Northern District of Illinois

Chicago — A former Dolton certified water operator was indicted yesterday on charges that, for several years, he routinely falsified paperwork to make it appear that Dolton was properly sampling its drinking water for microbiological contaminants. Dolton purchases its drinking water from the City of Chicago, which treats Lake Michigan water. However, Dolton is still required to test its drinking water for the presence of coliform bacteria in order to ensure that it has not become contaminated locally.

According to the six count indictment, between January 2008 and continuing through August 2013, Philip Kraus, 63, of Thornton, falsified records in order to conceal the fact that he was not sampling Dolton’s water system in accordance with the Safe Drinking Water Act and the U.S. EPA regulations that implement the Safe Drinking Water Act. Kraus will appear before for an arraignment at a later date determined by U.S. District Court.

Each month, Dolton was required to collect 25-30 samples of its drinking water from various points representative of the entire drinking water distribution system and thereafter to take those samples to a certified laboratory for testing. The samples were to be tested for the presence or absence of coliform bacteria – the presence of coliform bacteria in the drinking water may indicate that the drinking water is contaminated with microbiological contaminants. The indictment alleges that, contrary to the required sampling protocol, Kraus routinely collected multiple drinking water samples each month from only one or a few locations but falsely represented on Dolton paperwork and on forms submitted to Dolton’s contract laboratory that the samples were taken from representative locations throughout Dolton. The laboratory then transmitted the test results and the false sample site data to the Illinois EPA, which implements the federal Safe Drinking Water Act in Illinois pursuant to authorization from U.S. EPA. IEPA and U.S. EPA rely upon the test results and sample site data to ensure that Dolton was distributing to its residents and businesses drinking water free of microbiological contaminants. The contract laboratory is not accused of any wrongdoing.

The indictment charges Kraus with one count of engaging in a multi-year scheme between January 2008 and August 2013 to submit material false statements and five additional counts, each of which charges Kraus with causing the submission of a false statement to IEPA on a particular date in 2013.

The indictment alleges that all of the test results from the samples submitted to the contract laboratory were negative for the presence of coliform bacteria. The government does not possess information indicating that any person was harmed as a result of the alleged offenses.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Randall K. Ashe, Special Agent-in-Charge of the U.S. EPA’s Criminal Investigation Division in Chicago.

"The residents of the Village of Dolton relied upon Mr. Kraus, the Village’s Certified Water Operator, to make sure that their drinking water was properly sampled and tested for microbiological contamination." said Mr. Fardon. "Mr. Kraus violated the trust of the residents of Dolton, and, although we have no evidence that Mr. Kraus’ conduct caused any actual harm, it did create a very real risk of contamination going undiscovered."

Each of the six counts carries a maximum penalty of 5 years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant United States Attorney Timothy J. Chapman.

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.

Complaint

Chicago – A Wilmette man was arrested this morning by agents from the Federal Bureau of Investigation and detectives from the Norridge and Arlington Heights Police Departments and is facing federal wire fraud charges for defrauding his clients of at least $1 million of investment funds. Alan Gold, age 60, was arrested at his residence and charged by criminal complaint that was unsealed following his arrest. FBI agents also conducted a search pursuant to a search warrant of Gold’s residence this morning. Gold appeared before U.S. Magistrate Judge Jeffrey Gilbert earlier today and was released on a $10,000 recognizance bond and is due back in court for a status on June 15 at 9:00 a.m.

According to the complaint, Gold engaged in a scheme to defraud his clients for at least five years through false statements. Gold, who managed several million dollars of client funds through his company, Alan Gold & Associates, based in his residence, allegedly sent account statements to clients falsely representing that their assets were invested in certain stocks, real estate funds, futures contracts, and other investment products, when Gold had actually spent those client funds on his own personal expenses.

According to the complaint, Gold, as early as 2008, told his clients that he would make “alternative investments” on their behalf using funds that he would wire from their brokerage account to his bank account. Among the investments Gold listed on client account statements were real estate ventures and holdings in real estate ventures, gold and natural gas futures contracts, and the stocks of publicly traded companies. Gold did not purchase securities and futures contracts for his clients, but allegedly spent the funds on gambling expenses at area casinos and personal living expenses. Gold allegedly continued to wire transfer funds from client accounts for at least five years using the same false statements and representations to clients. The scheme was exposed when Gold stopped returning client phone calls and a client reported the matter to law enforcement.

If convicted of wire fraud, Gold could be sentenced to a maximum term of imprisonment of 20 years and a $250,000 maximum fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois and Robert J. Holley, Special Agent-in-Charge of the Federal Bureau of Investigation Chicago Office. The Chicago office of the U.S. Securities & Exchange Commission, the Arlington Heights Police Department, and the Norridge Police Department assisted with the investigation.

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

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 guilty beyond a reasonable doubt.

Complaint

ROCKFORD — A former Sycamore, Ill. resident was sentenced today by U.S. District Judge Frederick J. Kapala for possessing child pornography.  MICHAEL PODOLSKY, 27, now of Elkader, Iowa, who pled guilty to the charge on January 27, 2015, was sentenced to 97 months imprisonment, to be followed by 5 years of supervised release.  In his written plea agreement, Podolsky admitted that on and prior to July 12, 2013, he owned and was in possession of a computer at his home in Sycamore that contained more than 600 images of children engaged in sexually explicit conduct, and that among the images he possessed were images that depicted prepubescent minors engaged in sadistic conduct and violence. 

The sentencing was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent‑in‑Charge of the Chicago Office of the Federal Bureau of Investigation; and Glenn Theriault, Chief of the Sycamore Police Department.

The government was represented by Assistant United States Attorney Michael D. Love.

ROCKFORD — A former Machesney Park, Ill. man was sentenced today in federal court by U.S. District Judge Frederick J. Kapala for concealing assets from a Bankruptcy Trustee.  The defendant, ROBERT J. YONKEE, JR., 56, now of Lake Geneva, Wis., was sentenced to 8 months in federal prison, to be followed by 1 year of supervised release, and was ordered to a fine of $1,000. 

In pleading guilty to the charge on Jan. 14, 2015, Yonkee admitted he filed a Chapter 7 Bankruptcy Petition on Sept. 15, 2008, and by signing a Declaration verified his Petition, all his Schedules, and a Statement of Financial Affairs under penalty of perjury.  According to the written plea agreement, from Sept. 15, 2008 through at least May 8, 2009, Yonkee fraudulently concealed property from the bankruptcy trustee, including his ownership interest in: a business that sold auto parts, automobiles, and motorcycles; the United States Super Truck Racing Series; Bobby Yonkee Racing; as well as other inventory, merchandise, capital, vehicles, and motorcycles.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

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

CHICAGO ― A Skokie man was indicted last week for international parental kidnapping of his three children and traveling with them to Turkey without their mother’s consent, permission or knowledge.  MURTAZA ALI, 44, of Skokie, was charged with one count of international parental kidnapping by a federal grand jury.  Ali was arrested on May 6 upon his return to O’Hare International Airport with the children, and remains in federal custody.  Ali is scheduled to be arraigned Tuesday, June 2 at 10:00, in front of U.S. District Judge Samuel Der-Yeghiayan.

According to the court documents, Ali is a Pakistani-national, and with individual A, has three minor children.  According to Individual A, on the evening of May 2, 2015, she was at a social gathering.  Ali, along with the three children, was scheduled to pick her up after the event.  He did not pick her up, and when she arrived home, Ali and the three children were not home, the house was a mess, and the passports and luggage were missing.  An investigation by Skokie Police Department determined Ali’s last known location was believed to be near O’Hare Airport.

Ali, along with the three children, boarded a Turkish Airlines flight at O’Hare Airport and arrived in Istanbul, Turkey on May 2.  According to Individual A, Ali called her from Turkey and stated that he had the three children and that he was traveling to Pakistan.  According to information obtained from Turkish Airlines and other law enforcement agents, there was reason to believe that Ali was planning to board a flight from Turkey bound for Karachi, Pakistan, with the children. He was arrested on a federal complaint when he and his three children returned to the United States on May 6.

The arrest and indictment were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and William A. Ferrara, Chicago Director of Field Operations, Customs and Border Protection. Skokie Police Department assisted in the investigation.

The government is being represented by Assistant U.S. Attorney Heather McShain.

International parental kidnapping carries a maximum sentence of three years in prison and a $250,000 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.

Indictment

CHICAGO ― A former owner and operator of Selectcare Health, Inc., a provider of outpatient physical and respiratory therapy located in Park Ridge and Skokie, was sentenced to federal prison for engaging in a $2.5 million health care fraud scheme. Ankur Roy, 38, of Miami Beach, Florida, was sentenced last Friday to 75 months in prison followed by 3 years of supervision after his release by U.S. District Court Judge Gary Feinerman.  Roy was also ordered to forfeit more than $2.5 million in proceeds he and his codefendants gained by defrauding Medicare and Blue Cross Blue Shield of Illinois.  Roy was ordered to surrender to the Federal Bureau of Prisons on July 15, 2015.  Roy was charged in 2013 with two co-defendants who both pled guilty; Dipen Desai, who was sentenced to 27 months’ imprisonment in December 2014, and Akash Patel, who is scheduled to be sentenced in July.  Roy was convicted of five counts of the indictment by a jury in July 2014.   

Between March and May 2011, Roy and his co-defendants submitted false and fraudulent health insurance claim forms to Medicare and Blue Cross Blue Shield for respiratory therapy services that they knew were never provided to patients. Roy, who proposed the scheme to his co-defendants as a means to extricate themselves from debt, designed the scheme to avoid raising red flags with Medicare and Blue Cross Blue Shield’s fraud detection systems. As a result of these false claims, Medicare and Blue Cross Blue Shield paid defendants over $2.5 million. Defendant took over $600,000 of that sum and used it for his own personal purposes, including for personal expenses, paying off credit card bills and repaying his student loan.

“Defendant Roy’s fraud deprived Medicare and Blue Cross Blue Shield of over $2.5 million, a substantial sum of money that should have gone to pay for medical services for senior citizens, and not to line his and his partners’ pockets,”  Assistant U.S. Attorney Maureen Merin argued at sentencing.

The sentence today was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, Robert J. Holley, Special Agent in Charge of the Federal Bureau of Investigation Chicago; Lamont Pugh III, Special Agent in Charge of the Chicago Regional Office of Health and Human Services, Office of Inspector General; and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor Office of Inspector General in Chicago.

The government was represented by Assistant U.S. Attorney Maureen Merin. 

CHICAGO — A former director and a former officer of First Community Bank and Trust in Will County were sentenced for fraudulently making false entries in the bank’s records which generated reports falsely representing that loans were current, when, in fact they were delinquent. MARTIN E. SCHMIDT, JR., 56, of Beecher, was sentenced to 8 months of imprisonment by U.S. District Court Judge Charles Kocoras. DONNA M. BARBER, 53, also of Beecher, was sentenced by U.S. District Court Judge Jorge L. Alonso to one year of supervised release, with the first six months to be served as home confinement. Schmidt and Barber were ordered to pay restitution in the amounts of $1,183,374 and $684,938, respectively. Schmidt must report to the Bureau of Prisons on June 2, 2015. As a result of their convictions, both defendants are also barred from associating with or being employed by a financial institution for ten years.

The defendants together concealed that loans totaling approximately $2.8 million where delinquent, and caused the bank to lose more than $1.1 million. Schmidt was senior vice president for lending and a member of the board of directors of First Community Bank and Trust, which operates in Beecher and Peotone, and co-defendant Barber was vice president for mortgage lending.

Schmidt and Barber were charged together in October 2014 in a criminal information with making false bank reports with intent to defraud. Schmidt pled guilty in November 2014, and Barber pled guilty in December 2014.

“Both defendants were long-time trusted employees of the bank,” argued Assistant U.S. Attorney Brian P. Netols in the government’s sentencing memoranda, “In committing the offense, [they] repeatedly betrayed and violated that trust.”

Schmidt and Barber admitted that they caused and made false entries in the bank’s past due accounts report for September 2009 by intentionally omitting to disclose as past due two customers’ loans and advances in the total principal amount of approximately $2.5 million.

According to court documents, Schmidt was the point of contact for Customer K, and Barber was the point of contact for Customer M, and their compensation was based, in part, on the performance of the loans for which they were each responsible. By September 2008, Schmidt and Barber each knew that Customers K and M were unable to make payments to the bank on their various loans. They agreed that they needed to take action to prevent the delinquent accounts from appearing on the bank’s reports and began concealing their past due nature. The false entries extended from September 2008 until October 2009.

Barber, with Schmidt’s knowledge and approval, and Schmidt made and caused false entries in loan records allowing Customer M to skip payments without paying the interest due and extending notes without interest payments being current. Some false entries were made on a retroactive basis so the actual condition of the loans would not appear on the bank’s current monthly records. With these serious delinquencies concealed, the bank made additional loans to Customer M totaling $708,274, on which he subsequently defaulted.

At Schmidt’s request, Barber also made false entries in the Bank’s records relating to Customer K which allowed loan payments to be improperly skipped and overrode restrictions on additional advances. Schmidt then approved $269,038 in loans to Customer K after Schmidt knew that Customer K was then unable to repay. Schmidt also made unauthorized undocumented advances to Customer K totaling $105,562, paid $22,500 of Customer K’s overdrafts, and issued an unauthorized letter of credit to Customer K in the amount of $80,000.

