Northern District of Illinois

CHICAGO — A Chicago investment advisor was sentenced today to three years in federal prison for engaging in a scheme to defraud an Oak Brook bank and two of his clients out of more than $3.2 million.

ROBERT J. LUNN made a series of misrepresentations to Leaders Bank to obtain a line of credit and loans purportedly for the benefit of his business, Lunn Partners LLC, and two of his clients, including former Chicago Bulls player Scottie Pippen.  Lunn misled the bank about the value of his assets and the purpose of the financing, and he fraudulently stated that Pippen and the other client, retired venture capitalist Robert Geras, were aware of the loans.  In reality, neither Pippen nor Geras had any knowledge of them.  Lunn used nearly all of the fraudulently obtained funds for his own benefit and to pay some of his other clients.

A federal jury in 2014 convicted Lunn, 66, of Chicago, on five counts of bank fraud.  In addition to the 36-month sentence, U.S. District Judge Charles R. Norgle also ordered Lunn to pay restitution of more than $1.16 million to Leaders Bank, and $400,000 to Pippen.  

“It is clear from the evidence that Lunn’s avarice knows no bounds,” Assistant U.S. Attorney Kenneth E. Yeadon and Special Assistant U.S. Attorney Richard G. Stoltz argued in the government’s sentencing memorandum.  “He enriched himself by taking out the fraudulent loans and went to great lengths to conceal his crime from Leaders Bank, Mr. Pippen and Mr. Geras.”

According to evidence at trial, Lunn initially obtained a corporate line of credit from Leaders Bank for $480,000 in May 2001.  He increased the credit line twice in 2004, first to $1.2 million and later to $1.32 million, after submitting financial statements that falsely proclaimed personal ownership of millions of dollars in stocks. 

In September 2002, Lunn arranged for an unsecured bank loan of $1.4 million, purportedly for the benefit of Pippen.  Lunn secured the loan by falsely representing that the proceeds would be used by Pippen to purchase an interest in an airplane. 

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 Chicago Regional Office of the U.S. Securities and Exchange Commission provided cooperation and participation in the prosecution.

The government is represented by Mr. Yeadon of the U.S. Attorney’s Office for the Northern District of Illinois, and Mr. Stoltz, a senior attorney with the SEC.

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

CLIFFORD HORTON, 28, of Rockford, Ill., was sentenced to 86 months in federal prison, to be followed by 3 years of supervised release.  Horton pleaded guilty to the charge on Dec. 15, 2015, and admitted that on Nov. 4, 2014, having previously been convicted as a felon, he possessed a Taurus .380 caliber pistol. 

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Jeffery Magee, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; Gary Caruana, Winnebago County Sheriff; and, Patrick Hoey, Interim Chief of the Rockford Police Department.

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

CHICAGO — A former senior analyst at the Federal Reserve Bank of Chicago admitted in federal court today that he stole confidential financial documents from the bank shortly before resigning his position and accepting a new job.

JEFFREY CHO, 35, of Chicago, pleaded guilty to one misdemeanor count of theft of property.  The conviction carries a maximum sentence of one year in federal prison.  U.S. Magistrate Judge Michael T. Mason scheduled a sentencing hearing for June 21, 2016, at 10:00 a.m.

In his role as a Senior Supervision Analyst, Cho had access to sensitive, proprietary and valuable information belonging to the bank.  The information included financial data and materials relating to the bank’s responsibility to monitor the health of certain financial institutions in the United States.

According to a written plea agreement, Cho was in discussions in May 2015 to take a new job outside of the bank.  Less than a week before accepting the outside company’s employment offer, Cho printed a confidential Federal Reserve document from his work computer and took it home with him.  After accepting the offer on May 12, 2015, Cho printed an additional 31 confidential Federal Reserve documents from his work computer and brought those home as well.  On the same day he resigned from the bank on May 26, 2015, Cho printed 3 more proprietary Federal Reserve documents from his work computer and brought them home.

When confronted by FBI agents, Cho initially denied taking home the confidential documents, according to the plea agreement.  However, after a second interview with FBI agents the following month, Cho turned over four of the documents.  Cho told agents that he had shredded the remaining documents after his first interview with the FBI, according to the plea agreement.  On June 6, 2015, Cho turned over a bag full of shredded documents to the FBI, the plea agreement states.

Cho further admitted in the plea agreement that he printed confidential Federal Reserve documents while he was interviewing for another position with a different company in March 2015.  Those documents were also sensitive materials concerning the financial health of certain U.S. financial institutions.

The conviction prohibits Cho from directly or indirectly participating in the affairs of any United States financial institution for at least ten years.

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 Scott Redington, Special Agent-in-Charge of the Western Region Board of Governors of the Federal Reserve, Office of Inspector General.

The government is represented by Assistant United States Attorney Sunil Harjani.

Plea Agreement

CHICAGO — A California man who allegedly traveled to Syria to take up arms with terrorists has been indicted by a federal grand jury in Chicago for attempting to provide material support to acts of violence overseas.

AWS MOHAMMED YOUNIS AL-JAYAB, 23, of Sacramento, allegedly flew from Chicago to Turkey on Nov. 9, 2013, and then traveled to Syria.  Between November 2013 and January 2014, Al-Jayab reported on social media that he was in Syria fighting with terrorist organizations.

The indictment charges him with one count of attempting to provide material support and resources, knowing that such support and resources would be used in preparation for, and in carrying out, violence against persons outside of the United States.  The charge is punishable by up to 15 years in federal prison. 

The indictment was returned today in U.S. District Court in Chicago.  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; John P. Carlin, Assistant Attorney General for National Security; Monica M. Miller, Special Agent-in-Charge of the Sacramento Office of the Federal Bureau of Investigation; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the FBI.

The investigation was led by the Sacramento Joint Terrorism Task Force, which is comprised of FBI special agents and representatives from numerous federal, state and local law enforcement agencies.  The U.S. Attorney’s Offices for the Northern District of Illinois and the Eastern District of California, as well as the U.S. Department of Justice’s National Security Division, provided assistance in the investigation.

Al-Jayab was also indicted earlier this year by a federal grand jury in Sacramento for allegedly making a false statement involving international terrorism.  He pleaded not guilty to that charge.  His next court appearance in Sacramento will be a status hearing on May 12, 2016, at 9:00 a.m. PDT, before U.S. District Judge Morrison C. England Jr.

According to a criminal complaint filed in the Eastern District of California, Al-Jayab is a Palestinian born in Iraq, who came to the United States as an Iraqi refugee in October 2012.  Between October 2012 and November 2013, while living in Arizona and Wisconsin, Al-Jayab communicated via social media with numerous individuals about his intention to go to Syria to fight for terrorist organizations, the complaint states.  On Nov. 9, 2013, he flew from Chicago to Turkey, and then traveled to Syria, according to the complaint.  

Between November 2013 and January 2014, according to the complaint, Al-Jayab reported on social media that he was in Syria fighting with terrorist organizations.  Al-Jayab returned to the United States on Jan. 23, 2014, and settled in Sacramento.

The indictment in California contends that Al-Jayab gave false statements to agents from the U.S. Citizenship and Immigration Services during an interview on Oct. 6, 2014.  In the interview, Al-Jayab indicated that he never supported terrorist groups, and that the purpose of his trip to Turkey was to visit his grandmother.  The California indictment contends that both statements were false.

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 government is represented in Chicago by Assistant U.S. Attorneys Barry Jonas and Shoba Pillay of the Northern District of Illinois, and Trial Attorney D. Andrew Sigler of the National Security Division’s Counterterrorism Section.

Indictment

Aws Mohammed Younis Al-Jayab, 23, of Sacramento, California, was indicted today in the Northern District of Illinois for attempting to provide material support to acts of violence overseas.  

The indictment was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Zachary T. Fardon of the Northern District of Illinois, Special Agent in Charge Monica M. Miller of the FBI’s Sacramento Division and Special Agent in Charge Michael J. Anderson of the FBI’s Chicago Division.

Al-Jayab was also indicted earlier this year by a grand jury in Sacramento for allegedly making a false statement involving international terrorism.  He pleaded not guilty to that charge, and his next court appearance will be a status hearing on May 12, 2016, at 9:00 a.m. PDT, before U.S. District Judge Morrison C. England Jr. of the Eastern District of California.

According to a criminal complaint filed in the Eastern District of California, Al-Jayab is a Palestinian born in Iraq, who came to the United States as an Iraqi refugee in October 2012.  Between October 2012 and November 2013, while living in Arizona and Wisconsin, Al-Jayab communicated via social media with numerous individuals about his intention to go to Syria to fight for terrorist organizations, the complaint alleges.  The complaint further alleges that on Nov. 9, 2013, he flew from Chicago to Turkey and then traveled to Syria. 

According to the complaint, between November 2013 and January 2014, Al-Jayab reported on social media that he was in Syria fighting with terrorist organizations.  Al-Jayab returned to the United States on Jan. 23, 2014, and settled in Sacramento.

The indictment returned in California contends that Al-Jayab gave false statements to agents from the U.S. Citizenship and Immigration Services during an interview on Oct. 6, 2014.  In the interview, Al-Jayab indicated that he never supported terrorist groups and that the purpose of his trip to Turkey was to visit his grandmother.  The California indictment contends that both statements were false.

The statutory maximum sentence for attempting to provide material support is 15 years in prison.  An arraignment date has not yet been set.

An indictment is merely an allegation.  A defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

The investigation was led by the Sacramento Joint Terrorism Task Force, which is comprised of FBI special agents and representatives from numerous federal, state and local law enforcement agencies.  The U.S. Attorney’s Office of the Eastern District of California and the U.S. Department of Justice’s National Security Division provided assistance in the investigation.  The case in Chicago is being prosecuted by Assistant U.S. Attorneys Barry Jonas and Shoba Pillay of the Northern District of Illinois and Trial Attorney D. Andrew Sigler of the National Security Division’s Counterterrorism Section.

Al-Jayab NDIL Indictment

ROCKFORD — Three local men were indicted yesterday by a federal grand jury in Rockford, Ill. on charges of arson. 

JASON VANDUYN, 39, of Machesney Park, Ill.; and BRIAN BURD, 48, and ROBERT WARMOTH, 42, both of Rockford, were all charged with one count of arson and one count of conspiracy to commit arson.

The indictment alleges that between June 7 and 12, 2015, Vanduyn recruited Burd and Warmoth to blow up a pickup truck.  According to the indictment, 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.  The indictment states that Vanduyn offered to pay Burd and Warmoth 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, Ill., where the truck was parked.  Burd smashed a window on the truck and placed the explosive in the truck, the indictment charges.  No one was injured in the ensuing explosion.

Each count of arson and conspiracy to commit arson carries a mandatory minimum penalty of 5 years in prison and a maximum penalty of up to 20 years in prison, in addition to a fine of up to $250,000.  If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

Vanduyn was arrested this morning and pleaded not guilty during his arraignment today before U.S. Magistrate Judge Iain D. Johnston.  Vanduyn was ordered to be held in federal custody until a detention hearing on March 21, 2016, at 9:30 a.m.  Burd and Warmoth are scheduled to appear before U.S. Magistrate Judge Johnston for arraignment on March 17, 2016, at 11:30 a.m.

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

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Michael Anderson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; Jeffery Magee, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; and, Rodney Scott, 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 the FBI, ATF, Loves Park Police Department, Winnebago County Sheriff’s Department, and Rockford Police Department.

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

Indictment

CHICAGO — The owner of a Schaumburg real estate appraisal company pleaded guilty in federal court today to willfully failing to pay more than $550,000 in personal income taxes.

WILLIAM DADDONO, the owner of Advanced Appraisal Group, admitted in a plea agreement that from 2005 to 2010 he failed to pay taxes on more than $1.92 million in personal income.  Daddono attempted to conceal the earnings by having the money deposited in a corporate account held in the name of a defunct business that he previously owned.

