Northern District of Illinois
Press releases recorded for this federal judicial district.
Chicago Woman Pleads Guilty to Making Hoax Distress Call, Causing U.S. Coast Guard to Launch $13,000 Rescue EffortRead the Press Release
CHICAGO — A Chicago woman pleaded guilty today to a federal crime for making a false report two years ago that a person had fallen into Lake Michigan and was in distress, causing the United States Coast Guard and other first responders to launch a dangerous search and rescue operation that cost the Coast Guard $13,613.
LEONA CHEWNING, 24, was charged earlier this month with one count of communicating a false distress message to the Coast Guard. She pleaded guilty today at her arraignment before U.S. District Judge Charles Norgle in Federal Court in Chicago.
In pleading guilty, Chewning admitted that she knowingly and willfully communicated a false distress message to the Coast Guard resulting in a life-saving attempt when no help was needed.
“Hoax rescue calls are costly and risky for the responding agencies and personnel who put their own lives on the line in an effort to save others,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. “We will prosecute those who needlessly make false rescue reports and hold them accountable for their crime,” Mr. Fardon said.
“False distress calls like this one tie up valuable assets and put our crews at risk since we take every distress call seriously,” said Capt. Nicholas Bartolotta, chief of response for the Ninth Coast Guard District. “They impede the ability of first responders like the Coast Guard and our partners to respond to real distress where lives may be on the line. We want to make sure people know the dangers and consequences of knowingly making a hoax call.”
According to Chewning’s plea agreement, about 9:10 p.m. on Feb. 4, 2013, she made an emergency 911 call and reported a person was in distress in the lake near Roger’s Park Beach. The 911 call center transferred the call to the Coast Guard at Calumet Harbor. Chewning related her claim and provided a description of the person whom she reported fell into Lake Michigan. Chewning admitted that at the time she made the call, she knew her report was false.
In response to her call, the Coast Guard and federal and state law enforcement officers responded to Roger’s Park Beach. The Coast Guard initiated a search and rescue team, including launching a government vehicle with an ice and rescue team from the Wilmette Harbor station and a helicopter from the Traverse City, Mich., air station. A diver with the Chicago Fire Department entered the water, near where Chewning claimed a person fell in, to locate the alleged victim, but did not locate any person in the water.
Chewning is free on her own recognizance while awaiting sentencing, which was scheduled for 11:30 a.m. on April 22. She faces a maximum sentence of six years in prison and a $250,000 fine, as well as a civil penalty of $5,000 and mandatory restitution of $13,613. Her plea agreement anticipates an advisory United States Sentencing Guidelines range of 4 to 10 months’ incarceration, and the Court must impose a reasonable sentence.
The government is being represented by Assistant U.S. Attorney Timothy J. Storino.
Plea Agreement
Former Sycamore Resident Pleads Guilty to Child Pornography ChargesRead the Press Release
ROCKFORD — A former Sycamore, Ill. resident pleaded guilty today before U.S. District Judge Frederick J. Kapala to possessing child pornography. MICHAEL PODOLSKY, 27, now of Elkader, Iowa, admitted in the written plea agreement 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.
Podolsky faces a maximum of 10 years in prison for possessing child pornography, a term of supervised release following imprisonment of at least 5 years and up to life, and a fine of up to $250,000. The actual sentence will be determined by a United States District Court Judge, guided by the United States Sentencing Guidelines. Sentencing for Podolsky is set for April 29, 2015, at 2:30 p.m.
The guilty 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 Chicago Office of the Federal Bureau of Investigation; and Glenn Theriault, Chief of the Sycamore Police Department.
The government is represented by Assistant United States Attorney Michael D. Love.
Plea Agreement
Chicago Twins’ Cooperation Against Sinaloa Cartel Yields 14-Year Prison Terms; New Charges Target Cartel’s Top EchelonRead the Press Release
CHICAGO — Twin brothers PEDRO and MARGARITO FLORES, regarded as Chicago’s most significant drug traffickers who rose from street level dealers to the highest echelons of the Mexico-based Sinaloa Cartel and a rival cartel before they began providing unparalleled cooperation to the Drug Enforcement Administration, were each sentenced today to 14 years in federal prison. The sentencing marked the Flores brothers’ first public court appearance since they entered protective federal custody in 2008. Their August 2012 guilty pleas to a narcotics distribution conspiracy were unsealed in November 2014.
Also today, federal law enforcement officials announced the unsealing of an expanded eighth superseding indictment in the case in which the Flores brothers and leaders of the Sinaloa Cartel were initially indicted here in 2009. The eighth superseding indictment and three separate new indictments announced today, add significant new defendants, including two alleged cartel money laundering associates who were arrested in the United States, and extend the government’s efforts in Chicago and elsewhere to dismantle the Sinaloa Cartel under JOAQUIN GUZMAN LOERA, 60, also known as “Chapo,” and ISMAEL ZAMBADA GARCIA, 67, aka “Mayo.”
“The persistent determination of DEA special agents and leadership in Chicago, coupled with the efforts of those in DEA offices worldwide, is having a significant impact on the global operations of the Sinaloa Cartel,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. “This case put an end to the Flores brothers’ Chicago hub for transshipment of cartel narcotics nationwide. Our investigation and prosecution of cartel members is continuing,” Mr. Fardon said.
“The extraordinary work in this investigation continues,” said Dennis A. Wichern, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration. “Agents, investigators, prosecutors and our worldwide law enforcement partners continue to expand this investigation against members of the Sinaloa Cartel ― working to bring them to justice and in doing so ― helping to make the great city of Chicago a safer place.”
James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago, said, “IRS Criminal Investigation is committed to working together with the DEA and the United States Attorney’s Office to fight the war on drugs. IRS CI brings, and will continue to bring, its financial expertise to disrupt and dismantle the Sinaloa Cartel’s drug trafficking organization.”
Flores Brothers Sentencing
In sentencing the 33-year-old Flores brothers, U.S. District Chief Judge Ruben Castillo said that but for the Flores brothers’ cooperation, he would have imposed a life sentence, and noted that because of the peril their ongoing cooperation poses to them and their families, they effectively “are going to leave here with a life sentence.” If the City of Chicago had walls, Judge Castillo said, the brothers’ operation “devastated the walls of this city,” adding that their operation “became just a highway of drugs into this city.”
But, Judge Castillo added, “It is never too late to cooperate,” which is what earned the Flores brothers a significant discount in their sentences.
Judge Castillo ordered the Flores brothers to forfeit more than $3.66 million that was seized from them and a sport utility vehicle. In addition, more than $400,000 worth of assorted jewelry, several luxury automobiles, smaller amounts of cash, and electronics equipment were seized and forfeited in administrative proceedings by the DEA. The brothers left behind millions of dollars in additional assets in Mexico after they began cooperating.
The judge also placed each of the brothers on court supervision for five years when they are released from prison after serving at least 85 percent of their sentences.
Between 2005 and 2008, the Flores brothers and their crew operated a Chicago-based wholesale distribution cell for the Sinaloa Cartel and a rival drug trafficking organization controlled by Arturo Beltran Leyva, receiving on average 1,500 to 2,000 kilograms of cocaine per month. Approximately half of this cocaine was distributed to the Flores’ customers in the Chicago area, while the other half was distributed to customers in Columbus, Cincinnati, Detroit, Milwaukee, New York, Philadelphia, Washington, D.C., and Vancouver, among other cities. In total, the brothers admitted to facilitating the transfer of approximately $1.8 billion of drug proceeds from the United States to Mexico, primarily through bulk cash smuggling.
At great personal risk to themselves and their families, the Flores brothers began cooperating with the government in October 2008 and recorded conversations, including two directly with Chapo Guzman. Their cooperation resulted in indictments against leaders of the Sinaloa Cartel and the Beltran Leyva organization, as well as the complete dismantling of the brothers’ own Chicago-based criminal enterprise. In late 2008 alone, their cooperation facilitated approximately a dozen seizures in the Chicago area totaling hundreds of kilograms of cocaine and heroin and more than $15 million in cash, as well as the seizure of more than 1,600 kilograms of cocaine in the Los Angeles area that was bound for Chicago.
Further cooperation by the Flores brothers and members of their dismantled crew resulted in the convictions of more than a dozen of their high-level customers who received on average 50 to 100 kilos of cocaine per month. “While not as high-profile as the cartel figures, the successful prosecution of these defendants made a very real difference in combating the scourge of drug trafficking that fuels so much violence and the destruction of communities in Chicago,” prosecutors said in recommending a sentence at or near the low end of the agreed 10- to 16-year sentencing range.
“The Flores brothers (and their families) will live the rest of their lives in danger of being killed in retribution,” prosecutors stated in a sentencing memo. “The barbarism of the cartels is legend, with a special place reserved for those who cooperate.” In 2009, the brothers’ father was kidnapped and presumed killed when he reentered Mexico despite the U.S. government warning him not to do so.
The Primary ― Eighth Superseding ― Indictment
The eighth superseding indictment unsealed today charges a total of nine defendants, including Chapo Guzman, Mayo Zambada, and Guzman’s son, JESUS ALFREDO GUZMAN SALAZAR, 31, aka “Alfredillo” and “JAGS,” each of whom was among the initial group of co-defendants in the original indictment in 2009. Mayo Zambada and Guzman Salazar are fugitives, while Chapo Guzman remains in Mexican custody following his arrest last February.
Co-defendant, JESUS RAUL BELTRAN LEON, 31, aka “Trevol” and “Chuy Raul,” was arrested in Mexico this past November and remains in Mexican custody. The remaining co-defendants, all fugitives, are: HERIBERTO ZAZUETA GODOY, 54, aka “Capi Beto;” VICTOR MANUEL FELIX BELTRAN, 27, aka, “Lic Vicc;” HECTOR MIGUEL VALENCIA ORTEGA, 33, aka “MV;” JORGE MARIO VALENZUELA VERDUGO, 32, aka “Choclos;” and GUADALUPE FERNANDEZ VALENCIA, 54, aka “Don Julio” and “Julia.”
This indictment alleges that all nine defendants conspired between May 2005 and December 2014, when the indictment was returned under seal, to import and distribute narcotics and to commit money laundering. They allegedly conspired to smuggle large quantities of cocaine from Central and South America, as well as heroin, methamphetamine, and marijuana from Mexico to the United States and through Chicago for distribution nationwide. The indictment seeks forfeiture of $2 billion.
The U.S. Treasury Department’s Office of Foreign Asset Control today announced the designation of Felix Beltran, who is Guzman Salazar’s brother-in-law, pursuant to the Foreign Narcotics Kingpin Designation Act, freezing all of his assets in the U.S. or in the control of U.S. persons, and generally prohibiting any U.S. persons from engaging in transactions with him. A second designation was announced today against Alfonso Limon Sanchez, an alleged Sinaloa Cartel associate under federal indictment with Mayo Zambada and others in San Diego. Other alleged cartel leaders, including Chicago defendants Chapo Guzman, Mayo Zambada, Guzman Salazar, and Zazueta Godoy, were previously designated drug kingpins.
Charges brought in earlier versions of this primary indictment remain pending against three additional co-defendants: FELIPE CABRERA SARABIA, 44, who is in custody in Mexico; GERMAN OLIVARES, age unknown and a fugitive; and EDGAR MANUEL VALENCIA ORTEGA, 27, aka “Fox,” and Hector Miguel Valencia Ortega’s brother, who was arrested last year in the United States and is in federal custody in Chicago. His next court date is Feb. 19 for a status hearing.
In addition to the Flores brothers, ALFREDO VASQUEZ HERNANDEZ, 59, pleaded guilty and was sentenced last November to 22 years in prison. Two other co-defendants, Mayo Zambada’s son, VICENTE ZAMBADA NIEBLA, 39, and TOMAS AREVALO RENTERIA, 45, have pleaded guilty and are awaiting sentencing in Chicago. Altogether, 18 defendants have been charged in the primary case in Chicago.
Three New Indictments
Those 18 are among a total of 62 defendants, most of whom have been convicted and sentenced, who were indicted in nearly two dozen related cases in Chicago since 2009. Two new defendants, ALVARO ANGUIANO HERNANDEZ, 38, aka “Panda,” and JORGE MARTIN TORRES, 38, were arrested separately in the U.S. in November and are facing separate indictments here alleging they were high-level money laundering associates of the Sinaloa Cartel and participated in money laundering conspiracies. Anguiano Hernandez’s indictment seeks forfeiture of $950,000.
Torres allegedly conspired to launder in excess of $300,000 of drug proceeds from Mexico to the United States to purchase, refurbish, and transfer from Ohio to Mexico, a 1982 Cessna Turbo 210 to promote the cartel’s alleged narcotics conspiracy. His indictment seeks forfeiture of $1 million.
A third separate indictment announced today charges VENANCIO COVARRUBIAS, 26, aka “Benny,” of Elgin, who was arrested last October, with being a high-level cartel customer in the Chicago area. In September 2013, law enforcement, including U.S. Customs and Border Protection officers in Laredo, Tex., seized 159 kilograms of cocaine that was allegedly destined for a warehouse in Elgin leased by Covarrubias. The cocaine, wrapped in 118 brick-shaped packages, was hidden in a tractor-trailer containing a shipment of fresh tomatoes from a fictitious Mexican business called Tadeo Produce. The charges allege that during the prior year, Covarrubias wire transferred drug proceeds to Tadeo Produce while receiving narcotics disguised as tomato shipments. His indictment seeks forfeiture of $2.89 million.
The money laundering conspiracy charges against Anguiano Hernandez, Torres and Covarrubias carry a maximum sentence of 20 years in prison, a $500,000 fine, or an alternate fine totaling twice the amount of the funds involved in illegal activity. The narcotics importation and distribution conspiracy charges against Covarrubias and each defendant in the primary indictment carry a mandatory minimum sentence of 10 years to a maximum of life in prison and a $10 million fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines. The defendants against whom charges are pending are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Total Seizures Since 2008
Overall, the Chicago-based investigation of the Sinaloa Cartel has resulted in seizures of approximately $30.8 million, approximately 11 tons of cocaine, 265 kilograms of methamphetamine, and 78 kilograms of heroin. Law Enforcement in Chicago has worked closely with federal agents and prosecutors in San Diego to target the senior leadership of the Sinaloa Cartel. This partnership yielded the prosecutions here as well as 14 indictments announced this month in San Diego against 60 alleged Sinaloa leaders, lieutenants, and associates, including Mayo Zambada, two of his four sons, and another of Chapo Guzman’s sons.
The investigation in Chicago has been led by the DEA, joined by the IRS Criminal Investigation Division and the Chicago Police Department. Also assisting were DEA offices worldwide, including in Los Angeles, San Diego, and Mexico City, and its El Paso Intelligence Center; the Organized Crime Drug Enforcement Task Force (OCDETF); the Chicago High-Intensity Drug Trafficking Area (HIDTA) task force, the U.S. Attorney’s Offices in San Diego, Springfield, Ill., and Milwaukee and the Milwaukee Police Department; the Chicago and Peoria offices of the Federal Bureau of Investigation; the Chicago office of the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Marshals Service; the U.S. State Department’s Diplomatic Security Service; the Cook County Sheriff’s Department; suburban police departments in Calumet City, Evergreen Park, Oak Park, and Palos Heights; and the Beverly Hills, Calif., Police Department. The investigation was assisted by agents and analysts of the Justice Department Criminal Division’s Special Operations Division (SOD), and attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section, and Office of International Affairs.
The government is being represented by Assistant U.S. Attorneys Michael J. Ferrara, Erika Csicsila, Naana Frimpong, Georgia Alexakis, Kathryn Malizia, and Thomas D. Shakeshaft.
"Chapo" Guzman Loera et al Indictment
Hernandez Indictment
Covarrubias Indictment
Torres Indicment
Chicago Twins’ Cooperation Against Sinaloa Cartel Yields 14-Year Prison Terms; New Charges Target Cartel’s Top EchelonRead the Press Release
Twin brothers Pedro and Margarito Flores, regarded as Chicago’s most significant drug traffickers who rose from street level dealers to the highest echelons of the Mexico-based Sinaloa Cartel and a rival cartel before they began providing unparalleled cooperation to the Drug Enforcement Administration (DEA), were each sentenced today to 14 years in federal prison. The sentencing marked the Flores brothers’ first public court appearance since they entered protective federal custody in 2008. Their August 2012 guilty pleas to a narcotics distribution conspiracy were unsealed in November 2014.
Also today, federal law enforcement officials announced the unsealing of an expanded eighth superseding indictment in the case in which the Flores brothers and leaders of the Sinaloa Cartel were initially indicted here in 2009. The eighth superseding indictment and three separate new indictments announced today, add significant new defendants, including two alleged cartel money laundering associates who were arrested in the United States and extend the government’s efforts in Chicago and elsewhere to dismantle the Sinaloa Cartel under Joaquin Guzman Loera, 60, also known as “Chapo,” and Ismael Zambada Garcia, 67, aka “Mayo.”
“The persistent determination of DEA special agents and leadership in Chicago, coupled with the efforts of those in DEA offices worldwide, is having a significant impact on the global operations of the Sinaloa Cartel,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois. “This case put an end to the Flores brothers’ Chicago hub for transshipment of cartel narcotics nationwide. Our investigation and prosecution of cartel members is continuing,”
“The extraordinary work in this investigation continues,” said Special Agent in Charge Dennis A. Wichern of the Chicago Field Division of the DEA. “Agents, investigators, prosecutors and our worldwide law enforcement partners continue to expand this investigation against members of the Sinaloa Cartel ― working to bring them to justice and in doing so ― helping to make the great city of Chicago a safer place.”
“IRS Criminal Investigation is committed to working together with the DEA and the United States Attorney’s Office to fight the war on drugs,” said Special Agent in Charge James C. Lee of the Internal Revenue Service Criminal Investigation Division (IRS CI) in Chicago. “IRS CI brings, and will continue to bring, its financial expertise to disrupt and dismantle the Sinaloa Cartel’s drug trafficking organization.”
Flores Brothers Sentencing
In sentencing of the 33-year-old Flores brothers, U.S. District Chief Judge Ruben Castillo said that but for the Flores brothers’ cooperation, he would have imposed a life sentence and noted that because of the peril their ongoing cooperation poses to them and their families, they effectively “are going to leave here with a life sentence.” If the city of Chicago had walls, Judge Castillo said the brothers’ operation “devastated the walls of this city,” adding that their operation “became just a highway of drugs into this city.”
But, Judge Castillo added, “it is never too late to cooperate,” which is what earned the Flores brothers a significant discount in their sentences.
Judge Castillo ordered the Flores brothers to forfeit more than $3.66 million that was seized from them and a sport utility vehicle. In addition, more than $400,000 worth of assorted jewelry, several luxury automobiles and smaller amounts of cash and electronics equipment were seized and forfeited in administrative proceedings by the DEA. The brothers left behind millions of dollars in additional assets in Mexico after they began cooperating.
The judge also placed each of the brothers on court supervision for five years when they are released from prison after serving at least 85 percent of their sentences.
Between 2005 and 2008, the Flores brothers and their crew operated a Chicago-based wholesale distribution cell for the Sinaloa Cartel and a rival drug trafficking organization controlled by Arturo Beltran Leyva, receiving on average 1,500 to 2,000 kilograms of cocaine per month. Approximately half of this cocaine was distributed to the Flores’ customers in the Chicago area, while the other half was distributed to customers in Columbus, Cincinnati, Detroit, Milwaukee, New York, Philadelphia, Washington, D.C. and Vancouver, among other cities. In total, the brothers admitted to facilitating the transfer of approximately $1.8 billion of drug proceeds from the United States to Mexico, primarily through bulk cash smuggling.
At great personal risk to themselves and their families, the Flores brothers began cooperating with the government in October 2008 and recorded conversations, including two directly with Chapo Guzman. Their cooperation resulted in indictments against leaders of the Sinaloa Cartel and the Beltran Leyva organization, as well as the complete dismantling of the brothers’ own Chicago-based criminal enterprise. In late 2008 alone, their cooperation facilitated approximately a dozen seizures in the Chicago area totaling hundreds of kilograms of cocaine and heroin and more than $15 million in cash, as well as the seizure of more than 1,600 kilograms of cocaine in the Los Angeles area that was bound for Chicago.
