mental health treatment program; consent at any time to a search by a probation officer or designated law enforcement official of his home, property and electronic communication devices in his possession and control; attend violent extremism counseling; and comply with the requirements of a computer monitoring program, which includes the installation of computer-monitoring software on all devices in Khan’s possession and control that are capable of accessing the Internet.
Pursuant to the plea agreement, Khan agreed to fully and truthfully cooperate in any matter in which he is called upon by the U.S. Attorney’s Office for the Northern District of Illinois.
Khan, a U.S. citizen from southwest suburban Bolingbrook, has been detained in federal custody since his arrest on Oct. 4, 2014, at O’Hare International Airport in Chicago, Illinois. Khan pleaded guilty to these charges in 2015. According to his plea agreement, beginning no later than about February 2014, Khan used the internet to obtain introductions to ISIL members in Syria and to assist him with traveling there to join the terrorist group. Khan admitted to then speaking with ISIL members to coordinate the logistics of his admission into ISIL-controlled territory.
Khan further admitted in the plea agreement that he knew ISIL had been designated by the U.S. as a foreign terrorist organization. Khan intended to work in Syria under the direction and control of ISIL, and to be under the requirement to take any assignment ISIL gave him.
The case was investigated by the FBI-led Joint Terrorism Task Force (JTTF). The Chicago JTTF is comprised of FBI special agents, the Chicago Police Department officers and representatives from an additional 20 federal, state and local law enforcement agencies. U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement Homeland Security Investigations, and the Illinois State Police provided significant assistance in the investigation.
This case was prosecuted by Assistant U.S. Attorneys Matt Hiller, Angel Krull and Sean Driscoll of the Northern District of Illinois, and Trial Attorney Michael Dittoe of the National Security Division’s Counterterrorism Section.
Chicago Restaurateur Sentenced to a Year and a Day in Federal Prison for Failing to Pay Taxes on More Than $9.8 Million in Cash ReceiptsRead the Press Release
CHICAGO — The owner of several Chinese restaurants in the Chicago area was sentenced today to a year and a day in federal prison for withholding taxes by underreporting receipts paid in cash.
HU XIAOJUN, also known as “Tony Hu,” owns and operates several restaurants in Chicago and the suburbs, including the eateries operating under the Lao Sze Chuan brand. From January 2010 to September 2014, Hu intentionally withheld sales taxes from the Illinois Department of Revenue and the city of Chicago for receipts that customers paid in cash. Hu deposited the unreported cash into his personal bank account and used the money to pay personal expenses.
All told, Hu hid more than $1 million in taxes from state and local government from more than $9.8 million in cash sales.
Hu, 49, of Chicago, pleaded guilty in May to one count of wire fraud and one count of money laundering. In addition to the prison term, U.S. District Judge Amy J. St. Eve also fined Hu $100,000.
“Business leaders like the defendant owe a special obligation to abide by our tax laws and pay their fair share,” Assistant U.S. Attorney William Ridgway argued in the government’s sentencing memorandum. “When they fraudulently hide income it erodes the public’s trust in the tax system.”
The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division.
The government is represented by Mr. Ridgway.
Bolingbrook Man Sentenced to 40 Months in Federal Prison for Attempting to Provide Material Support to ISILRead the Press Release
CHICAGO — A Bolingbrook man was sentenced today to 40 months in federal prison, followed by 20 years of supervised release, for attempting to travel overseas to join a foreign terrorist organization in Syria.
MOHAMMED HAMZAH KHAN, 21, pleaded guilty last year to one count of attempting to provide material support to a foreign terrorist organization. The organization is identified in a written plea agreement as the Islamic State of Iraq and the Levant (“ISIL”).
U.S. District Judge John J. Tharp Jr. imposed the 40-month prison term and ordered that it be followed by 20 years of intensive supervised release. Among the special terms of supervised release, Khan must participate in a mental health treatment program; consent at any time to a search by a probation officer or designated law enforcement official of his home, property and electronic communication devices in his possession and control; attend violent extremism counseling; and comply with the requirements of a computer monitoring program, which includes the installation of computer-monitoring software on all devices in Khan’s possession and control that are capable of accessing the Internet.
Pursuant to the plea agreement, Khan agreed to fully and truthfully cooperate in any matter in which he is called upon by the U.S. Attorney’s Office for the Northern District of Illinois.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Mary B. McCord, Acting Assistant Attorney General for National Security; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
Khan, a U.S. citizen from southwest suburban Bolingbrook, has been detained in federal custody since his arrest on Oct. 4, 2014, at O’Hare International Airport in Chicago. According to his plea agreement, beginning no later than approximately February 2014, Khan used the Internet to obtain introductions to ISIL members in Syria and to assist him with traveling there to join the terrorist group. Khan admitted speaking with ISIL members to coordinate the logistics of his admission into ISIL-controlled territory, the plea agreement states.