Daddono, 59, of Palatine, pleaded guilty to one count of willfully attempting to evade and defeat the payment of federal income tax.  The conviction carries a maximum sentence of three years in prison and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.

U.S. District Judge Sharon Johnson Coleman scheduled a sentencing hearing for June 10, 2016.

According to the plea agreement, Daddono owned and operated AAG and later American Appraisal Consultants, both of which were based in Schaumburg and provided real estate appraisal services.  Daddono caused the companies to issue checks to Real Property Valuations, a defunct Illinois business that Daddono previously owned.  To conceal the scheme, Daddono instructed employees of AAG and AAC to record the checks as corporate expenses.

As the sole signatory on a bank account held in the name of Real Property Valuations, Daddono was able to deposit the checks and then withdraw the money for personal use, according to the plea agreement.  Daddono failed to report the amounts paid to him by AAG and AAC as income on his individual federal tax returns.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; James D. Robnett, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; 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 Sheri Mecklenburg.

CHICAGO — A Chicago man who traded more than 5,000 photos and 600 videos of children being sexually exploited has been sentenced to 15 years in federal prison.

Using the email account [email protected], DEVIN JONES traded the images and videos with others via the Internet.  Many of the photos and videos depicted real children, including toddlers, being sexually abused.  The images included portrayals of sadistic and masochistic conduct and other depictions of violence.

Jones, 27, of Chicago, pleaded guilty last year to one count of possession of child pornography.  U.S. District Judge Edmond E. Chang sentenced Jones on Monday to 15 years in prison.

“Defendant’s crime is a damaging, exploitative and violent one,” Assistant U.S. Attorney Yasmin N. Best argued in the government’s sentencing memorandum.  “Each time defendant viewed and distributed an image of a sexually abused child, he exploited that child.”

Jones admitted in a plea agreement that on Feb. 20, 2013, he received files on his laptop containing images of child pornography, including what appeared to be prepubescent females exposing their private areas.  Later that day, Jones replied to the sender with several other photographs and a video depicting children engaged in sexually explicit conduct.

In addition to trading the pornographic images, Jones admitted in the plea agreement that from 2007 to 2013, he engaged in inappropriate and often sexual contact with approximately six minor children between the ages of five and nine years old. 

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Cook County Sheriff Thomas J. Dart; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

CHICAGO — The U.S. Attorney’s Office will monitor the primary elections in Chicago and surrounding suburbs on March 15, 2016, Zachary T. Fardon, United States Attorney for the Northern District of Illinois, announced today.

As part of the monitoring effort, the office will operate a telephone hotline for candidates or the public to report complaints related to the voting process.  Two teams of Assistant U.S. Attorneys and other office personnel will monitor the hotline and be available to respond to complaints as needed.

The hotline number, staffed on Election Day only, is (312) 469-6157.

“There is no greater responsibility in a democracy than protecting the integrity of the voting process,” said Mr. Fardon. “A citizen who is entitled to vote should in no way be inhibited from doing so, and we stand ready to ensure the sanctity of the process.”

Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes.  Federal law also protects the rights of voters to mark their own ballot or to be assisted by a person of their choice.  Violations of federal voting rights statutes carry penalties ranging from one to ten years in prison and fines of up to $250,000.

The office’s election monitoring efforts and subsequent investigations, if any, will be performed in consultation with the U.S. Justice Department.  The Chicago office of the Federal Bureau of Investigation and the U.S. Marshals Service will assist in this effort by following up, if necessary, on any complaints of election fraud or voting rights infringements. 

Complaints about ballot problems or discrimination can also be made directly to the Voting Section of the Justice Department’s Civil Rights Division in Washington, D.C., at (800) 253-3931 or (202) 307-2767.  The Voting Section enforces the civil provisions of federal laws that protect the right to vote, including the Voting Rights Act, the Uniformed and Overseas Citizens Absentee Voting Act, the National Voter Registration Act, the Help America Vote Act and the Civil Rights Acts.

For information as to the location and hours of polling locations, Illinois residents are advised to contact the Illinois State Board of Elections by logging on to www.elections.il.gov or by calling (312) 814-6440.

CHICAGO — A Chicago psychiatrist was sentenced today to nine months in federal prison for accepting nearly $600,000 in fees and benefits from pharmaceutical companies in exchange for prescribing a medication to his patients. 

DR. MICHAEL J. REINSTEIN prescribed the drug Clozapine to thousands of elderly and indigent patients in Chicago-area nursing homes and hospitals.  In exchange for his efforts, the pharmaceutical companies provided Dr. Reinstein with consulting fees and entertainment expenses, including meals, tickets to sporting events, and all-expense-paid vacations.  At one point in the early 2000s, Dr. Reinstein was the largest prescriber of the drug to Medicaid recipients in the United States.

Dr. Reinstein, 72, of Skokie, pleaded guilty last year to one count of violating the federal Medicare and Medicaid Anti-Kickback Statute.  In addition to the nine-month sentence, U.S. District Judge Sharon Johnson Coleman also imposed forfeiture of $592,000, and ordered Dr. Reinstein to perform 120 hours of community service.

“Reinstein abused his position of public trust as a physician and took advantage of the faith and trust of his mentally ill patients in order to enrich himself,” Assistant U.S. Attorney Eric S. Pruitt argued in the government’s sentencing memorandum.

Clozapine is an anti-psychotic medication with potentially serious side effects, particularly for elderly patients.  While Clozapine has been shown to be effective for treatment-resistant forms of schizophrenia, it is also known to cause a potentially deadly decrease in white blood cells, as well as seizures and inflammation of the heart muscle.

Dr. Reinstein has been a psychiatrist in the Chicago area since 1973, with an office in Chicago’s Uptown neighborhood.  According to his plea agreement, he prescribed Clozaril, the brand-name version of Clozapine, long after less expensive, generic versions were available, because the manufacturer of Clozaril paid him thousands of dollars to promote the drug at speaking engagements. 

After the deal with the brand-name manufacturer ended in 2003, Dr. Reinstein agreed to switch his patients to the generic version, but only after its manufacturers, Teva Pharmaceuticals USA Inc. and IVAX Pharmaceuticals LLC, agreed to pay him a consulting fee and finance a Clozapine research study performed by a Reinstein-affiliated entity.  At Dr. Reinstein’s request, Teva also agreed to hire an individual whom Dr. Reinstein described as an important source of patient referrals.  Between July 2006 and July 2011, Teva paid the individual approximately $112,000 to enter white blood cell data into a national Clozapine registry.

Reinstein previously agreed to pay the United States and the State of Illinois $3.79 million to settle a civil lawsuit.  Teva and IVAX also paid the United States and the State of Illinois $27.6 million to settle civil allegations that they violated state and federal False Claims Acts.

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; and Lamont Pugh III, Special Agent-in- Charge of the Chicago Regional Office of the U.S. Department of Health and Human Services Office of Inspector General.

The government is represented by Mr. Pruitt.

ROCKFORD — A Loves Park, Ill. man appeared today before U.S. Magistrate Judge Iain D. Johnson on child pornography charges. 

GRANT WOJAHN, 35, of Loves Park, Ill., was indicted on Feb. 2, 2016, by a federal grand jury in Rockford and charged with one count of using a minor to engage in sexual conduct in order to produce child pornography, one count of transporting child pornography via the internet, and two counts of possessing child pornography that had crossed state lines, including an image of a minor under 12 years of age.  Wojahn was arrested on Feb. 8, 2016, in Marin County, Cal., and transported by federal authorities back to Rockford.  Wojahn pleaded not guilty during his arraignment today before U.S. Magistrate Judge Iain D. Johnston and was ordered held in federal custody until a detention hearing on March 15, 2016, at 2:30 p.m.

Sexual exploitation of a child for the purpose of producing child pornography carries a mandatory minimum of 15 years and a maximum of 30 years in prison, while transporting child pornography carries a mandatory minimum sentence of five years and a maximum of 20 years in prison, and possessing child pornography carries a maximum of 10 years in prison and up to 20 years in prison for an offense involving a minor under 12 years of age.  Each count carries a $250,000 maximum fine.  If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.  

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

The indictment and arrest were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Michael Anderson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation.

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

Indictment

CHICAGO — A Chicago man with a prior felony conviction has been indicted on federal gun charges for illegally dealing and possessing firearms.

The indictment contends that LAZARO SALAS, 32, illegally dealt firearms from September 2013 to November 2015.  Salas allegedly purchased between 40 and 60 guns through a straw purchaser and then later re-sold them, according to a federal criminal complaint and affidavit.  Two of the firearms were later found in the possession of Chicago gang members, the complaint states.

On Jan. 7, 2016, Salas purchased four handguns from an undercover agent with the U.S. Bureau of Alcohol, Tobacco, Firearms & Explosives, according to the complaint.  The sale took place in a store parking lot near Salas’ residence in Chicago.  Salas paid $350 for two of the guns, and he agreed to purchase the other pair for $200 and an ounce of marijuana, according to the complaint.

Salas was previously convicted of a felony, the indictment states. 

The indictment was returned Tuesday in U.S. District Court in Chicago.  It charges Salas with one count of dealing firearms without a license, and one count of being a felon-in-possession of a firearm.  An arraignment date in federal court has not yet been set.

The charge of dealing firearms without a license is punishable by up to five years in prison, while being a felon-in-possession of a firearm carries a maximum sentence of ten years in prison and a $250,000 fine.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Jeffrey A. Magee, Special Agent-in-Charge of the Chicago Field Division of ATF; and John Escalante, Interim Superintendent of the Chicago Police Department.  The Illinois State Police also assisted in the investigation.

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 government is represented by Assistant U.S. Attorney Scott Edenfield.

Indictment

CHICAGO — A federal jury has convicted the director of nursing assistants at Passages Hospice for participating in a scheme to bill Medicare and Medicaid for unnecessary hospice services.

ANGELA ARMENTA, 35, of Wheeling, was convicted Tuesday night on three counts of health care fraud.  Each count is punishable by up to ten years in prison.

Armenta is the seventh defendant to be convicted as part of the federal investigation into Passages Hospice LLC.  The prior convictions include former co-owner SETH GILLMAN and the company itself. 

Gillman, 47, of Lincolnwood, pleaded guilty last month to one count of health care fraud.  In his plea agreement, Gillman admitted that Passages regularly billed Medicare and Medicaid for a high level of hospice service called “general inpatient,” even though he knew that many of these services were not medically necessary.  Gillman further admitted that he implemented a bonus system to incentivize nursing directors and nursing-assistant directors, including Armenta, to place patients on general inpatient services when the patients did not need such services.

Evidence at Armenta’s seven-day trial revealed that from 2009 to 2012, Armenta was paid more than $300,000 in bonuses based on the number of patients who were placed on the higher level of services in the region Armenta and others supervised.  Witnesses at her trial testified that Armenta told nurses to disregard proper training about general inpatient services.

U.S. District Judge Thomas M. Durkin did not immediately schedule Armenta’s sentencing hearing.  A status hearing was set for July 19, 2016, at 9:00 a.m., at which time her sentencing date will be set.

In addition to Armenta, Gillman, and Passages Hospice, the four other defendants convicted in the investigation are:

GWEN HILSABECK, 49, of Pontiac, Passages’ former administrator.

CARMEN VELEZ, 36, of Palatine, Passages’ former director of clinical services.

JULIE PARKER, 56, of Shorewood, Passages’ former compliance officer.

LEROY MOORE, 49, of Shorewood, Passages’ former head of marketing.

In his plea agreement, Moore admitted that he and others at Passages offered gifts to staff members of various nursing homes to induce them to refer patients to Passages.  The gifts included tickets to events, electronic music players, televisions, and gift cards.