Further cooperation by the Flores brothers and members of their dismantled crew resulted in the convictions of more than a dozen of their high-level customers who received on average 50 to 100 kilos of cocaine per month.
“While not as high-profile as the cartel figures, the successful prosecution of these defendants made a very real difference in combating the scourge of drug trafficking that fuels so much violence and the destruction of communities in Chicago,” said the prosecutors in recommending a sentence at or near the low end of the agreed 10- to 16-year sentencing range.
“The Flores brothers (and their families) will live the rest of their lives in danger of being killed in retribution,” prosecutors stated in a sentencing memo. “The barbarism of the cartels is legend, with a special place reserved for those who cooperate.”
In 2009, the brothers’ father was kidnapped and presumed killed when he reentered Mexico despite the U.S. government warning him not to do so.
The Primary ― Eighth Superseding ― Indictment
The eighth superseding indictment unsealed today charges a total of nine defendants, including Chapo Guzman, Mayo Zambada and Guzman’s son, Jesus Alfredo Guzman Salazar, 31, aka “Alfredillo” and “Jags,” each of whom was among the initial group of co-defendants in the original indictment in 2009. Zambada and Salazar are fugitives, while Guzman remains in Mexican custody following his arrest last February.
Co-defendant, Jesus Raul Beltran Leon, 31, aka “Trevol” and “Chuy Raul,” was arrested in Mexico this past November and remains in Mexican custody. The remaining co-defendants, all fugitives, Heriberto Zazueta Godoy, 54, aka “Capi Beto,” Victor Manuel Felix Beltran, 27, aka “Lic Vicc,” Hector Miguel Valencia Ortega, 33, aka “Mv,” Jorge Mario Valenzuela Verdugo, 32, aka “Choclos” and Guadalupe Fernandez Valencia, 54, aka “Don Julio” and “Julia.”
This indictment alleges that all nine defendants conspired between May 2005 and December 2014, when the indictment was returned under seal, to import and distribute narcotics and to commit money laundering. They allegedly conspired to smuggle large quantities of cocaine from Central and South America, as well as heroin, methamphetamine and marijuana from Mexico to the United States and through Chicago for distribution nationwide. The indictment seeks forfeiture of $2 billion.
The U.S. Treasury Department’s Office of Foreign Asset Control today announced the designation of Felix Beltran, who is Salazar’s brother-in-law, pursuant to the Foreign Narcotics Kingpin Designation Act, freezing all of his assets in the U.S. or in the control of U.S. persons and generally prohibiting any U.S. persons from engaging in transactions with him. A second designation was announced today against Alfonso Limon Sanchez, an alleged Sinaloa Cartel associate under federal indictment with Zambada and others in San Diego. Other alleged cartel leaders, including Chicago defendants Guzman, Zambada, Salazar and Godoy, were previously designated drug kingpins.
Charges brought in earlier versions of this primary indictment remain pending against three additional co-defendants: Felipe Cabrera Sarabia, 44, who is in custody in Mexico; German Olivares, age unknown and a fugitive; and Edgar Manuel Valencia Ortega, 27, aka “Fox,” and Hector Miguel Valencia Ortega’s brother, who was arrested last year in the United States and is in federal custody in Chicago. His next court date is Feb. 19, 2015 for a status hearing.
In addition to the Flores brothers, Alfredo Vasquez Hernandez, 59, pleaded guilty and was sentenced last November to 22 years in prison. Two other co-defendants, Mayo Zambada’s son, Vicente Zambada Niebla, 39, and Tomas Arevalo Renteria, 45, have pleaded guilty and are awaiting sentencing in Chicago. Altogether, 18 defendants have been charged in the primary case in Chicago.
Three New Indictments
Those 18 are among a total of 62 defendants, most of whom have been convicted and sentenced, who were indicted in nearly two dozen related cases in Chicago since 2009. Two new defendants, Alvaro Anguiano Hernandez, 38, aka “Panda,” and Jorge Martin Torres, 38, were arrested separately in the U.S. in November and are facing separate indictments here alleging they were high-level money laundering associates of the Sinaloa Cartel and participated in money laundering conspiracies. Anguiano Hernandez’s indictment seeks forfeiture of $950,000.
Torres allegedly conspired to launder in excess of $300,000 of drug proceeds from Mexico to the United States to purchase, refurbish, and transfer from Ohio to Mexico, a 1982 Cessna Turbo 210 to promote the cartel’s alleged narcotics conspiracy. His indictment seeks forfeiture of $1 million.
A third separate indictment announced today charges Venancio Covarrubias, 26, aka “Benny,” of Elgin, who was arrested last October, with being a high-level cartel customer in the Chicago area. In September 2013, law enforcement, including U.S. Customs and Border Protection officers in Laredo, Texas, seized 159 kilograms of cocaine that was allegedly destined for a warehouse in Elgin leased by Covarrubias. The cocaine, wrapped in 118 brick-shaped packages, was hidden in a tractor-trailer containing a shipment of fresh tomatoes from a fictitious Mexican business called Tadeo Produce. The charges allege that during the prior year, Covarrubias wire transferred drug proceeds to Tadeo Produce while receiving narcotics disguised as tomato shipments. His indictment seeks forfeiture of $2.89 million.
The money laundering conspiracy charges against Anguiano Hernandez, Torres and Covarrubias carry a maximum sentence of 20 years in prison, a $500,000 fine, or an alternate fine totaling twice the amount of the funds involved in illegal activity. The narcotics importation and distribution conspiracy charges against Covarrubias and each defendant in the primary indictment carry a mandatory minimum sentence of 10 years to a maximum of life in prison and a $10 million fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States sentencing guidelines. The defendants against whom charges are pending are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Total Seizures Since 2008
Overall, the Chicago-based investigation of the Sinaloa Cartel has resulted in seizures of approximately $30.8 million, approximately 11 tons of cocaine, 265 kilograms of methamphetamine and 78 kilograms of heroin. Law Enforcement in Chicago has worked closely with federal agents and prosecutors in San Diego to target the senior leadership of the Sinaloa Cartel. This partnership yielded the prosecutions here as well as 14 indictments announced this month in San Diego against 60 alleged Sinaloa leaders, lieutenants and associates, including Zambada, two of his four sons and another of Guzman’s sons.
The investigation in Chicago has been led by the DEA, joined by the IRS Criminal Investigation Division and the Chicago Police Department. Also assisting were DEA offices worldwide, including in Los Angeles, San Diego, Mexico City and its El Paso Intelligence Center, the Organized Crime Drug Enforcement Task Force the Chicago High-Intensity Drug Trafficking Area task force, the U.S. Attorney’s Offices in San Diego, Springfield, Illinois and Milwaukee and the Milwaukee Police Department, the Chicago and Peoria offices of the Federal Bureau of Investigation, the Chicago office of the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Marshals Service, the U.S. State Department’s Diplomatic Security Service, the Cook County Sheriff’s Department, suburban police departments in Calumet City, Evergreen Park, Oak Park, Palos Heights and the Beverly Hills Police Department. The investigation was assisted by agents and analysts of the Justice Department Criminal Division’s Special Operations Division, the attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section and Office of International Affairs.
The government is being represented by Assistant U.S. Attorneys Michael J. Ferrara, Erika Csicsila, Naana Frimpong, Georgia Alexakis, Kathryn Malizia and Thomas D. Shakeshaft.
Pair Sentenced to Federal Prison Terms for Swindling $30 Million from More Than 100 Investors in Purported Telecom BusinessRead the Press Release
CHICAGO " Two defendants were sentenced today to federal prison terms for an investment fraud scheme in which they swindled more than $30 million from more than 100 investors in a purported voice-over-internet telecommunications business. One defendant, GAIL HOWARD, was sentenced to seven years in prison, while her co-defendant, JAMES JEDYNAK, was sentenced to 6½ years in prison. Together, Howard and Jedynak misappropriated more than $6 million of investors’ funds for their own benefit.
Howard, 64, of Springdale, Ark., and formerly of California, pleaded guilty to wire fraud, while Jedynak, 49, of Hemlock, Mich., and formerly of north suburban Northfield, was convicted of wire fraud at a trial in June 2013.
Both defendants were ordered to pay $30.27 million in restitution by U.S. District Judge Robert M. Dow, Jr., who imposed the sentences today in Federal Court in Chicago. Jedynak and Howard were each ordered to start serving their sentences on April 28.
According to court records, Howard was president and chief executive officer, and Jedynak was in charge of recruiting investors, at Unified Worldwide Transport, LLC (UWT), a Santa Monica, Calif., company that purported to be in the business of routing voice-over-internet protocol (VOIP) telecommunications traffic. UWT sold equity shares to investors through private placement offerings, and Jedynak was responsible for recruiting individuals and entities, including some from the Chicago area, to invest in the business.
Between 2003 and 2007, Howard and Jedynak raised more than $30 million through the fraudulent offer and sale of investment interests and loans to UWT. They falsely represented that investments and loans would be used to acquire telecommunications routes, build network infrastructure, provide working capital, repay debt, and purchase licenses and equipment. Instead, they misappropriated approximately $6.2 million to purchase luxury goods and services, such as a swimming pool, a boat, jewelry, and plastic surgery, to pay for home improvements, to make payments to friends and relatives, to make personal investments, to purchase real estate, and to fund outside business interests.
To facilitate the fraud scheme, the defendants falsely represented that UWT had a contract with Illinois-based Caterpillar Corp., which they claimed owed UWT a lot of money, when in fact there was no contract and no money owed.
Jedynak falsely represented to investors that he would receive no compensation from UWT until investors received all of their principal back. Howard told investors that she had a law degree and a master"s degree in business administration and had worked as a state prosecutor in Arkansas, none of which was true.
The sentences 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. The Illinois Department of Securities assisted the investigation conducted by the FBI.
The government was represented by Assistant U.S. Attorneys Rachel Cannon, Ryan Hedges, and Derek Owens.
Owner of Mchenry Tax Preparation Business and Seven Others Arrested on Federal Charges in Alleged $600,000 Tax Fraud SchemeRead the Press Release
ROCKFORD — The owner of a McHenry, Ill., tax preparation business, together with three employees and four clients, were arrested today after being indicted on federal charges alleging they participated in a $600,000 mail fraud scheme by preparing and filing over 200 false personal federal income tax returns for tax years 2006-2011. The defendants were also charged with conspiring with each other between March 2009 and May 2012 to defraud the United States by making false claims for tax refunds and obtaining payment.
A seven-count indictment returned by a federal grand jury last week was unsealed today following the arrests of PATTY CORDOBA, 42, of Crystal Lake, the owner of Patty’s Tax Service (PTS); three of its employees including Patty Cordoba’s husband, MARIO CORDOBA, 47, of Crystal Lake; LUISA CARBAJAL, 52, of Marengo; and ALICIA ARVALO, 48, of Poplar Grove; and four clients, OLGA LIDIA DIAZ-HERNANDEZ, 45, of McHenry; VICTOR HERNANDEZ, 41, of McHenry; VERONICA SANCHEZ-BARRADAS, 39, of McHenry; and CESAR BESICHE, 48, of McHenry.
All of the defendants pleaded not guilty at their arraignments today before U.S. Magistrate Judge Iain D. Johnston in Federal Court in Rockford. The defendants were ordered to remain in custody pending detention hearings before Magistrate Johnston on Friday for Patty Cordoba, Mario Cordoba and Carbajal, next Tuesday for Hernandez, and next Wednesday for Arevalo, Diaz-Hernandez, Sanchez-Barradas, and Besiche.
All eight defendants were each charged with one count of conspiracy to defraud the United States by obtaining the payment of false claims for tax refunds and at least one count, or more, of mail fraud. The indictment also seeks forfeiture of $642,514 from Patty and Mario Cordoba, Carbajal, Arevalo, Hernandez, and Sanchez-Barradas.
According to the indictment, Patty Cordoba, and her employees, Mario Cordoba, Carbajal and Arevalo, prepared more than 200 fraudulent personal federal income tax returns for Diaz-Hernandez, Hernandez, Sanchez-Barradas, Besiche and others, claiming materially false amounts of income and credits for tax years 2006-2011. The fraudulent tax returns were filed with the IRS and falsely claimed over $600,000 in tax refunds. As part of the scheme, Patty and Mario Cordoba, Carbajal and Arevalo allegedly prepared fraudulent returns for other filers using information provided by Diaz-Hernandez, Hernandez, Sanchez-Barradas, Besiche and others.
It was further part of the scheme that the defendants created and caused others to create fraudulent Individual Taxpayer Identification Number applications for taxpayers and dependents to accompany the fraudulent tax returns in order to increase the number of dependents listed on particular taxpayers’ return, thus increasing the amount of fraudulent tax refunds claimed on those returns. As part of the scheme, Patty and Mario Cordoba, Carbajal and Arevalo falsely represented that Diaz-Hernandez’s, Hernandez’s, Sanchez-Barradas’, Besiche’s, and others filers’ dependents were not residing in Mexico and fraudulently claimed that those dependents were qualifying children for the Child Tax Credit and Additional Child Tax Credit in order to fraudulently increase the amounts of the refunds claimed in those returns, the indictment alleges.
Patty and Mario Cordoba, Carbajal and Arevalo allegedly prepared returns for themselves and Diaz-Hernandez, Hernandez, Sanchez-Barradas, Besiche, and other filers, using false information to make it appear that they were entitled to substantial tax refunds. Further, Patty and Mario Cordoba, Carbajal and Arevalo allegedly prepared letters to the IRS on behalf of Diaz-Hernandez, Hernandez, Sanchez-Barradas, Besiche, and others, when the IRS requested additional information regarding income claimed on the returns that they had prepared, that falsely stated that Diaz-Hernandez, , Sanchez-Barradas, Besiche, and others had earned wages from an employer. PTS’s fees for preparing tax returns reporting cash wages were more than three times its fee for preparing returns reporting wages on a Form W-2, according to the indictment.
Each count of mail fraud carries a maximum penalty of 20 years in prison, a maximum fine of $250,000 fine, or an alternate fine totaling twice the loss or twice the gain derived from the offense, whichever is greater. Conspiracy to defraud the United States by obtaining payment of false claims carries a maximum penalty of 10 years in prison and a maximum fine of $250,000. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines, and restitution is mandatory.
The indictment was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, James C. Lee, Special Agent-In-Charge of the Chicago Field Office of Internal Revenue Service Criminal Investigation Division; Tony Gómez, Inspector in Charge of the Chicago Division of the United States Postal Inspection Service; and Gary Hartwig, Special Agent-In-Charge of the Chicago Field Office of Homeland Security Investigations.
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 of each defendant beyond a reasonable doubt.
The government is represented by Assistant U.S. Attorney Joseph C. Pedersen.
Indictment
Chicago Man Sentenced to 15 Months in Prison for Violating U.S. Sanctions Against Zimbabwe President Mugabe and OthersRead the Press Release
CHICAGO — A Chicago man was sentenced today to 15 months in federal prison for his role in a conspiracy to violate U.S. sanctions by agreeing to assist Zimbabwe President Robert Mugabe and others in an effort to lift economic sanctions against Zimbabwe. Between late 2008 and early 2010, the defendant, C. GREGORY TURNER, met multiple times in Africa with Zimbabwean government officials, including President Mugabe and Gideon Gono, governor of the Reserve Bank of Zimbabwe, who were individually subject to U.S. sanctions.
A November 2008 “consulting agreement” provided for total payment of $3.4 million in fees for Turner and his co-defendant, PRINCE ASIEL BEN ISRAEL, to engage in public relations, political consulting, and lobbying efforts to have sanctions removed by meeting with and attempting to persuade federal and state government officials, including Illinois members of Congress and state legislators, to oppose the sanctions.
Turner, 72, also known as “Greg Turner,” of Chicago and Israel, acted out of greed, U.S. District Judge Elaine Bucklo said in imposing the sentence in Federal Court in Chicago. The judge also said she did not believe Turner’s claim that his conduct was in the name of humanitarianism and helping the people of Zimbabwe. Turner was ordered to begin serving his sentence on March 13, and he was placed on court supervision for a year after he is released from custody.
Turner was found guilty last October of violating the International Emergency Economic Powers Act (IEEPA), following a jury trial in U.S. District Court. Turner was acquitted of one count each of conspiracy and acting as an agent in the United States of a foreign government without providing prior notification to the Attorney General.
“[Turner’s] motivation was his own financial enrichment. He sought to parlay his close relationships with well-connected government officials to score a big payday,” the government argued in a sentencing memo.
Ben Israel, 73, of Chicago, was sentenced last August to seven months in prison after pleading guilty to violating the Foreign Agents Registration Act (FARA).
The sanctions against President Mugabe and other specially designated individuals in Zimbabwe ― for human rights abuses ― were initially imposed in 2003 by President George W. Bush and have been continued annually by President Obama, starting in March 2009. President Mugabe and his ruling ZANU-PF party have governed Zimbabwe since its independence in 1980. The sanctions neither bar travel to Zimbabwe nor prohibit public officials from meeting with specially designated nationals to discuss removing the sanctions, but individuals may not provide services on behalf of or for the benefit of specially designated nationals.
According to the evidence at trial, in early November 2008, Turner and Ben Israel began having discussions with Mugabe, Gono, and other ZANU-PF leaders regarding the influence Turner and Ben Israel could wield to have the sanctions removed. The defendants discussed with Mugabe, Gono, and others their association with many public officials who purportedly had close connections with then President-Elect Obama. Turner violated IEEPA by conspiring to engage in public relations, political consulting, and lobbying efforts on behalf of President Mugabe and other Zimbabwe officials. In early December 2008, Ben Israel’s U.S. bank blocked a wire transfer of $89,970 into his account from a Zimbabwe official affiliated with ZANU-PF, and Ben Israel later traveled to Africa and personally withdrew $90,000 from the bank account of that same Zimbabwe official.
Turner and Ben Israel arranged for trips by federal and state government officials to meet with President Mugabe and other Zimbabwean officials, including in November and December 2008, and January and December 2009; attempted to have Gono and other Zimbabwean officials speak at an issues forum in Washington, D.C., sponsored by a then U.S. Representative from California, and to assist those officials in obtaining visas to travel to the U.S. to attend the event; arranged for President Mugabe to meet with federal and state government officials in New York; lobbied a caucus of state legislators on behalf of Zimbabwean officials; and failed to apply to the Treasury Department for a license to engage in transactions and services on behalf of specially designated nationals.
In early December 2008, Turner and Ben Israel arranged for a delegation to travel to Zimbabwe. After members of the delegation returned, President-Elect Obama’s transition team forwarded information about contact from a member of the delegation to the FBI based on its concerns that sanctions may have been violated.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John Carlin, Assistant Attorney General for the National Security Division; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. The Justice Department’s Counterespionage Section assisted in the investigation.
The government was represented by Assistant U.S. Attorneys Barry Jonas and Georgia Alexakis, and David Recker, a trial attorney with the Justice Department’s Counterespionage Section.
Computer Analyst Sentenced to Three Years in Prison for Stealing Trade Secrets from Citadel and Previous EmployerRead the Press Release
CHICAGO — A highly-skilled computer science engineer, YIHAO PU, who a prosecutor said “meticulously planned and brazenly executed” stealing sensitive trade secrets from two former employers ― a trading firm in New Jersey and later Citadel, LLC, a Chicago-based financial firm ― was sentenced today to three years in federal prison. Later today, Pu’s colleague, SAHIL UPPAL, who worked with and aided Pu at both firms, was sentenced to three years’ probation for obstruction of justice.
Pu, 27, currently of Waltham, Mass., and also known as “Ben Pu,” was ordered to begin serving his sentence on May 1, and was placed on three years of court supervision following his release from custody. Uppal, 27, of Colts Neck, N.J., and also known as “Sonny Uppal,” was placed on three years’ probation. U.S. District Judge Charles Norgle, who imposed the sentences, also ordered Pu and Uppal each to pay restitution totaling $759,649 to Citadel to cover the cost of its investigation. Both defendants pleaded guilty last August in Federal Court in Chicago.