Finally, Schmidt deceived the bank’s board of directors by leading them to believe that he and Barber were properly managing the bank’s loans, when they were actually fraudulently creating reports that made it appear that the loan portfolio was in better shape than it was.

The sentence was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

ROCKFORD — A Rockford, Ill. man was charged yesterday in federal court with possessing with the intent to distribute narcotic drugs.  ANTHONY ROSS, 34, of Rockford, Ill., was charged with possessing with the intent to distribute cocaine, cocaine base (crack cocaine), and heroin on May 28, 2015.  According to the complaint, Ross was taken into custody outside an apartment on 23rd Street in Rockford.  When law enforcement officers went into the apartment to execute a search warrant, they found $1,205 in cash, two loaded semi-automatic pistols, and numerous packages of cocaine, cocaine base and heroin.  When law enforcement officers went to a second location that day, a residence on Orchard Avenue in Rockford, they found over a kilogram of cocaine and 214 grams of heroin.

ROSS was brought before U.S. Magistrate Judge Iain D. Johnston yesterday for an initial appearance.  He was ordered to be held pending a detention hearing and a preliminary hearing on June 2, 2015, at 2:30 p.m.

Possession with the intent to distribute of the charged narcotic drug Controlled Substances carries a maximum potential penalty of up to 20 years in prison, at least 3 years of supervised release following imprisonment, and a fine of up to $1,000,000.  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 a complaint is only a charge and is not evidence of guilt.  The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The charge was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; CARL VASILKO, Special Agent-in-Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives; JOSEPH P. BRUSCATO, Winnebago County State’s Attorney; and GARY CARUANA, Winnebago County Sheriff.  Officers of the Rockford Police Department assisted in the investigation.

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

Complaint

Chicago --- A drug trafficker who used the illicit website “Silk Road” for worldwide drug sales was sentenced yesterday to 10 years’ imprisonment for selling millions of dollars’ worth of illegal drugs for bitcoins.  The defendant, Cornelis Jan Slomp, 23, of Woerden, the Netherlands, pled guilty in April 2014 to conspiracy to import and distribute various controlled substances worldwide.  Slomp was also ordered to forfeit $3,030,000 in illegal drug proceeds from his criminal enterprise.  Slomp has been in federal custody since his arrest in August 2013.

"The crime is an extraordinarily serious one given the amounts involved, there's no question about that," said U.S. District Court Judge Matthew F. Kennelly said in imposing the sentence.  

Slomp, who operated under the username “SuperTrips,” conducted more than 10,000 illegal online drug transactions and received approximately 385,000 in bitcoins as payment for his illegal drug sales.  By his own admissions and as confirmed by law enforcement’s examination of the data retrieved from the Silk Road server, Slomp was the world’s largest drug trafficker on Silk Road.

Shortly before law enforcement agents shut down the Silk Road web site in August 2013, Chicago Homeland Security Investigations (HSI) agents arrested Slomp when he traveled from the Netherlands to Miami, Florida.  At the time, Slomp had arranged to spin off his United States illegal drug trafficking business to his largest U.S.-based wholesale re-distributor of illegal drugs, Angel William Quinones, of Largo, Florida.  Quinones, who was later arrested, has since pleaded guilty in federal court in Tampa and has been sentenced to 70 months’ imprisonment for his role in Silk Road drug trafficking activity.

According to court documents, for an eighteen-month period from March 2012 through about August 2013, Slomp distributed worldwide approximately: 104 kilograms of powder 3,4-methylenedioxy-N-methylamphetamine (MDMA); 566,000 ecstasy pills containing MDMA; four kilograms of cocaine; three kilograms of Benzodiazepine; and substantial quantities of amphetamine, lysergic acid diethylamide (LSD), and marijuana, in addition to allowing for substantial quantities of methamphetamine, ketamine, and Xanax to be distributed on his SuperTrips Silk Road vendor account. 

“The public is harmed when illegal drugs are sold in the United States as well as in this district.  This harm to the public is magnified when drug traffickers such as the defendant use sophisticated modern technology to reach larger segments of the population as well as to further conceal their identities and criminal activity.  Here, the defendant used one of the most sophisticated dark websites of its time to sell enormous quantities of illegal drugs to wholesale redistributors, retailers, and users of drugs across the country – indeed, throughout the world – in more than 10,000 transactions,” argued Assistant United States Attorney Andrew S. Boutros in the government’s sentencing memorandum. 

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Gary Hartwig, Special Agent-in-Charge of HSI Chicago.

The case was prosecuted by Assistant U.S. Attorney Andrew S. Boutros.

CHICAGO ― The leader of a drug trafficking organization who created and managed a heroin distribution operation run via a hotline telephone between 2008 and 2012 on the city’s west side was sentenced to 20 years in federal prison yesterday, federal law enforcement officials announced.  The defendant, PIERRE HENDERSON, was responsible for supervising the distribution of over 30 kilograms of heroin, a federal judge determined before imposing the sentence.

Henderson, 37, of Chicago, pleaded guilty to conspiracy to distribute heroin in December 2014. U.S. District Judge Ronald A. Guzman imposed the 20-year sentence on Wednesday. Henderson’s brother, Eric Henderson, 35, pleaded guilty to conspiracy to distribute heroin in January 2014. In March 2015, U.S. District Judge Ronald A. Guzman sentenced Eric Henderson to 200 months in federal prison.

The defendant’s organization sold tens of thousands of user quantities to individuals from all over the Chicagoland area, “argued Assistant U.S. Attorney Shoba Pillay in the government’s sentencing memorandum. “His conduct directly contributed to the drug trafficking and attendant violence plaguing the streets of the city of Chicago and the heroin addiction crisis now afflicting this city.”

According to court documents, the Henderson brothers were involved in prolific daily sales of heroin to customers who called into the hotline to order heroin. After placing their phone orders the Henderson brothers’ customers traveled from all over the Chicagoland area to the city’s west-side to purchase heroin from street-level distributors, who worked for the Henderson brothers.

The Henderson brothers were among 8 federal defendants who were arrested in May 2013 following an FBI investigation, code-named Operation Heroin Hotline, of a phone-order heroin trafficking operation. 

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The investigation was led by the FBI and was conducted under the umbrella of the U.S. Organized Crime Drug Enforcement Task Force (OCDETF) in coordination with the Chicago Police Department.  

The government is being represented by Assistant United States Attorneys Shoba Pillay and Lindsay Jenkins. 

CHICAGO — A Naperville man pled guilty today to federal charges he set fire to the Chicago Air Route Traffic Control Center in Aurora on September 26, 2014, federal law enforcement officials announced today. Brian Howard, 37, of Naperville, was charged by information earlier this month with one count of willfully setting fire to, damaging, destroying or disabling an air navigation facility; and one count of using fire to commit a federal felony. Howard will be sentenced on September 11, 2015 by U.S. District Court Judge Gary Feinerman and remains in federal custody since his arrest in September 2014.

According to court documents, Howard was employed by an FAA contractor at the Chicago Air Route Traffic Control Center (the “Control Center”) in Aurora, Illinois. Howard worked on telecommunications matters at the Control Center and at other FAA facilities for approximately eight years.

Howard pled guilty to intentionally damaging and disabling the telecommunication infrastructure at the Control Center, and setting fire to the area which housed these key components.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and Carl Vasilko, Special Agent in Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives.

The government is being represented by Assistant U.S. Attorney Andrew K. Polovin.

Individuals impacted by the September 26, 2014 fire who wish to receive notice about future court hearings, including sentencing, are encouraged to contact the U.S. Attorney’s Office’s Victim Hotline number at 866-364-2621 (press #3), or by email at [email protected].

The charge of willfully setting fire to, damaging, destroying or disabling an air navigation facility, or willfully interfering by force or violence with the operation of that facility, likely endangering the safety of aircraft in flight, carries a maximum penalty of 20 years in prison and a maximum fine of $250,000 or twice the gross loss caused by defendant’s actions.

The charge of using fire to commit a federal felony carries a mandatory penalty of 10 years in prison, which must be in addition to any sentence imposed for the underlying felony.

If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

Plea Agreement
Victim Resources

CHICAGO ― A Chicago lawyer was indicted on federal charges alleging that he evaded the payment of income tax on income he received over the course of two decades, including income he received in connection with the State of Illinois’s lawsuit against various tobacco companies.

Daniel P. Soso, 63, of Alsip, was charged with one count of income tax evasion.  The indictment alleges that in 1996, the Illinois Attorney General entered into a written contract with several law firms who represented the State of Illinois in its lawsuit against certain tobacco companies to recover, among other things, money damages incurred by the State of Illinois as a result of the sale of tobacco products to residents of the State of Illinois.  In addition, the contract provided that the law firms representing the State of Illinois, including Law Firm B, would share a “contingent fee” equal to ten percent of the total monetary recovery realized by the State of Illinois in its planned lawsuit.  The indictment further alleges that Soso, Individual A (an individual formerly licensed to practice in Illinois) and Individual B (a partner of Law Firm B) entered into agreements to pay Soso and Individual A a portion of the attorney fees awarded in the tobacco lawsuit and concealed these agreements from the State of Illinois, the Illinois Attorney General and others.

The indictment further alleges that between 1993 and 2013, Soso failed to pay approximately $779,615.86 in taxes, which amount included taxes due from the income Soso received from the tobacco lawsuit.  Further, the indictment alleges that Soso took a variety of acts to evade the payment of these taxes, to include the use of nominee bank accounts; making false statements to the IRS concerning his sources of income; and causing the circumvention of levies issued by the IRS to third parties to recoup taxes due from Soso.

The defendant will be arraigned at a later date in U.S. District Court.  The charge carries a maximum sentence of five years in prison and a $100,000 fine.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

Zachary T. Fardon, United States Attorney for the Northern District of Illinois, announced the indictment with Stephen Boyd, Special Agent in Charge of the Internal Revenue Service Criminal Investigative Division Chicago and Robert J. Holley, Special Agent-in-Charge of the Federal Bureau of Investigation Chicago. The government is being represented by Assistant U.S. Attorneys Amarjeet S. Bhachu, Michael T. Donovan and Andrew K. Polovin.

The public is reminded that an indictment contains merely 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.

Indictment

CHICAGO — The former Speaker of the United States House of Representatives was charged today with structuring the withdrawal of $952,000 in cash in order to evade the requirement that banks report cash transactions over $10,000, and lying to the Federal Bureau of Investigation about his withdrawals. The defendant, JOHN DENNIS HASTERT, 73, of Plano, Illinois, was charged with one count each of structuring currency transactions to evade Currency Transaction Reports and making a false statement to the FBI in an indictment returned by a federal Grand Jury. He will be ordered to appear for arraignment on a later date in U.S. District Court.

According to the indictment, in 2010, Hastert agreed to provide Individual A $3.5 million in order to compensate for and conceal his prior misconduct against Individual A.   From 2010 to 2014, Hastert withdrew a total of approximately $1.7 million in cash from various bank accounts and provided it to Individual A. Beginning in approximately July 2012, Hastert started structuring his cash withdrawals in increments of less than $10,000 to evade the filing of Currency Transaction Reports (“CTRs”), which banks are required to file for cash withdrawals in excess of $10,000.  In December of 2014, when questioned by the FBI regarding his structuring of cash withdrawals, Hastert falsely stated that he was keeping the cash.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Stephen Boyd, Acting Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division.  

Each count of the indictment carries a maximum penalty of 5 years in prison and a $250,000 fine.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant United States Attorneys Steven Block and Carrie Hamilton.

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.

Indictment

CHICAGO — An area psychologist pled guilty today to engaging in a health care fraud scheme to defraud the Medicare program, federal law enforcement officials announced today.  SHARON A. RINALDI, a licensed psychologist, was charged in a five-count indictment returned in October 2012 with defrauding Medicare by submitting thousands of false claims for providing psychotherapy services to Medicare beneficiaries residing in skilled nursing homes in the Chicago area.  Rinaldi submitted false claims to Medicare seeking a total reimbursement of approximately $1.1 million and as a result of those false claims, Medicare paid Rinaldi at least $447,155 in funds to which she was not entitled.  Rinaldi, 60, of Inverness, pled to one count of health care fraud before U.S. District Court Judge Robert M. Dow.  Rinaldi also has agreed to forfeit of more than $100,000 that was seized from her home and a personal bank account in September 2012.

According to the plea, between December 2008 and August 2012, Rinaldi claimed that she provided services to Medicare beneficiaries who were deceased at the time; that she provided services on certain dates when she was in other locations, such as Las Vegas and San Diego; and she inflated the number of hours that she had provided services on particular dates, often exceeding 24 hours in a single day.

Health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine, and restitution is mandatory.  Upon a conviction, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The plea was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, Robert J. Holley, Special Agent-in-Charge of the Federal Bureau of Investigation Chicago; and ; Lamont Pugh III, Special Agent-in-Charge of the Chicago Regional Office of the HHS-OIG.

The government is represented by Assistant U.S. Attorney Paul Tzur.