Gillman, Passages, Hilsabeck, Velez, Parker and Moore are scheduled to appear for a status hearing before Judge Durkin on March 16, 2016, at 9:00 a.m., at which time their sentencing dates will be set.

The conviction of Armenta was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The investigation was carried out by the Medicare Fraud Strike Force, which is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the U.S. Justice Department and the U.S. Department of Health and Human Services to prevent fraud and to enforce anti-fraud laws around the country.  Dozens of defendants have been charged in numerous fraud cases since the strike force began operating in Chicago in 2011.

The government is represented by Assistant U.S. Attorneys Stephen Chahn Lee, Abigail Peluso and James Durkin.

ROCKFORD — A Rockford-based company pleaded guilty today before U.S. Magistrate Judge Iain D. Johnston to willfully violating Occupational Safety and Health Administration regulations, resulting in the death of an employee at the company’s facility in South Beloit, Ill.

BEHR IRON & STEEL INC., a high volume ferrous and nonferrous scrap processor, admitted in a plea agreement that on March 10, 2014, the company failed to provide lockout/tagout protection and confined space protection as required under OSHA regulations for the company’s employees who were cleaning a shredder discharge pit.  The company admitted that those violations caused the death of an employee who got caught in a moving, unguarded conveyor belt.

The Company faces a maximum sentence of 5 years’ probation, a maximum fine of $500,000, and restitution to the victim employee in an amount determined by the Court.  Sentencing is scheduled for July 12, 2016, at 1:30 p.m.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Ken Nishiyama Atha, Regional Administrator of OSHA in Chicago.

“Justice cannot restore life to the victim whose body was crushed because Behr Iron and Steel failed to provide protection from dangerous machinery on the job,” said Mr. Atha.  “Safety training at the plant was woefully insufficient.  Behr must be held responsible by the courts for ignoring safety standards and failing in its obligation to protect its workers on the job.”

Behr’s South Beloit facility recycles metals contained in such things as automobiles and refrigerators.  According to the plea agreement, OSHA regulations require employers to adopt safety procedures to ensure that dangerous machines are properly shut off and unable to start up again prior to the completion of maintenance or servicing work.  The safety procedures include placing a lock on the power source of the machine and a tag on the lock warning that the machine cannot be operated until the warning is removed, and identifying the employee who has the key to the lock.  OSHA also promulgated regulations that address the need to protect employees from entering a confined space without safety precautions.

Metals shredded through a shredding machine in Behr’s South Beloit facility fall onto a conveyor belt located about ten feet underground in a shredder discharge pit, which was approximately six feet long and six feet wide.  The shredded materials were then moved by a conveyor belt out of the discharge pit and through a sorting process.  Some of the shredded metals fall onto the ground of the discharge pit near the conveyor belt.  One or two Behr employees working on the shredding machine were required to clean the discharge pit on a daily basis.  The employees shoveled shredded materials from the floor of the discharge pit onto the running conveyor belt.

On March 10, 2014, a Behr employee was cleaning the discharge pit when the employee’s arm was caught by the unguarded conveyor belt.  The employee was pulled into the machinery and killed.

Behr admitted that there was no lock or operable emergency shut off switch in the discharge pit for the conveyor belt, and the conveyor belt did not have guards designed to protect employees.  Behr also admitted that employees in the discharge pit were not adequately trained to use the shredder or the conveyor belt, and that the company had not developed and implemented confined space protection for employees entering the discharge pit.

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

Plea Agreement

CHICAGO — A federal jury today convicted an Oak Brook doctor of illegally receiving benefits in exchange for referring elderly patients to Sacred Heart Hospital on Chicago’s West Side.

After a five-week trial, DR. VENKATESWARA R. “V.R.” KUCHIPUDI was convicted on one count of conspiracy to defraud the United States, and nine counts of illegally soliciting or receiving benefits in return for referrals of patients covered under a federal health care program.  Each count carries a maximum sentence of five years in prison and a $250,000 fine.

U.S. District Judge Matthew F. Kennelly scheduled a sentencing hearing for June 2, 2016, at 1:30 p.m.

Dr. Kuchipudi, 69, is the tenth defendant convicted in a multi-year investigation of the now-shuttered hospital at 3240 W. Franklin Blvd. in Chicago.  From 2001 through April 2013, Sacred Heart executives conspired to pay kickbacks and bribes to physicians to induce them to refer patients for services that would be reimbursed by Medicare and Medicaid.  The scheme earned Sacred Heart millions of dollars in reimbursements from Medicare and Medicaid.

The prior convictions include EDWARD NOVAK, the hospital’s owner and chief executive officer; ROY PAYAWAL, the chief financial officer; CLARENCE NAGELVOORT and ANTHONY J. PUORRO, both of whom were chief operating officers; and four other physicians.  Sacred Heart closed in 2013 in the aftermath of a federal law enforcement search of the hospital and the arrests of principal executives and Dr. Kuchipudi.

Evidence at Dr. Kuchipudi’s trial revealed that he was one of Sacred Heart’s most prolific sources of patient referrals.  In exchange for his referrals, Sacred Heart provided Dr. Kuchipudi with free labor in the form of physician assistants and nurse practitioners.  The free labor was provided not only inside Sacred Heart but also in Chicago-area nursing homes where many of Dr. Kuchipudi’s patients resided.  Sacred Heart allowed Dr. Kuchipudi to bill Medicare and Medicaid for the services of the physician assistants and nurse practitioners as if he employed them himself.

Evidence at trial further revealed that Dr. Kuchipudi and Sacred Heart arranged for his patients to be transported long distances to Sacred Heart for treatment, even when the nursing homes in which they resided were closer to hospitals where Dr. Kuchipudi had privileges and which had more comprehensive facilities. 

The conviction was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The investigation was carried out by the Medicare Fraud Strike Force, which is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the U.S. Justice Department and the U.S. Department of Health and Human Services to prevent fraud and to enforce anti-fraud laws around the country.  Dozens of defendants have been charged in numerous fraud cases since the strike force began operating in Chicago in 2011.

The government is represented by Assistant U.S. Attorneys Joel Hammerman, Diane MacArthur, Kelly Greening and Brian Wallach.

CHICAGO — A Chicago Police officer was sentenced today to two years in federal prison for using excessive force against an employee of a Southeast Side convenience store.

A store surveillance camera captured ALDO BROWN punching and kicking the clerk on Sept. 27, 2012.  BROWN had entered the store while on duty and without a search warrant, and proceeded to interrogate the victim about whether he possessed narcotics or weapons.  Brown punched the victim’s face, causing him to stumble backwards into a cooler.  Brown later kicked the victim in his ribs while he was handcuffed and lying on the ground.

A federal jury last year convicted Brown, 39, of Chicago, on one count of using excessive force.  U.S. District Judge Virginia M. Kendall imposed the 24-month sentence in federal court in Chicago.

“Even apart from the physical pain inflicted, defendant’s conduct has significant ramifications for the criminal justice system,” Assistant U.S. Attorney Jessica Romero argued in the government’s sentencing memorandum. “Sworn law enforcement officers are held to a higher standard of conduct, not merely because of the authority that they enjoy, but because society relies on their trustworthiness, their honor, and their integrity in upholding and enforcing the laws that protect the community.”

Evidence at trial revealed that the victim was compliant with Brown’s instructions and did not resist.  Brown can be seen on the video placing the victim in handcuffs and forcing him to lie on the floor.  After removing a gun from the victim’s back pocket, Brown kicked the victim in his ribs.

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 Ms. Romero and Assistant U.S. Attorney Lindsay Jenkins.

ROCKFORD — A McHenry, Ill. man was indicted today by a federal grand jury in Rockford on child pornography charges. 

MICHAEL L. CHAPARRO, 27, was charged with one count of transporting child pornography via the internet, and two counts of accessing child pornography that had crossed state lines, including an image of a prepubescent minor and a minor under 12 years of age, with intent to view the child pornography.

Transporting child pornography carries a mandatory minimum sentence of five years and a maximum of 20 years in prison, and accessing child pornography carries a maximum of 10 years in prison, and up to 20 years in prison for an offense involving a minor under 12 years of age.  Each count carries a $250,000 maximum fine.  If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.  

Chaparro will appear for arraignment on March 3, 2016, at 11:00 a.m. in Federal Court in Rockford, before U.S. Magistrate Iain D. Johnston.  

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 Anderson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation.  The McHenry County Sheriff’s Department and McHenry County State’s Attorney’s Office assisted in the investigation.

The government is represented by Assistant U.S. Attorney Michael D. Love.

Indictment

CHICAGO — A California man was sentenced today to three years in federal prison for vandalizing a Grundy County fur farm and releasing more than 2,000 mink from their cages.

After releasing the mink, KEVIN JOHNSON and an accomplice spray painted the barn with the words, “Liberation is Love.”  The pair also poured an acidic substance over two trucks that were parked on the farm in Morris, Ill.

JOHNSON, 28, of Los Angeles, pleaded guilty last year to one count of conspiring to travel in interstate commerce with the purpose of damaging an animal enterprise.  U.S. District Judge Amy J. St. Eve imposed the three-year sentence in federal court in Chicago.

Johnson “vandalized a small, family-owned business, forcing it to close its doors,” Assistant U.S. Attorney Bethany K. Biesenthal argued in the government’s sentencing memorandum.  “While his intentions are noble, his tactics are not.”

The accomplice, TYLER LANG, of Los Angeles, pleaded guilty last year to the same charge as Johnson.  Lang is scheduled to be sentenced by Judge St. Eve on March 23, 2016, at 9:15 a.m.

The vandalism and releasing of the mink occurred on Aug. 13, 2013.  The mink farmers, with assistance from law enforcement, were able to recover 1,600 of the animals.  The remaining mink died or were never found.  Johnson and Lang also destroyed cards from the cages that identified the breed of each animal, making it impossible to determine the breed of the recovered minks.

The sentencing of Johnson 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 being represented by Ms. Biesenthal and Assistant U.S. Attorney William Ridgway.

CHICAGO — A federal jury today convicted the president of a Chicago real estate firm on fraud charges relating to a $105 million line of credit for city and suburban properties, including a former Goldblatt’s Department Store on the North Side and the Streets of Woodfield Mall in Schaumburg.

The fraud perpetrated by LAURANCE H. FREED, the president of Joseph Freed & Associates LLC, also involved the theft of millions of dollars from his business partner, Kimco Realty Corp.  Freed also fraudulently obtained millions of dollars in publicly funded loans from the city of Chicago. 

After a two-week trial, Freed, 53, of Chicago, was convicted on three counts of bank fraud, one count of mail fraud, and four counts of making a false statement to a financial institution.  The conviction carries a combined maximum sentence of 230 years in prison. 

U.S. District Judge Robert M. Dow did not immediately schedule a sentencing hearing.  Judge Dow set a status hearing for March 24, 2016, at 9:30 a.m.

The conviction 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 Joseph M. Ferguson, Inspector General for the City of Chicago.

The investigation previously resulted in the conviction of JFA’s vice president, CAROLINE WALTERS.  Walters, of Palatine, pleaded guilty earlier this month to one count of making a false statement to a financial institution.  Her conviction carries a maximum sentence of 30 years in prison.  Walters is scheduled to be sentenced by Judge Dow on June 10, 2016, at 9:00 a.m.

According to evidence at Freed’s trial, the city of Chicago in 2002 issued two Tax Increment Financing notes to Uptown Goldblatts Venture LLC, a company formed by JFA to redevelop the former Goldblatt’s store in the city’s Uptown neighborhood.  The TIF notes had a combined principal of $6.7 million, and Freed pledged one of the notes to Cole Taylor Bank as collateral.