“Pu committed theft on a grand scale from not one, but two, employers. What Pu stole was a proven money-making system from Company A and valuable trade secrets from Citadel. He stole extremely valuable intellectual property consisting of HFT [high frequency trading] computer code and alpha outputs that generated millions of dollars each year, cost millions of dollars to build, and took teams of professionals years to develop and refine ― all of which generated millions of dollars in profits per year,” Assistant U.S. Attorney Patrick M. Otlewski argued in a sentencing memo.
According to their guilty pleas and court documents, Pu graduated from Cornell University and Uppal graduated from Carnegie Mellon University, and they worked together at Company A in Red Bank, N.J., in 2009 and 2010. By late 2009, they planned to develop trading strategies for themselves and not for the benefit of their employers. In March 2010, the day before Pu resigned from Company A, he accessed the firm’s secure internal computer servers and downloaded thousands of files containing Company A’s trade secrets and copied them onto a personal hard drive.
Pu began working at Citadel in May 2010 as a quantitative financial engineer and his responsibilities included working with analysts and researchers to develop and enhance Citadel’s high frequency trading strategies. As part of his duties, Pu was permitted to use his office computer to access a folder stored on Citadel?s servers that contained information and data related to predictions signals commonly referred to as “alphas,” which are the building blocks of Citadel’s automated electronic trading algorithms and strategies. The alphas use incoming market data and other information to predict the movement of investment instruments and relevant market activity.
Pu bypassed Citadel’s security measures and stole thousands of files that contained Citadels’ alpha outputs. Pu then used those alphas in his own high frequency trading strategy for his own personal investment account in an effort to replicate Citadel’s trading for his own benefit. When Uppal joined Pu at Citadel, they continued their scheme to benefit themselves during the summer of 2011. Uppal transferred to Pu three computer files containing Citadel trade secrets without Citadel’s authorization.
On Aug. 26, 2011, Citadel confronted Pu about suspicious activity on his work computer, and Pu returned home and began destroying evidence. With Uppal’s help, Pu took a half dozen hard drives to a friend’s apartment, and a few days later Pu instructed his friend to get rid of them. The friend discarded six of the hard drives in a sanitary canal in Wilmette, while keeping another one at his apartment. Uppal obstructed justice by helping Pu conceal evidence and Uppal lied when he too was confronted and questioned by Citadel.
Judge Norgle found that the crimes caused a total intended loss of approximately $12.2 million. Citadel brought their investigation to the attention of federal authorities and fully cooperated with the government’s investigation.
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 Patrick M. Otlewski and Lindsay C. Jenkins.
Former Machesney Park Man Pleads Guilty to Concealment of Assets from A Bankruptcy TrusteeRead the Press Release
ROCKFORD — A former Machesney Park, Ill. man pleaded guilty today before U.S. District Judge Frederick J. Kapala to the concealment of assets from a Bankruptcy Trustee. ROBERT J. YONKEE, JR., 55, now of Lake Geneva, Wis., 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.
Yonkee faces a maximum penalty of 5 years’ imprisonment, and 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 actual sentence will be determined by the United States District Court, guided by the Sentencing Guidelines. Sentencing for Yonkee is set for April 2, 2015, at 2:30 p.m.
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 being represented by Assistant U.S. Attorney Michael D. Love.
Plea Agreement
Naperville Man Admits Stealing U.S. Computer Equipment Worth $332,000 While Working for Defense Contractor in AfghanistanRead the Press Release
CHICAGO — A Naperville man who worked for a U.S. military contractor pleaded guilty today to stealing U.S. military computer and communications equipment worth more than $332,000 from a military air base in Afghanistan and later selling and shipping almost half of the high-end equipment to vendors in the United States for re-sale.
TIMOTHY L. MAURER, 51, a former systems administrator for Raytheon Corp., a U.S. Department of Defense contractor, was charged last month with one count of theft of government property. He pleaded guilty today at his arraignment before U.S. District Judge Robert M. Dow, Jr., in Federal Court in Chicago.
“Stealing from the U.S. government undermines our mission in Afghanistan and anyone seeking to defraud the American taxpayer will be brought to justice,” said John F. Sopko, Special Inspector General for Afghanistan Reconstruction (SIGAR).
The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; and Special Inspector General Sopko. The Air Force Office of Special Investigations (AFOSI), the Defense Criminal Investigative Service (DCIS), the Army Criminal Investigative Division/Major Procurement Fraud Unit (CID/MPFU), and SIGAR conducted the investigation.
In pleading guilty, Maurer admitted that between Dec. 23, 2013, and Feb. 2, 2014, he stole more than 150 items of computer and communications equipment, including laptop computers, cellular telephones, computer switches, adaptors, batteries, power cables, and electronic storage devices worth approximately $332,702. The equipment was stolen from storage containers and other areas belonging to the 445th Air Expeditionary Advisory Squadron, a U.S. Air Force unit, stationed at Shindand Air Base in Afghanistan. On at least one occasion, Maurer forced open a lock to gain entry to a storage container, and he also stole equipment from other locations where the equipment was being stored or used.
In January 2014, Maurer communicated with multiple vendors in the United States to arrange sales of the equipment that he stole. The vendors re-sold stolen equipment valued at approximately $152,697, while equipment worth approximately $180,005 was recovered from Maurer’s quarters, from vendors, or was intercepted after it was shipped but before it reached vendors. Maurer received payment from vendors via online transactions or wire transfer of funds.
Maurer is free on his own recognizance while awaiting sentencing, which was scheduled for April 7. He faces a maximum sentence of 10 years in prison and a $250,000 fine, while his plea agreement anticipates an advisory United States Sentencing Guidelines range of 24 to 30 months incarceration, and the Court must impose a reasonable sentence.
The government is being represented by Assistant U.S. Attorney Kartik K. Raman and DOJ Trial Attorney Wade Weems on detail to the Criminal Division’s Fraud Section from SIGAR.
Plea Agreement
Former Sandwich, Illinois Business Owner Pleads Guilty to Making A False Statement to A Financial InstitutionRead the Press Release
ROCKFORD — A former Sandwich, Ill. business owner pleaded guilty today before U.S. District Judge Frederick J. Kapala to a charge of making a false statement to a financial institution. The defendant, STEVEN J. MOORHOUSE, 62, was President and majority owner of Jefsco Manufacturing Co., Inc., a manufacturing business.
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.
Moorhouse faces a penalty of up to 30 years in prison, a term of supervised release of up to five years following imprisonment, a fine of up to $1 million, or twice the gross gain or gross loss resulting from that offense, whichever is greater. The Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines, as well as restitution. Sentencing for Moorhouse is set for April 16, 2015, at 2:30 p.m.
The guilty plea 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 is represented by Assistant U.S. Attorney Michael D. Love.
Plea Agreement
Federal Grand Jury Indicts Mohammed Hamzah Khan for Allegedly Attempting to Support Terrorism OverseasRead the Press Release
CHICAGO — A southwest suburban Bolingbrook man who was arrested in October, was indicted by a federal grand jury for allegedly attempting to travel overseas to join a foreign terrorist organization operating inside Iraq and Syria, federal law enforcement officials announced today. The defendant, MOHAMMED HAMZAH KHAN, 19, a U.S. citizen, was charged with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL) in a single-count indictment returned late yesterday.
A date for Khan to be arraigned in U.S. District Court in Chicago has not yet been determined. Khan has been detained in federal custody since he was arrested on Oct. 4, 2014, at O’Hare International Airport by members of the Chicago FBI’s Joint Terrorism Task Force before he attempted to fly to Vienna, Austria, on his way to Istanbul, Turkey.
Khan was initially charged in a criminal complaint with attempting to provide material support to a foreign terrorist organization, and the indictment formalizes that same charge. According to the indictment, between February and Oct. 4, 2014, Khan attempted to provide material support and resources, specifically, personnel, to ISIL.
Attempting 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 United States Sentencing Guidelines.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John P. Carlin, Assistant Attorney General for National Security; and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The investigation is continuing, they said.
The Chicago JTTF is comprised of Special Agents of the FBI, officers of the Chicago Police Department, and representatives from an additional 20 federal, state and local law enforcement agencies. U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), and the Illinois State Police also provided significant assistance in the investigation.
The government is being represented by Assistant U.S. Attorneys Matthew Hiller, Angel Krull, and Sean Driscoll, and DOJ Trial Attorney Michael Dittoe of the National Security Division.
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
Cicero Man Sentenced to 40 Years in Prison for Arson That Killed Man Sleeping in Adjacent Apartment in 2012Read the Press Release
CHICAGO — A Cicero man was sentenced today to 40 years in federal prison for setting fire in January 2012 to his estranged girlfriend’s southwest side apartment that resulted in killing a man sleeping in the apartment next door. The defendant, JUAN ADAME, was convicted of federal arson in October 2013 after a week-long trial in U.S. District Court.
Adame, 41, who has been in federal custody since he was arrested in March 2012, must serve at least 85 percent of his sentence. He is subject to two years of court supervision and deportation after any release.
Citing Adame’s history of domestic violence, U.S. District Judge Harry Leinenweber said the “tragic consequences” of the case called for Adame to be incapacitated to prevent him from committing future crimes. Adame was also ordered to pay restitution totaling $306,006.
According to court records and the evidence at trial, at approximately 4:30 a.m. on Jan. 14, 2012, Adame used gasoline to start a fire in the second-floor rear apartment of a building at 4246 West 63rd St., which contained two one-bedroom apartments on the second floor and commercial space on the ground floor. Adame had an ongoing domestic dispute with a woman who occasionally occupied the apartment where the fire began but who was not there at the time of the fire. The victim, James “Jimmy” Maca, 60, the sole occupant of the front apartment unit, died as a result of carbon monoxide intoxication and inhalation of smoke and soot.
“Jimmy Maca left behind friends and loving family members, including two siblings and a niece who attended every day of [Adame’s] trial. The lifelong impact of [his] crime on Jimmy Maca’s friends and family is indescribable,” Assistant U.S. Attorneys Michelle Nasser and Bethany Biesenthal argued in seeking a sentence of at least 40 years in prison. Maca’s brother, sister, and landlord each provided victim impact statements at today’s sentencing hearing.
The sentence 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 Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives; and Garry F. McCarthy, Superintendent of the Chicago Police Department. The Chicago Fire Department’s Office of Fire Investigation and the Illinois State Fire Marshal’s Division of Arson Investigation assisted the Chicago Police Department’s Bomb and Arson Section and ATF in the investigation.
Joliet Area Tax Preparer Pleads Guilty to Filing Hundreds of False Returns, Causing IRS to Lose More Than $5.3 MillionRead the Press Release
CHICAGO — A Joliet area tax preparer pleaded guilty today to filing hundreds of false federal income tax returns for clients, causing the Internal Revenue Service to lose more than $5.3 million. The defendant, JEFFREY SHELBY, JR., 31, of Joliet, pleaded guilty at his arraignment after being charged last week in U.S. District Court.
With the 2014 tax season just getting underway, IRS officials said the case serves as a reminder to tax preparers and taxpayers alike to comply with their tax obligations. “While most return preparers are honest and provide excellent service, others file false returns to defraud their clients and the United States government,” said James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.
The guilty plea was announced by Mr. Lee and Zachary T. Fardon, United States
Shelby pleaded guilty to two counts of aiding and assisting in the preparation of false federal income tax returns. He faces a maximum sentence of three years in prison and a fine of $250,000 on each count. U.S. District Judge Sara L. Ellis scheduled a status hearing for March 24 to set a sentencing date.
Between at least 2009 and 2012, Shelby owned Shelby Investment LLC, which had two
locations, one in Crest Hill and the other in Joliet, and he worked primarily in the Crest Hill office. Shelby admitted that for tax years 2009 through 2012, he filed hundreds of individual income tax returns for clients, each of which fraudulently and intentionally reduced the tax liabilities and increased the tax refunds for those taxpayers. Among other ways, Shelby overstated and misrepresented taxpayers’ eligibility to claim tax credits, including education credits and the Earned Income Credit; misrepresented taxpayers’ business income and expenses; and overstated and misrepresented his clients’ gifts to charity. As a result, he caused the IRS to lose approximately $5,350,243 in tax revenue.Shelby is subject to an order to pay full restitution. 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 Sarah Streicker.
Plea Agreement
Former Cook County Sheriff’s Deputy Sentenced to 1 Year in Prison for Using Excessive Force Against Detainee in MaywoodRead the Press Release
CHICAGO — A former Cook County sheriff’s deputy was sentenced today to one year in federal prison for violating the civil rights of a man who was being held in the county’s detention lockup facility in Maywood in 2010. The defendant, RAFAEL MUNOZ, pleaded guilty in September to using unreasonable force.
“What happened here was extremely serious,” U.S. Magistrate Judge Maria Valdez said in imposing the sentence in U.S. District Court. Munoz was ordered to begin serving his sentence on Feb. 6 and was placed on supervised release for one year following his prison term.
In pleading guilty, Munoz, 39, of Chicago, admitted that he grabbed and forcibly pulled the chain that connected a pretrial detainee’s ankle shackles to each other, causing the victim to flip forward and hit his head and face on the concrete floor. As a result of using excessive force, the victim suffered injuries, including a broken nose, a broken tooth, swelling, bruising, and bleeding from cuts to his lip and nose.
Munoz became a sheriff’s deputy in August 2006 and resigned in 2013. As part of his plea agreement, Munoz agreed not to seek or accept any future law enforcement employment or any position that would require or permit him to supervise or care for detainees or prisoners.
According to court records, the victim, identified as M.O., was arrested on July 8, 2010, and transported to the Maywood lockup, where he was detained in a holding cell. In that cell, M.O. was restrained with his hands handcuffed behind his back and his legs in ankle shackles. Shortly after 2 a.m. on July 8, 2010, Munoz entered the cell in response to M.O.’s request to loosen his handcuffs. Munoz ordered M.O. to turn around and face the wall and M.O. complied with Munoz’s instructions such that M.O.’s back and handcuffs faced Munoz while M.O. faced the rear of the cell. Throughout Munoz’s interaction with M.O., the victim complied with Munoz’s orders and did not pose a threat to Munoz, any other person, or himself.
After forcing the victim to fall by pulling his ankle chain, Munoz admitted that he attempted to cover up his use of excessive force by completing three false law enforcement reports. In each of those documents, Munoz reported that he entered the cell and “grabbed [M.O.’s] handcuffs to loosen at which time [M.O.] rolled onto the cell floor,” which Munoz knew was false.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division; 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 Andrianna Kastanek and Nathalina Hudson and DOJ Trial Attorney Ali Ahmad.
Rockford Woman Sentenced to 80 Months in Prison for Drug TraffickingRead the Press Release
ROCKFORD — A Rockford, Ill. woman was sentenced today in federal court by U.S. District Judge Frederick J. Kapala on a federal drug trafficking charge. The defendant, DENISE LAMBERT, 56, was sentenced to 80 months in federal prison, to be followed by 3 years of supervised release.
Lambert pleaded guilty to the charge on April 11, 2014. According to the written plea agreement, from Oct. 1, 2010 to Jan. 5, 2012, Lambert was part of a heroin trafficking organization in Rockford and conspired with her co-defendants, Michael J. Craig, Michael W. Charles, Elbert Charles Dixon, Melvin Bradley, Devon Zachary and Jose Melendez, to distribute heroin. The plea agreement noted that while working for Craig taking care of Craig's children, Lambert performed tasks at the request and direction of Craig to assist Craig in distributing heroin in Rockford, Illinois including renting an apartment and vehicles in Lambert’s relatives’ names for Craig to use to store and transport heroin and heroin trafficking proceeds, delivering heroin mixtures packaged in plastic baggies to Charles, Dixon, Zachery and Bradley for them to sell to others, and collecting money from Charles, Dixon, Zachery and Bradley after they sold the heroin and delivering the money to Craig.
Co-defendants Craig, Charles, Dixon, Bradley Lambert, Zachary and Melendez all previously pleaded guilty to conspiring to distribute heroin. On May 28, 2014, Charles was sentenced to 151 months’ imprisonment. On May 23, 2014, Dixon was sentenced to 70 months’ imprisonment. On May 9, 2014, Bradley was sentenced to 18 months’ imprisonment. On May 6, 2014, Zachery was sentenced to 124 months’ imprisonment. On Nov. 13, 2014, Melendez was sentenced to 135 months’ imprisonment. On Nov. 17, 2014, Craig was sentenced to 169 months’ imprisonment.
The sentencing 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; Carl Vasilko, Special Agent-in-Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms, & Explosives; Gary Caruana, Winnebago County Sheriff; Chet Epperson, Chief of the Rockford Police Department; and Hiram Grau, Director of the Illinois State Police.
The government was represented by Assistant U.S. Attorney Joseph C. Pedersen.
Chicago U.S. Attorney’s Office Collected $118.9 Million in Civil and Criminal Actions and Asset Forfeitures in Fiscal Year 2014Read the Press Release
CHICAGO ― The U.S. Attorney’s Office for the Northern District of Illinois collected $118.9 million in fiscal year (FY) 2014, Zachary T. Fardon, United States Attorney for the Northern District of Illinois, announced today. These collections included more than $29.8 million in criminal debts, more than $80.4 million in civil actions, and more than $8.7 million collected through asset forfeiture proceedings, resulting in the office’s total collections exceeding more than four times its budget of approximately $28.1 million in FY 2014. Over approximately the last 11 fiscal years combined, the office has collected more than $1 billion on behalf of the United States.
Additionally, the Northern District of Illinois worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $62.79 million, primarily in civil cases pursued jointly with these offices.
Attorney General Eric Holder announced last month that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Holder. “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy. And it shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crimes, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”
“Collecting more than four times what we cost is nothing short of remarkable considering that we are still recovering from serious financial challenges,” Mr. Fardon said. “Our attorneys and staff, especially in our Civil Division, Financial Litigation Unit, and Asset Forfeiture Section, continue to expand our commitment to protecting the public and recovering funds for the federal treasury and for victims of federal crime. We need to be constantly vigilant to ensure that crime does not pay, and in doing so, we have provided a substantial net financial benefit to the citizens of our district,” Mr. Fardon added.
During FY 2014, the U.S. Attorney’s Financial Litigation Unit in Chicago collected $29,831,085.20 in criminal actions, including more than $2.5 million in criminal fines; more than $6.5 million in restitution owed to the federal government; and more than $10.6 million in non-federal restitution owed to victims, including the victims of numerous financial fraud and Ponzi-type schemes. More than $9.4 million was restored to crime victims from assets that were forfeited in previous years, including approximately $9.2 million in net liquidated proceeds from the forfeited assets of Rita Crundwell, the former comptroller of Dixon, Ill., who is serving a sentence of nearly 20 years in prison for embezzling $53 million from the town over two decades. Some of the largest criminal fines and restitution in FY 2014 came from defendants who were prosecuted in a series of cases involving illegal importations of honey from China to avoid antidumping duties.
In civil actions, the office collected $80,406,164.97, including a $53 million civil penalty on behalf of the Internal Revenue Service from a businessman, H. Ty Warner, who pleaded guilty to failing to report income from a secret foreign bank account. Other significant civil collections included $15.5 million from a pharmaceutical manufacturer to settle Medicare false billing claims, and $7.2 million from a Chicago construction company to settle claims of fraud on government programs to benefit minority and women-owned businesses on public works contracts.
Civil collections typically stem from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. Civil debts were also collected on behalf of federal agencies, such as the U.S. Department of Housing and Urban Development, Health and Human Services, IRS, Small Business Administration, and Department of Education.
The U.S. Attorney’s Offices, along with the Justice Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the United States and criminal debts owed to federal crime victims. When defendants are convicted and sentenced in criminal cases, judges must impose restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. The U.S. Attorney’s Offices are authorized to make efforts to collect criminal debts for 20 years after defendants are released from custody.
While restitution is paid by Courts directly to the victim, criminal fines and felony assessments are paid to the Justice Department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs. Liquidated assets obtained through criminal and civil forfeiture proceedings are deposited into either the Department of Justice Asset Forfeiture Fund or the Department of Treasury Forfeiture Fund and are used to restore funds to crime victims and for a variety of law enforcement purposes.