Plea Agreement

CHICAGO ― Two men were indicted on April 29, 2015, by a federal grand jury in an indictment unsealed today for allegedly intending to defraud ATMs in and around Chicago by altering the settings of the ATMs so that the actual amounts disbursed far exceeded the withdrawal requests as well as the balance of the accounts from which the withdrawal requests were made.  The funds that were fraudulently obtained totaled approximately $185,000. The defendants, Trent Ratliff and Fredrick Lee, were charged in a 10-count indictment.  Both defendants were charged with one count of conspiracy to commit computer access fraud as well as separate counts of computer access fraud, corresponding to specific ATM withdrawals.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

Ratfliff, 52, of Chicago, and Lee, 60, of Chicago, were arraigned today before the Honorable Gary Feinerman and were released on a $4,500 bond.  Both defendants have a status date on August 24, 2015. The indictment seeks forfeiture of approximately $185,000.            According to the indictment, Ratliff and Lee, using debit cards that were registered in their own names from various banks or using debit cards that were registered in the names of several other individuals, deposited, or caused to be deposited, nominal sums of money on these debit cards.  Between September 2010 and January 2011, using these debit cards, Ratliff and Lee accessed the management function of various ATMs in and around Chicago, without authorization from the owners of the ATMs, and altered the settings so that the ATMs falsely recorded, incorrectly reported, and transmitted debit amounts that exceeded the balance of the debit card accounts. In many cases, Ratliff and Lee altered the ATM settings so that account debits were recorded and reported by the ATM as one-twentieth of the actual funds that the ATM disbursed.  In other words, a request for $100 from an altered ATM resulted in the disbursement of $2,000.  Following the withdrawal of money from these ATMs, Ratliff and Lee again accessed the management function of the ATMs and changed the settings back so that subsequent account debits from that ATM were recorded and reported as being equal to the actual funds disbursed.

Each count of the indictment carries a maximum penalty of 5 years in prison and a $250,000 fine.  If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

The government is being represented by Assistant United States Attorney Naana Frimpong.

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.

Indictment

CHICAGO — A former chief of staff for a Chicago alderman was sentenced today to 15 months in prison for accepting a $7,500 cash bribe in exchange for obtaining the alderman’s letter of support for a license to sell alcohol in the alderman’s ward.  The defendant, CURTIS V. THOMPSON, JR., 63, of Chicago, pled guilty in December 2014 to federal program bribery, in accepting a bribe from an individual who claimed he wanted to open a convenience store but was actually a cooperating witness in an FBI undercover investigation.  U.S. District Court Judge Samuel Der-Yeghiayan also sentenced Thompson to one year of supervision after his release and to forfeit $7,500, the amount of the bribe.  Thompson was ordered to surrender to the U.S. Bureau of Prisons on September 1, 2015.

According to court documents, Thompson accepted 75 $100 bills in a Christmas card that the cooperating witness gave him at the alderman’s holiday party in December 2013.  Thompson admitted that he used the money he received to pay personal expenses.

“Over the years, time and time again, officials have demonstrated their greed,” said Judge Der-Yeghiayan while imposing sentence.  “His job was to serve the citizens of Chicago, and he did not.” 

“He (Thompson) readily joined the ranks of corrupt public officials who have chosen to line their pockets at the public’s expense,” argued Assistant U.S. Attorney Megan Church in the government’s sentencing memorandum. “He gave the residents of Chicago one more reason to doubt its leaders and public officials; one more reason to question the legitimacy of their municipal government; and one more reason to give into the cynicism of a “where’s mine?”

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The government was represented by Assistant U.S. Attorneys Megan Church and Bethany Biesenthal.

CHICAGO — A southwest suburban pharmacist was indicted on federal charges for health care fraud, federal law enforcement officials announced today.  The defendant, WALTER BEICH, the owner and licensed pharmacist at Lockport Pharmacy, Inc. operating as Corwin Pharmacy, was charged in a twelve-count indictment returned by a federal grand jury last week, alleging he participated in a scheme to defraud various health care benefit programs in the amount of $2,400,000.  The indictment also charges Beich with aggravated identity theft for his use of patient and physician names and identifying information during his scheme. The indictment also seeks forfeiture in the amount of $2.4 million, the amount of the alleged loss to the health care providers.  Beich, 61, of Lockport, Illinois, was arraigned in federal court this morning and was released on a $4,500 unsecured bond and is scheduled for a status in front of U.S. District Court Judge John W. Darrah on June 26, 2015. 

According to the indictment, Beich participated in a scheme to defraud Medicare, Medicaid, Blue Cross Blue Shield, Humana, and United Healthcare by filing fraudulent claims for prescription drugs that were not dispensed to his customers or he had switched out for less-expensive supplements instead of FDA-approved prescription drugs. The indictment also alleges that Beich had his employees create fake prescriptions to make it appear as if a physician had phoned-in certain prescriptions. In addition, the indictment alleges that Beich obtained physician sample drugs and then submitted insurance claims for dispensing these sample drugs as if he obtained those drugs through commercial distribution channels. The indictment also alleges that Beich dispensed a foreign-sourced drug to customers instead of the prescription Viagra.

Health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine, and restitution is mandatory. Aggravated identity theft carries a mandatory prison term of two years’ incarceration, served consecutively to any other term of imprisonment imposed. Upon a conviction, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Lamont Pugh III, Special Agent-in-Charge of the Chicago Regional Office of the HHS-OIG; and James Vanderberg, Special Agent-in-Charge of the Chicago Regional Office of the U.S. Department of Labor-OIG.

The government is being represented by Assistant U.S. Attorney Samuel B. Cole.

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.

Indictment

ROCKFORD —SOULA APOSTOLOPOULOS, 46, of Woodstock, Ill., formerly of Barrington Hills, Ill., pled guilty today before U.S. District Judge Philip G. Reinhard to making false statements in her bankruptcy case. She was indicted on October 21, 2014, along with her husband, DANIEL APOSTOLOPOULOS.

According to the plea agreement, on March 13, 2010, Soula Apostolopoulos filed a Chapter 7 bankruptcy Petition, and made false statements on the Statement of Financial Affairs that she signed under penalty of perjury. According to the indictment, Soula Apostolopoulos fraudulently concealed income she received from her interest in a Chicago restaurant she previously purchased with her husband, as well as her interest in Wisconsin real estate and in financial accounts during the year preceding the filing of her bankruptcy.

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. The Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

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

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

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

Plea Agreement

ROCKFORD — A former Sandwich, Ill. business owner was sentenced today in federal court by U.S. District Judge Frederick J. Kapala for making a false statement to a financial institution. The defendant, STEVEN J. MOORHOUSE, 62, was sentenced to 21 months in federal prison, to be followed by 3 years supervised release, and was ordered to pay restitution of $881,012.38 to Old Second National Bank, Aurora, Ill. Moorhouse, who was President and majority owner of Jefsco Manufacturing Co., Inc., a manufacturing business, pled guilty to the charge on Jan. 12, 2015.

According to the plea agreement, during July 2009, Moorhouse sought a lender to make business loans to Jefsco and began to provide Jefsco’s financial information to Old Second National Bank (OSNB). The plea agreement further states that on Dec. 4, 2009, Moorhouse provided OSNB with a document that falsely inflated the value of the accounts receivable owed to Jefsco by hundreds of thousands of dollars. Moorhouse admitted he was aware that the amount of loan proceeds that OSNB would disburse would be, in part, determined by the amount of receivables.

The sentencing was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Christy Romero, Special Inspector General for the Troubled Asset Relief Program; and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The investigation was conducted jointly by the Office of the Special Inspector General for the Troubled Asset Relief Program and the Federal Bureau of Investigation.

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

CHICAGO — A Chicago man was arrested this morning and is facing federal gun charges for  being a felon in possession of a firearm.  The defendant, LABAR SPANN, was arrested following an investigation by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Chicago Police Department.

SPANN, 36, of the 800 block of North Francisco Street, was arrested at his residence and charged by criminal complaint that was unsealed following his initial appearance today.  He appeared today before U.S. Magistrate Judge Michael T. Mason and was ordered to remain in custody pending a detention hearing at 2:00 p.m. on Monday in U.S. District Court.

According to the complaint, on September 14, 2014, Spann, a convicted felon, knowingly possessed a firearm, namely a Glock 19, model 19C, .9 mm caliber handgun while with two individuals, L.H. and K.C., at Midwest Sporting Goods, a firearms store and shooting range, located in Lyons, Illinois.  Allegedly, one of the individuals, L.H., rented a Glock 19C pistol and proceeded to the firing line with Spann and K.C. while Spann allegedly loaded a magazine with 9 mm ammunition into the firearm and then shot at the target, emptying the magazine. Spann then allegedly loaded additional magazines into the firearm twice and handed it to L.H., then K.C., who each shot at targets and emptied the magazines.

If convicted of being a felon-in-possession of a firearm, the defendant could be sentenced to a maximum 10 years imprisonment and a $250,000 maximum fine.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Federal Bureau of Investigation Chicago Office; Carl Vasilko, Special Agent-in-Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives; and Chicago Police Superintendent Garry McCarthy.

The government is being represented by Assistant U.S. Attorneys Peter S. Salib, Timothy J. Storino and Tobara Richardson.

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.

Complaint

CHICAGO — A Bolingbrook man was sentenced today to 24 months in federal prison for  violating U.S. export laws by attempting to ship a thermal imaging camera from his company in Schaumburg to a company in Pakistan without obtaining a license from the U.S. Commerce Department, federal law enforcement officials announced today.  The defendant, Bilal Ahmed, 34, of Bolingbrook, Illinois, was also ordered to complete a term of two years of supervision after his release by U.S. District Judge Rebecca R. Pallmeyer.  Ahmed was ordered to report to the Federal Bureau of Prisons on July 17, 2015.  Ahmed pled guilty to one count of willfully violating export control regulations, specifically the International Emergency Economic Powers Act, between June 2009 and March 2014. 

Ahmed was the owner, president, and registered agent of Trexim Corporation, an Illinois corporation based in Schaumburg, which was in the business of purchasing items for export from the United States.  The defendant was regularly involved in the negotiation, purchase, and export of materials from United States manufacturers to overseas locations, including Pakistan.  The defendant received orders for goods from Pakistani entities, including Pakistan’s Space and Upper Atmosphere Research Commission, also known as SUPARCO, and then purchased and exported those items to the Pakistani entities, including to SUPARCO.  Ahmed knew that the export of goods, particularly the export of goods designated as “dual use” items, was controlled in some instances by the Department of State and the Department of Commerce and was aware that certain items required a license issued from either the Department of State or the Department of Commerce in order to be exported from the United States.

The items exported by Ahmed included, among other things, a FLIR HRC-U thermal imaging camera, carbon fiber to make “bullet proof-vests,” and microwave laminate, all to Pakistan.  Each of those items was on a Commerce Department list of controlled export goods for reasons of national security and regional stability.  A license was required to ship the items to Pakistan.  The defendant exported and attempted to export those items to Pakistan without ever having applied for such a license.

“For a period of at least four years, defendant made it his business to export items from the United States to overseas locations, without obtaining the necessary licenses and approvals when required.  In fact, based just on the purchase orders recovered from defendant’s computer at the time of his arrest, purchase orders reflected the export of approximately 203 items from the United States to Pakistan,” stated Assistant U.S. Attorney Bethany Biesenthal in the government’s sentencing memorandum.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, and Edward Holland, Supervisory Special Agent  of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement. The Justice Department’s National Security Division provided assistance in the case.

The government was represented by Assistant U.S. Attorney Bethany Biesenthal.

CHICAGO — Two Postal Service employees were arrested today for allegedly opening and stealing the contents of Express Mail and Priority Mail parcels, which included narcotics.  The defendants, Aramis Brown and Zaphronsia Wheeler, were arrested following an investigation by United States Postal Service Office of Inspector General (Postal OIG) and the United States Postal Inspection Service (USPIS).

Brown, 29, of Chicago, and Wheeler, 39, of Chicago, were charged by criminal complaints that were unsealed following their initial appearances today. They appeared today before Magistrate Judge Michael T. Mason in U.S. District Court and were released on a $4500  bond.

According to the complaint affidavits, Brown and Wheeler are Postal Service employees at the International Service Center located at O’Hare Airport, Chicago, Illinois (“International Service Center”) and allegedly have been opening and stealing the contents of Express Mail and Priority Mail parcels. These rifled Express and Priority Mail parcels fit the general profile for parcels which contain narcotics, in that they are sent from narcotics source states, from fictitious senders or to fictitious recipients, and narcotics sniffing canines alert to the parcels.  The defendants are alleged to have stolen contents, some which included narcotics, out of Express and Priority Mail parcels from at least 16 pieces of mail on at least seven occasions.

The arrests and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Scott Caspall, Special Agent-In-Charge of the Chicago Great Lakes Area Field Office of the U.S. Postal Service Office of Inspector General; and Tony Gomez, Postal Inspector in Charge, U.S. Postal Inspection Service.  Cook County Sheriff’s Office, Plainfield and Romeoville Police Departments assisted in the investigation.

The government is being represented by Special Assistant U.S. Attorney William Novak.

Theft of mail and narcotics offenses carries a maximum penalty of 5 years in prison and a $250,000 fine.  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 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.

Complaint
Complaint

CHICAGO – A Chicago investment adviser was sentenced today to 36 months imprisonment for fraudulently using new investor funds, including funds from elderly investors, to pay off old investors, leading to a loss of almost $1 million.  The defendant, JOSEPH HENNESSY, 54, of Western Springs, was also ordered to pay restitution in the amount of $645,900 to the victims of the fraud and was sentenced to three years of supervision after his release by U.S. District Court Judge Harry D. Leinenweber.  Hennessy was ordered to report to the Federal Bureau of Prisons on June 23, 2015.   Hennessy pled guilty on December 16, 2014 to one count of wire fraud.