Four years later, JFA-affiliated entities entered into agreements with a bank consortium for a revolving line of credit worth up to $105 million.  Uptown Goldblatts became a borrower under the revolving loan agreement through a subsequent deal with LaSalle Bank, which was one of the banks in the consortium and which had recently been acquired by Bank of America.  In the LaSalle deal, Uptown Goldblatts pledged the two TIF notes as collateral and also represented that the notes were owned free of other secured interests.  The deal did not mention that one of the notes had already been pledged to Cole Taylor.

In 2009, Uptown Goldblatts fraudulently advised Cole Taylor that it would obtain a release and termination of the double pledge.  The termination wasn’t possible, since the consortium had already declared JFA in default and had stopped negotiating with Freed.

Evidence at trial also revealed that in 2009 and 2010 Freed signed false affidavits to obtain millions of dollars in TIF payments from the city, knowing that the bank consortium and Cole Taylor were entitled to the payments. 

As Freed’s business experienced financial difficulties, he withdrew more than $7 million from the Streets of Woodfield partnership without the knowledge and consent of his business partner Kimco, which owned 45% of the venture.  Freed fraudulently recorded the money as “loans.”

The government is represented by Assistant U.S. Attorneys Renato Mariotti, Matthew F. Madden and Jessica Romero.

CHICAGO — A Kane County woman was convicted of witness tampering today for impeding a wide-ranging federal investigation into visa fraud and a sham marriage she had arranged for a Mongolian relative.

After a five-day trial in federal court in Chicago, the jury convicted ENKHCHIMEG ULZIIBAYAR EDWARDS, also known as “Eni Edwards,” on two counts of witness tampering and two counts of making false statements in a matter within the jurisdiction of the Executive Branch of the United States government.  Each count of witness tampering is punishable by up to 20 years in prison, while the false statement counts each carry a maximum sentence of five years.

The jury trial was conducted before Judge Richard A. Posner of the U.S. Court of Appeals for the Seventh Circuit, who sat in the district court by designation.  Judge Posner scheduled a sentencing hearing for May 26, 2016, at 10:00 a.m. 

Edwards, 38, of Carpentersville, is a U.S. citizen of Mongolian descent.  Evidence at trial revealed that she arranged a sham marriage in 2003 to allow her cousin, a Mongolian immigrant, to marry Edwards’ friend and seek permanent residency in the United States.  In 2008 she served as the vice president of the American Mongolian Association and personally vouched for Mongolians attempting to enter the United States.

Edwards subsequently was hired as an officer of the U.S. Customs and Border Protection.  In her employment application and background check, Edwards denied having close or continuing contact with foreign nationals.

During her time at CBP, Edwards was assigned to a team of federal law enforcement authorities conducting a broad investigation into visa fraud involving Mongolian immigrants.  In the course of the investigation, authorities began looking into the role that Edwards played in the sham marriage.  On at least two occasions during the investigation, Edwards attempted to corruptly persuade her friend to lie to investigators regarding the true reason for marrying Edwards’ cousin.

The jury verdict was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois.  The investigation was carried out by the U.S. Department of State, Diplomatic Security Service Chicago Field Office.  The U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the U.S. Department of Homeland Security’s Office of Inspector General assisted in the investigation.

The government is represented by Assistant United States Attorneys Peter S. Salib and Megan Cunniff Church.

ROCKFORD — A Freeport resident was sentenced today in federal court on a federal tax fraud charge. 

The defendant, DOMINIQUE CASTLE, 29, was sentenced by U.S. District Judge Frederick J. Kapala to 33 months in federal prison, and ordered to serve 3 years of supervised release following her term of imprisonment.  Castle was previously sentenced for fraud related charges in Stephenson County and the federal sentence of imprisonment will be served consecutively to her state prison sentence.  Judge Kapala also ordered Castle to pay $94,044 in restitution to the IRS and to four states.

On Nov. 3, 2015, Castle pleaded guilty to making a false claim to the IRS by filing a fraudulent income tax return.  She also admitted to filing a total of 54 fraudulent income tax returns with the IRS and an additional 17 fraudulent income tax returns with four different states.  Castle admitted in her plea agreement that in filing these returns, she obtained and used names of individuals, their Social Security account numbers, and their dates of birth in order to prepare and file the tax returns.  Castle admitted that in the tax returns, she would claim fictitious amounts of income and of income taxes purportedly withheld.

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 Chicago Office of the Criminal Investigations Division of the IRS.  The government was represented by Assistant U.S. Attorney John G. McKenzie.

ROCKFORD — A Poplar Grove, Ill. resident was indicted in federal court in Rockford on charges of mail fraud, aggravated identity theft, and access device fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, and U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

According to the indictment, SHAMEKA CARR filed fraudulent tax returns using stolen identities.  Carr directed the anticipated tax refunds to prepaid debit cards and to federal income tax refund checks.  She caused those items to be mailed to addresses that she had access to in Rockford, Ill. and surrounding areas.  Carr used the cards and checks to enrich herself.

Each count of mail fraud carries a maximum sentence of 20 years in prison.  Access device fraud carries a maximum sentence of 15 years in prison.  Each count of aggravated identity theft carries a mandatory sentence of two years in prison.  In addition, each count carries potential fines and restitution.

Acting Assistant Attorney General Ciraolo commended special agents of the United States Postal Service and IRS-Criminal Investigation and the Boone County Sheriff’s Department, who investigated the case, and Trial Attorneys Michael C. Boteler and John T. Mulcahy of the Tax Division, who are prosecuting the case.

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.

Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.

CHICAGO — An alleged con man has been charged in federal court with holding himself out as a psychiatrist and fraudulently prescribing medications to a nine-year-old child and dozens of others.

SCOTT C. REDMAN, 36, used the identity of an Illinois physician to see patients and prescribe medications at a clinic on Chicago’s Near North Side, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  The real physician is a resident at a different Illinois medical facility.

Redman used the physician’s name to prescribe 71 prescriptions to 44 individuals from Dec. 10, 2015, to Jan. 30, 2016, according to the complaint.  The purported patients included a nine-year-old child, who was prescribed a 30-day supply of Vyvanse, which treats attention deficit hyperactivity disorder, the complaint states.

Redman, formerly of Hammond, Ind., was arrested Wednesday.  The complaint charges him with intentionally using a fictitious registration number in the name of another person to distribute and dispense a controlled substance.  The charge is punishable by up to four years in prison.

Redman appeared yesterday before U.S. Magistrate Judge Jeffrey Cole and was ordered held in federal custody.  A detention hearing is scheduled for Feb. 16, 2016, at 10:00 a.m.

According to the complaint, Redman maintained office hours at the clinic to treat his supposed patients.  A purported profile of Redman on the clinic’s website contained the name of the real physician, alongside a photograph of Redman and fraudulent biographical and educational information, according to the complaint.

In addition to the Vyvanse, Redman prescribed other controlled substances, including Adderall, Clonazepam and Zolpidem Tartrate, the complaint states.

The complaint was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Dennis A. Wichern, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration.

The public is reminded that a complaint 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.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines. 

The government is represented by Assistant U.S. Attorney Katie M. Durick.

CHICAGO — A Milwaukee man was convicted in federal court today of transporting an underage girl to the Chicago area from Wisconsin to engage in prostitution.

DAJUAN KEY, 32, brought the girl to the Chicago area from Madison, Wisc., in September 2013.  At the time, the victim was 15 years old.  Once in the Chicago area, Key forced the girl to engage in commercial sex acts, with Key keeping all of the money.

After a three-day trial in federal court in Chicago, the jury convicted Key on one count of knowingly transporting a minor from Wisconsin to Illinois to engage in prostitution.  The conviction is punishable by a mandatory minimum of ten years and a maximum of life in prison.

U.S. District Judge Virginia M. Kendall scheduled a sentencing hearing for May 23, 2016, at 10:00 a.m.

Evidence at Key’s trial revealed that Key encountered a minor online and travelled to Madison to pick her up and bring her to southwest suburban Romeoville.  Key took photographs of the girl, provided her with lingerie to wear, and posted advertisements on the website Backpage.com.  Key rented multiple hotel rooms that were used for encounters with individuals who responded to the advertisements.  Key then collected all of the money earned by the minor victim.

The victim was rescued by officers of the Romeoville Police Department on Sept. 10, 2013, and Key was arrested.

The conviction 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 Romeoville Police Department provided assistance.

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 Assistant United States Attorneys Katherine Sawyer and Christopher V. Parente.

CHICAGO — A federal indictment unsealed today charges a Chicago woman with giving a loaded .38 Special revolver to a minor, knowing that the minor would use it to commit a violent crime.

VANDETTA REDWOOD, 34, is charged with one count of transferring a firearm to a juvenile while knowing that the juvenile intended to use it in a crime of violence, and one count of possession of a firearm within 1,000 feet of a school zone.

Special agents with the United States Bureau of Alcohol, Tobacco, Firearms and Explosives and officers from the Chicago Police Department arrested Redwood this morning.  She pleaded not guilty during her arraignment today before U.S. Magistrate Judge Maria Valdez.  Redwood was ordered held in federal custody until a detention hearing on Feb. 16, 2016, before U.S. District Judge Amy J. St. Eve.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Jeffery Magee, Special Agent in Charge of the Chicago Field Division of ATF; and Chicago Police Interim Superintendent John Escalante.

“Prosecuting federal weapons laws is a top priority of our office,” said Mr. Fardon.  “We will not hesitate to use every available federal tool to charge those responsible for furthering the cycle of violence in Chicago.”

“The circumstances of this case are tragic,” said Special Agent Magee.  “ATF is committed to investigating firearms-related violent crime and ensuring those responsible are held accountable.”

“The Chicago Police Department is relentlessly focused on targeting guns and the offenders that use them to victimize our communities,” said Chicago Police Interim Superintendent John Escalante.  “We will continue to use the full weight of our state and federal partners to send a very clear message that gun violence is not going to be tolerated on the streets of Chicago.”

According to the indictment, Redwood gave the loaded revolver to the minor on April 28, 2014.  The indictment contends that Redwood knew the minor intended to use the gun to commit a crime of violence, namely first-degree murder and other firearm-related offenses.  Redwood possessed the gun within 1,000 feet of two elementary schools on Chicago’s West Side – Oliver Wendell Holmes Elementary School and Visitation Catholic School, according to the indictment.

The charge of transferring a gun to a minor for use in a crime of violence carries a maximum sentence of ten years in prison.  Possessing a gun within 1,000 feet of a school is punishable by up to five years.

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.  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 United States Attorney Michelle Nasser.

Indictment

ROCKFORD — A former Rockford physician pleaded guilty today before U.S. District Judge Frederick J. Kapala to making false statements in a bankruptcy case.  LYNN Y. ZOIOPOULOS (also known as Lynn Shelton-Zoiopoulos), 60, now of Chicago, Ill., filed a Chapter 7 Bankruptcy Petition on Aug. 11, 2009.  According to the written plea agreement, Zoiopoulos signed 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 with the balance reaching up to $855,178 in May 2006.  In October 2008, Zoiopoulos used $550,000 of the money from that account to purchase an annuity contract, which after its purchase became an asset of the estate.  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 her sister 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.

In October of 2012, Zoiopoulos took the remaining balance of the annuity, $227,170.18, and used the money for her personal benefit although she knew the money was an asset of the estate. 

Providing material false statements or documents under penalty of perjury in a bankruptcy case carries a maximum penalty of 5 years in prison, a fine of up to $250,000, or twice the gross gain or gross loss resulting from that offense, whichever is greater.  The judge may also impose a sentence of probation of one to five years, and a term of supervised release of up to three years, and restitution.  The actual sentence will be determined by the United States District Court, guided by the Sentencing Guidelines.  Sentencing for Zoiopoulos is set for May 12, 2016, at 2:30 p.m.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Michael Anderson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation.

The government is represented by Assistant U.S. Attorneys Michael D. Love and Margaret J. Schneider.