Canadian Man Sentenced to Seven Years in Prison for Swindling Elderly Victims in $8 Million Telemarketing Scam from the PhilippinesRead the Press Release
CHICAGO — A Canadian man who cooperated with U.S. law enforcement and voluntarily traveled from the Philippines to face federal prosecution was sentenced to seven years in prison for swindling 168 elderly victims nationwide of approximately $8 million in a telemarketing fraud scheme, federal law enforcement officials announced today.
The defendant, AUSTIN ETCHES, 56, “was up to his eyeballs” in the “heinous” crime, U.S. District Judge Thomas Durkin said in imposing the sentence on Friday in Federal Court. Etches, who has remained in federal custody since he voluntarily traveled to the United States in June 2013, was also ordered to pay restitution totaling approximately $8 million.
Etches, who last resided in Toronto before Manila, pleaded guilty to mail fraud in June of this year and cooperated in the investigation, which has resulted in pending charges against two alleged co-schemers, who are believed to be outside the United States.
Citing letters to the judge from widows and retirees who were among the victims, Assistant U.S. Attorney Rachel Cannon argued in a sentencing memo, “Many of the victims were at the most vulnerable point of their lives, between their advanced ages, the death of their spouses, and their or their spouse’s health issues, not to mention their need for income.”
According to court documents, Etches and two co-schemers operated a series of companies through telemarketing call centers located in and around Manila. Between 2008 and 2012, they raised more than $8 million by fraudulently selling phony certificates of deposit and non-existent real estate investments to American senior citizens. They made false statements about the risks of the investments, the expected and actual rates of return, and the ways in which investors’ funds would be used. They provided investors with fraudulent account statements purporting to show that investments had increased in value, knowing that they had misappropriated the funds and the investments were worthless.
One elderly victim attended Etches’ sentencing with her son, who spoke on her behalf. He noted that his mother was an emigrant from Yugoslavia, and his parents had worked their entire lives in factory jobs. They managed to save $161,000, all of which Etches and others stole. The son described how the schemers hounded his mother with repeated phone calls, and they stopped calling her only when her son intervened.
In late 2013, related federal fraud charges were filed in Chicago against JONATHAN PAPA, 42, who is believed to be in the Philippines, and METHSIRI PALLIYAGURU, 56, who was formerly in the Philippines and is now believed to be in Canada. The charges are not evidence of guilt and they are presumed innocent.
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 Tony Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The FBI’s Los Angeles office and the U.S. Securities and Exchange Commission assisted in the investigation.
Beloit Wisconsin Woman Sentenced for Mail FraudRead the Press Release
ROCKFORD — A former shipping manager for American Extrusion International (“AEI”), of South Beloit, Ill., was sentenced today by U.S. District Judge Frederick J. Kapala for mail fraud. REVA K. VERA, 58, of Beloit, Wis., who pled guilty to the charge on Sept. 11, 2014, was sentenced to 29 months in federal prison, to be followed by 3 years of supervised release. In addition, Judge Kapala ordered Vera to pay $352,803.23 in restitution to AEI.
According to the plea agreement, Vera, as the shipping manager, was responsible for authorizing payments to vendors who provided shipping services to AEI. As stated in the plea agreement, Vera created two fraudulent companies, Total Quality Logistics (“TQL”) and Val Tech, Inc., and from May 4, 2012 to Oct. 9, 2013, defrauded AEI out of at least $352,803.23. During that time period, Vera created fictitious invoices from Val Tech, Inc. and TQL for shipping services that those companies had purportedly performed for AEI when in fact, Val Tech, Inc. and TQL provided no such shipping services for AEI. According to the plea agreement, Vera submitted the fictitious invoices to AEI’s accounts payable department causing checks to be issued by AEI payable to Val Tech, Inc. or TQL in the amount of the invoice. The plea agreement further states that after AEI’s accounts payable department generated the checks for the fictitious invoices submitted by Vera, AEI mailed the checks payable to Val Tech, Inc. to an address of Vera’s relative in Beloit, Wis., and the checks payable to TQL to a post office box in Loves Park, Ill. belonging to Vera. According to the plea agreement, as part of the scheme to defraud AEI, Vera obtained $85,993 in checks from AEI payable to Val Tech, Inc., and $266,810.23 in checks from AEI payable to TQL that she either cashed or deposited into her personal bank account. Vera used the money for her personal benefit.
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 South Beloit Police Department assisted in the investigation.
The government was represented by Assistant U.S. Attorney Joseph C. Pedersen.
Chicago Travel Agent Arrested on Federal Fraud Charge for Allegedly Swindling Muslim Pilgrims of Hajj Travel PackagesRead the Press Release
CHICAGO — A Chicago travel agent was arrested today on a federal fraud charge for allegedly cheating at least 50 customers of approximately $525,000 by misrepresenting his ability to sell travel packages for the Hajj that included the visa required to enter Saudi Arabia.
The defendant, RASHID MINHAS, 42, of Chicago, was charged with mail fraud in a criminal complaint that was filed yesterday in U.S. District Court and unsealed this morning following his arrest. He was scheduled to appear at 1:30 p.m. today before U.S. Magistrate Judge Sheila Finnegan in Federal Court.
Minhas was arrested without incident by FBI agents at his residence on the north side of Chicago. Agents also executed a federal search warrant at his business, Light Star Hajj Group, located at 5801 Northwest Hwy., Chicago. Minhas previously operated a travel agency in Chicago called City Travel & Tours.
According to the complaint affidavit, between March and November 2014, Minhas falsely represented that Hajj travel packages for September and October of this year included required Saudi Arabia entry visas. Minhas allegedly knew that Light Star Hajj was not authorized by Saudi Arabia to obtain visas and that he did not intend to obtain the required Hajj visas. He sold travel deals to at least 50 customers and deposited approximately $525,000 he collected into Light Star’s bank accounts, and then commingled those funds with other deposits and used the money to make partial refunds to customers, to transfer funds to Pakistan, and to pay personal expenses, the complaint alleges.
The affidavit describes the Hajj as an annual Islamic pilgrimage to Mecca, Saudi Arabia. The Hajj is a mandatory religious duty for Muslims, and must be carried out at least once in a lifetime by all adult Muslims who are physically and financially capable of undertaking the journey. This year, the Hajj pilgrimage was from Oct. 2-7, and each year, approximately two million pilgrims attend the Hajj.
The complaint states that agents reviewed Light Star’s bank records and determined that approximately $525,000 was deposited this year from the sale of Hajj travel packages. An additional $586,000 was deposited from other sources, including the sale of Umrah travel packages, cash deposits and transfers. Agents determined that approximately $745,000 was spent on expenditures that were not related to Hajj travel packages, including $159,000 in checks to cash, $339,000 in transfers to individuals in Pakistan, approximately $49,000 in checks to Minhas’ former wife, and other expenses.
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 Chicago Office of the Federal Bureau of Investigation.
Mail fraud carries a maximum sentence of 20 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 Kenneth E. Yeadon and Kathryn Malizia.
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
Steven Mandell Sentenced to Life in Prison for Barbaric 2012 Plot to Kidnap, Extort and Kill Victim in North Side Torture ChamberRead the Press Release
CHICAGO — A northwest suburban man was sentenced today to life in prison for plotting in 2012 to kidnap, torture, extort and murder an innocent victim and then take control of the victim’s real estate holdings. STEVEN MANDELL, 64, formerly known as “Steven Manning,” of Buffalo Grove, was tried in February of this year and convicted of conspiracy to commit kidnapping, extortion conspiracy, attempted extortion, possessing a firearm during a violent crime, being a felon-in-possession of a firearm, and obstruction of justice.
“This was an extremely serious and disturbing offense,” U.S. District Judge Amy J. St. Eve said in imposing the life term following a hearing in Federal Court. “Your actions in this case, Mr. Mandell, were evil . . . and showed a complete disregard for human life.”
The judge also imposed a mandatory consecutive five-year sentence for use of a firearm and a $5,000 fine. Mandell has been in custody since he was arrested in October 2012 and there is no parole in the federal prison system.
“Mr. Mandell was the mastermind of a truly barbaric crime,” Assistant U.S. Attorney Amerjeet Bhachu said in court today. Mandell “was the principal author of an exceptionally sadistic and depraved plan to kidnap, torture, extort and murder,” Mr. Bhachu and Assistant U.S. Attorney Diane MacArthur argued in a sentencing memo.
Mandell, a Chicago police officer for approximately 10 years until 1983, served more than a decade on Illinois’ death-row for a murder conviction that was later overturned on legal grounds involving the admissibility of evidence at his trial, not because of innocence.
A co-defendant in the 2012 murder plot, Gary Engel, who was 61 at the time, of Homer Glen and a former police officer in Willow Springs, committed suicide shortly after he was arrested with Mandell.
The evidence at trial showed that Mandell rented a location in the 5300 block of West Devon Avenue, known to him as “Club Med,” not knowing at the time that the FBI had installed a hidden camera and recording equipment after a cooperating witness reported Mandell’s plan. Mandell and Engel outfitted the rental location to restrain, torture and kill the victim. They developed a plan to lure him from his residence; stocked “Club Med” with all the tools they needed to carry out the crimes; and obtained all the trappings they needed to pose as police officers in connection with the victim’s abduction.
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.
Vehicle Dealer and Accountant Sentenced to Prison for $75.9 Million Financing Fraud Scheme That Caused 18 Lenders to Lose $58.8 MillionRead the Press Release
CHICAGO — A former area motorcycle and recreational vehicle dealer and his accountant were sentenced to 13½ and 2½ years, respectively, in federal prison for a $75.9 million fraudulent financing scheme that resulted in 18 lenders losing more than $58.8 million, federal law enforcement officials announced today.
RUSSELL S. OTT, 51, of Oswego, who pleaded guilty to bank fraud and tax evasion, was sentenced on Dec. 3 to 13½ years in prison, beginning Jan. 20, 2015, and ordered to pay approximately $61.16 million in restitution to the victim financial institutions and the United States Treasury. Ott was the owner of Emily, Inc., which did business as Pro Source Motorsports and was located last in Morris, Ill. Between 1995 and October 2008, Pro Source, the dealership at the center of the scheme, sold new and used motorcycles, luxury motor homes, recreational vehicles, all-terrain vehicles, boats and jet skis. In 2007 and 2008, Ott also had ownership interests in Liberty Cycle in Libertyville, and Huntley Chevrolet in Libertyville.
BRIAN McMAHON, 55, of Naperville, who pleaded guilty to two counts of aiding and assisting the filing of Ott’s false tax returns, was sentenced today to 2½ years in prison, beginning Jan. 21, 2015, and ordered to pay $396,829 restitution to the U.S. Treasury. McMahon was Ott and Emily, Inc.’s certified public accountant, and he also owned Triumph Suzuki in Naperville between 2001 and 2004 when he sold it to Ott.
The sentences were imposed by U.S. District Judge Edmond E. Chang in Federal Court in Chicago.
Eight other co-defendants who acted as straw buyers in sham vehicle sales were charged with Ott and McMahon in August 2013. All eight have pleaded guilty and have been sentenced or are awaiting sentencing.
According to court documents, Ott’s bank fraud scheme involved two prongs: in one, Pro Source Motorsports fraudulently obtained more than $31.3 million in direct financing through five lines of credit from Fifth Third Bank, which lost more than $27.1 million; and, in the second, individual straw borrowers obtained just under 200 fraudulent loans totaling more than $44.58 million, which resulted in 18 financial institutions losing more than $31.66 million.
Ott and the straw buyers fraudulently obtained money for their personal use and benefit, enabling them to maintain lavish lifestyles, operate various businesses, and/or make investments. The money they obtained created the false appearance of personal wealth and helped induce the lenders to advance funds more readily due to their misplaced confidence that the defendants had sufficient personal wealth to repay the loans.
Ott and McMahon fabricated false personal and business tax documents and financial statements and provided them to Fifth Third Bank, which funded traditional “floor plan loans.” Ott faxed false flooring requests with fictitious vehicle identification numbers for non-existent recreational vehicles, or real VINs for actual RVs but with dramatically inflated values. Ott sometimes “double floored” vehicles by obtaining separate financing from Fifth Third and a different lender for the same vehicle.
Ott enlisted the eight straw borrowers to obtain fraudulent loan proceeds to share with him even though they did not actually purchase the vehicles ― usually very expensive RVs ― for which the loans were made and the vehicles generally did not exist. The lenders generally deposited the loan funds into Emily, Inc.’s bank account, and then Ott periodically disbursed the proceeds to straw borrowers to operate and support their own businesses and lifestyles, make investments, and make monthly payments on some of the loans to perpetuate the scheme.
Ott used fraudulently obtained funds to operate Pro Source, which lost money from approximately 2001 through 2008; and to make lavish purchases, including a house in Elburn for approximately $679,491 and subsequent improvements that increased the home’s cost to more than $1.1 million; a $258,000 vacation home in Butternut, Wis.; a $350,000 rental home in South Elgin; a Sky Hawk 172 Cessna airplane and hanger for approximately $200,000; and pick-up trucks and other vehicles for family members and employees of Pro Source. He also used the money to invest in and purchase other vehicle dealerships, including more than $3.6 million in Huntley Chevrolet, and more than $1 million in Liberty Cycle.
The sentences 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 James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.
The government is being represented by Assistant U.S. Attorney William Hogan.
Eight Defendants Charged with Distributing Heroin in Chicago Area on Behalf of Guerrero Unidos Mexican Drug CartelRead the Press Release
CHICAGO — An Aurora man who allegedly led the Chicago area cell of the Guerrero Unidos Mexican drug trafficking cartel is among eight defendants who are facing federal narcotics charges here for their alleged roles in distributing kilogram quantities of heroin, federal law enforcement officials announced today. The investigation, led by the Chicago DEA, resulted in the seizure of approximately 68 kilograms of heroin, nine kilograms of cocaine, and more than $500,000 in cash since August 2013.
The alleged cell leader, PABLO VEGA CUEVAS, 40, and his brother-in-law, ALEXANDER FIGUEROA, 37, both of Aurora, were arrested yesterday morning in southeast Oklahoma, and three other defendants were arrested in the Chicago area. Arrest warrants were issued for three additional defendants, including one who is believed to be in Mexico. Also yesterday, DEA agents and local police seized several automobiles and executed four federal search warrants at residences in Aurora, Chicago, and Rockford, as well as at a business tied to Vega, Salude Bienstar, in Aurora.
According to a 131-page complaint affidavit unsealed yesterday, Vega worked with various narcotics sources in Mexico to import wholesale amounts of heroin and cocaine from Mexico to Illinois, often concealing the narcotics in commercial passenger buses that traveled from Mexico to Chicago. Vega’s organization stored drugs at warehouses in Aurora and Batavia, distributed drugs to wholesale customers, and collected cash proceeds on behalf of the Guerrero Unidos, the charges allege.
“This operation strikes at a major Mexican drug trafficking organization that is alleged to have routinely distributed large quantities of heroin and cocaine throughout the Midwest,” said Dennis Wichern, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration. “These arrests will have a significant impact on the supply and distribution of heroin and cocaine in the Chicago area,” he said.
Vega and Figueroa appeared yesterday in Federal Court in Oklahoma and were ordered transferred to Chicago in custody. Arrested in the Chicago area yesterday were: ELISEO BETANCOURT PEREIRA, 50, of Aurora; ROBERTO SANCHEZ, 39, of Chicago; and ISAIAS MANDUJANO, 29, of Rockford. Those three appeared before U.S. Magistrate Judge Sidney I. Schenkier and remain in federal custody pending detention hearings that were scheduled for Thursday and Friday.
Arrest warrants remain outstanding for: WILFREDO FLORES-SANTOS, 43, of North Aurora; JOSE RODRIGUEZ, 31, of Chicago; and ARTURO MARTINEZ, 33 or 34, who is believed to be in Mexico.
According to the complaint affidavit, on Aug. 21, 2013, law enforcement officers discovered and seized approximately $200,000 in cash during a traffic stop of an individual in Chicago. A subsequent search of the individual’s residence yielded 12 kilograms of heroin and nine kilograms of cocaine, as well as an additional $231,000, all of which the individual had delivered and picked up on behalf of a courier for Vega’s organization. On June 7 of this year, approximately 25 kilograms of heroin and 60 grams of cocaine were seized from Rodriguez after Figueroa and Betancourt allegedly distributed the heroin to him. Three days later, approximately 31 kilograms of heroin were seized from another individual allegedly supplied by Figueroa and Betancourt.
All of the defendants except Mandujano were charged with conspiring between August 2013 and November of this year to possess and distribute a kilogram or more of heroin. The charge carries a mandatory minimum sentence of 10 years and a maximum of life in prison and a $10 million fine. Mandujano was charged with possession with intent to distribute 100 grams of more of heroin in April of this year, which carries a mandatory minimum sentence of five years and a maximum of 40 years in prison and $5 million fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The arrests and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Mr. Wichern, of the DEA. Police departments in Aurora, North Aurora, Addison, Arlington Heights, Chicago, Oak Lawn, Oswego, and Prospect Heights assisted in the investigation, as well as the Cook County Sheriff’s Police and the Internal Revenue Service Criminal Investigation Division. The investigation was conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF).
The government is being represented by Assistant United States Attorneys Nicole Kim and Georgia Alexakis.
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
Tri State Metal Company, Inc. Charged with Federal Tax and Currency Crimes Involving Millions of Dollars in Cash DealsRead the Press Release
CHICAGO — A Chicago company dealing in scrap metal has agreed to plead guilty to federal tax and currency transaction charges alleging that it engaged in cash transactions that resulted in underreporting its corporate income and underpaying its payroll taxes. The defendant, TRI STATE METAL COMPANY, INC., was charged in a criminal information filed today in U.S. District Court in Chicago. The case is the first prosecution resulting from an ongoing investigation of cash transactions in the local scrap metal industry being conducted by the Internal Revenue Service Criminal Investigation Division.
Tri State Metal, located at 1745 West Fulton St., in Chicago, was charged with one count of corruptly obstructing and endeavoring to obstruct and impede the IRS, and one count of structuring cash transactions in amounts less than $10,000. Through its attorneys, Tri State authorized the government to disclose that it will plead guilty to the charges. The company will be arraigned on a date to be determined in Federal Court.
The charges also include a forfeiture allegation claiming that $1.85 million in cash that was seized from a bank account and $118,420 in cash that was seized from Tri State’s offices, both in October 2012, are subject to criminal forfeiture.
According to the charges, between September 2008 and September 2012, Tri State obtained cash by negotiating checks made payable to fictitious individuals and used that cash to pay vendors and cash wages to employees, as well as to provide cash for the personal benefit of the deceased owner and president of Tri State, who was not named and was identified in the charges as Individual A. The cash transactions were designed to assist the vendors, employees and Individual A in understating their income on federal tax returns, the charges allege.
As part of the corrupt endeavor, Tri State sold scrap to another scrap metal dealer, identified as Business A and, in return, allegedly received approximately 769 checks from Business A, all made payable to fictitious individuals in amounts less than $10,000. Tri State allegedly failed to record these sales or the receipt of funds from Business A and failed to report the income on its corporate tax returns.
Individual A allegedly directed Tri State employees to issue checks payable to fictitious persons to obtain cash to pay vendors and employee wages. Tri State paid certain vendors with both cash and checks, with vendors indicating how much they wanted to be paid in cash, and Tri State employees allegedly manipulated documents to conceal the cash payments. During the four-year period, Tri State paid approximately 15 scrap metal vendors more than $6.17 million in cash, the charges allege.
The company also paid employees a portion of their wages with both cash and checks. Tri State issued tax forms to its employees and filed quarterly returns with the IRS that allegedly falsely underreported the amount of wages paid by failing to include the amount of cash. In total, Tri State allegedly paid its employees cash wages totaling more than $1.47 million and failed to collect and pay the IRS federal income tax withholdings, FICA taxes, and Medicare withholdings on the cash wages.
The charges further allege that Tri State cashed more than $6.41 million in checks drawn on its bank account and payable to fictitious payees at an unnamed currency exchange in Chicago. Tri State also allegedly cashed at the currency exchange more than $2.92 million in checks issued by Business A to Tri State in the name of fictitious payees.