Hennessy operated Resource Planning Group, Inc., a registered investment adviser with the U.S. Securities and Exchange Commission, in Chicago.  Hennessy also formed and operated the Midwest Opportunity Fund, a private equity fund that targeted for purchase and investment small to medium-sized companies based in the Midwest.

“What you did involved a massive abuse of trust that needs to be punished,” stated Judge Leinenweber when imposing the sentence, “People relied on you.” 

According to court records, between May 2009 and February 2010, Hennessy solicited investors to invest in the Midwest Opportunity Fund, and offered a high interest rate between 10% to 15% per year with a short maturity date of between two and six months.  Hennessy falsely represented to the investors that their funds would be used to invest in small to medium-sized companies.  However, Hennessy used the new investor funds to pay off old investors in the Midwest Opportunity Fund.  Hennessy also misappropriated funds from the accounts of two elderly investors and forged their names on wire transfer forms without their authorizations. Hennessy used the elderly investors’ funds to repay existing investors in the Midwest Opportunity Fund.

“Defendant Joseph Hennessy owed a fiduciary duty to his clients.  He was an investment adviser tasked with managing his clients’ money.  However, when defendant went into debt with the Midwest Opportunity Fund, he used client money like a personal piggybank, selling promissory notes and transferring funds out of new client accounts to pay off old debtors,” argued Assistant United States Attorney Sunil Harjani in the government’s sentencing memorandum. 

The case was prosecuted by Assistant U.S. Attorney Sunil Harjani.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.  The Chicago office of the U.S. Securities and Exchange Commission provided assistance with the investigation.

CHICAGO ― Ten assorted pistols, rifles, shotguns, and a revolver have been seized and a Palos Hills man is facing federal firearms charges as a result of an investigation led by the Bureau of Alcohol, Tobacco, Firearms and Explosives.  Over the course of the investigation, the defendant illegally sold eight firearms to a confidential informant, and two additional firearms were seized from the defendant’s residence at the time of his arrest in March 2015.

Steven Riley, 23, of Palos Hills, was charged yesterday in a seven count indictment by a federal grand jury on charges of being a felon-in-possession of firearms and dealing firearms without a federal license.  Riley was arrested on a federal complaint in March 2015, and remains on bond.  Riley will be arraigned on a date to be determined by U.S. District Court Judge Virginia M. Kendall.

According to the complaint, beginning in October 2014 through February 2015, Riley sold numerous firearms to a confidential informant (CI).  In recorded conversations between Riley and the CI, Riley discussed the importance of removing the serial numbers so that the firearms could not be traced.  Riley also supplied the CI with ammunition at three of the five controlled purchases; one of the guns purchased by the CI was loaded with ammunition.

According to the charges, the CI purchased eight firearms in total from Riley; four rifles, three shotguns, and a revolver, many of which had obliterated serial numbers.  Riley is also charged with illegal possession of two loaded semi-automatic pistols recovered at his residence during the execution of a search warrant.  In addition, the indictment seeks forfeiture of 1,872 rounds of ammunition seized from his residence on the day of his arrest.

Being a felon-in-possession of a firearm carries a maximum sentence of 10 years in prison and a $250,000 fine.  Dealing firearms without a federal license carries a maximum sentence of five years in prison and a $250,000 fine.  If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois and Carl Vasilko, 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 being represented by Assistant U.S. Attorney Elizabeth Pozolo.

Criminal complaints are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Indictment

CHICAGO — A former Vice-President of a brewing company was charged in a twenty count indictment yesterday along with seven co-defendants, as a result of an alleged scheme to defraud the company of at least $7 million by submitting false estimates and invoices that billed for fictitious promotional and marketing events.  DAVID COLLETTI, 58, of Chicago, was charged in a federal grand jury indictment with wire fraud along with seven other co-defendants; RODERICK GROETZINGER, 61, of North Carolina, ANDREW VALLOZZI, 53, of Florida, JAMES RITTENBERG, 72, of Chicago, SCOTT DARST, 68, of Las Vegas, THOMAS LONGHI, 57, of Florida, FRANCIS BUONAURO Jr., 72, of Florida, and MARYANN ROZENBERG, 57, of Wisconsin. Defendants RITTENBERG and DARST were also charged with mail fraud.  All eight defendants will be arraigned at a date determined by U.S. District Court.

The indictment alleges that COLLETTI, as a Vice-President, oversaw the marketing, promotion, and sale of beer for the victim company, which hired third-party vendors to organize and hold events and promotions designed to market the company’s beer.  According to the indictment, GROETZINGER, VALLOZZI, RITTENBERG, DARST, LONGHI, BUONARO, and ROZENBERG controlled entities which claimed to provide third-party vendor services to the victim company during the course of the alleged scheme.  The entities included Beverage Industry Marketing Services, Rave Media, Events Marketing Network LLC, AVA Advertising, Inc., AVA Marketing and Communications, LLC, Food and Beverage Network, Inc., Prime Promotions, Inc.,  P&D Marketing, Inc., Longhi Golf Operations, F&B Marketing, and Golden Logistics.

The indictment alleges that during COLLETTI’s tenure at the company, he worked with GROETZINGER, VALLOZZI, RITTENBERG, DARST, LONGHI, BUONARO, and ROZENBERG to submit false estimates and invoices in the name of entities which falsely billed the company for fictitious promotional events and for events at inflated prices.  The estimates and invoices misrepresented the date, location, cost and type of events that were supposedly being held to market the company’s products.  The fictitious events included supposed food and beer pairings, trainings, and promotions for certain customer accounts, held at casinos, hotels, and flea markets.

The indictment alleges that COLLETTI oversaw the approval of a number of these false invoices for payment and the company paid in excess of $7 million to the defendants’ entities.  Subsequently, some of the defendants arranged for COLLETTI to receive a portion of the payments.  According to the indictment, the defendants used the victim company’s money, for among other things, defendants’ personal expenses, collectible firearms, international golf trips, hunting trips, investments in a hotel and bar, and an arena football team.

The indictment seeks forfeiture of at least $7 million.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The government is being represented by Assistant U.S. Attorneys Jessica Romero and Jennie Levin.

Each count of mail or wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or an alternate fine of twice the loss or twice the gain, whichever is greater, and restitution is mandatory.  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 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.

Indictment

CHICAGO — Former Chicago police officer Francis Zoller was the final defendant to be sentenced today in the six year investigation Operation Tow Scam, led by the Federal Bureau of Investigation.  Zoller, 46, of Chicago, pled guilty on June 11, 2014 to one count of attempted extortion under color of official right and one count of mail fraud.  U.S. District Court Judge Samuel Der-Yeghiayan sentenced Zoller to 12 months and one day in prison, followed by a term of one year of supervised release.  Judge Der-Yeghiayan also ordered Zoller to pay restitution in the amount of $14,020, and to report to the Bureau of Prisons on August 11, 2015. 

According to the court documents, Zoller engaged in a pattern of extortion of tow truck drivers and was also willing to stage an accident with one of them which led an insurance company to issue a check for $17,000 for damage that never occurred.  Zoller used the authority of his office to extort money from his favored tow drivers, but he also misused his office to privilege those drivers over other towing companies who sought to obtain vehicle tows at accidents.  “Zoller’s misuse of his authority on the streets of Chicago harmed the Chicago Police Department, the citizens he was sworn to protect and the tow truck drivers who were trying to make a living at accident scenes,” argued Assistant U.S. Attorney Michael Donovan in the government’s sentencing memorandum.

In total, 15 defendants were charged with extortion, tax fraud, lying to federal agents and accessing federal law enforcement database information.  Of the 15 defendants, 14 pled guilty and one was convicted at trial.  Of the 15 defendants, 11 are former police officers, including Zoller.  Those convicted in connection to the Operation were: 

Jimmie Akins, former CPD officer, pled guilty to attempted extortion under color of official right and filing a false tax return, and was sentenced to 18 months imprisonment;

Michael Ciancio, formerCPD officer, pled guilty to attempted extortion under color of official right, and was sentenced to 24 months imprisonment;

Scott Campbell, former CPD officer, pled guilty to mail fraud and tax misdemeanor, and was sentenced to one year of probation;

Joseph Grillo, formerCPD officer, pled guilty to mail fraud, and was sentenced to two years probation;

James Athans, pled guilty tomail fraud and tax fraud and was sentenced to a year and a day in prison;

Joseph DeMichael, pled guilty to mail fraud, and was sentenced to two years probation;      

Juan Prado, former CPD officer,pled guilty to attempted extortion under color of official right, and was sentenced to 46 months imprisonment;

James Wodnicki, former CPD officer, pled guilty to attempted extortion under color of official right and was sentenced to 24 months imprisonment;

Marcos Hernandez, formerCPD officer, pled guilty to improper access of a federal database, and was sentenced to two years probation;

Givoanni Rodriguez, pled guilty to making false statements to a federal officer, and was sentenced to two years probation;

Deavalin Page, former CPD officer,convicted after a jury trial of attempted extortion under color of official right, and was sentenced to 51 months imprisonment;

Gregory Garibay, former CPD officer, pled guilty to attempted extortion under color of official right and mail fraud, and was sentenced to 24 months imprisonment;

Brian Chandler, pled guilty to wire fraud and bank larceny, and was sentenced to 20 months imprisonment;

Ali Haleem, former CPD officer,pled guilty to attempted extortion under color of official right and selling firearms to a felon, and was sentenced to 15 months imprisonment. 

 Zoller’s sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.  The Chicago Police Department, Office of Internal Affairs, and the Internal Revenue Service, Criminal Investigative Division, assisted in the investigation.         

The government was represented by Assistant United States Attorneys Michael Donovan and Maggie Schneider.

CHICAGO — A Naperville man was charged by information today on federal charges he set fire to the Chicago Air Route Traffic Control Center in Aurora on September 26, 2014, federal law enforcement officials announced today.  Brian Howard, 37, of Naperville, was charged with one count of willfully setting fire to, damaging, destroying or disabling an air navigation facility; and one count of using fire to commit a federal felony. Howard will be arraigned at a date yet to be determined in U.S. District Court and remains in federal custody since his arrest in September 2014.

The Chicago Air Route Traffic Control Center (the “Control Center”) is located in Aurora, Illinois. The Control Center is responsible for safely guiding airplanes at high altitudes across its geographic territory. Given its central location, the Control Center is one of the nation’s largest and most important. It controls the air space over parts of Illinois, Indiana, Iowa, Wisconsin, and Michigan; provides air traffic services to the Chicago and Milwaukee metropolitan areas; and handles approximately 3,000,000 aircraft operations per year.

According to court documents, Howard was employed by an FAA contractor. He worked on telecommunications matters at the Control Center and at other FAA facilities for approximately eight years.

On September 26, 2014, at approximately 5:00 a.m., Howard entered the Control Center using his FAA-issued credentials. He was carrying a black Pelican suit case. Approximately 30 minutes after entering the Control Center, Howard posted a Facebook message that stated, in part, “Take a hard look in the mirror, I have. And this is why I am about to take out [the Control Center] and my life. April, Pop, love you guys and I am sorry. Leaving you with a big mess.”

Several minutes later, an individual who worked at the Control Center contacted 911 and notified emergency personnel that the Control Center was on fire. First responders arrived on the scene to heavy smoke. They observed that a floor panel had been lifted exposing the Control Center’s telecommunications cables, some of which had been severed and set on fire. First responders also saw a gas can next to the floor panel that had been pulled away, the nozzle to the gas can, a towel that appeared to have been burned, and a black Pelican suit case.

Howard is charged with intentionally damaging and disabling the telecommunication infrastructure at the Control Center, and setting fire to the area which housed these key components.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and Carl Vasilko, Special Agent in Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives.

The government is being represented by Assistant U.S. Attorney Andrew K. Polovin.

The charge alleged in the information of willfully setting fire to, damaging, destroying or disabling an air navigation facility, or willfully interfering by force or violence with the operation of that facility, likely endangering the safety of aircraft in flight, carries a maximum penalty of 20 years in prison and a maximum fine of $250,000 or twice the gross loss caused by Defendant’s actions.

The charge alleged in the information of using fire to commit a federal felony carries a mandatory penalty of 10 years in prison, which must be in addition to any sentence imposed for the underlying felony.

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 information 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.

Information

CHICAGO — A River Grove man was sentenced to 3 years in prison today as a result of his conviction for impersonating an employee of the U.S. Marshals Service on two occasions in 2013.  The defendant, ROBERT P. ROZYCKI, 39pledguilty to the offense in November 2014.  U.S. District Court Judge John J. Tharp, who imposed the sentence, also ordered Rozycki to one year of supervised release to include mental health treatment.  Rozycki has been in custody since his arrest in June, 2014.

According to court records, in March 2013, Rozycki was at a McDonald’s restaurant located in Chicago’s Wrigleyville neighborhood wearing clothing and paraphernalia which he intended to resemble the duty uniform of a Deputy U.S. Marshal, including a dark long-sleeved t-shirt worn under a grey golf shirt, khaki cargo pants, a law enforcement utility belt equipped with handcuffs and a police radio, and a thigh holster containing what appeared to be a firearm. While dressed in this fashion, he approached a customer, and after a brief but heated exchange, he directed the customer to stand up.  When the customer refused, Rozycki forcibly placed the customer in handcuffs and escorted him out of the restaurant. He released the customer a short time later at the direction of a McDonald’s manager.