Plea Agreement

CHICAGO — The vice president of a Chicago real estate firm pleaded guilty today to lying to a bank about a public financing note that was issued for the redevelopment of a former Goldblatt’s Department Store in the city’s Uptown neighborhood.

CAROLINE WALTERS, the vice president and treasurer of Joseph Freed & Associates LLC, admitted in a plea agreement that she lied to Cole Taylor Bank about a public financing note issued by the city of Chicago that had been pledged to two different banks as collateral.  Walters falsely told Cole Taylor that her company would resolve the other pledge, which had been made to a bank consortium after Cole Taylor’s interest in the note was already secured.  At the time Walters made the statement, she knew that the bank consortium had declared JFA to be in default and was no longer negotiating with them, according to the plea agreement.

Walters, 55, of Palatine, pleaded guilty to one count of making a false statement to a financial institution.  The conviction carries a maximum sentence of 30 years in prison and a maximum fine of $1,000,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.

U.S. District Judge Robert M. Dow scheduled a sentencing hearing for June 10, 2016, at 9:00 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 Joseph M. Ferguson, Inspector General for the City of Chicago.

Walters was indicted in 2013 along with JFA’s president, LAURANCE H. FREED.  Freed, of Chicago, has pleaded not guilty to seven counts of bank fraud, one count of mail fraud, one count of wire fraud, and six counts of making a false statement to a financial institution.  His jury trial is scheduled to begin on Feb. 8, 2016, in Judge Dow’s courtroom.

According to Walters’ plea agreement, the city of Chicago in 2002 issued two publicly-financed Tax Increment Financing notes to Uptown Goldblatts Venture LLC, a company formed by JFA to redevelop the former Goldblatt’s Department Store in Uptown.  The TIF notes had a combined principal of $6.7 million.  Uptown Goldblatts then secured a $15 million loan from Cole Taylor, conditioned on Uptown Goldblatts’ assignment to Cole Taylor of its rights to one of the TIF notes.

Four years later, two other JFA-affiliated entities – DDL LLC and Freed Illinois Holdings LLC – entered into agreements with a bank consortium for a revolving line of credit worth up to $105 million.  Uptown Goldblatts became a borrower under the revolving loan agreement through a subsequent deal with LaSalle Bank, which was one of the banks in the consortium and which had recently been acquired by Bank of America.  In the LaSalle deal, Uptown Goldblatts pledged the two TIF notes as collateral and also represented that the notes were owned free and clear of any other secured interests.  The deal did not mention that one of the notes had already been pledged to Cole Taylor.

In 2009, Uptown Goldblatts and Cole Taylor amended their loan agreement to reflect that Uptown Goldblatts would obtain a release and termination of the double pledge.  Walters also personally told Cole Taylor that JFA would resolve the issue as part of its negotiation with the bank consortium to modify and extend its loan, according to the plea agreement.  At the time Walters made the statement, however, she knew that the consortium had declared JFA in default and had terminated the negotiations, the plea agreement states.

The government is represented by Assistant U.S. Attorneys Renato Mariotti, Matthew F. Madden and Jessica Romero.

Plea Agreement

CHICAGO — Five men have been arrested on kidnapping charges for allegedly abducting a Berwyn man in broad daylight and holding him for ransom in a North Side auto body shop.

The kidnapping went awry after the abductors realized they had snatched the wrong man, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  The victim was the brother of the intended target.  He was blindfolded and held at gunpoint for nearly two days in an auto body shop in Chicago’s Avondale neighborhood, before being released, the complaint states.

Federal authorities arrested the five defendants yesterday.  Charged with conspiracy to commit kidnapping are ANTONIO SALGADO, 34; ARMANDO DELGADO, 36; OCTAVIO ALEJANDRE JR., 33; JAIME GUTIERREZ, 22; and MUNAF ABDULRAZAK MUSA, 22; all of Chicago.  The charge carries a maximum sentence of life in prison. 

All five defendants were ordered held without bond during initial court appearances yesterday before U.S. Magistrate Judge Susan E. Cox.  Musa’s next court appearance is scheduled for Feb. 5, 2016, while the other defendants will next appear on Feb. 8, 2016.

According to the complaint, the abduction occurred on the afternoon of May 30, 2015, when the victim was kidnapped at gunpoint outside of his Berwyn home.  The victim was forced into a sport-utility vehicle and taken to the auto repair shop.  While being held, one of the kidnappers pushed a gun into the victim’s body and threatened him, while another kidnapper placed a knife on the victim’s fingers and threatened to cut them off, the complaint states.

Early the next morning, the victim’s uncle received telephone calls from an unidentified man who stated he was holding the victim, according to the complaint.  The caller demanded approximately 25 kilograms of narcotics.  At one point the victim was placed on the phone and instructed to tell his uncle to cooperate, the complaint states.

Unbeknownst to the defendants, several of their phones had previously been intercepted by federal authorities who were conducting an unrelated investigation, the complaint states.  In a recorded call between Salgado and Delgado on the night of May 31, 2015, Delgado told Salgado, “There is a little situation.  It’s the wrong guy because it’s his brother of the one that we’re trying to get.”  According to the complaint, Salgado allegedly replied, “Let the guy go, but beat the [expletive] out of him.”

On the morning of June 1, 2015, the victim appeared at a bus station in Chicago, according to the complaint.  The victim told police that he had walked to the bus station after being released from captivity during the night.

The arrest and 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; Dennis A. Wichern, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration; Jim Ritz, Chief of the Berwyn Police Department; and John Escalante, Acting Superintendent of the Chicago Police Department.

The public is reminded that a complaint is not evidence of guilt.  The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines. 

The government is represented by Assistant U.S. Attorney Kartik K. Raman.

Complaint

ROCKFORD — A former Bull Valley, Ill. man was sentenced today in federal court by U.S. District Judge Frederick J. Kapala for the concealment of assets from a Bankruptcy Trustee.  JOSEPH MICHAEL PHELAN, 52, now of Augusta, Ga., was sentenced to 9 months in federal prison to be followed by 3 months of home confinement.  Phelan was also placed on 3 years of supervised release and ordered to pay $80,618.78 as restitution.  Phelan was the former President of Phezer Enterprises, Incorporated, located in Crystal Lake, Ill.

Phelan, who pleaded guilty to the charge on Sept. 17, 2015, caused a Chapter 7 Bankruptcy Petition to be filed for Phezer Enterprises on Aug. 18, 2008.  According to the written plea agreement, after Phelan closed Phezer Enterprises on Aug. 13, 2008, Phelan had three Phezer employees start cutting up and scrapping unused and used Phezer assets, including sheets of stainless steel and various metals.  On Aug. 18, 2008, the day Phezer filed for bankruptcy, Phelan sold 21,182 pounds of stainless steel to a scrap metal company.  Phelan personally received $15,251.04 for the steel.

As Phelan admitted in the plea agreement, between Aug. 18, 2008 and Aug. 29, 2008, two Phezer employees sold $13,399.24 worth of Phezer metals to a second scrap metal company.  The two employees received cash for the scrap and provided the cash to Phelan.

As further stated in the plea agreement, in September and October 2008, Phelan received two checks totaling $51,968.50 issued to him from another scrap metal company for Phezer metals sold to that company.  Phelan deposited both checks in his personal bank account.  Phelan did not advise the trustee or a secured creditor that corporate assets had been sold to the three scrap metal companies, or account and deliver to the trustee or the secured creditor the proceeds from the sales of Phezer assets.     

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.

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

CHICAGO — A Chicago woman has been charged with posing as a federal housing representative to scam homeowners out of cash, federal authorities announced today.

CYNTHIA WALLACE, 45, of Chicago, is charged with one count of falsely assuming and pretending to be an officer of the United States.  Last month Wallace posed as an official from the “Federal Housing Authority” and “H.U.D.” in numerous phone calls she placed to Chicago-area homeowners, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  During the calls, Wallace said the federal government would foreclose on the victims’ homes unless they wired money to a location determined by Wallace. 

One of Wallace’s intended targets was a 79-year-old woman from the West Side of Chicago, the complaint states.  Two other targets – a husband and wife from south suburban Harvey – wired more than $3,500 to Wallace, according to the complaint.

Wallace was arrested on Jan. 29, 2016, and appeared in court the following day before U.S. Magistrate Judge Michael T. Mason.  Judge Mason ordered Wallace detained in federal custody, pending further proceedings.  The next court date has not yet been set.

According to the complaint, Wallace – using the alias “Sherry Rice” – told the 79-year-old woman that the woman was entitled to $31,200 from the federal government, but only if the woman first wired $500 to a location determined by Wallace.  If the woman didn’t submit the money, Wallace said the government would foreclose on the woman’s home, according to the complaint.  The woman notified federal authorities, allowing agents to tape-record subsequent phone calls between her and Wallace.  In one recorded call, Wallace told the woman, “We can do whatever we want to do if you’re not compliant,” according to the complaint.  The woman did not wire any money.

Wallace later used a different alias – “Shree Box” – to target the Harvey couple, the complaint states.  Wallace told the couple that they were qualified for a $12,000 “H.U.D./F.H.A. grant” to avoid foreclosure on their house.  In order to receive the purported grant money, Wallace said they had to obtain a home inspection at a cost of $480 – payable via MoneyGram to a location determined by Wallace, the complaint states.  The couple wired the money.  In a series of subsequent phone calls, Wallace told the couple that they could qualify for a larger grant, a low-interest mortgage loan and mortgage insurance if they wired additional funds, according to the complaint.  The couple submitted the additional payments, but then notified federal authorities.

Wallace was arrested when she attempted to claim an additional $1,500 from the couple at a currency exchange on the South Side.  The purported MoneyGram was actually a ruse set up by federal authorities, the complaint states.

Wallace is not employed by the Federal Housing Administration, which is a division of the U.S. Department of Housing and Urban Development.

The arrest was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Brad Geary, Special Agent-in-Charge of the U.S. Department of Housing and Urban Development’s Office of Inspector General in Chicago; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The public is reminded that a complaint 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.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines. 

The government is represented by Assistant U.S. Attorneys Matthew S. Ebert and Maribel Fernandez-Harvath.

To report suspected fraud, logon to https://www.hudoig.gov/report-fraud or call 1-800-347-3735.

ROCKFORD — A former Davis, Ill. resident was sentenced in federal court today by U.S. District Judge Frederick J. Kapala for failure to register under the federal Sex Offender Registration and Notification Act (“SORNA”).  MARK STEPHEN CURTIS, 29, was sentenced to 26 months in federal prison, to be followed by 5 years of supervised release. 

Curtis pleaded guilty to the charge on Oct. 26, 2015.  In the written plea agreement, Curtis admitted that he was a sex offender required to register in Illinois under SORNA.  Curtis moved from North Carolina to Davis, Ill. during September 2014, and remained a resident in Davis, Ill. until at least Oct. 19, 2014.  Curtis admitted that he did not register as a sex offender as required, despite knowing that he needed to register within three days of moving to a new state.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Edward Gilmore, United States Marshal for the Northern District of Illinois.

The government was represented by Assistant U.S. Attorney Michael D. Love.

CHICAGO — An Aurora native who operated several fraudulent Mexican real estate businesses was sentenced today to 20 years in prison for his role in a $4.8 million swindle of timeshare owners.

GILBERT BRETT FREEMAN, 44, led a scheme to defraud more than 1,400 owners by falsely promising that he would sell their Mexican timeshares to corporate buyers.  Freeman and others collected payments from the owners for fictitious fees and taxes that he claimed were required to complete Mexican real estate deals, and that he promised would be refunded upon closing.  In reality, Freeman had no intention of selling the timeshares or reimbursing the owners.

Freeman instead used the money to fund a lavish lifestyle that included a penthouse apartment in an oceanfront resort, Rolex watches, numerous vacations, and the rental of a Lamborghini in Las Vegas for $1,399 per day.  Some of his victims resided in the Chicago area.