Tri State allegedly filed false federal corporate income tax returns for 2009, 2010, and 2011, that understated its gross receipts or sales by more than $2.92 million. In addition, Tri State failed to report or otherwise account for approximately $840,720 in cash expenditures for the benefit of deceased Individual A, the charges allege.
The tax offense carries a maximum penalty of five years’ probation and a $500,000 fine, and the structuring offense carries a maximum penalty of five years’ probation and a $1 million fine, and each count carries an alternate maximum fine totaling twice the loss or twice the gain, whichever is greater. 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 James C. Lee, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago. The government is being represented by Assistant U.S. Attorney Patrick King.
The public is reminded that criminal charges are 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
Two Former Will County Bank Officials Plead Guilty to Concealing Loan Delinquencies of Two CustomersRead the Press Release
CHICAGO — A former officer and a former director of a bank in Will County have pleaded guilty to federal charges for fraudulently creating false reports that made it appear that the bank’s loan portfolio was in better shape than it actually was. The defendants together concealed delinquent loan payments on behalf of two customers whose multiple loans totaled approximately $2.8 million, and together caused the bank to lose more than $1.1 million, according to their guilty pleas that were announced today by federal law enforcement officials.
One defendant, MARTIN E. SCHMIDT, JR., 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 in Will County. Co-defendant, DONNA M. BARBER, was vice president for mortgage lending. First Community Bank and Trust cooperated with the federal investigation.
Schmidt, 57, of Beecher, pleaded guilty on Nov. 13 to making false bank reports and is free on his own recognizance pending sentencing on Feb. 26, 2015. Barber, 53, of Beecher, pleaded guilty to the same charge last Thursday and is free on her own recognizance pending sentencing on March 17, 2015. Both will be sentenced by U.S. District Judge Charles Kocoras in Federal Court in Chicago. They were charged together in a criminal information that was filed in late October.
Making false bank reports carries a maximum penalty of 30 years in prison and a $1 million fine. Schmidt’s plea agreement anticipates an advisory United States Sentencing Guidelines range of 41 to 51 months in prison. Barber’s plea agreement anticipates an advisory guidelines range of 33 to 41 months in prison, with the government recommending a sentencing of approximately 22 months provided she continues to fully cooperate.
In addition, Schmidt and Barber each face a 10-year prohibition on directly or indirectly participating in the affairs of any federally insured credit union or financial institution.
In pleading guilty, 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 nine of Customer K’s loans and advances in the total principal amount of approximately $367,000, and 39 of Customer M’s loans 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.
Schmidt alone caused an unauthorized, undocumented advance of approximately $105,562 to be disbursed to Customer K to make payments on other delinquent loans. He also approved approximately $269,038 in loans to Customer K at a time when he knew that Customer K was unable to repay these loans. Schmidt also caused Barber to make entries in Customer K’s account records that allowed Schmidt to make unauthorized disbursements to Customer K.
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.
Schmidt caused the bank to lose more than $1.18 million resulting from both customers’ delinquent loans, which would not have been extended and would have been called in default at an earlier time, as well as by issuing an authorized $80,000 letter of credit and improperly guaranteeing $22,500 in insufficient funds checks for Customer K. Schmidt and Barber were responsible for causing the bank to lose approximately $708,274 relating to Customer M’s loans, while Schmidt alone was responsible for the bank’s loss of approximately $475,100 resulting from Customer K’s loans.
The government is being represented by Assistant U.S. Attorney Brian Netols.
The guilty pleas were 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.
Schmidt Plea Agreement
Barber Plea AgreementFutures Trader Indicted for Allegedly Stealing Computer-Stored Trade Secrets from His Former Chicago Trading FirmRead the Press Release
CHICAGO — A former futures trader at an unnamed trading firm in Chicago was indicted on federal charges for allegedly stealing trade secrets from the firm, including computer code for electronic trading and strategies and other intellectual property. The defendant, DAVID JACOB NEWMAN, was charged with three counts of theft of trade secrets in an indictment returned by a federal grand jury yesterday and made public today.
Newman, 32, of Chicago, began working at the trading firm as a clerk in 2004 and later as a trader until he left in March of this year, less than a week after he collected his 2013 bonus. Newman will be ordered to appear for arraignment on a date to be determined in U.S. District Court in Chicago.
According to the indictment, the trading firm’s trade secrets included custom-made software for pricing financial products, communicating and executing trades on public exchanges, and analyzing trading risk. They also included trading algorithms, trading profit and loss analysis, and the firm’s options modeling system. Most of the computer code the firm used for trading was custom-made by its employees or consultants, and the firm invested considerable time and money in developing its computer code and intellectual property. In 2011, Newman signed a document acknowledging that he understood the firm’s policies regarding protection of its trade secrets and proprietary information, and at no time was he authorized to copy or possess the firm’s trade secrets.
On Oct. 31, 2013, Newman allegedly accessed and copied computer files from a firm directory, containing trading algorithms, strategies, and analysis, onto a personal thumb drive. On Nov. 5, 2013, Newman accessed and copied additional files containing such information from four firm directories used by four specific traders onto a personal thumb drive, the indictment alleges. A week later, Newman established NTF LLC and was the sole owner and only member of the limited liability company.
On Feb. 24 of this year, Newman allegedly accessed and copied more than 400,000 computer files from the trading firm’s source code repositories onto a personal thumb drive. Three days later, Newman signed an agreement with the CME Group to allow NTF LLC to establish its own interface with CME online trading platforms.
A day after Newman resigned from the trading firm in March, he established an account enabling NTF LLC to trade speculatively in the futures markets, the indictment states.
Each count of theft of trade secrets carries a maximum penalty of 10 years in prison and a $250,000 million fine. If convicted, restitution is mandatory and the court must impose a reasonable sentence under federal 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 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. Attorney Clifford C. Histed, deputy chief of the Securities and Commodities Fraud Section of the U.S. Attorney’s Office.
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
Former Illinois State Rep. Keith Farnham Pleads Guilty to Transporting Child PornogrphyRead the Press Release
CHICAGO — Former Illinois State Rep. KEITH FARNHAM pleaded guilty today to a federal charge of transporting child pornography via computers in his office and residence in Elgin last year. Farnham resigned his seat in the Illinois General Assembly in March of this year, less than a week after federal agents seized computers from his home and office.
Farnham, 67, of Elgin, remains on restrictive conditions of bond, including home incarceration with electronic monitoring, while awaiting sentencing, which U.S. District Judge Edmond E. Chang scheduled for March 19, 2015, in Federal Court.
Farnham, who must register as a convicted sex offender, faces a mandatory minimum sentence of five years and a maximum of 20 years in prison and a maximum fine of $250,000. His plea agreement states that the government anticipates a United States Sentencing Guidelines range of at least 151 to 188 months in prison. Federal inmates must serve at least 85 percent of their sentence and there is no parole in the federal prison system.
In pleading guilty, Farnham admitted that on Nov. 25, 2013, he sent an email from a computer in his Elgin office with the following message: “do you trade. This is what I lik.” Farnham attached two files to the email that he knew contained child pornography. In addition, he possessed images and videos depicting child pornography on computers and electronic storage devices in his residence, car and offices.
On March 13 of this year, agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) executed federal search warrants at Farnham’s state office and residence in Elgin and seized computers and electronic storage devices. On that day, Farnham possessed no fewer than 2,765 images of real minors engaged in sexually explicit acts, including sexual intercourse, with prepubescent children. Some of the images involved sadistic or masochistic conduct and depictions of violence, according to Farnham’s guilty plea.
According to the court documents, HSI agents were investigating information received from the HSI Cyber Crimes Center that an email address, later linked to Farnham, was being used to trade child pornography on the Internet.
The guilty plea 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 government is being represented by Assistant U.S. Attorneys Timothy Storino and Michelle Petersen.
Plea Agreement
Two Men, Including Maryland Attorney, Indicted for Allegedly Defrauding 125 Business Owners of $2 Million in “Advance Fees”Read the Press Release
CHICAGO — Two principals of a defunct suburban company that purported to have billions of dollars to finance small businesses were indicted on federal fraud charges for allegedly swindling about $2 million in advance fees from approximately 125 business owners nationwide. With no such assets and no history of funding small businesses, the defendants instead allegedly used the money they collected for personal purposes, including more than $1.1 million in so-called “loans” to themselves and others.
One defendant, ALBERTO B. COLÓN, was the chairman of the board and chief executive officer, while the other defendant, ARTEMIO RIVERA, was the treasurer and chief corporate counsel of the Commercial or Residential Development Group, Inc., also known as COR, which had a mailing address in Hoffman Estates.
Colón, 46, of West Dundee and formerly of Elgin, and Rivera, 56, of Falls Church, Va., who is a licensed attorney in Maryland, were each indicted on four counts of wire fraud and one count of mail fraud in a five-count indictment returned yesterday by a federal grand jury in Chicago. The indictment also seeks forfeiture of approximately $2 million from both defendants, who will be ordered to appear for arraignment on a date to be determined in U.S. District Court in Chicago.
According to the indictment, Colón and Rivera defrauded business owners between September 2008 and December 2011 by making false representations that COR had billions of dollars in assets and would provide business owners with billions of dollars in funding; provide the funding within a specific time period; use the advance fees they collected for specific purposes related to the business owners’ requests; and refund the fees if COR failed to provide funding. Both defendants knew that COR had no such assets and no history of funding businesses, the indictment alleges.
The defendants allegedly solicited business owners themselves and also used individuals they sometimes referred to as “rangers” to solicit business owners to apply for funding. They fraudulently represented that COR had approved requests for funding in amounts ranging from $100 million to $1.2 billion, knowing that they had not secured funding for those projects, the charges allege.
Colón and Rivera also allegedly promised business applicants who signed so-called “Project Partner Agreements” and paid an advance fee of $20,000 that COR would apply the advance fee toward the creation of a new corporation, trust, and foundation to accept funding from COR. Further, the charges allege that they falsely promised COR would contribute an additional $80,000 to the funding entities in exchange for signing project agreements.
As part of the scheme, Colón and Rivera allegedly made false statements in proceedings before the Illinois Department of Securities.
Each count of wire and mail fraud carries a maximum penalty of 20 years in prison and a $250,000 million fine, or, alternatively, a fine totaling twice the loss or twice the gain, whichever is greater. If convicted, restitution is mandatory and the court must impose a reasonable sentence under federal 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 Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Illinois Department of Securities cooperated with the investigation.
The government is being represented by Assistant U.S. Attorney Cristopher McFadden.
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
Alderman’s Former Chief of Staff Pleads Guilty to Accepting $7,500 Bribe in Exchange for Letters of Support for Liquor LicenseRead the Press Release
CHICAGO — A former chief of staff for an unnamed Chicago alderman pleaded guilty today to accepting a $7,500 cash bribe in exchange for obtaining the alderman’s letters of support for a license to sell alcohol in the alderman’s ward. The defendant, CURTIS V. THOMPSON, JR., accepted the bribe from an individual who claimed he wanted to open a convenience store but was actually a cooperating witness in an FBI undercover investigation.
Thompson, 63, of Chicago, pleaded guilty to federal program bribery. 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 on Dec. 19, 2013. Thompson admitted today that he used the money he received to pay personal expenses.
Thompson faces a maximum sentence of 10 years in prison and a $250,000 fine. A written plea agreement states that the government anticipates a United States Sentencing Guidelines range of 12 to 18 months in prison. Thompson was arrested in February of this year and is free on bond while awaiting sentencing, which U.S. District Judge Samuel Der-Yeghiayan scheduled for March 17, 2015, in Federal Court.
Thompson’s plea agreement and court documents describe a series of telephone conversations and in-person meetings between the cooperating witness and other individuals, including a meeting with Thompson on Oct. 7, 2013, in the alderman’s ward office. During the meeting, the cooperating witness showed Thompson a note, which stated, “$7,500 to Ald for L.O.S.” Thompson understood the note to mean payment of $7,500 in exchange for a letter of support from the alderman for a liquor license for a store to be opened in the ward. After seeing the note, Thompson nodded his head and said “Okay. I understand.”
At a meeting with Thompson, the alderman, and another individual in the ward office on Oct. 29, 2013, the cooperating witness handed the alderman a note, which stated, “$12k to you for letter of support[.]” Thompson admitted that he was passed that note and that he understood that the cooperating witness was offering to pay money for a letter of support from the alderman for a liquor license. A third meeting was held on Nov. 19, 2013, at which the cooperating witness explained he was going through the process of becoming a convenience store franchisee.
Over the next few weeks, Thompson prepared two letters of support on the alderman’s letterhead and signed the alderman’s name, after seeking and obtaining the alderman’s approval to write the letters. Thompson knew that the cooperating witness had picked up the letters of support from the alderman’s ward office and understood they would be used to obtain a liquor license for the proposed store. The bribe payment was exchanged a short time later.
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 the Federal Bureau of Investigation.
The government is being represented by Assistant U.S. Attorneys Megan Church and Bethany Biesenthal.
Plea Agreement
Former Suburban Chicago Home Builder Sentenced to 30 Months in Prison for Failing to Pay $1.27 Million in Federal Income TaxesRead the Press Release
CHICAGO — A former west suburban home builder was sentenced to 2½ years in federal prison for failing to pay more than $1.27 million in federal income taxes and concealing certain business interests in his personal bankruptcy case. The defendant, DENNIS WEISS, was sentenced after pleading guilty last year to one count each of filing a false federal income tax return and making false statements in a bankruptcy petition.
Weiss, 64, of South Elgin and formerly of St. Charles, owned Custom Homes by D. R. Weiss, Inc., and Reliable Home Solutions, Inc., both formerly located in St. Charles. He was sentenced to 30 months in prison and was ordered to begin serving his sentence in January. He was also ordered to pay $296,643 in restitution to the Internal Revenue Service by U.S. District Judge John Z. Lee, who imposed the sentence yesterday in Federal Court.
According to court documents, Weiss filed false individual federal income tax returns for 2005 through 2009, and he failed to file corporate tax returns for both of his companies. Although he filed corporate tax returns on behalf of Custom for 1999 through 2004, he filed none starting in 2005. Reliable was formed in 2006 and dissolved in 2008, and Weiss never filed a corporate return on its behalf and concealed the company’s existence from his tax preparer.
Between 2005 and 2009, Weiss paid personal expenses from Custom’s business bank account, accepted cash payments from Custom and Reliable customers, and failed to record the receipt of these funds on the books and records of the corporations, resulting in a total federal tax loss of $1,271,280.
On March 10, 2009, Weiss filed a personal bankruptcy petition and intentionally concealed the existence of Melrose Currency Exchange, Inc., which he had owned for several years. In fact, Weiss had reported income from the currency exchange on his individual tax returns for 2005-2009. Court documents also state that Weiss also falsely declared that he had no interest in any partnerships or joint ventures when, in fact, he held interests in three family held entities: Royal Fox Country Club LP, Royal Fox Country Club LP II, and Weiss Private Equity LP. His false bankruptcy petition resulted in the discharge of his debts to approximately 43 trade creditors. (In re Dennis R. Weiss, 09 B 08028.)
The sentence was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and James C. Lee, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago. The government was represented by Assistant U.S. Attorney Patrick King.
In addition to criminal penalties, defendants convicted of tax offenses remain responsible for any taxes and interest due, as well as civil penalties of up to 75 percent of the tax owed.
Sinaloa Cartel Member Sentenced to 22 Years in Federal Prison; Plea Agreements Unsealed for Leaders of Cartel’s Chicago CellRead the Press Release
CHICAGO — A high-level member of the Sinaloa Cartel in Mexico was sentenced today to 22 years in federal prison and, separately, guilty pleas were unsealed in the same case for twin brothers who ran the cartel’s Chicago distribution cell and supplied vast quantities of cocaine and heroin in cities across the United States and Canada.
At a sentencing hearing this afternoon, the government argued that ALFREDO VASQUEZ HERNANDEZ, 59, coordinated the use of airplanes, trains, and submarines for the Sinaloa Cartel to transport cocaine from Central and South America to Mexico, as well as from Mexico into and throughout the United States. Vasquez Hernandez was placed on court supervision for five years after he is released from his 264-month sentence. He must serve at least 85 percent of his sentence and is subject to deportation following his release from custody.
Vasquez Hernandez, who was extradited from Mexico in 2012, pleaded guilty in April this year to participating in the Sinaloa Cartel drug distribution conspiracy between May 2005 and December 2009. In imposing sentence, U.S. District Chief Judge Ruben Castillo said he would have sentenced Vasquez Hernandez to 25 years but gave him credit for the time he was held in Mexico.
“We are tired, tired of drug trafficking and it continues to hurt this city and this country,” Judge Castillo said. The judge noted it was difficult to determine Vasquez Hernandez’s role in the cartel, but said it was undeniable that he involved himself in a major shipment of drugs that was headed to Chicago.
In pleading guilty without a plea agreement, Vasquez Hernandez admitted that he was responsible for smuggling only 276 kilograms of cocaine to Chicago in November 2008 for sale to twin brothers PEDRO and MARGARITO FLORES, who, unbeknownst to Vasquez Hernandez and co-conspirators, were cooperating with the U.S. Drug Enforcement Administration.
Also today, plea agreements that the Flores brothers, both 33, entered into when they pleaded guilty in August 2012 were unsealed and made public for the first time in advance of their anticipated sentencing next month in U.S. District Court.
According to the Flores brothers’ plea agreements, they and the Chicago distribution crew they controlled obtained and distributed from Chicago, Los Angeles, and elsewhere, on average, 1,500 to 2,000 kilograms of cocaine a month at certain times during the conspiracy and received some or all of that quantity from factions of the Sinaloa Cartel led by Joaquin Guzman Loera, also known as “Chapo,” and Ismael Zambada Garcia, also known as “Mayo.” Using several warehouse locations in the Chicago area to unload and store shipments of cocaine and heroin, the Flores brothers and their crew sold the narcotics to wholesale customers in the Chicago area, as well as to customers in Milwaukee, Detroit, Cincinnati, Columbus, Philadelphia, New York, Washington, D.C., as well as Vancouver, British Columbia.
During the course of their conspiracy, the brothers admitted that they and their crew were responsible for transporting $938,415,000 in narcotics proceeds, in the form of bulk U.S. currency, from the United States to Mexico.
According to their plea agreements and a preliminary forfeiture order that was filed today, the Flores brothers agreed to forfeit more than $3.6 million in cash that was seized from them, in addition to more than $400,000 worth of assorted jewelry, several luxury automobiles, smaller amounts of cash, and electronics equipment, all of which were seized and forfeited in an administrative process by the DEA.
If Judge Castillo accepts their plea agreements and grants the government’s motion at sentencing next month, then he must sentence the Flores brothers to prison terms ranging between 10 and 16 years in federal custody.
At Vasquez Hernandez’s sentencing today, the government argued that he worked directly with Chapo Guzman and the Flores brothers to smuggle cocaine from place to place using various modes of transportation, including, for example, large cargo planes to fly more than 20 tons of cocaine directly from Columbia to Mexico. Vasquez Hernandez specialized in using trains to smuggle drugs into the United States and transporting them to Chicago hidden in rail cars.
“This case is about drug trafficking at the highest levels at which it exists in the world. [Vasquez Hernandez] conspired directly with Chapo Guzman and other leaders of the Sinaloa Cartel to traffic ton quantities of cocaine that were ultimately distributed into the United States. The direct and indirect damage that those drugs have caused to communities in Chicago and elsewhere is immeasurable,” a team of federal prosecutors argued in a sentencing memo.
The Vasquez Hernandez sentencing and Flores brothers’ plea agreements were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Dennis Wichern, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration.
The DEA in Chicago led the investigation, joined by the Internal Revenue Service Criminal Investigation Division and the Chicago Police Department. Also assisting were the DEA’s National Drug Intelligence Center, the Chicago High-Intensity Drug Trafficking Area task force, the U.S. Attorney’s Office in Milwaukee and the Milwaukee Police Department; the U.S. Attorney’s Office for the Central District of Illinois; the Chicago and Peoria offices of the Federal Bureau of Investigation; the Chicago office of the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and the U.S. Marshals Service; the Cook County Sheriff’s Department, and other state and local law enforcement agencies. The investigation was assisted by agents and analysts of the Special Operations Division (SOD), and attorneys from the Justice Department Criminal Division’s Narcotic and Dangerous Drug Section. The Criminal Division’s Office of International Affairs assisted with the extraditions.