Khan further admitted in the plea agreement that he knew ISIL had been designated by the United States as a foreign terrorist organization. Khan intended to work in Syria under the direction and control of ISIL, and be required to take any assignment ISIL gave him.
The case was investigated by the Chicago Joint Terrorism Task Force, which is comprised of FBI special agents, Chicago Police Department officers, and representatives from an additional 20 federal, state and local law enforcement agencies. U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), and the Illinois State Police provided significant assistance in the investigation.
The government is represented by Assistant United States Attorneys Matt Hiller, Angel Krull and Sean Driscoll; and U.S. Department of Justice Trial Attorney Michael Dittoe of the National Security Division’s Counterterrorism Section.
North Suburban Businessman Sentenced to Nine Months in Federal Prison for Failing to Pay Taxes on Cash ReceiptsRead the Press Release
CHICAGO — A north suburban man who operated a manufacturing business in Wisconsin was sentenced to nine months in federal prison for failing to pay taxes on more than $2.3 million in cash receipts.
HERBERT C. WATTS, the owner and president of Branko Perforating FWD Inc., of Bristol, Wisc., failed to report cash receipts as income on his taxes for the calendar years 2009 to 2014. During those years, Branko received more than $2.3 million in cash from the sale of scrap metal to a Cicero-based company. The scrap sales were not reported in Branko’s business records, and the cash income was concealed from accountants who prepared tax returns for Watts and the company.
The case is part an ongoing investigation of cash transactions in the local scrap metal industry that has resulted in several other convictions.
Watts, 70, of Grayslake, pleaded guilty earlier this year to filing a false tax return. In addition to the nine-month prison term, U.S. District Judge John Robert Blakey on Tuesday fined Watts $10,000. Prior to sentencing, Watts paid the taxes he owed to the federal government and the state of Illinois.
“Defendant’s conduct was little more than repetitive evasion motivated by greed,” Assistant U.S. Attorney Patrick King argued in the government’s sentencing memorandum. “Evasion feeds on itself, reducing respect for the integrity of the tax system and leading to more cheating.”
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and James D. Robnett, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.
Property Manager Charged with Fraudulently Pocketing Fees from Chicago Condominium AssociationRead the Press Release
CHICAGO — A property manager has been charged in federal court with fraudulently pocketing more than $150,000 in illegal fees from a condominium association in Chicago’s Edgewater neighborhood.
ALAN P. GOLD, the owner and operator of Chicago-based A.P. Gold Realty & Management Inc., overbilled the Edgewater condo association for management services that were never performed, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago. He also skimmed from the association’s reserve account by paying himself monies to which he was not entitled, the complaint states.
Gold is suspected of pilfering an additional $750,000 from eight other Chicago condominium associations, according to the complaint.
The complaint charges Gold, 65, of Chicago, with one count of mail fraud. He was arrested on Nov. 9, 2016, and made an initial appearance that day before U.S. Magistrate Judge Susan E. Cox. Judge Cox ordered Gold released on a $10,000 personal recognizance bond.
The complaint was announced by Zachary T. Fardon, 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 complaint, Gold had signature authority over the Edgewater condo association’s bank accounts and was supposed to draw a monthly fee of $650 for management services, which included collecting special assessments and paying utility providers. Gold overbilled the association by withdrawing multiple $650 checks in the same month, and he tapped into its reserve fund to write substantially higher checks to himself, the complaint states. All told, Gold stole approximately $154,271 from the Edgewater condo association between 2010 and 2014.
Gold defrauded the other associations in a similar manner, the complaint states. He concealed the frauds by furnishing fraudulent monthly statements to the condo associations that showed their balances to be higher than they actually were, according to the complaint.
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. Mail 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. Attorney Vikas Didwania.
Chicago Drug Dealer Sentenced to 35 Years in Prison for Trying to Kill a Federal InformantRead the Press Release
CHICAGO — A drug dealer who sold crack cocaine and heroin on Chicago’s West Side and western suburbs was sentenced today to 35 years in prison for trying to murder a federal informant who was assisting law enforcement.