Freeman, a native of Aurora who most recently resided in Puerto Vallarta, Mexico, pleaded guilty in 2014 to five counts of wire fraud.  U.S. District Judge Elaine E. Bucklo imposed the 240-month sentence in federal court in Chicago.

“The defendant’s actions had a devastating impact on countless victims,” Assistant U.S. Attorney Christopher J. Stetler argued in the government’s sentencing memorandum.  “Rather than using his victims’ money to fund timeshare sales, the defendant chose to use that money to bankroll an extravagant lifestyle.”

Authorities arrested Freeman in July 2012 in Las Vegas.  According to his plea declaration, Freeman was involved with various Mexican-based companies, including International Resorts Resale, Resort Closing Services, Timeshare Consolidators, Timeshare Liquidators, and Transfer My Timeshare.  At Freeman’s direction, “lead generators” contacted the timeshare owners and explained that the companies could coordinate the sale of their properties.  When an owner expressed interest, company employees known as “liners” followed up to arrange the first payment, which the liners claimed would be refundable even though it wasn’t.

“Closers” from the companies were then brought in to convince the owners to make additional payments to cover the bogus fees and taxes that were purportedly needed to complete the deal, according to the charges.  Closers and liners received commissions for each payment collected from the timeshare owners.

The final step involved purported “escrow employees,” who claimed to represent independent businesses and who assured the owners that their money would be securely held until reimbursement.  In reality, there were no such escrow agreements, and the so-called escrow representatives were actually working for one of Freeman’s companies, according to the charges.

In all, eleven defendants have been charged in the scheme, which began in 2008 and continued in various forms until January 2015.  Four defendants, including Freeman, have pleaded guilty, while the others have pleaded not guilty and are awaiting trial.

The sentencing of Freeman 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 C. Steven Baker, Director of the Midwest Region of the Federal Trade Commission.  The government is being represented by Mr. Stetler.

CHICAGO — A suspended Chicago pharmacist was sentenced today to a year and a day in federal prison for dispensing counterfeit erectile-dysfunction pills he had imported from China.

MICHAEL MARKIEWICZ sold approximately 1,600 counterfeit Viagra and Cialis tablets without a prescription to customers at his Northwest Side pharmacy.   Markiewicz had ordered the phony pills from China via the Internet.  Had the pills been genuine, their retail value would have been approximately $35,000.

Markiewicz, 39, of Norridge, pleaded guilty last year to one count of trafficking and attempting to traffic in a counterfeit drug, and one count of dispensing a counterfeit drug with the intent to defraud and mislead.

In addition to the prison term, U.S. District Judge John Z. Lee also fined Markiewicz $10,000 and ordered him to forfeit his pharmacy to the government.

“Defendant’s conduct risked the health of his customers, both by ordering a drug with mysterious origins and by giving it to patients without a doctor’s authorization,” Assistant U.S. Attorney Samuel B. Cole argued in the government’s sentencing memorandum.  “It was a substantial breach of trust by a medical professional.”

According to Markiewicz’ plea agreement, the counterfeit tablets from China were shipped in boxes that purported to contain pens.  The customs declaration described the packages as containing only the pens, without identifying the hidden tablets.  Markiewicz sold the counterfeit tablets in his pharmacy for at least $20 per pill, according to the plea agreement.

The Illinois Department of Professional Regulation suspended Markiewicz’ pharmacist license in 2012, and it also revoked the pharmaceutical privileges of his business, Belmont Pharmacy.  Markiewicz had most recently been operating the business as an herb and nutrient retailer in the same location, 6148 W. Belmont Ave. in Chicago.

The sentencing was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Mark S. McCormack, Acting Special Agent-in-Charge of the U.S. Food and Drug Administration’s Office in Chicago; and Antonio Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.

The government is represented by Mr. Cole and Assistant U.S. Attorney Eric S. Pruitt.

CHICAGO — The former assistant transportation commissioner for the city of Chicago was convicted today on federal corruption charges in connection with the awarding of lucrative red-light camera contracts.

After a two-week trial in federal court in Chicago, the jury convicted JOHN BILLS on all counts against him.  The counts include nine counts of mail fraud; three counts of wire fraud; one count of extortion under color of official right; one count of conspiracy to commit bribery; three counts of bribery; and three counts of filing false tax returns.  Bills, 54, of Chicago, faces a maximum combined sentence of 304 years in prison. 

U.S. District Judge Virginia M. Kendall scheduled a sentencing hearing for May 5, 2016, at 10:00 a.m.

The conviction 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.

“By accepting bribes in exchange for influencing city contracts, John Bills deprived the city of Chicago of money and honest services,” said Mr. Fardon.  “When public officials abuse their power and violate the public trust for personal gain, we will be there to hold them accountable.”

As an assistant transportation commissioner, Bills was a voting member of the city’s Request for Proposal evaluation committee, which sought vendors under the city’s Digital Automated Red Light Enforcement Program.  In 2003, the committee recommended awarding contracts to Phoenix-based Redflex Traffic Systems Inc., to install cameras that automatically record and ticket drivers who run red lights.  Evidence at trial revealed that from approximately 2003 to 2011, Bills used his influence to expand Redflex’s business with the city, resulting in millions of dollars in contracts for the installation of hundreds of red-light cameras.  In exchange for his efforts, Redflex provided Bills with cash and personal benefits, including meals, golf outings, rental cars, airline tickets, hotel rooms and other entertainment.

Some of the benefits were given directly to Bills, while hundreds of thousands of dollars in cash was funneled to him through a friend, MARTIN O’MALLEY.  Redflex hired O’Malley as a contractor and paid him lavish bonuses as new cameras were added in Chicago.  O’Malley testified at trial that he often stuffed the bonus money into envelopes and gave it to Bills during meals in Chicago restaurants.

Between 2004 and 2008, Chicago paid Redflex approximately $25 million.  After KAREN FINLEY became CEO of Redflex in 2007, O’Malley’s commissions escalated and Redflex was awarded a “sole-sourced” contract for another $33 million.  The city then followed up that contract with another deal worth $66 million – for the installation of nearly 250 additional red-light cameras.

Bills retired from the city in 2011.

Finley, of Cave Creek, Ariz., pleaded guilty last year to one count of conspiracy to commit bribery.  She is scheduled to be sentenced by Judge Kendall on Feb. 18, 2016.

O’Malley, of Worth, pleaded guilty in December 2014 to one count of conspiracy to commit bribery.  His sentencing date has not yet been set.

The government is represented by Mr. Fardon and Assistant U.S. Attorneys Laurie J. Barsella and Timothy Storino.

CHICAGO — A physician at Chicago-based Mobile Doctors was convicted on federal fraud charges today for falsely certifying patients as confined to their homes as part of a scheme to defraud Medicare.

After a four-day trial in federal court in Chicago, the jury convicted DR. BANIO KOROMA on two counts of healthcare fraud and two counts of making false statements related to health care matters.  Dr. Koroma, 66, of Tinley Park, worked for Mobile Doctors, which contracted with physicians to arrange in-home visits for patients in Illinois, Michigan, Indiana and other states.  Mobile Doctors, which closed in 2013, was located at 3319 N. Elston Ave., in Chicago.

Evidence at trial revealed that Dr. Koroma certified patients as confined to their homes when they were not actually home-bound and did not require the skilled-nursing services that he had ordered.  One of the patients testified at trial that she was able to leave her home and could visit her primary-care physician for office visits, even though Dr. Koroma was certifying her as confined to the home.  Dr. Koroma’s false certifications cost Medicare more than $45,000 for this patient alone, according to evidence at trial.

The healthcare fraud counts each carry a maximum sentence of ten years in prison, while the false statement counts are each punishable by up to five years.  U.S. District Judge John J. Tharp Jr. scheduled a sentencing hearing for June 2, 2016, at 1:00 p.m.

The investigation was carried out by the Medicare Fraud Strike Force, which consists of agents from the Federal Bureau of Investigation and the U.S. Department of Health and Human Services, and prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section.  The strike force is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the Department of Justice and HHS to prevent fraud and to enforce anti-fraud laws around the country.

The investigation previously resulted in the conviction of DIKE AJIRI, who served as Mobile Doctor’s chief executive officer.  Ajiri, of Wilmette, pleaded guilty in October 2015 to one count of healthcare fraud.  He admitted fraudulently increasing Medicare bills for in-home treatment that was shorter and less complicated than the claims indicated.  The improper billing – known as “upcoding” – defrauded Medicare and the Railroad Retirement Board of approximately $1,854,000, according to Ajiri’s plea agreement.  Ajiri faces a maximum sentence of ten years in prison when Judge Tharp sentences him on April 19, 2016, at 2:00 p.m.

The jury verdict against Dr. Koroma 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 Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General.  The Railroad Retirement Board Office of Inspector General is also participating in the case.

The government is represented by Assistant United States Attorneys Stephen Chahn Lee and Eric Pruitt.  To report health care fraud or to learn more about HEAT, logon to: StopMedicareFraud.gov.

CHICAGO — The leader of a jewelry heist ring that robbed two Chicago jewelers and attempted to rob another in Lake Forest was sentenced today to more than 31 years in federal prison.

Over the course of two weeks in September and October 2012, PALO BROWN and his crew robbed two jewelry stores in Chicago and a gas station in Forest Park, and also attempted to rob a jeweler in Lake Forest.  As they fled the final robbery in Chicago’s Edgewater neighborhood, Brown and another member of his crew tried to car-jack a woman at gunpoint.  The woman screamed and fought back, and the pair fled.

Brown, 34, of Chicago, pleaded guilty last year to one count of conspiracy to obstruct, delay and affect commerce by robbery; one count of using, carrying and brandishing a firearm during a crime of violence; and one count of attempted car-jacking.  U.S. District Judge Virginia M. Kendall imposed the 376-month sentence in federal court in Chicago.

Assistant U.S. Attorney Peter M. Flanagan said Brown was “the mastermind of a multi-week campaign of armed violence.”  Flanagan argued in the government’s sentencing memorandum that Brown “organized a crew that threatened numerous people with guns.”

Brown admitted in a plea agreement that he and his crew robbed Thornton’s Gas Station in Forest Park on Sept. 24, 2012.  During the robbery, another member of the crew, PARIS STARWALT, pistol-whipped a customer over the head.  The robbery netted the crew $500 and two cartons of cigarettes.

The first jewelry heist occurred the following day at Arab Jewelry in the East Albany Park neighborhood of Chicago.  Brown, Starwalt and a third member of the crew, FELICE DESILVIA, took about $200,000 worth of diamonds and jewelry.  During the robbery, DeSilvia duct-taped a store employee to a chair to prevent him from running away.

The following week, Brown and DeSilvia attempted to rob Lake Forest Jewelers in Lake Forest.   Shortly after the pair entered the store armed with concealed handguns, an employee walked outside to place a call on his cellphone.  Fearing that the employee was calling the police, Brown and DeSilvia abandoned their plans and exited the store.

On Oct. 8, 2012, Brown, Starwalt and DeSilvia robbed Bryn Mawr Jewelry in the Edgewater neighborhood of Chicago.  Starwalt held two employees at gunpoint while Brown and DeSilvia collected $120,000 worth of loose diamonds and jewelry.  After Brown and Starwalt exited the store, they attempted to car-jack a woman at gunpoint in a nearby garage.  The woman screamed and bit Starwalt on the arm and hands, causing her and Starwalt to fall to the ground.  Brown and Starwalt ran off and were quickly apprehended by Chicago Police officers.

Starwalt, of Mattoon, Ill., pleaded guilty in 2014 to the same charges as Brown.  His sentencing hearing is set for April 1, 2016, at 1:00 p.m., before Judge Kendall.