The government is being represented by Assistant U.S. Attorneys Michael J. Ferrara, Erika Csicsila, Naana Frimpong, Georgia Alexakis, Kathryn Malizia, and Thomas D. Shakeshaft.
Former Owner of Defunct Chicago Rush Arena Football Team Arrested on Federal Bankruptcy and Wire Fraud ChargesRead the Press Release
CHICAGO — The former owner of the defunct Chicago Rush Arena Football League team was arrested today on federal fraud charges for allegedly concealing certain business interests and assets from creditors and overstating his net worth in connection with his purchase and operation of the indoor football team in 2013. DAVID STARAL, JR., was charged with one count each of bankruptcy fraud and wire fraud in a criminal complaint that was filed Friday in U.S. District Court and unsealed this morning following his arrest at his residence in Kenosha, Wis.
Staral, 35, formerly of Chicago, is scheduled to appear at 11:30 a.m. today before U.S. Magistrate Judge Geraldine Soat Brown in Federal Court.
The bankruptcy fraud count alleges that Staral schemed to discharge more than $900,000 in unsecured debt, while concealing from his creditors and the bankruptcy trustee additional businesses he was involved with, income he had received before filing for bankruptcy, and at least two personal bank accounts that he had when he filed a voluntary bankruptcy petition on Jan. 7, 2013. Staral allegedly failed to disclose in his bankruptcy filings his interest in an investment company called Star Julin Equity Partners and testified falsely under oath in a bankruptcy proceeding that he was unemployed and had no occupation after he had just purchased, and was serving as the manager of, the Chicago Rush.
Staral allegedly fraudulently purchased the Chicago Rush when, during purchase negotiations in February 2013, he falsely represented to the Arena Football League’s commissioner that he had a personal net worth of more than $5 million. In fact, Staral had filed for bankruptcy the month before and claimed to have a negative net worth. The purpose of Staral’s scheme was to enable him to purchase the Chicago Rush and benefit financially from ownership, while concealing that he did not have the financial ability to purchase and operate the team, according to an FBI affidavit.
Staral knew the requirements imposed upon him when filing for bankruptcy because he had previously filed a Chapter 7 bankruptcy petition in June 2002, resulting in the Bankruptcy Court discharging approximately $280,000 in debts and providing him with a fresh start, the affidavit states.
In 2012, Staral defrauded two individual investors in separate swindles, the complaint alleges as background. In February 2012, Staral obtained $39,000 from Individual A to use in opening two bars/restaurants in the Chicago area and never made the interest payments he promised or returned the principal, and instead used the money for his own benefit. In September 2012, Staral obtained $50,000 from Individual B and, instead of investing and trading the funds as he promised, Staral used the money to pay down a car loan, to generate cash for himself, and to pay personal expenses, among other things.
When Staral filed for bankruptcy in January 2013, he listed assets totaling $477,901, which were highly encumbered, and liabilities totaling more than $1.35 million, consisting primarily of mortgage and credit card debt and legal judgments against him. (In re David Staral, 13 B 585).
Staral’s bankruptcy filings allegedly concealed two bank accounts, as well as the fact that he had received $50,000 from Individual B and he did not list Individual A as a creditor. He also allegedly concealed his interest in Star Julin Equity Partners, an investment company he formed with Individual A just two months before the bankruptcy filing, Eventmark LLC, the bar/restaurant investment entity he managed, and his prior interest in FoodFunds, Inc. The alleged concealment and false statements prevented the bankruptcy trustee from properly administering Staral’s bankruptcy estate and prevented the trustee and creditors from conducting a proper inquiry into Staral’s assets and ability to pay creditors, the affidavit states.
In negotiations to purchase the Chicago Rush through Star Rush Football LLC, Staral allegedly claimed a personal net worth in excess of $5 million and did not disclose that he had filed for bankruptcy one month earlier, among other things. The commissioner of the Arena Football League told agents that the league would not have agreed to sell the team to Staral had it known about Staral’s alleged misrepresentations.
The charges further allege that Staral deposited approximately $5,000 from the sale of Chicago Rush tickets into his personal bank account and used some of the proceeds to cover personal expenses, including grocery and pharmacy payments, gas stations, and his car loan.
At a Bankruptcy Court creditors’ meeting on March 1, 2013, Staral allegedly made false statements under oath when he was questioned about his bankruptcy filings, knowing that he had concealed certain assets, failed to disclose certain debts, and failed to disclose his purchase of the Chicago Rush, among other things.
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 Chicago Office of the Federal Bureau of Investigation. The U.S. Trustee Program’s Chicago office assisted in the investigation.
Bankruptcy fraud carries a maximum of five years in prison and wire fraud carries a maximum of 20 years in prison, and each counts carries a maximum $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 Matthew F. Madden.
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
Six Defendants Indicted in Alleged Plot to Collect $40,000 Business Debt by Assaulting Former Restaurant EmployeeRead the Press Release
CHICAGO — Six men were indicted on federal charges alleging a plot to force a former employee of a now-closed suburban restaurant to pay a business debt of approximately $40,000, federal law enforcement officials announced today. On June 1 of this year, five of the six defendants allegedly physically assaulted the victim outside a different restaurant in Aurora, where the victim was working at the time, simultaneously punching and kicking him in the head and body after he was knocked to the ground.
All six defendants were charged with one count of conspiracy to collect credit by extortionate means, and five of the six were also charged with one count of extortionate collection of credit by the use of violence and threats of violence, in a two-count indictment that was returned by a federal grand jury yesterday.
An arrest warrant is outstanding for JINHUANG ZHENG, 31, aka “Benny,” of Indianapolis, who was an owner and employee of a restaurant supply company in Indianapolis. MINGRUI SUN, 20, of Chicago, was arrested today, and BING LIANG CHEN, 26, also known as “Michael,” and DANIEL ZHU, 19, both also of Chicago, were arrested in August. JACK WU, 24, of Chicago, voluntarily surrendered today, and SHENG QUAN DONG, 41, aka “Peter,” is scheduled to be arraigned on Wednesday in U.S. District Court. Sun, Chen, Zhu, and Wu all remain in federal custody pending further court proceedings.
According to the indictment, before June 1, the victim was an employee of Restaurant A, which had locations in Naperville and Lombard, both of which are now closed. Restaurant A owed approximately $40,000 to Zheng’s Company A in Indianapolis. At the time of the attack, the victim worked at Restaurant B in Aurora, which had no affiliation with Restaurant A.
In May of this year, Zheng allegedly discussed the business debt with Dong and showed him paperwork evidencing the debt. In May and early June, Zheng and Dong allegedly recruited Chen, Zhu, and Sun to help collect the debt owed to Company A from the victim. On June 1, these five defendants met in Chicago’s Chinatown neighborhood to discuss the debt, agreed to work together to obtain payment from the victim through violence and threats of violence, and then traveled together to Aurora to confront the victim and to intimidate him into paying the debt, the indictment alleges.
During the June 1 assault, one of the defendants allegedly told the victim, in essence, that if he did not pay, he was going to die.
After the victim refused to pay the debt and was beaten, Chen allegedly recruited Wu ― agreeing to pay Wu $2,000 ― to return to the Aurora restaurant with him to again threaten the victim into paying the debt. In June and July, Chen and Wu allegedly drove to Aurora three times to confront the victim about the debt. On July 9, Chen allegedly threatened to break the windows of Restaurant B if another employee did not provide the victim’s telephone number. That same day, Chen and Wu allegedly followed the second employee to that employee’s home in an effort to learn where the victim lived.
The arrests 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 Chicago Office of the Federal Bureau of Investigation. The Chicago and Aurora police departments assisted in the investigation.
Each count of the indictment carries a maximum penalty of 20 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 Steven Dollear.
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 Police Officer Indicted for Alleged Civil Rights Excessive Force Violation and Obstruction of JusticeRead the Press Release
CHICAGO ― A Chicago Police officer was indicted on federal civil rights and obstruction charges alleging that he used excessive force by punching and kicking a victim and then lied in a police report to cover up the incident in 2012, federal law enforcement officials announced today. The defendant, ALDO BROWN, was indicted on one count of violating the unnamed victim’s civil rights to be free from unlawful seizures and the use of unreasonable force by a law enforcement officer and two counts of obstruction of justice.
Brown, 37, joined the Chicago Police Department in December 2002. He will be arraigned on a date yet to be scheduled in U.S. District Court.
The three-count indictment was returned by a federal grand jury yesterday and 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. The Independent Police Review Authority cooperated with and assisted in the investigation.
According to the indictment, on Sept. 27, 2012, Brown and Officer A entered a convenience store located on East 76th Street in Chicago. When they arrived, the officers placed certain individuals inside the store in handcuffs, including Victim A. Brown and Officer A then began searching the store and the individuals inside. Shortly after Officer A removed the handcuffs from Victim A, Brown allegedly struck Victim A multiple times, resulting in bodily injury.
While Victim A was lying face down on the floor of the store, again in handcuffs, Brown recovered a firearm from Victim A’s rear pants pocket. Then, while Victim A was still handcuffed and lying face down, Brown allegedly kicked Victim A. Brown and Officer A then arrested Victim A.
One obstruction of justice count alleges that Brown made false statements in a tactical response report, including that Victim A was an “active resister,” who “fled” and “pulled away,” but the report did not indicate that Brown punched or kicked Victim A. Brown allegedly knew that Victim A did not actively resist, attempt to flee the situation, or pull away, and Brown knew that he punched and kicked Victim A.
The second obstruction count alleges that Brown lied in an arrest report, which falsely stated, in part, that:
P.O. Brown approached the above subject to conduct a field interview at which time the above subject stated to P.O. Brown, “I got some weed on me” and reached toward his rear pants pocket at which time P.O. Brown observed a handgun inside the above subject rear pants pocket. P.O. Brown conducted a emergency take down for officer safety and recovered the gun from the above subject rear pants pocket. The above subject was trying to pull away from P.O. Brown at which time P.O. Brown delivered a open hand stun to gain control of the above subject…
Brown allegedly knew the arrest report was false for multiple reasons, including that he did not observe a firearm on Victim A at the time of a field interview; he did not know that Victim A had a firearm in his possession until after he struck Victim A multiple times, handcuffed him for a second time, and Victim A was lying on the floor of the convenience store; and Victim A did not pull away from him as the arrest report indicated.
The civil rights count carries a maximum sentence of 10 years in prison, and each count of obstruction of justice carries a maximum of 20 years in prison, and there is a $250,000 maximum fine on all three counts. 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 Nancy DePodesta.
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
Rockford Man Sentenced to 14 Years in Prison for Drug TraffickingRead the Press Release
ROCKFORD — A Rockford, Ill. man was sentenced yesterday in federal court by U.S. District Judge Frederick J. Kapala on a federal drug trafficking charge. The defendant, MICHAEL CRAIG, 44, was sentenced to 169 months in federal prison, to be followed by 5 years of supervised release. Craig has been in federal custody since his arrest on March 15, 2013.
Craig pleaded guilty to the charge on March 21, 2014. According to the written plea agreement, from June 1, 2010 through January 5, 2012, Craig ran a heroin trafficking organization in Rockford and conspired with his co-defendants, Michael W. Charles, Elbert Charles Dixon, Melvin Bradley, Denise Lambert, Devon Zachary and Jose Melendez, to distribute more than 1 kilogram of heroin. The plea agreement noted that Craig and Melendez pooled their money and traveled together to obtain heroin from their suppliers in Chicago and that Craig then provided the heroin to Charles, Dixon, Zachery and others to distribute in Rockford. The plea agreement further noted that Lambert aided Craig in his heroin trafficking operation by storing Craig’s heroin and heroin trafficking proceeds at her apartment in Rockford. Craig also admitted as part of the plea agreement that he directed Charles and Dixon to distribute heroin to a witness who was secretly cooperating with law enforcement on two occasions in June 2011. Craig was also ordered to repay $2,300 in Abuy@ money used in the undercover operation.
Co-defendants Charles, Dixon, Bradley Lambert, Zachary and Melendez all previously pleaded guilty to conspiring to distribute heroin. On May 28, 2014, Charles was sentenced to 151 months’ imprisonment. On May 23, 2014, Dixon was sentenced to 70 months’ imprisonment. On May 9, 2014, Bradley was sentenced to 18 months’ imprisonment. On May 6, 2014, Zachery was sentenced to 124 months’ imprisonment. On November 13, 2014, Jose Melendez was sentenced to 135 months imprisonment. Lambert is awaiting sentencing and is facing a maximum sentence of 20 years’ imprisonment, in addition to a maximum fine of up to $1 million for her involvement in the conspiracy. The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The sentencing 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; Carl Vasilko, Special Agent-in-Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms, & Explosives; Richard Meyers, Winnebago County Sheriff; Chet Epperson, Chief of the Rockford Police Department; and Hiram Grau, Director of the Illinois State Police.
The government is being represented by Assistant U.S. Attorney Joseph C. Pedersen.
Chicago Man Charged with Additional Bank Robberies in Huntley and PeotoneRead the Press Release
ROCKFORD — A Chicago resident is now facing three federal bank robbery charges, federal officials announced today. ADAM A. SANBORN, 29, of Chicago and formerly of Milton, Florida, was originally arrested on Sept. 10, 2014, and charged with the Aug. 23, 2014, robbery of the Byron Bank in Davis Junction, Illinois. The federal grand jury in Rockford returned an indictment against Sanborn on Sept. 23, 2014, charging him with that robbery.
Today, 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, announced that the federal grand jury in Rockford returned a superseding indictment charging Sanborn with the robbery of the Byron Bank as well as the robbery of the First Community Bank and Trust in Peotone, Illinois, on Feb. 24, 2014, and the robbery of the Heartland Bank in Huntley, Illinois, on April 25, 2014. Sanborn will appear before U.S. Magistrate Judge Iain D. Johnston on Nov. 20, 2014, at 11:00 a.m. and be arraigned on all three charges contained in the superseding indictment. Sanborn has remained in custody since his initial arrest on Sept. 10, 2014.
United States Attorney Fardon praised the teamwork of the FBI and the Ogle County Sheriff’s Office, Huntley Police Department, and the Peotone Police Department in conducting the investigation.
Each bank robbery charge carries a maximum sentence of 20 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 U.S. Attorney John G. McKenzie.
The public is reminded that a superseding 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 will have the burden of proving guilt beyond a reasonable doubt.
Superseding Indicmemt
Chicago Man Indicted on Federal Charges for Allegedly Illegally Selling and Possessing FirearmsRead the Press Release
CHICAGO ― A Chicago man was indicted on federal firearms charges alleging that he illegally sold firearms and illegally possessed nearly two dozen firearms, including assault rifles, handguns, and shotguns earlier this year. All of the firearms were seized by ATF agents following alleged purchases by an undercover confidential source, federal law enforcement officials announced today.
The defendant, JIMMY WRIGHT, also known as “Lil Man,” 28, of Chicago, was charged with one count of selling firearms without a federal firearms dealer license and eight counts of being a convicted felon-in-possession of 22 firearms in a nine-count indictment returned yesterday by a federal grand jury.
Wright has remained in federal custody since he was arrested on Oct. 7 and charged in a criminal complaint. He will be arraigned on a date to be determined in U.S. District Court in Chicago.
According to the charges, between July 21 and Sept. 22, 2014, Wright illegally sold firearms without a federal license. According to the complaint affidavit, the confidential source purchased at least 12 firearms from Wright on six different dates between July 22 and Sept. 2. These firearms included two assault rifles, seven handguns, two shotguns, and a “Tec 9” semi-automatic handgun with an obliterated serial number and an extended magazine.
The eight felon-in-possession counts allege that Wright illegally possessed a total of 22 firearms on eight different dates between July 22 and Sept. 22 of this year.
The indictment 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; and Garry McCarthy, Superintendent of the Chicago Police Department.
Each count of being a felon-in-possession of firearms carries a maximum sentence of 10 years in prison, and selling firearms with a federal license carries a maximum sentence of five years in prison, and all nine counts carry a maximum fine of $250,000. 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 Timothy Storino.
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
Suburban Chicago Man Sentenced to 37 Months in Prison for Failing to Pay Taxes on $3.1 Million in Income over Eight YearsRead the Press Release
CHICAGO — A southwest suburban man was sentenced to just over three years in federal prison for failing to report more than $3.1 million in gross receipts and gambling income and failing to pay more than $582,000 in federal income taxes. The defendant, PAUL WEST, was sentenced after pleading guilty in August of this year to two counts of filing a false federal income tax return.
West, 62, of Lockport and formerly of Frankfort, also known as “Thomas Wilson,” and “Tom Wilson,” was in the business of selling materials for recycling, including scrap cardboard. In 2007 and 2011, West under-reported his income from his recycling services and gambling, reporting that he owed little or no taxes. For six other years between 2004 and 2011, he failed to file any individual income tax returns, despite gross receipts and gambling income over all eight years totaling $3,190,741.
West was sentenced to 37 months in prison and ordered to pay $582,934 ― the amount of taxes he owed ― in restitution to the Internal Revenue Service. U.S. District Judge Andrea R. Wood, who imposed the sentence last Friday in Federal Court, ordered West to begin serving his sentence on Jan. 15, 2015.
“West’s tax crimes wrongfully undermine our tax system and its fundamental premise of voluntary and truthful compliance,” Assistant U.S. Attorney Kaarina Salovaara argued at the sentencing.
The sentence was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and James C. Lee, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago.
In addition to criminal penalties, defendants convicted of tax offenses remain responsible for any taxes and interest due, as well as civil penalties of up to 75 percent of the tax owed.
Former Lansing Man Sentenced to Nearly 20 Years in Prison for Attempting to Persuade A Minor to Engage in Sexual ConductRead the Press Release
CHICAGO ― A former south suburban Lansing man was sentenced to nearly 20 years in federal prison for attempting to persuade an individual he believed was a 14-year-old girl to engage in illegal sexual conduct. The defendant, MARTIN N. PAZDZUIRA, 47, formerly of Lansing, who has been in custody since he was arrested on federal charges in 2012, pleaded guilty in April of this year to one count of using the Internet to attempt to persuade an individual he believed was a minor to engage in illegal sexual conduct.
“Thank goodness it was law enforcement posing as ‘Emily,’ and not Emily,” U.S. District Judge Amy J. St. Eve said in imposing a sentence of 235 months, or 19 years, 7 months, yesterday in U.S. District Court. The judge also ordered Pazdzuira placed on court supervision for life following his release from prison.
Using the Internet to entice a minor to engage in illegal sexual conduct carries a mandatory minimum sentence of 10 years in prison and a maximum of life.
In pleading guilty, Pazdzuira admitted that he frequently used the Internet to chat with underage girls. In August 2012, he began chatting with “Emily,” who he believed was 14, and told “Emily” that he was 16 years’ old. In further chats, Pazdzuira made plans to meet “Emily” and take her to a hotel in Indiana to engage in illicit sexual conduct. He was arrested when he showed up to meet “Emily,” who, unbeknownst to him, was an undercover law enforcement officer posing as a minor girl.
Pazdzuira has two prior convictions for child sexual exploitation offenses. In 1995, he was convicted of aggravated criminal sexual abuse involving an 8-year-old child, and in 2005, he was convicted of possession of child pornography.
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. The government was represented at sentencing by Assistant U.S. Attorney April Perry.
The investigation was conducted by the FBI’s Child Exploitation Task Force. The task force is part of a nationwide effort known as the Innocence Lost National Initiative targeting those involved in the commercial sexual exploitation of children in the United States. In Chicago, the CETF is comprised of FBI special agents and officers and investigators from the Chicago Police Department, the Cook County Sheriff's Office, and the Cook County State’s Attorney’s Office.
U.S. Attorney’s Office to Conduct Election Day Monitoring Election Day Hotline: (312) 469-6157Read the Press Release
CHICAGO The U.S. Attorney’s Office will monitor the general election in Chicago and surrounding suburbs on Tuesday, Nov. 4, 2014, 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 and other personnel will be monitoring certain polling places, while other attorneys will be available to respond to complaints as needed.
The hotline number, staffed on Election Day only, is (312) 469-6157.