KELSEY JONES and his associates tried to kill the informant on two occasions in the spring of 2014 in retaliation for the informant’s cooperation with the U.S. Bureau of Alcohol, Tobacco, Firearms & Explosives. In the first attempt, Jones’ younger brother, TOBY JONES, fired several shots through the front door of an apartment in the informant’s building in Oak Park. The informant was not injured, but an innocent victim was wounded. The second attempt occurred a week later, when Kelsey Jones approached the informant’s vehicle outside of the same building and fired several shots, wounding the informant and another occupant. Both victims survived, as did the victim of the first shooting.
Kelsey Jones, 40, and Toby Jones, 39, both of Chicago, were convicted earlier this year of conspiring with each other in the attempted murder of the informant, as well as gun and drug charges. Toby Jones was sentenced in May to 40 years in prison.
“Defendant’s crimes are among the most serious of federal offenses,” Assistant U.S. Attorney Sean J.B. Franzblau argued in the government’s sentencing memorandum in Kelsey Jones’ case. “When a federal undercover operation disrupted his drug trade, defendant had the audacity to join his brother Toby in an attempt to murder the informant.”
In handing down the sentence today for Kelsey Jones, Judge Amy J. St. Eve also found that he obstructed justice by lying at a 2015 suppression hearing in a failed effort to prevent the jury from hearing about admissions he made to ATF agents after his arrest.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and George Lauder, Acting Special Agent in Charge of the Chicago Field Division of ATF. The Oak Park Police Department assisted in the investigation.
Testimony at trial revealed that Toby Jones led a small group of cocaine and heroin dealers, and actively sought to obtain firearms in connection with his drug dealing activities. In December 2013, a confidential informant introduced an undercover ATF agent to Toby Jones, and for the next several months the agent and the informant purchased crack cocaine from him. Toby Jones also planned to purchase from the undercover agent a firearm with a high-capacity magazine in exchange for crack cocaine.
On March 26, 2014, Toby Jones sent one of his drug dealers, WESLEY FIELDS, to meet with the undercover agent and purchase the gun. Fields was arrested by federal authorities shortly after he arrived at the meeting. Toby Jones thereafter began a week-long effort to track down and murder the confidential informant who set up the deal, culminating in the shootings in Oak Park.
Fields, of Chicago, pleaded guilty to participating in a drug conspiracy and possessing a firearm. He was sentenced in May to nine years and nine months in prison.
The government is represented by Mr. Franzblau and Assistant U.S. Attorney Brian Hayes.
Former Redflex CEO Sentenced to 30 Months for Corruption in the Awarding of Chicago’s Red-Light Camera ContractsRead the Press Release
CHICAGO — The former chief executive of Chicago’s first red-light camera vendor was sentenced today to 30 months in federal prison and over $2 million in restitution for paying bribes to a city official to help procure the contracts.
As the CEO of Redflex Traffic Systems Inc., KAREN FINLEY would funnel cash and other financial benefits to the city official, JOHN BILLS, and his friend, MARTIN O’MALLEY, in exchange for improper assistance in awarding city red-light camera contracts to Redflex. The benefits included golf trips, hotels and meals, as well as hiring O’Malley as a highly compensated contractor for Redflex, some of which compensation was passed on to Bills.
The benefits flowed for nearly a decade, during which time the city expanded the Digital Automated Red Light Enforcement Program by awarding millions of dollars in contracts to Phoenix-based Redflex.
Finley, 57, of Cave Creek, Ariz., pleaded guilty last year to one count of conspiracy to commit bribery in a federal program. U.S. District Judge Virginia Kendall imposed the sentence in federal court in Chicago.
The sentencing was announced by Zachary T. Fardon, 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; Joseph M. Ferguson, Inspector General for the City of Chicago; and James D. Robnett, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.
All three defendants in the federal case have now been convicted and sentenced. Bills was sentenced in August to ten years in prison, while O’Malley was sentenced in September to six months in prison.
Redflex’s technology uses cameras to automatically record and ticket drivers who run red lights. The company was awarded its first contract with the city of Chicago in 2003. Over the next eight years, Bills used his influence as a transportation official to expand Redflex’s business with the city, resulting in millions of dollars in contracts for the installation of hundreds of red-light cameras.
Finley hired O’Malley as a contractor to ensure that Bills would continue to provide assistance to Redflex in obtaining and expanding contracts with the city. Finley personally signed O’Malley’s contract, which included provisions for lucrative increases in O’Malley’s compensation as new cameras were added. O’Malley testified at Bills’ trial that O’Malley often stuffed money he received from Redflex into envelopes and gave it to Bills during meals in Chicago restaurants. O’Malley also used some of the Redflex money to purchase and pay all expenses on a condo in Arizona that Bills used as his own.
The government is represented in the case by Mr. Fardon and Assistant U.S. Attorneys Laurie Barsella and Timothy Storino.