DeSilvia, of Chicago, pleaded guilty in 2014 to one count of conspiracy to obstruct, delay and affect commerce by robbery; and one count of using, carrying and brandishing a firearm during a crime of violence.  Her sentencing hearing before Judge Kendall will be scheduled at a later date.

Brown’s sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Jeffery Magee, Special Agent in Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Chicago Police Acting Superintendent John Escalante; and Cook County State’s Attorney Anita Alvarez.

The government is represented by Mr. Flanagan.

CHICAGO — A former clerk for the Cook County Recorder of Deeds pleaded guilty today to accepting a cash bribe in exchange for preparing a back-dated deed on an Oak Park home and agreeing to record it with her office.

REGINA TAYLOR accepted the $200 bribe from an individual who purportedly wanted to add a relative’s name to the deed of a residence in Oak Park, according to a written plea agreement.  Unbeknownst to Taylor, the individual was actually an undercover law enforcement agent, the plea agreement states.

Taylor, 59, of Chicago, pleaded guilty to one count of honest services mail fraud.  The conviction carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.

U.S. District Judge Sara L. Ellis scheduled a sentencing hearing for April 13, 2016, at 10:30 a.m.

According to the plea agreement, the fraudulent quit claim deed was created to add the purported relative as a fourth owner of the Oak Park property.  Taylor directed the undercover agent not to tell anyone that the three other individuals on the deed were deceased, according to the plea agreement.  Taylor then prepared the fraudulent deed and back-dated it by 18 months, confirming the purported relative as a grantee.

After giving the fraudulent deed to the undercover agent to have it stamped at the Village of Oak Park, the undercover agent gave Taylor $200 in cash, according to the plea agreement.  Taylor further directed the undercover agent to bring back the stamped copy of the fraudulent deed so that Taylor could officially file it at the Office of the Cook County Recorder of Deeds.

The guilty plea 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 United States Attorney Megan Cunniff Church.

Plea Agreement

CHICAGO — Two members of a Chicago-area rap group have been charged with using violence and coercion to force females to engage in prostitution, federal authorities announced today.

SAMUEL NICHOLS and CHARLES FEARS are each charged with one count of engaging in sex trafficking by force, fraud and coercion, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  The pair worked together to recruit females, including minors, to engage in the commercial sex business, the complaint states.

In order to solicit customers, Nichols and Fears posted advertisements on the website Backpage.com that featured photographs of the females wearing lingerie and posing in sexual positions, according to the complaint.  Nichols and Fears provided the females with cellular telephones and instructed them to answer calls and schedule meetings with Backpage.com customers, according to the complaint.  The meetings primarily occurred in motels in various suburbs, including Naperville, Downers Grove, Schaumburg, Lansing, Harvey, Alsip and Joliet, according to the complaint. 

After performing sex acts for money, the females gave the proceeds to Nichols and Fears, the complaint states.

Fears, 22, of Chicago, was arrested this morning.  He made an initial court appearance today and is scheduled for a detention hearing at 11:00 am on January 22, 2016 before U.S. Magistrate Judge Kim.

Nichols, 30, formerly of Chicago, was arrested in Tennessee and ordered removed in custody to Chicago.

According to the complaint, Nichols and Fears carried firearms and would often hit, slap and choke the females who worked for them, including one incident in which Nichols beat a female so badly she had to be hospitalized.  The pair also supplied the females with drugs and alcohol to help them participate in committing the sex acts, the complaint states.

According to the complaint, Nichols and Fears are members of a Chicago-area rap music group called “Hit Squad.”  The group, not to be confused with the 1990s East Coast-based hip hop collective of the same name, posts videos of their music on websites such as YouTube.com, the complaint states.

The charge of sex trafficking by force, fraud or coercion is punishable by a mandatory minimum of 15 years in prison and a maximum of life in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

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

The charges 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 and the Carol Stream Police Department, in coordination with the Cook County Human Trafficking Task Force.

The government is represented by Assistant U.S. Attorneys Sarah Streicker, Michelle Petersen and Libby Pozolo.

Complaint

CHICAGO — A Northbrook man was sentenced today to 12 months and a day in federal prison for illegally obtaining clean titles for salvaged and rebuilt vehicles and using them as taxicabs on the streets of Chicago.

As the owner of Seven Amigos Used Cars Inc., ALEXANDER IGOLNIKOV fraudulently obtained paperwork to conceal the history of the damaged cars in order to bypass City of Chicago laws that prohibit the use of salvaged and rebuilt vehicles as taxicabs.  Igolnikov, who also served as vice president of Chicago Elite Cab Corp., caused the impaired vehicles to be used as taxicabs on Chicago streets after they were falsely given clean titles in Indiana and Illinois.

Igolnikov’s scheme, which spanned from 2007 through April 2010, was uncovered in an investigation by federal authorities and the City of Chicago Inspector General’s Office.

Igolnikov, 68, of Northbrook, pleaded guilty last year to one count of conspiracy to transport, receive and possess a counterfeit security.  U.S. District Judge Edmond E. Chang imposed the sentence in federal court in Chicago.

According to Igolnikov’s plea agreement, he and his associates fraudulently obtained “rebuilt” titles for damaged vehicles by submitting false paperwork– including affidavits with the forged signature of an Indiana law enforcement officer – to the Indiana Bureau of Motor Vehicles.  The vehicles were then transported to the Chicago business of Chicago Carriage Taxi Company, which was also used by Seven Amigos Used Cars.  After obtaining the Indiana rebuilt title for a salvaged vehicle, Igolnikov and his associates placed a sticker over the “rebuilt” section of the Indiana certification and then used that title to obtain a clean Illinois title from the Illinois Secretary of State’s Office.  Igolnikov purchased the newly certified vehicles in the names of Seven Amigos Used Cars, Chicago Elite Cab and other related corporate entities, the plea agreement states. 

Igolnikov and his business associates, including Chicago Elite Cab, operated the fraudulently certified vehicles as taxicabs in Chicago – in violation of the city’s medallion laws, which prohibit any vehicle that was ever issued a “salvage” or “rebuilt” title in any state from being used as a taxicab, the plea agreement states.

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; and Joseph M. Ferguson, Inspector General for the City of Chicago.

The government is represented by Assistant United States Attorneys Margaret Schneider and Steven Dollear.

CHICAGO — A Chicago man was sentenced today to more than 16 years in federal prison for selling nearly a dozen firearms that had been transported from Indiana to the streets of Chicago.

TERRENCE GRIGGS, 36, sold eleven firearms and a bulletproof vest to an individual he believed was a high-ranking member of a Chicago street gang.  The weapons included two shotguns, four pistols, three revolvers and two rifles.  Unbeknownst to Griggs, the buyer was an informant who was cooperating with law enforcement officers from the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives.

A federal jury last year convicted Griggs on all four counts of being a felon in possession of a firearm.  U.S. District Judge Elaine E. Bucklo imposed a 200-month sentence today in federal court in Chicago.

“The city of Chicago is plagued with gun violence, and many of the guns in that violence are purchased through illegal sales like the ones Griggs orchestrated,” Assistant U.S. Attorney Angel M. Krull argued in the government’s sentencing memorandum.  “The nature and circumstances of the offense – not only possessing, but trafficking in firearms – are incredibly serious.”

Evidence at trial revealed that in eight separate meetings in the summer of 2011, Griggs personally sold ten firearms and one bulletproof vest to the cooperating informant.  Griggs also arranged and facilitated the sale of the eleventh weapon, although he wasn’t present for the sale.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Jeffery Magee, Special Agent in Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives.  The government is represented by Ms. Krull and Assistant U.S. Attorney Kartik K. Raman.

CHICAGO — A west suburban physician was sentenced today to two years in prison for fraudulently certifying patients as confined to the home, allowing healthcare agencies to bill Medicare for millions of dollars in unnecessary in-home treatment.

As an employee and part-owner of Bloomingdale-based Home Care Physicians Inc., DR. ARTHUR DAVIDA received referrals from home-health agencies asking him to certify the patients as confined to the home.  Although he knew that at least 20 percent of the patients were not confined to the home, Davida nonetheless provided the certification – allowing the agencies to bill Medicare for treatment that Davida knew was not medically necessary.  Davida acknowledged in a plea agreement that he provided the certifications because he feared that, if he didn’t, the home-health agencies would stop sending him the referrals.

In imposing the 24-month sentence, U.S. District Judge John J. Tharp Jr. described the crime as a “very serious offense,” and one that involved “stealing money” from the Medicare program.

Davida, 62, of Bloomingdale, pleaded guilty last year to a health care fraud charge contained in a criminal information.  According to the plea agreement, Davida began working at Home Care Physicians in 2009, and started conducting in-home visits in 2010.  From 2010 and continuing through August 2013, Davida certified numerous patients as confined to the home and in need of skilled nursing services, when, in fact, they were able to leave their homes and did not need such services.  The certifications caused the home-health agencies to submit claims to Medicare for payment of bills pertaining to medically unnecessary services. 

Home-health agencies were paid more than $20 million by Medicare based on orders signed by Davida.  Given his admission that 20 percent of these patients were not confined to the home, Davida acknowledged in the plea agreement that he caused losses of at least $4 million to the Medicare program.

The sentence 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 Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General.  The government is represented by Assistant United States Attorney Stephen Chahn Lee.

The investigation was carried out by the Medicare Fraud Strike Force, which consists of agents from the FBI and HHS, and prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section.  The strike force is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the Department of Justice and HHS to prevent fraud and enforce anti-fraud laws around the country.

To report health care fraud or to learn more about HEAT, logon to: StopMedicareFraud.gov.

ROCKFORD — A former Evanston, Ill. man was convicted today of bank robbery following a three-day jury trial in federal court in Rockford. 

CONRAD J. GONZALEZ, 47, was found guilty of robbing the First Federal Savings Bank, located at 701 1st Ave., in Rock Falls, Ill. on Oct. 30, 2013.

According to the indictment and evidence at trial, at approximately 1:00 p.m. on Oct. 30, 2013, Gonzalez entered First Federal wearing a baseball cap and Chicago Bears sweatshirt.   Gonzalez approached a bank teller and handed her a note demanding money.  When the teller attempted to retrieve the note from the counter, Gonzalez said, “That was a stupid thing to do,” and took the note back.  The teller then handed $1,870 to Gonzalez who then walked out of the bank on foot.

Gonzalez faces a maximum potential penalty of up to 20 years in prison, up to 3 years of supervised release following imprisonment, a fine of up to $250,000, and full restitution.  The court must impose a reasonable sentence guided by the advisory United States Sentencing Guidelines.  Sentencing for Gonzalez is set for April 19, 2016, at 2:30 p.m.

The conviction 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 Rock Falls and Sterling Police Departments assisted in the investigation.

The government was represented by Assistant U.S. Attorneys Joseph C. Pedersen and Monica V. Mallory.

CHICAGO — United States Marshals, acting with investigators from the U.S. Food and Drug Administration, today seized nearly 90,000 bottles of a beverage containing the herbal ingredient kratom.

The beverages were manufactured for and held by Dordoniz Natural Products LLC, of South Beloit, and marketed under the brand name RelaKzpro.  The product is estimated to be worth more than $400,000.

The bottles were seized after the U.S. Attorney’s Office in Chicago filed a civil forfeiture complaint on behalf of the FDA.  The complaint alleges that kratom is a new dietary ingredient for which there is inadequate information to provide reasonable assurance that it does not present a significant or unreasonable risk of illness or injury. 

Mitragyna speciosa, commonly known as kratom, is a botanical substance that grows naturally in Thailand, Malaysia, Indonesia and Papua New Guinea.  The complaint, which was filed yesterday in U.S. District Court in Chicago, alleges that serious concerns exist about the toxicity of kratom in multiple organ systems.  Consumption of kratom can lead to a number of health impacts, including respiratory depression, vomiting, nervousness, weight loss and constipation, the complaint states.  Kratom has been indicated to have both narcotic and stimulant-like effects.  Withdrawal symptoms may include hostility, aggression, excessive tearing, aching of muscles and jerky limb movements, according to the complaint. 