“This office has a long tradition of monitoring the polls on Election Day to help protect the integrity of the voting process,” Mr. Fardon said. “No one who is entitled to vote should in any way be inhibited from doing so, and we stand ready to ensure a fair process for all.”
Assistant U.S. Attorney Stephen Heinze coordinates the office’s election monitoring efforts and subsequent investigations, if any, in consultation with the Justice Department. The Chicago Office of the Federal Bureau of Investigation and the U.S. Marshals Service will assist in this effort by following up, if necessary, on any election fraud and voting rights complaints.
Complaints about ballot access problems or discrimination can also be made directly to the Civil Rights Division’s Voting Section in Washington at 1-800-253-3931 or 202-307-2767.
Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.
Violations of federal voting rights statutes carry penalties ranging from 1 to 10 years in prison and fines up to $250,000.
Former Northwestern Physician to Pay the United States $475,000 to Settle Cancer Research Grant Fraud ClaimsRead the Press Release
CHICAGO — A former cancer research physician at Northwestern University’s Robert H. Lurie Comprehensive Center for Cancer in Chicago will pay the United States $475,000 to settle claims of federal research grant fraud. Dr. Charles L. Bennett agreed to the settlement in a federal False Claims Act lawsuit that was first made public last year after the government investigated the claims made by a former employee and whistleblower who will receive a portion of the settlement.
In July 2013, Northwestern University agreed to pay the United States $2.93 million to settle identical claims against the university. Northwestern, which fully cooperated during the investigation, did not admit liability as part of the settlement.
In a settlement agreement filed today in U.S. District Court, Dr. Bennett, of Columbia, S. Car., also did not admit liability, nor did the government concede that its claims were not well-founded.
In a lawsuit filed in January this year, the government contended that Dr. Bennett submitted false claims under research grants from the National Institutes of Health. The settlement covers improper claims that Dr. Bennett submitted for reimbursement from the federal grants for professional and consulting services, food, hotels, travel, conference registration fees, and other expenses that benefited Dr. Bennett, his friends, and family from Jan. 1, 2003, through Aug. 31, 2010.
The allegations were initially made in a civil lawsuit filed under seal in 2009 by Melissa Theis, who in 2007 and 2008 worked as a purchasing coordinator in hematology and oncology at Northwestern’s Feinberg School of Medicine. She will receive $80,750 from the settlement with Dr. Bennett, and earlier she received $498,100 from the settlement with Northwestern. Her suit, which the government later settled on her behalf, alleged that the defendants submitted false claims to the United States when Dr. Bennett and others directed and authorized the spending of grant funds on goods and services that did not meet applicable NIH and government grant guidelines.
The allegations were investigated by the U.S. Department of Health and Human Services Office of Inspector General, the Federal Bureau of Investigation, the National Institutes of Health, and the U.S. Attorney’s Office. The government contended Northwestern improperly submitted claims to NIH for grant expenditures for items that were for the personal benefit of Dr. Bennett, his friends and family that were incurred in connection with grants as to which he was the principal investigator.
The settlement with Dr. Bennett resolves the remaining claims and effectively ends the litigation. The agreement reserves the authority of any federal agency, including HHS, to take any administrative action, such as suspending or debarring Dr. Bennett from receiving future research grants. United States v. Charles L. Bennett, M.D., No. 09 C 1943 (N.D. Ill.).
Dr. Bennett agreed to pay the settlement by Dec. 1, 2014. The agreement covers allegations that false claims were submitted to NIH for costs that Dr. Bennett incurred on his grant-funded research projects involving adverse drug-events, multiple myeloma drugs, a blood disorder known as thrombotic thrombocytopenic purpura, and quality of care for cancer patients. Dr. Bennett allegedly billed those federal grants for family trips, meals and hotels for himself and friends, and “consulting fees” for unqualified friends and family members, including his brother and cousin.
The settlement with Dr. Bennett was announced by the United States Attorney’s Office for the Northern District of Illinois, the U.S. Department of Health and Human Services, Office of Inspector General – Chicago Region, and the Chicago Office of the Federal Bureau of Investigation.
The United States was represented by Assistant U.S. Attorney Kurt N. Lindland.
Settlement Agreement
29 Defendants Facing State or Federal Charges for Alleged Roles in “Cracking Cards” Schemes Costing Banks Millions of DollarsRead the Press Release
CHICAGO — Twenty-nine northern Illinois and Indiana defendants are facing state or federal charges following a coordinated investigation of “cracking cards,” a scheme that costs banks millions of dollars and has its roots on Chicago’s south side and is spreading to other cities through rap music and social media. Six Indiana defendants include four men who are part of a group that has posted Internet rap videos referring to the cracking cards scheme and displaying large amounts of cash and expensive items, according to the charges announced today.
Federal agents and local law enforcement officers from the U.S. Postal Inspection Service, FBI, IRS Criminal Investigation Division, FDIC and U.S. Department of Labor Offices of Inspector General, the Chicago Police Department, and the Sheriff’s Offices of Cook and DeKalb counties began arresting the defendants yesterday. Sixteen are facing federal bank fraud charges in Federal Court in Chicago; six are facing federal charges in U.S. District Court in Hammond, Ind., and seven are facing state charges brought by the Cook County State’s Attorney’s Office.
Since at least 2011, the defendants and other individuals allegedly deposited counterfeit checks into banking accounts belonging to third parties who willingly or unwillingly surrendered their debit cards and PINs for use in the cracking cards schemes. The defendants then allegedly used automated teller machines or point of sale terminals at currency exchanges and retail stores to withdraw or spend funds that the banks advanced to the third-party accounts before learning that the deposited checks were bogus. The banks lost money they advanced to the account holders when the customers denied responsibility for the withdrawals and purchases.
Cracking cards schemes have become a popular method of obtaining illicit funds in Chicago and surrounding areas. The schemes often involve numerous participants, including some individuals affiliated with Chicago street gangs, the charges allege. Schemers use various methods to recruit bank customers to give up their debit cards and PINs, including approaching individuals at parties, schools, or on the street, and using social media outlets, such as Instagram and Facebook, to advertise opportunities for making fast cash by sharing a portion of the fraud proceeds.
“Our purpose today is to warn bank customers that fast cash schemes are usually too good to be true and they should always safeguard their account information, and, at the same time, we are putting those persons who engage in this type of illegal activity on notice that debit card fraud can result in serious state or federal charges, which carry severe penalties and consequences,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois.
“Over the last three years, the United States Postal Inspection Service and other federal, state, and local law enforcement agencies, have conducted this major bank fraud investigation involving ‘cracking cards.’ The charges allege that defendants knowingly deposited fraudulent checks intending to defraud banks and their customers. The Postal Inspection Service is committed to working together with the banking industry to protect the public and preserve its trust in the U.S. mail and banking system,” said Antonio Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.
According to the federal charging documents, after schemers obtained a debit card and PIN for a bank customer’s account, they manufactured or purchased one or more counterfeit checks to deposit into the account. The bogus checks often contained legitimate bank account and routing numbers that belonged to the accounts of actual businesses. Certain individuals developed a reputation for “making paper,” that is, making, printing, and selling counterfeit checks. The schemers then deposited, or recruited someone else to deposit, the counterfeit checks into the third party’s bank account, typically via an ATM transaction. The schemers then waited for the bank to credit the purported funds from the counterfeit check, usually within hours of the deposit, after which they often attempted a small ATM withdrawal of $100 or more to determine whether an account was credited with the advanced funds. If the transaction succeeded, schemers went to an ATM, a currency exchange, or point-of-sale terminal at a retail store to withdraw or spend the remaining funds that the bank advanced to the third-party account.
One defendant, MATTHEW MOSLEY, 26, of Chicago, allegedly “made paper,” that is, he manufactured counterfeit checks, which he used and sold to others in cracking cards schemes. Mosley was arrested yesterday and charged with bank fraud for allegedly causing banks to lose more than $32,000 in funds he withdrew after depositing counterfeit checks.
Mosley was one of 16 defendants charged with bank fraud in separate criminal complaints filed in U.S. District Court in Chicago. These 16 defendants allegedly caused bank losses totaling more than $1.7 million, with individual defendants responsible for amounts ranging from $26,000 to $260,000. Five of these defendants were arrested yesterday, one was already in custody, and arrest warrants were issued for 10 others.
Six other defendants were charged with conspiracy to commit bank fraud in a criminal complaint filed in U.S. District Court in Hammond. These defendants allegedly caused thousands of dollars in bank losses. Five of the six were arrested yesterday and remain in custody while the sixth was already in state custody. All six are scheduled to appear tomorrow morning in Federal Court in Hammond.
Four of these defendants ― KEVIN FORD, 26, of Chicago; CORTEZ STEVENS, 24, of Griffith, Ind.; STEPHEN GARNER, 23,of Portage, Ind.; and MIKCALE SMALLY, 21, of Chicago ― are identified in the complaint as part of a group that called themselves “R.A.C.K. Boyz,” “Rack Boyz,” or “TheRackBoyz.” The other two defendants, MERCEDES HATCHER, 21, of Danville, Ill., and BRITTANY SIMS, 24, of Portage, Ind., were identified as Ford’s and Garner’s girlfriends, respectively.
The RACK Boyz have Facebook and Twitter accounts and post videos on YouTube, including a rap video entitled, “For the Money,” which refers to cracking cards and shows the defendants wearing RACK Boyz shirts and displaying large amounts of cash, according to the complaint affidavit. Ford is also associated with a different so-called “money team,” known as BandKlan, which also has rap videos posted on YouTube.
The complaint alleges that the defendants use social media to recruit people with bank accounts or who will open bank accounts to use in the cracking cards scheme. They allegedly sent out numerous private messages and posted messages on their Facebook walls inviting people to participate in the scheme. The charges allege that the defendants were linked to numerous withdrawals from third-party bank accounts after counterfeit checks were deposited.
Ford also allegedly “made paper,” by printing fraudulent checks, and, on Oct. 20, Ford allegedly posted threats to law enforcement officers on his Facebook wall.
Seven defendants were arrested yesterday and today on state charges filed by the Cook County State’s Attorney’s Office. They are: RAPHAEL FOX, 23, of Chicago; TIERRE McKNIGHT, 19, of Country Club Hills; DONOVAN GRICE, 22, of Dolton; ROYTRELL LONG, 20, of Matteson; LAKEYA SHAMBLEY, 23, of Chicago; MICHAEL BONDS, 26, of Dolton; and ANTONIO CHAVIS, Jr., 21, of Chicago. Each was charged with continuing financial crimes enterprise, financial institution fraud, wire fraud, and Long, alone, was also charged with forgery.
In addition to Matthew Mosley, the remaining 15 Chicago federal defendants (all of Chicago unless noted otherwise) and the amounts of their alleged frauds are: DONNIVAN ALLEN, 25, $196,000; TYRONE BULLOCK, 25, $260,000; DURRAN DAVIS, 29, $90,000; SAMAJE DAVIS, 26, $140,000; MICHAEL GREEN, 27, $61,000; DAVEY HINES, 21, $85,000; CHESTER JACKSON, 23, $26,000; ANTWAN D. KINERMAN, 23, of Markham, $45,000; DENNIS MITCHELL, 26, of Hammond, $50,000; PAIGE PARKER, 24, $85,000; KEVIN THUNDERBIRD, 28, $45,000; RASHEED THURMAN, 28, $200,000; JAVON TURNER, 21, $70,000; MAHLIK WASHINGTON, 22, $100,000; and BLAKE WILLIAMS, 30, of Schaumburg, $230,000.
The charges identify Citibank, US Bank, JP Morgan Chase, Bank of America, and others as being among the victims of the schemes.
As a result of this investigation, CHRISTOPHER CAIN, 26, of Chicago, was charged previously with bank fraud in U.S. District Court in Chicago. Cain, who was the first defendant charged with card-cracking, pleaded guilty, admitting that he was responsible for bank losses totaling $184,877. Earlier this month, Cain was sentenced to five years in federal prison.
The arrests and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; David A. Capp, United States Attorney for the Northern District of Indiana; Anita Alvarez, Cook County State’s Attorney; Antonio Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; W. Jay Abbott, Special Agent-in-Charge of the Indianapolis Division of the Federal Bureau of Investigation; James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division; Joe Moriarty, Special Agent-in-Charge of the Federal Deposit Insurance Corporation Office of Inspector General; James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor Office of Inspector General; Garry McCarthy, Superintendent of the Chicago Police Department; Thomas Dart, Cook County Sheriff; and Roger A. Scott, DeKalb County Sheriff. Fraud investigators from several banks assisted in the investigation.
The 16 federal defendants in Chicago were each charged with one count of bank fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine. The six federal defendants in Hammond were each charged with one count of conspiracy to commit bank fraud, which 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.
In the federal cases, the government is being represented in Chicago by Assistant United States Attorneys Kate Zell, Sunil Harjani, Elizabeth Pozolo, and Special Assistant U.S. Attorney Heidi Manschreck. In Hammond, the government is being represented by Assistant United States Attorney Diane Berkowitz. The state case is being prosecuted by the Public Corruption and Financial Crimes Unit of the Cook County State’s Attorney’s Office.
The public is reminded that complaints contain only charges and are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Complaint
Joel R. Levin Returns to U.S. Attorney’s Office to Succeed Retiring First Assistant U.S. Attorney Gary S. ShapiroRead the Press Release
CHICAGO — A veteran federal prosecutor rejoined the U.S. Attorney’s Office today as the second-ranking official and will succeed the office’s longest-serving prosecutor upon his retirement early next month. Zachary T. Fardon, United States Attorney for the Northern District of Illinois, announced the appointment of Joel R. Levin, who was a federal prosecutor for 28 years in Chicago, San Francisco, and Milwaukee, as First Assistant U.S. Attorney, succeeding Gary S. Shapiro, who has held the position for nearly 17 years of his 42-year career with the Justice Department.
Mr. Levin, 60, who was a trial partner with Mr. Fardon and others in the prosecution of former Illinois Gov. George Ryan, left government service in 2008 for private law practice. He returned to the office today as the No. 2 official under Mr. Fardon.
Mr. Shapiro, 68, whose distinguished career over four decades included 16 months as the U.S. Attorney before Mr. Fardon took office a year ago, is retiring effective Nov. 3.
“I am very pleased to welcome Joel, my friend and former trial partner, as a senior member of our team, knowing that we are gaining the benefit of his judgment and counsel in the critically vital role of First Assistant. This office is extremely fortunate to have Joel step into a leadership role and draw upon his breadth of experience, both in this and other U.S. Attorney’s Offices, as well as private practice,” Mr. Fardon said.
“At the same time, we are keenly aware that Gary’s retirement brings an end to his guiding influence, which has been steadfast through the tenure of five U.S. Attorneys, as well as five additional U.S. Attorneys while Gary was with, and led, the independent Organized Crime Strike Force. We in law enforcement, and the citizens of the Northern District of Illinois, owe Gary our deepest gratitude for his four decades of public service and for upholding the highest principles of justice for all. We congratulate him and wish him a wonderful retirement,” Mr. Fardon added.
Mr. Levin said: “It is humbling to replace Gary but I am honored by the opportunity of returning to public service and working with Zach, as well as the entire U.S. Attorney’s Office. I am excited to contribute to protecting our national security, attacking the violence that has plagued our neighborhoods, rooting out public corruption, prosecuting health care fraud and bringing to justice those who attempt to undermine the integrity of our markets and financial system.”
Mr. Shapiro said: “Chicago is blessed with a remarkable federal prosecutor’s office, staffed with talented and dedicated public servants. I’ve been able to investigate and try cases with some of the most creative and committed investigators imaginable, and in an atmosphere in which ‘doing the right thing’ was the only object. I’ve been very lucky to be allowed to work here.”
The First Assistant U.S. Attorney, also known as the FAUSA, plays a major role in supervising all matters, including investigations and prosecutions involving international terrorism, public corruption, corporate fraud, and organized crime, including violent crime and narcotics and gang prosecutions. The FAUSA also has significant responsibility for managing more than 300 employees, including currently 162 Assistant U.S. Attorneys in Chicago and Rockford, serving 18 counties and nine million residents in northern Illinois.
Mr. Levin returns to the U.S. Attorney’s Office from Perkins Coie in Chicago, where he was a member of the firm’s White Collar & Investigations practice since 2008. Mr. Levin was an Assistant U.S. Attorney in Milwaukee from 1980 to 1984, and an AUSA in San Francisco from 1984 to 1997, serving as chief of the Criminal Division his last two years there. In 1997, he joined the U.S. Attorney’s Office in Chicago and held supervisory positions, including chief of the Financial Fraud and Special Prosecutions Section in 2007-08. In addition to the public corruption prosecution of Ryan and other defendants in Operation Safe Road, Mr. Levin handled numerous financial fraud cases and was a member of the trial team in the prosecution of Gustavo “Gino” Colon, the leader of the Latin Kings street gang.
Mr. Levin received four Justice Department Director’s Awards for superior performance between 1990 and 2006; the Federal Bar Association’s Frank McGarr Award in 2002; and the Chicago Crime Commission’s Star of Distinction Award in 2006. He has been an adjunct professor of law at Northwestern University since 2008.
Mr. Levin graduated from Yale University in 1976 and from Harvard Law School in 1979.
Mr. Shapiro served as the United States Attorney from July 1, 2012, to Oct. 23, 2013, between the terms of Mr. Fardon and Patrick J. Fitzgerald. Former U.S. Attorney Scott R. Lassar appointed Mr. Shapiro First Assistant in January 1998, and Mr. Fitzgerald reappointed him in that position after taking office in 2001. In 2007, Mr. Shapiro received a Justice Department Director’s Award for executive achievement.
He joined the Justice Department in 1972 as a trial attorney and, in 1974, he joined the Chicago Strike Force, a field office of the Justice Department’s Organized Crime and Racketeering Section. In 1984, he became Attorney in Charge of the Chicago Strike Force, responsible for supervising all federal organized crime investigations and trials in Illinois, Indiana, and Wisconsin. In 1990, when the Strike Force field offices nationwide were merged into the United States Attorney’s offices, Mr. Shapiro became Chief of the Organized Crime Section of the Chicago U.S. Attorney’s Office. In 1992, he was appointed Chief of the Criminal Division.
Mr. Shapiro brought his considerable experience prosecuting organized crime and the Chicago “Outfit” to bear over the last decade in supervising Operation Family Secrets, which resulted in Frank Calabrese, Sr., a street crew leader, Joey “The Clown” Lombardo, and James Marcello, both Outfit capos, each being sentenced to life in prison for crimes related to more than a dozen mob murders and attempted murders, including some of Chicago’s most notorious Outfit hits, dating back to the 1960s.
Mr. Shapiro also helped oversee the decade-long civil investigation of systemic corruption nationwide in the Laborers’ International Union of North America (LIUNA), which resulted in an unprecedented out-of-court settlement and a top-to-bottom reformation of LIUNA’s election and internal policing structures designed to rid the union of decades of organized crime influence. For this achievement, in 2000, Mr. Shapiro and other members of the team received the Attorney General’s Distinguished Service Award.
In the 1980s, Mr. Shapiro prosecuted Roy Williams, then president of the International Brotherhood of Teamsters; Allen Dorfman, once responsible for the management of the multi-billion-dollar Teamsters Central States Pension Fund; Joey Lombardo; and several pension fund trustees for conspiring to bribe then U.S. Sen. Howard Cannon, of Nevada, to kill proposed Senate legislation to deregulate the trucking industry. Following Williams’ conviction and sentencing, he became the highest-ranking Teamsters official ever to testify against the mobsters who then controlled the Teamsters Union, and his cooperation contributed substantially to the subsequent convictions of the leaders of the organized crime families in Chicago, Kansas City and Cleveland for skimming millions of dollars from Las Vegas casinos.
Mr. Shapiro also prosecuted Harry Aleman, the notorious Chicago mobster and hitman, for operating a violent home invasion crew, and he oversaw the racketeering investigation and trial of Aleman, mob capo Ernest “Rocky” Infelise, and other Chicago Outfit members, as well as the prosecution of then-Cicero Town President Betty Loren Maltese. Mr. Shapiro is also credited with helping turn Robert Cooley, a corrupt former Chicago lawyer, into a government cooperating witness, who testified in several Operation Gambat trials involving organized crime and judicial corruption in the early 1990s.