In addition, in May 2013, the defendant was in the parking lot of the same McDonald’s restaurant wearing clothing and paraphernalia which he intended to resemble the duty uniform of a Deputy U.S. Marshal similar to the earlier impersonation. In addition, his car, a black Crown Victoria, was equipped to resemble a law enforcement vehicle with LED emergency lights, was parked in the same lot.

“The defendant usurped the authority of a legitimate law enforcement agent when he donned the uniform and equipment of a Deputy U.S. Marshal,” wrote Assistant U.S. Attorney Kathryn L. Maliza in the Government’s Sentencing Memorandum.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Roberto Robinson, Acting United States Marshal for the Northern District of Illinois.

The case was prosecuted by Assistant U.S. Attorney Kathryn Malizia.

CHICAGO — A Chicago man was sentenced yesterday to 90 months in federal prison by U.S. District Court Judge Edmond E. Chang for his role in a scheme involving theft of hundreds of identities which were used to file approximately 395 false and fictitious tax returns claiming refunds in amounts totaling approximately $357,539. 

The defendant, ROBERT BROWN, pleaded guilty in January 2015 to one count each of aggravated identity theft and wire fraud in a six-count indictment, admitting that beginning in January 2010 and continuing through March 2014, in cooperation with his co-defendant, he submitted fraudulent federal income tax returns using the misappropriated personal identifying information of approximately 332 taxpayers, causing the IRS to issue refunds.  Several of the identities were stolen from residents of nursing homes and assisted living facilities.  Judge Chang also ordered Brown to pay restitution in amount of $308,829, which is the amount that Brown caused the IRS to pay in fraudulently claimed tax refunds, and imposed a period of 3 years of supervision after his release.  Brown is currently in federal custody.

Brown, 30, of Chicago, and co-defendant Lorenzo Brown, obtained personal identifying information from victim taxpayers, including names, social security numbers, and dates of birth, without the knowledge or consent of the victim taxpayers. Co-defendant Lorenzo Brown gave the misappropriated names, social security numbers, and dates of birth to defendant, who knew that Brown obtained the misappropriated identifying information from the residents of nursing homes and assisted living facilities, including the social security number and other personal identifying information.  The defendant prepared fraudulent tax returns and electronically filed those fraudulent tax returns claiming fraudulent refunds based upon false income and false tax withholding information, using the identifying information provided to him by his co-defendant.  The defendant caused the IRS to send fraudulently claimed tax refunds via prepaid debit card, United States Treasury check, or electronic funds transfers to bank accounts in the name of the co-defendant, who withdrew the funds from the bank accounts and provided portions of these funds to defendant.

  “This defendant used the personal identifying information of many victims, including the vulnerable elderly and disabled victims who reside in nursing homes and assisted living facilities, for his own personal gain,” stated Assistant U.S. Attorney Kelly Greening in the Government’s Sentencing Memorandum, “He profited greatly off of the use of the victims’ information.”

Co-Defendant Brown is scheduled to be sentenced June 25, 2015, by U.S. District Court Judge Chang.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Stephen Boyd, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division.

The government was represented by Assistant U.S. Attorney Kelly Greening.

CHICAGO — A high-ranking leader of the Black Disciples street gang was sentenced today to 15 years in federal prison after being convicted of narcotics distribution.  The defendant, WALTER BLACKMAN, 52, of Gary, Indiana, pleaded guilty in August 2014 to distribution of illegal narcotics.  Today’s sentence was imposed by United States District Court Judge Edmond E. Chang.  Blackman has been in federal custody since his arrest in April 2013.  He must serve at least 85 percent of his sentence.

Blackman was a high-ranking leader of the Black Disciples street gang in Chicago.  He distributed drugs – including crack cocaine, powder cocaine, and heroin – and controlled the Black Disciples gang members’ drug trafficking in the city of Chicago’s far south side, including the violence-plagued Roseland and Altgeld Gardens communities.  According to the government’s sentencing memorandum, Blackman admitted that he had approximately 500 subordinate gang members underneath his control in his territory in “the hundreds,” being part of the Roseland neighborhood of Chicago named for the three-digit streets. 

Blackman’s charges in this case, namely sixteen counts of drug distribution, are a small sample of his larger drug trafficking operation in and outside the Black Disciples street gang – an operation that encompassed multiple drug types, multiple years, and multiple states. The defendant was a repeat and large scale supplier of controlled substances, selling and distributing crack cocaine, powder cocaine, and heroin in the Chicago area and elsewhere, including Wisconsin, to numerous wholesale customers. 

The Court held Blackman responsible for distributing approximately 4,000 grams of crack cocaine, 1,000 grams of powder cocaine, and approximately 390 grams of heroin.  Blackman also possessed firearms during his drug trafficking activities. 

“This sentence holds the defendant accountable for the narcotics enterprise he controlled, and for his role in the accompanying gang and gun violence that harms our communities,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois.  “I want to thank our local, state, and federal law enforcement partners for their brave and outstanding work which has resulted in a major impact on this street gang’s narcotics operation and illegal activities,” Mr. Fardon added.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.  The Internal Revenue Service’s Criminal Investigation Division and the Chicago Police Department’s Gang Investigations Division also had significant roles in the investigation, which was conducted through the federal High Intensity Drug-Trafficking Area (HIDTA) Task Force and under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF).  The Indianapolis, Milwaukee, Minneapolis and Omaha offices of the FBI also assisted with the investigation.   

The government was represented by Assistant U.S. Attorneys Carol A. Bell and Sarah Streicker.

CHICAGO — a former Miami Dade County Department of Corrections and Rehabilitation prison guard was sentenced today to 36 months in federal prison by U.S. District Court Judge Charles R. Norgle for his role in a scheme involving theft of prison inmates’ identities which were used to file false tax returns.

The defendant, CORNELIUS CRUMITY, pleaded guilty in May 2014, to one count each of aggravated identity theft and mail fraud in a two-count information, admitting that beginning in January 2008 and continuing through April 2011, he stole at least 50 inmate identities and filed fraudulent federal income taxes, attempting to cause the IRS to issue refunds in amounts totaling approximately $356,000. As a result of his conduct, the defendant caused the United States Treasury to suffer loss of at least $55,888. Judge Norgle also imposed a period of one year supervision after his release. Crumity has been ordered to report to the Bureau of Prisons on July 1, 2015.

Crumity, 39, of Pembroke Pines, Florida, was employed by the Miami-Dade County Department of Corrections and Rehabilitation (the “MDCDC”) as a prison guard. In that position, defendant had access to MDCDC databases and records which included the personal information of inmates, such as names and social security numbers. At various times, without the knowledge or authority of the MDCDC, the defendant accessed and copied the names and social security numbers of inmates who were incarcerated by the MDCDC, and used their names and social security numbers to file false and fraudulent tax returns with the Internal Revenue Service. Crumity filed the false and fraudulent tax returns without the knowledge or authorization of the inmates whose personal identifying information he had obtained from the MDCDC.

When preparing and filing the fraudulent tax returns, Crumity knowingly included false and fabricated W-2s, and false employer, wage and withholding information designed to result in significant tax withholding refunds to the purported filers, generally between $5,600 and $6,100 per return. In addition, he provided false home addresses for the purported filers, where defendant or his co-schemer in Illinois, David Mobley, received mail. In addition, in some instances, defendant caused the United States Treasury to credit the fraudulent tax withholding refunds to debit cards possessed by him or Mobley. After the defendant received the fraudulently issued refunds, he used the funds to his own benefit.

“Few crimes cause greater harm to society than law enforcement corruption,” stated Assistant U.S. Attorney Brian Hayes in the Government’s Sentencing Memorandum. “These ill effects are compounded when committed in a correctional institution, sending a message to inmates that directly contradicts the government’s goals of rehabilitation and reform.”

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Tony Gomez, Postal Inspector in Charge of the U.S. Postal Inspection Service, Chicago; and Stephen Boyd, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division.

The government was represented by Assistant U.S. Attorney Brian Hayes.

CHICAGO ― A federal grand jury returned a two count indictment charging BRUCE H. NIGGEMANN with receiving and possessing child pornography, federal law enforcement officials announced today.

Niggemann, 65, of West Dundee, was indicted April 16 on one count of receiving and one count of possessing child pornography, all via computer. The indictment was under seal until Niggemann’s arrest this morning. Niggemann was arraigned earlier today in U.S. District Court before Judge Charles R. Norgle, Sr. He remains in federal custody until a detention hearing scheduled for April 27, 2015 at 11:30 before Magistrate Judge Sheila M. Finnegan.

The indictment also seeks forfeiture of a laptop computer and a desktop computer and hard drives that were seized at Niggemann’s residence when special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) executed a federal search warrant at Niggemann’s residence in West Dundee.

In the circumstances in this case, receiving child pornography carries a maximum sentence of 40 years and a mandatory minimum sentence of 15 years in prison, while the count of possession carries a maximum sentence of 20 years, and a mandatory minimum sentence of ten years. Each count also carries a maximum fine of $250,000. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Gary Hartwig, Special Agent-in-Charge of HSI in Chicago. The Kane County Sheriff’s Office assisted in the investigation.

The government is being represented by Assistant U.S. Attorney Kaarina Salovaara.

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.

Indictment

ROCKFORD — Two Chicago area men were arrested today after being indicted yesterday by a federal grand jury in Rockford and charged with conspiring to manufacture, possess and distribute 1,000 or more marijuana plants. Arrested were: GEORGE H. BACUS, 51, of Niles, Ill., and JEREMIAH N. CLEMENT, 37, of Des Plaines, Ill. Also charged in the indictment were YOUSIF Y. PIRA, 62, of Chicago, Ill., and JUSTIN T. PAGLUSCH, 33, of Ingleside, Ill. The indictment alleges that between Jan. 2, 2013, and Jan. 6, 2015, the defendants conspired to illegally grow and store marijuana in a warehouse located at 1916 11th Street in Rockford. According to the indictment, Bacus initially contracted to purchase the warehouse on Jan. 2, 2013. The indictment alleges that Clement later entered into a lease with an option to purchase the warehouse. The warehouse was destroyed by a fire on Jan. 6, 2015.

Bacus is scheduled to appear before U. S. Magistrate Judge Iain D. Johnson for an initial appearance today at 3:00 p.m. in federal court in Rockford. Clement is scheduled to appear in federal court in Hartford, Connecticut at 1:30 p.m today. Arrest warrants for Pira and Paglusch were issued on April 21, 2015, and both are still at large.

The charge carries a mandatory minimum sentence of 10 years in prison and a maximum of life in prison and a $10 million 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 is only a charge 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; Carl J. Vasilko, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; and Derek Bergsten, Chief of the Rockford Fire Department. The Winnebago County Sheriff’s Department Narcotics Unit and Rockford Police Department Narcotics Unit assisted in the investigation.

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

Indictment

CHICAGO ― A former North Chicago school board member, and the last defendant of five,  was sentenced today to 30 months in federal prison for receiving at least $566,000 in kickbacks from three co-defendants who controlled several different transportation companies that received more than $21 million in student bus contracts over nearly a decade.

The defendant, ALICE SHERROD, 63, of North Chicago, pleaded guilty in September 2013 to one count each of wire fraud and filing a false federal income tax return. Sherrod admitted that between 2001 and 2010 she schemed to deprive the approximately 4,000-student North Chicago Community Unit School District 187 (NCSD) of her honest services. Sherrod, who was the school district’s Director of Transportation, participated in the fraud scheme with four co-defendants, including Gloria Harper, who was the former President of the North Chicago school board. The three co-defendants funneled kickbacks totaling at least $800,000 to Harper and Sherrod and made more than $9.6 million in profits.

“Unlike three of her co-defendants, she was in a position of public trust that affected poor children.  She did not think about who she was hurting.  And this went on for more than five years.”  U.S. District Judge Sharon Johnson Coleman said in imposing the sentence today.  Judge Coleman ordered Sherrod to serve her sentence beginning August 31, 2015.  The judge also ordered Sherrod to pay approximately $7.2 million in restitution.

“The North Chicago School District has one of the highest low-income populations in the state. But rather than looking out for the interests of the district’s taxpayers and the children who depended on the schools for education, Sherrod selfishly used her position to enrich herself, and then filed false tax returns,” Assistant U.S. Attorney Matthew Getter argued in the government’s sentencing memorandum.

All five defendants pled guilty last year and have been sentenced.  In addition to Sherrod’s sentence of 30 months imposed today, Gloria Harper, 64, of Berwyn and formerly of Gurnee, received a 10 year sentence, Tommie Boddie, 69, of Harvest, Ala., and formerly of Wadsworth received a one-day term of imprisonment followed by a three year term of supervised release including nine months’ home confinement; Derrick Eubanks, 50, of Lake Villa received six months’ imprisonment; and Barrett White, 55, of Matteson, received a one day term of imprisonment followed by a one year term of supervised release during which White will spend the first six months of supervised release serving weekend imprisonment.  