The complaint states that dietary supplements containing kratom are adulterated under the Federal Food, Drug, and Cosmetic Act.

The seizure and complaint were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Melinda Plaisier, the FDA’s Associate Commissioner for Regulatory Affairs.  The government is represented by Assistant U.S. Attorney Donald Lorenzen.  

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

Health care professionals and consumers should report any adverse events related to products containing kratom to the FDA by logging on to its website: www.fda.gov/medwatch/report.htm.

Complaint

CHICAGO — A Chicago-based partner in a global management consulting firm schemed with a client to bilk their companies out of hundreds of thousands of dollars in purported consulting services that were never performed, according to a federal indictment announced today.

NAVDEEP ARORA, a former partner in the Chicago office of McKinsey & Company Inc., was arrested Sunday at JFK International Airport in New York.  Arora, 51, of London, England, and formerly of Chicago, is charged with eight counts of wire fraud in an indictment filed in U.S. District Court in Chicago.  Arora made an initial appearance yesterday in U.S. District Court in New York and was ordered detained pending further proceedings.

The indictment, which was returned in August and unsealed yesterday, also charges MATTHEW SORENSEN, a former internal consultant for State Farm Mutual Automobile Insurance Co., with five counts of wire fraud.  Sorensen, 49, of Bloomington, Ill., is scheduled to appear for arraignment at 2:00 p.m. on Jan. 11, 2016, before U.S. Magistrate Judge Michael T. Mason in Chicago.

According to the charges, Arora oversaw various consulting services provided by McKinsey to State Farm.  The indictment contends that Arora and Sorensen used two companies – “Gabriel Solutions” and “Andy’s BCB” – to defraud their employers out of phony consulting fees.  Sorensen billed McKinsey for the bogus work purportedly performed by the companies, and Arora allocated the fees to the State Farm projects to which he was assigned, according to the indictment.

As a result of the scheme, McKinsey and State Farm paid $38,265 for consulting services purportedly performed by “Andy’s BCB,” and $452,710 in fees billed by “Gabriel Solutions,” the indictment states.  Sorensen pocketed nearly all of the fees paid to “Andy’s BCB,” and he took approximately $370,000 of the amount paid to “Gabriel Solutions,” according to the indictment.

In addition to the phony consulting services, the indictment contends that Arora fraudulently obtained over $400,000 from McKinsey, State Farm and other McKinsey clients in the form of travel and expense reimbursements.  Arora claimed that the costs had been incurred for legitimate business purposes, when in reality the expenses pertained to Arora’s personal travel.  The indictment alleges that Arora falsely expensed personal trips to Scottsdale, Napa, Vail, Miami, Las Vegas, New York, London, Prague and Munich, among others. 

Arora also obtained reimbursement for personal expenditures he incurred in Chicago while residing there, the indictment states.  The Chicago expenses included hotel, dining and theater costs, according to the indictment.

Each count of wire fraud carries a maximum penalty of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.

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 public is reminded that an indictment contains only charges and is not evidence of guilt.  The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant United States Attorneys Sunil Harjani, Timothy Storino and Jason Yonan.

Indictment

CHICAGO — A convicted felon from southwest suburban Hickory Hills pleaded guilty in federal court today to charges he illegally possessed firearms whose serial numbers had been obliterated.

STEVEN RILEY, 24, sold a 20-gauge shotgun, two rifles and 40 rounds of assorted ammunition to an individual for $2,500 in November 2014.  Unbeknownst to Riley, the buyer was a confidential informant who was working at the direction of agents from the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives.  Riley had previously been convicted of two felonies prior to the gun sales.

Riley pleaded guilty today to one count of illegal possession of a firearm by a convicted felon.  The conviction carries a maximum sentence of ten years in prison and a $250,000 fine.  U.S. District Judge Virginia M. Kendall scheduled a sentencing hearing for April 14, 2016, at 10:00 a.m.

In addition to the shotgun and rifles, Riley admitted in a plea agreement that he sold other firearms and assorted ammunition to the informant from October 2014 to February 2015.  These additional sales netted Riley $3,600.  In March 2015, agents executing a search warrant at Riley’s home in Hickory Hills discovered two loaded semi-automatic pistols and various ammunition, according to the plea agreement.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Jeffery Magee, Special Agent in Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives.  The Hickory Hills Police Department assisted in the investigation.

The government is represented by Assistant U.S. Attorneys Elizabeth Pozolo, John D. Mitchell, and Jordan Palmore.

Plea Agreement

ROCKFORD — A Rockford resident was sentenced today in federal court on a federal gun charge.  The defendant, MARTEZ DICKSON, 29, was sentenced by U.S. District Judge Philip G. Reinhard to a total of 235 months in federal prison, and ordered to serve 5 years of supervised release following his term of imprisonment.  On Sept. 15, 2015, following a two-day trial before U.S. District Judge Philip G. Reinhard, Dickson was found guilty by a federal jury of illegally possessing a firearm as a convicted felon. 

According to the indictment and evidence at trial, on May 31, 2014, Rockford Police Officers were called to the McDonald’s on 11th Street after Dickson was discovered asleep in the driver’s seat of a car parked in the drive-thru lane.  When officers arrived on the scene, Dickson was found in possession of a loaded 9 mm handgun, after previously having been convicted of a felony.  

Dickson was originally charged in state court and was transferred to federal court where he was charged under tough federal firearms laws as part of the Project Safe Neighborhoods program.  Project Safe Neighborhoods is an intensive, cooperative effort between local, state, and federal law enforcement to attack gun crimes.  The cornerstone of the program is that every defendant committing an offense involving a gun will be reviewed for possible federal prosecution in order to obtain the harshest penalties for the worst offenders.  Additional information about Project Safe Neighborhoods may be found at: www.psn.gov.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Jeffery Magee, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; Joseph Bruscato, Winnebago County State’s Attorney; and Patrick Hoey, Interim Chief of the Rockford Police Department.  The government was represented by Assistants U.S. Attorney Talia Bucci and Margaret J. Schneider.

The Department of Justice, including lawyers and senior leaders from the Civil Rights Division, and the U.S. Attorney’s Office of the Northern District of Illinois, completed two days of introductory meetings in Chicago today following last week’s announcement of a pattern or practice investigation into the Chicago Police Department (CPD).  The team, comprised primarily of lawyers from the Civil Rights Division was joined by the head of the Civil Rights Division Vanita Gupta, as well as Zachary Fardon, the U.S Attorney of the Northern District of Illinois.  The investigation into use of force, disparities in use of force and accountability systems of the CPD is being led by the Civil Rights Division with assistance from the U.S. Attorney’s Office of the Northern District of Illinois.

On Dec. 16, the group met with CPD Superintendent John Escalante and briefed CPD command staff on the investigative process.  The Civil Rights Division also had initial meetings with community members and organizations in order to solicit information and explain the pattern or practice investigation’s scope and process.

Today, Dec. 17, the Civil Rights Division and U.S. Attorney’s Office met with additional community groups, city officials and union representatives.  Meetings with the city of Chicago included Mayor Rahm Emanuel and his staff and a separate meeting with the Independent Police Review Authority Administrator Sharon Fairley. 

Throughout the investigative process the Civil Rights Division, assisted by the U.S. Attorney’s Office, will continue to meet with representatives from the community, the city and the unions.  During the course of the investigation, community members will have the opportunity to provide information both in public meetings and privately.  Any public meetings will be announced at a later date.  Anyone who wishes to share information relevant to the investigation is encouraged to contact the Department of Justice by phone: (844) 401-3735 or email: [email protected].

WASHINGTON – The Department of Justice, including lawyers and senior leaders from the Civil Rights Division, and the U.S. Attorney’s Office of the Northern District of Illinois, completed two days of introductory meetings in Chicago today following last week’s announcement of a pattern or practice investigation into the Chicago Police Department (CPD).  The team, comprised primarily of lawyers from the Civil Rights Division was joined by the head of the Civil Rights Division Vanita Gupta, as well as Zachary Fardon, the U.S Attorney of the Northern District of Illinois.  The investigation into use of force, disparities in use of force and accountability systems of the CPD is being led by the Civil Rights Division with assistance from the U.S. Attorney’s Office of the Northern District of Illinois.

On Dec. 16, the group met with CPD Superintendent John Escalante and briefed CPD command staff on the investigative process.  The Civil Rights Division also had initial meetings with community members and organizations in order to solicit information and explain the pattern or practice investigation’s scope and process.

Today, Dec. 17, the Civil Rights Division and U.S. Attorney’s Office met with additional community groups, city officials and union representatives.  Meetings with the city of Chicago included Mayor Rahm Emanuel and his staff and a separate meeting with the Independent Police Review Authority Administrator Sharon Fairley. 

Throughout the investigative process the Civil Rights Division, assisted by the U.S. Attorney’s Office, will continue to meet with representatives from the community, the city and the unions.  During the course of the investigation, community members will have the opportunity to provide information both in public meetings and privately.  Any public meetings will be announced at a later date.  Anyone who wishes to share information relevant to the investigation is encouraged to contact the Department of Justice by phone: (844) 401-3735 or email: [email protected].

CHICAGO — The chief executive of a Florida financial firm was arraigned today on federal fraud charges for allegedly selling $179 million in sham loans to a Milwaukee investment company.

Nikesh Patel, the chairman and CEO of Orlando-based First Farmers Financial LLC, forged signatures and produced false documents to create the appearance that approximately 26 government-backed loans had been issued to borrowers in Florida and Georgia, according to an indictment returned earlier this month in federal court in Chicago.  The sham loans purported to contain principal amounts ranging from $2.5 million to $10 million, the indictment states.  Patel sold the fraudulent loans to a Milwaukee investment firm for $179 million, according to the indictment.

The indictment charges Patel, 32, of Windermere, Fla., with five counts of wire fraud.  He pleaded not guilty this afternoon during his arraignment before U.S. District Judge Charles P. Kocoras in Chicago.  The next court appearance was scheduled for Jan. 21, 2016, at 9:30 a.m.

Through its Business and Industry Guaranteed Loan Program, the U.S. Department of Agriculture guarantees a percentage of loans issued to borrowers who improve the economic and environmental climate in rural communities.  First Farmers obtained certification to participate in the program after Patel submitted false statements to the USDA about his company’s assets and officers, according to the indictment.

The indictment contends that Patel then submitted false statements to the Milwaukee firm to secure the sale of the phony loans.  The fabrications included a false guarantee that the USDA had backed a portion of the loans’ principal amounts, according to the indictment.  The Milwaukee firm paid $179 million for the loans as an investment vehicle for its list of clients, which included community banks, retirement plans, municipalities, and subdivisions in Illinois and elsewhere, the indictment states.

The indictment 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.

Each count of wire fraud carries a maximum penalty of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.

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.  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 United States Attorneys Patrick J. King Jr. and Rick D. Young.

ROCKFORD — A Rockford man pleaded guilty today in federal court before U.S. District Judge Frederick J. Kapala to illegally possessing a firearm as a convicted felon.  CLIFFORD HORTON, 28, of Rockford, Ill., admitted that on November 4, 2014, having previously been convicted of a felon, he possessed a Taurus .380 caliber pistol. 

Horton is scheduled to be sentenced on March 18, 2016, at 2:30 p.m.  Horton faces a maximum sentence of up to 10 years’ imprisonment, a term of supervised release of up to 5 years following imprisonment, and a fine of up to $250,000.  The actual sentence will be determined by the United States District Court, guided by the advisory United States Sentencing Guidelines. 

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Jeffery Magee, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; Gary Caruana, Winnebago County Sheriff; and, Patrick Hoey, Interim Chief of the Rockford Police Department.

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

Plea Agreement