In the late 1970s, Mr. Shapiro headed the investigation and trials of Charles Nicosia, former mayor of East Chicago, Ind., and other East Chicago public officials and local contractors for significant bribery schemes involving the payment of millions of dollars to obtain and then skim the public works contract to revamp East Chicago’s water treatment and sewer system.
Mr. Shapiro graduated from Rice University in 1968 and from the University of Texas School of Law in 1971.
Illinois Lawyer and Internet Radio Talk Show Host Convicted in $9.7 Million Mortgage Fraud SchemesRead the Press Release
CHICAGO — An Illinois lawyer and Internet radio talk show host was convicted today on federal charges for engaging in two mortgage fraud schemes that defrauded lenders of a total of approximately $9.7 million. The defendant, WARREN BALLENTINE, schemed with others to obtain more than two dozen fraudulent mortgage loans and represented buyers at multiple closings, knowing that they were fraudulently qualified for loans to purchase homes in Chicago and various southern suburbs.
Ballentine, 43, of Durham, N. Car., and formerly of Country Club Hills, owned the Law Office of Warren Ballentine, LLC, in Country Club Hills. He was found guilty of two counts of bank fraud, two counts of making false statements to lenders, and one count each of mail fraud and wire fraud by a jury that deliberated less than an hour total late yesterday and today following a trial that began Monday in U.S. District Court.
Ballentine remains free on bond pending sentencing, which was set for Jan. 21, 2015, before U.S. District Judge Matthew Kennelly. Ballentine faces a maximum penalty on each count of 30 years in prison and a $1 million fine or an alternate fine of twice the gross gain or twice the loss, whichever is greater, and restitution is mandatory. Ballentine is also subject to forfeiture of more than $9.7 million.
The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
According to the evidence, between December 2004 and February 2005, Ballentine schemed with others to fraudulently cause various lenders to make at least eight loans totaling approximately $3.6 million by making false statements in loan documents, including applications, HUD-1 settlement statements, and occupancy statements concerning the buyers’ intention to occupy the homes they purchased as a primary residence. Ballentine then represented buyers recruited by others at real estate closings, knowing that they had signed and submitted false documents and had been fraudulently qualified to purchase the properties in Chicago, Monee, Woodridge, and Mokena.
Between February 2005 and May 2006, Ballentine engaged in a similar, separate scheme with others to fraudulently cause various lenders to make at least 20 loans totaling approximately $6.1 million by making false statements in mortgage documents, including the buyers’ intention to occupy the homes as a primary residence. Ballentine also represented these buyers at closings, knowing that they had been fraudulently qualified for the loans based on false documents, including some that Ballentine advised them to sign at closings. These homes were scattered throughout Chicago and other suburbs, including Country Club Hills, Richton Park, and Markham.
The guilty verdict 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 Antonio Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.
The government is being represented by Assistant U.S. Attorneys Jason Yonan and Andrew S. Boutros.
Des Plaines Man Sentenced to More Than 17½ Years in Federal Prison for Murder-For-Hire of Estranged Wife and Her FriendsRead the Press Release
CHICAGO — A former Des Plaines man who solicited two undercover law enforcement officers to kill his estranged wife and her friends was sentenced today to 17 years and 7 months in federal prison. The defendant, ZENON GRZEGORCZYK, has been in federal custody since he was arrested and charged in May 2012, following an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives. He pleaded guilty this past July in U.S. District Court.
Grzegorczyk, 51, was sentenced to serve 151 months in prison for murder-for-hire, consecutive to 60 months for possession of a firearm while arranging the murders. He must serve at least 85 percent of his 211-month sentence and there is no parole.
“Other than actually committing the murders, it doesn’t get much more serious than this,” U.S. District Judge Elaine Bucklo said in imposing the sentence.
Grzegorczyk’s conduct posed a real risk to several potential victims and to the community at large, Assistant U.S. Attorneys Jennie H. Levin and Matthew M. Schneider argued at sentencing. Grzegorczyk met with undercover officers on three occasions in April and May 2012 to discuss the murder of his estranged wife and her friends. Initially, Grzegorczyk met with the officers to discuss the sale and shipment of firearms to Poland when he turned the conversation to murder-for-hire.
Grzegorczyk told the officers that he wanted the proposed victims to be burned alive and said, “grab them, go some quiet place ― then burn them. Believe me, I want to see those faces, I want to see those faces ― but can’t”
Later, Grzegorczyk showed the officers several photos of intended victims and said he was willing to pay $5,000 for each person killed. He then identified the address of his estranged wife’s residence and told the officers that they should conduct surveillance because the intended victims spent time there. He said the number of victims could change depending on who was present because he did not want any witnesses, and he agreed to pay them a $3,000 deposit for the murders.
At their third meeting, Grzegorczyk gave the officers several additional photos of intended victims and opened a brief case containing $45,000 in cash and a 9mm semi-automatic handgun with two magazines of ammunition. Grzegorczyk said that he intended to leave for Poland in early June.
The sentence was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Carl J. Vasilko, Special Agent-in-Charge of the Chicago Office of ATF.
MCC Escapee Joseph Banks Sentenced to 36 Years in Federal Prison for Armed Bank RobberiesRead the Press Release
CHICAGO — A Chicago man who escaped from the Metropolitan Correctional Center in December 2012, just five days after he was convicted of armed robbery of two banks and attempting to rob two others in 2007 and 2008, was sentenced today to 36 years in federal prison. Approximately $547,000 stolen in the two robberies remains missing.
JOSEPH BANKS, also known as “Jose Banks,” 39, “intimidated and terrified” employees and bystanders at each of the four banks and those victims’ fears were renewed when Banks escaped and remained at large for three days before he was recaptured, Assistant U.S. Attorney Renato Mariotti argued in seeking a lengthy sentence.
“The defense claims [Banks’] bank robberies were common, but they inflicted an uncommon level of terror, by his design,” Mr. Mariotti said.
Rejecting Banks’ claims that he is “humble” and “anti-gun,” U.S. District Judge Rebecca Pallmeyer called Banks “narcissistic,” adding that he was and remains “a threat and a menace” to society. Judge Pallmeyer further rejected Banks’ so-called “sovereign citizen” defense, which he maintained at his trial in December 2012 and which he admitted was an act.
Banks was also ordered to pay $589,000 restitution. He has been in federal custody for six years and will receive credit for time served. He must serve 85 percent of his sentence and there is no parole in the federal prison system.
With nearly two dozen prior convictions, Banks was found guilty at a trial in December 2012 of attempting to rob the First Commercial Bank, 6945 North Clark St., on Aug. 30, 2007, and Chase Bank, 5134 North Clark St., on Aug. 26, 2008. He was arrested a week later on Sept. 3, 2008.
On Dec. 28, 2007, Banks was wearing a fake beard, a wig, sunglasses, gloves, a suit, and an overcoat when he entered the Citibank branch located 3128 North Ashland Ave. Armed with a gun, he leaped the counter, pushed bank employees to the ground, and forced them to open the vault for him. An employee suffered a panic attack and clutched his chest, hyperventilated, turned pale, and fell to the floor, thinking all the while that he was having a heart attack and would die. Banks fled the bank with approximately $317,000, which was never recovered.
On July 19, 2008, wearing a black stocking mask that obscured his face, Banks robbed a different Citibank branch located at 3753 North Clark St. Again, Banks brandished a gun and forced his way into the vault before fleeing with approximately $272,000. Of that, approximately $42,000 was recovered from a safe deposit box while the remaining $230,000 has never been found. Evidence at Banks’ trial showed that he spent some of the money on several vehicles.
Banks and his cellmate, Kenneth Conley, another convicted bank robber, escaped through the wall of their cell at the MCC and repelled down the exterior of the high-rise federal detention facility. Conley was captured two weeks later and is serving a sentence of 20 years for bank robbery, consecutive to 41 months for the escape.
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. Also representing the government were Assistant U.S. Attorneys Sheri Mecklenburg and Peter Salib.
Dentist and Wife Charged with Bankruptcy FraudRead the Press Release
ROCKFORD — A husband and wife, both formerly of Barrington Hills, Ill., were indicted today by a federal grand jury in Rockford on separate counts of making false statements in a bankruptcy case. The indictment alleges that DANIEL APOSTOLOPOULOS, 52, and SOULA APOSTOLOPOULOS, 45, each filed a Chapter 7 Bankruptcy Petition, and fraudulently failed to disclose financial interests.
According to the indictment, on Oct. 23, 2009, Daniel Apostolopoulos filed a Chapter 7 bankruptcy Petition, and made false statements on a bankruptcy schedule and a Statement of Financial Affairs, both of which were filed under penalty of perjury. Specifically, it is alleged that Apostolopoulos intentionally concealed his interest in a checking account, a Chicago restaurant, and property located in Wisconsin. It is also alleged that Daniel Apostolopoulos failed to disclose his relationships with his father-in-law and sister-in-law, to whom he had transferred a Volvo and a Mercedes automobile within two years of filing, as well as concealing his prior ownership in other financial accounts.
The indictment further alleges that on March 4, 2010, Soula Apostolopoulos filed a Chapter 7 bankruptcy Petition, and made false statements on her Statement of Financial Affairs, filed 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 property 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. If convicted, 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. Each 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 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 Federal Bureau of Investigation.
The government is represented by Assistant U.S. Attorney Michael D. Love.
Indictment
Corrections Officer and Three Inmates Among Seven Charged in Alleged Plot to Smuggle Contraband into Cook County JailRead the Press Release
CHICAGO — Nearly three ounces of marijuana was confiscated after it was found hidden inside two sandwiches that a Cook County corrections officer allegedly tried to smuggle into the Cook County Jail last year in exchange for a $200 bribe. As a result of that seizure and an allegedly broader conspiracy, the corrections officer, three inmates, two civilians, and a Chicago police dispatcher are facing federal charges in connection with alleged smuggling of marijuana and other contraband into the jail, sheriff’s department and federal law enforcement officials announced today.
In June 2013, three jail inmates allegedly conspired with two civilian women to bribe JASON MAREK, a corrections officer for the Cook County Department of Corrections since May 2011, to bring marijuana, cigarettes, tobacco, alcohol, food and other contraband into the jail for inmates’ consumption and for further distribution within the jail, according to a three-count criminal complaint that was filed yesterday and unsealed today.
According to the charges, an ounce of marijuana, which sells for approximately $200 outside the jail, could be sold for five times as much, or $1,000, inside the jail.
Marek, also known as “Murder” and “Murda,” 29, formerly of Orland Park, was assigned to the 3 to 11 p.m. shift at CCJ, Division 9, Tier 2H, when the alleged marijuana smuggling was thwarted on June 21, 2013. He was arrested this morning and was released on his own recognizance after appearing before U.S. Magistrate Judge Jeffrey T. Gilbert in Federal Court.
Between June 15 and 24, 2013, three jail inmates – THADIEUS GOODS, PRINCE JOHNSON, and LAVANGELIST POWELL – who were housed in the same tier where Marek was assigned, allegedly conspired with two women to bribe Marek to smuggle the marijuana and other contraband into the jail. During a recorded telephone call from the jail on June 15, 2013, Goods told his wife, PEARLISA STEVENSON, that, with her help, he had the opportunity to make some money by selling marijuana inside the jail as long as he also had a corrections officer willing to help him.
“Rooting out corruption in the Cook County Jail is a top priority of mine,” said Cook County Sheriff Thomas J. Dart. “I’m thankful to our federal partners at the FBI and the U.S. Attorney’s Office for working closely with my staff to conduct such a thorough investigation and to charge this far-reaching case.”
The arrests and charges were announced by Sheriff Dart, together with 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 a joint effort between the FBI and the Sheriff’s Office of Professional Responsibility, with Sheriff Dart’s full support, to improve the security and integrity within the Cook County Jail.
Goods, also known as “Big Weasy,” “Weasy,” and “Wang,” 36, of Calumet Park; Johnson, aka “Primo,” 32; and Powell, aka “JuJu” and “Juicy,” 22, both of Chicago, remain in state custody and will be transferred to face the federal charges on a date yet to be determined.
Stevenson, aka “Wang Wang,” 29, and NATOSHA McCOLLUM, aka “Tasha,” 21, who is Powell’s girlfriend, both of Chicago, were arrested this morning and were released on their own recognizance after appearing before Magistrate Gilbert.
Those six defendants ― Marek, Goods, Johnson, Powell, Stevenson, and McCollum ― were charged with conspiracy to possess with intent to distribute marijuana.
The seventh defendant, STEPHANIE LEWIS, 40, of Chicago, a “supervisor police operations” in the police dispatch group in the city of Chicago’s Office of Emergency Management and Communications, and who is Johnson’s girlfriend, was arrested last night. She was charged with one count of illegally accessing a law enforcement computer to assist the alleged extortion and drug distribution conspiracy. Lewis and three others ― Powell, Johnson, and McCollum ― were also charged with conspiracy to access a law enforcement computer to further extortion and a drug conspiracy.
Lewis was also released on her own recognizance. Marek, Stevenson, McCollum, and Lewis were each ordered to return to court at 9:30 a.m. Friday for a status hearing before Magistrate Gilbert.
According to a 48-page complaint affidavit, Goods and Powell pre-sold marijuana to inmates within the CCJ. In June 2013, inmates transferred funds to Stevenson and McCollum via the jail’s Inmate Trust Account system, allegedly to purchase marijuana and other contraband, which Goods, Powell, and Johnson expected to be brought into the jail. After collecting the money from other inmates, McCollum and Stevenson discussed with Goods and Powell their efforts to purchase marijuana from drug dealers outside the jail. Johnson and Lewis allegedly coordinated the delivery of contraband to Stevenson for delivery into the jail, and on June 21, 2013, Stevenson delivered the marijuana and other banned goods to Marek. At the same time, McCollum and Stevenson paid Marek a $200 bribe to smuggle the contraband into the jail. Marek attempted to deliver the marijuana to Goods but was intercepted by the FBI and the Sheriff’s Department’s Office of Professional Responsibility as he entered the jail.
After Marek failed to deliver the marijuana and contraband, Goods, Powell, and Johnson allegedly worked with McCollum and Lewis to obtain Marek’s home address and information about his family to threaten Marek and convince him to bring additional contraband into the jail. Johnson allegedly contacted Lewis and, after informing her that Marek had accepted a bribe but failed to deliver the goods, asked Lewis to provide Marek’s personal information, including his home address and names of family members because Johnson and Goods planned to send their associates to Marek’s house. After receiving Marek’s license plate number from McCollum, Lewis allegedly conducted an inquiry of Marek’s license plate on an OEMC computer linked to an Illinois State Police database, which queried the National Crime Information Center database, and Lewis then provided Marek’s home address to Johnson, the complaint alleges.
In June 2013, Good, Powell, and Johnson were housed in the jail’s Division 9, Tier 2H, where Marek was assigned for a 90-day rotation. Tier 2H is located on the second floor of the south tower of Division 9, which is located at 2834 West 31st St., Chicago, and is comprised of two interconnected three-story buildings that house general population male inmates with a maximum security classification.
Each count of the complaint carries a maximum penalty 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 government is being represented by Assistant United States Attorneys Megan Church and Michelle Nasser.
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
Suburban Dermatologist Convicted of Cheating Medicare and Private Insurers of $2.6 Million in Health Care Fraud SchemeRead the Press Release
CHICAGO — A dermatologist in west suburban Lombard was convicted today of defrauding Medicare and private health insurers by submitting false claims for more than 800 patients resulting in losses totaling more than $2.6 million. The defendant, DR. ROBERT KOLBUSZ, falsely diagnosed patients with actinic keratosis, or sun-induced skin lesions that have potential to become cancerous, and then billed public and private health insurers for treatments that were ineffective and falsely documented.
Kolbusz, 57, of Oak Brook, owns and operates the Center for Dermatology and Skin Cancer, Ltd., in Lombard and formerly located in Downers Grove. He was found guilty of three counts of wire fraud and three counts of mail fraud by a jury that began deliberating on Friday after a four-week trial in U.S. District Court.
Kolbusz remains free on bond pending sentencing, which was scheduled for Feb. 13, 2015, by U.S. District Judge John Z. Lee. Kolbusz faces a maximum penalty of 20 years in prison and a $250,000 fine on each count, or an alternate fine totaling twice the gross fraud loss or twice the gain, whichever is greater. The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
According to the evidence at trial, between 2003 and 2010, Kolbusz falsely documented hundreds of patients’ records to support medically unnecessary, cosmetic treatments he ordered. He typically billed for removing 15 or more lesions from hundreds of repeat patients, many for whom he treated on at least 10 or more occasions, and received insurance payments of up to $352.40 per treatment. Overall, he falsely claimed to have removed more than 150 pre-cancerous lesions from each of approximately 350 Medicare patients, more than 450 patients covered by Blue Cross and Blue Shield, and additional patients covered by Aetna and Humana health insurance. In fact, Kolbusz usually provided treatments that were merely cosmetic and that were not eligible for insurance payments.
Eight patients, several employees, and an expert witness testified for the government, while Kolbusz testified in his defense. One patient, who was a teenager at the time, testified that she thought only that she was getting her freckles lightened while Kolbusz claimed that he had destroyed approximately 491 pre-cancerous lesions on her skin.
The guilty verdict 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; Lamont Pugh III, Special Agent-in-Charge of the U.S. Department of Health and Human Services Office of Inspector General in Chicago; and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor Office of Inspector General in Chicago.
The government is being represented by Assistant U.S. Attorneys Stephen Chahn Lee, Abigail Peluso, and Jessica Romero.
Chicago Investment Advisor Convicted of Defrauding Suburban Bank and Two Clients of More Than $3.2 MillionRead the Press Release
CHICAGO ― A Chicago investment advisor was convicted today of federal bank fraud charges for engaging in a scheme to defraud Oak Brook-based Leaders Bank and two of his clients of more than $3.2 million and ultimately causing the bank to lose more than $2.7 million. The defendant, ROBERT J. LUNN, was found guilty of five counts of bank fraud by a federal jury that began deliberating yesterday following a trial that began Oct. 7.
Lunn, 64, of Chicago, who did business as Lunn Partners, LLC, an investment advisory business, remains free on bond pending sentencing, which was set for Jan. 21, 2015, by U.S. District Judge Charles Norgle. Lunn faces a maximum sentence of 30 years in prison and a $1 million fine on each count, or an alternate fine totaling twice the fraud loss or twice the gain, whichever is greater, as well as mandatory restitution. The court may also order forfeiture of any fraud proceeds.
According to the evidence at trial, Lunn fraudulently obtained a $1.32 million line of credit from the bank for his business, as well as separate loans of $1.4 million and $500,000 purportedly on behalf of two clients. Lunn made a series of misrepresentations to Leaders Bank about his own assets, the purpose of the loans, and the knowing authorization of clients purportedly seeking the financing. Instead, Lunn used substantially all of the fraudulently obtained funds for his own benefit, including mortgage payments and approximately $1.4 million in payments to other investment clients.
Lunn initially obtained a business line of credit from Leaders Bank for $480,000 in May 2001. He increased the credit line twice in early 2004, first to $1.2 million and later to $1.32 million, all after he submitted personal financial statements to the bank falsely stating that he owned millions of dollars of stock in Morgan Stanley and Lehman Brothers. In September 2002, Lunn arranged for an unsecured bank loan of $1.4 million, purportedly for the benefit of former Chicago Bulls star Scottie Pippen, a client at the time, after falsely representing the proceeds of the loan would be used by Pippen to finance the purchase of an interest in an airplane. In June 2004, Lunn arranged a bank loan for $500,000 for the benefit of another former client, Robert Geras, a retired venture capitalist, without Geras’ knowledge or authorization, after submitting a net worth report for Geras and stating that Geras wanted short-term financing for a business investment.
The guilty verdict 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. They thanked the U.S. Securities and Exchange Commission’s Chicago Regional Office for its cooperation and participation in the prosecution.
The government is being represented by Assistant U.S. Attorney Kenneth Yeadon and Special Assistant U.S. Attorney Rich Stoltz, a senior attorney with the SEC.