Sherrod, who was District 187's transportation director from 2001 to July 2010, used her  position, along with Harper, to enrich themselves secretly by soliciting and accepting gifts and cash from their three co-defendants in exchange for favorable official action regarding student transportation contracts. Initially, Harper and Sherrod received kickbacks of approximately $4,000 to $5,000 a month but, by 2003, they were collecting approximately $20,000 a month.

From the late 1990s until mid-2003, the NCSD contracted with various companies to provide student transportation, including T&M Transportation, which was owned in part and controlled by Boddie, and Eubanks Transportation, which was owned in part and controlled by Eubanks. In 2001, Harper and Sherrod met with Boddie and agreed they would arrange for the NCSD to increase the number of students that T&M transported in exchange for kickback payments.

In May 2003, Harper suggested to Boddie and Eubanks that they join together to form one company ― Safety First Transportation, Inc., which won the NCSD’s transportation contract in 2003, and Harper, Sherrod, Boddie, and Eubanks agreed that they would split the profits from the contract. After an IRS audit of Safety First in 2006-2007, White, who had been acting as the “bagman” for the kickbacks, began receiving funds from Safety First as both an employee and a contractor, even though he provided little service other than being the bagman.

In April 2008, the defendants agreed to set up a new company, Quality Trans, LLC, to replace Safety First and to assume its contracts with the school district. All five agreed to continue splitting profits from Quality Trans, and Boddie, Eubanks and White continued making cash payments to Harper and Sherrod.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Stephen Boyd, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. The North Chicago School District cooperated with the investigation.

CHICAGO — A former smoke shop owner and her employee were charged by criminal complaint yesterday for allegedly conspiring to distribute substances containing controlled substance analogues at the Cigar Box, a store formerly located in the Fox Valley Mall in Aurora, federal law enforcement officials announced today.

Ruby Mohsin, 52, of Glen Ellyn, and Mohammad Khan, 63, of Glendale Heights, were charged with conspiracy in United States District Court in Chicago.  Both defendants will make their initial appearance at a date yet to be determined in U.S. District Court. According to the affidavit, between March 1, 2011 and August 12, 2011, defendant Mohsin purchased hundreds of packages of synthetic drugs such as iAroma and Zero Gravity containing controlled substance analogues from an Iowa-based manufacturer and distributor.  

According to the affidavit, synthetic cannabinoids (sometimes referred to as synthetic marijuana) are a large family of substances with chemical structures similar to tetrahydrocannabinol (THC) in cannabis that mimic the effects of THC by acting on the same receptors in the central nervous system.  Synthetic cannabinoid chemicals are typically manufactured in China and shipped to the United States in powder form.   The powder is then mixed with acetone and sprayed on plant material such as marshmallow leaf and packaged for sale.   These new drugs (or analogues) are not listed in the Controlled Substance Act, but still have the same dangerous effects as the scheduled substances or compounds.  Accordingly, in 1986, Congress enacted the Controlled Substances Analogue Enforcement Act to address this issue.

On June 14, 2011, Mohsin sold three one-gram packages of “iAroma Hypnotic,” “iAroma Train Wreck,” and “iAroma Mango,” containing the controlled substance analogue JWH-210 for the sale price of $20 to 19-year old Max Dobner and a friend.   Shortly afterwards, Max Dobner smoked a portion of the package of iAroma Hypnotic, suffered a severe adverse reaction, and died when he crashed his car into a house in North Aurora, Illinois.  The FDA laboratory determined that the packages of iAroma Hypnotic, iAroma Train Wreck, and iAroma Mango that Mohsin sold to Max Dobner contained the controlled substance analogue JWH-210.   A toxicology examination revealed the presence of JWH-210 in Max Dobner’s blood at the time of his death and no other drugs or alcohol.

According to the complaint affidavit, Mohsin and Khan continued to offer synthetic drugs containing controlled substance analogues for sale at the Cigar Box after Max Dobner’s death.  On August 4, 2011, Khan sold two packages of “Head Trip” and “Kush Potpourri” containing the controlled substance analogue JWH-122 for $30 to an undercover Aurora Police officer. 

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois;  Dennis Wichern, Special Agent-in-Charge of the Chicago office of the Drug Enforcement Administration; John Redmond, Special Agent-in-Charge of the Food and Drug Administration’s Office of Criminal Investigations in Chicago, and Stephen Boyd, Acting Special Agent in Charge, IRS Criminal Investigation Division. The Kane County Sheriff’s Office, the Aurora Police Department, the Yorkville Police Department, and the Bettendorf, Iowa Police Department also assisted in the investigation.

The government is being represented by Assistant U.S. Attorney Matthew M. Schneider.

The charge in the criminal complaint carries a maximum penalty of 20 years in prison and a maximum fine of $1,000,000.  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 a criminal complaint 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.

Complaint

CHICAGO—A Chicago man was sentenced today to a 120 month term of imprisonment for taking control of two Chicago-area home health companies and using them to bilk Medicare out of more than $20 million. JACINTO “JOHN” GABRIEL, JR., 48, has been in custody since February 2014, when he entered a guilty plea to charges of conspiracy to commit health care fraud and tax evasion.

In sentencing Gabriel, U.S. District Judge Charles Norgle ordered him to pay $23.3 million in restitution to the Medicare program and $1.5 million to the Internal Revenue Service.

According to sentencing papers filed by the government, Gabriel fraudulently obtained confidential background information of hundreds of Medicare beneficiaries and then used that information to sign them up as patients of Perpetual Home Health, Inc. and Legacy Home Healthcare Services, companies that he controlled. “Gabriel used elderly patients as commodities to bill Medicare. Patients were intentionally misdiagnosed with medical conditions that they did not have, and then used to bill Medicare for treatment that they did not need,” the government wrote in its sentencing memorandum.

Gabriel was charged with eleven other defendants, including doctors and company employees who were enlisted to help implement the scheme. In pleading guilty to the charges, Gabriel admitted to directing company staff to alter and create patient records and doctor’s orders to support fraudulent Medicare claims; to make payments to doctors and others for referring patients and signing doctor’s orders; and to divert proceeds of the fraud scheme to him through friends, associates, and shell companies.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, Robert J. Holley, Special Agent-in-Charge of the Federal Bureau of Investigation’s Chicago office, Lamont Pugh III, Special Agent-in-Charge of the Chicago regional office of the U.S. Department of Health and Human Service’s Office of Inspector General, and Stephen Boyd, Acting Special Agent-in-Charge of the Internal Revenue Service’s Criminal Investigation Division in Chicago. The government was represented by Assistant U.S. Attorneys Brian Havey, Raj Laud, and Sam Cole.

CHICAGO ─ The Department Manager of Applications at PACE was arrested yesterday on a federal complaint for allegedly accepting over $280,000 in kickbacks and gratuities in exchange for the influence he exerted in placing certain information technology (“IT”) contractors at PACE and in their employment at PACE.

In a criminal complaint that was filed on Monday in the U.S. District Court and unsealed yesterday, the defendant, RAJINDER SACHDEVA, 51, of Schaumburg, was charged with receiving kickbacks and gratuities in connection with his employment at PACE, which is the Suburban Bus Division of the Regional Transportation Authority and receives federal funds. He appeared yesterday before U.S. Magistrate Judge Susan E. Cox in Federal Court and is being held in federal custody pending a detention hearing at 4:00 p.m. today before Magistrate Judge Cox.

Sachdeva was arrested yesterday without incident in Schaumburg. According to the complaint affidavit, Sachdeva oversees the implementation and performance of the database management system Oracle at PACE. According to the complaint, he supervises both PACE employees in the Applications Department and IT contractors from outside vendors that provide Oracle IT support at PACE.

According to the complaint affidavit, between January 2010 and the present, Sachdeva corruptly demanded, accepted, and agreed to accept kickbacks and gratuities, intending to be influenced and rewarded with the hiring and continued employment of IT contractors who worked at PACE via outside vendors. Sachdeva allegedly concealed payments that he received, either by obtaining the money through a company that employed the IT contractors and in which Sachdeva’s wife possessed an interest, or by obtaining payments directly from the IT contractors.

According to the complaint affidavit, Sachdeva, via his wife or his own consulting company, was paid in excess of $280,000 between 2010 and 2014, in exchange for the influence he exerted in placing certain IT contractors at PACE and in their continued employment at PACE. The complaint alleges that one of the IT contractors that Sachdeva placed at PACE in exchange for kickbacks and gratuities during approximately 2013 took over the PACE IT support services previously performed by a different contractor. Sachdeva allegedly told a cooperating witness that he wanted his share for placing people at PACE and that Sachdeva stated that the current contractor was only getting the job because of the defendant’s efforts.

According to the cooperating witness, who along with Sachdeva’s wife owned the company used to conceal the kickbacks, the company hired a contractor to serve as a subcontractor for a vendor that had a contract to provide IT support to PACE. This contractor then began to work as an IT contractor at PACE. While the contractor was working at PACE, the cooperating witness and Sachdeva’s wife’s company paid Sachdeva (via his consulting company) and his wife over $64,000.

The complaint also alleges that Sachdeva directed yet another contractor, a former PACE analyst supervised by Sachdeva, to submit invoices for PACE IT work to the cooperating witness and Sachdeva’s wife’s company using the false name “Sue Peters.” According to the complaint, this contractor then sent an invoice to their company using the false name, and caused an invoice to be submitted to the PACE IT vendor who then invoiced PACE for the time. PACE paid the invoice for “Sue Peters,” and the cooperating witness and Sachdeva’s wife’s company ultimately received the money they had invoiced for “Sue Peters.” Around that time, Sachdeva also directed the cooperating witness to pay the contractor, who submitted the false invoice, approximately 80% of what their company had billed for the “Sue Peters” invoice, which the cooperating witness did.

The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, and Michelle T. McVicker, regional Special Agent-in-Charge of the U.S. Department of Transportation, Office of Inspector General. PACE also assisted in the investigation.

The government is being represented by Assistant United States Attorneys Matthew F. Madden and Erika Csicsila.

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

Complaint

CHICAGO ― A former information technology manager for a Northbrook-based company was indicted Tuesday for allegedly damaging servers maintained by the company, intercepting company emails without authorization, and disclosing the contents of intercepted emails without authorization. The defendant, George N. Turner, was charged with one count of computer fraud, two counts of illegal wire interceptions, and four counts of disclosing information obtained from illegal wire interceptions in a seven count indictment returned by a federal grand jury, announced Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

Turner, 50, of Vernon Hills, will appear for an arraignment before Judge Feinerman on April 21, 2015, in U.S. District Court. The indictment seeks forfeiture of computers that were seized from Turner that were used in the commission of the crime.

According to the indictment, Turner worked for the victim company as the manager of information technology from approximately October 2007 through March 2014, during which time he had authorization to have access to the victim company’s computer network and servers, including the email server. Turner no longer worked for the company after March 2014, and was no longer authorized to access the victim company’s computer network or servers.

Beginning in April 2014, Turner allegedly intercepted the company email accounts of two of the victim company’s executives. Additionally, on May 12, 2014, Turner allegedly accessed and caused significant damage to some of the victim company’s servers. In July 2014, Turner allegedly sent multiple emails containing information he obtained from the victim company’s executives’ email accounts. In four separate emails, Turner allegedly sent to other persons the victim company’s payroll information, executive bonus information, and pricing information.

“This defendant used his skills to cause significant damage to his former employer, and illegally to obtain private information. Cybercrime hurts companies and their employees, and we will prosecute those responsible,” stated Zachary T. Fardon, United States Attorney, after the charges were announced.

The computer fraud count carries a maximum penalty of 10 years in prison and a $250,000 fine. Each of the illegal wire interception counts carries a maximum penalty of 5 years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

The government is being represented by Assistant United States Attorney Shoba Pillay.

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.

Indictment

ROCKFORD — A Cary, Ill. man was charged today in federal court with bank robbery. MICHAEL FETERICK, 45, of Cary, Ill., also known as “Michael Retterly,” was charged with the robbery of Fifth Third Bank, 1745 South Eastwood Drive, Woodstock, Ill., on April 15, 2015. According to the complaint, at about 10:50 a.m., Feterick entered the bank and presented a note written in black sharpie stating "Money, no dye pack" to a bank teller. The teller provided the subject with money from the teller’s drawer and left the bank. Feterick was arrested late yesterday by the FBI, and law enforcement officers of the Crystal Lake and Woodstock Police Departments, at a hotel in Algonquin, Ill. Feterick is presently in federal custody pending his initial appearance before U.S. Magistrate Judge Iain D. Johnston at 3:30 p.m. today.

Bank robbery carries 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. 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 a complaint is only a charge and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The charge was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; Robert W. Lowen, Chief of the Woodstock, Illinois Police Department; and James R. Black, Chief of the Crystal Lake, Illinois Police Department. The U.S. Marshals Service, and law enforcement officers of the McHenry County Sheriff’s Department and the Algonquin, Illinois Police Department assisted in the investigation.

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

Complaint

CHICAGO — A man formerly of Lafayette, Indiana and now in federal custody was sentenced yesterday to 30 months in federal prison for amassing a large collection of child pornography over multiple years. The defendant, THOMAS MANNING, 54, pleaded guilty last July to possessing child pornography, admitting that he had collected more than 50,000 illicit images and videos.

Manning was also ordered to pay a total of $9,750 in restitution to five identified victims who submitted restitution requests to the Court, as well as a $12,500 fine. He was placed on supervised release for five years following his prison term by U.S. District Chief Judge Sharon Johnson Coleman. There was also an order of forfeiture granted, and the defendant will forfeit certain computer equipment used in commission of the crime. Manning must serve at least 85 percent of his sentence before he is eligible for release. There is no parole in the federal prison system.

Manning was an employee of the Environmental Protection Agency, who worked as an Information Technology Specialist and maintained and oversaw EPA’s loaner pool of computers that were shared among EPA employees for official use. According to court documents, in 2012, the defendant used one of the laptops at EPA to search for and view child pornography. The defendant tried to erase his activity, using software designed for that purpose, and then returned the laptop to EPA. In July 2012, another EPA employee was in the process of reassigning the laptop to a new user, when the employee discovered evidence suggesting use of the laptop to view child pornography. The employee informed his supervisor, and the matter was referred to EPA’s Office of the Inspector General.  After further investigation, agents learned that Manning also possessed tens of thousands of images of child pornography on a personal hard drive that he stored in a locked drawer in his EPA office.

“Both the number of images defendant collected and the types of images defendant collected distinguish him as someone who had much more than a passing interest in seeing small children being hurt, humiliated, and exploited,” Assistant U.S. Attorney Julie Porter wrote in a sentencing memo.

The federal investigation was conducted by the Environmental Protection Agency, Office of Inspector General (EPA OIG).

“The OIG will continue to work with the U.S. Attorney’s Office to investigate EPA employees engaging in this type of criminal activity,” said Christopher Gaffney, Special Agent in Charge, Environmental Protection Agency, Office of Inspector General.    

The sentence was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Christopher Gaffney, Special Agent in Charge, Environmental Protection Agency, Office of Inspector General.    

The government was represented by Assistant U.S. Attorney Julie Porter. 

CHICAGO — A former Moecherville Water District (MWD) board president appeared in U.S. District Court in the Northern District of Illinois today on federal charges for allegedly stealing $33,597 in property mortgaged and pledged to the Secretary of Agriculture acting through the U.S. Department of Agriculture, Rural Development (USDA-RD), over the course of three months.

The MWD is a not-for-profit corporation that supplied water to households located in the Moecherville neighborhood of Aurora, Illinois. The defendant, MARK McDONALD, 57, of Aurora, was MWD board president, and in that capacity, was responsible for depositing the MWD customers’ payments into the water district’s bank account and writing checks to pay the  expenses and purchase goods and services for the benefit of the MWD.  McDonald was charged with 15 counts of disposal and conversion of property mortgaged and pledged to the Secretary of Agriculture, acting through the USDA-RD; one count of making a false statement; and three counts of filing a false tax return in an indictment that was returned by a federal grand jury April 7.  The offenses are alleged to have been committed between April 2009 and February 2013.

McDonald was arraigned today before U.S. District Judge Young B. Kim and released on an unsecured $4,500 bond.  His next status date is set for April 28 before U.S. District Court Judge Robert W. Gettleman.

According to the indictment, between 2005 and 2006, the MWD received $2.7 million in loans from the USDA-RD for the reconstruction of the MWD’s water distribution facilities. The MWD secured repayment of the reconstruction loans by mortgaging and pledging to the Secretary of Agriculture, acting through the USDA-RD, the MWD’s property and assets, and the revenues collected from the operation of the water facility, which included water payments made by the MWD’s customers. In October 2010, the United States filed a foreclosure complaint against the MWD due to the MWD’s failure to timely repay the USDA-RD reconstruction loans.  Also in October 2010, a federal judge appointed the Illinois Rural Water Association (IRWA) to be the Receiver of the MWD and authorized IRWA to take custody, control, and possession of the MWD’s facilities, assets, and funds.

The indictment alleges that, on 15 separate occasions between July 2010 and October 2010, and during his tenure as MWD board president, McDonald disposed of and converted to his own use MWD property in the form of cash water payments and bank account funds, which  was mortgaged and pledged to the Secretary of Agriculture, acting through the USDA-RD. The indictment also seeks forfeiture of $33,597, the total amount of MWD property that McDonald is alleged to have disposed of and converted to his own use illegally. McDonald also is accused of making a false statement to agents of the USDA-Office of the Inspector General and the Internal Revenue Service in the course of their investigation into the disposition of the MWD’s cash assets and the MWD’s expenditures.  Lastly, McDonald is accused of underreporting his income on his U.S. Individual Income Tax Returns to the IRS for the tax years 2008, 2009, and 2010.

The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, Anthony Mohatt, Special Agent-in-Charge, U.S. Department of Agriculture-Office of the Inspector General, and Stephen Boyd, Special Agent-in-Charge of the Internal Revenue Service-Criminal Investigation.    

“As the Board President of the Moecherville Water District, Mr. McDonald had a responsibility to water district customers and the U.S. Department of Agriculture to ensure that  customer funds were handled with accountability and integrity.” said Mr. Fardon. “Mr. McDonald violated the trust of the residents of Moecherville by stealing some of that money for his own personal use.”

“IRS-Criminal Investigation is committed to bring justice to those who commit crimes against our society,” said Mr. Boyd.  “We are committed to protecting the citizens of Aurora, Illinois and all American taxpayers by following the money and holding individuals accountable for their actions.  As the board president of the water district, Mr. McDonald, has violated the people’s trust by converting Moecherville Water District funds to his personal use.”

Each count of the disposal and conversion of property pledged to the Secretary of Agriculture, acting through the USDA-RD, and the count of making a false statement carries a maximum penalty of 5 years in prison and a $250,000 fine.  Each count of filing a false tax return carries a maximum penalty of 3 years in prison and a $100,000 fine, together with the costs of prosecution. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant United States Attorney Renai S. Rodney.

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.

Indictment

CHICAGO — Federal officials confirmed today that they are conducting a criminal investigation into the death of Laquan McDonald, 17, who died on Oct. 20, 2014, during an encounter with Chicago Police.  McDonald, who was armed with a knife, was near West 41st Street and South Pulaski Road on the city’s southwest side, when he was shot and killed during an encounter with police.

United States Attorney Zachary T. Fardon confirmed the investigation along with FBI Special Agent in Charge Robert J. Holley and Cook County State’s Attorney Anita Alvarez.  The joint investigation is being led by the Chicago Office of the Federal Bureau of Investigation in coordination with the Independent Police Review Authority, the U.S. Attorney’s Office, and the Cook County State’s Attorney’s Office. 

CHICAGO -- Eleven Chicago and suburban residents, among others, are facing federal prosecution for alleged federal income tax crimes in various separate cases filed recently.   Defendants from Bolingbrook and Palatine were charged with evading income taxes by funneling hundreds of thousands of dollars to bank accounts that they controlled and using the money for their own personal purposes.  A tax preparer from Lockport was charged with assisting clients in obtaining over $1 million in fraudulent refunds and other defendants from Chicago were indicted in an alleged scheme to use stolen identities to fraudulently claim and obtain tax refunds based on fictitious returns. 

“The IRS Criminal Investigation Division is focused on ensuring that taxpayers pay their fair share,” said Stephen Boyd, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago.  “Tax fraud does not know a season -- IRS special agents pursue criminals year round, not only at filing deadlines.  Taxpayers who might be thinking about cheating should think twice or they will risk the consequences,” he said.

“Federal tax prosecutions occur throughout the year but at this time of year it is especially prudent to remind taxpayers of the importance of voluntary compliance with their tax obligations,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois.

In addition to criminal penalties, including incarceration, fines, and the costs of prosecution, convicted defendants remain responsible for any taxes and interest due, as well as civil penalties of up to 75 percent of the tax owed, Mr. Fardon noted.  And those making false claims against the government may be required to pay restitution or may be sued civilly for an amount greater than the fraudulent claims, he added.

LEOPOLDO RODRIGUEZ, 42, of Bolingbrook, was indicted April 9 on 3 counts of tax evasion and 3 counts of filing false federal income tax returns.  Rodriguez worked at Chicago Pallet Service, which was a business that bought and sold pallets, and the indictment alleges that Rodriguez diverted income from the sale of pallets by his employer to bank accounts that he maintained and controlled, including a bank account maintained in the name of a business he operated called Sugar Daddy Stables.  Specifically, the indictment alleges that Rodriguez diverted approximately $230,000 in 2010, approximately $370,000 in 2011, and approximately $530,000 in 2012.  Rodriguez also allegedly filed false individual tax returns for each of those years when he failed to report the income that he diverted from his employer on his personal returns.  Rodriguez will be arraigned at a date to be determined by the district court.  Each count of filing false returns carries a maximum sentence of 3 years in prison and each count of tax evasion carries a maximum sentence of 5 years in prison.  Each of the counts also carries a maximum fine of $250,000 or twice the gross gain to the defendant or loss to the government.  Assistant U.S. Attorney Brian Hayes is representing the government.

WILLIAM DADDANO, 58, of Palatine, was indicted April 7 on 2 counts of tax evasion and 2 counts of filing false federal income tax returns.  Daddano, who owned real estate appraisal businesses, allegedly evaded payment of taxes by having his appraisal companies issue checks to a defunct company and funneling the money through a bank account maintained under the name of the defunct company, Real Property Valuation, and then using the money as his own personal income.  The indictment alleges that Daddano used Real Property Valuation to divert over $350,000 in 2008 and over $280,000 in 2009, and that he filed false corporate and personal returns for each of those years.  Daddano will be arraigned on a date to be determined by the district court.  Each count of tax evasion carries a maximum sentence of 5 years in prison and each count of filing a false income tax return carries a maximum sentence of 3 years in prison.  Each of the counts also carries a maximum fine of $250,000 or twice the gross gain to the defendant or loss to the government.  The government is represented by Assistant U.S. Attorney Sheri Mecklenburg.

 Two additional defendants were indicted on April 2, 2015 in an alleged scheme to fraudulently claim tax refunds in excess of $290,000. EBONY RICHARDSON, 34, of Chicago and LATASHA WEATHERALL, 35, of Chicago, were each charged with 4 counts of wire fraud and 2 counts of theft of government funds in an 8-count indictment.  According to the indictment, Richardson and Weatherall caused over 120 fraudulent tax returns to be filed on behalf of various taxpayers without the taxpayer’s knowledge or consent and then caused refunds exceeding $290,000 to be deposited into various accounts controlled by the defendants.  The indictment alleges that the fraudulent returns contained false amounts related to items of income, wages, pension distributions, federal tax withholdings, Earned Income Credits, and education and other credits.  Richardson and Weatherall each allegedly had control and access to multiple accounts into which the fraudulent refunds were deposited as part of the scheme.  Each count of wire fraud carries a maximum sentence of 20 years in prison, each count of theft of government funds carries a maximum of 10 years, and all counts carry a maximum fine of $250,000 or twice the gross gain to the defendants or loss to the government.  Assistant U.S. Attorney Michelle Petersen is representing the government.

Other recently charged cases include the following:

TIFFANY EICHELBERGER-MYERS, 32, formerly of Lockport, was charged April 10 with 2 counts of willfully assisting in the preparation of false income tax returns.  Eichelberger-Myers worked as a tax preparer at Shelby Investment, LLC and managed a branch location that did business under the name “Tiff’s Taxes.”  The information alleges that she fraudulently obtained over $1,100,000 in tax refunds for clients for tax years 2010 through 2012 by falsely claiming, among other things, business losses and education expenses on behalf of her clients.  Each count of assisting in the preparation of false returns carries a maximum sentence of 3 years in prison and a maximum fine of $250,000 or twice the gross gain to the defendant or loss to the government.  (Assistant U.S. Attorney Sarah Streicker)

DAVID A. BROWN, 47, of Country Clubs Hills, was charged April 9 on 27 counts of wire fraud, 33 counts of filing false claims, and 4 counts of filing false income tax returns.  Brown, who owned and operated a tax preparation business under the name of Tax Professional Consultant Agency, Inc. in Chicago, allegedly prepared and filed returns on behalf of clients that falsely claimed business losses, casualty and theft losses, and Schedule A deductions, in addition to false claims of entitlement to Earned Income Credits and Educations Credits for the 2008 through 2012 tax years.  Brown was also charged with filing false individual tax returns on his own behalf for tax years 2010 through 2013.  Brown will be arraigned on a date to be determined by the district court.  Each count of wire fraud carries a maximum sentence of 20 years in prison, each count of filing a false claim carries a sentence of 5 years in prison, each count of filing a false tax return carries a sentence of 3 years in prison, and all counts carry a maximum fine of $250,000 or twice the gross gain to the defendant or loss to the government.  The United States Secret Service also participated in the investigation.  (Assistant U.S. Attorney Bolling Haxall)

SOL K. WINER, 75, of Highland Park was charged April 10 with filing a false income tax return.  The information alleges that Winer substantially underrepresented his total income for tax year 2011.  The charge carries a sentence of 3 years in prison and a maximum fine of $250,000 or twice the gross gain to the defendant or loss to the government. (Assistant U.S. Attorney Patrick King)

DYONE DORSEY, 39, and JANET DORSEY, 42, of Chicago, were charged on April 2, 2015 in a 35-count indictment with preparing and assisting in the preparation of false income tax returns.  According to the indictment, the Dorseys owned and operated a tax return preparation business in Chicago that did business under the name “Dorsey’s Tax Service.”  Between 2009 and 2011, the Dorseys allegedly assisted in the preparation of income tax returns on behalf of clients that falsely claimed business losses as well as other deductions and credits to which the clients were not entitled.  The indictment also charged the Dorseys with filing a false joint income tax return on their own behalf for tax year 2010 as well as charging the Dorseys individually for filing false income tax returns on their own behalf for tax years 2008 and 2009.  Each of the charges carries a sentence of 3 years in prison and a maximum fine of $250,000 or twice the gross gain to the defendant or loss to the government. (Assistant U.S. Attorney Ryan Fayhee)

RONALD TAYLOR, 49, of Evanston, was charged on April 1, 2015 in a 4-count indictment with filing false claims and theft of government funds.  The indictment alleges that Taylor filed three income tax returns for trusts for the 2007, 2008, and 2009 tax years falsely claiming entitlement to refunds totaling $900,000 and stealing a tax refund of $300,000.  Each count of filing a false claim carries a maximum sentence of 5 years in prison, each count of theft of government funds carries a maximum sentence of 10 years in prison, and all counts carry a maximum fine of $250,000 or twice the gross gain to the defendant or loss to the government. (Assistant U.S. Attorney Jeremy Daniel)

SOLOMON SMITH, JR., 56, of Berkeley, was charged on April 1, 2015 in a 2-count indictment with filing and assisting in the preparation of filing of false tax returns.  According to the indictment, Smith filed income tax returns for trusts that falsely claimed, among other things, income and tax withholding amounts, and falsely claimed entitlement to a refund of $381,180 for 2008 and $381,213 for 2009.  Each count carries a maximum sentence of 3 years in prison and a maximum fine of $250,000 or twice the gross gain to the defendant or loss to the government.  (Assistant U.S. Attorney Stephen Heinze)

In each case, if convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

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

CHICAGO — A Chicago man was sentenced today to 48 months in prison by U.S. District Court Judge John Z. Lee for scamming people whom he had persuaded to invest in a bogus lending program involving short-term, high-interest loans to distressed homeowners.  The defendant, GREGG E. STEINNAGEL, was also ordered to a three year term of supervised release and to pay $1,734,270 in restitution to 20 victims of the fraud scheme.  Steinnagel was ordered to report to the Bureau of Prisons on July 10, 2015.

According to sentencing papers filed by the government, one of the victims entrusted her life savings to Steinnagel, a truck driver, and to a deceased co-schemer named Jeffrey Fazzio, a restaurant/department store worker who was posing as an attorney.  Another victim entrusted Steinnagel and Fazzio with retirement money that he had saved.  “It did not seem to matter to Steinnagel and Fazzio whether or not their victims could afford to lose any money.  Steinnagel and Fazzio were willing to defraud anyone who was willing to provide them with money,” the government argued in a sentencing memorandum.  Many of the victims of Steinnagel’s fraud were present and spoke at the sentencing. 

“Mr. Steinnagel preyed on victims who themselves were in financial need,” said U.S. District Judge John Z. Lee in sentencing the 54-year-old Steinnagel to a prison term at the high  end of the range established by federal sentencing guidelines.

In November 2014, Steinnagel pled guilty to one count of wire fraud, admitting that he and Fazzio led victims to believe that their money would be invested and repaid at high rates of interest, with no risk of loss because their investment money was supposedly secured by real estate.  As evidence that their money had been invested, Steinnagel and Fazzio provided victims with fabricated promissory notes purportedly signed by the owners of the real estate securing the victims’ investments.  The defendants lulled victims with occasional cash payments, in amounts of several hundred dollars or several thousand dollars, to gain their trust and induce them to continuously invest larger amounts of money.  Steinnagel and Fazzio then kept most of the victims’ money and failed to repay them.  Steinnagel admitted to using at least some of the victims’ funds to gamble at casinos in the Chicago area, Florida, and Nevada.

The sentence was announced this afternoon by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Federal Bureau of Investigation’s Chicago office.  The government was represented by Assistant U.S. Attorney Brian Havey.

CHICAGO — A Melrose Park detective was arrested yesterday for allegedly attempting to possess with intent to distribute five kilograms or more of cocaine and possession of a firearm in furtherance of a drug trafficking crime. The defendant, GREGORY SALVI, was arrested following an investigation by the Chicago Office of the Federal Bureau of Investigation.

Salvi, 42, of Melrose Park, was charged by criminal complaint that was unsealed following his initial appearance today. He appeared today before Magistrate Judge Jeffery Cole in U.S. District Court and is scheduled for a detention hearing on Tuesday, April 14, at 10:15 a.m.

As set forth in the complaint affidavit, on April 9, 2015, Salvi attempted to possess with intent to distribute five kilograms or more of cocaine, which he expected to deliver to the informants in return for money. The complaint further charges that Salvi was carrying a loaded Glock .45 caliber handgun and driving a police vehicle at the time he attempted to obtain cocaine.

Also according to the complaint affidavit, the defendant used his position as a law enforcement officer with the Melrose Park Police Department in order to unlawfully acquire narcotics from the Melrose Park Police Department. It is alleged in the complaint that Salvi twice stole narcotics held in evidence by the Melrose Park Police Department, which he then distributed to two individuals who, unbeknownst to Salvi, were cooperating with law enforcement. Specifically, in November 2014, Salvi distributed heroin to a cooperating individual. Then, in December 2014, Salvi distributed cocaine to a cooperating individual. According to statements made by the Salvi, on one occasion Salvi used his position as a law enforcement officer to take real narcotics from the police evidence storage, which Salvi replaced with fake narcotics, and Salvi planned to sell the real narcotics to narcotics traffickers.

Also, according to the complaint affidavit, during recorded conversations in January and February 2015, Salvi offered to sell two kilograms of cocaine to a cooperating individual that were being tested by a local laboratory for the police department. During that same time period, Salvi offered to procure firearms for a cooperating individual, and offered to help remove the firearms’ serial numbers.

The arrest and complaint were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the FBI. The Melrose Park Police Department is fully cooperating in the investigation.

If convicted of both charges in the complaint, intent to distribute and possession of a firearm in furtherance of a drug trafficking crime, the defendant could be sentenced to a mandatory minimum sentence of 15 years’ imprisonment, a maximum of life imprisonment, and a maximum fine of $10 million. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorney Patrick Otlewski.

A complaint contains merely 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.

Complaint

CHICAGO ― U.S. Attorney Zachary T. Fardon of the Northern District of Illinois, Assistant Attorney General for National Security John P. Carlin, and Special Agent in Charge Robert J. Holley of the Chicago Division of the Federal Bureau of Investigation announced today that two Aurora, Illinois, men were indicted Thursday for allegedly conspiring to provide material support to Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization.

Army National Guard Specialist HASAN EDMONDS, 22, and JONAS EDMONDS, 29, were arrested last month by members of the Chicago FBI’s Joint Terrorism Task Force (JTTF) and remain in federal custody. The defendants were charged in an indictment filed yesterday in U.S. District Court of the Northern District of Illinois with one count of conspiring to provide material support and resources to a foreign terrorist organization. Both defendants will be arraigned April 8, at 10:00 in front of Magistrate Judge Sheila M. Finnegan

Conspiring to provide material support to a foreign terrorist organization carries a maximum penalty of 15 years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

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

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.

Indictment

CHICAGO -- Consistent with a long-standing practice of the office, the U.S. Attorney’s Office will monitor the election in Chicago on Tuesday, April 7, 2015, 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 hotline for candidates or the public to call to report any complaints relating to voting. In addition, Assistant U.S. Attorneys will be available to respond to complaints as needed.

The hotline number is (312) 469-6157.

Coordination of the monitoring efforts and subsequent investigations, if any, will be directed by Assistant U.S. Attorney Maureen Merin. 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 election fraud complaints.

CHICAGO — A business owner of Chicago based prepaid phone stores pleaded guilty yesterday to federal income tax fraud, admitting that he filed four false tax returns, resulting in a tax loss to the United States of more than $174,093, beginning in 2009. The defendant, Ken Leon, 47, of Westmont, pleaded guilty to one count of filing a false individual federal income tax return in 2012 at his arraignment in U.S. District Court after he was charged in a single-count information filed late last month. U.S. District Court Judge Sara L. Ellis set sentencing for June 25, 2015.

Leon was the owner of Ezbuyphones, a prepaid phone business with three Chicago stores, which sold cellphones and accessories and prepaid cell phone minutes and provided electronic bill-paying services. Beginning no later than 2009 and continuing through 2012, the defendant received from his business significant income that he failed to report to the Internal Revenue Service. He received income from his business in two ways; he periodically made cash and check deposits from his business into his personal bank accounts and he paid personal expenses from his corporate bank account, such as mortgage payments for his residence and credit card expenditures on travel, clothing, groceries, and restaurants.

In pleading guilty, Leon admitted that he caused a federal tax loss of $174,093 by filing false tax returns for 2009 - 2012. Leon did not provide accurate information to an accountant who prepared his returns. Specifically, he reported that he had earned only slightly more than $110,000 for the year 2012, when, in fact, his wages and compensation totaled approximately $347,546.

Leon faces a maximum sentence of three years in prison and a $250,000 fine, and his plea agreement contemplates an advisory United States Sentencing Guidelines range of 12 to 18 months in prison.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, Robert J. Holley, Special Agent in Charge of the Chicago Division of the Federal Bureau of Investigation, and Stephen Boyd, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

Federal tax law requires that U.S. taxpayers pay taxes on all income earned worldwide and to report certain foreign financial accounts.

The government is being represented by Assistant U.S. Attorney William Ridgway.

Plea Agreement

CHICAGO — A suspended Chicago pharmacist today admitted to illegally obtaining counterfeit Viagra and Cialis from China and illegally dispensing the bogus medications at his north side pharmacy. The defendant, MICHAEL MARKIEWICZ, who owns Belmont Pharmacy, 6148 West Belmont, pled guilty to trafficking counterfeit Viagra from his pharmacy between 2010 and 2012.  United States District Court Judge John Z. Lee scheduled sentencing for July 8, 2015.

The Illinois Department of Professional Regulation suspended Markiewicz’ pharmacist license and revoked the license of Belmont Pharmacy in November 2012. The store continues operating as a nutrition and herb retailer.

Markiewicz, 38, of Norridge, was charged in April 2013 with eight counts of violating the federal Food, Drug and Cosmetic Act; four counts of trafficking in counterfeit drugs or goods using a counterfeit mark; and three counts of smuggling, in a 15-count indictment.  A superseding indictment was returned in March 2015 by a federal grand jury.  Defendant Markiewicz pled guilty today to Count One and Count Five of the superseding indictment, trafficking and attempting to traffic in counterfeit Viagra and holding for sale and dispensing counterfeit Viagra.

The plea was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John J. Redmond,Special Agent-in-Charge of the Food and Drug Administration’s Office of Criminal Investigations; and Tony Gomez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.

According to the plea agreement, between 2010 and 2012, via the Internet, Markiewicz ordered approximately 1600 counterfeit Viagra and Cialis tablets from China. The customs declaration on each outer packaging stated that it contained a “gift pen,” and the counterfeit drugs were hidden in unlabeled clear plastic baggies underneath the pen in the package. Markiewicz then sold the counterfeit drugs at his pharmacy to customers who had sought to purchase the medications without a prescription.

Trafficking counterfeit drugs carries a maximum penalty of 20 years in prison and a $5 million fine, and violating the federal Food, Drug and Cosmetic Act carries a maximum sentence of three years in prison and a $250,000 fine.  The Belmont Pharmacy is subject to forfeiture.

The government is being represented by Assistant U.S. Attorneys Samuel B. Cole and Eric S. Pruitt.

CHICAGO ― A West Chicago man was sentenced Monday to the maximum of 10 years in federal prison for transporting a minor for criminal sexual purposes.  The defendant, NICACIO JAIMES-MORENO, 52, pled guilty in October 2014, to one count of knowingly transporting a minor interstate with the intent to engage in sexual activity.  The defendant has been in federal custody since the filing of charges August 2013. 

At the sentencing hearing, a victim impact statement was read to U.S. District Judge John J. Tharp describing the traumatic damage that Jaimes-Moreno inflicted upon the victim’s life.  “The defendant engaged in serious criminal conduct that has caused lasting and immeasurable harm to his victim,” Assistant U.S. Attorney Matthew Ebert argued in seeking the highest sentence possible in the Government’s Sentencing Memorandum.  “Further compounding the trauma inflicted by defendant, he was a parental figure to the victim, and she was very much in defendant’s custody, care, and supervisory control throughout the time defendant was sexually assaulting her.”

According to court documents, the defendant began sexually abusing the victim at age 11 and continued the abuse for over four years in various places the defendant lived with the victim and her mother throughout Mexico, Oklahoma, Indiana and Illinois; all while not allowing the victim to attend school.  Further, court records describe that during the years the defendant was sexually assaulting the victim, he prevented her from telling anyone that he was assaulting her and she was only allowed outside when chaperoned by defendant.

Judge Tharp imposed the maximum sentence of 10 years in prison.  Jaimes-Moreno was also ordered to three years supervised court supervision but is subject to deportation upon release from custody because he is not a United States citizen. He must serve at least 85 percent of his sentence.  There is no parole in the federal prison system.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The case was prosecuted by Assistant U.S. Attorneys Matthew Ebert and Rachel Cannon.